Court of Appeal States that Placing Oneself in Position to Close Transaction not Waiver of Deficiency

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Business Law, Business Litigation, Civil Litigation, Commercial and Contract Litigation, Commercial Contracts, Commercial Litigation, Contract Disputes, Real Estate Litigation, Sale of Business Disputes0 Comments

In 1418885 Ontario Ltd. v. 2193139 Ontario Limited, 2018 ONCA 54, the appellant entered into an agreement of purchase and sale to buy a property from the respondent.  The property included residential apartments.  The appellant sought confirmation from the respondent that the residential apartments were permitted use under the existing zoning by-law.  The respondent maintained that the residential apartments were “a legal non-conforming use”.  However, the planning authority indicated that there was a possible problem with the residential apartments.  The appellant’s lawyer advised the respondent’s lawyer that the purchase deposits had to be returned if the issue was not resolved. In spite of the residential apartments issue, the appellant and respondent moved towards the closing date by exchanging draft documentation and related material.  However, on closing date, the appellant’s lawyer advised the respondent’s lawyer that the appellant would not be closing because of the residential apartments issue.  The deal did … Read More

Court of Appeal Provides Guidance on Whether Party Carrying on Business in Ontario as Basis for Jurisdiction

Andrew Ottaway, B.A. (Hons.), LL.B.Appellate Advocacy, Business Litigation, Civil Litigation, Commercial, Commercial and Contract Litigation, Commercial Litigation, Contract Disputes, Cross-Border Litigation, Jurisdictional Challenges, Of Interest to US Counsel0 Comments

In Sgromo v. Scott, 2018 ONCA 5, the Court of Appeal considered the scope of one of the presumptive grounds for jurisdiction of the Ontario Court: whether a party carried on business in Ontario.  The Defendants were incorporated in jurisdictions outside of Ontario.   The Defendants brought motions to stay or dismiss the subject actions. On the motion, the Plaintiff alleged that because the products of some of the Defendants were advertised, marketed, and distributed by third party retailers in Ontario, the Defendants were carrying on business in Ontario, such that Ontario had presumptive jurisdiction.  The motion judge rejected that argument. On appeal, the Court of Appeal agreed with the motion judge’s reasons, stating that: as set out by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), the Courts must be cautious when considering whether an entity is carrying on business in the jurisdiction, … Read More

Court of Appeal Allows Negligence Claim Against Individual Starbucks Employees to Proceed

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Civil Litigation, Commercial Litigation, Directors' and Officers' Liability, Insurance, Negligence0 Comments

In Sataur v. Starbucks Coffee Canada Inc., 2017 ONCA 1017, the plaintiff alleged that a Starbucks barista poured scalding water on the plaintiff’s hands.  The plaintiff sued Starbucks, and also brought  claims against the barista and the Starbucks store manager personally.  The plaintiff alleged that the barista and the store manager owed the plaintiff a duty of care and that each was personally liable to the plaintiff for breaching those duties. Starbucks brought a motion to strike the plaintiff’s  claims against the barista and store manager on the basis that, among others, the plaintiff could not claim against them personally.  The motion judge agreed, stating that employees are not liable for acts within the scope of their authority and done on behalf of their corporation.  The motion judge struck the plaintiff’s  claims against the barista and store manager. The plaintiff appealed.  The Court of Appeal, citing the Supreme Court of Canada’s … Read More

Court of Appeal Considers Scope of Errors of Jurisdiction under Model Law on International Commercial Arbitration

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Arbitration, Business Litigation, Civil Litigation, Commercial and Contract Litigation, Commercial Arbitration, Contract Disputes, Jurisdictional Challenges0 Comments

In Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939, the respondent was constructing a mine.  The appellant was contracted by the respondent to build a pipeline.  The construction contract contained a three stage dispute resolution process, being: 1) disputes were to be determined by the respondent’s supervising engineer; 2)  if the dispute was not resolved, it would be referred to adjudication by a sole adjudicator; and 3) if a party did not accept the adjudication, it could refer the dispute to arbitration pursuant to the International Commercial Arbitration Act, R.S.O. 1990, c. I.9, which incorporates the Model Law. Problems arose in the project.  The appellant alleged that the respondent had breached the contract.   The appellant sought an extension of the time for performance, compensation for its costs arising from delay, and compensation for additional work.   The appellant submitted its claims to the respondent’s engineer for … Read More

Court of Appeal States that Security for Costs Should Not be Treated Differently for Recognition and Enforcement Actions

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Business Litigation, Civil Litigation, Commercial and Contract Litigation, Commercial Litigation, Corporate Litigation, Cross-Border Litigation, Enforcement of Foreign Judgments, Of Interest to US Counsel0 Comments

Yaiguaje v. Chevron Corporation, 2017 ONCA 741 arose from an action by the Plaintiffs to enforce an Ecuadorean judgment in Ontario against the Defendant.   The Defendants obtained summary judgment dismissing the Plaintiffs’ claim.  After the Plaintiffs appealed, the Defendant sought a security for costs against the Plaintiffs, who were non-Ontario residents from Ecuador.   The Plaintiffs argued that security for costs should not be ordered because of, among other reasons, the unique nature of a recognition and enforcement action.  The Plaintiffs relied on the Supreme Court of Canada decision on jurisdiction in the same action: Chevron Corp v. Yaiguaje, 2015 SCC 42, [2015] 3 S.C.R. 69.  The Plaintiffs argued that the Supreme Court’s decision required courts to treat recognition and enforcement cases in a different manner than first instance actions. The Court of Appeal confirmed that courts should take a “generous” approach in finding jurisdiction in recognition and enforcement actions. … Read More

Court of Appeal Provides Guidance on Interpretation of Success Fee Contract

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Business Litigation, Civil Litigation, Commercial and Contract Litigation, Contract Disputes0 Comments

In RBC Dominion Securities Inc. v. Crew Gold Corporation, 2017 ONCA 648, the Plaintiffs (“RBC”) sued the Defendant (“Crew”) for a success fee (the “Success Fee,”) that RBC alleged it was owed under an agreement for the provision of investment banking services (the “Agreement”).  The Agreement provided, among other things, that RBC was entitled to the Success Fee “if a Transaction [was] completed involving any party, whether or not solicited by RBC, pursuant to an agreement to effect or otherwise complete a Transaction entered into during the term of its engagement […]”.   RBC provided certain services under the Agreement.  During the course of the Agreement, Crew was subject to a takeover.  The takeover was not anticipated by either party.  RBC was not involved in the takeover transaction.   The issue at trial was whether RBC was entitled to the Success Fee for its services. The trial judge found that the … Read More

Supreme Court Provides Guidance on Oppression Remedy

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Business Litigation, Civil Litigation, Directors' and Officers' Liability, Oppression Remedies0 Comments

In Wilson v. Alharayeri, 2017 SCC 39, The Plaintiff, Alharayeri, was the president, CEO and a shareholder and a director of the subject Corporation.  The subject corporation was incorporated under the Canada Business Corporations Act (“CBCA”).  In addition to common shares, the Defendant held convertible A and B preferred shares issued only to him as performance-based incentives.  The A and B shares were convertible upon the corporation meeting certain performance targets in 2007.  The Plaintiff held convertible C preferred shares, issued to him as an incentive for finding financing.  The C shares were convertible into common shares upon the Corporation meeting a specific financial target. In early 2007, the Defendant, Wilson, began negotiating a merger with Company M to address the Corporation’s cash flow issues.  At the same time, the Defendant arranged to sell some of his common shares to Company M as a result of personal financial difficulties.  The Corporation’s Board … Read More

Court of Appeal Reiterates Importance of Pleading Particulars of Fraud

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Civil Litigation, Contract Disputes, Fraud, Partnerships and Shareholder Disputes0 Comments

In Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320, the trial judge found the appellants liable to a company’s shareholders for fraudulent misrepresentations before and after an initial public offering (IPO).  On appeal, the appellants argued that the trial judge erred in finding liability based on the IPO-related statements because the respondents did not plead or argue at trial that such statements amounted to fraudulent misrepresentations. The Court of Appeal stated that a pleading of fraud or misrepresentation must set out with careful particularity the elements of the misrepresentation relied upon, including: the alleged misrepresentation itself; when, where, how, by whom and to whom it was made; its falsity; the inducement; the intention that the plaintiff should rely upon it; the alteration by the plaintiff of his or her position relying on the misrepresentation; the resulting loss or damage to the plaintiff; and if deceit is alleged, an allegation … Read More

Supreme Court Considers Oppression Remedy

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Civil Litigation, Commercial, Commercial Litigation, Contract Disputes, Partnerships and Shareholder Disputes0 Comments

In Mennillo v. Intramodal inc., 2016 SCC 51, the Supreme Court of Canada addressed the application of the oppression remedy under the Canada Business Corporations Act (“CBCA”), which applies to federally incorporated companies.  (The Ontario Business Corporations Act, which applies to Ontario incorporated companies, also contains an oppression remedy). The case involved a private corporation with originally two shareholders.  There was no shareholders’ agreement.  The Court described the parties’ dealings as being “marked by extreme informality”.  One of the two shareholders, Mennillo, eventually resigned as officer and director of the company by providing a notice of resignation.  The notice did not address his status as a shareholder.   There was conflicting evidence from the parties about whether Mennillo intended to cease being a shareholder.  Ultimately, the trial judge accepted that Mennillo’s withdrawal from the company included his intention to no longer guarantee the company’s debts.  The trial judge found that Mennillo agreed … Read More

Court of Appeal Emphasizes Confidence in Fact Finding on the Record for Summary Judgment

David Alderson, LL.B, LL.M (Commercial and Corporate), Q.Arb, Lawyer and ArbitratorAppeals, Appellate Advocacy, Civil Litigation, Commercial, Commercial Arbitration, Professions, Summary Judgment0 Comments

In Meehan v Good, 2017 ONCA 103, the Court of Appeal allowed the appeal of the plaintiffs of the dismissal of their claims by summary judgment against their former lawyer, Mr. Cardill. The motion judge had determined that the subject retainer was only with respect to assessment of the accounts of their earlier former lawyer, Mr. Good, and not any possible negligence action against Mr. Good, and thus there was no genuine issue whether Mr. Cardill owed the plaintiffs a duty of care to advise them about the limitation period in relation to a possible negligence action against Mr. Good. The Court of Appeal held that the motion judge’s analysis focused narrowly on the written retainer agreement, and not, as is required when determining if a lawyer owes a duty of care to a client, examining all the surrounding circumstances that define the lawyer and client relationship, when, as was pleaded here that … Read More

Court of Appeal Upholds Stay Based on Contractual Choice of Forum/Arbitration Clause Against Non-Contracting Parties

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Arbitration, Civil Litigation, Commercial Arbitration, Commercial Litigation, Contract Disputes, Contract Termination, Cross-Border Litigation0 Comments

In Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771, the plaintiff and the defendant Hägele were parties to an Exclusive Sales Agreement (“ESA”).  Hägele terminated the ESA.  The plaintiff sued Hägele, its individual principals and Cleanfix, a North American company related to Hägele. The defendants collectively moved to stay the Plaintiff’s claim, relying on a forum selection clause in the ESA which stated: “The contractual parties agree that German law is binding and to settle any disputes by a binding arbitration through the “Industrie und Handelskammer” (Chamber of Commerce) in Frankfurt.” The motion judge granted the stay, despite the fact that only Hägele, and not the other defendants, was a party to the ESA. The plaintiff appealed on two grounds: that the motion judge erred in i) interpreting the scope of the forum selection clause and ii) staying the action against the defendants who were not party to the … Read More

Toronto Lawyers for Victims of Investment Fraud: When Investing in a Toronto Business Goes Bad

David Alderson, LL.B, LL.M (Commercial and Corporate), Q.Arb, Lawyer and ArbitratorAppeals, Appellate Advocacy, Broker and Agent Claims, Business Litigation, Civil Litigation, Commercial Arbitration, Commercial Litigation, Contract Disputes, Fraud, Fraud Recovery, Injunction & Specific Performance, Investment Fraud, Summary Judgment0 Comments

A bad investment may not be the result of market fluctuations. A false representation inducing and leading to an investment loss may be actionable at law. Often there is a promised  high-yield on an investment in a company, project or property.  Sometimes a loss occurs from a scheme where there is no intention by those entrusted with an investment to make the promised purchase or transfer. In Ontario, civil lawsuits for the victims of investment fraud have often been framed as claims for deceit, fraudulent misrepresentation, civil conspiracy,  breach of contract, unjust enrichment and restitution. Increasingly though, plaintiffs in lawsuits simply claim damages for losses arising directly from the tort of civil fraud. The leading case on civil fraud in Canada is the Supreme Court of Canada decision in 2014 in Hryniak v. Mauldin, 2014 SCC 7, and in that case civil fraud is defined this way “… the tort of … Read More

Court of Appeal Provides Guidance on “Forum of Necessity” Doctrine

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Civil Litigation, Contract Disputes, Contract Termination, Cross-Border Litigation, Jurisdictional Challenges, Of Interest to US Counsel0 Comments

In Arsenault v. Nunavut, 2016 ONCA 207, the Plaintiff commenced a lawsuit in Ontario regarding an employment dispute with the defendant, the government of the Canadian territory of Nunavut.  The motion judge concluded that Ontario did not have jurisdiction over the dispute because the dispute did not have a “real and substantial connection” with the province of Ontario, and that Nunavut was clearly the more appropriate forum to hear the dispute.  The Plaintiff appealed, arguing that the motion judge had not properly considered whether Ontario was the “forum of necessity” – i.e. the doctrine allowing the Court to assume jurisdiction over a dispute, even though there is no “real and substantial connection” with Ontario, because there is no other forum in which the plaintiff can reasonably seek relief (see our previous posts regarding the doctrine of “forum of necessity” here and here). The Court of Appeal dismissed the Appeal.  The Court of Appeal noted … Read More

In Jurisdiction Dispute, Court of Appeal Confirms Contract Made Where Acceptance Received

Andrew Ottaway, B.A. (Hons.), LL.B.Appellate Advocacy, Civil Litigation, Commercial, Commercial Litigation, Contract Disputes, Cross-Border Litigation, Jurisdictional Challenges, Of Interest to US Counsel0 Comments

In Eco-Tec Inc. v. Lu, the Plaintiff Ontario company researched, developed and manufactured proprietary technology and products.  The Defendants were Lu, a Canadian citizen, his BVI company and three Chinese companies owned by him or his parents.  The Defendant companies were the Plaintiff’s consultant, agent or distributor in China.  In the course of their relationship, the Plaintiffs and Defendants signed a number of agreements. The Plaintiff ended its relationship with the Defendants in 2012, alleging that the Defendant’s Chinese companies were selling clones of the Plaintiff’s product in China.  The Plaintiff brought a claim for breach of confidence, breach of contract, breach of fiduciary duty, conspiracy, unjust enrichment and/or unlawful interference with its economic interests.  The Defendants brought a motion to dismiss the Ontario action on the basis that the Ontario Court did not have jurisdiction.  The motion judge dismissed the motion, finding, among other reasons, that the dispute was connected … Read More

Ontario Court of Appeal summarily dismisses appeal under new rule 2.1

R. Lee Akazaki, C.S., B.A. (Hons.), J.D.Appellate Advocacy, Civil Litigation0 Comments

In Brown v. Lloyd’s of London Insurance Market, 2015 ONCA 235, the Court of Appeal for Ontario summarily dismissed an appeal on its own motion, pursuant to rule 2.1.  Rule 2.1 has been in force since July 1, 2014, and is intended to put an end to civil actions that are, on the face of the statement of claim, so obviously without merit that no argument apart from counsel’s letter of request is required.  Gilbertson Davis’ Lee Akazaki was counsel for one of the successful defendants / respondents. This appears to be the first time the rule has been invoked to dismiss a civil appeal.  The practice has proven very economical, as the necessity for expensive, labour-intensive motions to strike statements of claim, has been eliminated in instances where actions are clearly without merit.

Divisional Court dismisses Groia v. LSUC appeal, reveals flawed strategy

R. Lee Akazaki, C.S., B.A. (Hons.), J.D.Appeals, Appellate Advocacy0 Comments

Today, the Divisional Court of the Ontario Superior Court of Justice dismissed Joseph Groia’s appeal from the Law Society of Upper Canada’s discipline conviction for uncivil conduct during a criminal trial (Groia v. LSUC).  One of the recurrent aspects of Groia’s position, both during tribunal and judicial proceedings, was that the Law Society ought not to have prosecuted the lawyer when the trial judge from the criminal trial against Groia’s client, John Felderhof, meted out no disciplinary measure against Groia.  Belief in this theory of defence appears to have guided the much of the strategy of the defence. At paragraphs 26-45 of the Divisional Court’s decision, Justice Nordheimer explained that the Law Society, as the statutory regulator of all lawyer conduct, has both the authority and expertise to consider allegations of lawyer misconduct.  In contrast, the supervisory role exercised by judges and courts can be tempered by exigencies of the … Read More

30 Day Time Limit to Appeal Arbitration Award

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Appellate Advocacy, Arbitration, Commercial, Commercial Arbitration0 Comments

The Ontario Court of Appeal decision in R & G Draper Farms (Keswick) Ltd. v. 1758691 Ontario Inc., 2014 ONCA 278, involved a dispute between two Ontario-based farming businesses over the purchase and sale of carrots and carrot chunks.  The parties agreed to resolve the dispute through arbitration in accordance with The Fruit and Vegetable Dispute Resolution Corporation (“DRC”) arbitration rules.  The arbitrator awarded damages to the respondent. The issue arose when the appellant applied to the Superior Court of Justice to set aside the arbitration award approximately two and a half months later.  The Arbitration Act, 1991 (the “Act”) provides for a thirty day time period to appeal the arbitration award while the International Commercial Arbitration Act (the “ICAA”) provides for a longer three month time period.  Unfortunately, the DRC rules are silent in respect to which arbitration act may apply. Under s. 2(1) of the Act, the Act applied unless the application of the Act was excluded by law, or the arbitration was … Read More