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Legal Blog:
Sep
20
2021
Owner’s Trust Breach
Feltz Design Build Limited v. Larson 2021 Ont SCJ
The owner, which had not paid money that its own consultant had certified, was held to have breached the owner trust section of the Construction Act. The contractor was able to adduce sufficient evidence to show that the owner had received funds from other developments. That was enough for the judge to hold that the owner breached its trust. It was not necessary for the contractor to demonstrate that the owner received money from the particular development. The judge also held the sole director and officer personally liable for the breach of trust.
Continue Reading >Sep
20
2021
Solicitor-Client Privilege
Matthews, Dinsdale & Clark LLP v. 1772887 Ontario Limited 2021 Ont SCJ
Law firm sued for fees that client had said it would not pay. Client took issue with some of the facts set out in the statement of claim, alleging that reference to them breached solicitor-client privilege. Client took the position that it was only disputing the quantum of the fees charged and not the quality of the services. The motion judge rejected this assertion; it is impossible to assess the quantum without delving into the scope of the retainer, reasonable expectations of the client, instructions provided, quality of work etc. Since the burden of proof was on the lawyers to justify the work done and fees charged, they had to be permitted to delve into solicitor-client privileged communications. The judge held that, as soon as the client repudiated the legal account and refused to pay, that was an implied waiver of the solicitor-client privilege to the extent needed for the lawyer to prove its claim for its fees.
Continue Reading >Sep
20
2021
Bankruptcy Priority
Re Marleau 2021 Ont SCJ
Debtor moved from Alberta to Ontario, took her car, and did not tell the financial institution that she had done so. The financial institution, accordingly, did not immediately register its security interest under the Ontario Personal Property Security Act. The debtor then went bankrupt. As soon as the financial institution was notified, it registered a financing statement under the PPSA. The trustee in bankruptcy denied the financial institution’s claim. The motion judge agreed with the trustee. The security interest was not perfected at the time of the bankruptcy and, accordingly, the financial institution had no security. Even if that were wrong, the PPSA states that, when security is moved, the financing statement has to be registered within the earlier of 60 days after the goods are brought to Ontario or 15 days after the secured party receives notice of the goods been brought to Ontario. In this case, through no fault of the financial institution, the registration was too late.
Continue Reading >Sep
14
2021
Costs-Disbursements
Charlesfort Developments Limited v. Ottawa 2021 Ont CA
Successful appellant claimed $292,000 for trial costs on a partial indemnity basis plus $566,000 for disbursements, of which $479,000 were for expert fees in delivering a report. The respondents agreed with the fees claimed, but took issue with the disbursements. The court noted that fees of experts are subject to a reasonability test, but are not subject to a further reduction based on the distinction between substantial indemnity costs and partial indemnity costs. The court confirmed that a disbursement for an expert report is reimbursable, regardless whether the expert is called to give evidence, because an expert report may help resolve the issues. In this case, the court held that the fees were not fully reasonable – noting that the respondent’s expert fees were ½ of the appellant’s expert fees and also contrasting the expert fees in comparison to the legal fees. Instead of the claimed amount for fees and disbursements of $771,000, the court awarded $700,000. In effect, the expert fees were reduced from $479,000 to $408,000.
Continue Reading >Sep
14
2021
Release Interpretation
Corner Brook (City) v. Bailey 2021 SCC
Releases are to be interpreted in the same manner as any other contract. The 1870 principle stating that releases are to be limited to occurrences in the contemplation of the parties at the time of the release is no longer good law. Accordingly, a release can cover an unknown claim with sufficient language and does not need to particularize with precision the exact claims that fall within its scope.
Continue Reading >Sep
02
2021
Security for Costs on Appeal
Thrive Capital Management Ltd. v. Noble 1324 Queen Inc. 2021 Ont CA
Plaintiff sued for fraud and breach of fiduciary duty. It obtained a Mareva injunction. The defendant breached the injunction and dealt with its assets. The defendants acknowledged its contempt and, on the sentencing hearing, the motion judge held, as a sanction, that the defendants were to pay the $8.7 million claimed amount to the plaintiff and directed the defendants to attend a judgment debtor exam, even if the defendants appealed the sentencing decision. The defendants appealed and the plaintiff moved for security for costs, both for the appeal and the motion itself. The Court held that, under Rule 61.06(1), there was “good reason” to order the costs. The Court also noted that, normally, after an appeal no JD exam may be conducted. However, in this case the examination being sought was not to support a monetary judgment being appealed, but rather under the terms of the motion judge’s order. This is not akin to an appellant being forced to drop its financial skirts when it may be ultimately exonerated on appeal; it is an examination that the defendants had to undergo because of the Mareva injunction issued against it.
Continue Reading >Sep
02
2021
Pure Economic Loss
Ottawa Carleton Standard Corporation No. 838 v. Redevelopment Group 2019 Ont SCJ (Div Ct)
Condo brought an action against the developer for construction deficiencies and negligent repair of them, including allegations of damages to the exterior of the building from water infiltration and corrosion. The developer commenced a third party action against the condo’s management corporation, alleging that the management corp was charged with keeping the building in a proper state of repair and negligently failed to follow proper maintenance procedures that would have prevented the damages from occurring or would have minimised that damage. The developer did not claim that it had an independent cause of action against the management corp; rather, it claimed that the management corp had a duty of care to the condo such that the condo could have joined the management corp in its action. The management corp moved to strike the third party action against it. The court rejected its arguments. The court held that the damages that the management corp may have caused would not have allowed the developer to claim contributory negligence against the condo; no one pleaded that the management corp was the condo’s agent and, even if it were, the management corp never advised the condo of the water problems.
Continue Reading >Sep
02
2021
Limitation Period and Knowledge
Grant Thornton LLP v. New Brunswick 2021 SCC
Province sued accounting firm for negligence resulting in losses to the Province because of an inadequate audit on which the Province relied. The Province knew about the problems with the audit on Feb 4, 2011 when it received an opinion from another auditor. The Province did not commence its action until Jun 23, 2014. Since, seemingly, the two-year limitation period may have expired, the accounting firm brought a motion to dismiss the action. The NB Court of Appeal held that the Province had to have knowledge of each of the constituent elements of the cause of action and dismissed the motion. The Supreme Court reversed; it held that the appropriate test was whether the Province had enough knowledge, actual or constructive, of the material facts to draw a plausible inference of liability. In this case, it did.
Continue Reading >Sep
01
2021
Lawyers & Trust Funds
Lawyers often go the extra mile to help their contractor clients, but, when money becomes available, particularly through their efforts, they quite reasonably expect to be paid for their efforts from the recovered money. Unfortunately, it does not always work that way, especially if the money recovered is characterised as trust money under the Construction Act.
Two cases illustrate this proposition: Great Northern Installation Services Ltd. v. King Road Paving and Landscaping Inc., a 2021 decision of the Ontario Court of Appeal and Electro-Works v. Fogler, Rubinoff LLP, a 2021 Ontario Superior Court of Justice decision.
