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Good evening.

These are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 9, 2022.

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In Lash v. Lash Point Association Corp., the Court allowed the appeal and set aside the approval of a sale of a property by a Received because the sale failed to satisfy any of the Soundair principles and ought not to have been approved. The factors relied upon by the motion judge to approve the sale could not serve as an effective substitute to the Soundair factors in the circumstances of the case.

In Taylor v. Hanley Hospitality Inc., the Court set aside the motion judge’s order dismissing the appellant’s action for constructive dismissal on the basis of the interpretation of the infectious disease emergency leave amendments to the Employment Standards Act. The motion judge made inappropriate findings of fact on the Rule 21 motion. The Court declined to interpret the amendments in the absence of a full record.

Other topics covered this week included fire insurance coverage/exclusions, the method of providing notice of waiver of conditions within agreements of purchase and sale of land and interveners.
Wishing everyone an enjoyable weekend.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Lin v. Weng, 2022 ONCA 367

Keywords: Contracts, Insurance, Interpretation, Property, Fire, Exclusions, Statutory Interpretation, Retrospectivity, Standard of Review, Insurance Act, R.S.O. 1990, c. I.8, s. 129.1, Hryniak v. Mauldin, 2014 SCC 7, Housen v. Nikolaisen, 2002 SCC 33, Daley v. Economical Mutual Insurance Company (2005), 206 O.A.C. 33 (C.A.); Ledcor Construction Limited v. Northbridge Indemnity Insurance, 2016 SCC 37, Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.), Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301, R. v. Bengy, 2015 ONCA 397, Tran v. Canada (Public Safety and Emergency Preparedness), 2017 SCC 50, Elmer A. Driedger, “Statutes: Retroactive Retrospective Reflections” (1978), 56 Can. Bar. Rev. 264, Ruth Sullivan, Statutory Interpretation, 2nd ed. (Toronto: Irwin Law, 2007), Pierre-André Côté, The Interpretation of Legislation in Canada, 4th ed. (Scarborough: Carswell, 2011), Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Markham: LexisNexis Canada, 2014)

Lash v. Lash Point Association Corp., 2022 ONCA 361

Keywords: Real Property, Receiverships, Sale Process, Approval, Rules of Civil Procedure, Rule 59.06(2)(a), Sengmueller v. Sengmueller (1994) 17 O.R. (3d) 208 (C.A.), Royal Bank of Canada v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.), Regal Constellation Hotel Ltd. (Re) (2004), 71 O.R. (3d) 355 (C.A.), Toronto-Dominion Bank v. Usarco Ltd. (2001), 196 D.L.R. (4th) 448 (Ont. C.A.), Frank Bennett, Bennett on Receiverships, 4th ed. (Toronto: Thomson Reuters, 2021)

Imperial Oil Limited v. Haseeb, 2022 ONCA 392

Keywords: Labour and Employment, Human Rights Law, Discrimination, Citizenship, Civil Procedure, Interveners, Friends of the Court, Human Rights Code, R.S.O. 1990, c. H.19, s. 5(1), Rules of Civil Procedure, Rule 13.03(1), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada (1990), 74 O.R. (2d) 164 (C.A.), Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Tranchemontagne v. Ontario (Director, Disability Support Program), 2006 SCC 14, Foster v. West, 2021 ONCA 263

Taylor v. Hanley Hospitality Inc., 2022 ONCA 376

Keywords: Employment Law, Constructive Dismissal, Infectious Disease Emergency Leave, Civil Procedure, Determination of Issue Before Trial, Employment Standards Act 2000, S.O. 2000, c. 41, ss. 50.1, 141, O. Reg. 228/20, Emergency Management and Civil Protection Act, R.S.O. 1990, Ch. E.9, ss. 7.0.1(1), 7.0.2, The Employment Standards Amendment Act (Infectious Disease Emergencies), 2020, S.O. 2020, c. 3, Interpretation Act, R.S.O 1990, c. I.11, s. 10, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 109, Rules of Civil Procedure, Rules 21, 25.08, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Public School Boards’ Assn. of Alberta v. Alberta (Attorney General), 2000 SCC 2, R. v. Find, 2001 SCC 32, Rizzo v. Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Elmer Driedger: Construction of Statutes (2nd ed. 1983), Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342

WED Investments Limited v. Showcase Woodycrest Inc., 2022 ONCA 384

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Waiver of Conditions, Notice, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, McKee v. Montemarano, 2009 ONCA 359, High Tower Homes Corporation v. Stevens, 2014 ONCA 911

Short Civil Decisions

London District Catholic School Board v. Michail, 2022 ONCA 378

Keywords: Torts, Defamation, Anti-SLAPP, Vexatious Litigation, Canadian Charter of Rights and Freedoms, ss. 2(b), 7, 12 and 15(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, 140, Veneruzzo v. Storey, 2018 ONCA 688, R. v. Reid, 2016 ONCA 524

Rieder zu Wallburg v. Plista Gmbh, 2022 ONCA 386

Keywords: Civil Procedure, Costs, Partial Indemnity

Drop and Run Inc. v. 1909703 Ontario Inc. (Integral Health Group Inc.), 2022 ONCA 375

Keywords: Real Property, Commercial Tenancies, Helping Tenants and Small Businesses Act, 2020, S.O. 2020, c. 23, Commercial Tenancies Act, R.S.O. 1990, c L.7

2056706 Ontario Inc. v. Pure Global Cannabis Inc., 2022 ONCA 381

Keywords: Bankruptcy and Insolvency, Receiverships, Contracts, Interpretation, Asset Purchase Agreements, Share Purchase Agreements, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Housen v. Nikolaisen, 2002 SCC 33


CIVIL DECISIONS

Lin v. Weng, 2022 ONCA 367

[Feldman, van Rensburg and Coroza JJ.A.]

Counsel:

P.H. Starkman and C. Zhang, for the appellant
F. Csathy, for the respondents

Keywords: Contracts, Insurance, Interpretation, Property, Fire, Exclusions, Statutory Interpretation, Retrospectivity, Standard of Review, Insurance Act, R.S.O. 1990, c. I.8, s. 129.1, Hryniak v. Mauldin, 2014 SCC 7, Housen v. Nikolaisen, 2002 SCC 33, Daley v. Economical Mutual Insurance Company (2005), 206 O.A.C. 33 (C.A.); Ledcor Construction Limited v. Northbridge Indemnity Insurance, 2016 SCC 37, Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.), Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301, R. v. Bengy, 2015 ONCA 397, Tran v. Canada (Public Safety and Emergency Preparedness), 2017 SCC 50, Elmer A. Driedger, “Statutes: Retroactive Retrospective Reflections” (1978), 56 Can. Bar. Rev. 264, Ruth Sullivan, Statutory Interpretation, 2nd ed. (Toronto: Irwin Law, 2007), Pierre-André Côté, The Interpretation of Legislation in Canada, 4th ed. (Scarborough: Carswell, 2011), Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Markham: LexisNexis Canada, 2014)

facts:

The appellant’s tenants burned down his property on the last day of their tenancy. They caused a fire and explosion in the basement by using a butane lighter, a stove, and a propane gas to extract marijuana resin. The appellant had asked the tenants to leave on account of the non-payment of rent. The appellant expected the tenants to move out that day and did not know they were doing anything in the basement. At the time of the fire, the appellant had a home insurance policy with Aviva General Insurance Company, respondent on the appeal. Aviva denied coverage based on two exclusion clauses in the policy: a marijuana production exclusion clause and an illegal activity exclusion clause. After the fire and while the appellant’s claim was outstanding, the legislature amended the Insurance Act by adding a provision limiting the application of criminal and intentional activity exclusion clauses to the claim of a person who caused the loss or who knew about or consented to the activity that caused the loss.

The motion judge awarded summary judgment to the respondents. He found that: 1) the respondents were entitled to deny the applicability of s. 129.1 to the appellant’s claim, even though they had not filed an amended statement of defence to address the s. 129.1 issue; 2) s. 129.1 does not apply retrospectively to insurance policies entered into before the date of its enactment; and 3) s. 129.1 does not apply to the marijuana exclusion clause.

issues:

(1) Did the motion judge err in law by allowing the respondents to rely on a legal issue that they did not plead?
(2) Did the motion judge err in law by finding that s.129.1 does not apply retrospectively to a claim under the policy for a loss that occurred before the enactment of s.129.1?
(3) Did the motion judge err in law by finding that s.129.1 does not affect or apply to the marijuana exclusion clause?

holding:

Appeal dismissed.

reasoning:

(1) No.

The interpretation of legislation and standard form insurance policies, where there is no unique factual matrix and interpretation is of precedential value, are reviewed on a standard of correctness. The motion judge was best positioned to interpret the pleadings and to determine the extent to which the appellant was faced with any “new issues”. The appeal was a procedural matter where the motion judge determined the fair and appropriate application of the Rules and case law to the circumstances of the motion before him. There was no basis to interfere with the motion judge’s decision on the issue.

(2) No.

If the legislature had intended the amendment to apply to entitlements or claims for losses that had already occurred, but for which the insurer had not yet paid the indemnity, i.e., outstanding entitlements or claims, it would have used clear language to so state. It did not do so and therefore the presumption against retroactivity was not rebutted. To the extent that there may be a special rule for beneficial legislation involving governmental bodies and the public, any such rule is not applicable in the context of the contractual rights of insureds and insurers.

(3) Not addressed.

The court did not address the third point because of the conclusion on the issue of temporal application of s.129.1.


Lash v. Lash Point Association Corp., 2022 ONCA 361

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

P. Shea and C. Stanek, for the appellants, Lash Point Association Corp., P.C.B.L. and J.E.A.L.

J. W. de Vries and J. Kaufman, for the respondents E.G.H., D.S., W.T.L., J.L., C.P.L., T.E.R., S.M.R and A.L.R

K. Kraft and S. Wilson, for the respondent Grant Thornton Limited in its capacity as court-appointed receiver of Lash Point Association Corp.

T.L., acting in person

Keywords: Real Property, Receiverships, Sale Process, Approval, Rules of Civil Procedure, Rule 59.06(2)(a), Sengmueller v. Sengmueller (1994) 17 O.R. (3d) 208 (C.A.), Royal Bank of Canada v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.), Regal Constellation Hotel Ltd. (Re) (2004), 71 O.R. (3d) 355 (C.A.), Toronto-Dominion Bank v. Usarco Ltd. (2001), 196 D.L.R. (4th) 448 (Ont. C.A.), Frank Bennett, Bennett on Receiverships, 4th ed. (Toronto: Thomson Reuters, 2021)

facts:

In 1996, thirteen family members (the “founding members”) transferred their ownership interests in Lash Point, a cottage property consisting of about 28 acres on Lake Rosseau in the Township of Muskoka Lakes, to a non-profit corporation, Lash Point Association Corporation (“LPAC”). The object of LPAC, as stated in its letters patent, was “to own and conserve land and its natural features for the enjoyment of its members and guests.” In the event LPAC was ever wound up, the founding members would receive a percentage of the proceeds realized from the sale of Lash Point equal to the percentage of their interest in Lash Point contributed to LPAC.

By 2016, LPAC had 25 family members from five groups or “clans”. They consisted of 13 founding members and 12 non-founding members. The family members disagreed on the future of Lash Point. Some wanted to stay, continue to enjoy the property, and avoid triggering capital gains tax (the “Remainers”) while others wanted to leave and realize on the fair market value of their interests (the “Departers”). Neither side could muster a two-thirds majority of voting members as required by LPAC’s by-laws. The parties concluded that a court-supervised solution was required. The appeal involved the evolution and outcome of that process.

On October 7, 2020, Messrs. S. and D. made a joint offer to purchase. Between October 14-19, 2020, the Receiver received letters of direction signed by 11 of the 13 founding members of LPAC asking the Receiver to seek an order from the Court facilitating the sale of all of Lash Point and approving the agreement of purchase and sale with Messrs. S. and D. J.E.A.L. and P.C.B.L. opposed the proposed agreement of purchase and sale, as did LPAC, of which they were the controlling directors and which the Remainers controlled.

Messrs. S. and D. finalized the agreement of purchase and sale with the Receiver, who then brought a motion for directions from the Court. The Receiver took no position on the motion and made no recommendation to the Court regarding the proposed sale.

In an order dated June 24, 2021, the motion judge (Dunphy J.) effectively reversed the approach adopted by Penny J., which recognized the desire of the Remainers to retain a portion of their cottage property. The Receiver was directed to cease the severance process. The motion judge approved the agreement of purchase and sale with Messrs. S. and D. for the whole of Lash Point. On the closing of the transaction, LPAC’s right, title, and interest in Lash Point would vest in Messrs. S. and D. Accordingly, the underpinning of Penny J.’s order that provided some protection to those who wished to retain their interest in the cottage property effectively disappeared.

issues:

(1) Did the motion judge lack jurisdiction to vary the buy-out order?

(2) Should the motion judge not have approved the sale to Messrs. S. and D.?

holding:

Appeal allowed.

reasoning:

(1) No.

The Receiver was a court-appointed officer over whom the Court had supervisory jurisdiction. The order appointing Grant Thornton Limited expressly provided it with the ability to return to Court to seek advice and directions. In addition, s. 16 of Schedule A provided to the Receiver and any founding member the ability to return to Court to address any dispute arising from the terms of Schedule A. Indeed, Penny J. recognized this point in his endorsement of November 24, 2016, and Dietrich J. reiterated the possibility of a variation in both of her endorsements. Penny J.’s order provided the Court with the flexibility to address disputes that arose including the pace at which the valuation and sales process was unfolding. The Court concluded that the motion judge had jurisdiction to make an order varying the order of Penny J.

The Court agreed with the motion judge that jurisdiction extended to authorizing the Receiver to terminate the severance plan and take steps to sell all of Lash Point. The parties ought to have moved much earlier in the process for advice and directions and/or a variation in the terms of Penny J.’s order which governed them. That said, the motion judge was not precluded from taking jurisdiction. The Court saw no reason to interfere with this aspect of the motion judge’s order. As the motion judge noted, the process launched by the buy-out order did not have a pre-determined deadline. The Receiver initially estimated, however, that completion of the severance process would require about two years, or about five years from when the Departers first began to seek an exit. The motion judge found that the circumstances had changed in a material way since the buy-out order.

(2) Yes.

The principles governing the approval of sale agreements in a receivership context were set out by the Court of Appeal in Royal Bank of Canada v. Soundair Corp.:

1. whether a sufficient effort has been made to obtain the best price and whether the receiver has acted improvidently;

2. the interests of all of the parties;

3. the efficacy and integrity of the process by which the offers were obtained; and

4. whether the working out of the process was unfair.

The motion judge erred in approving the S./D. agreement of purchase and sale in the face of an express finding that none of the factors in Soundair were satisfied. This was particularly problematic given that there was no true sales process, the property had not been exposed to the open market, there was no evidence from the Receiver that efforts had been made to obtain the best price and there was no written recommendation or analysis from the Receiver, as it had not been clothed with that mandate or given those directions from the Court.

The motion judge also erred in his identification of the factors that purportedly served as substitutes for the Soundair principles. First in that regard, he determined that Lash Point was “attractive to a relatively specialized portion of the Muskoka real estate market” and that it was a “narrow and specialized market”. He relied on this to conclude that the informal canvassing undertaken by some of the founding members provided interested buyers with an opportunity to make an offer and that “an effort to contact those most likely to be in a position to make an offer to acquire it was undertaken”.

There was no expert or other evidence to support these findings. Moreover, there was no evidence that the property was ever advertised either locally, nationally, internationally or indeed at all.

Second, the motion judge also placed great weight on there being no evidence that any of the founding members had any interest in the S./D. agreement apart from the common financial interest of all in obtaining the highest price obtainable. Although not technically an interest in the S./D. agreement, it was noted that Messrs. S. and D. were contributing financially to the Departers’ litigation. The agreement governing this arrangement was not brought to the Court’s attention.

Third, the motion judge also indicated that the purchase price compared very favourably to updated appraisal evidence. However, there was no such evidence. The main compound consisting of 6.25 acres and 1,210 feet of waterfront was appraised in April 2019; the entire property was not. There was simply an estimate of value.

Fourth, the motion judge determined that the overwhelming majority of those with an interest in the size of the “pie” was powerful and convincing evidence that the proposed transaction reflected fair market value. As the motion judge noted, of the four Remainer founding members of LPAC, two had changed camps and supported the transaction and two were firmly opposed, while the rest of the non-founding Remainers expressed no opinion to the Court. Including the two who had changed sides, 87% of the economic interest supported the transaction. However, the Soundair principles do not rest on a head count. Rather they demand integrity in the process and fairness to all claimants with an interest in the property.


Imperial Oil Limited v. Haseeb, 2022 ONCA 392

[Gillese J.A. (Motion Judge)]

Counsel:

S. Choudhry and A. Nayerahmadi, for the moving parties and proposed intervener South Asian Legal Clinic of Ontario and Colour of Poverty/Colour of Change Network
R. Nixon and D. Burns-Shillington, for the responding party Imperial Oil Limited
M. Evans Maxwell and T.G. Young, for the responding party M.H.
B.A. Blumenthal, for the responding party Human Rights Tribunal of Ontario

Keywords: Labour and Employment, Human Rights Law, Discrimination, Citizenship, Civil Procedure, Interveners, Friends of the Court, Human Rights Code, R.S.O. 1990, c. H.19, s. 5(1), Rules of Civil Procedure, Rule 13.03(1), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada (1990), 74 O.R. (2d) 164 (C.A.), Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Tranchemontagne v. Ontario (Director, Disability Support Program), 2006 SCC 14, Foster v. West, 2021 ONCA 263

facts:

M.H. applied to work at Imperial Oil which had a policy requiring prospective job applicants to be eligible to work in Canada on a permanent basis (the “Policy”). M.H. was an international student and did not meet that requirement. However, under the Post-Graduation Work Permit program (“PGWP”), he was eligible to work anywhere in Canada for at least three years upon graduation. PGWP holders may apply for permanent resident status.

Imperial Oil offered M.H. a job but rescinded the offer when he was unable to provide proof of his eligibility to work in Canada permanently. M.H. brought a claim against Imperial Oil to the HRTO, alleging discrimination on the basis of citizenship.

The HRTO found that the Policy constituted discrimination on the basis of citizenship, contrary to s. 5(1) of the Human Rights Code (the “Code”). It denied Imperial Oil’s request for reconsideration and ordered Imperial Oil to pay M.H. for lost income, compensation for injury to dignity, feelings and self-respect, plus interest.

Imperial Oil successfully brought a judicial review application to the Divisional Court. A majority of the Divisional Court held that the HRTO erred in concluding that the requirement that M.H. be able to work permanently in Canada was discrimination on the basis of citizenship and quashed the HRTO decision.

M.H. was granted leave to appeal the Divisional Court’s decision to the Court of Appeal.

The South Asian Legal Clinic of Ontario (“SALCO”) and the Colour of Poverty/Colour of Change Network (“COP-COC”) together brought a motion for leave to intervene, as a friend of the Court on the appeal.

issues:

(1) Should the Court grant SALCO and COP-COC leave to intervene as friends of the Court?

holding:

Motion granted.

reasoning:

(1) Yes.

When deciding motions for leave to intervene as a friend of the court pursuant to Rule 13.03(1), the Court will generally consider (1) the nature of the case and issues that are to be addressed, and (2) the likelihood the applicant will make a useful contribution to the resolution of the appeal without causing injustice to the immediate parties.

While the case arose from a private dispute between M.H. and Imperial Oil, the questions raised on the appeal showed that the issues transcended the interests of the immediate parties. The issues were of public importance, relating as they did to the interpretation of the Code, which is quasi-constitutional legislation, and whether policies requiring citizenship or permanent residency for prospective job applicants are discriminatory.

Given the proposed interveners’ expertise and experience, they were well-positioned to make a useful contribution by bringing a broader and different perspective on the issues. The proposed interveners brought a distinct perspective that would likely assist the Court when it grappled with the alleged mischaracterization of the rights of international students and graduates. The same held true on the issue of partial discrimination.

Taylor v. Hanley Hospitality Inc., 2022 ONCA 376

[Roberts, Miller and Zarnett JJ.A.]

Counsel:

L. Samfiru and L. Cerda, for the appellant
I. A. Johncox, for the respondent
T. Gleason and A. Lei, for the intervener Parkdale Community Legal Services

Keywords: Employment Law, Constructive Dismissal, Infectious Disease Emergency Leave, Civil Procedure, Determination of Issue Before Trial, Employment Standards Act 2000, S.O. 2000, c. 41, ss. 50.1, 141, O. Reg. 228/20, Emergency Management and Civil Protection Act, R.S.O. 1990, Ch. E.9, ss. 7.0.1(1), 7.0.2, The Employment Standards Amendment Act (Infectious Disease Emergencies), 2020, S.O. 2020, c. 3, Interpretation Act, R.S.O 1990, c. I.11, s. 10, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 109, Rules of Civil Procedure, Rules 21, 25.08, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Public School Boards’ Assn. of Alberta v. Alberta (Attorney General), 2000 SCC 2, R. v. Find, 2001 SCC 32, Rizzo v. Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Elmer Driedger: Construction of Statutes (2nd ed. 1983), Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342

facts:

In issue in this appeal are the amendments to ss. 50.1 and 141 of the Employment Standards Act (“ESA”) and the provisions of O. Reg 228/20 made under the ESA that create a new category of leave under the ESA: the infectious disease emergency leave (“IDEL”).

On March 27, 2020, the respondent employer, Tim Horton’s, placed the appellant, an assistant manager, on a “temporary lay-off” without pay. Before being recalled to her employment in September 2020, the appellant commenced an action against the respondent claiming damages for constructive dismissal, among other things. The respondent defended the action and pleaded that the appellant was on IDEL.

The respondent subsequently brought a motion under rule 21.01(1)(a) of the Rules of Civil Procedure for the determination of an issue before trial, namely, whether the appellant’s action was precluded by virtue of the provisions of s. 50.01 of the ESA and of O. Reg. 228/20, and asked for the dismissal of the appellant’s action. Neither party filed, or sought to file, evidence on the motion.

On the motion, the motion judge took judicial notice of a number of facts and accepted as uncontested the respondent’s allegations in its statement of defence because the appellant did not deliver a reply.

In interpreting s. 50.1 of the ESA and O. Reg. 228/20, the motion judge applied the facts that she accepted as admitted or by way of judicial notice and concluded that the provisions displaced the appellant’s common law claim for constructive dismissal and held that the appellant was on IDEL for all purposes; was deemed not to be laid off for all purposes; and was not constructively dismissed for all purposes. She dismissed the appellant’s action.

The appellant appealed from the motion judge’s decision.

issues:

(1) Did the motion judge err in her approach to the respondent’s rule 21 motion and in dismissing the action where no evidence was admitted and there were material factual issues to be determined?
(2) Did the motion judge err in concluding that the COVID-19 amendments to s. 50.1 of the ESA and the associated O. Reg. 228/20, that establish temporary infectious disease emergency leave, displaced the appellant’s common law right of action for constructive dismissal?
(3) Should the Court of Appeal interpret s. 50.1 of the ESA and O. Reg. 228/20?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The well-established approach to be followed on a motion brought under rule 21.01(1)(a), as set out in Beaudoin Estate v. Campbellford Memorial Hospital, is as follows:
(1) The test is whether the determination of the issue of law is “plain and obvious”;
(2) The facts pleaded in the statement of claim are assumed to be true, unless they are patently ridiculous or manifestly incapable of proof;
(3) The statement of claim should be read as generously as possible to accommodate any drafting inadequacies in the pleading.

The motion judge erred in failing to assume that the allegations in the statement of claim were true. As a result, the motion judge misapplied the provisions of rule 25.08 that stipulate where a reply is necessary and the deemed effect of the absence of a reply. The Court concluded a reply was not required, and accordingly, by not delivering a reply, the appellant was “deemed to deny the allegations of fact made in the defence” of the respondent. The motion judge therefore erred in treating the allegations in the respondent’s statement of defence as admitted facts.

The Court also held it was not open to the motion judge to take judicial notice of the “litany of adjudicative facts” that she did. The only facts that the motion judge was entitled to accept as true as far as they related to and affected the parties were those in the statement of claim. As a result, there was no basis for the motion judge’s myriad findings, including that the appellant had not resigned from her employment and that the appellant was on an infectious disease emergency leave because of the COVID-19 emergency government-mandated measures and therefore was not constructively dismissed by the respondent.

The Court held it was therefore not plain and obvious that the appellant’s action could not succeed. Accordingly, the motion judge erred in dismissing the appellant’s action which required the adjudication of the material facts that were in dispute and the determination of whether the ESA provisions even applied to the appellant’s circumstances.

(2) Yes.

The Court held the motion judge’s interpretation of s. 50.1 of the ESA and O. Reg. 228/20 was tainted by the analytical errors discussed under issue (1). Specifically, the motion judge erred by following the respondent’s submissions and primarily basing her interpretation of the provisions on her impermissible and unsubstantiated findings concerning the parties’ employment relationship, the appellant’s employment status, as well as the legislative intention and context underlying the provisions, for which there was no evidentiary foundation.

Further, while engaging in statutory interpretation, the Court held the parties and the motion judge erroneously focused their analysis too narrowly on only some of the provisions of the ESA and O. Reg. 228/20 and did not interpret them in the larger context that was required in the circumstances of the case.

The Court concluded that, given how intertwined the statutory interpretation issues were with the factual issues, the respondent’s rule 21 motion could not serve its stated purposes of disposing of all or part of the action, substantially shortening the trial or resulting in a substantial saving of costs. The motion judge erred in not dismissing the respondent’s rule 21 motion and further erred in dismissing the appellant’s action on the basis of an interpretation of the statutory and regulatory scheme that she should not have undertaken.

(3) No.

The Court declined to exercise its discretion to interpret the provision and regulations. The Court held that it had neither the record nor the submissions that would permit it to carry out a proper analysis of s. 50.1 of the ESA and O. Reg. 228/20.

In the result, the motion judge’s order was set aside, the respondent’s rule 21 motion was dismissed, and the action was remitted for determination before another judge of the Superior Court of Justice.


WED Investments Limited v. Showcase Woodycrest Inc., 2022 ONCA 384

[Huscroft, Thorburn and George JJ.A.]

Counsel:

M. Klaiman, for the appellants, Showcase Woodycrest Inc. and 2442459 Ontario Inc.
S. Schwartz and D. Marr, for the respondent, WED Investments Limited

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Waiver of Conditions, Notice, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, McKee v. Montemarano, 2009 ONCA 359, High Tower Homes Corporation v. Stevens, 2014 ONCA 911

facts:

The appellant Showcase Woodycrest Inc. (“Showcase”) is the owner of a property at 3775 Brock Street North in Whitby (the “Brock Street property”). The appellant, 2442459 Ontario Inc. (“244”) is the owner of another property at 201 Hopkins Street in Whitby.
On June 30, 2016, WED Investments Limited (“WED”) offered to purchase both the Brock Street and Hopkins Street properties from Showcase and 224. Each offer was sent by email and included the asking price and deposit proposed. On August 5, 2016, Showcase entered into a standard-form OREA Agreement of Purchase and Sale with WED for the sale of the Brock Street property (the “Agreement”).
The Agreement contained a “development condition” which permitted WED time to conduct due diligence. After extensions, the diligence period was set to end on October 17, 2016. On October 17, WED gave written notice of its waiver of the development condition and decision to proceed with the Agreement, by email only.
The trial judge determined that the delivery of the written notice to waive and proceed by email satisfied the notice requirement of the Agreement.

issues:

(1) Whether the trial judge erred in determined that delivery to waive conditions by email only satisfied the notice requirement in the Agreement?

holding:

Appeal dismissed.

reasoning:

Paragraph 3 of the standard form Agreement provides that any notices “shall be in writing” and “delivered personally or hand delivered to the Address for Service provided in the Acknowledgement below, or where a facsimile number or email address is provided herein, when transmitted electronically to that facsimile number or email address, respectively”. The attached Schedule A to the Agreement, provided that, “the parties hereto agree that this Agreement of Purchase and Sale and any Amendments thereto may be transmitted through the use of electronic mail and that a true copy will be delivered to the Buyer and the Seller following acceptance of said Agreement”. Paragraph 26 states that if there is a conflict, then the added provision supersedes that of the standard form.

The trial judge based their decision on the following reasons, with which the Court saw no error. As per Sattva, the trial judge noted the importance of looking at the Agreement as a whole, the genesis of the transaction, the background, the context, and the market in which the parties were operating. By doing so, the trial judge correctly identified that the aforementioned paragraph 26 provides that a provision added to the agreement governs to the extent it conflicts with or causes a discrepancy with any provision of the standard pre-set portion. As the Court has determined in the past, a specific notice provision was intended to prevail over a contradictory standard form notice provision, since it would have been unnecessary to include had the parties intended it to be overridden by the standard form provision. Furthermore, Schedule A governed the delivery of the waiver notice based on the language of the specific provision in Schedule A and the surrounding circumstances. The trial judge concluded that it would be inconsistent with the practical, common sense approach described in Sattva to read the contract as disallowing email communication, in light of the surrounding circumstances.


SHORT CIVIL DECISIONS

London District Catholic School Board v. Michail, 2022 ONCA 378

[Huscroft, Thorburn and George JJ.A.]

Counsel:

M. M., acting in person
L. Ledgerwood, for the respondent

Keywords: Torts, Defamation, Anti-SLAPP, Vexatious Litigation, Canadian Charter of Rights and Freedoms, ss. 2(b), 7, 12 and 15(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, 140, Veneruzzo v. Storey, 2018 ONCA 688, R. v. Reid, 2016 ONCA 524

Rieder zu Wallburg v. Plista Gmbh, 2022 ONCA 386

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

Counsel:

D. Spiller, for the appellants
E. Kurz, for the respondents

Keywords: Civil Procedure, Costs, Partial Indemnity

Drop and Run Inc. v. 1909703 Ontario Inc. (Integral Health Group Inc.), 2022 ONCA 375

[Huscroft, Thorburn and George JJ.A.]

Counsel:

A. Zaya and S. Erskine, for the appellant
T. Nemetz, for the respondent

Keywords: Real Property, Commercial Tenancies, Helping Tenants and Small Businesses Act, 2020, S.O. 2020, c. 23, Commercial Tenancies Act, R.S.O. 1990, c L.7

2056706 Ontario Inc. v. Pure Global Cannabis Inc., 2022 ONCA 381

[Huscroft, Thorburn and George JJ.A.]

Counsel:

R. Atkinson, A. Freedland and S. Singhal for the appellant, TS Pharmaceutical Ltd.
L. Williams, R. Nicholson, and M. Grossell, for the respondent, A. Farber & Partners Inc.

Keywords: Bankruptcy and Insolvency, Receiverships, Contracts, Interpretation, Asset Purchase Agreements, Share Purchase Agreements, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Housen v. Nikolaisen, 2002 SCC 33


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 evening.

Following are this week’s summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 2nd, 2022.

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In Poirier v. Logan, the Court upheld the permanent stay of an action for failure to disclose a partial settlement agreement with some of the defendants.

Other topics included specific performance relating to an agreement of purchase and sale of land, family law (equalization of NFP relating to pensions), charging orders in the family law context, conditional discharges from bankruptcy and mootness in relation to an appeal on the issue of standing to challenge COVID-19 restrictions that had already been lifted.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Chang (Re), 2022 ONCA 346

Keywords: Bankruptcy and Insolvency, Conditional Discharges, Disclosure Obligations, Civil Procedure, Fresh Evidence, Bankruptcy and Insolvency Act, R.S.C. 1985, c B-3 ss. 68,158, 170, 172(2)(c) and 173

Baber v. Ontario (Attorney General), 2022 ONCA 345

Keywords: Health Law, COVID-19, Constitutional Law, Civil Procedure, Standing, Private Interest Standing, Public Interest Standing, Mootness, Canadian Charter of Rights and Freedoms, ss. 2 and 15, Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9, Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17, Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342

Van Delst v. Hronowsky, 2022 ONCA 349

Keywords: Family Law, Equalization of Net Family Property, Pensions, Civil Procedure, Appeals, Orders, Amending or Varying, Family Law Act, R.S.O. 1990, c. F.3, s. 9, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(1), Van Delst v. Hronowsky, 2019 ONSC 2569, Van Delst v. Hronowsky, 2020 ONCA 329, Van Delst v. Hronowsky, 2020 ONCA 402

Poirier v. Logan, 2022 ONCA 350

Keywords: Civil Procedure, Partial Settlement Agreements, Abuse of Process, Failure to Disclose, Stay of Proceedings, Handley Estate v. DTE Industries Limited, 2018 ONCA 324, Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898, leave to appeal refused, [2011] S.C.C.A. No. 84, Laudon v. Roberts, 2009 ONCA 383, leave to appeal refused, [2009] S.C.C.A. No. 304, Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2022 ONCA 66, Waxman v. Waxman, 2022 ONCA 311, Pettey v. Avis Car Inc. (1993), 13 O.R. (3d) 725 (Gen. Div.), Aviaco International Leasing Inc. v. Boeing Canada Inc. (2000), 48 C.P.C. (4th) 44 (S.C.J.)

M & M Homes Inc. v. 2088556 Ontario Inc., 2022 ONCA 364

Keywords: Contracts, Real Property, Agreements of Purchase of Sale of Land, Remedies, Specific Performance, Purchase Price Abatements, Civil Procedure, Amending Pleadings

Foulidis v. Foulidis, 2022 ONCA 362

Keywords: Family Law, Contracts, Solicitor and Client, Charging Orders, Civil Procedure, Costs, Solicitors Act, R.S.O. 1990, c. S.15, sections 34(1), 34(2), Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Family Law Rules, O. Reg. 114/99, rule 2(2), Weenen v. Biadi, 2018 ONCA 288, Thomas Gold Pettinghill LLP v. Ani-Wall Concrete Forming Inc., 2012 ONSC 2182, Fancy Barristers P.C. v. Morse Shannon LLP, 2017 ONCA 82, Mpampas v. Steamatic Toronto Inc. (2009), 84 C.P.C. (6th) 85, Pino v. Van Roon (1998), 28 C.P.C. (4th) 274, Michael Dervin v. Manuel Suarez and Anatoie Koniouchine, 2021 ONSC 1339, Patton v. Patton, 54 R.F.L. (6th) 446, Booth (Re) (1985), 56 C.B.R. (N.S.) 289, Morton (Re), 2014 ONSC 5438, Guergis v. Hamilton, 2016 ONSC 4428

Short Civil Decisions

Sasso v. Sasso, 2022 ONCA 339

Keywords: Wills and Estates, Estate Trustees, Compensation

Madison Homes Cornell Rouge Limited v. Jiang, 2022 ONCA 351

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Misrepresentation, Damages, Civil Procedure, Summary Judgment, Hembruff v. Ontario Municipal Employees Retirement Board (2005), 78 O.R. (3d) 561 (C.A.), leave to appeal refused, [2005] S.C.C.A. No. 549 and [2006] S.C.C.A. No. 3

Curnew v. Loo, 2022 ONCA 341

Keywords: Civil Procedure, Striking Pleadings, Substantial Indemnity Costs

Flex Park Inc. v. Covello, 2022 ONCA 347

Keywords: Contracts, Real Property, Mortgages, Fraud, Civil Procedure, Default Judgements, Adjournment, Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2, Palmer v. The Queen, [1980] 1 S.C.R. 759

Scarlato v. Buzbuzian, 2022 ONCA 352

Keywords: Breach of Contract, Settlement Agreements, Estoppel, Civil Procedure, Summary Judgment, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 2484234 Ontario Inc. v. Hanley Park Developments Inc., 2020 ONCA 273

Hume v. 11534599 Canada Corp., 2022 ONCA 360

Keywords: Civil Procedure, Appeals, Quashing Appeals, Removal of Lawyer of Record

Fazl v. Home Trust Company, 2022 ONCA 356

Keywords: Civil Procedure, Litigation Guardians, Summary Judgment, Adjournments, Substitute Decisions Act, 1992, S.O. 1992, c. 30

Anthony v. Cundari, 2022 ONCA 363

Keywords: Real Property, Adverse Possession, Civil Procedure, Issue Estoppel, Res Judicata

Public Guardian and Trustee v. Zammit, 2022 ONCA 371

Keywords: Civil Procedure, Appeals, Mootness, Transmission of Interest, Rules of Civil Procedure, Rule 11


CIVIL DECISIONS

Chang (Re), 2022 ONCA 346

[Benotto, Miller and Copeland JJ.A.]

Counsel:

P. Masic, for the appellant

A. Ferguson, for the respondent J. Webb & Associates

R. Schliemann, for the respondent Bank of Montreal

Keywords: Bankruptcy and Insolvency, Conditional Discharges, Disclosure Obligations, Civil Procedure, Fresh Evidence, Bankruptcy and Insolvency Act, R.S.C. 1985, c B-3 ss. 68,158, 170, 172(2)(c) and 173

facts:

The appellant sought to set aside the application judge’s conditional discharge order which required him to pay $325,000 to the Trustee in specified monthly installments until paid in full. The appellant is a professional chartered accountant and chartered management accountant. The subject matter of the proceedings was his second bankruptcy.

The appellant was unemployed and married. His spouse filed for bankruptcy at the same time as the appellant and has since been discharged. According to the Official Receiver Report, his wife found employment and is earning $3,000 gross per month. The appellant contended that although he and his spouse lived together, they were separated. The couple lived beyond their means and relied on the appellant’s mother for loans to cover their expenses. The appellant’s mother passed away and the appellant stated his share of the estate was worth $300,000 but contested by siblings.

The application judge made credibility findings that the appellant was untruthful, evasive, and a sophisticated debtor who was not merely “unfortunate”. The application judge found a breach of the disclosure obligations under section 158 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c B-3. The trial judge’s findings under s. 173 resulted in a conditional discharge under s.172(2)(c) on payment in full of $325,000 to made in monthly installments. During the course of the proceedings, the Trustee wrote five letters directly to the application judge without copying the appellant or his counsel.

issues:

(1) Did the application judge err in granting a conditional discharge with a payment condition because the provisions of section 68 were not complied with?

(2) Did the application judge err in the amount of payment ordered?

(3) Can the appellant submit fresh evidence on appeal on consent of the respondent?

holding:

Appeal dismissed.

reasoning:

(1) No.

The appellant submitted that it was an error because the Trustee did not raise surplus income in the Report and that it was unfair that the appellant did not have an opportunity to respond to the assertion that he had surplus income.

Section 68 provides that a trustee is to determine if the bankrupt has surplus income and note it in the Report required under s. 170. The Court of Appeal found that s. 68 was not engaged. The application judge did not base his finding with respect to payment on surplus income but rather on the findings of fact and the appellant’s conduct in breaching his obligations of disclosure under s. 158.

There was no unfairness because the appellant had ample opportunity to address the issue of his income. It was improper for the Trustee to send letters to the application judge on an ex parte communication. However, here there was no miscarriage of justice or prejudice. The information and documentation contained in the correspondence were already known to the appellant and in his possession.

(2) No.

The appellant submitted that the amount was based on the possibility of the $300,000 inheritance. The application judge did not make a statement to this effect.

(3) No.

The respondent wanted to submit fresh evidence on the validity of the second mortgage on the appellant’s home. There was no relevance to the evidence and would not have affected the result.


Baber v. Ontario (Attorney General), 2022 ONCA 345

[Benotto, Miller and Copeland JJ.A]

Counsel:

S. Presvelos and E. Presvelos, for the appellants

J. Hunter, R. Cookson, and M. Stevenson, for the respondent

Keywords: Health Law, COVID-19, Constitutional Law, Civil Procedure, Standing, Private Interest Standing, Public Interest Standing, Mootness, Canadian Charter of Rights and Freedoms, ss. 2 and 15, Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9, Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17, Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342

facts:

The underlying application involved a challenge by the appellants to outdoor gathering restrictions imposed as a public health measure by regulations under the Emergency Management and Civil Protection Act and the Reopening Ontario (A Flexible Response to COVID-19) Act. The appellants pleaded in their application that the restrictions infringe their rights under ss. 2 and 15 of the Canadian Charter of Rights and Freedoms, and are not reasonable and demonstrably justified limits on their rights. The application judge dismissed their application on the basis that they did not have public interest standing. The appellants conceded that the underlying application was moot, as the regulations challenged were no longer in force. However, the appellant, R.B, submitted that the issue of his private interest standing to bring the application was not moot.

issues:

(1) Is the issue of the appellant’s, R.B, private interest standing to bring the application moot?

(2) If the issue of the appellant’s, R.B, private interest standing is moot, should the court exercise its discretion to hear and decide the issue of his private interest standing to bring the application?

holding:

Appeal dismissed as moot.

reasoning:

(1) Yes.

The appellant submitted that while the regulations were no longer in effect, the pandemic is not over and it is possible that the provincial government may impose similar public health restrictions in the future. In such a case, and if he seeks to bring a Charter challenge to any future restrictions, he argues that he may be prejudiced by the application judge’s decision that he did not have standing to bring the application in this matter.

The court concluded that the issue of private interest standing to bring the application was moot in the sense described in Borowski because the underlying application was moot. Further, a decision by the Court on whether he has private interest standing to bring this particular application would not resolve any controversy that affects R.B.’s rights: 1) Private interest standing to bring a hypothetical future application would be decided based on the circumstances and evidentiary record in a future application. The application judge’s reasons would not be binding in such a hypothetical future application based on new legislation/regulations; 2) The application judge considered public interest standing, but did not consider whether the appellant had private interest standing to bring the application.

(2) No.

Considering the three factors set out in Borowski, the Court determined that it was not appropriate to exercise its discretion to hear the appeal regarding the appellant’s private interest standing. The Court stated that the first and third factors did not raise an issue, but that it would not exercise its discretion to hear the appeal based on the second factor. Concern for judicial economy supported the conclusion that the Court should not expend scarce judicial resources to hear and decide the issue of the applicant’s private interest standing to bring a moot application, when his standing to bring this application will not govern his standing to bring a hypothetical future application.


Van Delst v. Hronowsky, 2022 ONCA 349

[Gillese, Harvison Young and Coroza JJ.A.]

Counsel:

T. J. H., acting in person

K. Shadbolt and D. Migicovsky, for the respondent

Keywords: Family Law, Equalization of Net Family Property, Pensions, Civil Procedure, Appeals, Orders, Amending or Varying, Family Law Act, R.S.O. 1990, c. F.3, s. 9, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(1), Van Delst v. Hronowsky, 2019 ONSC 2569, Van Delst v. Hronowsky, 2020 ONCA 329, Van Delst v. Hronowsky, 2020 ONCA 402

facts:

In 2017 the respondent wife brought an application against the appellant husband seeking a divorce, child and spousal support orders, and the equalization of net family property. All issues were resolved except for equalization of net family property, which went to trial in January of 2019.

The trial judge concluded that the appellant’s pension should be valued based on a normal age of retirement of 60, while the respondent’s pension should be valued based on a reasonable age of retirement of 65. The appellant appealed to the Court of Appeal and the appeal was allowed in part: the Court concluded that the value of both parties’ pensions should have been based on a normal age of retirement of 60 for both parties. Accordingly, the Court remitted the matter to the trial judge to determine the correct family law value of the respondent’s pension, to adjust the equalization payment accordingly, and to adjust the original costs order if necessary.

After a subsequent three-day trial, the trial judge made a new order dated March 29, 2021 (the “Order”) after having determined the correct family law value of the respondent’s pension as per the Court’s direction.

The appellant appealed the Order, seeking leave to appeal the trial judge’s costs award, and also appealed from a dismissed motion to stay the Order pending appeal (which the appellant was advised was unnecessary because the Order was automatically stayed pending appeal).

Additionally, the respondent sought two amendments to the Order.

issues:

(1) Did the trial judge err in her determination of the family law value of the respondent’s pension?

(2) Did the trial judge err in making an unjust and inoperable payment order in the Order?

(3) Did the trial judge err in deviating from the direction of the Court of Appeal, rendering the trial unfair?

(4) Should the appellant be granted leave to appeal the costs order of the trial judge?

(5) Should the appellant’s appeal of the motion judge’s order refusing to stay the order pending appeal be granted?

(6) Should the respondent’s request to amend the Order be granted?

holding:

Appeal dismissed.

reasoning:

Eight days prior the hearing of the appeal, the appellant requested a 60-day adjournment. The appellant was advised that, due to the proximity to the scheduled hearing of the appeal, he would be required to make his adjournment request to the panel on the hearing date, but had to be prepared to proceed that day regardless. At the oral hearing of the appeal, the Court dismissed the appellant’s adjournment request because the matters he sought to raise were outside the scope of the appeal.

(1) No.

The trial judge considered the evidence of experts who were called by the parties. Significantly, both experts arrived at valuations that were just shy of $1,000 apart, before tax. The appellant did not point to any error in the trial judge’s assessment. Further, some of the arguments advanced by the appellant sought to revisit what happened during the first trial, which did not disclose a basis for appellate intervention.

(2) No.

In the Court’s view, it was open to the trial judge to craft the Order under s. 9 of the Family Law Act, as the appellant had not complied with previous orders to provide proof of his annual income and sign a direction/authorization in a form acceptable to the bank; had not settled outstanding costs orders; and had delayed the resolution of the within matter by disputing garnishment proceedings initiated by the respondent in order to satisfy the outstanding costs orders.

(3) No.

The trial judge clearly stated that the scope of the matter before her had been narrowly circumscribed by the Court’s decision and all that remained was a recalculation of the equalization payment based on a normal retirement date of age 60 for both parties. There was no basis to conclude that the trial judge did not follow the direction of the Court or that the appellant was not afforded a fair hearing.

(4) No.

The Court saw no merit to the appellant’s submissions and found no basis to disturb the trial judge’s discretionary costs order.

(5) No.

The appellant’s motion before the motion judge was unnecessary because the Order was automatically stayed pending appeal. The motion judge informed the appellant of this fact, yet he persisted in requiring a full hearing to be held. Accordingly, the appeal from that decision was dismissed.

(6) Yes.

The respondent requested that the Court make two amendments to the Order by exercising the Court’s powers under s. 134(1) of the Courts of Justice Act. First, the respondent requested that the Court broaden the enforcement provision of the Order beyond the two bank accounts in the appellant’s name. The Court declined to grant the first amendment.

Second, the respondent requested that the Court extend the May 1, 2021 deadline by which time the appellant’s equalization payment must be made from his named bank accounts, after which the pension rollover provision of the Order takes effect. The respondent argued that extending the deadline would provide a period of time to seek enforcement of the Order for a cash payment from the appellant’s named accounts, without having the pension rollover immediately take effect since it was well past the May 1, 2021 deadline.

The Court granted the second amendment, noting that the initial Order was now dated through no fault of the respondent. Further, there was no prejudice to the appellant in making the second amendment.


Poirier v. Logan, 2022 ONCA 350

[Pardu, Paciocco and Thorburn JJ.A.]

Counsel:

R.P. Steep and L. Ostler, for the appellant, R.P.

S. Chaudhury and M. McGowan, for the respondents H.G. and Buchli Goldstein LLP

J. Larry, for the respondent J.L.*

M. Whelton, for the respondent J.F.**

M.C., acting in person ***

Keywords: Civil Procedure, Partial Settlement Agreements, Abuse of Process, Failure to Disclose, Stay of Proceedings, Handley Estate v. DTE Industries Limited, 2018 ONCA 324, Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898, leave to appeal refused, [2011] S.C.C.A. No. 84, Laudon v. Roberts, 2009 ONCA 383, leave to appeal refused, [2009] S.C.C.A. No. 304, Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2022 ONCA 66, Waxman v. Waxman, 2022 ONCA 311, Pettey v. Avis Car Inc. (1993), 13 O.R. (3d) 725 (Gen. Div.), Aviaco International Leasing Inc. v. Boeing Canada Inc. (2000), 48 C.P.C. (4th) 44 (S.C.J.)

facts:

The respondents M.C. and J.L. owned the respondent M.C. Capital Corp. (“M.C. Capital”), which carried on a wholesale and retail clothing business through an operating company, Standard Apparel Inc. (“Standard Apparel”). In 2015, J.L. asked the appellant, R.P., to invest in the clothing business by buying out M.C.’s shares. R.P. acquired M.C.’s interest in the clothing business and personally guaranteed the debts of the business. The clothing business soon failed, resulting in significant losses to R.P.

R.P. alleged that in purchasing the shares he relied upon what proved to be fraudulent or negligently misleading corporate financial statements. He alleged that those financial statements were prepared by J.F., the business accountant, and were provided to him by M.C., J.L. and J.F.

Lawyer H.G. of Buchli Goldstein LLP assisted R.P. in the share acquisition. H.G. was J.L.’s wife, and R.P. alleged that she breached their contract of retainer and acted in conflict of interest by failing to disclose relevant information known to her relating to the business risk he was undertaking. R.P. instituted an action against the respondents M.C., M.C. Capital, J.L., H.G. and Buchli Goldstein LLP. He also sued J.L.

While discoveries were underway, R.P. settled his claim against J.L, but his lawyers did not disclose the settlement to the respondents for six months. As a result of this period of non-disclosure, the motion judge stayed the action against the respondents, finding that the failure to disclose the settlement immediately was an abuse of process requiring the dismissal of the proceedings. The motion judge referred to the legal test he applied as the “dismissal principle”, and he relied on multiple authorities, including Handley Estate v. DTE Industries Limited, 2018 ONCA 324.

R.P. appealed the decision, arguing that the motion judge erred in law by applying an incorrect test and that he committed palpable and overriding errors of fact. He sought to have the stay set aside and the action reinstated.

issues:

(1) Did the motion judge err in applying an incorrect test?

a. Did the motion judge err by failing to apply a two-part test?

b. Did the motion judge err by failing to consider whether the settlement agreement made the pleadings a sham?

c. Did the motion judge err by considering the standstill agreement?

(2) Did the motion judge commit palpable and overriding errors?

holding:

Appeal dismissed.

reasoning:

(1) No.

a. No.

The Court held that Aecon Buildings v. Stephenson Engineering Limited does not set out a two-part test. MacFarland J.A. made clear that if it is determined that a party failed in its obligation to disclose a settlement agreement, an abuse of process will be found. MacFarland J.A. then went on to find that the failure to make immediate disclosure requires a stay of the action.

b. No.

Neither a change in the position of the parties reflected in the pleadings, nor a “sham” inquiry, are essential parts of the disclosure test. It is settled jurisprudence that the obligation to disclose arises where the settlement agreement changes entirely the landscape of the litigation in a way that significantly alters the adversarial relationship among the parties to the litigation or the “dynamics of the litigation”. In any event, the Court was not persuaded that the motion judge failed to consider J.F.’s pleaded position.

c. No.

The Court did not find the standstill agreement, or the cooperation between defendants – including J.F. – in preparing for the examination of R.P., to be irrelevant. The motion judge was entitled to use this as illustrative of the change in the adversarial relationship between the parties after the undisclosed settlement agreement. The obligation to disclose is not contingent on the settling parties appreciating that the landscape of the litigation has changed. It arises if the landscape of the litigation has been changed by the settlement agreement that they have made.

(2) No.

R.P.’s arguments relating to the first four alleged misapprehension of evidence claims represented an invitation to have the Court reconsider the motion on its merits and to come to and substitute a different decision from the one the motion judge made. The motion judge clearly understood the arguments being made, and rejected them, as he was entitled to do. The motion judge’s decisions were supported on the record and entitled to deference.


M & M Homes Inc. v. 2088556 Ontario Inc., 2022 ONCA 364

[MacPherson, Paciocco and George JJ.A.]

Counsel:

R. S. Choi and G. P. Rhodes, for the appellant

E. Birnboim and M. Crampton, for the respondent

Keywords: Contracts, Real Property, Agreements of Purchase of Sale of Land, Remedies, Specific Performance, Purchase Price Abatements, Civil Procedure, Amending Pleadings

facts:

The respondent, M & M Homes, agreed to purchase land for commercial development from the appellant, 2088556 Ontario Inc. (“208”). The Agreement of Purchase and Sale (the “APS”) required 208 to provide water, storm and sanitary services to the property line of the purchased property by a specified deadline, failing which the agreement “shall become null and void” and the deposit shall be returned. That deadline was not met but was extended repeatedly by agreement. After the last agreed deadline had expired without 208 having supplied the services, 208 attempted to return the deposit. M & M Homes refused and sued for specific performance. The matter proceeded to trial.

The trial judge found that M & M Homes was entitled to specific performance and an abatement arising from 208’s breach of a fundamental term of the APS. She granted a vesting order but invited 208 to reapply for an adjustment of the abatement if within 30 days it delivered written confirmation that the services had been completed, as well as an undertaking to fully cooperate in providing M & M Homes with access to those services. 208 did not reapply for an adjustment of the abatement. Instead, it appealed the judgment.

issues:

(1) Did the trial judge err in ordering specific performance?

(2) Did the trial judge err in ordering an abatement?

holding:

Appeal dismissed.

reasoning:

(1) No.

In its Statement of Defence, 208 resisted the abatement claim, but agreed that the APS should be enforced by specific performance. 208 also pleaded that it was “ready, willing and able to close on the terms of the APS on a new projected closing date” and pleaded that specific performance “should be granted”. On the first day of trial, new counsel for 208 sought to argue the opposite of what 208 had signalled in its Statement of Defence, namely, that the APS was null and void, and that specific performance should not be ordered.

After it became clear that its pleadings were an impediment to advancing these new and inconsistent litigation positions, 208 sought to amend its pleadings to reflect its current position. The Court saw no difficulty with the trial judge’s discretionary dismissal of 208’s motion to amend its pleadings.

Nor would the Court interfere with the trial judge’s conclusion that 208 was prevented by its pleadings from arguing that the APS was null and void, or that specific performance should not be ordered. Obviously, pleadings are intended to frame the live issues in an action. The trial judge’s decision to enforce the pleadings was appropriate.

The Court also rejected 208’s related argument that the trial judge erred by failing to recognize that it had pleaded in the alternative that specific performance should not be granted, and by not permitting 208 to elect at trial the remedy it would pursue.

Nor did the trial judge err by failing to exercise discretion before imposing the remedy of specific performance. She clearly exercised discretion before doing so. She expressly noted in her judgment that “this relief should be granted for two reasons”. The second of those reasons was that “the evidence does establish that specific performance is a remedy that should be granted in this case.” There was no merit in this ground of appeal.

The Court also rejected 208’s arguments that it was unfair of the trial judge to order specific performance given that at the time of the trial the property was owned by CRC Sutton Inc. (“CRC”), which had registered charges against the property. The trial judge was entitled to find that CRC was not “an innocent arm’s length purchaser” and had actual knowledge of the claim, given that its directing mind is the principal of 208.

(2) No.

The trial judge was entitled to receive and act upon the expert testimony offered by M & M Homes. She was also entitled to reject the testimony offered by 208 to prove that the services were completed. She was left unpersuaded by it.

Moreover, the trial judge was entitled to quantify the amount of the abatement based on the costs of independent servicing of the property, notwithstanding the evidence before her that the municipality may not permit M & M Homes to service the lands independently. The task of the trial judge in quantifying the abatement was to determine the diminution in value of the property to M & M Homes arising from 208’s breach of the APS. Her decision to base the abatement on the costs of independent servicing was appropriate given that 208 was in position to frustrate connection to city services. The trial judge was entitled to find that M & M Homes needed 208’s cooperation to accomplish this and “there is no reason to believe that [208] will be cooperative”. In the circumstances, an abatement based on the costs of connecting to 208’s service line could not be relied upon to compensate M & M Homes for 208’s breach.


Foulidis v. Foulidis, 2022 ONCA 362

[MacPherson, Paciocco and George JJ.A.]

Counsel:

G. M. Caplan and A. Simovonian, for the appellant/respondent by way of cross-appeal

S. N. Zeitz and J. S. Quigley, for the respondent/appellant by way of cross-appeal

Keywords: Family Law, Contracts, Solicitor and Client, Charging Orders, Civil Procedure, Costs, Solicitors Act, R.S.O. 1990, c. S.15, sections 34(1), 34(2), Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Family Law Rules, O. Reg. 114/99, rule 2(2), Weenen v. Biadi, 2018 ONCA 288, Thomas Gold Pettinghill LLP v. Ani-Wall Concrete Forming Inc., 2012 ONSC 2182, Fancy Barristers P.C. v. Morse Shannon LLP, 2017 ONCA 82, Mpampas v. Steamatic Toronto Inc. (2009), 84 C.P.C. (6th) 85, Pino v. Van Roon (1998), 28 C.P.C. (4th) 274, Michael Dervin v. Manuel Suarez and Anatoie Koniouchine, 2021 ONSC 1339, Patton v. Patton, 54 R.F.L. (6th) 446, Booth (Re) (1985), 56 C.B.R. (N.S.) 289, Morton (Re), 2014 ONSC 5438, Guergis v. Hamilton, 2016 ONSC 4428

facts:

The appellant, L. F., appealed a September 9, 2021 charging order issued by a family court motion judge against a Toronto residence (the “Property”). The charging order was granted to secure $664,323.38 in legal fees billed by the respondent, which arose from representation the respondent provided to L. F. in family litigation between L. F. and her husband G. F. The respondent also cross-appealed the motion judge’s order respecting costs of the charging order motion.

The motion judge found that the test for imposing charging orders was set out in Weenen v. Biadi, and that the respondent met her onus of satisfying the three parts of the Weenen test, as set out below:

1. the fund or property is in existence at the time the order is granted (the “existence of the property component”);

2. the property was recovered or preserved through the instrumentality of the lawyer (the “preservation of the property component”); and

3. there must be evidence that the client cannot or will not pay the lawyer’s fees (the “risk of non-payment component”).

issues:

(1) Did the motion judge err in finding that the existence of the property component of the Weenen test was satisfied?

(2) Did the motion judge err in finding that the preservation of the property component of the Weenen test was satisfied?

(3) Did the motion judge err in finding that the risk of non-payment component of the Weenen test was satisfied?

(4) Did the motion judge err by failing to consider the competing equities when imposing the charging order?

(5) (Cross-Appeal) Did the motion judge err in failing to provide sufficient reasons relating to costs?

holding:

Appeal and cross-appeal dismissed.

reasoning:

(1) No.

The Court held the motion judge was correct to consider s. 34(2) of the Solicitors Act, which provided: “A conveyance made to defeat or which may operate to defeat a charge under subsection (1) is, unless made to a person who purchased the property for value in good faith and without notice of the charge, void against the charge.” The Court rejected L. F.’s argument that s. 34(2) was inapplicable because it only applied to transfers that occur after charging orders are in effect – there was nothing in the language of s. 34(2) that restricted it to charges already made.

The Court also rejected L.F.’s argument that the charging order was invalid because it was made while her interest in the Property remained uncertain. Specifically, the Court held a solicitor’s charge is “intrinsically declaratory in nature”, and that declarations of charge can be granted in relation to amounts or property that may materialize in the future.

(2) No.

L. F. argued that before a finding could be made that property was “recovered or preserved through the instrumentality of the solicitor” within the meaning of s. 34(1) of the Solicitors Act, the solicitor’s contribution had to be found to be a “substantial and integral part in the recovery or preservation of assets to which the charging order might apply”. She argued that the motion judge’s finding that the respondent “was instrumental to some extent in preserving the equity in the asset” fell short, and therefore the motion judge erred in finding that the preservation of the property component of the Weenen test had been satisfied.

In rejecting L. F.’s argument, the Court held that it was not troubled by the fact that the motion judge did not describe the respondent’s contribution as “substantial and integral”. The Court held a judge is presumed to know the law and was not obliged to use that phrase. Moreover, given the natural meaning of the term, if a judge found that a contribution was “instrumental”, it could be taken as a given that the judge effectively concluded that the contribution was substantial and integral, unless there were persuasive indications to the contrary.

(3) No.

In her counterclaim, L. F. claimed that rather than owing the respondent money for fees, she was owed $2,000,000 as the result of the respondent’s alleged negligence relating to the retainer. Accordingly, the Court held it was obvious that L. F. was refusing to pay, and it was therefore open to the motion judge to make the finding that she did.

(4) No.

A charging order is a discretionary order that “will not be granted if it would offend the principles of equity, either by reason of the conduct of the solicitor or unfairness to the creditors by allowing the charging order to have effect”. The Court held the motion judge considered the relevant equities before exercising her discretion to issue the charging order.

(5) No.

The reasons provided by the motion judge relating to the costs order were not insufficient. Although the motion judge did not explain why she was not granting immediate costs to the respondent despite her success in securing a charging order, the reasons for the costs order were evident from the record as a whole.


SHORT CIVIL DECISIONS

Sasso v. Sasso, 2022 ONCA 339

[Benotto, Miller and Copeland JJ.A]

Counsel:

P. B. Cozzi, for the appellant

A. Bettencourt and J. Karjanmaa, for the respondent

Keywords: Wills and Estates, Estate Trustees, Compensation

Madison Homes Cornell Rouge Limited v. Jiang, 2022 ONCA 351

[Lauwers, Nordheimer and Zarnett JJ.A.]

Counsel:

R. He and Y. Yuan, for the appellant

S. Greaves, for respondent

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Misrepresentation, Damages, Civil Procedure, Summary Judgment, Hembruff v. Ontario Municipal Employees Retirement Board (2005), 78 O.R. (3d) 561 (C.A.), leave to appeal refused, [2005] S.C.C.A. No. 549 and [2006] S.C.C.A. No. 3

Curnew v. Loo, 2022 ONCA 341

[Lauwers, Nordheimer and Zarnett JJ.A.]

Counsel:

J. M. Natale, for the appellant

J. W. Thomas and S. Wouters, for the respondents

Keywords: Civil Procedure, Striking Pleadings, Substantial Indemnity Costs

Flex Park Inc. v. Covello, 2022 ONCA 347

[Lauwers, Nordheimer and Zarnett JJ.A.]

Counsel:

I. C., acting in person

C. A. Mills and M. Dusseault, for the respondent

Keywords: Contracts, Real Property, Mortgages, Fraud, Civil Procedure, Default Judgements, Adjournment, Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2, Palmer v. The Queen, [1980] 1 S.C.R. 759


Scarlato v. Buzbuzian, 2022 ONCA 352

[Benotto, Miller and Copeland JJ.A.]

Counsel:

A. S. Schorr, for the appellant

N. Holmberg, for the respondents

Keywords: Breach of Contract, Settlement Agreements, Estoppel, Civil Procedure, Summary Judgment, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 2484234 Ontario Inc. v. Hanley Park Developments Inc., 2020 ONCA 273

Hume v. 11534599 Canada Corp., 2022 ONCA 360

[Huscroft, Miller and George JJ.A.]

Counsel:

R. D’Mello, for the appellant

E. Peritz, for the respondents

Keywords: Civil Procedure, Appeals, Quashing Appeals, Removal of Lawyer of Record

Fazl v. Home Trust Company, 2022 ONCA 356

[Benotto, Miller and Copeland JJ.A.]

Counsel:

H. F., appearing in person

A. Melfi, for the respondent A. W.

D. Peat, for the respondent 2256157 Ontario Ltd.

J. Riewald, for the respondent Home Trust Company

J. S.G. Macdonald, for the respondent G. M.

Keywords: Civil Procedure, Litigation Guardians, Summary Judgment, Adjournments, Substitute Decisions Act, 1992, S.O. 1992, c. 30

Anthony v. Cundari, 2022 ONCA 363

[Benotto, Miller and Copeland JJ.A.]

Counsel:

G.P.A., appearing in person

R. Gandotra, for the respondent

Keywords: Real Property, Adverse Possession, Civil Procedure, Issue Estoppel, Res Judicata

Public Guardian and Trustee v. Zammit, 2022 ONCA 371

[Huscroft, Thorburn and George JJ.A.]

Counsel:

M. Tubie, for the appellant M.Z.

P. Z., acting in person

P. Geddie, for the respondent

Keywords: Civil Procedure, Appeals, Mootness, Transmission of Interest, Rules of Civil Procedure, Rule 11

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.

These are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of April 25, 2022.

Continue Reading

In Medcap Real Estate Holdings Inc. (Re), the Court determined that the application judge did not err in the exercise of his discretion and dismissed the appellant’s appeal of the bankruptcy order. The appellant did not establish either of the predicate factors that could justify refusing an otherwise proven bankruptcy application. It did not show that it was able to pay its debts, nor did it show any other sufficient cause why no bankruptcy order should be made.

In Martin v. 11037315 Canada Inc., the Court allowed the appeal in part, set aside the default judgment for foreclosure over a property, and ordered a trial of the issue whether the appellant, who had bought the property from the mortgagee out of foreclosure, was a bona fide purchaser for value without actual notice that the respondent was occupying the property and may have had a claim to set aside the default judgment for foreclosure.

Other topics covered this week included residential tenancies, the duty to defend in a title insurance matter, the appointment of a receiver in the securities regulation context, the collection and remittance of retail sales tax, mining royalty interests as interests in land that run with the land.
Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Smith v. Youthlink Youth Services, 2022 ONCA 313

Keywords: Administrative Law, Standard of Review, Real Property, Residential Tenancies, Statutory Interpretation, Residential Tenancies Act, 2006, S.O. 2006, c. 17, ss 5(k), 5.1, 210, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, White v. Upper Thames River Conservation Authority, 2022 ONCA 146, SOL-45003-14 (Re), 2014 CanLII 52441 (ON LTB)

Medcap Real Estate Holdings Inc. (Re), 2022 ONCA 318

Keywords: Bankruptcy and Insolvency, Applications for Bankruptcy Orders, Acts of Bankruptcy, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 37, 38, 42(1)(j), 43(1), 43(7), 71, Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36., Ivaco Inc. (Re) (2006), 83 O.R. (3d) 108 (C.A.), Cowper-Smith v. Morgan, 2017 SCC 61, Emms (Re), [2003] O.J. No. 4961, 484030 Ontario Ltd. (Re) (1992), 8 O.R. (3d) 243 (Gen. Div.), Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, Bankruptcy and Insolvency Law of Canada, loose-leaf (2022-Rel. 4), 4th ed. (Toronto: Thomson Reuters, 2009), Frank Bennett, Bennett on Bankruptcy, 23rd ed. (Toronto, Lexis Nexis: 2021)

Enterprise Rent-A-Car Canada Company v. Ontario (Finance), 2022 ONCA 327

Keywords: Tax, Retail Sales Tax, Retail Sales Tax Act, R.S.O. 1990, c. R.31, s. 18, Excise Tax Act, R.S.C. 1985, c. E-15, Housen v. Nikolaisen, 2002 SCC 33, Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336

Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 326

Keywords: Contracts, Interpretation, Real Property, Interests in Land, Mining Rights, Royalty Interests, Rules of Civil Procedure, Rule 20.01, Bank of Montreal v. Dynex Petroleum Ltd., 2002 SCC 7, Third Eye Capital Corp. v. Dianor Resources Inc., 2018 ONCA 253, Blue Note Mining Inc. v. Fern Trust (Trustee of), 2008 NBQB 310, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Weyerhauser Co. v. Ontario (Attorney General), 2017 ONCA 1007, Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corp., 2021 ONCA 592, Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Re Canadian National Railways and Canadian Pacific Ltd. (1978), 95 D.L.R. (3d) 242, (B.C.C.A.), aff’d, [1979] 2 S.C.R. 668, Thunder Bay (City) v. Canadian National Railway Co., 2018 ONCA 517, Geoff R. Hall, Canadian Contractual Interpretation Law, 4th ed. (Toronto: LexisNexis, 2020)

Martin v. 11037315 Canada Inc., 2022 ONCA 322

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Mortgages, Remedies, Foreclosure, Bona Fide Purchaser for Value Without Notice, Civil Procedure, Default Judgments, Setting Aside, Land Titles Act, R.S.O. 1990, c. L.5., s. 78(4), Rules of Civil Procedure, Rule 59.06, Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244, Thomas Farrell at al. v. John Kavanagh et al., 2020 ONSC 8154, 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702 (Div. Ct.), Babbie v. Petryczka (1975), 8 O.R. (2d) 718 (C.A.), Winters v. Hunking, 2017 ONCA 909, Ontario Housing Corp. v. Ong, (1987), 58 O.R. (2d) 125 (H.C.), Corbor v. Oakshott (1913), 13 D.L.R. 528 (Alta. S.C.), Gowling Lafleur Henderson LLP, Recovery Services Group, Marriott and Dunn: Practice in Mortgage Remedies in Ontario, loose-leaf (2021-Rel. 7), 5th ed. (Toronto: Thomson Reuters Canada, 2020), Canning v. Avigdor, [1961] O.W.N. 59 (Ont. C.A.), Blonski v. Jarmakowicz (1957), 9 D.L.R. (2d) 66 (Ont. H.C.), Diguillo v. Boland (1958), 13 D.L.R. (2d) 510 (Ont. C.A.), United Trust Co. v. Dominion Stores Ltd., [1977] 2 S.C.R. 915, Manias v. Norwich Financial Inc., 2008 ONCA 532, MacIsaac v. Salo, 2013 ONCA 98, MacIsaac v. Salo, citing Durrani v. Augier (2000), 50 O.R. (3d) 353 (S.C.J.), 719083 Ontario Ltd. v. 2174112 Ontario Inc., 2013 ONCA 11, aff’g 2012 ONSC 3815, Gold v. Rosenberg, [1997] 3 S.C.R. 767, Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, Tang v. Xpert Credit Control Solutions Inc., 2022 ONSC 1493

1152729 BC Ltd v. Chicago Title Insurance Company Canada, 2022 ONCA 321

Keywords:Contracts, Insurance, Title Insurance, Coverage, Duty to Defend, Rules of Civil Procedure, Rule 25.06(9), Panasonic Eco Solutions Canada Inc. v. XL Specialty Insurance Company, 2021 ONCA 612, 466 D.L.R. (4th) 276, Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, Wi-Lan Inc. v. St. Paul Guarantee Insurance Company, 2005 ABCA 352, [2006] 7 W.W.R. 458, leave to appeal refused, [2005] S.C.C.A. No. 548, Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, Kerr v. Baranow, 2011 SCC 10, Moore v. Sweet, 2018 SCC 52, Chicago Title Insurance Company v. 100 Investment Limited Partnership, 355 F. 3d 759 (4th Cir. 2004),  Security Title Guarantee Corporation of Baltimore v. 915 Decatur St. NW, LLC, 2019 WL 6728449 (D.D.C.), Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, 1540039 Ontario Limited v. Farmers’ Mutual Insurance Company (Lindsay), 2012 ONCA 210, 110 O.R. (3d) 116

Ontario Securities Commission v. Go-To Developments Holdings Inc., 2022 ONCA 328

Keywords: Securities Regulation, Enforcement, Receiverships, Procedural and Natural Justice, Adjournments, Civil Procedure, Appeals, Fresh Evidence, Securities Act, R.S.O. 1990, c. S.5, s. 126(1), Bank of Montreal v. Cadogan, 2021 ONCA 405, Penner v. Niagara (Regional Police Services Board), 2013 SCC 19

Short Civil Decisions

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2022 ONCA 331

Keywords: Contracts, Agency Agreements, Debtor-Creditor, Defences, Set-Off, Public Policy, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Uber Technologies Inc. v. Heller, 2020 SCC 16

Capsey v. Whiteside, 2022 ONCA 333

Keywords: Torts, Negligence, Occupier’s Liability, Evidence, Credibility, Occupiers’ Liability Act, R.S.O. 1990, c. O.2

Tewari v. McHenry, 2022 ONCA 335

Keywords: Civil Procedure, Striking Pleadings, Privilege, Absolute Privilege, Leave to Amend, Ontario Labour Relations Board

Derenzis v. Johnson, 2022 ONCA 323

Keywords: Civil Procedure, Striking Pleadings, Leave to Amend, Fraud, Breach of Contract, Negligence, Limitation Periods, Normart Management Ltd. v. West Hill Redevelopment Co. Ltd. (1998), 37 O.R. (3d) 97 (C.A.)

Overtveld v. Overtveld, 2022 ONCA 332

Keywords: Civil Procedure, Appeals, Extension of Time, Costs

Loojune v. Loojune, 2022 ONCA 334

Keywords: Wills and Estates, Guardianship, “Best Interests” Test, Management of Property, Fraud, Bias

Hemchand v. Toronto Community Housing Corporation, 2022 ONCA 330

Keywords: Civil Procedure, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, Rule 2.1, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733

Farej v. Fellows, 2022 ONCA 342

Keywords: Civil Procedure, Appeals, Orders, Courts of Justice Act, s. 134(7), Farej v. Fellows, 2022 ONCA 254


CIVIL DECISIONS

Smith v. Youthlink Youth Services, 2022 ONCA 313

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

Counsel:

M. Birdsell, Z. Shariff, and C. Millgate for the appellant, L.S

L. Rosen and C. Catelin, for the respondent, YouthLink Youth Services

L. Naidoo, for the intervener, Landlord and Tenant Board

Keywords: Administrative Law, Standard of Review, Real Property, Residential Tenancies, Statutory Interpretation, Residential Tenancies Act, 2006, S.O. 2006, c. 17, ss 5(k), 5.1, 210, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, White v. Upper Thames River Conservation Authority, 2022 ONCA 146, SOL-45003-14 (Re), 2014 CanLII 52441 (ON LTB)

facts:

The appellant was admitted into a transitional housing program operated by the respondent YouthLink, a registered charity that provides a range of programs and services to people aged 16-21. She was admitted on December 8, 2019 with a discharge date set for one year later, December 7, 2020. However, she was discharged after approximately one month.

The appellant was discharged from the program early because YouthLink alleged that she had failed to follow the program’s rules and expectations. In particular, YouthLink was concerned that the appellant’s failure to comply with COVID-19 directives and requirements posed a risk to the health and safety of other residents, as well as their staff. Despite being advised not to return to the premises until completing a period of self-isolation, the appellant returned on March 30, 2020. YouthLink staff called for the police and the appellant was removed.

The appellant applied to the Landlord and Tenant Board (the “Board”) for an order to determine whether the protections of the Residential Tenancies Act (the “Act”) applied to the YouthLink program. The Board concluded that the Act did not apply to the program. The Board’s decision was then confirmed by the Divisional Court, and the appellant appealed with leave to the Ontario Court of Appeal.

issues:

(1) Did the Divisional Court err by failing to follow and apply the governing principles of statutory interpretation?

(2) Did the Divisional Court err by failing to consider and apply the definition of transitional housing?

(3) Did the Divisional Court err by failing to properly consider and weigh the remedial purpose of the Act?

(4) Did the Divisional Court err by failing to take into account the legislature’s intent and purpose for introducing s. 5.1 to the Act?

(5) Did the Divisional Court err by failing to consider the appellant’s arguments with respect to the evidentiary issues before the Board?

holding:

Appeal dismissed.

reasoning:

(1), (2), (3), (4), (5)
The standard of review was correctness, as leave to appeal under s. 210 of the Act is restricted to appeals on questions of law. Correctness review empowers the court to substitute its view for that of the administrative actor. The court should, of course, consider the legal analysis of the administrative actor, but it does not defer to it; the decision concerning the interpretation of the Act belongs to the court.

All five issues argued on appeal were related to one question: whether section 5(k) of the Act continued to exempt the YouthLink program from the Act. The Court found that it did.

Section 5(k) is concerned with transitional housing. Although that concept is not defined in the Act, the nature of transitional housing in that section can be discerned from the terms of the exemption. Transitional housing is not concerned with simply the provision of short-term accommodation; rather, it is concerned with the provision of short-term accommodation for the purpose of receiving rehabilitative or therapeutic services. The duration of the accommodation is either fixed or tied to completion of an individual’s particular program, following which that individual will transition to another housing option.
Having regard to the text, context, and purpose of the legislation, the Court concluded that rehabilitative and therapeutic services in s. 5(k) must be interpreted as including not only medically-related services but also a broader range of support services including counselling and case management – services that are designed to establish the ability for individuals to transition to independent accommodation. In short, SOL-45003-14 (Re), relied on by the Board in support of its interpretation of s. 5(k), was correctly decided.

The Court also rejected the appellant’s argument that s. 5.1 of the Act reflects an intention to give s. 5(k) a different interpretation which creates a new regime governing transitional housing with which YouthLink and other transitional housing providers must comply in order to be exempt from the Act. The Court stated that s. 5.1 expands the exemptions to the Act significantly. It does so by including programs longer than one year in duration; programs that need not include rehabilitative or therapeutic services; and programs that may be accompanied by services that are not necessarily provided by the housing provider. The Court agreed that there is some overlap between ss. 5(k) and 5.1, but stated that nothing in s. 5.1 alters the operation of s. 5(k); a provider of services may be exempt from the Act by operation of one provision but not the other. Thus, the Board and the Divisional Court correctly held that even if s. 5.1 establishes a new, more comprehensive scheme for the regulation of transitional housing that overlaps to some extent with s. 5(k), the operation of s. 5(k) is not precluded on that account. Further, the Legislature’s decision not to amend s. 5(k) but, instead, to preserve its operation regardless of s. 5.1 must be given effect.


Medcap Real Estate Holdings Inc. (Re), 2022 ONCA 318

[Trotter, Zarnett and Favreau JJ.A.]

Counsel:

F.S. Turton, for the appellant

I.Y. Lavrence and R. Allan, for the respondents

Keywords: Bankruptcy and Insolvency, Applications for Bankruptcy Orders, Acts of Bankruptcy, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 37, 38, 42(1)(j), 43(1), 43(7), 71, Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36., Ivaco Inc. (Re) (2006), 83 O.R. (3d) 108 (C.A.), Cowper-Smith v. Morgan, 2017 SCC 61, Emms (Re), [2003] O.J. No. 4961, 484030 Ontario Ltd. (Re) (1992), 8 O.R. (3d) 243 (Gen. Div.), Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, Bankruptcy and Insolvency Law of Canada, loose-leaf (2022-Rel. 4), 4th ed. (Toronto: Thomson Reuters, 2009), Frank Bennett, Bennett on Bankruptcy, 23rd ed. (Toronto, Lexis Nexis: 2021)

facts:

The respondents Groia & Company Professional Corporation (“Groia”) and Anne Wilson (“Wilson”), together with three other entities – Bennington Financial Corp. (“Bennington”), Heffner Development Group (Brampton) Limited (“Heffner”) and Physiomed Health Holdings Inc. (“Physiomed”) – brought applications for a bankruptcy order against the appellant, Medcap Real Estate Holdings Inc. (“Medcap”), pursuant to s. 43(1) of the Bankruptcy and Insolvency Act (the “BIA”).

The application judge dismissed the applications of Bennington, Heffner, and Physiomed. He granted the applications of the respondents Groia and Wilson and made a bankruptcy order against the property of Medcap. He appointed A. Farber & Partners as trustee.

Medcap appealed the bankruptcy order on a single ground. It submitted that the application judge erred in failing to exercise his discretion to dismiss the application even though the prerequisites to the making of a bankruptcy order – a debt owing to an applicant of at least $1,000 and the commission of an act of bankruptcy within six months of the commencement of the application – had been proven.

Medcap made three arguments as to why the Court should interfere: (i) that the application judge erred in not finding that Medcap had the ability to pay its debts; (ii) that he erred in failing to find the application was brought for an improper motive; and (iii) that he erred in failing to appreciate that a bankruptcy order would serve no purpose

issues:

(1) Did the application judge err in failing to exercise his discretion to dismiss the application even though the prerequisites to the making of a bankruptcy order had been proven?

holding:

Appeal dismissed.

reasoning:

(1) No.

Ability to Pay Debts

The application judge did not err in rejecting Medcap’s argument. An application for a bankruptcy order is not merely for the benefit of the applicant creditor, but rather for all creditors. Arrangements between the applicant creditor and the debtor will not justify the withdrawal or dismissal of a bankruptcy application unless the court is satisfied that the debtor is solvent and other creditors will not be prejudiced by the withdrawal or dismissal: Bankruptcy and Insolvency Law of Canada.

To meet the test of an ability to pay debts as contemplated in s. 43(7), the focus must be on all of the debts. A debtor is required to lead evidence sufficient to establish what all of its debts are and also of its ability to pay them – in other words, that it is solvent.

Medcap did not lead such evidence. It did not establish its overall financial position, who all of its creditors were, and why its resources were sufficient to satisfy each of them. Medcap was not entitled to ask the Court to assume that its only creditors were those discussed in the evidence, given that it did not endeavour to meet its onus of showing its overall financial position.

Nor could a conclusion that Medcap had the ability to pay its debts be drawn simply from payments to some creditors, such as Wilson and Groia, since Medcap did not show that such payments were made by it or from its own resources, or by taking on obligations it had the ability to satisfy.

Improper Motive

 The existence of a motive is a question of fact. The application judge considered, and rejected, the suggestion that there was such an ulterior motive.

This finding was open to the application judge on the record, and the Court saw no basis to interfere with it.

No Purpose to a Bankruptcy

A debtor who has (a) committed an act of bankruptcy consisting of not paying debts as they generally come due, and (b) failed to lead evidence to satisfy the Court that it has the ability to pay its creditors bears a very heavy onus to show that a bankruptcy would nonetheless serve no purpose. The application judge did not err in finding that Medcap had not fulfilled that onus.

Although secured creditors stand largely outside the BIA process, Medcap had not shown either the non-existence of unsecured creditors, or that the value of its property that is subject to security does not exceed the secured claims. Accordingly, it has not shown that a BIA liquidation cannot serve a purpose.

Although Medcap complained that the application judge did not properly consider the situation at its Upper Wentworth property, the Court saw no error. The application judge noted that a maturing secured debt on that property was not paid by Medcap but by a related party who took an assignment of the security. He also noted that the only tenant of the property was a non-arm’s length entity. Viewed from the standpoint of the protection of creditors, these facts were relevant to the question of whether Medcap had shown that matters should simply continue to be left in its hands.

Similarly, the Court saw no error in the application judge’s consideration of events at Medcap’s Centennial Parkway property, including various litigation positions Medcap had taken with creditors. The application judge described these as raising serious concerns as they fell outside the bona fide raising of claims and defences. That finding was open to him to make.


Enterprise Rent-A-Car Canada Company v. Ontario (Finance), 2022 ONCA 327

[van Rensburg and Roberts JJ.A. and Tzimas J. (ad hoc)]

Counsel:

M.G. Williams and E.R. Potter, for the appellant

L. Patyk and D. Irvine, for the respondent

Keywords: Tax, Retail Sales Tax, Retail Sales Tax Act, R.S.O. 1990, c. R.31, s. 18, Excise Tax Act, R.S.C. 1985, c. E-15, Housen v. Nikolaisen, 2002 SCC 33, Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336

facts:

During an audit period from August 1, 2011 to July 31, 2015 (“the audit period”), Enterprise Rent-A-Car Canada Company (“Enterprise”), under its GST/HST number, remitted to the CRA as HST the taxes charged and collected on the insurance products sold to its customers. Its invoices to its customers bore its GST/HST number and set out the amount charged as HST.

On May 28, 2015, the Ministry of Finance (“the Ministry”), wrote an email to K. C. (the Vice President of Business Management and Canadian Operations for Enterprise) wherein the Ministry indicated that it was unable to find an active retail sales insurance premium tax account for Enterprise after June 30, 2010. The Ministry wrote that “Your company has been collecting RST on behalf of insurers and you were obligated to remit it to the Ministry.… let me know whether the taxes were filed with CRA in error (as has happened in many instances) and action can be taken to remedy the situation.”

In an email response dated May 29, 2015, K. C. stated: “I believe we have in fact been remitting the ORST (Premium Tax) in our HST (CRA) returns. You mention below there is a remedy, can you advise.”

The Minister carried out four assessments and determined the amount owing as RST to be $1,477,947.45 plus interest of $438,408.82. Enterprise filed a notice of objection dated April 20, 2018, with respect to each of the assessments. Enterprise was unsuccessful in its objection, and subsequently appealed to the Superior Court and brought a motion for summary judgment on the primary basis that HST was collected and that RST was not collected.

The motion judge determined that Enterprise had erroneously remitted what was in fact RST to the CRA as HST. He based his conclusion primarily on the email exchange between K. C. and the Ministry, which the motion judge characterized as an admission that Enterprise was charging, collecting, and remitting RST during the audit period.

Enterprise appealed from the motion judge’s decision and submitted that the motion judge erred in law by answering the wrong question. According to Enterprise, the analysis undertaken by the motion judge did not answer the question of which tax Enterprise in fact collected during the audit period but, instead, the question of which tax Enterprise thought it was collecting during the audit period

issues:

(1) Did the motion judge err in law by answering the wrong question?

(2) Which tax did Enterprise collect?

holding:

Appeal allowed.

reasoning:

(1) Yes.

While initially and correctly stating the question to be determined, the motion judge did not answer it. Rather, the motion judge focused on what tax Enterprise believed it was collecting, which he based primarily on K. C.’s email exchange with the Ministry.

The Court held that by focusing on Enterprise’s belief through K. C.’s evidence, the motion judge answered the wrong question and fell into error. Enterprise’s belief was not dispositive of the analysis about which tax Enterprise was in fact collecting. This was not a case where the taxpayer deliberately charged, collected, and remitted the wrong tax to the wrong government ministry. Rather, Enterprise’s collection and remittance of HST to the CRA, instead of RST to the Ministry, was a product of error or confusion as to which tax should be collected.

(2) HST.

The Court held the evidence of the actions that Enterprise in fact carried out was uncontroverted. As a result of the tax harmonization in July 2010, Enterprise’s internal tax team determined that HST and not RST was payable on the three insurance products in issue: 8% on two of them and 13% on the third. As a result, Enterprise changed its invoicing practices and internal controls to charge, collect, and remit HST on those insurance products. As of the effective date of harmonization, Enterprise closed its provincial tax accounts and updated its invoices to no longer show PST but instead showed HST, along with its GST/HST number. It did not register or open an RST account with the Ministry. There is no question that Enterprise duly remitted all the taxes collected to the CRA as HST during the audit period. The amounts so charged and collected by Enterprise were reported and remitted to the CRA in Enterprise’s HST returns under Enterprise’s GST/HST number.

The evidence clearly established that during the audit period Enterprise was charging, collecting, and remitting HST to the CRA. The Court held it would make absolutely no sense that Enterprise would knowingly charge, collect, and remit RST to the CRA. Rather, it would have complied with its obligations under the Retail Sales Tax Act and its regulations to charge, collect, and remit RST to the Ministry.

The parties agreed that the only basis for the Minister’s assessments in this case was under s. 18 of the Retail Sales Tax Act, which permits assessments of the “tax collected”. The “tax collected” by Enterprise was not RST but HST. Accordingly, the Minister had no basis to assess the “tax collected” by Enterprise.


Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 326

[Lauwers, Huscroft and Coroza JJ.A.]

Counsel:

Z. Levy and H. Skinner, for the appellant

D. Sischy and B. Pascutto, for the respondent

Keywords: Contracts, Interpretation, Real Property, Interests in Land, Mining Rights, Royalty Interests, Rules of Civil Procedure, Rule 20.01, Bank of Montreal v. Dynex Petroleum Ltd., 2002 SCC 7, Third Eye Capital Corp. v. Dianor Resources Inc., 2018 ONCA 253, Blue Note Mining Inc. v. Fern Trust (Trustee of), 2008 NBQB 310, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Weyerhauser Co. v. Ontario (Attorney General), 2017 ONCA 1007, Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corp., 2021 ONCA 592, Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Re Canadian National Railways and Canadian Pacific Ltd. (1978), 95 D.L.R. (3d) 242, (B.C.C.A.), aff’d, [1979] 2 S.C.R. 668, Thunder Bay (City) v. Canadian National Railway Co., 2018 ONCA 517, Geoff R. Hall, Canadian Contractual Interpretation Law, 4th ed. (Toronto: LexisNexis, 2020)

facts:

The appellant Detour Gold Corporation is the registered owner of certain mining claims and leases in Northern Ontario. It acquired its interest from Conquest Resources Inc. The respondent, Prism Resources Inc., sued Detour for a declaration that it has a valid and enforceable royalty interest in Detour’s mining claims and leases in two properties. The motion judge granted summary judgment, concluding that Prism’s royalty interest was an interest in land under the principles of law set by the Supreme Court.

issues:

(1) Did the motion judge make palpable and overriding factual errors?
(2) Did the motion judge err in her approach to the governing law in Dynex?
(3) Did the motion judge err in her approach to contractual interpretation? That is, did the motion judge make improper use of the evidence of the “surrounding circumstances”, which she permitted to “overwhelm” the text of the 2004 Letter Agreement?
(4) Did the motion judge err in taking into account the post-transaction conduct of the parties?

holding:

Appeal dismissed.

reasoning:

The motion judge’s chain of reasoning led her to conclude: “In all the circumstances, I am satisfied that the Letter Agreement created a property interest which runs with the lands in question”. The appellant was unable to demonstrate any error in her methodology or chain of reasoning, nor any error in principle or palpable and overriding error of fact.

(1) No.

The appellant asserted that the motion judge clearly erred when she said, “Prism ultimately acquired a 100% interest in the Properties”. The court disagreed with the appellant’s position, stating that this argument did not fit with other statements in the reasons that showed the motion judge’s complete and accurate grasp of the true situation. The appellant also argued that the motion judge made a similar error when she said that at the time of the 2004 Letter Agreement “Conquest was the owner”. Again, the court disagreed with this argument, stating that this demonstrated that the motion judge knew throughout that the issue was about an interest in an interest. The latter is further supported at para. 30 when she said “Conquest could make such payments on its behalf, whereupon Conquest’s interest in Prism’s interest in the Property would increase…” (emphasis added).

(2) No.

The appellant argued that “[t]he 2004 agreement does not state that Prism’s interest was ‘in the land’ or contain any other language conveying an intention to create a right that would bind future owners of the Properties. The Dynex case recognized that a “royalty interest” or an “overriding royalty interest” can be an interest in land under two conditions: first, if “the language used in describing the interest is sufficiently precise to show that the parties intended the royalty to be a grant of an interest in land, rather than a contractual right to a portion of the oil and gas substances recovered from the land”; and, second, if “the interest, out of which the royalty is carved, is itself an interest in land”. The Court stated that the motion judge was well-aware of the reasoning in Dynex, noting, at para. 18: “The ruling in Dynex specifically changed the law to bring it in line with industry practice, to permit a royalty that consists of a right to payment of profits to be an interest in land”. After specifying the two-part test in Dynex, the motion judge said, at para. 19: “There is no issue in this case that the second part of the test set out in Dynex is satisfied in that the property interest claimed by Prism has been carved out of Conquest’s property interest”. Further, the court noted “contractual terms are not necessarily determinative of whether an interest in land was intended; the language does not require magic words to demonstrate the parties’ intention”.

(3) No.

In simplified terms, the Court stated that the governing principles of contractual interpretation revolve around text, context, and purpose. Importantly, that the “surrounding circumstances”, as noted in the Sattva case, “must never be allowed to overwhelm the words of that agreement” and cannot be used “to deviate from the text such that the court effectively creates a new agreement”. The Court stated that it believed the motion judge to have been careful in instructing herself on the proper use of the evidence of the surrounding circumstances according to the Supreme Court of Canada in Sattva. The surrounding circumstances the motion judge considered were set out in the evidence the parties filed and over which they argued. While the appellant further argued that the motion judge erred in her use of the interpretative principle of commercial reasonableness, the court stated that the use of “commercially reasonable” is implicit in the Supreme Court’s logic for contractual analysis and is also a basic to the interpretation of commercial contracts.

(4) No.

Unlike the factual matrix, which “relates solely to events at the time of contract formation,” evidence of which is “admissible in every case,” evidence of the parties’ subsequent conduct is only admissible in certain circumstances. If, after considering the text and the factual matrix, the contract remains ambiguous, then subsequent conduct evidence may be admitted to help resolve that ambiguity. This is not to say that the probative value of such does not come without risk, and therefore a court must carefully consider how much weight to assign to conduct subsequent to contractual formation. The Court determined that the motion judge was scrupulous in her self-instruction on the use to which subsequent conduct could be put, including the Court’s decision in Shewchuk. Her analysis did engage with the factual question of whether there was an ambiguity. Immediately after pointing this ambiguity out, the motion judge dealt with surrounding circumstances, which she was entitled to consider under Sattva, even without an ambiguity. It was only after this methodology that the motion judge turned to the subsequent conduct. After doing so, the motion judge came to the determination that the subsequent conduct showed that Prism’s royalty interests were considered by Conquest, and hence by its contracting party, Detour, to be a permitted encumbrance. The Court further pointed out that the motion judge expressly noted that Conquest’s subsequent conduct on which Prism relied did not have the dangers referred to by the Court in Shewchuk because the conduct occurred before any dispute between Prism and Detour, so “it could not possibly have been contrived to benefit Prism in this proceeding (that is referring to the dangers that can be associated with relying on subsequent conduct).”


Martin v. 11037315 Canada Inc., 2022 ONCA 322

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

Counsel:

P. Robson and S. Chhina, for the appellants

D. Van Sickle, for the respondent

M. Whiteley and M. Dhaliwal, for the non-party 1614358 Ontario Ltd.

K. Randhawa, for the non-party R.S.P.

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Mortgages, Remedies, Foreclosure, Bona Fide Purchaser for Value Without Notice, Civil Procedure, Default Judgments, Setting Aside, Land Titles Act, R.S.O. 1990, c. L.5., s. 78(4), Rules of Civil Procedure, Rule 59.06, Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244, Thomas Farrell at al. v. John Kavanagh et al., 2020 ONSC 8154, 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702 (Div. Ct.), Babbie v. Petryczka (1975), 8 O.R. (2d) 718 (C.A.), Winters v. Hunking, 2017 ONCA 909, Ontario Housing Corp. v. Ong, (1987), 58 O.R. (2d) 125 (H.C.), Corbor v. Oakshott (1913), 13 D.L.R. 528 (Alta. S.C.), Gowling Lafleur Henderson LLP, Recovery Services Group, Marriott and Dunn: Practice in Mortgage Remedies in Ontario, loose-leaf (2021-Rel. 7), 5th ed. (Toronto: Thomson Reuters Canada, 2020), Canning v. Avigdor, [1961] O.W.N. 59 (Ont. C.A.), Blonski v. Jarmakowicz (1957), 9 D.L.R. (2d) 66 (Ont. H.C.), Diguillo v. Boland (1958), 13 D.L.R. (2d) 510 (Ont. C.A.), United Trust Co. v. Dominion Stores Ltd., [1977] 2 S.C.R. 915, Manias v. Norwich Financial Inc., 2008 ONCA 532, MacIsaac v. Salo, 2013 ONCA 98, MacIsaac v. Salo, citing Durrani v. Augier (2000), 50 O.R. (3d) 353 (S.C.J.), 719083 Ontario Ltd. v. 2174112 Ontario Inc., 2013 ONCA 11, aff’g 2012 ONSC 3815, Gold v. Rosenberg, [1997] 3 S.C.R. 767, Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, Tang v. Xpert Credit Control Solutions Inc., 2022 ONSC 1493

facts:

The appellants appealed from an order of Gibson J. dated December 23, 2020, setting aside a default judgment for foreclosure and possession of charged property dated November 20, 2019.

The appellant, 11037315 Canada Inc. (“1103”), was the chargee who obtained the default judgment for foreclosure. The appellant, 2670082 Ontario Corp. (“267”), purchased the property from 1103 for $425,000 under an agreement of purchase and sale dated December 5, 2019.

The respondent, K.M., was the owner/chargor of the subject property prior to the November 20, 2019 default judgment for foreclosure.

The December 23, 2020 order setting aside the default judgment for foreclosure also contained terms requiring that the subject property be sold, that the net proceeds of sale in excess of $425,000 be paid to K.M., and that the appellant chargee, 1103, pay to K.M. the difference between $425,000 and the amount 1103 claimed in its statement of claim as owing on its charge.

issues:

(1) Did the application judge err in setting aside the default judgment for foreclosure and possession of the property?

(2) Did s. 78(4) of the Land Titles Act preclude the Court from interfering with 267’s title?

holding:

Appeal allowed in part.

reasoning:

(1) No.

The application judge’s reasons demonstrated that he fully considered the factors set out in Winters v. Hunking and concluded that the equities in favour of setting aside the default judgment outweighed the equities against doing so. The application judge acknowledged that K.M. made a mistake in failing to consult a lawyer promptly after being served with the statement of claim. Nonetheless, the Court agreed with his conclusion that, overall, the evidence on the application overwhelmingly demonstrated that the equities favoured setting aside the default judgment.

In particular, the evidence showed that 1103 proceeded with the foreclosure and sale with great haste in a manner that concealed that K.M. was at risk of losing her significant equity in the property and further, that 1103 and 267 made a bargain that effectively split K.M.’s significant equity in the property between the two companies.

Subject to what the Court had to say about s. 78(4) of the Land Titles Act and the application judge’s finding that 267 was not a bona fide purchaser for value without notice (which would not affect the decision to set aside the default judgment as against 1103), the Court saw no palpable and overriding error in the application judge’s findings of fact, no error in principle in his reasoning and no other basis on which to interfere with his discretionary decision to set aside the default judgment based on equitable principles.

Further, the Court saw no error in the application judge’s alternative conclusion that the default judgment for foreclosure and possession should be set aside because it was irregularly obtained.

(2)

Because the Court concluded that s. 78(4) of the Land Titles Act was not raised in the court below, the Court was not persuaded the application judge’s finding was necessarily an error in the context in which it was made. The “without notice” component of bona fide purchaser for value without notice can refer to actual and/or constructive notice depending on the context.

As s. 78(4) was not raised before him, the application judge was not required to determine whether any exception to its application existed. In particular, he was not required to consider the specific issue whether 267 had actual notice at the time of purchasing the property that K.M. was occupying the property and may have had a claim to set aside the default judgment for foreclosure. In the circumstances, his finding that the principal of 267 or 267 had constructive knowledge that foreclosure judgments can be set aside did not preclude a finding of actual knowledge when the issue was considered in relation to s. 78(4) of the Land Titles Act.

The Court considered the record to assess whether it was in a position to determine whether 267 was a bona fide purchaser for value without notice such that it qualified for the protection of s. 78(4) of the Land Titles Act. The Court concluded that it was not.

267 submitted that, in purchasing the property, it relied on the default judgment for foreclosure and that its solicitor examined the judgment and underlying statement of claim to confirm that the foreclosure was carried out properly. It claimed it had no notice of any defect or irregularity in the foreclosure proceeding and “discover[ed] that the owners prior to the Foreclosure were still occupying the property” on a visit to the property after the purchase was completed.

However, to assess whether 267 had actual notice that K.M. was occupying the property and may have had a claim to set aside the foreclosure judgment, it was necessary to consider the inferences arising from the circumstances in which the purchase was arranged, how it was handled, what 267 knew about the property and the terms and conditions of sale. In the Court’s view, there were issues arising from the evidence given by the principal of 267 about these matters.

The totality of this evidence raised questions about what 267 or the principal of 267 knew about the true value of the property, who was occupying it and whether the occupant may have had a claim to set aside the default judgment for foreclosure.

In all the circumstances, the Court concluded there should be a trial of the issue whether 267 was a bona fide purchaser for value without notice that K.M. was occupying the property and may have had a claim to set aside the default judgment for foreclosure. Once this issue has been decided, the presiding judge can determine whether 267 is entitled to the protection of s. 78(4) of the Land Titles Act.


1152729 BC Ltd v. Chicago Title Insurance Company Canada, 2022 ONCA 321

[Feldman, Pepall and Tulloch JJ.A.]

Counsel:

T. Evangelidis and D. S. Fisher, for the appellant

P. Robson, for the respondent

Keywords: Contracts, Insurance, Title Insurance, Coverage, Duty to Defend, Rules of Civil Procedure, Rule 25.06(9), Panasonic Eco Solutions Canada Inc. v. XL Specialty Insurance Company, 2021 ONCA 612, 466 D.L.R. (4th) 276, Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, Wi-Lan Inc. v. St. Paul Guarantee Insurance Company, 2005 ABCA 352, [2006] 7 W.W.R. 458, leave to appeal refused, [2005] S.C.C.A. No. 548, Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, Kerr v. Baranow, 2011 SCC 10, Moore v. Sweet, 2018 SCC 52, Chicago Title Insurance Company v. 100 Investment Limited Partnership, 355 F. 3d 759 (4th Cir. 2004),  Security Title Guarantee Corporation of Baltimore v. 915 Decatur St. NW, LLC, 2019 WL 6728449 (D.D.C.), Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, 1540039 Ontario Limited v. Farmers’ Mutual Insurance Company (Lindsay), 2012 ONCA 210, 110 O.R. (3d) 116

facts:

The appellant insurer provided the respondent insured with title insurance on a property in Bradford, which the insured purchased under a power of sale from 9706151 Canada Ltd. (“970”). The former owner, CS, who had defaulted on his mortgage to 970, sued the insured and 970, seeking (i) a declaration that the sale to the insured was invalid, (ii) an order setting aside the sale, (iii) a certificate of pending litigation, and (iv) other relief. The insured called on the insurer to defend the action. The previous owner’s amended statement of claim asked the court to set aside the sale and claimed, in the alternative, a remedy for unjust enrichment. The insurer initially agreed to defend the claim, but with a reservation of rights based on two exclusions in the policy for risks created by the insured or risks known to the insured, but not the insurer, on the date of the policy.

After the pleading containing a statement of defence, counterclaim, and crossclaim was delivered on behalf of the insured, it lost title to the property when the property was sold again by power of sale. Once the insured was no longer on title to the property, the insurer advised the insured that it no longer had a duty to defend or indemnify it. The insured then brought an application for an order that the insurer’s duty to defend continued even though it no longer owned the property, because CS’s action included a claim against the insured for damages and once the insurer undertook the defence, the policy did not allow it to resile from the defence of the action.

On the application, counsel for the insurer conceded that, although the insured no longer had title to the property, if the amended statement of claim also claimed damages against the insured, the insurer’s duty to defend would remain in place. Therefore, the issue before the application judge was whether the amended statement of claim did contain a claim for damages against the insured. If it did, the duty to defend continued.

The application judge found that, giving the amended statement of claim a “generous” reading, it contained a claim for damages against the insured. As a result, the duty to defend continued. The insurer appealed.

issues:

(1) Did application judge err by finding that the amended statement of claim included a claim for damages against the insured, based on five errors of law;

  1. considering the allegations made in the insured’s statement of defence;
  2. applying the wrong principles of interpretation and in particular, applying a fanciful rather than a reasonable reading of the pleading;
  3. failing to use Rule 25.06(9) of the Rules of Civil Procedure to assess whether the amended statement of claim sought damages based on unjust enrichment against the insured;
  4. erring in the interpretation of available remedies for unjust enrichment; and
  5. considering extrinsic evidence in the interpretation of the claim?
holding:

Appeal dismissed.

reasoning:

(1) No.

There was no error in the application judge’s analysis or conclusion that the amended statement of claim could reasonably be read to include a claim for damages against the insured. The duty to defend continued in this case, even though the insured no longer owned the property.

The pleading by the claimant against the insured is what triggers the duty to defend. If the facts alleged in the pleading would, if true, require the insurer to indemnify, then the insurer has the duty to defend. The pleadings are to be interpreted broadly, with any doubt to be resolved in favour of the insured. Where the claim alleges facts that might fall within coverage, the duty arises.

  1. Considering the allegations made in the insured’s statement of defence

The reasons of the application judge made it clear that she determined the meaning and effect of the amended statement of claim based only on that pleading, then looked at the statement of defence, and found confirmation, because it was drafted by counsel representing the insurer. She emphasized that the response by counsel appointed by the insurer was not determinative of the meaning of the amended statement of claim, but only a factor to be considered. As her finding did not turn on the pleading in the statement of defence, it was not an error.

     2. Applying the wrong principles of interpretation and, in particular, applying a fanciful rather than a reasonable reading of the pleading

The application judge’s analysis of the claims in the amended statement of claim represented a reasonable and realistic view of that pleading. When the application judge referred to a “generous reading”, that was another way of saying she was giving the allegations “the widest latitude”. Within that parameter, the reading must be reasonable and not fanciful. Had counsel retained by the insurer for the insured believed that once the insured no longer owned the property, there was no other claim against it left in the amended statement of claim, counsel could have moved on behalf of the insured to have the action dismissed against it. That was not done because it would not have been successful.

      3. Failing to use Rule 25.06(9) of the Rules of Civil Procedure to assess whether the amended statement of claim sought damages based on unjust enrichment against the insured

The insurer was incorrect that, because CS did not seek a specific amount of damages from the insured, his pleading did not seek a monetary remedy from it, and, to find otherwise, would endorse non-compliance with Rule 25.06(9).

The pleading claims a constructive trust and a remedy for unjust enrichment, both of which could involve the payment of money, depending on the circumstances, which would include the state of and availability of the property. While the amended statement of claim does not explicitly seek monetary damages for unjust enrichment, it does specifically plead that the insured was unjustly enriched by improperly acquiring the property at a “deep discount”. The pleading quantifies the damages as the difference between the sale price and the fair market value of the property.

     4. Erring in the interpretation of available remedies for unjust enrichment

There was no merit to the insurer’s argument that, because the property was CS’s home, a proprietary remedy would be more appropriate than a monetary one. A monetary remedy is viewed as the primary remedy for unjust enrichment. A constructive trust will only be ordered if the plaintiff first establishes that a monetary remedy would be inadequate. Even if it was not the primary remedy, damages are an available remedy for unjust enrichment, depending on the circumstances at the time of judgment.

      5. Considering extrinsic evidence in the interpretation of the claim

The insurer objected to the application judge considering the fact that the insured no longer owned the property after the amended statement of claim was delivered, and relying on that fact to find that damages would be the only available remedy for unjust enrichment. The claims in the pleading for unjust enrichment and constructive trust over the proceeds of the sale could be read to include claims against the insured, the remedy for which can be damages. Therefore, it was not necessary for the application judge’s interpretive analysis to consider the subsequent sale of the property. If it was an error to do so, it was a harmless error.


Ontario Securities Commission v. Go-To Developments Holdings Inc., 2022 ONCA 328

[Gillese, Miller and Coroza JJ.A.]

Counsel:

G. Azeff and M. Faheim, for the appellants

R. P. Steep, E. Hoult, S. D’Souza and B. Stapleton, for the respondent

I. Aversa and T. Dolny, for KSV Restructuring Inc.

Keywords: Securities Regulation, Enforcement, Receiverships, Procedural and Natural Justice, Adjournments, Civil Procedure, Appeals, Fresh Evidence, Securities Act, R.S.O. 1990, c. S.5, s. 126(1), Bank of Montreal v. Cadogan, 2021 ONCA 405, Penner v. Niagara (Regional Police Services Board), 2013 SCC 19

facts:

The Ontario Securities Commission (the “Commission”) had been investigating the appellants for breaches of securities law. O. F. was the principal of Go-To Developments Holdings Inc., and according to the Commission, O. F. was the directing mind of the other appellants, including Go-To Spadina Adelaide Square LP (“Adelaide LP”). The Commission investigation revealed that undisclosed payments were made to O. F. resulting in misappropriation and improper use of Adelaide LP funds.

On December 19, 2021, an application to appoint a receiver and manager over Go-To Developments Holdings Inc. and the other related companies was heard. Counsel for O. F. sought an adjournment so that O. F. could retain new counsel and file responding material. The Commission opposed the adjournment request.

The application judge denied the adjournment and granted the application appointing a receiver and manager. The application judge explained that, based on the allegations against O.F., the interests of the investors made it necessary to deal with the application rather than adjourn it and leave O. F. in charge. The application judge also stated it was his view that O. F. had sufficient notice to file material.

The appellants appealed the Receivership Order.

issues:

(1) Did the application judge err in denying the appellant’s adjournment request?

(2) Did the application judge err in admitting the transcripts of O. F.’s examination in the Commission investigation?

holding:

Appeal dismissed.

reasoning:

The Commission applied for the admission of fresh evidence on the appeal, consisting of two reports of the receiver and further evidence of the appellants’ actions since the Receivership Order. The Court admitted the fresh evidence as it held it was credible, not available when the application was heard, and relevant.

(1) No.

The decision of whether to grant an adjournment will be set aside only where the judge misdirected him or herself or was so clearly wrong as to amount to an injustice. The Court held the application judge did not misdirect himself.
Far from being “clearly wrong”, the Court held the fresh evidence showed that the application judge’s concerns about O. F.’s conduct were justified. The application judge denied the adjournment and made the Receivership Order based on concerns O. F.’s ability to operate Go-To in a manner compliant with securities laws and to protect the investors. The fresh evidence demonstrated further misconduct and self-dealing after O. F. was served with the application materials.

The Court also held it was significant that the application judge was satisfied that O. F. had sufficient notice of the application and time to respond.

(2) Declined to address.

The Court declined to address the issue of the application judge’s reliance on the transcripts of O. F.’s examination in the Commission investigation, as the appellants raised the issue for the first time on appeal.

Because the issue was not raised below, there was no adequate record on which the Court could consider and decide it. The Court held the Commission may well have adduced evidence on the matter; the parties would have had the opportunity to squarely argue the matter in the context of an appropriately constructed record; and the application judge would have decided the matter and given reasons for that decision.


SHORT CIVIL DECISIONS

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2022 ONCA 331

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

S. Schwisberg, for the appellant

J-S. Schoenholz and A. Paquette, for the respondent

Keywords: Contracts, Agency Agreements, Debtor-Creditor, Defences, Set-Off, Public Policy, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Uber Technologies Inc. v. Heller, 2020 SCC 16

Capsey v. Whiteside, 2022 ONCA 333

[Fairburn A.C.J.O., Paciocco and Sossin JJ.A.]

Counsel:

W. W., acting in person as the appellant

W. C. Wolfe, acting for the respondent

Keywords: Torts, Negligence, Occupier’s Liability, Evidence, Credibility, Occupiers’ Liability Act, R.S.O. 1990, c. O.2

Tewari v. McHenry, 2022 ONCA 335

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

G. T., acting in person as the appellant

D. Iny and M. Anderson, for the respondents

Keywords: Civil Procedure, Striking Pleadings, Privilege, Absolute Privilege, Leave to Amend, Ontario Labour Relations Board

Derenzis v. Johnson, 2022 ONCA 323

[Gillese, Miller and Caroza JJ.A]

Counsel:

O.G. Barnwell, for the appellant

L. Hickman, for the respondents

Keywords: Civil Procedure, Striking Pleadings, Leave to Amend, Fraud, Breach of Contract, Negligence, Limitation Periods, Normart Management Ltd. v. West Hill Redevelopment Co. Ltd. (1998), 37 O.R. (3d) 97 (C.A.)

Overtveld v. Overtveld, 2022 ONCA 332

[Lauwers, Nordheimer and Zarnett JJ.A.]

Counsel:

G. F. Windsor, for the moving parties

G. J. Tighe, for the responding parties Blaney McMurtry LLP and T. MacDonald, and as agent for the responding parties C.R., MBC Law PC, R.R., Borden Ladner Gervais LLP, K.M., D.S.-S., Norton Rose Fulbright LLP, J.M., Cavanaugh LLP, S.S., M.R., Merovitz Potechin LLP, Y.V. and C.M.

A. Posno, for the responding parties J.O., T.O. and G.K.

J. Warwick, for the responding party Logan Katz LLP

K.W. Nash, for the responding party L.B.

Keywords: Civil Procedure, Appeals, Extension of Time, Costs

Loojune v. Loojune, 2022 ONCA 334

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

N. L., acting in person as the appellant

S. Jones, for the respondent Office of the Public Guardian and Trustee

No one appearing for the respondent D.L.

Keywords: Wills and Estates, Guardianship, “Best Interests” Test, Management of Property, Fraud, Bias

Hemchand v. Toronto Community Housing Corporation, 2022 ONCA 330

[Benotto, Miller and Copeland JJ.A.]

Counsel:

R.H., acting in person as the appellant

D.L., for the respondent Toronto Community Housing Corporation

M. Chung, for the respondent Attorney General of Ontario

Keywords: Civil Procedure, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, Rule 2.1, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733

Farej v. Fellows, 2022 ONCA 342

[Doherty, Miller and Sossin JJ.A]

Counsel:

J.J. Adair, J.V. Katz, D. Embury, D.M. Pacheco and B. Di Domenico, for the appellants

P.W. Kryworuk and J.R.W. Damstra, for the respondent

Keywords: Civil Procedure, Appeals, Orders, Courts of Justice Act, s. 134(7), Farej v. Fellows, 2022 ONCA 254


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