Alan B. Merskey

The plaintiff sued the defendant for breach of a software license agreement, a general security agreement, and the duty of honest performance.

The dispute centered on whether the defendant's newly bundled software suite constituted 'Replacement Software' triggering higher royalty payments, and whether the defendant failed to negotiate in good faith regarding pricing changes.

The court dismissed the action, finding that only one module of the bundled suite met the contractual definition of Replacement Software.

Furthermore, the court held that the plaintiff failed to prove any breach of the duty of honest dealing, as there was no evidence of dishonesty or a refusal to negotiate by the defendant.

The appellant sought leave to appeal an order approving a bankruptcy trustee's second auction process for the sale of assets of two bankrupt corporations, and refusing an adjournment.

The Court of Appeal dismissed the motion for leave to appeal, finding that the proposed appeal did not raise an issue of general importance, lacked prima facie merit, and would unduly hinder the progress of the bankruptcy proceedings, as the sale had already been completed.

The appellants, former employees whose employment was terminated following a corporate restructuring, appealed the dismissal of their application for supplementary retirement benefits under a supplementary executive retirement plan (SERP).

Following a partial wind-up of the registered pension plan, the appellants became entitled to statutory 'grow-in' benefits, allowing them to retire at age 55 with unreduced pensions.

The dispute centered on whether the SERP's formula required excluding these grow-in benefits when calculating their supplementary entitlement.

The Court of Appeal upheld the application judge's interpretation, which relied on expert actuarial evidence to conclude that the SERP's proviso mandated the exclusion of grow-in benefits from the base calculation but not from the deduction of earned registered benefits, resulting in a nil supplementary entitlement.

The plaintiff, Callidus Capital Corporation, moved for summary judgment to enforce a guarantee and mortgage against the defendant, Jeffrey J. McFarlane, for obligations of Xchange Technology Group LLC (XTG).

McFarlane had guaranteed XTG's debt to Callidus, limited to US$3 million, excluding certain facility and forbearance fees.

McFarlane argued that the debt was extinguished by an asset purchase agreement (APA) via a credit bid, and that Callidus had impaired its security.

The court found that the guarantee was a commercial agreement, not subject to the *contra proferentem* rule, and that the $3 million carve-out in the APA was intended to maintain McFarlane's guarantee obligation.

The court also rejected the impairment of security argument, noting a broad release signed by McFarlane.

Summary judgment was granted to Callidus for US$3 million plus interest and costs.

Nortel Networks Corporation and its Canadian debtor affiliates brought a summary judgment motion to dismiss claims by SNMP Research International, Inc. and SNMP Research Inc. for breach of contract, breach of confidence, and copyright infringement.

SNMP's claims arose from Nortel's post-CCAA filing sales of its business segments (LOBs), during which SNMP's proprietary software source code was allegedly transferred to purchasers without authorization.

The court dismissed SNMP's claim for disgorgement of Nortel's profits, finding no evidence that Nortel received revenue derived from the copyright infringement, as purchasers knew they were not acquiring rights to SNMP software and negotiated separate licenses.

However, the court held SNMP's damage claim in abeyance for six months, acknowledging ongoing discovery in a related U.S. proceeding and the possibility of future evidence regarding LOB purchasers' use of unlicensed SNMP software.

The plaintiffs brought a motion for partial summary judgment seeking a declaration that the defendant law firm, Aylesworth LLP, was vicariously liable for the alleged professional negligence of a solicitor, Welsh.

Welsh had a 'counsel' relationship with Aylesworth but operated his own independent practice in Oakville, through which he provided legal services to the plaintiffs regarding a fraudulent investment scheme.

The court dismissed the motion, finding no genuine issue requiring a trial.

The court held that Aylesworth was not vicariously liable because it did not materially enhance the risk of wrongdoing, had no knowledge or control over Welsh's independent files, and did not hold Welsh out as its agent to the plaintiffs.

The moving defendants brought a motion to strike several paragraphs of the statement of claim alleging conspiracy, misrepresentation, injurious falsehood, and interference with economic relations arising from alleged diversion of employees and business from a technology company.

The court held that the pleading disclosed no reasonable cause of action against one defendant spouse because no material facts supporting any claim were pleaded against her, and struck the relevant paragraph and dismissed the action against her with leave to amend.

The court found that allegations supporting fraudulent misrepresentation, negligent misrepresentation, injurious falsehood, and civil conspiracy were adequately pleaded when the statement of claim was read as a whole.

However, the pleading failed to properly plead the tort of intentional interference with economic relations.

That claim was struck with leave to amend within 30 days.

In CCAA liquidation proceedings, the secured creditor and investment advisor sought a declaration that it was entitled to a contractual additional fee arising from the sale of one of the debtor’s portfolio investments.

The creditor argued that the debtor breached a settlement agreement by failing to repay outstanding advisor debt before the asset sale closed, which would have triggered the fee.

The court held that the agreement required payment only when reasonably practicable based on the debtor’s commercially reasonable estimate of liquidity and expenditures.

Given the uncertainty of the closing and the debtor’s limited cash resources during CCAA proceedings, the decision to wait until proceeds were actually received was commercially reasonable.

The motion for a declaration and payment of the additional fee was dismissed.

The applicants sought a declaration that they were entitled to supplementary pension benefits under the respondent's supplementary pension plan following a partial wind up of the registered pension plan.

The partial wind up triggered statutory 'grow in' benefits under the Pension Benefits Act, allowing the applicants to retire early with unreduced pensions.

The court interpreted the supplementary plan's formula, which explicitly excluded 'grow in' benefits from the calculation of the base pension amount.

The court found that when the 'grow in' benefits were excluded, the applicants' base pension amounts were less than the pension benefits they actually earned, resulting in no supplementary benefits being payable.

The application was dismissed, and the court declined to order costs payable from the pension fund.

The applicants, claiming to be victims of a Ponzi scheme, sought a disclosure order under section 17 of the Securities Act to obtain transcripts and materials from a Commission investigation.

They sought these materials to assist in a civil action against their former lawyers, alleging breach of fiduciary and professional duties during the investigation.

The Commission found that, unlike typical cases where disclosure is sought against the subjects of an investigation, the applicants sought disclosure against their own lawyers regarding their conduct before the Commission.

Finding no appreciable confidentiality interest remaining and no risk to the concluded investigation, the Commission held it was in the public interest to authorize disclosure of the section 13 transcripts and related communications.

On a motion to lift the CCAA stay, the moving parties sought to pursue post-filing software licensing and copyright-related claims against the Canadian debtors in U.S. proceedings, relying in part on a forum selection clause and asserted overlap with claims against U.S. debtors and a purchaser.

The court held that in insolvency proceedings the single proceeding model and the public policy favouring centralized control of claims outweighed the contractual forum provision.

The court found the moving parties were not strangers to the insolvency, that fragmented proceedings created risks of inefficiency and inconsistent findings, and that the U.S. process would not adequately serve the timely and economical resolution of claims within the CCAA.

The motion to lift the stay was dismissed.

The appellants advanced funds to Cash Store, a payday lending company operating under CCAA protection.

They appealed a motion judge's dismissal of their claim that they were the sole legal and beneficial owners of loan payments and accounts receivable from Cash Store's customers.

The motion judge found that the actual practices of the parties, including the payment of interest and commingling of funds, reflected a debtor-creditor relationship rather than the principal-broker relationship set out in their agreements.

The Court of Appeal dismissed the appeal, finding no error in the motion judge's factual determinations.

The Applicants, operating a network of alternative financial services branches across Canada, sought initial protection under the Companies' Creditors Arrangement Act (CCAA) due to a severe liquidity crisis and regulatory challenges.

The court found the Applicants to be insolvent and granted a stay of proceedings to provide breathing space for restructuring.

The court confirmed its jurisdiction to hear the matter in Ontario, as the Applicants' chief place of business is located there.

However, the court deferred the request for a DIP financing charge to allow other stakeholders time to respond.

The applicants moved for declarations regarding their pension rights under a supplemental pension plan.

The respondent argued the claims were barred by the Limitations Act, 2002, asserting the limitation period began when option statements denying the benefits were issued.

The court held that the claims were not statute-barred, finding that the cause of action for pension benefits does not crystallize until the payments actually fall due and are wrongfully refused, rather than when an anticipatory breach occurs.

The Ministry of the Environment appealed a CCAA judge's order declaring that environmental remediation orders issued against the insolvent respondents were financial in nature and subject to a CCAA stay of proceedings.

Applying the Supreme Court's decision in AbitibiBowater, the Court of Appeal held that ongoing environmental remediation obligations are only provable claims if it is sufficiently certain that the province will perform the work and seek reimbursement.

The Court found it was not sufficiently certain the MOE would perform the remediation for most of the sites, as the orders were also directed at subsequent owners.

The appeal was allowed, and the stay was modified to apply only to the portion of the London property still retained by the respondents.

The applicant insurer sought leave to appeal an order requiring it to pay the legal fees of Nortel's executives without reference to a $10 million retention amount or a directors and officers trust fund.

The motion judge had found that the indemnification was a pre-filing claim subject to the CCAA stay, and that allowing access to the trust would improperly elevate the insurer's priority.

The Court of Appeal denied leave, finding the motion judge's conclusions were within his expertise and entitled to deference, and the issues were specific to the case rather than of broader interest.

The Court also declined to consider fresh evidence filed by the applicant because no motion for leave to admit it was brought.

In a Companies’ Creditors Arrangement Act restructuring, the applicants sought court approval of a sale transaction to BlackRock Kelso Capital Corporation, authorization to assign certain store leases and designated contracts, and related relief.

A former employee also moved to be appointed as representative of terminated employees and to appoint representative counsel funded from transaction proceeds to assist with potential Wage Earner Protection Program Act claims.

The court approved the sale transaction and the assignment of leases and contracts under ss. 36 and 11.3 of the CCAA, finding the sale process reasonable and the transaction maximized value while preserving employment and ongoing operations.

The court declined to appoint representative counsel for terminated employees, holding the proceeding lacked the complexity seen in cases such as Nortel and Canwest, and that WEPPA claims could be addressed in the anticipated bankruptcy process by the trustee.

Funding representative counsel from the purchaser’s transaction funds was also found inappropriate.

The plaintiffs sued their former lawyers for negligence, breach of fiduciary duty, and breach of the duty of loyalty, alleging the lawyers facilitated a Ponzi scheme and failed to disclose the plaintiffs' interests during an Ontario Securities Commission investigation while representing other clients.

The defendant lawyers moved to strike portions of the statement of claim, arguing their statements and omissions before the OSC were protected by the doctrine of absolute privilege.

The Court of Appeal dismissed the appeal, holding that it is not plain and obvious that absolute privilege immunizes a lawyer from a client's claim for breach of loyalty based on statements made while representing different clients in a quasi-judicial proceeding.

In ongoing Companies’ Creditors Arrangement Act proceedings, the applicants sought advice and directions regarding the application of a directors’ and officers’ liability insurance policy issued by the insurer.

The dispute concerned whether a US$10 million retention applied to defence costs incurred by executives facing claims arising from alleged pre‑filing misconduct.

The applicants argued that the CCAA stay prevented the company from indemnifying the executives, thereby triggering the policy’s non‑indemnifiable loss provisions and eliminating the retention requirement.

The court held that the indemnity obligation was a pre‑filing obligation and that the stay prevented payment, rendering the loss non‑indemnifiable within the meaning of the policy.

As a result, the insurer was required to respond to the executives’ losses without reference to the retention.

The plaintiff moved for leave to amend the statement of claim under Rule 26.01 of the Rules of Civil Procedure.

The court reaffirmed that leave to amend should generally be granted unless non-compensable prejudice would result, but amendments may be refused where they constitute an abuse of process or fail to plead necessary material facts.

Several proposed amendments were denied because they asserted negligence, breach of trust, fiduciary duty, and duty of care without pleading the material facts required under Rule 25.06(2).

One proposed amendment was also rejected as inconsistent with the plaintiff’s own discovery evidence.

Limited amendments were permitted, portions of an affidavit disclosing mediation communications were struck, and the defendants were awarded costs.