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Page 14 May 4, 2015 • Law Times www.lawtimesnews.com may not assess amount in excess of amount of Federal Court cer- tificate. Director knew that three companies were facing significant cash f low issues due to developer failing to pay invoices and chose not to make remittances, believ- ing that developer would eventu- ally pay and remittances could be made in future. Director took no steps to prevent failure by three companies to make remittances. Failure to make remittances in be- lief that failure could be corrected in future did not constitute de- fence under s. 323(3) of Act. While director may not have been able to foresee events that occurred with respect to developer's contract, he was person who made decision not to pay certain of three com- panies' accounts payable, includ- ing remittances. Director was not entitled to rely upon due diligence defence in s. 323(3) of Act. Maxwell v. R. (Mar. 25, 2015, T.C.C. [General Procedure], Steven K. D'Arcy J., File No. 2011- 2668(IT)G, 2011-2669(GST)G, 2011-2687(IT)G, 2011-2688(GST) G) 250 A.C.W.S. (3d) 711. ONTARIO CIVIL DECISIONS Civil Procedure WANT OF PROSECUTION Judge must adopt overall contextual approach on motion to set aside dismissal for delay Fuller sued CPI, supplier of patent management systems, for negli- gence and breach of contract, al- leging CPI failed to monitor dates when patent maintenance fees became payable. Fuller alleged CPI negligently relied on incor- rect representations of R, Toron- to-based patent lawyer against whom Fuller also brought claim. Fuller granted R extensions to file statement of defence, but did not require CPI to file defence, instead focusing attention on claim against R. R died and CPI filed its statement of defence five days later. Fuller failed to set ac- tion down within required time- limit. Registrar's status notice not received by solicitors for Fuller because registrar sent notice to wrong address. Subsequent or- der dismissing action also sent to wrong address. Upon becoming aware of dismissal, counsel for Fuller took position that registrar had no jurisdiction to dismiss be- cause status notice not served in accordance with rules. However, failure to properly serve status no- tice is mere irregularity. Counsel for Fuller continued settlement discussions with R's insurer, ul- timately bringing application to set aside dismissal about three months after becoming aware of dismissal order. Motion judge dismissed motion. Fuller's appeal allowed and action reinstated. Judge must adopt overall contex- tual approach when considering relevant factors. Two-part test requiring plaintiff to provide ac- ceptable explanation for delay and show that defendant would suffer no non-compensable prejudice if action proceeded may be adopted. Defendant's conduct in litigation also relevant. Weight of author- ity favours deciding matters on merits, particularly where delay results from error by counsel. Mo- tion judge placed little weight on fact that status notice not properly served and that Fuller moved to set aside order reasonably quickly. Delay due in large part to coun- sel's mistaken view that registrar lacked jurisdiction. Motion judge also failed to consider that Fuller lost opportunity to prevent action being dismissed by delay because status notice went to wrong ad- dress. In considering prejudice, motion judge erred in failing to consider CPI's passivity and failed to link question of prejudice to whether fair trial still possible. CPI did not plead non-compensable prejudice and nothing occurred between issuance of status notice and motion to set aside dismissal order that increased prejudice to CPI. Fair trial was still possible. H.B. Fuller Co. v. Rogers (Mar. 16, 2015, Ont. C.A., K.M. Wei- ler J.A., Gloria Epstein J.A., and David Brown J.A., File No. CA C59444) Decision at 244 A.C.W.S. (3d) 556 was reversed. 250 A.C.W.S. (3d) 591. Civil Procedure CLASS ACTIONS Order under s. 25 of Class Proceedings Act, 1992 (Ont.) was required Plaintiffs were passengers on train that derailed. Action was certified as class action and had 45 class members. Defendant confessed judgment for four of five com- mon issues. Parties participated in mediation, but it was not suc- cessful. Defendant made offers to settle. Class counsel refused to communicate offers to settle to class members on basis that it was premature to do so. Parties were not able to agree on how to pro- ceed. Plaintiffs brought motion for order granting judgment on common issues; order appointing adjudicator; order setting terms of order under which adjudica- tion would be conducted; and awarding plaintiffs costs of cer- tification motion and of action. Motion granted. Common issues that defendant confessed to were not dispositive of action and ac- tion was about to enter individual issues stage. Order under s. 25 of Class Proceedings Act, 1992 (Ont.), was required. Section 25 of Act required court to define issues to be resolved in further hearing that would constitute individual issues stage of class action; deter- mine who would decide issues; give necessary directions relat- ing to procedures for individual issues stage; and set reasonable time limit for individual claims. Before resort could be made to s. 25 of Act, common issues stage must formally be brought to end and parties agreed judgment should issue for four common issues. With grant of judgment and entry into individual issues stage, there should be assessment of costs of class action up to com- pletion of common issues stage. Class counsel was correct not to disseminate offers to settle until common issues stage had formal- ly concluded. Before offers could be disseminated, common issues stage of class action had to be for- mally completed by judgment or- dered; individual issues litigation plan needed to be negotiated and settled; offers to settle needed to be amended to undifferentiated lump sums; and notice to class members under s. 18 of Act had to be prepared. Lundy v. VIA Rail Canada Inc. (Mar. 23, 2015, Ont. S.C.J., Perell J., File No. CV-12-447653-00CP) 250 A.C.W.S. (3d) 563. Contracts FRANCHISE AGREEMENTS Impugned section of franchise agreement was unenforceable Respondent franchisees entered into franchise agreement with appellant franchisor. Franchisees decided to sell businesses and assign franchise agreements to third parties. Pursuant to fran- chise agreements, franchisor's consent was required before fran- chisee was able to assign rights under franchise agreement and condition precedent to franchi- sor's consent required franchisee to provide general release of any claims against franchisor. Fran- chisees took position that clause was contrary to s. 11 of Arthur Wishart Act (Franchise Dis- closure), 2000 (Ont.), and they sought declaration that clause was void, unconscionable and unenforceable. Application judge issued declaration that section of franchise agreement was void and unenforceable. Franchisor ap- pealed. Appeal dismissed. Section 11 of Act was engaged. Impugned section of franchise agreement was not voided by s. 11 of Act, but it was unenforceable because enforcement would be contrary to Act. Blue pencil severance did not apply in circumstances be- cause there was no phrase in sec- tion that could be struck out to enable section to require release of only non-Act claims. Notional severance was not appropriate remedy in circumstances. No- tional severance would diminish protection afforded by s. 11 of Act against franchisors who might seek to have franchisees contract out of rights under Act. Allowing notional severance of overbroad clause could subvert policy and purposes of s. 11 of Act. Potential for some windfall to franchisees did not outweigh potential for abuse and subversion of purposes of s. 11 of Act if severance was permitted. Clause should not be notionally severed to require only release of non-Act claims by fran- chisee as condition of franchisor's consent to assignment. 2176693 Ontario Ltd. v. Cora Fran- chise Group Inc. (Mar. 12, 2015, Ont. C.A., Gloria Epstein J.A., K. van Rensburg J.A., and M.L. Benotto J.A., File No. CA C58420) Decision at 237 A.C.W.S. (3d) 388 was affirmed. 250 A.C.W.S. (3d) 598. Corporations DIRECTORS Current proxy not invalid Applicants requisitioned special meeting of shareholders of AI Inc., seeking resolutions remov- ing current directors and elect- ing applicants' proposed slate. Meeting was called and board of directors established special committee of three independent directors to direct all matters pertaining to applicants' proxy campaign. Counsel for special committee advised applicants their proposed slate did not satisfy by-law requirement that majority of directors reside in Canada. AI Inc. mailed out amended notice and current proxy. Special com- mittee proposed one of its direc- tors be meeting chair. Applicants objected to proposed chair on the basis he was involved in im- pugned transactions, involved with associated companies, had taken side of incumbent directors and had taken legal position on applicants' resolutions. Current proxy contemplated resolutions removing current directors and, if successful, election of seven of fourteen nominees, including ap- plicants' proposed slate and cur- rent directors. Applicants wanted only their slate to be electable if first resolution passed. Applicants brought motion for order requir- ing appointment of independent chair for special meeting and dec- laration of invalidity of current proxy. Motion dismissed. Appli- cants' concerns were not sufficient individually or together to require proposed chair to refrain from acting. Proposed chair was not purchaser in impugned transac- tions or respondent in application. There was no evidence of improp- er or undisclosed involvement in other companies, and taking side in contested proxy fight was not sufficient. Current proxy ref lected text of resolutions contemplated by requisition. Applicants did not propose resolution that removed current directors and replaced them with applicants' proposed slate in same resolution, so there was no basis for court to make such order. There was no sugges- tion current proxy did not comply with Business Corporations Act (Ont.). Current proxy ref lected approach that avoided confusion. Meson Capital Partners, LLC v. Aberdeen International Inc. (Jan. 23, 2015, Ont. S.C.J., H. Wilton- Siegel J., File No. CV-15-10823- 00CL) 250 A.C.W.S. (3d) 602. Taxation SALES TAX Neither corporate taxpayer nor principal had legal standing to bring application for repayment of charges under Retail Sales Tax Act (Ont.) Corporate taxpayer and its prin- cipal brought application for re- payment of penalties and interest charged with respect to Retail Sales Tax Act (Ont.) assessments, and for damages as result of erro- neous collection actions. Minis- ter of Finance brought motion to strike out application. Application dismissed; motion granted. Nei- ther corporate taxpayer nor prin- cipal had legal standing to bring application. Corporate taxpayer did not exist as it had been dis- solved, so it had no right to com- mence court proceedings. Prin- cipal had never been assessed by Minister, so he had no legal right to bring application on behalf of corporate taxpayer in his per- sonal capacity. Since more than two years had passed since corpo- rate taxpayer had been dissolved, principal ceased to be director. Section 29.1 of Act explicitly pro- hibited bringing of application under R. 14.05(3) of Rules of Civil Procedure (Ont.), in respect of matter arising under Act, such as collection and assessment of tax. Accordingly, taxpayer and princi- pal's application as to issue of re- payment was dismissed. As there was claim for damages against Crown, Proceedings Against the Crown Act (Ont.), must be fol- lowed, such that action had to be commenced and proper notice needed to be given. Action was not commenced and notice was not given, so claim for damages was not properly before court. Compucare Systems Ltd. v. On- tario (Mar. 11, 2015, Ont. S.C.J., H. MacLeod-Beliveau J., File No. Kingston CV-14-177-00) 250 A.C.W.S. (3d) 713. Trusts and Trustees TYPES OF TRUST Presumption of resulting trust was not rebutted Mother had two children, son and daughter. Son had two children. Son predeceased mother. Mother was diagnosed with cancer in October 2002. In 2004, mother executed new will and transferred title to family home to herself and daughter as joint tenants. Fam- ily home was mother's only sig- nificant asset. Will stipulated that property was to go to daughter on condition that she paid $70,000 to each grandchild within one year of her death. Mother died in 2005. Daughter sold property and it was not dealt with as part of mother's estate. Grandchildren brought action challenging validity of will and daughter's conduct in relation to property. Trial judge found that will was valid. Trial judge found that presumption of resulting trust in respect of property had been rebutted. Trial judge found that will created trust obligation on daughter to pay grandchil- dren $70,000 each and she was in breach of trust. Daughter ap- pealed and grandchildren cross- appealed. Appeal and cross-ap- peal dismissed. Trial judge's find- ing that mother had testamentary capacity and that daughter did not exert undue inf luence on her were available on record. There was no basis to interfere with trial judge's determination that will was valid. Trial judge correctly concluded that daughter was liable to pay grandchildren $70,000 each and failure to make those payments was breach of trust. Daughter held property on resulting trust and when mother died property formed part of her estate and was to be dealt with in accordance with 2004 will. Trial judge erred in principle in finding that daughter rebutted presumption of resulting trust. As trial judge found that sale of property after mother's death was to be source of funds for be- quests under will, she could not CASELAW

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