Legal Blog

Execution

1842752 Ontario Inc v. Fortress Wismer 3-2011 Ltd. 2020 Ont CA

An execution creditor of debtor, who was the beneficial owner of 35% of an 18-story condominium development, brought an application for a declaration that its writ of seizure and sale against the debtor (i) bound the property of the legal owner, a bare trustee of the development, (ii) could be executed against the trustee, and (iii) ranked in priority to a mortgagee of the development over funds that been advanced after its writ had been given to the sheriff. The Court of Appeal upheld the application judge in dismissing the application. The court noted that the Execution Act is only a procedural statute and does not purport to grant substantive rights to judgment creditors. It does not give authorisation to add the trustee of the property to a writ of seizure and sale. Although a sheriff has authority under section 9(1) of the Act to sell lands held in trust for the execution debtor, the trustee in this case did not hold 100% of the property in trust for the execution debtor. The execution creditor therefore had a right only to sell the 35% interest of the execution debtor in the property. Similarly, there is no authority to acquire priority over subsequent advances by a prior mortgagee any more than the execution debtor had a right to do so. Although section 14 of the Creditors’ Relief Act gives an execution creditor priority over a charge registered after the execution, it does not give priority over subsequent advances made under a charge registered before the execution.

Security for Costs

Canadian Metal Buildings Inc. v. 1467344 Ontario Limited 2019 Ont SCJ

In a construction dispute, the Master set out rules for security for costs and found that security was appropriate. The Master ordered the security by stages in the litigation process. The first stage took the litigation up to and including examinations for discovery.

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.

Discovery Plan

Concord Adex Inc. v. 20/20 Management Limited 2020 Ont SCJ (MC)

The plaintiff and defendant proposed very different discovery plans. The Master noted that the principles in setting a discovery plan were as follows: (i) common sense and proportionality are important; (ii) the settling of a discovery plan is not meant to be a speculative motion on refusals or for a better affidavit of documents; (iii) a discovery plan is not meant to be a form of advance ruling on scope and propriety of questions; and (iv) proportionality and litigation culture shift require “want” to be replaced with “need”. The Master chose the defendants’ plan because it covered the appropriate time period, provided for delivery of supplementary affidavits of documents, and noted that the parties reserved their rights to seek broader production at a later date. The Master noted that the plaintiff’s plan was overly broad and was attempt to obtain an advance ruling on scope and relevance that ought not to have been put into a discovery plan.

Limitations

Beniuk v. Leamington (Municipality) 2020 Ont CA

Owners complained that use of a roadway caused damage to their house. They commenced a proceeding against the municipality before the Ontario Municipal Board and were unsuccessful. After that decision, they commenced a civil action claiming damages for nuisance and negligence, but did so more than 2 years after they commenced their proceeding before the OMB. The court first ruled that the regular 2-year limitation period applied rather than the 10-year limitation period under the Real Property Limitations Act. The court held that a negligence claim involving real property was very different from a claim to an interest in land and therefore the RPLA did not apply. The Court did reference cases in which a constructive trust claim and a fraudulent conveyance claim were held to fall within the RPLA. The court also held that, just because alternative processes were available, this did not, in itself, suspend the running of the limitation period. Although under some circumstances, it is appropriate to extend the limitation period, s5(a)(a)(iv) of the Limitations Act 2002, dealing with whether it is appropriate to commence a proceeding, does not necessarily permit a party to engage in litigation in stages for the same wrong. It is incumbent upon the claimant to explain why its approach was reasonable.

Discovery

Aside from the 15-year absolute limitation period, which, for the most part, applies regardless whether the aggrieved party even knows of its loss, discovery is the key to the running of a (standard 2-year) limitation period. The claimant must, or ought to, know that (i) the loss has occurred, (ii) it was caused by an act or omission of a specified person, and (iii) having regard to its nature, a proceeding would be an “appropriate means” to seek to remedy it. Invariably, the facts of the case drive the result. Such was the situation in Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., a 2019 Ontario Court of Appeal decision.

Irving Fox Speaking at Restaurants Canada’s Rapid Recovery Series Webinar: Navigating Landlord and Tenant Agreements

On June 10, 2020, Irving Fox, the head of our business law and commercial real estate groups, spoke at Restaurants Canada’s Rapid Recovery Series: Navigating Landlord and Tenant Agreements. Irving discussed issues concerning termination of a commercial lease and distress. More specifically, he addressed applicable legislation, types of defaults, landlords’ remedies, and tenants’ options.

You may find the presentation here.

Security for Costs

Prasher Steel v. Gateman-Milloy Inc. 2020 Ont SCJ

In a construction case, with a bond, the defendant moved for security for costs. The defendant demonstrated that the plaintiff had insufficient assets to pay costs. The shareholders of the plaintiffs did have equity in their house, but were unable to obtain financing to unlock any of that equity. The judge ruled that the plaintiff had a real possibility of success against the defendant and that the plaintiff was impecunious. The judge refused the order for security, holding that such an order would preclude the impecunious plaintiff from pursuing what appeared to be a meritorious claim.

Quantum Meruit

Nijjar v. Feldman 2020 Ont SCJ

A real estate salesperson had been acting for his broker to obtain financing for a corporation. The salesperson left the employ of the broker, after he had obtained the initial letter of intent from the prospective mortgagee, and the broker and the corporation agreed to terminate the listing. The salesperson continued to assist the corporation in closing the transaction, but was not able to enter into another agreement with the corporation; they disagreed as to its terms. The judge held that there was no contract, but that the salesperson should be paid for his work after he had left the broker. Since, at one point, the corporation had offered to pay the salesperson $65,000, rather than the claimed $100,000, that was enough to quantify the services at $65,000. The reasons did not indicate why the settlement discussions were admitted into evidence.

Document Production

Falcon Lumber Limited v. 2480375 Ontario Inc. cob GN Mouldings 2020 Ont CA

The defendant continually breached orders requiring production of documents. The motion judge struck out its statement of defence and ordered costs of the motion against the defendant’s lawyers. The Court of Appeal upheld the decision and set out a number of factors when considering whether to strike out a party’s pleadings and indicated that these factors should include the extent to which the defaulting party’s conduct has increased the other party’s cost of litigating the action and delayed the final adjudication of the case on its merits. The court noted that the moment to make the order to strike will come much earlier in a simple claim for a modest amount than in a more complex one. In that regard, the court referenced the claim of $131,000 as modest. The Court also upheld the costs decision against the lawyers. They requested and received and adjournment ultimately determined to be no more than a delay tactic, provided final production of documents that were improperly redacted, and were complicit in the flagrant disregard of the Rules. Further, the Court noted that the lawyers were in a conflict of interest by acting for both the client and themselves on the appeal.