The Lawyers Weekly - June 18, 2010

issues in dispute. The evidence showed a contract between the parties, the applicable terms, performance of the contract, completion of the contract, payments received, and a balance due and payable of $155,714, and that a claim for lien had been registered for $147,082. Once plaintiff had proven its claim that there was no triable issue, defendant was required by affidavit material or other evidence to adduce specific facts demonstrating there was a genuine issue requiring a trial. Defendant was unable to adduce such facts. Based on all the evidence before the court, there was no genuine issue for trial. The motion was granted for $155,714, and of that amount, $147,082 by way of claim for lien.

6007325 Canada Inc. (c.o.b. Group
5) v. LPQ 18 Yorkville Avenue Inc.,
[2010] O.J. No. 2031, Ont. S.C.J.,
Polika (Master), May 14/10. Digest No.
3007-006 (Approx. 7 pp.)
CORPORATIONS
BORROWING – Respondent cor-
poration was not obligated to repur-
chase notes sold to raise money to
finance a mine project.

Appeal by the trustee for certain noteholders of respondent from the dismissal of its action. Respondent had the right to exploit a mine in Venezuela. It sold notes to raise money to develop the mine. The notes provided for respondent’s repurchase of the notes at 102 percent par value plus interest in the event of a change of control of the mine project. At the time the notes were sold, respondent had not yet obtained environmental approval to develop the mine. In 2008, its application for environmental approval was formally rejected. The noteholders sought to have their notes repurchased. The judge held that there had been no change in control of the mine project despite the Venezuelan government’s representation that it was taking back the mine. He also dismissed the trustee’s claim that respondent breached the trust indentures by selling equipment purchased from the proceeds of selling the notes and using the sale proceeds for purposes other than the mine development. The judge held that the noteholders had no reasonable expectation that respondent would pursue any particular course of action in the event it had a problem obtaining the necessary permit to develop the mine, that they were aware of the political climate and history of the mine property and therefore the risk associated with the project, and that respondent made a reasonable decision not to give up on the development and to pursue arbitration.

HELD: Appeal dismissed. Despite the Venezuelan government’s refusal to issue the necessary permits to respondent, it retained beneficial ownership of the development rights for the mine. As such, respondent was not obliged to repurchase the notes from the noteholders under the change of control provision. There was no specific reference in the notes to the use of the proceeds of sale of any equipment, so there was no remedy for the noteholders to recover from such sale.

Computershare Trust Co. of Canada
v. Crystallex International Corp.,
[2010] O.J. No. 2100, Ont. C.A., per
Doherty, Simmons and Epstein JJ.A.,
May 19/10. Digest No. 3007-007
(Approx. 5 pp.)

JOINT VENTURES – The trial judge
did not err in finding that respondents
did not owe a fiduciary duty to make
investment opportunities available to
appellant pursuant to a joint venture
agreement.

Appeal from a judgment finding respondents did not owe a fiduciary duty to make investment opportunities available to appellant pursuant to a joint venture agreement. The parties established a closed-end mutual fund trust pursuant to a 1997 joint venture agreement. The purpose of the joint venture was to create the mutual trust fund, cause the trust to issue units to the public and participate in and charge fees for the ongoing administration of the trust. In 1999, respondent M created a new closed-end mutual fund and several other funds. Respondents participated in these funds but appellant was not invited to participate. The trial judge’s conclusion that there was no fiduciary duty to offer participation in the other funds arose from his findings as to the relationship between the parties, and the reasonable expectations that might arise from that relationship, and was based largely on his interpretation of the joint venture agreement as limited to a single undertaking.

HELD: Appeal dismissed. The trial judge correctly interpreted the joint venture agreement, which specifically authorized the parties to conduct other business activities and precluded the parties from acquiring any interest in any other business conducted by a party. The agreement also specifically disclaimed the creation of a partnership. There was no support for the proposition that a fiduciary duty that arose in one relationship must extend to other relationships between the same parties. The judge’s finding that the other funds were not part of one business was supported on the record and was entitled to deference.

Roorda v. MacIntyre, [2010] A.J.
No. 564, Alta. C.A., per Hunt, Costigan
and Bielby JJ.A., May 18/10. Digest No.
3007-008 (Approx. 7 pp.)
CRIMINAL LAW
INDICTMENT AND INFORMA-
TION – Crown counsel acted pre-
maturely in withdrawing a private
information prior to a pre-enquete.
Appeal by the Crown from an order
directing that a pre-enquete be held with
respect to an information sworn by M, a
private citizen, against three named indi-
viduals. M appeared before a justice of
the peace on August 19, 2008, alleging
the individuals committed a common
nuisance on a specific date one year ear-
lier. The justice was satisfied of the facial
sufficiency of the information. M
appeared at the pre-enquete on Oct. 7,
2008. He objected to the participation of
the Crown counsel present, because of
his participation in earlier proceedings
involving M. Crown counsel withdrew
the charges against the individuals on the
basis that the prosecutions were an abuse
of process and not in the interests of jus-
tice. The justice did not hear or consider
any evidence from M or the Crown. M
successfully applied for an order of man-
damus. The judge decided the case
should be returned to a justice of the
peace for a pre-enquete to determine
whether process should issue to compel
the named individuals to appear on the
charges Crown counsel had withdrawn.
The judge held that the Crown was not
entitled to withdraw the information
prior to the pre-enquete.

EQUITY
REMEDIES – The appellate court
upheld an equitable declaration that a
company transferred a tax refund to
its principal.

Appeal by the senior lender to the company in protection from an equitable declaration that it transferred a tax refund to the company principal, G. The company was in the lumber business. In April 2008, G and the company entered a Tax Refund Agreement (TRA) whereby G paid the company $20 million to purchase $10 million worth of income tax refunds due to the company. Thus the TRA provided for the immediate acquisition of the $20 million in 2008 with no corresponding transfer of the interest in the tax refund until delivery of the transfer upon the closing date on Jan. 2, 2009. The agreement also required the company to hold the 2009 tax refund, upon receipt, in trust for G’s benefit post-clos-ing. The company failed to deliver to G the transfer on the closing date as required under the TRA. The company sought and obtained creditor protection. G filed a motion for equitable relief to the effect that the transfer occurred on the closing date. The motion was successful. The lender appealed.

HELD: Appeal dismissed. The TRA imposed a clear obligation on the company to deliver the transfer on the closing date. The company failed to perform that obligation. Delivery would have created a beneficial interest in the 2009 tax refund in favour of G and a corresponding trust obligation on the company. The transfer was the type of obligation that G was entitled to specifically enforce, and thus was able to invoke the equitable maxim that equity considers done what ought to be done. The maxim cured the company’s breach of the obligation. To find otherwise would create the inequitable result of the company taking advantage of its own breach to excuse itself from a contractual obligation. It was not inequitable to the lender because the lender helped make the agreement with G.

Grant Forest Products Inc. (Re),
[2010] O.J. No. 1993, Ont. C.A., per
Goudge J.A. (O’Connor A.C.J.S.C.J.
and Doherty J.A. concurring), may
14/10. Digest No. 3007-010 (Approx.
7 pp.)

FAMILY LAW
ABDUCTION – The trial judge erred
in finding that a child was habitually
resident in Ontario.

Appeal from the dismissal of the father’s application for the return of his two-year-old daughter to England under the Hague Convention. The child was born in England and was a citizen of both Canada and England. The father and his family resided in England. The mother was a Canadian citizen but had lived with the father in England. In 2009, the mother came to Canada with the child on vacation. She did not return with the child to England and applied for custody. The application judge found that the child was habitually resident in Ontario or in both Ontario and England, and that the Convention consequently did not apply. In the alternative, she found that returning the child to England would place her in an intolerable situation based on evidence that the father had a drinking problem, treated the mother with disrespect, made derogatory comments about the mother and her family and had been violent towards the mother on one occasion.

HELD: Appeal allowed. The child was to be returned to England. The application judge erred in determining the child’s habitual residence. The evidence clearly established that at the time at which the wrongful retention began, the child was habitually resident in England and had been visiting Canada. The Convention applied. The judge set the standard of intolerable situation too low. The evidence accepted by the judge described the father as irresponsible and disrespectful toward the mother, which was insufficient to ground a finding that the child would be placed in an intolerable situation.

Ellis v. Wentzel-Ellis, [2010] O.J.
No. 1987, Ont. C.A., per LaForme
(Goudge and MacFarland JJ.A. concur-
ring), May 13/10. Digest No. 3007-011
(Approx. 10 pp.)
EQUALIZATION – The appellate
court ordered a new trial to assess the
tax burden to the husband of an equal-
ization payment schedule.

Appeal from the valuation and division of the husband’s shares in a holding company which held a one-half interest in a partnership created for the purpose of developing lands for a subdivision. The parties married in 1995 and separated in 2005. The trial judge adopted the “ going-concern” approach to valuation of the shares. The judge accepted the opinion of the accountant retained by the wife that the present value of the husband’s income from the partnership was $1,500,000, based on the assumption that the husband would withdraw the profits from his company over a 15-year period. The judge added to that amount $150,000 as the amount of equipment necessary to generate the income. The equalization payment was to be made within two years.