Corporate/Commercial Law - ONCA

This is an appeal from a Superior Court judgment that found the appellants liable for fraudulent misrepresentation and pierced the corporate veil.

The underlying dispute involved a three-way agreement for medical gloves, where the appellants, acting as distributors, failed to deliver a significant portion of goods and misrepresented their "factory direct" relationship with the manufacturer.

The trial judge found the appellants engaged in fraudulent misrepresentation in Canada, leading to the plaintiff's losses, and held the individual principals personally liable.

On appeal, the appellants challenged the application of the corporate veil piercing test, the trial judge's distinction between Canada-based and China-based fraud, and the costs award.

The Court of Appeal dismissed the appeal, affirming that fraudulent misrepresentation constitutes "conduct akin to fraud" for piercing the corporate veil, that the trial judge's analysis of distinct frauds was within the pleadings, and that the costs award was a discretionary matter warranting no interference.

The appellant, Paul Blanchard, appealed a trial judgment that found his personal guarantee to JPM Trade Capital Inc. was a continuing guarantee, covering multiple subsequent loans to TEC International Corporation.

The Court of Appeal applied the principles of contractual interpretation from *Sattva* and *Earthco*, affirming that such interpretation is a question of mixed fact and law, subject to palpable and overriding error review.

The court found no palpable and overriding error in the trial judge's determination that the guarantee was continuing, based on the contract's language and surrounding circumstances, and dismissed the appeal.

The Court of Appeal for Ontario heard an appeal and cross-appeal concerning a trial judge's decision on fraudulent conveyance and oppression claims.

The trial judge had found oppression but did not rule on fraudulent conveyance, basing the oppression finding on a theory not pleaded or argued.

The Court of Appeal found the trial judge's reasons legally insufficient, internally inconsistent, and procedurally unfair, as the decision was based on an unpleaded "reasonable expectation" of a reserve fund.

The court determined it could not conduct a de novo analysis or substitute findings due to credibility issues and the record not inevitably yielding a particular outcome.

Consequently, the appeal was allowed, the trial judgment set aside, and the matter remitted for a new trial.

The Honourable Mark Falk (Ret.), as U.S. Ancillary Receiver for Broad Reach Capital, LC (BRC), sought leave to intervene as an added party in an appeal under Rule 13.01 of the Rules of Civil Procedure.

The appeal concerned a fidelity bond claim by Surefire Dividend Capture, LP (SDC) against National Liability & Fire Insurance Company (Berkshire) for losses from a Ponzi scheme.

The Ancillary Receiver argued that the trial judge's findings, including that BRC was an insured entity under the bond and the non-determination of the alter ego issue, were favorable to BRC's potential claim against Berkshire and could be prejudiced on appeal.

SDC consented, while Berkshire opposed the intervention.

The court granted the motion for leave to intervene, conditional on the U.S. Court confirming the Ancillary Receiver's authority, finding that BRC had a common question of law or fact with the appeal and that intervention would not unduly delay or prejudice the appeal.

This appeal addresses whether limited partners can bring a common law derivative action on behalf of a limited partnership.

The Court of Appeal for Ontario held that while limited partners have direct causes of action against a general partner for breach of fiduciary duty or contract, negating the need for a derivative action in such cases, a common law derivative action may be available against third parties who have harmed the limited partnership, particularly when the general partner is in a conflict of interest and refuses to act.

The court dismissed the derivative action against the general partner and its director but granted leave for a derivative action against the three third parties, establishing a test for such leave.

This appeal arose from a residential real estate development joint venture that ended in dispute over profit overpayments and retained proceeds.

The trial judge found oppression, ordered an accounting, and made findings on set-off, piercing the corporate veil, pre-judgment interest, and costs.

The Court of Appeal found errors in the trial judge's premature dismissal of set-off claims, the personal liability findings against individuals (Rekha and Meena Sharma) by improperly piercing the corporate veil of non-parties or for insufficient reasons, and the finding of an ad hoc fiduciary duty.

The Court also determined that the immediate payment orders for net sale proceeds, the pre-judgment interest rate, and the costs award were premature given the outstanding accounting.

The appeal was allowed, setting aside parts of the trial judgment and the entire interest and costs judgment, and directing the Associate Judge conducting the accounting to determine interest and costs after the accounting is completed.

This appeal concerned the breadth of the court's jurisdiction to address a breach of a Mareva order and abuse of process.

The appellant, Trade Capital Finance Corp., appealed a distribution order in favour of the respondent, Buduchnist Credit Union Limited (BCU).

BCU had made advances to clients in breach of a Mareva order and subsequently obtained consent judgments.

The motion judge found BCU breached the Mareva order, disallowed its secured claim for post-Mareva advances, but allowed it to enforce as an unsecured judgment creditor.

Trade Capital argued the enforcement should be delayed.

BCU cross-appealed its loss of priority.

The Court of Appeal found that the motion judge erred in limiting his discretion.

It held that the court has broad inherent jurisdiction to respond to a breach of its orders, including delaying enforcement of claims arising from such breaches.

The Court allowed Trade Capital's appeal, ordering that BCU's judgment enforcement for post-Mareva advances be delayed until Trade Capital's action is determined, with both parties collecting pari passu if Trade Capital succeeds.

The cross-appeal by BCU was dismissed.

The issue of specific Woodland Property advances was remitted for further adjudication.

Downing Street Financial Inc. sought leave to appeal an order dismissing its motion for summary judgment and granting summary judgment to the responding parties, which dismissed an action related to a co-tenancy agreement and alleged fraudulent conveyances/preferences under the Bankruptcy and Insolvency Act and other provincial statutes.

The Court of Appeal dismissed the motion for leave to appeal, finding that the proposed appeal was not prima facie meritorious and did not raise issues of significance to insolvency practice.

The court upheld the motion judge's findings that the parties dealt at arm's length and that deadlocked shareholders do not have de jure control for the purposes of the BIA, and that there was no intent to defeat creditors.

The appellant sought to enforce an alleged agreement, contained in an email exchange, for the acquisition of shares in a family corporation and a declaration that the respondent had consented to the sale of shares owned by one of her brothers.

The motion judge found no binding agreement, determining that essential terms regarding the transaction's structure, method of payment, and dividend payments were not settled.

The Court of Appeal upheld this decision, affirming that the structure and method of payment, which directly impacted the net-of-tax amount, and the precise terms of dividend payments were essential terms that had not been agreed upon.

This appeal concerned the interpretation of a prior summary judgment order that set aside and unwound a corporate reorganization.

The appellants argued the order applied to only six of seven entities involved in rooftop solar projects, excluding one.

The Court of Appeal upheld the motion judge's interpretation, finding that the original order intended to unwind the reorganization for all seven entities, as it would make no sense to exclude one given the context of the initial findings of oppression and the single reorganization event.

The Court of Appeal for Ontario dismissed an appeal by DeFi Technologies Inc. against an order awarding Zach Justein and Joseph Weinberg 750,000 share options.

The options were granted by a unanimous board resolution, but later cancelled by management on the grounds that the recipients were not "consultants" under the stock option plan.

The application judge found that the board had the authority to determine eligibility and that the cancellation constituted a breach of contract and an oppression remedy.

The Court of Appeal affirmed that the board's resolution made the respondents eligible, their reasonable expectations were defeated, and the damages calculation was appropriate, noting that the respondents were not required to attempt to exercise options after the agreement's repudiation.

The Court of Appeal for Ontario heard two motions arising from an appeal of a trial decision concerning the division of a business.

The appellant sought to file an extended factum, which was unopposed and granted.

The respondent moved to lift an automatic stay of enforcement for a portion of the trial judgment, arguing financial hardship and that the amount represented the appellant's "best position" even if successful on appeal.

The court granted the motion to lift the stay for $1,874,400, finding demonstrable hardship to the respondent, minimal risk of non-recovery for the appellant given his admitted liability, and that the appeal on factual findings was not strong.

The order included a proportional transfer of shares to the appellant upon payment.

The appellants appealed a summary judgment that held them liable for the balance of a business purchase price.

Their defence was based on fraudulent misrepresentations about the business's revenues.

The motion judge had dismissed this defence, relying on an "entire agreement" clause in the purchase agreement and the appellants' opportunities for due diligence.

The Court of Appeal found that the motion judge erred in law by giving preclusive effect to the entire agreement clause, as such clauses do not immunize against fraudulent misrepresentation.

Furthermore, opportunities for due diligence do not negate a party's right to avoid a contract based on fraudulent misrepresentation if actual knowledge of the untruth was not proven.

The Court concluded that a genuine issue for trial existed regarding the fraudulent misrepresentation and allowed the appeal, setting aside the summary judgment and remitting the matter for trial.

Trade Capital Finance Corp. (TC) and Buduchnist Credit Union Limited (BCU) filed opposing motions in an insolvency appeal.

TC sought an extension of time and leave to appeal a lower court's final disposition order concerning the distribution of receivership proceeds, arguing the order allowed BCU to enforce judgments arising from transactions in breach of a Mareva order.

BCU sought to lift the automatic stay of proceedings and security for costs.

The Court of Appeal granted TC's motions for extension of time and leave to appeal, finding the appeal prima facie meritorious and raising issues of general importance regarding Mareva orders and creditor enforcement in insolvency.

The court denied BCU's motions to lift the stay and for security for costs, concluding that the BIA governed the appeal and that lifting the stay would render TC's appeal moot, and that security for costs was not fitting given BCU was the applicant below and TC's insolvency stemmed from the alleged fraud.

This appeal concerned the personal liability of an individual who signed dishonoured cheques under an unregistered trade name.

The appellant, a directing mind of several corporations, argued he did not intend personal liability, believing he was signing on behalf of a corporation.

The Court of Appeal affirmed the motion judge's decision, holding that under section 131(1) of the Bills of Exchange Act, signing a bill in a trade name or assumed name incurs personal liability, especially when the name is not registered to the corporate entity.

The court emphasized the Act's purpose of ensuring certainty in negotiable instruments.

The appeal was dismissed with costs.

This appeal concerned the reasonableness of a motion judge's exercise of enhanced powers under Rule 20 of the Rules of Civil Procedure in granting summary judgment to enforce guarantees.

The appellants argued the motion judge erred in finding no genuine issues requiring a trial, particularly regarding credibility issues arising from new evidence about representations limiting the guarantees.

The Court of Appeal dismissed the appeal, affirming the motion judge's careful application of the Hryniak framework, his findings on credibility, and his interpretation of the agreements, concluding there was no basis to interfere with the summary judgment.

The appellant, 2161907 Alberta Ltd., appealed a lower court decision that found it had wrongfully terminated agreements with the respondent, 11180673 Canada Inc., and acted in bad faith, ordering payment of a $2 million branding fee.

The dispute arose when 216 refused to fund 111's rent, leading 111 to threaten not to open its cannabis store. 216 terminated the license agreement, citing a "threat to cease carrying on business." The Court of Appeal upheld the lower court's finding that 216's termination was invalid, interpreting the "threat" clause objectively in context.

However, the Court of Appeal set aside the finding of bad faith, clarifying that an incorrect belief in a valid termination right, even if motivated by a desire to end the relationship, does not automatically constitute bad faith when there is no knowing misrepresentation or deliberate creation of the breach.

The appeal regarding the sublease termination was dismissed as practically resolved.

The Court of Appeal for Ontario heard an appeal concerning the interpretation of a commitment letter for real estate financing and the calculation of damages.

The lender (MarshallZehr Group Inc.) terminated the commitment letter before any funds were advanced to the borrower (Ideal (BC) Developments Inc. et al.), citing the borrower's failure to satisfy initial funding conditions.

The motion judge had granted summary judgment to the lender, upholding the termination and awarding damages including a lender fee.

The appellate court affirmed the motion judge's interpretation that the cancellation provision in the commitment letter allowed for termination in the pre-closing period when no funds had been advanced.

However, the court found that the lender fee was not recoverable as the commitment letter stipulated it would be deducted from the initial advance, which never occurred.

The damages award was reduced accordingly.

The appellant, Gerard Lee, former CEO of Lalu Canada Inc., appealed the dismissal of his application for advance funding of legal costs to defend a fraud action.

The application judge denied funding, finding a strong prima facie case of fraud against Lee regarding "acquisition fees" he had received.

The Court of Appeal dismissed the appeal, upholding the application judge's interpretation of the consulting agreement and assessment of evidence regarding concealment.

The court also affirmed the application judge's application of the "strong prima facie case" test for denying advance funding, finding it commensurate with the stringent standard required.

The appellant, Marvin Rubner, appealed a lower court decision that found no binding settlement agreement had been reached between him and his brother, Joseph Rubner, regarding their real estate business interests.

The application judge had concluded that Joseph's counsel had limited authority to negotiate only the minutes of settlement, not the "Deal Points," and that Marvin's counsel was aware of this limitation.

The Court of Appeal dismissed the appeal, affirming that the application judge's interpretation of the agreement and application of the test for ostensible authority were questions of mixed fact and law, reviewable only for palpable and overriding error, which was not demonstrated.