The Supreme Court of Canada rarely hears appeals in commercial disputes anymore, but when it does, one can usually expect that a new direction is about to be taken.  Such was the case in Southcott Estates Inc. v. Toronto Catholic District School Board, a decision just released by the Supreme Court of Canada on appeal from the Ontario Court of Appeal in a dispute involving a land purchase. 

In this case, a developer, Southcott, incorporated a company purely to sign an agreement to purchase a particular piece of land for development (which is a common way of going about these transactions).  The company’s only asset was the deposit given to it by the developer that owned it to submit with its offer. 

Mitigation of damages is always a fundamental aspect of a damage claim.

The Defendant was a school board that agreed to sell the property.  As a condition in the sale agreement, the school board agreed that it would obtain a severance from the local committee of adjustments before closing. 

The board did apply for a severance but ran into procedural problems.  The committee of adjustment indicated to the board that it would have submit a development plan.  It was clear that it would be impossible to close the transaction by the scheduled closing date given the time it would take for a development plan to be prepared and submitted.  Southcott suggested that the closing date be put off into the future to allow for this to take place.  The board refused, declared the deal to be at an end, and returned Southcott’s deposit. 

Southcott felt that the board had breached the sale agreement by taking this step.  It sued the board for specific performance of the sale agreement.  In other words, Southcott asked the court to order the board to complete the transaction.  Continue reading →

Several weeks ago, in an event highly publicized across Canada, a 15-year old teenager from British Columbia named Amanda Todd took her own life.  Apparently, she had been the victim of cyber bullying for quite some time. 

Shortly before her death, she had posted a video on YouTube describing the experiences that eventually motivated her to take her own life. 

Most companies of any size have instituted policies governing the way in which their employees conduct themselves online.

Her death has sparked a great deal of interest on the topic of cyber bullying.  Unfortunately, it has also sparked a great deal of comment of a negative nature. 

One such comment, which was particularly offensive, was posted by a resident of London, Ontario on an Amanda Todd Memorial Facebook web page.  The author wrote the words “Thank God this b—– is dead”. 

A woman living in Calgary noticed the comment and found it sufficiently offensive to try to determine who had left it.  She was successful in doing so and determined that the author was employed by Grafton-Fraser, a national clothier, at one of its stores in London, Ontario.  She reported the event to the company which then terminated the individual’s employment.  The company issued a statement indicating that “our company ethics are based on tolerance, respect and fair and honourable treatment of all individuals, internally, with our customers and the population as a whole”.  Continue reading →

The recent Superior Court decision in 7984987 Canada Incorporated v. Lixo Investments, provides a useful summary and update of the law on the relief from forfeiture.

Ontario’s Commercial Tenancies Act provides that where a tenant is in default with respect to a rent payment of 15 days or more, the landlord can exercise its remedies including termination of the lease (unless the lease itself provides otherwise).

Normally, when the default is merely for nonpayment of rent, relief from forfeiture will be granted.

Landlords do not normally pounce on tenants on the 16^th day after a rent cheque either doesn’t arrive or bounces.  Such events are normally followed by communication between the parties often resulting in the payment being made. 

If the tenant is prepared and able to remedy the default, but the landlord decides that it would prefer to end the relationship, the tenant still has an option.  The same statute provides that the tenant can apply to the court for what is referred to as relief against forfeiture.  The tenant can ask the court to require the landlord to accept the late rental payment and allow the tenant back into the premises.  Continue reading →

From time to time, a party to a commercial contract will feel that the other party to the contract has treated him improperly or unfairly.  A review of the contract, however, does not reveal any specific provisions that have been breached by the other party’s offending conduct.  In those circumstances, is there any room to argue that the other party had a duty implied in the contract to act in good faith, and breached the contract by failing to do so?

This question has been put before the court on a number of occasions over the last several years.  On each occasion, a Plaintiff has alleged that the Defendant had an implied contractual duty to act honestly and in good faith in the performance of a contract between the parties.  The duty is said to be implied simply because there is no explicit term in the contract that specifies the existence of such a duty. 

A duty of good faith has been implied to make sure that parties do not act in a way that defeats the essential objective of the contract.

In the past, when the court has referred to the existence of a duty of good faith, it is done so in circumstances in which the case was decided on the basis of established legal principles.  As one judge has said, “Canadian courts have not developed a comprehensive and principled approach to the implication of duties of good faith in commercial contracts”. 

This issue was very recently addressed again by the Ontario Superior Court in 1001411 Ontario Limited v. City of Toronto Economic Development Corporation.  This case involved a dispute over a lease agreement that commenced in May, 1994.  The Defendant/Landlord had a right to terminate the agreement on notice, although the contract did not specify any particular timeframe for notice.  Notice was provided by the Defendant, but the Plaintiff/Tenant took the position that the parties had agreed at the outset that the notice period would be 18 months and far less than that was given.  The Plaintiff alleged that the failure to give a full 18 months’ notice constituted a breach by the Defendant of an implied duty of good faith in the implementation of the lease agreement, giving rise to damages.  Continue reading →

The recent Ontario Court of Appeal decision in Bank of Montreal v. Barber Glass Industries Inc. contains some interesting observations on entire agreement clauses.

In this case, Grant Thornton Limited, a court appointed receiver, entered into an Auction Service Agreement (“ASA”) with a well-known liquidator, Danbury Industrial.  The agreement concerned the sale of assets of a debtor. 

The ASA provided that Danbury would be entitled to a 12% Buyer’s Premium on the sale of the debtor’s assets and envisioned an auction sale.

Where a strict technical construction will produce an unfair result, more often than not the court will find a way around it.

Prior to the auction taking place, Danbury was able to find a purchaser for almost all of the assets by means of a private purchase for $8.5 million.  Danbury entered into an agreement of purchase and sale with the purchaser accordingly.  The agreement made no reference to a Buyer’s Premium.

However, the parties also entered into a bill of sale which was later amended to include a handwritten amendment stating that the purchase price was “inclusive of the Buyer’s Premium”.

After the transaction was completed, Danbury claimed a Buyer’s Premium from the receiver.  The receiver refused to pay and this action started.  Continue reading →

There was a time long ago when under common law, judgment debtors could be imprisoned for failing to pay debts.  Obviously, and thankfully, that is no longer true.  However, judgment debtors who ignore court orders made in debt collection proceedings against them do take the risk of jail time as the penalty for their misconduct. 

“I fought the law, and the law won.”

The Rules of Civil Procedure give the court discretion to order incarceration if a party is found to have disobeyed a court Order.  This is most often seen in the context of a judgment creditor attempting to locate assets to satisfy a judgment, and a judgment debtor doing his or her best to frustrate those efforts.

A perfect example is illustrated by the recent Ontario Court of Appeal decision in Doobay v. Diamond. 

In 2007, the Plaintiffs obtained a judgment by default against Anthony Diamond in the amount of about $850,000.  In May, 2008, Mr. Diamond was examined under oath as part of the Plaintiffs’ efforts to locate assets to satisfy the judgment.  He refused to answer any questions.  Several months later, the Court ordered him to re-attend to answer questions.  As a result, he was examined again in December, 2008.  He still refused to answer a substantial number of questions.  Continue reading →

The recent Superior Court decision of Lata v. Rush et al. provides an interesting reminder of how difficult it is to attack a properly prepared Will, and the circumstances under which a claim for unjust enrichment might still be available to someone who feels short-changed by a deceased. 

Helen Oshchytok died in 2001 at the age of 64 for reasons related to her chronic alcoholism. 

Helen had executed a Will in October, 1997 which included a bequest to her relative, the Plaintiff, Leszek Lata, of a house in Etobicoke. 

Three months before her death, in November, 2000, she executed a new Will giving the house to a friend of hers, Dennis Weber.  Her new Will provided that Lata would receive the sum of $50,000 instead of the house.

After her death, Lata sued Weber, another beneficiary, and the lawyer who had drawn the new Will.  The lawyer died before the trial started, and the trial proceeded only against Weber and other beneficiary.

The deceased had never married and had no children.  She had a long history of alcoholism and had been unable to work for many years.  Continue reading →