Ontario recently enacted the International Choice of Court Agreements Convention Act, 2017, which will give effect to the Hague Convention on Choice of Court Agreements (the “Hague Convention”) in Ontario once Canada ratifies the Hague Convention. (Canada has not yet signed or ratified the Hague Convention. It is not yet known when Canada will ratify the Hague Convention. The Uniform Law Conference of Canada adopted a model implementation statute in 2010, suggesting that Canada may sign and ratify the Hague Convention.) In preparation for ratification, Ontario businesses should be aware of the Hague Convention’s key features, including: • where parties of member States have expressly agreed to a court in their contract, the court selected by parties must act in every case as long as the choice of court agreement is valid. The agreed Court does not have discretion (on forum non conveniens or other grounds) to decline jurisdiction in favour of courts of another State. • any court … Read More
The Importance of Brand Protection
In many cases, a business’s brand, reputation, and goodwill, can be its most important assets. Customers will visit, re-visit, and refer others to a business because of the reputation created through its successful branding initiatives and quality products and services. Therefore, it is important for any business to be aware of the tools available to protect their brand from being devalued or misused by others. Some of these tools are preventative, such as by registering a trademark with CIPO. the USPTO, or other national trademark offices, and by ensuring the proper assignments or licences are set out in any contracts with any designers or users of your trademarks. The copyrights for creative works can be registered, while fashion designers can seek protection of their creations as an industrial design. Unfortunately, the more successful a trademark or brand, the more likely it is to be used by copycats, counterfeiters, and competitors to drive business … Read More
International Sale of Goods – the Law Applicable in Ontario
Many Ontario businesses buy and sell goods from foreign companies. However, few Ontario businesses are aware that different laws apply to international purchases and sales of goods. For purchases and sales of goods between Ontario companies, the Ontario Sale of Goods Act will typically apply. However, for purchases and sales of goods between Ontario and foreign companies, the United Nations Convention on Contracts for the International Sale of Goods (the “CISG”) will typically apply. The CISG is “Ontario law”. It is enacted in Ontario by the International Sales Conventions Act. There are a number of key differences between the Ontario Sale of Goods Act and the CISG. One of the most notable is the obligation on the buyer to inspect goods (article 38) and give notice of any non-conformity (article 39). The inspection obligation imposed by article 38 can have significant consequences: if the buyer fails to detect a lack of conformity … Read More
Court of Appeal Reiterates Importance of Pleading Particulars of Fraud
In Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320, the trial judge found the appellants liable to a company’s shareholders for fraudulent misrepresentations before and after an initial public offering (IPO). On appeal, the appellants argued that the trial judge erred in finding liability based on the IPO-related statements because the respondents did not plead or argue at trial that such statements amounted to fraudulent misrepresentations. The Court of Appeal stated that a pleading of fraud or misrepresentation must set out with careful particularity the elements of the misrepresentation relied upon, including: the alleged misrepresentation itself; when, where, how, by whom and to whom it was made; its falsity; the inducement; the intention that the plaintiff should rely upon it; the alteration by the plaintiff of his or her position relying on the misrepresentation; the resulting loss or damage to the plaintiff; and if deceit is alleged, an allegation … Read More
Court Considers When Jurisdiction May be Found Against Sole Officer And Director of Foreign Corporation
In Olympique CMCT Inc. v Les Industries Pancor Limitée, 2017 ONSC 1929, the Plaintiff, Olympique, was a Quebec company. Olympique obtained default judgment in a Quebec action against the Defendants Pancor, an insolvent Ontario company, and Panarese, Pancor’s sole officer and director. Olympique brought an action in Ontario seeking recognition and enforcement of the Quebec judgment against Panarese in Ontario. Panarese argued that Ontario should not enforce the Quebec judgment because, among other reasons, the Quebec Court did not have jurisdiction to grant the Quebec judgment against him. Panarese lived in Ontario. Pancor was primarily located in Ontario. However, the Court stated that it was sufficient that Quebec had a real and substantial connection with the subject matter of the action, even if it had no connection with Panarese. The Court found that Panarese signed purchase orders which were transmitted to Olympique in Quebec, meaning that the contracts between Pancor and … Read More
Court Refuses to Authorize Shareholder Buyout in Absence of Oppression
The Ontario Business Corporations Act provides a wide range of remedies to a person affected by the actions of a corporation or its directors that are found to be oppressive, unfairly prejudicial, or unfairly disregard the interests of that person. Most commonly, these remedies are sought by minority shareholders when actions are taken or threatened that would unfairly hurt their interests. One of those remedies is to direct the corporation, or any other person, to purchase the shares of the complainant. This remedy essentially allows shareholders to be relieved of their shares for a fair price, leaving the corporation and its remaining shareholders to carry on without further complaint from the complainant. However, this remedy does not create a free-standing right for a shareholder of a privately-held corporation to force the sale of his or her shares for any reason. This principle was recently confirmed in Wilfred v Dare et al. In that case, the complainant sought … Read More
Supreme Court Considers Oppression Remedy
In Mennillo v. Intramodal inc., 2016 SCC 51, the Supreme Court of Canada addressed the application of the oppression remedy under the Canada Business Corporations Act (“CBCA”), which applies to federally incorporated companies. (The Ontario Business Corporations Act, which applies to Ontario incorporated companies, also contains an oppression remedy). The case involved a private corporation with originally two shareholders. There was no shareholders’ agreement. The Court described the parties’ dealings as being “marked by extreme informality”. One of the two shareholders, Mennillo, eventually resigned as officer and director of the company by providing a notice of resignation. The notice did not address his status as a shareholder. There was conflicting evidence from the parties about whether Mennillo intended to cease being a shareholder. Ultimately, the trial judge accepted that Mennillo’s withdrawal from the company included his intention to no longer guarantee the company’s debts. The trial judge found that Mennillo agreed … Read More
Family Business Dispute, Start Up Company Dispute, and Closely-Held Company Litigation
We have experience acting for, advising and representing those in closely-held company litigation, both arising from family business disputes and from start-up company disputes. Family Business Disputes Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow, as key members of the company or partnership leave the family business, or when personal relationships of the key members of the family business change or deteriorate. One of the most common differences between a family business and other established businesses, whether or not a shareholders’ agreement, partnership agreement and other legal documentation was used in the formation of the family business, is the informality in operation of the family business, including the often ignored distinction in fact between employees, shareholders, or partners – since family members take on multiple roles. Please see our webpage on Family and Closely Held Business Disputes. Start Up Company … Read More
Shareholder Disputes, Oppression Remedy, and Directors and Officers Liability
Our lawyers have acted in Ontario and other jurisdictions for small and mid-sized Ontario corporations, shareholders, directors, officers, executives and creditors in corporate disputes and shareholder disputes. We have acted 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. When any act or omission of the corporation or any of its affiliates effects or threatens to effect a result; the business or affairs of the corporation or any of its affiliates are, … Read More
Partnership Disputes & Joint Venture Litigation
Our lawyers have acted in Ontario and other jurisdictions for partners in small and mid-sized partnerships, and limited liability partnerships (LLPs) and contractual parties and partners in joint ventures. Partnership Disputes Partnership is a relationship between persons carrying on a business in common with a view to profit, which is not a corporation. It is one of the most commonly used business associations for small and medium-sized business. A partnership can be created at law and the Partnerships Act, R.S.O. 1990, c. P.5 sets out rules for determining existence of partnership, though commonly the parties enter into a partnership agreement. Joint Venture – Is it a Partnership? Joint ventures are often established to synergize what each member of the joint venture can add to the consortium. Sometimes a joint venture is the structure chosen because those members engaged in the joint venture are located in different jurisdictions. While invariably created by contractual agreement, some … Read More
Toronto Lawyers for Victims of Investment Fraud: When Investing in a Toronto Business Goes Bad
A bad investment may not be the result of market fluctuations. A false representation inducing and leading to an investment loss may be actionable at law. Often there is a promised high-yield on an investment in a company, project or property. Sometimes a loss occurs from a scheme where there is no intention by those entrusted with an investment to make the promised purchase or transfer. In Ontario, civil lawsuits for the victims of investment fraud have often been framed as claims for deceit, fraudulent misrepresentation, civil conspiracy, breach of contract, unjust enrichment and restitution. Increasingly though, plaintiffs in lawsuits simply claim damages for losses arising directly from the tort of civil fraud. The leading case on civil fraud in Canada is the Supreme Court of Canada decision in 2014 in Hryniak v. Mauldin, 2014 SCC 7, and in that case civil fraud is defined this way “… the tort of … Read More
Business Dirty Tricks: Unfair Competition: Intentional Interference, Inducing Breach of Contract, Conspiracy and Defamation
Sometimes businesses and their stakeholders act wrongfully in seeking to advance their interests and / or harm competitors. There are often reports of the “dirty tricks” used by those in business to seek to destroy, defeat or diminish the effectiveness of a competitor. These are often unethical tactics, but sometimes such conduct is also wrongful and has been recognized by the common law as actionable in the courts for damages or injunctive or other urgent equitable relief, or prohibited by a statute which provides for a civil monetary remedy or grounds for an injunction. These causes of action have been recognized and provide the basis of lawsuits for harm, loss and damage, and in suitable circumstances, grounds for an immediate injunction or mandatory order prohibiting the further commission of the wrongful acts. In short, wrongful intentional acts causing harm, loss or damage to businesses or their stakeholders may give rise to a cause of action in common law business torts (the so-called … Read More
Court Stays Arbitration but Denies Costs to Successful Party for “Blameworthy Conduct”
In Gorman v Kosowan, 2016 ONSC 5085, the applicant commenced a proceeding regarding a business dispute. The applicant and individual respondent were joint owners of a transportation and warehouse business. A dispute arose between them. The respondents subsequently terminated the applicant’s employment and excluded him from the business. The applicant sought relief from the allegedly oppressive conduct under the Canada Business Corporations Act and the Ontario Business Corporations Act. The respondents brought a motion to stay the oppression application based on an arbitration clause in the parties’ Unanimous Shareholders’ Agreement (“USA”). The USA arbitration clause required arbitration for “disputes under” the USA. The Judge found that the applicant’s claims were covered by the arbitration clause and granted the respondents’ motion to stay the application. In the Judge’s subsequent costs decision, here, the Judge denied the respondents’ request for costs of the motion. While a winning party is typically entitled to its costs … Read More
Joint Venture Disputes and International Joint Venture Arbitration
Joint ventures are often established to synergize what each member of the joint venture can add to the consortium. Sometimes a joint venture is the structure chosen because those members engaged in the joint venture are located in different jurisdictions, a consideration which may be pivotal for its success. While invariably created by contractual agreement, some joint ventures have been held by the courts to be a partnership, while others have been determined to be merely contractual, without comprising a partnership. A myriad of considerations have been used by the courts in determining whether a joint venture is a partnership. Issues have also arisen concerning the management and operational structure of a joint venture and whether such structure necessarily results in the joint venture being found to comprise a partnership. Historically the distinction between partner and contractor has been important, since the law only imposed a fiduciary duty upon partners, and not … Read More
Partnership and Contractual Disputes between Professionals (Dentists, Doctors, Accountants, Lawyers, Architects, Engineers)
Partnerships Professionals often carry on their professional practice as partners in a partnership or limited liability partnership. Partnerships can be created simply by conduct and the application of the Partnership Act or by a simple or complex partnership agreement. Joint Venture Contract – Fiduciary Duties? In other cases professionals associate in practice by participation in a contractual joint venture which, depending on the agreement and the circumstances, may or may not at law also be a partnership but, in any event, may attract the duties and obligations of partners, including fiduciary duties. Sharing Space Lastly, some professionals may consider that they are only sharing space with other professional and may be very surprised to find that the arrangement gave rise at law to unexpected obligations. Duty of Honest Performance The recent decision of the Supreme Court of Canada in Bhasin v. Hrynew, though not a case about partnerships, nonetheless has a wide-ranging impact … Read More
David Alderson, Panelist on Law Society of Upper Canada Annotated Partnership Agreement 2015 CDP
David Alderson, of Gilbertson Davis LLP, will be a panelist at the Law Society of Upper Canada Continuing Professional Development program, The Annotated Partnership Agreement 2015, on September 29, 2015 (alternate date, November 20, 2015) on the panel entitled “Review of the Differences (Legal and Drafting) Between a Partnership and a Joint Venture – Understanding the Significant Consequences”. Moderator of the panel (and Chair of the program) is Alison Manzer, Cassels Brock & Blackwell LLP and co-panelist is Sunita Doobay, TaxChambers LLP. David Alderson, LL.B (Osgoode), LL.M (Lond.) is a commercial litigator with Toronto insurance and commercial litigation firm Gilbertson Davis LLP. He holds a Master of Laws degree in commercial and corporate law and has been admitted to practice in England & Wales, Bermuda and New York State, as well as Ontario. David has practised local law in England, Bermuda, Dubai and Ontario, in diverse business and commercial litigation practice … Read More
Oppression Actions vs. Derivative Actions under the OBCA
The Ontario Business Corporations Act (OBCA) provides broad remedial options for directors, officers, shareholders, and other “complainants” to correct oppressive or prejudicial actions by or against a corporation. Most commonly, these take the form of either an oppression action or a derivative action. Oppression actions are where a complainant commences an action where that individuals interests have been oppressed or unfairly prejudiced. Derivative actions, on the other hand, are where a complainant starts litigation in the name of the corporation where the corporation has been wronged and the corporation (by its board of directors) chooses not to commence litigation itself. Because derivative actions bring the corporation into litigation without its consent, and often require the corporation to pay the legal costs of that action, leave of the court is required to commence a derivative action. Tersigni v. Georgevitch OBCA actions, and in particular oppression actions, can sometimes blur the legal distinction between … Read More