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Case Law is a sample selection from the weekly summaries of notable unreported civil and criminal court decisions published in Law Times newspaper.

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Consumer Protection

Limitation period

Basic limitation period had no application to statutory framework for consumer credit reporting

Applicant brought application for order that two consumer reporting agencies remove debts over two years old that were shown on his credit report, where no legal action had been commenced or judgment obtained in respect of debts. Applicant relied on provisions of Limitations Act, 2002 (Ont.) (LA), and in particular basic limitation period of two years applicable to commencement of proceeding in respect of claim. Applicant took position that two-year limitation period should apply in interpreting provisions of Consumer Reporting Act (Ont.) (CRA). Applicant’s application was dismissed. Applicant appealed. Appeal dismissed. Application judge did not err in his dismissal of applicant’s application, on basis that basic limitation period had no application to statutory framework for consumer credit reporting in province, and there was no violation by consumer reporting agencies of requirements of CRA. LA did not apply to CRA, whether expressly or by implication. Reporting of debts after limitation period had passed was not inconsistent with purposes of CRA, and was expressly contemplated by its terms.
Grant v. Equifax Canada Co. (June 23, 2016, Ont. C.A., Paul Rouleau J.A., K. van Rensburg J.A., and M.L. Benotto J.A., CA C61664) Decision at 259 A.C.W.S. (3d) 673 was affirmed. 268 A.C.W.S. (3d) 337.


Bankruptcy and Insolvency

Courts and procedure

Motion judge found that defendants’ claim was not personal and vested in trustee

Defendants entered into franchise agreement and sublease to operate store with plaintiff corporations. Defendants operated store for just under two years, when they abandoned premises and claimed rescission under Arthur Wishart Act (Franchise Disclosure), 2000 (Ont.). Plaintiffs brought action for sum of $77,112 for arrears of rent and damages for breach of franchise agreement and sublease. Defendants filed statement of defence and counterclaim. Defendants brought motion for summary judgment dismissing plaintiffs’ claim and granting judgment in favour of defendants for sum of $156,392 for rescission of franchise agreement. Motion judge dismissed defendants’ motion. Motion judge found that defendant P, which owned 60 per cent of defendant corporation, had made assignment in bankruptcy after action was commenced but before statement of defence and counterclaim were filed. Motion judge found that defendants’ claim was not personal in nature and vested in trustee in bankruptcy. Motion judge held that statement of defence and counterclaim was nullity. Defendants appealed. Appeal quashed. Order from which appeal was taken was interlocutory. Motion judge’s remarks that statement of defence and counterclaim were nullities, and about spoliation as obiter, explained why he was not inclined to exercise any discretion to allow matter to proceed despite bankruptcy of one of defendants.
Treats International Franchise Corp. v. 2247383 Ontario Inc. (June 2, 2016, Ont. C.A., R.G. Juriansz J.A., David Brown J.A., and L.B. Roberts J.A., CA M46387 (C61544)) 268 A.C.W.S. (3d) 278.


Civil Procedure

Default

Appeal to set aside default judgment was dismissed

Respondent was tenant who had slip and fall accident in 2003, on appellant landlords’ property. Tenant brought action against landlords, and had landlords noted in default in 2005. Tenant did not obtain default judgment until 2014. Landlords claimed they only learned of action during enforcement proceedings in 2015. Landlords applied to set aside default judgment, but were unsuccessful. Landlords claimed that they acted promptly after learning of default, and had meritorious case. Landlords claimed that setting aside default was in interest of justice. Landlords appealed from motion judgment. Appeal dismissed. Motion judge made proper finding that it was likely landlords had prior knowledge of action. Landlords were found to have evaded service. Landlords’ own evidence was that they learned of court proceeding in 2014, but took no steps to inquire as to nature of proceeding for six months. There was evidence that tenant resided at property, contrary to landlord’s assertions. Findings were based in evidence. Motion judge made no error. 

Ur-Rahman v. Mahatoo (July 8, 2016, Ont. C.A., J.C. MacPherson J.A., E.A. Cronk J.A., and M.L. Benotto J.A., CA C61704) Decision at 262 A.C.W.S. (3d) 325 was affirmed. 268 A.C.W.S. (3d) 48. 


Arbitration

Jurisdiction

Court will not interfere with procedural or interlocutory orders in arbitration matters

Regional municipalities retained applicant to design, build, and operate energy-from-waste facility. Applicant entered into main agreement with respondent CPP as material subcontractor to perform construction services for facility. Agreement provided for CPP to participate as party to any arbitration between municipalities and applicant if notified by either party and for applicant and CPP to submit to binding arbitration of any dispute not resolved through negotiations. CPP entered into agreements with subcontractors for specific services required to build facility. Subcontract agreement also contained mandatory arbitration clause. CPP issued notice of arbitration to applicant. Arbitrator granted CPP’s motion for order adding subcontractors as parties to arbitration. Applicant’s application for order setting aside arbitrator’s decision was granted on basis that arbitrator failed to satisfy himself that persons sought to be joined in arbitration were parties to main agreement. CPP appealed and applicant brought motion to quash appeal on basis that no appeal lies from decision of application judge under Arbitration Act, 1991 (Ont.). Motion granted. Article 16(3) of UNCITRAL Model Law on International Commercial Arbitration and s. 17(9) of Act provide that there shall be no appeal from decision of court on question of arbitrator’s jurisdiction. CPP’s submission that application judge did not have jurisdiction to review applicant’s application to set aside arbitrator’s ruling because his decision was not jurisdictional in nature, and that court had jurisdiction to hear appeal of judge’s decision, was rejected. Whether person is party to arbitration, agreement is question of jurisdiction. Court will not interfere with procedural or interlocutory orders in arbitration matters. Appeal quashed. 

Covanta Durham York Renewable Energy Limited Partnership v. Barton-Malow Canada, Inc. (July 11, 2016, Ont. C.A., G.R. Strathy C.J.O., David Brown J.A., and Grant Huscroft J.A., CA M46511 (C62067)) 268 A.C.W.S. (3d) 16.


Aboriginal Peoples

Property

Motion judge’s finding was palpable and overriding error

C group of companies operated marina located on premises owned by landlord 212 Inc.. C group became insolvent. Receiver was appointed and continued to operate marina. When marina’s lease expired, 212 Inc. leased location to new tenant and brought motion to establish its right to occupation rent from receiver. Motion judge determined receiver was not obligated to pay occupation rent. 212 Inc. appealed. Appeal allowed. Receiver occupied marina and was liable to pay occupation rent. Receiver deprived 212 Inc. of its rights of use of premises in manner that constituted occupation. Motion judge’s finding to contrary was palpable and overriding error. Where deprivation of use is tantamount to actual occupation, liability to pay occupation rent is engaged. Motion judge erred by focusing primarily on “deprivation of use”, when there was admitted possession and evidence of actual occupation, and by conflating “deprivation of use of premises” in real property sense with “deprivation of use” in more general cost/benefit or economic sense. Presumption in favour of obligation to pay rent had not been rebutted, and no equitable considerations applied.
Crate Marine Sales Ltd., Re (June 3, 2016, Ont. C.A., Alexandra Hoy A.C.J.O., R.A. Blair J.A., and L.B. Roberts J.A., CA C61243) Decision at 259 A.C.W.S. (3d) 278 was reversed. 267 A.C.W.S. (3d) 272.


Contracts

Franchise agreements

Determination of who was franchisor’s associate required full factual record

US auto manufacturer’s predecessor declared bankruptcy. As part of court-supervised restructuring, manufacturer received assets of bankrupt predecessor company and bailouts from, among others, Canadian and Ontario governments. Canadian dealers brought action against manufacturer and Canadian subsidiary alleging manufacturer’s preferential financial support to US dealers constituted breach of duty of good faith in performance of franchise agreements and breach of Arthur Wishart Act (Franchise Disclosure), 2000 (Ont.). Manufacturer and subsidiary brought successful motion under R. 21 of Rules of Civil Procedure (Ont.) to strike claims. Motion judge dismissed entire claim against manufacturer without leave to amend, finding, among other things, that manufacturer was not party to franchise agreement and could not be held liable under s. 3(2) of Act or at common law for alleged breaches of franchise agreement by subsidiary. Dealers appealed. Appeal allowed with costs fixed at $20,000. It was not plain and obvious action that manufacturer was not franchisor’s associate. Motions judge approached motion as if it were motion for summary judgment and required dealers to demonstrate that they would succeed rather than requiring manufacturer to demonstrate that dealers could not possibly succeed. Interpretation of “party” in s. 3 would likely have important precedential value and answer should be decided on full record. Determination of duties owed under remedial legislation such as Act involved important questions of legal interpretation, were subject of limited jurisprudence, and required factual record. Interpretation of “party” and extent of duty in s. 3 would likely have important precedential value and answer should be decided on full record, as did question of whether level of control alleged and special obligations owed in context of franchise relationship could open door for imposition of common law duty. Determination of who was franchisor’s associate required full factual record. Motion judge concluded that manufacturer could not be “directly involved in grant of franchise” because grant of franchise occurred before manufacturer was in existence, but conclusion was based on improper treatment of document on R. 21 motion as evidence. Conclusion required trial based on full record, not R. 21 motion.
Addison Chevrolet Buick GMC Ltd. v. General Motors of Canada Ltd. (May. 3, 2016, Ont. C.A., Doherty J.A., G. Pardu J.A., and M.L. Benotto J.A., CA C60644) Decision at 254 A.C.W.S. (3d) 334 was reversed. 267 A.C.W.S. (3d) 329.


Conflict of Laws

Jurisdiction

Presumptive connecting factor was not rebutted

GMC terminated Saab dealership network in Canada. Defendant was incorporated to act as new franchisor and supplier for new Saab dealership network in Canada. Defendant made representations to plaintiffs regarding its plans for new Saab dealership network in Canada. Plaintiffs were approved as Saab franchisees. Parties entered into dealer agreements, which granted plaintiffs right to sell and service Saab motor vehicle and to sell Saab parts and accessories. Ontario and Alberta plaintiffs received disclosure document that did not contain financial statements for defendant although they were required by legislation. Disclosure document failed to disclose material facts. Plaintiffs in Nova Scotia, Quebec and British Columbia received no disclosure document. Plaintiffs rescinded dealer agreements. Rescission required defendant to pay amount within 60 days. Defendant failed to pay amount. Plaintiffs sought declaration that they validly rescinded their dealer agreements pursuant to Arthur Wishart Act (Franchise Disclosure), 2000 (Ont.) and Franchises Act (Alta.). Plaintiffs sought compensation or damages. Defendants brought motion to set aside service ex juris of statement of claim asserting that California was more appropriate forum. Motion dismissed. Court’s jurisdiction over claim was established. Defendant carried on active business in Ontario. Presumptive connecting factor was not rebutted. Defendants failed to establish that there was more appropriate forum than Ontario to fairly and efficiently dispose of litigation. Evidence of defendant’s representatives could be taken in Windsor, which bordered Detroit. Dealer agreements specified that they were governed by law of Ontario. Trying claim in Ontario would avoid expense of proving Ontario law in foreign jurisdiction by expert evidence.
Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC (May. 3, 2016, Ont. S.C.J., Marrocco A.C.J.S.C., Toronto CV-13-476346) 266 A.C.W.S. (3d) 370.
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