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
Promises vs. Paperwork: Ontario Court Clarifies Limits of Proprietary Estoppel in Share Disputes in Burwell et al v. Wozniak, 2024 ONSC 5851
In the recent Ontario Superior Court of Justice decision Burwell et al v Wozniak, 2024 ONSC 5851, the Court examined complex trust and proprietary estoppel issues between former partners. The decision in Burwell clarifies the boundaries of proprietary estoppel within Ontario law and emphasizes the importance of consistency between preliminary promises and formal agreements in trust disputes. The applicant and respondent were involved in a former relationship, during which time the applicant and their business partner launched a subscriber-based billing management software company (the “Company”). The applicant sought to establish a family trust; however, the pair separated. Wishing to reconcile the relationship, the applicant sent the respondent an email purporting to bequeath her fifty (50) percent of the shares of the Company (the “Email”). Later the pair finalized a trust agreement appointing the applicant and respondent as beneficiaries. However, the trust agreement did not clearly define the ownership of the … Read More
Promissory Estoppel, Part Performance, and Limitation Periods: Ontario Superior Court Refuses to Enforce Mortgage Beyond 10-Year Limit
In Albrecht v 1300880 Ontario Inc., 2024 ONSC 3328, the Ontario Superior Court of Justice examined key legal principles surrounding the extension of limitation periods through promissory estoppel and part performance. The case involved a mortgage that had been in default for over a decade, with the mortgagee seeking enforcement beyond the statutory limitation period (the “Mortgage”). The applicant sought to have the Mortgage discharged, arguing that enforcement was barred under Ontario’s Real Property Limitations Act (“RPLA”) ten-year cutoff. The respondent countered by asserting that an oral agreement between the parties extended the limitation period, relying on promissory estoppel and part performance to justify enforcement despite the expired limitation period. Citing the doctrine of promissory estoppel, which prevents a party from reneging on a promise without formal consideration, the respondent claimed there was an oral agreement to delay the enforcement of the Mortgage until the applicant’s financial condition improved, thereby … Read More
United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration (1985) – More States adopt Model Law Legislation
In 1981, an international working group was formed with the objective of creating a model law for commercial arbitration. The goal was to develop a framework for utilization as a reference for domestic legislation by nations aiming to establish a contemporary legal structure promoting commercial arbitration. The Model Law was formally adopted by the United Nations Commission on International Trade Law (UNCITRAL), on June 21, 1985. The United Nations Commission on International Trade Law, sometimes known as the Model Law, provides the basis of Ontario’s statute for the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5. In 1986, Canada was the first country to adopt the Model Law with the federal Commercial Arbitration Act, and British Columbia was the first jurisdiction in the world to adopt the Model Law with the enactment of the International Arbitration Act. Today, legislation based on the Model law has been adopted … Read More
Summary Judgment Granted, Costs Awarded – Ontario Superior Court grants Summary Judgment in FactR Limited v. R.R.I.C.H. Construction, 2024 ONSC 4792
Summary judgment is a powerful procedural mechanism, allowing a party to file a motion to resolve a case early in the proceedings if there are no genuine issues for trial. In FactR Limited v. R.R.I.C.H. Construction, 2024 ONSC 4792, the Ontario Superior Court recently demonstrated the enhanced fact-finding powers afforded to judges when determining summary judgment motions involving contractual breaches and conversion of property. In FactR Limited v. R.R.I.C.H. Construction, the plaintiffs sought to recover money loaned to two defendants (the “Contract Defendants”) through invoicing factoring agreements (the “Agreements”), as well as an additional defendant for their alleged role in improperly converting a cheque payable to the plaintiffs (the “Fraudulent Defendant”). The motion judge ultimately ruled in favour of the plaintiffs, granting summary judgment and concluding there were no genuine issues requiring a trial. At the hearing for the summary judgment motion, the plaintiffs tendered evidence demonstrating the Contract Defendants’ … Read More
No Adjournment Granted, International Arbitration Award Upheld: Court of Appeal for Ontario
In Xiamen International Trade Group Co., Ltd. v. LinkGlobal Food Inc., 2024 ONCA 605, the respondent brought an application in Ontario to enforce an international arbitration award from China. During the hearing of this request, the appellant sought an adjournment of the hearing to initiate legal proceedings in China. The goal of these proceedings was aimed at compelling the appellant’s former legal counsel to provide testimony regarding alleged breaches of natural justice in the international arbitration process. Such breaches, if substantiated, may have resulted in the refusal to enforce the arbitration award. The Court of Appeal for Ontario denied the appellant’s argument, noting that the scope of denial for an international arbitration award is “narrow” and without evidence or substantive submissions with an air of reality, judgment should be granted to enforce the order. The Court of Appeal remarked that the appellant had a complete year from the date of … Read More
Ontario Court of Appeal Orders Payment of Outstanding Costs Order before Appeal is Heard
In Rathod v Chijindu, 2024 ONCA 625, the moving parties brought a motion (the ”Motion”) seeking, among other things, an Order dismissing the appeal brought by the respondents concerning a decision by a lower Court in Rathod v. Chijindu et al, 2024 ONSC 939 (“939”). The moving parties submitted that the appeal should be dismissed due to the respondents’ non-payment of the costs Order in 939. At the Motion hearing, the Court of Appeal agreed, holding that the respondents were required to pay the overdue costs Order in 939 within seven (7) days. As background, the respondents obtained substantial loans from the moving parties to finance mortgages on two properties. Following their default on these mortgages, the properties were sold via a power of sale and the net proceeds from these transactions were paid into the Court. The funds were then ordered to be distributed to the moving parties to … 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
Ontario Court of Appeal upholds Partial Summary Judgment Decision in VP Auto Sales & Service Ltd v Ahmed2 Inc.
VP Auto Sales & Service Ltd. v Ahmed2 Inc., 2024 ONCA 507, saw the Ontario Court of Appeal (the “Court”) address a motion judge’s grant of partial summary judgment, with damages being reserved for trial. The Court, in one of its rare decisions on partial summary judgment, agreed with Motion judge’s ruling. The respondent entered an Agreement of Purchase and Sale (the “Agreement”) with the appellant. Before the closing, the appellant raised concerns about the price being too high and requested a discount, which was refused by the respondent. On the scheduled closing date, the appellant did not proceed with the transaction, citing a breach of the Agreement by the respondent. This resulted in the property remaining unsold, prompting the respondent to seek summary judgment against the appellant for the purchase price of $4,750,000. The motion judge granted summary judgment on liability, finding the appellant accountable for the failure to … 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
Jurisdiction and forum non conveniens in the Digital Age – Ontario Court Refuses to Certify Class Action against the United States Largest Cryptocurrency Exchange due to Lack of Jurisdiction
In Shirodkar v Coinbase Global Inc. et al, 2024 ONSC 1399, the Ontario Superior Court of Justice provides a review of jurisdictional challenges and the issue of forum non conveniens involving a cryptocurrency class action. The defendants, Coinbase Global, Inc., along with its affiliated entities (“Coinbase”), faced a class action lawsuit brought by a user of its online trading platform, Mr. Shirodkar, which Coinbase sought to dismiss due to a lack of jurisdiction. Coinbase operates a platform for buying and selling digital assets, including cryptocurrency. Between October 2017 and January 2021, Mr. Shirodkar conducted transactions on the Coinbase platform while residing in France and later in Ontario. His complaint, in the form of a class proceeding, alleged that the crypto assets traded on the Coinbase platform should be classified as “securities” under the Securities Act, R.S.O. 1990, c. S. 5 and that Coinbase failed to abide by the disclosure requirements … Read More
Licensing Breaches and Lingering Fiduciary Obligations – Ontario Court of Appeal Rules License Agreement Breach Constitutes Fiduciary Duty Violation
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
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