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Good evening.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of September 26, 2022.

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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.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

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


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 action?

holding:

Appeal allowed.

reasoning:

(1) Yes

The Court held that, viewed properly, the claim alleged one central misrepresentation, that is, Cronos misrepresented its revenues for the 2019 interim financial statements by treating transactions involving the exchange of cannabis products with a third party as generating revenue. The motion judge made a palpable and overriding error in characterizing the claim as alleging that the respondents made 7,449 separate misrepresentations. S. 138.3(6) of the Securities Act provides the Court with the discretion to treat multiple misrepresentations having common subject matter as a single misrepresentation.

Furthermore, though the appellant sought a declaration that there were multiple misrepresentations, it was clear that the purpose of this was to maximize available damages due to the limit imposed in s. 138.7 of the Securities Act. The Court stated that the declaration sought by the appellant was part of the relief sought, and therefore an issue to be dealt with at trial.

(2) Yes

The Court found that the test for leave to proceed with a misrepresentation claim under s. 138.3 of the Securities Act is that (a) the action is being brought in good faith, and (b) there is a reasonable possibility that the action will be resolved in favour of the plaintiff at trial. The Court noted that no issue was raised regarding good faith. In order to meet the “reasonable possibility” of success branch of the test, the plaintiff must show that there was a misrepresentation and that it was material. This branch is meant to be “more than a speed-bump”, but not meant to be a “mini-trial”: Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, at para. 39.

The motion judge had accepted the evidence of the respondent’s expert witness that the drop in the share price was largely a result of the COVID-19 pandemic. Furthermore, he found that the transactions that led to the restated financial reports were a relatively small portion of Cronos’s business. The Court held that this analysis was tainted by the mischaracterization of the claim as being 7,449 individual misrepresentations. Therefore, a proper analysis on whether the single misrepresentation was material was never conducted. Had this been done, the motion judge ought to have found that misrepresentations were corrected in early 2020 and that there was a corresponding drop in the share price. There had been conflicting evidence regarding whether the share price dropped due to reissuing the financial statements or because of the COVID-19 pandemic. The reasonable possibility threshold was met and the issue should be left for trial.

(3) Yes

The motion judge simply dismissed the certification motion on the ground that the test for leave to proceed on the misrepresentation claim was not met. The requirements for certification under s. 5(1) of the Class Proceedings Act were not addressed. Accordingly, the Court held that it would not be appropriate to decide this issue and that the Ontario Superior Court was in a better position to address this at first instance. The issue of certification was therefore remitted to the Superior Court.


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

Paciocco J.A. (Motion Judge)

Counsel:

B. Grossman and S-A. Wilson, for the moving party (M53722) and the Responding Party (M53725) Buduchnist Credit Union Limited

P.W.G. Carey, C. Lee and D. Magisano, for the Moving Party (M53725) and the Responding Party (M53722) Trade Capital Finance Corp.

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.)

facts:

Trade Capital Finance (“TC”) alleged that it was the victim of fraud perpetrated by Mr. DM. TC traced what it claimed to be the proceeds of the fraud into The Cash House Inc. (“Cash House”), and 2242116 Ontario Inc. (“116 Ontario Inc.”), a family corporation, two entities allegedly controlled at the relevant time by Mr. DM. TC commenced an action against Mr. DM, 116 Ontario Inc., and other defendants but that action remains outstanding.

On May 6, 2015, to address the risk that defendants, including Mr. DM, would dissipate their assets before TC’s claim could be determined, TC obtained a Mareva Order to enjoin Mr. DM from dealing with his assets. TC also provided notice of the Mareva Order to Buduchnist Credit Union (“BCU”), as it held three mortgages over Mr. DM’s properties.

After receiving notice of TC’s Mareva injunction, BCU arranged to use two of the mortgages as security for a post-Mareva debt to BCU that Mr. DM incurred. Mr. DM had written approximately $6 million in cheques from the Cash House to a BCU account. The accounts were credited before the cheques cleared and Mr. DM withdrew the funds. All relevant mortgages went into default and BCU obtained consent judgments against all mortgagors, which totalled more than $9 million.

On January 17, 2019, BCU obtained a Receivership Order over the mortgaged properties, pursuant to s. 243(1) of the Bankruptcy and Insolvency Act (“BIA”), and s. 101 of the Courts of Justice Act (“CJA”). All of the properties have now been sold pursuant to that order. TC objected to the distribution of any proceeds of sale in respect of any of the loans made by BCU after it received notice of the Mareva Order. The parties agreed that some of the proceeds of sale held by the receiver were attributable to the pre-Mareva advances, and those funds have been distributed to BCU pursuant to two consent Interim Distribution Orders. BCU brought a contested distribution motion to resolve what should happen to the remaining net proceeds of sale.

On June 17, 2022, the motion judge released the Final Disposition Order (the “Order”). He held that the post-Mareva mortgage loans to Mr. DM as security were in breach of the Mareva Order. The contested proceeds held by the receiver were ordered to be paid to the Sheriff for the benefit of Mr. DM’s creditors. Finally, the motion judge found BCU to be entitled in its capacity as judgment creditor to execute on its judgment against all available assets of Mr. DM held by the Sheriff. On June 30, 2022, TC sought clarification from the motion judge as to the meaning of “all available assets.” On August 3, 2022, the motion judge stated that the reasons were clear, and it meant that BCU was entitled to enforce its judgment against assets held by the Sheriff for the benefit of creditors. TC and BCU have each filed opposing notices of motion regarding the Order.

TC moved for an extension of time to appeal, leave to appeal, if necessary, and for stay pending appeal. BCU brought a cross-motion for security for costs.

issues:

(1) Does the BIA or the CJA govern TC’s appeal?

(2) Is TC’s appeal out of time, and if so, should relief be granted to TC, or should a declaration be made that TC’s appeal is a nullity that does not stay the Order?

(3) Is TC’s appeal as of right, or is leave required, and if so, should leave be granted?

(4) Should a stay pending appeal be applied?

(5) Should an order be made requiring TC to pay security for costs?

holding:

Motion for leave to appeal and stay pending appeal granted. Cross-motion for security for costs dismissed.

reasoning:

(1) The BIA applies.

The Court held that where a receivership order is made pursuant to both s. 243 of the BIA and s. 101 of the CJA, the more restrictive appeal provisions of BIA govern the rights of appeal. TC argued that the jurisdiction of the Court is governed by the substance of the order made. The Court stated that the test to be applied is whether the order under appeal is one granted in reliance on the jurisdiction of the BIA. It was clear that the Receivership Order in this case purported to direct a receiver, appointed pursuant to the authority of the BIA, in the management of the receivership. In other words, it was clear that the orders “substantively” engaged the receivership. The fact that TC’s purported appeal also addressed orders governing creditors’ rights issues relating to the distribution of the proceeds of sale did not change this. The BIA governs.

(2) No.

The Court held that when clarification of an order is required because the judgment is uncertain on an issue, it is reasonable to treat the date of the clarification as the date from which the appeal period begins. In this case, the Court found that there was no uncertainty with the order in question. Notwithstanding the Court’s ruling that TC’s appeal was out of time, the Court rejected BCU’s request for a declaration that the appeal was a nullity. The implications of non-compliance with a procedural rule should turn on prejudice and broader interests of justice. BCU did not experience material prejudice because TC filed late.

The Court noted that granting the motion for an extension to file TC’s appeal depended upon whether justice required it. The Court stated that the relevant considerations were: 1) whether TCF formed an intention to appeal within the appeal period; 2) the length of, and explanation for delay; 3) prejudice to BCU; and 4) the merits of the appeal.  The Court was satisfied that TC formed an intention to appeal within the relevant appeal period, the delay was short and did not materially prejudice BCU and the proposed appeal had merit.  The Court held it was in the interest of justice to grant an extension in this case.

(3) Leave was required and was granted.

TC argued that it was entitled to appeal as of right, pursuant to s. 193(c) of the BIA, which permits an appeal “if the property involved in the appeal exceeds in value ten thousand dollars”. The court must evaluate the effect of the order to be appealed before determining whether the order “directly involves” property exceeding $10,000. The Court determined that the Order under appeal will not remove property from the proceeds held by the receiver, or in any way diminish or jeopardize the value of property held by the receiver, nor did the motion judge adjudicate the value of the mortgaged property or its proceeds in the orders that were being appealed. Instead, those orders related to the manner in which proceeds of sale of an agreed upon amount would ultimately be distributed. The Court held that TC did not satisfy s. 193(c). Therefore, TC required leave to appeal pursuant to s. 193(e).

The Court granted TC leave to appeal, notwithstanding that it failed to seek leave until filing its Supplementary Notice of Appeal almost two months after the Final Distribution Order.

The Court noted that in considering to grant leave, the focus is on whether the proposed appeal: 1) raised an issue of general importance to the practice in bankruptcy/insolvency; 2) was prima facie meritorious; and 3) would unduly hinder the progress of the proceedings.

First, the parties knew of no authority addressing whether a party may enforce a judgment debt, thereby defeating the purpose of a Mareva Order, where that judgment debt arises from a transaction undertaken in breach of a Mareva Order. The Court was satisfied that this was an issue of general importance to the practice in bankruptcy/insolvency. For similar reasons, as well as the fact that BCU and its claims are arguably not legitimate, rendering it unable to enforce a judgment against assets otherwise subject to a Mareva Order, the Court held that TCF’s appeal was prima facie meritorious. Lastly, there was no evidence that granting leave would unduly hinder the progress of the proceeding.

(4) Yes

The Court held that the appeal had merit and lifting the stay would render the appeal moot. The balance of prejudice favoured leaving the stay in force.

(5) No.

Rule 61.06(1)(b) authorizes the Court to make an order for security for costs that could be made against an appellant. However, a respondent in an appeal, such as BCU, may only rely upon Rule 61.06(1)(b) where it was not the applicant below, that is, the applicant in the proceeding where the Order was made that is the subject of the appeal. The Court explained that this limitation is intended to prevent imposing security for costs orders on impecunious parties who were forced into court. Although TC became a party because it took the initiative of objecting to the requested distribution order, it was responding to proceedings initiated by BCU. The Court held that a security for costs order against TC would not be fitting, nor in the interests of justice.


Wu v. Chen , 2022 ONCA 664

Zarnett, Coroza and Favreau JJ.A

Counsel:

A. Ostrom, for the appellant

J. Rosenstein, for the respondent

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.)

facts:

After the breakdown of their equal partnership in a business, the appellant sought recovery from the respondents of debts he claimed were owed to him. The appellant’s debt claim was on a series of promissory notes, some signed by respondent Q.C., and some signed by respondent B.C. The respondents denied the notes were authentic and alleged they were forgeries. They also denied that the appellant had advanced the funds the note indebtedness was said to represent. The respondents claimed to have made their own financial contributions to the business which negated or reduced the appellant’s claimed over-contribution, which the appellant contested.

The trial judge found the appellant to be a credible witness. She found the evidence of the respondent Q.C. to be neither reliable nor credible, and that the evidence of respondent B.C. had to be approached “with caution”, however, she was satisfied that he made financial contributions to the business that had to be deducted from the appellant’s claim against him. She accepted that the promissory notes were genuine and had been signed by the respondents, represented funds the appellant had advanced, and were valid debts of the respondents. The appellant argued these findings were not open to the trial judge; that having accepted the appellant’s evidence and found the notes to be genuine, she ought to have rejected the respondents’ evidence, including that of contributions.

The appellant also argued that the trial judge erred in failing to award interest on all of the promissory notes at the rate of 18 percent per year from their dates. Some of the promissory notes provided for interest at 1.5 percent per month. They did not express the interest as an annual rate. For those, the trial judge held that the Interest Act, R.S.C. 1985, c. I-15, limited the amount payable. The other promissory notes were silent as to interest.

Section 4 of the Interest Act provides that (except for mortgages) whenever interest is made payable by the terms of a written contract, and no statement of the equivalent yearly rate is stated in the contract, no greater rate is payable than 5 percent per year. The word “contract” in s. 4 of the Interest Act includes a promissory note: Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills (1989), 68 O.R. (2d) 165 (H.C.), at p. 174, aff’d 3 O.R. (3d) 123 (C.A.). As a result, the trial judge awarded interest on these notes at the rate of 5 percent from their dates to the date that the appellant demanded payment. From that date, she awarded pre-judgment interest at 1.5 percent per month.

issues:

(1) Did the trial judge err in her findings by accepting the respondent’s evidence that there were financial contributions made by them in the business?

(2) Did the trial judge err in failing to award interest on all of the promissory notes at the rate of 18 percent per year from their dates?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court held that the finding of the trial judge that there were contributions by respondent B.C. was open to her, and was entitled to deference from the Court. Absent a palpable and overriding error, the Court cannot interfere with them: Housen v. Nikolaisen, 2002 SCC 33. The trial judge conducted an assiduous review of the evidence. It was open to her to accept the evidence of any witness in whole or in part. She gave reasons for accepting the evidence of B.C. that he had made contributions, noting that it found some support in customs and shipping documents, and invoices. She considered difficulties with the respondents’ evidence but also noted there were difficulties with the appellant’s accounting as well.

(2) No.

The Court held that the language of s. 4 of the Interest Act was directly applicable to the foundation of the debt on which the appellant claimed and on which the trial judge awarded judgment, namely, the promissory notes. The Court, however, noted that arguably, the trial judge should have limited interest after demand on these notes to no more than 5 percent per year, but any error in this regard ran in the appellant’s favour.

The appellant argued the trial judge should have awarded interest on these notes at 18 percent per year, to give effect to the appellant’s evidence that 1.5 percent per month was a customary rate in the region of China from which the parties originate.  The Court rejected this argument, stating that had the parties expressly incorporated the rate of 1.5 percent per month into these notes, and interest on them would have been limited to 5 percent per year by s. 4 of the Interest Act. A term may sometimes be implied into a written agreement by custom, but when that occurs, it is still a term of the written agreement. The Court was not satisfied that the trial judge found the customary rate was an implied term of the notes, but even if it were, it would be given the same effect as if it had been an express term in the written agreement.


Di Santo v. Di Santo Estate , 2022 ONCA 671

Gillese, Huscroft and Sossin JJ.A.

Counsel:

M. Hull, D. Lok Yin So and J. Lo Faso, for the moving parties (M53584) / responding parties (M53617 & M53638) J. D. S., C. D. S., S. M., T. D. P., and OJCR Construction Ltd. (“OJCR”)

M.Rendely and N. Hojjati, for the responding party (M53584) / moving party (M53617 & M53638) O. D. S.

K.A. Charlebois, for CIBC Trust Corporation, in its capacity as Estate Trustee During Litigation of the Estate of V. D. S., deceased, and in its capacity as Trustee During Litigation of the V. D. S. 2003 Family Trust

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

facts:

The application judge ordered the removal of J. D. S., C. D. S., S. M. and T. D. P. as estate trustees for the Estate of V. D. S. (the “Order”). Further, J. D. S., S. M., and T. D. P. were removed as trustees of the V. D. S. 2003 Family Trust (“Family Trust”). CIBC Trust Corporation was ordered to be the estate trustee during litigation and the replacement trustee of the Family Trust. The application judge also ordered that certain interim funding payments be made to the respondent, O. D. S. (the “Respondent”), with such payments to be made from OJCR Construction Ltd. (“OJCR”). The application judge awarded the Respondent costs of the application of $80,000 (the “Costs Order”).

J.D. S., C. D. S., S. M. and T. D. P., and OJCR (the “Appellants”) have brought an appeal to be heard on December 7, 2022, appealing the provisions of the Order relating to the removal and replacement of the trustees. In the interim, the parties brought three motions before the Court.

In the first motion, the Appellants sought a stay of the provisions in the Order that removed the named trustees and replaced them with CIBC Trust, pending the disposition of the appeal (M53584). In the second motion, the Respondent sought an order lifting the stay of the Costs Order (M53617). In the third motion, the Respondent sought an order quashing or staying the appeal (M53638).

issues:

(1) Should the Appellant’s motion for a stay of the provisions in the Order that removed the named trustees and replaced them with CIBC Trust pending appeal be granted?

(2) Should the second motion, brought by the Respondents, to lift the stay of the Costs Order be granted?

(3) Should the third motion, brought by the Respondents, to quash or stay the appeal be granted?

holding:

Appellants’ motion granted. Respondents’ motions dismissed.

reasoning:

(1) Yes.

In RJR-MacDonald Inc. v. Canada (Attorney General), the Supreme Court held that, on a motion for a stay pending appeal, the court must determine whether: (1) there is a serious issue to be determined on the appeal; (2) the moving party will suffer irreparable harm if the stay is not granted; and (3) the balance of convenience favours a stay.

The Court held that all three factors militated in favour of ordering the requested stay. On the first factor, the Court noted that removing a trustee whom a deceased has specifically chosen is a serious matter and is a serious issue to be determined on appeal.  On the second factor, if the stay is not granted and the removal and replacement orders are overturned on appeal, the Estate, the Family Trust (the “Entities”), and their underlying businesses will suffer enormous business disruptions and financial upheaval. The ensuing harm cannot be quantified in monetary terms nor cured by damages. The stay is necessary to avoid the potential irreparable harm to the administration, and financial health, of the Entities. On the third factor, the Court noted that the appeal to be heard is in a few weeks and that the Appellants have (a) followed and continue to follow the interim support payments required by the Order and (b) are moving promptly to comply with other aspects of the Order, including disclosure and the passing of accounts.  On this basis, the Court held that there would be no prejudice to the Respondent if the stay was ordered. The balance of convenience favoured granting the stay pending the disposition of the appeal.

(2) No.

The Costs Order was automatically stayed by the filing of the appeal: Rules of Civil Procedure, r. 63.01(1). The Court saw no basis for lifting that stay.

(3) No.

The Respondents’ motion to quash or stay the appeal was based on two grounds. First, it was submitted that the appeal must be quashed for lack of jurisdiction because the appeal route for the interlocutory parts of the Order was to the Divisional Court (and, in some instances, leave of that court is required). Second, the Respondent said that the Appellants “flagrant[ly]” disregarded the Order and their “wilful breach[es]” disentitle them to proceed with their appeal.

In responding to the first ground, the Court held that the Order relating to the removal and replacement of trustees are final in nature and, therefore, the Court had jurisdiction to hear them.

In responding to the second ground, the Court held that the Appellants had made all payments of money and support required by the Order. Further, they acted reasonably and promptly in respect of disclosure and passing of accounts. In the Court’s view, there was nothing in the Appellants’ conduct that disentitled them from proceeding with their appeal.  Thus, the Respondents’ motion to quash or stay the appeal was dismissed.


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

Gillese, Huscroft and Sossin JJ.A.

Counsel:

J. Sacks, for the appellant

P. Bakos, for the respondents

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.)

facts:

The appellant entered into a sub-tenancy agreement with the respondent, Pistachio Financier Corp. (“Pistachio”). The respondent, Real Crowd Capital Inc. o/a R2 (“RCCI”), indemnified Pistachio’s obligations pursuant to the Sublease. Pistachio defaulted after failing to pay rent, which gave the appellant the option to terminate the Sublease. The appellant gave notice of termination and commenced an action against Pistachio and RCCI seeking payment of amounts owed under the Sublease and damages of $750,000, and pre- and post-judgment interest at the lesser of prime plus 5% per annum and the maximum rate permitted by applicable law, in accordance with the terms of the head lease. Under the terms of the Sublease, those matters were expressly governed by the head lease. The respondents commenced their own action claiming unlawful termination of the Sublease. The appellant successfully moved for summary judgment and was awarded damages of $91,952.58, pre-judgment and post-judgment interest in accordance with the Courts of Justice Act and costs on a partial indemnity basis. The damages award did not include the appellant’s claim for loss of profit, the interest awarded was not the contractual rate of interest, and the costs awarded were not the contractual scale of costs.

issues:

(1) Did the motion judge err in finding there was no evidence to support the appellant’s claim for loss of profit?

(2) Did the motion judge err by not enforcing the interest rate set out in the head lease with respect to the post-judgment interest?

(3) Did the motion judge err by awarding costs on a partial indemnity scale despite the higher costs scale set out in the head lease?

holding:

Appeal allowed in part.

reasoning:

(1) No.

The Court held that the motion judge carefully considered the matter and invited the appellant to address the calculation of damages for lost profits. In essence, the appellant relied on the difference between the rent RCCI owed under the lease and the amount it charged Pistachio as proof of loss of profits. The Court held that the motion judge was entitled to conclude that the appellant failed to establish that this disparity amounted to a loss of profits.

(2) Yes.

The Court held that the motion judge erred in declining to award post-judgment interest at the rate of interest set out in the head lease, namely, prime plus 5%. In the absence of exceptional circumstances, the appellant was entitled to interest at the rate set out in the head lease. The Court found that the motion judge provided no reasons for her decision not to give effect to the parties’ agreement. Accordingly, the appellant was entitled to post-judgment interest at the rate of prime plus 5% per annum.

(3) Yes.

The Court noted that the motion judge found that the appellant’s costs were reasonable but awarded them only on a partial indemnity basis. The Court further noted that the motion judge gave no reason for not enforcing the terms of the head lease, which clearly entitled the appellant to costs on a higher scale. Thus, the Court held that the appellant was entitled to costs of the appellant’s summary judgment motion and dismissal of the respondents’ action, which the Court fixed at $75,279, all inclusive.


Bogue v Miracle, 2022 ONCA 672

Doherty, Tulloch and Miller JJ.A

Counsel:

I.J. Collins, for the appellant

G. Roberts, for the respondent

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

facts:

The appeal originated as a dispute between father and son. Both are Mohawks of the Bay of Quinte and thus qualify as Indians under the Indian Act. The initial dispute focused on the right to profits and ownership over an on-reserve business, Smokin’ Joes. The Superior Court of Justice ordered that the issue go to arbitration.

The appellant father retained the respondent to act for him on the arbitration on a contingency fee basis. The respondent is not an Indian for the purposes of the Indian Act. The contingency agreement stipulated that the respondent would receive 25 percent of any amount awarded in the arbitration. The arbitrator ultimately awarded the appellant over $11 million, as well as the right to take over Smokin’ Joes from his son.

The appellant has only paid the respondent $12,500. The Superior Court appointed a receiver and manager over the appellant’s property on October 11, 2019.

The Ontario Court of Appeal heard the appeal and returned the matter to the application judge to determine whether appointing a receiver contravened s. 89 of the Indian Act. The application judge held that the appointment of the receiver constituted an exception to s. 89. Hence, the receiver had the power to operate two of the appellant’s businesses on-reserve. The receiver would collect the profits of the appellant’s businesses until the debt to the respondent and the receiver fees and disbursements were satisfied.

The appellant appealed the order of the application judge on the ground that the order contravened s. 89 of the Indian Act, which prohibits the enforcement by anyone who is not an “Indian or a band” against the assets of an Indian situated on a reserve. The appellant argued that since the respondent is not an Indian for the purposes of the Indian Act, this section prevented the receiver from seizing the proceeds of the appellant’s businesses. The Court determined that this was a threshold issue which needed to be decided before an appeal could be heard. The Court directed that the matter be returned to the application judge. On November 15, 2021, the application judge entered the order under appeal, which held that the appointment of the receiver constituted an exception to s. 89 of the Indian Act.

The application judge reviewed s. 89 of the Indian Act and drew, in part, upon McDiarmid Lumber Ltd. v. God’s Lake First Nation, 2006 SCC 58. McDiarmid Lumber addressed the issue of whether the immunity offered under ss. 89 and 90(1) of the Indian Act extends to funds in an off-reserve account pursuant to a Comprehensive Funding Agreement between a band and the federal government, where those funds are to be spent exclusively for certain designated purposes. The application judge was satisfied this “commercial mainstream” exception to s. 89 applied in the circumstances. Since the sales of Smokin’ Joes and the Canna Kure marijuana dispensary (collectively, the “appellant’s businesses”) were in the commercial mainstream and amounted to normal business transactions, they were not protected by s. 89 from being placed into receivership.

issues:

(1) Are the actions of the Receiver covered by s. 89 of the Indian Act?

(2) Is there a “commercial mainstream” exception to s. 89 of the Indian Act?

(3) Are the appellant’s on-reserve businesses “situated on reserve”?

(4) Did the appellant waive his s. 89 rights under the Indian Act?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The Court held that while s. 89 does not expressly refer to receiverships, it does reference seizures and restraints of property, which captured the substance of the current order under appeal. The Superior Court had appointed a receiver to take control of the appellant’s businesses located on reserve. Furthermore, the receiver was to recoup the proceeds from the operation of these businesses for the benefit of the respondent. The Court concluded that overall, the appointment of a receiver was closely akin to an order for the seizure or restraint of the debtor’s property which brought it into the scope of s. 89.

(2) No.

The application judge interpreted McDiarmid Lumber to find that s. 89 did not extend to “contractual arrangements in the commercial mainstream that amount to normal business transactions”. The appellant’s business was therefore open to the receiver to take control of and recoup profits from. However, the Court held that the application judge committed a reversible error by inaccurately relying on a summary of the jurisprudence on s. 89.  While the Supreme Court of Canada has recognized the existence of a “commercial mainstream” exception in relation to s. 90(1) of the Indian Act, this exception has not been extended to s. 89.

The Court noted that the application judge misinterpreted McDiarmid Lumber to stand for a broad application of the “commercial mainstream” exception. The Court clarified that the analysis in McDiarmid Lumber is bifurcated into two parts – one for s. 89, the other for s. 90. When read in context, McDiarmid Lumber refers to s. 90(1) of the Indian Act and not s. 89. Moreover, the Supreme Court of Canada reaffirmed that the “commercial mainstream” exception does not apply to s. 89 in Bastien Estate v. Canada. Cromwell J. noted that in Mitchell v. Peguis Indian Band, La Forest J. “was clear that, even if an Indian acquired an asset through a purely commercial business agreement with a private concern, the [ss. 87 and 89] exemption[s] would nonetheless apply if the asset was situated on a reserve”.

The Court concluded that, apart from the case law, nothing in the language of s. 89 offered support for a broad “commercial mainstream” exception. S. 89 draws distinctions between: (1) the property of an Indian or band, and the property of others; (2) property located on, and off, reserve; and (3) execution-type measures taken by Indians or Indian bands, and those taken by everyone else. Foreclosing commercial property located on reserve from s. 89 would undermine both the text and purpose of the provision.

(3) Yes.

The Court held that the locations of the appellant’s businesses were “objectively easy to determine”. The appellant’s businesses were firmly located on the Tyendinaga Mohawk Territory and owned by the appellant, who is an Indian within the meaning of the Indian Act. As such, neither property is “subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a band”. Thus, the Court concluded that the respondent’s receiver, acting on behalf of a creditor who is not an Indian for the purposes of the Indian Act, cannot recoup profits from the appellant’s on-reserve businesses.

(4) No.

The respondent cited Tribal Wi-Chi-Way-Win Capital Corp. v. Stevenson et al.,  a case where the debtor had signed a promissory note that included an express provision stating he would not exercise his rights under the Indian Act. The Manitoba Court of Appeal found that this constituted a valid waiver and as such, the debtor could not prevent the receiver-manager from seizing his on-reserve assets.  The respondent submitted that, based on Tribal, it is possible to implicitly waive one’s rights under the Indian Act. The Court rejected this argument could not see how the appellant’s actions – written or otherwise – implicitly amounted to a waiver of s. 89 in this case.


SHORT CIVIL DECISIONS

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

van Rensburg, Pardu and Copeland JJ.A

Counsel:

S. Carlstrom and G. Poirier, for the appellants

D. Ong, for the respondent

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

Glenrio Financing Limited v. Rakovac, 2022 ONCA 677

Lauwers, Roberts and Miller JJ.A

Counsel:

D. Richter, for the appellants, M. R., 1255717 Ontario Ltd., 1255705 Ontario Ltd., and 1290976 Ontario Ltd.

C. Yamashita, for the respondents

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

Downey v. Arey, 2022 ONCA 673

Feldman, Hoy and Lauwers JJ.A.

Counsel:

P.H. Griffin and L.M. Taylor, for the appellants

R.B. Cohen, for the respondent

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


The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of September 19, 2022.

Continue Reading

In Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., the Court dismissed an appeal of an application judge’s finding that a Notice of Termination of a commercial lease pursuant to a demolition clause was not effective to terminate the lease because the landlord had not yet obtained a demolition permit prior to issuing its Notice of Termination. The Court rejected the landlord’s argument that the commencement of asbestos abatement prior to obtaining a demolition permit constituted “the commencement of the demolition process” within the meaning of the lease. Justice Roberts dissented, determining that the application judge’s interpretation of the lease as patently unreasonable.

Other topics this week included damages for wrongful dismissal and whether a costs award could include disbursements incurred for mandatory mediation, and security for costs.

Have a nice weekend,

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., 2022 ONCA 658

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, , Demolition Clauses, Building Code Act, 1992, S.O. 1992, c. 23, O. Reg. 278/05 under the Ontario Health and Safety Act, R.S.O. 1990, c. O.1, s. 6(1), Goodyear Canada Inc. v. Burnhamthorpe Square Inc. (1992), 41 O.R. (3d) 321, 166 D.L.R. (4th) 625 (C.A.), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd., [1997] 2 W.L.R. 945, [1997] A.C. 749 (H.L.), Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, Arnold v. 2261324 Manitoba Ltd. (1994), 97 Man. R. (2d) 216, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37

Pavlov v. The New Zealand and Australian Lamb Company Limited , 2022 ONCA 655

Keywords: Employment Law, Wrongful Dismissal, Damages, Civil Procedure, Costs, Disbursements, Mandatory Mediation, Rules of Civil Procedure, Rule 24.1, Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), Paquette v. TeraGo Networks Inc., 2015 ONSC 4189, Saltsov v. Rolnick, 2010 ONSC 6645

Short Civil Decisions

Ducharme Estate v. Thibodeau , 2022 ONCA 661

Keywords: Civil Procedure, Security for Costs, Frivolous and Vexatious, Rules of Civil Procedure, R. 61.06(1)(a), Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine, 2019 ONCA 576


CIVIL DECISIONS

Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., 2022 ONCA 658

Feldman, Roberts and Favreau JJ.A

Counsel:

S. Zucker and N. J. Tourgis, for the appellant

B. M. Jenkins, for the respondent

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, , Demolition Clauses, Building Code Act, 1992, S.O. 1992, c. 23, O. Reg. 278/05 under the Ontario Health and Safety Act, R.S.O. 1990, c. O.1, s. 6(1), Goodyear Canada Inc. v. Burnhamthorpe Square Inc. (1992), 41 O.R. (3d) 321, 166 D.L.R. (4th) 625 (C.A.), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd., [1997] 2 W.L.R. 945, [1997] A.C. 749 (H.L.), Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, Arnold v. 2261324 Manitoba Ltd. (1994), 97 Man. R. (2d) 216, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37

facts:

In August 2015, the respondent tenant entered into an amending agreement that extended their five-year-term lease for a further seven years, expiring on January 31, 2023. The lease was subsequently assigned by the owner to the appellant landlord when it purchased the building. The appellant’s intention in purchasing the building was to tear it down and develop the property as a condominium complex. By October 2019 there were 20 tenants remaining in the building and they were all given 6 months’ written notice to vacate on October 31, 2019 through a Notice of Termination.

On or around April 24, 2020, the respondent learned that the appellant had not obtained any permits to demolish or to substantially renovate the building. While no permit was required to conduct asbestos abatement, York Demolition Corp. had received authorizations necessary to commence the abatement removals. The respondent brought an application for a declaration that the lease had not been terminated by the Notice of Termination because the appellant had not obtained a demolition permit.  The landlord brought a cross-application that the lease was terminated by the tenant’s breaches of lease before April 30, 2020, by transferring the lease without consent to a corporation and breaching use restrictions. In furtherance of the cross-application, the landlord sent out notices of default giving the tenant a time limit to rectify the breaches, with the following covering letter:

As a result of the position you have taken with our application, we are delivering two notices of default. These notices of default are without prejudice to our position that the lease has been terminated as a result of the Notice of Termination dated October 31, 2019.

The issue for the application judge was whether the asbestos abatement, which did not require a permit or authorization, constituted the ‘commencement of the demolition process’. The application judge considered s. 8(2) of the Building Code Act which provided that the chief building official in a municipality shall issue a demolition permit unless the demolition would contravene the Act, the building code or “any other applicable law”. Section 6(1) of O. Reg. 278/05 under the Ontario Health and Safety Act, R.S.O. 1990, c. O.1 (“OHSA”) provides: [T]he demolition of all or part of machinery, equipment, a building, aircraft, locomotive, railway car, vehicle or ship shall be carried out or continued only when any asbestos containing material that may be disturbed during the work has been removed to the extent practicable.

The application judge found that because s. 6 of the OHSA regulation was not one of the listed applicable laws in s. 1.4.1.3(1) of O. Reg. 332/12, non-compliance with that regulation does not prevent the issuance of a demolition permit. The application judge also rejected the appellant’s argument that asbestos abatement constituted “the commencement of the demolition process” within the meaning of s. 15.05 [Termination on Demolition clause] of the lease. In interpreting s. 15.05 of the lease, the application judge found that by applying a common-sense, practical approach as required by Sattva, the correct conclusion was that having chosen to name “demolition” in the Notice of Termination as the reason for requiring vacant possession, the landlord was required to obtain a demolition permit in order to comply with the notice. He added that to hold otherwise would constitute a rewriting of the contract. As a result, the application judge concluded that the Notice of Termination was not effective and the lease therefore continued as valid and subsisting after April 30, 2020.

The application judge turned to the landlord’s cross-application and found that the landlord’s subsequent notices of termination also did not have the effect of terminating the lease.  He found that although subsequent notices were delivered by the landlord under a cover letter stating ‘without prejudice’ to its position that the lease had been terminated by the Notice of Termination under the demolition clause, they were nevertheless intended to operate with prejudice, and therefore had the effect of recognizing that the lease remained in effect after April 30, 2020 and constituted a waiver of the Notice of Termination under the demolition clause.

issues:
  1. Did the application judge err in fact or in law by finding that the Notice of Termination did not comply with s. 15.05 of the lease and was therefore ineffective to terminate the lease as of April 30, 2020?
holding:

Appeal dismissed.

reasoning:
  1. No.

The Court found that the sole issue was whether the landlord had complied with the second sentence of s. 15.05 which required the landlord to obtain “all requisite permits and authorizations for the commencement of such redevelopment, reconstruction or demolition”. The application judge took three approaches: (1) he determined that compliance with the asbestos abatement requirement of s. 6 of the OSHA regulation was not required before a demolition permit could be obtained (2) he found that asbestos abatement was not “the commencement” of the demolition process within the meaning of s. 15.05 and (3) he found that because the landlord had relied on demolition as opposed to redevelopment as the reason for requiring vacant possession in the Notice of Termination, it therefore had to have a demolition permit in order to comply.

The Court found that the first approach was not on appeal by the landlord thus, on the record before the Court, the landlord was not prevented from obtaining the demolition permit by April 30, 2020, had it sought to do so. The Court found that on second approach in the application judge’s interpretation of “the commencement”, attracted a standard of review being the deferential standard applied to questions of mixed fact and law. In any event, The Court agreed with the application judge’s conclusion that asbestos abatement is not the commencement of demolition. The word commencement must be read in the context of the sentence, which is the obtaining of permits to allow demolition to commence. In that context, commencement is the first step in the demolition process that is permitted to occur because the requisite permit has been obtained. On the third approach, the Court found that the application judge made no error in giving effect to the words used in the Notice of Termination including the word demolition. While the tenant was well aware that the project was being redeveloped before the end of its lease term, the tenant was entitled to rely on the words of the notice in conjunction with the protection contained in s. 15.05 of the lease that a permit was required to be in place before the notice could be effective.

The Court summarized that the correct approach to interpreting a notice to vacate a commercial lease is fairness rather than technicality. That approach requires the court to consider and assess what the respondent would have understood about the intent and effect of the Notice of Termination in conjunction with s. 15.05 of the lease. The Court found that while the respondent knew that redevelopment including demolition of the building was imminent, it also knew that no demolition permit had yet been obtained. It was not unfair to require the appellant to comply with its obligations under the demolition clause of the lease so that the respondent would know that vacant possession was actually required by the date in the notice.

Dissenting (L.B. Roberts J.A.):

Justice Roberts did not agree that the appellant’s Notice of Termination under s. 15.05 of the lease was ineffective. In her view, the application judge erred in his interpretation of the lease as applied to the factual circumstances of this case by holding that demolition of the building, including the premises leased by the respondent (“the building”), did not commence with the asbestos abatement and by failing to determine when demolition did commence.

In her view, the application judge’s finding that the asbestos abatement was not the commencement of the demolition process was patently unreasonable. This finding had no evidentiary foundation and contradicted the unchallenged evidence that he did not reject, but appears to have accepted – that the asbestos abatement was the first stage of the demolition process.


Pavlov v. The New Zealand and Australian Lamb Company Limited , 2022 ONCA 655

Gillese, Huscroft, Sossin J.A

Counsel:

McGinnis and S. Ramsay, for the Appellant

Fisher and K. Sebag, for the Respondent

Keywords:Employment Law, Wrongful Dismissal, Damages, Civil Procedure, Costs, Disbursements, Mandatory Mediation, Rules of Civil Procedure, Rule 24.1, Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), Paquette v. TeraGo Networks Inc., 2015 ONSC 4189, Saltsov v. Rolnick, 2010 ONSC 6645

facts:

The Respondent was the Appellant’s Director of Marketing Communications and Public Relations. The Respondent was terminated without cause on May 28, 2020. At the time, the Respondent was 47 years old and had been employed by the Appellant for three years. The Respondent had earned $131,943 per year plus benefits, and was eligible to receive an annual bonus of 15% of his base salary. He had received such bonus in his previous years of employment. Following the Respondent’s termination, he applied for over 100 jobs and retained a private career coach. Despite his efforts, the Respondent remained unemployed at the time of trial.

At trial, the judge, based on the Respondent’s age, position, duties, and level of renumeration, and prevailing economic uncertainties, awarded the Respondent damages equal to ten months’ notice. The trial judge also concluded that the Respondent was entitled to amounts reflecting the value of the bonus and benefits he would have received during the notice period. The trial judge awarded the Respondent $50,000 plus costs and disbursements of $4,560.28. The Appellant appealed the trial judge’s damage award, as well as the trial judge’s inclusion of disbursements incurred at mandatory mediation in the costs award.

issues:
  1. Did the trial judge err in applying the length of notice factors in accordance with Bardal?
  2. Did the trial judge err in including the pro-rata entitlement to the bonus?
  3. Did the trial judge err in awarding disbursements for the costs incurred by the respondent in retaining a mediator?
holding:

Appeal dismissed.

reasoning:
  1. and 2. No.

The Court held that there was no merit to the appellant’s arguments on appeal. The aspects of the trial judge’s decision challenged by the Appellant were all findings of mixed fact and law entitled to deference. The Appellant had raised no palpable or overriding error (or error of any kind) in relation to the trial judge’s analysis or conclusions.

3. No.

The Appellant challenged a portion of the $4,560.28 in disbursements awarded that related to the cost of a mediator to conduct a mandatory mediation required under r. 24.1 of the Rules. The Appellant argued that because the parties agreed to retain a mediator with experience in labour and employment disputes who was not a member of the approved mediation roster, any additional costs incurred were voluntary and thus not properly included in the costs award.

The Appellant relied on Saltsov v. Rolnick, where it was held that voluntary mediation was not properly part of a costs award. The Court rejected this submission, and agreed with the Respondent that Saltsov has no application to the context of mandatory mediation. Accordingly, it was within the discretion of the trial judge to approve the Respondent’s disbursements in relation to that mandatory mediation.


SHORT CIVIL DECISIONS

Ducharme Estate v. Thibodeau, 2022 ONCA 661

Paciocco J.A. (Motion Judge)

Counsel:

O.D. Thomas, for the moving party

Rastorp and C. Dookie, for the responding party

Keywords: Civil Procedure, Security for Costs, Frivolous and Vexatious, Rules of Civil Procedure, R. 61.06(1)(a), Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine, 2019 ONCA 576


The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of September 12, 2022.

Continue Reading

In Optiva Inc. v. Tbaytel, the Court dismissed the appeal from an arbitrator’s decision granting summary judgment. The arbitrator had the authority to proceed by summary judgment motion, as the arbitration agreement gave the arbitrator broad powers to determine the procedure to be employed.

In 2174372 Ontario Ltd. v. Dharamshi, a builder refused to release purchasers from their obligation to purchase after they were having difficulty obtaining purchase financing. However, by the time the closing date had come around, the builder had not completed construction, while the purchasers had come up with financing. The builder asked for an extension and was refused, and was unable to close. The purchasers were successful in obtaining a return of their deposit in the court below, and the builder’s appeal was dismissed by the Court.

Other topics this week included the interpretation of a Will, a property dispute involving ouster and occupation rent and leave to appeal under s.193(e) of the Bankruptcy and Insolvency Act.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Tsitsos v. Poka, 2022 ONCA 647

Keywords: Real Property, Joint Tenancies, Ouster, Occupation Rent, Civil Procedure, Affidavit Evidence, Translations, Fresh Evidence, Kerr v. Baranow framework: 2011 SCC 10, Palmer v. The Queen, [1980] 1 SCR 759, R. v. Araya, 2015 SCC 11, Griffiths v. Zambosco (2001), 54 O.R. (3d) 397 (C.A.)

Optiva Inc. v. Tbaytel, 2022 ONCA 646

Keywords: Contracts, Arbitration, Motion for Summary Judgment, Arbitration Act, 1991, S.O. 1991, c. 17, ss. 2, ss. 3, ss. 17, ss. 26, ss. 45 and ss. 46, Rules of Civil Procedure, R.R.O. 1990, s. 1.03, Reg. 194., Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, ss. 1(1) and ss. 15(1), Optiva Inc. v. Tbaytel, 2021 ONSC 2929, Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, 97 O.R. (3d) 161, Popack v. Lipszyc, 2016 ONCA 135, 129 O.R. (3d) 321, Desputeaux v. Éditions Chouette (1987) Inc., 2003 SCC 17, Travis Coal Restructured Holdings LLC v. Essar Global Fund Ltd., [2014] EWHC 2510 (Comm), Hryniak v. Mauldin, 2014 SCC 7, Alectra Utilities Corp. v. Solar Power Network Inc., 2019 ONCA 254, Ticketnet Corp. v. Air Canada, [1993] O.J. No. 289 (Gen. Div.), Mines Ltd. v. Ontario Hydro (2001), 56 O.R. (3d) 181, Ottawa (City) v. Coliseum Inc., 2016 ONCA 363.

VanSickle Estate v. VanSickle, 2022 ONCA 643

Keywords: Wills and Estates, Wills, Interpretation, Succession Law Reform Act, R.S.O. 1990, c. S.26, Trezzi v. Trezzi, 2019 ONCA 978

Conforti Holdings Limited (Re), 2022 ONCA 651

Keywords: Bankruptcy and Insolvency, Claims Provable in Bankruptcy, Valuation of Claims, Proposal Trustees, Civil Procedure, Jurisdiction, Multiplicity of Proceedings, Leave to Appeal, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s.135, s.193(e), Ontario Business Corporations Act, R.S.O. 1990, C. B.16, Business Development Bank of Canada v. Pine Tree Resorts Inc. et al, 2013 ONCA 282, Re Nortel Networks Corporation et al, 2015 ONSC 1354, Kitchener Frame Limited (Re), 2012 ONSC 234

2174372 Ontario Ltd. v. Dharamshi, 2022 ONCA 648

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Repudiation

Short Civil Decisions

Barker v. Barker, 2022 ONCA 652

Keywords: Appeal, Damages, Quantum of Costs, Reasonableness, Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, Waxman v. Leibow, 2004 CanLII 31901 (Ont. C.A.)


CIVIL DECISIONS

Tsitsos v Poka, 2022 ONCA 647

[Tulloch, Nordheimer and Harvison Young JJ.A.]

Counsel:

E.D. Fredman, for the appellant
A.V. Kralingen and K. Chau, for the respondents

Keywords: Real Property, Joint Tenancies, Ouster, Occupation Rent, Civil Procedure, Affidavit Evidence, Translations, Fresh Evidence, Kerr v. Baranow framework: 2011 SCC 10, Palmer v. The Queen, [1980] 1 SCR 759, R. v. Araya, 2015 SCC 11, Griffiths v. Zambosco (2001), 54 O.R. (3d) 397 (C.A.)

facts:

The appellant, K. P., is the sister of the respondent G. T. and sister-in-law to G.T.’s husband, B.T. In 1991, B.T. and his business partner purchased a pizzeria in Manitoba for $425,000. The appellant argued unsuccessfully at trial that she was a partner in this joint family venture and claimed to have contributed 24 million Greek drachmas (approx. C$150,000) to the respondents to buy their share of the pizzeria.

The appellant and respondents purchased a property in Toronto and both the appellant and the respondents were all on title as joint tenants. From 2005 onwards, the appellant and the respondents’ son were based full-time in Toronto. The appellant cared for the respondents’ son, who was musically talented and pursued his studies in Toronto. In 2013, shortly after the appellant’s son was charged with a serious criminal offence, G.T. returned to Toronto to act as a surety for the respondent’s son. She returned on the condition that the appellant vacate the home so that she could live there. The appellant’s son was denied bail, so the respondent, G.T. returned to Manitoba and the appellant moved back into the property. When the appellant returned to the property, she changed the locks and alarm code and refused to give the respondents a new set of keys or the alarm code, thereby preventing them, or their son, from having access to the home. During this period, the respondents paid the property’s carrying costs and also had to pay rent for their son’s alternative accommodations in Toronto.

issues:

(1) Is there merit to allow the appellant to admit fresh evidence?

(2) Did the trial judge err in dismissing all of the evidence provided by one of the appellant’s witnesses and in dismissing the witness after striking their affidavit for lack of translation?

(3) Did the trial judge err in her application of the law of ouster and occupation rent to the facts in this case?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court held that there was no merit in the application to admit fresh evidence as it failed to satisfy the criteria for admission as established in Palmer v. The Queen. When the fresh evidence is taken with the other evidence adduced at trial, even if believed, it could not have reasonably affected the result. The Court further stated that the proposed fresh evidence could have been produced at trial with due diligence and it was neither credible nor reliable.

(2) No.

The Court held that the trial judge committed no error in striking both the affidavit and dismissing the witness in this case. The Court found that it was clear that the trial judge’s reasons demonstrated that she considered the evidence as a whole and determined that the probative value of the respondents’ reply evidence outweighed the potential prejudice caused by the limited time that the appellant had to obtain responding documents. The Court concluded that the appellant had not identified any palpable and overriding error that could justify interfering with the trial judge’s decision on this issue.

(3) No.

The appellant submitted that the trial judge failed to consider that the appellant had first been ousted by the respondents before subsequently changing the locks and that she failed to properly appreciate the impact of the appellant’s allegations that she was allegedly assaulted by the respondents’ son in her ouster findings. The appellant also submitted that the trial judge erred in granting the respondents occupation rent for their son because he had no right to live in the house even if the respondents had not been ousted. The Court disagreed, stating that the trial judge had acknowledged that the ouster occurred after the appellant signed an agreement requiring her to vacate the property and after returning and discovering that the locks had been changed on all but one door.

The Court noted that a trial judge’s exercise of discretion in ordering occupation rent should not be interfered with unless the finding is unreasonable, or the trial judge has erred in principle: Griffiths v. Zambosco.


Optiva Inc. v. Tbaytel, 2022 ONCA 646

[Doherty, Huscroft and Harvison Young JJ.A.]

Counsel:

E. van Eyken and A. Coates, for the appellant Optiva Inc.
A.D. Rose and A. Urbanski, for the respondent Tbaytel

Keywords: Contracts, Arbitration, Motion for Summary Judgment, Arbitration Act, 1991, S.O. 1991, c. 17, ss. 2, ss. 3, ss. 17, ss. 26, ss. 45 and ss. 46, Rules of Civil Procedure, R.R.O. 1990, s. 1.03, Reg. 194., Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, ss. 1(1) and ss. 15(1), Optiva Inc. v. Tbaytel, 2021 ONSC 2929, Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, 97 O.R. (3d) 161, Popack v. Lipszyc, 2016 ONCA 135, 129 O.R. (3d) 321, Desputeaux v. Éditions Chouette (1987) Inc., 2003 SCC 17, Travis Coal Restructured Holdings LLC v. Essar Global Fund Ltd., [2014] EWHC 2510 (Comm), Hryniak v. Mauldin, 2014 SCC 7, Alectra Utilities Corp. v. Solar Power Network Inc., 2019 ONCA 254, Ticketnet Corp. v. Air Canada, [1993] O.J. No. 289 (Gen. Div.), Mines Ltd. v. Ontario Hydro (2001), 56 O.R. (3d) 181, Ottawa (City) v. Coliseum Inc., 2016 ONCA 363.

facts:

The respondent, Tbaytel, is an independent provider of telecommunication services that agreed to purchase a new software package from the appellant, Optiva Inc., for about $8.5 million in 2016. The parties expected the project to be completed by July 2018. However, problems developed resulting in the respondent terminating the contract in March 2018.

The contract provided for disputes to be determined by arbitration. In November 2018, the parties entered into an arbitration agreement naming the arbitrator and describing their powers. The arbitrator ruled that the respondent could bring a summary judgment motion in the arbitration. The arbitrator concluded that the appellant had breached the contract, and that the respondent was entitled to terminate the agreement and recover monies paid. The arbitrator gave lengthy reasons in support of their decision and issued a partial award in February 2020 requiring the appellant to pay the respondent $4.39 million.

Optiva moved in Superior Court for an order setting aside the arbitrator’s award pursuant to ss. 17 and 46 of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”). Optiva also sought leave to appeal on questions of law pursuant to s. 45 of the Act. In reasons released on April 20, 2021, the application judge refused to set aside the arbitrator’s order and dismissed Optiva’s application for leave to appeal.

In October 2021, the Court granted leave to appeal from the application judge’s order.

issues:

1. Did the application judge err in holding that Optiva’s application was governed by s. 17 of the Arbitration Act (the “Act”), and that Optiva had failed to challenge the ruling that Tbaytel could proceed by summary judgment within 30 days of receiving notice of the ruling, as required by s. 17(8) of the Act?

2. Did the application judge err in holding that the arbitrator could proceed by way of summary judgment motion?

3. Did the application judge err in holding that the arbitrator did not base his interpretation of the limitation of liability clause on a legal theory not advanced by either party?

4. Did the application judge err in refusing to grant leave to appeal from the arbitrator’s interpretation of the limitation of liability clause in the contract, and/or the arbitrator’s interpretation of the arbitration agreement?

holding:

Appeal dismissed.

reasoning:

1. Yes.

Section 17(1) of the Act provides in part that an arbitral tribunal may rule on its own jurisdiction to conduct the arbitration […]. Section 17(8) requires that [I]f the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.

On the application before the Superior Court, the respondent submitted that the appellant was required to bring an application in the Superior Court challenging the arbitrator’s preliminary ruling within 30 days of the arbitrator giving notice. The appellant did not do so, but instead proceeded with the arbitration and challenged the ruling only afterwards.

The appellant submitted that s. 17 of the Act had no application to procedural orders like the order made by the arbitrator, and argued that the arbitrator had no authority to conduct a proceeding by way of summary judgment motion. The appellant relied on Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, the controlling authority addressing s. 17 of the Act. In light of Inforica Inc., the Court concluded that the arbitrator’s decision to proceed by summary judgment was not a decision under s. 17(1) of the Act. Section 17(8) did not apply to the challenge, and, therefore, the appellant’s application to set aside the arbitrator’s award was properly brought under s. 46 of the Act.

2. No.

To support the appellant’s position that the arbitrator could not proceed by way of summary judgment motion, the appellant submitted that: (1) the arbitration agreement was silent on the availability of a summary judgment procedure; (2) regardless of the terms of the arbitration agreement, s. 26 of the Act gave the appellant the right to an oral hearing; and (3) the summary judgment procedure followed by the arbitrator resulted in unfairness to the appellant.

The Court did not accept these submissions because: (1) the agreement was not silent on the arbitrator’s authority to decide on the procedures, as it provided numerous examples of the kinds of motions the arbitrator could hear and gave the arbitrator interpretive powers under para. 8; (2) the phrase “presentation of evidence” under s. 26 of the Act did not connote viva voce evidence only and, as it was ultimately a procedural question, it was to the arbitrator’s discretion to decide how evidence was heard; and (3) the appellant had agreed that the arbitrator could determine the procedures governing the arbitration, and there was no evidence that the appellant did not have a full and fair opportunity to challenge the case put forward by the respondent.

3. No.

The appellant relied on a limitation of liability provision in the agreement to limit any damages owing to the respondent. The respondent took the position that the limitation of liability provision applied only to contractual breaches arising out of the “performance of services” under the agreement. The respondent maintained that the appellant’s breaches arose out of the “non-performance” of the agreement. The respondent relied on the limitation of liability issue included in the decision of Ticketnet Corp. v. Air Canada, [1993] O.J. No. 289 (Gen. Div.), although its counsel did not refer to the decision in oral argument. The arbitrator referred to Ticketnet in their reasons. As a result, the appellant described the arbitrator’s reference to Ticketnet as introducing a “new theory of liability” which the appellant did not have the opportunity to address.

The Court rejected the appellant’s submissions. The Court found that the arbitrator considered the limitation liability clause at length and conducted the kind of analysis customarily employed in contractual interpretation. Further, the Court determined that the arbitrator’s conclusion flowed, not on a reliance of Ticketnet, but rather from the common-sense observation that conscious, wilful conduct which violated the terms of the contract, could not be characterized as conduct performed “in the rendering of services” under the contract.

4. No.

The Court clarified that refusal to grant leave under s. 45 of the Act is, as a general rule, not appealable to the Court. A refusal to grant leave can only be appealed if it reflects an erroneous decline of the jurisdiction given to the Superior Court judge. The application judge did not decline to exercise his jurisdiction to determine whether leave to appeal should have been granted under s. 45. Rather, he refused leave on the merits. The application judge referred to the limitation of liability provisions as raising a question of mixed fact and law. The appellant submitted that the application judge was wrong in characterizing the contractual issue as mixed fact and law.

The rationale underlying restrictions on appeals to the Court from the refusal to grant leave to appeal in the Superior Court would be defeated if the Court were to engage in an assessment of the merits of the decision refusing leave under the guise of considering whether the court below declined to exercise its jurisdiction. The application judge’s conclusion that the question raised by the appellant involved a question of mixed fact and law, whether right or wrong, was determined on the merits of the appellant’s application for leave to appeal—a decision that was not appealable to the Court.

The Court agreed with the application judge’s analysis of the arbitration agreement and the conclusion that the arbitrator had the authority to proceed by summary judgment motion.


VanSickle Estate v. VanSickle, 2022 ONCA 643

[Miller, Nordheimer and Sossin JJ.A]

Counsel:

D. Sinko, for the appellants
E. G. Upenieks and J. M.E. Chumak, for the respondents Joan Pizzey, Allen VanSickle and Mary Ann Fletcher
J. Figliomeni, for the respondents Danny Fletcher and Marvn VanSickle, in their capacity as Estate Trutees for the Estate of Dorothy Ethel VanSickle

Keywords: Wills and Estates, Wills, Interpretation, Succession Law Reform Act, R.S.O. 1990, c. S.26, Trezzi v. Trezzi, 2019 ONCA 978

facts:

The appeal concerned the interpretation of a will. The testator died, leaving 6 surviving children. The testator provided one of her children with an option to purchase “the farming business carried on by me” in Brantford for $85,300. Four of the other children argued the testator had ceased carrying on the farming business many years earlier, the option to purchase had therefore lapsed, and the farm should fall into the residue of the estate. H.V., the beneficiary of the option, disagreed.
When the testator’s husband died in 1995, the testator began to rent out the farmland to their eldest son, H.V. H.V. continued working on the farm and subsequently began subleasing the fields to others and at times shared the extra profit with the testator.

The application judge concluded that the farming business carried on by the testator referred to the active farming business involving cultivation of crops and/or raising of livestock for commercial sale and profit that she and her husband had carried on for many years prior to the making of their wills. The application judge found the Testator did not intend the simple rental of land to come within the ambit of the phrase ‘farming business carried on by me.’ Accordingly, the trial judge found that the option to purchase the farm in favour of H.V. had lapsed.

issues:

Did the application judge err in their interpretation of the phrase “farming business carried on by me”?

holding:

Appeal allowed.

reasoning:

Yes.
The standard of review of an application judge’s interpretation of a will is the same as of a contract: Trezzi v. Trezzi, 2019 ONCA 978 at para 15. The findings of an application judge in interpreting the will in light of all the surrounding circumstances to determine the subjective intentions of the testator that it conveys, are findings of mixed fact and law entitled to appellate deference, absent an extricable error of law or palpable and overriding error. The Court found the application judge made an extricable error of law in failing to apply the presumption set out in s. 22 of the Succession Law Reform Act, R.S.O. 1990, c. S.26, that “[e]xcept when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to … the property of the testator”.
The Court found the testator was carrying on a farm business at the time of her death. There was nothing in the phrase “the farming business carried on by me” that pointed unambiguously to the business carried on in 1985 over the business carried on in 2019. There was no evidence about the surrounding circumstances that would suggest that the testator’s intention was to provide H.V. with an option to purchase the family farm so that he could continue farming it, but only if she was still involved in the day-to-day operations.
The will contained a further clause that defined the term “farming business” as including “all assets, stock, plant, liabilities, in connection there with on the other (sic) and it shall include the estate in fee simple of the farm.” The Court found the testator intended to benefit H.V. differently from her other children because of his lifelong commitment to the operation of the farm. Despite the passage of 34 years, the testator never chose to amend her will. The Court found the option to purchase the farm was valid and validly exercised.


Conforti Holdings Limited (Re), 2022 ONCA 651

[Pardu J.A. (Motion Judge)]

Counsel:

R. B. Bissell and J. Turgeon, for the moving party, Crowe Soberman Inc., in its capacity as trustee to the proposal to creditors of Conforti Holdings Ltd.
B. Sachdeva, for the moving party, Conforti Holdings Ltd.
C.P. Prophet, for the respondent, Moroccanoil Inc.

Keywords: Bankruptcy and Insolvency, Claims Provable in Bankruptcy, Valuation of Claims, Proposal Trustees, Civil Procedure, Jurisdiction, Multiplicity of Proceedings, Leave to Appeal, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s.135, s.193(e), Ontario Business Corporations Act, R.S.O. 1990, C. B.16, Business Development Bank of Canada v. Pine Tree Resorts Inc. et al, 2013 ONCA 282, Re Nortel Networks Corporation et al, 2015 ONSC 1354, Kitchener Frame Limited (Re), 2012 ONSC 234

facts:

Conforti Holdings Limited (“CHL”) operated a chain of 52 hair salons. It had been litigating in New Jersey for more than seven years with Moroccanoil over differences related to the supply of hair products. When advised that CHL had filed a notice of intention to make a proposal pursuant to the Bankruptcy and Insolvency Act (“BIA”) on September 28, 2020, the New Jersey court stayed proceedings there, upon Moroccanoil’s request, and over the objections of CHL.
Moroccanoil filed a proof of claim for $2,807,478.12 in the proceedings under the BIA. The Proposal Trustee declined to determine whether this was a provable claim or to value, it but brought a motion asking to be relieved of its obligations to do so. The motion judge refused the motion. Firstly, he held that s. 135(1.1) of the BIA required the trustee to determine the claim, and that there was no jurisdiction to exempt the trustee from carrying out this function. Secondly, he held that even if there was jurisdiction to make the order requested, the order sought was not appropriate, as it was not one of the clear cases that justified the exercise of discretion to depart from the usual process for valuation of claims under the BIA.
CHL and the Proposal Trustee sought leave to appeal from the dismissal of the Proposal Trustee’s motion for an order advising and directing the Proposal Trustee to not undertake the adjudication of the Moroccanoil proof of claim and the crossclaim by CHL against Moroccanoil, which would otherwise be required by s. 135 of the BIA, and lifting the stay of proceedings to allow the parties to continue litigating in New Jersey.

issues:

Does the moving party meet the test for leave to appeal under s.193(e) of the BIA?

holding:

Motion dismissed.

reasoning:

No.
Pursuant to s. 193(e) of the BIA, the court will look to whether the proposed appeal: a) raises issues of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole; b) is prima facie meritorious; and c) would unduly hinder the progress of the bankruptcy/insolvency proceedings.
The Court noted that decisions by judges in insolvency proceedings are entitled to considerable deference. The Court refused to conclude that there was a prima facie merit to the appeal, as the alternate discretionary conclusion by the motion judge that it was not appropriate to have proceedings involving the parties proceed in two different fora was unassailable. There was no demonstrable error that would justify the Court granting leave to appeal from the motion judge’s assessment of the advantages and disadvantages of dealing with the claims within the proceedings under the BIA. The general rule is that all claims should be adjudicated in the bankruptcy proceedings.
Finally, the conclusion that there was no material advantage to allowing the litigation to continue in New Jersey was entitled to deference. An appeal from the order refusing to excuse the trustee from his obligations under s. 135(1.1) of the BIA would likely be dismissed because of the deference owed to the motion judge’s factual determinations. Thus, leave to appeal was refused.


2174372 Ontario Ltd. v. Dharamshi, 2022 ONCA 648

[Lauwers, Roberts and Zarnett JJ.A.]

Counsel:

R. Macklin and W. Jiang, for the appellant
A. Jiwa, for the respondents

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Repudiation

facts:

This appeal arose out of a failed real estate transaction between the appellant vendor and the respondent purchasers for the sale of a house to be built by the vendor. The appellant builder sold to the respondents a residential house to be constructed for the purchase price of $869,445.641. The agreement of purchase and sale (“APS”) specified that the closing date was November 8, 2018. Through telephone communications and written notices, the respondents advised the appellant that they might not be able to close due to difficulty obtaining financing. The appellant refused to grant a price reduction with an extended closing period. The respondents visited the premises on November 5 and 7, 2018, and discovered that the building was not ready for occupancy, and not substantially completed. On November 9, 2018, the appellant set a new closing date for December 10, 2018, but the respondents’ maintained that the agreement was at an end and required the return of their deposits.
The motion judge allowed the respondents’ motion for summary judgment and dismissed the appellant’s action. The motion judge determined that although the respondents had earlier repudiated the APS by their assertions that they were unable to close the transaction, the APS did not come to an end at that point because the appellant did not accept the respondents’ repudiation and instead insisted on closing the transaction. He found that the respondents were ready to fulfill their contractual obligations to close on the closing date because they had certified closing funds, but that the appellant was not, because the house was not substantially complete. The agreement therefore came to an end on November 8, 2018, and could not subsequently be resurrected by the appellant’s insistence on an extended closing. The appellant appealed the dismissal of its action.

issues:

Did the motion judge err in his findings of fact?

holding:

Appeal dismissed.

reasoning:

No.

The appellant argued that the motion judge erred in finding that the respondents did not act in bad faith by entering into a mortgage to obtain closing funds without advising the appellant that they were in a position to close, notwithstanding their previous assertions to the contrary. The appellant argued they should have been able to exercise the right to extend the closing. The Court disagreed and found the appellant’s argument took issue with the motion judge’s careful assessment of the evidence and his detailed findings that were open to him on the record and free from any reversible error.

The appellant maintained that neither party was ready, willing and able to close the transaction on November 8, 2018, because the respondents had entered into a sham mortgage. The motion judge found otherwise, as the respondents’ uncontested evidence was that in the late afternoon of November 7, 2018, they finally managed to obtain financing from a family friend that enabled them to close the transaction. The mortgage was not a sham.

The Court found no error in the motion judge’s findings. There was no obligation on the respondents in this case to advise the appellant that they had succeeded in obtaining mortgage funds. The appellant proceeded as if it could close on the scheduled closing date even though the house was not substantially completed. The Court found the appellant could have exercised its right to extend the closing date prior to November 8, 2018, and failed to do so. The Court noted that the appellant took a calculated risk and could complain afterwards that it had miscalculated the situation.


SHORT CIVIL DECISIONS

Barker v. Barker, 2022 ONCA 652

[Hourigan, Trotter and Zarnett JJ.A.]

Counsel:

A. Christian-Brown and S. Hsu, for the appellant his Majesty the King in Right of Ontario
F. McLaughlin, S. Rogers, and B. Greenaway, for the appellants E.T.B. and G.J.M.
J. P. Rochon, P. R. Jervis, G. Nayerahmadi, M. W. Taylor and K. Bédard, for the respondents

Keywords: Appeal, Damages, Quantum of Costs, Reasonableness, Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, Waxman v. Leibow, 2004 CanLII 31901 (Ont. C.A.)


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