Corporate/Commercial Law - OCA

The appellants challenged the motion judge's conclusion that no binding agreement had been formed following negotiations, an offer, and a time-limited counter-offer.

The court held that the counter-offer expired by its own terms and was not accepted within the specified time.

Because there was no communication of acceptance before expiry, there was no meeting of the minds.

The appeal was dismissed with costs to the respondents.

The appellants appealed a trial judgment dismissing their claims of fraud and breach of fiduciary duty against the respondents.

The trial judge had found no evidence of misappropriation of funds and concluded that the respondents' involvement was financially neutral to the appellants.

The Court of Appeal dismissed the appeal, holding that the trial judge's findings of fact were amply supported by the evidence and entitled to deference.

A cross-appeal regarding costs was also dismissed.

The plaintiffs invested in worthless start-up companies on the advice of their financial advisor, who was registered to sell mutual funds through the appellant dealer.

The advisor promoted these off-the-books investments openly from his office.

The trial judge found the dealer liable in negligence for failing to supervise the advisor and vicariously liable for his actions, concluding he was an employee rather than an independent contractor.

The Court of Appeal dismissed the dealer's appeal, upholding the findings that the dealer breached its duty to supervise its mutual fund sales agent and was vicariously liable for his wrongdoing.

The appellant insurer appealed a declaration requiring payment of life insurance proceeds to the respondent, who was the named beneficiary under a policy maintained pursuant to a separation agreement.

The insured died accidentally from cocaine intoxication after ingesting narcotics, and the insurer argued both an implied contractual exclusion for criminal acts and a public policy bar against recovery flowing from criminal conduct.

The Court of Appeal held the policy was unambiguous, the insured did not intend to cause his own death, and the respondent claimed as an ordinary beneficiary rather than through the insured's estate.

Applying prior authority on the crime-profit rule, the court held that public policy did not bar recovery by an innocent beneficiary and dismissed the appeal.

The appellants challenged the trial judge’s calculation of business interruption losses under an insurance policy following a fire.

The court held that monthly mortgage interest payments were fixed obligations that necessarily continued during the interruption and were not deductible as non-continuing expenses from gross earnings.

It also rejected the argument that payment of the mortgages from fire insurance proceeds created double recovery.

The appeal was dismissed except for a conceded reduction of the judgment by the $5,000 policy deductible.

Commercial appeal arising from a terminated joint venture funding agreement for the acquisition of Greek mines.

The Court of Appeal held that no fiduciary duty survived termination of the parties' arm's-length commercial agreement, but upheld findings that the respondent group provided confidential information, that the appellant misused that information in acquiring the property, and that the confidentiality agreement and common law duty of confidence were enforceable.

The court refused to admit fresh evidence under the Palmer test and dismissed a non-party motion to set aside the judgment based on alleged ownership of the information.

The remedy awarding a 12 per cent carried interest plus a further 12 per cent participating interest was upheld, while both the main appeal and cross-appeal were dismissed.

The appellant inventory financier appealed a conversion judgment arising from the seizure and sale of a boat delivered to a dealer for resale.

Assuming without deciding that the dealer held the boat on consignment and lacked title, the court held that the financier could rely on s. 2(1) of the Factors Act because it took its chattel mortgage in good faith and without notice of any lack of authority.

The court rejected the trial judge's conclusion that good faith under s. 2(1) includes a due diligence requirement, holding instead that good faith means honesty, even if conduct is negligent.

The action was dismissed and the appellant received trial and appeal costs.

Appeal from a trial judgment concerning interpretation of a share purchase agreement for the sale of a life insurance company.

The dispute was whether post-closing industry-wide compensation assessments, calculated using pre-closing premium income, were payable by the vendors or the purchasers.

The court held that the assessments were liabilities arising in the years they were levied, not in the years used to calculate them, and that the agreement required the purchasers to pay them.

The court further held that the negotiation evidence supported that reading and that the general indemnity clause did not displace the specific allocation in the contract.

Appeal allowed, trial judgment set aside, and the action dismissed.

This appeal arose from an investment management dispute between two corporations and a related claim against a corporate director and officer personally.

The court held that where the formal legal relationship is between corporate entities, personal liability of a corporate officer must be specifically pleaded, including both the separate cause of action and the basis for suing the individual apart from the corporation.

The pleadings here did not sufficiently allege a personal claim or plead breach of fiduciary duty as against the individual, so the appeal on personal liability was allowed.

The cross-appeal on management fees was dismissed except for a minor agreed reduction of $3,887.

No costs were awarded.

The appellant airline appealed the dismissal of its action alleging that a wholesale travel agency retained excessive commissions from the sale of tickets issued on the airline's ticket stock.

The appeal turned on the interpretation of the passenger sales agency agreement and the incorporated travel agent's handbook, particularly whether the agency was entitled to retain 7% or 9% of the full retail fare value.

The court held that the specific commission provision in Resolution 016a governed and fixed the commission at 9%, and that the agency in fact retained less than that amount.

As a result, there was no breach of contract and the appeal was dismissed with costs.

On a bank's appeal from dismissal of an action on a promissory note signed by a spouse as co-signor of an investment loan, the court held that absent a fiduciary duty the lender had no obligation to disclose its concerns about the investment's quality, and failure to follow internal lending policies on independent advice did not itself render the loan unenforceable.

The majority held there is no categorical presumption of undue influence arising from a spousal relationship; rather, the party alleging undue influence must show a de facto relationship of trust and confidence in financial matters sufficient to support the presumption.

Although the lender was on constructive notice of potential wrongdoing because the transaction was disadvantageous to the spouse and arose within a marital relationship, the majority found no wrongdoing established and, alternatively, any presumption was rebutted.

The appeal was allowed and judgment granted to the bank, but no costs were awarded.

The appellants challenged a trial judgment ordering the winding up of a corporation and joint venture arising from a deadlocked commercial dispute over an apartment building.

The appeal also attacked findings of fiduciary breach, incidental damages, the scheme for distribution of remaining assets, and a solicitor-and-client costs award.

The Court of Appeal held that the trial judge's credibility findings, acceptance of evidence that the property sold at fair market value under power of sale, and conclusions on fiduciary misconduct were amply supported by the record.

The appeal was dismissed with costs.

Appeal from a Divisional Court order quashing a municipal restructuring commission’s final proposal amalgamating several municipalities and annexing unorganized territory.

The Court of Appeal held that judicial review of a restructuring commission performing a political and legislative function is narrowly confined to whether the commission acted according to law, and does not permit the court to revisit the merits of restructuring policy.

The Divisional Court erred in finding illegality, inadequate consultation with First Nations as a free-standing jurisdictional defect, failure to apply the former OMB 'three filters' test, an impermissible 'tax grab', and bias.

The cross-appeal seeking a declaration under s. 35(1) of the Constitution Act, 1982 was dismissed without prejudice because the record was inadequate for determination of the constitutional issue.

The appellant borrower agreed under a commercial loan arrangement to pay the lender's actual legal fees and authorized the lender to debit its account for those fees.

After the lender paid its solicitors from the appellant's account over the appellant's objection and without providing meaningful billing detail, the appellant sought an assessment under the Solicitors Act.

The Court of Appeal held that s. 11 applied because the bills had been paid, but that the contractual wording did not preclude assessment and did not amount to a waiver.

Special circumstances existed because the payment was made over objection, the third party payer had virtually no information about the work done, and only an assessment could determine whether the fees actually fell within the contractual obligation.

The appeal was allowed, an assessment was directed, privilege issues were left to the assessment officer, and costs were awarded to the appellant.

The appellant trustee appealed the dismissal of an application seeking approval of three proposed assignees of leased commercial premises under s. 38(2) of the Commercial Tenancies Act.

The proposed assignees were newly incorporated numbered companies created to hold individual leases after the trustee sold the bankrupt’s assets to a related purchaser controlled by an established gas retail operator.

The court held that, although backing and guarantees from related corporations may in principle be considered when assessing a corporate assignee’s fitness, the landlords were entitled to look to the named tenants as the primary obligors under the leases.

On the evidentiary record, the motions judge was entitled to conclude that the assignees were shell corporations designed to insulate the real operators from liability and were therefore not fit and proper persons.

The appeal was dismissed with costs.

Appeal concerning priority between prior perfected PPSA security interests and a later court-ordered charge granted to a mortgagee in possession for occupancy costs incurred while warehousing the bankrupts' personal property.

The court held that the priority issue was not governed by either the Bankruptcy and Insolvency Act or the Personal Property Security Act, and instead had to be resolved under common law and equitable principles.

The majority concluded that, although the appellants' security interests were first in time, their continuing and concerted misconduct in delaying payment of occupancy costs justified postponing their priority in favour of the mortgagee's charge.

The appeals were dismissed and the mortgagee's priority was upheld.

The appellant bank appealed an order striking portions of its defence in a cheque conversion action arising from employee fraud and forged endorsements.

The court held it lacked jurisdiction over the procedural complaint about allowing a late Rule 21 motion because that issue was interlocutory and required leave to the Divisional Court.

On the merits, the court held that the Supreme Court's strict liability conversion analysis in Boma bars a defence of contributory negligence, but does not eliminate the distinct statutory defence of preclusion under s. 48(1) of the Bills of Exchange Act.

Because the impugned paragraphs were unclear and could amount to contributory negligence, they were properly struck to that extent, but the appellant received leave to amend to plead any legally available defence clearly.

Costs were ordered in the cause.

In a commercial lending dispute arising from failed condominium project financing, the appellants challenged findings that they breached the original takeout mortgage commitment, the assignment of takeout financing, and a later amended commitment.

The Court of Appeal upheld the liability findings, concluding the appellants had no lawful basis to refuse funding in 1991 or 1992 and that the respondent was entitled to full damages from the earlier repudiation.

The court held, however, that compound interest was not available under s. 130 of the Courts of Justice Act and was not justified on equitable grounds in an ordinary breach of contract claim.

The appeal was therefore allowed only to substitute simple interest for compound interest.

On an appeal from an order refusing to add investor creditors as plaintiffs by counter-claim, the court held that a bank owed no fiduciary duty to unsecured creditors of its corporate customers merely because they shared a common debtor.

Applying the Anns/Kamloops framework, the court found no pleaded facts establishing proximity or reasonable reliance sufficient to create a prima facie duty of care in negligent misrepresentation.

The alleged statements to one guarantor did not support a relationship of reliance by a wider class of investors.

In any event, policy considerations barred recovery because recognizing such a duty would create indeterminate liability to an unlimited class.

The appeal was dismissed.

On an appeal from an application judgment concerning a non-profit airport authority's refusal to appoint a municipal nominee as member and director, the court upheld the declaration that the board acted contrary to its by-law.

The appeal turned on whether the board had clear and unambiguous evidence that the nominee would not at all times act in the authority's best interests.

The court held that neither the nominee's cautious interview answers nor the board's adverse credibility finding based on his subsequent letter could reasonably satisfy that stringent anticipatory standard.

The board's rejection of the nomination therefore fell outside the scope of its authority under the by-law, and the appeal was dismissed with costs.