Legal Blog:

Guarantees & Double Recovery

Hilson v. 1336365 Alberta Ltd. 2019 Ont CA

A mortgagee was given a number of standalone guarantees of 25 mortgages. She sued on the mortgages. The guarantors claimed that she was too late in her action and that the two-year period, under the Limitations Act, 2002, had expired. The Court held that the Real Property Limitations Act, with its 10 –year limitation period, applied to a standalone guarantee of a mortgage. The mortgagee had also sued her lawyer, claiming that the lawyer had not ensured that she received adequate security for the mortgage loans. The mortgagee had settled her action with the lawyer and the mortgagor wanted to receive credit for that settlement. The Court noted that there can be no double recovery, but the evidence did not support a conclusion that the mortgagee had recovered anything on the debt that the guarantors guaranteed. That recovery depended on the solvency of the guarantors and their means to pay what they owed. Until the mortgagee achieved full or substantial recovery of the debt, there was no double recovery.

Fraudulent Conveyance and Limitations

Jasmur Holdings Ltd. v. Callaghan 2019 BCSC

A creditor arising out of a failed joint venture obtained a judgment against the debtor in 2016. The court found that the debtor had transferred his only real asset, a half interest in his house, to his wife in 2005. The creditor brought a fraudulent conveyance action. The judge had no problem in finding that the transfer was made to defeat or delay the debtor’s future creditors. The debtor admitted that he transferred the house to protect it against future creditors just before entering into a “speculative and risky business venture.” The judge also dismissed limitations defence; he held that the limitation period normally starts upon the transfer of the land, but that it was not reasonable to expect a plaintiff to commence such an action until after the creditor obtained a judgment on the merits of its claim.

Lien Discharge

9585800 Canada Inc. v. JP Gravel et al 2019 Ont SCJ (Div Ct)

Subcontractor registered a claim for lien. However, the claim referenced the wrong date as the last day worked on the site. It stated that the first work was October 30, 2017 and the last work was May 5, 2017 when it should have said the last work was May 5, 2018. Before the 45 days to preserve the lien had elapsed, the sub discharged the first lien and registered another lien, identical to the first with the exception that the last day of work was the correct day. The general contractor took the position that once the first lien was discharged, the sub could not register a 2nd lien. The motion judge in this case distinguished that rule because she found the first lien to be a nullity as a lien for non-existent work (i.e. how could the sub lien for work that was allegedly completed before the job even started?). Accordingly she found that the first lien was a nullity and therefore (i) its discharge was meaningless and (ii) the second lien was an appropriate and valid lien. On appeal, the Divisional Court overturned the decision, discharged the second lien, and dismissed the action. It noted that s. 48 of the Construction Act states that, once a lien is discharged, it cannot be revived. It disagreed that the first lien was a nullity. It was merely an irregularity that could have been validated under s. 6 of the Act. Note: The normal correct course of action under the circumstances is set out in Southridge Construction v. 667293 Ontario (1993 Ont Div Ct): register the 2nd lien and then, on notice, move for an order to vacate the first lien and, if necessary, seek to amend the statement of claim enforcing the lien.

Allison Speigel speaking at CPD Event – “Our Civil Justice System: Envisioning Innovation and Change”

On February 25, 2020, Allison Speigel, a partner at Speigel Nichols Fox LLP and an innovator in the legal field, spoke at continuing professional development event hosted by the Law Society of Ontario entitled “Our Civil Justice System: Envisioning Innovation and Change.” The event addressed current obstacles and issues that the civil justice system is facing. Our legal system is lagging behind, both in process and from a technological perspective. “Because we’ve always done it this way” is not an excuse for the legal professional to stay immune from emerging trends that have touched almost every industry. Allison, while respecting our system’s core values, emphasizes our civil justice system’s much needed metamorphosis.

Comma

Grammar seems to be a lost art these days. Rules of grammar and drafting often do not mean anything, if only because neither the writer nor the reader knows what the rules are. This writer is often asked to opine on various clauses in an agreement and, in some cases, throws up his hands in disgust, noting that the clauses are so badly drafted that no one would know what they mean. This can be a problem when an agreement is being interpreted in court, particularly if a lot of money rides on the interpretation. This is exactly what happened in Austin v. Bell Canada 2019 ONSC 4757. The entire decision revolved around the insertion of a comma.

Class Action

A Bell Canada (“Bell“) retiree was the representative plaintiff in a class action. He claimed that his pension, and those of 35,000 other pensioners, should be calculated for 2017 with a 2%, rather than a 1%, increase over the 2016 pension. Of course, this difference would affect the 2018 and subsequent pension amounts because each increase is piggybacked on the previous year’s pension amount. That lowly 1% difference could have cost the Bell pension plan up to $130 million. The dispute revolved around the interpretation of one clause in the pension plan’s constating documents (the “Plan“).

Lose – Lose

We have continually maintained that, in many cases, judgment debtor examinations are of no real use because judgment debtors often lie about their assets during these examinations – assuming that the debtors even deign to attend the examinations. The debtor in Re Brennan, a 2019 Ontario Superior Court of Justice decision, provided one more example of a debtor not cooperating with the notice for a judgment debtor examination and, when finally examined, lying. In this case, however, all did not go well for the debtor.

Lie

The creditor, who at one time was the debtor’s lawyer, obtained a Small Claims Court judgment against the debtor on March 21, 2018. We were not told the judgment amount, but it was somewhere between $13,000 and $25,000.