Legal Blog:

Asad Moten Speaks at CPD Event

On April 24, 2020, Asad Moten, an associate at Speigel Nichols Fox LLP, presented at LSO’s “Key Principles in Commercial Litigation” CPD event. More specifically, Asad touched on written and oral advocacy in the commercial context and presented helpful tips on how to improve advocacy skills. Notably, this was LSO’s first full-length CPD program coordinated, recorded, and presented via Zoom.

Allison Speigel Addressing Issues for Lawyers During the Lockdown – CPD

On April 16, 2020 Allison Speigel, partner at Speigel Nichols Fox LLP, co-chaired the Ontario Bar Association’s CPD entitled “Maintaining Your Litigation Practice in a Remote Work Environment”. Allison addressed issues that lawyers might be facing while working under lockdown during the COVID-19 pandemic.

Watch the video here starting at 57’12.

Find out more about the OBA Civil Litigation Virtual Chat Series here.

Affidavit of Documents

Seifert v. Finkle Electric Ltd. 2020 Ont SCJ

An affidavit of documents that lumps a number of documents into one group is improper and must list each document separately. For example, an affidavit, which says the following, is deficient: “Tab 2. Document Description – Client provided file to xyz law firm containing various records. Date – Various”

Contract Frustration

Perkins v. Sheikhtavi 2019 Ont CA

In the height of the 2018 real estate boom, vendor and purchaser agreed to a sale. The federal government then changed its lending guidelines and property values declined significantly. The purchaser was unable to obtain financing to close the transaction. The vendor re-sold the property at a $620,000 loss. The purchaser claimed that the contract had been frustrated. The court held that frustration applies only when a supervening event alters the nature of the parties’ obligations to such an extent that performance would be radically different from what was originally agreed to be done. The court noted that the purchaser could have made the agreement conditional on financing and did not; the new government policy did not force the purchaser to do something radically different and the contract was not frustrated.

Tarion Closing Extensions

Ingarra v. 301099 Ontario Limited (Previn Court Homes) 2020 Ont CA

Neither purchaser nor vendor of a new home was ready to close on the closing date. They agreed to postpone it for 4 days and then an additional two days. The purchaser was still not ready to close and the vendor, who was ready to close, terminated the agreement and claimed the deposit. The purchaser relied on the Tarion Addendum, which called for an extension of 90 days, but allowed the parties, if they wished, to decide on their own closing date, as they did. The addendum stated, however, that the parties’ decision as to a new closing date was voidable by the purchaser – if the purchaser gave notice before the new set closing date. In this case, the purchaser did not notify the vendor that he was voiding the new closing date. Accordingly, the agreed closing date was still operative and the vendor terminated properly. The court then savaged the Tarion Addendum as a trap for the unwary.

Statutory Trusts & Insolvency

Urbancorp Cumberland 2 GP Inc 2020 Ont CA

Section 8 of the Construction Act establishes a trust for money being passed down the ladder into the hands of a contractor or subcontractor. Section 9 of the Act establishes a trust for the contractor if the owner’s land is sold and net funds come into the hands of the owner. In The Guarantee Company of North America v. Royal Bank of Canada, the Ontario Court of Appeal held that the section 8 deemed statutory trust satisfied the criteria for a common law trust and that, accordingly, the money in trust had priority over the unsecured funds available to ordinary creditors under the Bankruptcy and Insolvency Act. In the Urbancorp case, the Ontario Court of Appeal came to the same conclusion for the section 9 deemed statutory trust, in this case regarding the Companies’ Creditors Arrangement Act. The CCAA is a sister statute to the BIA dealing with insolvencies. As far as the court was concerned, the fact that the monitor under the CCAA arranged for the sale of the land was irrelevant; the sale was in the owner’s interests regardless that it occurred in an insolvency process.

Warranty and Setoff

IET International Energy Technologies Canada Ltd v. M&R Property Management Limited 2020 Ont SCJ

Electrical contractor sued a building manager for work that the contractor had performed on various buildings that the building manager managed. The building manager complained that some of the contractor’s work was deficient and therefore the cost to complete those deficiencies should be deducted from the amount otherwise owed to the contractor. The judge accepted the contractor’s evidence that (i) it provided a warranty for its work; (ii) it always honoured its warranty obligations; (iii) minor problems always arose on jobs and were always fixed; and (iv) it was never told of any of the complaints referenced in the setoff allegations. The judge held that it was incumbent upon the manager to ask the contractor to honour its warranty obligations before using other electrical contractors to do the work and that, had the contractor been asked, it would have attended to fix the problems. The judge refused to allow the setoff claims.

Security for Costs

Focal Elements v. TVM 2018 Ont SCJ

Owner brought a security for costs motion relating to contractor’s claim to enforce its lien. The judge first gave leave to the owner to bring the motion, both on the level playing field basis and the expediting an earlier resolution of the issues basis. The owner easily established good reason to believe that the contractor had insufficient assets in Ontario to satisfy a costs order. The contractor then had the onus to prove that it, and its shareholders, were, impecunious so that it would be inequitable to order security to be posted. Given that the contractor only produced partial financial information and information, the judge held that the contractor did not meet its onus. The judge reviewed the merits of the plaintiff’s claim on a superficial basis and could only say that the contractor might have a good chance of success on some issues and not on others. That analysis was only one aspect in the judge’s determination of whether it would be unjust to order security. Given that there was a counterclaim that could affect an increase in costs and that costs would be increased as the action continued, the judge ordered payment of $10,350 into court as security for costs for the period up to and including examinations for discovery. This case is instructive for the very detailed summary that the judge gave of the law and the considerations for a security for costs motion.

Contract Termination or Abandonment

Scepter Industries Ltd v. Georgian Custom Renovations Inc 2019 Ont (Div Ct)

Under the Construction Lien Act, the lien time, when there was no publishing of a certificate of substantial performance, started to run when the contract was either completed or abandoned. The court, reversing the motion judge, held that, even though the owner attempted to terminate the contract, the contractor never abandoned it until the settlement discussions, ultimately unsuccessful, were completed. Accordingly, since the claim for lien was registered within 45 days of the date that the settlement discussions completely broke down, the lien had been preserved in time. The motion judge had also said, in obiter, seemingly as consolation for discharging the claim for lien, that the contractor could always obtain a certificate of pending litigation, an interim preservation order, or an injunction to preserve its interest in the property. The Divisional Court noted “this statement is obiter dicta and is wrong.” Harsh words, but correct. A number of cases have all indicated that the Construction Act is a complete code for securing the price of services and materials against an improvement. Alternative remedies are not available. The controversy in this case would not have arisen under the Construction Act; it added a third category to start the lien period running: the date when the contract is terminated.

Constructive Trust, Express Trust

Serbian League of Canada v. Stojanovich 2020 Ont SCJ

Three members of a charitable organisation purchased property in 1964 for the use of the charity. In doing so, they paid $3,000 and gave a mortgage of $15,000. Approximately 54 years later, the charity wanted to sell the property and realised that title was still in the name of the individuals, who were long since dead. Their estates claimed that the property was theirs. The judge found that, aside from the payment of the $3,000, the individuals paid nothing towards the mortgage or improvements to, or upkeep of, the property. The judge held that there was no bare trust or express trust. Merely because the deed had the words “in trust” appearing in it was not sufficient to satisfy the necessity for certainty of object; no one had been able to give any evidence as to the intention of the parties at the time the property was purchased because the individuals who purchased it were dead. The court also held that the trust did not comply with section 9 of the Statute of Frauds because there had to be evidence in writing signed by the owners (i.e. the individuals) evidencing the trust. The judge did find that there was unjust enrichment and, in this case, a constructive trust. Since the property had been sold and the sale proceeds held in trust, the judge decided that the estates should receive 25% of the sale funds and the charity the remaining 75%.