The Court of Appeal for Ontario has overturned a lower court decision and ordered that two investors, Sarbjit Singh and Se Na Lee, who suffered losses on the purchase of units in the Trump International Hotel and Tower in Toronto, are entitled to remedies from U.S. presidential candidate Donald Trump and others.

Singh and Lee each bought units in the Trump International Hotel and Tower as investments in the belief that they would profit by renting out the rooms under the hotel’s “reservation program,” according to the appeal court’s decision. However, their investments failed. Singh lost approximately $250,000 and Lee lost almost $1 million, as a result.

The investors sued, separately, for rescission and damages, “claiming they were misled by marketing materials that projected impressive profit margins for purchasers who participated in the reservation program,” the appeal court notes.

They brought motions for partial summary judgment against Trump, Val Levitan, Alex Shnaider, and their company, Talon International Inc., which were dismissed by the motions judge; the claims against Trump, Levitan and Shnaider were tossed out in their entirety.

However, the appeal court has now found in favour of the investors, ordering that Singh’s agreement of purchase and sale should be rescinded; awarding damages to Lee as against Talon for negligent misrepresentation (to be determined by the court); reinstating a claim for fraudulent misrepresentation; and ordering that the only claim against Trump, Shnaider and Levitan that should be dismissed are claims that they breached an Ontario Securities Commission (OSC) ruling exempting the sale of the hotel units from the dealer registration and prospectus requirements on the basis that they should be treated as real estate, not as securities.

In overturning the lower court’s decision, the appeal court found that the defendants breached the terms of the exemption that the OSC granted.

“t would be unconscionable and would shock the conscience to allow a party to use an entire agreement or other exculpatory clause to escape liability for misrepresentations made in breach of the OSC’s terms for granting an exemption from the Securities Act requirements,” the appeal court said in its decision.