Corporate/Commercial Law - OCA

Following a change in corporate control, the new management of Echo Energy Canada Inc. sought to assess the paid accounts of three law firms retained by the former management.

The application judge dismissed the application, finding no 'special circumstances' under s. 11 of the Solicitors Act.

On appeal, the Court of Appeal allowed the appeal in part.

The Court found that the application judge erred in principle by adopting a lawyer-focused perspective and failing to consider evidence that the former directors may not have acted in the company's best interests when approving the accounts of litigation counsel (Lenczner and Voorheis).

Special circumstances were established for those accounts.

However, the appeal regarding the corporate counsel (McCarthy) was dismissed as no special circumstances were shown.

The appellant corporations were placed into receivership.

The boards of directors retained counsel to oppose the receivership and represent the corporations' interests.

The motion judge held that the boards did not have the right to retain counsel without court approval but awarded partial costs on an equitable basis.

On appeal, the Court of Appeal held that the boards retained residual authority to retain counsel without prior approval of the receiver or the court to challenge the receivership or the receiver's actions.

The Court ordered that the reasonable legal fees for the receivership litigation be paid out of the corporations' assets.

The appellant school board appealed a trial judgment finding it breached its obligation to treat bidders equally and fairly during a tendering process.

The respondent, an unsuccessful bidder, alleged the successful bid was non-compliant because the bidder provided a letter of credit instead of the required performance bonds.

The Court of Appeal allowed the appeal, finding that the tender documents only required performance bonds upon acceptance of the bid.

The successful bid was compliant when submitted, forming Contract A. The appellant's acceptance formed Contract B, discharging obligations to the respondent.

The subsequent modification to accept a letter of credit did not breach the respondent's contractual rights.

The respondent municipality gave notice of termination of a 1999 lease to the appellant soccer park corporation.

The respondent offered a new lease for the same property, but with a shorter term and a requirement that the appellant contribute to maintenance costs.

The 1999 lease required the respondent to provide another reasonably similar soccer facility at another location at its own expense upon termination.

The Court of Appeal held that the respondent failed to comply with these clear terms, rendering the termination invalid.

The appeal was allowed.

The appellant appealed a summary judgment dismissing its action.

The appellant argued that the parties had agreed to renew an existing commercial lease, subject only to agreeing on rent and the term.

The Court of Appeal dismissed the appeal, holding that an agreement missing essential terms such as rent and duration is merely an unenforceable agreement to agree.

The court also noted the appellant failed to comply with the in-writing requirements of the Statute of Frauds.

The appellant appealed a trial judgment that dismissed the majority of its contractual claims against the respondent regarding a magazine publishing agreement.

The Court of Appeal allowed the appeal and ordered a new trial, finding that the trial judge failed to consider material evidence regarding the factual matrix of the contract, ignored evidence of the respondent's lack of good faith in negotiating a renewal, and failed to provide adequate reasons for rejecting the credibility of the appellant's key witness.

The Town of Newmarket appealed a decision declaring it breached its Contract A obligations to the respondent contractor by accepting a non-compliant bid from another bidder.

The accepted bid contained a discrepancy between the stipulated price, the GST, and the total cost of the work.

The Court of Appeal upheld the application judge's finding that the price was uncertain, rendering the bid non-compliant and incapable of acceptance.

The Court distinguished previous case law where price discrepancies were mere clerical errors, finding that in this case, the intended price was unclear on the face of the bid.

The appeal was dismissed.

The appellant, an unsuccessful prospective purchaser of the debtor's assets, sought to appeal an order appointing an interim receiver and approving the sale of the debtor's assets to another party.

The Court of Appeal quashed the appeal, holding that the appellant lacked standing.

The court reaffirmed that an unsuccessful bidder does not have a legal or proprietary right in the property being sold and therefore does not have a direct interest sufficient to challenge a sale approval order.

The appellants appealed the trial judge's assessment of damages and dismissal of claims regarding a fraudulent kick-back scheme perpetrated by two officers of the appellant company and its suppliers.

The Court of Appeal found the trial judge erred in deducting advances made by the officers from the damages awarded for secret commissions, as the officers had no authority to borrow money from the bank to repay themselves.

The damages against the officers and their company were increased to $73,641.45.

The court also set aside a counterclaim judgment in favour of a supplier, finding he had already been fully paid.

The remainder of the appeal, including claims against the bank for unauthorized withdrawals and altered documents, and claims for punitive damages, was dismissed.

The appellants appealed a trial judgment enforcing an Indemnity Agreement and collateral demand mortgages.

The Court of Appeal upheld the trial judge's findings that the Indemnity Agreement was a specialty subject to a 20-year limitation period and that the action on the collateral mortgages was brought within the 10-year limitation period, which commenced when moneys were advanced under the primary indemnity obligation.

However, the Court allowed the appeal in part, finding that the trial judge erred by granting judgment on the mortgage covenants for an amount in excess of the primary indemnity debt, as the mortgages were collateral security.

The plaintiff brought a class action alleging that the administration fee charged by the defendant satellite television providers to delinquent subscribers constituted a criminal rate of interest under s. 347 of the Criminal Code.

The motion judge granted summary judgment to the plaintiff.

On appeal, the Court of Appeal allowed the appeal and dismissed the action.

The Court held that the administration fee was a legitimate estimate of collection costs and was not paid or payable for the advancing of credit, and therefore did not constitute interest under s. 347.

The respondent paid the appellant $112,056 in advance for hardwood flooring.

The appellant failed to deliver the product and instead applied the funds to a debt owed by a third party, claiming the third party was the respondent's agent.

The motion judge granted summary judgment to the respondent.

On appeal, the Court of Appeal upheld the decision, finding no evidence of actual or ostensible authority to support the agency claim.

The appeal was dismissed.

Matrix Integrated Solutions Limited appealed an order staying its action against Radiant Hospitality Systems Ltd. based on a forum selection clause in their Reseller Agreement.

Matrix alleged that its former employees breached fiduciary duties and that Radiant conspired with them.

The Court of Appeal held that the claims for breach of fiduciary duty and conspiracy were not contractual in nature and did not arise out of or in connection with the Reseller Agreement.

Therefore, the forum selection clause did not apply.

The appeal was allowed and the stay was set aside.

The appellants appealed a trial judgment awarding the respondent damages for wrongful dismissal, a 5% equity interest in two corporations, an oppression remedy, exemplary damages, and damages for breach of fiduciary duty.

The Court of Appeal upheld the 10-month notice period for wrongful dismissal and the award of exemplary damages against the employer corporation due to the egregious circumstances of the termination.

The Court also upheld the respondent's entitlement to a 5% equity interest in the employer corporation and the oppression remedy.

However, the Court set aside the equity interest in the holding company, the damages for breach of fiduciary duty, and the trial judge's decision to pierce the corporate veil, finding no legal basis to hold all defendants jointly and severally liable.

The defendants in a class action regarding payday loans appealed the dismissal of their renewed motion to stay the proceeding based on arbitration clauses in the loan agreements.

They argued that recent Supreme Court of Canada decisions changed the law, entitling them to a stay despite their previous unsuccessful stay motion.

The Court of Appeal dismissed the appeal, holding that the doctrine of issue estoppel applied.

The court exercised its discretion against allowing relitigation, finding that the plaintiffs' reliance on the prior determination and the advanced stage of the litigation outweighed the defendants' loss of the right to arbitrate.

The appellant appealed an order regarding the interpretation of an insurance policy endorsement.

The Court of Appeal dismissed the appeal, finding that the motion judge correctly resolved the ambiguity in Endorsement II to achieve commercial reality and reflect the reasonable expectations of the parties, rather than applying a strict rule of giving the same words the same meaning which would have rewritten the policy.

The appellant insurer appealed a trial judge's decision allocating 95% of the respondent insured's defence costs to the insurer.

The underlying action involved multiple claims, including wrongful dismissal and malicious prosecution, but only the malicious prosecution claim was covered by the policy.

The Court of Appeal dismissed the appeal, holding that the allocation of defence costs for mixed claims is a matter of contractual interpretation, not fairness or equity.

Because the policy contained an unqualified obligation to pay for the defence of covered claims, the insurer was required to pay all reasonable costs associated with defending the malicious prosecution claim, even if those costs also assisted in defending uncovered claims.

The appellants appealed a trial judgment regarding a promissory note, arguing statutory defences under the Bills of Exchange Act for failure to present the note and notify the guarantor of dishonour.

The Court of Appeal dismissed the appeal, finding that the appellants failed to plead these statutory defences at trial and did not seek leave to amend their pleadings upon discovering the relevant evidence.

The court noted that the appellants' prior conduct of making payments on the note could infer a waiver of presentment, and without amended pleadings, the respondent had no need to reopen the case.

The appellant appealed a judgment regarding the interpretation of a corporate resolution related to a share purchase agreement.

Under the agreement, the appellant received an $800,000 reduction in the purchase price in exchange for a pre-closing dividend declaration in favour of the respondent.

The Court of Appeal dismissed the appeal, finding that the appellant's interpretation would allow it to enjoy both the reduced purchase price and full ownership of the warrants involved in the dividend, which was contrary to the parties' joint good faith commercial intentions.

The appellant franchisor and respondent franchisee entered into two consecutive franchise agreements.

The franchisee rescinded the second agreement under the Arthur Wishart Act due to the franchisor's failure to provide a disclosure document, and brought an action for rescission and damages.

The franchisor moved to stay the action based on an arbitration clause in the agreements.

The motion judge dismissed the stay motion and granted partial summary judgment for rescission.

On appeal, the Court of Appeal held that the claims fell within the arbitration clause and that the failure to provide a disclosure document did not render the arbitration agreement invalid under the Arbitration Act.

The appeal was allowed, the summary judgment set aside, and the action stayed.