Corporate/Commercial Law - ONCA

Appeal and cross-appeal arising from limited partnership investment litigation involving an offering memorandum for a real estate tax shelter.

The court held that, read as a whole and in light of the financing and refinancing structure, the offering memorandum contemplated repayment of accrued interest and principal on the second secured loans only upon acceptable refinancing of the first loans; because that refinancing never occurred, the investors were not contractually obliged to repay the second loans.

The court also held that the cash flow loans were not expressly made repayable by investors under the offering documents.

On the cross-appeal, the court held that the contractual deemed-reliance clause was included to satisfy securities-law requirements and did not create a broader right to sue for misrepresentation outside the clause's 90-day notice period.

Both the appeal and cross-appeal were dismissed, with no costs.

The appellant appealed a trial judgment regarding compensation for services related to ATM machines, interest on loans, and the application of the Partnership Act.

The appellant also brought a motion to introduce fresh evidence consisting of a sentencing hearing transcript of a fact witness.

The Court of Appeal dismissed the motion, finding the fresh evidence would not affect the trial judge's conclusions.

The appeal was also dismissed, as the court found no misapprehension of evidence and ample support for the trial judge's findings on compensation, interest, and partnership.

The appellant appealed a trial judgment that failed to find the individual respondent personally liable for a debt.

The Court of Appeal allowed the appeal, finding that the trial judge erred by treating the case as one of piercing the corporate veil rather than personal contract.

Based on the uncontradicted evidence, including a quotation addressed to the individual and a purchase order signed by him without indicating a corporate capacity, the court concluded the appellant contracted with both the corporate and individual respondents.

The individual respondent was ordered to pay $89,849.94 plus pre-judgment interest.

The appellants appealed a decision finding they were not 'farmers' under the Farm Debt Mediation Act.

The Court of Appeal upheld the application judge's finding that there was inadequate evidence to show the appellants were engaged in farming for commercial purposes.

The Court also rejected the argument that an earlier motion for security for costs rendered the issue res judicata.

The appeal and cross-appeal were dismissed.

The appellants appealed a trial judgment awarding damages against them for failing to pay amounts owed under agreements for the purchase of an operating gravel pit.

The appellants argued they were induced to enter the agreements by oral warranties and promises made by the respondents, which were breached.

The Court of Appeal dismissed the appeal, deferring to the trial judge's factual findings that no such oral undertakings or warranties were made, noting the appellants were represented by experienced counsel and the alleged warranties were not included in the written documents.

The appellant, a construction lien claimant, appealed a Divisional Court decision that granted priority to a $5 million mortgage held by the respondent mortgagee over the appellant's lien.

The central issue was whether the mortgagee was an 'owner' under the Construction Lien Act.

The Court of Appeal allowed the appeal, restoring the trial judge's finding that the mortgagee and the registered owner were indistinguishable and controlled by the same individual.

The Court pierced the corporate veil, finding the mortgagee was an owner under the Act, and therefore its mortgage lost priority to the construction liens under s. 78(1).

The plaintiffs, assignees of a bankrupt Ontario corporation, brought actions against two Iranian state-owned oil and drilling companies for breach of contract, conversion, and conspiracy arising from oil drilling operations in Iran.

The defendants appealed the dismissal of their motions to stay the actions for want of jurisdiction.

The Court of Appeal allowed the appeals in part, staying the action against the oil company based on a forum selection clause in favour of Iran, and staying part of the action against the drilling company for lack of a real and substantial connection to Ontario.

The court allowed the claim based on a 1998 contract to proceed in Ontario due to a valid forum selection clause in favour of Ontario.

The appellant appealed a judgment enforcing a guarantee, arguing he was coerced into giving the guarantee by physical threats.

The Court of Appeal found that the evidence, consisting of a letter and a discovery transcript passage, did not support a finding of physical threats.

The court upheld the motion judge's conclusion that there was no triable issue on the defence of economic duress and dismissed the appeal.

The appellants appealed a summary judgment order requiring payment on a promissory note.

They argued the motion judge erred by not ordering a stay of execution or directing the monies be paid into court pending the resolution of a related oppression remedy action.

The Court of Appeal dismissed the appeal, finding no basis to disturb the motion judge's determination that the promissory note was sufficiently disconnected from the oppression action, and noting no prejudice was alleged.

The appellants appealed a trial judgment finding them personally liable for an unpaid restaurant account for food services provided to them, their family, and business associates.

At trial, the appellants argued that a corporation (SLM) was solely responsible, which the trial judge rejected.

On appeal, they attempted to argue they were only liable for meals when they were present.

The Court of Appeal dismissed the appeal, holding that the trial judge made no error and that the appellants could not shift their legal position on appeal, especially since it would require a reference to develop new evidence.

Costs of $8,803.43 were awarded to the respondent.

The appellants, tree harvesters, sued the respondent forestry company for negligent misrepresentation and breach of contract, alleging they relied on the respondent's assurances when incurring significant debt to mechanize their operations.

A jury found in favour of the appellants and awarded damages.

However, the trial judge subsequently granted the respondent's reserved motion for non-suit, dismissing the negligent misrepresentation claim.

The Court of Appeal allowed the appeal, finding the trial judge erred by weighing the evidence rather than assessing if a prima facie case existed.

The Court set aside the non-suit, dismissed the respondent's cross-appeal challenging the jury verdict, and restored the jury's damages award.

The appellants appealed an order requiring indemnification under an all risk insurance policy for losses of perishable food following a massive power failure in southern Ontario.

The court held that the blackout, not the lack of refrigeration, was the proximate cause of the direct physical loss.

It agreed that ambiguity in the exclusion clauses had to be construed in favour of the insured and distinguished prior authority based on materially different policy wording.

The appeal was dismissed, and appeal costs were awarded to the respondent.

The appellant, an independent contractor, appealed a trial judgment finding he breached non-solicitation, non-competition, and confidentiality clauses in his contract with the respondent consulting firm.

The appellant had allowed a competitor to submit his resume for a government contract he was already working on through the respondent.

The Court of Appeal allowed the appeal, finding the restrictive covenant was overly broad and unreasonable, as it prevented solicitation of any client or prospect without spatial limitation.

The Court also found no breach of confidentiality, as the appellant merely provided his own skills and qualifications to the competitor, which did not constitute confidential information.

The respondent, a former director of a corporation, sought a declaration that his insurer owed a duty to defend him against a counterclaim brought by the corporation.

The insurer denied coverage based on an 'insured v. insured' exclusion clause in the Directors' and Officers' Liability Policy.

The application judge found a duty to defend, relying on American authorities that considered the purpose of the exclusion clause.

The Court of Appeal allowed the insurer's appeal, holding that the exclusion clause was unambiguous and clearly excluded coverage for claims brought by the corporation against its directors.

As the claim fell outside coverage, there was no duty to defend.

The respondent obtained summary judgment against the appellant for unpaid goods.

The appellant sought a stay of the judgment pending the determination of its counterclaim for damages related to a previous delivery of allegedly defective goods.

The motion judge refused the stay, finding the claims were not closely connected.

The Court of Appeal allowed the appeal, finding the motion judge misapprehended the evidence, as the claims were closely connected through ongoing negotiations.

A stay was granted on the condition that the appellant pay the judgment amount, interest, and estimated trial costs into court.

The respondent's dairy barn and livestock were destroyed in a fire.

The appellant insurer paid over $1.17 million under the policy but disputed other aspects of the claim, including loss of livestock, loss of earnings, and damage to silos.

At trial, the jury awarded the respondent an additional $488,389 in compensatory damages and $750,000 in punitive damages for the insurer's breach of its duty of good faith.

The insurer appealed.

The Court of Appeal allowed the appeal in part, setting aside the punitive damages award.

The Court held that while the insurer breached its duty to act fairly and in good faith by failing to promptly pay amounts it reasonably believed were owing, its conduct was not so outrageous or extreme as to warrant punishment.

The appellants, holders of debentures issued by BCED, appealed a trial judgment finding that a series of corporate reorganizations and asset transfers did not breach a successor obligor clause in the trust indenture.

The clause prohibited BCED from transferring 'all or substantially all' of its assets unless the transferee assumed the debenture debt.

The Court of Appeal dismissed the appeal, holding that the asset transfers did not meet either the quantitative or qualitative threshold to constitute 'all or substantially all' of BCED's assets.

The Court also found that a subsequent guarantee and foreclosure did not constitute a prohibited 'transaction' under the trust indenture, as the indenture expressly permitted BCED to incur and secure senior indebtedness.

On an appeal from the dismissal of a rule 21.01(3) motion, the court considered whether a corporation incorporated after the vendor's repudiation of a real estate agreement could adopt a pre-incorporation contract under s. 21 of the Business Corporations Act and sue for damages.

The court held that s. 21 replaces the common law and must be interpreted as a self-contained statutory scheme.

A contract falling within s. 21(4) remains a nascent statutory contract before adoption, and after incorporation the corporation's adoption operates retroactively to the date of the agreement.

Accepted repudiation terminated only future performance, not accrued obligations, so there remained a contract capable of adoption.

The corporation adopted the contract by commencing the action and therefore had status to enforce it.

The respondent employees were hired by the corporation to provide services at a gold mine in West Africa.

The corporation failed and was unable to pay salaries, vacation pay, and expenses.

The employees sued the directors under s. 131(1) of the Ontario Business Corporations Act for these amounts.

The motion judge granted summary judgment, finding the directors liable for the unpaid expenses.

The directors appealed, arguing that expenses do not constitute wages.

The Court of Appeal dismissed the appeal, holding that under s. 131(1), expenses incurred by an employee in the course of providing services constitute a debt of the corporation for which its directors are liable, up to the statutory limit.

The appellants appealed an order setting aside a prior court order enforcing an arbitral interim order and declaring the arbitration terminated.

The Court of Appeal held there was no evidentiary basis for the conclusion that the arbitration board had refused to hear the respondent's variation application or that the respondent lacked the ability to pursue that remedy.

Without proof of a new material fact arising after the earlier order, the motion judge had no basis to set aside that order.

The appeal was allowed, the motion judge's order was set aside, and the earlier enforcement order was restored with costs to the appellants.