Corporate/Commercial Law - ONCA

An appeal from a summary judgment decision concerning the interpretation of a commercial loan contained in two letter agreements.

The appellants argued that the summary judgment judge erred in law by failing to give full effect to all terms of the agreements and to read them harmoniously.

The Court of Appeal found the judge's interpretation, particularly as set out in paragraphs 67-72 of his reasons, to be reasonable, informed by the factual matrix, and commercially sound.

The appeal was dismissed with costs awarded to the respondent.

The appellants appealed a partial summary judgment order finding them liable for breach of contractual warranty and/or negligent representation arising from an inaccurate tree inventory attached to an Asset Purchase Agreement for the sale of tree farm assets.

The respondents claimed a shortfall of 83,106 saleable trees from the represented inventory of 236,341 trees.

The Court of Appeal allowed the appeal and set aside the liability finding, holding that the tree inventory was not a contractual representation or warranty but rather a description of purchased assets.

The court found that the respondents had expressly agreed through due diligence inspection provisions that they had satisfied themselves as to the quantity and quality of plant material, precluding subsequent claims of misrepresentation.

Genstar Development Partnership appealed a Superior Court decision dismissing its application for specific performance to enforce a repurchase option contained in an Agreement of Purchase and Sale dated August 21, 1998, between Imasco Enterprises Inc. and the Roman Catholic Episcopal Corporation of the Diocese of Hamilton.

The repurchase option allowed the vendor to repurchase property if not developed as a church within 10 years.

The application judge found that Genstar had not established it was a successor to Imasco or an equitable assignee of the repurchase option, and that Genstar's tenders were deficient.

The Court of Appeal dismissed the appeal, finding no palpable and overriding error of fact and upholding the application judge's discretionary decisions regarding the admission of supplementary evidence and conversion to an action.

A commercial cold storage lease dispute concerning the interpretation of an energy cost pass-through clause and the tenant's right to renew.

The tenant failed to pay claimed increased energy costs, which the landlord characterized as a default preventing lease renewal.

The application judge found the tenant in breach and declined to grant relief from forfeiture due to lack of due diligence.

On appeal, the tenant challenged only the relief from forfeiture decision, arguing the wrong legal test was applied.

The appellate court upheld the decision, confirming that relief from forfeiture in lease renewal contexts requires a narrower test than the standard three-pronged approach, and that the tenant must demonstrate diligent efforts to comply with lease terms.

The appellant appealed a decision granting the respondent a declaration that a lease to a competing fitness facility was void and an injunction preventing the appellant from performing development services.

The core dispute concerned the interpretation of a non-competition agreement and a right of first refusal executed in connection with the sale of fitness facilities.

The application judge found that the non-competition agreement took precedence over the right of first refusal and prevented the lease.

The Court of Appeal allowed the appeal, finding that the application judge erred by relying on negotiations to interpret the contracts and by misunderstanding the factual matrix.

The court held that the plain language of the two agreements, read together, permitted the lease while requiring compliance with the non-competition agreement and the right of first refusal.

Vista owned a shopping mall and leased space to Zellers, which operated a retail store.

Zellers notified Vista in February 2004 of its intention to cease operations in May 2004, although the lease did not terminate until April 2005.

Vista sued, claiming Zellers was obliged under "continuous use" clauses in the lease to operate until the lease ended.

The trial judge found that Zellers was entitled to close when it did, interpreting the continuous use obligation as qualified by the hours of operation clause.

The Court of Appeal reversed, holding that the continuous use obligation in sections 8.01 and 8.05 was not overridden by the hours of operation clause in section 8.01.1, and that Zellers breached its obligation by closing prematurely.

The appellant, Cornerstone Builders Ltd., appealed a partial summary judgment granted by the motion judge in favour of the respondent, 1652620 Ontario Inc. The motion judge awarded payment of monies due under a promissory note and struck out portions of the counterclaim.

The core dispute arose from a shareholders' agreement requiring a non-competition agreement upon cessation of shareholding.

After the appellant purchased the respondent's shares in 2011, a falling out occurred and the respondent's principal established a competing business without signing the non-competition agreement.

The appellant ceased making payments on the promissory note.

The Court of Appeal allowed the appeal in part, finding errors in the motion judge's approach to the stay of execution, the adjournment of the summary judgment motion, and the striking of counterclaim allegations.

The appellants appealed a motion judge's decision that the insurer had no duty to defend based on exclusions in the Commercial General Liability Policy.

The appellants argued that the care, custody, or control exclusion did not apply because some damage may have occurred after the vines left their care.

The Court of Appeal upheld the motion judge's decision, finding that the pleadings alleged the defect was caused by the appellants' negligent treatment while the vines were in their care, custody, or control, triggering the exclusion.

Additionally, the court found that an alternative exclusion for damage resulting from fungi or spores also applied.

The appellant, a distributor of the respondent's products, appealed a summary judgment that dismissed its action and granted judgment on the respondent's counterclaim for approximately $430,000 in unpaid product purchases.

The motion judge found that the respondent properly terminated the distribution agreement based on the appellant's breach, including failure to honour customer orders and circulation of disparaging letters about the respondent.

The Court of Appeal upheld the summary judgment, finding no genuine issue for trial and rejecting the appellant's allegations of misuse of confidential information and interference with contractual relations.

Appeal from a summary judgment decision enforcing settlement agreements between Mars Canada Inc. and the appellants regarding the sale of grey market Mars products in Canada.

The appellants challenged the enforceability of the settlement agreements as being in restraint of trade, the motion judge's jurisdiction to order a reference on damages, and the award of substantial indemnity costs.

The Court of Appeal upheld the motion judge's decision, finding the settlement agreements reasonable under the Tank Lining test, confirming the court's jurisdiction to order a reference under Rule 20.04(3) on summary judgment, and affirming the substantial indemnity costs award based on the appellants' reprehensible conduct.

An employee of the Ontario Psychological Association appealed a motion judge's decision striking out paragraphs of her counterclaim that sought contribution and indemnity against six named defendants who were officers and/or directors of the Association.

The Court of Appeal upheld the motion judge's decision, finding that the six individuals owed no duty of care to the employee.

The court rejected the appellant's arguments that the individuals failed to supervise her properly and that they owed a duty to the Association that, if breached, would result in liability for the appellant's conversion of the Association's money.

Leave to amend was denied.

The appellant challenged the trial judge's conclusion that a payment did not fall within the language of an integration provision.

The Court of Appeal was not persuaded that the trial judge erred.

The appeal was dismissed with costs to the respondent.

The appellant challenged a trial decision arising from a commercial contract dispute involving nonpayment and an asserted oppression remedy.

The Court of Appeal held that the appellant failed the Cognos test because it was unreasonable to proceed with a contract of over $200,000 without payment protection beyond a lien claim and to continue working without questioning nonpayment.

The court also noted that the appellant did not seek to overcome the trial judge's credibility findings relating to the guarantee issue.

The appeal was dismissed with costs.

Two related appeals arose from disputes in a closely held corporation after the death of one member of a jointly held shareholder block.

The court held that the minority shareholder failed to prove a reasonable expectation, within the shareholders' compact, that corporate life insurance proceeds would be used to buy out its interest on death; the oppression claim was therefore dismissed without the need for a trial.

The court further held that the surviving joint investor had ostensible authority to bind the deceased shareholder's holding company to a post-death shareholders' agreement and a special shareholder loan arrangement.

Because a deadlock had developed in the management of the jointly held shares, the joint block was severed so that each holding company became the sole owner of half.

The appellant appealed a trial judgment awarding damages to a former chief financial officer and consultant arising from a stock option plan.

The central issue was whether a termination provision ending options when the optionee ceased to be an employee applied to a participant who was found at trial to be a consultant rather than a true employee.

The court held that, on a fair reading of the plan as a whole, the terms 'employee' and 'eligible participant' were used interchangeably, so the termination provision applied to all persons granted options under the plan.

Because the respondent did not exercise his options before ending his relationship with the company, his rights under the option agreement had terminated.

The appeal was allowed, the trial judgment was set aside, and the action was dismissed with costs.

The appellant challenged a trial judgment in a contract dispute concerning whether the agreement was for copying work or for design services.

The Court of Appeal held the matter was fact driven and found no basis to interfere with the trial judge's findings.

There was evidence to support the finding that the contract was to copy and not to design, and the remainder of the disposition followed from that conclusion.

The appeal was dismissed with costs.

The appellant challenged a motions judge's interpretation of sub-clauses in a head lease and argued that the subtenants' failure to agree to be bound by the head lease constituted a breach.

The Court of Appeal upheld the interpretation adopted below and found no basis to interfere with the findings on insurance coverage and signage, which were supported by the evidence.

The court further agreed that relief from forfeiture would have been appropriate in any event.

The appeal was dismissed with costs.

The appellant challenged a deficiency judgment arising from repossession and sale of a replacement boat delivered after the original financed boat proved deficient.

The Court of Appeal held that the replacement vessel was not "proceeds" within the meaning of the Personal Property Security Act, but concluded that the parties, by their conduct over several years, modified the original conditional sale contract so that it applied to the replacement boat.

As a result, the secured creditor was entitled to repossess the replacement boat after default and sue for the deficiency.

The appeal was dismissed with costs.

Following an earlier appeal allowing the appellants' challenge to a trial judgment in a constructive dismissal and shareholder buyout dispute, the court resolved two outstanding issues arising on settlement of the order.

The court held that the “Effective Date” under the shareholders’ agreement was the date the appeal reasons were released, because that was when judgment on the counterclaim was finally and effectively determined.

The court further held that no prejudgment interest was payable before that date, but postjudgment interest was payable from and after that date at the statutory rate under the Courts of Justice Act.

The court also directed payment out of court to the bank of funds previously paid into court.

Appeal from summary judgment dismissing a negligence action arising from an aircraft landing gear collapse allegedly caused by corrosion in a component part.

The appellant purchaser sought to avoid a contractual warranty package and exclusion clause, arguing that only certain warranty parts were accepted and that the exclusion did not extend to negligence or to a post-sale duty to warn.

The court held that the accepted warranty parts expressly incorporated Part 1, including a broad exclusion of all other liabilities occasioned by the manufacturer's negligence.

Applying the principle that contractual allocations of risk prevail over tort claims, the court concluded that the exclusion barred claims for negligent design, manufacture, and failure to warn.

Appeal dismissed with costs.