Legal Blog:

Plaintiff Awarded Costs of the Pre-Trial Conference

Rososhansky v. Williams 2018 Ont SCJ

A pre-trial judge awarded the plaintiff costs of the pre-trial, relying on Rule 50.12. The judge noted that there was nothing wrong with a defendant taking the position at the pre-trial that there was no risk of liability, but that position had to have some rational foundation either in law or on the evidence. The judge held that the defendant’s position was contrary to an objective (i.e. the judge’s) view of the evidentiary record and relied on evidence that had not yet been obtained. Accordingly, the defendant, by refusing any compromise other than to agree to the plaintiff dismissing the action without costs, was wasting the plaintiff’s time and needlessly running up costs for him. This decision makes no sense. Pre-trials are mandatory and every party should have a subjective, not an objective, right to determine whether to settle or not.

Summary Judgment and Settlement Enforcement

Viveiros v. Mokhtarian 2018 Ont SCJ

Minutes of settlement called for the payment of settlement funds and, in default, a judgment for an amount exceeding the settlement amount. The defendant continually defaulted, but ultimately paid the settlement amount. The plaintiff sued for the difference between what the minutes set out as the judgment amount and the settlement amount. The judge noted that the court had discretion not to enforce a settlement if it considered the settlement to be unreasonable or if the settlement would result in an injustice. The judge dismissed the summary judgment motion to enforce the minutes of settlement. He held that there were genuine issue for trial as to whether breaches of the minutes of settlement had been waived, the scope of the release, the calculation of the damages being claimed, and whether the amount claimed was a penalty.

Court of Appeal Dismisses Motion to Set Aside Default Judgment But Does Review and Reduce Damages

Sammut v. Sammut 2018 Ont CA

A judge granted default judgment for $466,000. The defendant moved to set aside the judgment, claiming that she did not receive the relevant legal documents, including the statement of claim. The motions judge decided that she had received appropriate notice and dismissed the motion. The Court of Appeal agreed with the motions judge regarding notice, but held that the motions judge still had to deal with the quantification of damages, which were extensively argued in the motion material. Contrary to the motions judge’s findings, it was not too late for her to have reviewed the damages. The court did review the damages and ultimately reduced the amount of the judgment to $289,000.

Illegal Substances Clause: Sellers’ Representation and Warranty Held To Be Limited To Their Knowledge and Belief When They Executed the Agreement of Purchase and Sale

Beatty v. Wei 2018 Ont CA

The vendor warranted and represented, in an agreement of purchase and sale, that he never used the property as a grow-op of illegal substances and that, to the best of his knowledge and belief, the property had never been used as a grow-op. The purchaser’s real estate agent, through some investigative work, then determined that the property had been used as a grow-op before the vendor purchased it. The purchaser refused to close the transaction. The motions judge held that the warranty was given as of the date of the agreement of purchase and sale – so that there was no breach of the warranty. However, he held that the representation bound the vendor up to closing – so that there was a breach of the representation. The Court of Appeal reversed. It noted that the representation was not a pre-contractual representation; it was a contractual representation, to be interpreted according to contractual interpretation rules. It also noted that a contractual representation is a statement of present or past fact, while a warranty is a contractual undertaking or guarantee that the fact is true. It held that the 2 concepts were bound up within the same clause, which did not reference the closing. After noting that other clauses in the agreement referenced the date of closing, the court interpreted the clause as taking effect as of the date it was given, not the closing date. Accordingly, the purchaser breached the contract and forfeited his deposit.

Construction Act – Part 3 – Holdbacks, Lien Expiry, Lien Perfection, and Exaggerated Liens

This is our 3^rd instalment on the changes to the Construction Lien Act (“CLA“), which, on July 1, 2018, became the Construction Act (the “Act“).

Holdbacks

There are three types of holdbacks (and these holdbacks have not changed):

1. Basic holdback – 10% of the price of services and materials actually supplied.

2. Finishing holdback – 10% of the price of services or materials supplied after substantial performance of the prime contract.

3. Notice holdback – basic holdback plus any amount, up to the amount of the lien, that the recipient payer owes to its payee – after a lien claimant delivers a written notice of lien.

Exercise of Discretion – Agreement of Purchase and Sale

Hacquard Wolfe Trust v. Richmond Holdings Ltd. 2017 BCSC

An agreement of purchase and sale was conditional upon the purchaser being “completely satisfied in its sole and absolute discretion” with an environmental report. The purchaser ultimately decided that it was not satisfied and that, accordingly, the transaction was dead. The judge relied on the Ontario Court of Appeal’s decisions in Greenberg v. Meffert, and Marshall v. Bernard Place Corp. and the British Columbia Court of Appeal decision in Mark 7 Development Ltd. He noted that there were 3 classes of discretionary conditions precedent: (1) those so imprecise or so entirely dependent on the purchaser’s subjective state of mind that the contract was simply unenforceable; (2) those that are clear, precise and objective; and (3) those that were partly subjective and partly objective, but still subject to an implied term of reasonable conduct. The judge held that the clause in this case was partly objective and partly subjective. The environmental condition was capable of being assessed under objective measurements and then the purchaser was obliged to assess those measurements subjectively, but rationally and in good faith. Accordingly, the condition was not so vague or subjective to make the agreement unenforceable. Further, in this case, the court held that there was no evidence to support the reasons that the purchaser gave to reject the report. The judge refused the purchaser’s motion for summary judgment and held that the matter had to go to trial.

Lienable Claims and Payment/Posting of Security

HIRA Limited v. Middlesex Standard Condominium No. 823 2018 Ont SCJ

The owner brought a motion as to the proper amount to be paid into court as security. The owner claimed that the contractor’s claim for lien was excessive. The judge relied on Structform International for much of his analysis. He allowed for some claims for change orders to continue, notwithstanding a failure to give appropriate notice pursuant to the contractual terms, because it was apparent that the parties had waived strict compliance with the contract relating to change order procedures. In the delay claim, he allowed for the supervision claim, but held that the plaintiff adduced insufficient evidence for the claims relating to temporary services, insurance costs, productivity loss, and overhead and markup.

Stretch

We have opined that the smell of a case often informs the decision. Sometimes judges can find facts that allow them to apply the law and come to the result they prefer. Sometimes, they have to stretch the facts or the law or both. This judicial stretching was, in our view, apparent in Westwood Mall Holdings Limited v. Kapila 2017 ONSC 5478, a decision of the Ontario Superior Court of Justice.

Issue

“You’re not being fair” – a cry of children in the schoolyard. Now, it seems, it is the cry of a purchaser who does not receive a price reduction from a developer when the developer gave that reduction to other purchasers.

The purchaser sued for damages in Small Claims Court. What damages and how they were calculated, we do not know.

The plaintiff, by his own admission, was unhappy with his prospective purchase and had actively complained about the developer. He alleged at trial, without any evidence, that, because of his complaints, the developer did not give him the same break on the price as it did to others. The developer submitted no evidence to counter this allegation, taking the position that its actions regarding other purchasers were irrelevant to its obligations to the plaintiff under his agreement of purchase and sale. Such a novel argument.

Timeliness of Lien

Ken Tulloch Construction Ltd. v. 1684567 Ontario Inc. 2018 Ont SCJ (MC)

The issue was when the lien time started to run. The Master held that the final commissioning work was not repair work or warranty work. Commissioning of equipment was part of the contract. Work done on an extra was also work done as part of the contract and extended the lien registration period.

Objection to Passing of Accounts: Court Addresses Limitations, Laches, and Acquiescence Arguments in Motion to Strike Notice of Objection

Wall Estate 2018 Ont SCJ

The beneficiary of an estate obtained an order in January 2015 for the estate trustee to pass his accounts from the date of death in 2005 until his removal as executor. He did so and, in June 2015, the beneficiary filed an objection to the accounts. The estate trustee argued that the notice of objection was a claim and that all but the last 2 years were proscribed by way of the Limitations Act. The judge noted that in Armitage, the Court of Appeal held that an application to pass accounts was not a “claim.” The motions judge held that if an application to pass accounts was not a claim, then an objection to the passing of accounts was also not a claim. The judge therefore held that there was no limitations problem and, further, that there was no acquiescence or laches.