Court of Appeal Summaries (June 16-20, 2014)

Winter v Royal Trust Company, 2014 ONCA 473
[Laskin, Rouleau and Epstein JJ.A.]
Counsel:
G. Sidlofsky, for the appellant Jeffrey Barkin
J. Fogarty and P. Masic, for the appellants Kerry J.D. Winter, Paul T. Barkin and Julia Winter
L. Fric and G. Scott, for the respondents

Keywords: Summary Judgment, Hryniak, Option Agreement, Interpretation, Terms

Facts:
The defendants, as executors of the plaintiffs’ father’s estate, agreed to sell his pharmaceutical company, Empire Ltd., to Sherman with right to the plaintiffs for royalties and options to purchase if Sherman controlled the company when they turned 21. The plaintiffs brought action against the defendants, with allegations including failure to advise them of their rights and failure to pass along any royalties. The defendants brought a successful motion for summary judgment.

Issues:
(1) Did the motion judge err in his interpretation of the option agreement?
(2) Did the motion judge err in holding that Royal Trust could not be liable for breach of fiduciary duty or negligence on the grounds that:
(a) Royal Trust failed to draft or negotiate a better option agreement?
(b) By its delay in producing the documents pertaining to the option agreement, Royal Trust prevented the appellants from proving their claims?
(3) Was it fair or just to decide this case without a trial?

Holding: Appeal dismissed.

Reasoning:
(1) No. The definition of “purchased business” in the asset sale agreement was unambiguous. The motion judge’s interpretation correctly found that after the sale of Empire Ltd. to ICN, the option agreement was null and void.

(2)(a) No. Royal Trust was not negligent or in breach of its fiduciary duties regarding option terms as the evidence showed that Sherman would not agree to different terms. The motion judge’s acceptance of the evidence was not tainted by palpable and overriding error.

2(b) No. There was no evidence to support that Royal Trust’s delay in producing the documents prevented the appellants from pursuing their claims or that the delay otherwise prejudiced them.

(3) Yes. This was an entirely appropriate case for summary judgement. The motion judge gave thorough reasons for granting summary judgment dismissing the appellants’ claims.

 

Harris v. Leikin Group Inc., 2014 ONCA 479
[Hoy A.C.J.O., Sharpe and van Rensburg JJ.A.]
Counsel:
R. Rueter and D. Barbaree, for the appellants
S. Victor, Q.C. and D. Cutler, for the respondents
D. Scott, O.C., Q.C. and I. Mentina, for the respondents
B. Zarnett and R. Cookson, for the respondents
A. D’Silva and D. Spence, for the respondents

Keywords: Civil Procedure, Summary Judgment, Hryniak; Fiduciary Duty, Costs

Facts:
The majority shareholders in a family business sought that their interests be bought out and after extensive negotiation, an agreement was reached. Members of the selling group commenced an action claiming the non-selling group and their advisors owed them a fiduciary duty which had been breached by withholding information during the negotiation of the buyout. An extensive summary judgment hearing was held that resulted in one claim being dismissed with a trial directed against the remaining defendants. The motion judge also specified areas where he needed to hear further evidence and legal arguments to decide the case.

Issues:
(1) Did the trial judge err in directing a “hybrid” trial, effectively robbing the appellants of control of the trial narrative?

(2) Did the trial judge make errors of law or palpable and overriding errors of fact about whether the respondents owed, and breached, fiduciary duties to the appellants during the share redemption negotiations?

(3) Did the trial judge err in holding that a costs order of over $2.5 million was “fair and reasonable”?

Holding: Appeal dismissed.

Reasoning:
(1) The Court   disagreed with the appellants’ submission that the trial was “simply a reconfiguration of the dismissed motion.” The hybrid trial process did not lead the trial judge to reverse findings of fact found in the summary judgment motion. The trial judge was able to “salvage the resources that went into the summary judgment motion” and gave all parties latitude when presenting their case.

(2) The appellants argued unsuccessfully that the non-selling shareholders and their advisors owed a per se or ad hoc fiduciary duty to the appellants. The Court agreed with the trial judge that on the evidence, the “appellants were not expecting the selling shareholders to protect their interests”. It is well established that directors owe a duty to the corporation and not stakeholders. The professional defendants such as the lawyers and accountants were not retained and did not act for the shareholders or the appellants and none of their conduct gave rise to a fiduciary duty.

(3) The appellants argued that the trial judge’s order of over $2.5 million in costs was not “fair and reasonable” in the circumstances. The Court found that trial judge properly scrutinized the bills of costs. The trial judge was correct in rejecting the appellants argument that they should “only be responsible for a portion of the respondents’ costs due the overlap in the claims against them.”

 

Tamminga v. Tamminga, 2014 ONCA 478
[Juriansz, Tulloch and Strathy JJ.A.].
J. Adair, for the appellant
R. Agarwal and G. White, for the respondents

Keywords: Insurance, automobile policy, motor vehicle accident, jurisdiction, Van Breda, Forum Non Conveniens

Facts:
Appellant Ms. Tamminga, a resident of Ontario, was injured in Alberta while riding in a truck operated by the respondent Mr. Tamminga. Mr. Tamminga and his company, respondent Tamminga Farms Inc., owned the truck. The individual respondent is an Alberta resident and Tamminga Farms carries on business solely in Alberta. The appellant underwent treatment in Alberta and later returned home where she underwent further treatment. Months later she began an action against the respondents and State Farm for uninsured or underinsured coverage pursuant to her standard automobile policy. The respondents followed with a motion to have the proceeding stayed based on absence of jurisdiction or forum non conveniens. The appellant then amended her pleading to add a claim against State Farm for statutory accident benefits.

Issue:
Is the appellant’s insurance contract a sufficient “presumptive connecting factor” pursuant to the test in Club Resorts Ltd. v. Van Breda to afford the court jurisdiction over the non-resident defendants?

Holding: No (appeal dismissed).

Reasoning:
The contract in the present case was far removed from the events which brought about the dispute. While automobile insurance policies anticipate accidents, tortfeasors are not identifiable until the tort is committed and nothing connected the policy to the respondents. The contract played no role in the appellant being in Alberta and only became relevant after the incident. As such and in line with case law, there is no nexus between the policy and the respondents. It was held unnecessary to deal with the forum non conveniens issue as the jurisdictional ground was dismissed.

 

Blundell v Milmine, 2014 ONCA 480
[MacPherson, Simmons and Gillese JJA]
Counsel:
R. Stewart, for the appellants
L. Farrell, for respondent

Keywords: Civil practice and procedure, Estates and Trusts

Facts:
Ms. Milmine, through her will, directed the reside of her estate (the “Estate”) to be distributed in equal shares to her 5 sons and Blundell. Her son Stephen, the appellant, was also the estate trustee, and the respondent Blundell, was her common law spouse. A disagreement ensued between the parties over when the appellant was permitted to sell three rental properties in the Estate after the appellant sold them to himself and his wife. A trial ensued and the respondent prevailed. The parties entered a settlement agreement and had a subsequent disagreement resulting in an order entitling the respondent to quantified damages.

Issues:
Did the motion judge err in:
(1) making orders not supported by the evidence adduced on the motion regarding who should pay damages;
(2) assessing damages for the period after the respondent began managing the rental properties; and
(3) providing insufficient reasons.

Holding: Appeal allowed. Judgment set aside and motion dismissed.

Reasoning:
(1) There may have been valid reasons to have ordered the sums in question to be payable from the Estate but in the absence of reasons from the record, the court would not determine if such an order was correct.

2) No reasons given for making this order. It was unclear why the respondent was entitled to damages given he defaulted in making the mortgage payments, leading to the sale of the property.

(3) Due to the insufficiency of the record and absence of the necessary findings of fact, the court was unable to decide the issues that were raised on the motion.

 

PT ATPK Resources TBK (Indonesia) v Hopaco Properties Limited, 2014 ONCA 466 [Endorsement]
[MacPherson, Simmons and Gillese JJ.A.]
Counsel:
O. Niedzviecki for the appellant
B. Illion for the respondent

Keywords: Commercial litigation, Foreign jurisdiction, Enforcing foreign judgment, Shares, Interest

Facts:
PT ATPK Resources TBK (Indonesia) (“ATPK”) applied to Ontario Superior Court of Justice to have two judgments of the High Court of the Republic of Singapore registered and enforced against Hopaco Properties Ltd. (“Hopaco”). The 2010 judgment declared Hopaco held shares of ATPK in trust for ATPK. Shares were being held in nominee accounts in Singapore. The judgment ordered shares be reconstituted and delivered to ATPK and Hopaco account for all benefits (“share judgment”). In 2011, a costs order was made against Hopaco for outstanding amount ($215, 112 CAD). The second judgment ordered Hopaco pay $10 million CAD (“money judgment”). The third judgment for the application ordered both the share judgment and money judgment be recognized and given full force and effect against Hopaco as an Order of the Superior Court of Justice. The Judge ordered Hopaco to pay prejudgment interest representing postjudgment interest that had accrued on the money judgment.

Issues:
Did the trial judge err in:
(1) finding that the share judgment was not superseded by the money judgment;
(2) finding that paragraphs 2 and 3 of the share judgment were not inconsistent;
(3) finding the share judgment sufficiently clear and unambiguous that it should be enforced;
(4) ordering pre- and postjudgment interest when there was no evidence that the Singapore judgments awarded any interest to ATPK; and,
(5) ordering the continuation of an interlocutory injunction preventing Hopaco from dealing with its assets or property in Ontario?

Holding: Appeal dismissed, costs to ATPK for $14,400, all inclusive.

Reasoning:
(1) The share judgment was a final equitable order. The money judgment arose out of an assessment conducted pursuant to the share judgment. The subsequent money order does not prevent the foreign equitable order from being registered. Hopaco should have raised the argument before the Singapore court.

(2) The parties understood the judgment because a large portion of the shares in issue were recovered pursuant to the share judgment in Singapore.

(3) The scope of the share judgment and property to which the obligations in the share judgment apply are clearly defined.  The declaration of equitable title is clear because it affects Hopaco. The terms of the share judgment can be enforced.

(4) The prejudgment and postjudgment interests are best understood when characterized as postjudgment interest.  The prejudgment interest covers postjudgment interest running from the date of the money judgment to the date of the enforcement judgement.  The postjudgment interest award covers any postjudgment interest that accrues after.  Section 129(3) of the Court of Justice Act RSO provides that postjudgment interest on a foreign judgment registered in Ontario accrues at the rate applicable under the law of the place where foreign judgment was given. Unless there are directions from the foreign judgment, interest accrues at this rate.

(5) The continuation of the order for an interlocutory injunction was necessary.  This was to ensure that Hopaco did not remove its assets from Ontario.

 

Pointe East Windsor Limited v Corporation of the City of Windsor, 2014 ONCA 467
[MacPherson, Simmons and Gillese JJ A]
Counsel:
R. Coulautti, for the appellant.
M. Nazarewich, for the respondent.

Keywords: Contract law, breach of contract, injunction, damages

Facts:
In 2010, the respondent, City of Windsor, agreed with a manufacturer of wind towers to have the company establish itself in Windsor. As part of the agreement, the City was required to arrange for a rail line to be provided to the company’s facility. To facilitate this agreement, the City negotiated with another party, the appellant, to purchase a part of its lands. The appellant agreed to sell 60 acres of land to the City, and as part of the agreement, the city was required to extend a road to the appellant’s remaining lands so that they may be developed. The City then sold this land to the wind turbine company. Following a mandatory environmental assessment, it became clear that the road and the rail line would come into conflict, and either only the rail line or only the road could be constructed as originally planned and agreed to. An alternate route was proposed for the road, which the appellant adamantly opposed, claiming that it would harm the commercial value of its property. By contrast, the rail line was only feasible as originally planned. Since the plans for the road formed part of the initial agreement between the appellant and the City, the appellant took the position that the City should be ordered to (1) not build the rail line, and (2) extend the road as agreed upon. The application judge found that the City had acted in good faith in entering into the agreements, and that the evidence did not establish that the appellant would suffer any substantial prejudice or irreparable harm by allowing the road to be extended by an alternate route. He also found that damages were an appropriate remedy for the City’s breach of contract.

Issues:
The issues raised by the appeal were as follows:
(1) Did the application judge err in not ordering a permanent injunction to prevent the City from constructing the rail spur?

(2) Alternatively, did the application judge err in dismissing the application in its entirety, rather than granting declarations that the City was in breach of its agreements and ordering a trial to determine the issue of damages?

Holding: No to both issues. Appeal dismissed with costs to the respondent.

Reasoning:
With respect to the above noted issues, the Court reasoned as follows:
(1) The application judge did not err in declining to order a permanent injunction against the City, as such an order is only appropriate where damages prove inadequate. The application judge found that damages provided an adequate remedy in the case at bar, and there is therefore no error in declining to award an equitable remedy.

(2) The application judge did not err in dismissing the action in its entirety without ordering a trial to resolve the issue of damages. The appellant made a tactical decision to seek a permanent injunction rather than seek damages. While the application judge determined that damages would provide an adequate remedy, the onus was on the appellant to seek such relief. The application judge cannot be faulted for refusing to order relief that the appellant did not seek.

 

Bouzari v Bahremani, 2014 ONCA 476 [Endorsement]
[Juriansz JA]
Counsel:
B. Clancy, for the appellants
M. Arnold, for the respondents

Keywords: Civil Procedure, Security for costs of appeal, Jurisdiction, International issues, Forum Non Conveniens

Facts:
The respondents (“Bouzari”) brought a motion for security for costs of the appeal as well as for the unpaid costs awarded. The appeal arises from an order dismissing a forum non conveniens motion, in which the appellant (“Bahremani”) argued the court should decline jurisdiction in favor of proceeding in England.

Issue:
(1) Is the appeal frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal (Rule 61.06(1)(a))?

(2) Is there other good reason that security for costs should be ordered (Rule 61.06(1)(c))?

Holding: Motion dismissed.

Reasoning:
(1) Although the appellant has no assets in Ontario, there is no reason to believe the appeal is frivolous and vexatious. Evidence established the appellant was denied admission into Canada in the past but it did not establish it was unlikely he would be admitted into Canada in the future. The appellant has a plausible argument that the motion judge erred in weighing this evidence and declining to infer he would be unable to defend the action in Canada.

(2) To rely on rule 61.06(1)(c), the respondents must establish there is some good reason to order security for costs “other than” those already encompassed in the other parts of the rule. They cannot rely on the unpaid costs order, the appellant’s lack of any assets in Ontario, and the submission the appeal lacks merit. The “other good reason” must be fairly compelling and must also be related to the purpose for ordering security: that a respondent is entitled to a measure of protection for the costs that will be incurred on the appeal. In this case, unless there is a change in circumstances, the appeal will likely be dismissed as abandoned.

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us. 

 

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