Legal Blog:

Appeal – Procedural Fairness & Condition of Agreement of Purchase and Sale

Union Building Corporation of Canada v. Markham Woodmills Development Inc. 2018 Ont CA

An agreement of purchase and sale was conditional upon the city consenting to a severance. The vendor was to seek the severance and satisfy any conditions that the city imposed, except conditions that were onerous or unreasonable. If the vendor refused to accept unreasonable conditions, it had to allow the purchaser to do so and, if the purchaser did not wish to do so, then the deal would die. The city did impose significant conditions relating to the development of the property, which the vendor would not accept. The purchaser accepted the conditions, and then sued the vendor for the $407,000 cost of them. The application judge decided the case not on the specific condition or on a basis that the parties advanced; rather, he decided the case on another condition in the contract dealing with the responsibility for zoning. The court allowed the appeal on 2 grounds: first, the application judge had no right to dispose of the application on the basis that was neither advance nor argued; that amounted to a denial of procedural fairness. 2^nd, under the condition itself, it was not reasonable to expect a vendor of undeveloped land to pay the costs associated with future development of the land.

Lease Damages – Foreseeability

Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited 2018 Ont CA

Tenant repudiated lease and landlord subsequently sold the property because it could not afford the maintenance and mortgage expenses without tenant’s rental income. Only damages were in issue. The trial judge awarded damages not only for lost rental profits, but for the capital appreciation that landlord would have enjoyed had it not been forced to sell the property. The court considered Hadley v. Baxendale, noting that damages could be recovered, if, in the usual course of things, the damages fairly, reasonably, and naturally resulted from the breach of contract or if they were reasonably contemplated by the parties at the time of the contract. The test under the first branch of remoteness is objective. The court held that the inherent bargain in a commercial lease does not include the opportunity to profit from speculative capital appreciation and damages for lost capital appreciation do not fairly and reasonably arise for breach of a commercial lease. Under the 2^nd test, there was no evidence that, at the time of the lease, the parties contemplated capital appreciation would be something for which the tenant would be liable if the lease were breached.

Fraudulent Conveyances – Examining the Start Date of the Limitation Period

We have written a number of times about the length of time a creditor is given under the Limitations Act to commence a fraudulent conveyance action. The law is still not fully settled as to whether it is a 2-year period or a 10-year period. Regardless of the length of the period, the start date of the period is crucial. The start date was analysed in Prima Technology Inc v. Yang, a 2018 decision of the British Columbia Supreme Court.

Fraud

A debtor was involved in an action commenced in the State of Washington in 2010 in which the debtor and her husband were alleged, and ultimately proven by way of a 2015 jury verdict, to have engaged in a massive fraud. The debtor appealed the $15 million judgment, but the appeal was ultimately dismissed for want of prosecution. In 2016, the creditor had the British Columbia Supreme Court recognise the judgment as enforceable in that court.

Unjust Enrichment & Lien Claims Against Owner

Direct Equipment Ltd. v. Metrolinx 2018 Ont SCJ (Master)

A subsub registered a claim for lien. The lien was vacated by order of the court after the owner paid all holdback into court. The subsub wanted to amend its statement of claim against the owner to claim for $95,000 that, the subsub alleged, the owner had not paid to anyone for rental equipment that the subsub had supplied. The Master refused to grant the amendment on grounds that the amendment was frivolous or did not disclose a reasonable cause of action. He held that there could be no contract claim because the claim in contract was against the general, not the owner. Once the claim for lien ceased to attach to the land and the holdbacks, there could be no lien claim against the owner. There could be no quantum meruit or unjust enrichment claim because section 55(1) of the then Construction Lien Act prohibited joining quantum meruit /unjust enrichment claims with lien claims. A contractual unjust enrichment claim was tenable if proven, but was not proven in this case. A contractual unjust enrichment claim is a claim made when the contract fails because the parties have not been able to agree on its terms, but still had an agreement for some payment to be made for work performed. In this case, there was no failed contract between the subsub and the owner; they never had contractual discussions at all.