Law Times

April 25, 2016

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Law Times • apriL 25, 2016 Page 19 CASELAW lants purchased DME's fran- chise and agreed to be bound by 2005 Franchise Agreement, including restrictive covenant which applied on termina- tion and prevented them from operating similar store for 18 months within 30-mile radius of their store or nearest franchise store. MEDIchair franchise sys- tem sold to Centric which also purchased Motion Specialties, group of corporate stores simi- lar to MEDIchair, including one in Peterborough. Appellants claimed Centric focused on Motion stores and number of MEDIchair stores declined. Ap- pellants did not renew franchise agreement, instead removing MEDIchair signage and con- tinuing to operate. Arthur Wis- hart Act requires franchisor to provide prospective franchisee with disclosure document be- fore franchise agreement signed except where grant of franchise not effected by or through fran- chisor. MEDIChair successfully applied to enforce restrictive covenant. Application judge found that MEDIchair exempt from disclosure requirement. Appellants' appeal allowed. No error in finding that MEDIchair exempt from disclosure. MEDI- chair merely gave required ap- proval, took transfer fee and ob- tained covenants and guarantee. Restrictive covenant not ambig- uous. Appellants extracted same restrictive covenant from former owner of DME. Courts regularly address restrictive covenants where standard is "similar" busi- ness. No basis to interfere with conclusion that "similar" not ambiguous in context of MEDI- chair's business. Courts give re- strictive covenants presumption of validity when negotiated as part of sale of a business. Focus is whether there is legitimate or proprietary interest of franchi- sor that is entitled to protection of covenant. MEDIchair had le- gitimate or proprietary interest to protect goodwill in MEDI- chair system. Purpose of cov- enant was to protect that inter- est for limited time and within defined territory. MEDIchair not entitled to protect its inter- est in franchise system as whole. By deciding not to operate in Peterborough, MEDIchair ef- fectively acknowledged it had no legitimate or proprietary in- terest to protect within defined territorial scope of covenant. MEDIchair LP v. DME Med- equip Inc. (Feb. 29, 2016, Ont. C.A., K. Feldman J.A., MacPher- son J.A., and B.W. Miller J.A., CA C60733) Decision at 257 A.C.W.S. (3d) 104 was reversed. 263 A.C.W.S. (3d) 287. Corporations SHARES Judge's conclusion that put-right option was part of bilateral con- tract contained in asset purchase agreement was reasonable Respondents were victimized by fraudster and obtained judg- ments against her. Corporation controlled by appellants pur- chased respondents' judgments. Respondents in exchange re- ceived two promissory notes and shares of corporation. Asset pur- chase agreement ("APA") con- tained put-right option that pro- vided respondents could compel appellants to purchase shares. Respondents attempted to ex- ercised put-right option but ap- pellants did not purchase shares. Respondents brought action and obtained summary judgment. Judge on summary judgment motion held that respondents successfully exercised option contained in APA. Appellants appealed. Appeal dismissed. Mo- tion judge's conclusion that put- right option was part of bilateral contract contained in APA was reasonable and supported by evidence. There was no basis to interfere with judge's conclusion that respondents substantially complied with notice require- ment in APA. Judge's conclusion that respondents' failure to pro- vide certificate under s. 116 of In- come Tax Act (Can.) did not viti- ate appellants' obligation to buy shares was reasonable. Judge's interpretation of release agree- ment was reasonable. Appellants were not prejudiced by judgment squarely within terms of relief claimed in statement of claim. Flintoff v. Crown William Mining Corp. (Jan. 29, 2016, Ont. C.A., S.E. Pepall J.A., G. Pardu J.A., and L.B. Roberts J.A., CA C60449) Decision at 254 A.C.W.S. (3d) 826 was affirmed. 263 A.C.W.S. (3d) 378. Evidence HEARSAY Deceased employee's discovery evi- dence was necessary and reliable Employer terminated employee in October 2012. Employee com- menced action against employer for damages for wrongful dis- missal. Employee was examined for discovery prior to amending statement of claim to include constructive dismissal and to add additional types of dam- ages sought. Employee passed away before trial. Voir dire was conducted to determine admis- sibility of employee's discovery evidence and statements from witnesses about what employee said and did. Evidence admis- sible. Employee's discovery evi- dence was admissible subject to taking into account employer's lack of opportunity to cross-ex- amine on constructive dismissal issue. Employee's direct evidence was clearly both necessary and reliable. Statements by witnesses regarding what employee said or did were admissible on basis of being necessary and reliable. Requirement in s. 13 of Evi- dence Act (Ont.) for corrobora- tion when dealing with deceased persons was not directed at issue of admissibility. Statutory cor- roboration requirement applied to admitted evidence. Record as whole provided sufficient other material evidence, both direct or circumstantial, to meet corrobo- ration requirement in s. 13 of Act regarding viva voce evidence given by witnesses who testified at trial. Williams Estate v. Vogel of Canada Ltd. (Jan. 26, 2016, Ont. S.C.J., Firestone J., CV-12- 467656) 263 A.C.W.S. (3d) 400. Family Law DIVORCE No authority to support proposi- tion that bigamy would consti- tute defence to wife's claims Husband and wife married in Bogota, Columbia in 1991. At time of marriage, wife was widow with two children. Par- ties had one child together, born November 1993. Marriage was traditional in that wife was principal homemaker and care- giver while husband was sole breadwinner. During marriage, family moved from Columbia to Guatemala, Brazil, Mexico, United States and finally to Can- ada to accommodate husband's career. In March 2014, wife com- menced proceeding for divorce, spousal support, child support and equalization of net family property. Husband filed Answer claiming divorce, spousal sup- port, child support and unequal division of property. Husband subsequently brought motion for leave to amend Answer to claim wife had committed bigamy. He claimed to have seen various documents during marriage and after separation that suggested wife's first spouse might still be alive. Motion denied. Husband offered no explanation for failure to make bigamy claim in original Answer. Even if claim was true, which wife vehemently denied, there was no authority to sup- port proposition bigamy would constitute defence to wife's claims. There was no suggestion wife had not entered marriage in good faith. Given already protracted nature of proceed- ing, disparate financial means of parties and complications that would arise from litigating issue on basis of 30-year-old evidence from Columbia, appropriate for court to exercise discretion to deny leave. Allowing amend- ment would disadvantage wife in manner costs or adjournment could not compensate. Mesa v. Quiros (Feb. 11, 2016, Ont. S.C.J., D.A. Broad J., 48760-14) 263 A.C.W.S. (3d) 447. Insurance AUTOMOBILE INSURANCE Deductible was not limited to only claim of operator of vehicle Heavy commercial vehicle in- sured by respondent rear-ended passenger vehicle insured by applicant. As result of accident applicant made statutory ac- cident benefits payments Ap- plicant requested loss transfer from respondent with respect to payments. Respondent applied deductible under s. 275(3) of In- surance Act (Ont.) to fir $2,000 requested by applicant for each insured. Applicant issued notice of initiate arbitration against re- spondent. Arbitrator determined he was bound by earlier arbitra- tion decision that found that right to loss transfer was subject only to $2,000 deductible in respect of operator of insured vehicle rather than $2,000 deductible for each person who was paid no-fault benefits. Respondent ap- pealed. Appeal allowed. Deduct- ible under s. 275(3) of Act applied to claim for loss transfer by first party insurer for each person to whom it paid statutory accident benefits. Deductible was not lim- ited to only claim of operator of vehicle. Interpreting deductible provided by s. 275(3) of Act to apply to each claim of indemnifi- cation for statutory accident ben- efits paid to each person involved in automobile accident was just and reasonable result. Economical Mutual Insur- ance Co. v. Northbridge Com- mercial Insurance Co. (Jan. 21, 2016, Ont. S.C.J., M.D. Faieta J., CV-15-535474) 263 A.C.W.S. (3d) 466. Municipal Law TAX SALE Legislature did not specifi- cally provide for judicial discre- tion under tax sale regime Taxpayer failed to pay municipal taxes assessed on property. City sold property, paying into court surplus of $76,064.60 left after de- duction of tax arrears and costs. Taxpayer missed deadline of one year for applying for paying out of surplus, such that surplus would be forfeited to city under s. 380(6) of Municipal Act, 2001 (Ont.) (MA). Taxpayer applied for paying out of surplus and city re- sponded by similarly applying for paying out of surplus. Taxpayer's application dismissed; City's application granted. Taxpayer missed deadline by three weeks because of belief that city would deal with issues surrounding tax sale of this property at same time as its two other properties that were also being sold for tax arrears. Taxpayer brought appli- cation as soon as it learned that deadline had passed. Denying remedy deprived former owner of surplus proceeds and resulted in windfall for municipality but denying remedy to statutory forfeiture created certainty and placed obligation to act diligently on delinquent taxpayer. Part XI of MA was carefully crafted leg- islative scheme. While it would be tempting to apply s. 5(1) of Fines and Forfeitures Act (Ont.) to rem- edy unfairness of this forfeiture, it did not apply to municipal tax sales. Section 98 of Courts of Jus- tice Act (Ont.) similarly did not apply to such sales. Since legisla- ture did not specifically provide for judicial discretion under tax sale regime, taxpayer's request for payment out of court could not be acceded to. Special circum- stances doctrine did not apply. Taxpayer applied three weeks late for payment out of court, slightly more than one year after payment into court, two years after sale of property and three years after fi- nal notice. Legislative scheme was to do just what was accomplished in this case. Legislature intended to place onus on delinquent tax- payer, relieving city of obligation of tracking down taxpayer who had already received notice of registration of tax arrears certifi- cate and final notice. Poplar Point First Nation Development Corp. v. Thunder Bay (City) (Jan. 19, 2016, Ont. S.C.J., W.D. Newton J., Thun- der Bay CV-14-0344-00) 263 A.C.W.S. (3d) 493. Ontario Criminal Cases Charter of Rights CRUEL AND UNUSUAL TREATMENT OR PUNISH- MENT Mandatory minimum sentences declared of no force or effect Accused was convicted of living on avails of prostitution of female person under age of 18 years, procuring under 18-year-old fe- male to prostitution, and obtain- ing sexual services from female person who was under age of 18 years. First and third count car- ried minimum custodial sen- tences. Accused brought motion for declaration that mandatory minimum sentences be of no force and effect. Motion granted. Section 212(2) and (4) of Crimi- nal Code were declared of no force or effect. Sentences would be out of line for persons within reasonably foreseeable hypothet- ical situation. Violation of s. 12 of Canadian Charter of Rights and Freedoms was established. Hand in hand with that consideration was denial of fundamental jus- tice. Section 1 of Charter could not save impugned sections be- cause they were far beyond ac- ceptability to society. R. v. Badali (Feb. 1, 2016, Ont. S.C.J., B. Glass J., 12-06456G) 127 W.C.B. (2d) 634.

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