Legal Blog: Five Liners

Jan
30
2018

Release

Pomeroy v. Couprie 2017 Ont SCJ

Plaintiff commenced an action for $3 million against the main defendant and others, including a lawyer. The plaintiff settled the action against the lawyer for payment of $3,000. The plaintiff was to make a payment “in return for a comprehensive mutual release (lawpro standard form) and … a Notice of Discontinuance.” In accepting the settlement, the plaintiff requested the draft release “in the form proposed for my review.” The parties agreed that there was a settlement regardless of the form of the release, but disagreed on the form of the release. The lawyer wanted the unchanged standard LawPro release. The plaintiff wanted to amend the no claims over clause to ensure that it would be able to continue its action against the remaining defendants and to ensure that a separate claim, not referenced in the statement of claim, could be made against the lawyer for breach of an alleged duty as bare trustee holding a disputed share certificate. The judge used commercial interpretation rules to decide that the plaintiff’s position was the better one.

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Jan
26
2018

Interest

Solar Power Network Inc. v. ClearFlow Energy Finance Corp. 2017 Ont SCJ

Section 4 of the Canada Interest Act specifies that, on all portions of non-mortgage loans, the yearly rates or percentages must be specified; otherwise, the interest rate will be 5% per year. The loan documents specified a base rate at 12% per year compounded and calculated monthly, an administration fee of between 1.81% and 3.55% of the principal at the start and any renewal of the loan, and a discount fee of 0.003% per day for every day that the loan was outstanding. The judge held that: (i) the administration fee was not interest because there were significant administrative tasks being covered by this fee; (ii) the discount fee had nothing to do with administration was categorised as interest; it was not linked to the creation of a new loan document or renewal, was not tied to risk, was calculated at a daily rate, and was not tied to a specific event, such as a renewal; (iii) since the discount fee was held to be interest and an annual rate was not given, this fee ran afoul of the Interest Act; (iv) since one of the components of the loan did not comply with the Interest Act, all of the interest provisions (even the proper provision at 12% per year) were tainted and all were subject to an interest rate at 5% per year – even those that complied with the Act.

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Jan
26
2018

Gift

Texieira v. Markgraf Estate 2017 Ont CA

Claimant was the deceased’s neighbour who helped her during the last years of her life solely out of goodwill and without expectation of any compensation. 6 days before her death, the deceased gave the claimant a cheque for $100,000. He attempted to cash it, but there were insufficient funds in that account – even though there were sufficient funds in other accounts. Before the claimant could sort out the problems, the deceased died. The motions judge held, and the Court of Appeal agreed, that a gift by cheque is not complete when the cheque is given; only when the cheque has been cashed or has cleared. An incomplete gift is no gift all. The claimant had other arguments, none of which were successful. There was no contract because there was no consideration. There is no claim on a bill of exchange because there was no consideration. Equity by estoppel did not apply because the claimant did not act in reliance on a shared assumption. For example, the claimant would have suffered no reliance detriment if the deceased had stopped payment on the cheque.

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Jan
18
2018

Lease Damages

1714959 Ontario Inc v. Goldenshtein 2017 Ont SCJ

Guarantor of the corporate tenant under a lease that had been terminated by the landlord was held to be liable for all damages that the landlord had incurred. The judge noted that once the premises had been re-let, mitigation had taken place and must be accounted for in any damages calculation. The judge assessed damages including arrears, pre-mitigation rental loss, rental shortfall, and the present value of the rental loss from the date of trial to the end of the lease term.

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Jan
18
2018

Undertakings, Settlement, Costs

Pullano v. Hinder 2017 Ont SCJ

An undertakings and refusals motion was settled. The only issue remaining was costs. The judge noted that undertakings had to be fulfilled and if a party does not answer them the party could anticipate a costs award against it. The judge assessed costs at $3,500 and had no qualms about doing so even though the only issue before him was costs.

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Jan
18
2018

Specific Performance, Conveyance & Good Faith

1954294 Ontario Ltd v. Gracegreen Real Estate Development Ltd 2017 Ont SCJ

Vendor trying to get out of deal because it was offered more money subsequently by another purchaser. The vendor’s lawyer complained of 12 technical deficiencies relating to agreement of purchase and sale, all of which the judge threw out. The judge relied on (i) the indoor management rule, (ii) the proposition that, before a vendor can rely on the standard agreement of purchase and sale regarding title deficiencies, the vendor must first attempt to satisfy title deficiencies that are matters of conveyance, (iii) the proposition that a vendor must make a genuine effort to obtain what is necessary to carry out the contract and not carry on in a capricious or arbitrary manner. The judge also held that specific performance was available even though it was a commercial property. The property was unique in that (i) the land was site ready for development; and (ii) other properties were no longer available at anywhere near the same price. The judge held that damages would not suffice because the vendor was a single asset corporation and any damages would not easily be collected and would result in more litigation. Further, the judge held that the vendor had acted in bad faith and therefore the equitable remedy of specific performance was appropriate.

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Jan
15
2018

Equitable Receiver

Luu v. Abuomar 2017 Ont SCJ

There are 4 requirements to the appointment of an equitable receiver: (1) creditor obtains a writ of execution and files it with the sheriff; (2) creditor requests sheriff to levy the execution but sheriff is unsuccessful; (3) debtor owns or has an interest in an asset that is not otherwise exigible at common law; and (4) there is some kind of legal or practical impediment to seizure at common law. The judge held that criterion 4 had to be considered at the same time as criterion 3. In this case, the creditor had attempted to sell the debtor’s joint undivided interest in the property on 4 separate occasions and that nothing of consequence had been received; a judgment debtor examination was unsuccessful; and the debtor had attempted to thwart the creditor’s efforts to sell the property by arranging for a significant judgment against himself, a judgment that the creditor had set aside on the basis of fraud. Under these circumstances, the judge ordered the appointment of an equitable receiver.

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Jan
15
2018

Trust Fund

Bank of Montreal v. Kappeler 2017 Ont SCJ

A masonry contractor was put into receivership and ultimately into bankruptcy. The block and concrete subcontractor claimed a deemed trust under section 8 of the Construction Lien Act and therefore claimed priority over the secured creditor. The judge relied on RBC v. Atlas Block (2014 Ont SCJ). She noted that the Bankruptcy and Insolvency Act took precedence over the CLA such that a deemed trust under the CLA did not apply. Only a common law trust would allow the subsub to gain priority over the secured creditor. In this case, the judge held that there was no common law trust because there was no certainty of subject matter. The receivership order did not require any segregation of funds and all funds were put in the same receiver account. The judge held that the fact that funds were received from various projects and could be traced and identified was irrelevant because the trust had not arisen in the first place.

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Jan
15
2018

Summary Judgment

Holmes v. Hatch 2017 Ont CA

In a wrongful dismissal matter, the motions judge decided that the employer’s failure to take into account some of the specific factors set out for termination in the employment agreement constituted a fundamental breach of that contract. Accordingly, she awarded damages at common law. The Court of Appeal set aside that decision because the employee never pleaded this type of breach of contract and never pleaded repudiation of the contract. Further, the employee did not advance those claims in his motion or in his factum. It was only when the motions judge raised the notion of this type of breach that the parties made oral and subsequent written submissions. Accordingly, the employer was denied the opportunity to adduce evidence on the precise breach allegation on which the judge decided the motion. A party must know the evidentiary burden it has to meet in a motion for summary judgment.

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Jan
15
2018

Guarantee-Improvident Sale

Bank of Nova Scotia v. Scholaert 2017 Ont SCJ

Bank sued guarantor of the debtor. It had sold assets of the debtor, but ultimately realised nothing from that sale because CRA had a claim in priority. Guarantor claimed that the bank made in an improvident sale of the debtor’s assets. The judge noted that the bank sold the assets for more than the asset valuation of an independent appraiser and that the guarantee gave the bank wide latitude on the sale of assets and stipulated that the bank only needed to act reasonably. The judge granted judgment against the guarantor.

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