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

Good afternoon.

There were only three substantive decisions released by the Court of Appeal this week. In Paulpillai Estate v. Yusuf, the Court reviewed in detail the factors to be considered in an analysis of whether an order is final or interlocutory for the purposes of determining the proper appeal route.

Other topics covered this week included bank negligence, and building code violations.

Wishing everyone a pleasant weekend.

John Polyzogopoulos

Blaney McMurtry LLP

416.593.2953 Email

Table of Contents

Civil Decisions

Paulpillai Estate v. Yusuf, 2020 ONCA 655

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Corporations, Remedies, Oppression, Receiverships, Interim Release of Funds, Injunctions, Adding Parties, Sealing Orders, Arbitration, Applications, Actions, Courts of Justice Act, ss. 6(1)(b), ss. (19(1)(b), ss. 101(1), Arbitration Act, ss. 7(1) and ss. 7(6), Grand River Enterprises v. Burnham (2005), 197 OAC 168 (CA), Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, Prescott & Russell (United Counties) v. David S. Laflamme Construction Inc., 2018 ONCA 495, Laurentian Plaza Corp. v. Martin (1992), 7 OR (3d) 111 (CA), Ontario Medical Assn. v. Miller (1976), 14 OR (2d) 468 (CA), Illidge (Trustee of) v. St. James Securities Inc. (2002), 60 OR (3d) 155 (CA), Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932, Susan J. Model & Talent Management Inc. v. IMG Models Inc., 2006 CanLII 2882 (Ont. CA), Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2016 ONCA 404

Whitby (Town) v. G & G 878996 LM Ltd., 2020 ONCA 654

Keywords: Municipal Law, Building Code, Civil Procedure, Appeals, New Issue on Appeal, Remedies, Set-off, Building Code Act, 1992, S.O. 1992, c. 23, s 15.10, Kaiman v. Graham, 2009 ONCA 77

Foodinvest Limited v. Royal Bank of Canada, 2020 ONCA 665

Keywords: Torts, Negligence, Duty of Care, Standard of Care, Banking, Fraud, Civil Procedure, Summary Judgment, Deloitte & Touche v. Livent Inc. (Receiver of), [2017] 2 SCR 855

Short Civil Decisions

Ballanger v. Ballanger, 2020 ONCA 663

Keywords: Costs

Samad v. Rasool, 2020 ONCA 656

Keywords: Civil Procedure, Appeals, Extension of Time, Orders, Setting Aside

Pearl Hospitality Inc. v. Ceballos, 2020 ONCA 672

Keywords: Contracts, Real Property, Mortgages, Civil Procedure, Torts, Fraudulent Misrepresentation

Levin v. Levin, 2020 ONCA 675

Keywords: Family Law, Costs

Old Navy (Canada) Inc. v. The Eglinton Town Centre Inc., 2020 ONCA 679

Keywords: Consent Dismissal

CIVIL DECISIONS

Paulpillai Estate v. Yusuf, 2020 ONCA 655

[Doherty, Hoy and Jamal JJ.A.]

Counsel:

O.G. Barnwell, for the appellants

E.G. Upenieks and A.H. Kwok, for the respondents

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Corporations, Remedies, Oppression, Receiverships, Interim Release of Funds, Injunctions, Adding Parties, Sealing Orders, Arbitration, Applications, Actions, Courts of Justice Act, ss. 6(1)(b), ss. (19(1)(b), ss. 101(1), Arbitration Act, ss. 7(1) and ss. 7(6), Grand River Enterprises v. Burnham (2005), 197 OAC 168 (CA), Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, Prescott & Russell (United Counties) v. David S. Laflamme Construction Inc., 2018 ONCA 495, Laurentian Plaza Corp. v. Martin (1992), 7 OR (3d) 111 (CA), Ontario Medical Assn. v. Miller (1976), 14 OR (2d) 468 (CA), Illidge (Trustee of) v. St. James Securities Inc. (2002), 60 OR (3d) 155 (CA), Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932, Susan J. Model & Talent Management Inc. v. IMG Models Inc., 2006 CanLII 2882 (Ont. CA), Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2016 ONCA 404

facts:

The respondent in this case is the estate of a deceased. The deceased and the appellant operated two universities together in the Caribbean. While several corporate structures and partnerships were interposed, their relationship was ultimately governed by a partnership agreement in Ontario. When the deceased passed away, the appellant suggested to the respondent that they alter the relationship and each take responsibility for one of the schools and no longer run them as affiliated schools. The respondent agreed to this. However, the respondent alleged that the appellant failed to provide proper financial disclosure to allow the respondent to make a proper choice as to which school to assume ownership for. Further, it was alleged the appellant began competing with the school owned by the respondent, poaching its staff and that the appellant also failed to account for partnership funds owed to the deceased’s estate arising after the deceased’s death.

As a result, the respondents commenced an application, seeking a declaration and damages for corporate oppression, a declaration and damages for breach of the partnership agreement and an accounting and tracing of partnership funds since the death of the deceased, among other relief. The appellant agreed to all the injunctive relief sought at the first appearance and so a consent order was granted. Thereafter, the respondent had reason to believe the appellant was breaching the consent order and so brought the application back before the court.

The motion judge issued the order that gives rise to this appeal, which order: i) appointed BDO Canada Limited (“BDO”) as an investigative monitor of the schools; ii) released funds on an interim basis to the appellant for the operation of their school, as an advance of any sum that might be found to be payable to them; iii) enjoined the appellant on an interim basis from competing unfairly with the respondent’s school or recruiting its students or personnel; iv) converted the application to an action; v) added parties to the action; and vi) declined to seal the entire court file.

The respondent brought a motion to quash the appeal as being in the wrong court. The appellant sought a stay of the order pending appeal.

issues: 

(1) Was the order under appeal final or interlocutory, such that an appeal lay to the Divisional Court, with leave?

(2) Should the order be stayed?

holding: 

Motion to quash granted. Motion to stay dismissed.

reasoning: 

(1) Was the order under appeal final or interlocutory, such that an appeal lay to the Divisional Court, with leave?

The order was interlocutory. An appeal from an interlocutory order lies to the Divisional Court. The Court of Appeal reviewed the main principles to be considered when assessing whether an order is interlocutory: i) an appeal lies from the court’s order, not from the reasons given for making the order; ii) an interlocutory order “does not determine the real matter in dispute between the parties — the very subject matter of the litigation — or any substantive right. Even though the order determines the question raised by the motion, it is interlocutory if these substantive matters remain undecided; iii) in determining whether an order is final or interlocutory, one must examine the terms of the order, the motion judge’s reasons for the order, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the order; and iv) the question of access to appellate review must be decided on the basis of the legal nature of the order and not on a case by case basis depending on the application of the order to the facts of a particular case … in other words, the characterization of the order depends upon its legal nature, not its practical effect.

The Court of Appeal then considered each element of the order under appeal to determine whether the order was interlocutory.

(i) Appointment of BDO
The motion judge’s reasons noted the court had “authority to appoint a receiver and manager by an interlocutory order where it appears to be just or convenient to do so: Courts of Justice Act, s. 101”. BDO was appointed to monitor the schools and ensure the respondents’ ability to recover was not prejudiced. It is well established before the Court of Appeal that a receiver appointed under s. 101(1) is an interlocutory order, and the court held in this case that appointing BDO an investigative monitor was a parallel decision.

(ii) Release of Funds to the respondent
An interim release of funds to one party, on motion, that settles no elements of the lis between the parties is an interlocutory order. In this case, the order itself referred to it as an advance of money that may be owing. If the application is unsuccessful, the money will have to be repaid and as such, it is not determinative of the parties’ rights.

(iii) Interim Injunction
An interim or interlocutory injunction is interlocutory for purposes of the appeal route, because its legal nature does not finally determine the essence of the litigation before the court, even if its practical effect may be to do so. As a result, the court concluded the injunction was interlocutory.

(iv) Conversion of the Application into an Action
The Court held that an order converting an application into an action is interlocutory. Such an order simply converts the application into an action that will proceed to trial. The matter was started in the Superior Court of Justice and remains there.

(v) Addition of Parties
The act of adding parties to an action or an application does not affect or finally determine the substantive rights of any of the parties. The litigation continues and the rights of the parties are decided in a further step in the action/application. Thus, an order adding parties is interlocutory.

(vi) Refusing to Seal the Court File
In refusing to seal the court file, the motion judge noted that the decision could be revisited if either party could present evidence to support it. This illustrates that it was not finally determinative, nor did it relate to the real matter in dispute. It was a collateral consideration as to whether the documents would be public. This was sufficient for the Court to find this aspect of the order as being interlocutory as well.

(vii) Refusal to Refer the Dispute to Arbitration
The partnership agreement stated that all disputes would be referred to arbitration and the parties may apply to a court for injunctive relief. The appellants suggested that by failing to order the matter into arbitration, the motion judge finally determined the forum for dispute resolution and deprived the appellants of their contractual right to arbitrate.

The Court dismissed this submission, largely because there was no motion before the motion judge to refer the dispute to arbitration. Further, the appellants did not make any attempt to stay the court proceedings in favour of arbitration, rather, they took significant steps in the court proceedings and thus waived their right to arbitrate.

Ultimately, the Court found that all aspects of the order were interlocutory, therefore it had no jurisdiction to hear the appeal. The appeal was therefore quashed.

(2) Should the order be stayed?

No. Since the Court of Appeal did not have jurisdiction for the appeal, the motion to stay the order under appeal was dismissed.

Whitby (Town) v. G & G 878996 LM Ltd., 2020 ONCA 654

[Hourigan, Trotter and Jamal JJ.A.]

Counsel:

J.A. Annen, for the appellant

R.A. Biggart and N. Sheikh, for the respondent

Keywords: Municipal Law, Building Code, Civil Procedure, Appeals, New Issue on Appeal, Remedies, Set-off, Building Code Act, 1992, S.O. 1992, c. 23, s 15.10, Kaiman v. Graham, 2009 ONCA 77

facts:

The appellant, G&G 878996 LM Ltd. (“G&G”), owned a multi-story, mixed-use commercial/residential building. A fire occurred at an adjacent building which resulted in it being demolished, except for the wall adjoining G&G’s property. This adjoining wall was eventually removed with the approval of the respondent, the Corporation of the Town of Whitby (“Whitby”).

Whitby’s Chief Building Official (“CBO”) later determined that the G&G owned building’s north wall, which had previously abutted the adjacent building that was demolished, constituted an immediate danger to occupants and the public-at-large. Pursuant to her authority under s.15.10 of the Building Code Act, 1992, (the “Act”), the CBO issued two emergency orders to eliminate the immediate danger posed by the exposed wall. Whitby then spent $335,089.86 to protect the public and effect repairs to terminate the danger. Following the issuing of an emergency order under s. 15.10 of the Act, a CBO must apply to a judge of the Superior Court to confirm the order. In the case at bar, the application judge confirmed the emergency orders and ordered that Whitby could recover from G&G its full costs in taking steps to terminate the immediate danger, as well as its costs of the application.

issues: 

(1) Did the application judge err in failing to consider whether the doctrine of equitable set-off applied in determining whether the amounts spent by Whitby were recoverable from G&G?

(2) Did the application judge err by approaching the case on the basis that it was analogous to an environmental damage claim?

holding: 

Appeal dismissed.

reasoning: 

(1) Did the application judge err in failing to consider whether the doctrine of equitable set-off applied in determining whether the amounts spent by Whitby were recoverable from G&G?

No. At the hearing of the application, G&G did not argue that it was entitled to an equitable set-off. Instead of arguing equitable set-off, it submitted that “[Whitby] should be estopped from collecting any of the funds expended on measures determining this perceived danger at that time.” The Court will generally not entertain entirely new issues on appeal because it is unfair to force a party on an appeal to respond when they might have adduced evidence below had they known that the matter would be an issue on appeal.

(2) Did the application judge err by approaching the case on the basis that it was analogous to an environmental damage claim?

No. The Court rejected the argument that the application judge incorrectly analogized the case at bar to an environmental damage claim. The comments of the application judge in that regard were part of a dialogue with counsel and not part of her reasons. Regarding the evidentiary record, no complaint was made by G&G on the return of the application about the state of the record. In any event, the Court was not satisfied that the record was insufficient for the application judge to make her order.

Foodinvest Limited v. Royal Bank of Canada, 2020 ONCA 665

[Doherty, Paciocco and Coroza JJ.A.]

Counsel:

G.K. Bastien, for the appellant

C. Francis, for the respondent

Keywords: Torts, Negligence, Duty of Care, Standard of Care, Banking, Fraud, Civil Procedure, Summary Judgment, Deloitte & Touche v. Livent Inc. (Receiver of), [2017] 2 SCR 855

facts:

The appellant (“Foodinvest”) contracted with the respondent (“RBC”) for the use of a self-service transfer facility (“RBC Express”) provided by RBC. That service allowed customers to personally transfer and receive funds from other financial institutions. Foodinvest used RBC Express to transfer funds to accounts in a Polish bank. Foodinvest subsequently claimed the beneficiary of the transferred funds had misappropriated those funds and defrauded Foodinvest. RBC received an email from the Polish bank to which the funds were being transferred, indicating the Polish bank suspected fraud in relation transactions in which Foodinvest had used RBC Express to transfer funds to the Polish bank. RBC did not pass this information on to Foodinvest. Foodinvest sued, maintaining RBC was under a duty to do so
The motion judge granted summary judgment for RBC and dismissed the claim. In dismissing the claim, the motion judge found RBC’s duty of care did not extend to an obligation to pass on the information provided by the Polish bank. Second, the motion judge found, even if a duty of care existed, there was no expert evidence in respect of the standard of care owed by RBC in the circumstances.

issues: 

(1) Did the motion judge err in making a determination on a summary judgment motion of novel legal issues?

(2) Did the motion judge err in holding that RBC’s duty of care did not extend to the requirement that RBC pass on the information it received from the Polish bank?

holding: 

Appeal dismissed.

reasoning: 

(1) Did the motion judge err in making a determination on a summary judgment motion of novel legal issues?

No. The argument on appeal that the issues were novel and not amenable to a motion for summary judgment was not made before the motion judge. In any event, the claim was not novel. The nature and extent of RBC’s duty of care fell to be determined under the principles articulated in Deloitte & Touche v. Livent Inc. (Receiver of), [2017] 2 SCR 855. In addition, the facts did not rise to a level of novelty or complexity unamenable to the summary judgment process.

(2) Did the motion judge err in holding that RBC’s duty of care did not extend to the requirement that RBC pass on the information it received from the Polish bank?

No. The scope of RBC’s duty of care to Foodinvest depended on the nature of the service it provided and the terms of the contractual relationship governing that service. The relevant agreement set out in exhaustive terms the nature and scope of RBC’s potential liability in respect of the services it offered to Foodinvest. RBC’s duty of care related specifically to the execution of the transfers made using the service provided by RBC. RBC’s duty of care extended to taking reasonable steps to ensure the transfers were properly authorized and properly carried out in accordance with the instructions provided. That duty did not require RBC to concern itself with the specifics or bona fides of the underlying transactions giving rise to the transfers. If Foodinvest was cheated, its loss flows not from any failure of the service provided by RBC, but from the dishonesty of the entities Foodinvest chose to do business with.

SHORT CIVIL DECISIONS

Ballanger v. Ballanger, 2020 ONCA 663

[Juriansz, Hourigan and Thorburn JJ.A.]

Counsel:

S. Beddoe and J. Robinson, for the appellant

G.S. Joseph and A.M. Mastervick, for the respondent, M.B.

J.J. Neal, for the respondent, K.H.

Keywords: Costs

Samad v. Rasool, 2020 ONCA 656

[Hourigan, Trotter and Jamal JJ.A.]

Counsel:

S.S., self-represented

A. Lee, for the respondent

Keywords: Civil Procedure, Appeals, Extension of Time, Orders, Setting Aside

Pearl Hospitality Inc. v. Ceballos, 2020 ONCA 672

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

Counsel:

D.C., acting in person

I.S. Arora and J. Chahal, for the respondent

Keywords: Contracts, Real Property, Mortgages, Civil Procedure, Torts, Fraudulent Misrepresentation

Levin v. Levin, 2020 ONCA 675

[Watt, Trotter and Zarnett JJ.A.]

Counsel:

P.I. Waldmann, for the appellant

R. Kniznik, for the respondent

Keywords: Family Law, Costs

Old Navy (Canada) Inc. v. The Eglinton Town Centre Inc., 2020 ONCA 679

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

Counsel:

J.F. Lancaster, for the appellants

C. Francis, for the respondent

Keywords: Consent Dismissal

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.

There were only two substantive civil decisions release by the Court of Appeal for Ontario this past week. Both related to the enforcement of settlements, one of a debt, the other of a medmal claim.

John Polyzogopoulos

Blaney McMurtry LLP

416.593.2953 Email

Table of Contents

Civil Decisions

Chaba v Khan, 2020 ONCA 643

Keywords: Contracts, Debtor-Creditor, Guarantees, Torts, Fraudulent Misrepresentation, Inducing Breach of Contract, Civil Procedure, Reasonable Apprehension of Bias, Costs, Courts of Justice Act, R.S.O. 1990, c. c.43, s. 131, Mariani v. Lemstra (2004), 246 D.L.R. (4th) 489 (Ont. C.A.), Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, R. v. Sahdev, 2017 ONCA 900, R. v. Aird, 2013 ONCA 447, R v. Gravesande, 2015 ONCA 774, R. v. Ibrahim, 2019 ONCA 613, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Boucher v. Public Accountants Council for Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)

Huma v Mississauga Hospital, 2020 ONCA 0644

Keywords: Torts, Negligence, MedMal, Contracts, Settlements, Enforcement, Implied Terms, Releases, Rules of Civil Procedure, Rule 49.09,  Milios v Zagas (1998), 38 OR (3d) 218 (CA),  Olivieri v Sherman, 2007 ONCA 0491, Hodai v RBC Dominion Securities, 2011 ONSC 6881, aff’d 2012 ONCA 0796, Kuo v Kuo, 2017 BBCA 245

Short Civil Decisions

Bilotta v Booth, 2020 ONCA 658

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Damages, Consequential Loss, Azzarello v. Shawqi, 2019 ONCA 820

WDM v Native Child and Family Services of Toronto, 2020 ONCA 0641

Keywords: Civil Procedure, Appeals, Frivolous, Vexatious, Abuse of Process, Parties Under Disability, Capacity, Rules of Civil Procedure, Rules 2.1.01(6), 2.1.01(1) & 7.04

Rolley v MacDonell, 2020 ONCA 0642

Keywords: Civil Procedure, Trial, Juries, Discharge of Jury, Mistrial, Evidence, Admissibility, Documents, Late Disclosure

Heliotrope Investment Corporation v 1324789 Ontario Inc., 2020 ONCA 647

Keywords: Civil Procedure, Appeals, Evidence, Examination of Witnesses, Solicitor-Client Communications, Rules of Civil Procedure, Rules 39.02(2) & 39.03(2)

CIVIL DECISIONS

Chaba v Khan, 2020 ONCA 643

[Doherty, Hoy and Jamal JJ. A.]

Counsel:

M.A. Khan, for the appellants

R.H. Parker, for the respondent

Keywords: Contracts, Debtor-Creditor, Guarantees, Torts, Fraudulent Misrepresentation, Inducing Breach of Contract, Civil Procedure, Reasonable Apprehension of Bias, Costs, Courts of Justice Act, R.S.O. 1990, c. c.43, s. 131, Mariani v. Lemstra (2004), 246 D.L.R. (4th) 489 (Ont. C.A.), Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, R. v. Sahdev, 2017 ONCA 900, R. v. Aird, 2013 ONCA 447, R v. Gravesande, 2015 ONCA 774, R. v. Ibrahim, 2019 ONCA 613, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Boucher v. Public Accountants Council for Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)

facts:

The individual appellant, a lawyer, provided a loan to a third party couple to finance the purchase of a home. When the borrowers did not make their monthly payments, the appellant issued a notice of sale and obtained an order for possession.

The respondent, a mortgage broker, became involved and tried to arrange alternative financing for the borrowers. The appellant and the borrowers later agreed to settle the debt. In a schedule to the settlement, the borrowers signed a promissory note in favour of the appellant, and the respondent signed as guarantor.

The respondent continued to seek financing for the borrowers, but in the meantime disputed his role as guarantor. He, in conjunction with the borrowers, sued the appellant for fraudulent misrepresentation. The appellant settled with the borrowers, but counterclaimed against the respondent, likewise claiming fraudulent misrepresentation, in addition to alleging that the respondent induced a breach of contract by undermining the original settlement for the debt.

The trial judge dismissed the appellant’s counterclaim, and held that the appellant’s settlement with the borrowers with respect to the debt released the respondent of any obligations as a guarantor. The appellant raised at least 14 issues on this appeal. The Court categorized these issues into six topics.

issues: 

(1) Did the trial judge err in dismissing the claim for fraudulent misrepresentation?

(2) Did the trial judge err in dismissing the claim for inducing breach of contract?

(3) Did the trial judge err in dismissing the claim to enforce the respondent’s guarantee?

(4) Did the trial judge approach the evidence unfairly by applying differential standards of scrutiny?

(5) Did the trial judge’s interventions give rise to a reasonable apprehension of bias?

(6) Did the trial judge err in his costs ruling?

holding: 

Appeal dismissed.

reasoning: 

(1) No. The trial judge correctly summarized the elements of fraudulent misrepresentation as laid out in Mariani v. Lemstra (2004), 246 D.L.R. (4th) 489 (Ont. C.A.): (i) defendant made a false representation of fact; (ii) defendant knew the statement was false or was reckless as to its truth; (iii) defendant made the representation with the intention that it would be acted upon by the plaintiff; (iv) the plaintiff relied upon the statement; and (v) the plaintiff suffered damages as a result.

(2) No. Once again, the trial judge correctly cited the four elements of inducing breach of contract as established in Drouillard v. Cogeco Cable Inc., 2007 ONCA 322: (i) plaintiff must have a valid and enforceable contract with the defendant; (ii) defendant was aware of the existence of the contract; (iii) defendant intended to and did procure the breach of the contract; and (iv) because of the breach, the plaintiff suffered damages.

Again, the Court was very brief in its analysis, and limited its comments to finding that there was no basis to interfere with the trial judge’s conclusion on this issue.

(3) No. The trial judge accepted that a lender may have separate claims against a borrower and their guarantor. However, in this case, it was not a term of the appellant’s settlement with the borrowers that he could maintain his pursuit of the respondent. Instead, the settlement provided for the “payment of the debt in its entirety.” Again, there was no basis to interfere with these findings.

(4) No. The Court emphasized that credibility findings are part of the bedrock of a trial judge’s function, and as such, attract a very high degree of deference on appeal (R. v. Sahdev, 2017 ONCA 900; R. v. Aird, 2013 ONCA 447). To challenge these findings, the appellant “must identify something clear in the trial judge’s reasons or the record indicating that a different standard of scrutiny was applied” (R v. Gravesande, 2015 ONCA 774). The Court concluded that the appellants did not meet this threshold.

(5) No. The appellant submitted that the trial judge’s apparently excessive questioning during his final submissions compromised his ability to cover all the issues before the court. However, the Court found no merit to these submissions, and pointed out that the questions involved nothing more than standard discussion between the court and counsel. This fell well short of meeting the test of a reasonable apprehension of bias as assessed from the perspective of a reasonable observer present throughout the trial (R. v. Ibrahim, 2019 ONCA 613).

(6) No. The Court stated that a costs award should only be set aside on appeal if the trial judge made an error in principle, or if the award is plainly wrong (Hamilton v. Open Window Bakery Ltd., 2004 SCC 9). This is a stringent test, and once again one that the appellants had failed to meet. The trial judge was well within his rights to exercise discretion in his costs award pursuant to s. 131 of the Courts of Justice Act, provided that the amount is “fair and reasonable” (Boucher v. Public Accountants Council for Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)). The Court found no error in this exercise of discretion, and therefore no basis to intervene.

Huma v Mississauga Hospital, 2020 ONCA 0644

[Rouleau, Miller and Zarnett JJ.A.]

Counsel:

R. P Bohm and D. S Lee, for the appellants

C.K. Hunter, for the respondent physicians

H. Ngan and B. Shakinovsky, for the respondent hospitals

Keywords: Torts, Negligence, MedMal, Contracts, Settlements, Enforcement, Implied Terms, Releases, Rules of Civil Procedure, Rule 49.09,  Milios v Zagas (1998), 38 OR (3d) 218 (CA),  Olivieri v Sherman, 2007 ONCA 0491, Hodai v RBC Dominion Securities, 2011 ONSC 6881, aff’d 2012 ONCA 0796, Kuo v Kuo, 2017 BBCA 245

facts:

The appeal arises from an alleged settlement in a medical malpractice case. One of the appellants alleged that the professional wrongdoing of the respondents left them injured, while the other two appellants were family members who brought claims under the Family Law Act. While the appellants had help from a lawyer drafting the statement of claim, the lawyer would not go on record, and the appellants were considered self-represented.

After almost two years had passed since the statement of claim was issued, lawyers for the respondents began making inquiries of the appellant as to their intention to pursue the claim. The appellant responded asking for further time to consider their options. The respondents’ lawyer advised the appellant that they would be seeking a court ordered timetable for the action and also asked the appellants if they would consider dismissing the action on a without cost basis in exchange for a release.

Two weeks later, one of the appellants sent an email to counsel for the respondents confirming they would be dismissing the case on a without costs basis, but made no mention of a release. They asked for confirmation of acceptance from the respondents as well as a copy of the form needed to file the dismissal with the court. All three appellants signed the letter. Counsel for the respondent physicians replied the same day confirming that the respondent physicians agreed to the dismissal in exchange for a release. A few days later, counsel for the respondent hospitals confirmed that the agreement was in exchange for a release and sent along a proposed form of release. This proposed release included a waiver of independent legal advice as well as a clause requiring the appellants to keep the terms of the settlement confidential.

Ultimately, the appellants refused to proceed with the settlement. They eventually retained legal counsel and wanted to proceed with the action. The respondents moved under rule 49.09 of the Rules of Civil Procedure to have the settlement enforced. The motion judge ultimately enforced the settlement and the appellants appealed that decision.

issues: 

(1) Did the motion judge err in finding an enforceable agreement to settle?

(2) Did the motion judge err by not exercising their discretion not to enforce an otherwise enforceable settlement on the grounds of unconscionability?

holding: 

Motion dismissed.

reasoning: 

(1) No. The appellants submitted that the spouse thought she was only taking an exploratory step when emailing counsel saying they would dismiss the action without costs. Citing Olivieri v Sherman, the Court of Appeal held that the conduct of the parties, including the language used, is to be viewed objectively when determining whether a contract has been made. The motion judge considered the words used in the email and held the requisite intention to create a binding settlement was present when viewed objectively.

Of particular note in this case was the issue of the releases. The appellants’ email did not mention releases as a term of the settlement. While the releases had been discussed initially, they were only re-introduced in the emails from the respondents’ counsel when accepting the offer from the appellant to dismiss the action. The Court of Appeal held that there is an implied obligation to furnish a release as part of a settlement, and so the fact the respondents introduced the term while accepting did not render the agreement unenforceable because the terms were not inconsistent. The releases proffered by both the respondent physicians and respondent hospitals’ counsel were overly broad, however. In particular, the proposed releases contained independent legal advice waivers and confidentiality clauses. These terms went beyond what was strictly necessary to enforce the intentions of the binding settlement agreement, and so they were beyond the reach of the implied obligation to furnish a release. The essential terms of the agreement, that is, to dismiss the action without costs and the implied obligation to furnish a release remained binding, however.

The appellants also submitted that the settlement was not enforceable because the spouse was acting without the authority of the other appellants when she sent the settlement email, and that the main appellant, the one who was injured, never consented or was never consulted on the settlement. The Court of Appeal accepted the motion judge’s finding that this was inconsistent with all three appellants having signed the email.

(2) No. The motion judge correctly recognized their overriding discretion to refuse to enforce a settlement and correctly cited the test in Milio v Zagas. Nevertheless, the motion judge did not find the terms of the settlement to be unconscionable and so did not exercise his discretion. The Court of Appeal saw no error in the motion judge’s approach and noted that he considered all the relevant factors in making his decision. This process and exercise of discretion was entitled to deference and the Court of Appeal saw no reason to intervene.

SHORT CIVIL DECISIONS

Bilotta v Booth 2020 ONCA 658

[Huscroft, Zarnett and Coroza JJ.A.]

Counsel:

Lee for the appellants KB and DB (Respondents/Applicants by Counter-Application)

Binavince, for the respondents CB and RB (Applicants/Respondents by Counter-Application)

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Damages, Consequential Loss, Azzarello v. Shawqi, 2019 ONCA 820

WDM v Native Child and Family Services of Toronto, 2020 ONCA 0641

[Juriansz, Hourigan and Thorburn JJ A]

Counsel:

WDM, acting in person

D. Mayer, for the respondents Her Majesty the Queen in Right of Ontario and the Public Guardian and Trustee

Keywords: Civil Procedure, Appeals, Frivolous, Vexatious, Abuse of Process, Parties Under Disability, Capacity, Rules of Civil Procedure, Rules 2.1.01(6), 2.1.01(1) & 7.04

Rolley v MacDonell, 2020 ONCA 0642

[Fairburn ACJO, Miller and Zarnett JJ A]

Counsel:

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

J.Y. Obagi and E. A. Quigley, for the respondents/appellants by way of cross-appeal

Keywords: Civil Procedure, Trial, Juries, Discharge of Jury, Mistrial, Evidence, Admissibility, Documents, Late Disclosure

Heliotrope Investment Corporation v 1324789 Ontario Inc., 2020 ONCA 647

[Hourigan, Trotter and Jamal JJ. A]

Counsel:

B. Marks for the appellants

C. Merovitz for the respondent

Keywords: Civil Procedure, Appeals, Evidence, Examination of Witnesses, Solicitor-Client Communications, Rules of Civil Procedure, Rules 39.02(2) & 39.03(2)

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

Good afternoon.

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

The decisions were all fairly short. Topics covered included prescriptive easements, breach of contract, family law (support), the approval of a settlement and contingency fee agreement in a personal injury matter and security for costs.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Ballanger v. Ballanger, 2020 ONCA 626

Keywords: Family Law, Spousal Support, Child Support, Retroactive Support, Civil Procedure, Appeals, Standard of Review, Hickey v. Hickey, [1999] 2 S.C.R. 518

Estates Associates Inc. v. 1645112 Ontario Ltd., 2020 ONCA 640

Keywords: Civil Procedure, Appeals, Security of Costs, Breach of Contract, Torts, Fraud, Negligent Misrepresentation, Conspiracy, Professional Negligence, Lawyers, Rules of Civil Procedure, Rules 61.06(1), Yaiguaje v. Chevron Corporation, 2018 ONCA 827

Honey Bee (Hong Kong) Limited v. VitaSound Audio Inc., 2020 ONCA 629

Keywords: Contracts, Technology, Manufacture and Sale, Fresh Evidence, Admissibility, “Palmer Test”, Due Diligence, Relevance, Reliability

Krukowski v Aviva Insurance Company of Canada, 2020 ONCA 0631

Keywords: Contracts, Solicitor and Client, Contingency Fee Agreements, Torts, Negligence, MVA, Settlements, Court Approval, Parties Under Disability, Henricks-Hunter v. 814888 Ontario Inc., 2012 ONCA 496, Wu (Estate) v. Zürich Insurance Company (2006), 268 DLR (4th) 670 (CA), leave to appeal refused, [2006] SCCA No. 289, Aywas v. Kirwan, 2010 ONSC 2278, Re Solicitor, [1973] 1 OR 652 (CA)

Paleshi Motors Limited v Woolwich (Township), 2020 ONCA 625

Keywords: Real Property, Easements, Land Titles, Watermain, Land Titles Act, R.S.O. 1990, c. L.5, s. 51(2), Municipal Act, 2001 S.O. 2001, ss. 6, 8, 9, Condos Castles Realty Inc. v. Janeve Corp., 2015 ONCA 466, Garfinkel v. Kleinberg and Kleinberg, [1955] O.R. 388 (C.A.), Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 116

White v 6975429 Ontario Inc., 2020 ONCA 627

Keywords: Breach of Contract, Real Property, Mortgages, Torts, Misrepresentation, Civil Procedure, Appeals, Sufficiency of Reasons

CIVIL DECISIONS

Ballanger v. Ballanger, 2020 ONCA 626

[Juriansz, Hourigan and Thorburn JJ.A.]

Counsel:

S. Beddoe and J. Robinson, for the appellant
G.S. Joseph and A.M. Mastervick, for the respondent
J.J. Neal, for the respondent

Keywords: Family Law, Spousal Support, Child Support, Retroactive Support, Civil Procedure, Appeals, Standard of Review, Hickey v. Hickey, [1999] 2 S.C.R. 518

facts:

This appeal was brought from the trial judge’s orders on spousal support, retroactive spousal support and retroactive child support. The appellant claims that the trial judge made palpable and overriding errors in granting insufficient spousal support and failing to order retroactive spousal support and child support.

The parties separated in 2004. In 2006, the parties agreed on amounts for both child support and spousal support, as well as a division of matrimonial assets. In 2008, however, the appellant applied for an increase in support based on an increase in the respondent’s income. A temporary order for an increase was made, as well as an order to pay retroactive support.

The parties later contentiously disputed the issue of spousal and child support over the course of an eight day trial. The trial judge fashioned an order based on average income attributed to the respondent, due to the fact that the respondent’s income varied greatly from year to year.

issues:

(1) Did the trial judge err in granting insufficient support and failing to order retroactive support?

holding:

Appeal dismissed.

reasoning:

No. The Court pointed out that the Supreme Court of Canada has instructed appellate courts to afford significant deference to trial judges in cases relating to support orders. Firstly, because the discretion involved in making a support order is best exercised by the judge who heard the parties directly. And secondly, because this approach promotes finality in family law matters.

The Court of Appeal therefore concluded that an appellate court can only interfere with a trial judge’s decision if there is a material error such as a serious misapprehension of the evidence, or an error in law. It is not entitled to overturn a support order simply because it would have made a different decision (Hickey v. Hickey, [1999] 2 S.C.R. 518).

The Court ultimately found that, in this case, the trial judge heard evidence over an extensive trial. His reasons were adequate and thoughtful, and it was clear that he had considered all of the relevant factors in arriving at his decision. As such, the Court of Appeal found no reason to interfere with the trial judge’s decision.

Estates Associates Inc. v. 1645112 Ontario Ltd., 2020 ONCA 640

[Strathy C.J.O., Brown and Huscroft JJ.A.]

Counsel:

M. I., acting in person for the appellant/ moving party

D.N.V., for the responding party, B.C.

A.S.D., for the responding parties, 1645112 Ontario Ltd., 1793411 Ontario Ltd., and R.M.

Keywords: Civil Procedure, Appeals, Security of Costs, Breach of Contract, Torts, Fraud, Negligent Misrepresentation, Conspiracy, Professional Negligence, Lawyers, Rules of Civil Procedure, Rules 61.06(1), Yaiguaje v. Chevron Corporation, 2018 ONCA 827

facts:

The appellant made claims for events that occurred 11 to 12 years ago including fraud, negligent misrepresentation, conspiracy, and breach of contract against the respondent, R.M. and his companies, in connection with the sale of a property. The appellant also claimed against the defendant, B.C., for allegedly negligent legal services. The claim was dismissed and the trial judge subsequently awarded costs to the respondents. The appellant sought to set aside or vary the order of the motion judge requiring that it post security for costs of the appeal in the amount of $100,000 each.

issues:

(1) Should the motion judge’s order requiring the appellant to post security for costs in the amount of $100,000 each be set aside or varied?

holding:

Motion dismissed.

reasoning:

No. The Court held that the motion judge’s order for security for costs rested on two foundations: first, a finding that the merits of the appeal were very much in doubt; and second, a finding that the respondents failed to establish that, despite its apparent impecuniosity, it did not have access to funds.

The motion judge’s order was discretionary and entitled to deference. The Court found that the appellant had demonstrated neither an error of law nor an error in principle in the exercise of the motion judge’s discretion. The Court found that, while the appeal may not be frivolous or vexatious, it appeared to have a very low prospect of success. The motion judge properly considered whether the appellant had established that it did not have access to funds and would not have been able to pay security for costs. There was evidence that the appellant had funded its litigation at various times by retaining several different lawyers, retaining an expert witness, and paying for the costs of the trial transcripts. In the face of this evidence, the appellant had an obligation to lead evidence that not only showed that it was without assets, but that it also had no access to funds. The appellant failed to do so, and the motion judge properly considered this failure in concluding that security for costs could be awarded.

Honey Bee (Hong Kong) Limited v. VitaSound Audio Inc., 2020 ONCA 629

[Rouleau, Miller and Zarnett JJ.A.]

Counsel:

M. Chamberlain and G. Ganguli for the appellant

Walter Kravchuk, for the respondent

Keywords: Contracts, Technology, Manufacture and Sale, Fresh Evidence, Admissibility, “Palmer Test”, Due Diligence, Relevance, Reliability

facts:

The appellant, VitaSound Audio Inc. (“VitaSound”), is a technology company in the business of developing personal audio devices. The respondent, Honey Bee (Hong Kong) Ltd. (“Honey Bee”), is in the business of manufacturing electronic devices. They entered into three agreements related to the manufacture and sale of audio devices Honey Bee manufactured using technology developed by VitaSound: a Loan Agreement for which the individual appellants executed personal guarantees, as well as an Investment Agreement and a Commercial Agreement.

VitaSound defaulted on the loan agreement. Honey Bee sued VitaSound for non-payment and the individual appellants pursuant to their personal guarantee. The appellants did not contest liability. However, VitaSound counterclaimed on the basis Honey Bee breached the Investment Agreement after the parties orally amended it. The appellants sought to set off Honey Bee’s liability against theirs under the Loan Agreement and personal guarantees.

The trial judge rejected VitaSound’s claims regarding oral amendment of the Loan Agreement and alleged breach by Honey Bee, and therefore any entitlement to a set-off from Honey Bee’s supposed liability. The trial judge found that the Commercial Agreement had no bearing on the matters in issue under the Loan Agreement or Investment Agreement.

In support of the appeal, the appellants sought to introduce fresh evidence. They alleged that Honey Bee sold units of an audio device in the Asian market, which contradicted Honey Bee’s evidence at trial. They argued that this evidence showed that Honey Bee not only misled the trial court, but also triggered an obligation under the Commercial Agreement to advance $500,000 to VistaSound. The appellants sought to set off their liability under the Loan Agreement against any damages for breach of the Commercial Agreement.

issues:

(1) Can fresh evidence be introduced on appeal from the trial decision?

(2) Did the trial judge err in not finding that Honey Bee breached the Commercial Agreement?

(3) Did the trial judge err in not finding that Honey Bee breached the Investment Agreement?

holding:

Motion and appeal dismissed.

reasoning:

(1) No. The Court applied the Palmer test and concluded the fresh evidence could not be admitted. The first branch of the Palmer test requires that the evidence not have been discoverable at trial through the exercise of due diligence. Emails that allegedly documented the sale of the device by Honey Bee were found after trial, by accident, when reviewing the spam folder of a departed employee’s email. The court found these emails were under the control of VitaSound at all times and were discoverable. Accordingly, the due diligence requirement was not satisfied.

The second branch of the Palmer test requires that the evidence be relevant, bearing upon a decisive or potentially decisive issue. The evidence was tendered to establish a breach of the Commercial Agreement and support a claim of set-off. A breach of the Commercial Agreement was never pleaded by the appellants at trial. Additionally, there was no basis in the evidence, including fresh evidence, to support that VitaSound would have been entitled to keep the entirety of the $500,000 advance payment from Honey Bee.

Finally, regarding reliability of the evidence, the fresh evidence consisted of emails from a third party to persons at VitaSound, from whom no direct evidence was elicited. Accordingly, the contents of the emails were hearsay.

(2) No. Performance of the Commercial Agreement was not a live issue at trial, and the trial judge made no error in that regard.

(3) No. The appellants argued that the trial judge ought to have accepted their evidence that the Investment Agreement had been orally amended, such that VitaSound could choose to have Honey Bee’s investment obligations be satisfied through the supply of audio units other than those enumerated in these agreements. The Court disagreed. The trial judge gave cogent reasons explaining why he concluded that the Investment Agreement had not been amended, including why he preferred the evidence of Honey Bee. There was therefore no basis for the Court to interfere with the trial judge’s decision.

Krukowski v Aviva Insurance Company of Canada, 2020 ONCA 0631

[Juriansz, Hourigan and Thorburn J.J.A.]

Counsel:

N. de Koning, for the appellant, Deutschmann Law Professional Corporation

No one appearing for the respondent, A.K.

Keywords: Contracts, Solicitor and Client, Contingency Fee Agreements, Torts, Negligence, MVA, Settlements, Court Approval, Parties Under Disability, Henricks-Hunter v. 814888 Ontario Inc., 2012 ONCA 496, Wu (Estate) v. Zürich Insurance Company (2006), 268 DLR (4th) 670 (CA), leave to appeal refused, [2006] SCCA No. 289, Aywas v. Kirwan, 2010 ONSC 2278, Re Solicitor, [1973] 1 OR 652 (CA)

facts:

The respondent was severely injured in a snowmobiling accident and was uninsured at the time. The respondent’s sister entered into a contingency fee retainer with the appellant wherein the appellant would receive 15% of any settlement they were able to reach with Aviva for the respondent.

The respondent eventually was found to be a party under disability and the Public Guardian Trustee (“PGT”) took control of the respondent’s property, pursuant to the Substitute Decisions Act, and as part of this control, entered into a new retainer agreement with the appellant where the contingency fee was set at 10%. The respondent’s sister was later named litigation guardian for the matter, and entered into a third retainer agreement on the same terms as the original one.

The appellant eventually reached a settlement with Aviva for $1,200,000. Based on their contingency arrangement, with HST and disbursements, the appellant’s portion of the settlement was just over $200,000. The appellant spent a total of 115 hours on the file (including clerk and associate time) and at the agreed upon billing rate, legal fees would have only amounted to approximately $20,000 absent the contingency agreement. The PGT objected to this amount and proposed reduced fees of $180,000 (including HST and disbursements), which the appellant agreed to.

When the settlement was brought to court for approval, the application judge approved the settlement, but further reduced the legal fees award to $60,000 plus HST and disbursements. The appellant appeals this cost order, submitting that while the application judge cited the correct legal test for legal fees in cases involving a party under disability, the application judged erred in applying the test to the case at hand.

issues:

(1) Did the application judge err in failing to apply the correct legal test to the determination of whether the legal fees for the accident benefits claim were reasonable?

holding:

Appeal dismissed.

reasoning:

No. A fee agreement involving a party under disability is not binding until it is approved by the court, and it is a discretionary exercise. Court approval of settlements for persons under disability is founded on the need to protect those who cannot care for themselves, and the court must ensure that the settlement as a whole, including provisions for legal fees are both reasonable and in the interest of the protected party.

Aywas v Kirwan and Re Solicitor were both cited by the court to identify the factors to be considered when fixing legal fees for a party under disability:
i) the time expended by the solicitor;
ii) the legal complexity of the matters dealt with;
iii) the degree of responsibility assumed by the solicitor;
iv) the monetary value of the matters in issue;
v) the importance of the matters to the client;
vi) the degree of skill and competence demonstrated by the solicitor;
vii) the results achieved;
viii) the ability of the client to pay;
ix) the client’s expectation of the amount of the fee;
x) the financial risk assumed by the solicitor of pursuing the action, including the risk of non-payment, the likelihood of success and the amount of the expected recovery; and
xi) the social objective of providing access to justice for injured parties.

The Court of Appeal reviewed the application judge’s analysis and found that not only did the judge cite the correct test and factors, but also discussed the factors relevant to this case when making their decision. In this case, the court noted that while the fees were agreed upon in a fair manner and were fully explained to the litigation guardian and that the appellant was very experienced in the area and obtained a favourable settlement, the issues in this case were not overly complex. Further, the appellants actual costs only amounted to $20,000 and a fee award that was many multiples of that amount was simply not reasonable or in the interest of the respondent.

The Court of Appeal found that it was clear that the application judge addressed and weighed all of the appropriate factors to be considered in deciding whether it would be fair and reasonable to approve the legal fees sought. Accordingly, there was no error and the appeal was dismissed.

Paleshi Motors Limited v Woolwich (Township), 2020 ONCA 625

[Doherty, Hoy and Jamal JJ. A.]

Counsel:

S. Rayman, C. Harris and S. Spitz for the appellant

P. A. Hertz, for the respondents

Keywords: Real Property, Easements, Land Titles, Watermain, Land Titles Act, R.S.O. 1990, c. L.5, s. 51(2), Municipal Act, 2001 S.O. 2001, ss. 6, 8, 9, Condos Castles Realty Inc. v. Janeve Corp., 2015 ONCA 466, Garfinkel v. Kleinberg and Kleinberg, [1955] O.R. 388 (C.A.), Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 116

facts:

The appellant, Paleshi Motors Limited owned property that consisted of two adjacent lots designated as Lots 20 and 21 (the “Paleshi property”). Lot 21 lies immediately to the east of Lot 20. Paleshi Motors acquired Lot 20 in July 1975 and acquired Lot 21 in July 1981. In late 1979 or early 1980, the respondent, the Corporation of the Township of Woolwich (“Woolwich”) installed a watermain just inside the eastern boundary of Lot 21. That watermain ran for some 200 feet along Lot 21. Woolwich acknowledged that it was aware the watermain was installed on property it did not own. Woolwich did not seek or obtain the permission of the owner of Lot 21, and did not attempt to enter into any easement agreement with the owner.

Paleshi Motors was acquired by new owners in 2015. None of the owners of the Paleshi property objected to either the installation or maintenance of the watermain until Paleshi Motors, under its new owners, objected in 2017. The Paleshi property was converted to the Land Titles Registry system on September 16, 2002. There was no evidence from anyone who owned the Paleshi property during the 20-year period preceding that date, or from anyone associated with any owner, as to the owner’s knowledge of the existence of the watermain, or any arrangement that existed between the owners and Woolwich with respect to the watermain.

In 2019, the present owners of Paleshi Motors brought an application seeking a declaration the watermain was illegally on their property and an order directing the removal of the watermain. At the same time, Woolwich brought an application seeking a declaration it had a prescriptive easement over the Paleshi property for the purposes of operating, maintaining, repairing and replacing the watermain.

The application judge dismissed Paleshi Motors’ application, and granted the prescriptive easement sought by Woolwich.

issues:

(1) Did the application judge err by concluding the appellants had acquiesced in the use of their property for the watermain during the relevant 20 year period?

(2) Should public authorities not be allowed to claim a prescriptive easement because they could expropriate the property?

holding:

Appeal dismissed.

reasoning:

(1) No. The application judge correctly identified the prerequisites to the existence of a prescriptive easement. There was no doubt Woolwich’s use and enjoyment of the Paleshi property for the purposes of the watermain was continuous, uninterrupted and peaceful during the relevant 20-year period. In reaching the conclusion that the owners of the Paleshi property during the relevant 20 years had acquiesced in the use of their property for the watermain, the application judge drew inferences based on the public nature of the construction in 1970-80, the regular maintenance of the watermain after it was installed, and Paleshi Motors’ ownership of the immediately adjacent lot (Lot 20) when construction occurred and maintenance was carried out. In considering whether the owners of Paleshi Motors were aware of the watermain on their property when they purchased Lot 21, the application judge was entitled to conclude the owners exercised reasonable diligence as purchasers when buying Lot 21. Paleshi motors had actual knowledge of the existence of the watermain on their property no later than 1986 based on a document prepared at Paleshi Motors’ request in respect of its proposed development of Lot 21 in 1986. Knowledge of the existence of the watermain could be imputed to the owners of the Paleshi property if an ordinary landowner, diligent in the protection of her interests, would have had a reasonable opportunity of becoming aware of the watermain. There is nothing unreasonable, either in the inferences drawn by the application judge, or in his ultimate conclusion that the owners of the Paleshi property had knowledge, actual or imputed, of the existence of the watermain by 1982 and acquiesced in Woolwich’s use of their property for that purpose over the next 20 years. Even if the application judge misplaced the ultimate burden of proof, it had no possible effect on his finding Woolwich did not have permission to use the property.

(2) No. Nothing in the case law offers any support for the proposition that public authorities should not be able, as a matter of law, to claim a prescriptive easement because they could have expropriated the property. To the extent the Municipal Act speaks to the issue, it offers support for the power of a municipality to acquire prescriptive easements in the same way as other legal entities. There are policy reasons for distinguishing between public authorities and private landowners insofar as the acquisition of easements by prescription is concerned. However, the fundamental policy underlying the common law’s recognition of prescriptive easements applies to all property owners. Whether that policy should apply to all, some, or no public authorities, is a question for the legislature.

White v 6975429 Ontario Inc., 2020 ONCA 627

[Pepall, Benotto and Coroza JJ.A.]

Counsel:

J. Zibarras, for the appellants/ respondents by way of cross-appeal

C. Shammas and T. Watson, for the respondents/ appellants by way of cross-appeal

Keywords: Breach of Contract, Real Property, Mortgages, Torts, Misrepresentation, Civil Procedure, Appeals, Sufficiency of Reasons

facts:

The respondents sold shares of 2402169 Ontario Inc. (“240”) to the appellants. The only assets of 240 were a quarry, the licence to operate it and equipment. The terms of the share purchase involved a sale price of $1,610,000, a promissory note and a personal guarantee signed by the appellants, and an agreement to assume the obligations of 240 with respect to three mortgages. The appellants also agreed to indemnify the respondents for all liabilities in connection with the mortgages. Prior to the closing of the transaction, the appellants were given a bill of sale that described the equipment and that it had been acquired on an “as is” condition from a third party. The appellants did not make the payments required, including the payments on the first mortgage.

The respondents brought an action in Newmarket (the “Newmarket action”) for damages arising from breach of the agreement. The appellants’ defence was that they were induced to enter the agreement by misrepresentations. They also counterclaimed asserting that the respondents had breached the agreement because they failed to deliver equipment that was in working order.

Meanwhile, the individuals who held the first mortgage, A.A. and A.F., brought an action in Toronto (the “Toronto action”) against the respondents for payment of the first mortgage. They obtained judgment against the respondents. The respondents brought a third-party action against the appellants for contribution and indemnity.

The two actions became the subject matter of two summary judgment motions heard together. In the Newmarket action, the motion judge granted judgment against the appellants and dismissed their counterclaim. He held that the various agreements were valid, and that the appellants were not induced by misrepresentation. In the Toronto action, the motion judge held that the appellants breached their agreement to assume all obligations and indemnify the respondents in relation to the mortgage. He declared that the respondents were entitled to contribution and indemnity from the appellants for all amounts in relation to the judgment against them.

issues:

(1) Did the motion judge err in his interpretation of the agreement by failing to consider the circumstances surrounding the agreement when he concluded that there was no representation in the Agreement that the equipment was in good working order?

(2) Were the respondents’ claims in respect of 240 capable of appellate review?

holding:

Appeal dismissed. Cross-appeal allowed.

reasoning:

(1) No. The appellants argued that various factors, such as the definition of “equipment” in the agreement and the appellants’ intention to use the equipment, support their allegation that the respondents made a misrepresentation that the appellants relied on. The Court did not accept these submissions. The motion judge considered the surrounding circumstances and found that there was no misrepresentation as to the condition of the equipment. The Court held that a plain reading of the agreement supported his conclusion. The Court found no legal error and gave deference to the motion judge’s interpretation of the agreement.

The Cross-Appeal
(2) No. The Court found this aspect of the appeal was not capable of review as the motion judge provided no reasons for the dismissal of the respondents’ claims in relation to 240. There was no consideration of the request for a declaration for an indemnity from 240, be it at law or in equity. The Court therefore remitted the claim against 240 to the motion judge for determination.