In the recent Court of Appeal decision of FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92 the Court of Appeal considered whether a landlord in a commercial lease arrangement could pursue a claim against the sole director and officer of the tenant corporation, for stripping the assets of the corporation to evade their debt obligations under the lease. The Facts The Appellants, FNF Enterprises Inc., and 2378007 Ontario Inc. (the “Landlord”) owned a commercial premises in Kitchener, Ontario which they leased to one of the Respondents on the appeal, a corporate entity named Wag and Tag Inc., (the “Tenant”). Wag and Tag Inc. was in the business of providing dog grooming, training and daycare services. The lease ran from 2015 to March 31, 2021. The premises was abandoned by the Tenant prior to the end of the lease term. The Claim In September 2020, the Landlord commenced … Read More
Failure To Close A Real Estate Transaction Can Be Very Costly
For many reasons, an agreement of purchase and sale to buy real estate may be breached by either the seller or the purchaser. The innocent party may be entitled to significant compensation. For instance, in the recent Ontario Court of Appeal (ONCA) decision, Rosehaven Homes Limited v. Aluko, 2022 ONCA 817, the ONCA upheld a lower court decision granting summary judgment requiring the appellants to pay damages to the respondent arising from the appellants’ failure to complete an agreement of purchase and sale for the purchase of a home. In that case, the appellants were unable to complete the transaction because they could not obtain sufficient financing. However, the agreement was not conditional on them obtaining financing. The respondent ultimately sold the property at a loss (compared to the sale price agreed to between the parties). The lower court awarded $331,922.27 to the respondent (being the difference between the original … Read More
Recognition of United States and Other Foreign Default Judgments – The Ontario Court Does Not Consider Underlying Merits!
Just over a month ago, the Ontario Superior Court of Justice (“ONSC”) in North Field Technology Ltd. v. Project Investors, Inc., 2022 ONSC 5731, recognized as orders of Ontario a default judgment and various ancillary orders that the Applicant obtained in the United States District Court, Southern District of Florida (“Florida Court”), against the Respondents. The Florida Court found that the Respondents were evading service of the legal proceedings in Florida and issued a series of judgments against the Respondents such as an asset freeze injunction and permanent injunction restraining the Respondents from transferring their assets, as well as orders for certain monetary and declaratory relief, among other orders. The ONSC validated service of the Ontario application, recognizing that the Florida Court “has already found that the respondents were avoiding service”. The ONSC also found that the Applicant has met the test for recognition and enforcement of the Florida Judgments … Read More
To Sue or Not to Sue? Failure to Sue = No Compensation
In Griffiths v. Zambosco, 2001 CanLII 24097 (ON CA), the Ontario Court of Appeal (“ONCA”) concluded that failure to sue is a bar to recovery of any compensation, even if the party to a lawsuit may otherwise have been entitled to compensation had she sued. In this case the Plaintiff sued the Appellant for negligence in respect of a vendor take back mortgage to the Plaintiff and his then-wife. The Plaintiff’s ex-wife refused to join the proceeding as a plaintiff and so the Plaintiff added her as a defendant. The trial judge found that the Appellant was negligent and awarded damages of close to $300,000 to both the Plaintiff and his ex-wife (almost $150,000 each). On appeal, the ONCA agreed with the trial judge that the Appellant owed a duty of care to both the Plaintiff and to the Plaintiff’s ex-wife. However, the ONCA did not agree with the trial … Read More
Entire Agreement Clause Not A Shield To Fraudulent Misrepresentation
In the recent Court of Appeal ruling of 10443204 Canada Inc. v. 2701835 Ontario Inc., 2022 ONCA 745, the Court of Appeal clarified that entire agreement clauses in contracts do not shield any representor or deprive any party to a contract from remedies available for a fraudulent misrepresentation. Background In May of 2019 the appellant Chirag Patel and his corporation 2701835 Ontario Inc. (the appellants) entered into a purchase agreement (the “APS”) with the respondent 10443204 Canada Inc. (the respondent), related to the purchase of a coin laundry business located in Brampton. The APS contained an entire agreement clause of which the relevant part indicated: “There is no representation, warranty, collateral agreement or condition, affecting this Agreement other than as expressed herein.” In accordance with amended terms to the APS concerning the purchase price the appellants made a partial payment of $100,000 on closing and the balance of the purchase … Read More
Rescission May Be Available Even If Innocent Third Parties Adversely Affected
In the recent Court of Appeal decision of Urban Mechanical Contracting Ltd. v. Zurich Insurance Company Ltd., 2022 ONCA 589, the Court of Appeal considered whether rescission is ever available as a matter of law when the rights of innocent third parties intervene and restitutio in integrum (putting the parties back to their original position) is impossible. The court answered in the affirmative. In the case the appellants brought two applications seeking a determination of whether, as a matter of law, a bond issuer can rescind a bond agreement on the basis of fraudulent misrepresentations and collusion when doing so would affect the rights of innocent parties. Background The case dealt with a public-private redevelopment project with infrastructure Ontario to build a new 17-storey patient care tower (the Project). The construction was to be financed and carried out by the private sector. The Project was subject to Ontario’s procurement process … Read More
Undocumented Trusts – No Requirement for Formal Trust Agreements
In the recent decision from the Ontario Court of Appeal (“ONCA”), Corvello v. Colucci, 2022 ONCA 159, the ONCA confirmed that a trust can exist even where there is no written trust agreement. At issue in the case was the ownership of a land use permit which allowed the holder(s) of the permit to build on and use the land for recreational purposes. In the court of first instance, the appellant took the position that the permit belonged to him alone. However, the trial judge determined that the appellant actually held the permit “in trust for himself and the respondents as beneficial owners”. On appeal, the appellant argued that the trial judge erred in law and in fact by determining that an undocumented trust agreement existed. The ONCA advised that it is trite law that a valid trust requires “three certainties: certainty of intention to create a trust, certainty of … Read More
Breach of Agreement of Purchase and Sale – What are Your Options?
The Ontario Court of Appeal (ONCA) in Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 (CanLII), recently outlined the options an innocent party to an agreement of purchase and sale (APS) has upon the other party breaching (i.e. repudiating) the APS. General Principles Repudiation is the refusal of one party to an APS to abide by the terms of the APS. Repudiation by one party does not in itself result in the termination of the APS. Rather, repudiation provides the innocent party (i.e. the non-repudiating party) to the APS with the following choices: Accept the repudiation (i.e. disaffirm the APS); or Treat the APS as subsisting (i.e. affirm the APS). The innocent party generally has a reasonable period of time to choose whether to disaffirm or affirm the APS. However, waiting too long may result in a court determining that the APS has been affirmed. During this reasonable waiting … Read More
Supreme Court of Canada Clarifies Duty Of Honest Performance In Contractual Relationships
In the decision of C.M. Callow Inc. v. Zollinger, 2020 SCC 45, the Supreme Court of Canada (SCC) expands on the scope of the duty of honest performance in contractual relationships, previously established by the SCC ruling in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494. Our firm previously blogged about the Court of Appeal Ruling in this case. See the previous blog here. The case concerns a breach of contract claim made by the Plaintiff. The Plaintiff is a company that provides maintenance services to condominium communities. The Defendants, a group of condominium corporations, had winter and summer maintenance contracts with the Plaintiff that renewed every two years. The contracts originated in 2012 and ran to 2014. In March or April of 2013, the Defendants decided to terminate the winter contract but they did not provide notice of their intention to terminate until September of 2013. The Defendants delayed … Read More
Court of Appeal Upholds Judicial Ruling Recognizing Anti-Black Racism in Commercial Lease Dispute
In the recent Court of Appeal decision of 8573123 Canada Inc. (Elias Restaurant) v. Keele Sheppard Plaza Inc., 2021 ONCA 371, the Court of Appeal upheld a Superior Court ruling made against a commercial landlord which made note of anti-black racism against the tenant and granted relief from forfeiture based on principles rooted in equity, sparing the tenant from eviction. See our blog regarding the original ruling. In this case the landlord of a commercial plaza unit, sought to evict a husband-and-wife team of restauranteur tenants who ran an African/Black/Caribbean restaurant, catering service and bar. The Landlord’s position was that the tenant had failed to give proper notice with respect to their option to renew and was subsisting in the unit as an overholding tenant. The tenant brought an application before the court for relief from forfeiture and sought the courts assistance in exercising it’s right to continue occupying the … Read More
When Construction Contracts Go Awry: Ontario’s New Construction Contract Adjudication Regime
Construction contracts come with expectations and potential risks to property owners and contractors. Property owners can face issues related to quality of workmanship, delays, and incomplete or abandoned work. Contractors (including sub-contractors) can deal with a myriad of problems which delay or hinder payment, including issues with other sub-trades, the general contractor, or the owner. Whether you are a property owner undertaking construction or renovations, or a contractor (or sub contract) who has been engaged on a project, if things don’t go as planned it’s important to know what your options for recourse may be. A newly established cost-effective adjudication regime has become an important option to consider. Want to learn more about how to protect yourself from a home renovation disaster? Check out our blog. With the Ontario Legislature’s ratification of the new Construction Act, prompt payment and adjudication came into effect on October 1, 2019. The new legislation … Read More
Aborting A Real Estate Deal Can Have Major Consequences
A recent Court of Appeal ruling illustrates the severe consequences that can flow from aborting a real estate transaction. In the decision of Joo v. Tran, 2021 ONCA 107, the Court of Appeal declined to give effect to a term that was included in an agreement of purchase and sale (APS), on the basis that such an interpretation of the clause would have resulted in an absurdity. The clause indicated that the vendors would discharge any encumbrances on or before closing, either through sale proceeds or by way of a solicitor’s undertaking, which term was included in Schedule A of the APS. The decision arose from the appeal of a ruling on a summary judgment motion brought by the seller, who sued the purchaser in a real estate transaction for breach of contract, after the purchaser expressing concerns regarding utility easements on the property, aborted the real estate transaction. The … Read More
Five Reasons People Sue After Buying or Selling Real Estate
In a heated real estate market where blind bidding and unconditional offers are necessary to compete, often times purchasers are vulnerable to pulling the trigger and asking questions afterwards. Conversely sellers are looking to capitalize on market highs and looking to sell for top dollar which often comes down to timing. These competing interests can lead to litigation when a real estate transaction doesn’t go as planned. Here are five common reasons that litigation arises from real estate transactions: 1) Breach of Contract Litigation often arises because a seller or purchaser has breached the purchase and sale agreement. There are many contractual terms that set out the rights and obligations of the respective parties in a real estate transaction including the closing date, title clearance, deposit requirements, inclusions, exclusions, and conditions. A Plaintiff commencing suit over a breach of the contract must prove that they have complied with all of … Read More
China International Arbitration Award Enforced by Ontario Court
Tianjin v. Xu, 2019 ONSC 628 (CanLII) involved an application under the International Commercial Arbitration Act, 2017, SO 2017, c 2, Sch 5 (the “Act”) for an order recognizing and making enforceable in Ontario an arbitral award of the Chinese International Economic and Trade Arbitration Commission (“CIETAC”). Respondent’s Defences The respondent argued that the arbitration award should not be enforced in Ontario because: Service: The respondent did not receive notice of the arbitral proceeding or the appointment of arbitrators; and Jurisdiction: The Ontario Superior Court of Justice did not have jurisdiction to enforce the arbitral award because the arbitration was not an “international commercial arbitration”. Service The court found that there is no requirement that service of notice of the arbitral proceedings or of appointment of arbitrators be effected in accordance with the CIETAC Rules. Rather, the court opined that the respondent was given “proper notice” of the proceedings and … Read More
It’s not all about Intent! – Court of Appeal Confirms Test for Civil Conspiracy
In the recent decision Mughal v. Bama Inc., 2020 ONCA 704 (CanLII), the Court of Appeal upheld a lower court decision in an action alleging civil conspiracy, among other things. The underlying action involved a plaintiff seeking the return of his investment in a corporation. On appeal, it was alleged that the trial judge applied the wrong legal test for and misapprehended the evidence to find commission of the tort of conspiracy to injure. The appellate court concluded that the trial judge applied the correct test for establishing civil conspiracy to injure as follows: Whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants’ conduct is to cause injury to the plaintiff; or, Where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury … Read More
Nick Poon Comments on Anti-Black Racism in Commercial Lease Dispute for The Lawyer’s Daily
Nick Poon was recently asked by The Lawyer’s Daily to comment on the Ontario Superior Court of Justice decision in Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457. The Lawyer’s Daily article is found here: Court cites ‘prejudices’ to Black tenants in overturning landlord’s eviction bid. In this case, the tenant was a husband and wife team that operated a successful restaurant/bar offering African and Caribbean cultural foods primarily to the black community. The tenant had spent $150,000 in leasehold improvements when it took over the lease in 2013. The lease included two further five-year renewal options, upon delivery of written notice at least six months before the lease expired. Although the tenant attempted to contact the landlord, both before and after the notice deadline, to start the renewal process, the landlord appeared to have avoided its telephone calls. The tenant brought an application for relief from forfeiture … Read More
Construction Arbitrator | Reasonable Hourly Rate | Good Availability
Construction arbitrators must be able to arbitrate efficiently and at the pace required by the parties, disputes ranging from simple renovations and repair, to complex multi-party multi-staged projects. The ability to understand construction stages and complexities of design, architecture, engineering and project management, and technical dimensions of a construction dispute are the hallmarks of an effective construction arbitrator. Sole Arbitrator – $450.00 per hour, plus HST Experience In his practice here in Ontario, and when practicing in Dubai and Bermuda, David has been involved in a wide array of construction disputes, including, but not limited to project development, project finance, infrastructure and construction disputes, including matters involving parking garages, road building, residential house construction and renovation, condo development and financing disputes, numerous joint venture disputes, matters involving demolition, collapse, fire and flood, as well as contract disputes concerning construction quality and warranties; and labour disputes in the construction industry. Arbitrator … Read More