Legal Blog: Lawyers’ Issues

Corporate Attribution

The common law doctrine of corporate attribution provides guiding principles for when the actions, knowledge, state of mind, or intent of the directing mind of a corporation may be attributed or imputed to a corporation. Attribution is generally inappropriate if the directing mind acted to defraud the corporation or those actions were not designed to benefit the corporation.

The Supreme Court of Canada has ruled in both civil and criminal cases that it would give effect to the exceptions and would not apply the corporate attribution doctrine in the contexts of those cases.

The court has now discussed the corporate attribution doctrine in bankruptcy and insolvency contexts:  Aquino v. Bondfield Construction Co. 2024 SCC 31 and Scott v. Golden Oaks Enterprises Inc. 2024 SCC 32.

Advocacy

Advocacy is an art, not a science – but it still has rules. Break a rule and you are probably not a very good advocate. Good advocacy, whether written or oral, helps clients win cases. Bad advocacy helps clients lose cases.  That said, depending upon the facts, good advocates can still lose cases and bad advocates can still win cases.

First Rule

Cases are usually won or lost on the facts. The law is normally established; the facts are whatever evidence counsel adduce to the court and then are found as part of the decision to be the facts. We talk about lawsuits, but they should really be known as factsuits. The job of a good advocate is to present all of the admissible facts necessary to support the client’s case.

Minefield

We often refer to construction lien law as construction litigation, but with security. The problem for practitioners who dabble in the area is that lien law is also a minefield waiting to blow up on unwary or inexperienced lawyers. Sometimes mistakes can be cured; often they cannot be. Fortunately, lawyers are insured and LawPro, the lawyers’ insurer, will appoint a construction lawyer who knows what to do to deal with these mistakes and sometimes turn a sow’s ear into a silk purse. One such case was Gay Company Limited v. 962332 Ontario Inc., a 2023 decision of the Superior Court of Justice.

What Happened

We are actually not entirely sure – because the references to plaintiff and defendant are interposed from what we would expect. However, we will assume that a contractor registered a lien against the lands of an owner for $767,000. But it is not quite that simple.

Discovery

The Limitations Act, 2002, which has a basic two-year limitation period, builds the discovery principle into its provisions. This is no surprise because the common law, outstanding for years before the Act’s enactment, recognised the discovery principle. In essence, subject to the 15-year ultimate limitation period, the law does not want an injured party to lose a right of action before even being aware of that right. Conversely, the Real Property Limitations Act (RPLA), which has a basic 10-year limitation period, has no discovery principle built into its provisions. Does the discovery principle apply to the RPLA limitation period regardless? The Court of Appeal answered this question in Browne v. Meunier 2023 ONCA 223.

Derelict

In 2017, purchasers bought a cottage abutting a river. Their immediate neighbours bought their property in 2015. When the purchasers bought their cottage, they believed that their property included a derelict boathouse, situate in the river, which they planned to demolish. After closing, they found that their neighbours’ predecessor in title built that boathouse in 1969 and that the purchasers did not own the boathouse.

Spoliation

“Spoliation is ‘the destruction or material alteration of evidence or…the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation’.” It is the law’s response to the age-old excuse that “the dog ate my homework.”

A party to an action is under a duty to preserve documents and information that the party knows, or reasonably ought to know, are relevant to a legal action. Accordingly, “where a party fails in this duty, the doctrine of spoliation imposes ‘a rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator. The presumption can be rebutted by evidence showing the spoliator did not intend, by destroying the evidence, to affect the litigation, or by other evidence to prove or repel the case’.”

With that in mind, we discuss the decision of the Ontario Court of Appeal in Trillium Power Wind Corporation v. Ontario 2023 ONCA 412.

Subterfuge

An owner of a property has rented it to a tenant; a purchaser submits an offer to purchase the property, but only with vacant possession so that the purchaser can occupy the property. The owner can deliver that vacant possession with ease, simply by serving on the tenant a notice terminating the tenancy on behalf of the purchaser. But is it that simple? Given the decision of the Ontario Court of Appeal in Elkins v. Van Wissen 2023 ONCA 789, probably not.

Legislation

An owner cannot terminate a tenancy merely on a whim. The owner has to fit within one of the termination provisions of the Residential Tenancies Act (the “Act“) that allow a termination. One of these provisions is found in s. 49(1) of the Act. This section empowers an owner, on behalf of the purchaser, to give a tenant a notice terminating the tenancy if the purchaser “in good faith requires possession of the residential complex or the unit for the purpose of a residential occupation by the purchaser” or the purchaser’s spouse, parent, or child.

Overturned

Subject to a decision of the Supreme Court of Canada, a decision of the Ontario Court of Appeal is binding on that court and any lower court – until it is not. Before the Ontario Court of Appeal will overturn a prior decision of a three-person panel of that court, it will deal with the appeal by way of a five-person panel. This is what happened in Bank of Montreal v. Iskenderov 2023 ONCA 528.

Fraudulent Conveyance

In this case, husband and wife were defendants in a fraudulent conveyance action and sought, by way of a summary judgment motion, to dismiss the action on grounds that the limitation period had passed. If the applicable limitation period were the 10-year limitation pursuant to the Real Property Limitations Act (RPLA), the defendants were out of luck; if it were the two-year limitation period pursuant to the Limitations Act, 2002 (New Act), the defendants had a chance.

Damages Not Presumed

In the 2014 decision in Bhasin v. Hrynew, the Supreme Court of Canada recognized a general organizing principle of good faith and the duty of honest performance in contract law. Recognizing the duty, however, was only the first step. Subsequent caselaw has delineated the scope of the duty.

The recent decision of the Ontario Court of Appeal in Bhatnagar v. Cresco Labs Inc. 2023 ONCA 401 clarifies how a court should normally assess damages for breach of the duty. The Court of Appeal confirmed that damages for breach of the duty of honest performance will not ordinarily be merely presumed. Instead, aside from exceptional circumstances, the plaintiff must show that the alleged breach actually caused damages and must lead evidence to prove what those damages are. This is in keeping with the normal approach of expectation damages for contractual breach.

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.

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.