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Good evening.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 29, 2023.

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The Catalyst Capital Group Inc. v West Face Capital Inc., 2023 ONCA 381 is a defamation and anti-SLAPP case involving multiple actions that have been going on for years and arise out of a dispute over the purchase of Wind mobile years ago. The Court upheld the dismissal of Catalyst’s claims under the anti-SLAPP provisions of the Courts of Justice Act.

In Lewis v Lifetime Developments, the appellant sued for an unpaid real estate commission earned back 2012. The appeal from the motion judge’s dismissal of the action as being out of time was dismissed.

In Burnham v. Co-operators General Insurance Company, a passenger of a stolen vehicle was injured, and claimed to have not known that the vehicle was stolen. The passenger made a claim against the owner’s insurer under the uninsured motorist coverage part of the policy. The motion judge held that the owner’s insurer had no liability to the passenger . The Court allowed the appeal and held that innocent passengers in a stolen vehicle are exempt from being excluded from coverage. Exclusions are to be interpreted and applied narrowly. The alternative to this outcome was that the passenger would have to be compensation out of the public Motor Vehicle Accident Claims Fund.

In Airport Business Park Inc. v. Huszti Holdings Inc., a vendor of land had a fixed period of time to remove an easement in favour of the City of Windsor from title to the property, failing which the purchaser would be entitled to an abatement of the purchase price. The vendor obtained and registered a court order removing the easement two days before the deadline. The City appealed (and ultimately lost). The purchaser still claimed the abatement, arguing that since the appeal was outstanding beyond the deadline, the vendor had not complied with the condition and the purchaser was entitled to the abatement. The motion judge found in favour of the vendor. The Divisional Court set aside that decision, finding in favour of the purchaser. The Court allowed the appeal and restored the motion judge’s decision. The issue hinged on whether order could be considered final or not. Since there was no stay of the order and a subsequent sale of the property by the purchaser before the City’s appeal was heard would have prejudiced the City’s appeal rights, the Court felt that the order was final for the purpose of complying with the contractual condition to remove the easement by the time period specified. Determining whether an order is final depends on the extent of why the finality was being questioned, and it is not a bright line test.

In Russian Federation v Luxtona Limited, the Russian Federation appealed an international arbitral tribunal’s ruling that it had the jurisdiction to hear a contractual dispute involving the Russian government. The Superior Court had dismissed the appeal and refused to permit Russia to file fresh evidence on the jurisdiction question. The Divisional Court set that order aside and found that the appeal to the court was a de novo hearing, as per international consensus. The Court agreed with the Divisional Court and dismissed the appeal.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

The Catalyst Capital Group Inc. v. West Face Capital Inc., 2023 ONCA 381

Keywords: Torts, Defamation, Anti-SLAPP, Injurious Falsehood, Conspiracy, Unlawful Means Tort, Securities Law, Canadian Charter of Rights and Freedoms, s. 2(b), Courts of Justice Act, R.S.O. 1990, c. C. 43, subsections 137.1(3) and (4), and sections 6(1)(d) and 133(b), Libel and Slander Act, R.S.O. 1990, c. L. 12, 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, Bent v Platnick, 2020 SCC 23, Grant v. Torstar Corp., 2009 SCC 61, Park Lawn Corporation v. Kahu Capital Partners Ltd., 2023 ONCA 129, Guergis v. Novak, 2013 ONCA 449, Miguna v. Toronto (City) Police Services Board, [2004] O.J. No. 2455, Frank v. Legate, 2015 ONCA 631, WIC Radio Ltd. v. Simpson, 2008 SCC 40, Lewis v. The Daily Telegraph Ltd., [1964] A.C. 234 (H.L.), Bangash v. Patel, 2022 ONCA 763, Hansman v. Neufeld, 2023 SCC 14, Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686, Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 25, Platnick v. Bent, 2018 ONCA 687, Subway Franchise Systems of Canada Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 26, Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.), Veneruzzo v. Storey, 2018 ONCA 688, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Duong v. NN Life Insurance Co. of Canada (2001), 141 O.A.C. 307, Levant v. DeMelle, 2022 ONCA 79, Hobbs v. Warner, 2021 BCCA 290

Burnham v. Co-operators General Insurance Company, 2023 ONCA 384

Keywords: Contracts, Insurance, Coverage, Automobile Insurance, Uninsured Motorist Coverage, Excluded Drivers, Driving Without Permission, Statutory Interpretation, Insurance Act, R.S.O. 1990, c. I.8, s. 265, Chilton v. Co-operators General Insurance Co. (1997), 32 O.R. (3d) 161 (C.A.)

Airport Business Park Inc. v. Huszti Holdings Inc., 2023 ONCA 391

Keywords: Contracts, Interpretation, Real Property, Land Titles, Deferred Indefeasibility, Mirror Principle, Curtain Principle, Insurance Principle, Civil Procedure, Orders, Finality, Appeals, Conveyancing and Law of Property Act, R.S.O. 1970, c. 85, s. 62, Land Titles Act, R.S.O. 1990, c. L.5, ss. 78(4), 78(4.1), 86(1), 93, 99, 101(1) 101(6), 102, 105, 111, 118, 119, 128, O. Reg. 430/11 “Forms”, Rules of Civil Procedure, r. 63, Smith et al. v. Tellier et al. (1974), 4 O.R. (2d) 154 (C.A.), Re West, 1928 CanLII 413 (ONSC), Leonard v. Wharton 1921 CanLII 441 (ON SC), Durrani v. Augier 2000 CanLII 22410 (ON SC), Re Regal Constellation Hotel (2004), O.R. (3d) (C.A.), Stanbarr Services Ltd. v. Metropolis Properties Inc., 2018 ONCA 244, 2544176 Ontario Inc. v. 2394762 Ontario Inc., 2022 ONCA 529, Martin v. 11037315 Canada Inc., 2022 ONCA 322, Waimiha Sawmilling Co. v. Waione Timber Co., [1926] A.C. 101 (P.C.), Lawrence v. Maple Trust Company, 2007 ONCA 74, United Trust Co. v. Dominion Stores Ltd., [1977] 2 S.C.R. 915, Hydro Fuels Inc. v. Mid-Pacific Services Inc., 2000 BCCA 608, R.A. & J. Family Investment Corp. v. Orzech (1999), 44 O.R. (3d) 385 (C.A.), Regal Constellation Hotel Ltd., Re (2004), 71 O.R. (3d) 355 (C.A), Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, Lamont on Real Estate Conveyancing, 2nd ed. (Thomson Reuters looseleaf, 1991)

Russian Federation v. Luxtona Limited, 2023 ONCA 393

Keywords: Contracts, Civil Procedure, International Arbitration, Jurisdiction, Competence-Competence Principle, Uniformity Principle, Fresh Evidence, Energy Charter Treaty, 17 December 1994, 2080 U.N.T.S. 95, Article 45(1), UNCITRAL Model Law on International Commercial Arbitration, Articles 16(1), 16(3) and 34(2), International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5., Schedule 2, Palmer v. The Queen, [1980] 1 S.C.R. 759, Uber Technologies Inc. v. Heller, 2020 SCC 16, Dell Computers v. Union des consommateurs, 2007 SCC 34, Dallah Real Estate and Tourism Holding Company v. The Ministry of Religious Affairs, Government of Pakistan, [2010] UKSC 46, République Arabe d’Egypte c. Southern Pacific Properties Ltd, Cour de cassation Civ. 1re, 6 January 1987, No. 84-17.274, Insigma Technology Co. Ltd. v. Alstom Technology Ltd., [2008] SGHC 134, aff’d [2009] SGCA 24, Electrosteel Castings Ltd v. Scan-Trans Shipping and Chartering Sdn Bhd, [2003] 2 All E.R. (Comm) 1064 (Q.B.), AQZ, Government of the Lao People’s Democratic Republic v. Sanum Investments Ltd., [2015] SGHC 15, Azov Shipping Co v. Baltic Shipping Co, S Co v. B Co, [2014] 6 HKC 421, AQZ v. ARA, [2015] SGHC 49, Sanum Investments Limited v. The Government of the Lao People’s Democratic Republic, [2016] SGCA 57, Lin Tiger Plastering Pty Ltd. v. Platinum Construction (Vic) Pty Ltd, [2018] VSC 221, Mexico v. Cargill, 2011 ONCA 622, Nigel Blackaby, K.C., Constantine Partasides, K.C., & Alan Redfern, Redfern and Hunter on International Arbitration, 7th ed. (Oxford: Oxford University Press, 2023), Emmanuel Gaillard & John Savage, eds., Fouchard, Gaillard, Goldman on International Commercial Arbitration (The Hague: Kluwer Law International, 1999)

Lewis v. Lifetime Developments, 2023 ONCA 388

Keywords: Breach of Contract, Civil Procedure, Summary Judgment, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Thermal Exchange Services Inc. v. Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186

Short Civil Decisions

Maynard v. Johnson Controls Canada LP, 2023 ONCA 392

Keywords: Contracts, Employment, Wrongful Dismissal, Remedies, Damages, Payment in Lieu of Notice, Employment Standards Act, 2000, S.O. 2000, c. 41


CIVIL DECISIONS

Catalyst Capital Group Inc. v West Face Capital Inc., 2023 ONCA 381

[Miller, Coroza and Copeland JJ.A.]

Counsel:

J.E. Callaghan, R.G. Dearden, B. Na, M. Karabus, and M.S. Romeo, D. Moore and K. Jones, for the appellant, Catalyst Capital Group Inc.
M. Milne-Smith, A. Carlson, and M. O’Sullivan, for the respondents, West Face Capital Inc. and G.B.
M.P. Tunley, for the respondents, Dow Jones and Company and J.M. and R.C.
L. Lung and R. Shoom, for respondents, ClaritySpring Inc. and N. A.
E. Bodnar and B. Campbell, for the respondent, K.B.
M. Wiffen, for the respondents, J. McFarlane and D.L.
A.D. Lascaris, P. Guy, and A. Seely, for the respondent, B.L.

Keywords: Torts, Defamation, Anti-SLAPP, Injurious Falsehood, Conspiracy, Unlawful Means Tort, Securities Law, Canadian Charter of Rights and Freedoms, s. 2(b), Courts of Justice Act, R.S.O. 1990, c. C. 43, subsections 137.1(3) and (4), and sections 6(1)(d) and 133(b), Libel and Slander Act, R.S.O. 1990, c. L. 12, 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, Bent v Platnick, 2020 SCC 23, Grant v. Torstar Corp., 2009 SCC 61, Park Lawn Corporation v. Kahu Capital Partners Ltd., 2023 ONCA 129, Guergis v. Novak, 2013 ONCA 449, Miguna v. Toronto (City) Police Services Board, [2004] O.J. No. 2455, Frank v. Legate, 2015 ONCA 631, WIC Radio Ltd. v. Simpson, 2008 SCC 40, Lewis v. The Daily Telegraph Ltd., [1964] A.C. 234 (H.L.), Bangash v. Patel, 2022 ONCA 763, Hansman v. Neufeld, 2023 SCC 14, Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686, Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 25, Platnick v. Bent, 2018 ONCA 687, Subway Franchise Systems of Canada Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 26, Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.), Veneruzzo v. Storey, 2018 ONCA 688, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Duong v. NN Life Insurance Co. of Canada (2001), 141 O.A.C. 307, Levant v. DeMelle, 2022 ONCA 79, Hobbs v. Warner, 2021 BCCA 290

facts:

This is a complex set of appeals. The three underlying actions allege multiple torts involving the coordinated actions of many individuals and companies. The appellants launched a comprehensive attack on the motion judge’s reasons, raising a dozen or so grounds of appeal against the dismissal of their two actions pursuant to anti-SLAPP motions and the dismissal of their competing anti-SLAPP motion in relation to a counterclaim.
The Catalyst Parties and West Face are significant players in the Canadian private equity and financing markets. They have a considerable history of animosity, with Catalyst having sued West Face three times relating to a 2015 business deal in which West Face triumphed over Catalyst to acquire WIND Mobile. Of the three lawsuits, the only action to proceed to trial was dismissed by Newbould J. in 2016.

On August 9, 2017, an article published on the Wall Street Journal’s (“WSJ”) website reported that a series of whistleblower complaints had been filed with the OSC. The WSJ article reported that whistleblowers had accused the Catalyst parties (Catalyst Capital and Callidus Capital) of fraud, and of deceiving borrowers. The article was written by the respondents R.C. and J.M., who were relying on information supplied by the respondent N.A. that he and several Callidus borrowers had filed complaints about Catalyst with securities regulators. The Catalyst parties claimed that the WSJ article defamed them to an audience of approximately 2.4 million readers and had a devastating effect on their business. This included shares of Callidus falling 19.2% in 28 minutes, resulting in a loss of at least $144 million.

The Catalyst parties brought three appeals from: the dismissal of two of their actions pursuant to anti-SLAPP motions brought by some or all of the defendants, and the dismissal of the Catalyst parties’ partial anti-SLAPP motion in relation to the West Face parties’ counterclaim:

1. The Defamation action was brought by the Catalyst parties against the Dow Jones parties for publishing allegedly defamatory statements in the WSJ article. The Dow Jones parties were successful in having the action against them dismissed through an anti-SLAPP motion, and the Catalyst parties appealed.

2. The Wolfpack action was brought by the Catalyst parties against the Wolfpack parties, claiming they engaged in a conspiracy against the Catalyst parties which culminated in the publication of the WSJ article. Some of the defendants brought an anti-SLAPP motion and were successful in having the Wolfpack action dismissed against them. The Catalyst parties appealed the dismissal of the Wolfpack action.

3. The West Face counterclaim was brought by the West Face parties in the Wolfpack action against the Catalyst parties and certain officers, seeking damages for defamatory comments and other tortious behaviour. The Catalyst parties brought an anti-SLAPP motion targeting a portion of West Face’s defamation action in the counterclaim. The Catalyst parties were unsuccessful, and they have appealed.

issues:

Defamation Action

1. Did the motion judge err in finding that the Catalyst parties failed to establish grounds to believe that the Defamation action as against the Dow Jones parties had substantial merit?

2. Did the motion judge err in finding that the Catalyst parties failed to establish grounds to believe that the Dow Jones parties had no valid defences of justification or responsible communication?

3. Did the motion judge err in law by weighing the evidence and making credibility findings with respect to R.C.’s participation in the common design?

Wolfpack Action

4. Did the motion judge err in law by improperly conducting the public interest weighing exercise under s. 137.1(4)(b)?

5. Did the motion judge err in law in finding the West Face parties, K.B. and D.L., who denied making the impugned expressions, met the threshold test under s. 137.1(3)?

6. Did the motion judge err in law by weighing the evidence and making credibility findings with respect to R.C.’s participation in the common design?
West Face counterclaim (cross-appeal)

7. Did the motion judge err in finding that section 137.1 does not permit partial anti-SLAPP motions?

8. Did the motion judge err in finding that the four statements were defamatory?

9. Did the motion judge err in finding that the harm allegedly suffered by the West Face parties was due to the four statements?

10. Did the motion judge err in finding that the public interest weighed in favour of permitting the underlying action to proceed under s. 137.1(4)(b)?

holding:

Appeals dismissed.

reasoning:

Defamation Action

1. Did the motion judge err in finding that the appellants failed to establish grounds to believe that the Defamation action as against the Dow Jones respondents had substantial merit?

No. The Court held that at the merits analysis stage, the onus on the responding party – the plaintiff in the action – is not a high standard; it is more than mere suspicion but less than proof on the balance of probabilities (1704604 Ontario Ltd. v. Pointes Protection Association).
The appellants first alleged that the motion judge misinterpreted the distinction drawn in Lewis v. The Daily Telegraph Ltd. (1963) between (i) reporting the fact that authorities – such as the OSC and the TPS – are conducting an inquiry into fraud, and (ii) reporting that parties have actually engaged in fraud. The motion judge relied on Lewis as support for the further proposition that “[t]he former is not capable, as a matter of law, of lowering the reputation of the appellants in the eyes of an ordinary person.” The appellants argue that the motion judge misread Lewis and was bound by a passage from Lord Devlin’s speech in which he stated: “I think it is undoubtedly defamatory of a company to say that its affairs are being inquired into by the police.” In rejecting this submission, the Court explained that the cited passage from Lord Devlin was dicta and not a binding proposition of law. Furthermore, Lord Devlin agreed with the view expressed by the majority of other Lord Justices that stating an investigation is afoot does not constitute innuendo imputing guilt. The Court held that the appellants made entirely too much of Lord Devlin’s dicta and held that the motion judge made no error either in his reading of Lewis or more generally in his understanding of the common law regarding defamation.

The appellants also alleged that the motion judge failed to give effect to the repetition rule – that one cannot escape liability for libel simply by prefacing the libel with a statement that one is just repeating what someone else has said (Grant v. Torstar Corp.). The Court held that the motion judge did not commit this error. The article did not contain a statement, from a first-person perspective, that the appellants had engaged in fraud. Whistleblowers made allegations of fraud to the OSC and to the TPS. The article reported this fact. That a reader is exposed to the idea that third parties believe the appellants to have committed fraud does not make the reporting of the allegation defamatory. If it did, it would never be permissible for a journalist to report that anyone was being investigated for fraud until such time as the matter was concluded. The law of defamation presumes that a reasonably thoughtful and informed reader understands the difference between allegations and proof of guilt (Guergis v. Novak; Miguna v. Toronto (City) Police Services Board; Frank v. Legate).

2. Did the motion judge err in finding that the appellants failed to establish grounds to believe that the Dow Jones respondents had no valid defences of justification or responsible communication?

No. With respect to the defence of truth or justification, the appellants argued that the defence was only available in this case to the extent that the whistleblower complaints were true. The motion judge found that the “main thrust” of the WSJ article was true – “that Whistleblower Complaints had been submitted to the OSC concerning the appellants and that, as a result, enquiries were being made.” Furthermore, the motion judge found that the WSJ article did not “purport to comment on the innocence or guilt” of the appellants or accuse them of wrongdoing. The Court held that the motion judge made no reviewable error in his analysis or conclusion in this regard.

The appellants also argued that justification is not available unless the defence accepts that it made the impugned statements (including the inferences alleged to be drawn from those statements) contained in the statement of claim. The appellants had pleaded that the statements made in the WSJ article were capable of supporting inferences that were defamatory. The Court held that the motion judge made no error in dismissing this argument, relying on WIC Radio Ltd. v. Simpson, for the proposition that the court need not accept the worst possible interpretation of the WSJ article for the purposes of assessing the truth defence. For the purposes of an anti-SLAPP motion, the Court held that the motion judge was entitled to resolve the issues by making findings about the inferences available from the impugned statements, on the basis of the limited record before the court, and was not required to accept the interpretation proposed by the appellants.

The Court also held that the motion judge made no error in finding that the appellants had not discharged their burden with respect to the unavailability of the responsible communication defence. The Court explained that to establish this defence, the publication must be on a matter of public interest and the defendant must show the publication was responsible, in that those involved in writing and publication were diligent in trying to verify the allegations, having regard to all the relevant circumstances (Grant v. Torstar). The Court found that the motion judge was entitled to make the factual findings that he did, on the record that was before him, which included evidence that the WSJ article was subject to a multi-tiered vetting process and the appellants had been provided an opportunity to comment before the article was released. As the motion judge is entitled to deference on appeal, the Court rejected the appellants argument that the motion judge erred by failing to find the Dow Jones respondents were actuated by malice.

3. Did the motion judge err in law by weighing the evidence and making credibility findings with respect to Copeland’s participation in the common design?

No. The Court explained that to avoid having a proceeding dismissed under s. 137.1(4)(b), the responding party must satisfy the motion judge that the harm it has suffered or will suffer because of the moving party’s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. The appellants argued that the motion judge failed to undertake this analysis and instead applied a different standard – dismissing the proceedings because of the “exceptional circumstances” of the appellants’ conduct. The Court held that this argument was misconceived, and that although the motion judge occasionally referenced “exceptional circumstances,” the s. 137.1(4)(b) analysis was entirely conventional.
The Court found that the appellants’ claim was that the motion judge ought to have concluded there was greater harm to the appellants, and that the expression was of lesser value than the motion judge found. The appellants invited the Court to replace the motion judge’s findings of fact with its own and engage in a reweighing of the public interest. The Court held that this was not the function of the Court, and therefore dismissed the appeal in relation to the Defamation action.

Wolfpack Action

4. Did the motion judge err in law by improperly conducting the public interest weighing exercise under s. 137.1(4)(b)?

Harm Analysis
No. The Court explained that section 137.1(4)(b) required the appellants to show that the harm they suffered (or were likely to suffer) as a result of the respondents’ expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the underlying expression. The appellants took issue with the motion judge’s finding that the harm they suffered was in the mid-range of the spectrum. However, the Court held that there was nothing wrong with the motion judge’s finding, which was entitled to deference on appeal.

Public Interest in allowing the claims to proceed

The appellants also argued that because the motion judge found that there were grounds to believe they would succeed on multiple claims, the public interest in their claims necessarily outweighed the public interest in protecting the respondents’ expressions. However, the Court rejected this argument, explaining that it ignored two principles of the s. 137.1(4)(b) analysis. First, at this stage, the Court explained that the “grounds to believe” standard is replaced with the more onerous “balance of probabilities” standard (Pointes Protection). Thus, a finding of “substantial merit” on the lower threshold in 137.1(4)(a) does not necessarily meet the public interest hurdle in s. 137.1(4)(b). Second, the Court held that the public interest hurdle of the analysis “serves as a robust backstop for motion judges to dismiss even technically meritorious claims if the public interest in protecting the expression that gives rise to the proceeding outweighs the public interest in allowing the proceeding to continue” (Pointes Protection). The Court further explained that it would be an error of law to do as the appellants suggested and tip the public interest balance in favour of findings made at an earlier stage of the s. 137.1 analysis, which would render the final step superfluous.

Public interest in protecting the expression

Furthermore, the appellants argued that the motion judge erred by failing to consider the quality of the expressions sought to be protected and the motivation behind them. They pointed to the motion judge’s findings that there were grounds to believe the claim had substantial merit because there was a real prospect that the respondents were motivated by malice. The Court disagreed, holding the appellants misunderstood the different thresholds of proof employed at the different stages of the s. 137.1 analysis. The Court explained that the motion judge was entitled to find the expression could be found false or motivated by malice on the lesser standard but also that it was not fair to conclude that the statements contained deliberate falsehoods or amounted to gratuitous personal attacks on the higher standard. The Court agreed with the motion judge’s findings that, considering the law and the facts before it, the expressions were “valid and important topics of public debate concerning major financial entities that solicit investments from both domestic and international actors.” The Court explained, again, that it is not the task of the Court of Appeal to redo the inferences drawn as to the quality of the commercial speech or the weight attached to it.

Factors relevant to weighing the public interest

The Court rejected the appellants’ claim that the motion judge considered factors irrelevant to the balancing exercise under s. 137.1(4)(b), because they sought an unduly narrow interpretation of this provision which ran contrary to the established jurisprudence. The Court stressed that indicia of a SLAPP are open-ended and can always be relevant to the public interest weighing exercise in an appropriate case. The Court found it was not an error for the motion judge to consider these indicia as part of the public weighing exercise so long as they were considered together with other relevant considerations and not automatically treated as dispositive.

The Court also rejected the Catalyst parties’ claim that consideration of the financial and power imbalance between the parties and impact of this defamation claim on court resources and access to justice concerns were irrelevant to a s. 137.1(4)(b) analysis. The Court found that where, as here, the financial and power imbalance was evident in an extraordinary record of judicial and extra-judicial attempts to intimidate others and suppress the public interest in free expression, it was difficult to argue that this consideration should be irrelevant.

The Court dismissed the appellants’ first ground of appeal.

5. Did the motion judge err in law in finding the West Face respondents, who denied making the impugned expressions, met the threshold test under s. 137.1(3)?

The appellants’ second ground of appeal was that the respondents, West Face, D.L., K.B., and B.L., who did not admit to making the expressions at issue or acting in common design with the other defendants giving rise to the expressions cannot then satisfy the threshold test under s. 137.1(3) that “the proceeding arises from an expression made by the person that relates to a matter of public interest.” The Court found that the appellants’ second ground of appeal was a question of law not arising on the facts of this case, and provided deference to the motion judge’s findings, dismissing this ground of appeal.

6. Did the motion judge err in law by weighing the evidence and making credibility findings with respect to R.C.’s participation in the common design?

The Catalyst parties’ third and final ground of appeal in the Wolfpack action related to the defendant R.C. and his participation in the alleged conspiracy. The Catalyst parties asserted legal errors such as applying the wrong test or misapprehending the evidence. The Court refused to revisit factual findings and redo the weighing exercise absent any palpable and overriding error, and dismissed this ground of appeal.

West Face Counterclaim

7. Did the motion judge err in finding that section 137.1 does not permit partial anti-SLAPP motions?

The Catalyst parties explained that they brought a partial anti-SLAPP motion with respect to four expressions only, because the remainder of the expressions were not attributable to them. They argued that they should not be precluded from bringing an anti-SLAPP motion only in respect of the expressions they admitted to making. The Court noted that the jurisprudential question of whether s. 137.1 contemplates partial anti-SLAPP motions would be better left to another appeal in which the issue would be dispositive.I In this case, the motion would not be dispositive of the counterclaim, nor the particular cause of action. The Court stated that an anti-SLAPP motion is meant to be summary, efficient, and final. It is intended to save resources. The Court expressed concern that it is too often simply an occasion for the waste of additional time and expense, at no risk to the moving party, and agreed with the motion judge’s concern that allowing a partial anti-SLAPP motion of this sort would have the effect of delaying the entire proceeding for little purpose and with great expense and delay. The Court found the motion judge did not err in dismissing the appellants’ first ground of appeal.

8. Did the motion judge err in finding that the four statements were defamatory?

No, the Court held that the motion judge did not err in finding that the four statements were defamatory. The Court found that the motion judge examined each statement individually, and determined correctly that all four statements advanced the same meaning. The Catalyst parties raised two other arguments under this ground that took issue with the factual findings, which the Court found failed to identify any palpable and overriding errors in the motion judge’s decision. Consequently, the Court rejected the second ground of appeal in its entirety.

9. Did the motion judge err in finding that the harm allegedly suffered by the West Face respondents was due to the four statements?

No, the finding of the motion judge was theirs to make and was grounded in G.B.’s evidence that investors were shunning West Face on the basis that they could not invest with them while the Catalyst parties’ allegations were outstanding. The Court stated that it is not the task of a judge faced with an anti-SLAPP motion to do a deep dive into the record, as requested by the Catalyst parties, to assess the West Face parties’ claim that they have suffered harm. The Court stated that an anti-SLAPP motion is brought at an early stage in the proceedings and requires only a limited assessment of the evidence from the motion judge’s perspective. While there was no doubt the issue of harm and damages will be highly contested at the trial of the action, the Court found that at this stage in the proceeding, the West Face parties met their burden to show the harm was sufficiently serious. Although the motion judge considered the Catalyst parties’ broader conduct in this analysis, the motion judge did not err in doing so given the close relationship between the statements and the conduct addressed.

10. Did the motion judge err in finding that the public interest weighed in favour of permitting the underlying action to proceed under s. 137.1(4)(b)?

No, the Court found that because the appellants failed to overcome the merits-based hurdle under s. 137.1(4)(a), there was no need for the Court to consider their final ground of appeal concerning the public interest analysis. The Court held that this was clearly a finding of fact entitled to significant deference. The appellants did not allege palpable or overriding error.


Burnham v. Co-operators General Insurance Company, 2023 ONCA 384

[Doherty, Zarnett and Sossin JJ.A.]

Counsel:

J. Friendly and T.M. Wasserman, for the appellant
M. Dhanani, for the respondent

Keywords: Contracts, Insurance, Coverage, Automobile Insurance, Uninsured Motorist Coverage, Excluded Drivers, Driving Without Permission, Statutory Interpretation, Insurance Act, R.S.O. 1990, c. I.8, s. 265, Chilton v. Co-operators General Insurance Co. (1997), 32 O.R. (3d) 161 (C.A.)

facts:

This appeal involved a dispute over the interpretation of a provision of the standard Ontario Automobile Policy (“Policy”) dealing with the circumstances where a vehicle covered by the Policy is driven by a person without permission (in this case, a stolen vehicle).
The respondent is the insurer, the Co-operators General Insurance Company (“Co-operators”). The Minister of Public and Business Service Delivery (the “Minister”), responsible for the Motor Vehicle Accident Claims Fund (the “Fund”), appealed this decision.
The passenger was in the back seat of a stolen pickup truck involved in a motor vehicle accident. The driver and a front-seated passenger of the pickup truck were killed, the passenger sustained serious injuries. The passenger then sued the owner’s insurer, Co-operators, for uninsured motorist coverage.

The question facing the motion judge was whether the provision in question excludes coverage for passengers of the vehicle who do not know the vehicle is being driven without consent. The motion judge ruled in favour of Co-operators and held that the passenger had no cause of action as against Co-operators, as his claims for uninsured motorist coverage were precluded under s. 1.8.2. of the Policy, whether or not his allegation that he did not know the pickup truck was stolen were true.

issue:

Did the motion judge err in his interpretation of s. 1.8.2 of the Policy by finding that the passenger of a stolen vehicle was precluded from uninsured motorist coverage under this exclusion in the Policy, even if the allegation that he did not know the pickup truck was stolen were proven to be true?

holding:

Appeal allowed.

reasoning:

Yes.

Uninsured automobile coverage is coverage mandated by statute included in every motor vehicle liability insurance policy, subject only to the limits prescribed by regulation, as provided by s. 265 of the Insurance Act. The Policy is a statutory contract. It includes uninsured automobile coverage but also includes certain exclusions from coverage. Section 1.8.2 of the Policy includes an exclusion entitled, “Excluded Drivers and Driving Without Permission”.

At issue was whether a passenger in a vehicle whose owner is a policyholder is caught by this exclusion where that passenger does not know or ought not reasonably to know that the vehicle is being driven by someone without the owner’s consent.

Section 5 of the Policy outlines coverage for injuries arising from accidents involving an uninsured automobile. The focus of the exclusion in s. 1.8.2 is on passengers in uninsured vehicles (that is, passengers in vehicles not driven by its owner or the spouse of its owner).
In order to claim under the uninsured automobile provisions of the Policy, a claimant must not otherwise be excluded from coverage under the Policy. Therefore, the exclusion in s. 1.8.2 determines which passengers in uninsured automobiles can claim coverage under s. 5 of the Policy.

The second paragraph of the exclusion sets out that, “there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.”

Both paragraphs appear to extend coverage to innocent occupants injured in stolen vehicles. As a general rule, clauses in insurance policies will be granted a liberal meaning “in favour of the insured and those clauses excluding coverage [will be] construed strictly against the insurer”: Chilton v. Co-operators General Insurance Co. (1997), 32 O.R. (3d) 161 (C.A.).
The wording of s. 1.8.2 of the Policy and its legislative history support an interpretation of the first paragraph which exempts innocent passengers in a stolen vehicle from the exclusion of coverage. The Court felt that the motion judge should have been guided by the principle that exclusions are to be interpreted and applied narrowly.

The Minister argued on appeal that the real issue for the Court’s consideration is whether an insurer, the Co-operators, or the public’s Fund, ought to pay for an accident where the passenger does not know (or ought to know) the vehicle is stolen.
The Court favoured the interpretation advanced by the Minister, as opposed to Co-Operators, for the following reasons:

1. This interpretation flows from the text of the first paragraph of s. 1.8.2 which excludes coverage to occupants of a stolen vehicle, where those occupants know or ought to know the vehicle is being driven without permission of the owner.

2. This interpretation allows for a coherent distinction between the two paragraphs which comprise s. 1.8.2 of the Policy, with the first paragraph exempting an innocent passenger in the insured stolen vehicle, and the second paragraph dealing with a passenger covered by the Policy in any stolen vehicle other than the insured vehicle.

3. This interpretation is the narrower one with respect to the exclusion and favours the insured rather than the insurer.

4. This interpretation accords with the legislative history and the goal in the 2010 amendments of addressing the gap left by the 2005 amendments regarding innocent passengers in an uninsured vehicle.

5. This interpretation is consistent with the legislative intent of the Policy to increase insurance coverage for uninsured vehicles and decrease recourse to the Fund.


Airport Business Park Inc. v. Huszti Holdings Inc., 2023 ONCA 391

[Zarnett, Coroza and Favreau JJ.A.]

Counsel:

S. Laubman, N. Holmberg, and X.L. (C) Li, for the appellant
D. Gatti, for the respondent

Keywords: Contracts, Interpretation, Real Property, Land Titles, Deferred Indefeasibility, Mirror Principle, Curtain Principle, Insurance Principle, Civil Procedure, Orders, Finality, Appeals, Conveyancing and Law of Property Act, R.S.O. 1970, c. 85, s. 62, Land Titles Act, R.S.O. 1990, c. L.5, ss. 78(4), 78(4.1), 86(1), 93, 99, 101(1) 101(6), 102, 105, 111, 118, 119, 128, O. Reg. 430/11 “Forms”, Rules of Civil Procedure, r. 63, Smith et al. v. Tellier et al. (1974), 4 O.R. (2d) 154 (C.A.), Re West, 1928 CanLII 413 (ONSC), Leonard v. Wharton 1921 CanLII 441 (ON SC), Durrani v. Augier 2000 CanLII 22410 (ON SC), Re Regal Constellation Hotel (2004), O.R. (3d) (C.A.), Stanbarr Services Ltd. v. Metropolis Properties Inc., 2018 ONCA 244, 2544176 Ontario Inc. v. 2394762 Ontario Inc., 2022 ONCA 529, Martin v. 11037315 Canada Inc., 2022 ONCA 322, Waimiha Sawmilling Co. v. Waione Timber Co., [1926] A.C. 101 (P.C.), Lawrence v. Maple Trust Company, 2007 ONCA 74, United Trust Co. v. Dominion Stores Ltd., [1977] 2 S.C.R. 915, Hydro Fuels Inc. v. Mid-Pacific Services Inc., 2000 BCCA 608, R.A. & J. Family Investment Corp. v. Orzech (1999), 44 O.R. (3d) 385 (C.A.), Regal Constellation Hotel Ltd., Re (2004), 71 O.R. (3d) 355 (C.A), Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, Lamont on Real Estate Conveyancing, 2nd ed. (Thomson Reuters looseleaf, 1991)

facts:

The appellant agreed to sell to the respondent a property located in Windsor pursuant to an Agreement of Purchase and Sale. The property was subject to an easement in favour of the City of Windsor (the “Easement”). Prior to closing, the respondent requisitioned that the appellant have the Easement discharged from title to the property. The appellant did not do so before the closing date. The parties closed the sale on revised terms. Title to the property was transferred to the respondent subject to the Easement, and a charge was placed on the property by a vendor take-back mortgage (the “VTB Mortgage”) with a provision that required the appellant to remove the Easement within one year, failing which the amount owing under the VTB Mortgage would be reduced.

The appellant commenced an application to have the Easement discharged. It obtained a court order discharging the Easement and it registered the order on the property’s title, thereby vacating the Easement before the deadline in the VTB Mortgage. After the deadline in the VTB Mortgage, the City of Windsor appealed the discharge order. The appeal was dismissed nine months after the appellant had obtained the discharge order. The respondent took the position that the discharge order vacating the Easement did not satisfy the requirements of the VTB Mortgage. The respondent commenced an application for a declaration that the appellant failed to comply with the condition to obtain a valid release of the Easement, arguing that the court order did not meet the condition, and furthermore, the order did not meet the deadline because appeal rights existed after the deadline. The Application Judge rejected both arguments and dismissed the application.

The Divisional Court reversed the Application Judge’s decision, holding that although the appellant had obtained a valid release of the Easement, the contractual deadline was not met because appeal rights still existed at the time of the deadline. Relying on the Court’s decision in Smith et al. v. Tellier et al. (“Smith (ONCA)”), the Divisional Court held that the order obtained by the appellant was “in a sense interlocutory” until appeal rights had been exhausted.

Although the Divisional Court noted that the Supreme Court of Canada reversed the Smith (ONCA) decision, it held that the Supreme Court did not displace the principle that an order which is subject to appeal is not effective for all purposes before appeal rights have been exhausted. The Divisional Court held that the Supreme Court only carved out a limited exception to the principle: where the “prospect of an appeal” was ephemeral. The Divisional Court reasoned that, in this case, the prospect of appeal was not ephemeral when the order was obtained and the respondent’s request for good title without contingency was not met until the actual appeal had concluded – which took place well beyond the deadline.

The appellant’s primary argument was that the Divisional Court’s reliance on Smith (ONCA) was misplaced and that the discharge order was a final order, binding on the parties unless it was reversed on appeal or stayed. The discharge order was registered on title, effective as of the deadline and complied with the terms of the mortgage. Accordingly, the Divisional Court erred in law and principle by failing to accord proper deference to the Application Judge’s finding that it had complied with the terms of the VTB Mortgage.

issues:

1. Did the Divisional Court err in law by finding that the discharge order was not final and did not satisfy the VTB Mortgage?

2. Did the Divisional Court err by failing to consider that the respondent will receive both the benefit of its bargain of having the Easement removed and the windfall of a reduction in the purchase price?

3. Should the court consider new arguments of relief from forfeiture on appeal?

holding:

Appeal allowed.

reasoning:

1. Yes.

The Court reviewed the decision in Smith (ONCA), which the Divisional Court relied on in reversing the Application Judge’s decision. In Smith (SCC), on appeal, Laskin C.J.C. instructed courts to use a contextual analysis to determine whether an order is final.
The Court interpreted the holding in Smith (SCC) to be an instruction that in determining whether an order is final depends on the context of why finality is being questioned. It is not a bright line test.

The Court held that the language of the VTB Mortgage was clear, it required the appellant to secure and register on title a good and valid Transfer Release and Abandonment relating to the Easement. When the appellant obtained a discharge order, it was equivalent of a good and valid Transfer Release and Abandonment. Once that order was immediately registered in the land titles system, the Easement, as the Application Judge correctly observed, was extinguished two days before the deadline set out in the VTB Mortgage.
The Court relied on the fundamental principles of a land titles regime described by Epstein J. in Durrani v. Augier (2000): 1) the mirror principle; 2) the curtain principle and; 3) the insurance principle.

Section 78(4) of the Land Titles Act is one of the main legislative mechanisms to achieve the mirror principle. Subject to limited exceptions that must be narrowly construed, s.78(4) establishes a deferred indefeasibility of title regime that guarantees that a transfer in favour of a subsequent purchaser is effective once registered. One of the exceptions is actual notice of an unregistered instrument to a third-party purchaser for value: United Trust Co. v. Dominion Stores Ltd.

The Court cited the British Columbia Court of Appeal’s (BCCA) decision in Hydro Fuels Inc. v. Mid-Pacific Services Inc. on whether the former owners of land retained some unregistered interest by bringing an appeal against orders vesting the land in another party. The BCCA rejected the contention that an appeal of a vesting order created an unregistered interest in property, stating that if the party wished to preserve their interest in title, they had to seek a stay of the order.

The Court further referenced that the relevant jurisprudence holds that where there is no stay of an order that is being appealed, there is no jurisdiction to rectify the register on a successful appeal, if to do so would interfere with the registered interest of a bona fide purchaser for value in the interest as registered (Re Regal Constellation).

The Court held that the importance of the City of Windsor not seeking a stay of the discharge order could not be overstated. The Court noted that there is no requirement under the Land Titles Act to show that no appeal is pending, or appeal rights have not terminated. Appeal rights may be protected by obtaining a stay, which precludes registration of the order, but where a losing party does not seek such a stay, their rights of appeal might well be prejudiced. The fact that the effect of the discharge order when registered was the equivalent in all respects of the release of the Easement required under the VTB Mortgage was a complete answer to the Divisional Court’s concern about title being uncertain or contingent.
The Court concluded that there was no basis to find that the City’s appeal rights impacted on the respondent’s good and marketable title in any meaningful way and the Divisional Court was wrong to find that the Application Judge erred in failing to consider the City’s appeal rights without first considering the significance of those appeal rights in the context of this case.

2. and 3.

The Court’s conclusion on the first issue was dispositive of the appeal. It was therefore not necessary to deal with the remaining grounds of appeal.


Russian Federation v Luxtona Limited, 2023 ONCA 393

[Fairburn A.C.J.O., MacPherson and Miller JJ.A.]

Counsel:

L. Caylor, S.A. Bandali, G. Beaulne, S. Babwani, S. Tolani, for the appellant
J. Lotz and N. Antturi, for the respondent

Keywords: Contracts, Civil Procedure, International Arbitration, Jurisdiction, Competence-Competence Principle, Uniformity Principle, Fresh Evidence, Energy Charter Treaty, 17 December 1994, 2080 U.N.T.S. 95, Article 45(1), UNCITRAL Model Law on International Commercial Arbitration, Articles 16(1), 16(3) and 34(2), International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5., Schedule 2, Palmer v. The Queen, [1980] 1 S.C.R. 759, Uber Technologies Inc. v. Heller, 2020 SCC 16, Dell Computers v. Union des consommateurs, 2007 SCC 34, Dallah Real Estate and Tourism Holding Company v. The Ministry of Religious Affairs, Government of Pakistan, [2010] UKSC 46, République Arabe d’Egypte c. Southern Pacific Properties Ltd, Cour de cassation Civ. 1re, 6 January 1987, No. 84-17.274, Insigma Technology Co. Ltd. v. Alstom Technology Ltd., [2008] SGHC 134, aff’d [2009] SGCA 24, Electrosteel Castings Ltd v. Scan-Trans Shipping and Chartering Sdn Bhd, [2003] 2 All E.R. (Comm) 1064 (Q.B.), AQZ, Government of the Lao People’s Democratic Republic v. Sanum Investments Ltd., [2015] SGHC 15, Azov Shipping Co v. Baltic Shipping Co, S Co v. B Co, [2014] 6 HKC 421, AQZ v. ARA, [2015] SGHC 49, Sanum Investments Limited v. The Government of the Lao People’s Democratic Republic, [2016] SGCA 57, Lin Tiger Plastering Pty Ltd. v. Platinum Construction (Vic) Pty Ltd, [2018] VSC 221, Mexico v. Cargill, 2011 ONCA 622, Nigel Blackaby, K.C., Constantine Partasides, K.C., & Alan Redfern, Redfern and Hunter on International Arbitration, 7th ed. (Oxford: Oxford University Press, 2023), Emmanuel Gaillard & John Savage, eds., Fouchard, Gaillard, Goldman on International Commercial Arbitration (The Hague: Kluwer Law International, 1999)

facts:

The appellant Luxtona is a former shareholder of Yukos, an energy company based in Russia. It alleges that the respondent Russia violated provisions of the Energy Charter Treaty relating to protection of investments, including Luxtona’s investment in Yukos. Russia is a signatory to the Treaty but has not ratified it. Luxtona sought damages of US$701 million and argued that pursuant to article 45(1) of the Treaty, Russia agreed provisionally to apply the Treaty, including its arbitration provisions, to the extent that the provisional application was not inconsistent with Russia’s constitution, laws and regulations. Russia took the position that it did not agree to apply the Treaty provisionally and that the arbitration provisions of the Treaty were inconsistent with Russian law.

The parties appointed an arbitral tribunal seated in Toronto. The tribunal received evidence and heard legal arguments on the jurisdiction issue. The arbitral tribunal held that it had jurisdiction to arbitrate Luxtona’s claims against Russia. Russia applied to the Ontario Superior Court of Justice to set aside the arbitral tribunal’s decision on jurisdiction. It based its application on the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”), enacted in Ontario as Schedule 2 to the International Commercial Arbitration Act, 2017,. Russia relied on Articles 16(3) and 34(2) of the Model Law.

The Superior Court rendered three (3) decisions on the jurisdiction issue.

1. Justice Dunphy held that Russia was entitled as of right to adduce its proposed fresh evidence. Justice Dunphy stated “…I am not confined to the findings of fact made in regard to Russian law by the tribunal where these relate to the question of jurisdiction nor am I confined to the record consulted by the tribunal in reaching its own conclusion.”

2. Justice Penny was assigned to hear the application but expressed some doubt about the correctness of Justice Dunphy’s reasoning and decision. Justice Penny directed the issue of admissibility of the new evidence to be re-argued, and following this, released reasons that determined that Russia could not introduce its proposed fresh evidence. Russia appealed this to the Divisional Court.

3. The Divisional Court allowed the appeal and set aside Justice Penny’s decision. The appellant appealed the Divisional Court’s decision.

issues:

1. Did the Divisional Court properly consider the competence – competence principle when deciding that the words “decide the matter” in Article 16 mean that Russia can file the Fresh Evidence as of right?

2. Did the Divisional Court err in concluding that there was an “international consensus” that parties may file fresh evidence as of right in jurisdictional set-aside applications?

3. Did the Divisional Court err in deciding the appeal based only on an interpretation of Article 16 and without regard to Article 34?

holding:

Appeal dismissed.

reasoning:

1. The competence issue
Yes.
The Court rejected the appellant’s argument that the Divisional Court erred in not referring to the competence-competence principle, and that this principle, which allows an arbitral tribunal to rule on its own jurisdiction, requires that parties be given strong incentives to put as much of the record before the tribunal as possible. Otherwise, the tribunal will not truly be able to rule on its own jurisdiction. The Court noted that the competence-competence principle had provided the tribunal with the first opportunity to resolve Russia’s challenge to its jurisdiction, and that this was as far as the competence-competence principle goes. The Court found that this principle does not require any special deference be paid to an arbitral tribunal’s determination of its own jurisdiction. Competence-competence is best understood as “a rule of chronological priority” rather than as “empowering the arbitrators to be the sole judge of their jurisdiction.”

The Court also found that the Divisional Court correctly noted the “uniformity principle” set out in Article 2A(1) of the Model Law makes international decisions strongly persuasive in Ontario. The weight of international authority shows that the competence-competence principle does not limit the fact-finding power of a court assessing an arbitral tribunal’s jurisdiction. The Court cited a Singapore court case AQZ, which states that because the court retains the final say over questions of jurisdiction, it necessarily follows that the court must be “unfettered by any principle limiting its fact-finding ability.”

2. The “international consensus” issue
No.
The Court rejected the appellant’s submission that the Divisional Court erred in concluding that a de novo hearing was appropriate, and instead found that the weight of the international authority supports the Divisional Court’s conclusion. Using the leading case in this area, Dallah, as relied upon by the Divisional Court, the United Kingdom Supreme Court held that the “tribunal’s own view of its jurisdiction has no legal or evidential value, when the issue is whether the tribunal had any legitimate authority in relation to the government at all. This is so however full was the evidence before it and however carefully deliberated was its conclusion.” The Court noted that this case was endorsed by Courts in several other countries and stated that it could not conclude that the Divisional Court erred in determining that there was a “strong international consensus” in favour of a de novo hearing in the circumstances of this dispute.

3. The Article 16/Article 34 issue
No.
The Court held that the Divisional Court correctly interpreted Article 16(3) as providing for a proceeding de novo, rather than a review or an appeal. Additionally, nothing in the language of Article 34(2)(a)(i) or (iii) suggested the nature of the proceeding under those articles was any different. The Court rejected the appellant’s argument that the nature of the court’s jurisdiction is any different under Article 34 than it is under Article 16, and this issue was not before the court in Cargill. The Court found that the question in Cargill was whether deference was owed to the tribunal’s determination of its own jurisdiction, not whether an application to set aside is a review or a proceeding de novo. The nature of a proceeding to set aside an arbitral award is a separate question from the standard to be applied in that proceeding.


Lewis v. Lifetime Developments, 2023 ONCA 388

[Pepall, van Rensburg and Harvison Young JJ.A.]

Counsel:

O. Lewis, acting in person
M. Lerner and S. Blakeley, for the respondents

Keywords: Breach of Contract, Civil Procedure, Summary Judgment, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Thermal Exchange Services Inc. v. Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186

facts:

The appellant commenced an action in May 2021 suing for a real estate commission alleged to have been owed to him and in respect of which he first made a demand in early 2012. After delivering a statement of defence denying that a commission was owed, and asserting that the action was barred by the Limitations Act,, 2002, the respondents brought a summary judgment motion. The motion judge dismissed the action after concluding that the action was out of time and there was no genuine issue requiring a trial. The appellant appealed the dismissal of his action. He has also brought a motion to adduce fresh evidence.

issues:

1. Did the motion judge err in dismissing the appellant’s action by way of summary judgment?

2. Should the appellant be permitted to adduce fresh evidence on appeal?

holding:

Appeal and motion dismissed.

reasoning:

1. No.

The appellant raised three arguments as to why the motion judge erred in granting summary judgement. The Court dismissed each ground.
First, the appellant argued that he had entered into a tolling agreement with the respondent, which suspended the running of the limitation period. The Court determined that the agreement referred to by the appellant did not meet the standard necessary to establish a tolling agreement under s. 22 of the Limitations Act, 2002.
Second, the appellant argued that he was not treated fairly at the hearing when he was not afforded the opportunity by the motion judge to obtain further evidence regarding his psychological incapacity. The appellant claimed that the respondent’s representative had used a racial slur when refusing to pay the commission in question, which resulted in psychological distress. He claimed the psychological distress he suffered from this interaction should have lengthened the limitation period under s. 7(1) of the Limitations Act, 2002. Further, he argued that fresh evidence should be considered in the form of a psychodiagnostics assessment dated April 27, 2023. The Court determined that the appellant was not treated unfairly by the motion judge. In fact, although the appellant had filed his supplementary affidavit late, and had delivered a reply factum, the motion judge explained to him that she would consider both, as there was no objection by the respondents. In addition, there was nothing to indicate that the appellant requested the opportunity to obtain more evidence, nor did he ask for an adjournment of the summary judgment motion hearing.
Third, the appellant relied on the Court’s decision in Thermal Exchange Services Inc. v. Metropolitan Toronto Condominium Corporation No. 1289 to assert that his good faith negotiations with the respondent’s representative suspended the operation of the limitation period. The Court distinguished that decision on the facts.

2. No.

Even if the new psychodiagnostic report had been before the motion judge, it would not have affected the outcome of the motion..


SHORT CIVIL DECISIONS

Maynard v. Johnson Controls Canada LP, 2023 ONCA 392

[Lauwers, Huscroft and Zarnett JJ.A.]

Counsel:

S. Gordon and Reuben Rothstein, for the appellant
N. C. MacDonald and Chris Randall, for the respondent

Keywords: Contracts, Employment, Wrongful Dismissal, Remedies, Damages, Payment in Lieu of Notice, Employment Standards Act, 2000, S.O. 2000, c. 41


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

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

Good evening.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 22, 2023.

Continue Reading

The Court released two companion decisions in Markowich v. Lundin Mining Corporation and Peters v. SNC-Lavalin Group Inc. which addressed the meaning of “material change” in the “business, operations or capital” under the secondary market liability provisions of the Securities Act. In both cases, the appellants alleged that the respondents failed to disclose “forthwith” a material change in the respondent reporting issuer’s “business, operations or capital”. The Court upheld the motion judge’s interpretation of “change in business, operations or capital” in Peters and overturned the motion judge’s interpretation in Markowich.

In Interhealth Canada Limited v. O’Keefe, the Court applied the test of breach of fiduciary duty in the context of diverting corporate opportunities, as set out in seminal Supreme Court decision in Can. Aero Service v. O’Malley. The Court agreed with the trial judge that the former CEO did not divert corporate opportunities.

In Imperial Oil Limited v. Haseeb, the Court set aside the decision of the Divisional Court and restored the decision of the Ontario Human Rights Tribunal. The Tribunal had found that Imperial Oil had discriminated against the appellant on the basis of citizenship when it withdrew an offer of employment as an engineer after he revealed that he was not a citizen or permanent resident and could only work on a temporary work visa.

In Davies v. Clarington (Municipality), the Court declined to order costs against third-party lenders who had made a loan to help fund a claim by a train passenger injured during a train accident in 1999. The plaintiff had sued for $50 million, had rejected a $500,000 offer, and only recovered $50,000 in damages after a 106-day trial. The amount of the loan had exceeded $400,000 by that point, as interest had been compounding at rates of almost 30% per year. $3.4 million in costs were awarded against the plaintiff, but were unrecoverable against him. The third-party lenders had no control over the conduct of the litigation and were not entitled to any part of any judgment obtained. Accordingly, the plaintiff was not a “person of straw” and there was therefore no basis for a costs award against the lenders.

In Jakab v Clean Harbors Canada, the appellants’ contractual claim to insure a truck was dismissed at trial, as was their related negligent misrepresentation claim. While the appeal on the contractual claim was dismissed, the appeal from the dismissal of the negligent misrepresentation claim was allowed and remitted to a new trial. The amount at issue is under $65,000.

Other topics covered this week included the survival of a debt on a statutory construction trust claim following bankruptcy as a result of the debt arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity and intervenors.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Imperial Oil Limited v. Haseeb, 2023 ONCA 364

Keywords: Constitutional Law, Human Rights, Discrimination, Employment Law, Immigration Law, Citizenship, Canadian Charter of Rights and Freedoms, s. 15,  Human Rights Code, R.S.O. 1990, c. H.19, s. 5, s. 11(1), s. 16, s. 16(1), s. 16(2), s. 16(3), s. 34, s. 34(1), s. 45(2), Brooks v. Canada Safeway Ltd., [1989] 1 S.C.R. 1219, R. v. Perka, [1984] 2 S.C.R. 232, Fanshawe College of Applied Arts and Technology v. Au Optronics Corporation, 2016 ONCA 131, The Guarantee Company of North America v. Royal Bank of Canada, 2019 ONCA 9, Ontario (Health) v. Association of Ontario Midwives, 2022 ONCA 458, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Briggs v. Durham (Police Board), 2022 ONCA 823, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Shaw v. Phipps, 2012 ONCA 155, Moore v. British Columbia (Education), 2012 SCC 61, Peel Law Association v. Pieters, 2013 ONCA 396, Québec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Centre), 2015 SCC 39, Ontario v. Association of Midwives, 2020 ONSC 2839, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 S.C.R. 3, Entrop v. Imperial Oil Limited (2000), 50 O.R. (3d) 18 (C.A.), Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 S.C.R. 536, Fraser v. Canada (Attorney General), 2020 SCC 28,  British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Stewart v. Elk Valley Coal Corp., 2017 SCC 30, Canada (Minister of Finance) v. Finlay, [1986] 2 S.C.R. 607, Bedford v. Canada, 2010 ONSC 4264, Carroll v. Toronto-Dominion Bank, 2021 ONCA 38, Landau v. Ontario (Attorney General), 2013 ONSC 6152, Washington [v. Student Federation of the University of Ottawa, 2010 HRTO 1976], (Litigation Guardian of) v. Ontario (Minister of Health) (2001), 55 O.R. (3d) 43 (C.A.), Canada Post Corp. v. Canadian Union of Postal Workers, 2019 SCC 67, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Railway Co. v. Canada (Canadian Human Rights Commission), [1987] 1 S.C.R. 1114, Robichaud v. Canada (Treasury Board), [1987] 2 S.C.R. 84, Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, Fawcett v. Fawcett, 2018 ONCA 150, Maurice v. Priel, [1989] 1 S.C.R. 1023, Thomas A. Cromwell, Locus Standi: A Commentary on the Law of Standing in Canada (Toronto: Carswell, 1986), The Construction of Statutes, 7th ed. (Toronto: LexisNexis Canada, 2022)

Interhealth Canada Limited v. O’Keefe, 2023 ONCA 368

Keywords: Corporations, Directors, Breach of Fiduciary Duty, Misappropriation of Corporate Opportunities, Civil Procedure, Trials, Procedural Fairness, Evidence, Admissibility, Affidavits, Witnesses, Cross-examination, Time Limits, Recalling of Witnesses, Rules of Civil Procedure, r. 53.01(3), Can. Aero Service v. O’Malley, [1974] S.C.R. 592, R v. Samaniego, 2022 SCC 9, 412 C.C.C. (3d) 7, Griffi v. Lee, 2005 CanLII 48316 (ONSC), Southwind v. Canada, 2021 SCC 28

40 Days for Life v. Dietrich, 2023 ONCA 379

Keywords: Torts, Defamation, Anti-SLAPP, Online Harassment, Constitutional Law, Freedom of Expression, Civil Procedure, Intervenors, Friends of the Court, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, Rules of Civil Procedure, r. 13.02, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), RWDSU Local 558 v. PepsiCola Canada Beverages (West) Ltd., 2002 SCC 8, Grant v. Torstar Corp., 2009 SCC 61, R. v. Doering, 2021 ONCA 924

Convoy Supply Ltd. v. Elite Construction (Windsor) Corp., 2023 ONCA 373

Keywords: Bankruptcy and Insolvency, Debts Surviving Bankruptcy, Fraud, Embezzlement, Misappropriation or Defalcation While Acting in a Fiduciary Capacity, Construction Law, Statutory Trust Claims, Civil Procedure, Orders, Default Judgments, Amending, Setting Aside, or Varying Orders, Deemed Admissions, Extrinsic Evidence, Admissibility, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 69.3, s. 69.4, s. 178(1)(d), Construction Lien Act, R.S.O. 1990, c. C.30, Construction Act, 1990, c. C.30, Rules of Civil Procedure, r. 59.06(2), Simone v. Daley (1999), 43 O.R. (3d) 511 (C.A.), Bibico Electric Inc v. Battlefield Electrical Services Inc., 2012 ONCA 676, aff’g, [2011] O.J. No. 6557 (S.C.), Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd., 2022 ONCA 556, Re: Ieluzzi (#2), 2012 ONSC 1474

Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360

Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Costs, Securities Act, R.S.O. 1990, c. S.5, Class Proceedings Act, 1992, S.O. 1992, Criminal Code, R.S.C. 1985, c. C-46, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Director of Public Prosecutions Act, S.C. 2006, c. 9, s. 121, s. 13, Markowich v. Lundin Mining Corporation, 2023 ONCA 359, NC-Lavalin Group Inc. v. Canada (Public Prosecution Service), 2019 FC 282, Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92, Hughes v. Liquor Control Board of Ontario, 2019 ONCA 305, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Das v. George Weston Limited, 2018 ONCA 1053, Markowich v. Lundin Mining Corporation, 2022 ONSC 81, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, Coffin v Atlantic Power Corp., 2015 ONSC 3686, Paniccia v. MDC Partners Inc., 2018 ONSC 3470

Markowich v. Lundin Mining Corporation, 2023 ONCA 359

Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Certification, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, s. 1(1), s. 57, s. 75(1), s. 75(2), s. 138.1, s. 138.3(4), s. 138.8, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5, Housen v. Nikolaisen, 2002 SCC 33, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310 (Div. Ct.), Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, rev’d on other grounds, 2014 ONCA 90, aff’d 2015 SCC 60, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, aff’d 2010 ONSC 3926 (Div. Ct.), Peters v. SNC-Lavalin Group Inc., 2021 ONSC 5021, Miller v. FSD Pharma, Inc., 2020 ONSC 4054

Jakab v. Clean Harbors Canada, Inc., 2023 ONCA 377

Keywords: Contracts, Interpretation, Covenant to Insure, Ambiguity, Contra Proferentem, Torts, Negligence, Negligent Misrepresentation, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 2249778 Ontario Inc. v. Smith (Fratburger), 2014 ONCA 788, Meridian C C Intl Inc. v. 2745206 Ontario Inc., 2022 ONCA 12, Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, Queen v. Cognos Inc., [1993] 1 S.C.R. 87, Mahendran v. 9660143 Canada Inc., 2022 ONCA 676

Davies v. Clarington (Municipality), 2023 ONCA 376

Keywords: Torts, Maintenance, Champerty, Civil Procedure, Costs, Non-Parties, Abuse of Process, Appeals, Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C. 43, ss. 6(1)(b), 131(1), Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30, 33.1, Davies v. Clarington (Municipality) (2006), 266 D.L.R. (4th) 375 (Ont. S.C.), Davies v. Corporation of the Municipality of Clarington et al., 2010 ONSC 418, Davies v. The Corporation of the Municipality of Clarington, 2018 ONSC 4370, Davies v. The Corporation of the Municipality of Clarington, 2019 ONSC 2292, 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, Arkin v. Borchard Lines Ltd. & Ors, [2005] EWCA Civ 655, Chapelgate Credit Opportunity Master Fund Ltd. v. Money & Ors, [2020] EWCA Civ 246, Fresco v. Canadian Imperial Bank of Commerce, 2021 ONCA 46, Hunt v. Worrod, 2019 ONCA 540, The St. James’ Preservation Society v. Toronto (City), 2007 ONCA 601, Housen v. Nikolaisen, 2002 SCC 33, Behn v. Moulton Contracting Ltd., 2013 SCC 26, McIntyre Estate v. Ontario (Attorney General) (2002), 61 O.R. (3d) 257 (C.A.), Houle v. St. Jude Medical Inc., 2017 ONSC 5129, Fehr v. Sun Life Assurance Company of Canada, 2012 ONSC 2715, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267, Das v. George Weston Limited, 2018 ONCA 1053

Short Civil Decisions

Hayer v. Bertasiene, 2023 ONCA 375

Keywords: Civil Procedure, Costs, Fresh Evidence, Hayer v. Bertasiene, 2023 ONCA 302


CIVIL DECISIONS

Imperial Oil Limited v. Haseeb, 2023 ONCA 364

[van Rensburg, Sossin and Copeland JJ.A.]

Counsel:

T. G. Young and M. E. Maxwell, for the appellant
R. Nixon and D. Burns-Shillington, for the respondent Imperial Oil Limited
B. A. Blumenthal, for the respondent Human Rights Tribunal of Ontario
S. Choudhry and A. Nayerahmadi, for the interveners the South Asian Legal Clinic of Ontario and the Colour of Poverty/Colour of Change Network

Keywords: Constitutional Law, Human Rights, Discrimination, Employment Law, Immigration Law, Citizenship, Canadian Charter of Rights and Freedoms, s. 15,  Human Rights Code, R.S.O. 1990, c. H.19, s. 5, s. 11(1), s. 16, s. 16(1), s. 16(2), s. 16(3), s. 34, s. 34(1), s. 45(2), Brooks v. Canada Safeway Ltd., [1989] 1 S.C.R. 1219, R. v. Perka, [1984] 2 S.C.R. 232, Fanshawe College of Applied Arts and Technology v. Au Optronics Corporation, 2016 ONCA 131, The Guarantee Company of North America v. Royal Bank of Canada, 2019 ONCA 9, Ontario (Health) v. Association of Ontario Midwives, 2022 ONCA 458, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Briggs v. Durham (Police Board), 2022 ONCA 823, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Shaw v. Phipps, 2012 ONCA 155, Moore v. British Columbia (Education), 2012 SCC 61, Peel Law Association v. Pieters, 2013 ONCA 396, Québec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Centre), 2015 SCC 39, Ontario v. Association of Midwives, 2020 ONSC 2839, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 S.C.R. 3, Entrop v. Imperial Oil Limited (2000), 50 O.R. (3d) 18 (C.A.), Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 S.C.R. 536, Fraser v. Canada (Attorney General), 2020 SCC 28,  British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Stewart v. Elk Valley Coal Corp., 2017 SCC 30, Canada (Minister of Finance) v. Finlay, [1986] 2 S.C.R. 607, Bedford v. Canada, 2010 ONSC 4264, Carroll v. Toronto-Dominion Bank, 2021 ONCA 38, Landau v. Ontario (Attorney General), 2013 ONSC 6152, Washington [v. Student Federation of the University of Ottawa, 2010 HRTO 1976], (Litigation Guardian of) v. Ontario (Minister of Health) (2001), 55 O.R. (3d) 43 (C.A.), Canada Post Corp. v. Canadian Union of Postal Workers, 2019 SCC 67, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Railway Co. v. Canada (Canadian Human Rights Commission), [1987] 1 S.C.R. 1114, Robichaud v. Canada (Treasury Board), [1987] 2 S.C.R. 84, Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, Fawcett v. Fawcett, 2018 ONCA 150, Maurice v. Priel, [1989] 1 S.C.R. 1023, Thomas A. Cromwell, Locus Standi: A Commentary on the Law of Standing in Canada (Toronto: Carswell, 1986), The Construction of Statutes, 7th ed. (Toronto: LexisNexis Canada, 2022)

facts:

The appellant was an international student in Canada about to graduate with a mechanical engineering degree, and not yet a Canadian citizen or permanent resident. Upon graduation, he was to be entitled to a Post-Graduate Work Permit (“PGWP”), which would have allowed him to work full-time, anywhere in Canada, for any employer, for up to three years.

The appellant applied for an entry-level engineering job with Imperial Oil as he neared university graduation. Imperial had a policy that required, as a condition of employment, permanent eligibility to work in Canada, as established by proof of either Canadian citizenship or permanent resident status. The appellant was the top candidate for the job. Imperial offered him the job, conditional on permanent eligibility to work in Canada. After initially answering in the affirmative of being eligible, when the appellant subsequently disclosed that he was neither a Canadian citizen nor a permanent resident, and would have to initially work on the three-year PGWP, Imperial withdrew its job offer.

In the time period relevant to this appeal, the appellant was not a Canadian citizen nor a permanent resident (he has since become a Canadian citizen). In February 2015, the appellant filed an application with the tribunal, as the Ontario’s Human Rights Code (the “Code”) prohibits discrimination in employment on the basis of citizenship. The appellant claimed that Imperial had discriminated against him on the basis of citizenship in requiring that he be a Canadian citizen or permanent resident to be hired, despite the fact that by the time the position was anticipated to commence, he would have his PGWP and an unrestricted right to work in Canada for up to three years.

The Human Rights tribunal found there had been discrimination by Imperial on the basis of citizenship and awarded the appellant $120,360.70 in damages for lost income, injury to dignity, feelings and self-respect, and pre-judgment interest. Imperial applied for judicial review of the tribunal’s decision to the Divisional Court. A majority of the Divisional Court allowed the application for judicial review, quashed the tribunal’s decision, and declined to remit the matter to the tribunal for a new hearing. The appellant appealed the Divisional Court’s decision.

issues:
  1. Was the tribunal’s decision that the appellant had standing to file an application claiming discrimination in employment on the basis of citizenship reasonable?
  2. Was the tribunal’s finding of a prima facie claim of employment discrimination on the basis of citizenship reasonable?
  3. Was the tribunal’s finding that Imperial withdrew the job offer because the appellant was not a Canadian citizen or permanent resident, rather than solely because of his dishonesty in the job competition, reasonable?
  4. Was the tribunal’s decision that the defence under s. 16(1) of the Code was not available to Imperial reasonable?
holding:

Appeal allowed.

reasoning:
  1. Yes.

The Court agreed with the appellant that the tribunal’s analysis and conclusion regarding his standing were reasonable. The principles relied on by the tribunal to assess the appellant’s standing were consistent with the broad language of s. 34(1) of the Code, with prior jurisprudence of the tribunal on standing, and with the approach to direct interest standing (private standing) in the courts. Ultimately, the factual conclusions reached by the tribunal were well-grounded in the evidentiary record and were reasonable.

First, the Court reasoned that as the tribunal noted, s. 34(1) of the Code provided for a broad grant of standing. Any person who “believes that any of his or her rights under Part I have been infringed” has standing to apply to the tribunal for a remedy. One could imagine scenarios where there was no factual basis for a person’s belief that their rights have been infringed, and on that basis the assertion of standing would be speculative. But the Court held that that was not the case here.

Citing Carasco v. University of Windsor (“Carasco”), the Court explained that the test applied by the courts for private interest standing required that the applicant or plaintiff have a personal and direct interest in the issue raised in the proceeding. The interest must not be too indirect, remote, or speculative. Various formulations of this requirement were used in the jurisprudence, including that the person is “specifically affected by the issue”, has a “personal legal interest”, or has a “personal and direct interest” in the outcome of the proceeding. This type of standing was often referred to as “direct interest” or “private” standing to distinguish it from public interest standing (the latter having different requirements). A claim in which there is no direct interest is in the nature of public interest standing, and under s. 35(1) of the Code, only the Ontario Human Rights Commission may bring such claims.

In this case, the evidence before the tribunal supported its findings that the appellant was a genuine job seeker; that upon graduation he would be entitled to a PGWP which would entitle him to work full-time, anywhere in Canada, for any employer, for up to three years; that he was anticipated to graduate in January 2015 (and in the event did); and that the expectation of both the appellant and Imperial was that he would commence work after he graduated (i.e., once he was permitted to work without restriction under the PGWP program). These findings supported the conclusion that the appellant had a direct interest in the hiring policy of Imperial limiting prospective employees to Canadian citizens and permanent residents. The tribunal’s conclusion that the appellant had satisfied the requirements for standing under s. 34(1) of the Code and to bring a claim of discrimination was reasonable.

  1. Yes.

In the Court’s view, the tribunal’s analysis of the scope of discrimination on the basis of citizenship in s. 5 of the Code was reasonable. However, the Court recognized that it was not the role of the Court to conduct a de novo interpretation of s. 5, but rather to engage with the tribunal’s reasoning and determine whether the tribunal’s interpretation was “defensible in light of the interpretive constraints imposed by law.”

First, the Court established that two principles must be borne in mind when considering the meaning of discrimination on the basis of citizenship in s. 5 of the Code: (1) in the administrative law context, a decision-maker must interpret legislative provisions “consistent with the text, context and purpose, applying its particular insight into the statutory scheme at issue”; and, (2)  human rights legislation is to be given a broad, liberal, and purposive interpretation, consistent with its remedial objectives.

Second, the Court reasoned that the text of both ss. 5 and 16 of the Code is the starting point for the interpretation of the meaning of “equal treatment with respect to employment without discrimination because of … citizenship.” Section 16 creates statutory defences to claims of discrimination on the basis of citizenship in some circumstances where Canadian citizenship is a requirement, qualification, or consideration.

Third, the Court noted that “citizenship” is not defined in the Code. Accordingly, on a plain reading, s. 5 appears to prohibit (subject to applicable defences) discrimination based on whether someone is or is not a Canadian citizen and also discrimination based on whether someone is or is not a citizen of another country. However, citing Rizzo & Rizzo Shoes Ltd. (Re) (“Rizzo”), the ordinary meaning of the legislative provision is not the end of the analysis.

Fourth, the Court found that reading s. 5 in the context of s. 16 of the Code, as the tribunal did, supported the tribunal’s analysis of the broader scope of s. 5. Based upon the principles of statutory interpretation, the Court held that it was reasonable for the tribunal to consider the scope of the defences available in s. 16 of the Code as providing interpretive guidance on the scope of “citizenship” as a prohibited ground of discrimination in s. 5. Both ss. 16(1) and 16(3) create defences to allegations of discrimination on the basis of citizenship that are applicable to the employment context. Consistent with the tribunal’s reasoning, the fact that the legislature created this defence and the terms in which it is expressed, show that the legislature understood that the concept of discrimination on the basis of citizenship in s. 5 of the Code applied to a requirement of Canadian citizenship.

Fifth, the Court clarified how in the statutory context of ss. 5 and 16 of the Code, and in particular s. 16(1), the provincial statute clearly invokes considerations of federal immigration law. With extensive federal legislation and regulation, the Court explained that the provincial legislature must have been aware that federal law is the most likely source of a requirement, qualification or consideration relating to Canadian citizenship “imposed or authorized by law.” In this particular context, the Court found that the harmony between the tribunal’s interpretation of the scope of discrimination on the basis of citizenship and federal immigration law and policy supports the reasonableness of its interpretation. The Court further held that tribunals and courts should strive to adopt interpretations of provincial laws that achieve harmony with, rather than frustrate, federal legislation.

The Court found that the tribunal’s conclusion that that Imperial’s policy discriminated against the appellant on the basis of citizenship reasonable. The Court reasoned that the tribunal reasonably found that the appellant: (1) was a member of a group defined by a protected ground under the Code, citizenship, because he was a non-Canadian citizen; (2) experienced adverse treatment because the job offer was withdrawn; and, (3) non-citizenship was a factor in the adverse treatment. The appellant was a non-Canadian citizen, who had a right to work fulltime, for any employer, anywhere in Canada, for up to three years. The Court found that the fact that the policy did not exclude all non-Canadian citizens did not “cure” its discriminatory effect. Rather, it resulted in partial discrimination (against a subset of non-Canadian citizens eligible to work in Canada), rather than full discrimination (against all non-Canadian citizens eligible to work in Canada).

The Court further held that the Divisional Court majority did not correctly apply the standard of review. First, the Court found that the majority reasons did not take as a starting point respectful attention to the reasons of the tribunal. Rather, the majority started by assessing the question of whether Imperial discriminated against the appellant by re-doing its own analysis from scratch. Second, the Court found that the majority mischaracterized the reasons of the tribunal. The Court clarified that respectful attention to a tribunal’s reasons, which is the starting point of reasonableness review, cannot be accorded if the reviewing court mischaracterizes the tribunal’s reasons. Third, the majority of the Divisional Court failed to follow well-established analytical principles for human rights claims.

  1. Yes.

The Court found that the tribunal’s finding that Imperial withdrew the job offer because the appellant was not a Canadian citizen or a permanent resident reasonable. This was evidenced by the letter that Imperial sent to the appellant withdrawing the job offer and which expressly stated that the job offer was being withdrawn because he was unable to meet the employment condition of permanent eligibility to work in Canada established by proof of either Canadian citizenship or permanent residence. The letter also invited the appellant to re-apply for work with Imperial if he became eligible to work permanently in Canada, and said that if he did so, Imperial “would be pleased to consider [his] application at that time.” The letter made no reference whatsoever to the appellant’s dishonesty about his status, and the Court found that the invitation to reapply belied Imperial’s reliance on the appellant’s lies as the reason for withdrawing the job offer.

The Court further found that the tribunal’s legal analysis about the impact of the appellant’s dishonesty about his eligibility to work permanently in Canada during the job competition was reasonable and consistent with human rights jurisprudence. The tribunal discussed the burden of proof at the outset of its discrimination analysis, and correctly stated that in human rights cases, the applicant has the onus of proving, on a balance of probabilities, that a violation of the Code has occurred. The tribunal correctly recognized that while the evidential burden may shift to the respondent during the analysis, the ultimate onus of proving discrimination remains on the appellant.

  1. Yes.

Subsection 16(1) of the Code provides that “a right under Part I to non-discrimination because of citizenship is not infringed where Canadian citizenship is a requirement, qualification or consideration imposed or authorized by law.” The Court held that the tribunal’s decision that the defence under s. 16(1) of the Code was not available to Imperial was reasonable. The Court found that Imperial failed to raise the s. 16(1) defence before the tribunal and should not be permitted to raise it for the first time on review, particularly given that the tribunal had specifically asked Imperial whether the section 16(1) defence was being raised and Imperial did not assert that defence in its submissions.

There is a particular concern that arises from new issues being argued in the judicial review context because of the reviewing court’s role vis-à-vis the tribunal. The legislature made the decision to entrust adjudication of human rights claims to the tribunal, subject to review by the Courts. Where an issue is not raised before the tribunal, there is no decision on an issue to review. Furthermore, the premise of judicial review starts with “respectful attention” to an administrative decisionmaker’s reasons, which cannot be applied where an issue was not raised below, and the tribunal was not given the opportunity to consider the issue and provide reasons. Accordingly, it was beyond the scope of this appeal to pronounce on the scope of that statutory defence.


Interhealth Canada Limited v. O’Keefe, 2023 ONCA 368

[Hoy, Thorburn and Favreau JJ.A.]

Counsel:

R. B. Cohen, D. Kelman and S. Mills, for the appellant
E. Evangelista, for the respondent, MO
P. L. Vay, S. Bass and K. A. Johnson, for the respondent, Canadian Hospitals Network International Inc.

Keywords: Corporations, Directors, Breach of Fiduciary Duty, Misappropriation of Corporate Opportunities, Civil Procedure, Trials, Procedural Fairness, Evidence, Admissibility, Affidavits, Witnesses, Cross-examination, Time Limits, Recalling of Witnesses, Rules of Civil Procedure, r. 53.01(3), Can. Aero Service v. O’Malley, [1974] S.C.R. 592, R v. Samaniego, 2022 SCC 9, 412 C.C.C. (3d) 7, Griffi v. Lee, 2005 CanLII 48316 (ONSC), Southwind v. Canada, 2021 SCC 28

facts:

The appellant, Interhealth Canada Limited, sued MO, a former CEO and director, for breach of fiduciary duty. Relying on Can. Aero Service v. O’Malley, [1974] S.C.R. 592 (“Canaero”), the appellant alleged that, after resigning, MO diverted two maturing corporate opportunities that belonged to it to Canadian Hospital Network International Inc. (“CHNI”), a corporation in which MO held a 15% interest for a time after his resignation. The trial focused on these two opportunities: the “HIH Opportunity” and the “Cromwell Opportunity”.

On or around April 12, 2006, CHNI entered into an agreement with HIH to provide services in relation to a project. At the time, MO held a 15% beneficial interest in CHNI. On April 9, 2006, four months after the appellant had submitted its proposal to HIH, and more than two months after HIH had rejected the appellant’s proposal, CHNI submitted a proposal to HIH to act as “Employee Prime.” That proposal was accepted, resulting in the April 12, 2006 agreement which constitutes the “HIH Opportunity.”

In December 2006, a corporation which CHNI had a minority interest in acquired the corporation which held a 20-year operating licence for Cromwell Hospital. MO served as the Hospital’s Interim CEO from December 2006 until February 2007. MO or CHNI’s indirect interest in the purchase of the operating licence for the Cromwell Hospital is the “Cromwell Opportunity” – the second alleged maturing opportunity of the appellant that MO diverted to CHNI. The appellant also sued CHNI. Its claim against CHNI depended on a finding that MO breached his fiduciary duty to the appellant.

After an 18-day trial, the trial judge found that the two “opportunities” the appellant alleged MO had diverted to CHNI did not fairly belong to the appellant in the circumstances. Therefore, MO had not breached his fiduciary duty to the appellant and, because he had not, there could be no finding against CHNI. She dismissed the appellant’s claims against MO and CHNI.

issues:
  1. Did the trial judge err in conducting a “trial by stopwatch” and deprived it of due process by unreasonably cutting its trial counsel off before he could complete his cross-examination of two key witnesses?
  2. Did the trial judge err in dismissing its motion to recall MO for cross-examination pursuant to r. 53.01(3) of the Rules of Civil Procedure, and in refusing to admit two affidavits?
  3. Did the trial judge make substantive errors in her interpretation and application of applicable law?
holding:

Appeal dismissed.

reasoning:
  1. No.

The Court held that where counsel seeks an extension of the time agreed or fixed for cross-examination, and their cross-examination has not been unduly repetitive, rambling, argumentative, misleading or irrelevant, it is prudent for a trial judge to inquire as to what additional questions counsel wishes to ask, and how long doing so might take before cutting counsel off. This brief exchange may need to take place in the absence of the witness. Such an inquiry should not create delay. Armed with the responses to these questions, the trial judge will be able to quickly assess the relevance and materiality of counsel’s proposed line of further inquiry and determine whether a brief extension is reasonable and warranted in all the circumstances. Whether the pace of counsel’s cross-examination had been slowed by unreasonable interjections of opposing counsel may be a relevant factor in deciding whether a brief extension is appropriate.

Here, the Court held that the trial judge did not ask counsel for the appellant what additional questions he wished to ask MO or SS, and how long doing so might take. She may have concluded that trial counsel had failed to focus and get to the point, as she had cautioned him to do, but she made no comment to that effect.

In any event, counsel did not put on the record what additional lines of inquiry he sought to pursue, and why. While counsel said it was clear that nothing he said would have changed the trial judge’s mind, he nonetheless should have done so. Nor did the appellant outline in its factum on appeal what those additional lines of inquiry were, and why he was prejudiced by his inability to ask further questions.

  1. No.

The appellant argued that the trial judge’s exercise of discretion in dismissing its motion was unreasonable in the circumstances. The Court held that the trial judge considered the jurisprudence which the parties agreed applied. She balanced the interests of both parties. She considered relevant factors and concluded that MO should not be recalled. She rejected the appellant’s argument that recall was warranted solely on the basis of relevance. The question was not whether the evidence sought to be gained from recalling MO was relevant (which the respondents continued to dispute at trial). Rather, it was whether there would be a “failure of justice” if he were not recalled. The trial judge did not err in applying a multi-factorial approach. The Court concluded that except perhaps in exceptional circumstances, relevance alone sets the bar too low on a recall motion.

Further, the Court held that the trial judge did not err by refusing to admit the affidavits. She had permitted the appellant to use the affidavit of one of the witnesses to attempt to impeach that witness. There was therefore no basis or need to admit the affidavit itself as evidence. As to the other affidavit, the affiant was not a witness at trial. The trial judge properly ruled that it was inadmissible hearsay. None of the exhibits to the affidavits were identified or authenticated in such a way that they could have been admitted into evidence in their own right.

  1. No.

First, the Court held that it was open to the trial judge to accept the evidence of MO that he believed that the possibility of being involved with HIH or the Cromwell Opportunity would not have been available to the appellant, as she clearly did, and to conclude that the appellant would not have believed that the Cromwell Opportunity was open to it.

Further, it was open to the trial judge to draw reasonable and logical inferences based on the admissible evidence. A finding that a defendant has usurped a corporate opportunity does not depend upon proof by a plaintiff that, but for the acts of the fiduciary, the plaintiff would have obtained the opportunity. Ultimately, the Court concluded that the trial judge’s finding that the HIH Opportunity and the Cromwell Opportunity were not available to the appellant was amply supported by the record.

Second, the Court was not persuaded that the trial judge’s conclusions were tainted by palpable and overriding error. While the trial judge could have done a far better job of explaining why she came to these conclusions, each of the impugned findings was supported by the record. The Court reasoned that the trial judge’s finding that the HIH Opportunity was “an entirely different opportunity” from that pursued by the appellant is supported by the evidence of MO as well as by the documentation. Further, the trial judge’s credibility assessments were entitled to deference. There was no basis for the Court to interfere with the trial judge’s acceptance of MO’s evidence as to why he resigned, and why he accelerated the date of his resignation. Reading her reasons in context, the evidence of SS and the resignation of several other directors at nearly the same time as MO clearly bolstered his evidence as to why he accelerated his resignation and underpinned her credibility finding.

Third, the Court held that the trial judge did not err in her application of Canaero by considering whether the Cromwell Opportunity and the HIH Opportunity were different from the opportunities which the appellant had sought to pursue. The “substantial resemblances” language in Canaero was merely a factor that may have assisted in determining whether the opportunity pursued by a fiduciary post-departure was different from one that the company pursued. In the case of the Cromwell Opportunity, the “project” changed from inquiring about the possibility of a contract to manage a hospital, to acquiring a licence to operate a hospital. In the case of the HIH Opportunity, the “project” changed from being hired by HIH as consultant – a Strategic Healthcare Planner – to acting as HIH’s representative, supervising that consultant and others. The opportunities were not simply “varied in some details”. They were fundamentally different.

Further, the Court held that the trial judge did not err in law by not considering that the Cromwell Opportunity could possibly be described as being in a related business as an indicator that it belonged to the appellant. The Court reasoned that the question of whether a corporate opportunity has been appropriated is a highly contextual one, which must be tested in each case by many factors. Whether, or the extent to which, the opportunity was in a related business might be a relevant factor, it was only one factor. The other factors that the trial judge relied on amply supported her conclusion that MO did not appropriate a corporate opportunity and the record supported her conclusion. There was no “opportunity” for MO to usurp, as it was nothing more than an exploratory expression of interest.

Fourth, the Court accepted the trial judge’s finding that MO did not resign to pursue a relationship with HIH. Based on her finding of fact that the HIH Opportunity would not have been available to the appellant, MO’s pre-resignation conduct posed no threat to the appellant’s market base. Taking preliminary steps in the period between submitting notice of resignation and the effective date of resignation that might assist in obtaining work post-resignation that was not, and would not be, available to one’s employer was not competing. The Court added that MO’s pre-resignation involvement with HIH did not breach his fiduciary duty. Even if it did, the appellant had not satisfied the requisite causal link between the breach and the gain which the appellant sought disgorgement of.


40 Days for Life v. Dietrich, 2023 ONCA 379

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

Counsel:

A. Bernstein, S. Whitmore, J. Lowenstein, and A. Matas, for the appellant BD
P.H. Horgan and R.T.R. Fernandes, for the respondent 40 Days for Life
Z.R. Levy and R. Laurion, for the proposed intervener Canadian Civil Liberties Association

Keywords: Torts, Defamation, Anti-SLAPP, Online Harassment, Constitutional Law, Freedom of Expression, Civil Procedure, Intervenors, Friends of the Court, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, Rules of Civil Procedure, r. 13.02, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), RWDSU Local 558 v. PepsiCola Canada Beverages (West) Ltd., 2002 SCC 8, Grant v. Torstar Corp., 2009 SCC 61, R. v. Doering, 2021 ONCA 924

facts:

The respondent, 40 Days for Life (“40 Days”), conducted vigils outside of abortion clinics. The appellant often engaged online with social justice issues, including pro-choice rights and reproductive freedom. The appellant posted a series of videos online relating to 40 Days and their protest activities. In some of the videos she made statements about 40 Days that it alleged were false and defamatory. 40 Days commenced an action for damages for libel, internet harassment, breach of contract, inducement of breach of contract, fraud, and/or conspiracy. In response, the appellant brought an anti-SLAPP motion under s. 137.1 of the Courts of Justice Act (the “CJA”). The motion was dismissed.

Prior to bringing her anti-SLAPP motion, 40 Days obtained two interim injunctions against the appellant and other unidentified defendants. The other defendants have appealed, with leave, those injunctions to the Divisional Court. The Canadian Civil Liberties Association (“CCLA”) was granted leave to intervene in the Divisional Court.  In the meantime, the appellant appealed the decision to dismiss her anti-SLAPP motion and the CCLA sought leave to intervene on the appeal to the Court.

On appeal, the appellant argued that the motion judge erred in finding that 40 Days had established substantial merit for its claims of internet harassment and conspiracy without finding grounds to believe that 40 Days had suffered the requisite harms. She also argues that the motion judge failed to adequately consider the context of the counter-protests and their connection with the public debate over abortion access in Canada, and thus failed to appreciate that the appellant’s counter-protests were expressive activities worthy of protection. In addition, the appellant submitted that the motion judge erred in conducting the balancing exercise under s. 137.1(4)(b) of the CJA by determining that the public interest in permitting the claims to continue outweighed the public interest in protecting the appellant’s expression. Therefore, the case will necessarily engage with whether and to what extent online protests should be considered analogous to in-person protests and how online activity intersects with the freedom of expression. Thus, while this is a private dispute, the resolution of that dispute will, to some extent, engage with a public policy dimension.

The CCLA sought intervenor status and proposes to make submissions on two issues. First, on the issue of whether freedom of expression ought to be protected in the online world, the CCLA proposes to provide a roadmap for applying the existing traditional jurisprudence on the location of expressive activity to the virtual environment. Second, the CCLA proposes to make submissions about how the new tort of internet harassment should develop in light of freedom of expression.

issues:

Should the CCLA be granted intervenor status?

holding:

Motion granted.

reasoning:

Yes.

The Court noted that, in an appeal involving private actors, the proposed intervenor must meet a stringent standard, one that can bend somewhat where issues of public policy arise.

40 Days opposed the CCLA’s intervention on five grounds: (1) This was a private claim and the appellant is capable of advancing the relevant submissions, (2) the CCLA’s submissions will be duplicative of the appellant’s on the applicability of freedom of expression jurisprudence, (3) the intervention will prejudice 40 Days because the motion was not brought in a timely manner, (4) the CCLA was really supporting a “pro-choice cause”, and (5) the CCLA overstepped its appropriate role as an intervenor in the Divisional Court and it is likely it will do the same here.

The Court rejected 40 Days’ arguments. First, the Court noted that there are remedies available if the CCLA oversteps in the intervenor role. Further, 40 Days was, in effect, asking the Court to anticipate that, if the CCLA is granted intervenor status, that it will breach the order allowing for the intervention by exceeding the boundaries of that order. The Court disagreed, stating that it was proper to operate on the assumption that the CCLA knows well the appropriate role of an intervenor and that the CCLA will comply with any order made.

Next, the Court stated that intervenors do not need to be entirely disinterested in the outcome of a legal issue. To the contrary, intervenors are frequently aligned with a party in terms of the outcome of a legal issue. It is the outcome of the case that they must remain distanced from. Therefore, the motion really came down to whether the CCLA had something useful to contribute to the appeal beyond what the appellant had already set out in her materials, and whether prejudice will arise from an intervention at this stage. The Court stated that the CCLA did have something useful to contribute because there was little overlap in the arguments put forth in the materials. Furthermore, any risk of overlap can be mitigated by narrowing the terms of the intervention. Lastly, even though the motion was brought at a fairly late stage, there was enough time for the CCLA to file a factum and for the parties to file reply factums should they wish to do so. The Court concluded that the CCLA should be granted intervenor status as a friend of the court.


Convoy Supply Ltd. v. Elite Construction (Windsor) Corp., 2023 ONCA 373

[Trotter, Sossin and Copeland JJ.A.]

Counsel:

C.J. Bondy, for the appellants
E. Durst, for the respondent

Keywords: Bankruptcy and Insolvency, Debts Surviving Bankruptcy, Fraud, Embezzlement, Misappropriation or Defalcation While Acting in a Fiduciary Capacity, Construction Law, Statutory Trust Claims, Civil Procedure, Orders, Default Judgments, Amending, Setting Aside, or Varying Orders, Deemed Admissions, Extrinsic Evidence, Admissibility, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 69.3, s. 69.4, s. 178(1)(d), Construction Lien Act, R.S.O. 1990, c. C.30, Construction Act, 1990, c. C.30, Rules of Civil Procedure, r. 59.06(2), Simone v. Daley (1999), 43 O.R. (3d) 511 (C.A.), Bibico Electric Inc v. Battlefield Electrical Services Inc., 2012 ONCA 676, aff’g, [2011] O.J. No. 6557 (S.C.), Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd., 2022 ONCA 556, Re: Ieluzzi (#2), 2012 ONSC 1474

facts:

In July 2020, the respondent commenced a claim against the appellants seeking, inter alia, approximately $92,000 in damages for breach of trust, or in the alternative, general damages in the amount of $92,000. The claim included a request for an order, if required, for leave to continue the action pursuant to s. 69.4 of the Bankruptcy and Insolvency Act (the “BIA”) as against any defendant that has made or makes an assignment in bankruptcy, as well as an order, pursuant to s. 178(1)(d) of the BIA, that a damages award made in the action would not be discharged in the event that any defendant has made or makes an assignment in bankruptcy. The Statement of Claim pleaded and relied upon the Construction Lien Act, R.S.O. 1990, c. C.30 (the “CLA”) and the Construction Act, 1990, c. C.30 (the “CA”), alleging that the appellants were liable pursuant to the statutory trust provisions and that the individual appellant was an officer, director, guarantor, and directing mind of the corporate appellant.

The appellants were noted in default. Default judgment was granted by Gordon J. on March 3, 2021. The order included an award of approximately $92,000 in damages for breach of trust, and an award of $7,500 in punitive damages. The respondent took various steps to attempt to enforce the default judgment. The appellants were not compliant with the enforcement procedures in that they failed to produce information and documents that they were repeatedly ordered to provide. At the time the motion under appeal was heard, the appellants remained in breach of various court orders to produce documents and attend for examination in aid of execution. Following the initiation of contempt proceedings against the appellants by the respondent in relation to orders made in the course of the respondent’s attempts to enforce the default judgment, the individual appellant made an assignment into bankruptcy on December 14, 2021.

issues:
  1. Did the motion judge err in refusing to admit evidence on the motion tendered by the individual appellant about mental health issues he experienced?
  2. Did the motion judge err in considering the procedural history of subsequent steps by the respondent to enforce the default judgment and the appellants’ actions in the context of those enforcement steps?
  3. Did the motion judge err in finding that the judgment debt arose from misappropriation or defalcation in relation to the trust funds by failing to apply the law correctly to the facts before him?
holding:

Appeal dismissed.

reasoning:
  1. No.

The Court held that the motion judge correctly recognized that he had a discretion to consider extrinsic evidence regarding the alleged misappropriation of trust funds on a rule 59.05(2) motion. The motion judge considered the nature of the evidence that the appellants proposed to tender and found that the evidence sought to contradict the deemed admissions that were inherent in the default judgment. The Court further held that the motion judge concluded it was not appropriate to allow the appellants to seek to contradict the deemed admissions by extrinsic evidence, as doing so would have been tantamount to setting aside the default judgment. The motion judge also noted that the appellants had failed to comply with court-ordered productions in the subsequent enforcement proceedings. The Court underlined that this evidentiary ruling was made in the context of the appellants having sought, and failed, to set aside the default judgment. As a result, the Court was not persuaded that the motion judge committed any palpable and overriding error in his exercise of that discretion.

2. No.

The Court saw no merit to this ground of appeal and held that the motion judge was entitled to rely on the procedural history as a factor in exercising his discretion regarding the admissibility of evidence. Further, the Court did not accept the appellants’ argument that the motion judge relied on the procedural history of the subsequent attempts to enforce the default judgment in concluding that the individual appellant failed to account for the trust funds under the CA. Instead, the Court held that the reasons of the motion judge demonstrated that he drew this conclusion from the deemed admissions that were available from reading the Statement of Claim as a whole.

3. No.

The Court held that the motion judge correctly stated the law in relation to the nature of the factual findings required to engage s. 178(1)(d) of the BIA. The motion judge recognized that, in order for a judgment debt to trigger s. 178(1)(d) as arising from “fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity”, the debt must arise from conduct that displays at least some element of wrongdoing or improper conduct that would be unacceptable to society because of its “moral turpitude or dishonesty” and that he was required to make a factual assessment of whether the breach of trust, in the context of the deemed admissions in the pleading, engaged s. 178(1)(d) of the BIA.

The Court did not agree with the appellants’ characterization of the motion judge’s decision and instead found that the motion judge made a case-specific finding and did not rely on a categorical rule in considering whether the deemed admissions were of conduct which could have been done negligently or incompetently (which would not have triggered s. 178(1)(d) of the BIA), or were of conduct done intentionally and with an element of misconduct. The Court saw no basis for appellate intervention in the motion judge’s findings that the record was sufficient to establish that the judgment debt arose from misappropriation or defalcation.


Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360

[Paciocco, George and Favreau JJ.A.]

Counsel:

J. Strosberg and S. Robinson, for the appellant/respondent by way of cross-appeal
K. L. Kay, D S. Murdoch, S. R. Hennig and H. Wafaei, for the respondents/appellants by way of cross-appeal
T. Q. Yang and M. Waddell, for the Law Foundation of Ontario, respondent by way of cross-appeal

Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Costs, Securities Act, R.S.O. 1990, c. S.5, Class Proceedings Act, 1992, S.O. 1992, Criminal Code, R.S.C. 1985, c. C-46, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Director of Public Prosecutions Act, S.C. 2006, c. 9, s. 121, s. 13, Markowich v. Lundin Mining Corporation, 2023 ONCA 359, NC-Lavalin Group Inc. v. Canada (Public Prosecution Service), 2019 FC 282, Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92, Hughes v. Liquor Control Board of Ontario, 2019 ONCA 305, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Das v. George Weston Limited, 2018 ONCA 1053, Markowich v. Lundin Mining Corporation, 2022 ONSC 81, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, Coffin v Atlantic Power Corp., 2015 ONSC 3686, Paniccia v. MDC Partners Inc., 2018 ONSC 3470

facts:

SNC-Lavalin Group Inc. (“SNC”) is a Canadian company that provided engineering and project management services throughout the world. The appellant was a professional engineer living in Ontario. He held shares in SNC at the relevant time, which was between September 4, 2018 and October 10, 2018. The proposed action arose from a prosecution against SNC and two of its subsidiaries in relation to the companies’ activities in Libya.

On February 19, 2015, the RCMP charged SNC and two of its related companies, SNC International and SNC Construction, with one count of fraud under s. 380 of the Criminal Code and one count of corruption under s. 3(1)(b) of the Corruption of Foreign Public Officials Act. The charges alleged that, between 2001 and 2011, SNC paid public officials in Libya over $47 million to influence government decisions and defraud Lybian organizations of approximately $130 million.

The appellant sought leave under s. 138.8, Part XXIII.1, of the Securities Act to bring a statutory cause of action against SNC and some of its former executives. The appellant alleged that SNC and the other defendants failed to disclose “forthwith” a material change in SNC’s “business, operations or capital” as required under ss. 75(1), 138.1 and 138.3(4) of the Securities Act.

The appellant also sought certification of a class action, under s. 5 of the Class Proceedings Act, 1992, advancing claims on behalf of certain shareholders of SNC based on: i) the statutory cause of action under the Securities Act; and ii) negligent misrepresentation at common law.

The motion judge dismissed the appellant’s motions. The “change” the appellant alleged SNC had an obligation to disclose was the content of a telephone call on September 4, 2018, when the Department of Public Prosecutions Services of Canada (the “PPSC”) advised SNC that it would not be invited to negotiate a remediation agreement under Part XXII.1 of the Criminal Code, which would have resolved a pending prosecution against SNC for fraud and corruption.

The motion judge concluded that leave should not be granted to bring a statutory cause of action because there was no reasonable possibility, based on a plausible interpretation of the Securities Act and credible evidence, that the September 4, 2018 call represented a change in SNC’s business, operations or capital. Specifically, SNC faced the prospect of prosecution before the call and SNC continued to face the prospect of prosecution after the call. SNC had publicly disclosed the risk of prosecution on many occasions. In addition, even after the call, the PPSC agreed to receive further submissions from SNC on the request for a remediation agreement. It was only on October 9, 2018, that the PPSC said that it did not accept SNC’s submissions, and the following day, on October 10, 2018, SNC made a public disclosure about the PPSC’s position on a remediation agreement. The motion judge held that, in all the circumstances, there was no reasonable possibility that a Court would find at trial that the September 4, 2018 call constituted a change in SNC’s business, operations or capital.

As the motion judge did not grant leave, he declined to certify the statutory cause of action as a class proceeding. The motion judge also concluded that the common law claim in negligent misrepresentation was not suitable for certification because the issue of reliance could not be decided on a class basis. Unlike for the statutory cause of action, there is no deemed reliance at common law.

The appeal was restricted to the motion judge’s refusal to grant leave to bring the statutory cause of action under the Securities Act and to certify that claim as a class proceeding. The appellant argued that the motion judge erred in his interpretation of “change” and erred in finding that the September 4, 2018 call was not a material change. The appellant argued that, at the very least, the motion judge improperly applied the test for leave. At this stage of the proceedings, the appellant claimed that he offered a plausible interpretation of “change” and, based on additional evidence that may become available at trial from the Government of Canada, there was a reasonable possibility of success. SNC cross-appealed on the issue of costs.

issues:
  1. Did the motion judge err in finding that the September 4, 2018 call was not a “change” within the meaning of “material change” because he adopted an overly narrow interpretation of “change” and did not consider that a “change” could include the risk of a change in SNC’s business, operations or capital?
  2. Did the motion judge err in failing to find that the September 4, 2018 call was “material” within the meaning of “material change”?
  3. Did the motion judge misapply the test for leave by making findings of fact that should be left for trial?
  4. Did the motion judge err in the amount of costs awarded to SNC?
holding:

Appeal and cross-appeal dismissed.

reasoning:
  1. No.

The Court noted that the standard of review on a question of law is correctness. In Kerr v. Danier Leather the Supreme Court (the “SCC”) emphasized that the Securities Act is “remedial legislation” that is to be given a broad interpretation. The Court held that the Securities Act protects investors by imposing disclosure obligations. At the same time, it limits the burden placed on reporting issuers of securities by requiring forthwith disclosure of material changes but not of material facts. The Court noted that in Kerr, the SCC stated that the distinction between a material change and a material fact is “deliberate and policy-based.”

The Court held that the issue of whether there has been a material change requires a two-step analysis. First, the court must determine whether there has been a change in the business, operations or capital of the issuer. Second, the court must determine whether the change was material, in the sense that it would be expected to have a significant impact on the value of the issuer’s shares.

The Court held that section 138.3(4) of the Securities Act creates a statutory right of action against an issuer who fails to make a timely disclosure. While s. 138.3(4) of the Securities Act creates a statutory cause of action that eliminates the need to prove reliance, to guard against strike suits, s. 138.8(1) of the Securities Act requires that a party obtain leave of the court before proceeding with a claim. The statutory test for leave provides that the Court is only to grant leave if it is satisfied that: (a) the action is being brought in good faith, and (b) there is a reasonable possibility that the action will be resolved in favour of the plaintiff at trial.

The Court found the motion judge did not err in his interpretation of the word “change” used in the context of “material change”. The motion judge adopted a very expansive definition of “change” and he explicitly accepted that a “change in business, operations or capital” could include a change in risk to an issuer’s business, operations or capital.

While the appellant had framed his disagreement with the motion judge’s consideration of whether the September 4, 2018 call was a change in SNC’s business, operations or capital as an error of law, the Court said the real focus of the appellant’s argument was on the motion judge’s application of his interpretation of those terms to the circumstances of this case.

The Court found that, consistent with Kerr, the motion judge had properly emphasized the distinction between a material change and a material fact. He recognized that this distinction was “a deliberate and policy-based legislative decision to relieve reporting issuers of the obligation to continually interpret external political, economic, and social developments as they affect the affairs of the issuer, unless the external change will result in a change in the business, operations or capital of the issuer, in which case, timely disclosure of the change must be made.” He also emphasized that the meaning of “change” was fact-specific and that there was no “bright-line test”.

Ultimately, the Court held that the only limit the motion judge placed on what could constitute a “change” in the definition of “material change”, were the qualifying words in the definition itself to the effect that the change must be “in the business, operations or capital”. In other words, external circumstances that may affect share prices but that did not effect a change in an issuer’s business, operations or capital did not qualify as change within the meaning of material changes. The Court held that, here, the motion judge made no such error. His interpretation of the term “change” was expansive, consistent with existing case law and properly focused on whether the September 4, 2018 call constituted a change in SNC’s business, operations or capital.

As part of his argument that the motion judge interpreted “change” too narrowly, the appellant said that the motion judge failed to consider that a change could include a change in risk. However, the Court found that it was evident from the motion judge’s reasons that he did consider that the obligation to disclose a material change under the Securities Act included an obligation to disclose a material change in risk in an organization’s business, operations or capital. He simply did not accept, based on the largely uncontested evidence before him, that the September 4, 2018 call could reasonably be found at trial to constitute a change in the risk SNC’s business faced. The Court saw no reversible errors in his reasoning.

The risk that SNC would be prosecuted and debarred from participating in Canadian projects for up to ten years was known to investors at the time of the call. At most, the communications between the PPSC and SNC’s counsel represented an effort by SNC to be invited to negotiate a remediation agreement. There was never any assurance an invitation would be forthcoming. In addition, discussions continued after the September 4, 2018 call. As in Theratechnologies, there was no change in SNC’s business, operations or capital, or to the risks faced by SNC’s business, operations or capital on September 4, 2018. The Court found the motion judge made no palpable and overriding errors in characterizing the September 4, 2018 call and in finding that there was no reasonable possibility that the appellant could succeed at trial in showing that the call was a change in SNC’s business, operations or capital, including a change in risk.

  1. No.

The appellant argued that the motion judge failed to consider that the September 2, 2018 call was material. Given the motion judge found there was no change in SNC’s business, operations or capital, it was not necessary for him to consider whether the September 4, 2018 call was material.

  1. No.

The appellant argued that the motion judge went too far in making findings of fact for the purpose of a motion for leave. Specifically, he argued that there may be more evidence available after discoveries about the PPSC’s and the Federal government’s intentions at the time of the September 4, 2018 call with respect to the issue of whether SNC would be invited to negotiate a remediation agreement. The appellant relied on the Court’s decision in Rahimi to argue that, on a motion for leave under the Securities Act, a motion judge should consider the evidence that is available and the evidence that is not available.

The Court found the motion judge made no error in his application of the test for leave in the circumstances of this case. First, the motion judge noted that this was an unusual case because there was extensive evidence available about the circumstances surrounding SNC’s efforts to be invited to negotiate a remediation agreement and there was little conflict in the evidence. In effect, the appellant obtained relevant documents through a freedom of information request, and therefore there was significant evidence available regarding internal communications within the Government of Canada at the relevant time.

In any event, the Court noted it was hard to see how additional information on the issue of internal government communications could be relevant to the appellant’s claim. The appellant alleged that SNC failed to disclose the September 4, 2018 call. The Court noted that each case is to be decided on its facts. As held by the SCC, on a motion for leave under the Securities Act, it is appropriate for the motion judge to weigh the evidence, without going so far as embarking on a mini-trial, for the purpose of determining whether there is a reasonable possibility that the plaintiff will succeed at trial. The Court found the appellant failed to identify any areas of missing evidence that may be available on discovery that could affect the outcome at trial.

  1. No.

The Court found the motion judge made no obvious error in exercising his discretion to reduce the costs sought by SNC. Leave to appeal a costs decision is only granted sparingly and only in “obvious cases where the party seeking leave convinces the Court there are ‘strong grounds upon which the appellate court could find that the judge erred in exercising his discretion'”: Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92. Even where leave is granted, an appellate Court will only overturn a costs award if the Court below made a legal error or the award is clearly wrong.

In this case, the Court held that the motion judge referred to the correct legal principles in his costs decision. Consistent with Das, he noted that legal novelty is on a “continuum”. He also noted that “to be a matter of public interest, the action must have some specific, special significance for, or interest to, the community at large beyond the interests of the parties to the litigation”. While the motion judge did not explicitly explain why he concluded that the case raised novel legal issues or matters of public importance, he said that his reasons for decision on the merits of the motions were incorporated into his costs decision. The Court was satisfied that his conclusion that the case raised novel legal issues and matters of public importance was supported by his lengthy reasons on the merits of the motions.


Markowich v. Lundin Mining Corporation, 2023 ONCA 359

[Simmons, Benotto and Favreau JJ.A.]

Counsel:

J. Groia, B. Pascutto and S. Robinson, for the appellant
L. Jackson and J.M. Picone, for the respondents

Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Certification, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, s. 1(1), s. 57, s. 75(1), s. 75(2), s. 138.1, s. 138.3(4), s. 138.8, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5, Housen v. Nikolaisen, 2002 SCC 33, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310 (Div. Ct.), Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, rev’d on other grounds, 2014 ONCA 90, aff’d 2015 SCC 60, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, aff’d 2010 ONSC 3926 (Div. Ct.), Peters v. SNC-Lavalin Group Inc., 2021 ONSC 5021, Miller v. FSD Pharma, Inc., 2020 ONSC 4054

facts:

The appellant was a shareholder of the respondent, LMC. The appellant sought leave under s. 138.8 of the Securities Act to bring a statutory cause of action against LMC for their failure to disclose “forthwith” a “material change” in LMC’s “business, operations or capital” as required under ss. 75(1), 138.1, and 138.3(4) of the Securities Act. The appellant also sought certification of a class action under s. 5 of the Class Proceedings Act, 1992, advancing claims on behalf of certain shareholders of LMC based on the statutory cause of action under the Securities Act and negligent misrepresentation at common law.

The appellant’s motions were dismissed as the motion judge found that the “changes” LMC was alleged to have had an obligation to disclose were a pit wall instability detected on October 25, 2017, in part of LMC’s open pit mine at its Candelaria copper mine in Chile, and a subsequent rockslide at the mine during which an estimated 600,000 to 700,000 tonnes of waste material fell down a slope from Phase 10 of the mining operation, restricting access to Phase 9. LMC did not disclose the pit wall instability at the time it occurred, but rather first publicly disclosed these events on November 29, 2017, in its November News Release, in which it stated that the instability of the pit wall occurred on October 31, 2017. On November 30, 2017, the price of LMC’s securities fell on the TSX from $8.96 on November 29, 2017 to $7.52 at closing time on November 30, 2017, representing a decline of $1.44 or 16%. This one-day drop amounted to over $1 billion of market capitalization.

The motion judge held that “[m]ining is an inherently risky and unpredictable industry” and “rock slides are routine”. In the context of open pit mines, one of the most common risks is slope instability. The motion judge concluded that leave should not be granted to bring a statutory cause of action because there was no reasonable possibility based on a plausible interpretation of the Securities Act and credible evidence that there had been a “change” to Lundin’s business, operations or capital. He did however conclude that if the matters relied upon by the appellant constituted a “change” they were “material”. Because the motion judge did not grant leave, he did not certify the statutory cause of action. The motion judge further concluded that the common law claim in negligent misrepresentation was not suitable for certification because a multitude of mini-trials would be required to address the issue of reliance. This was because unlike for the statutory cause of action, there is no deemed reliance for common law misrepresentation.

The appellant abandoned his claim for negligent misrepresentation at common law and restricted this appeal to the motion judge’s refusal to grant leave to the statutory cause of action under the Securities Act.

issues:
  1. Did the motion judge err in adopting an overly narrow interpretation of “change in the business, operations or capital”, especially in the context of a motion for leave?
  2. Did the motion judge’s narrow interpretation of these terms lead him to resolve conflicts and gaps in the evidence that should have been left for trial?
holding:

Appeal allowed.

reasoning:
  1. Yes.

The Court found that the motion judge erred in his interpretation of “change in the business, operations or capital” and that, as a consequence of this error, he erred in finding that the evidence available on the motion did not support granting leave. The Court held that taking a more generous approach to the terms “change in the business, operations or capital” was warranted. Based on this more generous interpretation and the evidence available at this stage of the proceedings, the appellant should have been granted leave to proceed with the action.

The disclosure requirements in the Securities Act for material facts and material changes are different. The Act imposes various disclosure obligations on reporting issuers with respect to material facts, but, unlike material changes, does not require that issuers disclose material facts “forthwith”. The issue of whether there has been a material change requires a two-step analysis. First, the court must determine whether there has been a change in the business, operations or capital of the issuer. Second, the court must determine whether the change was material, in the sense that it would be expected to have a significant impact on the value of the issuer’s shares. The Court found that this case focused on the first step of the analysis, specifically the meaning of “a change in the business, operations or capital” and the relevant case law.

The statutory test for leave under s. 138.8 of the Securities Act provides that the court is only to grant leave if it is satisfied that: (a) the action is being brought in good faith, and (b) there is a reasonable possibility that the action will be resolved in favour of the plaintiff at trial. The Court, citing Rahimi v. SouthGobi Resources Ltd., noted that on a motion for leave under s. 138.8 of the Securities Act, a motion judge is to engage in some weighing of the evidence, but this is also to include consideration of the evidence not available at this early stage of the proceeding.

The Court held that the motion judge erred in his interpretation of “change in the business, operations or capital” by concluding that, in order to find that a material change has occurred, the court must be satisfied the event at issue results in a “different position, course, or direction to a company’s business, operations, or capital”. The Court noted that the motion judge’s reference to a “different position, course, or direction” derived from a definition of “change” in the online version of the Merriam-Webster Dictionary. The motion judge provided no support for using this definition from any case law interpreting the definition of “material change” in the Securities Act, nor did he provide any rationale for adopting this definition of “change” in the context of the Securities Act.

After defining “change” as a “different position, course, or direction”, the motion judge went on to address the definitions of the terms “business”, “operations” and “capital”. Earlier in his decision, he had observed that these terms are not defined in the Securities Act. In this section of his decision, he gleaned definitions of these terms from a brief review of case law. With respect to the term “business”, the motion judge stated that it had been “broadly described by the OSC as the lines of activity in which the issuer engages to generate revenue”. He then concluded that “business” refers to “what the company does”. The motion judge then concluded that “operations” refers to “where” or “how” a company conducts its business and determined that “capital” refers to the “share structure and rights of shareholders”. The Court therefore held that the motion judge erred in adopting a definitive interpretation of the terms “change in the business, operations or capital” that was inconsistent with the interpretation of those terms to the extent they have been considered in other cases. The Court found that a review of the case law made it evident that, contrary to the motion judge’s approach, the distinction between material change and material fact does not focus on the magnitude of the change but, rather, on whether the change was external to the company as opposed to whether the change was in the business, operations or capital of the company.

The Court further held that in adopting a restrictive definition of “change”, the motion judge erred in law by relying on a statement made by Strathy J. (as he then was) in Green, to the effect that “[t]he requirement to make timely disclosure of a material change is not an obligation to provide running commentary on the company’s progress during the quarter or to comment on internal or external events that may impact its performance.” However, the Court noted that this comment in Green was made about the obligation to disclose a “material change”, and not about the meaning of the words “change in the business, operations or capital” in the definition of “material change” as a whole.

Finally, the Court held that case law has established that the definition of “change” was not meant to include its magnitude, but rather its qualitative nature, and that the magnitude of the change in business, operations or capital is reserved for the second part of the “material change” definition where materiality is considered. As a result, the motion judge erred in adopting an overly restrictive definition of “change”, in the context of the words “change in the business, operations or capital”.

  1. Yes.

The Court held that the motion judge erred in law because his assessment of the evidence was based on his interpretation of “change in the business, operations or capital” which was an erroneous application of the legal test to the evidence in the case. The Court held that had he applied the proper legal test, the available evidence should have led the motion judge to conclude that there was a reasonable possibility that the appellant could demonstrate that the pit wall instability and rockslide constituted a change in LMC’s operations.

The Court further held that had the motion judge adopted a less rigid interpretation of “change in the business, operations or capital” in the context of the motion for leave, he should have found that there was a reasonable possibility that the appellant and the proposed class could succeed at trial with the statutory cause of action under the Securities Act.


Jakab v. Clean Harbors Canada, Inc., 2023 ONCA 377

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

Counsel:

N.G. Aresta, for the appellants
K. Kernick, for the respondent

Keywords: Contracts, Interpretation, Covenant to Insure, Ambiguity, Contra Proferentem, Torts, Negligence, Negligent Misrepresentation, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 2249778 Ontario Inc. v. Smith (Fratburger), 2014 ONCA 788, Meridian C C Intl Inc. v. 2745206 Ontario Inc., 2022 ONCA 12, Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, Queen v. Cognos Inc., [1993] 1 S.C.R. 87, Mahendran v. 9660143 Canada Inc., 2022 ONCA 676

facts:

The individual appellant leased a transport truck through his solely owned corporation, the second appellant, Ontario Heavy Xpress Ltd. (“Xpress”). On July 5, 2018, after Xpress had purchased the truck outright, it caught fire and was destroyed. The truck could not be repaired.

At all relevant times the appellant was operating the truck exclusively for a large waste disposal company, the respondent. Pursuant to the terms of the “National Transportation Lease Agreement (Cdn.)” (the “contract”), Xpress agreed to provide freight haulage and furnish the trucking equipment to the respondent. During the currency of the contract, the truck was operated under licence plates registered in the respondent’s name. The appellants had not purchased any insurance for the vehicle, and the respondent had not insured it for first-party damage by fire. After the fire, the respondent looked into it and an amount between $18,000 – $20,000 (USD) was floated. The appellant therefore initially believed the respondent was going to pay for the Truck, but ultimately the respondent refused to do so.

The appellants sued the respondents for damages, which the trial judge assessed to be $63,775.22. The appellants claimed that the respondent had breached its contractual obligation to provide first-party insurance coverage for damage by fire (the “breach of contract claim”). It also advanced the alternative claim that, after the contract had been concluded, an employee of the respondent had negligently misrepresented to the appellant that the truck was “fully covered” (the “negligent misrepresentation claim”). The trial judge dismissed both claims.

issues:
  1. Did the trial judge err in dismissing the claim for breach of contract?
  2. Did the trial judge err in dismissing the claim for negligent misrepresentation?
holding:

Appeal allowed, in part.

reasoning:
  1. No.

The Court first reviewed the relevant legal principles, stating that contractual interpretation is an exercise in discovering the “objective intentions of the parties as expressed in the words of the contract”. The Court noted that the exercise of interpretation should also reflect the factual matrix underlying the contract and accord with sound commercial principles and good business sense, while avoiding commercially absurd interpretations. The Court also considered whether the correct standard of review for a standard form contract of adhesion was correctness or reasonableness. In the result, the Court declined to decide as it found that under either standard, it would uphold the trial judge’s decision.

The Court agreed with the trial judge’s interpretation that the parties had agreed that the respondent would be obligated to make available to the appellants only that coverage found in the policies of insurance that the respondent obtained and maintained. The Court reached this conclusion, in part, on its interpretation of the phrase, “make … available”. The Court held that the phrase more naturally described an obligation to provide access to something that is already held, than an obligation to obtain and maintain something new. Moreover, the Court held that if the phrase “make available” was meant to describe an obligation on the part of respondent to secure insurance for the appellants, the subsequent phrase in clause 1 of Schedule 2, “obtained and maintained” would be redundant.

The Court further found that when the provision was viewed in the context of the contract as a whole, all ambiguity was removed. If the appellant’s interpretation were correct, it would render meaningless several other terms in the contract. First, the Court found that clause 13 imposed sole responsibility on the appellants “for loss or damage to the Equipment however caused”, and it explicitly contemplated the appellants themselves maintain insurance in respect of damage to the truck. The Court rejected the appellants attempt to apply contra proferentem to this clause as the rule seeks to give effect to contract clauses, not nullify them.

The Court also noted that the contract stipulated that the respondent made no representation or warranty with respect to the adequacy of the insurance coverage and that this was irreconcilable with an obligation on its part to take responsibility for full insurance coverage. Further, the Court found that the contract imposed an obligation on the appellants to satisfy themselves as to the adequacy of insurance coverage, and that this obligation would be nonsensical if the respondents were then obliged to maintain coverage for the appellants.

In sum, the Court held that when the contract was read as a whole and interpreted in a manner that gave meaning to all of its terms it was clear that the parties agreed that the respondent was obligated to provide only that coverage found in the policies of insurance that it maintained. The Court also held that it was not commercially absurd to expect a subcontractor to insure their own interest in a truck that they leased.

  1. Yes.

The Court found that the trial judge had erred in dismissing the appellant’s claim for negligent misrepresentation. The Court first laid out the five elements necessary to establish negligent misrepresentation: There is a “special relationship” between the person making the statement and the person hearing it, it is reasonable for the person hearing the statement to rely on it, the statement is untrue, the person was careless in making the statement, and the person who reasonably relied on the statement suffered damages.

The trial judge dismissed the claim on the basis that the first three elements of the test had not been met. The Court found that the trial judge failed to resolve the factual question of whether the “fully covered” statement had been made by a representative of the respondent. The Court found that when the trial judge’s reasons were read as a whole, it became evident that she chose not to make a factual finding on whether the “fully covered” conversation occurred, but found that even if it had, it was not actionable.

The Court found that the trial judge erred in her analysis by requiring proof of who made the alleged representation. The Court held that, so long as the appellants established that an employee had made the representation, the first element of the test would be met. The Court also found that the trial judge erred in finding that there was no “special relationship”. The appellants were dependant on the respondents, pursuant to the contract, on receiving accurate information of what the respondent’s insurance covered. Accordingly, the Court found a special relationship existed.

The Court went on to find that the trial judge erred in applying the second stage of the test by requiring the appellants to show that the representation, if made, could be considered true. The court held that this overstated the onus on the appellants, and that the appellants were only required to show that it was more probable that the statement was inaccurate or misleading. The Court also found that the trial judge erred in the application of the third part of the test by requiring the appellants to prove the intention of the statement. The Court found that it was sufficient that the appellants show the statement negligently caused them to believe that they were fully covered for fire damage.

Accordingly, the Court ordered a new trial on the claim of negligent misrepresentation.


Davies v. Clarington (Municipality, 2023 ONCA 376

[Zarnett, Coroza and Favreau JJ.A.]

Counsel:

J.M. Regan, for the appellants/respondents by cross-appeal Apache Specialized Equipment Inc., Apache Transportation Services Inc., and T.G.
A. Barda and S. Ross, for the appellant/respondent by cross-appeal The BLM Group Inc.
L.P. Brasil and R. Egit, for the respondent/appellant by cross-appeal BridgePoint Financial Services Inc.
J. Strype, for the respondent/appellant by cross-appeal Yorkfund Investment Inc.
R. Aisenberg, for the respondent/appellant by cross-appeal Seahold Investments Inc.
N. Mizobuchi, for the respondent/appellant by cross-appeal Lexfund Inc.
S. Barclay, for Via Rail Canada Inc. and Canadian National Railway Company
S. MacDonald, for Hydro One Networks Inc.

Keywords: Torts, Maintenance, Champerty, Civil Procedure, Costs, Non-Parties, Abuse of Process, Appeals, Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C. 43, ss. 6(1)(b), 131(1), Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30, 33.1, Davies v. Clarington (Municipality) (2006), 266 D.L.R. (4th) 375 (Ont. S.C.), Davies v. Corporation of the Municipality of Clarington et al., 2010 ONSC 418, Davies v. The Corporation of the Municipality of Clarington, 2018 ONSC 4370, Davies v. The Corporation of the Municipality of Clarington, 2019 ONSC 2292, 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, Arkin v. Borchard Lines Ltd. & Ors, [2005] EWCA Civ 655, Chapelgate Credit Opportunity Master Fund Ltd. v. Money & Ors, [2020] EWCA Civ 246, Fresco v. Canadian Imperial Bank of Commerce, 2021 ONCA 46, Hunt v. Worrod, 2019 ONCA 540, The St. James’ Preservation Society v. Toronto (City), 2007 ONCA 601, Housen v. Nikolaisen, 2002 SCC 33, Behn v. Moulton Contracting Ltd., 2013 SCC 26, McIntyre Estate v. Ontario (Attorney General) (2002), 61 O.R. (3d) 257 (C.A.), Houle v. St. Jude Medical Inc., 2017 ONSC 5129, Fehr v. Sun Life Assurance Company of Canada, 2012 ONSC 2715, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267, Das v. George Weston Limited, 2018 ONCA 1053

facts:

This appeal arose out of a collision in 1999 between a Via Rail train and a tractor trailer that was stopped on the railway track. In 2000, a class action was certified on behalf of all passengers who were on the train. In 2006, a settlement among the defendants and the class was reached, which the court approved. The approval order provided that the settlement did not compromise the claim of CZ. The respondents (the “Lenders”) made separate loans to CZ to fund his litigation. The total principal, added together, was over $400,000. The loans bore interest, some at compound rates of up to almost 30% per year.

CZ sought $50 million for his claim. Prior to trial, he turned down an offer of $500,000, at a time when the loans, with interest, significantly exceeded that amount. CZ also made offers to settle. In November 2009, he offered to accept $35 million. In 2014, he offered to accept $26.2 million for damages and interest, plus costs, which were to include interest on the litigation loans. He then recovered only $50,000 after about seven years of pre-trial proceedings and a 106-day trial. The defendants to the claim were awarded costs against CZ of more that $3.4 million, which he cannot or will not pay. At the time of the costs award in March 2021, CZ’s aggregate debt to the Lenders was in excess of $6 million, considering principal and accrued interest.

The defendants sought an order that the lenders, as non-parties, pay the costs awarded against CZ. The trial judge made the following observations about the loans: (i) their interest provisions were onerous; (ii) none provided that the Lenders would indemnify CZ for any costs award against him; (iii) none gave the Lenders a share of any potential monetary award or settlement; and (iv) none gave the Lenders direct control over the litigation. Further, citing the Court’s decision in 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd. (“Laval”), the trial judge noted that there were two circumstances where the court can award costs against a non-party: (a) where the non-party meets the “person of straw” test, and (b) where the non-party initiates or conducts the litigation in such a manner that amounted to an abuse of process. The trial judge held that neither circumstance was present and declined to order costs against the Lender.

issues:
  1. Does the Court have jurisdiction to determine this appeal?
  2. Did the trial judge err in in law in failing to find that the conduct of the Lenders amounted to an abuse of process within the meaning of Laval?
  3. Did the trial judge err in in law in failing to conduct an analysis of whether the loans advanced by the Lenders constituted champerty and maintenance?
  4. Should the Lenders be granted leave to cross-appeal the trial judge’s discretionary decision not to award them costs?
holding:

Appeal dismissed. Leave to cross-appeal denied.

reasoning:
  1. Yes.

The Court noted that the Class Proceedings Act, 1992 (“CPA”) directs appeals from the determination of individual claims of class members to the Divisional Court. However, this was not an appeal by a class member or representative plaintiff, and therefore, the CPA was inapplicable on the route of appeal. The Court stated that, given the amount in issue on the costs award and the fact that the order under appeal is final, the appeal was properly to the Court pursuant to s. 6(1)(b) of the Courts of Justice Act.

  1. No.

The appellants did not challenge the trial judge’s finding that the person of straw test did not apply on these facts. The appellants argued that the trial judge erred by confining the abuse of process doctrine to situations where the non-party directly controls the litigation. They submitted that the Lenders’ decision to advance loans with uncapped compound interest exerted such an influence on CZ and his counsel that their involvement should be seen as ‘conducting’ the litigation within the meaning of Laval. They took this position for three reasons: (a) the loan was used to fund a lengthy proceeding for a wildly exaggerated claim, (b) the high rates of compounding interest on the loans pushed the indebtedness of CZ to levels that made it impossible to accept the defendants’ offers to settle, and (c) the trial judge made a finding that the loans needed, but did not qualify for, court approval.

The Court disagreed with the appellants’ submissions. First, the mere fact that a loan’s principal is used to fund unsuccessful litigation should not render the Lenders liable for the costs of that litigation absent evidence that the Lenders exercised control over the conduct of the litigation and did so in a way that constituted an abuse of process. In this case, although the proceeds of the loans were used to fund some aspects of the litigation, the trial judge made no finding, and the appellants pointed to no evidence, that the Lenders controlled CZ’s litigation choices.

Second, it was true that the trial judge identified the excess of the aggregate debt with interest over the defendants’ offers as creating a “massive impediment” to settlement. However, he also noted that CZ’s unrealistic expectations were an obstacle to settlement. Therefore, the Court noted that it could not be said that the Lenders were the cause of CZ’s refusal to accept the offers or of his choice to litigate his claim in the protracted way that he did. In fact, the Court stated that there was no evidence from CZ that, absent the debt, he would have accepted any of the defendants’ offers.

Lastly, the Court disagreed with the argument that the trial judge’s finding that the loans required, but did not receive, court approval buttressed their point that the trial judge should have found the Lenders “unreasonably controlled” CZ’s litigation. Even though the loans preceded the enactment of s. 33.1 of the CPA which now governs court approval of third-party funding agreements for class proceedings, at common law, a number of factors were considered before a funding agreement for a class proceeding was approved. One factor was that the agreement could not interfere with the right of the representative plaintiff to control the litigation. The Court noted that the trial judge never made a finding to the contrary.

  1. No.

The appellants argued that the trial judge failed to consider whether the Lenders were engaged in maintenance. The Court disagreed, stating that the trial judge carefully considered the terms of the loans, including that they did not give the Lenders any share of the proceeds. The Court held that the trial judge’s conclusion not to exercise his discretion to award costs against the Lenders in these circumstances cannot be said to have arisen from a failure to consider either the Laval test or the relationship of the concepts of champerty and maintenance to it. The Court held that the trial judge did not err in opting not to order costs against the non-party Lenders.

  1. No.

The Lenders sought leave to cross-appeal the trial judge’s discretionary decision not to award them costs of the appellants’ unsuccessful request that the Lenders pay the costs of the action awarded against CZ. The Court noted that leave to appeal a costs order will only be granted where there were strong grounds upon which the court could find that the judge erred in exercising their discretion. The trial judge refused to award costs on the basis that the issue was novel, which was an accepted principle on which a judge may make a no costs disposition. The Court stated that it was open to the trial judge in his discretion to consider that the case fell at a point on the novelty spectrum sufficient to decline to award costs. Therefore, the Court held that the trial judge made no error and leave to cross-appeal the costs award was denied.


SHORT CIVIL DECISIONS

Hayer v. Bertasiene, 2023 ONCA 375

[Doherty, Zarnett and Sossin JJ.A.]

Counsel:

T. Corsianos, for the appellants
H. Dhaliwal, for the respondents J.H. and B.H.
E.P. Youssoufian, for the respondents O.I. and V.I.
A. Schorr, for the respondents V.K. and S.K
Keywords: Civil Procedure, Costs, Fresh Evidence, Hayer v. Bertasiene, 2023 ONCA 302


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.

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Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of May 15, 2023.

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In Hydro One Networks Inc. v. Shiner, Hydro sought a declaration that it had a prescriptive easement to an access road on the respondent’s private property where it was required to maintain transmission lines and towers. The application judge held that Hydro had not established that the use of the access road was continuous or “as of right”, finding that Hydro’s use was “occasional at best”. Blaneys’ own Reeva Finkel, Brendan Jones and Ines Ferreira successfully appealed the decision of the application judge. The Court found that Hydro had provided uncontroverted evidence establishing that Hydro’s use of the access road was continuous and without express permission for more than 40 years. The Court noted that the meaning of ‘continuous’ must be viewed in the context of the right being claimed and concluded that Hydro had established a prescriptive easement.

In Moffitt v. TD Canada Trust, the appellant suffered a vicious assault when using an ATM machine located in a vestibule of one of the branches of the respondent, TD. The motion judge granted TD’s motion for summary judgment and dismissed the action against it. The appeal was dismissed.

In Catholic Children’s Aid Society of Toronto v. V.O., the Court clarified the flexible application of the test for leave for a status review application in child protection cases as set out in Children’s Aid Society of Metro Toronto v. B.A.F., noting that a strict application of the criteria would fetter judicial discretion under s. 115(5) of the Child, Youth and Family Services Act, 2017. The Court found that the B.A.F. criteria was applied correctly by the motion judge, and was correctly upheld by the appeal judge. The appeal was dismissed.

Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc. considered the legal principle applicable to the application of res judicata. The Court, in considering cause of action estoppel and issue estoppel, dismissed the appellant’s appeal on the basis that the requested vesting order and declaration could not extinguish other claims or insulate an option to purchase property from challenge, and that such claims were not barred by the application judge’s earlier orders. The Court also considered declaratory relief available on an application. The Court found that there was no basis to interfere with the application judge’s exercise of discretion not to grant a declaration foreclosing and dismissing challenges to the option to purchase.

Other topics covered this week included the enforcement of a settlement, reasonable apprehension of bias in a family law case involving self-represented litigants and extension of time to appeal.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Hydro One Networks Inc. v. Shiner, 2023 ONCA 346

Keywords: Real Property, Prescriptive Easements, Continuous Use, Consent, Civil Procedure, Evidence, Affidavits, Admissibility, Land Titles Act, R.S.O. 1990, c. L.5, Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Sch. B, Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 31, Balogh v. R.C. Yantha Electric Ltd., 2021 ONCA 266, Carpenter v. Doull-MacDonald, 2017 ONSC 7560, aff’d 2018 ONCA 521, Balogh v. R.C. Yantha Electric Ltd., 2019 ONSC 6748, Condos and Castles Realty Inc. v. Janeve Corp., 2015 ONCA 466, Axler et al. v. Chisholm (1977), 16 O.R. (2d) 665, Creeggan v. Fijalkowski, 1990 CarswellOnt 5116 (Ont. Dist. Ct,), L.M.U. v. R.L.U., 2004 BCSC 95, Vivekanandan v. Terzian, 2020 ONCA 110, Caldwell v. Elia (2000), 30 R.P.R. (3d) 295 (Ont. C.A.), Ogden Entertainment Services v. United Steelworkers of America, Local 440 (1998), 38 O.R. (3d) 448 (C.A.), J. Gaunt QC and the Honourable P. Morgan, Gale on Easements, 19th ed. (London, England: Sweet & Maxwell, 2012)

Moffitt v. TD Canada Trust , 2023 ONCA 349

Keywords: Torts, Negligence, Occupier’s Liability, Civil Procedure, Summary Judgment, Jury Notice, Expert Evidence, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 108(1), Occupier’s Liability Act, R.S.O. 1990, c. O.2., Family Law Act, R.S.O. 1990, c. F.3, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, s. 248(1), Crown Liability and Proceedings Act, 2019, S.O. 2019, c. 7, Sched. 17, s. 20, Rules of Civil Procedure, rr. 1.04(1), 14.05(3), 20.04(2)(a), 20.04(2)(b), 20.04(2.1), 20.04(2.2), 21.01(1)(a)), 21.01(1)(b), 22.01, 53.03(2.1), 53.03(3), 53.08(1), 76, R. v. Pangan, 2014 ONCJ 229, Cowles v. Balac, (2006), 83 O.R. (3d) 660 (C.A.), Louis v. Poitras, 2021 ONCA 49, Moffitt v. TD Canada Trust, 2019 ONSC 5208, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23 Roy v. Ottawa Capital Area Crime Stoppers, 2018 ONSC 4207, Hryniak v. Mauldin, 2014 SCC 7, R. v. Mohan, [1994] 2 S.C.R. 9

Haider v. Rizvi , 2023 ONCA 354

Keywords: Contracts, Civil Procedure, Settlements, Enforcement, Limitations Act, 2002,S.O. 2002, c. 24, Sched. B, Rules of Civil Procedure,, R. 49.09, Terranata Winston Churchill Inc. v. Teti Transport Ltd., et al., 2020 ONSC 7577, Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, Gianopoulos v. Olga Management Ltd. (2006), 207 O.A.C. 58 (C.A.), Vanderkop v. Manufacturers Life Insurance Company (2005), 78 O.R. (3d) 276 (S.C.), aff’d (2006), 40 C.C.L.I. (4th) 180 (Ont. C.A.). 1504641 Ontario Inc. et al. v. 2225902 Ontario Inc. et al., 2021 ONSC 2917, aff’d 2022 ONCA 175, Dodla v. Dodla, 2022 ONSC 5648, GMBR Capital Corp.v.Parmar, 2021 ONSC 7798, Fieguth v. Acklands Ltd. (1989), 59 D.L.R. (4th) 114 (B.C.C.A.), Hodaie v. RBC Dominion Securities,2012 ONCA 796, Umholtz v. Umholtz (2004), 238 D.L.R. (4th) 736 (Ont. S.C.), Gedco Excavating Ltd. v. Aqua-Tech Dewatering Co., [2014] O.J. No. 2513 (S.C.), Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.), aff’d [1995] O.J. No. 3773 (C.A.), Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis, 2020)

Stanley v. Lucchese, 2023 ONCA 357

Keywords:Civil Procedure, Appeals, Extension of Time, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 123, Rules of Civil Procedure, r. 61.04, Echelon Environmental Inc. v. Glassdoor Inc., 2021 ONCA 763, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Malik v. Attia, 2020 ONCA 787

Kim v. McIntosh , 2023 ONCA 356

Keywords: Family Law, Parenting Time, Decision Making Authority, Child Support, Civil Procedure, Uncontested Trials, Appeals, Stay Pending Appeal, Reasonable Apprehension of Bias, Children’s Law Reform Act, R.S.O. 1990, c. C.12, s. 24(2), s.24(3), s.37, Family Law Act, R.S.O. 1990, c. F.3, s. 31, Child Support Guidelines, O. Reg. 391/97, s.19(1)(a), Family Law Rules, O. Reg. 114/99, rr. 2(2)(3)(5), r. 25(19), Kim v. McIntosh, 2020 ONSC 719, Drygala v. Pauli (2002), 61 O.R. (3d) 711 (C.A.), Dickie v. Dickie, 2007 SCC 8, Lamothe v. Ellis, 2022 ONCA 789, Gray v. Gray, 2017 ONCA 100, Wewaykum Indian Band v. Canada, 2003 SCC 45, R. v. S. (R.D.), [1997] 3 S.C.R. 484, Bailey v. Barbour, 2012 ONCA 325

Catholic Children’s Aid Society of Toronto v. V.O., 2023 ONCA 355

Keywords: Family Law, Child Protection, Best Interests of the Child, Status Review, Child, Youth and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1, s. 112, s. 115(5), s. 115(7), s. 115(9), s. 122(1), Family Law Rules, O. Reg. 114/99, r. 2, Children’s Aid Society of Metro Toronto v. B.A.F., [1988] O.J. No. 2950 (Prov. Ct. (Fam. Div.)), Children’s Aid Society of Haldimand and Norfolk v. J.A.M.-F., 2011 ONCJ 53, Titova v. Titov, 2012 ONCA 864, Children’s Aid Society of Hamilton v. M.W., 2011 ONSC 1382, Children’s Aid Society of Waterloo Region v. L.M., 2015 ONCJ 103, Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), The Children’s Aid Society of Toronto v. S.C., 2017 ONCJ 240, S.R. v. Catholic Children’s Aid Society of Toronto, 2011 ONCJ 11, Children’s Aid Society of Brant v. A.C., 2015 ONCJ 436, M.P. v. Windsor-Essex Children’s Aid Society and S.G., 2022 ONCJ 298

Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc., 2023 ONCA 363

Keywords:Bankruptcy and Insolvency, Contracts, Real Property, Option to Purchase, Civil Procedure, Vesting Orders, Res Judicata, Cause of Action Estoppel, Issue Estoppel, Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Assignments and Preferences Act, R.S.O. 1990, c. A.33, Canada Business Corporations Act, R.S.C. 1985, c. C-44, s. 241, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 65.11, ss. 95, ss. 96, Interest Act, R.S.C. 1985, c. I-15, s. 8(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 97, Rules of Civil Procedure, r. 14.02, r. 14.05, In the Matter of the Notice of Intention to make a Proposal of CIM Bayview Creek Inc., 2021 ONSC 220, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, Fresco v. Canadian Imperial Bank of Commerce, 2022 ONCA 115, Nortel Networks Corporation (Re), 2013 ONCA 518, Solosky v. The Queen, [1980] 1 S.C.R. 821, Grain Farmers of Ontario v. Ontario (Ministry of the Environment and Climate Change), 2016 ONCA 283, J.N. v. Durham Regional Police Service, 2012 ONCA 428, Harrison v. Antonopoulos (2002), 62 O.R. (3d) 463 (S.C.), S.A. v. Metro Vancouver Housing Corp., 2019 SCC 4, Gook Country Estates Ltd. v. Quesnel (City of), 2008 BCCA 407, T1T2 Limited Partnership v. Canada (1995), 23 O.R. (3d) 81 (Gen. Div.), aff’d (1995), 24 O.R. (3d) 546 (C.A.),  Harry Woolf & Jeremy Woolf, Zamir & Woolf: The Declaratory Judgment, 3rd ed. (London: Sweet & Maxwell, 2002), Lazar Sarna, The Law of Declaratory Judgments, 4th ed. (Toronto: Thomson Reuters, 2016)

Short Civil Decisions

Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 353

Keywords: Civil Procedure, Costs, Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245

RCML Corp. v. 2524258 Ontario Inc., 2023 ONCA 352

Keywords: Contracts, Real Property, Mortgages, Enforcement, Power of Sale, Damages, Deficiency, Improvident Sale, Civil Procedure, Summary Judgment, No Genuine Issue Requiring Trial, Manufacturers Life Insurance Co. v. Granada Investments Ltd., 2001 150 O.A.C. 253, Oak Orchard Developments Ltd. v. Iseman, [1987] O.J. No. 361, aff’d [1989] O.J. No. 2394 (C.A.)

K.K. v. M.M., 2023 ONCA 366

Keywords: Family Law, Child Support, Spousal Support, Civil Procedure, Appeals, Stay Pending Appeal, Costs, Security for Costs, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311

Truscott v. Co-Operators General Insurance Company, 2023 ONCA 372

Keywords: Civil Procedure, Costs, Rules of Civil Procedure, r. 21.01(1)(b)

Plewes v. Chaudhry, 2023 ONCA 371

Keywords: Real Property, Agreements of Purchase and Sale of Land, Tax Allocation, Excise Tax Act, R.S.C., 1985, c. E-15., s. 224.1


CIVIL DECISIONS

Hydro One Networks Inc. v. Shiner, 2023 ONCA 346

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

Reeva M. Finkel, Brendan Jones, and Ines Ferreira, for the appellant

M. Kemerer, for the respondent

Keywords: Real Property, Prescriptive Easements, Continuous Use, Consent, Civil Procedure, Evidence, Affidavits, Admissibility, Land Titles Act, R.S.O. 1990, c. L.5, Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Sch. B, Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 31, Balogh v. R.C. Yantha Electric Ltd., 2021 ONCA 266, Carpenter v. Doull-MacDonald, 2017 ONSC 7560, aff’d 2018 ONCA 521, Balogh v. R.C. Yantha Electric Ltd., 2019 ONSC 6748, Condos and Castles Realty Inc. v. Janeve Corp., 2015 ONCA 466, Axler et al. v. Chisholm (1977), 16 O.R. (2d) 665, Creeggan v. Fijalkowski, 1990 CarswellOnt 5116 (Ont. Dist. Ct,), L.M.U. v. R.L.U., 2004 BCSC 95, Vivekanandan v. Terzian, 2020 ONCA 110, Caldwell v. Elia (2000), 30 R.P.R. (3d) 295 (Ont. C.A.), Ogden Entertainment Services v. United Steelworkers of America, Local 440 (1998), 38 O.R. (3d) 448 (C.A.), J. Gaunt QC and the Honourable P. Morgan, Gale on Easements, 19th ed. (London, England: Sweet & Maxwell, 2012)

facts:

The appellant, Hydro One Networks Inc. (“Hydro”), built transmission lines and towers in the 1930’s that passed through several properties in Cloyne, Ontario, including that of the respondent. An easement over the land was granted in 1948 (the “Hydro Easement”). Hydro employees required access to the Hydro Easement in order to service and maintain the transmission towers and trim the vegetation around the transmission lines. The Hydro Easement was accessed by Hydro through a private road (referred to as the “Hydro Road”) that is, in part, on the respondent’s land. The respondent purchased the property in 2017 and subsequently objected to Hydro’s use of the portion of the road that was on his property. The respondent then locked two gates at either end of the road, preventing access to Hydro.

Hydro’s position was that it had continuous, uninterrupted, open and peaceful use of the road without the owner’s permission for more than 40 years, giving it a prescriptive easement either under the doctrine of lost modern grant, or by s. 31 of the Real Property Limitations Act (“RPLA”). The respondent’s position was that Hydro had not met its onus of proof, that its use was not continuous, uninterrupted, open and peaceful, that there are several good alternative routes that Hydro One can use to access the Hydro Easement, and that it had sought the owner’s permission to use the access road and offered to pay him compensation for that use.

The respondent submitted an affidavit attaching a letter as an exhibit from a previous employee of Hydro which stated that he did not frequently use the easement in question. This letter was unsworn and this previous employee did not provide affidavit evidence.  Hydro submitted affidavit evidence from current and former Hydro employees that set out the historic use of the Hydro Road to access the Hydro Easement. The Hydro affiants also stated that Hydro never sought permission from the respondent or the former owners of the land to use the Hydro Road. The respondent argued that an agreement between the parties from 2018 (the “2018 Agreement”) was evidence that Hydro was using the Hydro Easement with the respondent’s permission, and therefore, Hydro was not using it “as of right.”  Hydro argued that the 2018 Agreement was in response to complaints by the respondent with respect to property damage. Specifically, Hydro agreed to install fences across the right of way with locked gates in satisfaction of any claim for damages. The Hydro employees stated that the 2018 Agreement did not provide that permission was being sought to use the Hydro Road.

The application judge agreed with the respondent and concluded that there was evidence that Hydro had sought the respondent’s permission to use the Hydro Road. Further, she found that the historic use of the Hydro Road was “occasional at best” and dismissed the application.

issues:
  1. Did the application judge err by misinterpreting the meaning of the requirement that the prescriptive use must be “continuous”?
  2. Did the application judge err by finding that Hydro had sought permission to use the Hydro Road in 2018, and therefore, its use of the road before 2008 was not “as of right”?
holding:

Appeal allowed.

reasoning:
  1. Yes.

The Court stated that, under the doctrine of lost modern grant, an easement by prescription can be established by the owners of the dominant tenement over the affected portion of the servient tenement based on 20 years of continuous, uninterrupted, open and peaceful use of the land without objection by the owner of the servient tenement. The use must be “as of right” meaning that the owner of the servient tenement must have knowingly acquiesced to the establishment of the easement, not just granted permission or a license to use the land.  However, under the RPLA, after 40 years, the right is absolute unless permission to use the land was given in writing during the 40 years.

The Court held that the evidence clearly showed that Hydro used the Hydro Road to access the Hydro Easement for more than 40 years. The only issues were whether this use was continuous or as of right. The Court noted that in order to establish an easement by prescription, Hydro’s use of the property over the 20-year period must be “continuous, uninterrupted, open and peaceful” and without objection by the respondent. All of these requirements work together to indicate a pattern of behaviour that was accepted by the owner of the servient tenement over a long period so that the user would come to rely on the right to that use. Whether the use is “continuous” is viewed in that context.

The application judge found that there was no evidence that Hydro used the road continuously within the meaning of the caselaw. Specifically, she stated that it was conceded by Hydro that its workers accessed the easement approximately every one to three years for a foot patrol and every six to eight years for brush clearing. The Court found that the application judge misapprehended the evidence. The evidence of Hydro’s affiants was that when Hydro was undertaking spraying operations from about 1997 to early 2008, spraying would occur daily during the spring and the summer. Furthermore, the evidence of the owner of the neighbouring property to the respondent was that he observed Hydro vehicles accessing the right of way twice a year since 1966.

The Court found that the weight of the evidence before the application judge was of a pattern of use of the Hydro Road by Hydro which was open, peaceful and uninterrupted from 1966 to 2018. It held that, in the circumstances, the frequency and nature of the access was sufficient to satisfy the “continuous” criterion.

  1. Yes.

The Court noted that the affidavit evidence adduced by Hydro was not challenged on cross-examination. In that evidence, the Hydro employees consistently testified that they were seeking to accommodate and appease the respondent’s concerns regarding the use of the Hydro Road in order to have a good relationship. Without cross-examination challenging that evidence, it was not open to the application judge to reject all of the evidence without explanation.

Furthermore, there was nothing in the written correspondence or 2018 Agreement that indicated that the installation of the gates, fencing and gravel was in exchange for the respondent’s permission to use the Hydro Road. In addition, no evidence was adduced of permission given to Hydro by the predecessor land owner to use the Hydro Road at any point in their ownership between 1925 to 2017. Therefore, the Court held that the application judge erred in law by failing to find that Hydro’s use of the Hydro Road over the prescriptive period was as of right. As a result, the prescriptive easement was established on the record before the court.


Moffitt v. TD Canada Trust, 2023 ONCA 349

[Brown, Sossin and Copeland JJ.A.]

Counsel:

C.I.R. Morrison and S. Pickering, for the appellants

D. Zuber and J. Tausendfreund, for the respondent

Keywords: Torts, Negligence, Occupier’s Liability, Civil Procedure, Summary Judgment, Jury Notice, Expert Evidence, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 108(1), Occupier’s Liability Act, R.S.O. 1990, c. O.2., Family Law Act, R.S.O. 1990, c. F.3, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, s. 248(1), Crown Liability and Proceedings Act, 2019, S.O. 2019, c. 7, Sched. 17, s. 20, Rules of Civil Procedure, rr. 1.04(1), 14.05(3), 20.04(2)(a), 20.04(2)(b), 20.04(2.1), 20.04(2.2), 21.01(1)(a)), 21.01(1)(b), 22.01, 53.03(2.1), 53.03(3), 53.08(1), 76, R. v. Pangan, 2014 ONCJ 229, Cowles v. Balac, (2006), 83 O.R. (3d) 660 (C.A.), Louis v. Poitras, 2021 ONCA 49, Moffitt v. TD Canada Trust, 2019 ONSC 5208, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23 Roy v. Ottawa Capital Area Crime Stoppers, 2018 ONSC 4207, Hryniak v. Mauldin, 2014 SCC 7, R. v. Mohan, [1994] 2 S.C.R. 9

facts:

The appellant, BM, suffered a vicious assault when was using an ATM machine located in the vestibule of one of the Toronto branches of the respondent, TD Canada Trust (“TD”). The assault was captured by video cameras at the ATM.

BM and the other appellants sued his assailant, the respondent FP, and the person who accompanied FP at the ATM, JG. They also sued TD for damages based on occupier’s liability and negligence.

The appellants served a jury notice which, pursuant to s. 108(1) of the Courts of Justice Act, requires that “the issues of fact be tried or the damages assessed, or both, by a jury, unless otherwise provided.” TD moved for summary judgment dismissing the action against it on the basis that there was no genuine issue requiring a trial regarding its liability. The motion judge granted the motion. On appeal, the appellants sought to set aside the summary judgment and restore the action to be tried by a civil jury.

issues:
  1. Did the motion judge err in law by granting summary judgment in the face of their jury notice that required a jury to make the findings of fact?
  2. Did the motion judge improperly exclude the opinion evidence of an expert, Mr. LF, a security consultant, filed by the appellants on the motion?
  3. Did the motion judge conduct the pre-motion case management process and the summary judgment motion in a procedurally unfair manner?
holding:

Appeal dismissed.

reasoning:
  1. No.

The Court held that it was open to the motion judge to grant summary judgment in an action in which the plaintiffs had served a jury notice and the Court saw no error in the test that the motion judge applied. The Court did not accept the appellants’ submission that summary judgment motions in a civil jury action should apply the special test spelled out in Roy v. Ottawa Capital Area Crime Stoppers (“Roy”).

The Court rejected the appellant’s submissions for several reasons: (1) adopting a special summary judgment test for civil jury actions would create two categories of summary judgment motions – those brought in civil jury actions and those brought in all others – a distinction that is not supported in the language of r. 20 of the Rules of Civil Procedure; (2) the creation of two categories of summary judgment motions would undermine the needed culture shift directed in Hryniak v. Mauldin (“Hryniak”) by impeding the development of adjudication models that offer timely and cost-effective alternatives to conventional trials; (3) the appellants’ proposed special test essentially would replace the Hryniak test and methodology with the much narrower test used for a directed verdict in a civil trial. The Court concluded that the Hryniak test and methodology applied to summary judgment motions brought in civil jury actions. Absent an error of law, the exercise of powers under r. 20 attracts deference.

2. No.

The Court found that the motion judge properly exercised his duty as gate-keeper in excluding the evidence of Mr. LF. In oral submissions, the appellants conceded that the motion judge applied the correct legal principles to his assessment of the expert evidence. The record showed the motion judge’s decision was not based on an error in principle or misapprehension of the evidence. Further, as the motion judge explained, the deficiencies in Mr. LF’s report went to the heart of his opinion, not some peripheral matter.

3. No.

The Court found that the motion judge conducted the motion in a procedurally fair manner. The appellants broke down their complaint into four parts: (1) by bringing a summary judgment motion, TD accelerated what the appellants’ thought would have been the normal timetable for the delivery of expert reports; (2) the appellants complained that the motion judge improperly criticized their conduct regarding the delivery of expert reports; (3) the appellants complained that the motion judge applied uneven scrutiny to their evidence as compared to his treatment of the respondent’s evidence; and, (4) the appellants took issue with the motion judge “blaming” BM for initiating the physical confrontation in the ATM lobby.

The Court found no merit to these complaints,. T, and addressed each as follows (1) the first complaint spoke to a culture of delay that surrounds Ontario civil jury actions rather than offering any insight into the fairness of the process employed by the motion judge; (2) a review of the case management endorsements released by the motion judge belied the criticism of improper conduct; (3) the complaint lacked the particularity that would enable the Court to begin a serious analysis of uneven scrutiny by the motion judge; and, (4) although the appellants may disagree with the comments by the motion judge, it was not a sufficient basis for a complaint that the summary judgment process was unfair.


Haider v. Rizvi , 2023 ONCA 354

[van Rensburg, Huscroft and George JJ.A.]

Counsel:

R. Trifts, for the appellant

S. Zakaryan, for the respondent

Keywords: Contracts, Civil Procedure, Settlements, Enforcement, Limitations Act, 2002,S.O. 2002, c. 24, Sched. B, Rules of Civil Procedure,, R. 49.09, Terranata Winston Churchill Inc. v. Teti Transport Ltd., et al., 2020 ONSC 7577, Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, Gianopoulos v. Olga Management Ltd. (2006), 207 O.A.C. 58 (C.A.), Vanderkop v. Manufacturers Life Insurance Company (2005), 78 O.R. (3d) 276 (S.C.), aff’d (2006), 40 C.C.L.I. (4th) 180 (Ont. C.A.). 1504641 Ontario Inc. et al. v. 2225902 Ontario Inc. et al., 2021 ONSC 2917, aff’d 2022 ONCA 175, Dodla v. Dodla, 2022 ONSC 5648, GMBR Capital Corp.v.Parmar, 2021 ONSC 7798, Fieguth v. Acklands Ltd. (1989), 59 D.L.R. (4th) 114 (B.C.C.A.), Hodaie v. RBC Dominion Securities,2012 ONCA 796, Umholtz v. Umholtz (2004), 238 D.L.R. (4th) 736 (Ont. S.C.), Gedco Excavating Ltd. v. Aqua-Tech Dewatering Co., [2014] O.J. No. 2513 (S.C.), Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.), aff’d [1995] O.J. No. 3773 (C.A.), Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis, 2020)

facts:

The appellant and the respondent and his wife entered into Minutes of Settlement dated December 11, 2017, that were signed after two actions CV-13-480703 and CV-16-547391 in the Superior Court (the “Actions”) were settled at a pretrial conference.In January 2019, counsel for the parties exchanged emails about the content of a Full and Final Mutual Release, and the respondent’s counsel provided a draft form of release. The appellant’s counsel objected to the release of unknown claims, and a clause prohibiting the parties from taking proceedings against any other person who could claim over for contribution or indemnity against a releasee (a “no claims over clause”). The appellant’s counsel advised that the appellant was contemplating an action against other parties who could third party the respondent. Unfortunately, counsel for the respondent became ill in 2019 and passed away in 2020, without the terms of the release having been finalized.

In November 2021, the respondent brought a motion in Action No. CV-13-480703 seeking: (1) a declaration that the parties had reached a settlement of the Actions; (2) an order requiring the appellant to enter into a Full and Final Mutual Release as contemplated by the Minutes of Settlement; and (3) an order and declaration that the form of release sent to the appellant’s counsel on January 25, 2019 met the requirements of a Full and Final Mutual Release contemplated by the Minutes of Settlement.

The appellant opposed the motion, asserting that r. 49 of the Rules of Civil Procedure, which was referred to in the respondent’s notice of motion, was not applicable; that the respondent was precluded from obtaining a release because a limitation period had expired; and that if the parties were required to sign a Full and Final Mutual Release, it should not contain certain wording that the respondent had included in the draft provided by his counsel, including the release of unknown claims and a no claims over clause.

The motion judge agreed with the respondent that he was entitled to move to enforce the settlement under r. 49 because the action in which the settlement was reached had not yet been dismissed. She also rejected the appellant’s limitation period argument, stating that the Limitations Act, 2002, did not apply to motions under r. 49, but that if it did, the two-year limitation period did not begin to run until January 19, 2022, when the appellant indicated for the first time that he was not prepared to sign any release.

As for the content of the Full and Final Mutual Release, the motion judge concluded that, because the parties had not provided otherwise in their Minutes of Settlement, they should be required to sign a “standard form” release releasing all claims arising out of the subject matter of the Actions and containing a provision barring claims over. The appellant appealed the order of the motion judge requiring him to “execute a standard form Full and Final Mutual Release, which released all claims arising out of the subject matter” of the Actions “and containing a clause, barring claims-over”.

issues:
  1. Did the motion judge procedurally err in determining the issues on a r. 49 motion?
  2. Did the motion judge err in failing to find that the respondent’s claim for delivery of a Full and Final Mutual Release was statute-barred under the Limitations Act, 2002?
  3. Did the motion judge err in requiring the delivery of a Full and Final Mutual Release in a “standard form” and including a no claims over provision?
holding:

Appeal allowed in part.

reasoning:
  1. No.

The appellant had demonstrated no reversible error in the motion judge’s conclusion that the issue could be determined on the motion before her. R. 49 applies to offers to settle and provides that where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may (a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or (b) continue the proceeding as if there had been no accepted offer to settle.

Although the notice of motion relied on r. 49 and the motion judge described the motion as having been brought under that rule, the Court found that r. 49 was not applicable. The settlement did not arise out of an exchange of offers made under r. 49. However, it was appropriate for the respondent to bring the matter before the Court by way of motion, when the Minutes of Settlement arose out of a settlement entered into after a pretrial conference, and the Actions had not yet been dismissed. The commencement of a fresh proceeding to enforce the settlement was unnecessary and would have been inappropriate.

The Court found the motion judge had jurisdiction to determine the motion and therefore did not err in hearing and deciding it. Although she stated that she was deciding the motion under r. 49.09, in essence she was deciding a motion to enforce a settlement that was reached in an action that had not yet been dismissed.

  1. No.

The appellant argued that the motion judge erred in refusing to dismiss the motion on the basis that the respondent’s claim for a Full and Final Mutual Release was statute-barred. He contended that the claim for performance of the Minutes of Settlement was a new cause of action that required the commencement of a new proceeding, or at least the amendment of pleadings in the existing action, which could not occur more than two years after the date of the settlement agreement.

The Court noted that the appellant had identified no error in the motion judge’s conclusion that the respondent’s claim arose only at the time that the appellant refused to deliver any release at all, and not at the time the Minutes of Settlement were signed or while the parties were in negotiations about the content of the release. On that factual finding, there was no question of the expiry of a limitation period.

The Court also saw no basis for the appellant to rely on the expiry of a limitation period. It was unnecessary to address whether and in what circumstances a limitation period might bar subsequent proceedings or claims to enforce aspects of a settlement agreement since the issue before the Court was only the delivery of a release. The delivery of a release was properly sought in the context of a motion in an ongoing action. The respondent was not required to start a new action or to amend his pleadings to seek an order for an exchange of releases as part of the completion of the settlement. Even if no Full and Final Mutual Release had been delivered, the respondent was released by the terms of the Minutes of Settlement, subject only to the Undertaking.

  1. Yes.

The task confronting the motion judge was to determine what type of release should be signed. In this case, the form of release was not prescribed in the settlement agreement, the content and scope of the release depended on an interpretation of the settlement. Although the motion judge referred to Terranata as authority for the order she made, she did not apply the appropriate interpretive analysis. The motion judge referred to two passages from Terranata to conclude that the appellant should be ordered to sign a “standard form Release” releasing all claims arising out of the subject matter of the Actions and containing a no claims over provision. By contrast, it was clear from Vella J.’s examination of the circumstances before her, including the settlement agreement and the actions that were settled, that her intention was not to default to a standard form of release, but to determine the objective intentions of the parties based on the settlement they had concluded.

The appellant objected to the respondent’s proposed form of release, arguing that the scope of the release was overbroad, because it would apply to claims he might have in the future against the respondent arising out of anything that was raised or could have been raised in the Actions, including damage and loss not now known or anticipated. He also objected to the inclusion in the release of a no claims over clause.

Following the approach in Terranata, the Court found the motion judge ought to have considered these arguments in the context of the specific terms of the settlement the parties had reached, including the Actions that had been settled and the Undertaking that would survive the settlement. In the interest of clarity, it would have been helpful if she had reviewed and approved a particular version of a release (there were at least two in the materials), with any changes that were appropriate to reflect her interpretation of the Minutes of Settlement and its surrounding circumstances.

The Court asked the parties to provide the form of release that they believed the motion judge had approved, and the form of release that they were asking the Court to approve. The parties did not agree on what the “standard form” ordered by the motion judge should include; and they now agreed on all of the terms of a Full and Final Mutual Release, except for whether there should be a no claims over clause, and whether such a clause should include an indemnity. The Court reviewed the terms of the Minutes of Settlement, including the Undertaking that was to specifically survive the settlement and the pleadings in the Actions, and concluded that it was appropriate that the Full and Final Mutual Release to include a no claims over clause.

The Court found that the intention of the parties was that, in consideration of the payment of the settlement funds and the survival of the respondent’s indemnities of the appellant for various matters provided by the Undertaking, the matters raised in the Actions could not be raised again. The settlement would be incomplete and ineffective if the appellant were to commence proceedings against a third party arising out of matters covered by the release.

The wording and circumstances of the Minutes of Settlement made clear that, subject only to the various matters carved out of the release by the Undertaking, the parties were agreeing to extinguish each other’s full underlying liability in relation to the subject-matter of the settlement. A no claims over clause was a natural extension of their agreement and was consistent with the parties’ goal of providing a full and final release.

However, the Court saw no basis for the inclusion of an indemnity for breach of the no claims over clause. While this would aid in the enforcement of the no claims over clause and an indemnity to support and enforce a no claims over clause is frequently included without objection in releases in completion of settlements, the parties had bargained for certain indemnities to survive the settlement – those that were included specifically in the Undertaking. The Court found the indemnity wording proposed by the respondent to reinforce the no claims over clause went beyond what the parties reasonably bargained for. The Court approved the version of the Full and Final Release that contained a no claims over clause, and attached a copy of the Undertaking, in the form submitted to the Court by the appellant and directed the appellant to sign and deliver to the respondent a copy of that release.


Stanley v. Lucchese, 2023 ONCA 357

[Simmons J.A. (Motions Judge)]

Counsel:

Y. Lipetz, for the moving party

J. Thomas, for the responding party

Keywords: Civil Procedure, Appeals, Extension of Time, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 123, Rules of Civil Procedure, r. 61.04, Echelon Environmental Inc. v. Glassdoor Inc., 2021 ONCA 763, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Malik v. Attia, 2020 ONCA 787

facts:

The respondent obtained partial summary judgment against the moving party on a $1.8 million loan by way of an endorsement typed on the back of a motion record (the “Endorsement”). The Endorsement was dated August 4, 2021. Counsel for the respondent first obtained a copy of the Endorsement on March 2, 2023, more than 18 months after it was made. Counsel for the respondent then forwarded the Endorsement to the moving party.

On March 30, 2023, newly retained counsel for the moving party requested the respondent’s consent to an extension of time to appeal the partial summary judgment. The respondent’s counsel responded by stating that they would seek instructions, but the notice of appeal should be served without delay. On April 11, 2023, counsel for the moving party sent a notice of appeal to counsel for the respondent and asked for their position on consent to an extension of the time for appealing. Consent was not given and a motion was brought on May 2, 2023.

issues:

Should the moving party be granted an extension of time to appeal?

holding:

Motion granted.

reasoning:

The Court noted that there are five factors to consider when exercising discretion to grant or deny an extension of time to appeal, which are: (a) whether the appellant formed an intention to appeal within the relevant time period, (b) the length of and explanation for the delay, (c) prejudice to the respondent, (d) the merits of the appeal, and (e) whether “the justice of the case” supported an extension.

First, the respondent argued that the moving party did not form an intention to appeal within the relevant period because they failed to serve the notice of appeal within the 30-day period from receipt of the Endorsement, after being notified to serve his notice of appeal “without delay”. The Court rejected this argument, stating that the March 30, 2023 email showed an intention to appeal on time. In addition, the significant delay in receiving the Endorsement was an obvious potential challenge to filing a notice of appeal on time. In the circumstances, the respondent should have explicitly warned the moving party if she expected him to comply with a specific timeline.

Second, the Court noted that, while the moving party’s delay was not well-explained, it viewed it as a neutral factor, or even a factor slightly favouring the moving party given the brevity of the delay and the fact that the respondent acquiesced in the delay. This was because, while neither party is responsible for the court’s delay in providing the Endorsement, the record was silent on efforts made by the respondent, who was the lender, to obtain the Endorsement prior to March 2, 2023. Furthermore, the respondent should have put the moving party on notice had they intended to rely strictly on a 30-day timeline from receipt of the Endorsement to serve a notice of appeal. Rather, they did not respond to the email until immediately after the notice of appeal was served.

Third, the Endorsement awarded the respondent $1.8 million, but nothing had been paid. Given that the respondent acquiesced in the court’s delay in delivering the Endorsement, the comparably brief delay at issue will not prejudice her.

Next, with respect to the merits of the appeal, the Court noted that the moving party admitted that he was loaned the money and guaranteed the loan, and did not attack any of the reasons provided by the motion judge. Rather, the moving party argued that granting partial summary judgment did not serve the objectives of achieving proportionate, timely and affordable justice. The Court stated that the moving party’s chances of success on appeal were remote. In addition, assuming that bringing the partial summary judgment motion added to the cost and length of the overall proceedings, that was not a defence to the claim on the loan and did not justify appellate intervention. This factor weighed in favour of the respondent.

Lastly, although the moving party’s chances of success on appeal are remote, the Court was not satisfied that the interests of justice favoured depriving him of his right to have an appeal heard by three judges because a litigant’s absolute right of appeal is an important right not to be interfered with lightly. Therefore, the extension of time to appeal was granted.


Kim v. McIntosh, 2023 ONCA 356

[Doherty, Zarnett and Sossin JJ.A.]

Counsel:

A.M., acting in person

A.K., acting in person

Keywords: Family Law, Parenting Time, Decision Making Authority, Child Support, Civil Procedure, Uncontested Trials, Appeals, Stay Pending Appeal, Reasonable Apprehension of Bias, Children’s Law Reform Act, R.S.O. 1990, c. C.12, s. 24(2), s.24(3), s.37, Family Law Act, R.S.O. 1990, c. F.3, s. 31, Child Support Guidelines, O. Reg. 391/97, s.19(1)(a), Family Law Rules, O. Reg. 114/99, rr. 2(2)(3)(5), r. 25(19), Kim v. McIntosh, 2020 ONSC 719, Drygala v. Pauli (2002), 61 O.R. (3d) 711 (C.A.), Dickie v. Dickie, 2007 SCC 8, Lamothe v. Ellis, 2022 ONCA 789, Gray v. Gray, 2017 ONCA 100, Wewaykum Indian Band v. Canada, 2003 SCC 45, R. v. S. (R.D.), [1997] 3 S.C.R. 484, Bailey v. Barbour, 2012 ONCA 325

facts:

There were three matters before the court. In all three, A.M. was the appellant/moving party and his former partner, A.K., was the respondent.

The appellant and the respondent met in 2005. They had four children together between September 2008 and July 2017. The parties did not marry and eventually separated in August 2019. In September 2019, the respondent commenced an application seeking sole decision-making authority for the children, child support, and other relief. The children have always lived in Ontario with the respondent. Since the separation, she has been their sole provider. The appellant is an Australian national and returned to live in Australia shortly after the separation. The appellant has not paid any child support since the proceedings began.

The proceedings were marked by the appellant’s repeated non-compliance with numerous court orders and a stream of motions and appeals brought by the appellant at various court levels. He appeared on his own behalf in all these proceedings.

The appellant appealed from the order of Steele J. of the Superior Court of Justice, made after an uncontested trial. The appellant further sought an order vacating the order of Nordheimer J.A. In that order, Nordheimer J.A. refused to stay the order of Steele J. pending appeal. In addition, the appellant brings what the Court described as an omnibus motion, seeking a wide variety of orders. On that motion, the appellant challenged various orders. He also sought an order directing the recusal on all matters pertaining to these proceedings of any judge who received or saw a certain case note made by Shore J. of the Superior Court of Justice. In addition, he asked the Court to set aside any order made by any judge of the Toronto Superior Court who may have seen or read Shore J.’s case note before he or she made an order in this proceeding.

issues:
  1. Should the motion to set aside the order of Nordheimer J.A. be granted?
  2. Did Steele J. err in proceeding with an uncontested trial?

The Omnibus Motion

  1. Did Rouleau J.A. err in refusing to remit the proceeding to the trial court?
  2. Should the Court order the preparation of the Voice of the Child Report?
  3. Were the motions brought by the appellant not heard in a timely fashion?
  4. Did Steele J. err in ordering an uncontested trial?
  5. Was there a reasonable apprehension of bias in the proceedings against the appellant?
holding:

Appeal and motions dismissed.

reasoning:
  1. No.

Nordheimer J.A. declined to stay the order of Steele J. pending the hearing of the appeal from that order. The Court found that, as they had heard the appeal from Steele J.’s order, the impugned orders of Nordeimer J.A. had been spent. Accordingly, the Court found no purpose in reviewing those orders.

  1. No.

Shore J. had ordered that if the appellant did not comply with the terms on which the further extension allowing him to file his response to the application brought by the respondent had been granted, the respondent could seek to proceed by way of an uncontested trial. Nine months later in September 2021, the matter came before Steele J. The appellant had filed an answer to the respondent’s application, but had not complied with the terms of the order of Shore J., on which he was granted the further extension of time to file his answer. Specifically, the appellant had not paid the various costs orders and had not posted security for costs.

Shore J. cited the appellant’s failure to pay many costs orders, his breach of a restraining order, and his failure to post the required security for costs, as reasons to allow the respondent to proceed with an uncontested trial.

The Court agreed with Steele J.’s consideration of the merits of the respondent’s claim. The Court held that Steele J. had applied the correct test, the best interest of the child, in determining decision-making authority, parenting time, and whether to grant a non-removal order. The appellant was also ordered to pay their proportionate share of child support, despite their claim of impecuniosity.

The Court held that the appellant’s complete non-compliance with the conditions imposed by Shore J. provided ample justification for Steele J.’s order to proceed by way of uncontested trial. The Court further found that the appellant could not escape his obligation to comply with court orders by pleading impecuniosity. The Court accordingly upheld Steele J.’s finding that the appellant was intentionally unemployed and capable of earning a good income.

As the appellant’s failure to comply with any of the costs orders, or the security for costs order, even in part, was viewed as intentional by the Court, the Court found no error in the decision to proceed with an uncontested trial.

Having determined that Steele J. did not err in proceeding with an uncontested trial, it was doubtful that the appellant had standing to challenge the merits of the order made in the uncontested trial. The Court found that it did not need to decide that issue as it found no error in the order made by Steele J.

The Omnibus Motion

  1. No.

Rouleau J.A. heard a motion brought by the appellant to de-list the appeal so that he could bring a proceeding under r. 25(19) of the Family Law Rules (“FLRs”) in the trial court to set aside the decision of Steele J.  Rouleau J.A. dismissed the motion, holding that the order of Steele J. was a final order, appealable to the Court.

The Court agreed with the reasons on Rouleau J.A. The Court found that the order of Steele J. clearly determined the substantive rights in the proceedings and stood as a final order.

  1. No.

The Court rejected the appellant’s submission that the Court should make an order requesting the preparation of a Voice of the Child Report. The Court found that there was nothing in the appeal record that would warrant the reception of such evidence on appeal. The Court found that the appellant’s request was an attempt to alter the evidentiary record on which the order of Steele J. was made.

  1. No.

The Court held that there was nothing in the material to support the claim that the two motions brought by the appellant were not heard in a timely fashion.

  1. No.

The Court found that this submission was a restatement of the appeal from Steele J.’s order. The Court restated that there was no error in that order.

  1. No.

The Court found that there were two questions that had to be resolved on a reasonable apprehension of bias claim: what material should the court look at in determining the claim, and, should the claim succeed?

The appellant’s reasonable apprehension of bias claim originated with a case note made by Shore J. on January 12, 2021 (the “case note”). Certain language in the case note precipitated a motion by the appellant in the Superior Court for an order recusing any judge who had seen the case note from further participation in any aspect of the proceeding. In response to the recusal motion, in February 2022, the Associate Chief Justice of the Superior Court, in her capacity as head of the Divisional Court, directed that all Divisional Court proceedings relating to any of the appellant’s matters be heard by judges from outside of the Toronto Region. She further ordered that the case note in question be removed from the Case History Report.

The Court held that the order of the Associate Chief Justice, and the Regional Senior Justice, supported only the conclusion that they determined that the safest and most efficient way to proceed, in the face of the appellant’s recusal application, was to bring in a judge from outside of the region. The Court found that the administrative decision to avoid the risk of a proceeding tainted by a reasonable apprehension of bias is not a finding that there was, in fact, a reasonable apprehension of bias.

The Court agreed with the respondent’s submission that, were the Court to consider the reasonable apprehension of bias without looking at the contents of the case note, there would be no evidentiary basis upon which the Court could conclude that the contents of the case note created a reasonable apprehension of bias.

The Court, in considering the case note, held that Shore J. was concerned with the appellant’s conduct of the litigation, including the multiplicity of proceedings, presented a danger to the timely and fair adjudication of the merits of the dispute. In her case management function, Shore J. determined to take control of the progress of the litigation on a go-forward basis.

The Court held that the actions of Shore J. were consistent with the philosophy of the FLRs and the exercise of her case management function.

The focus of the reasonable apprehension of bias claim was Shore J.’s description of the appellant as “a dangerous individual”. The Court held that the reasonable apprehension of bias inquiry required an assessment of the relevant facts as those facts would be viewed by a reasonable informed person, looking at the matter realistically.

The Court held that the reasonable informed person, conversant with the case management practices and responsibilities in family law matters, and viewing the case note realistically and practically, would appreciate that the comments were made in reference to the conduct of the litigation by the appellant, and not in reference to the ultimate substantive merits of any facet of the litigation. The Court found that the order of Steele J. was inconsistent with any suggestion that she regarded the appellant’s “dangerousness” as relevant to any order she would make on any of the issues raised at the uncontested trial.

The Court held that an informed person, looking at the matter realistically and practically, and having regard to the context in which the comment was made, would take the comment as a reference to the appellant’s conduct in the litigation. Accordingly, the Court found that there was no reasonable apprehension of bias.


Catholic Children’s Aid Society of Toronto v. V.O., 2023 ONCA 355

[Feldman, Gillese and Huscroft JJ.A.]

Counsel:

A. Burgess and J. Gagné, for the appellants

F. Husain, for the respondent

Keywords:Family Law, Child Protection, Best Interests of the Child, Status Review, Child, Youth and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1, s. 112, s. 115(5), s. 115(7), s. 115(9), s. 122(1), Family Law Rules, O. Reg. 114/99, r. 2, Children’s Aid Society of Metro Toronto v. B.A.F., [1988] O.J. No. 2950 (Prov. Ct. (Fam. Div.)), Children’s Aid Society of Haldimand and Norfolk v. J.A.M.-F., 2011 ONCJ 53, Titova v. Titov, 2012 ONCA 864, Children’s Aid Society of Hamilton v. M.W., 2011 ONSC 1382, Children’s Aid Society of Waterloo Region v. L.M., 2015 ONCJ 103, Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), The Children’s Aid Society of Toronto v. S.C., 2017 ONCJ 240, S.R. v. Catholic Children’s Aid Society of Toronto, 2011 ONCJ 11, Children’s Aid Society of Brant v. A.C., 2015 ONCJ 436, M.P. v. Windsor-Essex Children’s Aid Society and S.G., 2022 ONCJ 298

facts:

The appellants are L’s biological parents. The respondent Catholic Children’s Aid Society of Toronto (“CCAS”) apprehended L in March 2019 when she was one year old following her hospitalization as a result of serious concerns about her growth. L at one years old was severely underweight. She weighed only 4.2 kg – a weight expected for a one-month-old. She was developmentally delayed, unable to walk, stand, or roll over, and could barely hold her head up. A pediatrician concluded that L required immediate medical treatment. She was taken to Humber River Hospital on March 4, 2019, and shortly afterwards transferred to the Hospital for Sick Children. L was placed into foster care by the CCAS following her discharge from the hospital on March 28, 2019. She gained weight steadily while in foster care. The appellant mother gave birth to another child on April 16, 2019, and the CCAS placed that child in the same foster home as L the next day. Both children thrived in foster care. The appellants had supervised in-person parenting time as well as virtual parenting time during the COVID-19 pandemic.

Protection applications for both children were set for trial. However, in November 2020, the appellants consented to an order placing L into extended CCAS care. In the agreed statement of facts, the appellants agreed that there was a risk that L was “likely to suffer physical harm” if she remained in their care due to a “pattern of neglect in caring for, providing for, supervising or protecting the child”. The consent order permitted the appellants monthly visits with L at the CCAS office, which were later extended to unsupervised visits. L’s younger sister was placed in the appellants’ care pursuant to a 12-month supervision order. The supervision order was subsequently terminated on consent. More than a year later, in January 2022, and after the CCAS advised it was seeking an adoption placement for L, the appellants applied to the court for a status review, asking for L to be returned to their care.

The motion judge held that leave was required to apply for a status review and denied the appellants leave to bring an application. The motion judge concluded that the appellants’ choice not to go to trial and to consent to extended CCAS care for L was not a circumstance justifying leave. Nor was the fact that they had been able to care for L’s younger sister, who has no special needs. The motion judge concluded that the appellants were seeking to relitigate whether L should have been placed in extended CCAS care in the first place. Her decision was affirmed by the appeal judge.

The appellants appealed on the basis that they were entitled to bring a status review application as of right. In the alternative, they argued that they should have been granted leave to bring their application.

issues:
  1. Did the appeal judge err in refusing to decide if leave was required to bring a status review application?
  2. Was leave required for the parents to bring a status review application in this case?
  3. If leave was required to bring a status review application, does the Court have jurisdiction to hear an appeal from a refusal of leave?
  4. What is the proper framework for leave under s. 115(5) of the Child, Youth and Family Services Act, 2017?
  5. Did the motion judge err in the exercise of her discretion?
holding:

Appeal dismissed.

reasoning:
  1. Yes.

The Court found that the appeal judge erred in failing to decide whether leave was required because the appeal judge had the discretion to hear a new argument and should have exercised it to hear the appellants’ leave argument. The appellants’ failure to object to the leave requirement at the time of the motion should not have precluded them from raising the issue on appeal. The appeal judge erred in concluding otherwise.

  1. Yes.

The Court held that leave was required for the parents to bring a status review application and that the appeal judge’s error in failing to decide whether leave was required did not assist the appellants because leave was required.

On a plain reading of s. 115(5), leave was required because L, a child in extended CCAS care, received continuous care from the same foster parent for over two years. The Court rejected the appellants’ argument that leave to bring a status review application was not required because L’s situation is not one that was intended to be captured by s. 115(5) because the “continuous care” from the same foster parent was set to be interrupted by the adoption anyway and the status quo would not have been maintained. The appellants further argued that the leave requirement could not be said to be in the child’s best interests where the CCAS plans to move the child and instead that it would be in the child’s best interests to give her biological parents a full opportunity at a status review hearing. The Court rejected this interpretation, holding that s. 115(5) clearly indicates that a parent may not make a status review application without leave once a child has received continuous care for at least two years from the same foster parent or from the same person under a custody order.

In the alternative, the appellants argued that the two-year period set out in s. 115(5) begins after an extended CCAS care order has been made and it had only been one year since the extended care order was made. The Court held that there was no textual or case law support for this interpretation.

The motion judge did not err in counting time with the foster family prior to the extended CCAS care order in the two-year period referred to in s. 115(5). Time is of the essence in child protection cases and the effect of the delay is plain: but for the appellants’ status review application and two appeals, L would be in her adoptive home. The Court held that the appellants required leave to proceed with their status review application.

  1. Yes.

The Court held that it had jurisdiction to hear an appeal from a refusal of leave and in particular, as in this case, an order refusing leave which is final.

The Court held that the motion judge did not err in articulating the burden of proof and articulated that the proper framework for leave under s. 115(5) of the CYFSA, stating that it does not amount to a “test for leave” but rather established a discretion to grant leave without enumerating any relevant considerations. Had the motion judge applied the five criteria set out in Children’s Aid Society of Metro Toronto v. B.A.F. strictly, the motion judge would have fettered her discretion under s. 115(5). However, the Court found that the motion judge did not apply the criteria strictly, instead citing the line of cases confirming that the court’s discretion should not be fettered and that a flexible approach should be taken.

The Court saw no error in this approach and held that discretionary authority should not be reduced to a set of criteria that apply in a rule-like fashion, as doing so would undermine the nature and purpose of discretionary authority. Different considerations may be of greater or lesser significance in different cases, and, as a result, the Court held that the motion judge correctly applied a flexible approach to the B.A.F. criteria.

  1. No.

The Court found that the motion judge exercised her discretion reasonably and did not err in so doing, in particular, the motion judge did not err in considering inadmissible evidence, as the appellants contended. The Court stated that reliance on two doctor’s opinions as expert evidence would have been inappropriate, given that the reports did not meet the test for filing expert reports, and neither doctor had examined L. However, the Court found that the motion judge did not rely on the doctor’s opinions as expert evidence, instead the motion judge specifically declined to rely on the report, stating that it was unnecessary to rely on the report to conclude that the parents continued to refuse to accept responsibility for their role in the severe neglect of L. It was reasonable for the motion judge to conclude that the parents’ lack of care in the first year of L’s life must have played a role, and reasonable to note the parents’ failure to take any responsibility for L’s condition when she was apprehended by the CCAS.


Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc., 2023 ONCA 363

[van Rensburg, Sossin and Copeland JJ.A.]

Counsel:

R. Choi, H. Trbizan, and J. Gross, for the appellants

A.M. Slavens, J. Silver, M. Noel, and J.J. Barr, for the respondents T.H and J.H (The Enforcement Committee of the Debentureholders)

J.N. Birch, for the respondent Grant Thornton Limited in its capacity as former Proposal Trustee and current Bankruptcy Trustee of CIM Bayview Creek Inc.

E. P. Shea, for the respondents GR (CAN) Investment Co. Ltd. and Monest Financial Inc.

Keywords: Bankruptcy and Insolvency, Contracts, Real Property, Option to Purchase, Civil Procedure, Vesting Orders, Res Judicata, Cause of Action Estoppel, Issue Estoppel, Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Assignments and Preferences Act, R.S.O. 1990, c. A.33, Canada Business Corporations Act, R.S.C. 1985, c. C-44, s. 241, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 65.11, ss. 95, ss. 96, Interest Act, R.S.C. 1985, c. I-15, s. 8(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 97, Rules of Civil Procedure, r. 14.02, r. 14.05, In the Matter of the Notice of Intention to make a Proposal of CIM Bayview Creek Inc., 2021 ONSC 220, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, Fresco v. Canadian Imperial Bank of Commerce, 2022 ONCA 115, Nortel Networks Corporation (Re), 2013 ONCA 518, Solosky v. The Queen, [1980] 1 S.C.R. 821, Grain Farmers of Ontario v. Ontario (Ministry of the Environment and Climate Change), 2016 ONCA 283, J.N. v. Durham Regional Police Service, 2012 ONCA 428, Harrison v. Antonopoulos (2002), 62 O.R. (3d) 463 (S.C.), S.A. v. Metro Vancouver Housing Corp., 2019 SCC 4, Gook Country Estates Ltd. v. Quesnel (City of), 2008 BCCA 407, T1T2 Limited Partnership v. Canada (1995), 23 O.R. (3d) 81 (Gen. Div.), aff’d (1995), 24 O.R. (3d) 546 (C.A.),  Harry Woolf & Jeremy Woolf, Zamir & Woolf: The Declaratory Judgment, 3rd ed. (London: Sweet & Maxwell, 2002), Lazar Sarna, The Law of Declaratory Judgments, 4th ed. (Toronto: Thomson Reuters, 2016)

facts:

CIM Bayview, the registered owner of a residential development property in Richmond Hill, Ontario (the “Property”), granted an option to purchase the Property (the “Option”) to Bayview Creek Residences Inc. (formerly Bryton Creek Residences Inc.), as part of a transaction with its second mortgagee Bryton Capital Corp. GP Ltd. (together, the “appellant”). The appellant sought to exercise the Option and was opposed by other creditors of CIM Bayview, who stand to recover nothing if the appellant acquires the Property under the Option. A sale under the Option was also opposed by Grant Thornton Limited, CIM Bayview’s trustee in bankruptcy.

In earlier proceedings, while CIM Bayview was seeking to make a bankruptcy proposal, the application judge dismissed certain challenges to the Option, refused an order vesting the Option from title to the Property, and declared that the appellant was entitled to exercise the Option.

The appellant subsequently brought an application in CIM Bayview’s bankruptcy proceedings for an order: (1) directing and approving the sale of the Property by its private receiver; (2) vesting title to the Property free and clear of all encumbrances; (3) declaring that any proceedings related to the validity of the Option were res judicata; (4) in the alternative, declaring that the Option could not be challenged in proceedings under the Fraudulent Conveyances Act (the “FCA”), the Assignments and Preferences Act (the “APA”), s. 241 of the Canada Business Corporations Act (the “CBCA oppression remedy”), and ss. 95 and 96 of the Bankruptcy and Insolvency Act (the “BIA”), together with an order dismissing those claims.

The application judge dismissed the appellant’s application on the basis that the requested vesting order and declaration could not extinguish other claims or insulate the Option from challenge, and that such claims were not barred by his earlier orders.

issues:
  1. Did the application judge err in his approach to the principle of res judicata?
  2. Did the application judge err by refusing to grant the declaration sought by the appellant?
holding:

Appeal dismissed.

reasoning:
  1. No.

The Court began with an overview of the doctrine of res judicata, noting that the underlying principle is that ““[a]n issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner”, and that “[d]uplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided”. The Court noted that res judicata has two main branches: cause of action estoppel and issue estoppel. Cause of action estoppel prohibits a litigant from bringing an action against another party when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction, and also prevents a party from re-litigating a claim that could have been raised in an earlier proceeding. The Court noted that issue estoppel is narrower than cause of action estoppel as “[i]t applies to prohibit the re-litigation of an issue that has already been decided in an earlier proceeding, even where the cause of action is different in the two proceedings”.

The Court noted that an appellate court owes deference to a judge’s application of the tests for cause of action and issue estoppel. Intervention is only warranted if the judge “misdirected himself, came to a decision that is so clearly wrong as to be an injustice, or gave no or insufficient weight to relevant considerations”.

The Court found no error in the application judge’s approach to cause of action estoppel or his conclusions. First, the Court held that there was no question that the application judge’s January 2021 decision made no determination of the merits of any ss. 95 and 96 BIA claims. The Court found that the application judge had accepted the appellant’s argument in his January 2021 decision that the Notice of Intention Trustee lacked the statutory authority to bring such claims. The Court noted that the application judge also expressly refused to make any substantive determination regarding the claims.

Second, the Court found that the appellant’s arguments about the application of cause of action estoppel to the Creditor Claims that the Third Mortgagees sought to bring on behalf of other creditors failed for a similar reason. As the application judge had found that the creditors could not have acquired the right to bring these causes of action via a s. 38 motion until the debtors were bankrupt, the Court found that these claims would have been premature in the prior proceeding.

Third, with respect to the Third Mortgagees’ direct claims, the Court found that the application judge was entitled to reject the meaning that the appellant attributed to his Scheduling Order. The Court agreed with the application judge that the direct claims were related to the claims requiring a s. 38 motion and would be properly brought by way of an application or an action. The Court found that the intention was not to require all challenges to the Option to be brought forward at that time. The Court held that this interpretation was supported by the fact that some claims could only be brought after the debtors were bankrupt. The Court found that, the extent the application judge was interpreting his own orders, the application judge’s determinations were entitled to deference.

The Court then considered the appellant’s argument of issue estoppel – that the application judge erred in failing to give effect to specific findings that he made in his January 2021 decision.

The Court found that the application judge had made no error. His findings did not determine that the Option was valid in every context. The Court found that he had specifically provided for the ss. 95 and 96 BIA claims to be made in the future, and that he did not say anything that would suggest that such findings would affect the merits of any future challenge to the Option.  The Court agreed with the application judge’s conclusion that, until such claims were made, it would not be proper to determine whether issue estoppel applied to preclude the re-litigation of any issues decided in his January 2021 decision.

The Court concluded that there was no error in the application judge’s approach to the principle of res judicata, and there was nothing to suggest that the assertion of these claims in the normal course of the insolvency proceedings, while under the supervision of the Commercial List, would be an abuse of process.

  1. No.

The Court noted that r.14.05 was procedural in nature. The rule does not create jurisdiction, but assumes it, and provides a means by which to engage that jurisdiction. The Court held that a court must have jurisdiction independent of r. 14.05 before it can consider the appropriate vehicle for bringing the matter forward, whether by application or action.

The Court also noted that a declaratory judgment is “a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs”. The Court held that declaratory relief, being restricted to a declaration of the parties’ rights, “is mainly sought in commercial matters to help parties define their rights” and contains no provision ordering any party to do anything or any form of sanction. The Court found that such relief was discretionary.

The appellant submitted that it met all the requirements for a declaration under Solosky v. The Queen and that it had properly brought the application under r. 14.05(3)(e) because the relief claimed was the settling of the priority of interests or charges, and it relied on the court’s jurisdiction under s. 97 of the Courts of Justice Act to “make binding declarations of right, whether or not any consequential relief is or could be claimed”. The appellant argued that, in the absence of evidence by the respondents to support their claims, the application for declaratory relief should be granted.

The Court found no merit to this ground of appeal and noted that the appellant’s attempt to obtain declaratory relief was defective on two bases: (1) it was not a proper use of the application procedure, and (2) it went beyond the proper scope of declaratory relief. The Court further found that the application judge’s refusal to exercise his discretion to grant declaratory relief was entitled to deference.

The Court found that the appellant had erred in its reliance on r. 14.05(3)(e) to initiate its application for declaratory relief. The appellant was not simply seeking a declaration of its rights; it was seeking a dismissal of the Creditor Claims and of ss. 95 and 96 BIA claims, whether on their merits or on default of the respondents bringing forward evidence to support the claims.

The Court also found that it was obvious from the scope of relief sought by the appellant that it was seeking relief that extended far beyond a declaration of its rights: it sought to dismiss proceedings that were already underway and to bar any further proceedings to challenge the Option.

Finally, the Court held that the application judge did not consider an irrelevant factor when he referred to the existence of other proceedings to challenge the Option. The Court noted that declaratory relief is discretionary and can be refused based on a variety of considerations, including whether other available recourse is appropriate. The Court held that declaratory relief should not be entertained if it results in “an abuse of process, an unwarranted side-stepping of delays and costs attached to other recourses, or a procedural or evidentiary prejudice against the other parties to the action”.

The Court concluded that the argument that any delay in its ability to exercise the Option would only increase the appellant’s costs in relation to the exercise of the Option was insufficient to justify the use of the application procedure to bar or dismiss the creditors’ claims.


SHORT CIVIL DECISIONS

Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 353

[Zarnett, Thorburn and Copeland JJ.A.]

Counsel:

K. Thomson, S. Campbell, A. Hassan, M. Littlejohn, A. Alexander and T. May, for the appellants

I. Nishisato, H. Meighen, E. Peters and S. Gagné, for the respondent

Keywords: Civil Procedure, Costs, Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245

RCML Corp. v. 2524258 Ontario Inc., 2023 ONCA 352

[Pepall, van Rensburg and Harvison Young JJ.A.]

Counsel:

B. Cozzi, for the appellants

Davis and N. Sidlar, for the respondent

Keywords: Contracts, Real Property, Mortgages, Enforcement, Power of Sale, Damages, Deficiency, Improvident Sale, Civil Procedure, Summary Judgment, No Genuine Issue Requiring Trial, Manufacturers Life Insurance Co. v. Granada Investments Ltd., 2001 150 O.A.C. 253, Oak Orchard Developments Ltd. v. Iseman, [1987] O.J. No. 361, aff’d [1989] O.J. No. 2394 (C.A.)

K.K. v. M.M., 2023 ONCA 366

[Huscroft J.A. (Motion Judge)]

Counsel:

G. Pop-Lazic, for the appellant

A. Pasha, for the respondent

Keywords:Family Law, Child Support, Spousal Support, Civil Procedure, Appeals, Stay Pending Appeal, Costs, Security for Costs, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311

Truscott v. Co-Operators General Insurance Company, 2023 ONCA 372

[Gillese, Tulloch and Roberts JJ.A.]

Counsel:

J.A. Scarfone and J. Sazio, for the appellants

R. Dowhan and M. McMahon, for the respondents

Keywords:Civil Procedure, Costs, Rules of Civil Procedure, r. 21.01(1)(b)

Plewes v. Chaudhry, 2023 ONCA 371

[Trotter, Sossin and Copeland JJ.A.]

Counsel:

M. Morden, for the appellants

D. Winer and P. Casuccio, for the respondent

Keywords: Real Property, Agreements of Purchase and Sale of Land, Tax Allocation, Excise Tax Act, R.S.C., 1985, c. E-15., s. 224.1


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