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Legal Blog

Disclaimer of Liability: The Speigel Nichols Fox LLP Blog is intended to provide helpful general information; however, it is not legal advice. You must consult a lawyer if you have a specific legal question or issue that requires an answer.

Dec
01
2021

Registrar’s Dismissal for Delay

Grillo Barristers P.C. v. Kagan Law Firm P.C. 2021 Ont SCJ

The associate judge had allowed a motion setting aside a registrar’s dismissal under Rule 48.14 for a five year delay. The motion judge, to whom the appeal was taken, savaged the decision of the associate judge, reviewed the Reid factors, and concluded that although the plaintiff explained the delay for some periods of the five years, many other periods were not. As to the final Reid factor, prejudice, the judge noted that it was not an error for the associate judge to consider the defendant’s conduct, but it was an error to place the burden on the defendant to complain of the delay, to warn of the impending dismissal, or to move the action to trial. A defendant does not have a burden to do so and the primary responsibility for the progress of an action lies with the plaintiff. The action remained dismissed.

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Dec
01
2021

Bankruptcy Discharge

Cook (Re) 2021 BCSC

A three-time bankrupt applied for a discharge. The British Columbia Securities Commission was, by far, the largest creditor relating to sanctions assessed against the bankrupt for his breach of the Securities Act, breaches that resulted in losses to a number of investors. The court refused to grant any discharge at all. To do so would be contrary to the aims of the bankruptcy system and would bring the system into disrepute. The bankrupt’s inability to pay was a much less important factor than factors such as denunciation, deterrence, and protection of others.

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Nov
29
2021

Mortgage Priority

Scott, Pichelli Easter Limited v. DuPont Developments Ltd. 2021 Ont SCJ (Div Ct)

Under section 78(3) of the Construction Act, mortgages registered before the time when the first lien arose have priority over liens arising from the improvement to the extent of the lesser of (i) the actual value of the premises at the time when the first lien arose, and (ii) the money advanced under the mortgage. The mortgage arose as a vendor takeback mortgage on the sale of the land and, almost by definition, it would have been less than the value of the land at the time of the sale and therefore before any liens arose. It was common ground that the mortgage principal had priority to the liens. The Divisional Court held that the mortgage priority included not only the principal, but also the interest and other charges set out in the mortgage.

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Nov
29
2021

Repudiation

New Generation Woodworking Corp. v. Arviv 2021 Ont SCJ

The owner refused to supply certain materials for the contractor to install. Consequently, the contractor was unable to totally complete the contract. The associate judge stated that paying the contractor and granting access to the contractor to do its work are two critical obligations of owners in construction contracts. The owner refused to do both. Accordingly, the owner, not the contractor, repudiated the contract. The associate judge noted that had the owner’s counterclaim not been struck, the owner would still not have been able to establish his alleged deficiency correction damages because of that repudiation.

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Nov
24
2021

Declaration for Survival of Bankruptcy

Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd.  2021 Ont SCJ

Sub brought a motion to vary a default judgment that it had obtained against the general contractor and 2 directors. Although there were many allegations regarding breach of trust in the statement of claim, the original judgment was for a monetary award only because none of the defendants had been bankrupt at the time. Because the statement of claim had raised the issue of a breach of trust, the judge allowed further evidence as to that breach and, based on that evidence, granted an order that the judgment survived the defendant’s bankruptcy.

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Nov
24
2021

Declaration for Survival of Bankruptcy

Matthews Equipment Limited v. Yalda Contracting Inc. 2021 Ont SCJ

Default judgment, on notice, as against the general contractor and its two directors. Sub requested a declaration that the judgment survive any future bankruptcy. None of the defendants had become bankrupt and the judge held that the allegations in the statement of claim were insufficient to show that the judgment arose, not as the result of simple inadvertence, negligence or incompetence, but out of fraud or misappropriation pursuant to section 178(1)(d) of the Bankruptcy and Insolvency Act. Accordingly, the judge refused to grant the declaration. It would have to be adjudicated on a proper record when and if an issue arose during a bankruptcy proceeding.

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Nov
22
2021

Arbitration Stay

Jencel 407 Yonge Street Inc. v. Bright Immigration Inc. 2021 Ont SCJ

A lease contained an arbitration clause. The defendant failed to pay rent and the landlord commenced an action and a summary judgment motion. The tenant claimed that the action ought to be stayed and dealt with by way of arbitration. Normally, a judge would have acceded to that request. However, section 7(2) of the Act gives a judge discretion to refuse to stay an action if “the matter is a proper one for …. summary judgment.” In this case, the court held that summary judgment was appropriate and granted judgment in favour of the landlord.

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Nov
22
2021

Limitations & Bankruptcy

Re John Trevor Eyton 2021 Ont SCJ

A promissory note was statute barred by way of the Limitations Act, 2002. However, when the promisor assigned into bankruptcy, the creditor filed a proof of claim in the bankruptcy. The trustee disallowed the claim because the creditor’s action was statute barred. On appeal, the motion judge upheld the bankruptcy associate judge and held that a debt that was extinguished could not be claimed in a subsequent bankruptcy. The judge specifically referred to reasoning in a previous case, noted that it was obiter and therefore not binding, and refused to follow it.

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Nov
17
2021

Construction Deposit

Grandeur Homes Inc. v. Zeng 2021 Ont SCJ (Div Ct)

New home build. Contract price – $38 million, payable in eight instalments as construction progressed. The contract provided for a $3.8 million non-refundable deposit and stated that the deposit “shall be applied towards the final progress payment and other final amounts to be invoiced by the Contractor….” The owner breached the contract at stage 4. The contractor sued for the work actually completed and kept the deposit as forfeited. The contractor did not sue for lost profit on the work that it had not completed. The Divisional Court agreed with the motion judge that the deposit was not to be applied to the contractor’s damages. That would normally be the case if the contractor were suing for expectation damages, but, in this case, the contractor was not and it was clear that the deposit was not to be applied to loss of profit, but was intended to motivate the owner to complete the contract.

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Nov
17
2021

Contempt

Thrive Capital Management Ltd. v. Noble 1234 Queen Inc. 2021 Ont CA

Defendants were in breach of a Mareva order to disclose their assets. Because of the continued breach and contempt, the motion judge granted judgment in favour of the plaintiffs for $9 million. The Court of Appeal noted that this sentencing remedy was appropriate, but only if there was a more searching inquiry about the merits of the defence, somewhat resembling a summary judgment motion. The Court, which set out the sentencing factors, sent the matter back to another motion judge for sentencing. The court also noted that it was settled law that a fine imposed for contempt is payable to the Crown and not to the opposing party.

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