Legal Blog

Exclusion Clauses

What happens when a contractor buys material from a supplier and the material that is supplied is not in accordance with specifications? Does the answer to this question change when the supplier specifically states that the contractor is to test the material before it is supplied and, if it fails to do so, can make no claim regarding the quality of the material? These questions were answered in Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc., a 2024 decision of the Supreme Court of Canada.

Factual Background

The City of Toronto hired a contractor to remediate the effects of basement flooding in a residential area. The remediation including the removal and replacement of existing topsoil with another topsoil better suited to water drainage. The prime contract initially called for a substantial performance date of August 19, which was ultimately extended to October 15. Liquidated damages applied for every working day thereafter.

Personal Liability

A corporate tenant shuts down, but the business pops up elsewhere. Can the disappointed landlord successfully claim its losses against the corporate tenant’s principal? The two most likely attacks to establish personal liability were discussed in FNF Enterprises Inc. v. Wag and Train Inc., a 2023 decision of the Ontario Court of Appeal.

Allegations

The landlord alleged in its action that the corporate tenant abandoned the leased premises with rent owing and that the sole director, officer, and shareholder then moved the business to a different location under a different name. The landlord alleged that the principal had treated the corporation’s assets as her own and benefitted personally by the move. This, the landlord alleged, was fraud.

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.

Joinder

The simple question for this newsletter is whether a statement of claim to enforce a claim for lien can also join a trust claim to that lien claim. This issue was dealt with in Devlan Construction Ltd. v. SRK Woodworking Inc., a 2023 decision of the Divisional Court. The answer to the question was dependent on statutory interpretation, an esoteric exercise that lawyers and judges often must perform, but which we normally spare our readers. But not this time. We are going to give you the reasoning behind a relatively simple answer to a simple question – if only so that you understand the intellectual exercises in which lawyers and judges must sometimes engage for a case.

Krystyne Rusek Presents at Knowledge Hub 2024

On April 25, 2024, Krystyne Rusek, counsel with Speigel Nichols Fox LLP, presented at the Knowledge Hub 2024: Churches, Charities and Not-for-Profits.

Krystyne Rusek Quoted in Investment Executive’s Article “Invalid wills: How far is too far?”

Krystyne Rusek, counsel with Speigel Nichols Fox LLP, is quoted in Rudy Mezzetta’s article, “Invalid wills: How far is too far?” for Investment Executive published March 11, 2024.

Access the full article here.

Consumer Proposal Annulled

Re Singh 2024 Ont SCJ (AJ)

A consumer proposal may be annulled under s. 66.31(1) of the BIA – even after the trustee has been discharged and the debtor has paid everything he promised to pay – if the debtor were not eligible to file a consumer proposal in the first place or the court’s approval were obtained by fraud. In this case, the debtor did not notify the trustee of the creditor’s judgment and the amount of that judgment meant that the debtor owed more than $250,000, the limit for a consumer proposal. The associate judge annulled the proposal.

Bankruptcy Survival

Brinkman Bankruptcy 2023 Ont SCJ

By way of a motion in the bankruptcy action, brought almost immediately after the trustee’s discharge, a creditor sought a declaration that that her judgment survived bankruptcy. The creditor had given the bankrupt funds to invest in a specific corporation; he did not do so and pocketed the money. The judge granted the declaration pursuant to s. 178(1)(d) of the BIA.

Mistake

Espartel Investments Limited v. MTCC 993 2024 Ont CA

Condo corporation had been paying inflated invoices relating to shared electricity since 2006. Its consultant caught the invoicing mistake in 2017 after the condo had paid $730,000 too much. The defendant argued that the condo should have caught the overcharge earlier such that most of it was statute barred. The trial judge held that it was not actually apparent and that a reasonable defendant would not have caught the mistake. The Court of Appeal upheld the decision. The court noted that the fact that the errors were capable of being discovered did not necessarily start the limitations clock. The test is reasonable discoverability, not the mere possibility of discovery. The court ordered the return of the funds, based on unjust enrichment.

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Attacks on Fraud

When a defrauded creditor realizes it has been defrauded and that the fraudster has seemingly moved the proceeds of the fraud to his spouse, what actions can the creditor take, in what form should it take them, and what evidence does it need to prove where its funds went? These questions were discussed in Sase Aggregate Ltd. v. Langdon, a 2023 decision of the Ontario Court of Appeal.