Corporate/Commercial Law - OCA

The appellant appealed a trial judgment ordering the repayment of a shareholder's loan.

The trial judge found that the loan, which had no fixed term, was payable within a reasonable period of time after a demand for payment was made.

The Court of Appeal dismissed the appeal, holding that the trial judge's conclusion was a finding of fact supported by the evidence, including the directors' intentions, financial statements, and the hybrid character of the loan.

A cross-appeal regarding the date from which pre-judgment interest runs was also dismissed.

The appellants appealed a summary judgment, arguing the motion judge erred in calculating the amounts owing under a loan and guarantee.

Both parties agreed that calculation errors occurred and consented to rectifying the judgment amounts for two of the guarantors.

The Court of Appeal rectified the judgment accordingly and ordered a trial on the discrete issue of whether one guarantor's liability was limited to 25 percent of the outstanding loans.

The appellant appealed an order of the Superior Court of Justice regarding the interpretation of an agreement.

The Court of Appeal dismissed the appeal, agreeing with the application judge's analysis that Sections 8 and 2 of the agreement must be read together.

The court found the application judge's reasoning sufficient to dispose of the interpretative issue in favour of the respondents.

The appellant appealed a summary judgment in favour of the respondent bank for $383,755 owing on a line of credit.

The appellant admitted to borrowing the funds but argued that a new line of credit agreement should have been issued after the original balance was temporarily paid down upon the sale of his home.

The Court of Appeal dismissed the appeal, finding no evidence of a second agreement and affirming the bank's right to demand payment under the original agreement.

The Ontario Energy Board (OEB) imposed a condition on Toronto Hydro-Electric System Limited (THESL) requiring approval from a majority of its independent directors before declaring future dividends to its affiliates, due to concerns over large dividend payouts amidst aging infrastructure.

The Divisional Court struck down this condition, finding the OEB exceeded its jurisdiction.

The OEB appealed.

The Court of Appeal allowed the appeal, holding that the OEB's broad rate-setting powers under the Ontario Energy Board Act included the jurisdiction to impose such a condition to protect ratepayers.

The Court found the OEB's decision was reasonable and did not improperly usurp corporate law principles, as it merely added a regulatory check to the directors' discretion.

The appellants (majority directors) appealed a costs order of $213,380.64 made against them personally following an application by the respondents (minority directors).

The Court of Appeal upheld the quantum of costs but found the application judge erred in ordering costs against the directors personally without a finding of mala fides.

The court noted the corporation's constitution provided for indemnification of directors acting in the execution of their duties.

The appeal was allowed in part, varying the order to make the corporation responsible for the costs.

The appellant appealed a decision ordering the dissolution of a partnership under s. 35(f) of the Partnerships Act.

The application judge found that the partners had fundamentally different visions for the partnership's future following the loss of their primary medical clinic tenant, and that they had lost the mutual trust and confidence necessary to continue the partnership.

The Court of Appeal dismissed the appeal, holding that the application judge's findings were amply supported by the evidence, including serious allegations of breach of fiduciary duty and misleading the court.

The appellant franchisee received a disclosure document from the respondent franchisor more than 14 days after paying a franchise fee, but six months before executing the franchise agreement.

Nearly two years later, the franchisee sought to rescind the agreement under the Arthur Wishart Act.

The Court of Appeal upheld the motion judge's finding that the franchisee had no right of rescission.

Section 6(2) applies only when no disclosure document is ever provided, and section 6(1) requires rescission within 60 days of receiving a late or deficient document, which the franchisee failed to do.

The appellant appealed a summary judgment dismissing his action against the respondent bank for breach of a settlement agreement.

The appellant argued the bank improperly reported his written-off debt as an R9 'bad debt' credit rating.

The Court of Appeal dismissed the appeal, finding the motion judge correctly applied the summary judgment test and that the settlement agreement explicitly stated the bank was not required to report to credit agencies in any particular way.

The appellants appealed a trial judgment finding they breached a consulting agreement by playing both ends against the middle and preventing Royal Trust from advancing funds.

The Court of Appeal dismissed the appeal, holding that the trial judge's findings were supported by the pleadings and evidence, and the appellants could not rely on the failure to advance funds when they were instrumental in bringing about that result.

The appellants appealed a judgment based on a promissory note and uncontradicted evidence of debt.

The Court of Appeal dismissed the appeal, refusing to entertain submissions that contradicted concessions appropriately made by the appellants' counsel before the motion judge.

Costs were awarded to the respondent.

The appellants purchased goods from the respondent under a contract stating the goods must be free of liens.

After accepting the goods and making payment, the appellants discovered an outstanding lien and sought to repudiate the contract.

The trial judge found the breach should be treated as a breach of warranty under s. 12(3) of the Sale of Goods Act, entitling the appellants to damages rather than repudiation.

The Court of Appeal upheld this finding, noting the appellants' actions were consistent with treating the term as a warranty.

The appeal was dismissed, but execution of the judgment was stayed up to $40,000 pending resolution of a Third Party Notice from the Ministry of Revenue.

The appellant appealed a decision finding that the execution of a forbearance agreement did not release him from his guarantee.

The Court of Appeal dismissed the appeal, holding that the terms of the guarantee explicitly allowed the bank to grant time and other indulgences to the borrower without discharging the guarantor's liability.

The appellant insurer appealed a summary judgment ordering it to pay 80 percent of the defence costs incurred by the respondent's directors and officers in a class action for prospectus misrepresentation.

The insurer argued that a pollution exclusion clause in the directors' and officers' liability policy excluded coverage because the class action arose following a tailings dam collapse and the release of toxic waste.

The Court of Appeal dismissed the appeal, upholding the motion judge's finding that the exclusion clause applied to pollution losses rather than all losses connected to a pollution-related claim, and that the allocation endorsement was properly applied since the claims involved both covered and uncovered losses.

Ardagh PLC, an unsuccessful bidder in a court-approved sale process under the CCAA, sought leave to appeal the order approving the sale of Consumers Packaging Inc.'s assets to Owens-Illinois, Inc. The Court of Appeal refused leave, noting that leave to appeal in CCAA proceedings should be granted sparingly and not where it would prejudice the restructuring.

The court also noted that an unsuccessful bidder generally lacks standing to challenge a sale approval order.

The appellant bank sought recovery of funds paid under a clean irrevocable letter of credit, alleging the respondent beneficiary’s call was fraudulent because the proceeds were applied to a different project under a cross-collateralization agreement unknown to the bank.

The court upheld the trial judge’s conclusion that there was no fraud, emphasizing the wording of the letter of credit, the legal advice obtained before the call, and the existence of formal grounds supporting the call in any event.

The related claims in mistake of fact and unjust enrichment failed because they were tied to the fraud allegation.

The respondent’s appeal from the trial costs disposition was also dismissed, including its request for solicitor-and-client costs and its effort to shift third party costs to the bank.

The drawee bank certified a forged cheque drawn on its customer's account.

The collecting bank accepted the cheque for deposit into an account with a similar name to the payee, without obtaining an endorsement.

The drawee bank sued the collecting bank for the unrecovered proceeds, arguing the collecting bank was liable under the Canadian Payments Association Clearing Rules for failing to provide the missing endorsement.

The Court of Appeal allowed the collecting bank's appeal, holding that the fictitious payee rule in s. 20(5) of the Bills of Exchange Act applied, making the cheque a bearer instrument that could be negotiated by delivery alone.

The Court further held that the Bills of Exchange Act prevails over the CPA Clearing Rules.

The appellants, a corporation and its chairman, appealed a Divisional Court order permitting the respondent to amend its statement of claim.

The amendments sought to add claims for intentional interference with economic relations and conspiracy to injure against the chairman personally.

The Court of Appeal allowed the appeal in part.

It struck the claim for intentional interference because the respondent failed to plead the requisite unlawful means.

However, the Court permitted the conspiracy to injure claim to proceed, holding that it was not plain and obvious at the pleadings stage that the Said v. Butt exception—which protects corporate officers acting bona fide in the company's interests—would immunize the chairman from personal liability.

The appellant corporation entered into a personal services contract with the respondent company.

The contract, drafted by the appellant's principal, contained a termination clause providing for compensation if the respondent unilaterally terminated the agreement.

The respondent's principal signed the contract without reading the termination clause.

The respondent later unilaterally terminated the agreement.

The trial judge held that the appellant's principal owed a duty to bring the termination clause to the respondent's attention and rectified the contract by striking the clause.

The Court of Appeal allowed the appeal, finding no such duty existed as the respondent's principal was an experienced businessman who was advised to read the contract.

The Court also held that rectification was inapplicable as there was no mutual intention regarding unilateral termination.

The appellant company sought payment of a $5 million key-man life insurance policy following the death of its principal from colon cancer.

The trial judge dismissed the action, finding the deceased materially misrepresented his medical history at the time of application and failed to disclose a change in insurability before the policy was delivered.

The Court of Appeal upheld the dismissal, agreeing that the failure to disclose relevant medical information rendered the policy voidable by the insurer under section 183 of the Insurance Act.