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 →

The recent decision of the Ontario Superior Court in Barton v. Rona Ontario Inc. sheds interesting light on an issue relating to wrongful dismissal that is rarely articulated.  That issue has to do with the difference between the way in which a company assesses misconduct and its need to respond in a way which sends an appropriate message to its other employees, on the one hand, and the analysis that a court will undertake in assessing the situation, on the other hand.

The Court will not consider the totality of the business reasons why an employer might wish to terminate an employee.

In this case, Mr. Barton was an assistant store manager at a Rona hardware store in Barrie, Ontario. 

In April, 2009, a computerized training program was scheduled to take place at the training centre at the store.  The training centre was on the second floor and not accessible by individuals in wheelchairs. 

One of the store’s employees was a Mr. Malmstrom, who was wheelchair-bound.  He wanted to attend the seminar and the management team at the store wanted to accommodate him.  Unfortunately, there was no conventional way of bringing him up to the second floor of the store.  Continue reading →

When I first started receiving referral work from American lawyers many years ago, I became aware that for the most part, American litigants are responsible for bearing their own legal costs.  I found many American lawyers surprised to find that this is not the case in Ontario. 

As Canadian litigants are well (and often painfully) aware, a court will have discretion at the end of a case to award costs as it sees fit.  In almost every case, costs are awarded in favour of the successful party. 

What is less commonly understood by non-lawyers is that “costs” to be paid by the losing party is not the same as requiring the losing party to pay all of the winning party’s legal expenses.  The normal rule is that the loser must pay what is referred to as partial indemnity costs – roughly a percentage, usually between 50% and 2/3, of the winning party’s legal expenses. 

This rule applies not only to cases that have been concluded by a trial, but also to motions.  Typically, the winner of a motion is also entitled to partial indemnity costs.  Continue reading →