Ontario’s Divisional Court has upheld a $22,841.61 breach-of-contract award arising from an unsuccessful business venture, finding no basis to overturn a trial judge’s conclusion that the parties had agreed to share expenses and profits despite never signing a formal contract.
In Berkel v. Fleischmann, 2026 ONSC 5508, released October 1, 2026, Justice Schreck dismissed Sam Berkel’s appeal from a Small Claims Court judgment in favour of Jeff Fleischmann. The damages award, together with pre- and post-judgment interest, remains in place. Berkel must also pay $7,500 in appeal costs, including taxes and disbursements.
A venture built around unsold inventory
Fleischmann was winding down a business supplying parts to costume-jewellery manufacturers and had approximately $200,000 in inventory. Berkel proposed moving it to premises used by his trading business so they could sell it together.
The two experienced businesspeople incorporated F&F 2020 Limited, held equal shares and contributed equal seed funding. In November 2019, Fleischmann prepared a document setting out proposed arrangements for employee costs, rent and the distribution of surplus. Neither party signed it, and their names did not appear on it.
Fleischmann testified that the document followed discussions between them and that Berkel had expressed no disagreement. Berkel described it as a discussion note rather than a binding agreement.
The business struggled after the pandemic began. In May 2021, the relationship broke down and operations ended. Berkel wrote himself an $18,000 cheque that essentially emptied the company’s account. That withdrawal formed part of the contractual dispute; it was not the amount of the eventual damages award.
What the trial judge found
The trial judge rejected most of Berkel’s evidence and found an expense- and profit-sharing contract. Under its terms, the company would pay taxes, maintenance and insurance and half the base rent, while Berkel would pay the other half. Surpluses and profits would be distributed according to the arrangements recorded in the document.
The judge found Berkel had breached the agreement and calculated Fleischmann’s entitlement on the basis of what would have been available if Berkel had paid his rent share and had not withdrawn the $18,000.
Three appeal arguments rejected
Berkel first argued that the document was only an unenforceable agreement to agree. Justice Schreck accepted that such preliminary arrangements are not enforceable contracts, but said the trial judge had found an actual agreement. The question was not whether the unsigned document alone constituted a contract. It was whether the parties’ conduct and surrounding circumstances objectively showed that they intended to be bound. The court applied the established requirements of an offer, acceptance, an intention to create legal relations and consideration.
Contract formation was a question of mixed fact and law in this case. Berkel had not identified a palpable and overriding error that would justify interfering with the trial judge’s findings.
Second, Berkel argued that the trial judge had imposed unagreed terms by relying on what made sense. Read in context, the passage concerned calculating damages under the terms already found to exist, Justice Schreck held. It did not show the judge inventing a bargain.
Third, Berkel argued that the judge had improperly considered subjective intentions. Justice Schreck said the objective test permits consideration of surrounding circumstances, including what the parties said and did. The trial judge had examined their relationship, communications, conduct and the document. Nothing showed reliance on their private intentions.
The ruling applies established contract principles to the evidence of this particular venture. Its significance is that the absence of signatures did not end the inquiry: the court considered the parties’ dealings as a whole. It does not make every unsigned proposal binding or treat silence alone as acceptance.
