Legal Blog: Commercial Matters
DHMK Properties Inc. v. 2296608 Ontario Inc. 2017 Ont SCJ
Purchaser of a commercial building refused to close and sued for specific performance and an abatement because the income represented in the agreement of purchase and sale was lower than the actual income that the property produced. The trial judge held that the representation was a warranty, which entitled the purchaser to sue for damages but did not entitle the purchaser to refuse to close. Accordingly, the purchaser was in breach. Another hearing was held to determine the vendor’s damages arising out of the purchaser’s repudiation of the agreement. The court held that the damages were the difference between the sale price and the market value of the property at the date of closing. This difference was significant because the income was lower than that represented and therefore the fair market value was lower. Because the purchaser repudiated the agreement before closing, the vendor had a duty to mitigate its damages. The purchaser offered to purchase the property on the same terms as previously after it lost the first trial, but that offer was attached to a condition that the purchaser could sue for the misrepresentation as to income. The vendor, not surprisingly, refused that offer. The court held that the failure to accept this offer was not a failure to mitigate its damages; mitigation only requires a vendor to act reasonably rather than destroying or sacrificing previous rights as part of the mitigation.Continue Reading >
Wilson v. Alharayeri 2017 SCC
A disgruntled diluted shareholder commenced an oppression application for losses under section 241(3) of the Canada Business Corporations Act against the directors of a corporation, rather than the corporation itself, for the damages that the shareholders suffered as a result of a reorganisation of the corporation. The court held that 2 directors, who personally benefited from the reorganisation, were liable for the applicant’s losses. In making the award, the court was guided by 2 requirements: the director or officer must be implicated in the oppressive conduct and the order must be fit in all the circumstances. Four criteria inform whether the order is fit: (1) the oppression remedy must in itself be a fair way to deal with the situation (resulting in 4 subcategories: personal benefit to the directors; breach of the personal duty they owed as directors; misuse of a corporate power; or a remedy against the corporation would unduly prejudice other security holders); (2) the order should go no further than necessary to rectify the oppression; (3) the order should serve only to vindicate the reasonable expectation of the complainant; and (4) director liability should not be a surrogate for other forms of statutory or common law relief that may be more fitting in the circumstances.Continue Reading >
Landlord brought a motion for possession of leased premises; tenant brought a motion for relief from forfeiture and for an order requiring the landlord to renew the lease. Landlord was successful. Judge granted substantial indemnity costs of $51,000 because a clause in the lease required the tenant to pay “all costs and expenses including legal fees on a substantial indemnity basis incurred by the Landlord in enforcing the lease.”Continue Reading >
Parties entered into an agreement of purchase and sale for a commercial condominium. There was an interim closing. The builder vendor then set a closing date, as it was entitled to do. The purchaser requested an extension without giving reasons and the vendor refused the extension without giving reasons. The closing date came and, after a partial tender, the vendor’s lawyer claimed that the purchaser was in breach. The next business day, the purchaser’s lawyer notified the vendor’s lawyer that the purchaser would be in funds a day later and would complete the transaction. The vendor refused to close and claimed the $70,000 that the purchaser had previously paid. Each claimed that the other failed to act in good faith. The judge noted that good faith depended upon the relationship of the parties. If the parties had a long-term, ongoing relationship, a level of good faith might have been flexibility beyond the letter of the contract. However, commercially experienced buyers and sellers in a one-off transaction would not be expected to vary from the strict contractual terms. Accordingly, the judge held that the purchaser breached the agreement and that the vendor properly terminated it. The judge awarded the vendor the deposits of $40,000, but held that the $30,000 occupancy closing amount was not a deposit; rather, it was a payment towards the balance due on closing and had to be returned because there was no closing.Continue Reading >
In the recent Court of Appeal decision in Howard v. Benson Group Inc., 2016 ONCA 256, the employer learned a very costly lesson when it was ordered to pay an employee more than $200,000.00 following the employee’s termination under a fixed term contract. The decision highlights the need for employers to pay very close attention when drafting early termination clauses in fixed term contracts.
The employee had entered into an employment contract for a 5-year fixed term. His employer terminated his employment, without alleging cause, 23 months into the contract. Employee sued for breach of contract claiming payment of compensation for the unexpired term of the contract i.e more than three years’ salary. On the employee’s motion for summary judgment, the judge granted the motion but not the relief sought by the employee. Instead the motions judge awarded the employee common law damages for wrongful dismissal.
The contract in issue contained an early termination provision that stated as follows:Continue Reading >