Court Of Appeal Summaries (September 26, 2022 ' September 30, 2022)

• Published date: 05 October 2022
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Litigation, Mediation & Arbitration, Family and Matrimonial, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Charges, Mortgages, Indemnities, Financial Services, Insolvency/Bankruptcy, Contracts and Commercial Law, Arbitration & Dispute Resolution, Class Actions, Trials & Appeals & Compensation, Securities, Civil Law, Wills/ Intestacy/ Estate Planning
• Law Firm: Blaney McMurtry LLP
• Author: Mr John Polyzogopoulos

In Badesha v. Cronos Group Inc., a shareholder of Cronos Group Inc. sought leave to proceed with and certify a proposed class action for alleged secondary market misrepresentations in Cronos' financial statements that resulted in a drop in the respondent's share price once the errors were corrected. The motion judge denied leave to proceed, and dismissed the motion for certification on the basis that the appellant relied on nearly 8,000 individual misrepresentations. The Court held that the motion judge erred in characterizing the claim as asserting nearly 8,000 misrepresentations instead of one main one. This mischaracterization at the outset of the hearing tainted the findings of the motion judge, who had concluded that the appellant had no reasonable possibility of success at trial. The Court held that there was conflicting evidence on whether the reissuance of the financial statements led to a drop in the share price, and this was sufficient to grant leave to bring the proceeding under s. 138.3 of the Securities Act. The issue of certification was remitted to the Superior Court.

In Buduchnist Credit Union Limited v. 2321197 Ontario Inc., each party brought contested motions regarding the distribution of proceeds of sale of properties. The question was raised as to whether a party may enforce a judgment debt that arose in breach of a Mareva order, thereby defeating the purpose of the Mareva Order. The Court granted leave to appeal.

In Bogue v Miracle, the Court confirmed that a non-Indian cannot appoint a receiver over a Indian debtor's property on reserve in order to collect a debt. In this case, a lawyer had successfully handled an arbitration on a 25% contingency fee basis, recovering $11 million for their client. The client, who is an "Indian" under the Indian Act, only paid $12,500 of their $2.75 million debt. The Superior Court had appointed a receiver over the debtor's businesses to run them and pay off the debt. The Court set the receivership aside.

Other topics this week included stay pending appeal in a dispute over the removal of estate trustees, and interest and costs under a commercial lease.

Table of Contents

Civil Decisions

Badesha v. Cronos Group Inc., 2022 ONCA 663

Keywords: Securities Law, Secondary Market Misrepresentation, Class Proceedings, Leave to Commence Proceeding, Certification, , Securities Act, R.S.O. 1990, c. S.5, ss. 138.3 - 138.8, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1), Business Corporations Act, R.S.O. 1990, c. B.16, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, 1654776 Ontario Limited v. Stewart, 2013 ONCA 184, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Kaynes v. BP, P.L.C., 2018 ONCA 337, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2016 ONSC 5784

Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2022 ONCA 670

Keywords: Bankruptcy and Insolvency, Receiverships, Priority Dispute, Civil Procedure, Orders, Injunctions, Mareva Injunctions, Leave to Appeal, Stay Pending Appeal, Security for Costs, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-43, s. 193(e), 195, 243(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Rules of Civil Procedure, R. 56.01, 60.12(c), 61.06(1)(b), Bankruptcy and Insolvency General Rules, C.R.C., c. 368, s. 31(1), Trade Capital v. Cook, 2017 ONSC 1857, aff'd 2018 ONCA 27, KingSett Mortgage Corporation v. 30 Roe Investments Corp., 2022 ONCA 479, Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, REF II BHB IV Portofino, LLC. v. Portofino Corporation, 2015 ONCA 906, Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283, Dal Bianco v. Deem Management Services Limited, 2020 ONCA 585, Fanshawe College of Applied Arts and Technology v. Hitachi Ltd., 2022 ONCA 144, Ilic. v. Ducharme Fox LLP, 2022 ONCA 463, Lawrence v. International Brotherhood of Electrical Workers (IBEW) Local 773, 2017 ONCA 321, aff'd, 2018 SCC 11, Heliotrope Investment Corporation v. 1324789 Ontario Inc., 2021 ONCA 23, Chandra v. Canadian Broadcasting Corp., 2016 ONCA 448, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, Re Bearcat Exploration Ltd. (Bankrupt), 2003 ABCA 365, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, Ontario Wealth Management Corporation v. Sica Masonry and General Contracting Ltd., 2014 ONCA 500, Trade Capital Finance Corp. v. Cook, 2017 ONSC 1857, Diversitel Communications Inc. v. Glacier Bay Inc. (2004), 181 O.A.C. 6 (C.A.)

Wu v. Chen , 2022 ONCA 664

Keywords: Contracts, Debtor-Creditor, Promissory Notes, Damages, Interest, Interest Act, R.S.C. 1985, c. I-15, s. 4, Housen v. Nikolaisen, 2002 SCC 33, Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills (1989), 68 O.R. (2d) 165 (H.C.)

Di Santo v. Di Santo Estate, 2022 ONCA 671

Keywords: Wills and Estates, Estate Trustees, , Civil Procedure, Order, Costs Order, Leave to Appeal, Stay Pending Appeal, Rules of Civil Procedure, r. 63.01(1), RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311

Professional Court Reporters Inc. v. Pistachio Financier Corp., 2022 ONCA 669

Keywords: Contracts, Real Property, Commercial Leases, Damages, Interest, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43 s. 127, National Leasing Group Inc. v. Verbanac Law Firm Professional Corporation, 2015 ONSC 145, Boucher et al. v. Public Accountants Council for the Province of Ontario et al., (2004), 71 O.R. (3d) 291 (C.A.)

Bogue v Miracle, 2022 ONCA 672

Keywords: Aboriginal Law, Contracts, Debtor-Creditor, Enforcement, Receiverships, Indian Property on Reserve, , Indian Act, R.S.C. 1985, c. I-5, ss. 87, 88, 89 and 90, Courts of Justice Act, R.S.O. 1990, c. C.43. s. 101, Tyendinaga Mohawk Council v. Brant, 2014 ONCA 565, McDiarmid Lumber Ltd. v. God's Lake First Nation, 2006 SCC 58, Mitchell v. Peguis Indian Band, [1990] 2 S.C.R, Williams v. Canada, [1992] 1 S.C.R. 877, Benedict v. Ohwistha Capital Corporation, 2014 ONCA 80, Tribal Wi-Chi-Way-Win Capital Corp. v. Stevenson et al., 2009 MBCA 72, Bastien Estate v. Canada, 2011 SCC 38

Short Civil Decisions

2748355 Canada Inc. v. Aviva Insurance Company of Canada, 2022 ONCA 667

Keywords: Contracts, Insurance, Coverage, Civil Procedure, Parties, Procedural Fairness

Glenrio Financing Limited v. Rakovac, 2022 ONCA 677

Keywords: Contracts, Real Property, Mortgages, Civil Procedure, Summary Judgment

Downey v. Arey, 2022 ONCA 673

Keywords: Wills and Estates, Contracts, Real Property, Agreements of Purchase and Sale of Land, Fundamental Terms

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CIVIL DECISIONS

Badesha v. Cronos Group Inc. , 2022 ONCA 663

Feldman, Roberts and Favreau JJ.A.

Counsel:

P. Bates, G. Myers and P. Guy, for the appellant

J. Doris, M. O'Brien and A. Matic, for the respondents

Keywords: Securities Law, Secondary Market Misrepresentation, Class Proceedings, Leave to Commence Proceeding, Certification, , Securities Act, R.S.O. 1990, c. S.5, ss. 138.3 - 138.8, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1), Business Corporations Act, R.S.O. 1990, c. B.16, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, 1654776 Ontario Limited v. Stewart, 2013 ONCA 184, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Kaynes v. BP, P.L.C., 2018 ONCA 337, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2016 ONSC 5784

facts:

The appellant was a shareholder in Cronos Group Inc. ("Cronos"). Cronos is a cannabis company in Canada. In March 2019, Cronos entered into two cannabis product exchange transactions with third parties. Cronos attributed revenue to these transactions in the three subsequent quarterly interim financial statements. In November 2019, Cronos entered into a series of similar transactions, and reported revenue from the transactions on the following quarterly interim financial statement. Over the course of several press releases between February and March 2020, Cronos ultimately issued a material change report and reissued the quarterly financial statements disclosing that the revenue reported for 2019 Q1 would be reduced by $2.5 million and for 2019 Q3 by $5.1 million. Cronos also disclosed that it anticipated reporting one or more material weaknesses in its internal controls.

The appellant sought leave to proceed with a proposed class action on behalf of the shareholders of the respondent Cronos alleging that there were misrepresentations in Cronos' 2019 public filings. In order to proceed with the proposed action, the appellant required leave of the court pursuant to s. 138.8 of the Securities Act, R.S.O. 1990, c. S.5, and certification of the action as a class proceeding pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6. The motion judge heard the leave motion and certification motion together. The motion judge characterized the appellant's proposed claim as an action alleging that the defendants made 7,449 separate misrepresentations. He dismissed the motion for leave under the Securities Act ("SA") on the basis that the appellant failed to put forward any evidence that each of the alleged misrepresentations materially contributed to the drop in the price of Cronos's shares at the relevant time. The motion judge also dismissed the motion for certification on the same basis.

issues:

(1) Did the motion judge err in characterizing the claim as 7,449 individual misrepresentations?

(2) Did the motion judge err in finding that the appellant had no reasonable possibility of success at trial?

(3) If the motion judge did err in determining that the appellant had no reasonable chance of success, should the Court certify the class...