Legal Blog:

Discovery RPLA

Browne v. Meunier 2023 Ont CA

The court held that the common law discovery principle applied to a claim under the Real Property Limitations Act regardless that the specific discovery principles are not outlined in that Act – as is done in the Limitations Act, 2002. However, the court also held that the claimant’s predecessor in title ought reasonably to have discovered the problem and that discovery occurred when the predecessor ought to have known, not when the claimant knew or ought to have known. As a result, fraudulent conveyances, which are governed by the RRPLA, are subject to the discovery principle.

Honest Performance Breach

Bhatnager v. Cresco Labs Inc. 2023 Ont CA

The vendor claimed that the purchaser ought to have informed the vendor of an after-closing occurrence that would have affected the vendor’s entitlement to a post-closing adjustment. Motion judge agreed, but held that purchaser suffered no damages because the evidence showed that, knowing about the problem or not, the purchaser could have done nothing about it. The Court of Appeal dismissed the appeal and stated that a breach of a duty of honest performance (per the SCC in Callow) does not presume a claimant’s damages; the claimant must still prove that there was a lost opportunity that had monetary adverse effects. The Court also held that, on the evidence, that there actually was no breach – because the vendor had told the purchaser of the problem on a timely basis.

Writ Priority

Senthillmohan v. Senthillmohan 2023 Ont CA

Court directed the sale of the matrimonial home held in joint tenancy by wife and husband. Husband’s execution creditor filed a writ, husband and wife sold the home, and execution creditor agreed to temporarily lift the execution to facilitate the sale with the proceeds in trust. Wife moved to have her portion of the proceeds paid to her without payment of the execution creditor. The creditor took the position that its writ bound the interests of both husband and wife and had to be paid first in priority. The court held that it mattered not whether the wife’s interest was as a joint tenant or tenant in common, the execution binds only the execution debtor’s interest in jointly held property. Wife received her portion of the net sale proceeds without payment to the creditor.

Patent-Latent

In most completed real estate transactions, the purchasers are relatively satisfied with the condition of the property that they purchased (i.e., for the most part, the property is in the condition that the purchasers expected it to be). Sometimes, however, the property is most certainly not in that condition, the purchaser sues, and the outcome depends upon whether the defects were patent or latent or concealed. These were the issues in Purdy v. Russell 2022 ONSC 4692.

Ancillary Claims

The limitations period for claims dealing with land is 10 years; the ordinary limitations period is only two years. Can an otherwise tenable trust claim in land be defeated by a two-year limitation period because, before the claimant commenced the action, the land was sold? This issue was decided in Studley v. Studley, a 2022 decision of the Ontario Court of Appeal.

Contract Costs & Interest

Awards of costs and interest have been the subject of numerous textbooks and, accordingly, cannot be summarized in a newsletter. It is sufficient just to note that both costs and interest can be increased by way of contract. Mortgages invariably deal with both. The mortgage rate is usually greater than the prejudgment interest rate and legal costs are almost always held to be collectible on a full indemnity basis rather than the usual partial indemnity basis. There are exceptions, of course, but they are limited. In Everest Finance Corporation v. Jonker and Scimmi, a 2023 Ontario Court of Appeal case, the court dealt with both interest and costs in unusual circumstances.

Changed Substratum

We learn new things every day. It seems that, for purposes of wrongful dismissal, there is a common law doctrine of “changed substratum.” Under it, provisions in a written employment contract that restrict or limit the amounts payable to a dismissed employee may be unenforceable. The doctrine applies if (i) there were fundamental expansions in the employee’s duties after the employment contract was made so that the foundation of the employment contract had disappeared or substantially eroded, or (ii) it can be implied that the contract could not have been intended to apply to the role the employee ultimately performed.

This issue was discussed in Celestini v. Shoplogix Inc. et al 2023 ONCA 131.