Judicial Frustration Mounts as Self-Reps Turn to AI

The decision, Marper Holdings Limited v. Foxpark Development Corporation, 2026 ONSC 3254, arose in the receivership of 77 Fox Street in Penetanguishene. Spetter Zeitz Klaiman PC had previously placed the debtor’s property into receivership on behalf of its secured creditor client, and the court‑appointed receiver—Russo Corp.—returned to court seeking approval of its Fourth Report, approval of fees, authority to assign the debtor into bankruptcy, and its eventual discharge.

Instead, the hearing became a case study in the judicial system’s growing struggle with AI‑generated litigation.

Justice Myers on AI: “A lot of words but few with any substance”

Justice Myers did not mince words. He noted that Mr. Strand, a self‑represented guarantor of the debtor, filed a 23‑page factum drafted entirely by AI which “contains a lot of words but few with any substance.”  He also noted that it “was apparent during the hearing that Mr. Strand [did] not really understand the arguments he was reading” out in court.

Justice Myers further identified three cases the AI had “hallucinated”—cited for propositions that did not exist in the decisions. His endorsement underscores a growing judicial concern: AI tools can produce confident‑sounding but legally baseless arguments, and self‑represented litigants may not understand the difference.

The vexatious litigant order—despite Rule 2.2.03(1)(a)

Perhaps the most consequential part of the decision is Justice Myers’ willingness to declare Mr. Strand a vexatious litigant—even though Strand was not a formal party to the receivership proceeding.

Rule 2.2.03(1)(a) of the Rules of Civil Procedure states that a vexatious litigant order may be sought only against a party. Yet Justice Myers held that Strand’s conduct—relentless relitigation, collateral attacks, and improper attempts to represent the debtor corporation—brought him within the court’s reach.

The judge relied on the Court of Appeal’s reasoning in Lenczner Slaght LLP v. GlycoBioSciences Inc., 2025 ONCA 841, holding that s. 140 of the Courts of Justice Act can reach the “operating mind” of a corporation who directs vexatious litigation. Justice Myers wrote: “In my view when a corporation is used as an arm of a vexatious litigant… a vexatious litigant order can be sought against the operating mind as well.”

This is a significant expansion of practical exposure for individuals who attempt to litigate through corporations—especially in insolvency proceedings.

Receiver seeks discharge; court pushes back against relitigation

The receiver sought approval of its activities and a pathway to discharge. Justice Myers agreed, noting that the receiver’s work had been reasonable and that its fees were inflated largely because of Mr. Strand’s constant opposition: “His kneejerk opposition to the Receiver at every stage requires added effort in reporting, preparation, and extra time in court.”

The court also authorized the receiver to assign the debtor into bankruptcy and to serve as trustee—rejecting Strand’s argument that a lawsuit he had commenced against the receiver created a conflict.

Take Aways

• AI is not a substitute for legal judgment. Courts are increasingly alert to AI‑generated submissions and will scrutinize them—especially when they contain hallucinated authorities or misstate the law.
• Self‑represented litigants face real risks when relying on AI. As this case shows, AI‑driven filings can actively harm credibility and lead to adverse findings.
• Vexatious litigant orders can reach beyond formal parties. Justice Myers’ reasoning signals that individuals directing abusive litigation through corporations may be personally exposed.
• Receivership courts will protect the process. Where a receiver’s work is impeded by repetitive or meritless challenges, the court will intervene decisively.
• Spetter Zeitz Klaiman PC’s receivership strategy was upheld. The court confirmed the propriety of the receivership, the sale process, and the receiver’s conduct—paving the way for discharge and bankruptcy administration.

Written by: James Quigley