In 7868073 Canada Ltd v 1841978 Ontario Inc, 2024 ONCA 371, the Ontario Court of Appeal recently assessed the legal effects of engaging in competing business ventures and the importance of honoring fiduciary duties stemming from license agreements following a parties departure from a former corporation. Robert Langlois (“Langlois”), alongside two partners, launched a powder-coating business, whereby Langlois granted a perpetual license (the “License”) for his industry “knowledge” to 7868073 Ontario Inc. (“786”), a company which the three parties formed and held equal shares in. In turn, 786 owned shares in two other companies (collectively referred to as “ACS”), which Langlois worked with. When Langlois left ACS to start another business without informing his former partners, ACS alleged that Langlois breached the License. The Court of Appeal affirmed the trial judge’s findings, rejecting the argument that the License was void ab initio due to its unreasonable worldwide scope and restrictions … Read More
Internal Business Disputes in Trades, Subtrades, Contractors and Subcontractors
Internal Business Disputes in Trades, Subtrades, Contractors and Subcontractors Our Business Dispute Practice Group can represent shareholders in dispute with other shareholders and/or directors in Closely Held Businesses, Family Businesses, and Startup Businesses. Often a dispute arises because a shareholder cannot obtain access to financial information, financial statements, financial documents and records of the corporation, voting rights, rights with respect to meetings or fraud. In some circumstances, an application can be made by a shareholder for access to financial information, financial statements and records of the corporation. Shareholders remedies include oppression remedy actions and derivative actions, and the appointment of an auditor or an an inspector. One of our senior business litigation lawyers was a faculty member of the Osgoode PD professional development program concerning Shareholder Litigation and the Closely-Held Company. Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests … Read More
Ontario Court of Appeal Comments on the Oppression Remedy – Oppression is Focused on Fairness and Equity, not on Legal Rights
In the recent decision of the Ontario Court of Appeal (“ONCA”), Pereira v. TYLT Technologies Inc. (TYLTGO), 2023 ONCA 682, the appellant successfully appealed a judgment dismissing his application for an oppression remedy under the Canada Business Corporations Act, RSC 1985, c C-44 (the “CBCA”). The appellant argued that the application judge erred in only considering the appellant’s expectations as an employee and failing to consider his expectations as a shareholder. The ONCA opined that the application judge took an “overly narrow” approach by placing focus mostly on the documents signed by the parties and not considering all of the circumstances. The ONCA considered some of the major principles related to the oppression remedy, including the following: Oppression is an equitable remedy which seeks to ensure fairness. Thus, conduct found to be oppressive does not need to be “unlawful” per se, because oppression is focused on “fairness and equity”, rather … Read More
Stay of Court Proceedings in Favour of Arbitration – Standard of Proof
In the recent decision Husky Food Importers & Distributors Ltd. v. JH Whittaker & Sons Limited, 2023 ONCA 260, the Ontario Court of Appeal (“ONCA”) reviewed the law of international commercial arbitration, and in particular opined on the issue of the standard of proof that a party needs to meet in order for the court to grant a stay of a court proceeding pursuant to section 9 of the International Commercial Arbitration Act, 2017 (the “Act”), in favour or arbitration. Section 9 of the Act states as follows: Where, pursuant to article II (3) of the Convention or article 8 of the Model Law, a court refers the parties to arbitration, the proceedings of the court are stayed with respect to the matters to which the arbitration relates. The appellant submitted that the proper analytical framework for assessing a request to stay an action under the Act was set out in the … Read More
Domain Name Disputes, Counterfeit Websites, Fake Bad Reviews and Remedies
I discuss here a number of internet-based “dirty tricks” that competitors or others may deploy and which may have serious adverse consequences for you or your business. I also briefly mention the types of remedies which may be available to those victimized in this way. Confusingly Similar Domain Names In today’s modern web-based commercial world, it is more important than ever to ensure that potential customers and returning customers are properly connected with your website domain name, and to use domain names that are well-branded and associated with your business. It is not uncommon for competitors, cyber-squatters, or other persons to obtain control of domain names that are confusingly similar to your trademarks, business names, or your domain name. Then there is a real risk that users seeking your website are instead directed elsewhere by that confusingly similar domain name. Recovering a Domain Name In order to recover (transfer to … Read More
Internet Harassment: New Tort Recognized in Ontario
Following up on our previous blog in which we advise that the Ontario Court of Appeal decided that there is no common law tort of harassment, the Ontario Superior Court of Justice has now recognized the new tort of online harassment. In the recent decision, Caplan v. Atas, 2021 ONSC 670 (CanLII), the court recognized the inadequacies in the current legal system’s responses to internet defamation and harassment matters. The court opines that while defamation law and freedom of speech have created a balance in society which promotes both free democratic debate and protection of one’s reputation simultaneously, the internet has “cast that balance into disarray”. Recognition of the New Tort of Harassment The difficulty in the cases before the court was that the defendant was not deterred from further egregious conduct even in the face of multiple severe consequences. The defendant was also impecunious, so compensation was not a … Read More
Online Defamation and Use of Pseudonyms
Online Defamation (“Cyber Libel”) Many of our defamation matters come from the internet. These cases take many forms, from defamatory articles, to social media posts, to negative reviews of a business or person. Courts have recognized that online defamation or “cyber libel” is far more perverse than other forms of defamation. This is because internet users can reach the global population within seconds by publishing defamatory remarks about an individual or a business. As such, cyber libel can be significantly more damaging to a person’s business and/or reputation than other forms of defamation. Posting via Online Pseudonyms Some individuals go so far as to create aliases to post malicious and defamatory comments about others on the internet. In Ontario, you can sue an anonymous defamer by naming them as “John Doe” and/or “Jane Doe” in your claim against them. There are methods to determine the identity of these anonymous defamers, … Read More
Toronto Defamation Lawyers – Libel and Slander Law in Ontario
Defamation is the tort of false publication (whether written or oral). Typically, a publication which tends to lower a person’s reputation in the opinion of reasonable members of society, or to expose a person to hatred, contempt or ridicule, is defamatory and will attract liability. The major piece of legislation governing the law of defamation in Ontario is the Libel and Slander Act. According to the Act, you can be defamed in two ways: via either (1) Libel and/or (2) Slander. What is Libel? Defamatory communications may be by words, pictures, sounds, or other forms of communication. They may be published on the internet, in social media postings, on websites, online reviews, chat rooms, or in other forms of broadcast. The dissemination of such defamatory comments or communications to the public is libelous. What is Slander? Slander is the public utterance of words that are meant to disparage a person … Read More
Confidentiality, Non-Competition and Non-Solicitation Clauses In Contracts
Confidentiality, non-competition, and non-solicitation clauses often show up in a variety of business contracts including employment and executive contracts, shareholder, and director agreements, as well as, independent contractor agreements, joint venture agreements and mergers, to name a few. A question that must be considered by contracting parties to such agreements is: What is the enforceability of these types of restrictive covenants? This question particularly becomes important when parties may part ways and a breach of the clauses is suspected or confirmed. These clauses are premised on the assumption that the relationship between the parties will result in the sharing of proprietary and sensitive business knowledge, contacts and relationships related to the operations of a business, which the company seeks to protect, particularly once the relationship between the parties ends. Non-competition clauses usually restrict one’s ability to engage in a competing business. Non-solicitation clauses prohibit one from soliciting stakeholders and contacts … Read More
Corporate Governance Considerations During the Covid-19 Pandemic
Corporate governance issues are top of mind for directors and businesses who are attempting to navigate through the Covid-19 Pandemic related closures and emergency measures. Boards of Directors still need to operate and make decisions in the best interests of the corporation, and this can involve tough decisions, particularly where there is little guidance as to how measures to lift Covid-19 related restrictions will play out. By example, while it may be in the best interest of investors and shareholders that the Board act to lay off employees in the short term, the impact of staff shortages when Covid-19 restrictions are lifted may pose it’s own challenges. Many businesses must consider how to hold governance meetings during Covid-19 times. On March 30, 2020, Ontario passed an Order under the Emergency Management and Civil Protection Act (EMCPA), (Ontario Regulation 107/20) entitled “Meetings for Corporations” making temporary changes to the Business Corporations … Read More
Measures of Last Resort – The Benefits of Exit Provisions in Shareholder’s Agreements
The benefits of a shareholder’s agreement may not be fully considered when parties are intending to go into business together and become joint shareholders in a corporation. Perhaps the mood is optimistic and none of the participants anticipate that things might sour between them down the road. Sometimes corporations are formed absent such an agreement. However, among other benefits, these agreements become particularly useful in managing risk and guiding shareholders through governance issues and disputes that may arise, efficiently so as to minimize disruption to the corporation’s business. Absent a shareholder’s agreement, shareholders in a closely held corporation that cannot see eye-to-eye regarding the operation and path of the corporation, may become stuck in a deadlock where decision-making is effectively stifled due to a stalemate between them. Shareholder’s agreements can serve to provide mechanisms to address deadlock, protect the voice and rights of minority shareholders, provide a road map for … Read More
Liability of Directors and Officers | Oppression Remedy | Shareholders Claims
The lawyers in our Business Dispute Practice Group have acted in Ontario and other jurisdictions for small, mid-sized and large corporations (incorporated in Ontario and in Canada), shareholders, directors, officers, and executives in corporate disputes and shareholder disputes. We have acted for clients in both oppression remedy action and derivative actions. Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests of shareholders and stakeholders in a corporation against wrongful conduct. Whether the Ontario or Canada Act will apply depends on the jurisdiction in which the corporation was incorporated. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the acts of other shareholders, the board of directors or other affiliates of the corporation. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the … Read More
Protecting Your Internet Domain Name
In the age of the internet and e-commerce, the domain name of a business holds tremendous value and is often an integral part of the identity of a business. Since a website can only have one domain name on the internet, there is no shortage of disputes which arise over ownership rights of domain names, particularly those closely affiliated with a registered or unregistered trademark. What is Cyber-Squatting? Cyber-Squatting occurs when someone has registered a domain name in which they have no legitimate business interest, and can sometimes involve setting up a fake website for a business. The reason could be that the registrant will then seek to sell the domain name to the legitimate owner of the business or trademark, or their competitor for a profit. Alternatively, it may be to syphon away business leads online to competitors for a fee, or for advertising revenues. Typo-Squatting is similar to … Read More
Manufacturers and Distributors – Toronto Litigation Lawyers
Our lawyers can provide sound advice and effective representation to manufacturers and distributors involved in actual or potential disputes or litigation. We focus on a wide variety of manufacturing industries in a broad array of legal disputes, including sale of goods, branding and brand protection, transportation and logistics, supply and outsourcing contracts, unpaid accounts, internal business disputes, construction and urgent remedies. The automotive industry, the food and beverage industry and technology industries in the Toronto – Waterloo Innovation Corridor comprise the most substantial sectors of the Ontario manufacturing landscape. We also can provide advice and representation to the many other manufacturing industries in Toronto and elsewhere in Ontario, including these: Automated Machinery and Robotics, Automotive Industry, Auto Parts Manufacturing, Building Materials, Canning and Bottling, Chemical Manufacturing and Supply, Clean Tech, Computer Equipment and Electronic Equipment, Concrete, Brick, Glass, Drywall, Lumber and Stone, Confectionery, Food and Beverage, Financial Technology, Furniture Manufactures and Importers, , Bottling, Packaging and Containers, Heating, Ventilation and Air Conditioning – HVAC, Insulation and Environmental Solutions, … Read More
Entire Agreement Clause Upheld in Manorgate Estates Inc. v. Kirkor Architects and Planners
Entire Agreement Clauses are meant to prevent negotiations that occurred prior to the contract being formed from influencing the Court’s interpretation of the terms set out in the final contract. In other words, past discussions are to have no bearing on the understanding of the contractual terms. In theory, a fully integrated agreement of this kind supplants any earlier oral or written agreements. There is competing jurisprudence in which Entire Agreement Clauses have been both effective and ineffective. However, Manograte Estates Inc. v. Kirkor Architects and Planners is a recent Ontario Court of Appeal decision where an Entire Agreement Clause was effective. In Manograte Estates Inc. v. Kirkor Architects and Planners, the Ontario Court of Appeal upheld the Motion Judge’s decision that the Entire Agreement Clause in the relevant agreement, regarding architectural consulting for a construction project, operated as a complete defence to the appellants’ claim of alleged negligent misrepresentation. The Entire Agreement Clause … Read More
The Supreme Court of Canada On Defence Against the Tort of Conversion (Teva Canada Ltd. v. TD Canada Trust)
In Teva Canada Ltd. v. TD Canada Trust, Teva Canada Ltd. (“Teva”), a pharmaceutical company, “was the victim of a fraudulent cheque scheme implemented by one of its employees”, (para 1). Teva claimed the collecting banks were liable for the tort of conversion. Teva Canada Ltd. v. TD Canada Trust provides insight into the Bills of Exchange Act‘s (“BEA”) section 20(5) defence to the tort of conversion, by clarifying the approach used to determining whether a payee is “fictitious or non-existing”. In the event that a payee is deemed fictitious or non-existing within the meaning of section 20(5) of the BEA, the bill may be treated as payable to the bearer, and thus can be negotiated by simple “delivery” to the bank meaning endorsement is not required, and the defence will succeed (para 5). Justice Abella, writing for the majority, outlined the two-step framework a bank must satisfy to demonstrate that a payee is fictitious or … Read More
Gilbertson Davis LLP Enforces Liquidated Damages Clause in Settlement Agreement by Summary Judgment
In Haas v. Viscardi, 2018 ONSC 2883 (CanLII) the plaintiff settled a claim of $200,000 based on fraudulent misrepresentation with three defendants. The settlement agreement provided for various payments by the defendants on specified dates. The settlement agreement required Viscardi to make payments of $30,000 in three installments. If Viscardi failed to make the payments on the dates provided, the settlement agreement provided that Viscardi would consent to judgment for $60,000 (the “Consent Judgment Clause”). Viscardi made one payment of $10,000, but failed to make the remaining two payments, in breach of the settlement agreement. He then refused to consent to judgment. The plaintiff commenced a claim to enforce the settlement agreement, and brought a motion for summary judgment. The motion judge rejected Viscardi’s argument that the Consent Judgment Clause was an unenforceable penalty clause. The judge considered the test for whether a liquidated damages clause is an unenforceable penalty: … Read More
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