In Grayson Consulting Inc. v. Lloyd, 2019 ONCA 79, the plaintiff obtained default judgment in South Carolina dated August 20, 2014 default judgment in the amount of US $451,435,577.37 against the defendant. The plaintiff sought a Mareva injunction (i.e. a freezing order). Although the Court initially granted the injunction, the Court later set aside the injunction in response to the defendant’s motion arguing that the Ontario proceedings were commenced outside the limitation period. See our blog on the motion decision here. On appeal, the Court of Appeal reiterated the applicable test from Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, being: (i) the basic two-year limitation period applies to a proceeding on a foreign judgment; and (ii) the limitation period begins to run when the time to appeal the foreign judgment has expired or, if an appeal is taken, the date of the appeal decision, unless the claim … Read More
Renewal time for professional liability insurance? Mind the gap!
How can a policyholder who purchased consecutive policies of professional liability insurance lose the benefit of insurance? On October 29, 2018, the Ontario Superior Court released its judgment in Cronnox Inc. v. Lloyd’s Underwriters, 2018 ONSC 6437 (CanLII), holding that the professional liability insurer did not owe the policyholder a duty to defend or to indemnify it in respect of a subrogated law suit. It was the second part of an insurance coverage dispute among an engineering company, two insurers and a law firm. In the first instalment, the same court also held earlier this year that the second insurer in the sequence was also not liable: Liberty Mutual Insurance Company v. Cronnox Inc., 2018 ONSC 1578 (CanLII). In September, 2013, the policyholder chose not to act on letters and emails from counsel for subrogating insurers who had paid to repair damage to a Toronto-area hotel, allegedly in the millions … Read More
The Ontario Securities Commission and the “Active Market”
Determining what constitutes an “active market” for securities can have significant implications for Investment Dealers, Approved Persons, and other market participants facing civil lawsuits and regulatory scrutiny. Such a determination provides ample assistance to investors seeking to quantify damages allegedly sustained through (1) misrepresentations in a company’s financial documents or (2) the negligence of their financial advisors. In Sutton (re), 2018 ONSEC 42, however, the failure to show an active market for securities proved devastating to the defence of a Chief Financial Officer (“CFO”) in charge of pricing those securities. Background As CFO of First Leaside Securities Inc. (“FLSI”), Brian Sutton’s (“Mr. Sutton”) position required him to assess the price of certain unlisted securities (“Fund Units”) issued by three limited partnerships (“Funds”). In pursuit of meeting these obligations, Mr. Sutton relied on the Fund Units’ allegedly active market to ascribe an appropriate price. The Industry Investment Regulatory Organization of Canada (“IIROC”) … Read More
Canadian Court Shuts Down Loan Shark’s Law Suit
In Canada, it is not everyday one witnesses a loan shark resorting to judicial process to collect on outstanding obligations. In fact, outside cases involving payday loans and hidden credit card fees, where legitimate loans might inadvertently cross the 60% interest rate threshold under s. 347 of the Criminal Code, we have to date not seen any cases where the court has considered enforcement of blatantly usurious loans bearing interest of, say, 2,000% APR, as the Superior Court did in Ikpa v. Itamunoala, now available on line. Gilbertson Davis successfully obtained summary judgment rejecting the bid by the plaintiff, a resident of the United Kingdom (where laws banning usury no longer exist), to recover USD$500,000 on a USD$100,000 promissory note that had remained outstanding for four months before the start of litigation. The plaintiff sought to have an equitable mortgage securing the note paid out in priority to the defendants’ registered mortgage. … Read More
Federal Court of Appeal Considers Reviewing of Evidence in Judicial Review Applications
In judicial review applications, like most legal proceedings, evidence plays an essential role in securing a successful result. This includes not just the quality of the evidence, but the process through which the court considers that evidence. The Federal Court of Appeal’s recent decision in Apotex Inc. v. Canada (Health), 2018 FCA 147 (“Apotex”) affirms the control accorded to judges when reviewing evidence in judicial review applications.
Court Considers Jurisdiction in Context of Online Sales
In Dish v. Shava, 2018 ONSC 2867 (CanLII), plaintiffs obtained judgment in Virginia, including an injunction, against the defendants, who were located in Ontario. The plaintiffs then brought an action in Ontario seeking recognition and enforcement of the Virginia judgment and injunction in Ontario. On the motion for summary judgment, the Ontario Court considered whether the Virginia Court had exercised jurisdiction based on the Ontario test for jurisdiction: i.e. whether the defendants had a real and substantial connection with Virginia. The defendants owned and operated an interactive, commercial website through which users purchased TV set-top boxes. The Ontario Court found that the defendants had a real substantial connection to Virginia based on the nature of the business they were operating, specifically: users in Virginia purchased the TV set-top boxes from the defendants’ website. At least 193 customers with a Virginia shipping address purchased Shava TV product from the Defendants’ distributor … Read More
Ontario Securities Commission Clarifies Test for Severance Motions
In Hutchinson (Re), 2018 ONSEC 40 (“Hutchinson”), the Ontario Securities Commission (“OSC”) considered the proper framework to assess a motion for severance in the context of a regulatory proceeding before the OSC. OSC Staff alleged that the respondent, David Paul George Sidders (“Sidders”), engaged in insider trading with respect to three transactions. The OSC also alleged that three other individual respondents, one of which settled, engaged in insider trading and/or insider tipping. Respondent Sidders moved before an OSC Commissioner (“Commissioner”) to request that it sever his hearing from the hearings of the other remaining respondents. The question before the Commissioner was how to assess, in the context of an OSC proceeding, whether the interests of justice require severance. The Supreme Court of Canada in R v. Last, 2009 SCC 45 (“Last”) listed several factors to consider when balancing the risk of prejudice to the accused with the public interest in … Read More
When is Oral Evidence Required to Resolve Credibility Issues in Summary Judgment Motions?
The Ontario Court of Appeal decision in 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, involved the appeal of a partial summary judgment decision in a dispute between the franchisor and a franchisee of Crabby Joe’s Tap and Grill. In this case, the franchisee operated a Crabby Joe’s franchise for a year and a half prior to serving a notice of rescission of the franchise agreement on the franchisor. Claims The franchisee claimed that the disclosure document provided was materially deficient and it was entitled to rescind the franchise agreement within two years of execution of the franchise agreement under section 6(2) of the Arthur Wishart Act (Franchise Disclosure), 2000 (“the Act”). The franchisee claimed for rescission damages under section 6(6) of the Act and also damages for breach of contract and breach of the fair dealing obligations under the Act. In response, the franchisor brought a counterclaim for a declaration that the franchise agreement was validly terminated and a … Read More
Court Grants Interim, Interim Injunction Without Specific Evidence of Harm
In Knowmadics v. Cinnamon, 2018 ONSC 4451 (CanLII) the plaintiff company sought an urgent interim, interim injunction regarding an app sold by the defendants pending the hearing of a motion for an interlocutory injunction. The plaintiff sold specialized computer software. The individual defendant was employed by the plaintiff and signed an employment agreement, including a confidentiality and non-competition clause. The defendant also had a business, the corporate co-defendant, which did subcontracting work for the plaintiff after the defendant resigned from employment with the plaintiff. The corporate defendant signed a non-disclosure agreement with the plaintiff. The plaintiff alleged that the defendants were selling certain software that directly competed with the plaintiff’s software and infringed the plaintiff’s copyrights. The plaintiffs commenced an action against the defendants. After commencing the action, the plaintiff alleged that they learned that the defendants were also selling a certain app over which the plaintiffs asserted ownership. The … Read More
Entire Agreement Clause Upheld in Manorgate Estates Inc. v. Kirkor Architects and Planners
Entire Agreement Clauses are meant to prevent negotiations that occurred prior to the contract being formed from influencing the Court’s interpretation of the terms set out in the final contract. In other words, past discussions are to have no bearing on the understanding of the contractual terms. In theory, a fully integrated agreement of this kind supplants any earlier oral or written agreements. There is competing jurisprudence in which Entire Agreement Clauses have been both effective and ineffective. However, Manograte Estates Inc. v. Kirkor Architects and Planners is a recent Ontario Court of Appeal decision where an Entire Agreement Clause was effective. In Manograte Estates Inc. v. Kirkor Architects and Planners, the Ontario Court of Appeal upheld the Motion Judge’s decision that the Entire Agreement Clause in the relevant agreement, regarding architectural consulting for a construction project, operated as a complete defence to the appellants’ claim of alleged negligent misrepresentation. The Entire Agreement Clause … Read More
Court Considers When a Matter is in “Public Interest” in Anti-SLAPP Motion
In Paramount v. Johnston, 2018 ONSC 3711 (CanLII), the Ontario Court considered whether to dismiss a defamation claim based on the anti-SLAPP (Strategic Litigation Against Public Participation) provision of the Court of Justice Act (section 137). We have previously blogged on the new anti-SLAPP provision: see our earlier post “Court Awards Damages to Defendant in Defamation Case”. In Paramount v. Johnston, the plaintiff company operates a number of middle-eastern restaurants. The plaintiff company was owned by the individual plaintiffs. The plaintiff company was hosting a fundraiser organised for Prime Minister Justin Trudeau. A protest had been organised outside the restaurant to coincide with the fundraiser. The defendants alleged that they attended at the restaurant for the protest. The defendants allegedly defamed the plaintiffs in a total of eight videos taken on the day of the protest. One of the defendants brought a motion to dismiss the claim against him based … Read More
Shareholders’ Remedies under the OBCA: An Overview (Part 2/2)
When a shareholder’s rights are breached, there are a variety of legal remedies available under the Ontario Business Corporations Act (“OBCA”). For more information on shareholders’ rights, please click here to see part 1 of this post. Oppression Remedy It is first important to note that as per the Ontario Court of Appeal decision Maurice v. Alles, the standard two-year limitation period set out in the Limitations Act applies to oppression remedy claims. The “clock starts to run” when the oppressive conduct first began, meaning that individuals must not delay if they wish to pursue an oppression remedy. The oppression remedy under s. 248 of the OBCA is broad in nature, and there is a large amount of judicial discretion afforded in its application. The oppression remedy can be an especially strong tool in protecting minority shareholders. When the Court determines that there has been oppressive conduct, unfairly prejudicial conduct, or conduct that disregards the interests of any shareholder it may make an order to resolve the matter in a variety of ways. … Read More
Shareholders’ Rights under the OBCA: An Overview (Part 1/2)
Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Please click here to see part 2 of this post on shareholders’ remedies. Voting Rights The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under … Read More
The Supreme Court of Canada On Defence Against the Tort of Conversion (Teva Canada Ltd. v. TD Canada Trust)
In Teva Canada Ltd. v. TD Canada Trust, Teva Canada Ltd. (“Teva”), a pharmaceutical company, “was the victim of a fraudulent cheque scheme implemented by one of its employees”, (para 1). Teva claimed the collecting banks were liable for the tort of conversion. Teva Canada Ltd. v. TD Canada Trust provides insight into the Bills of Exchange Act‘s (“BEA”) section 20(5) defence to the tort of conversion, by clarifying the approach used to determining whether a payee is “fictitious or non-existing”. In the event that a payee is deemed fictitious or non-existing within the meaning of section 20(5) of the BEA, the bill may be treated as payable to the bearer, and thus can be negotiated by simple “delivery” to the bank meaning endorsement is not required, and the defence will succeed (para 5). Justice Abella, writing for the majority, outlined the two-step framework a bank must satisfy to demonstrate that a payee is fictitious or … Read More
Mattresses and Slogans and Interlocutory Injunctions, Oh My! (Sleep Country Canada Inc. v. Sears Canada Inc.)
In Sleep Country Canada Inc. v. Sears Canada Inc., Sleep Country Canada Inc. (“Sleep Country”) was granted an interlocutory injunction against Sears Canada Inc. (“Sears”) to prevent Sears from using their slogan “THERE IS NO REASON TO BUY A MATTRESS ANYWHERE ELSE” while the trade-mark infringement litigation (in which Sleep Country claims Sears’ slogan infringes on Sleep Country’s trade-marked slogan of, “WHY BUY A MATTRESS ANYWHERE ELSE”) is ongoing. The three-part test set out in RJR-MacDonald v. Canada (Attorney General) was ultimately satisfied. The heart of the case was not on whether this was a serious issue or on the balance of convenience, but rather, on whether irreparable harm was established. The Court found in favour of Sleep Country’s arguments that confusion, depreciation of goodwill, and loss of distinctiveness would result, as well as, a loss of sales in the minimum 18-24-month period between the time of this hearing and the determination of the … Read More
Court of Appeal Upholds Non-Solicitation Agreement
In MD Physician Services Inc. v. Wisniewski, 2018 ONCA 440 (CanLII), the individual defendants signed a non-solicitation agreement with the plaintiff company. The agreement provided that the individual defendants “shall not solicit during the Employee’s employment with the Employer and for the period ending two (2) years after the termination of his/her employment, regardless of how that termination should occur, within the geographic area within which s/he provided services to the Employer.” “Solicit” was defined as: “to solicit, or attempt to solicit, the business of any client, or prospective client, of the Employer who was serviced or solicited by the Employee during his/her employment with the Employee.” The individual defendants left the plaintiff to work for a competitor, the defendant company. On their first day of work for the defendant company, the individual defendants began contacting the plaintiff’s clients. The trial judge found that the individual defendants had breached the … Read More
Gilbertson Davis LLP Enforces Liquidated Damages Clause in Settlement Agreement by Summary Judgment
In Haas v. Viscardi, 2018 ONSC 2883 (CanLII) the plaintiff settled a claim of $200,000 based on fraudulent misrepresentation with three defendants. The settlement agreement provided for various payments by the defendants on specified dates. The settlement agreement required Viscardi to make payments of $30,000 in three installments. If Viscardi failed to make the payments on the dates provided, the settlement agreement provided that Viscardi would consent to judgment for $60,000 (the “Consent Judgment Clause”). Viscardi made one payment of $10,000, but failed to make the remaining two payments, in breach of the settlement agreement. He then refused to consent to judgment. The plaintiff commenced a claim to enforce the settlement agreement, and brought a motion for summary judgment. The motion judge rejected Viscardi’s argument that the Consent Judgment Clause was an unenforceable penalty clause. The judge considered the test for whether a liquidated damages clause is an unenforceable penalty: … Read More