Legal Blog:
Limitations with Multiple Invoices
Newman Bros. Ltd. v. Universal Resource Recovery Inc. 2018 Ont SCJ
Owner and contractor entered into an oral cost plus construction contract. Payments were due 16 days after the delivery of each invoice. The contract was substantially performed on November 24, 2008. After that, the contractor did further work. The owner claimed that this further work was a maintenance contract and not the construction contract and that the last payment on the construction contract, not the maintenance contract, was made August 13, 2009; the contractor claimed that it was all one contract and that the last payment was made May 31, 2011 (and it was). The action was commenced December 27, 2012. Unfortunately, the reasons did not set out the dates of the invoices. In any case, the judge decided, even if the contractor knew or reasonably ought to have known of its cause of action, it was not appropriate that the contractor commence an action 2 years after the date of each invoice. This would not be commercially reasonable, would be unduly onerous on the parties, and would be a potential waste of judicial resources. The judge accepted the argument that, based on the promises made in writing, the contractor believed that payment would ultimately be forthcoming and, in some cases, were forthcoming. The judge held that it was a reasonable consideration to forbear on issuing the claim to see if further payments would be made. The judge dismissed the owner’s summary judgment motion. There were genuine issues for trial.
Continue Reading >Arbitration, Good Faith, & Limits of Damages
Alectra Utilities Corporation v. Solar Power Network Inc. 2018 Ont SCJ
Contract had wide arbitration clause. Contract allowed the financial party to issue a termination notice in its discretion. The arbitrator held that there was an implied term of the contract to exercise that right in good faith and that the financial party breached that implied term. The arbitrator then calculated the damages ignoring a stipulation in the contract that damages were not to include loss of profit. The court agreed with the arbitrator regarding the breach, but held that, based on a reasonable interpretation, the general clause allowing damages had to be informed by a specific clause disallowing loss of profit in any calculation of damages. The judge also noted that there was no free standing concept of good faith; it was an integral part of the contract and accordingly, a breach of that contract had to incorporate the contractual provisions setting out the excluded damages.
Continue Reading >Forbearance
Royal Bank of Canada v. Everest Group Inc. 2018 Ont SCJ
Franchisee took out a small business financing loan and other indebtedness to the bank in order to finance its new franchised restaurant. The restaurant was not successful. The franchisee claimed rescission under the Arthur Wishart Act and damages in the millions for improper disclosure. The franchisor terminated the franchise and took control of the restaurant. The bank claimed that this, and the franchisee’s non-payment of the loan payments, were events of default entitling the bank to demand payment of the loans. The bank commenced an action and obtained summary judgment for $535,000. The judge noted that “I admire the audacity and originality of” the franchisee, but held that the bank did not have to forbear from collecting its debt on the hope that the franchisee would be successful in its action against the franchisor.
Continue Reading >Evidence & Articles
S.D. v. The Royal Winnipeg Ballet 2018 Ont SCJ
Scholarly articles cannot be included in a motion or application record without an affidavit in support. We presume that scholarly articles may be included in a book of authorities and referenced in submissions.
Continue Reading >Undue Influence
Seguin v. Pearson 2018 Ont CA
In the context of an inter vivos gift, there is a rebuttable presumption of undue influence. In the context of a testamentary disposition, the onus is on the person alleging undue influence to prove it.
Continue Reading >Construction Deposit, Repudiation, Forfeiture
Aylward v. Rebuild Response Group Inc. 2018 OntSCJ
Construction contract called for 25% deposit of $175,000, which was paid. The owner cancelled the contract after meetings, positions taken, and correspondence. The judge held that (i) the contractor’s failure to commence construction was reasonable under the circumstances, (ii) the contractor did not fundamentally breach the contract, and (ii) by terminating it, the owner repudiated the contract. The contractor accepted the repudiation and claimed the deposit. The judge held that the money paid was indeed a deposit and not merely a part payment of the contract price. The judge refused to exercise his discretion to grant relief from forfeiture because the deposit amount was relatively close to the contractor’s actual damages and its payment was not unconscionable.
Continue Reading >Lawyers’ Negligence & Third Party Claims
Tisi v. Raby 2018 Ont SCJ
An agreement of purchase and sale was not completed. The parties applied to the court for a determination as to who was responsible. The court held for the vendor because, it said, the parties had not fully agreed on the agreements terms. The purchaser sued her real estate agents, blaming them for improperly handling the agreement. The agents commenced a third party action against the purchaser’s litigation lawyer, claiming that the lawyers improperly handled the litigation and that, had they not done so, the purchaser would have been successful in her application. The court struck the third party action. It held that the wrong done to the purchaser flowed from the formation, or not, of the agreement, not the purchaser’s attempt to mitigate her damages by way of the application. Anything done by the lawyers could have been claimed against the purchaser by way of defence. The lawyers owed no duty of care to the agents for events that occurred after the initial wrong.
Continue Reading >Bad Faith
Time Development Group Inc. (in trust) v. Bitton 2018 Ont SCJ
A purchaser did not close a land transaction because the purchaser had lost its financing at the last moment. The vendors, relying on a time of the essence clause, refused to extend the closing of the transaction. The vendors scooped the $500,000 deposit and, ultimately, the purchaser brought an action for specific performance. By way of a summary judgment motion, the motions judge dismissed the purchaser’s action. He noted, correctly, that the Supreme Court of Canada did not recognise good faith as a rule of law or a general duty applicable to all contracts. It did not recognise good faith as a stand-alone duty or rule. It was merely an informing principle to manifest itself in different ways for different types of contracts and different contractual relationships. Further, good faith merely requires that a party not seek, in bad faith, to undermine the other party’s interests. It does not engage loyalty to the other party; it is not an opportunity for ad hoc judicial moralism or to be used as a pretext for scrutinising the motives of contracting parties. Accordingly, the vendors, merely by refusing to extend the closing of a contract as was their contractual right, did not perform an act of bad faith. They were subject to no good faith principle or rule that would oblige them to forego their rights under the agreement.
Continue Reading >Doctrine of Abuse of Process
Winter v. Sherman Estate 2018 Ont CA
The doctrine of abuse of process (which has nothing to do with the tort of abuse of process) is a doctrine that is part res judicata and part issue estoppel. It is similar to issue estoppel because it can bar litigation of legal and factual issues necessarily bound up with the determination of an issue in a prior proceeding. However, it does not need mutuality and it can apply to issues that could have been determined in a previous proceeding. The doctrine bars litigation that, if it proceeded, would “violate such principles as judicial economy, consistency, finality, and the integrity of the administration of justice.” In this case, the evidentiary underpinning of the action was the same as a previous action such that it was unfair and an abuse of process to allow the plaintiffs to re-litigate their case with a new theory to see if it would succeed while the previous theories had failed.
Continue Reading >Res Judicata
Kovacs v. Sparkes 2017 Ont SCJ
An owner was awarded a judgment in a lien action brought by a corporate contractor. The owner then brought an action against the principals of the corporation alleging that they stripped the corporation of its assets and misrepresented and concealed how the corporation had charged the owner during the project. The principals attempted to dismiss the action on the basis of res judicata and abuse of process. The motions judge held the original action had not alleged that the corporation’s assets had been stripped to avoid judgment and could not have been raised because there was no judgment in favour of owners. Fact that the factual matrix might have been the same in both actions was irrelevant. The new action was not res judicata and certainly not an abuse of process.
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