Legal Blog:

Venue and Choice of Law

Douez v. Facebook, Inc. 2017 SCC

Plaintiff wanted to commence a class-action for breach of privacy. Facebook’s contract noted that all disputes had to be resolved in California according to California law. The court noted that there is a 2-step process to determine whether to enforce a forum selection clause. First, the party seeking to enforce the forum selection clause (the “Enforcing Party”) has to establish that the clause is clear and enforceable and applies to the cause of action. At this step, the court references contract law principles to determine the validity of the clause and, as with any contract claim, the party resisting enforceability (the “Resisting Party”) may raise defences such as unconscionability, undue influence, and fraud. Second, if the Enforcing Party passes the first test, the Resisting Party must show strong reasons why the court should not enforce the clause and stay the action. To do so, the court has to consider all circumstances, including the convenience of the parties, fairness, the interests of justice and public policy. In this consumer context case, unlike a commercial matter, there was a gross inequality in bargaining power. Further, the rights being litigated were quasi-constitutional privacy rights. The Court did not enforce the clause.

Court of Appeal Rules That Not All Mitigation Income Will Be Deducted from Wrongful Dismissal Damages

Overview

The plaintiff was a 25-year employee of various MacDonald’s restaurants. She had been employed for 20 of those years by the defendant. Following her first negative performance review after many years of strong performance, she was transferred to a Wal-mart location that had been struggling for some time. After several months at the Wal-mart location, the plaintiff’s performance review continued to be less than adequate and she was placed on a 90-day progressive discipline plan. At the end of the 90 days, the plaintiff was told that she had failed the plan and was given a choice between a demotion from restaurant manager to a first assistant, and termination. She refused on the basis that the demotion would be humiliating for her and was then immediately terminated. In her subsequent wrongful dismissal action, the employer alleged among other things that it had just cause to terminate the plaintiff due to performance issues. That defence was rejected by the trial judge and the plaintiff was awarded 20 months’ pay in lieu of notice. The employer appealed on several grounds: that the plaintiff was not wrongfully terminated; that her refusal to accept the position of first assistant constituted a failure to mitigate, thereby disentitling her to damages; and that the trial judge failed to properly account for income that the plaintiff earned during the notice period. At the time of her dismissal the plaintiff was 62 years old.

Mitigation during the Notice Period

The Court of Appeal’s decision in Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402 (CanLII) is particularly significant in the way it deals with the mitigation of damages during the notice period and the amounts that are to be deducted from those damages. The employer advanced two arguments in respect of the mitigation issue:

1. that the trial judge erred in finding that the plaintiff had made reasonable efforts to mitigate her losses; and

2. that the trial judge erred in law in failing to deduct from the damages award the income that the plaintiff had received during the notice period

Tiziana Moretti’s Canadian Lawyer Magazine Article

Tiziana‘s article was recently featured in Canadian Lawyer Magazine. Click here to read: Catch me if you can: The art of pursuing fraudulent debtors

Relief from Forfeiture

Poplar Point First Nation Development Corp. v. Thunder Bay Ont CA

After a municipal tax sale, a party entitled to the surplus that has been paid into court has one year to make an application for payment out of court to it. If no one makes the application within the one-year period, the surplus is deemed to be forfeited to the municipality. The Court of Appeal held that a court has power under section 98 of the Courts of Justice Act to grant relief from forfeiture even after the passing of the one-year period.

Affidavits

Bramer v. Toronto Lawn Tennis Club 2017 Ont SCJ

Applicant brought an application for remedies relating to his membership in the respondent club. The Club moved to strike paragraphs in the affidavit on grounds that it contained argument, used information and belief for contested facts, and referenced material that was subject to privilege. The motions judge held that the general rule to allow the judge hearing the application to make those determinations applied in this case and dismissed the motion.

Forever

We often write about attacking a transaction on grounds that it is a fraudulent conveyance. What does that mean; what is the remedy; and is that remedy relevant to anything outside of the action? These questions were answered in part in Guthrie v. Abakhan & Associates Inc., a 2017 decision of the British Columbia Court of Appeal. Although the language of the BC Fraudulent Conveyance Act has been updated as compared to the Ontario Fraudulent Conveyances Act, and the 1571 English Statute of Elizabeth on which both were based, the substance of the Ontario and BC statutes is still essentially the same.

Essence

Fraudulent conveyance statutes have but one purpose: to stop a debtor from successfully transferring away assets for no or inadequate consideration (i.e. payment or other value). The simplest example is a husband transferring assets to his wife to avoid having to pay his debts. With this simple transfer the family unit keeps and enjoys the asset and the husband’s creditors are left howling in frustration.

Chance

Everyone is affected by chance. In Jarbeau v. Maclean 2017 ONCA 115, a lawyer appealed a judgment and took a chance on a position, which contended that his clients’ damages were not 100% of their losses but, rather, a lesser amount representing the “loss of a chance.”

Facts

Clients purchased from a builder a leaky new house, not constructed or designed according to Code. The clients retained the lawyer to sue those responsible for building and selling them a defective house. The lawyer sued the builder, the municipality, and Tarion. Unfortunately, the lawyer did not sue the engineer who negligently certified the design and construction of the house. The lawyer incorrectly thought that, because the clients did not have a contract with the engineer, there was no cause of action against the engineer.

Advantage

A trust action has a number of advantages over a regular breach of contract action. An obvious advantage is the ability to claim against directors and officers of a corporate trustee. A more subtle advantage was brought to the fore in One-Way Drywall Inc. v. Lomax Management Inc., a 2016 decision of the Ontario Superior Court of Justice.

Action

A sub brought an action against a general for breach of contract and breach of trust and joined its two directors to the trust action. During the course of the action, the plaintiff amended its statement of claim to increase the amount claimed from $260,000 to $280,000.

The action moved along at a snail’s pace for over 4 years, mostly because of the defendants’ delay tactics. They finally attended at a discovery, but refused to answer any questions dealing with the project’s finances and the financial relationship between the owner and the general. In short, they stonewalled.

The general paid $260,000 to its lawyer in trust to the credit of the action to be payable if the sub succeeded on its contract claim. The two directors also offered to guarantee payment of any amount due to the sub to a maximum of $260,000.

The general and the two directors then brought a motion to have the trust portion of the action dismissed, resulting in the entire action being dismissed against the directors personally. They argued that, given the money paid to their lawyer and their offer of a guarantee, the trust aspect of the claim was pointless.

Simplified Rules

Singh v. Concepts Plastics Ltd. 2016 Ont CA

Employees, who were claiming wrongful dismissal, brought motion for summary judgment within the Simplified Rules. Issues involved credibility, constructive dismissal, and mitigation. Although, under the ordinary Rules, judges can make decisions based on conflicting evidence, under the Simplified Rules, opposing parties cannot cross-examine on affidavits and cannot examine a non-affiant witness on the motion. The employer argued, and the Court agreed, that if there is significant conflicting evidence on issues confronting a motions judge, summary judgment is not appropriate under Simplified Rules.

Injunctions, Mareva and Norwich

Trade Capital Finance Corp. v. Cook 2017 Ont SCJ

One unsecured creditor obtained a Mareva injunction, which included an order that the seized assets could not be attacked without further order of the court. A non-party, who was a judgment creditor of the defendant and had filed a writ of seizure and sale, moved to have the order vacated against it so that it could seize and sell specific assets to satisfy its judgment. The court granted the order, holding that a Mareva injunction was an injunction in general and not a proprietary injunction against specific property claimed to be owned by the unsecured creditor. Accordingly, the plaintiff, an unsecured creditor, could not hold a preferred position over the judgment creditor.