Legal Blog:

Common Employer Liability

O’Reilly v. ClearMRI Solutions Ltd. 2021 Ont CA

One corporation in a group of related corporations can be held liable to a claim from an employee nominally employed by another of those corporations. This is the common employer theory. However, a simple interrelationship is not enough; the employee must show that the target corporation also had an employer-employee relationship with the employee. A written agreement will be relevant, but the real question is where effective control over the employee resided. In this case, the employee adduced no evidence of a relationship between him and the parent corporation and was unsuccessful.

Writ Renewal

Achtem v. Boese 2021 Ont CA

Judgment creditor did not actively attempt to recover the debt after her lawyer informed her that the creditor owned two properties without equity and only had disability income that could not be garnished. The 6-year time to file a writ expired. Shortly after, the creditor moved under Rule 60.07 for leave to have a writ issued. The motion judge refused leave because (i) aside from the creditor’s explanation set out above, the creditor could give no reason for not moving to collect on the judgment and (ii) the debtor relied on the creditor’s inaction to his detriment. The Court of Appeal disagreed. The explanation that the creditor gave for doing nothing was a sufficient explanation to explain the delay. Further, the debtor did not rely on the creditor’s inaction. The creditor never gave any indication that she was giving up her rights under the judgment and the expenses that the debtor incurred on his properties were necessary to continue renting the property for income.

Specific Performance

Lucas v. 1858793 Ontario Inc. (Howard Park) 2021 Ont CA

The Supreme Court of Canada in Semelhago ruled that specific performance is not automatically granted for real property. The property had to be unique. The Court of Appeal recognised that, for a purchaser seeking specific performance, uniqueness means that the property cannot be easily duplicated, for example in a rising real estate market (particularly when a deposit is tied up in the aborted purchase).

Extraction Lien

1140676 Ontario Inc. 2650997 Ontario Inc. 2021 Ont SCJ

Extraction of rock (such as a quarry) is not an improvement to the land and is therefore not lienable.

Limitation Acknowledgment

1475182 Ontario Inc. o/a Edges Contracting v. Ghotbi 2021 Ont SCJ

Section 13 of the Limitations Act extends the limitation period if the debtor has acknowledged the debt in writing signed by the debtor or its agent and applies even if the debtor does not promise to pay the balance owing on a liquidated sum. The debtor acknowledged the debt by way of a text message, but indicated he may be setting off expenses he incurred. The judge held that a text message was a digital signature that, in this case, was authentic and that a traditional signature was not necessary. He also noted that it was sufficient for a debtor to acknowledge the debt, even though disputing the precise amount.

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd. 2021 Ont SCJ

Same scenario as in Edges Contracting. The debtor acknowledged the debt by ordinary email, which was deemed sufficient to be an acknowledgment in writing signed by the debtor.

Interest on Damages

Madison Homes v. Shi 2020 Ont SCJ

Purchaser did not close, vendor re-sold, and vendor sued for damages. Aside from a discussion of damages and mitigation, the judge had to decide whether to enforce a clause in the agreement that gave interest on all money that the purchaser was to have paid at 20% per year compounded monthly. The judge noted that even the vendor realised that this clause was onerous, given that it claimed the interest only on the shortfall and not on the full sale price. The judge held that the clause was unreasonable and unenforceable because the clause was not drawn to the purchaser’s attention when he signed the agreement.

Burkshire Holdings Inc. Ngadi 2021 Ont SCJ

Same situation as in Madison; indeed, same interest rate of 20%. The judge realised that the agreement was not in the same category as signing a rental car agreement; there was time to reflect and legal advice involved. However, the judge still held that the clause was “surprisingly onerous,” not brought to the purchaser’s attention, and therefore unenforceable.

Allison Speigel’s Articles: Tips for Preventing Employee Fraud

An economic downturn, an existence based on disconnection, and the prevalence of working remotely have created the perfect storm for employee fraud during COVID-19.

It’s not hard to understand why: your employees may be under intense financial pressure; are more disconnected from you and your business (making it easier to rationalize hurting you); and are likely less supervised than ever before. The convergence of financial pressure, the ability to rationalize fraud, and the opportunity to commit employee fraud, is a recipe for disaster for business owners.

There are endless ways in which employee fraud can be perpetrated: skimming cash, submitting fake expenses, processing payments to non-existent suppliers, stealing inventory, or cooking the books (in some way or another).

The consequences of employee fraud can be devastating, particularly for a small business and its owners. I have seen my clients learn some of the following lessons the hard way.

Pretrial & Expert

Sosnov v. J&H Freiberg Ont SCJ (Div Ct)

Over the objections of both parties, the pretrial judge, without reasons, appointed an expert to assist the court in understanding questions of liability. It was a very wide order. The Divisional Court noted that a judge has discretion to appoint an expert, at any time including during a pretrial, but could not appoint an expert to determine the matters in issue as well as issues the parties had not even raised. A court appointed expert is to be appointed to assist the court to understand evidence, not to investigate, advance possible theories, and state, as conclusions of fact, opinions based on matters not advanced in evidence. Doing so usurps the role of the trier of fact and the parties’ right to present the case as they see fit.

Costs JD Exam

6071376 Canada Inc. v. 3966305 Canada Inc. 2021 Ont SCJ

The judgment debtors did not properly answer undertakings and only waited until a day before the hearing to deliver further answers, which were inadequate or meaningless. The court ordered appropriate relief. The court also noted that the debtors had not complied with their duties as debtors and had frustrated the creditor’s attempt to execute its judgment. The judge ordered substantial indemnity costs.

Two Rungs

With apologies to Albert Einstein, to whom this saying is attributed: the definition of insanity is doing the same thing over and over again and expecting a different result. Subs who make a claim against an owner, two rungs up on the construction ladder, for breach of trust under the Construction Act (or the old Construction Lien Act, which is unchanged in this regard) fall into that definition. Such was the case in Tremblar Building Supplies Ltd. v. 1839563 Ontario Limited, a 2020 decision of the Ontario Divisional Court.