In the recent case of 1252662 Ontario Inc. v Swisslog, the Ontario Court of Superior Justice held that a contractual clause which provided that, in the event of a conflict with another agreement, that terms of the other agreement would prevail. In this case, the parties had entered into a multi-million dollar construction contract. One of the documents to the contract set out a number of terms which limited the liability of the defendant as against the plaintiff for a wide variety of issues, including delay in construction. However, that document also provided that the terms of a companion document would prevail in the event of any conflict between the two terms. That companion document provided a general statement that the plaintiff had “all rights and remedies provided by law and by this agreement”. The construction was ultimately delayed, and the plaintiff sued for its common law damages as incurred a … Read More
Partnership and Contractual Disputes between Professionals (Dentists, Doctors, Accountants, Lawyers, Architects, Engineers)
Partnerships Professionals often carry on their professional practice as partners in a partnership or limited liability partnership. Partnerships can be created simply by conduct and the application of the Partnership Act or by a simple or complex partnership agreement. Joint Venture Contract – Fiduciary Duties? In other cases professionals associate in practice by participation in a contractual joint venture which, depending on the agreement and the circumstances, may or may not at law also be a partnership but, in any event, may attract the duties and obligations of partners, including fiduciary duties. Sharing Space Lastly, some professionals may consider that they are only sharing space with other professional and may be very surprised to find that the arrangement gave rise at law to unexpected obligations. Duty of Honest Performance The recent decision of the Supreme Court of Canada in Bhasin v. Hrynew, though not a case about partnerships, nonetheless has a wide-ranging impact … Read More
Gilbertson Davis LLP News – OsgoodePD Program on Shareholder Litigation and the Closely-Held Company
David Alderson, of Gilbertson Davis LLP attended as a faculty member of the OsgoodePD professional development program on April 7, 2015 concerning Shareholder Litigation and the Closely-Held Company. He was on the panel addressing Ethical and Professional Issues in Shareholder Disputes and Litigation. Osgoode Hall Law School said of this professional development program, “This OsgoodePD program brings together some of the country’s top commercial litigators and other experts to provide insight into key aspects of litigating these cases.” Shareholders disputes are one of the most common and most complex disputes handled by commercial litigators and in-house counsel. The panel on Ethical and Professional Issues in Shareholder Disputes and Litigation included Paul N. Feldman of Feldman Lawyers, Tom Curry of Lenczner Slaght Royce Smith Griffin LLP and David Alderson of Gilbertson Davis LLP, with Lisa C. Munro of Lerners LLP moderating. The program is being re-broadcast on May 22, 2015 as described here. David Alderson has experience in shareholder and partnership disputes, both in arbitration … Read More
Bad Faith Claims against Canadian Liability Insurers: Sober Second Thought
No aspect of insurance defence counsel’s tripartite retainer with an insured and a liability carrier more frequently strains the divided loyalty more than the over-limits exposure. Whether it is an automobile policy responding to a catastrophic bodily injury claim, or a general liability policy building collapse or fire attributed to the carelessness of a tradesperson, the cost of indemnity has increased dramatically in relation to standard million-dollar policy limits. Those limits have not changed in Canada for over a decade. It is a matter of economic conflict between two independent markets. In a competition for premiums, underwriters have failed to market increases in policy limits, while medical and rebuilding costs for commercial buildings have soared. This simple divergence of demand-and-supply curves has many ramifications for tort law in Canada. Here, I discuss one issue, the rise and apparent panic in the insurance industry over the importation of an American doctrine … Read More
Court of Appeal Dismisses Appeal Pursuant to “Competence-Competence” Principle
In Ciano Trading & Services C.T. v. Skylink Aviation Inc. the Ontario Court of Appeal considered the appeal of an order staying court proceedings pending the arbitration of the dispute. The arbitration clause at issue was part of a Services Agreement that was terminated prior to commencement of the court proceedings. The Services Agreement listed the provisions that would survive termination, but did not specifically address whether the arbitration clause survived termination. The appellant argued that the motion judge should have found that the arbitration clause did not survive termination of the Services Agreement, and therefore should not have stayed the court proceedings. The Court of Appeal disagreed stating that, because it was arguable whether the arbitration clause survived termination of the Services Agreement, it was preferable to leave the issue of jurisdiction to the arbitrator pursuant to the “competence-competence” principle. The Court of Appeal dismissed the appeal. If you require advice … Read More
Court Considers Effect of Non-Exclusive Jurisdiction Clause
In Silveira v. FY International Auditing & Consulting Corp., the Plaintiff commenced an action in Ontario alleging breach of an agreement and misrepresentation. Less than a month later, one of the Defendants commenced an action in British Columbia against the Plaintiff based on the same agreement. The Defendants acknowledged that the Ontario had jurisdiction simpliciter, but brought a motion to stay the Plaintiff’s action on the grounds that Ontario was forum non conveniens and that the action should proceed in British Columbia. The Court found that there were not sufficient evidence to conclude, as the Plaintiff argued, that B.C. action was “tactical”. Further, the Court stated that the fact that the Plaintiff started her action in Ontario first was not a basis to determine which forum was more appropriate for litigation of the dispute. The Court found that both the Plaintiff and the Defendants, and their evidence, had equally strong connections to Ontario and … Read More
Court Finds No Real And Substantial Connection Despite Ontario Contract
CIBC FirstCaribbean v. Glasford involved an equitable mortgage held by a Barbados bank, FirstCaribbean, over a St. Kitts property owned by one of the Plaintiffs, Glasford, a Barbados resident. The second Plaintiff, Vinton, was Glasford’s son, who lived in Toronto. Vinton was the second mortgagor on the property. The Plaintiffs claimed that they were induced into the mortgage by the Defendant’s alleged misrepresentations. The Plaintiffs had already commenced an action in St. Kitts regarding the mortgage, as had FirstCaribbean in St. Kitts to enforce the mortgage. FirstCaribbean brought a motion to dismiss or permanently stay the Ontario action. The Judge considered whether Ontario had jurisdiction by “a real and substantial connection between Ontario, the subject matter of the litigation and the defendant”. The Judge found that the mortgage was presumptively connected to Ontario because the mortgage agreement was made in Ontario. Specifically, Vinton signed and returned the mortgage agreement by mail … Read More
Court Declines Plaintiff’s Request to Stay Its Own Action in Favour of Arbitration
In Paul Wurth Inc. v. Anmar Mechanical and MAG Engineering, the Plaintiff entered into a contract with MAG Engineering. The contract contained an arbitration clause. Nevertheless, the Plaintiff brought a court action against MAG Engineering for breach of contract. The Plaintiff also claimed against Anmar Mechanical. Anmar Mechanical was not a party to the contract. But the Plaintiff alleged that the services under the contract were to be provided by both MAG Engineering and Anmar Mechanical, and that MAG Engineering was an agent, partner, or joint venturer of Anmar Mechanical. After starting its court action, the Plaintiff brought a motion to stay its action and to require MAG Engineering and Anmar Mechanical participate in binding arbitration. In the alternative, the Plaintiff sought to force only MAG Engineering to participate in arbitration, and to stay its action against against Anmar Mechical pending the outcome of that arbitration. The Judge dismissed the Plaintiff’s motion … Read More
Court Sets Out Notice Period to Terminate Franchise Agreement
The Ontario Superior Court in France v. Kumon Canada Inc. considered the appropriate notice period required to terminate a franchise agreement, in this case in respect to a Kumon tutoring franchise. Kumon terminated the franchise agreement with 12 months’ notice. The Plaintiff had successfully run the franchise for 20 years. There was no franchise agreement in place (as the franchise was entered into by oral agreement 20 years earlier when their franchise agreements were not in writing). The Plaintiff sued Kumon for damages, arguing that her franchise was perpetual and could not be terminated. Kumon argued that the franchise agreement could be terminated on reasonable notice, and brought a motion for summary judgment. The Court granted Kumon summary judgment, but asked for further submissions regarding the proper notice period. The Court noted that there were no cases directly on point. The Court accepted that a franchise relationship is close to an employer/employee relationship. However, … Read More
Court Stays Action in Favour of Mexico Arbitration
In Kavanagh v. Magna, the Plaintiff alleged that he was wrongfully dismissed by his Mexican employer. The Plaintiff sued an Ontario affiliate company of his Mexican employer in the Ontario Courts. The Plaintiff had also brought an arbitration proceeding against his Mexican employer in the Mexico. The Defendants sought to have the Ontario action dismissed on the grounds that the Ontario Courts lacked jurisdiction of over the dispute. The Ontario Court applied a two part test considering i) whether it had jurisdiction, and ii) whether it should assume jurisdiction. i) The Ontario Court found that the dispute did not have a “real and substantial connection” to Ontario: the Plaintiff signed his employment contract in Mexico, worked in Mexico, and was terminated in Mexico. There was also a clause in his employment contract agreeing to resolve disputes in accordance with the laws of Mexico. Nevertheless, the Judge found that the Ontario … Read More
License to use “Marilyn Monroe” Trade-mark is not a Franchise Agreement
In MGDC Management Group Inc. v. Marilyn Monroe Estate, 2014 ONSC 4584, the Respondents and Applicants were parties to a License Agreement which granted to the Applicants the exclusive right to use the trademark “Marilyn Monroe” in its restaurants. The Applicants sought rescission of the License Agreement by claiming that the License Agreement qualifed as a franchise agreement which entitled it to receive full disclosure under the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”). The Respondents moved to dismiss the Application. Justice Morgan of the Ontario Superior Court of Justice found that the Act did not apply to the License Agreement for the following reasons: The parties expressly agreed that franchise disclosure laws such as the Act did not apply to the License Agreement. And, in fact, the principal of the Applicants acknowledged that she was aware of this provision when she signed the License Agreement. Section 2(3)5 of the Act stated that it does not apply to a single trade-mark licensing agreement. The … Read More
International Sale of Goods Convention – New Members in 2014 and 2015
The United Nations Convention on Contracts for the International Sale of Goods (“CISG”) establishes a comprehensive code of legal rules governing the formation of contracts for the international sale of goods, the obligations of the buyer and seller in contracts for the international sale of goods, and the remedies for breach of contracts for the international sale of goods. Canada on accession to the CISG declared that, in accordance with article 93 of the Convention, the Convention would extend to Ontario (and other provinces named in the declaration). The Canadian International Sale of Goods Contracts Convention Act, S.C. 1991, c. 13, has been in effect in Ontario since 1992 because of the International Sale of Goods Act, R.S.O. 1990, c. I.10. These two acts brought into effect in Canada the United Nations Convention on Contracts for the International Sale of Goods. The Ontario International Sale of Goods Act provides that the contracting parties “may … Read More
Evicted Tenant Granted Relief From Forfeiture in Commercial Lease Case
In Kristen Lee Nesbitt v. RJH Reinsurance Services Inc., 2014 ONSC 2643, the landlord evicted the tenant due to alleged unpaid rent, realty taxes, water bills and arrears on a demand loan for leasehold improvements. The tenant applied to the Court for relief from forfeiture (e.g. possession of the premises) under the Commercial Tenancies Act, R.S.O. 1990, c. L.7, in order to continue operating its restaurant business on the premises. Since relief from forfeiture is an equitable remedy, the Court must consider the proceedings and the conduct of the parties under the circumstances, and any such terms as to payment of rent, costs, expenses, damages, compensation, penalty or the granting of an injunction to restrain any similar breach in the future. Justice Morgan found that the tenant did not appear to come to the Court with “unclean hands” as the dispute was regarding an accounting issue and the terms of the lease agreement, and it was not equitable to put the tenant out of business … Read More
Court Grants Summary Judgment in Employment Dispute
In Gregory Smith v. Diversity Technologies Corporation, the Plaintiff employee was terminated by the Defendant company for cause. The Defendant stated that the Plaintiff had made a sale to a customer despite being specifically instructed not to do so, and that the order disrupted the Defendant’s production process. The Plaintiff denied that he had been instructed not to sell to the customer. The Defendant argued that a Trial was necessary to resolve the credibility issues. The Judge disagreed, and, following the Supreme Court’s recent decision in Hyrniak v. Mauldin, stated that there was sufficient documentary evidence to allow the court to carry out a fair and just adjudication of the dispute. The Judge stated that she would consider the Defendant’s case “at its highest and best”, and set aside the credibility issues. She stated that even if the Plaintiff had disregarded the Defendant’s instructions not to sell to the customer, it was … Read More
Court of Appeal on Restrictive Covenant on Dissolution of Partnership
The Court of Appeal for Ontario released its decision on February 11, 2014, in Greenaway v Sovran 2014 ONCA 110 on the appeal by a “withdrawing” partner of a two-member firm from the decision of the Superior Court of Justice on an application to determine the enforceability of a “restrictive covenant” in their partnership agreement. The application judge found that the two-member firm partnership had been dissolved and declared the restrictive covenant unenforceable as a penalty, but directed a trial of an issue to determine the damages payable by the appellant as a result of a breach of the portion of the portion of the covenant he found valid and severable – the withdrawal having triggered a clause in the agreement which called for the reduction of the withdrawing partner’s capital account “by 500% of the average fees billed by the firm to clients who transfer to the withdrawing partner within 24 … Read More
Dubai’s DIFC Announces Amendment of Arbitration Law to Accord with New York Convention
Canada and UAE – New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards In 2006, United Arab Emirates joined 137 other nations in acceding to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the so-called 1958 New York Convention). Canada acceded to the New York Convention in 1986 declaring that it would apply the Convention only to differences arising out of legal relationships, whether contractual or not, that were considered commercial under the laws of Canada, except in the case of the Province of Quebec where the law did not provide for such limitation. In Ontario, it found its way into the International Commercial Arbitration Act, RSO 1990, c I.9 to the extent it is contained in the UNCITRAL Model Law, a schedule thereto. Respect of Arbitration Agreements under the New York Convention By Article II (3) of the New York Convention “The court of a Contracting State, when seized of … Read More
Summary Judgment in Wrongful Dismissal Action in IT Sector
The plaintiff in Wellman v. The Herjavec Group Inc., 2014 ONSC 2039, whose employment with the defendant was terminated without cause after one week short of a year, was granted summary judgment and found to be entitled to damages from the defendant for wrongful dismissal on the basis of a reasonable notice period of four months. The parties had agreed that the issue of a reasonable notice could be properly considered on a motion for summary judgment and the court agreed that such a motion is more proportionate, more expeditious less expensive means than a trial to achieve a just result (citing Hryniak v. Mauldin, 2014 SCC 7) In considering the issue the court considered the: Bardal factors; the age of the employee (including when considering mitigation it is reasonable to assume that at the plaintiff’s age there could have family responsibilities that might make him less mobile); length of service (just one factor to be taken … Read More