Shovels Down: Lessons from Kapahi Real Estate Inc. v. Elite Real Estate Club of Toronto Inc, 2026 ONSC 1438

*Brian J. Lunde

Mistakes can and do happen in the legal profession. When they happen, having the insight to recognize the error and then begin taking steps to mitigate the problem is an important skill. There are likely many ways to tackle the problem, but also some which should be avoided. The two worst options available are to pretend the error didn’t happen or make attempts to cover the mistake.

The decision in Kapahi Real Estate Inc. v. Elite Real Estate Club of Toronto Inc, 2026 ONSC 1438 [Kapahi] is a recent illustration of this. The decision involved an application for a costs award against counsel personally.

In Kapahi, counsel had filed a written submission which cited seven decisions. Each one of the seven decisions had a valid neutral citation. From those real decisions, seven paragraphs were ostensibly pulled and put into a written submission, which was filed with the Court. The problem, however, was that none of the paragraphs “quoted” actually existed. As Justice Myers repeated in Kapahi: “Nothing like this quotation appears in the case. It is wholly made up.”

The immediate suspicion was that counsel had relied on artificial intelligence and that the citations were “AI hallucinations”. The bizarre part of this decision is that counsel denied relying on artificial intelligence. Instead, counsel attributed the false quotations to “a lack of due care” and “human errors.”  Justice Myers was perplexed, noting:

Try as I might, I do not understand [Counsel’s] response. If he did not use AI, how did he come to make up seven paragraphs and call them quotations from real cases? If I accept that [Counsel] did not use AI for research or drafting, I am at a loss for how these quotations could be a result of human error, a lack of due care, misreading the cases cited, carelessness, or inadvertence as stated by [Counsel].

When things are going wrong, there are resources available for lawyers. Organizations like the Saskatchewan Lawyers’ Insurance Association, the Canadian Lawyers Insurance Association, or the Law Society of Saskatchewan (or the insurer or law society in your jurisdiction) all have resources available to lawyers when things are going sideways. Young lawyers in particular should also note that many insurers require that lawyers report claims as soon as practicable after learning of a claim, or becoming aware of circumstances which might give rise to a claim, however unmeritorious.

The first step to making things better is to stop making things worse. As noted by Justice Meyers in Kapahi: “As is often the case, if [Counsel] has not been truthful, the cover-up may be worse than the initial error.”  The Kapahi decision concludes with the Court referring the decision to the Law Society of Ontario, noting that other bodies “like the Toronto Police Service and the Law Society of Ontario that [sic] are equipped to investigate wrongdoing if they exercise the discretion to do so.”

This is an outcome every lawyer no doubt hopes to avoid. The main takeaway here is that when counsel finds themselves in a bit of a hole, the best thing to do is to put down the shovel.

*Brian J. Lunde is a 2016 graduate of the University of Saskatchewan College of Law and was admitted to the Saskatchewan bar in 2017. He is an experienced litigator in the McKercher LLP Regina office, with a focus in insurance law and health law.