the sagging lines and facilitate the move.
The cost of removing and replacing the
roof was $80,000. After the move, appellant invoiced the defendants for $8,763.
Respondents refused to pay the invoice.
Appellant sued for breach of contract. No
counterclaim was filed. The trial judge
found that although appellant was entitled
to judgment, respondents were entitled to
set-off for an equivalent amount. Appellant argued that the trial judge erred in
applying set-off when it had not been
pleaded and in accepting respondents’
allegations of loss without evidence to
substantiate their claim.
HELD: Appeal dismissed. There was
no error in applying the principles of set-off. Appellant’s representative was aware
of the effect of sagging wires at different
times of year and declined to raise the
matter with appellant. There were sufficient facts to find a negligent misrepresentation with respect to that issue based
on appellant’s failure to provide relevant
information. As a result, the respondents
incurred unavoidable costs. The issue of
set-off was raised sufficiently in the pleadings where respondents described the
expenses they had incurred. In addition,
the trial judge flagged the issue of set-off
in his questions to respondents. There
was no requirement to use set-off wording
in small claims pleadings.
Hydro One Networks Inc. v. Yakeley,
[2010] O.J. No. 3675, Ont. Div. Ct., Mul-
ligan J., Aug. 31/10. Digest No. 3020-
007 (Approx. 6 pp.)
CORPORATIONS
SHARES – Court protected the claimed
value of applicants’ shares in respondent
corporation pending an application to
determine the value of the shares.
Motion for an order protecting the
claimed value of applicants’ shares. Applicants were shareholders of respondent
corporation, which decided to sell its principal asset to a Delaware-based company.
The principal asset was land that could be
developed for wind farms. Applicants
reviewed respondent’s finances and found
that, in the previous two years, the value
of the principal asset had increased
slightly but respondent’s expenses and
liabilities had increased significantly.
Applicants became concerned that the
expenses and liabilities were not legitimate and dissented on the sale resolution.
Applicants then brought an application
for a determination of the fair value of
their shares, which was pending. The
value of liabilities and expenses was
approximately eight cents per share.
Applicants valued their shares at 12 cents
per share but the respondent claimed they
were worth only two cents per share. The
sale had gone forward and respondent
was expecting to receive the second and
final payment for the land.
HELD: Motion allowed. There was
clearly a serious issue to be tried with
respect to the value of the shares. The balance of convenience favoured granting the
motion because if the claimed value was
not protected, applicants could get nothing
even if they were successful on their application to have the shares valued. The order
protected the amount of $812,520, the
claimed value of the applicants’ shares.
Conn v. Twenty Two Degree Energy
Corp., [2010] O.J. No. 3563, Ont. S.C.J.,
Hockin J., Aug. 24/10. Digest No. 3020-008
(Approx. 5 pp.)
SHARES – Appeal court removed certain assets from a valuation of a farm
corporation’s assets and increased the
discount rate applied to the value of the
shares of a minority shareholder.
Appeal from a judgment finding that
appellants had acted oppressively towards
respondent, a minority shareholder, and
ordering them to purchase respondent’s
shares valued according to the value of the
corporation’s assets, rather than on its earnings. Appellant RD and respondent were
brothers. Their father had incorporated the
corporation to run a farm. There were five
sons. Each son had 10 common shares and
the father retained 10 common shares. At
the time of the oppression application, RD
and respondent were the only shareholders.
Only RD had remained on the farm. After
respondent brought the oppression application, RD changed the share register to
indicate that he held 50 common shares
and respondent held 10 common shares.
The trial judge found that RD had manipulated the share register. Appellants challenged the judge’s findings on the number
of shares and valuation.
HELD: Appeal allowed in part.
Respondent was not a successor in interest
to his brothers’ holdings. He continued to
hold the 10 common shares his father gave
him within a share structure that contained
50 other common shares. The trial judge
was entitled to conclude that the income
approach was not appropriate in a farming
operation where the asset base was far
more significant than the income stream.
There was no basis to upset the judge’s conclusion regarding the appropriate discount
for tax purposes. The judge erred by including certain assets in his valuation that did
not belong to the corporation. Although the
judge correctly applied a minority discount
to respondent’s shares, a deeper discount
than 20 per cent was called for, considering
that respondent left the farm shortly after
receiving his shares, his reasonable expectations when he left, his operation of a competing business, and the delay incurred
before seeking redress. The proper discount
rate was set at 60 per cent.
Derdall v. Derdall Irrigation Farms
Ltd., [2010] S.J. No. 513, Sask. C.A, per
Jackson J.A. (Gerwing J.A. and Wilkin-son J. (ad hoc) concurring), Sept. 2/10.
Digest No. 3020-009 (Approx. 12 pp.)
COURTS & JUDGES
JURISDICTION – Ontario Superior
Court of Justice was not the appropriate
court to hear a motion for an order
extending the suspension of a declaration that legislation was invalid.
Motion for an order extending the suspension of a declaration of invalidity. In
April 2009 judgment was granted declaring that s. 96 of the Royal Canadian
Mounted Police Regulation infringed the
freedom of association guaranteed by subs.
2(d) of the Charter and was of no force or
effect. Section 96 established an employee
relations scheme for members of the RCMP
and entrenched it as the sole entity through
which those members could collectively
interact with management in relation to
labour relations issues. Recognizing that
Parliament might choose to enact a constitutionally acceptable alternative scheme,
the declaration was suspended for 18
months. The Attorney General appealed
against the judgment. The appeal had been
perfected but had not yet been heard.
HELD: Motion dismissed. The relief
sought by the Attorney General was in pith
and substance a stay of the declaration
pending appeal. Under Rule 63.02 the
court that made an order only had author-
ity to direct it be stayed pending appeal
until a notice of appeal or a motion for leave
to appeal was filed. After that point, the
Court of Appeal had exclusive jurisdiction
in relation to stays pending appeal. This
court did not have jurisdiction to grant the
relief sought. In any event, the Attorney
General had twice brought unsuccessful
motions before single judges of the Court of
Appeal for essentially the same relief. The
Superior Court of Justice was not the
appropriate forum for a third motion.
DAMAGES
(PERSONAL INJURY)
WRIST – Appellant doctor was negligent in failing to advise respondent of the
proper after-care for a broken wrist but
general damages assessed against him
were reduced to $30,000.
Appeal from a decision finding appellant liable to respondent for damages associated with the improper treatment of her
wrist injury. Respondent attended the hospital after breaking her wrist. An x-ray
revealed a fracture. Appellant was the surgeon who performed a closed reduction
surgery involving manipulating respondent’s wrist back into place. An x-ray taken
after surgery showed that the joint was
properly aligned. Appellant applied a cast
to hold the reset bones. He advised respondent to have an x-ray taken within a week
and to follow-up with her family doctor,
which she did. When respondent had her
deteriorating cast removed, she found her
wrist severely disfigured. An x-ray showed
that her wrist fracture had not healed properly. Immediate surgery involving a bone
graft from respondent’s pelvic area was
ordered. Respondent underwent two further surgeries which involved insertion of
metal hardware. Respondent’s wrist was
left visibly deformed. Respondent suffered
pain in the wrist and in her pelvis from the
bone grafts. At trial, appellant conceded
that he did not advise respondent about the
risk of displacement during the first three
weeks after surgery. The judge found that
appellant failed to meet the applicable
standard of care in failing to so advise
respondent about her after-care, and in
doing his own follow up. The judge found
that, but for appellant’s negligence,
respondent would have had a better prognosis. Respondent’s damages were assessed
at $90,000 for general damages, $1,000
for past income loss and $10,000 for future
income loss.
HELD: Appeal allowed in part. Appel-
lant was negligent in failing to advise
respondent of the information she needed
to pursue a proper course of after-care.
Respondent left the hospital ill-equipped to
ensure optimal recovery from appellant’s
surgery. Appellant was responsible for
respondent’s sub-optimal healing. There
was no evidence that the displacement of
the bones in respondent’s wrist after sur-
gery occurred while she was still at the
hospital, so the judge erred in finding that
appellant’s failure to take a post-casting
x-ray was causally linked to respondent’s
damages. The lack of information provided
to respondent caused her damages. General
damages were reduced to $30,000 because
appellant was not responsible for the injury
itself, and because the injury was so severe
that it was not likely to have completely
healed notwithstanding his negligence.
EMPLOYMENT
& DISMISSAL LAW
RESTRICTIVE COVENANTS –
Court upheld restrictive covenant
agreement signed by applicant with
respondent employer.
Application to have restrictive covenant
declared unenforceable. After being with
respondent for 17 years, applicant’s employment was terminated. He commenced an
action against respondent for wrongful dismissal. Respondent defended the claim and
counterclaimed for damages for breach of
contract and fiduciary duties. Respondent
claimed that applicant breached the
restrictive covenant agreement, which he
had signed as a term of employment, by
using his knowledge and experience at
respondent to gain business opportunities.
Applicant alleged that the restrictive covenant was unreasonable and far too broad.
HELD: Application dismissed. Applicant held the position of technical sales
representative. He was required to be familiar with the business of respondent’s customers, and their operations and needs.
The covenant was clear and the wording
was not ambiguous. Given the global nature
of respondent’s business, notwithstanding
the limits within which applicant worked,
the covenant was not unreasonable. Applicant could transfer from one territory to
another over the course of his employment
and was in a position to acquire knowledge
beyond his own field. The covenant was
only in effect for one year, which was considerably shorter than periods found in
other restrictive covenants. The geographic
scope and activity restriction were necessary in the circumstances of respondent’s
business and bearing in mind applicant’s
employment and knowledge of respondent’s business, products and customers.
The covenant did not violate public policy.
Mason v. Chem-Trend Limited Part-
nership, [2010] O.J. No. 3680, Ont.
S.C.J., Kruzick J., Aug. 26/10. Digest No.
3020-012 (Approx. 7 pp.)
WRONGFUL DISMISSAL – Plain-
tiff’s action for wrongful dismissal was
dismissed because plaintiff clearly
resigned from his employment.
Action for damages for wrongful dismissal. Defendant A Ltd. was a large precision machine shop that custom manufactured metal parts for gas turbines.
Defendant S Ltd. was a related management company through which A Ltd.’s
employees were paid. Plaintiff was a skilled
machinist who worked for A Ltd. as a
machine operator for eight years. His
employment ended on July 25, 2007. Plaintiff claimed he was fired without notice.
Defendants alleged he quit without notice.
Plaintiff sought damages for wrongful dismissal and the defendants counterclaimed
for losses they sustained because of plain-
