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

Good afternoon,

Following are the summaries for the few civil decisions released by the Court of Appeal this week.

Topics covered included trespass by an owner’s invitees over lands that were subject to a right of way granted by the owner to the plaintiff, stay pending appeal in the context of the ongoing administration of the residential schools settlement, appealing a judgment for breach of a commercial lease on the basis of fresh evidence (the landlord re-letting the property shortly after judgment, resulting in over-compensation), mental distress damages for negligence claims, jurisdiction and attornment in a custody dispute, and abuse of process in the context of requesting a reconsideration of an appeal. Continue Reading ONTARIO COURT OF APPEAL SUMMARIES (SEPTEMBER 10 – 14, 2018)

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

Good afternoon.

With this edition of our summaries of the civil decisions of the Court of Appeal for Ontario, I am pleased to be launching our firm’s newly redesigned blog, now known as “Blaneys Appeals”.

As you will see, our blog features a brand new look, more information and a fully responsive layout for all platforms (desktop, laptop, tablet or smartphone). All of our content dating back to the blog’s inception in June 2014 has been imported into our new site. We hope you will find the new blog easier to navigate and that you will be able to search and find previously summarized decisions more quickly.

Turning then to our summaries for the week, I would first like to congratulate our partner, Colin Empke, on his successful appeal on behalf of our client in Nasr Hospitality Services Inc. v Intact Insurance. In yet another decision as to the meaning of “appropriate means” under subsection 5(a)(iv) of the Limitations Act, 2002, the Court reiterated that settlement negotiations between parties do not toll the limitation period within the meaning of that subsection. The Court set aside the motion judge’s decision and dismissed the action against our client as being out of time.

Continue Reading ONTARIO COURT OF APPEAL SUMMARIES (SEPTEMBER 4 – 7, 2018)

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

Good afternoon,

Following are the summaries for this week’s civil decisions of the Court of Appeal for Ontario.

This was anti-SLAPP week at the Court of Appeal. In 1704604 Ontario Ltd. v. Pointes Protection Association, the Court of Appeal addressed in detail the Protection of Public Participation Act, 2015, which provides defendants to a lawsuit with the option of a pre-trial motion to dismiss the lawsuit on the basis that it constitutes a Strategic Lawsuit Against Public Participation (SLAPP). In this case, 170604 Ontario Ltd. brought an action against Pointes Protection Association and others for breach of contract stemming from a settlement, which allegedly prohibited Pointes and the other defendants from advancing certain claims in subsequent judicial proceedings. Analyzing both the Act in general and the relevant provisions (mainly s. 137.1), the Court found that the plaintiff failed, on grounds of insufficient merit to its lawsuit and on grounds of public interest, to satisfy the court that its action should continue.  The Court’s detailed analysis of the two-part test under section 137.1 of the Act will invariably inform the case law on this section as it develops. Continue Reading ONTARIO COURT OF APPEAL SUMMARIES (AUGUST 27 – 31, 2018)

TABLE OF CONTENTS | CIVIL DECISIONS |  SHORT CIVIL ENDORSEMENTS| CRIMINAL DECISIONS

Good afternoon,

Following are the summaries for this week’s civil decisions of the Court of Appeal for Ontario. There was one noteworthy decision released relating to Bernard Madoff’s Ponzi scheme. Almost 10 years have passed since Madoff’s confession!

In Fairfield Sentry Limited v. PricewaterhouseCoopers LLP, several Fund companies that invested heavily into Madoff’s scheme brought an action against auditors PWC, asserting that PWC was negligent in performing the audits of the Funds’ financial statements for the two years prior to Madoff’s fraud confession in December 2008.  The Funds alleged that PWC should have uncovered the Ponzi scheme and its failure to do so resulted in damages to the Funds of $2.5 billion. PWC brought a successful motion for summary judgment dismissing the action (note PWC assumed liability for the purposes of the motion and the only issue was whether there was a genuine issue for trial regarding damages). The Court of Appeal dismissed the Funds’ appeal and found that the motion judge, who was faced with several expert opinions ranging from accounting and insolvency to United States law, correctly applied the facts and evidence of this case to the test established in Livent Inc. v Deloitte & Touche for calculating damages.

Continue Reading ONTARIO COURT OF APPEAL SUMMARIES (AUGUST 20 – 24, 2018)

TABLE OF CONTENTS | CIVIL DECISIONS | SHORT CIVIL DECISIONS

Good afternoon,

There were only two substantive civil decisions from the Court of Appeal this week.

In Toure v Canada (Public Safety & Emergency Preparedness), the Court of Appeal dismissed an appeal and allowed a cross-appeal from a decision that denied the appellant/applicant – who was a detainee at the Central East Correctional Centre pending his removal from Canada – his request to be released from immigration detention pursuant to the Habeas Corpus Act, but found the government to have breached the applicant’s s. 12 Charter rights. As relief for this breach, the applicant was ordered transferred to the Toronto Immigration Holding Centre.  The Court of Appeal found that the application judge made no errors either in law or in fact with respect to the issues around Habeas Corpus, but had made erroneous findings of fact with respect to the s.12 Charter analysis.

Continue Reading COURT OF APPEAL SUMMARIES (AUGUST 13 – 17)

Good afternoon.

There was only one case released by the Ontario Court of Appeal this week, Zando v Ali. At issue was the assessment of damages in a case of sexual assault by a physician. The appellant asserted that the trial judge had erred in establishing a range for damages for non-pecuniary damages, and erred in basing her award of punitive damages on the fact that the appellant had not been charged criminally.

The Court adopted the Nova Scotia Court of Appeal’s framework for determining damages in a civil sexual battery or assault case in Nova Scotia (Attorney General) v B.M.G. per Comwell J.A. (as he then was), and found that the trial judge had correctly established the range of damages and assessed the damages within that range. Continue Reading COURT OF APPEAL SUMMARIES (AUGUST 7 – 10)

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

Good afternoon,
There were only three substantive civil decisions released by the Ontario Court of Appeal this week.

In Ontario Medical Association v. Ontario (Information and Privacy Commissioner), the Toronto Star requested access to information from the Ministry of Health and Long-Term Care pursuant to the Freedom of Information and Protection of Privacy Act.  The newspaper wanted to know the names of the top 100 physician billers to OHIP and their area of specialty. The OMA resisted the request on the basis that the names of the doctors was “personal information”. The court upheld the Privacy Commissioner’s decision to release the information, finding it not to be “personal information”. In doing so, the court confirmed that administrative tribunals are not bound by stare decisis.

In a 2-1 decision in Janicek v Janicek (van Rensburg dissenting), the court upheld the application judge’s interpretation of a will that left it to the estate trustees to determine to whom a farm property should be sold.

Continue Reading COURT OF APPEAL SUMMARIES (JULY 30-AUGUST 3)

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

Good afternoon.

Following are summaries of this week’s civil decisions of the Ontario Court of Appeal.

In Gillham v. Lake of Bays (Township), a negligent construction case, the Court appears to have expanded the meaning of the “Appropriate Means” aspect of the discoverability test under section 5 of the Limitations Act, 2002. Up until now, the Court had interpreted “appropriate means” as “legally appropriate means” – if there is an alternative legal proceeding that can effectively determine the matter, the limitation period is suspended until the alternative legal proceeding runs its course. In this case, however, the Court appears to have interpreted “appropriate means” as permitting a plaintiff to take a “wait and see” approach before suing. It was not initially clear that there was anything more than trivial damage, and the plaintiff was entitled to “wait and see” by conducting further investigations to determine the extent of the damage before suing. This seems to conflate the issues of whether there is knowledge of damage with the issue of the appropriate means for seeking redress for that damage.

In 2212886 Ontario Inc. v. Obsidian Group Inc., a franchise rescission case, the Court set aside summary judgment granting the franchisee rescission damages of almost $1 million. While the motion judge properly identified the key factual issue, having found that the paper record was inadequate to resolve that issue because findings of credibility were required, the motion judge erred in deciding the credibility issue using the fact-finding powers under r. 20.04(2.1) without resorting to oral evidence. The Court confirmed that a motion judge’s discretion to use their fact-finding powers is entitled to deference, and reviewable on a standard of whether it would be contrary to the interests of justice to have used those powers. This seems analogous to the cases that look at whether there has been a denial of procedural or natural justice. If so, then the appeal is allowed and the normal standards of review (correctness or reasonableness/palpable and overriding error) are not applicable.

Other topics covered this week included mortgage enforcement, the enforcement of an indemnity under a commercial lease, jurisdiction and limitation periods in the labour law context, vexatious litigants, adjournments, settling orders, and extensions of time to appeal.

I hope everyone is enjoying the weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2053  Email

Table of Contents

Gillham v. Lake of Bays (Township), 2018 ONCA 667

Keywords: Breach of Contract, Construction, Negligence, Civil Procedure, Summary Judgment, Limitation Periods, Discoverability, “Appropriate Means”, Limitations Act, 2002, SO 2002, c 24, Sched B, s 4, s 5(1)(a)(iv),  Kudwah v Centennial Apartments, 2012 ONCA 777, 407 ETR Concession Company Limited v Day, 2016 ONCA 709, Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218

2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670

Keywords: Franchise Law, Rescission, Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000 ss 6(2), Civil Procedure, Summary Judgment, Genuine Issue Requiring Trial, Credibility, Fact-Finding Powers, Oral Evidence, Standard of Review, “Contrary to the Interests of Justice”, Hryniak v Mauldin, 2014 SCC 7, Baywood Homes Partnership v Haditaghi, 2014 ONCA 450, Choquette v Viczko, 2016 SKCA 52, Trotter Estate, 2014 ONCA 841, 1615540 Ontario Inc. (c.o.b. Healing Hands Massage Therapy Clinic) v Simon, 2016 ONCA 966, Rules of Civil Procedure, Rule 20.04(2.1), 20.04(2.2)

Carby-Samuels II v. Carby-Samuels, 2018 ONCA 664

Keywords: Civil Procedure, Vexatious Litigants, Summary Judgment, Reasonable Apprehension of Bias, Courts of Justice Act, R.S.O. 1990, c. C.43., s 140(3), Children’s Aid Society of the Regional Municipality of Waterloo v. C.T., 2017 ONCA 931

Derakhshan v. Narula, 2018 ONCA 658

Keywords: Civil Procedure, Appeals, Extension of Time, Rules of Civil Procedure, Rule 3.02

Romanko v. Aviva Canada Inc., 2018 ONCA 663

Keywords: Civil Procedure, Trials, Adjournments, Estrada v Estrada, 2016 ONCA 697

Schnarr v. Blue Mountain Resorts Limited, 2018 ONCA 668

Keywords: Civil Procedure, Orders

Parc Downsview Park Inc. v. Penguin Properties Inc., 2018 ONCA 666

Keywords: Contracts, Real Property, Commercial Leases, Guarantees, Indemnities, Enforceability, Misrepresentation, Contractual Interpretation, Standard of Review, Teal Cedar Products Ltd v British Columbia, 2017 SCC 32, Atos IT Solutions v Sapient Canada Inc, 2018 ONCA 374, Damages, Mitigation, Civil Procedure, Applications

1173928 Ontario Inc. v. 1463096 Ontario Inc., 2018 ONCA 669

Keywords: Real Property, Mortgages, Power of Sale, Notices of Sale, Conveyancing, Mortgages Act, RSO 1990, c M 40, s. 22 and 31, Conveyancing and Law of Property Act,RSO 1990, c C 34, s 41, Farrar v Farrars Ltd. (1888), 40 Ch D 395 (Eng C), Ostrander v. Niagara Helicopters Ltd. (1973), 1 O. (2d) 281 (HC), Commercial Leases, Commercial Tenancies Act, RSO 1990, c L7

United Food and Commercial Workers Canada, Local 175, Region 6 v. Quality Meat Packers Holdings Limited, 2018 ONCA 671

Keywords: Employment Law, Labour Law, Civil Procedure, Jurisdiction, Limitation Periods, Representative Actions, Class Actions, Orders, Nunc Pro Tunc, Rules of Civil Procedure, Rules 10.01(f), 12.08, 21.01(1)(a), 21.01(1)(b), 21.01(3)(a), Weber v Ontario Hydro, [1995] 2 SCR 929, Ritchie v Canadian Airlines International Ltd (2001), 13 CPC (5^th) 368, Logue Mechanical Services Ltd v UA, Local 787, [2016] OLRB Rep July/August 691, Class Proceedings Act, 2002, SO 1992 c 6,Canadian Imperial Bank of Commerce v Green, 2015 SCC 60, 1100997 Ontario Limited v North Elgin Centre Inc., 2016 ONCA 848, Lawrence v International Brotherhood of Electrical Workers, 2017 ONCA 321

CIVIL DECISIONS

Gillham v. Lake of Bays (Township), 2018 ONCA 667

[Rouleau, Roberts and Fairburn JJ.A.]

Counsel:

David A Morin, for the appellants Stuart Zacharias, for the respondent, The Corporation of the Township of Lake of Bays

David Thompson, for the respondent, Royal Homes Limited

Keywords: Breach of Contract, Construction, Negligence, Civil Procedure, Summary Judgment, Limitation Periods, Discoverability, “Appropriate Means”, Limitations Act, 2002, SO 2002, c 24, Sched B, s 4, s 5(1)(a)(iv), Kudwah v Centennial Apartments, 2012 ONCA 777, 407 ETR Concession Company Limited v Day, 2016 ONCA 709, Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218

Facts:

The appellants’ action against the respondents arose out of alleged deficiencies in the construction of their prefabricated cottage. The appellants first noticed a problem with one of the deck piers in the summer of 2009. The appellants approached Royal Homes seeking warranty assistance. On Royal Homes’ recommendation, the appellants subsequently retained Trow Associates Inc., a structural engineering firm, to investigate. Trow did not suggest that the stone retaining wall was failing, nor that there were any construction issues with the stone retaining wall or the cottage foundation. JM, who built the retaining wall, told the appellants that they should just monitor the situation and “wait and see” if the stone retaining wall found its own level over the next year or two. As a result, the appellants took no further steps at that time.

The problems continued and the appellants retained Fowler Construction Company Ltd. to inspect the property in 2012. On July 30, 2012, Terraprobe delivered a report concluding that the stone retaining wall was failing and recommended that it be removed and reconstructed. When Fowler commenced the remedial work in 2013, it discovered that the cottage foundation and footings had also been constructed on loose soil.

The appellants commenced their action on October 21, 2013. The appellants alleged that the construction of the foundation of the cottage and the stone retaining wall was negligent because they were built on loose soil, which caused them to migrate down the slope of the property. The appellants pleaded that the Corporation of the Township of Lake of Bays was negligent in its oversight and approval of the construction of the cottage foundation and the stone retaining wall.

The respondents successfully moved for summary judgment of the appellants’ action against them on the basis that the applicable two-year limitation period under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, (the “Act”), had expired. The motion judge concluded that the appellants knew or should have known in 2009 that there were some problems with the construction of their cottage, with or without the Trow report. The appellants appeal from the dismissal of their action.

Issue:

(1) Did the motion judge err by finding that the appellants’ claims were statute-barred because they were discoverable more than two years before the appellants issued their statement of claim?

Holding: Appeal allowed.

Reasoning:

(1) Yes. The motion judge erred in his approach to the question of discoverability of the appellants’ claims and made palpable and overriding errors in his consideration of the evidence related to that question.

The motion judge was required to consider the provisions of s. 5(1) of the Act, in the light of the governing principles regarding discoverability. The overarching question in the discoverability analysis under s. 5 of the Act is whether the claimant knew or reasonably should have known, exercising reasonable diligence, the material facts stipulated under s. 5(1)(a) that give rise to a claim. Knowledge of the claim includes knowledge of the identity of a potential defendant, although it is not necessary for a claimant to know with certainty a potential defendant’s responsibility for an act or omission that caused or contributed to the loss. While neither the extent nor the type of loss need be known, the claimant must know that some non-trivial loss has occurred, and that a proceeding would be a legally appropriate means to seek to remedy it: Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218 at para 34.

First, the court found the motion judge’s conclusions problematic because they contained a fundamental misapprehension of the expert reports and revealed a flawed discoverability analysis. The motion judge’s finding of discoverability was based on a fundamental misstatement of the Trow report. The motion judge also misapprehended the contents of the Terraprobe report as confirming the issues raised in the Trow report.  Finally, the motion judge erred by concluding that even without the Trow report, the appellants would have known that they had a claim against the defendants. However, there was no evidentiary basis for the appellants to reasonably suspect that there was anything wrong with the cottage or its foundation until receipt of the Terraprobe report.

Second, the court found that the motion judge erred in failing to undertake an analysis of the criterion under s. 5(1)(a)(iv) of the Act. The court cited Kudwah v Centennial Apartments, 2012 ONCA 777 at paragraph 2, for the proposition that “a court considering the limitation claim must address the specific requirements of s. 5 of the Act, particularly on the facts of this case, the requirement of s. 5(1)(a)(iv).” In considering whether the appellants knew or should have known that they had a claim, the court held that the motion judge had to go on to consider whether, having regard to the nature of the injury, loss or damage, the appellants knew or should have known that a proceeding would be an appropriate means to seek to remedy it. The court then identified that one recognized reason why the legislature added “appropriate means” as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation: 407 ETR Concession Company Limited v Day, 2016 ONCA 709. The court then concluded that the motion judge failed to consider “the specific factual or statutory setting” of the case before him and determine whether it was reasonable for the appellants not to immediately commence litigation but to “wait and see.”

Finally, the court found that the motion judge erred by failing to consider whether the appellants knew or reasonably could have known the material facts giving rise to their claim against the Township more than two years prior to the commencement of their action. It was not until Fowler started the remedial work in 2013 that it uncovered the foundation wall that had been approved by the Township and discovered that the cottage footings and foundation were negligently placed on the same loose soil and organic materials as were under the stone retaining wall. There is no evidence that these material facts informing a claim against the Township were known to, or reasonably discoverable by, the appellants in 2009.

2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670

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

Counsel:

Geoffrey Adair, for the appellants

Daniel MacKeigan and Cole Vegso, for the respondents

Keywords: Franchise Law, Rescission, Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000 ss 6(2), Civil Procedure, Summary Judgment, Genuine Issue Requiring Trial, Credibility, Fact-Finding Powers, Oral Evidence, Standard of Review, “Contrary to the Interests of Justice”, Hryniak v Mauldin, 2014 SCC 7, Baywood Homes Partnership v Haditaghi, 2014 ONCA 450, Choquette v Viczko, 2016 SKCA 52, Trotter Estate, 2014 ONCA 841, 1615540 Ontario Inc. (c.o.b. Healing Hands Massage Therapy Clinic) v Simon, 2016 ONCA 966, Rules of Civil Procedure, Rule 20.04(2.1), 20.04(2.2)

Facts:

This is an appeal from a partial summary judgment in litigation concerning a franchise dispute. The franchisee and its principals were granted rescission of the franchise agreement and damages against the franchisor and its director in the sum of $964,805.33. The counterclaim was dismissed.

The appellants are Obsidian Group Inc. (“Obsidian”), the franchisor for Crabby Joe’s Tap and Grill (“Crabby Joe’s”), Obsidian Inc., the franchisee’s sub-landlord, and GK (referred to by the motion judge as “G”), the sole director of both companies. The respondent 2212886 Ontario Inc. (“221”) is a franchisee that operated a Crabby Joe’s restaurant in Bradford, Ontario. 221 was incorporated by its principals, the other two respondents to this appeal, WP (“W”) and KP (“K”).

W and K communicated their interest in acquiring a Crabby Joe’s franchise in April 2009. In June 2009, they paid a deposit of $31,500 and they incorporated 221 in July 2009. Between September 2009 and May 2010, the parties, working together, identified a suitable location. On June 1, 2010, the franchisor provided a franchise disclosure document. On June 16, 2010, Obsidian and 221 entered into a franchise agreement. On September 7, 2010, they signed a new franchise agreement (the “replacement agreement”) that was substantially identical to the first agreement, as well as a franchise amending agreement (the “amending agreement”) to replace some of the standard terms for the benefit of the respondents.

The franchisee paid a total of $660,465 for the purchase of the franchise. The acquisition was financed in part by a small business loan from Royal Bank of Canada (“RBC”).

The respondents operated their Crabby Joe’s franchise from March 9, 2011, until they served notice of rescission of the franchise agreement and related agreements on September 5, 2012. They demanded payment of their rescission damages by letter dated September 18, 2012. The franchisor purported to terminate the franchise agreement and related agreements on September 18, 2012. The franchise was transferred to a third party in January 2013. The respondents were sued by RBC on their small business loan (the “RBC litigation”), resulting in judgment in June 2014 against 221 and the personal respondents.

There were two principal issues respecting liability. The first was whether the disclosure document provided by the franchisor in June 2010 was so materially deficient as to constitute no disclosure at all, giving rise to a right to rescission within two years of the execution of the franchise agreement under s. 6(2) and compensation under s. 6(6) of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 (the “AWA”). The second liability issue was whether the two-year period ran from the date the parties first executed the franchise agreement, in which case the claim would be out of time, or from the date the parties executed a replacement agreement, in which case the claim was timely.

The respondents relied on a number of allegations of non-disclosure in support of their claim for rescission, only one of which was accepted by the motion judge. He concluded that the franchisor’s representative provided revenue projections in a meeting with the principals of the franchisee in May 2010, that the information was highly material, and that the failure to include the projections in the franchisor’s disclosure constituted “no disclosure”. The motion judge also concluded that since the franchisor insisted on a replacement agreement, the time for asserting the rescission rights under s. 6(2) of the AWA ran from the date of that agreement.

The appellants’ principal argument on appeal is that the motion judge erred in determining the central disputed factual issue on which liability depended (whether the earnings projection was shown to the respondents in May 2010), where the evidence was contradictory, and where the record did not permit such a determination to be made.

Issues:

(1) Did the motion judge err in his approach to summary judgment – by making determinations of credibility and findings on a key factual issue, where the evidence was contradictory, where the appellant’s deponent was not cross-examined, and without calling for or even considering the need for oral evidence?

(2) Did the motion judge err in his conclusion that the failure to provide the earnings projections in the disclosure document constituted “no disclosure” under s. 6(2) of the AWA?

(3) Did the motion judge err in failing to dismiss the claim for rescission because it was asserted more than two years after the original franchise agreement was signed?

(4) Did the motion judge err in his assessment of damages (essentially by including amounts for lease payments made by 221 to Obsidian Inc.)?

Holding: Appeal allowed.

Reasoning:

The court indicated that it was sufficient for the determination of this appeal to address only the first and third issues.

(1) Yes. The motion judge erred in granting summary judgment in this case.

(a) It was not in the interest of justice to determine the issues on summary judgment in this case without oral evidence.

Where, on the record, there appears to be a genuine issue requiring a trial, the motion judge may then consider whether the need for a trial can be avoided by using the powers under Rules 20.04(2.1) and (2.2). The motion judge’s decision to exercise these powers is discretionary and attracts appellate deference “provided that their use is not against the interest of justice”: 1615540 Ontario Inc. (c.o.b. Healing Hands Massage Therapy Clinic) v Simon, 2016 ONCA 966, at para. 22.

In this case the motion judge concluded that the record did not permit him to make an order for summary judgment, and that there was a genuine issue for trial with respect to the May 2010 meeting. He then proceeded to invoke the “expanded” powers under (1.1) to determine the rescission claims by summary judgment. However, he did not consider the obvious need for oral evidence under (2.2).

In this case, a number of factors were relevant and ought to have been considered before the motion judge decided to use the “enhanced” powers absent oral evidence to determine the respondents’ rescission claims in a motion for summary judgment.

The motion judge ought to have determined whether, in these circumstances, it would have been appropriate, or indeed necessary, to hear oral evidence as he was entitled to require under r. 20.04(2.2). If credibility cannot be assessed on a written record, that should be a sign that oral evidence or a trial is required: Trotter Estate, 2014 ONCA 841, 122 O.R. (3d) 625, at para. 55. Here, the motion judge ought to have considered whether oral evidence on the key disputed factual issue would have enabled him to determine the rescission claims on this motion: see for example Hryniak v Mauldin, at para. 51; Choquette v Viczko, 2016 SKCA 52, at paras. 54-56.

(b) The motion judge could not, on this record, adequately resolve the credibility issues. The motion judge’s reasons for accepting W’s evidence on the key factual dispute and rejecting D’s, are not persuasive.

First, the concerns about D’s evidence that were identified by the motion judge were not sufficient to reject his evidence out of hand, especially where he had not been cross-examined. The motion judge characterized D’s evidence as “heavy on speculation” and “light on direct knowledge”. However, D was, as the motion judge observed, a very experienced member of the industry who sold or opened at least 1,000 franchises prior to this matter

The import of D’s evidence was that if he had prepared a business plan and sent it to RBC, he would have done so at the request of the respondents to assist them in obtaining financing. W’s own evidence confirmed that the appellants provided him and his wife with assistance in obtaining financing from RBC. The determination that the franchisor was involved in the financing – whether by helping the respondents to prepare a business plan, or by preparing the business plan in its entirety for submission to RBC – is not determinative of the central issue: whether the earnings projections that were ultimately included in the business plan were shown to W and K, as they alleged, before they signed the franchise agreement in June 2010.

Second, after rejecting D’s evidence, the motion judge did not critically assess the respondents’ evidence. The only mention of W’s evidence was in respect of the inconsistencies about when he first saw the business plan and earnings projections, and then to say that he accepted it. The Court has cautioned that in the summary judgment and mini-trial context, motion judges must take great care “to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters”: Baywood Homes Partnership v Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at para. 44.

The motion judge’s treatment of the evidence, including his acceptance of W’s explanation for his inconsistencies, did not ensure that this key issue would be fairly resolved.

(2) Yes. The key and essential finding that there was non-disclosure which amounted to a breach of s. 6(2) of the AWA and justified rescission and damages ought not to have been made in the circumstances of this case. That finding could not be made on the basis of untested evidence, and without invoking at least the powers under Rule 20.04(2.2) to hear oral evidence

(3) No. The conflict in the evidence on this issue was not material. Whatever the motivation for the replacement agreement, it is undisputed that the request originated with the franchisor. There was nothing to suggest that there was any benefit to the franchisee in signing a replacement agreement in terms that were substantially identical to the original agreement. The motion judge rightly concluded that “[h]aving chosen to require the franchisees to sign and enter into a replacement agreement, the franchisor cannot now argue that an existing franchise agreement is already in place such that the protections afforded under s. 6(2) are already partially diluted.” In arriving at this decision, he properly considered the intent and consumer protection purpose of the AWA.

The motion judge’s decision on the effective date of the franchise agreement for the purpose of s. 6(2) is entirely reasonable and supported by the evidence. The court did not view the credibility issues identified earlier with respect to the earnings projections as in any way affecting the motion judge’s decision on this issue, or that oral evidence would have been required to determine it.

(4) Considering the resolution of the issues above, it was not necessary to consider the issue of damages.

Carby-Samuels II v. Carby-Samuels, 2018 ONCA 664

[Hoy A.C.J.O., van Rensburg and Pardu JJ.A.]

Counsel:

RSC II, acting in person

John E Summers, for the respondent

Keywords: Civil Procedure, Vexatious Litigants, Summary Judgment, Reasonable Apprehension of Bias, Courts of Justice Act, R.S.O. 1990, c. C.43., s 140(3), Children’s Aid Society of the Regional Municipality of Waterloo v. C.T., 2017 ONCA 931

Facts:

The appellant, RCS, appeals (1) the judgment of the application judge granting his father, the respondent HCS, summary judgment dismissing the appellant’s claim against him; and (2) the order of the application judge declaring that the appellant had instituted vexatious proceedings and conducted proceedings in a vexatious manner, and prohibiting him from instituting a proceeding, directly or indirectly, in any court in Ontario without first obtaining leave under s. 140(3) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

The appellant argues that the court cannot declare a Canadian citizen vexatious “for seeking to ensure the well-being of his Mom as an expression of religious conscience as affirmed by the Charter”. He also argues that the court should find that there was a reasonable apprehension of bias because the application judge accepted his father’s assertions, failed to refer to evidence that he says supported his position, failed to grant an adjournment, and proceeded in the face of his intention to bring a motion for an order that she recuse herself. Further, he argues that the application judge erred in relying on an affidavit of an administrator working in the office of his father’s lawyer. Finally, he also challenges the authority of the lawyer to act on behalf of his father and asks that he be ordered to disclose his fees.

Issues:

(1) Did the application judge err in granting summary judgment dismissing the appellant’s claim?

(2) Did the application judge err in declaring that the appellant had instituted vexatious proceedings and conducted proceedings in a vexatious manner, and prohibiting him from instituting a proceeding, directly or indirectly, in any court in Ontario without first obtaining leave under s. 140(3) of the Courts of Justice Act, R.S.O. 1990, c. C.43?

Holding: Appeal dismissed.

Reasoning:

(1) No. There is no basis for this court to interfere with the application judge’s order granting summary judgment dismissing the appellant’s action against his father, seeking an order permitting him to see his mother, who was 85 years of age at the time of the motion. The application judge correctly held that there is no basis for the court to make an order compelling a mentally competent adult (the father) to require another mentally competent adult (the mother) to interact with a third family member (the appellant).

(2) No. There is no basis to interfere with the application judge’s order declaring the appellant a vexatious litigant and prohibiting him from instituting any proceeding in Ontario without leave. The application judge provided thorough and compelling reasons. Further, there is a strong presumption of judicial impartiality and a heavy burden on a party who seeks to rebut this presumption. The test is whether a reasonable, informed person, viewing the matter realistically and practically – and having thought the matter through – would conclude that it is more likely than not that the judge, whether consciously or unconsciously would not decide fairly: see Children’s Aid Society of the Regional Municipality of Waterloo v. C.T., 2017 ONCA 931, [2017] OJ No 6324, at para. 84. The appellant has not discharged the heavy burden of rebutting the strong presumption of judicial impartiality.

Derakhshan v. Narula, 2018 ONCA 658

[Hoy A.C.J.O., Rouleau and Benotto JJ.A.]

Counsel:

FD, acting in person

Ian Vallance, for the respondent

Keywords: Civil Procedure, Appeals, Extension of Time, Rules of Civil Procedure, Rule 3.02

Facts:

FD brought a motion to set aside an order of the chambers judge, dismissing his motion for an order extending the time within which to serve and file a notice of appeal. The applicant represented himself during a 21-day trial which took place in the Family Court Branch of the Superior Court. He claimed retroactive spousal support, and asserted a constructive trust interest in the respondent’s assets on the basis of unjust enrichment or a joint family venture. The trial judge found that the parties had not been in a spousal relationship and dismissed FD’s claims. The judge also found that there was no evidence of unjust enrichment.

When the decision was released, it was emailed to FD, who was in Australia at the time. He made arrangements to rush back to Canada to deal with his proposed appeal. The applicant prepared a notice of appeal and served the respondent within the 30 days provided for in the Rules, on Friday, February 23. Unfortunately, he had attempted to file the materials with the Superior Court of Justice and not the Court of Appeal. As a result, his materials were rejected by the court office. When FD was informed of his error, he acquired the requisite forms and began to prepare a new notice of appeal. The following day, the applicant served this new notice of appeal on the respondent by email. This was 31 days following the release of the decision.

FD sought the respondent’s consent to the late filing, but this was refused. FD then prepared a motion for an order extending the time in which to file his notice of appeal. The chambers judge refused this motion based on three factors: prejudice to the respondent, the merits of the appeal and the justice of the case did not favour granting the extension.

Issue:

(1) Did the chambers judge err in dismissing the motion for the extension?

Holding: Motion granted.

Reasoning:

(1) Yes. The chambers judge erred in finding that there was prejudice to the respondent on the basis that her costs award was unlikely to be satisfied. This is not prejudice caused by delay. The delay was of only one day and the notice of appeal, albeit to the wrong court, had been served within the 30 days provided in the Rules.

The error in the chambers judge’s analysis of prejudice clearly factored into his exercise of discretion and as a result, no deference was owed to his decision. It would be unfair to deprive FD of his right of appeal in the circumstances. FD.is self-represented and the delay in serving the appeal materials addressed to the appropriate court was barely one day. There was clearly no prejudice to the respondent and the loss of the right to appeal is very significant to FD.

Romanko v. Aviva Canada Inc., 2018 ONCA 663

[Hoy A.C.J.O., van Rensburg and Pardu JJ.A.]

Counsel:

OR and NR, acting in person

Alan L Rachlin, for the respondents

Keywords: Civil Procedure, Trials, Adjournments, Estrada v Estrada, 2016 ONCA 697

Facts:

The appellants appeal the dismissal of their action against the respondents, which arose from a motor vehicle accident.

Issue:

(1) Did the trial judge err in not granting a further adjournment of the appellants’ jury trial?

Holding: Appeal dismissed.

Reasoning:

(1) No. The decision to grant an adjournment is a matter of judicial discretion. The scope of appellate review is whether the discretion was exercised judicially on proper principles (Estrada v Estrada, 2016 ONCA 697). The trial judge provided thorough reasons why she declined the request for a further adjournment. The trial judge highlighted the appellants’ history of delay, multiple changes of counsel, and failure to abide by court orders. The trial judge marked the trial peremptory but gave a further extension to the appellants to produce evidence. There is no basis to set the trial judge’s decision aside. Her discretion was exercised reasonably on proper principles, such as the interests of the parties and the administration of justice.

Schnarr v. Blue Mountain Resorts Limited, 2018 ONCA 668

[Doherty, Brown and Nordheimer JJ.A.]

Counsel:

John A Olah, for the appellant, Blue Mountain Resorts Limited

Edward Chadderton and Jeffrey Belesky, for the respondents/appellants by cross-appeal, Snow Valley Resorts (1987) Ltd. aka Snow Valley (Barrie), Snow Valley Barried, Snow Valley Ski Resort, Snow Valley, and 717350 Ontario Ltd. (collectively, “Snow Valley”)

Paul J Pape, Shantona Chaudhury and Evan Rankin, for the respondent, DS and for the appellant/respondent by cross-appeal, EW

Keywords: Civil Procedure, Orders

Facts:

This is an appeal from the orders of Justice Ria Tzimas of the Superior Court of Justice, dated January 6, 2017 with reasons reported at 2017 ONSC 114, and of Justice John McCarthy of the Superior Court of Justice, dated January 13, 2017 with reasons reported at 2017 ONSC 222.

On March 28, 2018, the Court of Appeal released its decision allowing both appeals and the cross-appeal, setting aside the two orders below, and remitting the matters back to the Superior Court of Justice to proceed in accordance with the Court of Appeal’s reasons. Subsequent to the release of the Court’s reasons, counsel advised in writing that certain issues had arisen with respect to taking out the formal orders.

Issues:

(1) Should the “no order as to costs” provision incorporate both the parties and the interveners, or should this be dealt with separately?

(2) Should the court’s conclusion regarding s. 93(2) of the Consumer Protection Act, 2002, SO 2002, c 30, Sched A be reflected in the formal order?

(3) Should the court’s conclusion regarding the effect of the respective waivers be reflected in the formal order? If so, how should that conclusion be worded?

Holding: The Court gave directions on the wording of its orders.  

Reasoning:

(1) The Court agreed with counsel that the “no order as to costs” could be reflected in the orders as relating to both the parties and to the interveners, but for a separate issue that the Court identified below. If all of the costs had been determined at the same time, a simple provision that there be no order for costs of the appeal either for or against any party including the interveners would suffice.

(2) No. The Court found that the second and third issues could be dealt with together. The simple answer to those issues is that neither of these conclusions ought to be reflected in the formal order. A formal order reflects the ultimate disposition of a proceeding. It does not reflect the reasons for that disposition. Absent a request for a formal declaration, conclusions regarding issues raised in a proceeding ought not to be reflected in the formal order. For example, if a court concludes that the defendant was negligent and awards damages as a consequence, the formal order does not say that the defendant was negligent. It simply says that the defendant is ordered to pay to the plaintiff damages in a set amount.

In this case, the formal order ought not to reflect the interpretation that the Court applied to s. 93(2) Consumer Protection Act, nor should it reflect the conclusion reached regarding the applicability of the respective waivers. Those conclusions are reflected in the reasons and the parties could make submissions as to the consequences of those conclusions if necessary as the proceedings continue. Counsel was in agreement that it was open to the plaintiffs to make other arguments as to why they might not be bound by the waivers. All that the formal orders will record is that the appeals (and cross-appeal) were allowed and the matters remitted back to the Superior Court of Justice.

The other issue regarding costs alluded to above, arose from the draft orders submitted by counsel. The decision on costs is a determination separate and apart from the determination of the merits of the appeals (and cross-appeal). Counsel drafted a single order incorporating both the date of the merits decision and the date of the costs decision. That was improper. Rather, what was required was for two formal orders to be taken out. The first order should deal with the merits, and the costs as they related to the interveners, and the second order should deal with the issue of costs as they related to the parties, with each order bearing the respective date when those decisions were released.

Parc Downsview Park Inc. v. Penguin Properties Inc., 2018 ONCA 666

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

Counsel:

Anne Posno and Robert Trenker, for the appellant/respondent by way of cross-appeal

Jonathan Lisus and Zain Naqi, for the respondent/appellant by way of cross-appeal

Keywords: Contracts, Real Property, Commercial Leases, Guarantees, Indemnities, Enforceability, Misrepresentation, Contractual Interpretation, Standard of Review, Teal Cedar Products Ltd v British Columbia, 2017 SCC 32, Atos IT Solutions v Sapient Canada Inc, 2018 ONCA 374, Damages, Mitigation, Civil Procedure, Applications

Facts:

This appeal concerns the validity and scope of an indemnity given by the appellant (“Penguin”), to the respondent and cross-appellant (“PDP”). In 2010, PDP entered into a lease of premises as landlord with the National Squash Academy Inc. (the “Academy”) as the tenant. After the Academy defaulted on its obligations under the 2010 lease, PDP required that a guarantor be found to indemnify the rental obligations of the Academy under a new lease. MG, the principal of Penguin, was approach and agreed to “backstop” the obligations of the Academy under the lease. The lease and indemnity agreement (“Indemnity”) were executed in December 2012 and did not expire until August 31, 2020.

In September 2013, the Academy defaulted on its obligations under the lease to pay rent. After two years of unsuccessful negotiations, PDP delivered a termination notice to the Academy in October 2015. The Academy then made a voluntary assignment into bankruptcy in February 2016. In November 2016, PDP gave further notice of default to Penguin under the Indemnity. It then commenced this application seeking payment under the Indemnity of unpaid rent, future rent, and other costs and losses.

The application judge granted the application. He found that Penguin had breached the Indemnity and ordered it to pay PDP $788,603.45 “on account of amounts owing to [PDP] up to June 12, 2017 under the terms of the indemnity agreement.” Penguin appealed, asking the court to set aside the judgment and convert the application into an action. PDP cross-appealed, seeking to vary the judgment to include an order requiring Penguin to pay rent due from June 13, 2017 until August 31, 2020, less any rent it receives from new tenants during that period.

Issues:

(1) Is Penguin liable under the Indemnity?

(i) Did the application judge err by applying too rigorous a test in refusing to convert the application into a trial?

(ii) Did the application judge apply the wrong test to determine whether PDP made a negligent misrepresentation upon which Penguin relied to enter into the Indemnity?

(iii) Did the application judge err in finding that no representation had been made?

(2) What is the appropriate quantum owing under the Indemnity?

(i) Did the application judge err in finding Penguin responsible for restoration costs

(ii) Did the application judge err by failing to award PDP amounts for rent due under the Lease from June 12, 2017 until the end of the stated term of the Lease, on August 31, 2020?

Holding: Appeal dismissed. Cross-appeal allowed.

Reasoning:

(1) Yes. Justice Brown, writing for the majority of the court, concluded that there was a sound evidentiary basis for the application judge’s finding that Penguin had not established PDP made some collateral, pre-contractual representation which, if breached, would relieve it of its obligations under the Indemnity.

(i) No. The suitability of using an application, rather than an action, to decide a contractual dispute depends upon the specific facts of the case, including the nature and extent of any factual dispute. The issue in dispute was a narrow one: Had two employees of PDP made misrepresentations to MG upon which Penguin had relied in giving the Indemnity? Justice Brown saw no unfairness resulting from the application judge determining the contractual dispute by way of application instead of directing a trial. As well, an application provided an expeditious and cost-effective means to determine the dispute on its merits.

(ii) No. Justice Brown was not persuaded that the application judge applied an inaccurate summary of the legal principles applicable in the circumstances of this case. Penguin bore the burden of establishing who made a representation, when, where, and its content. The application judge required nothing more and was not persuaded that the evidence established an actionable misrepresentation.

(iii) No. Justice Brown found that the application judge’s findings were not tainted by any misapprehension of the evidence or palpable and overriding error. The application judge relied on the following evidence: (i) the parties were sophisticated; (ii) Penguin acknowledged that the representations it alleged were made orally and not in writing; (iii) there was not a single piece of correspondence produced by Penguin that referred to any of the oral representations asserted; (iv) clause 7 of the Indemnity stated it could “only be modified in writing, signed by both the Indemnifier and the Landlord”; (v) by its terms the Indemnity was “absolute and unconditional”; and (vi) on the issue of which party relied on whom, the Indemnity began with the language, “[i]n order to induce the Landlord to sign the agreement to lease between the Landlord and [the Academy] as Tenant …, the Indemnifier agrees with the Landlord that…” Accordingly, Penguin’s appeal from the judgment that it had breached the Indemnity was dismissed.

(2) PDP is entitled under the Indemnity to payment by Penguin for rent due during the period from June 12, 2017 until August 31, 2020, subject to the credit that clause 3 requires be given for rent obtained from a new tenant.

(i) No. The application judge held that the restoration costs were “costs incurred as a result of [the Academy’s] failure to pay rent” in accordance with Clause 1 of the Indemnity. Absent the existence of an extricable question of law or a palpable and overriding error, the application judge’s interpretation and application of the Indemnity is entitled to deference. To answer the question of whether the indemnity covered restoration costs, the application judge considered the events both before and after the Academy defaulted in paying rent, including its ultimate assignment in bankruptcy. Justice Brown concluded that the application judge made a reasonable interpretation and application of the Indemnity clause to the specific facts of this case.

Justice Brown did not accept Penguin’s alternative submission on this issue that the application judge erred in finding it liable for the full amount of restoration costs and legal fees. Justice Brown saw no reversible error in the application judge’s interpretation of the second part of clause 1 as covering the full amount of “any losses or costs” (emphasis added), not a pro rata share. The application judge’s interpretation was one reasonably available on the language of clause 1 of the Indemnity: Atos IT Solutions v Sapient Canada Inc, 2018 ONCA 374 at paras. 85-86. Penguins appeal was dismissed.

(ii) Yes. Justice Brown regarded the application judge’s conclusion that PDP was not entitled under the Indemnity to rent until the end of the term as a palpable and overriding error. In reaching this conclusion, Justice Brown regarded that the deferential standard of review applies because the question of whether PDP’s claim under the Indemnity is subject to an obligation to mitigate rental losses as a question of mixed fact and law. The resolution of the question primarily requires a consideration of the language of the Indemnity, read within the “factual matrix” of, amongst other matters, the circumstances surrounding the concurrent execution of the lease: Teal Cedar Products Ltd v British Columbia, 2017 SCC 32, at para 47.

In paragraph 12 of his supplementary reasons, the application judge interpreted clause 3 of the Indemnity as disclosing no obligation on PDP to mitigate its rental losses. He then proceeded to depart from the plain language of the Indemnity’s provisions dealing with rent and incorrectly imported into his consideration of Penguin’s liability under the Indemnity the quite separate issue of any mitigation duties PDP might owe the Academy, as tenant, under the concurrently executed Lease. There was no language in the Indemnity that supported making such a link. Justice Brown concluded that by reading into the Indemnity a limitation on PDP’s entitlement that ran counter to the document’s plain language, that the application judge made a palpable and overriding error.

Justice Brown recognized the contrasting assessment of the factual matrix in which the Indemnity’s language must be interpreted between the majority and the dissent. He noted that the prior default by the Academy is a key element of the factual matrix in which the Indemnity arose. To interpret the language of the Indemnity as subjecting PDP to an implied duty to mitigate future rent would fail to give effect to that key aspect of the factual matrix. It could result in a situation where PDP is left holding the bag – a result contrary, in Justice Brown’s view, to the express language of the Indemnity.

Dissent

Justice van Rensburg did not agree with Justice Brown’s proposed disposition of the cross-appeal and would have dismissed the cross-appeal because the application judge’s determination of the claim for ongoing rent, as part of PDP’s claim under the Indemnity, revealed no reversible error.

Justice van Rensburg did not read the application judge as in any way saying that PDP’s obligation to mitigate its claim for rents under the Indemnity followed from the fact that it may have had an obligation to mitigate under the Lease vis-à-vis the tenant. She also regarded that there was nothing wrong with the application judge considering the terms of the Lease in his interpretation of the Indemnity, which provided for the indemnification of PDP for the tenant’s defaults under the Lease. She concluded that the application judge’s analysis gave effect to the whole of the Indemnity and his interpretation of the Indemnity was not contrary to its express language. Finally, Justice van Rensburg did not regard the obligation under the Indemnity to pay rent “throughout the Term as though the Early Termination had not occurred” as clear wording that ruled out a duty to mitigate.

1173928 Ontario Inc. v. 1463096 Ontario Inc., 2018 ONCA 669

[Lauwers, Benotto and Nordheimer JJ.A.]

Counsel:

Geoff R Hall and Anu Koshal, for the appellants

Peter M Callahan, for the respondents

Keywords: Real Property, Mortgages, Power of Sale, Notices of Sale, Conveyancing, Mortgages Act, RSO 1990, c M 40, s. 22 and 31, Conveyancing and Law of Property Act,RSO 1990, c C 34, s 41, Farrar v Farrars Ltd. (1888), 40 Ch D 395 (Eng C), Ostrander v. Niagara Helicopters Ltd. (1973), 1 O. (2d) 281 (HC), Commercial Leases, Commercial Tenancies Act, RSO 1990, c L7

Facts:

The appellant, RVA, operates a business known as “Nu-Co Plastics” in a building on a property at 34 Storey Street in Blenheim owned by the respondent corporation, 1463096 Ontario Inc. (“146”). The property was leased to RVA’s company, 1358329 Ontario Inc. (“135”). RVA also has two other companies: 1173928 Ontario Inc. (“117”) and 1732076 Ontario Limited (“173”).

In March 2008, the landlord, 146, defaulted in paying the mortgage held by Bayview Financial LP. On November 17, 2008, Bayview Financial issued a notice of sale to 146. The notice claimed the fully accelerated amount of $368,472.41 owed under the mortgage

On January 6, 2009, RVA through 117 borrowed $230,000 from Libro Credit Union Limited and purchased the mortgage from Bayview Financial for $360,705.12, which was the balance then owing under the mortgage. On that same date, 117 received an assignment of the mortgage, the guarantees, and related security including the attornment of rents and a Loan and Security Agreement.

Bayview Financial gave 146 notice of the assignment of the mortgage and related security. 117 registered the Assignment of Mortgage and Notice of Assignment of Leases and Rents on title to the property later in January 2009.

On January 12, 2009, 117 purported to terminate the existing lease and enter into a new lease on significantly more favourable terms in an effort to reduce the rental credit to which 146 was

On January 16, 2009, 146 responded by starting an application as landlord under section 20 of the Commercial Tenancies Act, RSO 1990, c L7, against RVA and 117 seeking payment of the outstanding rental arrears together with injunctive relief restraining 117 from enforcing the mortgage.

On March 4, 2009, 117 started the mortgage action that is the subject of this appeal. Within several days, 117 received but did not accept an offer to purchase the property for $250,000.

On October 1, 2009, acting as mortgagee selling under power of sale, 117 entered into an agreement of purchase and sale with itself as purchaser to acquire the property for a price of $210,000 plus unpaid municipal taxes of $29,327 (“First Sale”). 117 did not give 146 notice of the purported sale of the property.

The First Sale foundered on the basis that 117 did not have an interest in the mortgage entitling it to sell the property because it had earlier assigned the mortgage and related security to Libro Credit Union as security for its loan. The assignment was registered against title to the property in favour of Libro Credit Union on January 23, 2009.

On November 2, 2009, a month after the abortive First Sale, Hockin J heard 146’s Commercial Tenancies Act application. By judgment dated January 18, 2010, he granted an interim order relieving 117 from forfeiture of the lease for the property.

On May 27, 2010, Libro Credit Union re-assigned the mortgage back to 117 and took a general security agreement from 117 in its place, and 117 regained status to act under the mortgage as of that date.

The parties could not come to an agreement and so appeared again before Hockin J on August 16, 2010.  On August 20, 2010, he ordered 117 and RVA to pay the rental arrears owed under the lease for the period from January 1, 2007 to August 31, 2010, fixed in the amount of $240,000 as agreed by the parties.

On October 6, 2010, RVA made a second effort to acquire the property. Relying once again on Bayview Financial’s original notice of sale, 117 purported to convey the property to itself under power of sale for the purchase price of $210,000 (“Second Sale”).

On October 12, 2010, as the putative owner, 117 purported to convey the property in fee simple to 173 for the purchase price of $213,750 (“Third Sale”).

In the judgment under appeal, the trial judge held that the First Sale was invalid because Libro Credit Union – not 117 – owned the mortgage at the date of the purported transaction. The trial judge found that the Second Sale of the property by 117 to itself was invalid. She held that a mortgagee can legally transfer its security to itself, but only where it “can establish it acted in good faith and took reasonable precautions to obtain a proper price.” Because 117 did not acquire title to the property through the Second Sale, it was not the fee simple owner. This invalidated the Third Sale.

Accordingly, the trial judge dismissed the mortgage action for payment and possession brought against the respondents as mortgagors by 117 as assignee of the mortgage. She also granted judgment in the lease action in favour of 146, as landlord, against RVA, 135, and 173, jointly and severally.

Issues:

(1) Did the trial judge err in holding that the original notice of sale issued by Bayview Financial was invalid?

(2) Did the trial judge err in holding that the mortgagee, either Bayview Financial or later 117, failed to comply with section 22 of the Mortgages Act having the effect of invalidating the Second Sale and Third Sale?

Holding: Appeal dismissed. 

Reasoning:

(1) No.  While reluctant to agree with the trial judge that the errors in Bayview Financial’s notice of sale were fatal to its validity based on the standard of commercial reasonableness, there was no error in law.

The trial judge found the Bayview Financial notice of sale to be invalid under section 31 of the Mortgages Act on two grounds. First, the original notice of sale issued by Bayview Financial, upon which 117 relied throughout, was not “correct in all material aspects” when it was issued. The judge found that it did not reflect the correct amount needed to redeem the mortgage then, contrary to section 31 of the Mortgages Act.

There is a principle that partial payment of arrears owing under a mortgage does not lead automatically to the requirement of a new notice of sale. However, the Court rejected the appellants’ argument that the principle applies on the facts of this case.

The Court was also not persuaded that the appellants’ argument that any errors in the amounts claimed in the notice of sale did not materially affect 146’s ability to redeem and that 146 never attempted to do so. This argument is more related to the issue of getting proper mortgage statements under section 22 of the Mortgages Act.

The trial judge’s second finding was that a fresh notice of sale was required in this case because the flow of time and the stream of attorned rental payments changed the state of the accounts, increasingly rendering inaccurate the original notice of sale. Because a notice of sale is a point-in-time document, it does not become inaccurate with the flow of time. The accounts undoubtedly changed, but the usual process for addressing changes in accounts is by the mortgagor requesting a mortgage statement under section 22 of the Mortgages Act, not by requiring a fresh notice of sale.

The artificial staging of the issues brought about by RVA’s strategy suggests that it would not be wise to rule definitively on when, if ever, a fresh notice of sale is required, and the Court declined to do so.

(2) No. The trial judge correctly found that 117 failed to provide updated statements of account to 146 to reflect the reduction of the mortgage balance achieved through the attornment of rents, contrary to sections 22(2) and (3) of the Mortgages Act. As a result,both the Second Sale and the Third Sale were invalid because they were executed at a time when 117’s enforcement rights were statutorily suspended under section 22(3) of the Mortgages Act.

The purpose of section 22(1) of the Mortgages Act is to provide a mortgagor with access to relief from acceleration of the entire mortgage debt that came about because of the default. Section 22(2) works together with section 22(3). Where the mortgagee fails to answer a request for a mortgage statement within 15 days without reasonable excuse or answers it incompletely or incorrectly, then the mortgagee’s rights to enforce the mortgage, including the exercise of a power of sale or commencement of a mortgage action, is suspended until the mortgagee provides an accurate and complete mortgage statement.

The critical dates for determining the effect of section 22 of the Mortgages Act are (i) the date of the mortgagor’s request for a mortgage statement; (ii) the date of the mortgagee’s response; (iii) the date of a sale (the possibilities are October 6, 2010, the date of the purported Second Sale; or October 12, 2010, the date of the purported Third Sale); and (iv) the date of the commencement of a mortgage action by the mortgagee (March 4, 2009 at the earliest). Neither the dates of the purported sales nor the date on which 117 started the mortgage action figure into the decision.

After all of the legal wrangling, 117 gained full status on May 27, 2010 to enforce the mortgage and bring the action (and therefore to continue it). However, there were two outstanding requests to 117 for a mortgage statement that 117 had never answered:

• On June 15, 2009, the respondent’s lawyer wrote to 117’s lawyers requesting a statement of the mortgage account and a notice of the interest rate adjustment, since it was a variable rate mortgage. They did not respond.
• On January 19, 2010, the respondent’s lawyer wrote again to 117’s lawyers requesting a mortgage statement and an account of the rental money received by 117. No response was received.

Accordingly, this left the suspension under section 22 of the Mortgages Act in place, thereby invalidating both the Second Sale and Third Sale.

Although the issue is moot, in her discussion of whether 117 was legally entitled to sell the property to itself under the power of sale, the trial judge opened a door better left closed. In the Second Sale, 117 purported to sell the property to itself under power of sale. The appellants invoked section 41 of the Conveyancing and Law of Property Act:

A person may convey property to or vest property in the person in like manner as the person could have conveyed the property to or vested the property in another person.

The trial judge described this as a “general statutory provision” that is “subject to the more restrictive statutory provisions and common law principles imposed on mortgagees as transferors.” She identified one such limit in the common law: a mortgagee cannot sell to itself under a power of sale, citing Farrar v Farrars Ltd. (1888), 40 Ch D 395 (Eng CA).

However, the trial judge stated that the rule in Farrar gives rise to a presumption that “is rebuttable in certain circumstances.” The trial judge referred to Ostrander v. Niagara Helicopters Ltd. (1973), 1 O (2d) 281 (HC) and held that a mortgagee can transfer its security to itself where it “can establish it acted in good faith and took reasonable precautions to obtain a proper price.” The trial judge found that RVA could not rely on Ostrander because he had not acted in good faith and had not taken reasonable precautions to obtain a proper price for the property.

The trial judge had no basis upon which to apply the rebuttable presumption in Ostrander to the facts of this case. Ostrander does not stand for the proposition that the common law allows a mortgagee to sell under a power of sale to itself, nor for the proposition that a mortgagee can sell to a company that is owned by the mortgagee. Rather, it stands for the proposition that a party acting for the mortgagee can sell to a corporation in which that party has some interest, if it can rebut the presumption of an invalid sale by evidence that it took reasonable steps to obtain a proper price and acted in good faith. Ostrander does not apply to a mortgagee selling to itself under power of sale.

Even though section 41 of the Conveyancing and Law of Property Act was enacted (with slight differences) in 1933, there are no reported decisions in which an Ontario court has squarely considered its effect on the common law rule in Farrar in a mortgage action. Whether section 41 of the Conveyancing and Law of Property Act has overcome the rule in Farrar is an issue best left for another day.

United Food and Commercial Workers Canada, Local 175, Region 6 v. Quality Meat Packers Holdings Limited, 2018 ONCA 671

[LaForme, Rouleau and van Rensburg JJ.A.]

Counsel:

Andrew J Hatnay, Demetrios Yiokaris and Amy Tang, for the appellants (C63620) and for the respondents (C63635)

Jeffrey E Goodman, Frank Cesario and Dianne Jozefacki, for the appellants (C63635) and for the respondents (C63620), Quality Meat Packers Holdings Limited, BNJ Cold Storage Inc., Two Tecumseh Street Inc., Tasty Chip (2008) Inc. and DS

Matthew P Gottlieb and Brad Vermeersch, for the appellants (C63620) and for the respondents (C63635), BS and Franklyn Bernard Company Limited

Kyla Mahar, for the respondent, 1581337 Ontario Inc.

Keywords: Employment Law, Labour Law, Civil Procedure, Jurisdiction, Limitation Periods, Representative Actions, Class Actions, Orders, Nunc Pro Tunc, Rules of Civil Procedure, Rules 10.01(f), 12.08, 21.01(1)(a), 21.01(1)(b), 21.01(3)(a), Weber v Ontario Hydro, [1995] 2 SCR 929, Ritchie v Canadian Airlines International Ltd (2001), 13 CPC (5^th) 368, Logue Mechanical Services Ltd v UA, Local 787, [2016] OLRB Rep July/August 691, Class Proceedings Act, 2002, SO 1992 c 6,Canadian Imperial Bank of Commerce v Green, 2015 SCC 60, 1100997 Ontario Limited v North Elgin Centre Inc., 2016 ONCA 848, Lawrence v International Brotherhood of Electrical Workers, 2017 ONCA 321

Facts:

A family-owned meat processing business went bankrupt in 2014 and some 800 employees were terminated without notice or severance. Two separate actions were commenced: one by SC on behalf of the 700 or so unionized employees (the “Caetano” action), and the other by DA and AA on behalf of the 100 or so non-unionized employees (the “Abreu” action). The defendants in both actions were the bankrupt companies, other related family-owned businesses, and two individuals who together are all alleged to have been the common employer of the employees.

In response, the defendants filed two motions:

1) A motion that the Caetano action be stayed on the basis of jurisdiction pursuant to rule 21.01(3)(a) of the Rules of Civil Procedure (the “jurisdiction motion”); and

2) Motions under rules 21.01(1)(a) & (b) of the Rules of Civil Procedure that the representative elements of both actions be struck because the claims of the individuals sought to be represented were time-barred and thus failed to disclosed a reasonable cause of action (the “limitations motion”).

The motion judge granted the jurisdiction motion because he was of the view that the wrongful dismissal of unionized employees is subject to the exclusive jurisdiction of the provincial labour relations regime. He also granted the limitation motion in the Caetano action.

SC appeals the decision on the Caetano jurisdiction motion. The defendants appeal the dismissal of the Abreu limitations motion.

Issues:

SC Appeal

(1) Did the motion judge err in deciding that the Ontario Labour Relations Board (“OLRB”) has exclusive jurisdiction to determine the claims asserted in the Caetano action?

(2) Did the motion judge err in concluding that, in the alternative, the representative portions of the actions were statute-barred because a court order pursuant to rule 12.08 of the Rules of Civil Procedure was not obtained within two years of the dismissal of the unionized employees?

Defendants’ Appeal

(3) Did the motions judge err in concluding that the Abreu action was not statute-barred and could proceed?

Holding: SC appeal dismissed. AA and DA appeal allowed.

Reasoning:

(1) No. The motion judge was correct to conclude that he did not have jurisdiction over the Caetano proceeding and properly conducted the Weber v Ontario Hydro analysis. That analysis dictates that if the substance of the dispute is the interpretation, application, administration, or violation of the collective agreement, then the dispute falls within the exclusive jurisdiction of the labour arbitrator.

The core of the Caetano action is the wrongful dismissal and unpaid severance of unionized employees, claims which are all tied to the terms of the employees’ employment and governed by the collective agreement. The Ritchie decision cited by SC was not helpful because it involved a breach of contract that was not a collective or employment agreement. SC’s reliance on Logue was misplaced because, unlike in Logue, SC is not attempting to bypass the provisions of the Bankruptcy and Insolvency Act to undermine the orderly distribution of the bankrupts’ property to creditors. Further, unlike in Logue, this was not a proceeding where the OLRB was being asked to enforce its own orders against a defendant.

(2) No. While Rule 12.08 is silent on limitation periods, it is instructive to consider that the Class Proceedings Act suspends the limitation period in a class proceeding in favour of a class member on the commencement of the class proceeding. Rule 12.08 requires a court order to bring a proceeding on behalf of or for the benefit of all members, and reading the rule harmoniously with s. 4 of the Limitations Act suggests that the limitation period does not stop running for claims of class members until a proceeding has been brought on their behalf under Rule 12.08. Rule 12.08 does not purport to extend, suspend, or otherwise vary any limitation period. The Supreme Court’s decision in Canadian Imperial Bank of Commerce v Green identifies that, absent a provision to the contrary, limitation periods applicable to claims of class members continue to run until the court authorizes the claims to be brought by the representative plaintiff. A nunc pro tunc order would not be available in circumstances where, like in this case, leave was not sought prior to the expiry of the limitation period.

(3) Yes. The motion judge held that there was nothing in Rule 10.01 that plainly and obviously required that a motion for a representation order be brought within the two-year limitation period. Rule 10.01(f) permits a judge to appoint one or more persons to represent any person or class of persons for any other matter where it appears necessary or desirable. The appellants sought to rely on this rule as a class action alternative. The question is whether AA and DA can assert claims, through a representation order, on behalf of persons who are not plaintiffs in the proceeding after the limitation period in respect of such claims has already expired. No motion under Rule 10 was brought for a representation order before the two-year limitation period expired. Parties cannot circumvent the Limitations Act by amending their pleadings to add additional claims (1100997 Ontario Limited). The other terminated employees, while referred to in AA and DA’s statement of claim, are not parties to the proceeding and their claims cannot be advanced by AA or DA unless or until a representation order is obtained. There is, like rule 12.08, no tolling provision which governs Rule 10.01 and suspends the running of the limitation period and thus the Green, supra logic applies.

The reliance on Lawrence by AA and DA does not assist because it has no application to the circumstances of this case, nor does it provide any general authority for granting a representation order to permit claims to be pursued after a limitation period has expired. In Lawrence, parties were added to the claim after the limitation period had expired to correct a misnomer.

Short Civil Decisions

Corsi v. Skanes, 2018 ONCA 661

[Hoy A.C.J.O., van Rensburg and Pardu JJ.A.]

Counsel:

FC, acting in person

Suhaib Ibrahim, for the respondent

Keywords: Civil Procedure, Vexatious Litigants, Frivolous and Vexatious Proceedings, Breach of Charter Rights, Highway Traffic Act, ss 128, 172, Canadian Charter of Rights and Freedoms, s 8, Rules of Civil Procedure, r 2.1.01

Matos v. Driesman, 2018 ONCA 660

[Hoy A.C.J.O., van Rensburg and Pardu JJ.A.]

Counsel:

DD, acting in person

Michael Polisuk, for the respondent

Keywords: Family Law, Child Support, Calculation of Income, Disclosure, Extraordinary Expenses, Federal Child Support Guidelines, s 7

Ontario Review Board Decisions

Honsinger (Re), 2018 ONCA 662

[Hoy A.C.J.O., van Rensburg and Pardu JJ.A.]

Counsel:

Robert F Goddard, for the appellant

Erica Whitford, for the respondent Crown

Marie-Pierre Pilon, for the Person in Charge, Brockville Mental Health Centre

Keywords: Ontario Review Board, Criminal Law, Assault, Mischief, Uttering Death Threats, Not Criminally Responsible, Mental Disorder, Threat to Public Safety

CRIMINAL DECISIONS

R. v. Esseghaier, 2018 ONCA 659

[Watt J.A. in Chambers]

Counsel:

Iain MacKinnon, for the moving party, Canadian Broadcasting Corporation

Sarah Shaikh, for the responding party, Attorney General of Canada

Keywords: Criminal Law, Terrorism Offences, Freedom of the Press, Open Court Principle, Evidence, Confidential Informants, Confidentiality Orders, Sealing Orders, Undertakings

R. v. Culotta, 2018 ONCA 665

[Hourigan, Pardu and Nordheimer JJ.A.]

Counsel:

Dirk Derstine, for the appellant

Matthew Asma, for the respondent

Keywords: Criminal Law, Operating a Vessel Causing Bodily Harm, Impaired Operation of a Vessel, Breach of Charter Rights, Evidence, Admissibility, Right to Silence, Right to Counsel, Voluntariness, Criminal Code, ss 255(2.1), 487, Canadian Charter of Rights and Freedoms, ss 9, 10(b), 24(2), R. v. Taylor, 2014 SCC 50, R. v. Grant, 2009 SCC 32

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.