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Legal Issues: Four recent cases

By Donald H. Lapowich

When dealing with a former non-management employee, no fiduciary duties are owed to past employers, such as a real estate brokerage.

In an Alberta case, it was ruled that former employees were entitled to compete with former employers subject to a duty of confidentiality and any contractual duty. An interim injunction that prohibited employment with new employers and required the return of confidential information and disclosure of contact with customers of former employers, was deemed too broad.

Realtors are professionals and should not be stopped from practicing their trade or from making a living from that trade.

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In another case, the developer signed a contract to purchase the defendant’s 91 acres of land.  The owner defendant, however, had to subdivide and provide an environmental assessment of the remaining 18 acres – a former battery site.

Prior to the closing date, the developer and owner learned that the cost to remediate the battery site would “take years” and a cost of $500,000 to $1 million.

When the purchase of the 91 acres did not close, the developer sued the owner.

It was held by Alberta Court that before the developer could get a permit, the land use by-law required the environmental assessment.  The cost of remediation was beyond what the developer and owner contemplated.  To perform the sale, the contract would be radically different from what the parties understood and undertook to do.  The sale contract being impossible by the closing date, the contract was “frustrated” and the developer’s claim for damages dismissed.

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In a case that wasn’t about real estate, but may still be of interest to sales reps using social media, a university ruled that students who made negative comments about a professor on Facebook had committed non-academic misconduct. The students were put on probation.

The Alberta court held that the university acted as an agent of the Alberta government, and that the students’ Charter Rights were infringed (not justifiable by Section 1 of the Charter).

The court said that no injury was caused to the professor by comments on Facebook. It also ruled that this was not non-academic misconduct.

In Ontario, the Ontario Court of Appeal recently held that a court has jurisdiction to hear claims of tort/breach of contract unless an action is instituted to “circumvent” the internal procedures of universities or colleges.

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A British Columbia builder agreed to lease bare land from the city and built a building there at its own expense.

When the builder offered to purchase the land from the city, it argued that only the Property Transfer Tax on the land should be paid (its value) excluding the building.

The B.C. Court held that it could not interfere with the legislated assessment of transfer tax.  The administrative scheme that set out the market value procedure had to be followed (land plus building on the land).

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.