Daniel S. Murdoch

In this costs endorsement following a summary judgment ruling on liability in a software licence and copyright dispute, the plaintiffs sought partial indemnity costs of both the motion and the action to date.

The court held it was premature to award costs of the motion because the action had been bifurcated by the plaintiffs and the defendant had an outstanding monetary offer to settle the entire action, engaging the potential costs consequences of Rule 49.10(2).

The court declined to award action costs at this stage and deferred entitlement to motion costs until after the damages trial.

It nevertheless fixed the plaintiffs' partial indemnity costs of the summary judgment motion at $280,000 inclusive, should those costs later be awarded.

On a summary judgment motion in a software licensing dispute, the court interpreted a licence agreement governing enterprise use of document conversion software.

The court held that the agreement did not impose a one-server-per-licence restriction, but it did restrict use to the AIX platform and to association with IBM's CMOD database.

The moving parties obtained declarations that use outside those limits breached the licence and infringed copyright under the Copyright Act.

Estoppel and limitation defences based on technical support knowledge did not raise a genuine issue requiring a trial on liability.

Damages were directed to a trial rather than a reference.

On a refusals motion arising from a pending leave motion under Part XXIII.1 of the Securities Act, the court considered the proper scope of cross-examination and documentary production under s. 138.8.

The court reiterated that pre-leave examinations are narrower than discoveries and are intended to prevent speculative securities claims from turning into discovery-like rummaging through corporate and non-party records.

One question directed to a mine planner about his understanding of any accelerated introduction of cement grout support packs was ordered answered because it went to the central factual dispute.

All other disputed questions were upheld as refused on grounds of irrelevance, overbreadth, improper documentary discovery, or litigation privilege.

The moving parties sought an order requiring the responding party, a franchisee corporation, to post security for costs in relation to a counterclaim and third party proceedings arising from a franchise dispute.

The court considered Rule 56.01 of the Rules of Civil Procedure and whether the circumstances justified ordering security for costs against the counterclaim plaintiff.

The court held that the third parties were not entitled to security for costs because none of the recognized exceptions permitting recovery of third party costs from a plaintiff applied.

However, the defendant by counterclaim established that the responding party had previously pursued substantially identical relief in earlier proceedings and had failed to satisfy outstanding costs orders exceeding $40,000.

The court exercised its discretion to order security for costs in favour of the defendant by counterclaim.

In a leave application under Part XXIII.1 of the Securities Act alleging failure to disclose a material change in mining operations, the parties brought competing motions to strike expert and fact affidavits.

The respondents sought to strike the applicant’s mining expert affidavit on the basis that it improperly opined on legal issues, relied on false assumptions, and lacked independence.

The applicant sought to strike several fact and expert affidavits filed by the respondents, arguing they violated Rule 39.01(5), relied on hearsay, and attempted to shield witnesses from cross-examination.

The court held that expert evidence may rely on second-hand information and that Rule 39.01(5) does not govern admissibility of expert opinion.

The alleged conflicts and factual disputes affected weight rather than admissibility.

Both motions to strike were dismissed and no costs were awarded.

In a leave application under Part XXIII.1 of the Securities Act alleging failure to disclose a material change in mining operations, the parties brought competing motions to strike expert and fact affidavits.

The respondents sought to strike the applicant’s mining expert affidavit on the basis that it improperly opined on legal issues, relied on false assumptions, and lacked independence.

The applicant sought to strike several fact and expert affidavits filed by the respondents, arguing they violated Rule 39.01(5), relied on hearsay, and attempted to shield witnesses from cross-examination.

The court held that expert evidence may rely on second-hand information and that Rule 39.01(5) does not govern admissibility of expert opinion.

The alleged conflicts and factual disputes affected weight rather than admissibility.

Both motions to strike were dismissed and no costs were awarded.

The plaintiff moved under Rule 48.11 to restore an action to the trial list after it had been struck when a Trial Certification Form was not filed.

The court held that the trial coordinator had jurisdiction to remove the action from the list under the Courts of Justice Act and the Rules of Civil Procedure.

Applying the test articulated by the Court of Appeal, the plaintiff was required to provide an acceptable explanation for delay and demonstrate that the defendant would not suffer non-compensable prejudice.

The court found a prolonged period of inactivity between 2007 and 2011 with no adequate explanation and inferred a deliberate decision to hold the litigation in abeyance.

The plaintiff also failed to rebut the presumption of prejudice arising from the lengthy delay.

The motion to restore the action to the trial list was dismissed.

In a liquidating CCAA proceeding, the court considered whether a deemed trust under the Pension Benefits Act arose in respect of pension plan wind-up deficiencies, giving priority over secured creditors.

Applying the Supreme Court's decision in Indalex, the court held that no deemed trust arose because the pension plans were not wound up prior to the CCAA Initial Order.

The court granted the second lien lenders' motion to lift the stay of proceedings to allow a bankruptcy petition to proceed, concluding that imposing a provincial deemed trust priority in the middle of an insolvency proceeding would undermine the predictability and flexibility of the CCAA regime.

The appellant appealed a decision determining that interest on the principal outstanding under a note runs from the date of issue.

The Court of Appeal dismissed the appeal, agreeing with the motion judge that without clear language, interest does not run on the balance owed before the note was issued and the payee, principal, and rate were fixed.

Competing applications sought declarations regarding when interest began accruing on a promissory note issued as part of consideration for a receiver-approved asset sale.

The note holder argued that interest accrued from the asset purchase agreement’s final closing date, while the issuer sought rectification of the note to reflect a court‑approved amended form that tied interest payments to the note issuance date.

The court held the issuer had mistakenly issued an outdated form of note contrary to the prior court order approving the amended form.

Rectification was granted so the issued note conformed to the court‑approved amended note.

Interest therefore began accruing only once the note was issued following the priorities order identifying the noteholder and principal amount.

The applicants, facing severe liquidity issues and unable to meet financial covenants, sought protection under the Companies' Creditors Arrangement Act (CCAA).

The court found the applicants met the statutory definitions of 'company' and 'debtor company' and that a stay of proceedings was necessary to allow them to maintain operations and complete a sales process.

The court granted the Initial Order, which included the appointment of a Chief Restructuring Officer, approval of a DIP facility, various priority charges (Administration, Critical Supplier, Directors', and DIP Lenders'), and a Cross-Border Protocol to coordinate with parallel Chapter 11 proceedings in the United States.

In a proceeding under the Companies’ Creditors Arrangement Act, the applicants sought several restructuring-related orders, including increased priority for certain court-ordered charges, suspension of special pension payment obligations under an individual pension plan, and approval of an engagement letter for a financial advisor.

The court held that it had jurisdiction under ss. 11.2, 11.4, 11.51 and 11.52 of the CCAA to grant super‑priority charges and accepted the applicants’ submissions regarding critical suppliers, DIP lenders, and a directors’ charge.

The court also approved the suspension of special pension payments and the engagement of the proposed financial advisor on specified terms.

Certain issues relating to a key employee incentive plan were deferred for later determination.

An order was issued granting the requested relief.

The applicants, companies engaged in leasing motor vehicles and equipment, sought a declaration that the Bulk Sales Act did not apply to a proposed asset securitization financing transaction involving the periodic sale of leases and related equipment to a special purpose vehicle.

The transaction was designed to raise operational financing while the applicants continued operating their businesses.

The court examined the purpose and scope of the Bulk Sales Act and the definition of a "sale in bulk".

It held that the proposed transaction constituted an ordinary-course financing technique and did not amount to a sale of assets out of the usual course of business.

Accordingly, the Act did not apply to the transaction.

The appellants succeeded on a limitation issue in a class action appeal and sought costs for the appeal and the motion below.

The Court of Appeal declined to alter the motion judge's order that costs of the motion remain in the cause.

For the appeal, the court recognized the appellants' success but modified the costs award because the appeal raised a novel issue of law and involved access to justice considerations in a class action.

The court awarded costs of the appeal in the cause, fixing them at $20,000 for the Timminco appellants, $20,000 for the Photon Consulting appellants, and $10,000 for the Walsh appellant.

Following a summary judgment motion in a franchise dispute, the court addressed costs after the moving party was largely unsuccessful except for striking a jury notice.

The plaintiffs sought substantial indemnity costs, arguing the motion had little chance of success, while the defendant argued costs should be reserved or limited because the motion was reasonably brought.

The court held that although the motion was not unreasonable, the unsuccessful party should ordinarily pay the successful party’s costs of the motion.

Applying the Rules of Civil Procedure and considering duplication of effort and partial success on the jury issue, the court fixed partial indemnity costs at $50,000 inclusive of disbursements and tax.

The defendant franchisor brought a motion for summary judgment dismissing the franchisees’ action on the basis of a mutual release signed following the failure of the franchised restaurant, and alternatively sought partial summary judgment dismissing a statutory rescission claim under the Arthur Wishart Act (Franchise Disclosure), 2000.

The plaintiffs argued the release was unenforceable due to unconscionability and statutory invalidity, and that disclosure deficiencies entitled them to rescind within the two‑year period applicable where no compliant disclosure document is provided.

The court held that genuine issues requiring a trial existed regarding the enforceability of the mutual release, including potential unconscionability, lack of legal advice, and imbalance of bargaining power.

The court also found that determining whether the disclosure requirements were satisfied under the statute required a full evidentiary record and could not be resolved on summary judgment.

However, the court struck the plaintiffs’ jury notice based on the contractual waiver and the equitable nature of certain relief sought.

The plaintiff commenced a proposed class action alleging secondary market misrepresentations by the defendants.

The statement of claim asserted common law causes of action and indicated an intention to seek leave to assert a statutory cause of action under section 138.3 of the Securities Act.

Facing a potential limitation issue, the plaintiff successfully moved for a declaration that the limitation period was suspended under section 28 of the Class Proceedings Act.

The defendants appealed.

The Court of Appeal allowed the appeal, holding that a statutory cause of action under section 138.3 is not 'asserted' within the meaning of section 28 until leave to proceed has been granted.

The appellant appealed an order declaring a 'Covenant and Postponement of Claim' valid and enforceable against it.

The appellant argued it was a guarantor, not a principal debtor, and was released from liability due to a failure to receive a demand notice.

The Court of Appeal dismissed the appeal, finding that the specific language of the Covenant precluded the appellant from relying on the lack of notice, and that the appellant had ratified the events that might have otherwise entitled it to release.

The appellant appealed the dismissal of its motion under Rule 45.02 for an order preserving a sum of money held as cash collateral.

The appellant argued that its obligations under a Letter of Credit Agreement were discharged because the respondent entered into a forbearance agreement with the principal borrower, materially altering the guaranteed loan.

The Divisional Court dismissed the appeal, finding that the agreement was for a standby letter of credit, not a guarantee, and thus the law of guarantees did not apply.

Furthermore, the cash collateral was not a specific fund to which the appellant had a proprietary claim, and the appellant had implicitly ratified the forbearance agreement by participating in the borrower's insolvency proceedings without objection.

The appellant sought leave to appeal a decision dismissing its motion for an interim preservation order regarding a $3.5 million cash collateral drawn from a standby letter of credit.

The motions judge had found that the appellant had no proprietary interest in the funds and that the law of guarantee did not apply.

The Divisional Court granted leave to appeal, finding good reason to doubt the correctness of the decision and noting that the application of guarantee law to a standby letter of credit in the context of an underlying agreement is an issue of broader significance.

A stay of the order directing payment of the funds was also granted pending the appeal.