Michael McWilliams

This decision addresses two related appeals.

In the main appeal (C70874), Physicians’ Dialysis Center Inc. (PDC), and Drs.

George Wu and Gordon Wong appealed a trial judgment that found them unjustly enriched at the expense of Drs.

Perkins and Boll, and liable for general and punitive damages due to abuse of trust and breach of fiduciary duty.

The appellants argued errors in the interpretation of a Memorandum of Understanding (MOU) concerning compensation for clinic space and services, and that the claims were statute-barred.

The Court of Appeal dismissed this appeal, upholding the trial judge's findings on unjust enrichment, contract interpretation (clarifying payments were for overhead, not extra billing), and the application of the limitations period.

In the second appeal (COA-22-CV-0392), Dr. Donald Kim appealed the denial of his share in interpleaded funds, and this appeal was granted.

Following an 11-day trial where the plaintiffs were successful, the court determined the quantum and scale of costs.

The plaintiffs had made multiple offers to settle that were more favourable than the trial judgment.

Applying Rule 49.10(1) and Rule 57.01(1), the court awarded the plaintiffs costs on a substantial indemnity basis fixed at $724,850.49, noting the defendants' unreasonable positions during the litigation.

Several nephrologists practiced together in a partnership and provided services at a hospital.

The hospital paid funds to a corporation controlled by three of the partners, excluding two other partners from their share.

The excluded partners discovered this arrangement and sued for unjust enrichment and breach of fiduciary duty.

The court found that the defendants were unjustly enriched and ordered them to pay compensatory damages based on the plaintiffs' proportionate contributions to overhead, as well as punitive damages for abusing their positions of trust.

The applicants, Dr. David Perkins and Dr. Philip Boll, sought court approval of a partial settlement agreement (Pierringer agreement) with Dr. Arturo Wadgymar and Dr. Donald Kim.

The non-settling parties, Physicians’ Dialysis Centre Inc., Dr. George Wu, and Dr. Gordon K. T. Wong, neither consented to nor opposed the motion.

The court, having served as case management judge and reviewed the material, found that the agreement did not cause unfairness or prejudice to the non-settling parties and was in the interests of justice.

The court approved the agreement, confirming it does not alter the adversarial position of the parties or impair the applicants' ability to pursue claims against the non-settling parties.

The appellant appealed an application judge's decision that the respondent was free to sell a property to a third party despite the appellant's right of first refusal under a lease.

The appellant had exercised its right of first refusal by matching a third-party offer, which included a 30-day financing condition.

The appellant failed to obtain financing, requested an extension which was refused, and the agreement expired.

The Court of Appeal dismissed the appeal, finding no palpable and overriding error in the application judge's commercially reasonable interpretation that the right of first refusal was exercisable only once and was spent after the appellant failed to waive the financing condition.

The applicants, a minority shareholder and its principal, sought an oppression remedy against the majority shareholder and his holding company in a family-owned transportation business.

The court found that the majority shareholder unfairly disregarded the applicants' interests by excluding the individual applicant from management, terminating his employment, paying excessive compensation to himself and his spouse, and improperly deducting expenses from the minority shareholder's dividends.

The court ordered the respondents to purchase the minority shares for $1,592,000 based on a February 2019 valuation and to pay $80,902.67 in compensation for unpaid dividends.

The plaintiffs brought an unopposed motion to transfer the action from Newmarket to Toronto under Rule 13.1.02 of the Rules of Civil Procedure.

The court applied the holistic factors for venue transfer and found that the interest of justice required the transfer.

The transfer was granted primarily because there were common issues with a related Toronto action, and summary judgment motions for all related proceedings had already been ordered to be heard together in Toronto.

The plaintiffs, Gerald Witiluk and the trustees of the Gerald Witiluk Family Trust, brought a motion seeking an order that the defendants, Jack Witiluk and others, were in contempt of three previous court orders regarding document production in an ongoing oppression remedy case.

The court dismissed the motion, finding that while there were delays in production, the plaintiffs failed to prove beyond a reasonable doubt that the defendants' conduct was intentionally contemptuous.

The court exercised its discretion, considering the complex, long-standing nature of the family business litigation, the moving target of the share valuation date, and the defendants' good faith efforts to comply.

The court also criticized the plaintiffs' use of aggressive language in their motion, including a request for imprisonment, which was deemed unhelpful to the process.

The defendant appellants sought leave to appeal to the Divisional Court from an interlocutory order dismissing their motion to set aside a Mareva injunction.

They argued that the motion judge relied on a purported fraud exception excusing the requirement to show dissipation of assets and that conflicting authorities existed on that issue.

The court found that the motion judge had in fact identified evidence of dissipation of assets and had not relied solely on any fraud exception.

The applicants also failed to establish that the decision was open to very serious debate or that the proposed appeal raised an issue of general importance.

Leave to appeal was therefore refused.

The moving defendants sought to set aside a Mareva injunction freezing their assets in a civil fraud action involving alleged fraudulent factoring transactions worth approximately $6.5 million.

The court considered whether the plaintiff continued to demonstrate a strong prima facie case of fraud and a real risk of asset dissipation.

Evidence showed that the moving defendants’ companies received substantial funds from entities involved in the fraud, that explanations for the transactions were unsupported by documentation, and that the alleged sale of a business appeared suspicious.

The court also noted conduct inconsistent with the injunction, including the use of undisclosed bank accounts.

The court held that the plaintiff continued to meet the requirements for a Mareva injunction.

Following a trial regarding a construction contract dispute, the parties made written submissions on costs.

The court found that the Ministry of Transportation of Ontario (MTO) engaged in reprehensible and unconscionable conduct by manipulating expert evidence and withholding information.

As a result, the court awarded full indemnity costs to Leveque.

Bruell was awarded mixed partial and substantial indemnity costs based on a Rule 49 offer to settle.

The court also granted a Sanderson Order, directing MTO to directly pay the partial indemnity costs of the successful defendant, AECOM, because MTO's defence strategy made it necessary for AECOM to remain in the litigation.

The Ministry of Transportation (MTO) awarded a contract to Leveque for highway surface treatment.

The initial treatment failed shortly after application.

MTO ordered Leveque to remove and replace it, arguing Leveque was responsible under the contract's warranty for selecting incompatible aggregate.

Leveque performed the work under protest and sued for breach of contract.

The court found the contract was a method specification, meaning MTO bore the risk of the design's performance.

The court held that the failure was primarily caused by MTO's excessive binder application rates, poor weather, and MTO's refusal to restrict heavy truck traffic or permit sanding.

MTO was found solely liable for breach of contract and ordered to pay damages for the extra work.

The appellant insurers appealed a summary judgment finding them liable under a Commercial General Liability policy to indemnify condominium owners for extensive foundation damage caused by the insured general contractor's negligence.

The contractor had negligently installed a dewatering system that washed away the natural foundation beneath the building.

The Court of Appeal dismissed the appeal, holding that the damage to the natural foundation and structural columns constituted third-party property damage, not merely damage to the contractor's own work product.

Furthermore, the negligent installation that caused the damage was an 'accident' and therefore an 'occurrence' within the meaning of the policy.