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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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Corporations

CORPORATE IDENTITY

Corporate defendants were alter egos of each other and acted as single business

Plaintiff delivered electrical equipment to defendant companies. Plaintiff claimed it was owed $150,950.16. Defendants did not dispute receiving goods from plaintiff for which they had not paid, but disputed amount owing. Plaintiff brought motion for summary judgment for breach of contract and breach of trust under Construction Lien Act (Ont.). Motion granted in part. Plaintiff’s documents were sufficient to establish account balance and were accepted in absence of any probative evidence to contrary. Plaintiff was awarded judgment of $150,950.16 plus interest. Defendant companies were iterations of same business. It was not clear which company ordered and used goods purchased from plaintiff. It was within defendants’ knowledge which company had benefit of supply of plaintiff’s goods. Defendants were deliberately misdirecting liability among themselves. For purposes of supply contracts at issue, corporate defendants were alter egos of each other and acted as single business and were jointly and severally liable. Individual defendant was operating mind of companies and was person plaintiff dealt with. If there was breach of trust then individual would be liable for it. It was for plaintiff to show that there were trust funds and that funds had been disbursed in breach. Information that was relevant to establishing propositions would be in defendants’ possession and had not yet been produced. Individual defendant failed to attend for cross-examination, but there was evidence that failure was inadvertent and individual defendant was given another chance to discharge his obligation before drawing adverse interference of breach of trust. Individual defendant was to provide list of documents.
Rexel Canada Electrical Inc. v. Tron Electric Inc. (Mar. 31, 2014, Ont. S.C.J., D.L. Corbett J., File No. CV-11-433830) 239 A.C.W.S. (3d) 361.

Civil Procedure

SUMMARY JUDGMENT

No evidence of economic loss or damage as result of sigma of haunted property

Plaintiff purchased commercial property from defendant. Article appeared in newspaper in which director of defendant was quoted as saying that property was haunted. Plaintiff commenced action on basis that there was latent defect in property that defendant knew about and concealed or failed to disclose, namely, death or murder at property. Defendant successfully brought motion for summary judgment and claim was dismissed. Plaintiff appealed. Appeal dismissed. There was no direct evidence of economic loss or damage as result of stigma of haunted property. There was no direct evidence from anyone who observed any strange occurrences at property. Motion judge did not err in concluding that case was proper one for dismissal on summary judgment.
1784773 Ontario Inc. v. K-W Labour Assn. Inc. (Apr. 14, 2014, Ont. C.A., Feldman J.A., Rouleau J.A., and Hourigan J.A., File No. CA C57674) Decision at 234 A.C.W.S. (3d) 1067 was affirmed.  239 A.C.W.S. (3d) 529.

Contracts

BUILDING CONTRACTS

Subcontractor had no obligation to correct deficiencies arising from others’ work

Subcontractor performed certain exterior work on property owner’s condominium construction project. Owner complained about various cosmetic defects. Subcontractor remedied certain defects, but others were due to problems with prior construction. Owner was unwilling to pay extra to remedy underlying problems. Owner refused to make final payment to subcontractor. Subcontractor brought action against owner for payment of amount owing. Action allowed. Subcontractor was awarded $39,728.58 as claimed. Subcontractor had performed its contractual obligations, subject to concerns about deficiencies. Subcontractor did not have obligation to take steps to correct deficiencies arising from others’ work. Subcontractor had offered to perform extra work to remedy underlying problems, but owner had refused. After correcting certain other deficiencies, subcontractor’s work was as good as it could have been.
Window & Door Centre Inc. v. Pine Lake Properties Inc. (Mar. 21, 2014, Ont. S.C.J., A.D. Grace J., File No. 8394-12) 239 A.C.W.S. (3d) 79.

Bankruptcy and Insolvency Civil Procedure

DISCOVERY

Documents relevant to product liability and duty to warn causes of action

Lawsuits arose out of airline crash in which people died. Appellants manufactured engine that failed and was identified as one of causes of crash. Appellants were ordered to produce documents concerning parts, counterweights and accidents. Documents were found to be relevant to show appellants had propensity to manufacture improperly and that they knew of issues with similar systems. Appellants complained they were being asked to produce large number of documents over substantial period of time. Appellants appealed. Appeal dismissed. There was no error in assessment of relevancy. Documents were relevant to product liability and to duty to warn causes of action pleaded. Appellants were in regulated field where information was routinely updated as state of knowledge advanced. Without evidence from appellants with description of hardship to counterbalance relevancy and discretionary factors, there was no basis to conclude there was error of law, principle, or appreciation of facts.
Hudson v. ATC Aviation Technical Consultants (Mar. 4, 2014, Ont. S.C.J., Myers J., File No. CV-09-37858800-0000) 239 A.C.W.S. (3d) 54.

Civil Procedure

PLEADINGS

Amendments proposed new cause of action based on new set of facts

Plaintiffs’ business was destroyed by fire. Plaintiffs claimed they were insured under policy with defendant. Plaintiffs claimed they were not adequately indemnified under insurance policy for losses they sustained. Plaintiffs brought motion for leave to amend statement of claim to add paragraph setting out particulars of negligence, breach of contract and breach of fiduciary duty. Defendant brought cross-motion for summary dismissal of claim based on admissions plaintiffs made during examinations for discovery. Motion dismissed. Cross-motion granted. Claim was dismissed. Amendments proposed new cause of action based on new set of facts and were barred by expiry of limitation period. Claim related to adequacy of limits of coverage placed and all of facts pleaded in support of claim related to failures alleged to have occurred before loss and not after. Proposed amendment would create cause of action in negligence for failing to properly assess plaintiffs’ loss under policy after fire occurred, and not for failing to put in place proper policy of insurance beforehand. Plaintiffs conceded that if plaintiffs’
motion failed, defendant’s cross-motion should succeed.
Lauzon v. Dominion of Canada General Insurance Co. (Mar. 27, 2014, Ont. S.C.J., Ellies J., File No. CV-10-4812) 238 A.C.W.S. (3d) 845.

Bankruptcy and Insolvency

BANKRUPTS

Bankrupt not aware of friend’s misrepresentations or mortgage fraud

Bankrupt was employee of bank and was asked by friend if he would be willing to co-sign mortgage application to assist new immigrant who lacked sufficient credit history in Canada to obtain mortgage. Bankrupt and friend signed separate mortgage applications at different times in different places. Bankrupt provided accurate information about his income and employer while friend misrepresented income and employment and submitted inflated property valuation. Bankrupt was not aware of misrepresentations. Bank investigated what it believed to be fraud. Mortgage went into default. Bank sued and obtained default judgment against bankrupt and friend and judgment was assigned to Canada Mortgage and Housing Corporation (CMHC). Bankrupt made assignment in bankruptcy. CMHC applied for declaration that outstanding amount of bankrupt’s debt would not be released under s. 178(1)(e) of Bankruptcy and Insolvency Act (Can.). Judge determined that bankrupt’s debt would not survive his discharge from bankruptcy. CMHC appealed. Appeal dismissed. Section 178(1)(e) required finding that bankrupt obtained property by fraudulent misrepresentation or false pretences. Causal connection was required between bankrupt’s wrongdoing and creation of debt. Mortgage was obtained by friend’s fraudulent misrepresentations and not as result of anything bankrupt said or failed to disclose. Bankrupt was not aware of friend’s misrepresentations or mortgage fraud. Trial judge did not err in failing to find that bankrupt was not wilfully blind. Decision did not condone straw man debtor scenario.
Canada Mortgage and Housing Corp. v. Gray (Mar. 28, 2014, Ont. C.A., John Laskin J.A., K. van Rensburg J.A., and C.W. Hourigan J.A., File No. CA C57109) Decision at 229 A.C.W.S. (3d) 333 was affirmed.  238 A.C.W.S. (3d) 807.

Civil Procedure

COSTS

Applicant awarded $35,387.63 as respondents sought to increase applicant’s legal costs

Applicant sold business publishing magazine to respondent company. Individual respondent provided most of acquisition funding. Part of purchase plan was deferred and respondent company executed general subordinated security agreement in favour of applicant to secure deferred payment. Applicant executed subordination agreement with respondents that provided that respondent company had borrowed money from individual respondent and applicant agreed to subordinate payment of deferred payment to respondent company’s obligations to individual respondent. Respondent company did not pay deferred payment. Applicant made requests for information from respondents, which they ignored. Applicant brought application seeking several kinds of relief. Order was made for respondents to satisfy undertakings. Applicant applied for costs. Application granted. Applicant made legitimate request for information from respondents, which they ignored. Respondents’ refusal to provide information was done as stall tactic. Respondents ignored legal obligations to disclose requested information and they sought to increase applicant’s legal costs. Respondents’ conduct was reprehensible and warranted award of substantial indemnity costs. Applicant was awarded costs of $35,387.63.
Markplan Inc. v. Magazine Acquisition Corp. (Mar. 18, 2014, Ont. S.C.J. [Commercial List], D.M. Brown J., File No. CV-13-10315-00CL) 238 A.C.W.S. (3d) 559.
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