In Kapahi Real Estate Inc. v. Elite Real Estate Club of Toronto Inc, 2026 ONSC 1438, Justice Myers addressed serious concerns arising from inaccurate quotations contained in written submissions filed with the Ontario Superior Court of Justice.
Background
The issue arose following an unsuccessful motion under Rule 59.06 of the Rules of Civil Procedure to vary an order of Justice Steele, which enforced a decision of an arbitral tribunal and awarded costs. During the subsequent costs process, the applicants sought enhanced costs and raised concerns about the respondents’ reply factum, alleging that it contained apparent AI “hallucinations”. The applicants also advised that they intended to seek costs against the respondents’ counsel personally under Rule 57.07, although that motion was later abandoned following a settlement of the costs issue between the parties.
The Inaccurate Quotations
Justice Myers reviewed the authorities cited in the reply factum and found seven paragraphs containing inaccurate quotations. In all but one instance, the passages were formatted as indented quotations, and all were enclosed in quotation marks, yet nothing like them appeared in the precedent cases from which they were purportedly drawn. In two of the examples, the quotation was also attributed to the wrong judge.
Justice Myers emphasized that these were not minor transcription errors where counsel was attempting to quote an actual part of a case. Rather, the passages were completely made up and presented as direct quotations from the specified authorities.
Counsel’s Response and the Court’s Analysis
Respondents’ counsel wrote to the court acknowledging that his recitation of legal principles and the substance of the referenced cases was not accurate. Counsel accepted full responsibility, but expressly advised the court that he did not use or rely on artificial intelligence or similar tools in preparing the factum. Instead, counsel attributed the inaccuracies to “human errors,” “a lack of due care,” “carelessness,” and misreading the cited cases. Counsel also acknowledged that the certification required by Rule 4.06.1(2.1) had been omitted from the reply factum.
Counsel offered that he was a sole practitioner who was only called to the Ontario bar in 2022. Justice Myers firmly rejected this as an explanation, stating he did not believe anyone could get through bar admission and ethics courses believing that counsel are allowed to make up principles and attribute them to real cases.
Justice Myers noted that while AI hallucinations were the “most obvious explanation,” he declined to make a definitive finding as he had not had the benefit of full submissions on the issue. Instead, the court highlighted a concerning quandary: either counsel used AI and was untruthful about it, or counsel deliberately fabricated seven fake paragraphs and chose to present them as actual quotations from precedent cases.
Relationship to Ko v. Li
Justice Myers also referenced his earlier decisions in Ko v. Li, where counsel relied on non-existent authorities. In later proceedings, after counsel admitted she had been untruthful in statements made to the court during the initial contempt process, Justice Myers directed that carriage of a new contempt of court proceeding be referred to the Attorney General of Ontario.
In Kapahi, however, the court declined to pursue contempt proceedings at this time. Justice Myers noted that the factual facts remained unclear, and counsel had already been exposed to some jeopardy in costs under Rule 57.07. Concluding that the best outcome was for bodies equipped with investigative authority to determine whether there was use of AI hallucinations or deliberate falsification of law, Justice Myers directed that the decision be referred to the Law Society of Ontario for its consideration.
The Use of AI in Legal Practice
Although the court did not conclusively determine whether AI was involved, Kapahi reflects growing judicial concern about the potential for generative AI to produce fabricated legal authorities or quotations. AI tools may assist with research or drafting, but they can also generate convincing-sounding legal content that does not exist. Courts have made clear that responsibility for the accuracy of legal submissions remains strictly with counsel. Where AI tools are used, lawyers must ensure that authorities are independently verified and that quotations are checked against the source decisions. As Kapahi illustrates, inaccuracies in cited authorities may have consequences beyond the litigation itself, including potential professional regulatory scrutiny.