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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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Conflict of Laws

SERVICE EX JURIS

Mother permitted to proceed with undefended trial as father properly served

Parties were married on March 7, 1987, and separated on May 13, 1995. Parties had two children born on Jan. 15, 1990, and Feb. 16, 1993. Court issued final order on Dec. 18, 2008, which terminated child support for oldest child, adjusted child support payable for youngest child, and addressed outstanding arrears. Mother now brought motion to change final order. Father lived in state of Georgia. Motion to change was served on father in Georgia. Father failed to respond within 30 days required under Family Law Rules (Ont.). Motion proceeded on undefended basis. Motion granted. Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters applied to case. Convention must be complied with for service of family law proceedings within contracting states. Process server employed by mother was authorized, within State of Georgia, to serve court documents anywhere in Georgia. Father was served in manner that was authorized by Convention, and service in that way was permissible in Ontario. Service was acceptable. Since father was properly served with motion to change and appropriate documents, and had not responded, mother was permitted to proceed with undefended trial. Based on her affidavit material, court was persuaded mother was entitled to order sought.
Pitman v. Mol (Apr. 24, 2014, Ont. S.C.J., Gray J., File No. 4060/08) 240 A.C.W.S. (3d) 63.

Administrative Law

BIAS

Judge’s comments indicated partiality to evidence given by police officers

Applicant brought application for declaration that certain moneys that she had advanced to daughter and respondent, who was daughter’s common law husband, towards purchase of house were not gift, but loan that constituted unregistered mortgage on home. Although application was supported by one document, meaning and intent of that document was in dispute, as were the facts that had to be found in order to determine whether declaration should be granted. Trial judge dismissed application. Trial judge accepted respondent’s contention that loan had been gift, which was made in return for free room and board. Daughter and respondent were police officer. Trial judge expressed concern about making finding that police officer was untruthful. Applicant appealed on basis that application judge erred in failing to find that trial was necessary in circumstances, and on basis that impugned comments by application judge created reasonable apprehension of bias. Appeal allowed. Applying test for reasonable apprehension of bias, it was clear that reasonable observer would conclude that it was more likely than not that, consciously or unconsciously, application judge would not impartially decide whom to believe. Application judge’s comments indicated partiality to evidence given by police officers. Even though he gave other reasons for deciding whose evidence he believed, those reasons were tainted by comments. Decision was set aside and new trial ordered.
Laver v. Swrjeski (Apr. 17, 2014, Ont. C.A., K. Feldman J.A., J.C. MacPherson J.A., and Gloria Epstein J.A., File No. C57052) 240 A.C.W.S. (3d) 2.

Family Law

DOMESTIC CONTRACTS

Absence of witness to husband’s signature did not preclude wife from relying on contract

Parties cohabited from 2007 to 2012 in wife’s home and had one child. Wife had significantly greater assets and income than husband. In 2008, wife asked husband to sign domestic contract. Husband took contract to lawyer for legal advice. Husband claimed he signed contract without witness. After parties separated, husband brought application alleging that wife had been unjustly enriched as result of contributions he made to her home. Motion judge concluded that husband’s claims were prohibited by domestic contract and claims were dismissed. Husband appealed motion judge’s decision. Appeal dismissed. Section 55(1) of Family Law Act (Ont.), provided that domestic contract was unenforceable unless it was made in writing, signed by parties and witnessed. Strict requirements of s. 55(1) may be relaxed where court was satisfied that contract was executed by parties, terms were reasonable and there was no oppression or unfairness in circumstances that surrounded negotiation and execution of agreement. Both parties signed contract and wife’s signature was witnessed. Both parties certified that they received independent legal advice before they signed contract. There was full financial disclosure before contract was executed. Both parties were educated and sophisticated and there was no duress, lack of capacity, vulnerability or other circumstance that would vitiate contract. Absence of witness to husband’s signature did not preclude wife from relying on domestic contract as defence to husband’s claims. Domestic contract was clear and unambiguous when it was read as whole and parties contracted for separate property regime. Wife was entitled to do what she wanted with husband’s rent payments and her acceptance and use of them did not repudiate contract.
Gallacher v. Friesen (May. 15, 2014, Ont. C.A., S.T. Goudge J.A., E.A. Cronk J.A., and G.R. Strathy J.A., File No. CA C57663) 239 A.C.W.S. (3d) 967.

Arbitration

AWARD

Nothing about award was contrary to principles of contract law

Applicant ordered seeds from respondent and made partial payment of $62,460.80. Respondent delivered seeds, but applicant complained about quality and respondent took them back and re-cleaned them and sought $51,330.25 balance owing. When payment was not made, respondent marketed and sold seeds to company in China without applicant’s knowledge. Applicant applied for arbitration as provided for by contract and parties agreed to be bound by decision. Arbitrator found application for arbitration was made within 30 days of breaking of negotiations, so was on time under the Normaseed Rules, which parties agreed applied to their contract. Arbitrator found both parties breached contract as applicant only paid for part of crop and respondent sold seeds without authorization. Arbitrator ordered respondent to refund money paid by applicant with interest and parties to share costs of arbitration. Application for order recognizing arbitration award, which respondent had refused to comply with on the basis arbitrator exceeded his jurisdiction in ordering return of partial payment after finding both parties breached contract. Application granted. Contract provided any breach would be settled by arbitration in accordance with Rules, so it was clearly not the case that the arbitrator exceeded his jurisdiction by arriving at decision upon finding breaches occurred. Contract did not impose limits on arbitrator beyond Rules, and Rule VIII(2)(b) stipulated equitable solution would be determined where there was dispute over quality, which was exactly what had occurred. Parties did not waive contract and nothing about award was contrary to principles of contract law. Award recognized pursuant to Article 36(a)(iii) of International Commercial Arbitration Act (Ont.).
Proseeds Marketing Inc. v. Power Seed Inc. (Apr. 11, 2014, Ont. S.C.J., Andre J., File No. Guelph 918/13) 239 A.C.W.S. (3d) 844.

Corporations

WINDING UP

Behaviour was not so serious as to justify winding up of company

Parties were all family and extended family members. Parties were shareholders of numbered company that was incorporated in 1990 to enable acquisition of investment property by original investors. Applicants were majority shareholders of company. Since 2003, relations among parties began to become more difficult as regards operation of business and other matters. Applicants alleged that they had now been precluded from obtaining any information about business, that respondent individual had failed to disclose financial and other information about operation of business, had failed to call shareholders meetings since 2006, had obtained and used pre-signed blank cheques from applicant, had misused them and had misappropriated funds. Applicants sought orders, including removal of respondent individual as director, repayment by respondent individual of misappropriated funds, full disclosure of all financial and corporate books and records, accounting of all finances of company, and winding up of company with sale or court imposed buy-sell process. Application allowed in part. Evidence did not support applicants’ assertions that their reasonable expectations were violated by conduct falling within terms oppression, unfair prejudice or unfair disregard of relevant interests. While court was satisfied that that there had been disaccord, mistrust and some unco-operative and unbusiness-like behavior on parts of various shareholders, it was not of view, that such behaviour was so oppressive, unfairly prejudicial or so serious as to justify winding up of company. However, there was to be full disclosure of all business records, financial statements, banking records from all banks used by company from 2008 to present, within 30 days. Thereafter, shareholders meeting was to be held on annual basis.
Papais v. Moretto (Mar. 27, 2014, Ont. S.C.J., Carole J. Brown J., File No. CV-13-480434) 239 A.C.W.S. (3d) 639.

Civil Procedure

DEFAULT

To move from finding arguable defence to final determination was not just result

For years plaintiff provided crop services to defendant. When defendant did not fully pay for services, plaintiff had him sign invoice to acknowledge outstanding amount of $49,862.82. Pre-printed words at bottom of invoice stated that interest would be charged on overdue accounts at annual rate of 24%. Plaintiff sued defendant for unpaid amount plus interest and obtained default judgment. Six years later defendant brought motion to have default judgment set aside. Motion judge concluded that defendant had arguable defence on merits of applicable interest rate. Motion judge varied default judgment by substituting annual interest rate of 5%. Plaintiff appealed. Appeal allowed. Motion judge considered relevant factors. There was evidence before motion judge that called into question whether defendant had agreed to pay interest at rate of 24% per annum. Having found that there was arguable defence, it was open to motion judge to find that interests of justice favoured setting aside default judgment. Motion judge did not fail to give adequate weight to unexplained delay and prejudice to plaintiff. Motion judge made no error in law or principle, no palpable or overriding error of fact and decision was not so clearly wrong as to amount to injustice. However, motion judge erred in making final determination of merits of defendant’s defence. Defendant’s motion sought to set aside default judgment. Motion did not seek determination of whether defence should succeed if there was arguable defence. To move from finding arguable defence to final determination was not just result. Appropriate remedy was to set aside default judgment in part and order that matter proceed on issue of interest.
Mountain View Farms Ltd. v. McQueen (Mar. 14, 2014, Ont. C.A., E.E. Gillese J.A., Paul Rouleau J.A., and M. Tulloch J.A., File No. CA C56832) Decision at 227 A.C.W.S. (3d) 969 was reversed.  239 A.C.W.S. (3d) 635.

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.
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