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Legal Blog:
Nov
29
2021
Repudiation
New Generation Woodworking Corp. v. Arviv 2021 Ont SCJ
The owner refused to supply certain materials for the contractor to install. Consequently, the contractor was unable to totally complete the contract. The associate judge stated that paying the contractor and granting access to the contractor to do its work are two critical obligations of owners in construction contracts. The owner refused to do both. Accordingly, the owner, not the contractor, repudiated the contract. The associate judge noted that had the owner’s counterclaim not been struck, the owner would still not have been able to establish his alleged deficiency correction damages because of that repudiation.
Continue Reading >Nov
24
2021
Declaration for Survival of Bankruptcy
Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd. 2021 Ont SCJ
Sub brought a motion to vary a default judgment that it had obtained against the general contractor and 2 directors. Although there were many allegations regarding breach of trust in the statement of claim, the original judgment was for a monetary award only because none of the defendants had been bankrupt at the time. Because the statement of claim had raised the issue of a breach of trust, the judge allowed further evidence as to that breach and, based on that evidence, granted an order that the judgment survived the defendant’s bankruptcy.
Continue Reading >Nov
24
2021
Declaration for Survival of Bankruptcy
Matthews Equipment Limited v. Yalda Contracting Inc. 2021 Ont SCJ
Default judgment, on notice, as against the general contractor and its two directors. Sub requested a declaration that the judgment survive any future bankruptcy. None of the defendants had become bankrupt and the judge held that the allegations in the statement of claim were insufficient to show that the judgment arose, not as the result of simple inadvertence, negligence or incompetence, but out of fraud or misappropriation pursuant to section 178(1)(d) of the Bankruptcy and Insolvency Act. Accordingly, the judge refused to grant the declaration. It would have to be adjudicated on a proper record when and if an issue arose during a bankruptcy proceeding.
Continue Reading >Nov
22
2021
Arbitration Stay
Jencel 407 Yonge Street Inc. v. Bright Immigration Inc. 2021 Ont SCJ
A lease contained an arbitration clause. The defendant failed to pay rent and the landlord commenced an action and a summary judgment motion. The tenant claimed that the action ought to be stayed and dealt with by way of arbitration. Normally, a judge would have acceded to that request. However, section 7(2) of the Act gives a judge discretion to refuse to stay an action if “the matter is a proper one for …. summary judgment.” In this case, the court held that summary judgment was appropriate and granted judgment in favour of the landlord.
Continue Reading >Nov
22
2021
Limitations & Bankruptcy
Re John Trevor Eyton 2021 Ont SCJ
A promissory note was statute barred by way of the Limitations Act, 2002. However, when the promisor assigned into bankruptcy, the creditor filed a proof of claim in the bankruptcy. The trustee disallowed the claim because the creditor’s action was statute barred. On appeal, the motion judge upheld the bankruptcy associate judge and held that a debt that was extinguished could not be claimed in a subsequent bankruptcy. The judge specifically referred to reasoning in a previous case, noted that it was obiter and therefore not binding, and refused to follow it.
Continue Reading >Nov
17
2021
Construction Deposit
Grandeur Homes Inc. v. Zeng 2021 Ont SCJ (Div Ct)
New home build. Contract price – $38 million, payable in eight instalments as construction progressed. The contract provided for a $3.8 million non-refundable deposit and stated that the deposit “shall be applied towards the final progress payment and other final amounts to be invoiced by the Contractor….” The owner breached the contract at stage 4. The contractor sued for the work actually completed and kept the deposit as forfeited. The contractor did not sue for lost profit on the work that it had not completed. The Divisional Court agreed with the motion judge that the deposit was not to be applied to the contractor’s damages. That would normally be the case if the contractor were suing for expectation damages, but, in this case, the contractor was not and it was clear that the deposit was not to be applied to loss of profit, but was intended to motivate the owner to complete the contract.
Continue Reading >Nov
17
2021
Contempt
Thrive Capital Management Ltd. v. Noble 1234 Queen Inc. 2021 Ont CA
Defendants were in breach of a Mareva order to disclose their assets. Because of the continued breach and contempt, the motion judge granted judgment in favour of the plaintiffs for $9 million. The Court of Appeal noted that this sentencing remedy was appropriate, but only if there was a more searching inquiry about the merits of the defence, somewhat resembling a summary judgment motion. The Court, which set out the sentencing factors, sent the matter back to another motion judge for sentencing. The court also noted that it was settled law that a fine imposed for contempt is payable to the Crown and not to the opposing party.
Continue Reading >Nov
15
2021
Will Validity
Re: Lacroix Estate 2021 Ont SCJ
A lawyer was able to take instructions from a hospitalized testatrix, but was not able to be allowed into the hospital to witness, along with another person, the execution of the will. Accordingly, the lawyer had the testatrix write in her own hand that the holograph will incorporated the attached draft will, which she initialed on each page. In effect, the lawyer attempted to turn the typed will into a holograph will. The judge refused a certificate of appointment, stating that the will was not wholly in the handwriting of the testatrix and was therefore not a holograph will. In effect, a holograph will cannot incorporate by reference a typewritten document.
Continue Reading >Nov
15
2021
Proportionality for Costs & Interest
1157391 Ontario Inc. v. Ortiz, Tremblay, and Meridian Credit Union 2020 Ont SCJ
After a three-week construction lien trial, the plaintiff was awarded judgment of $104,210 (but had beaten its offer to settle) and claimed substantial indemnity costs of $200,000. The defendant claimed that the amount requested was not proportional to the amount at stake and noted that, had it been successful, it would have claimed costs of only $86,000. The judge awarded $181,000, holding that the principle of proportionality should not be rigidly applied to reduce costs for a wholly unmeritorious defence to a legitimate claim because, to do so, would undercompensate litigants for costs legitimately incurred and impose unfair results on wronged litigants. The judge awarded interest at 12% based on the contractual rate set out in the contract and interpreted the words “12% per annum calculated daily not in advance” as compound interest. The judge awarded interest on the non-lienable portion of the judgment award at the rate set out in the Courts of Justice Act.
Continue Reading >Nov
15
2021
Oppression & CPL
Tahmasebi v. Hamid 2021 Ont SCJ
Two 50% shareholders of a corporation: one operated the corporation; the other was a silent investor. The silent investor brought an oppression action claiming that the operating shareholder did not maintain accurate financial and accounting records and charged personal expenses to the corporation. The judge held that a failure to maintain adequate financial records constituted oppressive conduct and also concluded that the operating shareholder was running significant personal expenses through the books of the corporation. The judge rejected the explanation that these expenses were offset against an agreed-upon salary of $8,000 per month, given that the salary was paid in cash. The judge, however, concluded that a CPL that the silent investor had obtained and registered was improper. That investor adduced no evidence at trial that material payments were made to the property using corporate funds. The judge awarded significant damages for the oppression, but directed a reference to determine whether the operating shareholder suffered any damages as a result of the improper registration of the CPL.
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