Corporate/Commercial Law

The appellant appealed the dismissal of its application to set aside an arbitral award arising from a post-closing earnout dispute in an international commercial arbitration.

It argued that the application judge improperly assessed alleged breaches of natural justice on a reduced procedural fairness standard because the arbitrator was an accountant rather than a legally trained adjudicator.

The Court of Appeal held that the application judge correctly applied the governing principles, made factual findings open on the record, and repeatedly grounded the analysis in the parties' agreed arbitral process.

The appeal was dismissed, and the respondents were awarded all-inclusive partial indemnity costs.

The appellant challenged an order holding that a dispute over vested options to acquire shares in a related corporate entity had to be resolved in Delaware rather than under the mediation-arbitration clause in his Ontario employment agreement.

The court held that the competence-competence principle did not require referral to an arbitrator because arbitral jurisdiction could be determined through a superficial review of the contractual record.

Reading the employment agreement, option agreement, and incorporated equityholders agreement together, the court held that the options dispute was not contemplated by or connected with the employment agreement and was instead governed by the Delaware forum selection clause.

The court also rejected the argument that the forum selection clause was unconscionable, finding no improvident bargain or evidence that the chosen forum placed a remedy out of reach.

The appellant challenged a trial judgment holding him personally liable on an unsecured line of credit, arguing that the facility was entered on behalf of several corporations and that the trial judge committed multiple factual processing errors.

The Court of Appeal applied the palpable and overriding error standard and held that, although the trial judge failed to address some evidence concerning the rarity of such unsecured personal lending and the borrower's recorded net worth, those errors were not sufficiently significant to vitiate the core factual finding.

The court accepted that the documentary record, account statements, banking records, and post-agreement conduct amply supported the conclusion that the facility was a personal line of credit.

The appeal was dismissed, with costs to the respondent.

Tacora Resources Inc. sought an interpleader order to deposit mining royalty payments into court due to competing instructions from two groups claiming control over the payee, 1128349 B.C. Ltd. The application judge dismissed the application, finding no 'adverse claims' and a lack of jurisdiction, but issued an unrequested interim order directing payment to one group's counsel.

The Court of Appeal allowed the appeal, holding that the competing instructions constituted adverse claims under Rule 43, the Ontario court had jurisdiction, and the interim order was improperly granted.

Tacora was permitted to pay the royalties into court pending resolution of the corporate control dispute.

This endorsement addresses two motions heard by a motions judge of the Court of Appeal for Ontario.

The appellant, Stayside Corporation Inc., sought leave for its president, Charles Guilbault, to represent the corporation in its appeal against a summary judgment.

The respondents, Cyndric Group Inc. and Richard Menard, sought security for costs.

The court granted Stayside's motion for representation, finding it in the interests of justice to allow the appeal to proceed as scheduled.

The court dismissed the respondents' motion for security for costs, deeming it unjust due to the significant delay in bringing the motion, noting that most appeal costs had already been incurred and an order would effectively deprive the appellant of its day in court.

Santokh Mahal sought a declaration that his security interest in Golden Miles Food Corporation's personal property was valid and had priority, securing $2,182,914 in advances.

The Applicant, Skymark Finance Corporation, and the Receiver, KSV Restructuring Inc., opposed the motion.

The court granted Mahal a secured claim for $281,600, representing direct personal advances, but dismissed the remaining $1,901,314 claimed for advances made by corporations controlled by Mahal.

The court found that these corporate advances were not indirect debts secured by Mahal's General Security Agreement due to insufficient documentation and lack of PPSA registration by the advancing corporations.

The applicant brought a contempt motion against the respondent for failing to comply with previous court orders regarding the filing of corporate tax returns and winding up a company.

The respondent, who was self-represented and challenged the court's jurisdiction, did not substantively respond to the allegations.

The court found the respondent in contempt beyond a reasonable doubt, noting her deliberate non-compliance and history of disregarding court orders.

The court declined to allow the respondent to purge her contempt due to extensive delays and ordered specific remedies, including dispensing with her consent for tax documents and corporate winding-up, and directing the distribution of funds held in trust to cover corporate tax liabilities, accounting fees, and outstanding costs owed to the applicant.

M. Singh Law Professional Corporation (MS) sought a charging order under section 34 of the Solicitors Act against property of River Green (Thunder Bay) Inc. in the possession of 2801100 Ontario Inc. The court applied the three-part test for a charging order, specifically focusing on whether MS was instrumental in preserving the property.

The court found that while the property existed and the client could not pay, MS's efforts were not "substantial and integral" to the preservation, as the assets had already been preserved by a prior court order obtained before MS was retained.

Consequently, the court dismissed the motion for a charging order.

This case involved a dispute between two married couples, who were also siblings and their spouses, over the apportionment of substantial losses from a failed M&M Meat Shops franchise business.

The court was tasked with interpreting a "Letter of Understanding" (LOU) signed during mediation and its relationship to an earlier unanimous shareholders agreement.

The court found a material common or mutual mistake regarding the total corporate debt amount stated in the LOU, rendering the debt distribution terms of the LOU ineffective.

However, the LOU's provision for a $30,000 "sweat equity" payment to the defendants was upheld.

The remaining funds were ordered to be distributed based on the initial shareholders agreement's proportionate contribution terms, after correcting for disproportionate contributions and rejecting a minor claim for frozen food.

This is the third installment of a trial to determine the fair value of a corporate entity and other damages owed by an estate, following previous findings of oppression.

The court addressed complex accounting issues, including the outstanding balance of a shareholder loan, financing fees, and the ownership interests and loan obligations of added parties in related entities.

The court made specific findings on these financial adjustments, leading to a significant payment ordered from the estate to the applicant.

The decision also clarified the application of res judicata in multi-stage proceedings and emphasized the consequences for parties responsible for poor financial record-keeping.

Indigenous Ecuadorian villagers obtained a US$9.5 billion judgment against Chevron Corporation in Ecuador for environmental pollution.

They sought to enforce the judgment in Ontario against Chevron Corporation and its seventh-level indirect subsidiary, Chevron Canada.

The motion judge granted an order requiring the plaintiffs to post security for costs of approximately $942,951 before the appeal could proceed.

The appellants moved to vary this order.

The Court of Appeal set aside the security for costs order, finding that the motion judge erred in principle by failing to conduct a holistic analysis of the justness of the order in all circumstances.

The court emphasized that security for costs orders must be just and should not be used as a litigation tactic to prevent cases from being heard on their merits.

A neighbour who provided assistance to an elderly woman for nearly 15 years sought to enforce a $100,000 cheque given to him by the woman shortly before her death.

The woman had also made a bequest of $100,000 to the neighbour in her will.

The cheque was returned by the bank due to insufficient funds in the account, and the woman died before the shortfall could be remedied.

The court held that a gift by cheque is not complete until the cheque is cashed or has cleared.

Since the woman lacked sufficient funds in her account and died before the cheque could be presented for payment, the gift failed for lack of delivery.

The court also rejected arguments based on the Bills of Exchange Act, estoppel by convention, and equitable principles.

The defendant brought a motion for summary judgment seeking dismissal of a claim arising from a land purchase agreement involving residential development lands in Oshawa.

The plaintiff alleged that the Agreement of Purchase and Sale and related Omnibus Agreement required a post-closing readjustment of the purchase price where the net developable area of the lands was later reduced.

The court held that the contracts did not provide for post-closing adjustments to the purchase price, and that the closing adjustments based on the consultant’s calculation of net developable area were final.

The plaintiff’s later attempt to rely on a recalculation based on modified development constraints was not conducted using the contractual definition of net developable area and was based on the purchaser’s subsequent development choices.

Interpreting the agreements to allow indefinite post-closing adjustments would create commercial uncertainty and absurdity.

Summary judgment was granted dismissing the claim.

The applicants sought an order appointing an arbitrator under a Shareholder Purchase Agreement containing a mandatory arbitration clause following the purchase of a real estate brokerage.

The dispute concerned alleged improper bookkeeping and tax liabilities discovered after the closing of the transaction, which the applicants alleged breached the respondent’s representations, warranties, and indemnities.

The respondent argued that a prior mutual release resolving earlier litigation extinguished the agreement and barred the claims.

The court held that the claims were discovered after the release and were not covered by it, and that the dispute was at least arguable within the scope of the arbitration clause.

The court appointed an arbitrator and directed the dispute to arbitration.

The defendant appealed a master's order granting leave to amend a statement of claim to include relief for recognition and enforcement of a Russian arbitration award under the International Commercial Arbitration Act.

The appellant argued the amendment introduced a new cause of action after the limitation period and relied on a prior decision setting aside default judgment.

The court held that the master's decision correctly found the amendments merely particularized an existing claim referencing the arbitration award and did not introduce a new cause of action.

The prior decision setting aside default judgment was limited to procedural deficiencies in the pleadings and did not extinguish the underlying claim.

The appeal was dismissed and the master's order upheld.

A former employee of a digital cinema company misappropriated proprietary 2D to 3D conversion software and confidential information while still employed and used it to establish competing businesses in China.

The court found breaches of the duty of good faith and fidelity, misuse of confidential information and trade secrets, misappropriation of a corporate opportunity, and the tort of conversion.

The defendants, most of whom were noted in default, used the stolen technology to win a theatre project and compete in the digital cinema market.

The court awarded damages reflecting the minimum cost of developing the stolen technology, disgorgement of profits from the misappropriated project, punitive damages, and substantial costs.

At a Commercial List case conference in a complex civil fraud action involving numerous defendants and related proceedings, the court addressed litigation management issues including settlements, expert reports, discoveries, and trial planning.

Several defendants had reached settlements with the plaintiff.

Discoveries were complete and the matter was ready for trial.

The parties proposed an electronic trial process, which the court approved, directing that the plaintiff initially fund the infrastructure costs but permitting those costs to qualify as allowable disbursements for later costs determination.

The court also endorsed a streamlined trial timetable expected to shorten the originally estimated trial length.

A shareholder dispute arose during implementation of a prior court order directing valuation of a company and providing one shareholder an option to purchase the other’s shares.

The applicant sought to replace the process with a buy/sell mechanism and contested the information to be provided to the court‑appointed appraiser, while also attempting to rely on a personal net worth statement of the respondent obtained from family law proceedings.

The court held that the appraiser should be free to evaluate all information provided by the parties and declined to prescribe limits on materials submitted.

The request to replace the previously ordered process with a buy/sell arrangement was refused, though the court varied timelines to complete the valuation.

The court also ruled that the inadvertently disclosed net worth statement remained privileged and could not be relied upon.

A commercial trucking company sought indemnity under an automobile insurance policy after its tractor unit was reported stolen.

The insurer denied the claim, alleging the insured provided false particulars and failed to disclose significant unrepaired damage and the true market value of the vehicle during the application process.

The court held the insurance broker acted as the insured’s agent and that the insured was bound by the contents of the signed application and OAF1 form.

Relying on s. 233(1)(a)(i) and (ii) of the Insurance Act, the court found the insured provided false particulars and knowingly failed to disclose material facts, which prejudiced the insurer’s underwriting decision.

The claim was therefore invalid and indemnity forfeited.

The applicant sought to set aside an arbitration award requiring payment of finder’s fees arising from investments made by a third-party investor introduced through the respondent.

The applicant argued the arbitrator committed unreasonable errors of law, improperly relied on a prior agreement, misinterpreted a non‑circumvention clause, and exceeded jurisdiction by determining issues relating to securities law registration requirements.

The court held that even if reasonableness review were available, the arbitrator’s interpretation of the finder’s fee agreement was reasonable and grounded in the contractual language and factual matrix.

The court further held that securities law compliance issues were capable of arbitration and that the applicant had waived jurisdictional objections by raising the issue before the arbitrator.

The application to set aside the award was dismissed and the cross‑application to enforce the arbitration award was granted.