Legal Blog: Commercial Matters

Dec
16
2016

Costs Indemnity

Michele’s Italian Ristorante Inc. v. 1272259 Ontario Ltd. 2016 Ont SCJ

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.”

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Aug
10
2016

Good Faith

2336574 Ontario Inc. v. 1559586 Ontario Inc. Ont SCJ

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.

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Jun
16
2016

Damages and the Duty to Mitigate in Fixed Term Employment Contract Situations

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.

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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:

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