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Legal Blog: Commercial Matters

Dec
18
2020

Distress & Termination

Bonaventura v. 1603752 Ontario Inc. 2020 Ont SCJ

Another case of a landlord changing locks and, at the same time, refusing the tenant the ability to obtain its goods and chattels by claiming distress. Changing locks affected a termination of the lease and one cannot distrain after the lease is terminated. Landlord forced tenant to bring a motion to obtain its chattels; landlord ultimately agreed to that order and the judge ordered substantial indemnity costs against landlord.

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Nov
03
2020

Contract Formation

Alkin Corporation v 3D imaging Partners Inc. 2020 Ont CA

Vendor of shares wished to sell his shares to the corporation. The parties negotiated a purchase price for the shares and the corporation sent an unexecuted share purchase agreement to the vendor. The vendor signed and returned it to the corporation, but the corporation never signed it. The agreement contained a clause that specified it would become effective only when executed by both parties. The Court of Appeal confirmed the motion judge’s dismissal of the vendor’s action. The motion judge had found that it was the parties’ clear intention that obligations were to be deferred until a formal contract had been approved and executed. That finding of fact was supported by the terms of the draft agreement and was fatal to the vendor’s action. There was no contract.

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Nov
03
2020

Undue Influence

JGB Collateral v. Rochon 2020 Ont CA

The trial judge concluded that a mortgage was not enforceable against wife because it was the product of presumed undue influence from husband, the mortgagee had constructive notice of the undue influence, and the mortgagee did not adequately ensure that wife received independent legal advice. The Court of Appeal reversed. The presumption of undue influence is rebuttable. It arises if the relationship between the debtor and guarantor, coupled with the nature of the transaction between them, justifies an inference that the transaction was the result of undue influence. If the presumption applies, then the lender is put on notice and must take reasonable steps to try to ensure that the guarantor understands the transaction and is entering into it voluntarily by encouraging the guarantor to seek independent legal advice. If the lender does not take these steps, then the lender has the evidentiary onus to adduce sufficient evidence to rebut the presumption of undue influence. In this case, there was evidence from the mortgagee that it had obtained an oral confirmation from the two lawyers who acted for the corporate debtor, husband, and wife that they had explained the transaction to both husband and wife. Further, wife had a financial interest in the debtor corporation. More importantly, wife admitted that she signed the documents of her own free will and that husband did not threaten or force her to sign any of the documents. She merely said that she signed the documents because husband asked her to so. Wilful blindness is not proof of undue influence.

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Aug
24
2020

Derivative Action

Tran v. Bloorston Farms Ltd. 2020 Ont CA

Tenant’s corporation ran a business from tenant’s land. Landlord improperly terminated the lease and, consequently, the business failed. Tenant sued for the diminution in the value of her shares in the corporation. Landlord argued that, based on the rule in Foss v. Harbottle, a shareholder had no right to sue for a wrong done to the corporation and, accordingly, the tenant had no right to claim that loss against landlord. The court noted that there were exceptions to this rule. An applicable exception occurs when the shareholder is not suing for a wrong done to the corporation for which the corporation can sue. In this case, the corporation, which had no relationship to the landlord, had no right to sue and, if tenant had no right to sue, the improper actions of landlord would have no remedy. The court ordered landlord to pay to tenant the loss of the value of the corporation’s business.

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Aug
05
2020

Rectification

2484234 Ontario Inc. v. Hanley Park Developments Inc. 2020 ONCA 273

Purchaser claimed rectification of an agreement relating to an easement over part of land necessary to allow access to other lands that purchaser had purchased from vendor.

The Court noted that “Rectification is an equitable remedy available to correct a document that fails to accurately record the parties’ true agreement. It is not available to correct an improvident bargain or to fill a gap in the parties’ true agreement, even when the omission defeats what one (or both) of the parties was seeking to achieve. As an equitable remedy, it is also not available when the party seeking it does not have ‘clean hands’.”

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Jul
27
2020

Termination Clause Void

Waksdale v.Swegon North America Inc. 2020 Ont CA

An employment agreement had two termination clauses: one for termination for cause without knowledge and one for termination without cause with notice. The clause for termination for cause was contrary to the Employment Standards Act and therefore void. The clause for termination without cause was not contrary to the ESA. The employer terminated with notice pursuant to the clause for termination without cause. The Court struck down that clause, even though it complied with the ESA, because it was tainted by the illegality of the other clause on which it had not even relied.

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Jul
07
2020

Tenancy Termination

VMAT (Oakville) Inc. o/a Suvai Classic Indian Restaurant v. Trafalgar Terrace Enterprise Inc. 2020 Ont SCJ

Landlord terminated a tenancy based on a notice setting out the reasons of default that the judge decided were never proven and, in effect, were just a ruse to get rid of the tenant. The judge ordered the return of deposit and tenant’s last month’s rent plus additional damages of $205,000 for loss of profit over the remainder of the term.

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May
27
2020

Contract Termination & Injunction

Bombardier Transportation Canada Inc. v. Metrolinx 2017 Ont SCJ

The contract contained a dispute resolution procedure. After giving a default notice and a notice that the owner might terminate the contract, the contractor, who had invoked the dispute resolution procedures, moved for an injunction to force the owner to continue with the dispute resolution procedures rather than terminate. Based on the unusual facts of the case, the judge granted the injunction.

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May
14
2020

Damages & Limitations

G.H.T. Genesis Inc. v. Gaska 2020 Ont SCJ

An employee brought an action for constructive dismissal against an employer. The employer counterclaimed, claiming that as a consequence of the employee’s actions, it was liable to future possible claims by CRA. On a motion for summary judgment, the employer was not able to adduce any evidence as to losses or damages that it sustained, other than speculative and prospective damages regarding taxes owed to CRA (which CRA had thus far not claimed). Accordingly, the judge dismissed the counterclaim, holding that all claims in the counterclaim for indemnification were premature and not actionable because CRA had not as yet made any claims. For claims seeking damages for negligent advice as a result of CRA reassessment, the Ontario Court of Appeal has found that the limitation analysis is fact dependent, but likely begins, at the earliest and possibly later, when CRA reassesses (see see Lipson v. Cassels Brock & Blackwell LLP, 2013 ONCA 165 and Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325).

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Apr
29
2020

Asad Moten Speaks at CPD Event

On April 24, 2020, Asad Moten, an associate at Speigel Nichols Fox LLP, presented at LSO’s “Key Principles in Commercial Litigation” CPD event. More specifically, Asad touched on written and oral advocacy in the commercial context and presented helpful tips on how to improve advocacy skills. Notably, this was LSO’s first full-length CPD program coordinated, recorded, and presented via Zoom.

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