Jump To: Table of Contents | Civil Decisions

Good afternoon.

Please find below our summaries of the civil decisions of the Court of Appeal for Ontario for the week of January 11. There were only three substantive civil decisions released this past week.

In Wiseau Studios LLC, Justice Thorburn granted security for judgment, an apparent first in Ontario. In this case, Wiseau Studios, the producers of the cult-classic movie The Room, had engaged in improper litigation conduct, such as refusing to pay costs awards and improperly obtaining an injunction that was later set aside. The moving parties, who had produced a documentary about the cult-like following of The Room, but could not release their film because of the litigation, successfully brought a motion for security not only for the costs of the trial and appeal, but for the amount of the trial judgment itself. In making the order, Her Honour relied on s. 134(2) of the Courts of Justice Act and mostly BC appellate decisions, as well as the Supreme Court’s well-known Mareva injunction decision in Aetna Financial v Feigelman.

Stonehouse Group Inc. is an appeal from a rare tax decision of the Superior Court. In interpreting the Corporations Tax Act (an Ontario statute), the Court concluded that the taxpayer who had been compelled to overpay tax pending a reassessment was entitled to “enhanced interest” on the overpayment after they succeeded in the reassessment, rather than normal interest, which is currently set at 0%.

In Heliotrope Investment Corporation, the Court granted leave to file a supplementary notice of appeal but denied leave to file fresh evidence.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Stonehouse Group Inc. v Ontario (Finance), 2021 ONCA 10 

Keywords: Tax Law, Statutory Interpretation, Standard of Review, Interest on Overpayment of Tax, Enhanced Interest, Corporations Tax Act, R.S.O. 1990, c. C.40, s. 79(7), s. 82(5), Housen v. Nikolaisen, 2002 SCC 33, Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20, The Ontario Committee on Taxation, The Provincial Revenue System, vol. III (Toronto: Queen’s Printer, 1967)

Heliotrope Investment Corporation v 1324789 Ontario Inc., 2021
ONCA 23

Keywords: Contracts, Real Property, Mortgages, Civil Procedure, Appeals, Extension of Time, Fresh Evidence, Rules of Civil Procedure, Rule 3.02(1), Rizzi v. Mavros, 2007 ONCA 350, Bratti v. Wabco Standard Trane Inc., 1994 CanLII 1261 (Ont. C.A.), Chandra v. Canadian Broadcasting Corporation, 2016 ONCA 448, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131

Wiseau Studio, LLC v Harper, 2021 ONCA 31

Keywords: Copyright, Injunctions, Civil Procedure, Appeals, Security for Costs ,Security for Trial Judgment, Courts of Justice Act, RSO 1990, c C43, s. 134(2), Rules of Civil Procedure, Rule 56.01, Vaillancourt v Cater, 2017 ABCA 282, Aetna Financial Services Ltd. v Feigelman, [1985] 1 SCR 2, C.H. v. M.H., 1997 ABCA 263, Vaccarov Twin Cities Power-Canada U.L.C., 2013, ABCA 252, Creative Salmon Company Ltd. v. Staniford, 2007 BCCA 285, Richland Construction Inc. v. Manningwa Developments Inc., 1996 CanLII 3188 (B.C. C.A.), First Majestic Silver Corp. et al. v Davila, 2013 BCCA 312, Paz v. Hardouin, 1995 CanLII 1808 (B.C. C.A.), Cadinha v. Chemar Corp. Inc., 1995 CanLII 1017 (B.C. C.A.), Kedia v. Shandro Dixon Edgson, 2007 BCCA 316, Chan v. Vancouver Trade Mart Ltd., 1997 CanLII 4108 (B.C. C.A.)


CIVIL DECISIONS

Stonehouse Group Inc. v Ontario (Finance), 2021 ONCA 10

[Lauwers, Miller and Nordheimer JJ.A.]

Counsel:

Kutyan and T. Trieu, for the appellant

A.H. Bornstein and J. Epp-Fransen, for the respondent

Keywords: Tax Law, Statutory Interpretation, Standard of Review, Interest on Overpayment of Tax, Enhanced Interest, Corporations Tax Act, R.S.O. 1990, c. C.40, s. 79(7), s. 82(5), Housen v. Nikolaisen, 2002 SCC 33, Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20, The Ontario Committee on Taxation, The Provincial Revenue System, vol. III (Toronto: Queen’s Printer, 1967)

facts:

The appellant was reassessed with respect to its 2008 taxation year to disallow a deduction for a loss carried back under the Corporations Tax Act, R.S.O. 1990, c. C.40 (the “CTA”). As a result, the appellant was required to pay $560,000 in taxes, plus interest. Although the appellant filed an objection, the full amount owed was paid pending the determination of the objection, as statutorily required.

The reassessment was eventually reversed to allow the full amount of the loss carry back. Accordingly, the respondent made a refund payment to the appellant, without any refund of the interest. The appellant objected to the failure of the respondent to refund the interest, and argued that the respondent ought to have paid interest calculated at the “enhanced rate” under the CTA.

The motion judge disagreed with the appellant’s arguments, and found that the appellant was not entitled to the enhanced interest rate under the CTA, but was instead only entitled the “normal” interest rate. Due to the current state of low interest rates, the “normal rate” under the CTA is currently set at zero percent, which in turn meant that although the appellant was technically entitled to “normal interest”, in practice there was no interest actually refunded to the appellant.

issues:
  1. Was the appellant entitled to “normal interest” or “enhanced interest” under the CTA?
holding:

Appeal allowed.

reasoning:
  1. Was the appellant entitled to “normal interest” or “enhanced interest” under the CTA?

The appellant was entitled to “enhanced interest”. The appellant’s position was that it was entitled to interest calculated at the enhanced rate in accordance with s. 82(5) because, after the reversal of the reassessment, it had a surplus in its tax account, namely, the amount of tax that it had been required to pay because of the initial reassessment.

The respondent, on the other hand, contended that s. 79(7) of the CTA is a special provision relating to loss carry backs, which takes this particular situation outside the scope of s. 82(5). Specifically, the respondent submitted that the effect of s. 79(7) is that the tax payable is deemed to be the same as it was before the deduction of the loss.

The Court began by noting that since the appeal involved a question of law, the proper standard of review was correctness (Housen v. Nikolaisen, 2002 SCC 33). Further, the Court went on to add that there is no longer a special rule of interpretation that applies to taxation statutes. In other words, taxation statutes are not to be interpreted strictly against the taxing authority, as once was the case. Instead, taxation statutes are to be interpreted as any other statute would be, that is, “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament” (Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20).

After outlining the broad principles of statutory interpretation, the Court considered the positions of the parties, and concluded that the respondent’s interpretation did not seem to give effect to the object and scheme of the CTA. Specifically, the Court found that the problem with the respondent’s interpretation is that it would in fact operate to deny a corporation any refund interest, not just refund interest at the enhanced rate. The effect of this interpretation stood in contrast to the respondent’s position as pleaded, namely, that the appellant was entitled to normal interest under s. 82(4), but not to the enhanced interest under s. 82(5).

Due to the Court’s acknowledgement that the wording of s. 79(7) was anything but clear, alternative tools of statutory interpretation were necessary. As mentioned in Placer Dome, “where the words of a statute give rise to more than one reasonable interpretation, the ordinary meaning of the words will play a lesser role, and greater recourse to the context and purpose of the Act may be necessary.” On that note, the Court looked to the report of The Ontario Committee on Taxation, The Provincial Revenue System, vol. III (Toronto: Queen’s Printer, 1967), which was the report that gave rise to the adoption of the legislation providing taxpayers with the right to receive interest on overpayments of tax. The report of the Committee concluded that it would be fundamentally unfair for taxpayers to not receive interest on overpayments of tax, and that where the overpayment was the result of a compelled payment arising from a dispute between the taxpayer and the government, the taxpayer should receive interest at an enhanced rate if ultimately successful in disputing the tax.

The conclusion of the report of the Committee gave support to the Court’s conclusion that s. 82(5) does in fact contemplate taking into account a deduction from a loss carried back when calculating tax payable. The respondent’s interpretation was not only inconsistent with its own pleadings, but was also refuted by the background evidence. The Court concluded by noting that the language of s. 79(7) is not ambiguous when read in its entire context, and although not necessary to resort to it in this case, there remains a “residual presumption in favour of the taxpayer” in interpreting such legislative provisions, according to Placer Dome.


Heliotrope Investment Corporation v 1324789 Ontario Inc., 2021 ONCA 23

[Thorburn J.A. (Motions Judge)]

Counsel:

D. Marks for the moving parties, 1324789 Ontario Inc., 1073650 Ontario Inc., M. L. B. and J. G. B.

L. Merovitz and E. Lay for the responding parties, Heliotrope Investment Corporation and Canadian Western Trust Company

Keywords: Contracts, Real Property, Mortgages, Civil Procedure, Appeals, Extension of Time, Fresh Evidence, Rules of Civil Procedure, Rule 3.02(1), Rizzi v. Mavros, 2007 ONCA 350, Bratti v. Wabco Standard Trane Inc., 1994 CanLII 1261 (Ont. C.A.), Chandra v. Canadian Broadcasting Corporation, 2016 ONCA 448, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131

facts:

The parties’ principals were involved in residential land development projects since 2013, where the respondent would provide the financing and the appellant (the moving party) was the project manager. Through negotiations, the parties decided that the respondents would lend money to 1324780 Ontario Inc. (“132”) through a Registered Retirement Savings Plans held with Canadian Western, secured by mortgages on several properties under development, pursuant to Joint Venture Agreements. The appellants would then provide management services to the Joint Ventures. However, the mortgages went into default due to cost overruns and delays.

Summary Judgment

The respondents brought motions for summary judgment for payment of monies owing in respect of three mortgages with the appellants. The parties agreed that the respondents had advanced monies secured by mortgages, and that the appellants had been in default for some time.

The respondents took the position that these were two experienced commercial parties, where the respondents lent the appellants money secured by mortgages, and the mortgages are in default. Absent redemption of the mortgages, the respondents are entitled to enforce their rights, which include possession of the mortgaged lands and judgment for the amount due and owing on the loans (affirmed by Joint Venture Agreements signed in 2014).

The appellants disputed the enforceability of the mortgages, and raised two issues on the summary judgment motion: (1) the appellants claimed that the respondents made representations that the loans would not have to be repaid before development of the properties was completed; and (2) in any event, judgment should be stayed pending appeal as there was related litigation that, if successful, would reduce the amounts owing by the appellants. Both arguments were rejected by the motion judge.

The motion judge held that the debt instruments and Joint Venture Agreements were negotiated at arms-length with the benefit of independent legal counsel. As well, the appellant’s did not adduce any evidence otherwise and there was no evidence of a fraudulent scheme by the respondents. The motion judge granted summary judgment in favor of the respondents and ordered that there should be no stay on the enforcement of the judgments, because lifting the stay would not prevent the appellants from proceeding with their other litigation between the parties.

Notices of Appeal

In the Notice of Appeal, the appellants sought an order that the judgment be stayed pending the determination of other related claims, as the motion for summary judgment comprises only three of the six enforcement actions on mortgages.

The appellants also sought to file a Supplementary Notice of Appeal because they claimed the Notice of Appeal filed by their lawyers focused on the order denying a stay, however, the appellants claimed they thought the merits of the underlying judgment were being appealed. The appellants also sought to file fresh evidence to support their argument that they did not have independent legal advice when they signed the Joint Venture Agreement, and that they signed the Agreement under duress.

The respondents claimed that the request to file a Supplementary Notice of Appeal was just another delay tactic to prevent them from recovering the funds owing pursuant to simple mortgage collection action. Regarding the fresh evidence, the respondents claimed that the appellants could have adduced this evidence earlier and, in any event, there was no evidence that the appellants were without legal counsel when they signed the Joint Venture Agreement.

issues:
  1. Should the Court extend the time for the appellants to file a Supplementary Notice of Appeal?
  2. Should the Court permit the appellants to file fresh evidence?
holding:

Motion granted, in part.

reasoning:

(1) Yes. The Court allowed the request by the appellants to file a Supplementary Notice of Appeal that clarified that both issues (denial of stay of enforcement and underlying merits) were being raised by way of appeal from the motion for summary judgment. When looking at the evidence as a whole, and bearing in mind that it was the appellants’ intention and the interest of justice that matters, the Court accepted that the appellants intended to raise both issues.

The Court did not accept the respondent’s concern that the Supplementary Notice of Appeal would allow the appellants to appeal the monetary amounts. Rather, the Court stated that the motion judge noted that there was no dispute regarding the calculation of principal and accrued interest pursuant to the mortgages that were in default. The Court also rejected the respondents’ claim that even if the appellants intended to appeal both issues, the interests of justice favoured dismissal of this motion to include the second issue, as this case has no precedential value, and is of interest only to the parties.

Regarding the court’s discretion to extend the time for service of a Notice of Appeal, the court, citing Rule 3.02(1) of the Rules of Civil Procedure, commented that it is well-settled law that while appellate courts have to consider a number of different factors in determining whether to grant leave to extend the time to appeal, the governing principle is simply whether the “justice of the case” requires that an extension be given (Bratti v. Wabco Standard Trane Inc., 1994 CanLII 1261 (Ont. C.A.), at p. 3).

(2) No. The Court dismissed the appellants’ request to adduce fresh evidence stating that there was no basis for allowing the fresh evidence. The appellants claimed they signed the Joint Venture Agreements under duress and without the benefit of legal advice. As a result of this, the appellants purchased a share in the property of the joint ventures and were unable to meet the payments due.

The Court held that the appellants knew whether they did or did not have legal representation at the time they signed the agreement and that the communications they sought to adduce were all available at the time of the hearing before the motion judge. Further, the court held that there was no issue that the appellants were represented by the same counsel and there was no evidence that the retainer had been terminated. Thus, there was nothing “fresh” about the evidence the appellants sought to adduce.


Wiseau Studio, LLC v Harper, 2021 ONCA 31

[Thorburn JA (Motions Judge)]

Counsel:

Diskin and M. Bacal, for the moving parties

Brinza, for the responding parties

Keywords: Copyright, Injunctions, Civil Procedure, Appeals, Security for Costs ,Security for Trial Judgment, Courts of Justice Act, RSO 1990, c C43, s. 134(2), Rules of Civil Procedure, Rule 56.01, Vaillancourt v Cater, 2017 ABCA 282, Aetna Financial Services Ltd. v Feigelman, [1985] 1 SCR 2, C.H. v. M.H., 1997 ABCA 263, Vaccaro v Twin Cities Power-Canada U.L.C., 2013, ABCA 252, Creative Salmon Company Ltd. v. Staniford, 2007 BCCA 285, Richland Construction Inc. v. Manningwa Developments Inc., 1996 CanLII 3188 (B.C. C.A.), First Majestic Silver Corp. et al. v Davila, 2013 BCCA 312, Paz v. Hardouin, 1995 CanLII 1808 (B.C. C.A.), Cadinha v. Chemar Corp. Inc., 1995 CanLII 1017 (B.C. C.A.), Kedia v. Shandro Dixon Edgson, 2007 BCCA 316, Chan v. Vancouver Trade Mart Ltd., 1997 CanLII 4108 (B.C. C.A.)

facts:

The moving parties, who were collectively referred to as Room Full of Spoons, brought a motion for security for the trial judgment, security for costs of the trial and appeal, and in the alternative, an order to lift the stay of the trial judgment pending appeal.

The appeal arose in the context of the cult classic movie The Room, created by the responding party. In 2016, Room Full of Spoons completed a documentary called Room Full of Spoons about the cult phenomenon surrounding The Room. The responding party brought a claim against them in 2017 and since then, Room Full of Spoons has not been able to exploit their work. In June of 2017, the responding party obtained an ex parte injunction restraining the release of the documentary. A few months later, the injunction was dissolved when it came to light that the responding party (the applicant in that case) had not been forthright with the court and failed to disclose that they were in negotiations with Room Full of Spoons about releasing the movie. The court found this was litigation misconduct and awarded nearly $100,000 in substantial indemnity costs, which costs award was not paid for eleven months.

As the action proceeded, the responding party was uncooperative and stalled scheduling at every possible opportunity among several other improper acts. In January of 2020, the moving parties were ultimately successful at trial and was awarded $200,000 in punitive damages (because of the responding party’s conduct throughout), $550,000 USD in damages for the improper injunction and nearly $500,000 CAD in costs. The responding party sought to vary the order but was unsuccessful, resulting in a further $20,000 in costs being awarded.

The responding party continued their questionable conduct post-judgment by failing to attend examinations in aid of execution and failing to comply with court orders requiring disclosure of information about assets.

The responding party appealed the trial judgment and this motion was brought in the context of that appeal.

issues:
  1. Should security be granted for the trial judgment, a novel order in Ontario?
  2. Should security for costs be granted?
holding:

Motion granted.

reasoning:

(1) Yes.

Under s.134(2) of the CJA, an appeal court can make any interim order that is considered just. The Court noted that security for judgment is an extraordinary measure and should only be granted in exceptional circumstances, and requires the appellant to post sufficient assets to secure the disputed judgment before moving forward with the appeal. The order has been granted in other jurisdictions, such as BC and Alberta, relying on provisions substantially similar to s. 134(2) of the CJA.

Security for judgment is an extraordinary remedy that should only be granted in exceptional circumstances: Vaillancourt v. Cater, 2017 ABCA 282, at para. 20; Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2 at p. 10; C.H. v. M.H., 1997 ABCA 263.

Such an order requires an appellant to post security for judgment before continuing with the appeal. In this way, security for judgment functions much like a Mareva injunction and restrains the appellant from disposing of or dissipating assets in order that they be available to satisfy the judgment should it be upheld  and if security for judgment is ordered and not posted, the appeal is dismissed: Vaillancourt, at. para. 20; Vaccaro v. Twin Cities Power-Canada U.L.C., 2013 ABCA 252, at para. 14.

Security for judgment has been granted in other jurisdictions in the following circumstances:

  1. Where there are no assets in the jurisdiction against which to enforce a judgment and the appeal has little merit (Vaccaro at para. 11; Creative Salmon Company Ltd. v. Staniford, 2007 BCCA 285, at paras. 12 and 14; Richland Construction Inc. v. Manningwa Developments Inc., 1996 CanLII 3188 (B.C. C.A.) at paras. 12-13);
  2. To preserve assets that would otherwise be destroyed, disposed of, or dissipated prior to the resolution of the dispute: Aetna Financial at p. 12; and
  3. To encourage respect for the judicial process and avoid abuse of process (C.H., at para. 23, citing Mooney v. Orr (1994), 100 BCLR (2d) 335 at p. 348 (B.C. S.C.); Vaccaro at paras. 12-14; and in respect of Mareva injunctions, Aetna Financial at pp. 13-14).

In First Majestic, the British Columbia Court of Appeal set out the following principles to govern the discussion around such an order:

  1. The onus is on the applicant to show that it is in the interest of justice to order posting for security of a trial judgment and/or of trial costs.
  2. The applicant must show prejudice if the order is not made.
  3. In determining the interests of justice the chambers judge should consider the merits of the appeal and the effect of such an order on the ability of the appellant to continue the appeal.

The interests of justice may include a consideration of the ex juris residence of an appellant and therefore the effective immunity of an appellant from enforcement of the judgment. They may also include a consideration of the ability to enforce the judgment in the appellant’s ex juris jurisdiction and/or the absence of assets in the jurisdiction in which the judgment was rendered. The interests of justice may not be relied upon by a successful plaintiff where the effect of requiring the posting of security for a trial judgment would be to preclude a party from pursuing the appeal: Kedia v Shandro Dixon Edgson, 2007 BCCA 316.

Adverse financial circumstances will generally not defeat an application for security where an appeal is virtually without any merit. A successful plaintiff should not be required to respond to an unmeritorious appeal when there is no real prospect of recovery. A finding that an appeal has no reasonable prospect of success may be a factor.

In the present appeal, the responding party were residents of the United States, and there was some suggestion that the action was commenced in Ontario for the specific purpose of shielding themselves from enforcement.

The Court determined that the exceptional circumstances required were present in this case. The responding party was resident in a different country and has repeatedly failed to provide any information on its assets. They have sufficient assets to post security without jeopardizing their ability to pursue the appeal and accordingly, the interest of justice requirement was met.

There was also ample evidence of prejudice that the moving parties might suffer if the award was not granted. They have been restrained from airing their movie for over four years now and the Court was satisfied that in the absence of this order, they may never actually recover on the judgment after appeal. The fact that responding party had shown a settled intention to disregard the rules of Ontario courts and not pay costs awards supported this.

Finally, the Court also found that the notice of appeal filed by the responding party was frivolous and articulated no errors that the trial judge made in their extensive reasons. The Court ordered that security for the trial judgment in the amount of $200,000 CDN and Canadian currency sufficient to purchase $575,488.36 USD.

(2) Yes.

Under rule 56.01 of the Rules of Civil Procedure, the Court of Appeal may order security for costs in one of the enumerated circumstances. Germaine to this appeal were the following circumstances:

(a) the plaintiff is ordinarily resident outside Ontario;

(c) the party has an order against them for costs which remains unpaid;

(d) the party is a corporation and there is good reason to believe there are insufficient assets in Ontario to pay the award; or

(e) there is good reason to believe the action is frivolous and vexatious and the party has insufficient assets in Ontario to satisfy the award.

The Motion Judge found that the record amply supported each of the above grounds and ordered security for costs.


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 and Happy New Year!

Coming out of the holiday season, this past week was a very light week for the Court of Appeal. Only two civil decisions were released, one of them short.

In Oakville (Town) v Sullivan, the Court’s first reported decision of 2021, the Court upheld the application judge’s ruling that the pool amenities built by the appellants on land subject to a hydro easement was an actionable encroachment. The easement had not been abandoned or partially extinguished and the equitable doctrine of propriety estoppel did not preclude the enforcement of the easement.

Please mark down April 27, 2021, from 5:30-7:45pm in your calendars for our fifth annual “Top Appeals” CLE, which will take place via Zoom. Justice Benjamin Zarnett will be co-chairing the event with me and Chloe Snider of Dentons. We are in the process of inviting speakers who participated in the top appeals to be featured, and will be in a position to provide further details about the line-up of cases and panelists shortly. In the meantime, please register for the program by visiting the OBA’s website.

Wishing all of our readers the very best for 2021!

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Oakville (Town) v. Sullivan, 2021 ONCA 1

Keywords: Real Property, Easements, Propriety Estoppel, Contracts, Interpretation, Building Code Act, 1992, S.O. 1992, c. 23, Fallowfield v. Bourgault (2003), 68 O.R. (3d) 417 (C.A.), Raimondi v. Ontario Heritage Trust, 2018 ONCA 750, Weidelich v. de Koning, 2014 ONCA 736, Hunsinger v. Carter, 2018 ONCA 656, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, Tessaro v. Langlois, 2019 BCCA 95, Twogee Developments Ltd v. Felger Farming Co Ltd, 2017 ABCA 138, Remicorp Industries Inc. v. Metrolinx, 2017 ONCA 443, Kaiman v. Graham, 2009 ONCA 77, Whitby (Town) v. G & G 878996 LM Ltd., 2020 ONCA 654, Clarke v. Johnson, 2014 ONCA 237

Short Civil Decisions

The Ontario College of Teachers v. Bouragba, 2021 ONCA 8

Keywords: Civil Procedure, Appeals, Jurisdiction, Orders, Final or Interlocutory, Stay Pending Appeal, Courts of Justice Act, ss. 137.1, 137.1(5)


CIVIL DECISIONS

Oakville (Town) v. Sullivan, 2021 ONCA 1

[Trotter, Zarnett and Jamal JJ.A.]

Counsel:

A.G. Formosa and M. N, for the appellants

C.M.K. Loopstra and S.E. Hamilton, for the respondents

Keywords: Real Property, Easements, Propriety Estoppel, Contracts, Interpretation, Building Code Act, 1992, S.O. 1992, c. 23, Fallowfield v. Bourgault (2003), 68 O.R. (3d) 417 (C.A.), Raimondi v. Ontario Heritage Trust, 2018 ONCA 750, Weidelich v. de Koning, 2014 ONCA 736, Hunsinger v. Carter, 2018 ONCA 656, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, Tessaro v. Langlois, 2019 BCCA 95, Twogee Developments Ltd v. Felger Farming Co Ltd, 2017 ABCA 138, Remicorp Industries Inc. v. Metrolinx, 2017 ONCA 443, Kaiman v. Graham, 2009 ONCA 77, Whitby (Town) v. G & G 878996 LM Ltd., 2020 ONCA 654, Clarke v. Johnson, 2014 ONCA 237

facts:

The appellants built a pool, surrounding deck, platform and other elements (“Pool Amenities”) behind their house. The Pool Amenities were on land which, although owned by the appellants, was subject to an easement held by the respondents. The easement prohibited “the erection of any building or structure”. The application judge declared the Pool Amenities to be a “building or structure” erected on land subject to an easement, and thus an encroachment. He also ruled that the equitable doctrine of proprietary estoppel did not prevent the respondents from enforcing their rights. The appellants were ordered to remove the Pool Amenities and remediate any damage.

In obiter dicta, the application judge added that had he not concluded that the Pool Amenities contravened the express terms of the easement, he would have ruled that the respondents had not established an actionable encroachment. He was prepared to accept that the Pool Amenities could cause some unknown, but probably minor, degree of inconvenience to the respondents, however, that is not the test for substantial interference. The appellants appealed.

issues:
  1. Is there an actionable encroachment on the easement?
  2. Was the easement abandoned or partially extinguished?
  3. Does the equitable doctrine of propriety estoppel preclude enforcement of the easement?
holding:

Appeal dismissed.

reasoning:
  1. Is there an actionable encroachment on the easement?

Yes. The Court first determined the nature and extent of the easement by interpreting the wording of the instrument creating the easement and the surrounding circumstances when the easement was created. The Court then considered the test for an actionable encroachment, which is whether there is a “substantial interference” with the use and enjoyment of the easement for the purpose identified in the grant. The appellants asserted that the application judge erred in ruling that the Pool Amenities were an actionable encroachment, for two reasons:

  1. the easement did not limit the right to build because it was only intended to be used, and was only ever used, for a hydro line, which could be serviced even with the Pool Amenities.
  2. the application judge applied the wrong test for actionable encroachment by ruling that the appellants were prohibited outright from erecting any structure, regardless of whether that structure substantially interfered with the rights of the easement holders.

The Court did not accept these submissions.

Does the Easement Prohibit the Erection of a Structure such as the Pool Amenities?

Yes. First, the application judge’s ruling as to the nature and extent of the easement involved a question of mixed fact and law that attracted appellate deference, and was reviewable only for palpable and overriding error. The Court held that the application judge properly focused on the wording of the easement indenture. The indenture stated that the appellants’ rights to use the land specifically excluded the erection of any building or structure. He was entitled to conclude that the erection of a building or structure on the easement land was not permitted, period.

The appellants argued that the judge’s interpretation focused mainly on the wording of the indenture and ignored evidence that suggested the easement was primarily intended to permit a hydro line under the appellants’ property. They said that modern technology allowed the hydro line to be repaired even if a structure was erected. The Court did not accept this submission finding that it was, in effect, an invitation for the court to read down the clear words of the easement based on the circumstances and the use made of the easement to date. But, as Rothstein J. for the Supreme Court cautioned in Sattva Capital Corp. v. Creston Moly Corp., “[w]hile the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement”. The easement indenture in this case was not limited to placing a hydro line under the property. It also allowed the respondents to install and maintain “underground sewers, drains, pipes, conduits, wires and services generally”. That these facilities had not been installed within the easement to date was irrelevant as the easement was perpetual, not time limited.

In the Court’s view, the application judge’s determination of the nature and extent of the easement was not tainted by palpable or overriding error. The Court therefore rejected the appellants’ first argument that the easement did not prohibit the erection of a structure such as the Pool Amenities.

Did the Application Judge Apply the Wrong Test for an Actionable Encroachment?

No. Although the Court did agree that the application judge’s reasons could have been clearer, the Court read those reasons as implicitly applying the substantial interference test. By contravening the outright prohibition against erecting a structure, the Pool Amenities encroached upon the easement. The easement indenture did not say that the appellants were prohibited from erecting a structure unless it created a barrier or obstacle to the respondents’ exercise of their rights. The appellants were prohibited outright from erecting any structure. By agreeing to an outright prohibition, without qualification, the parties had effectively defined for themselves what would constitute a substantial interference with the easement.

The Court found that the application judge’s observation in obiter that the respondents did not discharge their onus of establishing substantial interference did not detract from this conclusion. Because it was in the alternative, it did not consider the outright prohibition against erecting any structure. But when the outright prohibition was considered, as it was under the first part of the application judge’s analysis, a substantial interference was established.

  1. Was the easement abandoned or partially extinguished?

No. In Remicorp Industries Inc. v. Metrolinx, the Court had reviewed the general principles relating to abandonment of an easement by release and partial extinguishment of an easement. Unless an easement is granted for a term, the rights conferred by an easement are perpetual and are actually or potentially valuable rights. Therefore it is not likely to be inferred that the owner of such a right would give it up for no consideration. Other than by an express release, an easement can be abandoned by release impliedly by non-use coupled with evidence of an intention to abandon the easement. An easement can also be extinguished either by statute or at common law.

Here, in the alternative, the appellants asserted that the easement had been abandoned for any purpose other than the hydro cable. They also suggested that the easement had been partially extinguished at common law because the easement served no purpose other than servicing the hydro cable. The application judge made no express findings on abandonment or partial extinguishment, and it was not clear whether these issues were argued before him. The Court generally does not entertain entirely new issues on appeal.

In any event, based on the evidence before the Court, there was no basis to conclude that the easement was abandoned or partially extinguished. No express abandonment was alleged, nor had the appellants established implied abandonment. The Court found that the creation of the easement by express grant and its continued use was sufficient to find that the respondents did not intend to abandon it. Nor was there any basis to find that the easement was extinguished at common law. There was no evidence that the municipal purposes for creating the easement had come to an end. Nor did lack of use and lack of need suffice to extinguish an easement by operation of law.

  1. Does the equitable doctrine of propriety estoppel preclude enforcement of the easement?

No. Proprietary estoppel is an equitable doctrine that can create or affect property rights when there is a want of consideration or of writing. Three elements must be established. First, the owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property. Second, in reliance upon his belief, the claimant acts to his detriment to the knowledge of the owner. Finally, the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.

The appellants’ argued: (i) the Town expressly permitted the construction of a portion of the appellants’ house and carport within the easement, and thus induced, encouraged, or allowed them to believe that the easement was abandoned or no longer in use; (ii) the appellants relied on this belief when building the Pool Amenities; and (iii) it would be unconscionable to allow the respondents to now assert that the Pool Amenities encroach on the easement.

The application judge rejected this argument finding there was no evidence to suggest that the respondent knew about the other structures, thus it could not be said it induced, encouraged or allowed the appellants to build. Additionally, there was nothing “unconscionable” about the respondents enforcing the clear wording of the indenture. The Court found that the application judge’s conclusion that the appellants had not established the conditions for proprietary estoppel was a finding of mixed fact and law that attracted appellate deference, absent palpable and overriding error. In the Court’s view, the appellants had shown no such error.


SHORT CIVIL DECISIONS

The Ontario College of Teachers v Bouragba, 2021 ONCA 8

[Doherty, Zarnett and Coroza JJ.A.]

Counsel:

A.B., appearing in person

C.L. Lonsdale and C-A. Malischewski, for the respondent

Keywords: Civil Procedure, Appeals, Jurisdiction, Orders, Final or Interlocutory, Stay Pending Appeal, Courts of Justice Act, ss. 137.1, 137.1(5)


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.

Below are our last summaries of 2020, which include all civil decisions released by the Court of Appeal for Ontario for the weeks of December 21 and 28, 2020.

Topics covered included human rights in the employment context, the refusal to enforce a foreign letter of request in the family law context, a breach of contract decision in the real estate development context issued by the Court in French (summarized by us in English), interveners in the administrative law context (ancillary fees at Ontario colleges and universities) and a decision in respect of the administration of a claims process in a receivership.

On another note, please mark down April 27, 2021, from 5:30-7:45pm in your calendars for our fifth annual “Top Appeals” CLE, which will take place via Zoom again. I am very pleased to announce that Justice Benjamin Zarnett will be co-chairing the event with me and Chloe Snider of Dentons. We are in the process of reviewing and deciding on the top appeals of the year, so if anyone has any suggestions, please let us know. In the meantime, please register for the program by visiting the OBA’s website.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Longueépée v. University of Waterloo, 2020 ONCA 830

Keywords:Administrative Law, Judicial Review, Standard of Review, Reasonableness, Patent Unreasonableness, Human Rights, Discrimination, Duty to Accommodate, Undue Hardship, Human Rights Code, R.S.O. 1990, c. H.19, s. 34, s. 11, s. 45.8, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Dunsmuir v. New Brunswick, 2008 SCC 9, British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Groia v. Law Society of Upper Canada, 2016 ONCA 471, Ball v. McAulay, 2020 ONCA 481, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3. S.C.R. 3, Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15

Glegg v. Glass, 2020 ONCA 833

Keywords: Family Law, Custody, Torts, Intentional Interference with Custodial Rights, Intentional Infliction of Emotional Distress, Civil Procedure, Private International Law, Conflict of Laws, Documentary Discovery, Foreign Letters of Request/Letters Rogatory, Enforcement, Solicitor-Client Privilege, Litigation Privilege, Public Policy, Rules of Civil Procedure, Rule 38.09.1(1), Blank v. Canada (Minister of Justice), 2006 SCC 39, R. v. Zingre, [1981] 2 S.C.R. 392, Frame v. Smith, [1987] 2 S.C.R. 99, Maranda v. Richer, 2003 SCC 67, Descôteaux et al. v. Mierzwinksi, [1982] 1 S.C.R. 860, Gulf Oil Corporation v. Gulf Canada Ltd. et al., [1980] 2 S.C.R. 39, Treat America Ltd. v. Nestlé Canada Inc., 2011 ONCA 560, R.G. v. K.G., 2017 ONCA 108, Perlmutter v. Smith, 2020 ONCA 570, Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, Young v. Tyco International of Canada Ltd., 2008 ONCA 709, Presbyterian Church of Sudan v. Taylor, (2006), 275 D.L.R. (4th) 512 (Ont. C.A.), France (Republic) v. De Havilland Aircraft of Canada Ltd., (1991), 3 O.R. (3d) 705 (C.A.), O.G. v. R.G., 2017 ONSC 6490, Re Friction Division Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et al. (No. 2), (1986), 56 O.R. (2d) 722 (H.C.), Fecht v. Deloitte & Touche, (1996), 28 O.R. (3d) 188 (Gen. Div.), aff’d (1997) 32 O.R. (3d) 417 (C.A.), Re Westinghouse Electric Corporation and Duquesne Light Co. (1977), 16 O.R. (2d) 273 (H.C.)

1750738 Ontario Inc. c. 1750714 Ontario Inc., 2020 ONCA 836

Keywords: Contracts, Real Property, Interpretation, Oral Contracts, Essential Terms, Part Performance, Exclusion Clauses, Corporations, Shareholder Agreements, Adoption of Pre-Incorporation Contracts, Remedies, Specific Performance, Civil Procedure, Costs, Offers to Settle, Ontario Business Corporations Act, RSO 1990 c B.16, s. 21(2), Rules of Civil Procedure, Rule 49.10, Modern Paving Ltd v. Donovan Homes Ltd., 2011 NLCA 39, Bawitko Investments Ltd v. Kernels Popcorn Ltd. (1991), 79 DLR (4th) 97 (Ont CA), Credit Security Insurance Agency Inc v. CIBC Mortgages Inc. (2006), 268 DLR (4th) 725 (Ont SC), aff’d 2007 ONCA 287, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Matic et al. v. Waldner et al., 2016 MBCA 60, UBS Securities Canada Inc v. Sands Brothers Canada Ltd, 2009 ONCA 328, Singh v. Trump, 2016 ONCA 747, Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, DLG & Associates v. Minto Properties Inc., 2015 ONCA 705, Douez v. Facebook Inc., 2017 SCC 33, Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, de Montigny v. Brossard (Succession), 2010 SCC 51, Beswick v. Beswick, [1968] AC 58 (HL), Gasparini et al. v. Gasparini et al. (1978), 20 OR (2nd) 113 (Ont CA), Smith v. Inco Limited, 2013 ONCA 724, Seaton v. Bolton, 2007 CanLII 46250 (Ont SC), Niagara Structural Steel (St Catharines) Ltd. v. WD Laflamme Ltd., 1987 CanLII 4149 (Ont CA), GHL Fridman, The Law of Contract in Canada, 6th ed (Toronto, Thompson Reuters Canada Ltd, 2011)

Canadian Federation of Students v. Ontario (Colleges and Universities), 2020 ONCA 842

Keywords: Administrative Law, Colleges and Universities, Ancillary Fees, Civil Procedure, Interveners, Friends of the Court, Rules of Civil Procedure, Rule 13.02, Canadian Charter of Rights and Freedoms, s. 2(b), Canadian Federation of Students v. Ontario, 2019 ONSC 6658, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), Wilson v. British Columbia (Superintendent of Motor Vehicles), 2015 SCC 47

Manthadi v. ASCO Manufacturing, 2020 ONCA 839

Keywords: Contracts, Solicitor and Client, Solicitor’s Liens, Solicitors’ Act, s. 34(1), Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 7(2) and (3), Weenen v. Biadi, 2018 ONCA 288, Dalcor Inc. v. Unimac Group Ltd., et al, 2017 ONSC 945, Foley v. Davis, 1996 CanLII 1145 (Ont. C.A.)

Comfort Capital Inc. v. Yeretsian, 2020 ONCA 846

Keywords: Bankruptcy and Insolvency, Receiverships, Claims Process, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 243(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Coast Capital Savings Credit Union v. Symphony Development Corp., 2011 BCSC 333, DBDC Spadina Ltd. v. Walton, 2015 ONSC 5608, Lilydale Cooperative Limited v. Meyn Canada Inc., 2019 ONCA 761

Short Civil Decisions

1632093 Ontario Inc. (Turn-Key Projects) v. York Condominium Corporation No. 74, 2020 ONCA 843

Keywords: Civil Procedure, Appeals, Palpable and Overriding Error, Costs, Rules of Civil Procedure, Rule 29

Krieser v. Garber, 2020 ONCA 840

Keywords: Civil Procedure, Appeals, Motions, Costs

Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 849

Keywords: Costs Endorsement

CIVIL DECISIONS

Longueépée v. University of Waterloo, 2020 ONCA 830

[Strathy C.J.O., Lauwers and van Rensburg JJ.A.]

Counsel:

F. Cesario and A.P. Cohen, for the appellant

D. Baker and L. Lepine, for the respondent R.L.

B.A. Blumenthal and J. Tam, for the respondent Human Rights Tribunal of Ontario

Keywords: Administrative Law, Judicial Review, Standard of Review, Reasonableness, Patent Unreasonableness, Human Rights, Discrimination, Duty to Accommodate, Undue Hardship, Human Rights Code, R.S.O. 1990, c. H.19, s. 34, s. 11, s. 45.8, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Dunsmuir v. New Brunswick, 2008 SCC 9, British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Groia v. Law Society of Upper Canada, 2016 ONCA 471, Ball v. McAulay, 2020 ONCA 481, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3. S.C.R. 3, Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15

facts:

The individual respondent brought an application to the Human Rights Tribunal of Ontario (the “HRTO”) alleging discrimination under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19 (the “Code”) against the University of Waterloo (the “University”). Specifically, the respondent alleged that the University discriminated against him on the basis of his disabilities by refusing him admission.

Several years before applying to the University, the respondent had attended Dalhousie University (“Dalhousie”), where he achieved grades well below the minimum threshold for admission to the University as a transfer student. However, satisfied that the respondent’s Dalhousie grades were rendered at a time when the respondent had undiagnosed disabilities, the University convened an Admissions Committee to give special consideration to his application. The Admissions Committee was provided with an application package consisting of academic transcripts, information about the respondent’s volunteer work, medical reports, and reference letters. Nevertheless, the Admissions Committee ultimately concluded that the application did not demonstrate the respondent’s ability to succeed at university, and opted to refuse admission.

When the respondent brought an application to the HRTO, the Vice Chair of the HRTO concluded that the respondent did in fact have a “disability” within the meaning of the Code, and that the respondent was discriminated against in the admissions process. Having made a finding of prima facie discrimination, the Vice Chair then identified the issue to be determined as whether the University accommodated the respondent in the admissions process to the point of undue hardship, pursuant to s. 11 of the Code.

The Vice Chair agreed with the respondent’s submission that the duty to accommodate has both procedural and substantive components. The Vice Chair concluded that the University met its procedural duty to accommodate by considering the respondent’s application despite it being submitted late, not being submitted through the normal OUAC process, and after all the student positions in the faculty had been filled. Further, the University convened a meeting of the Admissions Committee to consider the application due to the extenuating circumstances.

The Vice Chair similarly concluded that the University also met its substantive duty to accommodate. It was noted that the ultimate question to be determined under the Admissions Committee’s inquiry was whether the respondent demonstrated that he would in fact be successful in his academic studies. The Vice Chair observed that the University was entitled to rely on the respondent’s past academic performance, and could not be expected to presume that the respondent would now be successful in university merely because his Dalhousie grades were unaccommodated due to his undiagnosed disabilities. Further, the Vice Chair rejected the argument that the Admissions Committee should have also involved the University’s Accessibility Services department. This argument, in the opinion of the Vice Chair, would require universities to involve accessibility services in every admission application made by a student with a disability, and in this case would effectively require one university to sit in review of how another university accommodated its students.

The Vice Chair of the HRTRO dismissed the respondent’s application alleging discrimination by the University.

The respondent then made a judicial review application to Divisional Court. The Divisional Court first confirmed that the applicable standard of review was reasonableness. The Divisional Court then went on to refer to the three-part test in British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868 (“Grismer”) that applies when a requirement or standard has been shown to be prima facie discrimination. The responding party must prove on a balance of probabilities that: (a) it adopted the standard for a purpose that is rationally connected to the function being performed; (b) it adopted the standard in good faith, in the belief that it is necessary for the fulfillment of the purpose; and (c) the standard is reasonably necessary to accomplish its purpose, in the sense that the defendant cannot accommodate persons with the characteristics of the claimant without incurring undue hardship.

There was no difficulty in establishing the first two elements of the Grismer test. However, on the third element, the Divisional Court noted that the Admissions Committee had professed an “accommodation dialogue”, but the dialogue was “firmly anchored to the very grades which the Admissions Committee implicitly, if not expressly, recognized as not being reflective of the respondent’s abilities. In other words, the admission decision was anchored to the grades the respondent obtained at Dalhousie, notwithstanding that all parties were in agreement that those grades were obtained at a time when the respondent had undiagnosed disabilities.

Due to the fact that the Dalhousie grades could not be interpreted free from their discriminatory effect, the University either had to assess the respondent’s candidacy without recourse to those grades, or establish that it would result in undue hardship for it to do so. The Divisional Court concluded that the University failed to do either. Further, related to the latter course of action, the Divisional Court noted that the Vice Chair made an implicit observation of undue hardship (in her aside on the tantamount requirement of conducting in-depth assessments of every application from a person with a disability) notwithstanding the fact that undue hardship was never advanced as an argument by the University, and that there was no evidence on the record to support such a conclusion. This reinforced the Divisional Court’s conclusion that the HRTO erred in its decision. The Divisional Court ultimately set aside the HRTO’s decision, and opted to remit the matter to the Admissions Committee for consideration by a process consistent with the court’s reasons.

issues:

(1) Did the Divisional Court appropriately identify “reasonableness” as the standard of review or is the standard of review post-Vavilov “patent unreasonableness”?

(2) Did the Divisional Court correctly apply the standard of review?

(3) If the Vice Chair’s decisions were properly set aside, did the Divisional Court err in its remedy in sending the matter back to the Admissions Committee rather than to the HRTO?

holding:

Appeal allowed in part.

reasoning:

(1) Did the Divisional Court appropriately identify “reasonableness” as the standard of review or is the standard of review post-Vavilov “patent unreasonableness”?

Yes. The Divisional Court appropriately identified the standard of review. This issue was slightly complicated by the fact that in between the Divisional Court’s decision, and before this appeal was heard, the Supreme Court released its decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. Accordingly, the HRTO submitted that its decisions should be reviewed under the “patent unreasonableness” standard, which is the standard of review under s. 45.8 of the Code. However, the Court declined to comment on whether the statutory standard of review under s. 45.8 of the Code should be given effect post-Vavilov. The Court also opted not to undertake an analysis of whether a “patent unreasonableness” review would be materially different from a review for “reasonableness”.

The Court justified these conclusions on the basis that these issues should be decided in a case where the standard of review makes a difference as to the outcome. In this case, the Court concluded that the result would be the same under both standards of review.

(2) Did the Divisional Court correctly apply the standard of review?

Yes. The majority in Vavilov described the review for reasonableness as one that focuses on the decision actually made, the rationale for the decision, and the outcome. According to Vavilov, “a reasonable decision is one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker”. In order to successfully challenge a decision on a reasonableness standard, the flaws in the decision must be sufficiently significant to render the decision unreasonable.

In its analysis, the Court endorsed the three-part Grismer test applied by the Divisional Court. The Court similarly reinforced the notion that the duty to accommodate has both procedural and substantive elements. Although there is often overlap, the procedural element is typically tied to the process adopted in providing accommodation. The substantive element, on the other hand, often refers to the steps taken to implement the actual accommodation to the point of undue hardship.

The Court noted that the Vice Chair’s conclusion that the University met the procedural component was rooted in the Admissions Committee opting to conduct an individualized assessment of the respondent’s application. The Court did not point out any patent deficiencies in this particular conclusion on its own. However, the issues arose when it was considered in conjunction with the Vice Chair’s related conclusion that the University also met the substantive component. Particularly, this conclusion was made despite the fact that there was no evidence to suggest the Admissions Committee actively engaged with the variety of materials provided with the respondent’s application, or that the decision was ultimately based on anything but the respondent’s unaccommodated grades. In the opinion of the Court, this put the Vice Chair’s two conclusions at odds with one another. The “holistic approach” that the Admissions Committee supposedly undertook, which was relied on in finding that the procedural element was met, was in conflict with the conclusion that the exclusive evaluation of past academic performance in fact discharged the substantive element.

This led to the conclusion that the Vice Chair’s reasons did not reflect an internally coherent chain of analysis justified by the facts. Without resolving these contradictory findings, the conclusion as a whole was unreasonable. The Court noted that the Vice Chair effectively bypassed the final step of the Grismer test. Reasonable accommodation could not take the form of simply applying the discriminatory grade standard to the respondent’s unaccommodated grades. If the University sought to do so, it would have to establish undue hardship.

Again, related to the point of undue hardship, the Court similarly agreed with the Divisional Court’s conclusion that the Vice Chair’s reasons implied the existence of undue hardship, despite the University never relying on such a defence. The University was certainly entitled to advance a defence based on undue hardship, but would have to discharge the corresponding burden of leading evidence on such issue (Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15). In this case, the Vice Chair was effectively deciding an issue on which no evidence was led. This further reinforced the finding that the decision of the HRTO was unreasonable.

(3) If the Vice Chair’s decisions were properly set aside, did the Divisional Court err in its remedy in sending the matter back to the Admissions Committee rather than to the HRTO?

Yes. The majority in Vavilov held that “where a decision reviewed by applying the reasonableness standard cannot be upheld, it will most often be appropriate to remit the matter to the decision maker to reconsider the decision.” However, the court added the caveat that declining to remit a matter may be appropriate where it is evidence that a particular outcome is inevitable and remittance would serve no useful purpose.

The Court concluded that although the conclusion is inevitable that the University discriminated against the respondent, the appropriate remedy was not to bypass the HRTO. The Court commented that in these “early post-Vavilov days”, it is preferable to return the matter to the HRTO for its further disposition so that it may fashion the remedy that, in its opinion, would promote compliance with the Code.


Glegg v. Glass, 2020 ONCA 833

[Pepall, van Rensburg and Brown JJ.A.]

Counsel:

J. Zibarras, for the appellant

J.R.G. Cook and J. Beesley, for the respondent L.G.

I. McKellar, for the respondents C.D. and Christen Seaton Burrison Hudani LLP

Keywords: Family Law, Custody, Torts, Intentional Interference with Custodial Rights, Intentional Infliction of Emotional Distress, Civil Procedure, Private International Law, Conflict of Laws, Documentary Discovery, Foreign Letters of Request/Letters Rogatory, Enforcement, Solicitor-Client Privilege, Litigation Privilege, Public Policy, Rules of Civil Procedure, Rule 38.09.1(1), Blank v. Canada (Minister of Justice), 2006 SCC 39, R. v. Zingre, [1981] 2 S.C.R. 392, Frame v. Smith, [1987] 2 S.C.R. 99, Maranda v. Richer, 2003 SCC 67, Descôteaux et al. v. Mierzwinksi, [1982] 1 S.C.R. 860, Gulf Oil Corporation v. Gulf Canada Ltd. et al., [1980] 2 S.C.R. 39, Treat America Ltd. v. Nestlé Canada Inc., 2011 ONCA 560, R.G. v. K.G., 2017 ONCA 108, Perlmutter v. Smith, 2020 ONCA 570, Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, Young v. Tyco International of Canada Ltd., 2008 ONCA 709, Presbyterian Church of Sudan v. Taylor, (2006), 275 D.L.R. (4th) 512 (Ont. C.A.), France (Republic) v. De Havilland Aircraft of Canada Ltd., (1991), 3 O.R. (3d) 705 (C.A.), O.G. v. R.G., 2017 ONSC 6490, Re Friction Division Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et al. (No. 2), (1986), 56 O.R. (2d) 722 (H.C.), Fecht v. Deloitte & Touche, (1996), 28 O.R. (3d) 188 (Gen. Div.), aff’d (1997) 32 O.R. (3d) 417 (C.A.), Re Westinghouse Electric Corporation and Duquesne Light Co. (1977), 16 O.R. (2d) 273 (H.C.)

facts:

The appellant and Ms. V married in 1998, separated in 2001, and divorced in 2002. Their daughter, O, was born in 1999. Pursuant to a separation agreement in 2001, mother and father had joint custody of O and each agreed to live within a stipulated distance of Oakville until she turned 18.

In 2013, Ms. V and Mr. P moved to Florida. O visited her mother in Florida in 2014, at which time she was 15 years old. Following O’s arrival in Florida, Ms. V’s Ontario counsel wrote the appellant to advise that O did not want to return to Ontario and had enrolled in a Florida high school.

In 2014, the appellant commenced litigation against his ex-wife in Ontario and Florida that resulted in O’s return to Ontario. After, when O turned 16 years old, she sought and obtained an order from an Ontario court that she had withdrawn from her parents’ control.

In 2018, the appellant commenced a proceeding in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida (the “Florida Court”) against Ms. V and Mr. P (the “Florida Action”). The appellant’s Verified Complaint asserted two counts against his ex-wife and her husband: (i) intentional interference with custodial rights granted by Ontario court orders, including orchestrating the daughter’s proceedings for a declaration that she was free from parental control; and (ii) intentional infliction of emotional distress resulting from the alleged interference in the appellant’s custodial rights, including the violation of Ontario court orders.

In 2019, the appellant sought and obtained two letters of request from the Florida Court seeking the assistance of Ontario courts to secure the production of documents for use in the Florida Action (the “Letters of Request”). Specifically, the Letters of Request sought production of documents from two former lawyers for Ms. V, LS and CD, as well as from lawyers who had acted for O, LG and Justice for Children and Youth (“JFCY”).

Later in 2019, the appellant commenced an application seeking to enforce the Letters of Request against LS, JFCY, LG and CD, together with her law firm, Christen Seaton Burrison Hudani LLP. The application was withdrawn against LS, whilst responding materials were filed by the remaining respondents. Cross-examinations were conducted of the appellant, CD, and JFCY’s executive director.

Prior to the return of the application, the appellant reached a settlement with LS and CD in which he agreed to withdraw the application against LS, and in which CD agreed not to oppose the application provided the redaction of privileged information applied to all categories of documents. On the return of the application, the application judge was informed that the appellant was withdrawing the application against LS and CD was not opposing the proceeding. It did not appear that the application judge was told the terms of the settlement.

On the return of the application, the appellant also sought an adjournment of the proceeding against JFCY. The application judge refused to adjourn the application against JFCY unless the entire application was adjourned. The appellant, in his application as against LG, was relying on information from the affidavit and cross-examination of JFCY and the positions being taken by the parties were intertwined. The appellant then advised that he was withdrawing his application with prejudice against JFCY.

The application then proceeded against LG, CD, and her law firm. The application judge dismissed the application. He concluded that it would be against public policy to enforce the Letters of Request for two reasons. First, it would offend public policy to enforce letters of request from a foreign court “in aid of a cause of action that is forbidden in Ontario.” Second, he concluded that the application should be dismissed because it interfered with solicitor-client privilege and client confidentiality, notions fundamental to the administration of justice and to the Canadian legal system.

issues:

(1) Did the application judge conduct the hearing in a procedurally unfair manner?

(2) Did the application judge err in his public policy analysis?

holding:

Appeal dismissed.

reasoning:

(1) Did the application judge conduct the hearing in a procedurally unfair manner?

No. The appellant was not denied procedural fairness in the hearing before the application judge. Although the appellant criticized the application judge for referring to the evidence of Ms. B from JFCY, the appellant referred to her affidavit and cross-examination at paras. 33, 61 and 71 of his main factum. This quite understandably led the application judge to describe the positions being taken by the parties as “intertwined”. As well, one exhibit to the appellant’s affidavit in support of the application was his Verified Complaint in the Florida Action, to which were attached several of the Ontario and Florida custody orders. The responding materials filed by CD and JFCY reproduced some of the other orders made in those proceedings. It was open to the application judge to consider all of the orders to gain an accurate understanding of the events that led to the issuance of the Letters of Request.

The appellant’s submission that the application judge could only refer to materials that the appellant had listed in the Confirmation Form he filed for the return of the application was not accepted. Rule 38.09.1(1) of the Rules of Civil Procedure requires the party who makes an application on notice to give the registrar, at least three days before the hearing date, a confirmation of application using Form 38B. If no confirmation is given, the application will not be heard except by order of the court: r. 38.09.1(2). Regional practice may modify the content of a confirmation form. As is apparent from the language on the Toronto Region’s modified confirmation form, the document operates as a device that assists court staff in the Civil Scheduling Unit to identify the materials that should be delivered to the judge hearing an application or motion. The form does not act as some sort of administrative constraint on a judge’s discretion to determine the materials that are in fact relevant to the decision he has to make.

Appellant’s counsel did not dispute the proposition that on the return of the application, no party asked the application judge to disregard specific materials. Further, in considering whether to enforce letters of request, a judge must determine “whether the request imposes any limitation or infringement on Canadian sovereignty and whether justice requires an order for the taking of commission evidence”: Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, at para. 59. To make that determination, a judge must understand the circumstances that led to the issuance of the letters of request. That is especially so in the unusual circumstances presented by this case, where extensive litigation in Ontario preceded the initiation of the foreign proceeding in which the Letters of Request were issued.

(2) Did the application judge err in his public policy analysis?

No. The application judge made no error in his decision to refuse the foreign request. The decision to grant or refuse a foreign request is a matter of judicial discretion to which the Court must give deference in the absence of a demonstrated error in principle by the court below, which would include a misapprehension of or failure to take into account the evidence, or a clearly wrong or unreasonable result: Presbyterian Church of Sudan v. Taylor, (2006), 275 D.L.R. (4th) 512 (Ont. C.A.) at paras. 19 and 30; Perlmutter v. Smith, 2020 ONCA 570, at para. 26; Young v. Tyco International of Canada Ltd., 2008 ONCA 709, at para. 27.

The application judge’s conclusion on solicitor-client privilege was not obiter. His reasons were clear that it was a discrete basis on which he dismissed the application as contrary to public policy. Second, the application judge aptly rejected the appellant’s contention that he was not seeking documents protected by solicitor-client privilege as “sophistry”.

No evidence was placed before the application judge that either of the two clients – Ms. V or O, had consented to the release of the documents or information sought. On their face, the documents sought in the subpoenas attached to the Letters of Request were presumptively protected by solicitor-client privilege or fell within the ambit of the principle of litigation privilege. While litigation privilege usually ends when the litigation ends, it continues where litigants or related parties remain locked in what is essentially the same legal combat: Blank v. Canada (Minister of Justice), 2006 SCC 39 at para. 34. Related litigation includes separate proceedings that involve the same or related parties and arise from the same or a related cause of action, or proceedings that raise issues common to the initial action and share its essential purpose. The history of the parties’ custody litigation provided support for the application judge’s observation that O’s withdrawal of her application for child support did not bring a ceasefire to the family battles. As well, the history and character of the litigation strongly suggested that, for the purposes of determining whether litigation privilege continued to apply, the Florida Action would constitute litigation related to the terminated Ontario proceedings.

In the circumstance of this case, it was not necessary to consider the issue of whether an Ontario court can refuse to enforce letters of request on the ground that the foreign cause of action is not one recognized in Ontario. It was not necessary since the application judge did not err in declining to enforce the Letters of Request on the other public policy ground – namely, because they would improperly interfere with solicitor-client privilege and confidentiality. That was a sufficient basis on which to dispose of the appeal.


1750738 Ontario Inc. c. 1750714 Ontario Inc., 2020 ONCA 836

[van Rensburg, Benotto and Thorburn]

Counsel:

J.G. Saikaley, G. Poliquin and M.P. Dupont, for the appellants

S.C. Reitano, for the respondent

Keywords: Contracts, Real Property, Interpretation, Oral Contracts, Essential Terms, Part Performance, Exclusion Clauses, Corporations, Shareholder Agreements, Adoption of Pre-Incorporation Contracts, Remedies, Specific Performance, Civil Procedure, Costs, Offers to Settle, Ontario Business Corporations Act, RSO 1990 c B.16, s. 21(2), Rules of Civil Procedure, Rule 49.10, Modern Paving Ltd v. Donovan Homes Ltd., 2011 NLCA 39, Bawitko Investments Ltd v. Kernels Popcorn Ltd. (1991), 79 DLR (4th) 97 (Ont CA), Credit Security Insurance Agency Inc v. CIBC Mortgages Inc. (2006), 268 DLR (4th) 725 (Ont SC), aff’d 2007 ONCA 287, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Matic et al. v. Waldner et al., 2016 MBCA 60, UBS Securities Canada Inc v. Sands Brothers Canada Ltd, 2009 ONCA 328, Singh v. Trump, 2016 ONCA 747, Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, DLG & Associates v. Minto Properties Inc., 2015 ONCA 705, Douez v. Facebook Inc., 2017 SCC 33, Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, de Montigny v. Brossard (Succession), 2010 SCC 51, Beswick v. Beswick, [1968] AC 58 (HL), Gasparini et al. v. Gasparini et al. (1978), 20 OR (2nd) 113 (Ont CA), Smith v. Inco Limited, 2013 ONCA 724, Seaton v. Bolton, 2007 CanLII 46250 (Ont SC), Niagara Structural Steel (St Catharines) Ltd. v. WD Laflamme Ltd., 1987 CanLII 4149 (Ont CA), GHL Fridman, The Law of Contract in Canada, 6th ed (Toronto, Thompson Reuters Canada Ltd, 2011)

facts:

This decision is in French.

M. Leclair, a home builder who operated Les Habitations Leclair Inc., sought to develop a housing estate of approximately 100 residential lots in Limoges, ON. He needed investors so that he could purchase the land. His stepfather M. Lacroix, the respondent, agreed to invest in the project. A disagreement arose as to whether an oral contract had been formed and, if yes, the terms of that oral contract. According to M. Lacroix, he was only interested in investing if his share of the lots to be built were transferred to Maisons Lacroix Homes Inc. for construction. According to M. Leclair, M. Lacroix was offered “2 or 3 lots per year”, which he accepted.

Subsequently, M. Leclair found additional investors: 1750714 Ontario Inc. (“714”), 1751917 Ontario Inc. (“917”), and 6888631 Canada Inc. (“631”). The fourth investor was 1750738 Ontario Inc. (“738”), operated by M. Lacroix. Each investor contributed 25% toward the total investment. A holding company, 1750739 Ontario Inc. (“739”), was incorporated to carry out the project. To secure a mortgage, the mortgagee required the investors to sign a shareholder agreement. This was prepared by a lawyer and contained a standard exclusion clause, relating to “the organization and affairs of the Corporation and/or the sale of any Shareholders’ shares of the Corporation.” The documents were in English, and the lawyer did not receive input from M. Lacroix prior to drafting.

Following approval of the subdivision by the municipality, the lots were distributed 75% to Habitations Leclair and 25% to Maisons Lacroix. Once construction was underway, 714, 917 and 631 criticized Maisons Lacroix for selling their homes cheaper and for their construction methods. The other investors imposed financial conditions upon Maisons Lacroix. As a result of the disagreements, 714, 917 and 631 terminated the business relationship with Maisons Lacroix.

At trial, the respondent submitted that the appellants, 714, 917 and 631, violated the terms of the oral contract when they decided to stop the transfer of 25% of the lots to Maisons Lacroix. The trial court decided that an oral contract existed between M. Leclair and M. Lacroix, a condition of M. Lacroix’s investment was that a number of lots equal to his participation in the project would be built by Maisons Lacroix, 738 could continue the action on its part, and the shareholder agreement did not negate the effect of the previous oral contract. The trial court ordered specific performance of the contract, binding the appellants to the orders.

issues:

(1) Did the trial judge err in concluding there was an oral contract while the material terms of this alleged contract were too uncertain, or in adding implicit conditions to the contract?

(2) Did the trial judge err by failing to interpret the exclusion clause in the agreement, or concluding that the clause had the effect of terminating the contract?

(3) Did the trial judge err by ordering specific performance of the contract?

(4) Did the trial judge err by enforcing the orders against 714, 917, and 631?

(5) Alternatively, should leave to appeal the order for costs and the amended order be granted?

holding:

Appeal dismissed.

reasoning:

(1) Did the trial judge err in concluding there was an oral contract while the material terms of this alleged contract were too uncertain, or in adding implicit conditions to the contract?

No. Determining the existence of an oral contract and the certainty of its terms are mixed questions of fact and law considering the factual matrix as a whole. Non-essential terms and details do not have to be settled in order for legal effect to be given to the reasonable expectation of the parties. The facts to be considered depend on the context of the contract. It is also important to know whether the parties acted as if they were bound by an agreement.

In this case, the trial judge concluded that M. Lacroix undertook to participate in financing the subdivision project on an equal basis with the other investors and, in return, Maisons Lacroix was to be the chosen contractor to build houses on a number of lots equal to M. Lacroix’s share in the project. Those were the essential terms. It was not necessary to know the precise number of lots or the future sale price of each home for the agreement to be binding. The other investors were informed of the essential terms and accepted them when 739 was incorporated. Furthermore, when the time came to distribute the lots to the contractors, 739 distributed 25% of the lots to Maisons Lacroix in accordance with the oral contract. The Court held that no palpable and overriding error was committed by the trial judge in concluding there was an oral contract between M. Leclair and M. Lacroix because the essential terms were precise and certain.

(2) Did the trial judge err by failing to interpret the exclusion clause in the agreement, or concluding that the clause had the effect of terminating the contract?

No. Contractual interpretation consists of determining the objective intention of the parties following a fact-driven analysis. In conducting such analyses, courts have considered the language used in the entire agreement, the relationship of the parties when the contract was formed, the sophistication of the parties, the nature of the negotiations, and the language of other terms of the contract. An exclusion clause cannot have the effect of excluding substantive elements of a pre-existing contractual agreement unless it can be demonstrated that the clause was specifically brought to the attention of the party renouncing his rights.

The trial court noted that the exclusion clause was not brought to the attention of M. Lacroix, the wording of the clause made no mention of the intention to set aside the oral contract, all parties were aware of his limited knowledge of English, he did not have independent legal advice prior to signing the shareholder agreement, and there was no explanation of the clause and its importance. In preparing the shareholder agreement, counsel simply incorporated information into an English precedent. None of the shareholders expressly asked to include the clause and no discussion of the clause took place before signing. As it was clear from the facts that the clause was never brought to the attention of M. Lacroix or 738, the analysis ended there. The trial court also determined that if the exclusion clause applied, the only explanation would be that 714, 917 and 631 included it intending to take advantage of M. Lacroix by depriving him, for no consideration, of the benefit they knew was the primary reason for his investment. The Court agreed, finding no error by the trial judge in not interpreting the exclusion clause, or not finding that it terminated the oral contract.

(3) Did the trial judge err by ordering specific performance of the contract?

No. The object of redress for breach of contract is to return the affected party to the position it would have been in had the contract been performed. Specific performance can be ordered when the object of the agreement is unique or irreplaceable. Since it is a discretionary remedy, an appellate court should not interfere with the trial court’s decision unless it committed an error in principle or was clearly wrong. Ordering specific performance is indicated when the contract is for the benefit of a third party.

M. Lacroix testified that he agreed to invest only to benefit Maisons Lacroix. He became an investor in the project through 738, which suffered prejudice as a result of 739’s decision to cease doing business with Maisons Lacroix. The subdivision project was a unique opportunity for investors and builders in the Limoges, ON area. It was also the only long-term, complex real estate development wherein 738 could pass on 25% of the lots to Maisons Lacroix. The trial court therefore accepted that 738 was entitled to continue the action, that damages were inadequate, and that it would be impossible to quantify damages. The obligation to distribute 25% of the lots to Maisons Lacroix by applying the same conditions as those imposed upon Habitations Leclair was clear and created no obstacles to judicial supervision. The Court therefore found no error in the trial judge’s decision to order specific performance.

(4) Did the trial judge err by enforcing the orders against 714, 917, and 631?

No. Enforcement of the orders upon 714, 917 and 631 flowed from the trial judge’s conclusion that all investors must be bound by the judgment. All investors in 739 were aware of the 75/25 spit and agreed to be bound by the oral contract at the time 739 was incorporated. 739 then ratified the oral contract by adopting “action[s] or conduct signifying [739’s] intention to be bound” by the oral contract within the meaning of s. 21(2) of the Ontario Business Corporations Act. Finally, 714, 917 and 631, were represented by the same lawyers as 739. Therefore, the Court found no error by the trial judge.

(5) Alternatively, should leave to appeal the order for costs and the amended order be granted?

No. Absent an error in principle or a manifest error in the granting of costs, a high level of deference must be given to a court of first instance. The respondent, 738, had presented an offer to settle the action. The appellants declined the respondent’s offer, and also made no offer to settle. Therefore, 738 had no choice but to proceed to trial. At trial, the respondent received judgment more favourable than the terms of its Rule 49.10 offer to settle. The trial court did not make any reviewable error in applying Rule 49.10, and correctly ordered that costs be paid by 714, 917 and 631.


Canadian Federation of Students v. Ontario (Colleges and Universities), 2020 ONCA 842

[Fairburn A.C.J.O. (Motion Judge)]

Counsel:

S.S. Mathai, K. Chatterjee, A. Sinnadurai and B. Kettles, for the appellant

M. Wright, L. Century and G. Philipupillai, for the respondents

D. Elmaleh and A. Rosenberg, for the proposed intervener B’nai Brith of Canada League for Human Rights

E. Krajewska, T. Markin and M. Chowdhury, for the proposed intervener University of Toronto Graduate Students’ Union

P. Hrick and D. Rakic, for the proposed interveners S.P. and Guelph Queer Equality

M.P. Tunley and J.P. Saville, for the proposed interveners Canadian Journalists for Free Expression, Centre for Free Expression, Canadian Association of Journalists, PEN Canada, World Press Freedom Canada and Canadian Association of University Teachers

R.A. Centra and L. Pearce, for the proposed interveners the University of Ottawa, Queen’s University at Kingston, the Governing Council of the University of Toronto, the University of Waterloo, and the University of Western Ontario

D. Kastner and V. Vaitheeswaran, for the proposed intervener the Association for Canadian Clinical Legal Education

Keywords: Administrative Law, Colleges and Universities, Ancillary Fees, Civil Procedure, Interveners, Friends of the Court, Rules of Civil Procedure, Rule 13.02, Canadian Charter of Rights and Freedoms, s. 2(b), Canadian Federation of Students v. Ontario, 2019 ONSC 6658, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), Wilson v. British Columbia (Superintendent of Motor Vehicles), 2015 SCC 47

facts:

In 2018, the Ontario Cabinet required the Minister of Training, Colleges and Universities to direct publicly-funded colleges and universities to allow students to opt out of ancillary fees related to student associations, products and special services. In 2019, the Minister issued the “Student Choice Initiative”, which was incorporated in policy directives for colleges and guidelines for universities. The Initiative categorized student fees into either essential mandatory fees or non-essential optional fees. The respondents on appeal brought an application for judicial review to the Divisional Court seeking to quash the directives underlying the Initiative. The Court granted the application and quashed the directives on the basis that they were inconsistent with the statutory scheme respecting the governance of universities and colleges. The appellant, Ontario, has been granted leave to appeal that decision.

Pursuant to Rule 13.02 of the Rules of Civil Procedure, six moving parties sought leave to intervene as friends of the court in a pending appeal from the Divisional Court’s decision in Canadian Federation of Students v. Ontario, 2019 ONSC 6658. The appellant consented to the motions for leave to intervene brought by B’nai Brith of Canada League for Human Rights (“B’nai Brith”) and the University of Toronto Graduate Students’ Union (“UTGSU”). The appellant took no position respecting the proposed interventions by the Start Proud and Guelph Queer Equality (collectively, the “LGBTQ+ Coalition”), the University of Ottawa, Queen’s University, the Governing Council of the University of Toronto, the University of Waterloo, and the University of Western Ontario (collectively, the “Universities”), and the Association for Canadian Clinical Legal Education (“ACCLE”). The appellant opposed the proposed intervention by the Canadian Journalists for Free Expression, the Centre for Free Expression, the Canadian Association of Journalists, PEN Canada, World Press Freedom Canada, and the Canadian Association of University Teachers (collectively, the “Coalition”). The appellant argued that the Coalition sought to raise new issues on appeal.

issues:

(1) Should intervener status be granted to each of the proposed interveners?

holding:

Motions granted.

reasoning:

(1) Should intervener status be granted to each of the proposed interveners?

Yes. Beginning with the consents, the Court held that, in light of their prior contributions as friends of the court before the Divisional Court, and the parties’ positions, intervener status as friends of the court was granted to B’nai Brith and UTGSU.

Turning to the unopposed interventions, the Court considered multiple criteria in deciding whether to grant leave to intervene, including: the general nature of the case, the issues that arose, and the contribution that the intervener could make to those issues without doing an injustice to the parties. The Court found that this appeal raised issues that had a far-reaching impact and that each proposed intervener had an interest that was engaged in the pending appeal. The Court was satisfied that each of the proposed interveners had useful and important contributions to make on appeal and would provide perspectives that would not be offered by the parties. As reflected in the parties’ positions respecting the proposed interveners of the LGBTQ+ Coalition, Universities and ACCLE, the Court held that no injustice to the parties would result from the motions being granted.

The Court then considered the opposed motion to intervene brought by the Coalition. The Coalition contended that it had a distinct perspective to bring to the appeal. The Coalition stated that it would argue that, when viewed through the lens of the free expression values in section 2(b) of the Charter of Rights and Freedoms and purposes that underlie Ontario’s legislative scheme for the governance of universities and colleges, the Divisional Court’s interpretation of the applicable legislation was correct and should be upheld.

The appellant argued that the Coalition’s motion to intervene should be dismissed because the Divisional Court did not characterize the governing legislation as ambiguous, nor did it use s. 2(b) of the Charter as an interpretive aid. The appellant emphasized that Charter values may only be used as an interpretive aid where there is a genuine ambiguity in the legislation. The appellant argued that, as the Divisional Court did not find ambiguity in the legislation, and neither party had argued that an ambiguity existed, the Coalition’s s. 2(b) argument reflected a new issue on appeal. Permitting the Coalition to raise this argument at this late stage would, according to Ontario, work an unfairness to the parties.

The Court did not agree with the appellant’s submissions. The appeal raised the issue of the proper interpretation of legislation affecting the governance of universities and colleges. The appropriateness of using s. 2(b) of the Charter as an interpretive tool was not a new legal issue, but rather was a new argument being introduced to support the Divisional Court’s interpretation of the applicable legislative provisions. The appellate court may conclude that the relevant provisions were ambiguous even though the Divisional Court did not, and even though the parties were not arguing that the legislation is ambiguous. Were the court to reach this conclusion, it was not beyond the realm of possibility that s. 2(b) of the Charter could be considered as an interpretive tool to resolve the ambiguity. The Court held that the Coalition’s submissions may be of assistance to the Court in conducting the interpretive exercise demanded by this appeal. Additionally, since the parties would have an opportunity to respond, no prejudice would result from the Coalition’s participation as a friend of the court.


Manthadi v. ASCO Manufacturing, 2020 ONCA 839

[Thorburn J.A. (Motions Judge)]

Counsel:

J.S. Contini, for the moving party

R. Mann, for the responding parties

Keywords: Contracts, Solicitor and Client, Solicitor’s Liens, Solicitors’ Act, s. 34(1), Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 7(2) and (3), Weenen v. Biadi, 2018 ONCA 288, Dalcor Inc. v. Unimac Group Ltd., et al, 2017 ONSC 945, Foley v. Davis, 1996 CanLII 1145 (Ont. C.A.)

facts:

J. S. Contini Law Professional Corporation (“Contini”), the former solicitor for the responding parties ASCO Manufacturing and N. M., brought two companion motions for solicitors’ liens. In the ASCO claim, Contini sought a lien on the costs awarded to his then client, ASCO Manufacturing, when his client’s appeal was allowed. In the N.M. claim, Contini sought a lien on the costs awarded to his then client, N.M., when the appeal brought by the opposing party was dismissed, and when the $150,000 that the opposing party had paid into court was ordered to be paid out with costs, in a related appeal.

issues:

(1) Should a solicitor’s lien be issued?

holding:

Motions granted.

reasoning:

(1) Should a solicitor’s lien be issued?

Yes. The Court held that without a solicitor’s lien, there was a significant risk N.M. would not or may not be willing and or able to pay the moving party’s receivables. The Court has the jurisdiction to issue a lien over accounts pursuant to s. 34(1) of the Solicitors’ Act or pursuant to the Court’s inherent jurisdiction. In order for the Court to order such a lien, the solicitor must demonstrate that the fund exists, the property was recovered or preserved through the efforts of the solicitor, and there is some evidence that the client cannot or will not pay the fees. In deciding whether to grant a solicitors’ lien, the court must balance the circumstances and equities of each case.

In each of the moving party’s claims, the Court noted that there was a fund in existence. ASCO conceded that the full sum was recovered or preserved through the efforts of Contini and N.M. conceded that the costs award was recovered through the instrumentality of Contini. Both respondents also claimed that during the course of their litigation, they paid Contini more than the amounts sought, and Contini had failed to show that either respondent could not or would not pay Contini’s fees.

The Court found that the moving party correctly noted that prior payments for other steps in the litigation were not relevant to this motion, as there was a fund recovered that was available to protect Contini’s unpaid receivables. The amounts could therefore be subject to a solicitor’s lien to secure those funds, pending resolution of their dispute. Moreover, in both cases, the Court found that the moving party had adduced evidence to support his claim that the responding parties could not or would not pay his fees.

In the case of the ASCO appeal, prior to the hearing of the appeal, express representations were made that Contini’s receivables would be paid. Only after the appeal was allowed and arrangements made to receive the costs award did the responding party ASCO refuse to pay the moving party’s receivable, and indicated that they intended to assess his invoices. In the N.M. appeal, prior to receipt of the funds recovered through the instrumentality of Contini, express representations were made to Contini that his receivables would be paid and he continued to work on the appeals. Moreover, after the appeal was dismissed and the $150,000 paid out of court, N.M. resiled from the position that Contini’s receivable would be paid. He refused to pay it and instead suggested that he intended to assess his invoices. Only after these motions were brought did the responding parties take the position that the moving party should accept their counsel’s undertakings to hold the funds in trust in lieu of a solicitor’s lien, and suggested there was no evidence they could not or would not pay the moving party’s fees.

For these reasons, the Court held that, without a solicitor’s lien, there was a significant risk N.M. would not pay the moving party’s receivables. The undertaking provided by N.M. and his counsel afforded none of the protections of a solicitor’s lien in the event that N.M. or his counsel failed to abide by the undertaking or other creditors asserted claims against the monies presently held in trust by counsel. It was therefore unreasonable to expect the moving party to rely on such an undertaking in lieu of a solicitor’s lien.


Comfort Capital Inc. v. Yeretsian, 2020 ONCA 846

[Feldman, Simmons and Harvison Young JJ.A.]

Counsel:

J. Zibarras, for the appellant

D. Bourassa, for the respondents

Eric Golden and Elsir Tawfik, for the court-appointed receiver

Keywords: Bankruptcy and Insolvency, Receiverships, Claims Process, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 243(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Coast Capital Savings Credit Union v. Symphony Development Corp., 2011 BCSC 333, DBDC Spadina Ltd. v. Walton, 2015 ONSC 5608, Lilydale Cooperative Limited v. Meyn Canada Inc., 2019 ONCA 761

facts:

A receivership order was made in February 2018. Properties under receivership were sold and proceeds were recovered. The applicants held first mortgages against six properties owned by the debtors. Various related corporations, including CIC, held subsequent mortgages on the six properties. Around the time of the receivership, a principal of CIC and related corporations who held subsequent mortgages on the properties was charged with fraud. Resulting publicity led to Mareva-like claims being advanced in the receivership to freeze surplus proceeds arising from the sale of any of the six properties. A claims process was established on consent under which claimants could prove a direct claim against one of the subsequent mortgagee corporations on a balance of probabilities, entitling the claimant to a pro rata unsecured claim against surplus proceeds to which the particular mortgagee corporation was entitled.

The Scollard action arose out of a power of sale conducted by CIC in 2014, which yielded proceeds of $5.86M. CIC held the first mortgage on the Scollard property. The Stanbarr claimants held eleven subsequent mortgages. Following the Scollard sale, CIC failed to account to the Stanbarr claimants for the proceeds of sale. CIC held a second mortgage on the Caldwell property, one of the six aforementioned properties. The receivership sale of that property yielded surplus proceeds to which CIC was entitled. In June 2018, the Stanbarr claimants moved in the receivership for an order requiring the Receiver to pay the surplus proceeds from the Caldwell sale into court to meet its claim arising out of the Scollard action. At a hybrid trial of that action, the Stanbarr claimants successfully challenged the validity of the notice of sale as the notice was not served on them, and the amount claimed was inflated by over $1.1M in expenses CIC claimed it incurred before obtaining an assignment on the first mortgage. The trial judge did not, however, determine the final amount owing on the mortgage as of the date of closing. As a result, the Stanbarr claimants did not obtain a money judgment against CIC arising out of this trial.

Regarding the Receivership proceedings, CIC and the Stanbarr claimants agreed that the funds that would otherwise have been paid by the Receiver to CIC from the Caldwell sale would be paid into court to the credit of the Scollard Action, obviating the need for a Mareva injunction. In its Tenth Report to the court, the Receiver determined that CIC could have been entitled to $4.85M from the Scollard proceeds, leaving a balance of $920,000 owing to the Stanbarr claimants. The Receiver recommended that the Caldwell surplus proceeds of $785,000 belonging to CIC, which had already been paid into court, should be paid to the Stanbarr claimants. The motion judge accepted this recommendation.

issues:

(1) Did the motion judge err by making an order in Stanbarr’s favour for payment when it never submitted a claim by way of statement of claim and only moved for a Mareva injunction?

(2) Did the motion judge err by holding that the onus was on the party disputing the Receiver’s recommendation?

(3) Did the motion judge err by accepting the Receiver’s recommendation that a finding in the Scollard trial judge’s reasons was dispositive of the Stanbbarr claim when the final amount owing under the CIC mortgage in the Scollard action was left as an outstanding issue yet to be determined in a further proceeding in the Scollard action?

(4) Because the claims process only included claimants who sought a Mareva injunction against CIC to freeze funds payable to CIC and held by the Receiver, was there prejudice to the rights of any creditors of CIC who were not part of the process, including any judgment creditors who may have filed a writ of execution with the sheriff?

holding:

Appeal dismissed.

reasoning:

(1) Did the motion judge err by making an order in Stanbarr’s favour for payment when it never submitted a claim by way of statement of claim and only moved for a Mareva injunction?

No. A party making a claim to surplus proceeds would have to prove on a balance of probabilities that it had a direct claim against CIC. Both Stanbarr and CIC relied on affidavits from the Mareva stage of the proceedings, which was resolved by the payment into court. The only remaining issue was the determination of the claims. This was a consent process and it was clear that Stanbarr’s participation was based on its claim to the surplus of the Caldwell property sale. The consent procedure was followed and there was no need for a statement of claim.

(2) Did the motion judge err by holding that the onus was on the party disputing the Receiver’s recommendation?

No. The onus of proof on the claimant was for the purpose of the Receiver’s report and recommendation. On review, the onus shifted to the party disputing that recommendation to show sufficient reasons why it should not be followed. A court should only intervene in the case of an error or law or a palpable and overriding error of fact. The motion judge applied the correct onus on review.

(3) Did the motion judge err by accepting the Receiver’s recommendation that a finding in the Scollard trial judge’s reasons was dispositive of the Stanbbarr claim when the final amount owing under the CIC mortgage in the Scollard action was left as an outstanding issue yet to be determined in a further proceeding in the Scollard action?

No. At the outset of trial in the Scollard action, the parties agreed that the issue of CIC’s entitlement to pre-assignment expenses related to the first mortgage would be determined by the trial judge. The trial judge found that the $1.1M expense claim was invalid, but left the determination of the amount to a future hearing as the validity of post-assignment expenses had not yet been adjudicated. CIC argued that the issue of quantifying pre-assignment expenses was not finalized at trial but left for a future hearing, meaning that the Caldwell proceeds could not be paid out of court to the Stanbarr claimants in this claims process.

Using the findings from the Scollard trial, the Receiver was able to precisely calculate the amount of the invalid pre-assignment expenses, which CIC did not challenge in the claims process. As there was no appeal from the trial judge’s decision on the issue of the pre-assignment expenses, the quantification based on her findings was res judicata and barred from re-litigatoin by issue estoppel. The only issues left for a future hearing were quantification of post-assignment expenses and determination of the final amount owing to CIC on the Scollard mortgage. The motion judge made no error by accepting the Receiver’s recommendation that the surplus funds from the Caldwell sale be paid to the Stanbarr claimants in respect of their claim against CIC in the Scollard case.

(4) Because the claims process only included claimants who sought a Mareva injunction against CIC to freeze funds payable to CIC and held by the Receiver, was there prejudice to the rights of any creditors of CIC who were not part of the process, including any judgment creditors who may have filed a writ of execution with the sheriff?

No. Claims of other potential creditors of CIC who did not seek a Mareva injunction to preserve funds collected by the Receiver of a debtor of CIC were not barred by this claims process. The only effect was that these creditors would not have access to CIC’s Caldwell funds. In its written submissions, CIC advised it had solvency issues. So, to protect the rights of any judgment creditor of CIC that filed a writ of execution with the sheriff, the Court directed the Receiver to pay the funds out of court to the Stanbarr claimants after conducting a bankruptcy search and determining there were no writs of execution filed against CIC. If writs were filed, the Receiver would then be able to return the issue of entitlement or priority to the motion judge.


SHORT CIVIL DECISIONS

1632093 Ontario Inc. (Turn-Key Projects) v. York Condominium Corporation No. 74, 2020 ONCA 843

[Tulloch, Miller and Paciocco JJ.A.]

Counsel:

A. Casalinuovo, for the appellant/respondent by way of cross-appeal

M. Simaan and R. Gandotra, for the respondent/appellant by way of cross-appeal

Keywords: Civil Procedure, Appeals, Palpable and Overriding Error, Costs, Rules of Civil Procedure, Rule 29

Krieser v. Garber, 2020 ONCA 840

[Doherty, Hoy and Jamal JJ.A.]

Counsel: 

P.W. Kryworuk and J.R.W. Damstra, for the appellants M.N. and Nealon Wood Products Ltd.

A.I. Schein and S. Schreiber, for the appellants A.G., M.G. and S.G.

K. Prehogan and L. Boritz, for the respondent

Keywords: Civil Procedure, Appeals, Motions, Costs

Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 849

[Huscroft, Zarnett and Coroza JJ.A.]

Counsel: 

P.J. Pape, for the appellants

J.C. Lisus, A. Winton and V.A. Calina, for the respondents

Keywords: Costs Endorsement


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