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Legal Blog: Five Liners

Dec
02
2022

Mareva Injunction

Sapex Canada Inc. v. 2264233 Ontario Inc. 2022 Ont SCJ

Landlord was suing tenant and indemnifier for damages for breach of a lease. The indemnifier bought a house and was selling her old house in the ordinary course. It was expected she would net about $20,000 from the sale. Landlord moved for a Mareva injunction. The judge agreed that he had jurisdiction to issue an injunction under the Simplified Rues, but held that the balance of convenience favoured the indemnifier. There was no genuine risk of the indemnifier putting her assets beyond the reach of the landlord. She had equity in the new house and the corporate tenant was still a going concern.

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Dec
02
2022

Mortgage Priority & Holdbacks

BCIMC Construction Fund Corp v. 33 Yorkville Residences Inc. 2022 Ont SCJ

Section 78(1) of the Construction Act notes that, subject to exceptions (e.g. see ss. 2), liens arising from an improvement have priority over mortgages of the owner’s interests. Section 78(2) gives a lien priority to the extent of the deficiency in any holdbacks the owner is required to maintain. In this case, the owner had two building mortgages. Had the owner only one building mortgage, the lien claimants would have had priority over $x of the deficiency in the holdback. But, because there were two mortgages, the lien claimants argued that they had priority of $x over each mortgage. The judge held that they were limited to $x in aggregate.

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Nov
30
2022

Obligations to Insure & Risk

Capital Sewer Servicing Inc. v. Crosslinx Transit Solutions Constructors 2022 Ont CA

Just because a contract stipulates that a party must obtain insurance does not necessarily mean that the party who has to insure bears the risk of loss. That depends on the interpretation of the contract as a whole. In this case, in which a sub caused a loss to third party neighbours who sued the general contractor and the sub, the owner had to obtain a primary wrap-up liability policy, naming as insureds all contractors and subcontractors. However, since the contract called for the sub to indemnify the general contractor against all of its acts that caused loss to the general contractor, the court held that the sub had to indemnify the general contractor for defence costs, indemnity payments made, and insurance deductibles, regardless who had to obtain insurance.

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Nov
30
2022

Municipality Liability

Breen v. Lake of Bays (TWP) 2022 Ont CA

Case discusses the legal framework governing construction permits and inspections under the Building Code Act. Under the Act, municipalities owe a duty of care to all who it is reasonable to conclude may be injured by the negligent exercise of its inspection powers. This includes subsequent purchasers of a building constructed for another owner. Once a municipality enacts a bylaw dealing with building permits, the municipality makes a policy decision to enforce the Act and its duties arise. A municipality is liable if the inspector derogates from the standards of an ordinary reasonably prudent inspector. The reasonably prudent inspector is not expected to uncover every latent defect.

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Oct
26
2022

Debt Surviving Bankruptcy

Royal Bank of Canada v. Bedard 2022 Ont CA

The Court overturned an order stating that the debt survived bankruptcy. Although fraud was involved, there were other issues that would affect a survival order and these should be dealt with by the Bankruptcy Court when and if the debtor became bankrupt.

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Oct
24
2022

Off Title Objections – Contract Interpretation

2651171 Ontario Inc. v. Brey 2022 Ont CA

The clause allowing the purchaser to search for, and object to, work orders and building and zoning use stated that the purchaser had from the earlier of:  alternative (1) (a) the later of 30 days from the requisition date (Oct 16) and (b) 30 days from the date on which the conditions in the agreement were waived (Aug 26), and alternative (2) 5 days before closing (Sep 26) . Closing was scheduled for Oct 1 and the purchaser objected to a zoning problem on Sept 26. The motion judge ignored the (1a) Oct 16 date because, she said, this would yield an absurd result; Oct 16 was after the closing date. She therefore used Aug 26 as the alternative 1 date. Finally she chose Aug 26 as the objection date because it was earlier than the alternative 2 date. The Court of Appeal reversed. Alternative 1 gave a choice of the later of two dates, one of which and the later of which would be Oct 16. This date would then be compared to the alternative 2 Sep 26 date and the earlier date would be chosen. This date for objections was therefore Sep 26 and the purchaser’s objection was timely.

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Oct
24
2022

Accelerated Mortgage Interest

First National Financial GP Corporation v. Golden Dragon Ho 10 Inc. 2022 Ont CA

There is no common law right to an acceleration of interest on a debt default. That right is either in the mortgage or it is not. In this case, the court interpreted the mortgage to limit the acceleration clause to situations in which the mortgagor wanted to redeem rather than a situation of default and a mortgage sale of the property.

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Oct
19
2022

Partial Summary Judgment

NDrive, Navigation Systems S.A. v. Zhou 2022 Ont CA

A person (the rep) who was supposed to be assisting the plaintiffs in an arbitration did all sorts of nasty things; in particular, he kept the plaintiff’s settlement money without even notifying the plaintiff of the settlement. The plaintiffs commenced an action against the rep and the lawyers who had acted for the plaintiffs in the arbitration. The plaintiffs moved for and obtained partial summary judgment against the rep for the amount improperly retained and punitive damages. The court agreed that partial summary judgment was proper. There was no risk of duplicative or inconsistent decisions in the remaining portion of the action and the issues regarding the remaining defendant were factually related, but not legally similar, to the issues dealt involving the rep.

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Oct
19
2022

Oppression

Wisser v. CEM International Management Consultants Ltd. 2022 Alta QB

Employee was dismissed without proper notice. He brought an action against his old employer and its principals and a new corporation that the principals had incorporated to carry on the old employer’s business. He brought his action against the principals and the new corporation under the oppression section of the Alberta Business Corporations Act. The court held all defendants liable, holding in particular that the transfer of all assets for minimal consideration to the new corporation was oppressive conduct.

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Sep
19
2022

Mitigation

Humphrey v. Mene Inc. 2022 Ont CA

Wrongful dismissal action. Employee had been offered and refused a job at a comparable salary and, though not the same management position, a good one. The trial judge refused to deduct for lack of mitigation, saying that the employer had not provided the judge with persuasive evidence as to whether the two roles were comparable. The Court of Appeal held that comparable did not mean identical. It was sufficient that the employee had been offered a senior management position with a salary as good as or more than her previous salary and it was sufficient for the employer to show that the employee had been offered and rejected the job. Any further evidence had to come from the employee. The court reduced the award by 6 months for failure to mitigate.

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