The Ontario Court of Appeal recently confirmed the proper appeal procedure for an arbitrator’s ruling on a preliminary question in an arbitration. Joseph Lebovic Charitable Foundation v. Jewish Foundation of Greater Toronto, 2024 ONCA 933, concerned an appeal of an application decision. The application judge was asked to review a ruling from the parties’ arbitrator on his own jurisdiction to hear the issues before him, which was upheld. We invite you to read our firm’s blog on the application judge’s decision for more information. The applicants sought leave to appeal the application judge’s decision to the Ontario Court of Appeal. The respondents brought a motion to quash this appeal on the basis that the Court of Appeal’s jurisdiction to hear it was precluded by section 17(9) of the Arbitration Act 1991, S.O. 1991, c. 17 (the “Act”). The Court of Appeal agreed with the respondents and quashed the applicants’ … Read More
Superior Court of Justice for Ontario Continues to Clarify the Utility of Summary Judgment in Failed Real Estate Transactions
In Kinariwala v Ruiz, 2024 ONSC 7188, the Superior Court of Justice – Ontario, dealt with yet another summary judgment motion involving a failed purchase agreement for a residential property. In Kinariwala v Ruiz, the defendant had agreed to purchase a piece of property located in Windsor, Ontario for $465,000.0 but failed to close the transaction, citing an inability to secure financing. This breach led the seller/plaintiff to re-list and eventually sell the property at a significantly reduced price of $340,000.00. The plaintiff sought to recover the financial losses incurred, including the difference in sale prices and holding costs. At the hearing of the motion, the Court addressed two primary issues between the parties. First, the court confirmed that the defendant breached the Agreement of Purchase and Sale (“APS”) for the property. Despite her claim that misrepresentations about the property’s income as a successful Airbnb potentially influenced her decision to … Read More
The Role of Summary Judgment in Real Estate Disputes: Reid v. Abass, 2024 ONSC 7083
In Reid v. Abass, 2024 ONSC 7083, the Ontario Superior Court of Justice highlights the efficiency and clarity that summary judgment can bring to disputes arising from complex real estate transactions. This case in Reid v Abass arose from the defendants’ failure to close a real estate transaction under a February 24, 2022, Agreement of Purchase and Sale (“APS”) for $999,000. Following an alleged anticipatory breach by the defendants, the parties renegotiated the terms under a July 7, 2022, Extension Agreement, which set a reduced purchase price of $850,000 and a new closing date of July 28, 2022. The plaintiffs sought summary judgment for damages representing the difference between the original and renegotiated prices, claiming the defendants remained liable under the original APS despite closing under the revised agreement. The defendants argued the extension agreement released them from liability if they closed on the new date. Both parties agreed that … Read More
Krieser v. Seligman, 2024 ONCA 827: Clashes Over Contracts, Claims, and Residential Construction
In Krieser v. Seligman, 2024 ONCA 827, the case revolved around the construction of a luxury home in Forest Hill, Toronto, and a subsequent legal battle involving allegations of contract breaches, construction deficiencies, and claims of fiduciary duty. In 2004, the plaintiffs contracted the defendant to build their home. While construction progressed, disputes emerged, leading the plaintiffs to withhold payments. Litigation ensued in 2007, with both parties asserting significant claims: the plaintiffs sought damages for alleged deficiencies, while defendant pursued payment for outstanding invoices. The case culminated in a trial in 2022-2023, where the trial court largely ruled against the plaintiffs. The appeal focused on two primary issues: the alleged breach of contract and a claim for breach of fiduciary duty. The plaintiffs argued that the trial judge erred in finding their delayed payments constituted a breach that disentitled them from warranty claims. Additionally, they contended the judge failed to … Read More
Lessons from Paracha v. Naqi Construction Ltd.: The Importance of Written Agreements and Credibility in Real Estate Disputes
In the recent Ontario Court of Appeal decision in Paracha v. Naqi Construction Ltd., 2024 ONCA 816, the case involved a dispute over four real estate transactions, contested ownership interests, and allegations of financial misconduct. The case arose from investments made by the in four properties, with funds allegedly advanced to the appellants property acquisition, renovation, and sale. While the respondents claimed ownership interests in the properties, the appellants asserted the funds were loans. The absence of written agreements made the trial judge’s reliance on witness testimony and circumstantial evidence central to resolving the dispute. A critical factor in the trial court’s decision was its assessment of credibility. The trial judge found that the appellants’ testimony lacked reliability and that their arguments were contradicted by other witnesses, including a credible real estate agent. In contrast, the respondents’ evidence was found to be consistent and corroborated by independent inspections and documentation. … Read More
Evidence in Summary Judgment Motions: Ontario Superior Court Provides Guidance for Responding Parties
A recent decision of the Ontario Superior Court of Justice (the “Court”) provides an important reminder for parties responding to a summary judgment motion. In Lukey Capital Corp v. 1000110300 Ontario Inc. et al, 2024 ONSC 6589 (“Lukey Capital”), the plaintiff brought a motion for summary judgment before the Court for the payment of a loan it made to the Defendants under a promissory note. Upon reviewing the evidence before it, the Court granted the sought relief. In doing so, the Court underscored a key principle for parties responding to a summary judgment motion to keep in mind. The Defendants made several arguments that there were genuine issues in the proceeding which required a trial. Among these arguments was a submission that other evidence may be uncovered through further examinations and productions which would support their defence. The Court, echoing well-settled principles regarding evidence on summary judgment motions … Read More
Staying a Court Order Pending Appeal: Temagami (Municipality) v. Temagami Barge Limited et al.
In civil litigation, the ultimate goal is to obtain a final order granting a remedy for the successful party. But what if the final order is under appeal, and the appellant stands to suffer prejudice from the order’s effects while they wait for their day in appeals court? What recourse is available to appellants to limit their harm from an order that, in their view, was incorrect in the first place? The Ontario Court of Appeal was recently tasked with answering this question in Temagami (Municipality) v. Temagami Barge Limited, 2024 ONCA 859. The respondents successfully brought an application for a permanent injunction which prohibited the appellants from conducting certain commercial activities on their property. While the parties’ appeal was waiting to be heard before the Ontario Court of Appeal (the “Court”), these prohibitions would remain in effect, to the detriment of the appellants’ business. As such, the appellants … Read More
Essential Terms of a Contract: Ontario Superior Court of Justice Confirms Agreements Must Be Complete and Concise
In Qureshi v. Zeema Investments Incorporated, 2024 ONSC 5855, the Ontario Superior Court of Justice emphasized the importance of ensuring that the essential terms of contractual agreement are comprehensive and clear. This summary judgment arose from an unpaid commission payment on a real estate transaction. A broker was mediating a purchase and sale of a hotel between a buyer and seller. the broker and buyer had executed a Buyer’s Representation Agreement (the “BRA”) listing the commission owing to the broker by the buyer on closing at “TBD,” and was to be confirmed upon executing an agreement. The BRA required a commission to be paid to the broker in the event of buyer default on any agreement of purchase and sale that is entered. The broker subsequently entered a Commission Agreement with the seller, which included a commission payment of $650,000 that was owed by the seller to the broker on … Read More
Derivative Actions and Limited Partnerships: Binscarth Holdings LP v. Anthony et al.
In Binscarth Holdings LP v. Anthony, 2024 ONCA 522, the Ontario Court of Appeal confirmed that, in some circumstances, a limited partner may obtain leave to commence a common law derivative action in the name of a limited partnership. Derivative actions are typically actions brought on behalf of a corporation for wrongs that are done to it. The action has common law origins and was created to counteract the rule in the seminal case of Foss v. Harbottle that, as a separate legal entity from its shareholders, only a corporation itself possesses a cause of action for wrongs done to it. The derivative action allows a person to bring an action in the name of a corporation against its management for harm they have caused to the company. In modern Canadian corporate law, the derivative action has been codified under Ontario’s Business Corporations Act, R.S.O. 1990, c. B.16, and the Canada … Read More
Notice, a Condition Precedent to Coverage – Ontario Court of Appeal says no Relief of Forfeiture for Late Notice of Claim
In the recent case of Furtado v Underwriters, 2024 ONCA 579, the Ontario Court of Appeal reviewed an appeal from an insured party challenging an application judge’s decision denying coverage under a Directors and Officers policy (the “Policy”). The Court upheld the application judge’s ruling, determining that the insured had reported its loss beyond the specified notice period outlined in the contract, as well as affirming the recent legal precedents concerning the doctrine of relief from forfeiture in the insurance context. While the Policy was in effect, the Ontario Securities Commission (“OSC“) initiated inquiries into the business dealings of Go-To, a company in which the insured held a directorial position. Following this, the OSC issued an Order for the insured to produce certain documents related to the investigation into Go-To. As part of the process, the insured was cautioned by the OSC that section 16(1) of the Securities Act prohibited … Read More
Time is of the Essence – Court-Imposed Deadline for Contractual Performance Upheld by Ontario Court of Appeal
In 2533619 Ontario Inc. (Calibrex Development Group) v. Lucadamo, 2024 ONCA 536, the Ontario Court of Appeal upheld a court-imposed deadline for a party’s performance of its obligations under an agreement of purchase and sale. The appellant was the purchaser of three residential lots under an Agreement of Purchase and Sale that it had entered into with the respondent vendor in 2017 (the “APS”). The APS included a clause that allowed any deadline in the agreement to be extended or abridged by agreement. The closing of the APS was originally stipulated as a a fixed date, but the parties consented to a new closing date of “30 days following the appellant’s receipt of severance approval for the lots.” Five years elapsed between the amendment date and the appellant’s commencement of its severance application. When the application got underway in 2022, the appellant was told by the respondent that the APS … Read More
Full and Frank Disclosure, Material Misrepresentations, and the availability of Directors’ and Officers’ Liability Coverage
The Ontario Court of Appeal’s (the “Court“) recent decision in Davies v AIG Insurance Company of Canada, 2024 ONCA 509 (“Davies“), deals with an insurance coverage dispute related to the defense of a Ponzi scheme fraud claim. Notably, the Court’s decisions underscores the significance of full and frank disclosure by insureds when applying for coverage. In Davies, the subject Applicants acted as the principals of related Ontario real estate development companies (the “Companies”). AIG Insurance Company of Canada (“AIG”) issued directors’ and officers’ liability insurance policies (the “Policies”) to the Companies. As part of this action, the Applicants were named as defendants in two separate lawsuits alleging that they used the Companies to conduct a Ponzi scheme and that the Companies’ alleged real estate developments were funded by millions of dollars in syndicated mortgages (the “Underlying Actions”). Soon after being named as defendants in the Underlying Actions, the Applicants sought … Read More
Recognition and Enforcement of a CIETAC Arbitral Award Allowed as Partial Summary Judgment
In Shanghai Investment Co. Ltd. V. Lu et al. 2024 ONSC 2762, the Ontario Superior Court of Justice (Commercial List), allowed a foreign arbitral award to be recognised and made enforceable as a partial summary judgment. The Plaintiff, Shanghai Lianyin Investment Co Ltd. (“SLIC”) sought the recognition and enforcement of a CAD $233 million arbitral award rendered under the rules of the China International Economic and Trade Arbitration Committee (“CIETAC”) against the Defendant Zheng Yao Lu (“Lu”) as a threshold matter; and a declaration that the other defendant, Lichun Guo (“Guo”) held her interest in two properties in Ontario on behalf of Lu, and that SLIC could enforce its award against these properties. The court found that the CIETAC award should be recognised and made enforceable as both of the following requirements under Articles IV and V of the New York Convention (incorporated in the International Commercial Arbitration Act, 2017, S.O. 2017, c. … Read More
Ontario Court Favours Place of Arbitration over Forum Selection Clause in Asset Purchase Agreement
In Tehama Group Inc v. Pythian Services Inc., 2024 ONSC 1819, the Ontario Superior Court of Justice held that the place of an arbitration, not a forum selection clause in a contract, determines the jurisdiction that recourse against an arbitral award must be taken in. The litigants were parties to a cross-border asset purchase agreement (the “APA”). The APA included an arbitration clause for disputes regarding the calculation of the purchase price, and the parties appointed “the Toronto office” of an accounting firm as arbitrator for these disputes. The APA also included broad forum selection and governing law clauses, which required “any suit, action or other proceeding arising out of this Agreement” to be brought exclusively in the courts of New York and in accordance with its laws. A dispute arose regarding an earnout clause in the APA, and the parties proceeded to arbitration. When the Toronto-based arbitrator rendered an … Read More
Letters of credit and the fraud exception: Supreme Court examines applicability to fraud by a third party
A letter of credit or a bank guarantee is an autonomous instrument that is issued by a financial institution on the directions of a customer. The letter of credit seeks to underwrite the customer’s obligations to the beneficiary under the distinct underlying contract. It entitles the beneficiary to payment on demand from the issuing bank, so long as that demand strictly complies with the requirements set out in the letter of credit. The obligation of the financial institution to pay when presented with a valid demand is near absolute. The only recognized exception in Canadian law is when there is fraud by the beneficiary that is brought to the financial institution’s attention prior to payment. In Eurobank Ergasias S.A. v. Bombardier Inc. 2024 SCC 11 (CanLII), the Supreme Court of Canada examined a critical issue of when an issuing bank is required to refuse to honour a demand for payment … Read More
A Promise Made is a Promise Kept: Ontario Superior Court Grants Permanent Injunction to Enforce Provisions of Long-term Supply and Lease Agreement
In Parkland Corporation v. Caledon Fuels Inc., 2024 ONSC 2361, the Ontario Superior Court of Justice granted an injunction which prevented a party to a long-term lease and supply agreement from breaching certain negative covenants contained in that contract. The Applicant and Respondent were both parties to an agreement under which the Applicant was made the exclusive supplier of petroleum products to a gas station which it subleased to the Respondent. In January of 2024, the Respondent notified the Applicant that it intended to enter into arrangements with another supplier, in contravention of the agreement. The Applicant brought an urgent application seeking a permanent injunction, to prevent the Respondent from doing so. In its decision, the Court’s analysis on the injunctive relief sought by the Applicant followed the Ontario Court of Appeal’s decision in 711811 Ontario Ltd. (AdLine) v. Buckley Insurance Brokers Ltd., 2014 ONCA 125, where that Court cited … Read More
7 Things to Know About Recognition and Enforcement of Foreign Judgments in Ontario
In the recent decision of the Ontario Superior Court of Justice (“ONSC”), Roger Vanden Berghe NV v. Merinos Carpet Inc., 2023 ONSC 6728, the ONSC provided a helpful guide on some of the key principles applicable to cases involving the recognition and enforcement in Ontario of judgments from other countries. In this case the ONSC granted an application for the recognition and enforcement of a judgment from a court in Belgium; the Ghent Business Court, Kortrijk Division, First Chamber (the “Judgment”). The underlying dispute that was adjudicated in Belgium was with respect to unpaid invoices for textile orders. The respondent did not respond to the proceeding in Belgium, although summoned by a Writ of Summons. The respondent claimed that it was not properly served with the Writ of Summons, and even if it was, one of its representatives would not have been able to attend given the Covid-19 travel restrictions … Read More