Corporate/Commercial Law

The plaintiff commercial tenant sought a mandatory interlocutory injunction to regain possession of commercial premises and recover seized equipment after being evicted by the defendant landlord.

The court dismissed the motion, finding that the plaintiff failed to provide a meaningful undertaking as to damages, did not demonstrate a serious issue to be tried as the landlord had lawfully terminated the tenancy for non-payment of rent and non-compliance with insurance requirements, and did not establish irreparable harm.

The balance of convenience favored the landlord.

The plaintiffs sought payment of $54,500 plus interest, representing the unpaid balance of a $100,000 purchase price for a pizza business.

The defendants argued there was no binding contract or, alternatively, that the plaintiffs breached its terms.

The court found a binding contract existed as of July 31, 2012, for the purchase of the business, including equipment and the assignment of a lease, contingent on the plaintiffs fulfilling certain conditions.

However, the plaintiffs failed to take necessary steps to assign the lease and transfer corporate shares, and allowed the lease to fall into default, leading to its termination.

This made it impossible for the plaintiffs to complete their end of the bargain.

Consequently, the plaintiffs' claim was dismissed against all defendants, with costs awarded to the defendants.

The plaintiff advanced funds to a partnership operated by relatives pursuant to promissory notes and personal guarantees, including a $1,000,000 loan with an option to convert to equity.

The defendants asserted that the plaintiff elected to convert the loan to equity through a signed authorization, while the plaintiff alleged the document was forged.

The court found the authorization document to be a forgery and held that the plaintiff remained a lender entitled to repayment under the promissory note and guarantees.

The plaintiff also sued a bank for releasing funds from his account without authorization.

The court held that the plaintiff was bound by verification provisions in the bank’s Financial Services Agreement, which relieved the bank of liability due to the plaintiff’s failure to review and report account discrepancies.

In CCAA proceedings involving several affiliated corporate applicants, the monitor sought court approval of a settlement resolving competing priority claims over estate funds among pension plans, a U.S. bankruptcy trustee, secured lenders, and other creditors.

The settlement provided for partial distributions to pension beneficiaries and retired executives, with the remaining funds payable to the U.S. trustee for the bankruptcy estates of related U.S. debtors.

The court held the settlement was a reasonable and proportionate resolution that avoided costly and protracted litigation over competing statutory deemed trusts and secured claims.

A related motion by the pension plan administrator sought amendment of the salaried pension plan to implement the settlement distribution scheme.

Relying on its broad discretionary authority under s. 11 of the Companies’ Creditors Arrangement Act, the court ordered the amendment where notice had been given and no affected party objected.

The court considered a motion by a court‑appointed receiver seeking approval of an agreement of purchase and sale for property owned by the respondent corporation.

The first mortgagee and the second mortgagee supported the proposed sale despite a projected shortfall on the second mortgage.

A shareholder objected, arguing the property should first be marketed through MLS and pointing to higher appraisals.

The court accepted the receiver’s evidence regarding market uncertainties, marketing timelines, and financial realities, including the absence of any realistic economic benefit to the objecting shareholder.

The motion approving the sale was granted.

The plaintiffs moved under Rule 32.01 of the Rules of Civil Procedure for an order permitting inspection of a biofuel production plant owned by a defendant corporation.

The plaintiffs argued the inspection would allow their experts to assess whether the plant was operational in connection with a forthcoming Mareva injunction motion and claims relating to allegedly fraudulent transactions designed to defeat enforcement of anticipated U.S. judgments.

The court held that inspection orders require necessity for the proper determination of an issue in dispute and must reveal something useful or probative for the trier of fact.

Because the operational status of the plant was not relevant to the plaintiffs’ pleaded claim that certain funds were used to acquire the plant, the inspection was not necessary and that part of the motion was dismissed.

However, the court ordered production of written documents referred to in an affidavit pursuant to Rule 30.04(2).

The plaintiff corporation brought a motion for partial summary judgment arising from an alleged fraudulent investment scheme involving a purported $900 million bond‑trading program.

The plaintiff had transferred $2 million to a company account controlled by the principal defendant, believing the funds would be used in a short‑term bond transaction, but the funds were diverted through various accounts and ultimately used to purchase personal assets including a luxury residence.

The defendants asserted the transaction was legitimate and that the funds had been used for the bond program, but produced no reliable documentation supporting the existence of the bonds or the investment structure.

The court found overwhelming evidence that the scheme was fraudulent and that the principal defendant had knowingly misappropriated the funds.

Partial summary judgment was granted for $2 million against the principal defendant and related companies, while claims against other parties were left for trial.

A commercial landlord sued a prospective tenant for damages arising from the tenant’s refusal to proceed with a lease after an offer to lease had been executed and a draft lease negotiated.

During design work, the parties discovered that a structural bearing wall prevented installation of the large windows contemplated by the offer, and that installing them would cost more than ten times the estimated amount.

The court held that the subsequent draft lease was unenforceable under the Statute of Frauds because it was never signed and no written memorandum satisfied the statute.

The court further found that the original offer to lease was frustrated by an unforeseeable structural condition that fundamentally altered the nature of the bargain, as the building could not reasonably provide the natural light and design features essential to the tenant’s intended use without radically increased cost.

Both the action and the tenant’s counterclaim were dismissed.

The defendants brought a motion to stay the plaintiffs’ civil action on the basis of an arbitration clause contained in a shareholders agreement executed as part of a share purchase transaction.

The plaintiffs alleged misrepresentations inducing the share purchase and sought declarations regarding share value, rescission of the transaction, and damages including wrongful dismissal.

The court held that the dispute was not clearly outside the scope of the arbitration clause, which broadly applied to disputes relating to interpretation or implementation of the shareholders agreement.

Applying s. 7(1) of the Arbitration Act, 1991 and appellate guidance on deference to arbitration agreements, the court stayed the claims that arguably required interpretation of the shareholders agreement.

The wrongful dismissal claim arising from a separate employment agreement was not stayed.

Addendum to a prior decision addressing an argument concerning the applicability of s. 25 of the Personal Property Security Act regarding security interests in proceeds.

The applicant argued that the respondent’s consent to franchise agreement transfers eliminated the priority of the respondent’s security interest over those agreements.

The court accepted that the respondent’s signature constituted consent to the transfers and that, under s. 25 of the PPSA, the respondent’s security interest would not have priority over the applicant’s with respect to the franchise agreements in evidence.

However, the court declined to extend the finding to franchise agreements not supported by evidence in the record.

Following earlier reasons finding a binding agreement and liability for breach, the court addressed the remaining issue of damages concerning the valuation of shares under a draft partnership agreement.

The dispute centred on the meaning of “fair market value” and whether “earnings” in the contractual formula referred to gross commissions or net earnings after expenses.

The court held that, absent an express contractual definition, the traditional meaning of fair market value—an arm’s length price in the open market—should apply.

Applying principles of implied terms and contractual interpretation, the court concluded that earnings should be interpreted as net earnings rather than gross commissions to give business efficacy to the agreement.

Damages were therefore calculated based on net earnings.

Cross-motions arose from disputes between joint investors in multiple commercial real estate development projects.

The respondents sought a stay of the applicants’ claims in favour of arbitration based on a mediation/arbitration clause in the project agreements.

The court held that the arbitration clause was narrowly drafted and applied only to disagreements regarding management and completion of projects, not to alleged breaches of express contractual provisions.

Evidence suggested unauthorized refinancing, diversion of funds, and failure to provide required financial reporting.

The court declined to stay the action, appointed an inspector under s. 161 of the Ontario Business Corporations Act to investigate the affairs of the owner corporations, and granted injunctive relief enforcing contractual restrictions on property dealings.

The plaintiff claimed that she transferred ownership of a cleaning services franchise to the defendant temporarily, with an agreement that it would be returned after six months.

The defendant maintained that the transfer was permanent and that the only agreement was that he would provide work opportunities to the plaintiff and her sons in the future.

After assessing conflicting testimony, documentary evidence, and credibility of witnesses, the court preferred the defendant’s version of events.

The court found that the transfer was intended to be permanent and that there was no agreement requiring the defendant to return the franchise.

The plaintiff therefore failed to establish unjust enrichment or breach of agreement.

A not‑for‑profit organization sought an interlocutory injunction preventing a bank from terminating its banking relationship pending trial or the outcome of related Federal Court of Appeal proceedings.

The bank had provided approximately four months’ notice of termination after the organization’s charitable status had been revoked by the Canada Revenue Agency.

The court held that banks may terminate banking relationships without cause provided reasonable notice is given and that reasonableness should be assessed in ordinary circumstances rather than based on the plaintiff’s regulatory difficulties.

Applying the RJR‑MacDonald test, the court found the plaintiff failed to establish a strong prima facie case, failed to prove irreparable harm, and did not satisfy the balance of convenience.

The request for mandatory injunctive relief was therefore refused.

A bank sought to recover approximately USD $5.4 million under guarantees related to credit facilities advanced to a UAE construction entity and alleged that settlement proceeds from unrelated international litigation were fraudulently conveyed to affiliated corporations to defeat its claim.

The plaintiff also sought to add numerous additional corporate and individual defendants, rely on the discoverability doctrine and misnomer exceptions to the Limitations Act, and pierce the corporate veil on the basis of a common enterprise among related companies.

The court held that most proposed defendants could not be added because the claims were statute‑barred and the discoverability doctrine did not apply due to the plaintiff’s lack of diligence in identifying corporate entities earlier in the litigation.

Although one entity was permitted to be added due to misnomer, the court found no fraudulent conveyance under the Fraudulent Conveyances Act and declined to pierce the corporate veil, emphasizing the principle of separate corporate personality.

The plaintiff’s claims were dismissed and costs were awarded to the defendants.

The moving party sought an order under Rule 45.02 of the Rules of Civil Procedure requiring $1.1 million from the proceeds of the sale of a Hamilton property to be paid into court for interim preservation pending litigation.

The dispute arose from a property investment arrangement between long‑time associates, where the moving party alleged entitlement to a proportionate share of the profits based on funds invested.

The court held that the moving party did not establish a proprietary claim to a specific fund because he was merely an investor and had no proprietary interest in the sale proceeds held in an investment account.

Even if the first branches of the test were met, the balance of convenience did not favour the order as there was no evidence the responding parties intended to dissipate assets or frustrate enforcement of a potential judgment.

The motion was therefore dismissed with costs.

The applicant sought continuation of a Mareva injunction freezing the respondent’s assets in connection with a disputed promissory note and security agreement.

The respondent argued the injunction should be set aside due to material non‑disclosure on the original ex parte motion, including the applicant’s assignment of the security underlying the debt and the respondent’s asserted set‑off claim.

The court held that the potential weakness of the undertaking as to damages arising from the assignment should have been disclosed to the judge who granted the ex parte order.

Although the court declined to continue the Mareva injunction in its existing form, it found that some interim relief was justified to preserve the status quo pending a short trial.

The injunction was continued temporarily for ten days with limited permitted expenses and directions for proposals regarding payments and trial scheduling.

The plaintiffs, operators of cheque cashing and currency exchange businesses, sued a bank for breach of contract after the bank froze their accounts and reversed deposits arising from several fraudulent cheques.

The bank counterclaimed for overdraft balances and sought to enforce personal guarantees and personal liability against the principal of the companies.

The court held the bank acted within its contractual rights under the financial services agreements to reverse dishonoured deposits and debit the accounts.

Evidence showed the principal failed to respect the separate corporate identities, was wilfully blind to obvious indicators of cheque fraud, and used corporate accounts interchangeably for personal purposes.

The court pierced the corporate veil and imposed joint and several liability on the companies and their principal for the outstanding debts and overdrafts.

Investors brought an ex parte motion to amend a prior receivership order and expand the powers of an Interim Receiver in proceedings concerning corporations involved in Ontario real estate development projects.

Evidence from an appointed inspector indicated that investment funds raised for development projects had been diverted, including funds used to renovate a Florida property and transferred through corporate accounts controlled by the directing individual.

Additional evidence suggested asset transfers, movement of funds to foreign accounts, and restructuring of corporate holdings while insolvency proceedings were pending.

Relying on statutory authority under the Courts of Justice Act, the Ontario Business Corporations Act, the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act, and the Bankruptcy and Insolvency Act, the court amended the pleadings to add additional respondents and expanded the interim receiver’s authority to protect assets pending further proceedings.

The plaintiff bank brought a motion for summary judgment to enforce a personal guarantee executed by a defendant in respect of a small business loan to a corporation operating a pub.

The guarantor argued that the guarantee was conditional upon finalizing a business arrangement with another participant and alternatively that the document was to be held in escrow.

The court held that the guarantee was expressly described as continuing, absolute, and unconditional and required any alteration or waiver to be in writing.

Applying the parol evidence rule and authorities from the Supreme Court of Canada, the court found that alleged oral conditions or collateral agreements could not vary the written terms of the guarantee.

Summary judgment was granted in favour of the bank for the guaranteed amount plus interest.