Creditor sued debtors’ former bankruptcy trustee. It first needed to obtain a s. 38 order and an order granting leave to do so under s. 215 of the BIA. The trustee claimed that the action was statute barred. Section 12 of the Limitations Act deals with an assigned action (including an action under s. 38 which was assigned from the current trustee in bankruptcy) has to be brought within 2 years from earlier of the dates that the predecessor and the claimant first knew or ought to have known of the matters in issue. In this case, the fact that the creditor’s representative was an inspector of the bankrupt estate was irrelevant because an inspector owes a duty to act in the best interests of the estate, not in its own best interests and suing the then trustee was not in the best interests of the estate. Further, the claimant was not able to sue the trustee until it obtained the s. 38 and s. 215 orders and the action was commenced within two years of obtaining them.Continue Reading >
Sase Aggregate Ltd. v. Langdon 2023 Ont CA
Husband stole money from his employer. The employer sued wife claiming that the stolen money went into the renovations of wife’s house. The court found that the wife demonstrated that she used money from legitimate sources to fund the renovations and that there was therefore no unjust enrichment – other than about $177,000 for which wife could not account. The court held that wife did not knowingly receive the fraudulent funds or knowingly assist husband in his fraudulent conduct. Although stolen money went into their joint account, it was immediately moved to third parties and wife knew nothing about the deposits or the transfers. For whatever reason, the employer was not able to trace where the funds ultimately went.Continue Reading >
ADT Security Service v. Fluent Home 2023 Ont SCJ (Div Ct)
The parties settled at a pretrial and informed the pretrial judge that it was a firm and binding agreement. The defendant then raised issues about the release and wanted payment terms that had not previously been discussed. The court noted that if parties settle litigation and then disagree on non-essential terms of the settlement, the court imposes reasonable terms. The court held that 30 days for payment was reasonable and that the precise wording of the release, on which the parties ultimately agreed, was not an essential term in the context of the settlement.Continue Reading >
Prasher Steel v. BWK Construction Company 2023 Ont SCJ
The general was wholly successful against the sub. The general tried to get costs awarded against the sub’s principal, but was unsuccessful because the principal had done nothing improper during the proceedings and had not acted fraudulently or deceitfully. The judge did award substantial indemnity costs against the sub; the general had beaten its offer to settle and the sub’s lien was excessive.Continue Reading >
Chesney v. Malamis 2023 Ont SCJ
Contractor liened for the amount specified in his invoice. It was apparent that all but $15,000 of the invoice had nothing to do with actual work being valued; it was, in essence, a claim for an equitable interest in the property being renovated. The judge noted that the damages such as loss of profits, lost opportunity costs, property management fees, and head office overhead were not improvements and were not lienable. The judge reduced the security from $173,000 to $15,000.Continue Reading >
Arad Incorporated v. Rejali 2023 Ont SCJ
Contractor liened for money owed. In the meantime, the parties had two adjudications: one by the contractor for money owed and the other by the owner for money overpaid to someone associated with the contractor. We gather that the adjudicator had little evidence to go on and ultimately dismissed both adjudications. He held that the contractor had been paid everything to which it was entitled and that any overpayment was made to someone other than the contractor. The owner, who had paid money into court to vacate the contractor’s claim for lien moved for the return of that money. The judge refused. He held that an adjudicator’s decision was an interim decision and that it did not bind the court; it was merely one piece of evidence. The adjudicator’s decision alone was therefore insufficient to justify the loss of the contractor’s security.Continue Reading >
The Gowing/Walsh litigants in the previous case were also involved in another action dealing with another construction project. This matter had progressed beyond the pleadings stage when issues arose about the productions of documents, resulting in a 2023 motion.
In the documentary discovery phase of litigation, parties must generally provide each other with all relevant, non-privileged documents. On a large-scale construction project, productions can involve hundreds of thousands of documents, particularly when emails informing the progression of the project are included. Before documentary discovery occurs, parties are required to agree on a discovery plan, which sets out the scope of production, including how electronic evidence is to be searched to eliminate production of irrelevant documents.Continue Reading >
A motion for security for costs allows a defendant to respond to a claim brought by an impecunious or out-of-jurisdiction plaintiff. A successful motion essentially establishes a pay-to-litigate system in which the plaintiff is required to proactively pay money into court to account for any adverse costs award that might eventually be awarded if it were to lose the case.
On a motion for security for costs, the defendant must first meet the initial burden of establishing that it appears that there is good reason to doubt that the plaintiff has sufficient assets in Ontario to satisfy an adverse costs award. If the defendant does so, then the onus shifts to the plaintiff to demonstrate that the order for security for costs would be unjust in the circumstances.
In Gowing Contractors Ltd. v. Walsh Construction Company Canada, a 2022 decision of the Ontario Superior Court of Justice (Associate Judge), a general contractor brought a seemingly textbook motion for security for costs. The general was sued by its sub for over $3 million. The sub was no longer in business: it had ceased operations, tendered no evidence of what happened to its assets, transferred property to a numbered company with no apparent connection, changed its registered business address, held no real property, no longer had a website, and was even named as a defendant in several other actions in Ontario. Yet, the associate judge denied security for costs, finding that the general had not even met its initial burden. The reason for this seemingly incongruous result is all in the holdback.Continue Reading >