Corporate/Commercial Law - SCJ

In ongoing Companies’ Creditors Arrangement Act proceedings, the applicants sought advice and directions regarding the application of a directors’ and officers’ liability insurance policy issued by the insurer.

The dispute concerned whether a US$10 million retention applied to defence costs incurred by executives facing claims arising from alleged pre‑filing misconduct.

The applicants argued that the CCAA stay prevented the company from indemnifying the executives, thereby triggering the policy’s non‑indemnifiable loss provisions and eliminating the retention requirement.

The court held that the indemnity obligation was a pre‑filing obligation and that the stay prevented payment, rendering the loss non‑indemnifiable within the meaning of the policy.

As a result, the insurer was required to respond to the executives’ losses without reference to the retention.

The plaintiff sought recovery of funds secured by a mortgage arising from an investment agreement relating to a car export venture.

The defendant argued the parties were partners and that the plaintiff should only recover his principal investment and share any losses.

The court examined the investment agreement, addendum, mortgage documents, and promissory note, finding the documentation consistently characterized the plaintiff as an investor rather than a partner.

The court concluded the defendant acknowledged a debt secured by the mortgage and that there was no evidence the plaintiff shared the risk of loss.

Judgment was granted to the plaintiff for the balance of the mortgage together with interest.

A commercial landlord brought a motion for security for costs and to strike portions of affidavits filed by the tenant and subtenant in an application seeking consent to change the restaurant’s operating name under a lease agreement.

The tenants opposed the motion and brought a cross‑motion seeking to convert a related landlord application into an action due to disputed facts.

The court held that the tenants’ application had merit and that there was no basis for security for costs, noting the tenants had substantial assets and the matter was not frivolous.

The court also declined to strike the impugned affidavit evidence and held that communications between the parties should be disclosed.

Because the landlord’s related application involved numerous contested factual issues requiring viva voce evidence, it was converted into an action.

Following the dismissal of an application seeking interpretation of a commercial lease concerning the calculation of property taxes, the successful respondent sought partial indemnity costs exceeding $75,000.

The applicant argued the amount was disproportionate to the approximately $160,000 in dispute and the relatively limited complexity of the proceeding.

The court applied the principles governing reasonable expectations of the losing party under the Boucher line of authorities and assessed the reasonableness of the time spent by counsel and the claimed disbursements.

Finding the claimed hours and overall expenditures excessive for an application hearing lasting less than a day, the court reduced the recoverable costs.

The defendants brought a motion seeking additional production of documents and an order that this action be tried together with or consecutively to a related proceeding.

The plaintiff brought a motion for leave to file a Fresh as Amended Statement of Claim and sought orders compelling further documentary disclosure and updated information from the defendants.

The court held that, following amendment of the pleading, document production should be assessed in relation to the amended claim and limited to documents relevant to common customers and vendors.

The court ordered ongoing disclosure obligations on the defendants regarding common customers and vendors but declined to order the actions tried together.

An interim award of $35,000 was granted to the defendants as costs thrown away arising from the amendment.

Former employees and a competing corporation moved to set aside or vary an interim injunction and Anton Piller order obtained ex parte by their former employer.

The employer alleged the employees copied large volumes of confidential engineering files relating to proprietary sonar technology before leaving to establish a competing business.

The court found strong prima facie evidence of copying confidential files in breach of confidentiality agreements, a risk of serious commercial harm, and a real possibility that electronic evidence could be destroyed.

The balance of convenience favoured maintaining the injunction and preservation measures.

The injunction remained in effect and the Anton Piller order was varied largely on consent while preserving seized materials under the supervision of an independent supervising solicitor.

Following dismissal of stay and forum non conveniens motions in an application to recognize and enforce a foreign arbitral award, the court determined the appropriate costs award.

The successful applicant sought $65,000 in partial indemnity costs apportioned between the responding corporation and a non‑party that had actively participated in the motion.

The court applied Rule 57 of the Rules of Civil Procedure and the principles of proportionality and fairness articulated by the Court of Appeal, finding the requested amount reasonable given the complexity of the issues and extensive materials filed.

It held that a non‑party that voluntarily participates in litigation to protect its own interests may be liable for costs under s. 131(1) of the Courts of Justice Act.

Costs were fixed at $65,000 and apportioned 75% to the corporate respondent and 25% to the participating non‑party.

The defendants moved under Rules 21.01 and 25.11 of the Rules of Civil Procedure to strike portions of the plaintiff’s statement of claim alleging conspiracy, intentional interference with contractual relations, and personal liability of individual defendants, or alternatively for further particulars.

The action arose from an agreement for the acquisition of corporations owned by the plaintiff, followed by allegations that the defendants diverted assets, issued fraudulent invoices, and caused the companies’ insolvency.

The court reviewed the pleading standards applicable to motions to strike and emphasized the low threshold required to sustain pleadings where material facts supporting recognized causes of action are alleged.

It held that the pleadings sufficiently alleged elements of civil conspiracy, intentional interference with contractual relations, and potential personal liability through closely held corporate entities.

The motion to strike was dismissed and the defendants were ordered to deliver a statement of defence.

Following a motor vehicle accident involving an uninsured driver who struck a pedestrian, the driver and her spouse sought a declaration that the spouse’s automobile insurer was required to indemnify them after the spouse added the vehicle to his existing policy the day after the accident.

The insurer alleged the addition was obtained through intentional misrepresentation, including false statements about ownership and the failure to disclose the prior accident.

The court found the spouse had no insurable interest in the vehicle and that both individuals engaged in a scheme to deceive the insurer by backdating coverage and concealing material facts.

Under s. 233 of the Insurance Act, their right to recover indemnity was forfeited due to fraud and false statements.

The action was dismissed and the uninsured motorist insurer was required to respond to the personal injury claim.

The applicant sought a vesting order under the Trustee Act transferring full title to partnership property held in trust by the respondent.

The court determined that the parties had formed an oral real estate partnership in 1987 to acquire, maintain, and sell investment properties and that the partnership continued despite discussions of dissolution.

The respondent was entitled to an accounting of partnership assets and reimbursement for excess contributions before any transfer of property could occur.

The court rejected limitation arguments, holding that equitable principles and the doctrine of laches governed the dispute.

Issues relating to accounting and potential transfer of the disputed property were reserved for further submissions.

The proposed representative plaintiff brought a motion to certify a class proceeding for settlement purposes against certain defendants in alleged price‑fixing within the static random access memory (SRAM) industry.

The action alleged breaches of Part VI of the Competition Act, civil conspiracy, and tortious interference with economic interests.

A national settlement had been reached with certain defendants, providing payment to class members and cooperation in the ongoing litigation against remaining defendants.

The court considered the certification criteria under s. 5 of the Class Proceedings Act, 1992 and found they were satisfied for settlement purposes.

The court approved certification against the settling defendants and approved the proposed notice and notice plan, setting a date for settlement approval proceedings.

In a proposed class proceeding arising from a vending machine distributorship program, the plaintiffs alleged misrepresentation and sought rescission and damages under the Arthur Wishart Act (Franchise Disclosure), 2000.

A supplier of nut products brought a motion for summary judgment arguing it was neither a partner nor a “franchisor’s associate” of the program’s operator.

The court held the documentary record showed the supplier merely licensed trademarks and supplied products and did not share profits, manage the program, or exercise control over the franchisor.

Applying the statutory definition and partnership principles, the court concluded there was no genuine issue requiring a trial.

The claim against the supplier was dismissed while the proposed class action continued against the franchisor.

The court addressed a motion and cross‑motion seeking directions concerning the forensic review and discovery of electronic information stored on an external hard drive belonging to a former employee accused of misappropriating confidential information and competing with his former employer.

Disputes arose regarding who should conduct the review, how privileged material should be handled, and whether backup files on the drive should be examined.

The court held that the defendant must review potentially privileged communications with former counsel and produce those relating to advice about the enforceability of a restrictive covenant, over which privilege had been waived.

The court also authorized further forensic analysis of backup files by an independent expert and ordered transparency regarding prior searches conducted by the plaintiff’s counsel.

Costs of the forensic work were ordered to be borne by the plaintiff but recoverable in the cause.

The plaintiffs sought leave under Part XXIII.1 of the Securities Act and certification of a proposed class proceeding alleging secondary market misrepresentation by a public issuer and its directors and officers in continuous disclosure documents.

They also requested approval to discontinue common law negligent misrepresentation and oppression remedy claims in favour of the statutory cause of action.

The court held that the plaintiffs met the statutory leave test by demonstrating good faith and a reasonable possibility of success at trial.

It further concluded that discontinuance of the common law and oppression claims would not prejudice class members because the statutory claim avoided reliance issues and certification difficulties.

The action was certified as a class proceeding, with identifiable class members, common issues, and a preferable procedure established.

The appellant insurer appealed a master’s order compelling answers to discovery refusals and production of documents from its claims file in litigation arising from a propane facility explosion and a coverage dispute.

The insurer asserted solicitor-client privilege and litigation privilege over memoranda, meeting notes, and claims file materials generated during the coverage investigation.

The court held that an appeal from a master’s decision is not a de novo hearing and is limited to correcting errors of law, wrong principles, or palpable and overriding errors.

The insurer failed to establish an evidentiary basis for either solicitor-client privilege or litigation privilege because no affidavit evidence demonstrated that the documents contained legal advice or were created for the dominant purpose of litigation.

The master’s order requiring production was therefore upheld.

The applicant sought leave to appeal a carriage decision in competing securities class proceedings under the Class Proceedings Act, 1992.

A prior motion judge had granted carriage to one group of plaintiffs and stayed the applicant’s action after comparing factors such as causes of action, class definitions, representative plaintiffs, and litigation strategies.

The applicant argued the motion judge improperly conducted a substantive comparison of the competing theories and failed to give sufficient weight to factors such as conflicts of interest and retainer arrangements.

The court held that there was conflicting jurisprudence regarding the proper scope of analysis on carriage motions and that the issue warranted appellate clarification.

Leave to appeal was granted on the question of whether the motion judge erred in assessing the theories and attributes of the competing class actions and in determining carriage.

The appellant insurance broker appealed a Small Claims Court judgment holding it liable for failing to properly advise the respondents regarding a vacancy exclusion in an insurance policy for a boarding house property.

The insurer had denied coverage for vandalism-related water damage that occurred while the property was vacant.

The trial judge found the broker breached its duty by failing to explain the vacancy exclusion despite the respondents relying on the broker’s expertise to obtain appropriate coverage.

Applying the appellate standards of review for factual and legal errors, the court held there was no palpable and overriding error in the factual findings and no error of law in the application of governing principles on insurance broker duties.

The appeal was dismissed.

Following a prior ruling that the defendants incorporated a company to defeat enforcement of a judgment obtained by the plaintiff, the court addressed costs of the motion.

The evidence established that the defendants collaborated to divert income through a corporation to prevent garnishment and frustrate the plaintiff’s efforts to enforce her judgment arising from fraudulent misrepresentation.

The court found the defendants’ conduct akin to fraud and held that substantial indemnity costs were warranted.

In the absence of responding submissions from the defendants, the court reviewed the claimed fees and disbursements and fixed costs.

Substantial indemnity costs were awarded jointly against both defendants.

The applicants sought a representation order under Rule 10.01 of the Rules of Civil Procedure permitting them to represent 416 claimants who had used payroll processing services and alleged that trust funds were misapplied by a bank.

The underlying dispute concerned funds withdrawn from employers’ accounts for payroll and tax remittances that were deposited into mixed trust accounts and partially applied to reduce the payroll processor’s indebtedness to the bank or transferred to a related entity.

The bank opposed the representation order, arguing that two separate transactions created distinct issues among claimants.

The court held that common issues existed because liability for the alleged breaches of trust would affect all claimants collectively and distribution of any recovery would be shared.

A representation order was granted and a related unopposed motion concerning distribution of funds held by a government agency was also authorized.

The defendant manufacturer brought a motion seeking relief from an earlier consent arrangement requiring it to maintain an exclusive distribution agreement with the plaintiff distributor pending further court order.

The court interpreted the earlier arrangement as permitting the matter to be brought back before the court and considered whether the plaintiff was entitled to an interlocutory injunction to maintain the agreement until trial.

Applying the test from R.J.R. MacDonald v. Canada (Attorney General), the court found that although there were triable issues regarding the duration and alleged breaches of the agreement, the plaintiff failed to establish irreparable harm and the balance of convenience did not favour injunctive relief.

The court emphasized that enforcing exclusive distribution agreements through injunctions can require ongoing judicial supervision of deteriorating commercial relationships.

The request for an interlocutory injunction was refused, though the agreement was temporarily maintained for 60 days to allow the distributor to transition its business.