Legal Blog:

Molly Luu’s Toronto Entrepreneurs Conference Presentation

Molly Luu presented to a room full of CPA Accounting Professionals on the topic: Tax Traps to Avoid on May 9, 2018 at the TorontoEntrepreneurs.ca 2018 Conference.

The conference was well-attended and Speigel Nichols Fox LLP was honoured to participate among 3,000 pre-registered-attendees and 17 presenters. Click here for conference details.

Fundamental Breach: Deficiencies in Home Renovation Work

Turano’s Home Improvement Inc. v. Stern 2018 Ont SCJ (MC)

Contractor and owner had a dispute over services. Ultimately, the Master held that the contractor’s lien claim was invalid because the lien was registered in the corporate contractor’s name whereas the contract seems to have been in the name of the individual contractor. The Master then held that there were so many deficiencies, including serious deficiencies relating to health and safety, that the contractor was held to have repudiated the contract by way of fundamental breach. Accordingly, the Master did not allow the contractor to claim for the unpaid invoices because, at the time of the repudiation, the contractor had not achieved substantial performance of the project. The Master allowed the owner her costs of completing the work that exceeded the cost that she would have had to pay the contractor had he completed the work.

Divisional Court Overturns Decision and Grants Mareva Injunction

2092280 Ontario Inc. v. Voralto Group Inc. 2018 Ont SCJ

Plaintiffs moved without notice for a Mareva injunction after introducing evidence of the fraudulent activity of the defendants. The motions judge declined to give the injunction without notice and instead noted that the defendants had to be served with the notice of the motion for the injunction. The Divisional Court overturned that decision and granted the injunction. It noted that the plaintiffs were not required to adduce direct evidence showing that the defendants would actively dissipate their assets. A serious risk of dissipation is sufficient and that risk may be inferred by the surrounding circumstances of the fraud. The court noted that a Mareva injunction was an important tool to recover losses from fraud or theft and notification of the injunction request would significantly water down the remedy.

I’ll Just Add it To Your Bill: Court Discusses Lease Damages, Mitigation, and Summary Judgment in Commercial Lease Dispute

A tenant does not pay rent. In the normal course, the landlord may work with the tenant if the cash flow problem is short-term, but, ultimately, if the tenant cannot meet its obligations, the landlord will take possession of the premises, re-let them, and look to the tenant for damages. What happens when the tenant does not pay rent as a power play to negotiate better terms and the landlord sits back, does nothing to take possession, and ultimately sues for arrears of rent? This unusual situation was dealt with in 7Marli Ltd. v. Pet Valu Canada Inc. (2017) 85 RPR (5^th) 112 (Ont SCJ).

Dispute

The parties had a 10 year lease with minimum rent at $20 a square foot for the first 5 years and $22 a square foot for the next 5 years. After factoring in additional rent, the tenant was liable to pay $9,500 per month in rent for the first 5 years. In 2013, two years into the term, the parties agreed that the tenant could pay a reduced minimum rent at $15 per square foot, resulting in a reduction of rent to $7,700 per month.

Construction Act – Part 2 – Irregularities, Set-Off, Trust Money, and Leasehold

This is our 2^nd instalment on the changes to the Construction Lien Act (“CLA“), which, on July 1, 2018, becomes the Construction Act (the “Act“).

Irregular

No, we are not discussing one’s bowel issues. We are referring to section 6 of the CLA as amended by the Act.

Section 6 of the CLA stated that if a claim for lien or a certificate of substantial performance “does not strictly comply” with the sections governing them, then the claim or certificate is still valid unless a person is prejudiced by the error. The jurisprudence held that this section allowed a court to refuse to invalidate some liens, but not others.

The new section 6(1) of the Act repeats the old one in essence, but adds a new subsection, listing the examples of errors to which section 6(1) applies:

1. A minor irregularity in:

a) names of owner, payment certifier, or person with whom the lien claimant contracted,

b) legal description of premises (if, however, you get the description completely wrong by, say, liening the wrong land, you may still be out of luck), or

c) address for service.

2. Inserting the owner’s name in the wrong portion of the claim for lien. (It seems that, previously, some lien claimants could not read).