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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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Civil Procedure


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


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


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.



Arguable that claims fell within terms of very broad arbitration clause

Plaintiff was Italian corporation that provided commissary, or meal delivery, services for defendant corporation in Afghanistan pursuant to March 2013 services agreement. Corporation was Ontario corporation. Corporation terminated services agreement on June 7, 2013. On July 17, 2013, plaintiff commenced action in Ontario against corporation and certain of its directors, officers and employees, seeking damages for termination of services agreement and other relief. Plaintiff then commenced application against corporation for order that arbitration clause contained in services agreement did not survive termination of services agreement. Corporation moved for order staying action pending arbitration of dispute between parties. Motion granted. Review of amended statement of claim disclosed that it was certainly arguable that claims asserted by plaintiff against corporation in action fell within terms of very broad arbitration clause, which covered any dispute or controversy between parties arising under, out of, in connection with or relation to services agreement. Under services agreement, it was unclear whether termination affected or impaired party’s right to enforce rights and remedies contained in agreement. That issue was best left to arbitrator. Claims against personal defendants concerned performance and termination of services agreement. Action was stayed against all defendants pending arbitration between plaintiff and corporation. Plaintiff’s application was dismissed.
Ciano Trading & Services C.T. &. S.R.L. v. Skylink Aviation Inc. (Mar. 17, 2014, Ont. S.C.J. [Commercial List], D.M. Brown J., File No. CV-13-10273-00CL, CV-13-484963) 238 A.C.W.S. (3d) 539.

Bankruptcy and Insolvency


Self-represented person
entered into agreement
without benefit of interpreter
Action was brought in Small Claims Court. Appellant did not have representation and required interpreter. Appellant entered into settlement agreement. Appellant wished to resile from settlement agreement and have it set aside on basis appellant did not understand what she was agreeing to and she was tricked into signing agreement. Appellant was no longer represented. Appellant was attempting to retain counsel, had personal health issues, and was primary caretaker of elderly mother. Appellant faced criminal trial matter and was still attempting to secure representation for it. Appellant brought motion for extension of time to serve, file and perfect appeal. Motion granted. Appellant’s explanation for her portion of delay was reasonable and justified. Appellant’s situation was unique especially given language barrier. Self-represented person who entered into agreement without benefit of interpreter, when one was needed was at least prima facie serious consideration.
Tran v. Schwartz (Mar. 17, 2014, Ont. S.C.J., K.P. Wright J., File No. DC 12/507) 238 A.C.W.S. (3d) 291.

Contempt of Court


Having corporation pay for car and cellphone did not violate provisions of court order

Husband, who owned his own real estate firm, was in arrears of support payments in excess of $150,000 and had long history of attempting to avoid obligations under court orders. Current contempt motion arose from order made on Jan. 2, 2013, after husband lost motion to change quantum of his spousal support obligation. Order provided that husband was prohibited from receiving any income other than salary income from any corporation or business in which he held interest when he was in default of any support order and was prohibited from declaring or receiving any dividend income, receiving shareholder loans, receiving any commission income or receiving any other benefits from any corporation or business in which he had interest when he was in default of any support order. In support of yet another motion to change, husband subsequently filed financial statement in which he claimed his car, extended medical and life insurance benefits and his cell phone as benefits paid on his behalf by his company. In this motion for contempt, wife alleged that these items were benefits from husband’s corporation in violation of order that prevented husband from receiving “any other benefits” from any corporation or business in which he had interest while in default of any support order. Wife’s motion for contempt dismissed. Having his corporation pay for his car and cell phone, items that counsel for wife acknowledged husband required for operation of his business, did not violate provisions of court order.
Freedman v. Freedman (Feb. 21, 2014, Ont. S.C.J., Bonnie R. Warkentin J., File No. FC-08-1285) 238 A.C.W.S. (3d) 76.
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