Corporate/Commercial Law - ONCA

The appellant and respondent entered into a consensual arbitration over a commercial dispute arising from a share purchase agreement containing an earn-out provision.

The arbitrator found in the respondent's favour.

The appellant brought a judicial review application to the Divisional Court, which dismissed the application.

On appeal, the Court of Appeal held that the Divisional Court erred in principle by failing to determine the standard of review before deciding the application.

However, applying either a reasonableness or patent unreasonableness standard, the Court of Appeal found no basis to interfere with the arbitrator's award, concluding that the arbitrator's interpretation of the agreement was not unreasonable.

The appeal was dismissed.

The appellant franchisor failed to provide the required disclosure document to the respondent franchisee under the Arthur Wishart Act.

Days before the two-year limitation period expired, the franchisee rescinded the agreement and immediately set up a competing business servicing the same customers.

The application judge upheld the rescission and dismissed the franchisor's counter-application for an accounting and injunctive relief.

On appeal, the Court of Appeal held that while the franchisee has an absolute right to rescission under s. 6(2), the franchisor retains the right under s. 9 to pursue an action for the franchisee's post-rescission conduct.

The Court set aside the dismissal of the franchisor's application and converted it into an action due to material facts in dispute.

The appellant franchisors appealed a trial judgment granting the respondent franchisees rescission of their franchise agreement and damages under the Arthur Wishart Act.

The franchisors argued they had substantively complied with disclosure requirements by providing information piecemeal over several months.

The Court of Appeal dismissed the appeal, holding that the Act strictly requires disclosure in a single document delivered at one time.

The Court also found that the franchisees did not affirm the contract by continuing to operate the business briefly to mitigate losses after serving the notice of rescission, as statutory rescission operates differently from equitable rescission.

The appellant contractor sued the respondent bank for misrepresentation after the bank failed to advance a $150,000 loan to a mall owner to pay for renovations.

The trial judge dismissed the action, finding the bank had informed the contractor that the loan was conditional on a guarantor's signature.

The Court of Appeal allowed the appeal, finding the trial judge misapprehended the evidence.

The bank had represented that the loan was a sure thing and that the signature was a mere formality, knowing this was untrue and that the contractor would rely on it.

Judgment was entered for the contractor for the undisputed contract amount plus costs.

The appellant general contractor entered into a construction contract and a subcontract with the respondent for a fire protection system.

The appellant was contractually obligated to obtain all-risks property insurance and fire insurance but failed to do so.

A flood occurred due to the respondent's admitted negligence.

The appellant paid the owner for the damages and sought to recover the amount from the respondent.

The Court of Appeal dismissed the appeal, applying the principle that a contractual undertaking to secure property insurance operates as an assumption of the risk of loss or damage caused by the peril to be insured against.

The appellant's failure to obtain the insurance precluded its claim against the respondent.

The appellants appealed a trial judgment, arguing that the trial judge erred in his assessment of credibility and reliance on a contract they claimed was a fake.

The Court of Appeal found no error in the trial judge's approach, noting he thoroughly reviewed the evidence, found neither main witness reliable, and properly gave effect to the language of the agreement.

The appeal was dismissed with costs awarded to the respondent.

The appellants, Confederation of National Trade Unions and La Régie Des Rentes Du Québec, appealed an order staying the obligation of Slater Steel to file an actuarial report and relieving the company and its directors from any resulting obligations.

The Court of Appeal dismissed the appeal, finding no error in the motion judge's reliance on evidence that further employer contributions were not due until the valuation report was filed.

The Court also noted that other parties had acted in reliance on the stay order.

The appellant appealed an order dismissing its claims against a corporate tenant's director for breach of trust and inducing breach of contract.

The Court of Appeal dismissed the appeal, finding that the commercial lease did not create a trust relationship.

Furthermore, the pleadings failed to establish the limited circumstances under which a corporate director or officer could be held personally liable for inducing a breach of contract by the corporation.

The appellants opened a hydro account personally in 1967.

In 1975, they incorporated a business which thereafter paid the account.

The trial judge found the appellants remained personally liable for the account because there was no evidence of assignment or novation to the corporation.

The Court of Appeal found no palpable and overriding error in the trial judge's findings and dismissed the appeal.

The appellants appealed a motion judge's order enforcing a settlement agreement for the purchase of shares for $275,000.

The Court of Appeal upheld the finding that the settlement was not contingent on a corporate reorganization and that payment was due within a reasonable time.

However, the Court allowed the appeal in part, finding that the motion judge erred in ordering an additional payment for tax consequences, as the $275,000 was inclusive of taxes.

The Court also reduced the motion costs from substantial to partial indemnity, finding that a letter sent by the respondent did not constitute a Rule 49 offer.

The United Mexican States appealed a decision dismissing its application to set aside a NAFTA Chapter 11 arbitration award.

The arbitration tribunal had found that Mexico breached NAFTA by denying tax rebates to an American-owned company while granting them to domestic companies in similar circumstances.

Mexico argued the tribunal erred by drawing adverse inferences from its refusal to disclose confidential taxpayer information and that the damages award violated public policy.

The Court of Appeal dismissed the appeal, holding that the tribunal's decision was entitled to a high degree of deference, the procedure was not contrary to the parties' agreement, and the damages award did not offend fundamental principles of justice and fairness.

The appellants appealed a trial judgment awarding the respondents $1,173,960 in compensatory damages and $150,000 in punitive damages for breach of a construction management contract.

The respondent had worked for 17 months without pay before being abruptly terminated on the eve of his entitlement to substantial compensation.

The Court of Appeal dismissed the appeal, finding that the trial judge correctly interpreted the contract to assess damages, properly declined to consider mitigation as it was not pleaded, and appropriately awarded punitive damages given the appellant's reprehensible conduct.

In a supplementary endorsement, the Court of Appeal for Ontario clarified its previous judgment regarding the post-maturity interest rate on a promissory note.

The court set aside its previous endorsement and specified that the intent was to ensure the interest after maturity remained the same as before maturity.

Accordingly, the post-maturity interest rate was set at 10 per cent per annum, calculated semi-annually not in advance.

The appellants requested that the Court of Appeal change its judgment to award post-maturity interest at 10 per cent per annum as compound interest rather than simple interest.

The Court declined the request, noting that the appellants had not previously asserted a claim for compound interest and that the governing promissory note did not provide for it.

The award of 10 per cent simple interest was maintained.

Following the release of the appeal decision, the parties disagreed on the settlement of the formal order regarding whether it should specify the date of termination of the commercial lease.

The Court of Appeal held that the omission of the termination date could be rectified under Rule 59.06 and determined by the remaining justices under s. 123(3) of the Courts of Justice Act.

The Court declared the lease was effectively terminated on November 19, 2001, noting this does not inhibit the trial judge's discretion on relief from forfeiture.

The appellants were investors who signed agreements to purchase condominium units, paying the balance of the purchase price by delivery of promissory notes to the vendor.

The vendor assigned the notes to the respondent bank, which had no knowledge that the vendor would be unable to convey title.

When title was not conveyed, the investors stopped making payments, and the bank sued to enforce the notes.

The Court of Appeal upheld the trial judge's finding that the notes were unconditional promises to pay within the meaning of s. 176(1) of the Bills of Exchange Act, distinguishing the case from Range v. Belvedere Finance Corp., and dismissed the appeal.

The appellants appealed a trial judgment that found oppressive conduct in the management of a family holding company and ordered the corporation to purchase the respondents' shares for cancellation.

The trial judge devised a valuation formula that included an unequal distribution of the corporation's capital dividend account to compensate the respondents for their share of the refundable dividend tax on hand.

The Court of Appeal dismissed the main appeal, finding no error in the trial judge's findings of oppression or his general valuation approach.

However, the Court allowed the respondents' cross-appeal in part, correcting a mathematical error in the trial judge's tax account formula to ensure the respondents were fully compensated for their pro rata share of the refundable dividend tax on hand.

The appellants appealed a judgment granted in favour of the respondent bank.

The Court of Appeal found no basis to interfere with the trial judge's conclusion that the bank was entitled to judgment.

However, based on fresh evidence admitted on consent, the court varied the judgment amount to $101,941.26.

The appeal was otherwise dismissed with costs.

A real estate broker became insolvent after its principal misappropriated trust funds for day-to-day operations.

The Director, representing the trust claimants, asserted priority over the broker's assets, including accounts receivable collected by a secured bank and funds remaining in trust accounts.

The Court of Appeal held that the accounts receivable were not impressed with a constructive trust because there was no clear connection between the misappropriated funds and the generated receivables, allowing the bank to realize its security.

Furthermore, the funds remaining in the trust accounts were not restored trust funds, giving the Crown priority over those funds pursuant to the deemed trust provisions of the Income Tax Act.

The appellant, an investor who purchased shares in the secondary market, sought to certify a class proceeding against the issuer, underwriters, and auditors for negligent misrepresentation in a prospectus.

The motions judge dismissed the action, finding the pleadings failed to disclose a reasonable cause of action as they did not establish a special relationship giving rise to a duty of care.

The Court of Appeal upheld the dismissal, agreeing that the pleadings lacked material facts to support a duty of care owed to secondary market purchasers by the auditors or underwriters.