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Parties intended for defendant to be personally liable for obligation

Plaintiff hired defendant and agreed to help him buy a house where he would be working. Plaintiff advanced funds. Defendant signed agreement to be personally liable to repay majority of funds if he did not stay in plaintiff’s employ for five years. Defendant left plaintiff before five years ended. Defendant gave plaintiff post-dated cheques to repay amount advanced but bank returned one of cheques NSF. Plaintiff sued for balance owed. Defendant asserted he signed loan agreement as witness for his holding company, shielding him from liability to repay money. Plaintiff brought motion for summary judgment. Motion granted. Nature and content of loan agreement and circumstances in which it was signed established that defendant in signing below name of his corporation showed that parties intended for him to be personally liable for obligation agreement entailed. Where person’s signature appeared immediately above or below name of his corporation without another signature on document, and without clear indication that person was signing in representative capacity only, instrument was deemed to be ambiguous and court was to look to other evidence from nature and content of document and circumstances in which it was signed to determine whether parties intended signer to have personal liability for obligations in it. Defendant additionally assumed personal liability by authorizing corporation as his agent to enter into loan agreement on his behalf and to undertake that he would be personally liable to repay balance of funds he received. Defendant represented to plaintiff that corporation had authority to enter loan agreement on his behalf. Plaintiff was induced to advance funds to defendant by his representation that corporation was authorized to enter into loan agreement on his behalf and his acknowledgement that he would be liable to repay balance of funds advanced. Defendant was estopped from denying his personal liability having regard to fact that plaintiff relied on his promise to its detriment and to his benefit by advancing funds to him.
H.S.C. Aggregates Ltd. v. McCallum (Oct. 31, 2014, Ont. S.C.J., Price J., File No. Owen Sound CV-112-SR) 246 A.C.W.S. (3d) 819.



Defendant’s actions in reselling vessel to third party was high-handed act

Plaintiff wished to purchase boat from defendants. Offer to purchase was signed by plaintiff and personal defendant who used his own initials without indicating he was acting on behalf of corporate defendant. Offer was conditional on plaintiff being satisfied with inspection and sea trial. Personal defendant had same rights as regards plaintiff’s trade-in vessel. Plaintiff completed inspection and provided acknowledgement of acceptance of vessel. Personal defendant did not conduct inspection or provide acknowledgement. Personal defendant indicated he did not wish to proceed with sale because he was unable to obtain necessary financing. Personal defendant asserted value of trade-in vessel was far less than amount indicated in offer to purchase. Purchase did not close. Vessel was sold to another purchaser for better price two days prior to personal defendant signing rejection of trade-in vessel. Plaintiff sold his trade-in vessel and found comparable vessel to purchase that cost much more. Plaintiff asserted defendants breached contract by failing to conduct inspection and by failing to close purchase and sale due to financing difficulties although such was not condition of contract. Plaintiff asserted that personal defendant signed contracts and not corporate defendant and personal defendant was liable for damages. Personal defendant was owner of corporate defendant. Plaintiff was entitled to damages of $212,536 and to punitive damages of $25,000. There was binding enforceable contract that was breached by defendants. Parties agreed to their bargain and there was offer, acceptance and consideration. Personal defendant did not satisfy condition of inspecting trade-in vessel and to act in good faith in so doing. Contract was not subject to defendant’s financing needs and such provision could not be now imported or implied into contract. Values of vessels were already agreed upon in written contract and only inspection remained. Defendants failed to act pursuant to contract, failed to satisfy condition and did not act reasonably or in good faith. Plaintiff took reasonable steps to mitigate damages. Defendants’ actions in reselling vessel to third party prior to advising plaintiff that contract in defendants’ mind was terminated was high-handed act.
Proulx v. Canadian Cove Inc. (Nov. 3, 2014, Ont. S.C.J., Carole J. Brown J., File No. CV-11-434847) 246 A.C.W.S. (3d) 740.

Civil Procedure


Not open to appeal judge to adjudicate novel question of law

Action arose out of single vehicle accident. Plaintiff appealed master’s decision denying leave to amend statement of claim to add insurer as named party defendant in main action. Appeal was dismissed. Without prior notice appeal judge determined key contractual interpretation issue, which was conclusive of coverage dispute. Plaintiff appealed. Appeal allowed. Appeal judge erred in proceeding in that manner. Proper focus of inquiry was whether requested amendment should be allowed. It was open to appeal judge to determine whether plaintiff’s proposed coverage claim against insurer was tenable at law but it was not open to him to finally adjudicate novel question of law under paradigm that was not disclosed to parties and where underlying relevant facts had not been determined. Claim sought to be advanced was novel. At early stage of proceedings where material facts remained contested, it could not be said that proposed claim was could not succeed at trial. Insurer would not suffer prejudice as result of proposed amendment that could not be compensated in costs. Amendment should be allowed.
Vogler v. Lemiux (Nov. 13, 2014, Ont. C.A., E.A. Cronk J.A., E.E. Gillese J.A., and Paul Rouleau J.A., File No. CA C58646) Decision at 230 A.C.W.S. (3d) 88 was reversed.  246 A.C.W.S. (3d) 551.



Order against non-party lawyers could not be severed from judgment

On January 19, 2014, court dismissed respondent’s motion to set aside judgment against her for $1.2 million. Court awarded costs on substantial indemnity basis against respondent, but dismissed appellant’s motion for costs payable by lawyers for respondent on personal basis resulting from allegations that lawyers knew affidavit respondent had put before court was false. Appellant moved before Divisional Court for leave to appeal costs order to Divisional Court. Respondent claimed that Divisional Court did not have jurisdiction to hear appellant’s motion for leave to appeal to Divisional Court. Motion for leave to appeal dismissed. Order respecting costs was final and not interlocutory. In result, leave to appeal must be obtained from Court of Appeal and Divisional Court had no jurisdiction to entertain appeal. It did not matter that order sought was against non-party lawyers. Order of costs against non-party lawyers was made as part of judgment and could not be severed or segregated from that judgment.
Grewal v. Sidhu (Oct. 27, 2014, Ont. S.C.J., MacKenzie J., File No. DC-14-10-ML) 246 A.C.W.S. (3d) 586.

Civil Procedure


Settlement funds had to be repaid and mediation must fail before court proceeding commenced

Plaintiff was injured in single motor vehicle accident. Defendant insured plaintiff under no-fault policy for accident benefits. Plaintiff applied for statutory accident benefits, which defendant paid. Defendant then terminated plaintiff’s income replacement benefits. Plaintiff signed full and final release that released defendant from any obligation to pay accident benefits to plaintiff. In exchange, defendant made lump sum payment of $3,000 to plaintiff. Plaintiff claimed that release was nullity and defendant breached its duty of good faith and caused her mental distress by unlawfully terminating benefits. Plaintiff brought action. Defendant brought motion for summary judgment on basis that claim was statute-barred. Plaintiff brought motion for partial summary judgment. Motion judge found that plaintiff’s claim was subject to mandatory mediation and she was obligated to repay settlement funds and proceed to mediation before she could commence litigation. Plaintiff’s motion for summary judgment was dismissed and defendant’s motion was allowed and action was dismissed. Plaintiff appealed. Appeal dismissed. Settlement funds had to be repaid and mediation must fail before court proceeding could be commenced. Plaintiff had not fulfilled statutory preconditions to commencement of court proceeding. Claims asserted by plaintiff all flowed from denial of benefits and there were no independent causes of action. Motion judge did not make any error of law in analysis and there was no basis to interfere with decision to grant defendant’s motion for summary judgment. All of plaintiff’s claims were properly dismissed on defendant’s summary judgment motion.
Madder v. South Easthope Mutual Insurance Co. (Oct. 21, 2014, Ont. C.A., C. William Hourigan J.A., K.M. Weiler J.A., and G. Pardu J.A., File No. CA C57494) Decision at 230 A.C.W.S. (3d) 393 was affirmed.  246 A.C.W.S. (3d) 81



Endorsement did not address criteria for when party should be added to proceeding

Plaintiff was involved in motor vehicle accident on June 9, 2009, in which she was injured. She sought entitlement to and recovery of long-term disability benefits from defendant insurer under insurance policy where she was insured. Defendant insurer denied those benefits alleging that plaintiff did not meet applicable test under its policy. Non-party insurer was plaintiff’s accident benefits insurer and had been paying her income replacement benefits arising from their acceptance that she was unable to return to work due to injuries she sustained in accident. Non-party insurer moved to be added as defendant on grounds that it was necessary party to action because it had interest in, and may be adversely affected by, outcome of action. Motion judge granted motion on Jan. 30, 2014. Defendant insurer sought leave to appeal order. Leave to appeal granted. Endorsement of motion judge did not satisfactorily address criteria for when party should be added to proceeding. It was not entirely clear how motion judge reached his decision, and while his decision was deserving of deference, because parties themselves were unable to conclude with certainty basis for decision, court was satisfied that decision was open to serious debate. Because of that, court found that there was good reason to doubt  correctness of motion judge’s decision. Court was also satisfied that appeal raised matters of general importance.
Atwi v. Manufacturers Life Insurance Co. (Oct. 20, 2014, Ont. S.C.J., B.R. Warkentin J., File No. Ottawa 11-51297) 246 A.C.W.S. (3d) 11.

Civil Procedure


Examination of second representative would not avoid further undertakings

Plaintiffs were hedge fund and customer of defendant’s prime brokerage unit. In absence of plaintiffs being able to meet margin requirements for accounts, defendant seized them and subsequently liquidated them. Plaintiffs alleged that defendant’s actions resulted in significant loss and they brought this action. Plaintiffs examined representative of defendant. Plaintiffs sought order granting them leave to examine for discovery second representative of defendant. Motion dismissed. Plaintiffs had not met test for leave to examine second representative. Court was not satisfied that plaintiffs had not been able to obtain satisfactory answers through undertakings. Fact that there were numerous undertakings did not establish that first representative failed to properly inform himself of issues. Defendant took long time to answer undertakings but there were many undertakings that involved many individuals. Examination of second representative would not avoid further undertakings. Examination of second representative would not expedite action.
Silvercreek II Ltd. v. Royal Bank of Canada (Oct. 24, 2014, Ont. S.C.J. [Commercial List], L.A. Pattillo J., File No. CV-11-9538-00CL) 245 A.C.W.S. (3d) 799.
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