Shareholders bring derivative action on company’s behalf to recover misappropriated assets and revenues
Our clients are two director-shareholders of a closely held company. Shortly after their business relationship with the other two director-shareholders fell apart, they discovered evidence that the corporation’s business was being diverted to another company. Our clients satisfied the test for leave to commence a derivative action on their company’s behalf, in order to sue for damages caused by the misappropriation of its assets and revenues. Given the allegations of misappropriation and breach of fiduciary duty, it was evident that the directors, collectively, would not bring the proposed action or authorize our clients to do so, even though the action appeared to be in the company’s best interests. The judge was satisfied that any claim, if successful, would benefit all shareholders of the company.
Court of Appeal upholds husband’s default judgment against wife for fraud
We acted for a husband in a fraud litigation matter against his wife, who had admitted to a fraud in a handwritten note. The husband client had obtained default judgment against his wife for $466,420.22 and then an order that the judgment would survive bankruptcy discharge. The defendant wife moved to set aside the default judgment on the basis of defective service but was unsuccessful. The motion judge found that whatever the issues of service, it was largely due to the wife’s own actions and in actions. The Court of Appeal also rejected the wife’s arguments about improper service, noting that the wife had a clear obligation to advise of changes in addresses, which she had failed to do, and that it was clear that she had received the relevant legal documents throughout the litigation
Court of Appeal upholds second mortgagee’s victory in priority contest
Our client was a private lender who held a second mortgage on a commercial property. The first mortgage was refinanced with the principal increasing such that there was no equity available for our second mortgagee client. However, the new mortgagee failed to obtain a postponement from our second mortgagee client before registering. Our second mortgagee client claimed priority over the new mortgage. The new mortgage claimed that it was entitled to priority on the basis of equitable subrogation. Our client had been granted summary judgment, wherein the motion judge had found that it would be unfair to leave our client with nothing, given that the lender had advanced its funds despite knowing about our client’s mortgage and failing to secure a postponement. Furthermore, it would not be equitable to grant the plaintiff lender priority given that its mortgage was more than double in value than the mortgage it replaced, as well as carrying a higher interest rate. The Court of Appeal agreed, seeing no reason to interfere with the judgment granted in favour of our client.
Court of Appeal finds mortgage against estate property valid
In the course of a fraud litigation matter, our client accepted a mortgage from the opposing party on a house in Mississauga in exchange for an adjournment of a trial and an agreement to split costs of a forensic accounting. Ultimately our client obtained judgment and sought to enforce the mortgage. Our client then learned that the property over which it had a mortgage was held by an estate trustee in his capacity as estate trustee, and not personally. A beneficiary brother sought to have the mortgage declared invalid on the basis that our client knew that it was taking a mortgage from an estate trustee who had no personal interest in the property.
At trial, the judge found that the interests of the 3 beneficiaries (one of whom was the estate trustee) vested and our client’s mortgage was only against a 1/3 interest in the property. The beneficiary brother appealed and we cross-appealed.
We succeeded on appeal having the mortgage recognized as valid as against the entire property. The Court of Appeal found that the estate trustee was within his right to mortgage the property and that our client could ignore the references in the title registration to the property being held in trust by virtue of the Land Titles Act.
Vendor recovers deposit for aborted sale transaction through settlement
Our client entered into an agreement to sell an investment property in Toronto to a foreign investor who made an offer without conditions and without having seen the property. The purchaser made a substantial deposit, but then decided against the purchase. We claimed for forfeiture of the deposit and settled the matter at the discoveries stage.
Trial decision limiting indemnity under a lease upheld on appeal
Our client ran a retail business on the ground floor of a large office building. He sold his business in 2003 and the landlord required that he sign an indemnity for the lease until the end of its term and any extensions or renewals. The business was subsequently sold to a new operator who extended the lease for 5 more years at higher rates and then breached the lease and abandoned the premises. The landlord commenced an action against our client on the indemnity. At trial, we succeeded in limiting our client’s exposure to approximately $13,000 on the basis of a material change to the underlying lease when the extension was negotiated. The landlord appealed, but the trial decision was upheld.
Lender client succeeds in securing judgments for collateral mortgages
Our client is a mortgage lender. He took 4 collateral mortgages as part of a complex transaction meant to secure another mortgage that was in default. The 4 collateral mortgages went into default and we commenced an action for possession and sale. The action was defended on the basis that the underlying debt was satisfied so that the lender no longer had recourse to the mortgages. The defendants put forward a document purporting to be an acknowledgement that the debt was satisfied. The evidence was challenged at discoveries and the matter settled on the morning of trial with full recovery of principal, interest and costs on the 4 collateral mortgages.
Construction breach of trust claim dismissed
Our client is a general contractor who was sued for breach of trust for a municipal construction project. The trade was a subcontractor to a subcontractor with whom our client contracted. Our subcontractor wound up its operations and allegedly left its trade unpaid. We succeeded in having the claim dismissed on the grounds that the trade was dilatory in pursuing its action.
Homeowners have improper constructions liens discharged
We acted for homeowners in a nightmare scenario. They had paid their general contractor in full who did not pay one of his subtrades in turn. The house was liened for amounts that they had already paid. We contested the timeliness of the subtrade’s lien and a trial of that issue was ordered. We succeeded in having the lien ordered discharged on the basis that it was not registered in time and that the subtrade bootstrapped made useless attendances after its work was done for the purpose of trying to re-set its 45 day clock to register a claim for lien.
Electrical contractor secures substantial settlement for unpaid accounts
Our client is an electrical contractor who was hired on 2 large projects on a time and materials basis. At the end of the project, a substantial account was withheld while the owner challenged the time, materials and rate. After extensive productions and discoveries, our clients were able to secure a substantial settlement at mediation.
Client wins large settlement from departing employee and new employer
Our client is a software company that had specific non-compete and non-solicitation clauses in its employment agreement. A departing senior salesperson went to work for a competitor who was specifically named in the non-compete agreement. The employee began soliciting our client’s former customers and prospects specifically referencing our client’s pricing and promising to beat it. We were able to secure a settlement after discoveries compensating our client for the loss of its contracts.
Ex-boyfriend gets settlement from bank and ex-girlfriend for invasion of privacy
Our client is a general contractor and his girlfriend worked at one of the large banks in a branch. He learned that over the course of their relationship, his girlfriend was using her position at the bank to access his banking activity and track his activities. We commenced a lawsuit based on the new tort of, intrusion upon seclusion. We commenced an action against the bank for failing to have proper procedures in place to prevent unauthorized access. We were able to negotiate a settlement with the bank prior to discoveries.
Settlement for collection from overholding tenant on behalf of an estate
Our client is an estate. Prior to the death of the parents, a large commercial tenant of theirs had been overholding and failing to pay at the higher rate under the lease and ultimately terminated. We commenced an action on behalf of the estate and secured a settlement prior to discoveries.
Action against commercial tenant dismissed
Our client is a social media technology and strategy firm. They leased space in downtown Toronto that was purchased by one of the large REITs. During the sale process and when the new owner was in place, basic problems at the premises were ignored. Our client notified the landlord and abandoned the premises. The landlord commenced an action for breach of the lease. Through negotiation, the landlord dropped the case against our client.