The recent summary judgment motion decision in Time Development Group Inc. v. Bitton, 2018 ONSC 4384, involves a situation that arises quite often in failed closings of real estate transactions. One of the main causes for an aborted real estate transaction is the failure of the purchaser to obtain the required financing to close on the transaction, possibly influenced by the Ontario Fair Housing Plan and the new mortgage lending rules. In this case, the plaintiff entered into an agreement to purchase three adjoining properties for a residential home redevelopment project. There were a series of amendments to the agreement with the terms as follows: (a) purchase price of $10.55 million; (b) deposit of $500,000; (c) two vendor take back mortgages; and (d) closing date of July 31, 2017. The plaintiff had secured a commitment letter to finance the transaction, however, six days before the closing date, the plaintiff was dismayed to find out that their financing had been withdrawn because the market conditions had changed. … Read More
When is Oral Evidence Required to Resolve Credibility Issues in Summary Judgment Motions?
The Ontario Court of Appeal decision in 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, involved the appeal of a partial summary judgment decision in a dispute between the franchisor and a franchisee of Crabby Joe’s Tap and Grill. In this case, the franchisee operated a Crabby Joe’s franchise for a year and a half prior to serving a notice of rescission of the franchise agreement on the franchisor. Claims The franchisee claimed that the disclosure document provided was materially deficient and it was entitled to rescind the franchise agreement within two years of execution of the franchise agreement under section 6(2) of the Arthur Wishart Act (Franchise Disclosure), 2000 (“the Act”). The franchisee claimed for rescission damages under section 6(6) of the Act and also damages for breach of contract and breach of the fair dealing obligations under the Act. In response, the franchisor brought a counterclaim for a declaration that the franchise agreement was validly terminated and a … Read More
Popack v. Lipszyc: Recognition and Enforcement of Arbitration Awards – Clarifying the term “binding”
Popack v. Lipszyc appears to be the first Ontario Court of Appeal case on the recognition and enforcement of arbitration awards under the 2017 International Commercial Arbitration Act (“ICAA”). The ICCA includes the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the 2006 amended version of UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The appellants used articles 35 and 36 of Model Law to apply for the recognition and enforcement of the international commercial arbitration award they received in August 2013 against the respondents. While the application judge dismissed the application, the Court of Appeal allowed the appeal. The Court of Appeal stated that “in Ontario, a strong “pro-enforcement” legal regime” exists for the recognition and enforcement of international commercial arbitration awards, as grounds for refusal are “to be construed narrowly”. Importantly, the Court, and not the tribunal, is the proper avenue to … Read More
Court Grants Interim, Interim Injunction Without Specific Evidence of Harm
In Knowmadics v. Cinnamon, 2018 ONSC 4451 (CanLII) the plaintiff company sought an urgent interim, interim injunction regarding an app sold by the defendants pending the hearing of a motion for an interlocutory injunction. The plaintiff sold specialized computer software. The individual defendant was employed by the plaintiff and signed an employment agreement, including a confidentiality and non-competition clause. The defendant also had a business, the corporate co-defendant, which did subcontracting work for the plaintiff after the defendant resigned from employment with the plaintiff. The corporate defendant signed a non-disclosure agreement with the plaintiff. The plaintiff alleged that the defendants were selling certain software that directly competed with the plaintiff’s software and infringed the plaintiff’s copyrights. The plaintiffs commenced an action against the defendants. After commencing the action, the plaintiff alleged that they learned that the defendants were also selling a certain app over which the plaintiffs asserted ownership. The … 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
Shareholders’ Remedies under the OBCA: An Overview (Part 2/2)
When a shareholder’s rights are breached, there are a variety of legal remedies available under the Ontario Business Corporations Act (“OBCA”). For more information on shareholders’ rights, please click here to see part 1 of this post. Oppression Remedy It is first important to note that as per the Ontario Court of Appeal decision Maurice v. Alles, the standard two-year limitation period set out in the Limitations Act applies to oppression remedy claims. The “clock starts to run” when the oppressive conduct first began, meaning that individuals must not delay if they wish to pursue an oppression remedy. The oppression remedy under s. 248 of the OBCA is broad in nature, and there is a large amount of judicial discretion afforded in its application. The oppression remedy can be an especially strong tool in protecting minority shareholders. When the Court determines that there has been oppressive conduct, unfairly prejudicial conduct, or conduct that disregards the interests of any shareholder it may make an order to resolve the matter in a variety of ways. … Read More
Shareholders’ Rights under the OBCA: An Overview (Part 1/2)
Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Please click here to see part 2 of this post on shareholders’ remedies. Voting Rights The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under … Read More
Real Estate Litigation – Ontario Court Decides Dispute Over House Flipping Profits
The Ontario Superior Court of Justice decision in Ballestin v. 1304478 Ontario Inc., 2018 ONSC 2969, involved a dispute between parties that entered into an arrangement for the purposes of flipping a house during the surging real estate market in 2016. In the fall of 2016, the Plaintiffs were interested in purchasing, renovating and re-selling a property for a profit, however, they were unable to obtain financing for their house flipping venture. During an open house, the Defendant homeowner suggested that they enter into an agreement with an extended closing date to provide the Plaintiffs with sufficient time to renovate and sell the property to a third party prior to the closing date. The terms of the agreement included: (a) a deposit of $25,000; (b) a purchase price of $600,000; (c) the balance owing to the Defendant was $605,000 less the deposit and less the difference between $5,000 and actual legal fees paid; and (d) any profit above … 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
Grounds for Judicial Intervention on International Arbitral Awards – Key Takeaways
In Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., a decision of the Court of Appeal for Ontario, a USD$258 million project for the construction of a slurry pipeline from a nickel mine in the mountains of Madagascar to the coast lead to arbitration between the appellant (the contractor) and the respondent (tendered the project). After mutually agreeing to by-pass the adjudication stage of their three-stage dispute resolution process and go straight to a Tribunal, the appellant was only awarded $7M of its $91M claim and the respondent was awarded nearly $25M on its counterclaim. These awards were challenged on appeal as being made without jurisdiction, in breach of procedural fairness, and violating public policy. However, the appeal was dismissed. Judicial intervention in international arbitral awards under the United Nations Commission on International Trade Law (UNCITRAL) Model Law (the “Model Law”) – though given the force of law by the International Commercial Arbitration Act … Read More
McDonald’s Not Served Valid Revocation of Waiver – Commercial Leasing in the Court of Appeal
The Court of Appeal for Ontario in North Elgin Centre Inc. v. McDonald’s Restaurants of Canada Limited, 2018 ONCA 71 allowed an appeal by McDonald’s from a decision on applications by both parties to determine whether the subject lease came to an end on a described date because McDonald’s had not complied with the renewal provision in the lease. The Court of Appeal allowed the appeal of the decision of the application judge, that despite that the parties were in negotiations, and that the respondent had waived its right to insist on strict compliance with the terms of the renewal provision (to refer the determination of the renewal rental rate to arbitration), that the respondent had effectively revoked its waiver and reverted to its strict legal rights, namely to terminate the lease in the absence of the referral of the dispute on renewal rental rate to arbitration within the permitted time. On the … Read More
UNCITRAL International Sale of Goods Convention – New Members in 2016 and 2017
The United Nations Convention on Contracts for the International Sale of Goods (“CISG”) establishes a comprehensive code of legal rules governing the formation of contracts for the international sale of goods, the obligations of the buyer and seller in contracts for the international sale of goods, and the remedies for breach of contracts for the international sale of goods. Canada on accession to the CISG declared that, in accordance with article 93 of the Convention, the Convention would extend to Ontario (and other provinces named in the declaration). The Canadian International Sale of Goods Contracts Convention Act, S.C. 1991, c. 13, has been in effect in Ontario since 1992 because of the International Sale of Goods Act, R.S.O. 1990, c. I.10. These two acts brought into effect in Canada the United Nations Convention on Contracts for the International Sale of Goods. The Ontario International Sale of Goods Act provides that the contracting parties “may … Read More
China Signs Hague Convention on Choice of Court Agreements
We previously wrote that Ontario had 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.) Since our previous blog post, the People’s Republic of China signed the Hague Convention. China has not yet ratified the Hague Convention, which requires approval by the National People’s Congress. China’s signing of the Hague Convention represents an important step towards more widespread adoption of the convention. The lawyers are Gilbertson Davis have experience in international litigation and arbitration, and in interpreting international conventions. Please contact us for an initial consultation.
Is a Burrito a Wrap? Ontario Court Decides Injunction Involving Exclusivity Clause in Commercial Lease
In 2432714 Ontario Inc. v. Heffner Development Group Limited, 2018 ONSC 1034, the Ontario Superior Court of Justice was recently asked to decide the age old question of whether a burrito was a wrap in the context of an exclusivity clause in a commercial lease agreement. In this case, the tenant operated a Pita Pit franchise in a 13 unit plaza owned by the landlord. The tenant had negotiated an exclusivity clause in the lease agreement that gave it the exclusive right to sell “pitas and wraps” in the plaza. When the tenant discovered that a Mexican fast food chain, Holy Guacamole, was renovating one of the units, it brought a motion for an interlocutory injunction prohibiting the landlord from leasing a unit in the plaza to Holy Guacamole. The tenant argued that Holy Guacamole sold “wraps” because its menu of tacos, burritos and quesadillas were all prepared by wrapping up food items in a tortilla. … Read More
Court of Appeal Considers Effect of Nude Photos on Contractual “Morals Clause”
In Zigomanis v. 2156775 Ontario Inc. (D’Angelo Brands), 2018 ONCA 116 (CanLII), the Defendant entered into a promotional contract with the Plaintiff, who was at the time a professional hockey player. The contract contained a “morals clause”, stating that the Defendant could terminate the contract if the Plaintiff “commits any act which shocks, insults, or offends the community, or which has the effect of ridiculing public morals and decency.” The Defendant terminated the contract for an alleged breach of the morals clause: specifically, unknown persons published nude photographs of the Plaintiff on the internet. The photos had originally been sent by the Plaintiff to his girlfriend, before he entered into the contract. The Defendant argued that sending the nude photos violated the morals clause. The Plaintiff sued the Defendant for wrongful termination of the contract. The trial judge found, among other things, that the private transmission of nude photographs within … Read More
Court of Appeal States that Placing Oneself in Position to Close Transaction not Waiver of Deficiency
In 1418885 Ontario Ltd. v. 2193139 Ontario Limited, 2018 ONCA 54, the appellant entered into an agreement of purchase and sale to buy a property from the respondent. The property included residential apartments. The appellant sought confirmation from the respondent that the residential apartments were permitted use under the existing zoning by-law. The respondent maintained that the residential apartments were “a legal non-conforming use”. However, the planning authority indicated that there was a possible problem with the residential apartments. The appellant’s lawyer advised the respondent’s lawyer that the purchase deposits had to be returned if the issue was not resolved. In spite of the residential apartments issue, the appellant and respondent moved towards the closing date by exchanging draft documentation and related material. However, on closing date, the appellant’s lawyer advised the respondent’s lawyer that the appellant would not be closing because of the residential apartments issue. The deal did … Read More
Court of Appeal Confirms Importance of Requisitions in Real Estate Transactions
The Court of Appeal of Ontario decision in 1418885 Ontario Ltd. v. 2193139 Ontario Limited, 2018 ONCA 54, recently overturned a summary judgment motion decision which confirmed the importance of requisition letters in real estate transactions. In this case, the parties had entered into an Agreement of Purchase and Sale for a property with a restaurant, golf course, 12 residential apartments, a two-storey home and a banquet hall. The Agreement of Purchase and Sale included the following requisition clause: 8. TITLE SEARCH: Buyer shall be allowed until 6:00 p.m. on the 30th day of May, 2016 (Requisition Date) to examine the title to the property at his own expense and until the earlier of: (i) thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement are fulfilled or otherwise waived or, (ii) five days prior to completion, to satisfy himself that there are … Read More