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Good morning.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of March 11, 2024.

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In Beshay v Labib, the appellant had purchased a business and subsequently sued for breach of contract and misrepresentation, alleging the business was not as profitable as had been claimed. The case was dismissed for delay, as the appellant failed to provide a sufficient explanation for the litigation’s lack of progress, despite the extended deadlines due to the COVID-19 pandemic. The appeal was also dismissed, with the Court emphasizing the necessity of an acceptable explanation for delay with supporting evidence (which was lacking in this case).

In Jacob v Canada (Attorney General), the Court granted leave to intervene to the Canadian Civil Liberties Association and the Income Security Advocacy Center in an appeal. The case relates to a claim of discrimination against people with disabilities by the Federal Government in its implementation of the following emergency COVID-19 benefit programs: Canada Emergency Response Benefit, the Canada Recovery Benefit and the Canada Recovery Sickness Benefit.

In Roe v. Roe, a mother disinherited one of her four sons. He unsuccessfully challenged the Will at trial on the basis of a lack of capacity or undue influence. His appeal was dismissed.

In Scheibler v. Scheibler, a wife was ordered at trial to pay support to her husband. Her appeal was dismissed, partly on the basis that she had acquiesced in the husband’s failure to “get a job”.

In Frenkel v. Frenkel, the Court allowed an appeal, in part, from a property equalization order in a family law case. The trial judge had made calculation errors.

Wishing everyone a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Beshay v Labib, 2024 ONCA 186

Keywords: Civil Procedure, Dismissal for Delay, Rules of Civil Procedure, r. 48.14(7)(a), 1196158 Ontario Inc v 6274013 Canada Limited, 2012 ONCA 544, Windebank v Toronto East General Hospital, 2022 ONSC 6913, Yang v The Christian World Korea Inc, 2019 ONSC 6131, Burgess v University Health Network, 2022 ONCA 105

Jacob v Canada (Attorney General), 2024 ONCA 195

Keywords: Civil Procedure, Interveners, Canadian Charter of Rights and Freedom, s. 15, R v Sharma, 2022 SCC 39, Fraser v Canada (Attorney General), 2020 SCC 28

Roe v. Roe, 2024 ONCA 179

Keywords: Wills and Estates, Capacity, Undue Influence, Suspicious Circumstances, Vout v. Hay, [1995] 2 S.C.R. 876, Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. S.C.), Boughton v. Knight (1873) L.R. 3 P. & D. 64 (U.K.), Tate v. Gueguegirre, 2015 ONSC 844 (Div. Ct.), Orfus Estate v. The Samuel and Bessie Orfus Family Foundation, 2013 ONCA 225

Scheibler v. Scheibler, 2024 ONCA 191

Keywords: Family Law, Property, Matrimonial Home, Occupation Rent, Equalization of Net Family Property, Spousal Support, Family Law Act, R.S.O. 1990, c. F.3, s. 14(a), Hickey v. Hickey, [1999] 2 S.C.R. 518, Kerr v. Baranow, 2011 SCC 10, D.B.S. v. S.R.G., 2006 SCC 37

Frenkel v. Frenkel, 2024 ONCA 193

Keywords: Family Law, Property, Equalization of Net Family Property, Civil Procedure, Evidence, Witnesses, Credibility

Short Civil Decisions

Buduchnist Credit Union Limited v 2321197 Ontario Inc, 2024 ONCA 190

Keywords: Civil Procedure, Orders, Injunctions, Mareva Orders, Enforcement, Costs, Trade Capital Finance Corp v Cook, 2017 ONCA 281

Ekum-Sekum Incorporated (Brantco Construction) v. Lanca, 2024 ONCA 189

Keywords: Contracts, Construction, Breach of Trust, Construction Lien Act, R.S.O. 1990, c. C.30

9806881 Canada Corp. v. Swan, 2024 ONCA 187

Keywords: Contracts, Security Agreements, Repair and Storage Liens, Priority, Personal Property Security Act, Civil Procedure, Appeals, Orders, Directions

Shannon v. Hrabovsky, 2024 ONCA 188

Keywords: Civil Procedure, Appeals, Costs, Enhanced Costs, Substantial Indemnity, Rules of Civil Procedure, rr 1.03, 57.01(1), Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 29, Unisys Canada Inc. v. York Three Associates Inc. (2001), 150 O.A.C. 49, Davies v. Clarington (Municipality) et al., 2009 ONCA 722, Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, Sawdon Estate v. Sawdon, 2014 ONCA 101, Westover Estate v. Jolicouer, 2024 ONCA 81, Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771, Yan v. Hutchinson, 2024 ONCA 158

Kesete v. Gaspar, 2024 ONCA 198

Keywords: Torts, Negligence, MVA, Damages, Civil Procedure, Costs


CIVIL DECISIONS

Beshay v Labib, 2024 ONCA 186

[Pepall, George and Dawe JJ.A.]

Counsel:

A. Katzman, for the appellant

G. Honickman, for the respondents

Keywords: Civil Procedure, Dismissal for Delay, Rules of Civil Procedure, r. 48.14(7)(a), 1196158 Ontario Inc v 6274013 Canada Limited, 2012 ONCA 544, Windebank v Toronto East General Hospital, 2022 ONSC 6913, Yang v The Christian World Korea Inc, 2019 ONSC 6131, Burgess v University Health Network, 2022 ONCA 105

Facts:

The appellant purchased Forest Grove Academy of Arts & Technology Inc. from A.L and H.L in December 2015 and sued them in December 2016 for breach of contract and misrepresentation, claiming the business was less profitable than represented. The appellant sought to rescind the purchase agreement or receive damages, while the respondents denied the claims. Despite occasional correspondence between counsel, the appellant made no significant effort to advance the litigation. The efforts to arrange a settlement were unproductive, and the appellant’s counsel was unresponsive for years. The legal deadline for setting the action for trial was extended due to the COVID-19 pandemic, but the appellant’s motion to avoid dismissal for delay was unsuccessful, leading to the dismissal of the action in May 2023. The appellant appealed from the dismissal order.

Issues:

Did the motion judge fail to properly apply the established legal test for dismissing actions for delay?

Holding:

Appeal dismissed.

Reasoning:

This legal test as per 1196158 Ontario Inc v 6274013 Canada Limited required the plaintiff to establish that there was “an acceptable explanation” for the delay, and also to demonstrate that the defendant would not suffer any non-compensable prejudice if the action was allowed to proceed. The Rules of Civil Procedure had previously required dilatory plaintiffs to bring a motion under r. 48 if an action had not been set down for trial within two years, but this deadline had been extended to five years.

The appellant contended that the motion judge made errors by setting an overly high standard for an “acceptable” explanation for delay, improperly evaluating his reasons for not advancing the litigation, and incorrectly assessing the prejudice to the respondents. The appellant attributed his inaction to family deaths, mental health issues, and financial strains, but the motion judge found these explanations unsupported by evidence, particularly noting his active business engagements during the period of alleged incapacity. The Court also rejected the appellant’s claim that financial difficulties due to the preschool’s profitability and the COVID-19 pandemic were to blame, pointing out his significant income and assets.

The Court concluded that the motion judge did not err in her decisions, highlighting the appellant’s failure to present convincing evidence for his delay and the respondents’ potential prejudice due to faded memories and missing records. The appellant’s argument that the motion judge should have considered the respondents’ inactivity and his proposed litigation timetable was dismissed, with the Court emphasizing the primary responsibility of the party initiating the proceeding to advance it. The dismissal of the action for delay was seen as justified, considering the appellant’s insufficient explanations for his inaction and the clear prejudice to the respondents.


Jacob v Canada (Attorney General), 2024 ONCA 195 

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

Counsel:

M. Chowdhury, E. Krajewska, É. Arsenault and A. Bakshi, for the proposed intervener, the Income Security Advocacy Centre

S. Choudhry, for the appellant

B. Sunallah and M. Ambwani, for the respondent

Keywords: Civil Procedure, Interveners, Canadian Charter of Rights and Freedom, s. 15, R v Sharma, 2022 SCC 39, Fraser v Canada (Attorney General), 2020 SCC 28

Facts:

The appeal arose from an unsuccessful s. 15 Charter challenge relating to benefit programs during the COVID-19 pandemic: the Canada Emergency Response Benefit (“CERB”), the Canada Recovery Benefit (“CRB”) and the Canada Recovery Sickness Benefit (“CRSB”). The programs were offered to workers who lost employment income as a result of the pandemic. To be considered a “worker”, the claimant must have earned at least $5,000 from specified income in the 12 months prior to the claim. Income from federal or provincial disability support benefits did not qualify as income. The appellant challenged the $5,000 threshold, claiming that it discriminated against people living with disabilities.

The Canadian Civil Liberties Association (“CCLA”) and the Income Security Advocacy Centre (“ISAC”) sought leave to intervene in the appeal as friends of the court. The appellant, V.J, consented to both interventions. The Respondent, Attorney General of Canada, took no position in relation to the CCLA’s motion for leave to intervene and opposed the motion brought by the ISAC.

Issue:

Should the CCLA and the ISAC be granted leave to intervene in the appeal as friends of the court?

Holding:

Motion granted.

Reasoning:

Yes.

The CCLA, recognized for its expertise in constitutional issues, was deemed capable of making a unique contribution to the appeal, especially regarding the issues of remedy and retroactivity in legal declarations. The ISAC, despite opposition from the respondent, was acknowledged for its potential to contribute valuable insights into substantive equality, particularly in the context of income security and disability. They aimed to enrich the Court’s understanding of the substantive equality analysis, which had not been extensively explored by the parties. The Court found the ISAC’s expertise relevant for addressing the legal challenges of adverse-impact discrimination and substantive equality affecting low-income individuals with disabilities. It was determined that their involvement would assist the Court without them overstepping into the decision-making process. Consequently, both CCLA and ISAC were granted permission to intervene under specific conditions, including limiting their submissions and oral presentation time, and they were not allowed to incur or be subject to any costs associated with the motions or the appeal.


Roe v. Roe, 2024 ONCA 179

[Tulloch C.J.O., Hourigan and Dawe JJ.A.]

Counsel:

B. Donavan and N. Kochman, for the appellant RMR

N. Mukherjee and A. Rogerson, for the respondent RSR

D.N. Delagran, for the respondent RCR

Keywords: Wills and Estates, Capacity, Undue Influence, Suspicious Circumstances, Vout v. Hay, [1995] 2 S.C.R. 876, Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. S.C.), Boughton v. Knight (1873) L.R. 3 P. & D. 64 (U.K.), Tate v. Gueguegirre, 2015 ONSC 844 (Div. Ct.), Orfus Estate v. The Samuel and Bessie Orfus Family Foundation, 2013 ONCA 225

Facts:

BGR died on July 12, 2014, at the age of 90. Her Last Will and Testament dated August 24, 2005 (the “2005 Will”), named three of her four sons as beneficiaries – RTR, RSR, and RCR. Her fourth son, RMR, was excluded. The exclusion of RMR was a change from her previous wills, which provided for her assets to be split equally among her four sons.

RMR applied to have the 2005 Will declared invalid on the basis that BGR lacked testamentary capacity. In a related action, RMR sued RTR, RSR, and RCR to set aside monetary gifts that BGR made prior to her death. However, RMR conceded that if he was not successful in setting aside the 2005 Will, he had no standing to challenge the gifts.

The application judge dismissed the application and the action. RMR challenged all of the application judge’s findings on appeal.

Issues:

  1. Did the application judge err in finding that the 2005 Will was made under suspicious circumstances, but that BGR had the requisite testamentary capacity to make it and was not operating under “insane delusions” when she disinherited RMR?
  2. Did the application judge err in finding that BGR was not unduly influenced by RTR when she instructed counsel on the 2005 Will?
  3. Did the application judge err in finding that BGR understood the extent of her property?

Holding:

Appeal dismissed.

Reasoning:

Regarding insane delusions, the application judge adopted the approach in Banton v. Banton that the fundamental question regarding the issue was “whether the belief should be characterized merely as being quite unreasonable, on the one hand, or as something that, in the particular circumstances, no one ‘in their senses’ could believe.” The application judge engaged in a detailed review of the circumstances, which she found provided a factual basis to explain the disinheritance. The application judge also found that there was a tendency in the family for members to “hold onto beliefs that can be countered by more reasonable and objective facts” and that the “[R]’s appear to be a passionate family who think and feel deeply about the issues that affect them.”  While the application judge found that BGR acted irrationally and hyperbolically at times, she held that there was a factual foundation to ground her views. There was no error in the analysis and no basis for appellate interference.

Contrary to RMR’s submission citing Tate v. Gueguegirre, there is no set list of considerations that must be considered in all cases when considering an allegation of undue influence. Instead, the analysis of the issue is case specific and should examine the circumstances to understand the nature of the relationship between the alleged influencer and the deceased.

The application judge focused on the evidence of RMR’s expert on elder abuse to determine whether RTR unduly influenced BGR to disinherit RMR. There was nothing impermissible in the application judge relying on this evidence to understand the nature of the relationship between RTR and his mother. She concluded that the facts did not support the inference that BGR was susceptible to RTR’s influence and that BGR was not particularly vulnerable to him. The application judge also found that “BGR and RTR had a symbiotic relationship that seemed to work” and that she was able to manage RTR. There was no error in that analysis, which was well rooted in the evidence.

The application judge was entitled to rely on the evidence of the geriatric psychiatrists and conclude that BGR understood the nature and extent of her property. A competent testator does not have to know the precise make up of her estate, only in a general way the nature and extent of her property: Orfus Estate v. The Samuel and Bessie Orfus Family Foundation. There was no basis for appellate interference.


Scheibler v. Scheibler, 2024 ONCA 191

[Tulloch C.J.O., Hourigan and Dawe JJ.A.]

Counsel:

A. I. Jiwa, for the appellant

P. Howie, for the respondent

Keywords: Family Law, Property, Matrimonial Home, Occupation Rent, Equalization of Net Family Property, Spousal Support, Family Law Act, R.S.O. 1990, c. F.3, s. 14(a), Hickey v. Hickey, [1999] 2 S.C.R. 518, Kerr v. Baranow, 2011 SCC 10, D.B.S. v. S.R.G., 2006 SCC 37

Facts:

The parties were married in August 2000 and separated on December 31, 2013. It was a third marriage for both. Following the separation, the respondent husband remained in the matrimonial home and operated a wildlife sanctuary, which he had opened in 2003, on the surrounding property. The respondent eventually applied for a divorce in February 2017, which led to the order which is the subject of the appeal.

Throughout the marriage, both before and after the separation, the appellant wife worked as a grocery store clerk. On appeal, she challenged the trial judge’s order requiring her to pay retroactive non-compensatory spousal support to the respondent totaling $39,000 for the years 2014 to 2016, and the trial judge’s determinations concerning ownership of, expenses for, and occupancy rent in relation to, the matrimonial home.

Issues:

  1. Did the trial judge err in ordering that the appellant pay to the respondent transitional retroactive non-compensatory spousal support for the three-year period following the separation?
  2. Did the trial judge err in failing to order that the respondent pay occupation rent for his exclusive occupation of the matrimonial home post separation and/or in failing to order that he reimburse the appellant for expenses relating to the matrimonial that she paid post separation?
  3. Did the trial judge err in dismissing the appellant’s claim for sole ownership of the matrimonial home?

Holding:

Appeal dismissed.

Reasoning:

A high level of deference is owed to a trial judge’s determination of appropriate spousal support because of its fact-based and discretionary nature. The appellant invited the reweighing of evidence and retrying of the case, which is not the function of an appellate court.

It was open to the trial judge to come to the determination that the respondent was financially dependent on her during the marriage. There was ample evidence to support the trial judge’s this finding, and that the appellant acquiesced in that dependence, even though she had actively encouraged the respondent to “get a job”.

As for the appellant’s second submission that the trial judge erred by ordering her to pay retroactive spousal support for a period prior to the date on which the respondent’s divorce application was issued and before any notice of his claim for spousal support, the amount ordered was only notionally “retroactive”, since the appellant had in fact supported the respondent by paying significant expenses during the relevant time. The trial judge set off the $43,243 he ordered the respondent to repay the appellant against the amount owing for retroactive support and a portion of the equalization payment the appellant owed the respondent. It was implicit in the trial judge’s reasoning that he was satisfied that the appellant had effective notice of the respondent’s claim for spousal support by virtue of the payments she already made on his behalf for living expenses. Moreover, the fact of those payments adequately explained the respondent’s delay in making a formal application for support.

The trial judge was not asked to reduce the amount of support for transitional retroactive non-compensatory spousal support to reflect tax consequences. The failure to do so did not reflect an error in principle.

The trial judge reviewed the principles applicable to the equitable remedy of requiring payment of occupation rent in circumstances where one joint owner of property occupies the property to the exclusion of another. There was no error in the trial judge’s exercise of discretion not to award occupation rent where he was faced with an unusual set of circumstances. The parties had no children and the appellant was the primary income earner, acquiescing in the respondent’s failure to seek remunerative employment. Both parties were dilatory in seeking any remedy through legal action. The trial judge was entitled to exercise his discretion in balancing the parties’ competing claims for spousal support, occupancy rent and reimbursement of expenses.

The appellant’s evidence did not rise to the level of asserting that the parties had agreed that the matrimonial home would be registered in their names as joint tenants conditional on the respondent contributing to the payments. In the absence of direct evidence of the mutual intentions of the parties, it was open to the trial judge to rely on the inferences to be drawn from the actions of the parties. In the circumstances, there was no error in the trial judge’s finding that the appellant failed to rebut the presumption of joint tenancy that arises under s. 14(a) of the FLA. It was therefore unnecessary that he resolve the conflict in the evidence concerning the parties’ respective contributions to the purchase price of the matrimonial home.


Frenkel v. Frenkel, 2024 ONCA 193

[Trotter, Zarnett and Sossin JJ.A]

Counsel:

EF, acting in person

VF, acting in person

Keywords: Family Law, Property, Equalization of Net Family Property, Civil Procedure, Evidence, Witnesses, Credibility

Facts:

The issues on appeal stemmed from the equalization of net family properties following a marriage breakdown, with the appellant challenging the trial judge’s order to pay the respondent $210,665.48, reflecting an adjusted equalization payment of $233,363.02 minus certain child support arrears and s. 7 expenses. The dispute, litigated over an eight-day trial, centered on who removed $314,945.25 in precious metals and $60,000 in cash from the apartment, items stored in safes by the respondent. The trial judge, after evaluating the evidence, concluded that the appellant retained these valuables and, consequently, adjusted her net family property statement, leading to the appellant owing $23,918.79 in equalization payments, further adjusted for the precious metals value, culminating in the final adjusted equalization payment owed by the appellant. The appellant appealed.

The respondent filed a very late motion for an order that the appellant be enjoined from dissipating any of her assets. He also sought an order for security for costs.

Issues:

1) Did the trial judge improperly engage in a criminal investigation and find the appellant guilty of theft?

2) Did the trial judge err in finding that the appellant retained or removed the disputed items from the apartment?

3) Did the trial judge make a mathematical error in the final calculation of the adjusted equalization payment?

4) Should the appellant be enjoined from dissipating her assets?

5) Should the appellant be ordered to pay security for the costs of the appeal?

Holding:

Appeal allowed, in part.

Reasoning:

1) No.

The trial judge was not engaged in a criminal investigation. The appellant was not found guilty of “theft”. In addressing the equalization of net family property and the required post-separation adjustments, the trial judge was required to determine which party retained which assets. Although the factual background of the case may have been somewhat unique, the trial judge was engaged in a routine task of family law judges – tracing the assets of the parties in the determination of net family property. The Court found that the trial judge did not exceed her jurisdiction in doing so.

2) No.

The Court saw no error in the trial judge’s resolution of the factual dispute. As she noted in her reasons, the case turned on the credibility of the witnesses. The Court noted that credibility findings of a trial judge must be afforded substantial deference on appeal unless an appellant can demonstrate a material misapprehension of the evidence, an error in principle, or that the findings are clearly unreasonable. The Court concluded that the appellant has not demonstrated any such deficiency in the trial judge’s findings on this issue.

3) Yes.

The Court agreed with the appellant that the trial judge erred in calculating the post-separation adjustment based on her finding that the appellant had retained all the jointly owned precious metals valued at $314,945.25. The Court found that the trial judge should have adjusted for each party to receive half the value, or $157,472.50, of the precious metals. Instead, an incorrect adjustment of $232,077.47 was made, favoring the respondent unfairly. Further, the trial judge incorrectly deducted amounts related to joint BMO and Effective Technologies bank accounts from what the appellant owed, when these amounts should have increased her payable sum. Correcting these errors, the adjusted equalization payment was $168,282.39, not $233,363.02 as originally determined, leading to a net amount due of $145,584.85 after accounting for child support and s. 7 expense arrears.

4) and 5) No.

There was no basis to grant any of the requested relief. The motions for non-dissipation of assets and for security for costs were dismissed.


SHORT CIVIL DECISIONS

Buduchnist Credit Union Limited v 2321197 Ontario Inc, 2024 ONCA 190

[Roberts, Trotter and Sossin JJ.A.]

Counsel:

P. Carey and C. Lee, for the appellant/respondent by way of cross-appeal

B. Grossman and S.A Wilson, for the respondent/appellant by way of cross-appeal

Keywords: Civil Procedure, Orders, Injunctions, Mareva Orders, Enforcement, Costs, Trade Capital Finance Corp v Cook, 2017 ONCA 281

Ekum-Sekum Incorporated (Brantco Construction) v. Lanca, 2024 ONCA 189

[Rouleau, Lauwers and Monahan JJ.A.]

Counsel:

A. J. Gabriele and A. M. Beney, for the appellant

D. Touesnard, for the respondents

Keywords: Contracts, Construction, Breach of Trust, Construction Lien Act, R.S.O. 1990, c. C.30

9806881 Canada Corp. v. Swan, 2024 ONCA 187

[van Rensburg, Roberts and Favreau JJ.A.]

Counsel:

J. M. Wortzman and J. C. Wortzman, for the appellants

P. Virc and R. Karrass, for the respondent

Keywords: Contracts, Security Agreements, Repair and Storage Liens, Priority, Personal Property Security Act, Civil Procedure, Appeals, Orders, Directions

Shannon v. Hrabovsky, 2024 ONCA 188

[Roberts, Sossin and Dawe JJ.A.]

Counsel:

N. Ronski, for the appellants

V. Msi, for the respondent

Keywords: Civil Procedure, Appeals, Costs, Enhanced Costs, Substantial Indemnity, Rules of Civil Procedure, rr 1.03, 57.01(1), Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 29, Unisys Canada Inc. v. York Three Associates Inc. (2001), 150 O.A.C. 49, Davies v. Clarington (Municipality) et al., 2009 ONCA 722, Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, Sawdon Estate v. Sawdon, 2014 ONCA 101, Westover Estate v. Jolicouer, 2024 ONCA 81, Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771, Yan v. Hutchinson, 2024 ONCA 158

Kesete v. Gaspar, 2024 ONCA 198

[Fairburn A.C.J.O., Simmons J.A. and Daley J. (ad hoc)

Counsel:

M. Stoiko, for the appellant

M. Kennedy and G. Harper, for the respondent

Keywords: Torts, Negligence, MVA, Damages, Civil Procedure, Costs



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

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

Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of March 4, 2024. There were only two civil decisions this week.

Continue Reading

In Halton (Regional Municipality) v. Canadian National Railway Company, the Regional Municipality of Halton was unsuccessful in blocking the construction of a large intermodal hub by CN for the carriage of goods by rail that was approved by the federal government. The Region and residents of Milton are strongly against the project for traffic, noise and environmental reasons. The application judge dismissed Halton’s application to stop the project until its land use planning bylaws and a myriad of other provincial laws were complied with. The Court dismissed the appeal. The Constitution gives jurisdiction over interprovincial railways to the federal government and the constitutional law doctrines of interjurisdictional immunity and paramountcy mean that the federal law prevails over provincial and local laws.

In La Française IC 2 v Wires, a foreign arbitral award was enforced.

Wishing everyone a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Halton (Regional Municipality) v. Canadian National Railway Company, 2024 ONCA 174

Keywords: Constitutional Law, Federal Undertakings, Interprovincial Railways, Division of Powers, Interjurisdictional Immunity, Paramountcy, Municipal Law, Land Use Planning, Civil Procedure, Issue Estoppel, Abuse of Process, Pesticides Act, RSO 1990, c. P.11 Courts of Justice Act, RSO 1990, c. C.43, Constitution Act 1867, CN Commercialization Act, S.C. 1995, c. 24, Quebec Environment Quality Act, C.Q.L.R. c. Q-2, Halton v CNR, 2018 ONSC 6095, Halton (Regional Municipality) v Canada (Environment), 2024 FC 348, Carmichael v GlaxoSmithKline Inc, 2020 ONCA 447, Kelly v Palazzo, 2008 ONCA 82, Chippewas of Mnjikaning First Nation v Chiefs of Ontario, 2010 ONCA 47, Canadian Western Bank v Alberta, 2007 SCC 22, Rogers Communications Inc v Châteauguay (City), 2016 SCC 23, Bank of Montréal v Marcotte, 2014 SCC 55, Québec (Attorney General) v Canadian Owners and Pilots Association, 2010 SCC 39, Marine Services International Ltd v Ryan Estate, 2013 SCC 44, Desgagnés Transport Inc v Wärtsilä, 2019 SCC 58, Canada (Attorney General) v PHS Community Services Society, 2011 SCC 44, British Columbia (Attorney General) v Lafarge Canada Inc, 2007 SCC 23, Ontario (Attorney General) et al v Winner et al, [1954] 4 DLR 657 (PC), Greater Toronto Airports Authority v. Mississauga (City) (2000), 50 OR (3d) 641 (CA), Toronto Corporation v Bell Telephone Co of Canada, [1905] AC 52 (PC), Canadian Pacific Railway Company v Corporation of the Parish of Notre Dame de Bonsecours, [1899] AC 367 (PC), Clark v Canadian National Railway Co, [1988] 2 SCR 680, R v TNT Canada Inc (1986), 58 OR (2d) 410 (CA), Ontario v Canada Pacific Ltd (1993), 13 OR (3d) 389 (CA), Johannesson v Rural Municipality of West St Paul, [1952] 1 SCR 292, Attorney General of Quebec v IMTT-Québec Inc, 2019 QCCA 1598, Commission de Transport de la Communauté Urbaine de Québec v Canada (National Battlefields Commission), [1990] 2 SCR 838, Toronto (City) v CUPE, Local 79, 2003 SCC 63, Catalyst Group Inc v VimpelCom Ltd, 2019 ONCA 354, Heynen v Frito Lay Canada Ltd (1999), 45 O.R. (3d) 776 (CA), Dosen v Meloche Monnex Financial Services Inc (Security National Insurance Company), 2021 ONCA 141, Strickland v Canada (Attorney General), 2015 SCC 37, Operation Dismantle v The Queen, [1985] 1 SCR 441, Hofer v Hofer et al, 2022 MBCA 99, SA v Metro Vancouver Housing Corp, 2019 SCC 4, Daniels v Canada (Indian Affairs and Northern Development), 2016 SCC 12, Solosky v The Queen, [1980] 1 SCR 821, Gook Country Estates Ltd v Quesnel (City of), 2008 BCCA 407, Bunker v Veall, 2023 ONCA 501, Bryton v Capital Corp GP Ltd v CIM Bayview Creek Inc, 2023 ONCA 363, William v British Columbia, 2012 BCCA 285, Tsilhqot’in Nation v British Columbia 2014 SCC 44, Doria v Warner Bros Entertainment Canada Inc, 2023 ONCA 321, Feinstein v Freedman, 2014 ONCA 205, Hamilton v Open Window Bakery Ltd, 2004 SCC 9, Association des parents de l’école Rose-des-vents v British Columbia (Education), 2015 SCC 21

La Française IC 2 v. Wires, 2024 ONCA 171

Keywords: Contracts, Arbitration Agreements, Civil Procedure, Arbitration Awards, Enforcement, Behn v Moulton Contracting Ltd, 2013 SCC 26, Canam Enterprises Inc v Coles (2000), 51 O.R. (3d) 481 (CA), R v Scott, [1990] 3 SCR 979, Law Society of Saskatchewan v Abrametz, 2022 SCC 29


CIVIL DECISIONS

Halton (Regional Municipality) v. Canadian National Railway Company, 2024 ONCA 174

[Simmons, Paciocco and Thorburn JJ.A.]

Counsel:

K. E. Thomson, S. G. Frankel, C. Li, R. Northey and H. Machum, for the appellants

S. Block, A. Bernstein, Y. Bienenstock, J. Silver and C. Koopman, for the respondent

J. Cheng, A. Law and M. Cormack, for the intervener, Attorney General of Canada

P. Ryan and A. Ralph, for the intervener, Attorney General of Ontario

Keywords: Constitutional Law, Federal Undertakings, Interprovincial Railways, Division of Powers, Interjurisdictional Immunity, Paramountcy, Municipal Law, Land Use Planning, Civil Procedure, Issue Estoppel, Abuse of Process, Pesticides Act, RSO 1990, c. P.11 Courts of Justice Act, RSO 1990, c. C.43, Constitution Act 1867, CN Commercialization Act, S.C. 1995, c. 24, Quebec Environment Quality Act, C.Q.L.R. c. Q-2, Halton v CNR, 2018 ONSC 6095, Halton (Regional Municipality) v Canada (Environment), 2024 FC 348, Carmichael v GlaxoSmithKline Inc, 2020 ONCA 447, Kelly v Palazzo, 2008 ONCA 82, Chippewas of Mnjikaning First Nation v Chiefs of Ontario, 2010 ONCA 47, Canadian Western Bank v Alberta, 2007 SCC 22, Rogers Communications Inc v Châteauguay (City), 2016 SCC 23, Bank of Montréal v Marcotte, 2014 SCC 55, Québec (Attorney General) v Canadian Owners and Pilots Association, 2010 SCC 39, Marine Services International Ltd v Ryan Estate, 2013 SCC 44, Desgagnés Transport Inc v Wärtsilä, 2019 SCC 58, Canada (Attorney General) v PHS Community Services Society, 2011 SCC 44, British Columbia (Attorney General) v Lafarge Canada Inc, 2007 SCC 23, Ontario (Attorney General) et al v Winner et al, [1954] 4 DLR 657 (PC), Greater Toronto Airports Authority v. Mississauga (City) (2000), 50 OR (3d) 641 (CA), Toronto Corporation v Bell Telephone Co of Canada, [1905] AC 52 (PC), Canadian Pacific Railway Company v Corporation of the Parish of Notre Dame de Bonsecours, [1899] AC 367 (PC), Clark v Canadian National Railway Co, [1988] 2 SCR 680, R v TNT Canada Inc (1986), 58 OR (2d) 410 (CA), Ontario v Canada Pacific Ltd (1993), 13 OR (3d) 389 (CA), Johannesson v Rural Municipality of West St Paul, [1952] 1 SCR 292, Attorney General of Quebec v IMTT-Québec Inc, 2019 QCCA 1598, Commission de Transport de la Communauté Urbaine de Québec v Canada (National Battlefields Commission), [1990] 2 SCR 838, Toronto (City) v CUPE, Local 79, 2003 SCC 63, Catalyst Group Inc v VimpelCom Ltd, 2019 ONCA 354, Heynen v Frito Lay Canada Ltd (1999), 45 O.R. (3d) 776 (CA), Dosen v Meloche Monnex Financial Services Inc (Security National Insurance Company), 2021 ONCA 141, Strickland v Canada (Attorney General), 2015 SCC 37, Operation Dismantle v The Queen, [1985] 1 SCR 441, Hofer v Hofer et al, 2022 MBCA 99, SA v Metro Vancouver Housing Corp, 2019 SCC 4, Daniels v Canada (Indian Affairs and Northern Development), 2016 SCC 12, Solosky v The Queen, [1980] 1 SCR 821, Gook Country Estates Ltd v Quesnel (City of), 2008 BCCA 407, Bunker v Veall, 2023 ONCA 501, Bryton v Capital Corp GP Ltd v CIM Bayview Creek Inc, 2023 ONCA 363, William v British Columbia, 2012 BCCA 285, Tsilhqot’in Nation v British Columbia 2014 SCC 44, Doria v Warner Bros Entertainment Canada Inc, 2023 ONCA 321, Feinstein v Freedman, 2014 ONCA 205, Hamilton v Open Window Bakery Ltd, 2004 SCC 9, Association des parents de l’école Rose-des-vents v British Columbia (Education), 2015 SCC 21

facts:

The respondent, Canadian National Railway Company (“CN”) was in the process of constructing an “intermodal hub” on a 485-hectare parcel of land in the town of Milton. The intermodal hub project had affected many local residents adversely, including through the disruption caused by ongoing construction, the noise and heavy truck traffic it will generate, its environmental impact, and the demands it will impose on local infrastructure. The project generated fierce local opposition.

While federal approval was under consideration, Halton applied for declarative relief on issues relating to the applicability of provincial and local laws to the intermodal hub. Halton identified fewer than 20 specific local laws that it said applied, and sought, among other relief, a declaration that “[v]alid provincial and municipal by-laws of general application apply to the [intermodal train hub] unless they (a) impair a vital or essential aspect of a federal railway, or (b) conflict with a federal statute, regulation or approval.” CN secured a temporary stay of the initial application pending disposal of the federal approval process.

In 2021, federal approval for the construction of the intermodal hub on CN’s property in the Halton Region was granted by the Governor in Council, CTA and the Minister. The temporary stay of Halton’s initial application for declaratory relief issued by the stay motion judge ended with the federal approval.

In 2022, Halton amended that application, for the second time, expanding the reach of the relief it was seeking. This second amended application was the one that was before the application judge and that was the subject of the current appeal. Halton was seeking declarations that CN “is obligated to seek and obtain all requisite approvals under each of the [listed] provincial laws … prior to constructing and operating the [intermodal hub].”

issues:
  1. Did the application judge misapprehend the evidence relating to CN’s claim to absolute immunity?
  2. Did the application judge misapprehend the evidence in finding that Halton wished to block the intermodal hub, or make and base his decision on unfair and unjustified findings concerning the conduct of elected officials?
  3. Did the application judge err in law by misapplying the law of interjurisdictional immunity to the three bylaws?
  4. Did the application judge err by failing to apply the stay motion judge’s finding that Halton’s applications were not hypothetical or premature?
  5. Did the application judge err in law or in fact by declining to address the constitutional applicability and operability of the overwhelming majority of the listed local laws?
  6. Should leave to appeal the costs award be granted and the appeal from the costs decision be allowed?
holding:

Appeal dismissed.

reasoning:
  1. No.

The application judge did not find that CN never denied that local laws apply to the project. His comment in his Reasons for Judgment that the federal approval of the project “does not mean that CN was immune to any or all local or provincial laws” showed that he attended to the evidence before him on this point. It was clear from the context that he was simply describing the position that CN took before him. Whatever Halton may think of the sincerity of the position CN took before the application judge, the application judge was entitled to accept it, and the Court saw no basis for interfering with his decision to do so.

  1. No.

Halton argued that during the application hearing, it “made clear that their purpose in pursuing the Application is not to block the intermodal hub from proceeding, but rather to ensure that CN complies with local enactments…”. It argued that the application judge misapprehended its position by finding that the Regional Municipality of Halton and the other applicants “wish to prevent CN from constructing the intermodal hub until it complies with municipal planning processes”.

The Court did not agree with this submission. The application judge based his conclusion about Halton’s position not only on the historical opposition of Halton to the intermodal hub, but also on his observation that most of the materials that Halton filed dealt with complaints about the federal approval, and on the implications of the requests for relief that were before him. Halton was seeking an injunction that would have prevented further construction until application processes relating to curb cutting and regional roads that required official plan amendments were completed. The application judge had an evidentiary basis before him for the conclusions reached. His factual findings were entitled to deference.

  1. No.

Cooperative federalism holds that statutes enacted by both levels of government should be permitted to operate, where possible. The doctrine of “interjurisdictional immunity” serves to qualify the operation of cooperative federalism by preventing concurrent jurisdiction in limited circumstances. Interjurisdictional immunity prevents laws validly enacted by one order of government from impairing the “unassailable core” content of a head of power or a vital or essential aspect of an undertaking that is specified as exclusive under the Constitution Act, 1867.

Limits are imposed on interjurisdictional immunity in two ways. First, the doctrine is to be used with restraint. Second, to prevent interjurisdictional immunity from being given broad sweep the doctrine is applied strictly. To be rendered ineffective under this doctrine a law must: (1) impair, (2) a “core” or “vital and essential” element of the exclusive power.

There are two steps in an interjurisdictional immunity inquiry. The first step is to determine whether the impugned law trenches on the protected core of the other level of government’s legislative jurisdiction. If interjurisdictional immunity could apply based on this inquiry because the impugned law will intrude upon the protected undertaking, the second step is launched, which is to resolve whether the impugned law’s intrusion on the exercise of the protected undertaking is sufficiently serious to invoke the doctrine.

  • Did the application judge err in deciding that the three bylaws intruded upon a “core” federal undertaking?

The parties agreed that the federal government had jurisdiction over interprovincial railways. However, Halton argued that the three bylaws do not intrude upon the core of the railway undertaking that is protected by interjurisdictional immunity and submitted that the application judge erred in finding otherwise.

First, the Court was not persuaded that the application judge erred in treating the intermodal hub as a vital part of a railway undertaking. There was ample evidence before the application judge establishing that the function of the intermodal hub was to enable the transport of goods in and out of the Greater Toronto Area by rail. The involvement of the trucks did not alter the function of the intermodal hub as an essential part of the railway undertaking. The intermodal hub served the railway in the same way a more conventional railway station does, as a location to embark and disembark cargo.

Second, Halton argued that the application judge erred by finding there was “ample precedent for interjurisdictional immunity in relation to the location and operation of interprovincial railway undertakings and undertakings declared to be of national import”. Its position was that absent precedents establishing that the construction and operation of an intermodal hub lies at the “core” of federal railway jurisdiction, the rigorous precedential limitation on the application of interjurisdictional immunity cannot be met. The Court held that Halton’s position was unduly rigid. The fact that there may not be precedents was not enough on its own to oust interjurisdictional immunity, even leaving aside that in some cases interjurisdictional immunity claims could be recognized without precedent. Even if there had not been precedents directly on point, the application judge would not have erred by considering analogous precedents. The analogous precedents the application judge considered supported his decision.

Third, Halton argued that the application judge erred by applying interjurisdictional immunity where there was a “double aspect” that arose from the concurrent jurisdiction that CN had over railroads, on the one hand, and municipalities had, on the other hand, over local environmental matters. Not only can interjurisdictional immunity apply in double aspect cases, but a finding of interjurisdictional immunity could obviate the need to resolve double aspect issues. The Court therefore rejected this submission.

Fourth, Halton relied on the recital in the Minister Decision Statement that Ministry approval did “not relieve [CN] from any obligation to comply with other legislative or other legal requirements of the federal, provincial, or local governments” as supporting its position that interjurisdictional immunity should not be applied. The Court found this statement irrelevant. The Minister did not purport to describe what provincial or local laws qualified as legal requirements relating to this project. The Minister was expressing the caveat that Ministry approval did not absolve CN from complying with any other legal requirements that apply.

  • Did the application judge err in determining that the three bylaws “impair” the core of the federal undertaking?

The application judge based his decision on his conclusion that in order to comply with those bylaws “prior to building the intermodal hub CN was required to apply for exemptions from curb cut and grading bylaws by applying for and obtaining official plan amendments.” The Court saw two strains of reasoning in this explanation. First, the official plan approval that he found to be required under each of the three bylaws confers broad discretion on municipal officials that effectively authorizes them to prohibit the construction of the intermodal hub. The power to prevent the project was impairing. Second, he found that the official plan approval would require years of proceedings. Although he did not articulate it, it was clear from his reasoning that he found this delay would itself constitute an impairment of the core federal power.

Not all local or provincial legislation requiring permits will impair the exercise of the federal power or a vital or essential part of an undertaking. If a provincial law purports to claim the authority to impair a federal undertaking, the doctrine is available, especially in the context of a case such as this where Halton had asked a court to grant prophylactic declarations and injunctions on the strength of its assertion of authority to regulate. The Court therefore rejected Halton’s position that a finding of impairment was premature.

In the Court’s view there could be no realistic issue taken with the breadth of discretion that operates when an official plan amendment is being considered. Official plans, by their very nature, reflect planning objectives and priorities that local governments choose, an inherently discretionary determination. The application judge could not be faulted for not stating the obvious in his decision.

The Court saw no error in the application judge’s interpretation of bylaw 32-17 as requiring official plan compliance. The Court was not persuaded that the application judge erred in finding that the relief Halton sought under all three bylaws impaired the core of exclusive federal jurisdiction, which includes CN’s constructing and operating the intermodal hub in a location approved by the federal government. Even in the absence of a broad discretion to refuse permit approval, imposing an overlong approval delay pending official plan amendments is sufficiently serious to constitute an impairment.

  1. No.

The application judge did not err by “ignoring” the stay motion judge’s conclusion that Halton’s application was not “premature” or “too hypothetical or lacking a concrete factual foundation”. The underlying principles of res judicata, issue estoppel and abuse of process that Halton was invoking did not apply. The application judge’s task was to determine if, on the factual record before him, the much broader declarations sought in the second revised application were premature or too hypothetical to adjudicate after the hearing, where CN was not claiming absolute immunity as a federal undertaking from all provincial legislation.

The Court had recognized that even where the requirements of issue estoppel are not met, it may be appropriate to bar re-litigation using the abuse of process doctrine. However, given the starkly different issue the application judge was facing, there can be no principled basis for holding, based on the principles of abuse of process, that the application judge erred in failing to prevent re-litigation as an abuse of process.

  1. No.

Halton argued that the application judge erred by denying its requests for declaratory relief without addressing the applicability and operability of most of the listed local laws it had identified. The Court found that the application judge’s conclusions that Halton’s application for declaratory relief lacked the factual underpinnings to demonstrate a live controversy warranting such relief, and also lacked the specific information required to resolve whether interjurisdictional immunity applied to these remaining laws, leading him to decline to consider the “premature” and “hypothetical questions” that Halton had posed. The Court found that the application judge applied the correct legal tests, placing the burden on Halton to establish the evidentiary foundation for the declarations it sought. His conclusion that the necessary factual underpinnings were lacking was supported by the record and provided an appropriate basis for his decision to deny the relief requested.

  1. No.

The Court did not grant Halton leave to appeal the $2.3 million costs award, despite the imposing amount of that award. Costs decisions are highly discretionary and afforded significant deference. The Court found that the decision by the application judge was entirely understandable given his findings that Halton’s application was overreaching, and that Halton was using the litigation to shut down the construction of the intermodal hub. CN’s claim to absolute immunity was not litigated, as it conceded during the litigation that it did not have absolute immunity and ultimately prevailed on all of the issues that were in dispute. Halton’s assertion that the costs award was clearly excessive and inflated lacked a factual basis, especially considering Halton’s tactical decision to raise more than 65 laws for consideration and to seek sweeping relief relating to a project of obvious importance.


La Française IC 2 v. Wires, 2024 ONCA 171

[van Rensburg, Roberts and Gomery JJ.A.]

Counsel:

P. Michell, for the appellant

M. Seers, for the respondent

Keywords: Contracts, Arbitration Agreements, Civil Procedure, Arbitration Awards, Enforcement, Behn v Moulton Contracting Ltd, 2013 SCC 26, Canam Enterprises Inc v Coles (2000), 51 O.R. (3d) 481 (CA), R v Scott, [1990] 3 SCR 979, Law Society of Saskatchewan v Abrametz, 2022 SCC 29

facts:

The appellant appealed from a judgment that recognized and enforced an Arbitration Award dated April 7, 2021, where the arbitrator had dismissed the appellant’s claims and ordered them to pay various fees, including the arbitrator’s fee of EUR 44,541.25, the Stockholm Chamber of Commerce (“SCC”) Administrative fee of EUR 14,412.50, and the respondent’s costs of GBP 112,107.38. The dispute originated from a Bespoke Funding Agreement between the appellant and Profile Investment on behalf of IC2 Fund, SICAV-FIS, leading to an arbitration in London against the respondent to recover damages. Throughout the arbitration, the appellant faced a series of setbacks including being ordered to pay security for costs, failing to pay, challenging the arbitrator’s appointment unsuccessfully, and attempting to discontinue the arbitration. Eventually, the arbitrator ruled in favor of the respondent, dismissing the arbitration and awarding costs. The appellant contested the enforcement of the award, arguing that it should be set aside and reconsidered due to alleged judicial errors.

issues:
  1. Did the application judge err in failing to address the appellant’s argument that the arbitral tribunal was improperly constituted as a result of an alleged lack of independence and impartiality and also erred in finding that it was an abuse of process for the appellant to relitigate this issue.
  2. Did the application judge err in finding that the respondent had standing to bring the application and correcting the misnaming of the respondent in the Award?
  3. Did the application judge err in upholding the arbitrator’s award of costs to the respondent that included costs settled by the parties?
holding:

Appeal dismissed.

reasoning:
  1. No.

The Court found that the appellant was not entitled to re-raise issues about the arbitral tribunal’s propriety because they had not pursued further appeals in England against the SCC’s decision. The court supported the application judge’s view that allowing such a challenge would constitute an abuse of process, considering the doctrine’s role in preserving the fairness and integrity of judicial proceedings. The court noted that the appellant’s objections appeared to stem more from dissatisfaction with the arbitrator’s decisions rather than genuine concerns about impartiality or independence. The issues had been discoverable at the time of appointment, and the SCC had already dismissed the appellant’s late allegations as unfounded. The Court agreed that revisiting these challenges would be an abuse of process, especially given the earlier opportunity to rectify any valid issues through an appeal, which the appellant neglected to pursue.

  1. No.

The Court affirmed the application judge’s decision that correctly identified the respondent as the party to the arbitration and the judgment. The judge’s determination was based on evidence, including the appellant’s own arbitration request, which consistently named the respondent. An isolated mis-reference to a different corporation number was deemed a minor error without impact. Consequently, the respondent was rightfully recognized as a party entitled to enforce the Award, and the judge had the authority to confirm the parties to the Award and to mandate its recognition and enforcement.

  1. No.

The Court found that the application judge made no error in recognizing and enforcing the costs in the Award. The arbitrator distinguished between the settled costs of the respondent’s counterclaim and the costs of the arbitration. He applied a discount to the costs of the arbitration to account for the distinction. There was no double-counting or overcompensation.


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

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

Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of February 26, 2024.

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Congratulations to our very own Anthony Gatensby and our recently retired partner, Dominic Clarke, for the result achieved for our client in Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada. This is a seminal insurance coverage decision in which the Court discussed the appellants’ duty to defend the respondents in several billion-dollar class action lawsuits related to the sale and distribution of opioid drugs in Canada. The Court addressed numerous important issues that commonly arise in insurance coverage matters, including the apportionment of defence costs amongst the various insurers, the treatment of self-insured retentions, relief from forfeiture for pre-tender defence costs, conflicts of interest, and separate representation by independent counsel. The Court of Appeal allowed the appeals in part. For an in-depth review of this decision by Anthony and our partner, Jason Mangano, please see their article discussing the decision here.

Fletcher v Ontario is an aboriginal law decision involving the Missanabie Cree First Nation’s treaty rights claim under Treaty No. 9. The treaty was found to provide reserve lands to the First Nation on the basis of the population at the time the treaty was entered into in 1906 (no more than one square mile per family of five).

Penate v. Martoglio was a MedMal case in which the trial judge discharged the jury and dismissed the action, finding the plaintiff had not proved that the doctor’s negligence had caused the baby’s brain damage. The Court allowed the appeal solely on the basis that the trial judge failed to provide adequate reasons for discharging the jury. Litigants have a right to a jury trial, and it should not be taken away except as a last resort and when it is, there must be adequate reasons explaining why. A new trial was ordered.

Castillo v. Xela Enterprises Ltd. is a civil contempt decision involving the enforcement of an equitable receivership order to enforce a judgment. The defendant was sentenced to 30 days in jail. The appeal was dismissed.

In Markham (City) v Ross, the Court dismissed an appeal against the enforcement of a Heritage Easement Agreement by the City of Markham for unauthorized alterations to the appellant’s property. There was no error by the application judge in finding that the appellant had breached the Agreement by constructing a hockey rink and cabana without approval.

Ihnatowych Estate v. Ihnatowych was a will rectification case. A biological son made a claim under his late father’s will. His siblings, who were children of their father’s marriage to their mother, were successful in obtaining an order for rectification to exclude their brother as a beneficiary under their father’s estate. The Court dismissed the appeal.

In Steinberg v Adderley, the Court allowed the appeal and enforced a litigation funding agreement. There was no finding of unconscionability, accordingly the motion judge erred in reducing the amount of interest payable.

In Vyazemskaya v. Safin, the appellant was found to have sought a divorce in Russia to avoid Ontario’s spousal support obligations. The respondent contested the Russian divorce. The trial judge refused to recognize the Russian divorce in Ontario, citing “unfair forum-shopping” by the appellant as a violation of public policy, given the intent to avoid spousal support, which is contrary to Ontario’s legal principles. The Court dismissed the appeal.

In another foreign divorce case, Sonia v. Ratan, this one involving a Bangladesh divorce, the Court dismissed the appeal. On the basis of fraud, the motion judge was justified in setting aside the consent orders that did not recognize the Bangladesh divorce after it was discovered that the wife had remarried following the Bangladesh divorce (and before the consent orders were made).Moreover, the Bangladesh divorce was not a “bare” talaq, and accordingly, it was properly recognized in Ontario.

In Falsetto v. Falsetto, the Court allowed an appeal in favour of a former father-in-law against his former daughter-in-law in a purchase money resulting trust claim in respect of a property. Justice MacPherson dissented.

In Abaxx Technologies Inc. v. Pasig and Hudson Private Limited, the motion judge dismissed the action for want of jurisdiction and a lack of a real and substantial connection. The Court dismissed the appeal.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Storoszko & Associates v. 1489767 Ontario Limited, 2024 ONCA 147

Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Orders, Variation, Abuse of Process, Courts of Justice Act, R.S.O. 1990, c. C.43, s 19, Rules of Civil Procedure, r. 59.06, Gallen v. Sutherland, 2023 ONCA 170, Elguindy v. Elguindy, 2021 ONCA 768, Mountain View v. McQueen, 2014 ONCA 194, R. v. Cunningham, 2010 SCC 10, Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, R. v. Church of Scientology (1986), 1986 CanLII 4633 (C.A.), R. v. 974649 Ontario Inc., 2001 SCC 81

Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada, 2024 ONCA 145

Keywords: Contracts, Interpretation, Insurance, Coverage, Duty to Defend, Defence Costs, Apportionment, Deductibles, Self-insured Retentions, Representation by Solicitor, Conflicts of Interest, Remedies, Relief from Forfeiture, Civil Procedure, Class Proceedings, Competition Act, R.S.C. 1985, c. C-34, Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, Civil Code of Québec, S.Q. 1991, c. 64, Quebec Charter of Human Rights and Freedoms, R.S.Q., c. C-12, Hanis v. Teevan, 2008 ONCA 678, Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48, Markham (City) v. AIG Insurance Company of Canada, 2020 ONCA 239, Tedford v. TD Insurance Meloche Monnex, 2012 ONCA 429, Goodyear Canada Inc. v. American International Companies, 2013 ONCA 395, Lombard General Insurance Company of Canada v. 328354 B.C. Ltd., 2012 BCSC 431, St. Paul Fire & Marine Insurance Co. v. Durabla Canada Ltd. (1996), 29 O.R. (3d) 737 (C.A.), Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, AIG Insurance Company of Canada v. Lloyd’s Underwriters, 2022 ONCA 699, Housen v. Nikolaisen, 2002 SCC 33, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, International Radiography and Inspection Services (1976) Ltd. v. General Accident Assurance Company of Canada (1996), 47 Alta. L.R. (3d) 137 (C.A.), Hanis v. University of Western Ontario (2005), 32 C.C.L.I. (4th) 255 (O.N.S.C.), Derksen v. 539938 Ontario Limited, 2001 SCC 72, Surrey (District) v. General Accident Assurance Co. of Canada (1996), 19 B.C.L.R (3d) 186 (C.A.), Stonewall Insurance Co. v. Asbestos Claims Management Corp., 73 F. (3d) 1178 (2d Cir. 1995), General Electric Canada Co. v. Aviva Canada Inc., 2010 ONSC 6806, David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 76 O.R. (3d) 161 (C.A.), Ontario v. St. Paul Fire and Marine Insurance Co., 2023 ONCA 173, Monk v. Farmers’ Mutual Insurance Company (Lindsay), 2019 ONCA 616, Kozel v. Personal Insurance Co., 2014 ONCA 130, Lloyd’s Underwriters v. Blue Mountain Log Sales Ltd., 2016 BCCA 352, GFL Infrastructure Group v. Temple Insurance Company, 2022 ONCA 390, Sovereign General Insurance Co. v. Walker, 2011 ONCA 597, Brockton (Municipality) v. Frank Cowan Co. (2002), 57 O.R. (3d) 447 (C.A), Zurich of Canada v. Renaud & Jacob, [1996] R.J.Q. 2160 (C.A.), Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, Canadian Indemnity v. Canadian Johns-Manville Co., [1990] 2 S.C.R. 549, Canadian Newspapers Co. v. Kansa General Insurance Co. (1996), 30 O.R. (3d) 257 (C.A.), Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, Parlee v. Pembridge Insurance Co., 2005 NBCA 49, San Diego Federal Credit Union v. Cumis Ins. Society Inc.,162 Cal. App. 3d 358 (1984), Foremost Ins. Co. v. Wilks, 206 Cal. App. 3d 252 (1988), Glassford v. TD Home and Auto Insurance Company (2009), 94 O.R. (3d) 630 (S.C.), Trenton Cold Storage Ltd. v. St. Paul Fire and Marine Insurance Co. (2001), 146 O.A.C. 348, Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53, Lizotte v. Aviva Insurance Company of Canada, 2016 SCC 52, General Accident Assurance Company et al. v. Chrusz et al. (1999), 45 O.R. (3d) 321 (C.A.), Fellowes, McNeil v. Kansa General International Insurance Co. (2000), 138 O.A.C. 28

Fletcher v. Ontario, 2024 ONCA 148

Keywords: Aboriginal Law, Honour of Crown, Treaty Rights, Treaty No. 9, Interpretation, Standard of Review, Civil Procedure, Sealing Orders, Settlements, Enforcement, Appeals, Abuse of Process, Indian Act, R.S.C. 1985, c I-5, Rules of Civil Procedure, R.R.O. 1990, Reg. 194, R. v. Marshall, [1999] 3 S.C.R. 456, Lac La Ronge Indian Band v. Canada, 2001 SKCA 109, Restoule v. Canada (Attorney General), 2021 ONCA 779, R. v. Marshall, [1999] 3 S.C.R. 456, Ross River Dena Council Band v. Canada, 2002 SCC 54, Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, Halfway River First Nation v. British Columbia, 1999 BCCA 470, West Moberly First Nations v. British Columbia, 2020 BCCA 138, Caron v. Alberta, 2015 SCC 56, R. v. Sioui, [1990] 1 S.C.R 1025, Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, R. v. Bernard, 2005 SCC 43, R. v. Badger, [1996] 1 S.C.R. 771, R. v. Taylor and Williams (1982), 34 O.R. (2d) 360 (C.A.), Whiteduck v. Ontario, 2023 ONCA 543, Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, Beckman v. Little Salmon/Carmacks First Nation, 2010 SCC 53, Mikisew Cree First Nation v. Canada (Governor General in Council), 2018 SCC 40, Palmer v. The Queen, [1980] 1 S.C.R. 759, Catholic Children’s Aid Society of Metropolitan Toronto v. M. (C.), [1994] 2 S.C.R. 165, Sherman Estate v. Donovan, 2021 SCC 25, R. v. Ottawa Citizen Group Inc., (2005) 75 O.R. (3d) 590 (C.A.), Toronto (City) v. C.U.P.E. Local 79, 2003 SCC 63, 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc., 2022 ONCA 718, Currie v. Halton Regional Police Service Board (2003), 233 D.L.R. (4th) 657 (Ont. C.A.), Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141

Falsetto v. Falsetto, 2024 ONCA 149

Keywords: Property, Trusts, Presumption of Resulting Trust, Purchase Money Resulting Trusts, Gifts, Planning Act, R.S.O. 1990, c. P.13, Pecore v. Pecore, 2007 SCC 17, Nishi v. Rascal Trucking Ltd., 2013 SCC 33, Lattimer v. Lattimer, (1978), 18 O.R. (2d) 375, Schwartz v. Schwartz, 2012 ONCA 239, Andrade v. Andrade, 2016 ONCA 368, Holtby v. Draper, 2017 ONCA 932

Vyazemskaya v. Safin, 2024 ONCA 156

Keywords: Family Law, Divorce, Spousal Support, Foreign Divorces, Recognition, Jurisdiction, Domicile, Real and Substantial Connection, Forum Shopping, Public Policy, Divorce Act, R.S.C., 1985, c. 3, (2nd Supp.), Family Law Act, R.S.O. 1990, c. F.3, D.B.S. v. S.R.G., 2006 SCC 37, Rothgiesser v. Rothgiesser, 46 O.R. (3d) 577 (C.A.), Virani v. Virani, 2006 BCCA 341, L.G.V. v. L.A.P., 2016 NBCA 23, Leonard v. Booker, 2007 NBCA 71, Armoyan v. Armoyan, 2013 NSCA 99, Okmyansky v. Okmyansky, 2007 ONCA 427, Cheng v. Liu, 2017 ONCA 104, Wilson v. Kovalev, 2016 ONSC 163, Beals v. Saldanha, 2003 SCC 72, Indyka v. Indyka, [1969] 1 A.C. 33 (U.K.H.L.), Powell v. Cockburn, [1977] 2 S.C.R. 218, Holub v. Holub (1976), 71 D.L.R. (3d) 698 (Man. C.A.), Orabi v. Qaoud, 2005 NSCA 28, R.S. v. P.R., 2019 SCC 49, Abraham v. Gallo, 2022 ONCA 874, R.N.S. v. K.S., 2013 BCCA 406, Yan v. Xu, 2023 ONSC 1288, Zhang v. Lin, 2010 ABQB 420, Marzara v. Marzara, 2011 BCSC 408

Sonia v. Ratan , 2024 ONCA 152

Keywords:  Family Law, Divorce, Spousal Support, Property, Equalization of Net Family Property, Jurisdiction, Foreign Divorces, Enforcement, Civil Procedure, Orders, Setting Aside, Fraud, Costs, Bad Faith, Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), s.22, Family Law Act, R.S.O. 1990, c. F.3., s.7(3), 22(3), Family Law Rules, O. Reg. 114/99, r.25(1), Rules of Civil Procedure, r.59.06(2)(a), Abraham v. Gallo, 2022 ONCA 874, Rothgiesser v. Rothgiesser (2000), 46 O.R. (3d) 577 (Ont. C.A.), Okmyansky v. Okmyansky, 2007 ONCA 427, Cheng v. Liu, 2017 ONCA 104, Syed Ali Nawaz Gardezi v. Lt. Col. Muhamad Yusuf (1963), 15 D.L.R. 9 (Supreme Court of Pakistan), Novikova v. Lyzo, 2019 ONCA 821, Qaoud v. Orabi, 2005 NSCA 28, Beals v. Saldanha, 2003 SCC 72, Saleh v. Tawoosi, 2016 ONSC 540, Wilson v. Kovalev, 2016 ONSC 163, Kadri v. Kadri, 2015 ONSC 321, Danylkiw v. Danylkiw (2003), 37 R.F.L. (5th) 43 (Ont. S.C.), Virc v. Blair, 2014 ONCA 392, Amin v. Canada (Minister of Citizenship and Immigration), 2008 FC 168, Chaudhary v. Chaudhary, [1984] 2 All. E.R. 1017 (C.A.), Quazi v. Quazi, [1980] A.C. 744 (H.L.), Saleem v. Canada (Citizenship and Immigration), 2010 CanLII 87618 (IRB App. Div.), Butt v. Canada (Citizenship and Immigration), 2010 CanLII 78765 (IRB App. Div.), Tiraei v. Canada (Citizenship and Immigration), 2009 CanLII 78323 (IRB App. Div.), Nanji v. Canada (Citizenship and Immigration), 2022 FC 1306, Khaleque v. Canada (Citizenship and Immigration), 2012 CanLII 101473 (IRB App. Div.)

Ihnatowych Estate v. Ihnatowych, 2024 ONCA 142

Keywords: Wills and Estates, Wills, Interpretation, Equitable Remedies, Rectification, Re Estate of Blanca Esther Robinson, 2010 ONSC 3484, The Bank of Nova Scotia Trust Company v. Haugrud, 2016 ONSC 8150, Daradick v. McKeand Estate, 2012 ONSC 5622, Hofman v. Lougheed et al., 2023 ONSC 3437, Canada (A.G.) v. Fairmont Hotels Inc, 2016 SCC 56, Johnson v. Johnson, 2022 ONCA 682, Gironda v. Gironda, 2013 ONSC 4133, Spence v. BMO Trust Co., 2016 ONCA 196, Lipson v. Lipson (2009), 52 E.T.R. (3d) 44 (Ont. S.C.)

Castillo v. Xela Enterprises Ltd., 2024 ONCA 141

Keywords: Civil Procedure, Orders, Enforcement, Equitable Receivers, Contempt, Costs, Rules of Civil Procedure, r. 60.11, Libman v. The Queen, [1985] 2 S.C.R. 178, Canada (Human Rights Commission) v. Canada Liberty Net, [1998] 1 S.C.R. 626, R. v. Greco (2001), 159 C.C.C. (3d) 146 (Ont. C.A.), leave to appeal refused, [2001] S.C.C.A. No. 656., R. v. Barra, 2021 ONCA 568, R. v. Zingre, [1981] 2 S.C.R. 392, Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, Tolofson v. Jensen, [1994] 3 S.C.R. 1022, Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897, Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663, Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574, Echostar Communications Corp v. Rodgers, 2010 ONSC 2164, Sussex v. 3933938, 2003 CanLII 49336 (Ont. Sup. Ct.), Manis v. Manis (2001), 55 O.R. (3d) 758 (Ont. C.A.)

Steinberg v. Adderley, 2024 ONCA 167

Keywords: Contracts, Debtor-Creditor, Litigation Funding Agreements, Defences, Unconscionability, Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2, Uber Technologies Inc. v. Heller, 2020 SCC 16, Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75

Markham (City) v. Ross, 2024 ONCA 161

Keywords: Contracts, Easement Agreements, Municipal Law, By-Law Enforcement, Heritage Buildings, Ontario Heritage Act, R.S.O. 1990, c. O.18, Provincial Offences Act, R.S.O. 1990, c. P.33, Building Code Act, 1992, S.O. 1992, c. 23, Fire Code and Fire Protection and Prevention Act, 1997, S.O. 1997, c. 4, Marshall v. Bernard Place Corp. (2002), 58 O.R. (3d) 97 (C.A.)

Abaxx Technologies Inc. v. Pasig and Hudson Private Limited, 2024 ONCA 164

Keywords: Breach of Contract, Breach of Duty of Good Faith and Fair Dealing, Breach of Fiduciary Duty, Conspiracy, Breach of Confidence, Fraud, Jurisdiction, Real and Substantial Connection, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353, British American Tobacco P.L.C. v. Ontario, [2013] S.C.C.A. No. 327, Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, Truscott v. Co-Operators, 2023 ONCA 267

Penate v. Martoglio , 2024 ONCA 166

Keywords: Torts, Negligence, MedMal, Civil Procedure, Jury Trials, Discharge of Jury, Procedural and Natural Justice, Sufficiency of Reasons for Decision, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 108, OZ Merchandising Inc. v. Canadian Professional Soccer League Inc., 2019 ONSC 3882, King v. Colonial Homes Ltd., [1956] S.C.R. 528, Kempf v. Nguyen, 2015 ONCA 114, R. v. Chouhan, 2021 SCC 26, Hunt (Guardian of) v. Sutton Group Incentive Realty Inc. (2002), 60 O.R. (3d) 665 (C.A.), St. Marthe v. O’Connor, 2021 ONCA 790, Vanderbeke v O’Connor, 2013 ONCA 665, Hamstra (Guardian ad litem of) v. British Columbia Rugby Union, [1997] 1 S.C.R. 1092, Landolfi v. Fargione (2006), 79 O.R. (3d) 767 (C.A.), Brochu v. Pond (2002), 62 O.R. (3d) 722 (C.A.), Groen v. Harris, 2010 ONCA 621, Placzek v. Green, 2012 ONCA 45, Lawson v. Lawson (2006), 81 O.R. (3d) 321 (C.A.), R. v. Sheppard, 2002 SCC 26, R. v. G.F., 2021 SCC 20, Bruno v. Dacosta, 2020 ONCA 602, Canadian Broadcasting Corporation Pension Plan v. BF Realty Holdings (2002), 214 D.L.R. (4th) 121 (Ont. C.A.), R. v. R.E.M., 2008 SCC 51, R. v. Sahdev, 2017 ONCA 900, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, R. v. Dinardo, 2008 SCC 24, Ghiassi v. Singh, 2017 ONSC 6541

Short Civil Decisions

Yan v. Hutchinson ,2024 ONCA 158

Keywords: Costs

One Clarendon Inc. v. Finlay , , 2024 ONCA 153

Keywords: Real Property, Residential Tenancies, Rent, Arrears, Civil Procedure, Costs

Bouragba v. Conseil des écoles publiques de l’Est de l’Ontario, 2024 ONCA 140

Keywords: Civil Procedure, Amending Pleadings, Appeals, Perfection, Vexatious Litigation, Rules of Civil Procedure, R 2.1.01, 61.06, 61.13

Molani Estate v. Iran , 2024 ONCA 163

Keywords: Costs

Geng v. Cao, 2024 ONCA 169

Keywords: Family Law, Civil Procedure, Summary Judgment, Fresh Evidence, Palmer v The Queen, [1980] 1 SCR 759


CIVIL DECISIONS

Storoszko & Associates v. 1489767 Ontario Limited, 2024 ONCA 147

[Lauwers, Miller and Harvison Young JJ.A.]

Counsel:

R.B. Macdonald, for the respondent/moving party

B. Salsberg, for the appellant/responding party

Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Orders, Variation, Abuse of Process, Courts of Justice Act, R.S.O. 1990, c. C.43, s 19, Rules of Civil Procedure, r. 59.06, Gallen v. Sutherland, 2023 ONCA 170, Elguindy v. Elguindy, 2021 ONCA 768, Mountain View v. McQueen, 2014 ONCA 194, R. v. Cunningham, 2010 SCC 10, Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, R. v. Church of Scientology (1986), 1986 CanLII 4633 (C.A.), R. v. 974649 Ontario Inc., 2001 SCC 81

facts:

On June 24, 2018, Trimble J. granted default judgment in this mortgage action in favour of Storoszko & Associates (“Storoszko”), which then sought to petition DH into bankruptcy. DH moved to vary the judgment on April 26, 2021. Trimble J. made an order dismissing the motion to vary, which DH appealed.

Sitting as a bankruptcy court judge on a 9:30 a.m. appointment on May 3, 2021, Patillo J. had given this direction: “Adjourned to a date to be set by counsel for scheduling following completion of a motion that is set to be heard in Brampton on June 22/21.” The motion Patillo J. was referring to was brought almost three years after DH was initially noted in default and led to the order under appeal. The motion judge found that DH provided no explanation for this lengthy delay and dismissed the motion in part on that basis.

issues:
  1. Should the appeal be quashed on jurisdictional grounds?
  2. Should the appeal be summarily dismissed as an abuse of process?
holding:

Motion and appeal dismissed.

reasoning:
  1. No.

The moving party argued that the Court lacked jurisdiction to hear DH’s appeal because the order under appeal was interlocutory: Gallen at para 5. If the order was interlocutory, then any appeal was to the Divisional Court with leave of that court under s. 19 of the Courts of Justice Act.

While the motion judge mistakenly referred to r. 19.02 in his reasons, his analysis in substance reflected the proper approach under r. 19.08. The factors the motion judge listed and applied were the factors that the Court has set out for the determination of whether a default judgment should be set aside or varied under r. 19.08.

The dismissal of a motion to vary a final judgment is axiomatically itself a final judgment. Therefore, the appeal lies to the Court of Appeal. The motion to quash was dismissed.

  1. Yes.

The Court noted that it will not permit its process to be used and abused as an instrument for prolonging a procedural morass. Although a statutory court, the Court has implicit powers that derive from its power to control its own process: R. v. Cunningham at para 19. The court’s powers extend to “all powers that are reasonably necessary to accomplish its mandate” or, stated differently, “the powers necessary to perform its intended functions”: R. v. 974649 Ontario Inc at para 70.

The Court rejected the argument that because the bankruptcy court sanctioned this process, it cannot be an abuse of process. DH sought to delay further by appealing Patillo J’s order instead of addressing the matter in bankruptcy court. The delay resulting from these machinations were considerable and did no credit to the civil justice system. Therefore, the Court dismissed the appeal summarily as an abuse of process.


Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada, 2024 ONCA 145

[Pepall, Trotter and Nordheimer JJ.A.]

Counsel:

M. M. O’Donnell and C. L. Foster, for the appellant Royal & Sun Alliance Insurance Company of Canada

N. Bombier, S. Lewis and M. Galloway, for the appellant AIG Insurance Company Canada

A. L. W. D’Silva and G. Zacher, for the appellant Aviva Insurance Company of Canada

J. P. Thomson, for the appellant Liberty Mutual Insurance Company

J. Macdonald, for the appellant Zurich Insurance Company Ltd.

J. Nicholl, H. Gray and J. Vizzaccaro, for the appellant Chubb Insurance Company of Canada

M. B. Snowden and A. D. Brijpaul, for the appellant Certain Underwriters at Lloyd’s as represented by their coverholder Markel Canada Limited

Dominic T. Clarke and Anthony H. Gatensby, for the appellant QBE Syndicate 1886 at Lloyd’s of London

L. G. Theall, J. A. Brown and D. J. Cox, for the respondents Loblaw Companies Limited, Shoppers Drug Mart Inc. and Sanis Health Inc.

Keywords: Contracts, Interpretation, Insurance, Coverage, Duty to Defend, Defence Costs, Apportionment, Deductibles, Self-insured Retentions, Representation by Solicitor, Conflicts of Interest, Remedies, Relief from Forfeiture, Civil Procedure, Class Proceedings, Competition Act, R.S.C. 1985, c. C-34, Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, Civil Code of Québec, S.Q. 1991, c. 64, Quebec Charter of Human Rights and Freedoms, R.S.Q., c. C-12, Hanis v. Teevan, 2008 ONCA 678, Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48, Markham (City) v. AIG Insurance Company of Canada, 2020 ONCA 239, Tedford v. TD Insurance Meloche Monnex, 2012 ONCA 429, Goodyear Canada Inc. v. American International Companies, 2013 ONCA 395, Lombard General Insurance Company of Canada v. 328354 B.C. Ltd., 2012 BCSC 431, St. Paul Fire & Marine Insurance Co. v. Durabla Canada Ltd. (1996), 29 O.R. (3d) 737 (C.A.), Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, AIG Insurance Company of Canada v. Lloyd’s Underwriters, 2022 ONCA 699, Housen v. Nikolaisen, 2002 SCC 33, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, International Radiography and Inspection Services (1976) Ltd. v. General Accident Assurance Company of Canada (1996), 47 Alta. L.R. (3d) 137 (C.A.), Hanis v. University of Western Ontario (2005), 32 C.C.L.I. (4th) 255 (O.N.S.C.), Derksen v. 539938 Ontario Limited, 2001 SCC 72, Surrey (District) v. General Accident Assurance Co. of Canada (1996), 19 B.C.L.R (3d) 186 (C.A.), Stonewall Insurance Co. v. Asbestos Claims Management Corp., 73 F. (3d) 1178 (2d Cir. 1995), General Electric Canada Co. v. Aviva Canada Inc., 2010 ONSC 6806, David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 76 O.R. (3d) 161 (C.A.), Ontario v. St. Paul Fire and Marine Insurance Co., 2023 ONCA 173, Monk v. Farmers’ Mutual Insurance Company (Lindsay), 2019 ONCA 616, Kozel v. Personal Insurance Co., 2014 ONCA 130, Lloyd’s Underwriters v. Blue Mountain Log Sales Ltd., 2016 BCCA 352, GFL Infrastructure Group v. Temple Insurance Company, 2022 ONCA 390, Sovereign General Insurance Co. v. Walker, 2011 ONCA 597, Brockton (Municipality) v. Frank Cowan Co. (2002), 57 O.R. (3d) 447 (C.A), Zurich of Canada v. Renaud & Jacob, [1996] R.J.Q. 2160 (C.A.), Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, Canadian Indemnity v. Canadian Johns-Manville Co., [1990] 2 S.C.R. 549, Canadian Newspapers Co. v. Kansa General Insurance Co. (1996), 30 O.R. (3d) 257 (C.A.), Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, Parlee v. Pembridge Insurance Co., 2005 NBCA 49, San Diego Federal Credit Union v. Cumis Ins. Society Inc.,162 Cal. App. 3d 358 (1984), Foremost Ins. Co. v. Wilks, 206 Cal. App. 3d 252 (1988), Glassford v. TD Home and Auto Insurance Company (2009), 94 O.R. (3d) 630 (S.C.), Trenton Cold Storage Ltd. v. St. Paul Fire and Marine Insurance Co. (2001), 146 O.A.C. 348, Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53, Lizotte v. Aviva Insurance Company of Canada, 2016 SCC 52, General Accident Assurance Company et al. v. Chrusz et al. (1999), 45 O.R. (3d) 321 (C.A.), Fellowes, McNeil v. Kansa General International Insurance Co. (2000), 138 O.A.C. 28

facts:

The respondent, Loblaw Companies Limited (“Loblaw”), is a Canadian grocery retailer that operated pharmacies across Canada. The respondent, Shoppers Drug Mart Inc. (“SDM”), was primarily a Canadian franchisor for retail pharmacies. SDM was acquired by Loblaw in 2014. The respondent, Sanis Health Inc. (“Sanis”), manufactured generic drugs including two drugs classified as opioids. Sanis was a wholly-owned subsidiary of SDM since 2009. The three respondents were variously facing five class actions in various provinces that related to the manufacture, distribution, and sale of opioid drugs in Canada beginning in 1996 (the “Class Actions”).

The appellants, Royal & Sun Alliance Insurance Company of Canada (“RSA”), AIG Insurance Company of Canada (“AIG”), Aviva Insurance Company of Canada (“Aviva”), Liberty Mutual Insurance Company (“Liberty”), and Zurich Insurance Company Ltd. (“Zurich”) (collectively, the “Primary Insurers”), issued primary Commercial/Comprehensive General Liability (“CGL”) policies to the respondents during the class periods. Each of the Primary Insurers also issued excess liability policies to one or more of the respondents from time to time. The appellants, Chubb Insurance Company of Canada (“Chubb”), Certain Underwriters at Lloyd’s as represented by their coverholder Markel Canada Limited (“Markel”), and QBE Syndicate 1886 at Lloyd’s of London (“QBE”), are excess insurers of the respondents (collectively, the “Excess Insurers”).

The respondents brought applications seeking declarations that each of the Primary Insurers had a duty to defend the Class Actions under their insurance policies. The respondents also sought a declaration that each respondent was entitled to select any single policy under which there was a duty to defend and require the selected insurer to defend all the claims against it.

The Class Actions claim billions of dollars in damages from all or some of the respondents. The class periods span over 20 years, beginning in 1996 when Purdue Pharma began selling the opioid “OxyContin”. The five Primary Insurers issued primary CGL policies that covered one or more of the respondents for varying time periods. The primary policies generally provided coverage for the respondents’ legal liability to pay damages arising from “bodily injury” sustained as a result of an “occurrence” happening “during the policy period”, or words to that effect. Except for the two policies issued by Zurich for the 1998-2001 and 2001- 2003 periods, each primary policy contains an express duty to defend any claim for bodily injury against the insured.

AIG issued a primary CGL policy to Loblaw for the period July 1, 1995 to May 1, 1997, and RSA issued a primary CGL policy to Loblaw for the period May 1, 1997 to January 1, 1998. AIG’s primary policy provided that Loblaw was to give notice of an accident, occurrence, claim, or suit to the insurers “as soon as practicable.” RSA’s policy required notice of an accident or occurrence “as soon as practicable” and notice of a claim or suit “immediately”. AIG also issued excess umbrella liability policies to SDM for the years 1998 to 2000 and RSA issued excess liability policies to Loblaw for the years 1997 and 1998.

The respondents gave notice of the claims to the appellants, asked each of the Primary Insurers to defend the litigation, and retained a law firm to defend them in the Class Actions. Certain of the Primary Insurers’ policies contain varying self-insured retentions (“SIRs”) or deductibles that must be satisfied before the insurer will assume responsibility for defence costs. Loblaw sought payment of its pre-tender defence costs from AIG and RSA but they refused to pay.

Each of the Primary Insurers issued excess liability policies to one or more of the respondents from time to time. Most of the Excess Insurers, including QBE, specifically reserved the right to deny coverage based on policy exclusions including intentional conduct. On July 14, 2020, counsel for the respondents wrote to the appellants, noting that several of the insurers had reserved their rights to later deny coverage based on certain exclusions, including intentional act exclusions. The respondents proposed a Defence Reporting Agreement (“DRA”) for each of their insurers, both primary and excess. The DRA was stated to allow the parties to work openly and cooperatively on the defence of the claims, which included the sharing of Privileged Defence Information relating to the defence of the claims.

issues:
  1. Did the application judge err in their decision regarding payment of defence costs?
  2. Did the application judge err in their treatment of the self-insured retentions and deductibles?
  3. Did the application judge err in concluding that Loblaw was entitled to relief from forfeiture for pre-tender defence costs from AIG and RSA?
  4. Did the Application Judge err in finding a reasonable apprehension of a conflict of interest that required the insurers to enter into the DRA in order to associate and to obtain Privileged Defence Information and in holding that the Non-DRA Insurers’ internal ethical screens were insufficient?
  5. Did the application judge err in refusing RSA’s request for a declaration that Loblaw be separately represented by independent counsel?
holding:

Appeals allowed in part.

reasoning:
  1. Yes.

The Court noted that the challenge presented by these appeals was what to do with the cost of defending claims that involve allegations of continuous or progressive injury that span many years (long-tail claims) where there are insurance policies with different risks.

The policies provided for a time-limited bargain

First, the judgment of the application judge failed to give effect to the express language of the parties’ bargain. The proposed pro rata time-on-risk allocation accorded with the contractual time-limited duty to defend which the respondents and the Primary Insurers had agreed to. The relationship between an insurer and its insured is contractual in nature. An inquiry into the nature and scope of the duties an insurer owes to its insured starts with the insurance policy that governs them: Hanis, at para. 22. When interpreting contracts of insurance, the court should give effect to clear language, reading the contract as a whole and applying general rules of contractual construction to resolve any ambiguities: Progressive Homes Ltd at paras 21-24. The application judge ignored the language found in the policies of each of the Primary Insurers that qualified the duty to defend and linked it to the insurance provided by the policy. The indemnity coverage provided by the Primary Insurers was for the policy period that is in each case described in the declarations that form part of the policies. The policies were all limited to coverage “during the policy period” and the duty to defend in each case was qualified by the words “with respect to such insurance as is afforded by the policy” (or equivalent language). This language clearly linked the duty to defend to the coverage for which the parties bargained. Consistent with the bargain made, the respondents managed their insurance coverage on the basis of successive coverage.

The Primary Insurers were not “concurrent” insurers

Where an insured holds more than one policy of insurance that covers the same risk, the insured is entitled to select the policy under which to claim indemnity, subject to any conditions to the contrary: Family Insurance at para 14. The selected insurer is then entitled to contribution from all other insurers who have covered the same risk. The application judge erred in concluding that the insurers were concurrent insurers. The Primary Insurers insured discreet risks in successive time periods. They had not agreed to indemnify for risks falling outside those time periods and therefore had no duty to defend claims arising entirely from them. To require the Primary Insurers to defend claims outside of their policy periods was inconsistent with the parties’ bargains. Accordingly, in the absence of concurrent obligations, the application judge further erred in concluding that the selected insurer could then seek equitable contribution from the other insurers.

Hanis was not applicable to situations involving multiple policy periods

Third, it was an error to apply the principles from Hanis, which focussed on mixed claims giving rise to multiple theories of liability, to a situation involving multiple policy periods. The application judge permitted the selected insurer to seek apportionment of the defence costs at the end of the proceeding and also to seek contribution from the insurers whom she said had a concurrent obligation to defend. Seeking apportionment at the end of the proceeding required the selected insurer to fund both lengthy and costly proceedings. The application judge’s disposition placed a disproportionate and unreasonable burden on the selected insurers. The application judge’s reliance on equitable contribution placed the burden of collecting contributions from other insurers on risk on the selected insurer.

The application judge did not meaningfully analyze the pleadings

To determine if a duty to defend has been triggered, the insurance policy and the claims in the pleadings are to be examined to ascertain whether there is a possibility of the claims falling within the insurance coverage: Progressive Homes, at paras. 6, 19-20. Where it is clear that a claim does not fall within the original grant of coverage or is excluded, there is no duty to defend: Nichols at p. 810.

The Class Action claims were outside the time parameters of at least some of the policies targeted. There was no single policy that could possibly be called upon to indemnify the respondents in full for the claims given the evolving nature of the claims and the time-limited nature of the coverage provided. The consecutive nature of the insurance policies rendered a time-on-risk allocation a simple exercise at a preliminary stage in these proceedings. The time periods in the policies were readily identifiable. A time-on-risk allocation fit with the temporal nature of the allegations asserted against the respondents.

An “all sums” approach was erroneously applied

Under the “all-sums approach” to liability allocation, a single insurer could be required to pay the entire amount of an asbestos injury claim, notwithstanding that multiple policy periods are triggered by the applicable claim. Canadian courts have tended to prefer the pro rata approach to allocating liability as opposed to the “all-sums approach”: Goodyear at paras. 17-18 and 21. The Court noted that “all sums” does not apply to both indemnification and defence costs in Canada.

Defence costs were not a peril in the nature of an insured risk

The concept of “risk” involves two variables: the object of the insurance and the insured peril. The insured object is the person or thing covered by the insurance while the insured peril is the unanticipated occurrence that causes the loss, or the danger that has materialized. The Court established that defence costs are not a danger or peril in the nature of an insured risk. The relevant peril for which the respondents sought insurance under most of the primary policies was their unintentional infliction of “bodily injury”. That was the harm that was causing the respondents to incur losses. Defence costs were a consequence of that peril, not the peril itself.

The courts should limit conflicts of interest

The Court stated that it made no sense for an insurer with minimal exposure to be tasked with controlling the defence and the defence costs. The participation of all insurers at an early stage was conducive to the conduct of the best defence possible and also serves to promote settlement.

  1. Yes.

Exhausting the SIRs

The Court noted that SIR provisions were often drafted to give a sophisticated, commercial insured a degree of control typically absent in deductible clauses. The respondents were clearly experienced and sophisticated users of commercial insurance products and in many instances opted to negotiate policies with significant SIRs with attendant reductions in premium payments. This was the degree of exposure they chose to adopt, and they adopted it multiple times with respect to several discreet time periods under policies with many different insurers. In short, they had agreed to pay new and additional SIRs/deductibles for each period. Given that the respondents looked to each policy for coverage for separate policy periods, it follows that the SIR obligation in each policy must have been satisfied before that insurer had a duty to defend. The duty to bear the costs of the defence was only engaged when the SIR has been exhausted: Ontario at para 54. Until then, the payment obligation remained with the insured.

Application Judge’s Order on Exhausting SIRs Through Payment by Other Insurers is Inapplicable

The significance of this issue flowed from the application judge’s determination that the respondents could each select one policy to defend and payments made by the selected insurer could be used to reduce the SIRs on other policies. An SIR depends on the legal obligations to pay, among other things, defence costs. The language of the policies in issue on SIR obligations differed.

Unquestionably an SIR must be paid before an insurer has an obligation to defend. However, as a pro rata time-on-risk formula was applicable, the issue of payment by another insurer disappeared. This was because the pro rata time-on-risk formula applied to the exhaustion of the SIRs.

Adjusting Equitable Allocation Among Insurers

The Court noted that each Primary Insurer agreed to cover a portion of the defence costs of the Class Actions. Within each policy period, the insured was responsible for defence costs up to the exhaustion of the SIR, but that had not affected the proportion of time for which other insurers were responsible. Until the judge on the trial of an issue determined whether the SIRs relating to the Liberty, AIG, and RSA policies have been satisfied, or until a further court order, it was incumbent on the respective respondents to pay the percentages of legal fees allocated to those policies based on the time-on-risk formula. After that point, the insurers were responsible for the proportion of defence costs equivalent to their time-on-risk.

  1. Yes.

Pre-tender defence costs are defence costs incurred by an insured prior to providing notice of a claim to its insurer, in this case AIG and RSA. An insurer also has the right to control the defence of an insured claim and this includes the right to appoint defence counsel: Brockton at para 31. The right to control the defence and to appoint defence counsel flows from the insurer’s obligation to indemnify: Zurich of Canada at p.2168. Given that the insurer controls the defence and appoints counsel, it follows that the insurer is also required to pay for all reasonable costs that have been incurred at the insurer’s request: Brockton, at para. 54. Although independent from the notice provision, the voluntary payments provision complemented the notice provision.

Relief from forfeiture refers to the power of a court to protect a person against the loss of an interest or a right because of a failure to perform a covenant or condition in an agreement or contract: Kozel, at para. 28. It is an equitable and discretionary remedy. Relief from forfeiture is granted sparingly and the party seeking the relief bears the onus of proof: Ontario (Attorney General) at para 87. In Ontario, relief from forfeiture is governed by s. 98 of the Courts of Justice Act and in the insurance context also by s. 129 of the Insurance Act. The Court noted that for the purposes of this appeal, any distinction between s. 98 of the CJA and s. 129 of the Insurance Act was immaterial.

The purpose of allowing relief from forfeiture in insurance cases is to prevent hardship to beneficiaries where there has been a failure to comply with a condition for receipt of insurance proceeds, and where leniency in respect of strict compliance with the condition will not result in prejudice to the insurer: Falk Bros. Industries Ltd at p. 783.

The Court noted that the duty to defend arises on demand or notice. Otherwise, the insurer may have no knowledge of the claim it is obligated to defend or opportunity to exercise its contractual rights respecting this defence or other policy conditions and exclusions.

On receipt of notice, AIG had not rejected the contract. Rather, it reserved its rights and stated that liability did not attach until the SIR had been exhausted as provided for in the policy. It also sought copies of pleadings on an ongoing basis and an update on settlement discussions. These steps amounted to an acceptance of the contract. Here, AIG was actively seeking to enforce its contract, including the independent voluntary payment, SIR, and exclusion provisions. This situation was different from those where an insurer on receiving late notice rejected the contract and refused to defend and to pay pre-tender costs.

Where the insurer has acknowledged its duty to defend and indemnify going forward subject to exhaustion of its SIR, there is nothing left to relieve against. Moreover, the voluntary payments clause, which operated as an independent commitment, simply reflected the parties’ contract. There was no forfeiture and relief from forfeiture was therefore not engaged.

  1. No.

The respondents sought a declaration that only those insurers who signed the DRA be entitled to associate in the defence of the Class Actions and receive defence-side reporting.

Reasonable apprehension of conflict

Defence counsel’s primary responsibility is to represent the insured and act in its best interest in any liability action: Parlee at para 17. The right to control the defence is not absolute and the insurer may be required to surrender that control: Brockton at para 43.

The mere fact that an insurer has reserved its rights on coverage does not cause the insurer to lose its right to control the defence and appoint counsel. The question is whether the circumstances of the case create a reasonable apprehension of conflict of interest if that counsel were to act for both the insurer and the insured in defending the action: Brockton, at paras. 39-40, 43. Ontario courts have found that where an insurer denied a duty to defend or reserved rights on coverage exceptions at issue in the litigation (e.g., intentional act exclusions), the insured was entitled to appoint independent counsel: see e.g., Glassford at paras 26-31.

The right to associate allows an insurer to manage its exposure by giving the insurer the opportunity to exercise a voice in the defence of the legal action. The right to associate is not the right to direct the defence of the action. It is the right to be heard in the course of the defence and to obtain information reasonably necessary to be heard.

As to the issue of a reasonable apprehension of a coverage conflict, all Non-DRA Insurers reserved their rights with respect to intentional conduct with the exception of Chubb, which provided a “full” reservation of rights. It will be rare that an early general reservation of rights that is almost standard form gives rise to a reasonable apprehension of conflict. However, here, the reservations were specific to intentional conduct and the pleading of intentional conduct in the Class Actions was pervasive in the opinion of the Court.

Without an effective ethical screen that silos Privileged Defence Information from the Non-DRA Insurers’ coverage teams, the insurers’ input and advice could be tailored to align with the coverage position that the insureds engaged in intentional conduct thereby eliminating the Excess Insurers’ indemnity obligation. In the face of a reservation of rights on intentional conduct in the context of a right to associate, defence counsel was put in the position of having conflicting mandates if they had to disclose Privileged Defence Information contrary to the interests of the insured. Put differently, the Non-DRA appellants had not established that the application judge erred in her findings that a reasonable apprehension of conflict existed in the circumstances. None of the non-DRA insurers were entitled to privileged coverage information (privileged information as between the respondents and their separate coverage counsel).

When the interests of the insured and the insurer are aligned, common interest privilege protects against production of privileged information to third parties. Neither QBE nor Chubb were required to enter into the DRA, as they did not seek to associate. This conclusion was premised on the basis of no future exercise by Chubb of its right to associate.

The necessary measures that courts may impose when a reasonable apprehension of conflict exists should be viewed on a continuum, ranging from the insured’s right to independent counsel paid by the insurer to some form of split-file protocol. As the application judge correctly observed, the adequacy of the measures must be tailored to the circumstances of the case.

In this case, should the Class Actions be successful, there was a clear risk that the excess layers of insurance could have been pierced. While an ethical screen limited to handlers at the lower level may have been appropriate with respect to smaller claims, in cases such as these billion-dollar Class Actions, handlers at the lower level may not have sufficient decision-making authority and may be required to consult individuals higher in the corporate decision-making pyramid. Accordingly, in the context of their appeals, a split-file protocol that reached farther up that pyramid was justified. In the view of the Court, the DRA proposed by the respondents was a reasonable response to address the unique challenges presented by these Class Actions.

  1. No.

RSA was not directing the Loblaw defence and it is not for it to impose its position on the insurers who are. Second, there is currently no evidence of any conflict between Loblaw, Sanis, and SDM. That said, this determination does not preclude a conflict arising in the future. If it should arise, the issue could be addressed on a proper evidentiary record.


Fletcher v. Ontario, 2024 ONCA 148

[Pepall, Lauwers and Harvison Young JJ.A.]

Counsel:

R. S. Maurice, R. M. Lake, L. Schaan, and W. B. Henderson, for the appellants

M. Fancy, Richard Ogden, and Catherine Ma, for the respondent His Majesty the King in Right of Ontario

J. Brooks, C. Fiske, M. Torrie, and M. Khan, for the respondent Attorney General of Canada

Keywords: Aboriginal Law, Honour of Crown, Treaty Rights, Treaty No. 9, Interpretation, Standard of Review, Civil Procedure, Sealing Orders, Settlements, Enforcement, Appeals, Abuse of Process, Indian Act, R.S.C. 1985, c I-5, Rules of Civil Procedure, R.R.O. 1990, Reg. 194, R. v. Marshall, [1999] 3 S.C.R. 456, Lac La Ronge Indian Band v. Canada, 2001 SKCA 109, Restoule v. Canada (Attorney General), 2021 ONCA 779, R. v. Marshall, [1999] 3 S.C.R. 456, Ross River Dena Council Band v. Canada, 2002 SCC 54, Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, Halfway River First Nation v. British Columbia, 1999 BCCA 470, West Moberly First Nations v. British Columbia, 2020 BCCA 138, Caron v. Alberta, 2015 SCC 56, R. v. Sioui, [1990] 1 S.C.R 1025, Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, R. v. Bernard, 2005 SCC 43, R. v. Badger, [1996] 1 S.C.R. 771, R. v. Taylor and Williams (1982), 34 O.R. (2d) 360 (C.A.), Whiteduck v. Ontario, 2023 ONCA 543, Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, Beckman v. Little Salmon/Carmacks First Nation, 2010 SCC 53, Mikisew Cree First Nation v. Canada (Governor General in Council), 2018 SCC 40, Palmer v. The Queen, [1980] 1 S.C.R. 759, Catholic Children’s Aid Society of Metropolitan Toronto v. M. (C.), [1994] 2 S.C.R. 165, Sherman Estate v. Donovan, 2021 SCC 25, R. v. Ottawa Citizen Group Inc., (2005) 75 O.R. (3d) 590 (C.A.), Toronto (City) v. C.U.P.E. Local 79, 2003 SCC 63, 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc., 2022 ONCA 718, Currie v. Halton Regional Police Service Board (2003), 233 D.L.R. (4th) 657 (Ont. C.A.), Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141

facts:

The issue on appeal relates to Treaty No. 9 (the “Treaty”). According to the Treaty, which the appellants, the Missanabie Cree First Nation (the “Missanabie Cree” or “MCFN”), entered into in 1906, the MCFN became entitled to reserve lands the size of which was to be calculated based on a formula not exceeding one square mile for each family of five. Although MCFN members at Missanabie received Treaty annuities and adhered to the Treaty as of 1906, no reserve was allocated at that point for reasons that are not clear from the historical record.

The trial judge relied on a two-step inquiry. At step one, the trial judge found that the reserve clause of Treaty No. 9 showed a common intention that the size of the reserve would be determined as at the time of Treaty, not subsequently. At step two, the trial judge considered the question, does the historical and cultural backdrop suggest any latent ambiguity or alternative interpretation? The trial judge began this second phase of his analysis by noting that it continues the search for an understanding of the parties’ common intention. Noting that the principal concern expressed by the First Nations representatives was the assurance that they would be able to hunt and fish as they had in the past, the trial judge found this assurance was given.

issues:

Issues on appeal

  1. Did the trial judge misdirect himself by asking the wrong question in relation to the crystallization date?
  2. Did the trial judge err in finding that there was a common intention that the population be enumerated in 1906?
  3. Did the trial judge err in failing to find that the actions of the Treaty Commissioners and the subsequent conduct of Crown officials breached the honour of the Crown?

Ancillary issues

  1. Should the Agreement be admitted as fresh evidence?
  2. If admitted, should the Agreement be sealed?
  3. Is continuing the appeal as against Canada an abuse of process in light of the Agreement?
holding:

Appeal dismissed.

reasoning:

Issues on appeal

  1. No.

The appellants submitted that the trial judge misdirected himself by asking “when did, or will, the right to a reserve crystallize?” rather than answering the question in the Sproat Order: “As of what point in time (the “Crystallization Date”) should the population of the Missanabie Cree be determined for the purposes of applying the reserve entitlement formula stipulated by Treaty 9?” This mistake in law, the appellants argued, led the trial judge to assume that the right to a treaty reserve (in this case, arising in 1906) was the same date as the crystallization date for the purpose of enumerating the population.

The respondents submitted that the trial judge neither conflated the crystallization date with the date that the right to a reserve arose, nor wrongly instructed himself as to the question in Master Sproat’s order. The entirety of the trial judge’s decision was focused on the question of determining the date to calculate the size of the reserve land entitlement based on the population of the MCFN.

The Court noted that the trial judge correctly asked the threshold question. The trial judge understood that all parties recognized that the MCFN was entitled to a reserve as of 1906, but that the question of when to count the population for purposes of applying the reserve entitlement formula was outstanding. The trial judge was correct not to apply the formulas used in Ross River or Lac La Ronge to the reserve clause in Treaty No. 9, and instead to interpret Treaty No. 9 to answer the question of when the population of the MCFN should be determined for the purposes of applying the reserve entitlement formula.

The Court held that Ross River was not applicable in this case. In that case, the Supreme Court looked to other indicia to see if there was a common intention to create a reserve and the majority found there was none. The Court was also of the view that the trial judge correctly distinguished Lac La Ronge from this case. The trial judge distinguished Lac La Ronge on the basis of the difference between the reserve clause in Treaty No. 6, which was at issue in that case, and Treaty No. 9.

The Court was of the opinion that the trial judge read and interpreted the language of the reserve clause in Treaty No. 9 correctly: the location was to be arranged by the Commissioners, Chiefs and Headmen, and the boundaries thereof to be “hereafter surveyed and defined the said reserves when confirmed shall be held and administered by His Majesty for the benefit of the Indians…”. This implied a twostep process. The first step occurred when the right itself crystallized, i.e., when the Commissioners, Chiefs and Headmen met in 1905 and 1906. The second step occurred simply when the right was “confirmed” by survey, unlike in Lac La Ronge, where these two steps were combined into one.

  1. No.

The appellants argued that it was an error to find there was a common intention that the population be enumerated in 1906 given Treaty No. 9’s silence on the crystallization date. Moreover, they argued that there was little or no evidence to support the trial judge’s finding of common intention. The MCFN submitted that the absence of a common intention at the time of Treaty was supported by the fact that no reserve was provided at that time, and from the absence of any information or discussion about the provision of reserve land. The appellants argued that the only negotiation for Treaty No. 9 took place between Canada and Ontario. The MCFN further argued that the promise of a reserve was never even communicated or held out by the Treaty Commissioners. The appellants argued that it is an error of law to impute the same common intention to the Crown and the MCFN as that of other First Nations in 1906, given that other First Nations had reserve lands and areas identified for them at the time of Treaty, whereas the MCFN did not.

The Court held that treaty interpretation is a matter of law, reviewable on a correctness standard, while the factual findings underlying the conclusions about the content of a treaty are reviewable on a palpable and overriding error standard. The factual findings here were largely based on the parties’ joint evidence delivered through the joint expert report and as set out in the Agreed Statement of Facts. They remained largely uncontested on appeal. The trial judge’s interpretation was well-supported by the record before him and by the wording of the reserve clause. The Court saw no error, either of fact or of law.

The MCFN took the position that the crystallization date for the MCFN was 2011, when Canada set aside the reserve land. In effect, the appellants argued that there was no common intention to create a reserve for the MCFN in 1906, so 1906 cannot possibly be the crystallization date. The trial judge’s interpretation relied on a “myth” of common intention. The Court disagreed with this argument. Even though Treaty No. 9 did not contain wording to account for the situation at hand, the goal remained choosing among various possible interpretations of common intention at the time the Treaty was signed.

Turning to the facial meaning of the reserve clause, the trial judge found the date of signing or adhesion was the crystallization date; he thoroughly considered the record before him in reaching that conclusion and cited a number of undisputed factors, which, seen together, provide strong support for his conclusion. In examining the reserve clause, he noted that (unlike Lac La Ronge), it expressly provides the “Commissioners and the Chiefs and Headmen” were to determine the location of the reserves “…the same not to exceed in all one square mile for each family of five”. The trial judge noted the historians’ agreement that the clear intention was to have the locations of the reserves arranged by agreement at the time that the Commissioners met with the First Nations and that the only time that the Commissioners, the Chiefs and Headmen were to meet was at the point the Treaty was made. Since pay-lists had to be generated to pay the annuities to First Nations, these could also be used to calculate the square mileage of reserve size for agreement between the parties. The very purpose of the lists was to pay gratuities and size the reserves.

The trial judge found no evidence of any First Nations being treated or asking to be treated in a manner inconsistent with an understanding that their reserves were to be identified and calculated as of the date the Treaty was made.

The effect of the appellants’ argument was that the interpretation of the Treaty based on the common intention including the consideration of the intentions of other signatories to the Treaty is of no value in the absence of any clear intention expressed by the Crown or the Missanabie Cree to setting aside a reserve for the MCFN. The Court did not agree.

First, aside from the historical evidence reviewed above showing Crown intention to make treaty, a treaty will presumptively provide the necessary Crown intent. Second, the Court agreed with Chief Justice Bauman’s majority judgment in West Moberly, that in some cases, “the absence of Indigenous intention cannot prevent the dispute over it from being settled.” In that case, “[t]he trial judge did not fail to consider the intention of Indigenous parties to the Treaty.” In this case, the issue of whether there was an absence of intention from the Missanabie Cree in 1906 did not arise because the parties have agreed, as set out in the Sproat Order, that the MCFN has been a party to Treaty No. 9 since 1906 and, pursuant to the reserve clause of that Treaty, that a reserve should have been set aside for the benefit of the Missanabie Cree shortly after the making of the Treaty. The trial judge did not rely on a “myth” of common intention, but reasonably inferred common intention from the agreed facts that placed the Missanabie Cree in the same position as the other signatories to Treaty No. 9 in 1906. Third, the trial judge’s interpretation was consistent with the common intentions of the Crown and all the signatories to Treaty No. 9 in 1906. Courts have assumed the inquiry is into the intention of the signatories generally (not the claimants specifically), at the time the treaty was signed, even when considering how the treaty applies to later adherents. Only the clearest evidence of a specific claimant’s intention would find that the same treaty language has different meanings in respect of different signatories. In this case, there was no clear evidence of the MCFN’s intentions. Finally, the Crown’s failure to set aside a reserve in accordance with its obligations under the Treaty might result in a claim for damages or other remedies, but it did not change the date for the calculation of treaty entitlement. The breach of a treaty obligation does not change the nature or content of the treaty obligation.

  1. No.

The appellants submitted that the trial judge erred by not finding that the actions of the Treaty Commissioners and the subsequent conduct of Crown officials breached the honour of the Crown. The Court disagreed. The trial judge was alive to and considered the honour of the Crown correctly throughout his reasons in relation to the narrow question before him.

The appellants argued that there was “compelling evidence that the actions of the Crown in refusing to “make treaty” at Missanabie was intentional, at the very least willfully blind and at worst dishonest.” The respondents made a number of submissions in response. First, both Ontario and Canada submitted that the allegation of sharp dealing is a new issue on appeal and should not be permitted for that reason. Canada further submitted that the appellants’ broad arguments about the Crown and sharp dealing constitute an abuse of process because the legitimacy of adhesion and allegations made against federal agents post-treaty for failure to provide the MCFN a reserve are covered by Canada’s Settlement Agreement with the MCFN. Ontario’s central submission is that the trial judge did not err by failing to give due consideration to the Crown’s lack of diligence in fulfilling the reserve promise, or to evidence of alleged “sharp dealing” by the Treaty Commissioners, and makes three related points.

The principle that the honour of the Crown is always at stake in the Crown’s dealings is well-founded in case law. The honour of the Crown is to be presumed, and it “infuses” the process of treaty interpretation. n the case of treaty obligations, the honour of the Crown arises both with respect to the interpretation of treaty obligations, and to their implementation, that is, whether the obligations have been breached.

The Court agreed that the honour of the Crown applies to the interpretation stage, which is the stage before the court in this appeal. This stage, however, is further defined by the parties’ agreement, expressed in the Sproat Order, which provides that the sole issue before the trial judge was that of interpreting the Treaty to determine the crystallization date. The appellants are thus precluded from asserting sharp dealing in the course of the treaty negotiation process just as the respondents are precluded from asserting the Missanabie Cree were not entitled to a reserve. Moreover, as set out above, the Court saw no error in the trial judge’s purposive interpretation of the reserve clause.

The trial judge was alive to the foundational principle of the honour of the Crown, but also noted: “[I]t is not the role of treaty interpretation to distort the meaning of the treaty in an attempt to redress an historical wrong”. In this respect, he was in line with the jurisprudence that “‘generous’ rules of interpretation should not be confused with a vague sense of after-the-fact largesse” and that the honour of the Crown “cannot alter the terms of the treaty by exceeding what ‘is possible on the language’ or realistic”. In short, the trial judge applied the correct law within the context of the Marshall framework and gave full consideration to the honour of the Crown to the extent it was appropriate to do so given the scope of the issue before him.

Ancillary issues

  1. Yes.

Canada brought a motion to introduce fresh evidence on the appeal as to the achievement of the Settlement Agreement. The Court admitted the fresh evidence, as the test for its admission was met.

The Settlement Agreement, reached after judgment was rendered in the trial of this matter, was highly relevant to issues regarding the liability of the Crown. There were no concerns about its credibility in that a settlement was clearly reached, ratified and reflected in an Order-in-Council dated February 29, 2020 (the “OIC”). It was material to the issues on appeal, such as Canada’s motion to have the appeal against it dismissed.

  1. No.

The Court dismissed Canada’s motion to continue the sealing order. Canada did not demonstrate that the public objectives of “administration of justice, the promotion of settlements and settlement privilege” were at “serious risk” on the facts of this case, namely because the most salient elements of the Settlement Agreement were already publicly available through the OIC.

Canada’s principal submission was that disclosure of the documents could have a negative impact upon and jeopardize future Crown-First Nation negotiations. In effect, Canada argued that in order to be able to negotiate effectively with other First Nations in the future, confidentiality must be guaranteed. In oral argument, Canada expressed a concern that negotiators would not be frank, open and honest in their dealings for fear that their positions, as well as the negotiation process, might be exposed and ridiculed.

To limit the open court principle, a party must establish: (1) court openness poses a serious risk to an important public interest; (2) the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and (3) as a matter of proportionality, the benefits of the order outweigh its negative effects.

Canada did not satisfy this first requirement of the test. While invoking the public interest exception of (in this case) settlement privilege, it did so at a highly general level. It is necessary to identify both the public interest at issue and the seriousness of the risk to it within the specific facts viewed in context. Here, Canada only generally raised the broad concern that removing the seal would have a “chilling effect” on future Crown-First Nations negotiations.

  1. No.

Canada sought to dismiss the appeal against it and enforce the Settlement Agreement. It submitted that continuing the appeal was an abuse of process. The MCFN consented to a dismissal as against Canada but did not consent to a dismissal on the basis of abuse of process. Ontario agreed with the MCFN that the appeal against Canada was not an abuse of process.

The primary focus of the doctrine of abuse of process places more emphasis upon the integrity of the adjudicative functions of courts than the interests of parties. The Court was of the view that the motion to dismiss the appeal and enforce the Settlement Agreement should not be granted. The order sought was discretionary in nature and should only be granted in “the clearest of cases”, which this was not.


Falsetto v. Falsetto, 2024 ONCA 149

[MacPherson, Miller and Paciocco JJ.A.]

Counsel:

G. Cullwick, for the appellant

D. Cutler, for the respondent

Keywords: Property, Trusts, Presumption of Resulting Trust, Purchase Money Resulting Trusts, Gifts, Planning Act, R.S.O. 1990, c. P.13, Pecore v. Pecore, 2007 SCC 17, Nishi v. Rascal Trucking Ltd., 2013 SCC 33, Lattimer v. Lattimer, (1978), 18 O.R. (2d) 375, Schwartz v. Schwartz, 2012 ONCA 239, Andrade v. Andrade, 2016 ONCA 368, Holtby v. Draper, 2017 ONCA 932

facts:

The appellant, L.F., is the former father-in-law of the respondent, P.F. The appellant and his son A.F. were engaged in the business of buying and redeveloping real estate in the Ottawa area since around 1990.

At issue in this case was the property located at 415 Lisgar. The registered owners on the title to the property are P.F and A.F.

The background to L.F.’s claim of a purchase money resulting trust involved the circumstances prior to the closing of 415 Lisgar. In 2011, A.F. was initially listed as the sole purchaser of 415 Lisgar. However, prior to closing, his solicitor advised there would be an adverse consequence to A.F being the sole purchaser due to the operation of the Planning Act, since A.F. held legal and beneficial title to a property adjacent to 415 Lisgar. Thus, to avoid the two properties from becoming one parcel of land and merging titles, the solicitor suggested adding L.F. as on owner on the title to 415 Lisgar.

This required adding L.F. to the mortgage. However, six days before the closing, the bank advised that there was insufficient time to approve L.F. under the mortgage. To save the transaction, A.F.’s wife P.F. took L.F.’s intended place on title. P.F. made no financial contribution to the purchase.

In 2020, A.F. and P.F. separated. P.F. asserted a 50 percent interest in 415 Lisgar, pursuant to her being a signatory to the mortgage agreement and being registered on title as a co-owner. L.F. brought an application seeking a declaration that P.F. held legal title to 415 Lisgar in trust for him as a beneficial co-owner with A.F.

issues:

Did the application judge err in finding that the purchase funds were advanced with the intention of making a gift?

holding:

Appeal allowed.

reasoning:

Yes.

The application judge found that L.F. advanced the funds with the intention of making a gift to P.F. because there was no other way to avoid the operation of the Planning Act, and avoiding the operation of the Planning Act was Luigi’s sole purpose.

However, there were several problems with the application judge’s chain of reasoning.

First, the application judge’s characterization of L.F.’s intention was incomplete. What was left out was that L.F.’s purpose in participating in the transaction was to purchase 415 Lisgar as an investment property and  to become its co-owner in a joint business venture with A.F. L.F. always intended to and did earn income from the property.

There was an overwhelming amount of evidence in support of affirming the presumption of resulting trust. This included all of the evidence of his history of similar business transactions with A.F., his advancement of the purchase money and closing costs, his post-purchase management and renting out of the property, and his eventual payment of a share of the property taxes.

The application judge erred in concluding that the evidence did not assist in discerning whether L.F. intended to retain a beneficial interest rather than provide P.F. with a gift. L.F.’s history of dealing with the property, including his on-going payment of expenses would have made a gift that much more extravagant and that much less likely.

Furthermore, L.F. intended to purchase 415 Lisgar in a manner that did not trigger adverse Planning Act consequences. At first, he intended to accomplish this by registering himself on title as co-owner. When that option became impossible due to financing considerations, he and A.F. decided that P.F. would take title to a 50 percent interest, subject to a trust in favour of L.F.

In sum, the application judge erred in making the presumed operation of the Planning Act determinative of the question of whether L.F. intended to make a gift of the purchase money or retain a beneficial interest in the property.

MacPherson J., dissenting:

No

There were four crucial factual points that grounded the application judge’s legal analysis and conclusion.

First, the sole reason for putting the respondent P.F. on title to the property at 415 Lisgar was to avoid a merger of title of it and the adjoining property.

Second, after the respondent was placed on title in 2011, she remained the co-owner with her husband for more than ten years. Neither her husband (now ex-husband) nor her father in-law took any steps to change the formal ownership of the Lisgar property.

Third, for at least eight of those years L.F.’s tax returns reflected no ownership interest in 415 Lisgar.

Fourth, there was never any suggestion that P.F.’s co-ownership of 415 Lisgar would be held by her for L.F. There were no trust documents. There were no discussions between A.F. and P.F., or L.F. and P.F., about a trust.

The simple fact that governed the appeal was that for about ten years A.F. and L.F. initiated, accepted, and did not challenge P.F.’s crystal clear beneficial ownership, together with her husband, of the property at 415 Lisgar St. L.F.’s attempt, after his son’s marriage to P.F. ended, to claim half ownership of a property that was never registered in his name and for which he reported nothing to the tax authorities for almost a decade, was grossly unfair.


Vyazemskaya v. Safin, 2024 ONCA 156

[Doherty, Lauwers and George JJ.A.]

Counsel:

D.S., acting in person

S. Cocieru, for the respondent

Keywords: Family Law, Divorce, Spousal Support, Foreign Divorces, Recognition, Jurisdiction, Domicile, Real and Substantial Connection, Forum Shopping, Public Policy, Divorce Act, R.S.C., 1985, c. 3, (2nd Supp.), Family Law Act, R.S.O. 1990, c. F.3, D.B.S. v. S.R.G., 2006 SCC 37, Rothgiesser v. Rothgiesser, 46 O.R. (3d) 577 (C.A.), Virani v. Virani, 2006 BCCA 341, L.G.V. v. L.A.P., 2016 NBCA 23, Leonard v. Booker, 2007 NBCA 71, Armoyan v. Armoyan, 2013 NSCA 99, Okmyansky v. Okmyansky, 2007 ONCA 427, Cheng v. Liu, 2017 ONCA 104, Wilson v. Kovalev, 2016 ONSC 163, Beals v. Saldanha, 2003 SCC 72, Indyka v. Indyka, [1969] 1 A.C. 33 (U.K.H.L.), Powell v. Cockburn, [1977] 2 S.C.R. 218, Holub v. Holub (1976), 71 D.L.R. (3d) 698 (Man. C.A.), Orabi v. Qaoud, 2005 NSCA 28, R.S. v. P.R., 2019 SCC 49, Abraham v. Gallo, 2022 ONCA 874, R.N.S. v. K.S., 2013 BCCA 406, Yan v. Xu, 2023 ONSC 1288, Zhang v. Lin, 2010 ABQB 420, Marzara v. Marzara, 2011 BCSC 408

facts:

The parties are Russian citizens and immigrated to Canada. They are permanent residents. The appellant is employed in Canada. After unsuccessful efforts to negotiate a separation agreement – the appellant moved out of the matrimonial home. Three days later the appellant applied for a divorce in Russia. Upon learning of the divorce proceedings the respondent filed an objection with the Russian court, taking the position that the divorce, and corollary relief, should be determined in their place of residence, Toronto. A Russian justice of the peace granted the divorce (the “Russian divorce order”).

The wife’s uncontested evidence was that under Russian law, spousal support can only be ordered in certain limited circumstances, such as when the spouse seeking maintenance is disabled, past retirement age, pregnant, or the primary caregiver for a child under the age of three. At the time the divorce was granted the respondent met none of these conditions, and therefore spousal support was not available under Russian law. If the Russian divorce order is recognized in Canada, the respondent would not be able to seek spousal support under the Divorce Act. Nor could she seek spousal support under the Family Law Act.

The respondent brought a motion to set aside the divorce order. The trial judge held that, while the parties had a real and substantial connection to Russia, the Russian divorce order “should not be recognized in Ontario”. She referenced s. 22 of the Divorce Act, highlighting subsection (3) in particular, and determined that a divorce which is granted in a foreign jurisdiction is presumed to be valid. The trial judge then self-instructed that “the onus rests on the [respondent] to convince the court that the divorce ought to be set aside”.

The judge held that the public policy exception applied because the appellant had unfairly “forum shopped”. She found that, while the appellant might have had other reasons for pursuing a divorce in Russia, the “driving factor was avoiding court imposed spousal support obligations under Ontario law” and that “[t]his case involves exactly the sort of ‘moral’ and ‘fundamental’ values that underlie the public policy [defence]”.

issues:

Did the trial judge err by refusing to recognize the foreign divorce under s.22(3) of the Divorce Act?

holding:

Appeal dismissed.

reasoning:

No.

Section 22 of the Divorce Act and the “real and substantial connection” test

At common law, domicile alone was the traditional test for recognition of a foreign divorce. Canadian courts added “real and substantial connection” as a basis for recognition. Section 22 of the Divorce Act has been interpreted consistently such that a foreign divorce will be recognized in Canada where there is a real and substantial connection between one of the parties and the granting jurisdiction, unless an exception applies.

The Court held that the trial judge did not err when she concluded that 1) a real and substantial connection is sufficient to render a foreign divorce presumptively valid, 2) this test was met on account of the parties being Russian citizens, and 3) the onus was on the respondent – as the party alleging that the divorce was invalid – to adduce evidence demonstrating that the divorce was not properly obtained.

Unfair forum-shopping tactics is an exception to the recognition of foreign divorces

The trial judge declined to recognize the Russian divorce based on the public policy exception. The public policy defence turns on whether the foreign law is contrary to our view of basic morality. An argument based on public policy should not succeed “for the sole reason that … [the] foreign jurisdiction would not yield [the same result as Ontario or Canada]”.

Even if the appellant went to Russia for a divorce with the specific intention of avoiding spousal support – which he denied – and even if this decision led to what one might consider a repugnant outcome, the appellant argued that Beals v. Saldanha requires the Court to overlook these circumstances. The appellant asserted that the determinative question, and the one that the trial judge should have answered, per Beals, was whether the Russian law governing divorce and spousal support was repugnant. In the appellant’s view, his conduct and intentions were irrelevant. The appellant argued that the trial judge should have, but did not, conduct a comprehensive comparative analysis of Russian law, including an assessment of the law that governs child support and Russia’s broader social support system. The appellant’s position was that Russian law is fundamentally the same as Canadian law and that, in any event, expert evidence would be required to prove otherwise.

The Court disagreed with the appellant’s position. The appellant’s position overlooked the existence of other “nominate” defences established in Beals to the recognition of foreign divorces, including fraud and natural justice. The Court mentioned that Beals also refers to what the Court considered to be a fourth potential defence – one that, like “fraud” and “natural justice”, depends on the facts of a particular case, though only in passing. The Court in Beals, refers to the absence of “unfair forum-shopping tactics” as a condition for recognizing a judgment from another province.

The Court held that Beals leaves open “unfair forum-shopping tactics” as a possible exception. Therefore, like “fraud” and “natural justice”, “unfair forum-shopping tactics” is a category that is analytically distinct from the public policy defence. While forum-shopping will not always violate the principles of morality, “unfair forum-shopping tactics” most certainly will. And, if such unfair tactics are relevant to warrant consideration in a purely commercial context, like in Beals, then they must be relevant in a family law context where such a defence would be particularly persuasive.

The trial judge did not err in denying recognition of the Russian divorce order

The trial judge wrote that, in her view, the email correspondence between the parties supported the respondent’s position that the appellant sought and obtained the divorce in Russia pre-emptively so that she could not obtain a divorce and spousal support in Ontario. The trial judge reasonably concluded that on balance, the appellant pre-emptively sought and obtained the divorce in Russia to avoid paying spousal support under Ontario law to the respondent.

The Court therefore noted that the appellant did not demonstrate any palpable and overriding error in the trial judge’s findings of fact or with her ultimate conclusion that the Russian divorce should not be recognized. Accordingly, the Court found no basis to interfere.


Sonia v. Ratan , 2024 ONCA 152

[Simmons, Paciocco and Thorburn JJ.A.]

Counsel:

O. Hoque and Z. Moral, for the appellant

S. Kabir and M. Sidana, for the respondent

Keywords:  Family Law, Divorce, Spousal Support, Property, Equalization of Net Family Property, Jurisdiction, Foreign Divorces, Enforcement, Civil Procedure, Orders, Setting Aside, Fraud, Costs, Bad Faith, Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), s.22, Family Law Act, R.S.O. 1990, c. F.3., s.7(3), 22(3), Family Law Rules, O. Reg. 114/99, r.25(1), Rules of Civil Procedure, r.59.06(2)(a), Abraham v. Gallo, 2022 ONCA 874, Rothgiesser v. Rothgiesser (2000), 46 O.R. (3d) 577 (Ont. C.A.), Okmyansky v. Okmyansky, 2007 ONCA 427, Cheng v. Liu, 2017 ONCA 104, Syed Ali Nawaz Gardezi v. Lt. Col. Muhamad Yusuf (1963), 15 D.L.R. 9 (Supreme Court of Pakistan), Novikova v. Lyzo, 2019 ONCA 821, Qaoud v. Orabi, 2005 NSCA 28, Beals v. Saldanha, 2003 SCC 72, Saleh v. Tawoosi, 2016 ONSC 540, Wilson v. Kovalev, 2016 ONSC 163, Kadri v. Kadri, 2015 ONSC 321, Danylkiw v. Danylkiw (2003), 37 R.F.L. (5th) 43 (Ont. S.C.), Virc v. Blair, 2014 ONCA 392, Amin v. Canada (Minister of Citizenship and Immigration), 2008 FC 168, Chaudhary v. Chaudhary, [1984] 2 All. E.R. 1017 (C.A.), Quazi v. Quazi, [1980] A.C. 744 (H.L.), Saleem v. Canada (Citizenship and Immigration), 2010 CanLII 87618 (IRB App. Div.), Butt v. Canada (Citizenship and Immigration), 2010 CanLII 78765 (IRB App. Div.), Tiraei v. Canada (Citizenship and Immigration), 2009 CanLII 78323 (IRB App. Div.), Nanji v. Canada (Citizenship and Immigration), 2022 FC 1306, Khaleque v. Canada (Citizenship and Immigration), 2012 CanLII 101473 (IRB App. Div.)

facts:

The appellant and respondent were married in Bangladesh in 1998. In 2015, the respondent and the children obtained Canadian landed immigrant status. In January 2016, the respondent applied to sponsor his wife, the appellant, to become a permanent resident. In August 2016, the respondent and the children moved to Canada, but the appellant remained in Bangladesh.

On November 17, 2016, the respondent personally delivered a written notice of divorce to the appellant at the Dhaka airport in Bangladesh. A copy of the notice was couriered to the Mayor of Brahmanbaria (the Chairman for the purposes of s. 7 of a Bangladesh Ordinance).

On February 24, 2017, the appellant came to Canada. On March 17, 2017, the Bangladesh divorce became effective pursuant to the Bangladesh Ordinance. On January 7, 2020, the appellant filed an application in Ontario for a divorce and corollary relief under the Divorce Act and the Family Law Act.

The respondent disputed the application and filed a Divorce Certificate for the Bangladesh divorce issued on June 15, 2017. The respondent took the position that the parties were already divorced effective March 17, 2017, and that, since the appellant’s equalization claim was brought more than two years after the Bangladesh divorce, her property claims were barred by s. 7(3) of the Family Law Act.

The appellant denied that they were divorced in 2017, claiming that respondent’s evidence was fraudulent and, in the alternative, that he had not followed the proper procedure for a divorce in Bangladesh.

On March 30 and 31, 2021, two Consent Orders were issued. Among other things, the Consent Orders provided that (i) the Bangladesh divorce was valid in Bangladesh but should not be recognized for the purpose of Canadian law for public policy reasons; and (ii) the divorce in Canada would be granted, and the Ontario Court would have the jurisdiction to determine spousal support and equalization of property.

However, after the Consent Orders were signed, the respondent obtained evidence from witnesses who attended the wedding between the appellant and T. A. in 2020. The respondent brought a motion to set aside the Consent Orders and obtain an order declaring that the Bangladesh divorce was valid under the laws of Bangladesh and recognized in Canada. He took the position that the appellant’s claim that she had not married T. A. vitiated his consent to the Consent Orders and undermined her claim that the Bangladesh divorce was invalid.

The motion judge directed a hearing on the issue and ultimately found that the appellant married T. A. on May 24, 2020.

On December 2, 2022, the motion judge issued a final order setting aside the Consent Orders, and recognizing the Bangladesh divorce under Canadian law. The motion judge dismissed the appellant’s claim for spousal support and equalization.

The motion judge set aside the Consent Orders after previously unavailable evidence was adduced that the appellant had remarried in Bangladesh in 2020 (the “subsequent marriage”). Based on this new evidence, the motion judge found that the respondent’s consent to the prior Consent Orders was vitiated by fraud and that the Court would not have made those orders if it had knowledge of the subsequent marriage. The motion judge also held that the Bangladesh divorce was valid and recognized in Canada.

issues:

1.Did the motion judge err in law in setting aside the Consent Orders?

2. Did the motion judge err in law by recognizing the Bangladesh Divorce?

3. Did the motion judge make a palpable and overriding error in finding that the appellant acted in bad faith?

4. Did the motion judge err in awarding full indemnity costs?

holding:

Appeal dismissed.

reasoning:
  1. No.

The motion judge did not rely on the validity of the talaq divorce when setting aside the Consent Orders. The talaq divorce was not mentioned in that portion of his reasons, nor was there anything in the reasons to indicate that the validity of the divorce was a factor in setting aside the Consent Orders. Rather, it was the appellant’s misrepresentation that she never married T. A. which vitiated the respondent’s consent.

Second, the motion judge specifically rejected the suggestion that the respondent knew of the subsequent marriage at the time of the Consent Orders. The respondent suspected that a marriage had occurred in 2016. However, his consent was vitiated by the fact that at the time he agreed to the Consent Orders, there was no evidence that the appellant had remarried in 2020. Accordingly, the issue of whether she had remarried was not addressed.

The motion judge found that the appellant’s statement that she had never remarried was a misrepresentation that was intended to be acted upon and was in fact acted upon. There was no onus on the respondent to test the accuracy of her deliberate misrepresentation.

Finally, whether the subsequent marriage was valid was irrelevant. The motion judge specifically found that the second ground for setting aside the Consent Orders, namely that there were facts discovered after the Consent Orders were made, applied regardless of whether the appellant had, in fact, remarried. It was enough that there was credible evidence to this effect. The motion judge would not have approved the Consent Orders had he been aware of such evidence at the time the Consent Orders were made.

  1. No.

There was no dispute that there was a real and substantial connection to Bangladesh. The appellant was married, had her children and was living in Bangladesh until after she received the respondent’s divorce notice. The divorce is therefore presumptively valid under s. 22(3) of the Divorce Act and the onus fell on the appellant to prove that an exception applied: Abraham, at para. 15. In this case, the appellant relied solely on the public policy exception.

However, the Court disagreed that the recognition of the Bangladesh divorce was contrary to public policy. There was no issue that the divorce was obtained by fraud or that there was a denial of natural justice. The only issue was whether recognition of the Bangladesh divorce constituted a breach of public policy.

The appellant described the divorce as a “bare” talaq divorce that was not granted by a competent authority, and over which there was no state oversight. She therefore claimed it was against Canadian public policy. She was correct that “bare” talaq divorces are not recognized as valid in Canada. However, not all talaq divorces are “bare” talaq divorces.

Caselaw establishes that the procedure in s. 7 of the Bangladesh Ordinance removes the “bare” nature of a talaq divorce, satisfies the requirements of s. 22 of the Divorce Act and does not offend Canadian public policy.

Furthermore, the appellant’s own expert advised that the Bangladesh Ordinance removes the unilateral nature of the talaq and provides the wife with an opportunity to participate.

The requirements in the Bangladesh Ordinance that the wife be given notice, and the 90-day waiting period, alleviate the public policy concerns usually associated with “bare” talaq divorces. “Bare” talaq divorces continue to be unenforceable if obtained in Canada, however it would be contrary to the principle of comity to refuse to recognize any talaq divorce simply because it follows a different legal tradition than our own.

The Bangladesh divorce was granted after a 90-day period to enable the parties to consider reconciliation and after delivery of a copy of the Divorce Notice to the Mayor of Brahmanbaria. The divorce was recognized by the Registrar and the expert evidence of all three experts for both parties was that the Bangladesh divorce complied with s. 7 of the Bangladesh Ordinance.

  1. No.

It was an error in law to consider the appellant’s bad faith in deciding whether the divorce was contrary to public policy. As discussed above, the public policy exception is aimed at the foreign law, not the facts of the case: Beals, at paras. 71 and 75.

However, given that the divorce was not contrary to public policy, this error had no effect on the outcome of the case. Once it was established that the foreign divorce met the conditions in s. 22 of the Divorce Act, it was presumptively valid: Abraham, at para. 15. The public policy exception was only available to rebut that presumption. Where, as here, a divorce was presumptively valid, and there were no considerations weighing against this presumption.

Further, it was not strictly necessary to deal with this issue save to the extent it affected the appellant’s request for leave to appeal costs. Regardless, the motion judge’s findings on bad faith related solely to the fact that the appellant knew she had remarried and deliberately misrepresented this fact in the litigation, which was well-supported on the evidence.

  1. No.

Given the respondent’s success on the motion and the motion judge’s findings that the appellant conducted the litigation in bad faith and made numerous unfounded allegations of fraud, the appellant failed to meet the high threshold for obtaining leave to appeal the motion judge’s costs award.


Ihnatowych Estate v. Ihnatowych, 2024 ONCA 142

[Lauwers, van Rensburg and Thorburn JJ.A.]

Counsel:

A. McKague and C. Morano, for the appellants, Alexander Erik de Berner, Darwin de Berner and Parker de Berner, minors by their Litigation Guardian, Alexander Erik de Berner

A. Mayeski, K.J. Hagman and K. Watters for the respondent,
Ulana Olha Gorgi in her capacity as Estate Trustee of the Estate of John Ihnatowych

Keywords: Wills and Estates, Wills, Interpretation, Equitable Remedies, Rectification, Re Estate of Blanca Esther Robinson, 2010 ONSC 3484, The Bank of Nova Scotia Trust Company v. Haugrud, 2016 ONSC 8150, Daradick v. McKeand Estate, 2012 ONSC 5622, Hofman v. Lougheed et al., 2023 ONSC 3437, Canada (A.G.) v. Fairmont Hotels Inc, 2016 SCC 56, Johnson v. Johnson, 2022 ONCA 682, Gironda v. Gironda, 2013 ONSC 4133, Spence v. BMO Trust Co., 2016 ONCA 196, Lipson v. Lipson (2009), 52 E.T.R. (3d) 44 (Ont. S.C.)

facts:

J.I. died and the appellant A.E.d.B deposed that he was one of J.I.’s children from a relationship prior to J.I.’s marriage. A.E.d.B claimed a residuary interest in J.I.’s estate as his biological son and therefore J.I.’s “issue” under the “Residue Clause” in J.I.’s will (the “Will”). He also claimed that his sons were J.I.’s biological grandchildren and therefore beneficiaries of his estate under the “Grandchildren Clause” in the Will. U.O.G. and M.I. are the two children of John’s marriage. U.O.G. is the sole Estate Trustee of J.I.’s estate.

It was uncontested that A.E.d.B was J.I.’s biological son. A.E.d.B had not met J.I. at the time the Will was made but first met J.I. in person in 2014, and in the years that followed J.I. would visit from time to time. J.I. executed his final Will in 2009. The Will provided, in clause VI.1, that ten percent of the residue of his estate was to be distributed among his “grandchildren” alive at the time of his death in equal shares (the “Grandchildren Clause”), and in clause VI.4, that the balance of the residue was to be distributed among his “issue” alive at the time of his death in equal shares (the “Residue Clause”).

In a handwritten note regarding the Will, J.I. made numerous specific references to U.O.G. and M.I. but none to A.E.d.B. The lawyer who drafted the Will also stated that J.I. told him that he wished to leave his estate only to U.O.G. and M.I. and their children.

U.O.G.  brought an application to rectify the Will to name her and M.I. as J.I.’s children under the Residue Clause and the Grandchildren Clause, with the result that the appellants, A.E.d.B and his children, would be excluded as beneficiaries.

The application judge granted the rectification holding that the wording in the Will did not accurately carry out J.I.’s instructions.

issues:

Did the application judge make an unprecedented application of the equitable doctrine of rectification?

holding:

Appeal dismissed.

reasoning:

No.

The Court held that the application judge correctly invoked the third factor in Re Estate of Blanca Esther Robinson to enable rectification, that is, where the testator’s instructions have not been carried out. This had been done in other cases and the application judge’s application of the equitable doctrine of rectification was not unprecedented.

On the application, the parties agreed on the legal principles applicable to rectification of a will as set out in Re Estate of Blanca Esther Robinson.

Robinson, at paras. 24-25, provides that rectification is primarily concerned with “preventing the defeat of the testamentary intentions due to errors or omissions by the drafter of the will” and may be employed, “where the testator’s instructions have not been carried out”. The court in that case, at para. 24, listed three circumstances in which a court will rectify a will where there is no ambiguity on the face of the will, and the testator has reviewed and approved the wording:

  1. Where there is an accidental slip or omission because of a typographical error or clerical error;
  2. Where the testator’s instructions have been misunderstood; or
  3. Where the testator’s instructions have not been carried out.

On appeal, the appellants claimed the application judge erred by failing to apply the new test for rectification set out in Canada (A.G.) v. Fairmont Hotels Inc.

The appellants also took issue with the quality of evidence that the application judge accepted. They claimed that on the standard set out in Fairmont Hotels, there should be a presumption of validity and therefore clear evidence that leaves the court with little to no doubt about a mistake in order to rebut that presumption. The Court disagreed that Fairmont Hotels sets out a new and different test for rectification of a will.

In this case, the question was not whether the Will had the intended legal effect – that is that J.I.’s biological offspring would not be included as beneficiaries notwithstanding the wording that was used. Rather, rectification was available only on the basis that the Will did not conform to J.I.’s instructions, that it did not accurately set out the specific bequests that J.I. communicated to his lawyer.

However, given the parties’ agreement that Robinson provided the correct test for rectification of a will and the fact that applying the test in Fairmont Hotels would not require a different analysis or result, the Court did not give effect to this argument on appeal. The Court found that the application judge made no unprecedented application of the equitable doctrine of rectification. Rather, he applied the correct test and considered the evidence required to seek rectification of the Will.

As for the appellants’ argument about the evidence and standard of proof required, there was no question that extrinsic evidence may be admitted to establish an error in a will when the evidence comes from the solicitor who drafted the will, made the error and can testify to the testator’s instructions. The application judge correctly applied this standard and properly assessed the evidence against it.

The Court held that the evidence here met the test articulated in Fairmont Hotels of showing a “high degree of clarity, persuasiveness and cogency” such that rectification was appropriate. First, the application judge found that J.I.’s instructions regarding his Will were clear. Second, the application judge accepted the lawyer’s admission that he did not carry out J.I.’s instructions in the drafting of J.I.’s Will in that neither the Grandchildren Clause nor the Residue Clause reflected J.I.’s intention that his estate go only to U.O.G. and M.I. and their children. Third, while the standard form will contemplated an equal distribution of the residue of his estate into as many equal shares as he had children who survived him and their children, there was evidence that J.I. specifically intended to include U.O.G. and M.I. but no evidence that he specifically intended to include A.E.d.B and his children in his estate plan.

Because the application judge’s conclusions were rooted in the evidence adduced on the application, they were entitled to appellate deference. The Court saw no palpable and overriding error in the motion judge’s application of the evidence to the test for rectification of a will. Moreover, there was no evidence that the application judge confused will rectification with will interpretation. The application judge also correctly applied Lipson v. Lipson when considering the deletion and addition of words to correct an error in a will, by considering whether the Will reflected J.I’s intentions, reading the Will as a whole and in light of the surrounding circumstances.


Castillo v. Xela Enterprises Ltd., 2024 ONCA 141

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

Counsel:

B. Greenspan and M. Biddulph, for the appellant

M. Jilesen and D. Knoke, for the respondent KSV Advisory Inc., the Receiver of Xela Enterprises Ltd.

Keywords: Civil Procedure, Orders, Enforcement, Equitable Receivers, Contempt, Costs, Rules of Civil Procedure, r. 60.11, Libman v. The Queen, [1985] 2 S.C.R. 178, Canada (Human Rights Commission) v. Canada Liberty Net, [1998] 1 S.C.R. 626, R. v. Greco (2001), 159 C.C.C. (3d) 146 (Ont. C.A.), leave to appeal refused, [2001] S.C.C.A. No. 656., R. v. Barra, 2021 ONCA 568, R. v. Zingre, [1981] 2 S.C.R. 392, Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, Tolofson v. Jensen, [1994] 3 S.C.R. 1022, Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897, Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663, Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574, Echostar Communications Corp v. Rodgers, 2010 ONSC 2164, Sussex v. 3933938, 2003 CanLII 49336 (Ont. Sup. Ct.), Manis v. Manis (2001), 55 O.R. (3d) 758 (Ont. C.A.)

facts:

M.C., the appellant’s sister, obtained a judgment against the appellant, their father (deceased), and Xela Enterprises Ltd. In connection with enforcing her judgment, M.C. sought the appointment of a receiver over the property and assets of Xela, which order was granted by the Commercial List judge. The appellant was found and declared to be in civil contempt of the order appointing a receiver. He was sentenced to 30 days imprisonment and ordered to pay costs of the contempt proceedings on a full indemnity basis in the amount of $563,485.00. He appealed all three orders.

issues:

The appeal of the contempt finding

  1. Did the motion judge err in law by holding that the court had territorial jurisdiction to find the appellant in contempt based on his Declaration that was not made in Canada but in Guatemala?
  2. Did the motion judge err in law by concluding that the appellant was in contempt by finding that the appellant breached paragraphs 3 and 9 of the Appointment Order?

The Sentence Appeal

  1. Was the sentence of 30 days in prison unfit and outside the range, and did the motion judge err by failing to consider a conditional or intermittent sentence?

The Costs Appeal

  1. Did the motion judge make factual and legal errors that warrantted the intervention of the Court in the award of full indemnity costs?
holding:

Appeal dismissed.

reasoning:

The Contempt Appeal

  1. No.

The real and substantial link test broadened the inquiry from looking only at the location of the actions of the alleged contemnor, to the connections or links between the impugned conduct and Ontario. The test is not whether the contemnor has links to Canada, but whether the breach of the law or the court order has a “real and substantial link” to Canada. This concept was fully explained and applied by the Court in R. v. Greco, and more recently in R. v. Barra. A state cannot enforce its domestic laws in another state without the consent of that state. However, the principle of territoriality does not prevent a state from enacting laws or issuing court orders that are enforceable locally, but that govern conduct outside the state. A court in Canada may issue a probation order, enforceable in Canada, that binds the conduct of probationers both in Canada and outside the country.

Applying Libman, Greco and Barra, the motion judge made no error in focusing on the connections to Canada, rather than the physical location of the appellant when he made the Declaration. She correctly found a real and substantial link based on the significant connections between the swearing of the Declaration and the province of Ontario.

Of particular significance was that no country but Canada was concerned with enforcing the Ontario Appointment Order. In addition, as in Barra, there was clearly a benefit to the appellant in Ontario in undermining and interfering with the Receiver’s ability to obtain the information it needed about LISA and Gabinvest in order to do its job of enforcing the Ontario judgment against Xela.

The Court agreed with the motion judge that, read as a whole, the Order had no territorial limitation and applied to the persons named in the Order whether in Canada or elsewhere. There was no evidence offered that the Receiver needed any order or other legal authority in Panama or Guatemala to hold the corporate meetings it held or to take any other steps under the authority of the Appointment Order.

The doctrine of international comity is that “the Courts of one jurisdiction will give effect to the laws and judicial decisions of another jurisdiction, not as a matter of obligation but out of mutual deference and respect.” The appellant was free to engage the Panamanian legal system as long as he abided by the provisions of the Order. The contemptuous conduct was making the Declaration to be used to initiate a criminal complaint against the Receiver without seeking leave of the court in Ontario, as required by the Appointment Order. The evidence the appellant provided was misleading, incomplete, and untruthful regarding his status with Xela and failed to reveal the appointment of the Receiver.

  1. No.

The motion judge accurately articulated the three criteria for a finding of civil contempt: the order that is alleged to have been breached must be clear and unequivocal, the alleged contemnor must have knowledge of the order, and he must have intentionally breached the order.

The Appointment Order was clear and unequivocal. It gave the Receiver the exclusive authority to execute documents in relation to the Property of Xela (para. 3(h)), to exercise shareholder rights of Xela (para. 3(q)), and if exercising that authority, others including the appellant and Xela are excluded from doing so and they are precluded from interfering with the Receiver’s actions. (para. 3’s concluding words). By calling and holding the shareholders’ meeting of Gabinvest, the Receiver exercised its exclusive authority under paras. 3(h) and (q). As the motion judge found, by signing the Declaration as President of Xela, sole shareholder of Gabinvest, the appellant was purporting to exercise Xela’s shareholder’s rights, and did so by signing a document on behalf of Xela, contrary to paras. 3(h) and (q) and the exclusivity prohibition.

The Sentence Appeal

  1. No.

The motion judge gave full, clear and compelling reasons for imposing a 30 day period of incarceration as the only fit sentence in a case where the contemptuous conduct was egregious and constituted an attempt to undermine and thwart the actions of a court-appointed officer. The appellant’s position that he had done everything he could to purge his contempt and to have the Criminal Complaint and investigation withdrawn by the Panamanian authorities was completely rejected by the motion judge as insincere and disingenuous. The appellant’s conduct was “blatant, deliberate, wilful and …unrepentant”, not just accidental or misguided.

The Court had been provided with fresh evidence that the Panamanian Prosecutor’s office had closed the investigation on the basis that “the facts complained are not considered the crime of falsehood accused.” Therefore, there was nothing further that could be done to purge the contempt by withdrawing the complaint.

The motion judge noted that an apology by the contemnor can also be a mitigating factor on sentencing, but the appellant never apologized or expressed remorse.

The Costs Appeal

  1. No.

The appellant argued that the costs were awarded to compensate for a five-year long, hotly contested, complex action, while it was a simple, two-day contempt motion. The motion judge had the best knowledge of how long or complex the proceeding was and how the conduct of each side contributed to the length and complexity. Her findings were entitled to the deference of the Court.

The motion judge justified her decision based on the extremely serious, egregious wrongdoing by the appellant which “demonstrated an astounding lack of respect for this court.”  She determined, as a matter of fairness, that no costs of the contempt proceeding should be born by the only source of funding, the unpaid judgment creditor, M.C. The motion judge observed that the appellant should have expected that the Receiver’s costs would be higher than his counsel’s because of the heavy onus of proof on the Receiver, but did not say that the Receiver was entitled to elevated costs because of that onus.


Steinberg v. Adderley , 2024 ONCA 167

[Tulloch C.J.O., Hourigan and Zarnett JJ.A.]

Counsel:

R. Egit and H. Ahmed, for the appellant BridgePoint Financial Services Limited Partnership 1

M. Stoiko, for the respondents Rudolf Steinberg, Jakob Steinberg and Amanda Steinberg, minors by their Litigation Guardian, Rudolf Steinberg

R. Skiffington, for the respondent Pamela Adderley

Keywords: Contracts, Debtor-Creditor, Litigation Funding Agreements, Defences, Unconscionability, Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2, Uber Technologies Inc. v. Heller, 2020 SCC 16, Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75

facts:

The respondent, R.S., was injured while a passenger in a motor vehicle involved in an accident. He pursued claims as a result. On the advice of his then legal counsel, R.S. obtained five loans, totalling $65,500, from the appellant, BridgePoint Financial Services Limited Partnership 1 (“BridgePoint”). The loans were to fund expenses while R.S. litigated claims arising out of the accident. The loans bore compound interest at rates between 20% and 24%. The motion judge found that the loans were not contingent on success in the litigation, but that BridgePoint was given a security interest in any settlement funds. R.S. also signed an Irrevocable Authorization and Direction with each loan that required any new counsel to be bound by the provisions of the loan agreement for the balance owing on the loans together with any accrued interest.

issues:

Did motion judge err in reducing the amount of loans and accrued interest payable by R.S. by $75,000?

holding:

Appeal allowed.

reasoning:

Yes.

The Court held that once the motion judge found that the loan transactions were not unconscionable, there was no basis to vary the interest owing. The Unconscionable Transactions Relief Act (“UTRA”), which was the only basis upon which R.S. relied on the motion, did not give the court the power to vary interest charges without a finding that the transaction was “harsh and unconscionable”.

R.S. argued, on appeal, that the reduction could be justified based on the equitable doctrine of unconscionability. The there were two problems with this argument. First, that was not the basis on which R.S. brought his motion. Second, the doctrine requires a finding of unconscionability, which the motion judge did not make. The motion judge’s finding that the transactions were not unconscionable because R.S. had independent legal representation and signed acknowledgments confirming his understanding of how interest would accrue was supported by the record and was entitled to deference.

Additionally, delay in the litigation due to COVID-19 could not be an independent basis to reduce interest owing under loan agreements that had been found by the motion judge to be “contractually sound”. Allowing delay in the litigation due to COVID-19, even if in one sense “legitimate delay”, to justify a reduction of contractual interest simply rewrites the loan agreements. Courts are not generally empowered to rewrite contracts or relieve parties against the consequences of an improvident bargain.


Markham (City) v. Ross , 2024 ONCA 161

[van Rensburg, Roberts and Gomery JJ.A.]

Counsel:

A. Bouchelev, for the appellant

C. Barnett and A. Rintoul, for the respondent

Keywords:  Contracts, Easement Agreements, Municipal Law, By-Law Enforcement, Heritage Buildings, Ontario Heritage Act, R.S.O. 1990, c. O.18, Provincial Offences Act, R.S.O. 1990, c. P.33, Building Code Act, 1992, S.O. 1992, c. 23, Fire Code and Fire Protection and Prevention Act, 1997, S.O. 1997, c. 4, Marshall v. Bernard Place Corp. (2002), 58 O.R. (3d) 97 (C.A.)

facts:

M.R. appealed a judgment granting the City of Markham’s application to enforce various rights under a Heritage Easement Agreement registered on the title of M.R.’s property in Unionville, Ontario. The Agreement was entered into by the City and previous owners of the property and notice of the easement was registered on title in 2004 under ss. 37(3) of the Ontario Heritage Act. Under the Agreement, the owner is prohibited from making certain types of alterations to the property without the City’s prior written approval.

Beginning in the spring of 2021, the appellant began cutting down trees and regrading his backyard. He then laid a 60 foot by 80-foot concrete pad for a hockey rink and installed a cabana made from one or more repurposed shipping containers. All these steps were taken without the City’s authorization, and before the appellant sought permits required for the work. When the City was alerted to the appellant’s actions, it sent him a series of notices advising him that he was in breach of the Agreement and municipal by-laws. It also gave him verbal warnings. The appellant did not restore the property to its original state, although he did plant some trees. Over this same period, the appellant was charged under the Provincial Offences Act and convicted of violating the City’s tree preservation by-law, the Building Code Act and the Fire Code and Fire Protection and Prevention Act.

issues:

Did the application judge fail to interpret the appellant’s obligations under s. 2.8 in the context of the Agreement’s objectives, or to meaningfully consider evidence that the City’s reaction to the work on the property was based not on a genuine desire to preserve the heritage aspects of his property but was instead motivated by political or other purposes?

holding:

Appeal dismissed.

reasoning:

No.

The Court deferred to the application judge’s assessment of the evidence, as there was no palpable or overriding error.

The appellant contended that the application judge’s decision set a dangerous precedent because she found that the Agreement gave the City the sole discretion to decide if the appellant had breached his obligations and whether any such breach had been sufficiently remedied. The Court was satisfied that this case did not establish a precedent allowing the City to exercise an unfettered discretion to interfere with a property owner’s rights. The outcome was driven by the specific facts of this case. The appellant violated the Easement Agreement on any reasonable reading of s. 2.8. There was no evidence that the City acted capriciously, arbitrarily, or in bad faith. The application judge found that the appellant continued to violate the Agreement despite receiving notices and verbal warnings and being charged and convicted of breaching building code, fire code, and municipal by-law requirements. She found the situation was so exceptional that it warranted the granting of both declaratory relief and a permanent injunction. The Court therefore dismissed the appeal.


Abaxx Technologies Inc. v. Pasig and Hudson Private Limited, 2024 ONCA 164

[Gillese, Thorburn and Gomery JJ.A.]

Counsel:

M. Z. Tufman, for the appellants

B. Brooksbank and N. Tawdy for the respondents, Pasig and Hudson Private Limited, C.W.K. and S.D.

J. Percival and A. Ostermeier for the respondents, Green Tiger Markets Pte. Ltd. and J.H.K.

Keywords: Breach of Contract, Breach of Duty of Good Faith and Fair Dealing, Breach of Fiduciary Duty, Conspiracy, Breach of Confidence, Fraud, Jurisdiction, Real and Substantial Connection, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353, British American Tobacco P.L.C. v. Ontario, [2013] S.C.C.A. No. 327, Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, Truscott v. Co-Operators, 2023 ONCA 267

facts:

A dispute arose from work the respondent Pasig and Hudson Private Limited (“P & H”) and the individual respondents did for the appellants or companies controlled by them. The only contract filed was a Master Services Agreement between P & H and Abaxx Exchange Pte. Ltd. dated April 10, 2019 (the “Agreement”). J.K. entered into two agreements with entities related to Abaxx: an advisory consulting agreement signed on October 1, 2018, and an employment agreement to act as the CEO of Abaxx Singapore dated November 19, 2018. In June 2019, J.K. terminated both agreements claiming he had not been paid.

In their Statement of Claim, the appellants alleged that the respondents breached their fiduciary duties, conspired to misappropriate intellectual property, inventions, and corporate opportunities related to energy trading in the Philippines and elsewhere, breached their duty of confidence and good faith, misappropriated corporate information, and submitted fraudulent invoices. The appellants claimed Ontario was the governing law and the jurisdiction for the adjudication of any disputes.

The respondents successfully brought a motion dismissing the action for want of jurisdiction. The appellants appealed.

issues:

Did the motion judge err in dismissing the action on the basis that Ontario had no jurisdiction over the claim?

holding:

Appeal dismissed.

reasoning:

No.

The motion judge correctly identified the test to establish the requisite jurisdictional connection to Ontario as set out in Club Resorts Ltd. v. Van Breda, namely that (i) the defendant is domiciled or resident in the jurisdiction, (ii) the defendant carries on business in the jurisdiction, (iii) the tort was committed in the jurisdiction, or (iv) a contract connected with the dispute was entered into in the jurisdiction. He noted that the moving party must demonstrate a “good arguable case” on the basis of the pleadings and/or the evidence filed on the jurisdiction motion. The presumption of jurisdiction arising from these factors may be rebutted by showing that there is at most, a weak relationship between the subject matter of the litigation and the proposed forum.

The Court saw no error in the motion judge’s articulation of the test, his application of the test to the evidence, or his findings of fact. The appellants had the opportunity to lead evidence to challenge the rebuttal of the presumption of jurisdiction but failed to do so. The Court therefore agreed with the motion judge that the appellants did not demonstrate that there was a “good arguable case” made out on the pleadings and or evidence filed on the motion. Nor did the demands of fairness, efficiency and justice augur in favour of the court in Ontario assuming jurisdiction over this claim, as the appellants did not demonstrate that Ontario should assume jurisdiction over any of the parties or any of the claims.

The Court did not agree that the motion judge improperly embarked on a “disguised, unrequested and premature Rule 20 and/or Rule 21 motion.” The threshold posed by a “good arguable case” is commensurate with a genuine issue to be tried and is a higher threshold than the plain and obvious standard applied on a Rule 21 motion.


Penate v Martoglio , 2024 ONCA 166

[Tulloch C.J.O., Lauwers and Paciocco JJ.A]

Counsel:

G. MacKenzie, B. MacKenzie, H.Y. Elmaleh, and J. Syrtash, for the appellants

C.B. Kuehl, A. Patenaude, and C. Moore, for the respondents A.M., G.L., and M.B. and D.B. as Executors of the Estate of D.M.

K. Byrick and V. Sjolin, for the respondents St. Michael’s Hospital, S.K-F., and M.G.

Keywords: Torts, Negligence, MedMal, Civil Procedure, Jury Trials, Discharge of Jury, Procedural and Natural Justice, Sufficiency of Reasons for Decision, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 108, OZ Merchandising Inc. v. Canadian Professional Soccer League Inc., 2019 ONSC 3882, King v. Colonial Homes Ltd., [1956] S.C.R. 528, Kempf v. Nguyen, 2015 ONCA 114, R. v. Chouhan, 2021 SCC 26, Hunt (Guardian of) v. Sutton Group Incentive Realty Inc. (2002), 60 O.R. (3d) 665 (C.A.), St. Marthe v. O’Connor, 2021 ONCA 790, Vanderbeke v O’Connor, 2013 ONCA 665, Hamstra (Guardian ad litem of) v. British Columbia Rugby Union, [1997] 1 S.C.R. 1092, Landolfi v. Fargione (2006), 79 O.R. (3d) 767 (C.A.), Brochu v. Pond (2002), 62 O.R. (3d) 722 (C.A.), Groen v. Harris, 2010 ONCA 621, Placzek v. Green, 2012 ONCA 45, Lawson v. Lawson (2006), 81 O.R. (3d) 321 (C.A.), R. v. Sheppard, 2002 SCC 26, R. v. G.F., 2021 SCC 20, Bruno v. Dacosta, 2020 ONCA 602, Canadian Broadcasting Corporation Pension Plan v. BF Realty Holdings (2002), 214 D.L.R. (4th) 121 (Ont. C.A.), R. v. R.E.M., 2008 SCC 51, R. v. Sahdev, 2017 ONCA 900, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, R. v. Dinardo, 2008 SCC 24, Ghiassi v. Singh, 2017 ONSC 6541

facts:

The appellants sued the respondent hospital, physicians, and nurses for medical malpractice after the child appellant suffered a severe brain injury around the time of his birth. The appellants chose a jury trial. At the end of the trial, the trial judge decided to take away the appellants’ right to a jury trial and tried the case herself. She then ruled against the appellants and determined that they had failed to prove medical malpractice.

The trial judge released five-paragraph reasons for her decision to discharge the jury. Most of the decision comprised a block quote of the legal standard concerning counsel’s addresses to the jury from OZ Merchandising Inc. v. Canadian Professional Soccer League Inc. The reasons attached the respondents’ list of objections but did not explain which challenged comments were prejudicial and why. Despite this, in a paragraph that is an unattributed block quote from OZ Merchandising, the trial judge concluded that the appellants’ counsel made many improper comments that were cumulatively impossible to correct and required discharging the jury because any corrective instruction would have been “unwieldy and ineffective.”

The trial judge later dismissed the action. In her reasons for judgment, she found that the respondents neither caused the brain injury nor, aside from the doctor’s failure to document her actions, breached the standard of care. According to a chart provided by the appellants, whose accuracy the respondents did not seriously contest, more than 90% of her reasons were copied verbatim or substantially verbatim from the respondents’ submissions.

issues:

Did the trial judge err in not providing adequate reasons for her decision to take away their right to jury trial?

holding:

Appeal allowed.

reasoning:

Yes.

Subject to certain exceptions that were not at issue here, civil litigants in the Superior Court of Justice have a statutory right to trial by jury. Because of this right’s substantive nature and importance, trial judges should not lightly interfere with it; discharging the jury is a drastic remedy of last resort.

A trial judge’s decision to discharge a civil jury to remedy prejudicial conduct on the part of counsel during a trial is discretionary. The Court has adopted a two-step test to guide trial judges’ exercise of discretion. The trial judge must determine that: (1) counsel’s comments prejudiced the opposing party, and (2) the prejudice was so severe that issuing a corrective instruction to the jury would not cure it. In most cases, discharging the jury is not appropriate because the trial judge can instead issue an instruction correcting the prejudicial statements.

Appellate deference to the trial judge’s decision to discharge the jury requires adequate reasons. Adequate reasons are not merely a precondition for deference but are also a basic entitlement of every litigant. Providing adequate reasons also respects the dignity of losing litigants by demonstrating that the trial judge has considered their arguments and taken the time to explain why they lost, thereby increasing the likelihood that losing litigants will feel that they were treated fairly and appropriately. Reasons must explain why trial judges reached the decisions they did by addressing the parties’ key arguments and the key, live issues in the case and making any necessary findings concerning those issues.

The Court held that the trial judge in this case did not adequately explain her decision to take away the appellants’ right to a jury trial. While the trial judge concluded that the appellants’ counsel made improper comments to the jury that could not be corrected, she neither explained which comments were improper and why, nor why directing the jury to disregard any improper comments would have been insufficient. The trial judge also did not address the appellants’ key arguments concerning prejudice. The trial judge’s bare conclusion that the closing contained many prejudicial comments did not provide responsive reasons demonstrating that she listened to the appellants’ arguments.

The Court did not agree with the respondents that the Court could salvage the trial judge’s decision by reviewing the record because the record did not sufficiently clarify the decision or make it comprehensible.

The trial judge’s inadequate reasons prevented the Court from meaningfully reviewing whether her decision to discharge the jury was proper. Because trial by jury is a fundamental right and the Court was not convinced that the jury would have inevitably rejected the appellants’ medical malpractice claims as the trial judge did, the Court ordered a new trial.



SHORT CIVIL DECISIONS

Yan v. Hutchinson, 2024 ONCA 158

[Feldman, Lauwers and Roberts JJ.A.]

Counsel:

N.X.Y, acting in person

A. LeDrew and C. Breukelman, for the respondents, Greg Hutchinson and Shanna Christine Yee

G. Hnatiw and L. Snowdon, for the respondents, Rebecca Catherine Durcan, Maya Pearlston, Erica Richler and Robin Kenneth McKechney

I. Sinke, for the respondent, Edward Lawrence Marrocco

Keywords: Costs

One Clarendon Inc. v. Finlay , , 2024 ONCA 153

[Feldman, Benotto and Roberts JJ.A.]

Counsel:

K.F. and J.F., appellants acting in person

S. Sood and M. Helfand, for the respondent

Keywords: Real Property, Residential Tenancies, Rent, Arrears, Civil Procedure, Costs

Bouragba v. Conseil des écoles publiques de l’Est de l’Ontario , 2024 ONCA 140

[Lauwers, Paciocco and Thorburn JJ.A.]

Counsel:

A.B., acting in person

G. Therrien, for the moving parties Ottawa-Carleton District School Board and Kevin Gilmore

E. Mogil, for the moving parties Paul Marshall, Richard Lewko and Ontario College of Teachers

J. Claydon, for the moving parties Ontario Ministry of Education and Denis Chartrand

P. Marshall, for the moving parties Conseil scolaire de district catholique de l’Est de l’Ontario, Conseil des écoles publiques de l’Est de l’Ontario, and Ottawa Catholic School Board

Keywords: Civil Procedure, Amending Pleadings, Appeals, Perfection, Vexatious Litigation, Rules of Civil Procedure, R 2.1.01, 61.06, 61.13

Molani Estate, 2024 ONCA 163

[Tulloch C.J.O., Hourigan and Zarnett JJ.A.]

Counsel:

T. Arndt, for the appellants

P. Mann and A. Ottaviano, for the respondents The Estate of YYY
and XXX

V. Pileggi, for the respondent Ukraine International Airlines PJSC/Ukraine International Airlines

Keywords: Costs

Geng v. Cao, 2024 ONCA 169

[Pepall, George and Dawe JJ.A.]

Counsel:

R. He, for the appellant

J. Li, for the respondent

Keywords: Family Law, Civil Procedure, Summary Judgment, Fresh Evidence, Palmer v The Queen, [1980] 1 SCR 759


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