Legal Blog:

Discretion – Good Faith

Dominus/Cityzen Brampton SWQRP Inc. v. City of Brampton 2020 Ont SCJ

A site plan agreement allowed for a security deposit of $646,000 and gave the City the discretion to release part of it. The developer had done everything other than approximately $50,000 of work. It had not been able to do that because of opposition from neighbouring landowners. The City refused to reduce the security to $50,000, probably because the neighbouring landowners had also sued the City and the developer. The judge noted that the City was wearing two hats: the first as the municipal regulator and the second as the actual owner/user of the development. The court held that the City had exercised its discretion in bad faith. The fact that the City had been sued in its capacity as owner did not give it a right to set off possible future damages against the security deposit obtained in its capacity as municipal regulator.

Fraudulent Mortgage

Mohammed v. Makhlouta 2020 Ont SCJ

A vendor gave and had registered a mortgage in favour of his brother after the purchaser’s requisition letter had been received and before closing. That mortgage was registered to secure prior loans from the brother. Although not stated in the reasons, it was apparent that the lawyer for the purchaser did not update the search of title before the transaction closed; no one knew about the mortgage until after the brother died and five years after closing when the purchaser was refinancing his existing mortgage. Brother’s estate took the position that the mortgage was valid. The judge held that the mortgage was fraudulent – because it was not for new consideration, but rather to gain an advantage against other creditors – and set it aside under the Fraudulent Conveyances Act.

Presumptions

How important are beneficiary designations found in insurance policies and registered plans such as RSPs, RIFs, and TFSAs? In one regard, they are very important. They form a contract between the owner and the insurer/plan trustee allowing the insurer/trustee to pay the proceeds directly to the beneficiary with impunity. But does that mean that another frustrated beneficiary cannot claim that the designation itself was not meant to be a gift to the beneficiary, but, instead, was to be held by the beneficiary in trust on behalf of the estate? That was the issue discussed in Calmusky v. Calmusky 2020 ONSC 1506 (SCJ).

Early Bird (2)

In our December 2014 newsletter, we discussed a British Columbia Supreme Court decision in Re Walker dealing with costs awarded before bankruptcy and the means by which an execution creditor can be transformed into a preferred creditor in the bankruptcy. That decision was reviewed in Re Kim, a 2020 Ontario Superior Court of Justice decision.

To give you an appreciation of these decisions, we will shamelessly reproduce parts of the December 2014 newsletter.