Corporate/Commercial Law - SCJ

Investors who lost $17 million in a fraudulent certificate of deposit scheme brought a motion for leave to amend their statement of claim against a bank that had acted as a correspondent bank for the fraudster.

Earlier pleadings alleging a general duty on banks to monitor customers for fraud had been struck for failing to disclose a reasonable cause of action.

The proposed amendments added detailed allegations based on documents obtained by liquidators showing internal concerns within the bank about suspicious activities and regulatory issues surrounding the customer.

The court held that the amended pleading alleged a more specific duty arising from particular knowledge and circumstances rather than a broad duty to investigate customers generally.

Because the new allegations relied on information not reasonably available earlier and could potentially support a tenable claim, leave to amend was granted.

Following successful summary judgment motions by the defendants in an insurance coverage dispute, the court determined the appropriate costs award.

The defendants sought substantial costs exceeding $140,000 combined.

Applying Rule 57 and the principle of proportionality, the court considered the novelty of the legal issue, the defendants’ delay in bringing the summary judgment motions, and the plaintiff’s good‑faith pursuit of a non‑frivolous claim.

The court also emphasized access to justice concerns given the modest value of the underlying claim.

Costs were significantly reduced and fixed at $30,000 payable to the insurer and $20,000 payable to the broker, inclusive of disbursements and HST.

The plaintiff brought a motion for partial summary judgment seeking interpretation of long-term disability insurance policy provisions relating to coordination of benefits and cost-of-living indexation.

The dispute concerned whether Canada Pension Plan disability benefits should be treated as a direct offset from the policy entitlement or as part of an all-source maximum calculation, and whether indexation should apply to the gross policy amount or the net benefit paid.

The court held that the policy unambiguously required CPP disability payments to be deducted directly from the monthly policy entitlement and that indexation applied only to the net amount actually payable after the deduction.

Extrinsic evidence, including an insurer letter that had initially applied an indirect offset, could not create ambiguity where the contractual language was clear.

The motion for summary judgment was dismissed.

The applicants sought enforcement of a final arbitration award ordering the respondents to purchase the applicants’ minority shareholding in hotel development corporations for $1.15 million after findings of oppressive conduct.

The respondents requested additional time to arrange financing before enforcement.

The court exercised its authority under the Arbitration Act to enforce the award but stayed enforcement for approximately six weeks to permit completion of financing for the buy‑out.

Requests concerning termination of the minority shareholder’s board veto rights and the status of a mortgage held by the minority shareholder were declined.

Operational arrangements ordered in prior interlocutory endorsements were continued pending the buy‑out deadline.

Two subcontractors sued a prime contractor for breach of oral contracts relating to a municipal winter road maintenance contract.

The plaintiffs alleged their arrangements to supply trucks and operators were for the same five‑season duration as the contractor’s agreement with the municipality, while the defendant argued the arrangements were terminable at will.

The court held that the parties’ conduct, including deposits corresponding to the five‑year municipal contract and payment structures flowing from that contract, objectively demonstrated fixed‑term agreements.

The defendant’s termination after one season constituted breach of contract.

Damages representing lost profits for the remaining four seasons, subject to mitigation, were awarded.

Borrowers brought an application seeking a declaration that a lender’s $19,000 administrative fee charged under a mortgage commitment letter contravened the contract because only one draw of $150,000 had been advanced rather than the full $475,000 facility.

The applicants argued the fee should have been limited to 4% of the funds actually advanced.

The court held that the mortgage commitment letter unambiguously established a fixed administrative fee payable for the loan facility, not a percentage tied to individual advances.

Interpreting the contract according to its plain wording, the court rejected reliance on subjective understanding or subsequent documents.

The application was dismissed and the lender was awarded substantial indemnity costs.

A judgment creditor brought a garnishment motion alleging that the garnishee and its principal knowingly contravened notices of garnishment by continuing to pay salary to a judgment debtor while falsely stating no employment relationship existed.

Evidence showed the garnishee entities continued paying the debtor for management services despite service of garnishment notices and filed inaccurate garnishee statements.

The court found the payments constituted wages subject to garnishment and that the garnishee ought to have remitted the statutory portion to the sheriff.

Given the deliberate misrepresentations and the integrated business structure, the court pierced the corporate veil to impose personal liability on the principal.

Judgment was granted for the garnishable portion of the wages together with interest and substantial indemnity costs.

The plaintiff brought an application for summary judgment under Rule 20.04 of the Rules of Civil Procedure following the defendant’s default on a truck lease.

The defendant did not dispute the default, arrears, or interest calculation but challenged the value credited for the returned vehicle.

The court found the appraisal relied on by the plaintiff to credit $47,000 for the truck was vague and insufficient to determine the proper credit.

As the only genuine issue was the appropriate valuation of the returned vehicle, the court ordered a trial limited to that issue.

Following judgment awarding damages for auditor negligence, the court determined the appropriate prejudgment interest rate and start date under the Courts of Justice Act.

The court rejected the plaintiff’s proposed interpretation of the Ministry interest rate tables and held that the statutory quarterly rate corresponding to the commencement of the action applied.

The court also declined to average interest rates over the period absent compelling justification, emphasizing that deviations from the statutory scheme require substantial evidence.

Applying ss. 128 and 130 of the Act, the court structured the accrual of prejudgment interest to reflect when losses were actually incurred rather than the breach date alone.

Interest was calculated in stages culminating in a total prejudgment interest award exceeding $33 million.

A partnership sought the appointment of an arbitrator under the Arbitration Act, 1991 following the withdrawal of a former partner and the issuance of a notice of arbitration alleging breaches of the partnership agreement.

The former partner moved to stay the arbitration pending resolution of a separate civil action involving other former partners and raised counterclaims challenging the validity of provisions in the partnership agreement.

The court held that the arbitration clause in the partnership agreement was broad and that the disputes raised by the partnership clearly fell within its scope.

The court found that the respondent’s counterclaim in the civil action was a colourable attempt to sidetrack the arbitration and that the issues could properly be determined by an arbitrator.

The motion to stay the arbitration was dismissed, the respondent’s counterclaim in the civil action was stayed, and the court appointed an arbitrator pursuant to the Arbitration Act, 1991.

The applicants sought an order appointing an arbitrator under a Shareholder Purchase Agreement containing a mandatory arbitration clause following the purchase of a real estate brokerage.

The dispute concerned alleged improper bookkeeping and tax liabilities discovered after the closing of the transaction, which the applicants alleged breached the respondent’s representations, warranties, and indemnities.

The respondent argued that a prior mutual release resolving earlier litigation extinguished the agreement and barred the claims.

The court held that the claims were discovered after the release and were not covered by it, and that the dispute was at least arguable within the scope of the arbitration clause.

The court appointed an arbitrator and directed the dispute to arbitration.

The defendant appealed a master's order granting leave to amend a statement of claim to include relief for recognition and enforcement of a Russian arbitration award under the International Commercial Arbitration Act.

The appellant argued the amendment introduced a new cause of action after the limitation period and relied on a prior decision setting aside default judgment.

The court held that the master's decision correctly found the amendments merely particularized an existing claim referencing the arbitration award and did not introduce a new cause of action.

The prior decision setting aside default judgment was limited to procedural deficiencies in the pleadings and did not extinguish the underlying claim.

The appeal was dismissed and the master's order upheld.

The applicant brought a motion for directions regarding the procedure for an oppression-related application involving disputes over family-owned corporations.

The applicant sought to sever and proceed first with issues concerning ownership and valuation of shares in one corporation, arguing that those issues were discrete and could be resolved without delay.

The respondents argued the matters were intertwined and that the entire proceeding should be converted to an action and proceed to trial.

The court held that it was premature to determine whether the issues could ultimately be severed or whether a trial would be required, and that the applicant should be permitted to proceed with the proposed application hearing limited to the corporate issues identified.

The parties were directed to establish a timetable for hearing the application issues.

Members of a community association brought an application alleging mismanagement and lack of financial transparency by the association’s president and executive leadership.

The applicants relied on an audit report identifying deficiencies in financial controls, missing documentation for expenditures, and risks of fraud.

The respondent denied the allegations but provided limited evidentiary support and attempted to rely on materials filed late.

The court found the applicants’ concerns credible and concluded that significant governance and transparency issues existed.

The court ordered the association to convene a general meeting, present financial accounts with supporting documentation, appoint independent auditors, and establish a new statute‑review commission, but declined to dissolve the electoral commission.

A former employee of a digital cinema company misappropriated proprietary 2D to 3D conversion software and confidential information while still employed and used it to establish competing businesses in China.

The court found breaches of the duty of good faith and fidelity, misuse of confidential information and trade secrets, misappropriation of a corporate opportunity, and the tort of conversion.

The defendants, most of whom were noted in default, used the stolen technology to win a theatre project and compete in the digital cinema market.

The court awarded damages reflecting the minimum cost of developing the stolen technology, disgorgement of profits from the misappropriated project, punitive damages, and substantial costs.

In a professional negligence action arising from accounting advice regarding eligibility for Canadian Controlled Private Corporation status, the defendant accountants moved for summary judgment dismissing the plaintiffs’ claim.

The defendant also brought a third party claim against the plaintiffs’ solicitors alleging negligent misrepresentation and seeking contribution and indemnity.

The court held that the accounting negligence claim involved complex factual disputes, credibility issues, and professional standards unsuitable for determination on summary judgment and therefore required a trial.

However, the court granted summary judgment dismissing the third party claim against the solicitors, finding no duty of care and no reasonable reliance by the accountants on the solicitors’ confirmations regarding a shareholders’ agreement.

At a Commercial List case conference in a complex civil fraud action involving numerous defendants and related proceedings, the court addressed litigation management issues including settlements, expert reports, discoveries, and trial planning.

Several defendants had reached settlements with the plaintiff.

Discoveries were complete and the matter was ready for trial.

The parties proposed an electronic trial process, which the court approved, directing that the plaintiff initially fund the infrastructure costs but permitting those costs to qualify as allowable disbursements for later costs determination.

The court also endorsed a streamlined trial timetable expected to shorten the originally estimated trial length.

A shareholder dispute arose during implementation of a prior court order directing valuation of a company and providing one shareholder an option to purchase the other’s shares.

The applicant sought to replace the process with a buy/sell mechanism and contested the information to be provided to the court‑appointed appraiser, while also attempting to rely on a personal net worth statement of the respondent obtained from family law proceedings.

The court held that the appraiser should be free to evaluate all information provided by the parties and declined to prescribe limits on materials submitted.

The request to replace the previously ordered process with a buy/sell arrangement was refused, though the court varied timelines to complete the valuation.

The court also ruled that the inadvertently disclosed net worth statement remained privileged and could not be relied upon.

A commercial trucking company sought indemnity under an automobile insurance policy after its tractor unit was reported stolen.

The insurer denied the claim, alleging the insured provided false particulars and failed to disclose significant unrepaired damage and the true market value of the vehicle during the application process.

The court held the insurance broker acted as the insured’s agent and that the insured was bound by the contents of the signed application and OAF1 form.

Relying on s. 233(1)(a)(i) and (ii) of the Insurance Act, the court found the insured provided false particulars and knowingly failed to disclose material facts, which prejudiced the insurer’s underwriting decision.

The claim was therefore invalid and indemnity forfeited.

The applicant sought to set aside an arbitration award requiring payment of finder’s fees arising from investments made by a third-party investor introduced through the respondent.

The applicant argued the arbitrator committed unreasonable errors of law, improperly relied on a prior agreement, misinterpreted a non‑circumvention clause, and exceeded jurisdiction by determining issues relating to securities law registration requirements.

The court held that even if reasonableness review were available, the arbitrator’s interpretation of the finder’s fee agreement was reasonable and grounded in the contractual language and factual matrix.

The court further held that securities law compliance issues were capable of arbitration and that the applicant had waived jurisdictional objections by raising the issue before the arbitrator.

The application to set aside the award was dismissed and the cross‑application to enforce the arbitration award was granted.