In Re: Essar Steel Algoma Inc. et al, 2016 ONSC 595, an Ontario steel company, Essar, entered into a plan under Canada’s Companies’ Creditors Arrangement Act (“CCAA”, a Canadian corporate bankruptcy proceeding). As part of its restructuring, Essar entered into a contract with a U.S. supplier, Cliffs. A dispute arose between Essar and Cliffs regarding the contact. Essar brought a motion in the CCAA proceedings seeking, among other things, a declaration that Cliffs had to continue supplying under the contract. In response, Cliffs brought a motion seeking to dismiss Essar’s motion on the basis that the Ontario did not have jurisdiction or that Ontario was not a convenient forum. The Ontario Court applied “real and substantial connection” test set out by the Supreme Court of Canada in Van Breda, and considered i) whether the contract was made in Ontario and ii) whether Cliffs carried on business on Ontario. With respect to i), the Court … Read More
In Jurisdiction Dispute, Court of Appeal Confirms Contract Made Where Acceptance Received
In Eco-Tec Inc. v. Lu, the Plaintiff Ontario company researched, developed and manufactured proprietary technology and products. The Defendants were Lu, a Canadian citizen, his BVI company and three Chinese companies owned by him or his parents. The Defendant companies were the Plaintiff’s consultant, agent or distributor in China. In the course of their relationship, the Plaintiffs and Defendants signed a number of agreements. The Plaintiff ended its relationship with the Defendants in 2012, alleging that the Defendant’s Chinese companies were selling clones of the Plaintiff’s product in China. The Plaintiff brought a claim for breach of confidence, breach of contract, breach of fiduciary duty, conspiracy, unjust enrichment and/or unlawful interference with its economic interests. The Defendants brought a motion to dismiss the Ontario action on the basis that the Ontario Court did not have jurisdiction. The motion judge dismissed the motion, finding, among other reasons, that the dispute was connected … Read More
Court Upholds Prevailing Contract Clause
In the recent case of 1252662 Ontario Inc. v Swisslog, the Ontario Court of Superior Justice held that a contractual clause which provided that, in the event of a conflict with another agreement, that terms of the other agreement would prevail. In this case, the parties had entered into a multi-million dollar construction contract. One of the documents to the contract set out a number of terms which limited the liability of the defendant as against the plaintiff for a wide variety of issues, including delay in construction. However, that document also provided that the terms of a companion document would prevail in the event of any conflict between the two terms. That companion document provided a general statement that the plaintiff had “all rights and remedies provided by law and by this agreement”. The construction was ultimately delayed, and the plaintiff sued for its common law damages as incurred a … 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
Does adverse possession apply to exclusive-use condominium common elements in Ontario?
The marketing message behind the Condominium boom in Canada’s urban jungles is all about newness. The smell of new carpets and freshly cut flowers in the lobby appeals to the allure of modernity. The reality of the condominium as a form of residential property has been with us for decades, and condominium law has been overlaid on top of conventional property law. Buried within the registered title documents are discrepancies waiting for parties to turn them into legal disputes. With so many deals taking place, and lawyers not being trained in ‘parochial’ property law, condominium title disputes will only increase with time and the volume of transactions. One problem area, hitherto unknown in the legal community, is the effect of adverse possession on exclusive use common elements. The physical integration of a common element into a unit owner’s unit is not uncommon. For example, balconies, parking spaces, and storage areas … Read More
License to use “Marilyn Monroe” Trade-mark is not a Franchise Agreement
In MGDC Management Group Inc. v. Marilyn Monroe Estate, 2014 ONSC 4584, the Respondents and Applicants were parties to a License Agreement which granted to the Applicants the exclusive right to use the trademark “Marilyn Monroe” in its restaurants. The Applicants sought rescission of the License Agreement by claiming that the License Agreement qualifed as a franchise agreement which entitled it to receive full disclosure under the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”). The Respondents moved to dismiss the Application. Justice Morgan of the Ontario Superior Court of Justice found that the Act did not apply to the License Agreement for the following reasons: The parties expressly agreed that franchise disclosure laws such as the Act did not apply to the License Agreement. And, in fact, the principal of the Applicants acknowledged that she was aware of this provision when she signed the License Agreement. Section 2(3)5 of the Act stated that it does not apply to a single trade-mark licensing agreement. The … Read More
Franchise Rescission Granted Due to Deficient Disclosure
The recent Ontario Superior Court of Justice decision in 2337310 Ontario Inc. v. 2264145 Ontario Inc., 2014 ONSC 4370, addressed a partial summary judgment motion brought by the franchisee of a cafe seeking a declaration that it was entitled to exercise its right of rescission under the Arthur Wishart Act (Franchise Disclosure), 2000 (“the Act”). The franchisee sought to rescind the franchise agreement approximately six months after entering into the agreement by arguing that the disclosure document provided by the franchisor was so deficient that it amounted to receving no disclosure at all. In contrast, the franchisor argued that the franchisee was provided with disclosure as required under the Act, and the franchisee was simply attempting to resile from a bona fide transaction due to its own incompetence and inability to operate the business successfully. The Court found a number of deficiencies in the disclosure provided by the franchisor, including failure to provide: (1) … Read More
Court of Appeal Confirms Haunted House is not a Latent Defect in Real Estate Purchase and Sale
The Ontario Court of Appeal recently released its endorsement in 1784773 Ontario Inc. v. K-W Labour Association Inc., 2014 ONCA 288, a case which involved the purchase and sale of a “haunted” commercial property. In this case, the purchaser sued the vendor after hearing rumours that the property was haunted by ghosts of people who were murdered or had died on the property. The purchaser alleged that the vendor failed to disclose these latent defects in the property. The vendor brought a summary judgment motion to dismiss the claims against it. The judge hearing the summary judgment motion held that there was no genuine issue requiring a trial for the following reasons: (i) there was no evidence that anyone died on the property, either by natural causes or some criminal act; (ii) the vendor was not required to disclose that someone had died on the property or that the property may be haunted; (iii) there was no evidence as to how the purchaser could prove … Read More
Partial Summary Judgment in Franchise Disclosure Case
The Ontario Superior Court of Justice decision in Caffe Demetre v. 2249027 Ontario Inc., 2014 ONSC 2133, involved a partial summary judgment motion to dismiss the franchisee’s rescission claims (in its counterclaim) under the franchise disclosure legislation in Ontario, the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”). The Act provides the franchisee with the extraordinary right to rescind the franchise agreement: (i) within 60 days after receiving the disclosure documents; or (ii) within 2 years after entering in to the franchise agreement if the franchisor never provided the disclosure documents. The issue arose when the franchisee received the disclosure documents but attempted to rely on the 2 year rescission period, arguing that the disclosure documents contained “stark and material deficiencies” so as to be amount to no disclosure at all. The franchisee alleged that the franchisor failed to disclose material facts including ongoing litigation against the previous franchisee, implementation and amendment of operational policies, and the cost of remodelling and renovations. Following on the guidance provided by the Supreme Court … Read More
30 Day Time Limit to Appeal Arbitration Award
The Ontario Court of Appeal decision in R & G Draper Farms (Keswick) Ltd. v. 1758691 Ontario Inc., 2014 ONCA 278, involved a dispute between two Ontario-based farming businesses over the purchase and sale of carrots and carrot chunks. The parties agreed to resolve the dispute through arbitration in accordance with The Fruit and Vegetable Dispute Resolution Corporation (“DRC”) arbitration rules. The arbitrator awarded damages to the respondent. The issue arose when the appellant applied to the Superior Court of Justice to set aside the arbitration award approximately two and a half months later. The Arbitration Act, 1991 (the “Act”) provides for a thirty day time period to appeal the arbitration award while the International Commercial Arbitration Act (the “ICAA”) provides for a longer three month time period. Unfortunately, the DRC rules are silent in respect to which arbitration act may apply. Under s. 2(1) of the Act, the Act applied unless the application of the Act was excluded by law, or the arbitration was … Read More
Court Grants Interim Injunction Against Neighbour
The recent Ontario Superior Court of Justice decision in Sciara v. Szpakowski, 2014 ONSC 2157, involved a dispute between neighbours over the right to use a lane between the two houses. The lane was owned by the Respondent but the Applicants allege that they were allowed continuous use of the lane to access their backyard for many years. When the neighbours had an argument over another matter, the Respondent threatened to construct a fence to restrict the Applicants’ access to the lane. The Applicants sought an interim injunction restricting the Respondent from constructing a fence until their application for prescriptive easement over the lane was heard. In determining whether an interim injunction should be granted, the Court applied the test outlined by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, which was as follows: (i) is there a serious question to be determined, (ii) … Read More