Corporate/Commercial Law - ONCA

The appellant, an investment advisor, appealed a trial decision dismissing his claim for additional compensation under a letter agreement.

The trial judge found the agreement ambiguous regarding its application to Capital Markets transactions and relied on the parties' subsequent conduct to conclude it did not apply.

The Court of Appeal dismissed the appeal, holding that while subsequent conduct is not part of the factual matrix, it is admissible to resolve ambiguity.

The trial judge made no extricable error of law in finding ambiguity and properly weighed the appellant's subsequent conduct, which was overwhelmingly consistent with the respondent's interpretation.

The respondent successfully brought an application to enforce payment of $263,600 on a promissory note.

The appellant appealed, arguing the application judge erred by refusing to consider the broader factual matrix, including a side-agreement that allegedly converted the demand note into one payable from future profits.

The Court of Appeal allowed the appeal, finding that the matter involved material facts in dispute regarding the interpretation of the broader transaction and could not be resolved by application under Rule 14.05(3).

The judgment was set aside and the matter directed to proceed as a trial of an action.

The appellants appealed an order striking out most of their causes of action without leave to amend.

The action arose from a consulting agreement and alleged breach of trust and fraudulent diversion of funds by the respondents.

The Court of Appeal allowed the appeal in part, permitting the appellants to amend their statement of claim to include a breach of trust claim against the corporate owner of the properties and a personal liability claim against the individual respondents for fraudulent diversion of funds, finding the motions judge erred in restricting the piercing of the corporate veil to sham corporations.

The appellants appealed an order dismissing their motion for leave to commence a derivative action under the Business Corporations Act (OBCA) as statute-barred.

The Court of Appeal determined it lacked jurisdiction to hear the appeal, as section 255 of the OBCA directs appeals of orders made under the Act to the Divisional Court.

The appeal was transferred to the Divisional Court.

The appellants appealed a summary judgment decision, arguing that ambiguities in the written agreement required viva voce evidence and credibility findings at trial.

The Court of Appeal dismissed the appeal, upholding the motion judge's interpretation of the contract and security terms, which rejected the appellants' claim that they never intended to guarantee the principal amount.

The court found no genuine issue for trial requiring further evidence.

A commercial premises was largely destroyed by fire, causing the tenant to cease operations and stop paying rent.

The landlord sought coverage for lost rental income from its insurer, who denied the claim on the basis that the tenant remained legally obligated to pay rent.

The motion judge found the lease was frustrated and ordered the insurer to pay.

On appeal, the Court of Appeal upheld the result but for different reasons, finding that the loss of anticipated rental income triggered the business interruption coverage regardless of the tenant's continuing legal obligations.

The insurer was required to pay the claim and could subsequently pursue the tenant via subrogation.

The appellant appealed a summary judgment order finding that its relationship with the respondent was that of franchisor and franchisee, entitling the respondent to rescind their agreements under the Arthur Wishart Act due to a lack of disclosure.

The Court of Appeal upheld the finding on liability but found the motion judge's reasons for quantifying damages insufficient.

The appeal was dismissed regarding liability, and the matter was remitted to the motion judge to determine the quantum of damages in excess of the conceded amount.

The appellants appealed the dismissal of their action seeking to hold the respondent personally liable for half of their jointly owned corporation's debt.

The appellants argued that an agreement to share profits equally implied an agreement to share debts equally, and that the respondent had admitted personal liability.

The Court of Appeal dismissed the appeal, upholding the trial judge's finding that the parties understood they were limiting their personal liability by operating through a corporation and had not agreed to assume personal liability for corporate debts.

Sobeys appealed a decision finding it contractually obligated to directly fund a pension plan deficit following the termination of a warehousing and transportation agreement with Tibbett.

The Court of Appeal upheld the application judge's findings that the parties had entered into a new agreement for Sobeys to assume direct responsibility for the deficit, that Tibbett had acted with due diligence, and that the claim was not statute-barred because Tibbett was not notified of Sobeys' refusal to fund the deficit until 2013.

The appeal was dismissed.

The respondent investment dealer terminated the contracts of four sales agents when it closed its Thunder Bay office.

The respondent sued for repayment of transition loans that became due upon termination.

The appellants defended the action, claiming misrepresentation by omission regarding the office closure and equitable set-off.

The motion judge granted summary judgment against two of the appellants.

The Court of Appeal allowed the appeal, finding the motion judge erred in fact and law, and that a fair and just determination required a trial of all claims and counterclaims together to avoid inconsistent verdicts.

The appellant purchased rims and tires for his vehicle, financed by the respondent.

The respondent registered a non-possessory lien under the Repair and Storage Liens Act (RSLA) and attempted to seize the vehicle when the appellant defaulted.

The application judge declared the respondent was entitled to the lien.

On appeal, the Court of Appeal found that the vendor never possessed or repaired the vehicle, meaning no possessory lien arose that could be converted to a non-possessory lien or assigned to the respondent.

The court also held that RSLA liens arise by statute, not contract, and the deemed possession provision in s. 3(4) did not apply.

The appeal was allowed and the lien declared invalid.

The appellant tenant sued the respondent landlord for damages arising from two sewer backups, alleging breach of lease, negligence, and misrepresentation.

The motion judge struck most claims, finding they were barred by the lease's covenant to insure.

On appeal, the Court of Appeal held that while the covenant to insure barred the negligence and breach of contract claims, it was not plain and obvious that it or the 'entire agreement' clause barred the negligent misrepresentation claim.

The Court also allowed the tenant's claim that the landlord was estopped from relying on the covenant to insure for the second backup to proceed.

The appellant insurer appealed a declaration that it had a duty to defend the respondent OSPCA in three separate actions alleging malicious prosecution, false arrest, and defamation arising from animal cruelty investigations.

The insurer argued that coverage was excluded by policy clauses regarding willful violation of penal statutes and by the fortuity principle, which precludes coverage for intentional harm.

The Court of Appeal dismissed the appeal, finding that the OSPCA Act is not a penal statute, exceeding a search warrant is not a Criminal Code offence, and the fortuity principle did not apply because the policies expressly covered intentional torts like malicious prosecution and the plaintiffs did not plead that the OSPCA intended the specific harm suffered.

The appellants, holding unsecured crossover bonds, appealed a CCAA judge's decision that the common law 'interest stops' rule applies in CCAA proceedings, preventing them from claiming post-filing interest above their principal debt and pre-petition interest.

The Court of Appeal dismissed the appeal, confirming that the 'interest stops' rule is a fundamental tenet of insolvency law that applies to CCAA proceedings to ensure fair treatment of creditors and orderly administration.

The Court clarified that while creditors cannot legally claim post-filing interest, the rule does not preclude a negotiated CCAA plan from providing for such payments.

In a second appeal arising from insurance class proceedings concerning participating account transactions implemented in a 1997 life insurance acquisition, the appellants challenged the trial judge’s interpretation of the remedial formula previously crafted by the Court of Appeal.

The court held that the objective of the remedy was to unwind the transactions as of the effective date by restoring the participating accounts and shareholder accounts to the positions they would have occupied had the transactions not occurred, without conferring a windfall.

It concluded that amortization charges could not reduce the merger expense savings deduction, that the 6.91 percent return under paragraph 200(e) had to be calculated on an after-tax basis, and that paragraph 200(e) formed part of the deduction rather than an addition to the amount payable.

The appeal was allowed, the effective date remained December 31, 2011, and the amount repayable to the participating accounts was fixed at $51.6 million subject to updating.

In three related securities class action appeals, the court reconsidered whether a statutory secondary-market misrepresentation claim under s. 138.3 of the Securities Act is time-barred unless leave is obtained within the s. 138.14 limitation period.

The court overruled Timminco and held that, for purposes of s. 28 of the Class Proceedings Act, 1992, the statutory claim is asserted when the representative plaintiff pleads the statutory cause of action, the supporting facts, and an intention to seek leave within a timely commenced class proceeding.

The court also upheld the motion judge's interpretation of the s. 138.8 leave standard as screening out hopeless claims, while holding that the Green certification decision erred in failing to consider certifying common negligent misrepresentation issues other than reliance.

The plaintiffs' appeal in Green was allowed in part and the defendants' appeals in Silver and Celestica were dismissed.

A franchisor appealed from summary judgment dismissing its claim against a corporation's sole officer, director, and shareholder after the corporation had been found liable for misappropriating funds remitted for payment of utility invoices.

The Court of Appeal held that the individual was not personally liable under the pre-incorporation contract provisions because the corporation had adopted the agreement by conduct, but he was personally liable because he expressly directed the wrongful diversion of funds and the corporate veil should be pierced under Ontario law.

The court upheld the use of summary judgment, rejected reliance on a transition release obtained in the face of material non-disclosure, and found no binding 2007 replacement contract.

Damages were varied downward to reflect conceded deductions and an additional admitted set-off, and appeal costs were awarded against the corporation and the individual jointly and severally.

A receiver appealed from summary judgment dismissing its claim for indemnity under a trustee's errors and omissions policy after obtaining judgment against the insured trustee for breach of trust.

The court held that the insurer was entitled to rely on the dishonest acts exclusion because the trustee deliberately breached the trusts, knowingly exposed the beneficiaries to risk, and misappropriated trust funds for its own benefit.

The court further held that a prior order assigning to the receiver the 'proceeds from insurance coverage' did not assign the insured's separate cause of action for breach of the insurer's duty of good faith.

The receiver also had no direct good faith claim against the insurer, although it could return to the motion judge to seek directions on any other remedy if the insurer had deliberately frustrated the prior order.

The appeal concerned whether a lender could structure a business loan to an on-reserve borrower as a two-step conditional sale transaction in order to obtain effective security over existing chattels situated on reserve.

The court held that the arrangement was merely notional, with no real sale or repurchase, and amounted to an impermissible attempt to circumvent the protection in s. 89(1) of the Indian Act.

Because the transaction was a pure fiction rather than a genuine sale in which rights remained in the seller, it did not fall within s. 89(2).

The appeal from the conversion judgment was dismissed with fixed costs.

Les appelants ont contesté en appel la conclusion selon laquelle leurs lettres de démission du conseil d’administration d’une fondation étaient valides, plaidant l’influence indue et un complot visant la prise de contrôle de l’organisme.

La Cour d’appel a conclu que le juge des requêtes disposait de tous les faits pertinents, avait examiné les allégations soulevées et n’avait commis aucune erreur manifeste et dominante dans son appréciation factuelle.

La cour a aussi rejeté la demande d’autorisation d’interjeter appel de l’ordonnance de dépens.

Les dépens de l’appel ont été accordés aux intimés sur une base d’indemnité partielle.