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Allison’s 2016 in Review

Allison Speigel had a busy year!

She was a:

• panel member on Rogers TV show with Hazel McCallion: Shop Locally Professionally – https://www.youtube.com/watch?v=VnqTHw-Tlgw
• presenter at the Canadian Bar Association’s program: Practical Project Management: Proven Strategies to Keep You on Track
• presenter at the Ontario Bar Association’s program: Forge a Better Union: Civil Litigation Counsel and the In-House Lawyers who Instruct them

Click on the links to read more about each event.

Bet on SNF!

SNF is passionate about Mississauga. Along with other Mississauga professional service providers, it threw its second annual Shop Locally, Professionally event.

Read about it here in the Mississauga News: http://www.mississauga.com/news-story/6959962-shop-locally-professionally-always-a-good-bet-event-proclaims/

Failure to Mitigate – A Tough Argument for an Employer to Make

Even where an employer is not alleging cause for termination and there is little or no dispute over the length of reasonable notice to which the employee is entitled, the employer will often still argue for a reduction in damages based on the employee’s failure to adequately mitigate her damages. The recent Ontario Superior Court of Justice decision in Aylsworth v. The Law Office of Harvey Storm, 2016 ONSC 3938 provides further clarification regarding the limits of this defence for employers.

Aylsworth had worked as a legal assistant for the defendant lawyer (the “Employer”) for over 15 years. As the Employer was approaching retirement, the defendant negotiated the merger of his office with another law firm, REL, and gave Aylsworth approximately 4 months’ working notice. Shortly before the end of the working notice period, REL made an offer of employment to Aylsworth on terms similar to her employment with the defendant. There were, however, some differences:

i. Aylsworth was being asked to sign a written agreement;

ii. she would not be entitled to a vacation in the summer months;

iii. sick days would be treated as vacation days;

iv. she would be subject to an initial probationary period; and

v. her severance entitlement would be limited to the statutory minimum.

Discovery – Refusals

Lemesani v. Lowerys Inc. 2016 Ont SCJ

A party does not have an absolute right of discovery after refusals or undertakings. Further, the questions to be asked at the continued discovery are limited: See Rule 29.2 03. Similarly, a party does not have an unfettered right to bring a motion to compel answers to refusals. In this case, the defendant waited over a year (and 3 months before trial) to bring its motion for continued discovery and refusals. The judge refused the request because the cost of re-attendances and the strong potential for a delay to the trial outweighed any possible benefit to the defendant.

Res Judicata – Estoppel – Summary Judgment

D’Onofrio v. Advantage & Truck Rentals Ltd. 2017 Ont CA

Plaintiff joined individual driver and its own insurer as defendants in action for personal injury. Its own insurer was joined because there was an issue as to whether the individual driver was the actual driver and the insurer was responsible for damages if there were no identifiable driver. The insurer brought a motion for summary judgment claiming that there was no genuine issue for trial because the driver was known. The individual driver took no position on the summary judgment motion, but still wished to maintain its identity defence. The Court of Appeal held that this was an error. Once judgment was granted to the insurer, then, as a co-defendant, the individual driver could no longer rely on the identity defence. It was bound by the summary judgment. The same result would have held true had the individual driver consented to the dismissal of the action against the insurer. Although judgment will not be not given on the merits, a consent has the same effect because it is an agreement elevated to an order and the parties cannot resile from that agreement. As it happened, the insurer’s lawyer mistakenly told the motions judge that the order was on consent, when it was not. On that basis, since the order was granted by mistake, then, regardless of the error in assumptions of the driver, the order could not stand.

Moral: do not be quick to either take no position on, consent to, an order dealing with a co-defendant because your client will be bound by that order.

Jeopardy

A creditor has a right to examine an individual debtor or the representative of a corporate debtor as to the debtor’s assets and transfers of property. This is referred to as a judgment debtor examination. In the normal course, this examination invades the debtor’s rights of silence, but such is to be expected by a debtor who fails to pay its debts. What happens when the creditor commences an action against a corporate debtor’s representative, claiming that there was a fraudulent conveyance or other oppressive action and, in addition to its normal rights of discovery in that action, also attempts to examine the corporate representative by way of a judgment debtor examination. This was the issue in Kristina Zakhary Professional Corp v. Age-less Dermal Therapy Inc., a 2015 decision of the Ontario Superior Court of Justice.

Examinations

A director was to be examined in a judgment debtor examination as a representative of the corporate debtor. Before the examination, the creditor commenced another action against the corporation and the director personally, alleging a fraudulent conveyance. The director refused to attend at the judgment debtor examination and the creditor moved for an order requiring her to do so.

Information (2)

Pursuant to section 39 of the Construction Lien Act, contractual parties at the lower rungs of the construction ladder have a right to information relating to construction contracts higher on the construction ladder. S. 39(1) refers to information being supplied by an owner or a general; s. 39(2) refers to information being supplied by a general or a subcontractor.

For example, s. 39(2) applies to a request from a subsub to either its sub or the general dealing with information relating to the subcontract between the general and the sub. S. 39(1) applies to a request from a subcontractor or subsub to the general or the owner dealing with information relating to the prime contract. In each case, the party requesting the information has no knowledge of it.

Can either of the subsections be used to request information of the party with whom the requester has a contract (e.g. Can a sub request information of the general relating to the subcontract? Can a general request information of the owner relating to the prime contract?) These questions were answered in Coastal Steel Construction Ltd. v. Man-Shield (NWO) Construction Inc., a 2015 decision of the Ontario Superior Court of Justice.

Lien Gone

The Construction Lien Act creates lien rights and defines when those rights expire. It defines holdback duties of mortgagees, owners, generals, subs, subsubs, etc. A claimant’s lien rights extend only to the holdback requirements of a payor. What happens when, looking at the lien preservation rules in a vacuum, a sub may still have lien rights, but the general has lost its lien rights? Does the sub lose its lien rights as a result? This was the issue in Clarkway Construction Ltd. v. 2247129 Ontario Inc., a 2016 decision of a Master of the Ontario Superior Court of Justice.

Rationale

Although we have set out the theory of the Act in a number of newsletters, it bears repeating. The Master explained it succinctly as follows:

The scheme of the Act sets up a pyramid or ladder structure for contractors and subcontractors to recover payment for services and materials supplied to improve a property. The theory underlying the Act is that supplying services and materials to improve land is akin to advancing credit. Once the services or materials have been supplied the owner enjoys the benefit of what was supplied. Therefore the supplier of the services and materials is entitled to security in the form of a lien claim for having advanced credit to the owner. The Act creates a ladder or pyramid, with the owner at the top, the general contractor under the owner and subcontractors under the general contractor. The lien claim and holdback rights and obligations flow up the ladder or pyramid to the owner.

Surprise (2)

In our last newsletter (October 2016), we recounted the sorry tale of a settlement gone wrong and the inability of the creditor to collect on a judgment arising out of that settlement (Finness Yachting Inc. v. Menzies 2015 BCSC). We can now report that the creditor appealed the decision to the British Columbia Court of Appeal and that the appeal was dismissed. In this newsletter, we report on another settlement gone wrong and an attempt by the creditor to undo the settlement and obtain judgment for the original amount claimed before he compromised his claimed amount in the settlement: Clark v. 189557 Ontario Inc., a 2016 decision of the Ontario Superior Court of Justice.

Settlement

A corporate employer terminated the employment of an employee. The employer and employee entered into a settlement agreement whereby the employer was to pay $31,250 USD bi-weekly over six months. The employer was able to pay the first scheduled payments totalling to $18,750, but was unable to make the remaining payments totalling to $12,500 USD.

The employee sued the employer for $145,000 CDN, claiming that the settlement agreement should be set aside and that he should receive the actual damages for his wrongful dismissal. In order to set aside the settlement agreement, the employee had to overcome numerous hurdles that he would not have had to overcome had the settlement agreement gone one step further and stated what would happen if the employer failed to make any of the required payments set out in the settlement agreement.

Insurance

We have spent many hours negotiating the wording of insurance and repair clauses in leases, both for landlords and tenants. However, is the wording of those clauses critical for the allocation of risk? That question was answered in Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., (2016) 130 O.R. (3d) 418 (C.A.).

Lease

When determining whether a landlord or a tenant is liable for a loss in an insurance context, the lease, not the insurance policy, is the most important document. Who has agreed to obtain insurance and for what? In any subrogated claim, the insurer’s rights are no better than the rights of its insured.

The lease obliged the parties to obtain insurance coverage for specified risks:

• The landlord was to maintain coverage caused by identified perils to the “Premises” and the landlord’s property.
• The tenant was to obtain business interruption insurance to meet its obligations to the landlord and protect the tenant against loss of revenue. It was also to obtain insurance against all risks of loss or damage to its property. Further, if that provision were not wide enough, the tenant was to carry insurance against all perils, including fire, to its property within the Premises.
• The tenant was to add the landlord as an additional insured under the policies.
• The tenant and landlord had cross-indemnity covenants. The tenant indemnified the landlord against all claims arising out of the tenant’s occupancy of the Premises for damage to the Premises occasioned by any negligence of the tenant or people for whom it was responsible. The landlord indemnified the tenant in the same manner arising out of the landlord’s use or occupancy of the Premises for damage to the Premises occasioned by the negligence of the landlord or people for whom it was responsible (the “Landlord’s Indemnity“).
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