Law Times

Law Times • march 5, 2018 Page 15 www.lawtimesnews.com CASELAW Ontario Civil Cases Business Associations SPECIFIC MATTERS OF CORPORATE ORGANIZATION Foreign and extra-provincial corporations Notion of carrying on business requires some form of actual, not only virtual, presence in jurisdiction Plaintiff PS brought four related actions arising out of various deal- ings with defendants. Two of ac- tions were also brought by plain- tiff W Ltd., company in which PS was sole officer and shareholder. PS was Canadian citizen living in Ontario, but during period of time at issue in lawsuits he lived in United States. Actions of defen- dants of which PS complained all took place in United States. Defen- dants brought successful motions to dismiss actions on ground that Ontario court had no jurisdiction as there was no real and substan- tial connection between litigation and this province. Plaintiffs ap- pealed. Appeals dismissed. Both on appeal and motions, PS argued that because products of some of defendants were advertised, marketed and distributed in On- tario, defendants were carrying on business here. Motion judge in each case rejected this submis- sion, in some instances citing Su- preme Court of Canada decision wherein it was stated that notion of carrying on business requires some form of actual, not only vir- tual, presence in jurisdiction, such as maintaining office or regularly visiting territory of jurisdiction. There was agreement with these findings on motions, and it was added that in Supreme Court of Canada case it was emphasized that even active advertising in Ontario would not be enough to establish that defendant was car- rying on business here. Sgromo v. Scott (2018), 2018 CarswellOnt 143, 2018 ONCA 5, John Laskin J.A., B.W. Miller J.A., and David M. Paciocco J.A. (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 7411, 2017 ONSC 2522, D.C. Shaw J. (Ont. S.C.J.). (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 7412, 2017 ONSC 2525, D.C. Shaw J. (Ont. S.C.J.). (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 7429, 2017 ONSC 2524, D.C. Shaw J. (Ont. S.C.J.). (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 10870, 2017 ONSC 3978, T.A. Platana J. (Ont. S.C.J.). Civil Practice and Procedure CLASS AND REPRESENTATIVE PROCEEDINGS Representative or class proceedings under class proceedings legislation Major deficiency in proposed class action was failure to satisfy preferable procedure criterion Hospital operated drug testing laboratory between 2005 and 2015 and during that time tested hair of 18,463 individuals to screen for presence of drugs and alcohol. Of 18,463 individuals tested, total of 10,004 were reported as hav- ing positive result and 6,958 of reported positives were individu- als referred from child protection agencies. Proposed representa- tive plaintiff was one of individu- als tested and, following positive test results, her child remained in foster care for approximately two years. Proposed class action was commenced. Proposed represen- tative plaintiff brought motion for certification of proposed class action. Motion dismissed. Major deficiency in proposed class ac- tion was its failure to satisfy pref- erable procedure criterion. Pro- cedural and substantive access to justice would invariably require individual issues trials for class members with significant enough injury to justify expense of com- plex individual trials about liabili- ty. Individual issues trials were not amenable to any summary deter- mination as contemplated by s. 25 of Class Proceedings Act, 1992. Common issues would not suf- ficiently advance claims of class members and combining com- mon issues trial with individual issues trials made proceedings un- manageable and disadvantageous in comparison to alternative of individual actions. Class action was not preferable procedure for access to procedural justice. Given problems confronting substantive access to justice and problems of efficiency and productivity, and given what little would be accom- plished by common issues trial, more efficient and expeditious way to adjudicate claims would be to proceed directly by way of indi- vidual actions. Green v. The Hospital for Sick Children (2017), 2017 Car- swellOnt 16865, 2017 ONSC 6545, Perell J. (Ont. S.C.J.). Debtors and Creditors RECEIVERS Equitable execution Costs not awarded on full indemnity or substantial indemnity basis on simple receivership application Costs. Applicant judgment credi- tor L succeeded in obtaining number of costs orders against respondent judgment debtor A, which now amounted to $113,000. Applicant was largely unsuc- cessful in enforcing costs orders. Applicant requested that home jointly owned by respondent and his wife be sold by judicial sale and costs orders be satisfied out of respondent's share of proceeds. Request was denied on grounds that applicant as execution credi- tor did not have right to apply un- der Partition Act for sale of land where land was jointly owned by execution debtor and another person. Applicant brought appli- cation for appointment of equi- table receiver. Application grant- ed. Parties made submissions on costs and on draft judgment. Applicant was awarded costs of $10,000, all-inclusive, on partial indemnity basis. Costs were not to be awarded on full indemnity or substantial indemnity basis. This was not sort of "enforcement" costs that were encompassed in earlier decision. Respondent was entitled to take position he took. Provisions in second draft judg- ment were unnecessary for rather simple receivership. First draft judgment was approved with ad- ditional provision. Luu v. Abuomar (2017), 2017 CarswellOnt 18857, 2017 ONSC 7119, Gray J. (Ont. S.C.J.); additional reasons (2017), 2017 CarswellOnt 17176, 2017 ONSC 6658, Gray J. (Ont. S.C.J.). Environmental Law LIABILITY FOR ENVIRONMENTAL HARM Practice and procedure Facts not supporting interpretation of "successor" in reference to corporation as meaning something other than corporate successor In 2011, Ministry of Environ- ment issued director's order requiring W Ltd. and R Inc. to perform remedial work on aban- doned mercury waste disposal site, as two of previous owners of site. W Ltd. and R Inc. contended they enjoyed benefit of 1985 in- demnity provided by provincial government to earlier owners of pulp and paper facility, including waste disposal site. W Ltd. and R Inc. contended that government was obligated to indemnify them for any costs incurred to comply with director's order. Litigation ensued, and motion judge grant- ed summary judgment in favour of W Ltd. and R Inc.. Govern- ment appealed. Appeal allowed in part. Motion judge did not err in finding that 1985 indemnity covered costs of complying with director's order. Motion judge found that 1985 indemnity con- tained clear and unambiguous language covering losses caused by first party imdemnitor; there was no palpable or overriding error in his analysis. There was to be declaration that W Ltd. re- ceived assignment of full benefit of indemnity in 1998 acquisition. Issue of what rights, if any, W Ltd. possessed as assignee of indem- nity at time director's order was issued in 2011 was to be remit- ted to court below. In 2007, be- fore director's order, W Ltd. sold mill and other assets to another company. W Ltd. bore burden of demonstrating that at time of 2011 director's order it possessed legal rights entitling it to indem- nification. Motion judge erred in interpreting word "successor" in particular section of indemnity to include W Ltd.. Motion judge failed to explain how facts could support interpretation of word "successor" in reference to cor- poration as meaning something other than corporate successor. Motion judge erred in finding that R Inc. enjoyed benefit of in- demnity as "successor". As result of 1998 assignment of full benefit of indemnity from R Inc.'s cor- porate predecessor to W Ltd., R Inc. had no legal interest in in- demnity upon which to assert claim against government. Weyerhaeuser Company Limited v. Ontario (Attorney General) (2017), 2017 Carswel- lOnt 20156, 2017 ONCA 1007, John Laskin J.A., P. Lauwers J.A., and David Brown J.A. (Ont. C.A.); reversed (2016), 2016 CarswellOnt 11807, 2016 ONSC 4652, Hainey J. (Ont. S.C.J. [Commercial List]). Estates and Trusts ESTATES Dependants' relief legislation Spousal priority did not shelter pre-retirement death benefits paid to spouse from claw back Determining estate assets and debts. Testator had two children, RC and SC, during first marriage. SC suffered from developmental delay, and testator continued to pay child support for her while she lived with her mother after becoming adult. Testator was in common law relationship with new spouse when he obtained life insurance for her benefit and made her beneficiary of pre-re- tirement death benefit. Testator made some provision for mother and children, including in will. Testator died while SC continued to reside with mother, remain- ing dependent while receiving disability support payments. Testator brought application for dependent's relief under s. 58 of Succession Law Reform Act (SLRA). Application granted. Pursuant to s. 72 of SLRA, pre- retirement death benefit valued at $368,288.53 before taxes, vehicle gifted to spouse mortis causa valued at $28,755, and $97,000 in debts intended to be covered by life insurance policy were in- cluded in estate. While s. 48(6) of Pension Benefits Act clearly cre- ated statutory priority between "spouse" and other designated beneficiaries with respect to pre- retirement death benefits, this spousal priority did not shelter pre-retirement death benefits paid to spouse from "claw back" provi- sions of SLRA. If legislature had intended such exception to apply to pre-retirement death benefit, it would have been explicit in this regard. Provisions of SLRA spe- cifically contemplated balancing of assets between spouses and other dependants. To ignore pre- retirement death benefit altogeth- er would not only be arbitrary, but it could unduly skew "balancing" envisioned under s. 62 of SLRA. Cotnam v. Rousseau (2018), 2018 CarswellOnt 69, 2018 ONSC 216, C.F. de Sa J. (Ont. S.C.J.). Evidence OPINION Experts Report might work in art appraisal business but not expert analysis as bereft of methodology or reasoning Issue arose at trial as to authen- ticity of painting purportedly by Norval Morrisseau. Intervenors, who were standing in shoes of de- fendant at trial, proposed to call B as expert witness in art appraisal, and specifically in art work of Norval Morrisseau. B had long career as art appraiser but was not professional witness and did not have usual academic credentials. B's one-page report indicated that painting in question was "defi- nitely work composed by Norval Morrisseau" and provided mon- etary value for work. Interve- nors brought motion to qualify B as expert. Motion dismissed. It would be unfair to plaintiff to qualify B as expert witness. B's report was essentially authentic- ity and appraisal certificate and as such did not set out method- ology engaged in or reasoning pursued in coming to conclusion that painting was work by Nor- val Morrisseau. B's report might work in art appraisal business as certificate issued to art owner but as expert analysis it was bereft of methodology or reasoning. B's report was simply not true expert report as contemplated by Rules of Civil Procedure. Report gave little indication as to what B's tes- timony would contain. Virtually anything B said in oral testimony would not have been anticipated by reading of his report and would therefore take counsel by surprise. Hearn v. Maslak-McLeod Gallery Inc. (2018), 2018 Car- swellOnt 1790, 2017 ONSC 945, E.M. Morgan J. (Ont. S.C.J.). DIVISION OF FAMILY PROPERTY Determination of ownership of property Trial judge erring in placing onus on wife to rebut presumption of resulting trust Husband came into relationship with farm and interest in abut- ting 'Lot 8'. Lot 8 was transferred to parties as joint tenants. Wife made mortgage and property tax payments. Lot 8 was trans- ferred to wife. Parties incorpo- rated company, each owning 100 common shares. Company purchased husband's farm prop- erty and other assets. Husband transferred 400 Class B shares to wife, for $40,000. Trial judge found husband was beneficial owner, by resulting trust, of com- pany and Lot 8, and that wife was owed money for mortgage/tax payments. Wife appealed. Appeal allowed in part; parties declared joint owners of Lot 8. Transfer of shares to wife was gratuitous; wife did not rebut presumption of re- sulting trust. Husband made out claim to resulting trust, for 50 per cent of Lot 8. As to initial transfer to wife as joint owner, trial judge erred: in placing onus on wife to rebut presumption of resulting trust; in concluding wife received "gratuitous" transfer; and in fail- ing to consider that husband's purpose was consistent with in- tention to make wife joint benefi- cial owner. Subsequent transfer of husband's half interest of Lot 8 was gratuitous. Holtby v. Draper (2017), 2017 CarswellOnt 18889, 2017 ONCA 932, K. van Rensburg J.A., K.M. Weiler J.A., and Grant Huscroft J.A. (Ont. C.A.); re- versed (2015), 2015 CarswellOnt 17824, 2015 ONSC 7160, Conlan J. (Ont. S.C.J.).

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