David M. Brown

Motions were brought to oppose confirmation of a master's interim report under the Construction Lien Act determining the relationship between an owner and a construction firm.

The master concluded the relationship was one of owner and general contractor rather than owner and construction manager, affecting calculation of statutory holdback obligations and priority among lien claimants and mortgagees.

The moving parties argued the master misinterpreted the contract, improperly relied on extrinsic evidence, and incorrectly considered industry standards.

The court held that the master properly found ambiguity created by amendments to a standard form construction management contract and appropriately considered extrinsic evidence and the parties’ conduct in performing the contract.

Finding no reversible error in the contractual interpretation, the court confirmed the master’s interim report.

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 priority dispute arose between two mortgagees over lands on Queen Street East following a $400,000 advance intended to fund a principal payment under a vendor take-back mortgage.

Funds advanced by a second mortgagee were delivered by certified cheque to the first mortgagee but were subsequently returned to the borrower after arrangements between the borrower and the first mortgagee to defer the principal installment.

The second mortgagee argued that deposit of the cheque constituted acceptance of payment under the first mortgage and a re‑advance to the borrower, thereby affecting priority.

The court reviewed extensive email communications and evidence surrounding the transaction and raised credibility concerns about the first mortgagee’s knowledge of the source and purpose of the funds.

The court directed brief viva voce evidence and potential cross‑examination to resolve the factual dispute before determining priority.

The court-appointed receiver brought a motion to determine entitlement to the proceeds of the sale of a leased truck and past lease payments.

The respondent lessor had trespassed and seized the truck from the receiver without court approval.

The court found that while the lessor remained the owner of the truck and was entitled to past lease payments, its failure to sign a new security agreement or file a financing change statement after the original lessee's bankruptcy rendered its security interest unperfected.

The unperfected interest was subordinate to the receiver and secured creditors, so the lessor was ordered to pay the sale proceeds to the receiver, along with full indemnity costs due to its reprehensible self-help conduct.

In bankruptcy proceedings involving the debtor, the court addressed two issues: post‑judgment interest on a foreign judgment and the proposed terms of a Mareva injunction in aid of execution.

The parties agreed that simple interest on the foreign judgment would run from April 20, 1998 to September 28, 1998 at 10% per annum, which the court ordered.

The moving party sought a broad Mareva injunction restricting the debtor’s dealings with assets and requiring extensive disclosure.

Given emerging concerns about the adequacy of disclosure by the moving party in earlier proceedings and the fact that the trial judge would be hearing additional evidence on sanctions, the court declined to rule on the Mareva relief and left the issue to the trial judge.

After a defendant’s summary judgment motion was dismissed, the plaintiffs sought costs on a full indemnity basis for the motion.

The moving defendant argued that costs should either be reserved to the trial judge or fixed on a partial indemnity basis.

The court noted that both parties had adopted the unusual approach of filing evidence on a file-review basis and that the issue of the defendant’s liability remained a live issue requiring trial.

In these circumstances, the court held it was appropriate to leave the determination of motion costs to the trial judge.

Investors who were customers of a bank alleged negligence after advancing funds to entities engaged in a cheque‑kiting scheme whose accounts had been frozen by the bank.

They claimed the bank knew of the fraudulent activity and failed to disclose material information during communications with them, while applying the advanced funds to reduce the fraudster’s indebtedness to the bank.

The bank moved under Rule 21.01(1)(b) of the Rules of Civil Procedure to strike the negligence claim for disclosing no reasonable cause of action.

Applying the Anns/Cooper framework and the test on motions to strike, the court held it was not plain and obvious that the claims had no reasonable prospect of success.

Given the pleaded bank‑customer relationship and alleged communications between the bank and its customers, the negligence claim was at least analogous to recognized categories of proximity.

During a Commercial List case conference in a complex multi‑party commercial dispute, the court addressed ongoing discovery and production issues among numerous defendants and third parties.

The court directed timelines for outstanding undertakings and warned that unresolved production disputes would require formal motions before a Master.

The court emphasized counsel’s obligation to cooperate in resolving discovery issues and indicated that failure to do so could result in elevated or full indemnity costs.

Additional guidance was provided regarding potential motions for non‑party examinations and production of partnership financial statements.

The court scheduled a further case conference and noted that the matter would not proceed to trial as early as previously anticipated due to outstanding discovery issues.

In supplementary reasons addressing costs following earlier reasons under the Companies’ Creditors Arrangement Act, the applicant mortgage lender sought full indemnity costs based on contractual mortgage provisions.

The court confirmed that while contractual entitlement to full indemnity costs exists, the court retains supervisory authority to ensure the amounts claimed are fair and reasonable.

The applicant’s bill of costs was reduced for inefficiencies, including excessive research time and the use of senior counsel for work that could have been delegated or billed at a lower rate.

Additional reductions were made for excessive preparation time on reply materials.

The court ultimately fixed reasonable full indemnity costs and rejected arguments for further reductions based on partial success or for awarding costs to another resisting respondent.

The estate of a former CEO brought an oppression action under s. 248 of the Ontario Business Corporations Act seeking recovery of a $750,000 loan advanced to finance a corporate break fee.

The loan was structured through a related entity and contained provisions stating that proceeds from certain Irish transactions could be used, at the lender’s discretion, to repay the loan.

After the corporation received nearly $1 million from three of the four transactions, the directors and CFO used the funds for payroll, operating expenses, tax arrears, and to repay their own loans rather than repaying the lender.

The court held the lender had a reasonable expectation that proceeds from the Irish deals would be applied to the loan principal.

While some expenditures were made in good faith to keep the company operating, the repayment of insiders and a later lender constituted conduct that unfairly disregarded the lender’s interests.

Personal monetary orders were made against certain directors and the CFO.

Following a successful motion enforcing a Canadian-recognized foreign judgment obtained against a foreign state and its agencies for terrorism-related conduct, the successful parties sought substantial indemnity costs.

The court considered whether the conduct of the foreign state justified elevated costs.

It held that substantial indemnity costs require reprehensible litigation conduct, not merely objectionable political or international conduct by a foreign state.

Because the defendants did not participate in the proceeding and simply ignored it, their conduct did not meet the threshold for elevated costs.

Partial indemnity costs of $15,456.05 were awarded as fair and reasonable under Rule 57 of the Rules of Civil Procedure.

A law firm sought partial summary judgment seeking a declaration that it was entitled to invoice a bank for commissions relating to debtor payments received after the termination of a debt collection services agreement.

The bank brought a cross‑motion for summary judgment asserting that all amounts owed had already been paid under the agreement’s contingency‑based compensation structure.

The dispute turned on the interpretation of a termination clause allowing the firm to invoice for services performed up to the date of termination.

Applying established principles of contractual interpretation and considering the commercial context and factual matrix, the court held that compensation was limited to commissions on payments actually received before the termination date.

The plaintiff’s interpretation would have radically altered the agreed compensation methodology and was inconsistent with the contractual language and commercial sense.

The plaintiffs brought a motion under Rule 31.10 of the Rules of Civil Procedure seeking leave to examine a representative of the Royal Bank of Canada, a non-party, for discovery.

The action involved allegations that the defendant lender made representations regarding financing arrangements for hotel development projects, including construction financing to be provided by the bank.

The court held that the plaintiffs established that the bank likely possessed information relevant to material issues in the action, particularly regarding the financing proposal process and representations made by the defendant.

The court further found that the plaintiffs could not obtain the information from the defendants and that fairness required allowing the examination prior to trial.

Leave was granted to conduct a limited four-hour examination of the bank’s representative.

The moving party sought directions regarding a motion in writing under Rule 30.10 against a non-party for production of documents.

Although the parties indicated consent to the order sought, the court found that prior directions requiring service of an earlier endorsement had not been complied with.

The motion record failed to include the earlier endorsement and the affidavit of service did not confirm service of that endorsement on the non-party.

The court therefore required proper service of the motion record, the earlier endorsement, and the present endorsement on the non-party before the motion could proceed further.

A hog supplier sought an order terminating the 30‑day period for an insolvent company to file a proposal under s. 50.4(11) of the Bankruptcy and Insolvency Act or, alternatively, the appointment of a receiver over the debtor’s inventory under s. 101 of the Courts of Justice Act.

The moving party argued the debtor acted in bad faith by accepting livestock deliveries shortly before filing a notice of intention to make a proposal and that creditors would be prejudiced because farmers would otherwise be unable to claim the statutory priority for agricultural suppliers under BIA s. 81.2.

The court held the evidence did not establish lack of good faith, inability to make a viable proposal, inability to obtain creditor approval, or material prejudice to creditors as a whole.

The court further held it would be inappropriate to appoint a receiver solely to trigger the statutory farmer priority scheme where Parliament had chosen not to extend that priority to NOI proceedings.

During a Commercial List case conference in complex commercial litigation, the court addressed whether a lengthy upcoming trial should proceed using paper records or an electronic trial format.

The court emphasized the need for the justice system to adapt to modern information technology and criticized resistance within the legal profession to electronic processes.

Considering the scale and document volume of the litigation, the court ordered that the six‑week trial proceed as an electronic trial and directed counsel to prepare and submit a formal e‑trial plan.

The endorsement also addressed discovery scheduling, settlements with certain defendants, and a proposed but abandoned summary judgment motion.

In a will challenge involving a modest estate, the court considered procedural directions and a request for a summary judgment hearing.

The applicants sought to set aside the will alleging lack of testamentary capacity, lack of understanding, and undue influence, and also alleged that joint bank accounts were held on resulting trust for the estate.

The respondent requested a summary judgment motion to dispose of the case.

The court held that summary judgment would be a grossly disproportionate procedure given the modest estate and the presence of significant credibility disputes requiring viva voce evidence.

The court instead limited discovery and directed that the dispute proceed to a short hybrid trial.

The applicant corporation sought court approval of a plan of arrangement under s. 182 of the Ontario Business Corporations Act involving the acquisition of its shares by another corporation.

Applying the framework in BCE Inc. v. 1976 Debentureholders, the court considered whether statutory procedures were followed, whether the application was brought in good faith, and whether the arrangement was fair and reasonable.

The court concluded that the arrangement had a valid business purpose, had been approved overwhelmingly by shareholders, and provided a significant premium to shareholders.

The court declined to rely on a fairness opinion contained in the management proxy circular because it constituted opinion evidence that failed to meet the admissibility requirements under the Rules of Civil Procedure, as it did not disclose the analytical basis for the opinion.

The arrangement was nevertheless approved on the basis of other admissible evidence.

The applicant corporation sought an interim order under s. 192(4) of the Canada Business Corporations Act in connection with a proposed plan of arrangement involving an exchange of securities.

The court was satisfied the proposed transaction constituted an arrangement within the meaning of the statute and that the solvency requirements were met.

The interim order included a quorum provision for the shareholder approval meeting requiring the presence of one person representing at least 5% of the issued and outstanding shares, consistent with the corporation’s by-laws.

The court noted that although such a low quorum may satisfy procedural requirements, it may carry limited evidentiary weight when assessing whether the arrangement is fair and reasonable at the final approval stage.

In a will challenge concerning allegations of undue influence over the deceased, the court considered the proper procedural framework for managing the litigation following the Supreme Court of Canada's decision in Hryniak v. Mauldin.

The court held that proportionality principles should guide orders for directions in estate litigation and rejected the routine use of the traditional Estates List standard order for directions.

Instead, the court ordered limited documentary production, permitted written interrogatories in place of oral examinations for discovery, and scheduled a hybrid hearing using affidavit evidence with viva voce cross‑examination.

The court also transferred a related civil action to the Estates List and assumed case management of both proceedings to ensure a timely and cost‑effective resolution.