Law Times

www.lawtimesnews.com Page 2 January 21, 2008 / Law Times NEWS Lawrence v. Maple Trust top real estate case of 2007 O ntario courts were as busy as ever this year handing out rulings that affected the province — but some of those decisions will reverberate further into the future than others. In an attempt to separate the mundane from the noteworthy, Law Times queried top lawyers on which 2007 cases will have the biggest impact on their areas of practice down the road, specifically in the areas of real estate law, family law, and class actions. Real estate Lawrence v. Maple Trust Company was widely regarded as the most important real estate case of 2007. Borden Ladner Gervais LLP lawyer Noella Milne says the Ontario Court of Appeal's decision to reverse itself in Household Realty Corp. Ltd. v. Liu was vital because it re-establishes in Ontario the important standard in real estate of deferred indefeasibility. Milne says the principle protects purchasers who have taken hold of real estate from someone who innocently purchased a fraudulent title. "The courts feel that if I'm buying from a fraudulent person, it's my responsibility. But if someone buys from me, I'm innocent, and they're innocent, so that next person gets good title," says Milne. "What the courts were saying in the Lawrence case, Maple Trust, even though they were innocent, they still gave money to a fraudulent person; they should have been more careful. So that's why the status of deferred indefeasibility has been restored in Ontario, which is a very important principle." DelZotto Zorzi LLP lawyer Harry Herskowitz notes that the case led to the creation of new legislation, the Ministry of Government Services Cust- omer Protection and Service Modernization Act. "In turn it amended the Land Titles Act to help prevent fraud from being initiated . . . It tied hand to hand to the legislation and changes to the land titles assurance fund and prevented title insurers from making claims directly against the assurance fund," says Herskowitz. Another vital real estatecase was Ridgely v. Nielson, a case Milne says was "wrongly decided." The Superior Court case involved a homeowner's purchase of a house that was subject to a sewer easement. The Toronto Real Estate Board form says purchasers are stuck with anything considered a "permitted encumbrance," which is defined as something that doesn't materially affect the present use of the property. In this case the purchaser said they wanted to build a swimming pool in the backyard, which Milne says shouldn't be considered a "present use," as it is something that is intended to be done. "The court said that a present use . . . was interpreted to be anything that you could alternatively be put to or you might be reasonably expected to be put to," says Milne. "Therefore, the purchaser did not close on the deal, because the judge held that, yes, that's not a permitted encumbrance." In an analysis of Ridgely for the Ontario Bar Association and Law Society of Upper Canada, Davies Ward Phillips & Vineberg LLP lawyer Jeffrey Lem says the case "should serve as a drafting warning to the bar. "[If ] the reasoning in Ridgely v. Nielson becomes widely adopted, the impact on real estate practice can be significant . . . [E]asments might no longer be 'permitted encumbrances' if they materially affect any potential alternative or future uses of the property, so long as these alternative or future uses can be said to be 'reasonably expected' aspects of property ownership, and notwithstanding that the agreement of purchase and sale purports to adopt a present use test." Family law One of the many prominent family law cases this year was the Supreme Court's Dickie v. Dickie, which dealt with the courts' power to find a spouse in contempt of an order to post security. Torkin Manes Cohen Arbus LLP lawyer Lorne Wolfson says courts can't normally find contempt based on a refusal to pay money, but this case instead involved a court order for the provision of security for the payment of money. "The question was whether or not that was the same as paying money," says Wolfson. "The Supreme Court said, 'No, it is different, and yes, [the spouse] could be found in contempt." Marchese v. Marchese addressed the trend of private mediation and arbitration. The Ontario Court of Appeal held in the case that parties that sign mediation and arbitration agreements will be held to their contract and will not be able to go back to court. "That was the very first case in which the Court of Appeal seems to have recognized that med-arb agreements have legal teeth, and they'll be enforced," says Wolfson. Charles Morrison of Morrison Reist says the case is "not earth-shattering, but important. "This is our highest provincial court approving mediation- arbitration agreements, and what the court is saying here is, 'We're going to be pretty reluctant to allow people to escape if they have made, knowingly, a med-arb agreement.' So that lends legitimacy to the process, and of course given the cost of litigation, the tremendously onerous family law rules, a lot of us are turning now more and more to med-arb. So it's good to know that our Court of Appeal is going to approve of that process and make it difficult for you to worm out of it." AA v. BB in the Ontario Court of Appeal established that the court has the power to declare more than two people the parents of a child. The Children's Law Reform Act previously held that there was no power to do so. Mann & Partners LLP lawyer Christopher Arnold says what he found "most impressive" in the case was that "the court twisted itself into knots to make sure . . . the legislative lag between where people are, where society is, and where the legislature is, the court didn't just shrug and say, 'Oh well, the law doesn't say that you can do that; therefore get outta here.' It instead filled that gap with solid reasoning." Von Czieslik v. Ayuso is an Ontario Court of Appeal case that focused on the courts' power under s. 5.6 of the Family Law Act. The section deals with the maximum amount courts can give to the victim spouse if it finds that a 50-50 equalization of property is unconscionable. "Prior to that case, all the cases said that the most a court could do would be to give the victim spouse 100 per cent of the difference between the net family property," says Wolfson. "In this case, the court said . . . a court can give anywhere up to 100 per cent of a spouse's net family property." "Ultimately the order that was able to be made still didn't compensate the wronged party to the extent of the wrong, but they did what they could within the legislative framework they could look at," says Arnold. "It reaffirmed the courts' ability to . . . do justice away from the strictures and often unfairness of the operation of s. 4 and s. 5 of the Family Law Act." Class Action While there was little consensus on the top class action cases of the year, one case that was mentioned more than once was the Ontario Court of Appeal's Cassano v. Toronto Dominion Bank, which overturned a lower court decision. The case involved an appellant's claim that TD breached its contract with Visa credit card holders by charging undisclosed and unauthorized fees on foreign currency transactions. "The court weighed in on the issue of aggregate assessment of damages," says Rochon Genova LLP lawyer Joel Rochon. "It would seem as though that was an important step, since that concept was viewed unfavourably" in a previous decision. "It went a long way to breathing life into that concept." Rochon says Cassano came on the heels of a similar case, Serhan, which discussed the disgorgement of profits and revenue. "It seems as though the law has particularly evolved with the Cassano decision to move it forward into this more progressive space where we can deal with damages on an aggregate basis." Rochon notes that the case was heard by Chief Justice Warren Winkler. "He's signaling loud and clear his unfailing support for the class actions in Ontario, and his interest in continuing the development of law in this area." Siskind Cromarty Ivey & Dowler LLP lawyer Dimitri Lascaris also pointed to Cassano, and to its "cousin case," Markson v. MBNA Canada Bank, as vital due to the court's "ringing endorsement" of the principle of access to justice. 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