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Apr
05
2019
Default & Distress
Varsity v. 1666862 Ontario Inc. 2019 Ont SCJ
Distress can only take place if the tenant is in default of the lease provisions (and in previous cases to which this case did not refer, only in default of actual payment of rent). The tenant decided to shut down its unprofitable restaurant business. The tenant removed the perishables and left all of the other chattels and fixtures. The landlord noticed that the restaurant was closed and spoke to the tenant. The tenant informed the landlord that he had closed the business and was looking to find a new tenant to take over the lease. Four days later, while the rent had been fully paid, the landlord engaged a bailiff to lock the tenant out of the premises, posting its usual non-conforming notice that the tenant could re-enter subject to the landlord’s right of distress. The tenant stopped payment on the next monthly payment of rent and the landlord re-leased the premises months later for a loss of $208,000. The landlord relied on the definition in the lease of an event of default, which included the premises being vacant or unoccupied for 5 consecutive days or the tenant abandoning the premises or disposing of property so that there was insufficient property on the premises to satisfy rent for the next 12 months. The landlord then argued that, with an event of default, there was 3 months accelerated rent for which the landlord could distrain. The judge interpreted this event of default definition to include only the abandonment of the premises or removal of property in circumstances of abandonment. It made no sense that the removal of property, no matter how small, when the property was not being abandoned should constitute an event of default. Since the distress was illegal, the landlord was liable for payment of the chattels it seized, pre-paid rent, and the tenant’s deposit for last month’s rent. The landlord received no damages.
Continue Reading >Apr
05
2019
Breach of Trust
Gurkal Transport v. Gittani 2019 Ont SCJ
The issue was whether wife could be liable pursuant to section 13(1) of the Construction Act for breach of the deemed trust by the contractor that husband owned. The court held wife liable because she was an officer of the contractor, had worked for the contractor on a part-time basis for 20 years, dealt with financial aspects, was the bookkeeper, was in charge of accounts receivable and accounts payable, wrote the cheques, and dealt with subcontractors seeking payment of their accounts. Further, she had loaned the contractor over $270,000 at the time of the breach of trust and therefore knew that the contractor was in financial trouble.
Continue Reading >Apr
05
2019
Costs-Offer to Settle-Proportionality
Pollard Windows Inc. v. 1736106 Ontario Inc. 2019 Ont SCJ
This action arises out of a construction claim by a window supplier for payment of a debt of $10,300. The action was over 10 years old and had resulted in significant disputes and court proceedings. The plaintiff ultimately had to move to sell the premises in payment of its debt. The plaintiff had offered to settle the litigation for $25,000 on March 13, 2017 and beat that offer at the hearing. The judge awarded full indemnity costs of $150,000, holding that the defendant made the action as expensive as possible to forestall the plaintiff collecting a simple debt for which there was no legitimate defence. He noted that a combination of deceit, frivolous arguments, and repetitive proceedings would have worn out most plaintiffs. Based on the particularly egregious conduct, he felt full indemnity was appropriate even though the awarded costs were far greater than the original debt.
Continue Reading >Apr
05
2019
Be Careful What You Offer
Miller v. Wang 2018 Ont SCJ
After the market had dropped and one month before closing, purchaser’s lawyer notified vendor’s lawyer that purchaser would not be completing the purchase and advised the vendor to re-list the property. Vendor re-sold the house for damages of $200,000 and sued for them. Purchaser third partied her real estate agent, claiming that the agent wrongly pressured and induced her to purchase the property at an inflated price. The judge, on a summary judgment motion, awarded judgment against purchaser for vendor’s damages, dismissing each of purchaser’s defences. Vendor did not need to tender because purchaser had repudiated the agreement. Vendor made no false representations and therefore no evidence existed of unfair dealings or a false bidding war; Vendor merely accepted purchaser’s offer, which was the highest offer presented. Vendor was not unjustly enriched; it was purchaser’s decision to offer significantly more than the listing price. Purchaser did not establish that vendor failed to mitigate his damages. The judge refused to stay judgment pending disposition of the 3rd party claim. He saw no reason to force vendor to run the risk that purchaser’s financial circumstances could deteriorate over the period of the delay. He noted that vendor was innocent of any wrongdoing and that purchaser had clearly breached the agreement.
Continue Reading >Apr
05
2019
Surrounding Circumstances of Formation Relevant to Contract Interpretation
McDowell v. Fortress Real Capital Inc. 2019 Ont CA
A pleadings motion depended upon the interpretation of the relevant contract. The motion judge reviewed the contract, made his interpretation, and ruled that the claim disclosed no reasonable cause of action. The Court of Appeal overruled. It reasoned that that, since the interpretation of a contract is a question of mixed fact and law, the plaintiff was entitled to lead relevant evidence regarding the surrounding circumstances of the contract’s formation for its context to aid in its interpretation.
Continue Reading >Apr
05
2019
Promissory Estoppel Can Defeat Limitation Defences to Lien Claims
J.D. Strachan Construction Limited v. Egan Holdings Inc. 2019 Ont SCJ
The Construction Act sets out strict time periods in which to preserve a claim for lien and, then, perfect a claim for lien by commencing an action. Promissory estoppel is a defence that states a party ought to be estopped from relying on a positon, in this case a limitation period, if a party has made a promise or assurance to another, which was intended to affect their legal relationship, and, relying on that representation, the other party changed its position. The judge stated that promissory estoppel applies to the Construction Act limitation periods. However, the judge held that, for promissory estoppel to apply, the promisor had to intend, as objectively determined, to affect legal relations by giving the promise or assurance and, in this case, there was no evidence that the parties discussed the statutory period to perfect the lien or agree that the lien was not to be perfected. There was no evidence that the alleged promisor would not rely on the limitation period. Further, before coming to a deal, which the alleged promisor breached, the limitation period had already expired.
Continue Reading >Apr
05
2019
Sham Trust Discovered Based on Typeface (or “When Not to Use Cambria”)
Re McGoey 2019 Ont SCJ
One defence for a fraudulent conveyance action centres on the contention that the transfer was merely a transfer from trustee to beneficiary. In this case, when faced with the equivalent of a fraudulent conveyance claim, the bankrupt contended that he did not own 50% of two properties as shown on title; rather, he and his wife were trustees of the 2 properties for their 5 children. To bolster that defence, he produced two document dated January 4, 1995 and March 4, 2004 in which he and his wife agreed that the first property, and then the 2nd property, would be held in trust for their children. Why did the judge decide that these trusts were shams? He received expert evidence from a graphic arts expert, specialising in design and typography, who noted that the typeface used in the 1995 document had not yet been created as of the date of that document, had only been designed beginning in 2002, and did not reach the general public until 2007. Both documents, purportedly created in 1995 and 2004, used a typeface that did not then exist.
Continue Reading >Apr
05
2019
What does “Time is of the Essence” really mean?
Di Millo v. 2099232 Ontario Inc. 2018 Ont CA
Purchaser bought a lot in the vendor’s subdivision. The agreement provided that the purchaser was to build a building within 30 months of closing failing which the vendor had the option to buy back the land at the original price less real estate commission. The application judge held that the notice to buy back the land was delivered too late because “time was of the essence”. The Court of Appeal reversed because the judge misconstrued the meaning of time of the essence. It does not apply to impose a time limit that has not been set in the agreement; rather, it dictates the consequences that flow from failing to comply with a time limit stipulated in an agreement. Since the agreement did not specify a time before which the option had to be triggered, then it was sufficient if the option were triggered within a reasonable time. In this case, the Court held that it had been. The Court also held that tender was not necessary because the purchaser made it clear that it was not going to close the purchase in accordance with the option to purchase. The Court granted specific performance because the land was unique; it was part of the vendor’s subdivision and all of the subdivision had to be completed before the vendor was able to regain its deposit under its agreement with the municipality.
Continue Reading >Apr
05
2019
Conspiracy Claim Allowed to Proceed
McHale v. Lewis 2018 Ont C.A.
Pleadings motion. The plaintiffs pleaded conspiracy and a number of torts that arose out of the conspiracy. The court confirmed that a plaintiff could not obtain damages for conspiring to commit a tort and for committing the tort itself (i.e. the tort of conspiracy merged with the alleged torts committed). However, the court re-iterated that merger could not take effect until after the trial was held and a decision made as to the conspiracy and the torts committed. The court also noted that pleadings motions normally has to be brought after the pleadings are closed. It is a rare case in which the defendant can bring a limitations motion before the statement of defence because the motion judge needs to understand the extent to which the plaintiff will rely on discoverability.
Continue Reading >Apr
05
2019
When is it Appropriate to Sue? The Limitations Act and Suing Professionals
Presley v. Van Dusen 2019 Ont CA
The Limitations Act calls for an analysis of all of the components of section 5, including section 5(1)(a)(iv): “having regard to the nature of the … loss…, a proceeding would be an appropriate means to seek to remedy it;” In this case, the installer of a septic tank assured the property owner that the problem with smell could be remedied without cost to the owner. Accordingly, the limitation period did not start to run when the owner noticed the problem; it started to run when the owner realised that the problem was more serious than installer had led him to believe and that he was unwilling or unable to fix it. A previous case had stated that the fact that a defendant assists to rectify a problem does not postpone the running of the limitation period. The Court stated that this concept does not apply if the plaintiff is relying on the superior knowledge and expertise of a defendant, whether the defendant is a professional or simply has that superior knowledge.
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