Category: Litigation

Categories
Enforcement Of Foreign Judgments Litigation

Service of Court Documents to Foreign Company Deemed Invalid

We have previously written about what courts consider when determining whether to enforce a foreign judgment in Canada. Another issue that arises in disputes with foreign entities is the service of court documents abroad.

In the recent case of Salguiero et al. v. Instant Brands et al., the plaintiff in a product liability action attempted to serve court documents on the defendant, a company in China. The question before the Ontario Superior Court of Justice was whether the plaintiff had effectively served the defendant according to the Ontario Rules of Civil Procedure and international law.

The plaintiff purchased a defective from Amazon.ca

The plaintiff purchased a product from Amazon.ca and received it in December 2016. It became defective in February 2017. The Statement of Claim was not issued until days before the limitation period would run up, in February 2019. The defendants to the plaintiff’s lawsuit were Amazon.com Inc., Instant Brands Inc., and GD Midea Consumer Electric Manufacturing Co. Ltd.

The third company, GD Midea, is headquartered in China, while Amazon and Instant Brands have head offices in Seattle, Washington and Ottawa, Ontario, respectively. Service of the Statement of Claim was successfully made on both Amazon and Instant Brands, but there was a problem with service to GD Midea.

Service in the foreign country was stalled by investigation

Canada and China are contracting states under the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Under the Ontario Rules of Civil Procedure, there are specific rules on service to individuals outside of Ontario located in a contracting state:

Manner of Service in Convention States

(3) An originating process or other document to be served outside Ontario in a contracting state shall be served,

(a)  through the central authority in the contracting state; or

(b)  in a manner that is permitted by the Convention and that would be permitted by these rules if the document were being served in Ontario.

The plaintiff’s counsel knew about this rule and inquired about translating the documents for service to the central authority. However, the plaintiff’s lawyer did not follow through with this request. Despite this, in March 2019, GD Midea’s insurer contacted the plaintiff’s counsel to advise that an investigation into the matter was underway. It was also requested that no further steps be taken, such as noting the defendant in default. The plaintiff agreed to hold off until all defendants had the opportunity to investigate.

Foreign company raises issue with service of Statement of Claim after serving Statement of Defence

By April 2020, after GD Midea’s request to not be noted in default had been renewed multiple times, the plaintiff provided a 45-day time limit to receive statements from all defendants. GD Midea “served what purported to be a defence and crossclaim” in June 2020. Amazon and Instant Brands served their own statements of defence a month later.

After serving its statement of defence, counsel for GD Midea realized its client might not have been served in accordance with the Hague Convention or the Rules of Civil Procedure. Counsel notified the plaintiff mid-June 2020 and requested a copy of the affidavit of service. In July 2020, a day after Amazon and Instant Brands filed their statements of defence, counsel for the plaintiff relented that service had never been formally effected in China. In response, GD Midea said it would dispute the jurisdiction and forum for the claim. In other words, the company would dispute the authority of the Ontario court to hear the case. At trial, the company did not bring any arguments forward on this point because it was premature.

GD Midea could not have been noted in default if service had not been completed. However, the company’s conduct demonstrated its awareness of its involvement in the pending legal proceedings.

Did the service rules apply if the defendant was already aware of the case?

The question before the Ontario Superior Court of Justice was “whether the formalities of service under the [Hague Convention] are required when it is quite clear that the defendant knows the particulars of the claim, has insurance which would respond to the claim and where the insurer has instructed counsel in Ontario.” The Court also mentioned the related issue of counsel for GD Midea serving a statement of defence on behalf of the company after mistakenly assuming that service had been effected.

In the event that formal service was still required, the Court considered the plaintiff’s argument that the time for service should be extended as the limitation period expired in 2019.

The purpose of the Hague Convention for service in foreign jurisdictions

The purpose of the Hague Convention pertaining to service in foreign jurisdictions is to ensure uniform procedure across contracting states. Service must occur in accordance with the Hague Convention. If the situation were reversed, it is not likely that a foreign state would enforce judgment of claims served in breach of that state’s law. Those documents must also be translated for service to be validated.

There are remedies under the Hague Convention for those who cannot effectively service defendants to their claims, but this was not the case here. Counsel made no attempt to serve in accordance with the Hague Convention and the Rules of Civil Procedure.

The defendant can waive the formalities of service if they choose

Although the purpose of the law for contracting states was clear, the Court determined that the formalities of service are not always necessary. A foreign defendant can waive the requirement of service in compliance with those rules. However, the Court did not find this applied to the present case. There was an error in assuming service had been made but not an acceptance of service once the error was discovered. So while the formalities of service on contracting parties of the Hague Convention need not be followed every time, this case was not an exception.

Concerning the applicable notice period, the Court did not find it unjust that the plaintiff now had to service the defendant in accordance with the Hague Convention. It would have been a more significant prejudice to the defendant to have proceeded without service being effected. As service through the appropriate rules could take up to 18 months to complete, the Court agreed to extend the time for completing service to 24 months so long as the plaintiff commenced the process within six months of the Court’s decision.

Baker & Company Assists With Disputes With Foreign Entities

It is important to consult with legal counsel as soon as possible when a claim arises, especially when it involves entities headquartered in foreign jurisdictions. The skilled litigation lawyers at Baker & Company help clients in international disputes and assist with the enforcement of foreign judgments in Ontario or elsewhere in Canada. We also represent clients in various other matters, including corporate & commercial law, real estate law, employment law, estate law, and hotel law. We rely on more than 30 years of litigation experience to ensure that our clients’ rights are protected. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation

Courts Are Rejecting COVID-19 Excuses in Contract Disputes

We have previously discussed the application of “force majeure” clauses in relation to the COVID-19 pandemic and also discussed a case in which a court ruled that a party could not unilaterally change the terms of an agreement due to COVID-19, absent a force majeure clause.

In two recent British Columbia cases, courts have again shown that they will not accept the COVID-19 pandemic as an excuse in contract disputes.

First Case: Couple Who Cancelled Wedding Not Entitled to Refund

In a first case, a couple had hired an entertainment company for their wedding reception. The wedding was scheduled for March 29, 2020 and the couple was expecting around 450 guests.

Per the contract, the couple paid a 50% deposit to the company in the amount of $1,750, with the balance due one week before the wedding. The contract also stated that half of the deposit was non-refundable, while the other half was refundable if the couple cancelled the contract 30 days before the event.

The couple decided to cancel the wedding reception as a result of the COVID-19 government restrictions on gatherings of more than 50 people. The husband told the company of the cancellation on March 11th. 

The wife sought the refund of the deposit, but the company refused. 

The wife brought her case to court. She claimed that the contract had been frustrated by the COVID-19 pandemic restrictions and she was therefore entitled to the refund.

The company relied on the terms of the contract to defend against her claim.

The court noted that the parties’ contract did not contain a “force majeure” clause and that, absent such a clause, the common law doctrine of frustration applied. The law of frustration applies when an unforeseeable event occurs, for which the parties made no provision, where the contract becomes a thing radically different from that which was originally agreed.

However, the court found that the COVID-19 pandemic had not changed the contract radically from the parties’ original agreement, stating:

“I say this because although the government restrictions on gatherings of more than 50 people limited [the wife]’s intended reception attendance, this does not render the parties’ contract impossible. Rather, [the company] was willing and able to perform the contract, either with a smaller group in attendance on the original March 29, 2020 date, or some future date within 18 months. For a contract to be frustrated, it must be truly impossible to continue to perform the terms of the contract, not just inconvenient, undesirable, or uncomfortable […]. Although I acknowledge [the wife]’s wish for a large wedding reception, […] just because an event (the COVID-19 pandemic restrictions on gathering) has made performance of a contract undesirable does not mean the contract is frustrated. I find the restriction on gathering did not radically change the parties’ agreement, which was not based on the requirement of any minimum attendance. I find the contract was not frustrated. Therefore, the existing cancellation terms of the contract apply.”

As a result, the court dismissed the wife’s claim. 

Second Case: Company That Refused to Work at Couple’s Wedding Must Issue Refund 

In a second case, a couple had hired a photography company to take pictures at their wedding, which was scheduled for April 19, 2020. The couple had paid a $1,909 deposit to the company.

The contract stated that if the couple cancelled the event, the company would not refund the deposit. The contract also stated that if the company was unable to fulfill the contract due to unforeseen circumstances such as illness, injury, a death in the photographer’s family, casualty, act of God, or any other cause beyond the control of the photographer, the company would issue a full refund, including the deposit.   

The couple was originally planning on receiving 100 guests. But in early March, when the government imposed a restriction to gatherings of over 50 people due to the COVID-19 pandemic, the couple advised the company that they were considering cancelling the wedding. However, on April 7th, the couple told the company they were going ahead with the wedding on the original date, but would be limiting guests to 50 people.

The company responded that it had established COVID-19 safety policies, which included no longer shooting indoors, only taking photos in large, open and secluded outdoor areas, and only using camera lenses that allowed them to take pictures from a 2-meter distance.

The company told the couple that they would not photograph their wedding unless they agreed to their new COVID-19 policy. The couple refused to agree to all of the company’s COVID-19 rules and the company did not photograph the wedding.

When the company refused to refund the deposit, the couple went to court.

Ultimately, the court ruled that the company had to refund the $1,909 deposit, stating:

“I find that the [company] refused to complete the terms of the contract and they cannot rely upon the government health and safety measures imposed because of COVID-19 to justify the cancellation. I acknowledge the [company’s] reasons for making the cautious decision that they no longer wanted to provide the photographic services. However, they are not entitled to keep the [couple’s] deposit when there is no legal justification for the [company] deciding not to complete the contract because they unilaterally decided that they wanted all pictures to be taken outside.” 

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continue to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company, we are both everyday trusted advisors and problem solvers. Our team of skilled and experienced litigation lawyers are cherry-picked for their ability to analyze cases, counsel clients, and examine and present evidence at trial.  Our litigation team has dealt with all kinds of contract disputes in courts across Ontario and has significant experience at both the trial and appellate levels. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation

Court Finds That a Party Cannot Unilaterally Change the Terms of an Agreement Due to COVID-19 Absent a Force Majeure Clause

In a previous post, we discussed whether the COVID-19 pandemic could trigger “force majeure” clauses in contracts and what effects this could have on parties’ rights and obligations.

As we explained, a force majeure clause is included in a contract in case an unforeseen event occurs, making it impossible for one or more parties to carry out their obligations under the contract. This clause is usually contemplated with respect to what are often referred to as “acts of God”, such as earthquakes or hurricanes.

Some force majeure clauses specifically mention epidemics or pandemics in the list of events that could trigger the clause, in which case COVID-19 would certainly qualify as a triggering event. However, some contracts may not be so specific.

In a recent British Columbia case, the court was faced with a situation in which a workshop organizer (the “organizer”) refused to refund a workshop participant (the “participant”) for fees paid after the organizer cancelled the workshop due to COVID-19.

What Happened?

On August 26, 2019, the participant paid the organizer $1,700 to take her photography workshop. The workshop was to be held in Valencia, Spain, from August 2-5, 2020. Due to the ensuing COVID-19 travel restrictions, the organizer cancelled the workshop. 

On March 15, 2020, the organizer told the participant that the Spain workshop would be delayed until spring 2021 and offered him the option to attend an online version of the Spain workshop, attend the Spain workshop in person in the spring of 2021, or attend any future workshop. On March 17, 2020, the organizer refunded the participant $510 of the workshop fee.

In a March 18, 2020 email, the participant declined the organizer’s offers and asked for a full refund of the workshop fee, but the organizer declined. 

The participant went to court to claim a further refund of $1,190 for the balance of the workshop fee. 

The organizer claimed that the workshop was cancelled due to circumstances beyond her control and that the options she gave the participant to reschedule the workshop were more than fair. She asked that the claim be dismissed. Additionally, the organizer stated that she had non-refundable expenses relating to the workshop and that most of the other participants accepted the changes she offered. Finally, the organizer argued that under the signed agreement, she had discretion over how to deal with the cancelled workshop, as the agreement did not promise a full refund in the event of a “force majeure”, she claimed COVID-19 was such an event.

The Agreement

The agreement signed by both parties included cancellation and refund terms. It stated that requests for cancellation up to 120 days prior to departure would be refunded in full, minus a $50 processing fee and a 2.9% Paypal fee. The agreement also stated that workshops could be cancelled in the event of low registration, in which case fees would be refunded in full. 

Decision

First, the court stated that while the organizer’s expenses were unfortunate, they did not alter the terms of the agreement between herself and the applicant.

Further, the court explained that there was no force majeure clause in the parties’ agreement, and that the organizer could not unilaterally impose terms into the contract without the consent of the participant. The court stated: 

“In the absence of a force majeure clause, the existing cancellation terms of the agreement apply, even if unforeseen circumstances prevented [the organizer] from fulfilling her terms of the agreement.” 

The court acknowledged thatthe terms of the agreement addressed cancellation due to low registration, which would constitute an event outside of the organizer’s control; however, that was not what happened in this case. 

Rather, under the agreement, a full refund was to be provided if a participant cancelled more than 120 days prior to the workshop, which the court found the participant did. Additionally, the court found that because the organizer cancelled the workshop, she was not entitled to keep the processing fee or Paypal fee.

As a result, the court found that the organizer had to refund the participant the remainder of the workshop fee in the amount of $1,190. The court ordered the organizer to pay the participant within 30 days. 

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continue to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company, we are both everyday trusted advisors and problem solvers. Our team of skilled and experienced litigation lawyers are cherry-picked for their ability to analyze cases, counsel clients, and examine and present evidence at trial.  Our litigation team has dealt with all kinds of contract disputes in courts across Ontario and has significant experience at both the trial and appellate levels. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation Real Estate Law Residential Real Estate

Can I Back out of a Real Estate Contract Due to COVID-19?

As with everything else, the health pandemic has created a great deal of unease for those who entered into Agreements of Purchase and Sale for homes prior to our current situation. For various reasons, many people are left wondering if they have options to cancel contracts that were executed before the crisis hit. If not, people may be wondering what ramifications they would face for backing out of a closing. Below, we’ll address residential real estate contract obligations in light of COVID-19.

Property Values and Loss of Income

The two primary concerns buyers have with closing deals entered into in February or earlier are the potential drop in property values and loss of income. In many cases, both issues are a factor. With the closure of non-essential businesses throughout the province, many people have been laid off or are facing drastic reductions in income. Nearly one million Canadians applied for employment insurance benefits during the week of March 16th alone. Given the ongoing economic crisis, people have serious concerns about what effect this will have on property values in Ontario going forward. Considering we are still in the midst of a state of emergency, the long-term effects on housing prices won’t be known for some time.

Do people who have financial concerns have any recourse if they’re already entered into a contract?

Frustration of Contract and Force Majeure

We have previously discussed the potential for someone to argue frustration of contract or use a force majeure (or “Act of God”) clause to relieve themselves of liability in relation to COVID-19. Without specific language that considered a pandemic to be an event significant enough to walk away from the contract, this is a tough argument to make with most contracts. In a real estate context, it becomes even more difficult. Nearly all purchases and sales use the standard Ontario Real Estate Association Agreement of Purchase and Sale, which does not include such a provision. Parties are entitled to include additional clauses at will, however this must have occurred at the time the contract was executed in order to be valid.

There are previous examples of buyers seeking to back out of a purchase in light of an economic change. British Columbia introduced a foreign homebuyer’s tax in 2016 that had a significant impact on buyers from out of the province, which helped contribute to an overall decline in home prices. As a result, many buyers tried to get out of their contracts, however, they were not permitted. It is unlikely a court would find differently in light of the current circumstances.

Penalties for Backing Out

We have addressed the significant financial fallout that can occur when a person fails to close a real estate transaction in a previous blog, but it is worth noting again that it is not just a matter of losing one’s deposit. Buyers that fail to close could also face liability for a difference in purchase price if a seller is forced to re-sell at a lower price. One couple in Ontario had originally agreed to buy a home for $2.25 million and later backed out for financial reasons. When the seller resold, the price dropped to $1.77 million and the original buyers were found liable for the difference, which amounted to $470,000.

As demonstrated above, failing to close on an Agreement of Purchase and Sale can have hefty financial consequences for the party in breach, far beyond simply giving up the deposit. The housing market can fluctuate quite significantly and result in drastically different purchase prices just a few months later and the buyer who originally backed out may be forced to pay the difference in addition to legal costs. If you have concerns about a real estate deal you entered into prior to the pandemic, and questions about your rights and obligations, you should seek advice from an experienced real estate lawyer as soon as possible.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Corporate & Commercial Law Corporate Governance & Contracts Litigation

“Force Majeure” Clauses & COVID-19

COVID-19 is currently impacting nearly every aspect of our daily lives, from who we can see to where we can go and what we can do. Businesses are also beginning to feel the effects, with closures and reductions on services already happening. But is it possible that COVID-19 will also have an impact on our legal relationships? Some are speculating that the current pandemic could trigger “force majeure” clauses in many contracts, which will have a significant impact on the parties’ rights and obligations.

What is a “Force Majeure” Clause?

A force majeure clause is included in a contract in case an unforeseen event occurs, making it impossible for one or more parties to carry out their obligations under the contract. This clause is usually contemplated with respect to what are often referred to as “acts of God”, such as earthquakes or hurricanes. Could the same clause be applied to the situation we’re currently finding ourselves in?

In some cases, rather than tearing up the contract altogether, the parties may agree to extend deadlines for completion of obligations in the hope that the situation will change, allowing the contract to operate largely as originally intended, with some modified terms.

Some force majeure clauses specifically mention epidemics or pandemics in the list of events that could trigger the clause. In those cases, COVID-19 would certainly qualify as a triggering event. But what about contracts that aren’t as specific?

Enforcing a “Force Majeure” Clause for COVID-19

The availability of this clause as a means to repudiate, avoid penalities or extend deadlines under a contract will largely be dependent on the language in the clause itself. If the clause is specific about the types of events that could lead to enforcement of the clause and is not open-ended in any way, this may be a barrier to enforcing the clause due to the pandemic. However, if the language is somewhat vague and leaves the type of event open to interpretation, it may be enforceable. Of course, if the contract specifically considers the possibility of a pandemic or epidemic, COVID-19 would fall within that, as mentioned above.

Timing is also a factor. For contracts signed before the virus became a known threat, it is more likely to be included as a triggering event. However, if the contract was entered into after the virus was commonly known, it may no longer be considered an event that could not be foreseen by the parties.

Any party seeking to enforce their rights under a force majeure clause must be able to demonstrate that:

  • the event that occurred was outside the knowledge and control of the contracting parties; and
  • the event that occurred makes complying with one’s obligations under the contract impossible.

Courts in Ontario generally have a high standard when interpreting these clauses in a contract dispute, and so a party must be able to clearly demonstrate the factors impacting their ability to carry out their obligations as set out in the contract. In the absence of such a clause, it may be possible to raise the issue of the frustration of contract, however, the application of this doctrine is considerably more limited and is often used in an employment context.

The Outcome of Enforcing a “Force Majeure” Clause

When a party is successful in triggering the force majeure clause under a contract, several options are available with respect to the outcome. The option chosen will largely depend on the terms of the contract in question as well as the impact of the unforeseen event. If the event poses a temporary and calculable obstacle, deadlines may be extended or certain work may be deemed no longer required. However, in situations where the triggering event is much bigger or longer-lasting, it may result in a repudiation of the contract as a whole.

The current situation with COVID-19 is unpredictable and disruptive to nearly every aspect of doing business across the globe. It remains to be seen whether “force majeure” clauses will be commonly enforceed as a result of the pandemic, but given the extent and scale of the interruption, as well as the unpredictability as to how long the interruption will last, it seems feasible that this clause will be employed in more than a few instances.

At Baker & Company, we are both everyday trusted advisors and problem solvers. Our team of skilled and experienced litigation lawyers are cherry-picked for their ability to analyze cases, counsel clients, and examine and present evidence at trial.  Our litigation team has dealt with all kinds of contract disputes in courts across Ontario and has significant experience at both the trial and appellate levels. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation Wills & Estates

Court Invokes Doctrine of Unconscionable Procurement in Estate Matter

The doctrine of unconscionable procurement has not been invoked in Ontario in more than one hundred years, previous to a recent case heard by the Ontario Superior Court of Justice. The doctrine is used to set aside a gift or other significant transfer of wealth when it can be established that the gifter did not understand what they were doing, on the basis that it would be unconscionable to allow the gift to stand.

Proving Unconscionable Procurement

To prove the elements of the doctrine, one must establish two things:

  1. That one person received a significant benefit from another, and
  2. The receiver of the benefit had an active role in procuring or arranging the gift or transfer.

Once the two elements above have been established, there is a presumption of unconscionable procurement unless the receiver of the benefit can demonstrate otherwise.

Notably, most estate cases looking to challenge a gift or other transfer would look to the capacity of the gifter. The doctrine of unconscionable procurement does not require proof that the gifter lacked capacity.

A Mother Gifted Over $25 Million to One of Three Sons in Her Lifetime

In the case at hand, a woman passed away with a large estate, survived by two sons (a third son had predeceased her). One surviving son and the estate of the deceased son brought an action against the third due to significant gifts their mother had bestowed on him and his family while she was alive. They sought an equalization payment of 2/3 of the amount he had been gifted by their mother. In the last years of her life, she had given him over $25 million, which amounted to nearly half of her total assets.

While a psychiatrist testified that the mother had the capacity to make her own decisions at the time of the gifts, this did not have a bearing on the equitable doctrine in question. The court found that certain transactions lacked proper documentation. As a result, the son in receipt of those gifts, which totalled approximately $8 million, could not rebut the presumption of unconscionable procurement once the first to elements had been established.

The court noted that it was obliged to “look at the impugned transactions with its moral sense awakened and with a view to determining whether it would be unconscionable to allow the transaction to stand.” Given the presumption of unconscionability, the court was forced to find that the transactions lacking documentation could not stand. The remedy for the doctrine is to find any inequitable transactions are void.

The son who benefitted from those gifts was ordered to account for the money received and place it in trust for the estate, pending distribution among the beneficiaries.

Notably, this decision is going to be appealed, though not with respect to the unconscionable procurement aspect. This means that lawyers looking to challenge transfers of wealth have a new (old) method to establish their claim.

Documenting Large Gifts May Become the Norm

This case should also demonstrate the need to properly document any and all large gifts, donations and other transfers of wealth, to be sure that they will hold up under judicial scrutiny at a later time. If it is no longer necessary to prove that a person lacked the capacity to give a gift or make a charitable contribution, it may leave these types of transactions vulnerable to attack after the person has passed away. To ensure that a gift will stand, it may become necessary to set out the gifter’s intentions in writing.

At Baker & Company, our Toronto estate planning lawyers can help you establish an estate plan tailored to your needs, no matter your current family status. We have extensive experience and expertise in providing you with estate planning advice and implementing your desired plan. Should you find yourself in the position of challenging an existing will or estate, our lawyers can also represent you through the litigation process. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Defamation And Social Media Family Law

“False Light” Privacy Tort Invoked in Canada for the First Time

A recent Ontario decision has invoked a little-known privacy law tort for the first time to award damages to a mother involved in a high-conflict divorce with her former spouse. Ultimately, the mother was awarded a total of $300,000, a serious condemnation of the father’s activities by the court.

High-Conflict Divorce & Social Media Posts

Just a few weeks ago, we blogged about considerations parties need to keep in mind when posting to social media through a family law dispute. This case is an excellent example of how seriously the courts take negative online behaviour, particularly when it affects minor children.

In the case at hand, the parties were married and had two children together. The father requested a divorce and a month later, the mother moved with the children to the UK out of fear for her safety. Soon, the father began a public campaign to smear the mother, which consisted of him posting videos to YouTube in which he provided personal commentary on the ongoing disputes with his former spouse. As part of these postings, he had included photos and videos depicting private family moments with his children and engaged in online bullying of them as well. One child has a neurological disorder, and in some videos the father could be seen mocking her, saying she seemed ‘drugged’ and ‘not normal’.

He had also publicly accused his former wife of a host of crimes, including kidnapping, drugging the children, theft, fraud and child abuse. He also sent emails and posted flyers directing people to his videos to increase the audience.

The mother brought an action seeking various orders including child support, spousal support, invasion of privacy, intentional infliction of mental suffering, and more.

Citing a four-tort invasion of privacy catalogue introduced by American scholar William L. Prosser and later adopted by the American Law Society in 2010, the judge considered the following four civil invasion of privacy claims:

1. Intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs.

2. Public disclosure of embarrassing private facts about the plaintiff.

3. Publicity which places the plaintiff in a false light in the public eye.

4. Appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.

The ONCA first recognized the first in the list, intrusion upon seclusion, in a 2012 decision. This case also recognized that the fourth tort on the list, the appropriation of a plaintiff’s name or likeness, was already an actionable claim in Ontario.

The second tort on the list, the public disclosure of private facts, was also adopted in Ontario civil law via two decisions in 2016 and 2018, respectively.

The court in the case at hand then reviewed the elements of the American tort of ‘Publicity placing a person in a false light”, which are stated as follows in the Restatement (Second) of Torts (2010):

One who gives publicity to a matter concerning another that places the other before the public in a false light is subject to liability to the other for invasion of his privacy, if

(a) the false light in which the other was placed would be highly offensive to a reasonable person, and

(b) the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed.

The court adopted this definition of the tort and further clarified that while claims falling with the tort would be likely to be defamatory, defamation is not a required element. It would be sufficient that the public misrepresentation would be highly offensive to a reasonable person.

Tort Could Have Broad Implications

This finding could have much broader implications than just family law disputes. This tort could affect businesses and individuals going forward for characterizations posted publicly that could be said to misrepresent an individual. Further, the court in this case noted that while there is a $20,000 cap on awards for intrusion upon seclusion, the same could not be said for this new action, leaving the landscape open to large awards for misrepresenting a person on a public scale.

At Baker & Company, our Toronto family law lawyers are highly experienced in high-conflict divorce matters and support litigation. We are committed to making the process of legally addressing a family matter as clear and approachable as possible. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Corporate & Commercial Law Defamation And Social Media Litigation

Organization Unsuccessful in Blocking Defamation Claim as SLAPP Action

B’nai Brith (BB), a charitable organization supporting the Jewish people of Canada and human rights causes in general, recently brought a motion seeking to dismiss an action for defamation brought against it by the Canadian Union of Postal Workers (CUPW). BB claimed that the action should be classified as a SLAPP action, aka strategic litigation against public participation, and therefore dismissed. The court has denied the motion, allowing the action for defamation to go forward.

A Serious Accusation of Aligning With Terrorism Supporters

CUPW, as part of its ongoing work, regularly works with similar unions in foreign jurisdictions. One such organization is a union supporting Palestinian postal workers. CUPW has also taken a polarizing stance supporting the boycott of Israeli products, due to the union’s stance on the ongoing clash between the two countries. A worker and CUPW member brought a complaint with respect to CUPW’s public position, and as a result, BB began looking into CUPW’s activities and associations.

When investigating social media accounts associated with the Palestinian union, BB found a page maintained by a senior member of the union. On the page were messages praising individuals involved in terrorist activity as heroes. BB sent this information to CUPW and called for a comment, advising that BB would be making the information public. Five days later, BB released the first in a series of press releases, with the headline, “Canadian Postal Workers Align with Pro-Terrorism Palestinian Union”. In the press releases, it claimed that CUPW had aligned itself with terrorist-supporting organizations and with the “path of violence and extremism”.

CUPW brought an action for defamation against BB, claiming that BB’s actions were malicious. CUPW pointed out that it has made public, via the union’s website, its support of a peaceful two-state solution to the conflict in the middle east as well as its stance against terrorism, violence and antisemitism. CUPW further alleged that the claims against the Palestinian union were untrue and that BB issued its press releases based on faulty research and a reckless disregard for the truth.

BB then brought an anti-SLAPP motion claiming that CUPW’s action should be dismissed, as the action sought to limit BB’s expressions on a matter of public interest.

The Test for an Anti-SLAPP Action

The court then turned to the test set out in s. 137.1 of the Courts of Justice Act, which states:

 137.1 (1) The purposes of this section and sections 137.2 to 137.5 are,

(a) to encourage individuals to express themselves on matters of public interest;

(b) to promote broad participation in debates on matters of public interest;

(c) to discourage the use of litigation as a means of unduly limiting expression on matters of public interest; and

(d) to reduce the risk that participation by the public in debates on matters of public interest will be hampered by fear of legal action.

The court agreed that the issue of the conflict between Israel and Palestine was a matter of public interest and that legitimate criticism of the union’s views was protected speech. However, it also found that it would be an uphill climb for BB to rely on ‘truth’ as a defence to its public claims about CUPW. While it was true that CUPW was involved in a project with the Palestinian union, it would be very difficult to establish that because of that, CUPW could be said to support terrorism. The court pointed out that the Canadian government, European Union, United Nations and the State of Israel had all sponsored projects in the past in Gaza and the West Bank. This alone would not be enough to validate a claim of supporting terrorism.

The court also found that there was evidence to suggest that BB had acted without due diligence, which may be fatal to a defence of “fair comment” in the defamation action. BB’s research into the Palestinian union consisted of a cursory review of a few social media pages, and its public statements ignored CUPW’s publicly-posted policies against terrorism, violence and antisemitism. There was also the possibility that BB had acted with malice, stemming from BB’s vast disagreement withe CUPW’s stated support of boycotting products from Israel. Rather than publicly challenging the union on that stance, the court found that BB may have simply chosen to focus on a tenuous link between CUPW and the union in Palestine in order to blow that out of proportion.

The court was cautious to say that there had been no actual finding of malice, but simply the possibility of it. As a result, the court rejected BB’s motion to dismiss the defamation action, allowing it to be fully heard in court on the merits. It will be interesting to see how the courts decide this matter as the case moves ahead. Given the controversy surrounding the subject matter, there are undoubtedly passionate advocates on both sides of the issue. The challenge faced by the courts will be to come to a decision based on legal merits presented by both parties.

At Baker & Company, we are both everyday trusted advisors and problem solvers. Our team of skilled and experienced litigation lawyers are cherry-picked for their ability to analyze cases, counsel clients, and examine and present evidence at trial.  Our litigation team has dealt with all kinds of defamation matters in courts across Ontario and has significant experience at both the trial and appellate levels. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation Property Disputes Real Estate Law Residential Real Estate

Suing a Condo Corporation for a Delay in Repairs

What a condominium corporation’s obligations to individual owners with respect to repairs? If an owner is unsatisfied with the response to repeated complaints, are they entitled to damages? When might a condo corporation’s failure to address an issue to an owner’s satisfaction be considered oppressive?

A recent decision of the Ontario Superior Court of Justice dealt with these questions, following a five-year battle between a condominium owner and the corporation.

A Five-Year Complaint History

The complainant had purchased a unit on the top floor of a 15-storey condominium building. Four years after moving in, she began to notice an excessively loud noise emanating from what sounded like an industrial fan or a motor on the roof of the building that disturbed her significantly. She made a verbal complaint to the condominium corporation in 2014 about the noise and when nothing was done, she made a further complaint in writing.

In 2019, five years after the owner’s initial complaint, the condominium corporation replaced two exhaust fans that were located above the owner’s unit. While the noise was still present, the owner said that this helped to reduce it significantly. The complainant brought an action against the condo corporation for failure to meet its statutory obligations with respect to repairs and maintenance, as well as oppression.

What Exactly Are a Condominium Corporation’s Obligations?

Under ss. 89 and 90 of the Ontario Condominium Act, a corporation does have a statutory obligation to repair and maintain the common elements of a condominium:

89 (1) Subject to sections 91 and 123, the corporation shall repair the units and common elements after damage.

90 (1) Subject to section 91, the corporation shall maintain the common elements and each owner shall maintain the owner’s unit.

However, the court, in this case, was careful to point out that the standard of a corporation’s obligation is one of reasonableness. In this case, there was no evidence that the complained-about noise had occurred as a result of a failure to properly repair or maintain the fans that were eventually replaced. Further, there was evidence that the corporation had ensured that the fans were inspected and maintained on a regular basis, going back to before the complaints began.

To address the noise complaints, the corporation brought in a third party company to inspect the fans, and no underlying cause of the noise was found. The same company inspected the fans again six months later, and then six months after that. On the last visit, the company installed new blower assemblies on the fans above the complainant’s unit in an attempt to make them quieter.

In 2018, the complainant hired an acoustic engineer to inspect the fans. His report showed that the fans were old, contained some rust and did not appear to have any acoustic or vibration insulation. However, he did not test the fans beyond inspecting them visually.

Three months later, the corporation retained mechanical engineers to inspect the fans. The engineers recommended some servicing to address a slight bearing noise on one fan and said the other was actually quieter than industry standards. The corporation carried out the recommended service but the complainant said that the sound persisted.

Given the fact that the fans were regularly inspected and maintained, and that the corporation had the fans inspected by engineers specifically to address the complaints, it could not be said that the corporation had violated a reasonable standard of repair and maintenance. Further, the complainant alleged that the noise had been due to a failure to maintain the fans, but also said the noise persisted even after the service recommended by mechanical engineers had taken place.

Was the Corporation’s Conduct Oppressive?

The complainant alleged that the corporation had ignored her complaints and failed to address a serious issue that was highly disruptive for five years. However, the court found that this ignored several steps the corporation took during that time frame to identify and address the noise she complained of. When the corporation eventually did order new fans, the complainant, through her lawyer, objected to the manufacturer’s installation instructions, based on the opinion of a consultant she had retained to review them. The installation was delayed for nearly nine months due to this objection, and eventually, the complainant allowed the corporation to proceed with the original instructions.

While the corporation’s response had some faults, including failing to respond in writing initially, and then providing a memo from the superintendent that was dismissive and sarcastic in tone, overall the response was reasonable in the given circumstances. On the issue of oppression, the court ultimately concluded that:

A unit owner seeking an oppression remedy under the Condominium Act must show both that there was a breach of their reasonable expectations and that those reasonable expectations were breached by conduct legitimately characterized as oppressive. I find that [the complainant] had a reasonable expectation that [the corporation] would comply with its statutory obligations to repair and maintain its common elements. I also find that [the corporation] acted reasonably and in compliance with these obligations.

While condominium owners certainly have a right to expect action from their condominium corporation when it comes to the repair and maintenance of the common elements, the standard of reasonableness must be kept in mind. Prior to initiating a potentially costly and time-consuming action in court, a complainant should carefully consider whether they will be able to establish that the corporation failed to meet the reasonableness standard under the given circumstances.

At Baker & Company in Toronto, our lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, disputes, or through the litigation process. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Commercial Leases Litigation Real Estate Law

Anticipatory Breach of Contract & Limitation Periods

We have previously provided a general overview with respect to limitation periods in litigation. It is well established that the general limitation period extends for two years once a claim has been discovered, but when does the limitation period begin to run on a claim for anticipatory breach of contract? When does the clock start to run if there is no breach, but the Plaintiff has been made aware that a breach is imminent? This question was addressed by an Ontario court in a recent decision.

Changes to Commercial Property Impacted Plaintiff’s Business

The Plaintiff owned a commercial car wash operation in London, Ontario, and leased the property where the car wash was located from the Defendant. In addition to the car wash, the property contained other businesses including a gas station, a convenience store and a coin-operated car wash facility (this was separate from the Plaintiff’s business, which provided an automatic wash as well as interior car detailing services). The Defendant began to redevelop the land surrounding the car wash and demolished the gas bar, coin-op car wash and the convenience store. The Defendant also obtained site plan approval from the city to construct commercial buildings on the property to house various retail businesses.

The construction of one building on the property, as well as the addition of garbage dumpsters in front of the car wash, had reduced the visibility of the car wash from the main road.

The lease between the Plaintiff and the Defendant contained the following clause:

… the Lessor shall have the right to alter or modify the parking lot or the means of ingress or egress thereto provided that such alteration or modification shall not impede or limit any access to or from the leased premises nor will it divide or separate in any way the leased premises from any part of the Lessor’s lands, and further provided that any such alteration or modification shall not affect the marketability or potential marketability of the Lessee’s product from the leased premises in any adverse way; [Emphasis added]

The Plaintiff alleged that there had been a drop in the number of cars at the car wash, and largely attributed the change to the modifications made by the Defendant. In particular, the Plaintiff said that the reduced visibility of the car wash from the road had negatively impacted the number of cars the business had been servicing in the years following the changes.

Plaintiff Discovered the Potential Breach More Than 2 Years Before Bringing Action

The Plaintiff was made aware of the Defendant’s plan to construct a new building on the property in 2013. In response, the Plaintiff wrote a letter to the Defendant saying that this would block visibility of the car wash from the road and requested that the plans for the building be abandoned. The Defendant responded in early 2014, saying that they would be going ahead with their plans for construction. In addition to the planned buildings, the Defendant installed two garbage dumpsters in front of the entrance to the car wash in 2014 and constructed a concrete pad adjacent to the car wash in the same year. This also had the effect of reducing the visibility of the car wash from the main road.

The Plaintiff sought damages for the reduction in car count at their business owing to the loss of visibility and the Defendant defended on the grounds that the action was statute-barred. The discovery of the planned construction occurred in 2013, and the other incidents had taken place throughout 2014. The Plaintiff brought the action in February of 2016. The Defendant claimed this was outside of the 2-year limitation period.

The Defendant specifically claimed that the letter from the Defendant’s lawyer, dated January of 2014, constituted an anticipatory breach of the commercial lease and therefore the clock started to run on that date. However, the court held that:

[A] claim is not necessarily discovered when a party commits an anticipatory breach of contract as the innocent party may choose to treat the contract at an end and sue for damages, or it may treat the contract as subsisting and continue to press for performance of the contract and bring an action once the promised performance fails to materialize

In the case at hand, the Plaintiff chose to treat the contract as not yet breached and continued to perform its duties under the contract while pressing the Defendant to abandon the plans that would negatively impact the Plaintiff’s business. Given that, the complaint didn’t arise until the Plaintiff had experienced the reduction in car count, somewhere within the two-year limitation period.

This case should be of some comfort to parties concerned that advance knowledge of a potential breach may preclude them from seeking damages in court. However, it is always best to speak with an experienced lawyer as soon as possible to properly ascertain your position with respect to litigation and ensure that you are fully aware of any time limitations you may face when it comes to commencing an action. While limitation periods may seem cut and dry, as evidenced by this case, they can actually be quite complex depending on the specific circumstances involved.

At Baker & Company, our Toronto commercial real estate and litigation lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100 or contact us online for a consultation.