Hello everyone.  Below are this week’s Court of Appeal summaries.  Topics covered this week include vexatious litigants, wills and estates, family law, negligence, fresh evidence, issue estoppel and the Ontario New Home New Home Warranties Plan Act, and summary judgment.

Of special note is the decision in Ali v. Fruci, where our very own Blaneys’ lawyer, Chris McClelland successfully represented the appellant.

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Ali v. Fruci, 2014 ONCA 596
[Doherty, Laskin and Epstein JJ.A.]
Counsel:
Christopher McClelland, for the appellant
Robert Budgell, for the respondent Mary Fruci
Ken Garland, for the respondent David Willis

Keywords: Civil Procedure, Dismissal for Delay, Rule 24.01, Rules of Civil Procedure, Estates Law, Wills and Estates, Testamentary Capacity

Facts:
In February 2008, the appellant, Lorilee Ali, began an action contesting two wills made by her grandaunt, Florence Blackburn, on the grounds of incapacity. These two wills name the respondents, Mary Fruci and Robert David Willis, as executors and residual beneficiaries.

This appeal arises from a successful motion by the respondents to dismiss the appellant’s claim for reason of delay under subrule 24.01(1)(c) of the Rules of Civil Procedure, which allows a defendant to move for an action to be dismissed for delay where the plaintiff has not set the action down for trial within six months after the close of pleadings.

Pleadings were concluded by August 2008 and other than making some efforts to obtain relevant documents, the appellant took no further steps in moving the action forward.

The motions judge found in favour of the respondents on the ground that the delay was unreasonable, inexcusable and prejudiced the respondents’ right to a fair trial.

Issue:
Did the motion judge err in dismissing the appellant’s action for delay?

Holding:
Yes.  Appeal allowed. The motion judge’s order is set aside and the respondents’ motion to dismiss the action for delay is dismissed.

Reasoning:
The motion judge’s order was discretionary and therefore could only be interfered with if the motion judge exercised her discretion unreasonably or acted on a wrong principle.  The “Tucker litigation order” made on consent between the parties, which set out different procedures than the usual civil litigation procedures, did not relieve the appellant of her obligation to move the action toward trial. Therefore, the failure by the motions judge to consider that order had no bearing on the outcome of the appeal.

The court then examined the motion judge’s application of the three-part test for dismissing an action for delay is as set out in Langenecker v Sauvé, 2011 ONCA 803, namely:

(1) Was the delay inordinate or unreasonable?
(2) Was the delay inexcusable?
(3) Did the delay gave rise to a substantial risk that a fair trial of the issues in the litigation would not be possible?

(1) Inordinate or unreasonable delay? Yes
The length of the delay is measured from the beginning of the action to the motion to dismiss. In this case this timeline was five years. Although the court noted that such a timeline is perhaps a close case in the context of this litigation, the court deferred to the motion judge’s ruling that the time was inordinate and unreasonable.

(2) Inexcusable delay? Yes
Although the appellant has not produced an affidavit of documents, or made any effort to discover either respondent, the court noted that based on the “Tucker litigation order” agreed to between the parties, such actions were to be performed on request and such requests were never made by either side.
Nonetheless, the court deferred to the motion judge’s ruling that the appellant “has done very little to advance this action in an expeditious manner” and stated that the reasons for the delay have “not been adequately explained.”

(3) Loss of fair trial rights? No
The court distinguished between presumed prejudice, which is inherent in a long delay, and actual prejudice to a defendant as a result of the plaintiff’s delay. In some cases, presumed prejudice is enough to meet this branch of the test. However, the court found in this case, the delay was not so inordinate as to allow the respondents to rely on presumed prejudice alone.

The court concluded that the respondents, who bore the onus of demonstrating actual prejudice, failed to show that they would be actually prejudiced by the delay. In finding actual prejudice, the motion judge failed to take into account the existence of possible testimony of doctors who examined the testatrix, as well as considerable documentary evidence such as lawyer’s files and medical reports.

Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2014 ONCA 588
[Doherty, Laskin and Epstein JJ.A.]
Counsel:
Peter M. Callahan, for the appellant
C. Du Vernet and Carlin McGoogan, for the respondent

Keywords: Noting in default, Motion to Set Aside, Rule 19.03, Rules of Civil Procedure

Facts:
This was an appeal from an order dismissing the defendant/appellant’s motion to set aside a noting in default. The motion judge dismissed the motion on the basis of a finding that “the conduct of the defendant ‘reveal[s] a litigant who has no real interest in going to trial but simply wishes to delay for as long as possible’”.

Holding: 
Appeal dismissed.

Reasoning:
The Court of Appeal determined that the motion judge’s finding was not unreasonable and therefore declined to interfere with the order.

Stephenson v Gravenhurst (Town), 2014 ONCA 589
[Doherty, Laskin and Epstein JJ.A.]
Counsel:
D. Stephenson and S. Woodrow, appearing in person
M. Miller, for the respondent

Keywords: Civil Procedure, Courts of Justice Act, s. 140, Rules of Civil Procedure, R. 2.01, Applications, Motions, Vexatious litigants, Stay

Facts: 
The appellants brought an application to lift a stay imposed in an earlier proceeding by Healey J. The respondents brought a “motion” for an order declaring the appellants vexatious litigants under s. 140 of the Courts of Justice Act. McCarthy J. considered the respondent’s “motion” before the appellants’ application and declared the appellants vexatious litigants.

Holding: 
Appeal dismissed.

Reasoning: 
While the respondent technically speaking should have proceeded by way of application rather than motion, pursuant to Rule 2.01 of the Rules of Civil Procedure, and absent any demonstration of prejudice, the appellants’ technical argument could not succeed. The misdescription of the proceeding as a “motion” caused no prejudice to the appellants. They had full notice of the respondent’s position and the arguments advanced against them.

The lower court judge was not obliged to hear the appellant’s application first. The judge was entitled to proceed as he did. In any event, given his reasons, the judge would no doubt have dismissed the application even if he had addressed it first. The finding that the appellants are vexatious litigants was fully warranted in the record.

Baradaran v. Tarion Warranty Corporation, 2014 ONCA 597
[Feldman, Watt and van Rensburg JJ.A.]
Counsel:
Manoucher Baradarin, acting in person
Howard L. Shankman, for the respondents Abassgholi Nasseri and Master Custom Homes Inc.
Sophie Vlahakis, for the respondents Tarion Warranty Corporation and Roger Boyd

Keywords: Tarion, Ontario New Home Warranties Plan Act (ONHWPA), subsection 13(6), Licence Appeal Tribunal, issue estoppel, res judicata, abuse of process, vexatious litigants, Courts of Justice Act; section 140

Facts:
The appellant submitted numerous claims to Tarion under the ONHWPA’s 30-day and one-year warranty provisions.  Tarion initially dismissed all but one of the appellant’s claims, but then later reassessed many of them as being covered under the Act.  After the appellant refused the respondents access to his home to assess and repair the defects, Tarion ultimately rejected all of the appellant’s reassessed claims.

The appellant took the remaining claims to the Licence Appeal Tribunal (“Tribunal”), which ruled that only two of the contested claims were warranted.  Due to the acrimonious relationship between the parties, the Tribunal ordered that the appellant be paid out of the guarantee fund rather than have Tarion or the builder carry out the repairs.

The appellant then claimed under ONHWPA’s two-year warranty provisions.  Tarion denied each of the appellant’s claims.  The denials were upheld by the Tribunal and the Divisional Court.  The Court of Appeal refused to grant leave to appeal.
The appellant began proceedings against the respondents in both the Small Claims Court, which he did not pursue, and in the Superior Court, where he sought $1 million in damages.  The respondents moved to have the Superior Court action dismissed on the basis of res judicata or issue estoppel, and also sought an order declaring the appellant a vexatious litigant.  The appellant also moved for leave to amend his pleadings to add further damages and to add his wife and children as parties to the action.

The applications judge held that the action was an attempt to relitigate the issues decided by the Tribunal, and was hence a collateral attack on the correctness of the Tribunal’s decision.  The  doctrine of res judicata applied to preclude the Superior Court action, which amounted to an abuse of process.

The applications judge also declared the appellant a vexatious litigant, noting the nearly 60 actions commenced by the appellant in just over 10 years, as well as the appellant’s pattern of adding opposing counsel as defendants and making complaints against members of the judiciary.  The order prohibited the appellant from instituting or continuing proceedings against the respondents without leave in respect of the matters already decided by the Tribunal, and not until outstanding costs awards were paid.

With regards to the appellant’s motion, the applications judge concluded that if he was wrong in dismissing the action, he would have permitted the appellant to amend his own claim, but not to add his family members as parties.  The applications judge made this order without prejudice to the rights of the appellant’s family members to bring their own motions to be added as parties.

Issues:
(1) Did the applications judge err in ruling that issue estoppel operated to preclude the appellant’s action?
(2) Did the applications judge err in declaring the appellant a vexatious litigant?
(3) If the answer to the above two questions is yes, did the applications judge err in refusing to allow the appellant to add his wife and children as parties to the action?

Holding:
Appeal allowed in part.  The orders dismissing the action and declaring the appellant a vexatious litigant are set aside, as is the costs order.  The appellant is granted leave to amend his statement of claim to increase damages.

Reasoning:  
(1) Yes.  In the court below, the parties did not address the Court of Appeal’s decision in Metropolitan Toronto Condominium Corp No 1352 v Newport Beach Development Inc, which held that Tarion decisions do not give rise to issue estoppel. Subection 13(6) of ONHWPA entitles buyers of new homes to make claims both under the Act, as well as in court for breach of warranty. 

(2) Yes.  The vexatious litigant order was based on the erroneous conclusion that the Superior Court action itself was vexatious.  The appellant’s general pattern of litigation is not sufficient to uphold the order, which was limited in scope to apply only to the respondents and to the remedies the appellant is entitled to pursue.

(3) No.  The appellant had no legal authority to represent his family at the motion and they were not served with a notice of motion.

McAfee v. Holloway, 2014 ONCA 600
[Doherty, Laskin and Epstein JJ.A.]
Counsel:
J. McAfee, the appellant, appearing in person
Fiske, appearing as amicus and duty counsel
Smallwood, for the respondent

Keywords:   Negligence, Medical Malpractice, Rules of Civil Procedure, Rule 20, Summary Judgment, Evidence of Standard of Care

Facts:
The motion judge granted the defendant’s motion for summary judgment and dismissed the plaintiff’s medical malpractice claim. The appellant argued that the respondent doctor had misunderstood the medical root of her problems, and that her problems were primarily related to visual deficiencies and not developmental deficiencies, as indicated in the defendant’s report.

Issue:  
Was summary judgment dismissing the action appropriate?

Holding:
Appeal Dismissed.

Reasoning:  
Yes.  Even if the plaintiff’s argument was correct, given the absence of evidence that the respondent fell below the requisite standard of care, the motion judge made no error in finding that there was no genuine issue requiring a trial.

Rogers v. Rogers, 2014 ONCA 590
[Doherty, Laskin and Epstein JJ.A.]
Counsel:
Ted R. Laan, for the appellant
Laura E. Oliver, for the respondent

Keywords:  Family Law, Tracing, Net Family Property,

Facts:
(Taken from the lower court decision)  In a family law proceeding, the lower court found that the appellant had failed to trace the proceeds of excluded assets into an asset he owned at the date of separation and consequently, the asset formed part of his Net Family Property for the purposes of Net Family Property equalization. The trial judge also rejected the appellant’s expert evidence.

Holding: 
Appeal dismissed.

Reasoning:
The lower court’s findings were fact driven and supported by the evidence and were therefore entitled to deference.

Fiorito v. Wiggins, 2014 ONCA 603
[Pardu J.A.]
Counsel:
Harold Niman and Donna A.Wowk, for the applicant
Brian Ludmer for the respondent

Keywords: Family Law, Custody, Transfer of Custody, Best Interests of the Child, Office of the Children’s Lawyer, Motion to Appoint the Children’s Lawyer, Courts of Justice Act, section 89

Facts:
At trial, the judge ordered a transfer of custody to the father after it was found that the mother had attempted to poison the children against their father. The mother’s conduct was held to amount to serious emotional abuse of the children and empowered the children to behave in an abusive and disrespectful manner towards the father. When a finding of contempt was insufficient to change the mother’s conduct, the trial judge ordered a transfer of custody to the father and granted limited access to the mother. The children strongly objected to this transfer. The mother appealed the custody order. She also moved for an order appointing the Children’s Lawyer pursuant to s.89 of the Courts of Justice Act to act on behalf of the children on the appeal.

Issue:
Should the Office of the Children’s Lawyer be appointed to act for the children in the appeal of the trial decision regarding custody?

Holding:
Motion dismissed. Costs to the respondent.

Reasoning:
No, as the motion was brought more than a year after the change in custody, the appointment of the Children’s Lawyer would delay the hearing of the appeal, which could otherwise be perfected in a matter of weeks. The court held that any advantages that involvement of the Children’s Lawyer might have had in this case were outweighed by the disadvantages. The judge noted that the delay in the hearing of the appeal would not be in the best interests of the children. Appointing counsel for the children would instead carry the risk of polarizing the children further in the contest between mother and father. The children’s views at the time of the trial judgment were clear and it was found likely that they still held those beliefs. The court noted that little weight was to be given to the children’s preferences where they were the result of the mother’s deliberate attempts to ruin the children’s relationship with their father. Despite the conflict the children had been exposed to, they seemed to be doing well and at no point prior to this motion had any party requested that the Children’s Lawyer be involved at any stage in the litigation. The court held that possible new evidence, in the form of a report and investigation by the Office of the Children’s Lawyer, risked distorting the appeal process.

Mehedi v. 2057161 Ontario Inc. (Job Success), 2014 ONCA
[Juriansz J.A., In Chambers]
Counsel:
Mehedi, acting in person
Stanek, duty counsel for the appellant
No one appearing for the responding party

Keywords: Directions, Proper Forum for Motion to Setting Aside or Varying Trial Judgment after Appeal, Fraud, Fresh Evidence, Rules of Civil Procedure – Rule 59.06, Rule 59.06(2)(a).

Facts:
The appellant, Golam Mehedi, brought a motion for directions regarding the court, the judge and the procedure to be followed in the introduction of new evidence after final judgment at trial and the dismissal of his appeal. Specifically, Mehedi relied on rule 59.06(2)(a) of the Rules of Civil Procedure to introduce fresh evidence, and therefore required direction from the court on its interpretation and application to his case.

Mehedi initially brought an action for breach of contract, alleging that he paid the respondent company (also known as “Job Success”) thousands of dollars in exchange for a guaranteed job and salary as a project manager. The action proceeded to trial and the trial judge ruled in favour of the respondent, finding that its representatives never guaranteed Mehedi a job placement. Mehedi then appealed to the Court of Appeal, and his appeal was dismissed, as the court deferred to the trial judge’s findings of fact and credibility.      

Less than one month after Mehedi’s appeal was dismissed, the CBC released a television broadcast which purported to show how Job Success exploits unemployed immigrants by guaranteeing them job placements (which they fail to secure) in exchange for fees. After viewing this broadcast, Mehedi attempted to bring a motion under rule 59.06(2)(a) to introduce this new evidence before his trial judge, as well as a judge in the Superior Court. Unfortunately, Mehedi was unable to bring this motion before his trial judge due to scheduling conflicts. He was also  unsuccessful in the Superior Court because the motions judge in the Superior Court directed him to the Court of Appeal to seek directions.   

Issues:
(1) In what court should rule 59.06(2)(a) motion to introduce new evidence be brought, after the matter has been finally disposed of at trial and on appeal?
(2) Does rule 59.06(2)(a) require the moving party to bring the motion before the trial judge who presided at trial?
(2)(a) What is the proper procedure in bringing a motion under rule 59.06(2)(a) to introduce new evidence?

Holding:
Mehedi’s motion to introduce new evidence under rule 59.06(2)(a) should be brought in the Superior Court before a motions judge (another judge and not the judge who presided at trial)   in the ordinary way.

Reasoning:
(1) A motion under rule 59.06(2)(a) to introduce new evidence in this context should be brought before a judge of the Superior Court, and not before the Court of Appeal. Relying on the analogous case of Aristocrat v. Aristocrat (2004), 73 O.R. (3d) 275 (C.A.), the judge found that Mehedi is also seeking to re-open and set aside (or vary) the original judgment of the trial judge, on the basis of both fraud and new facts. Therefore, he must also bring his motion in the Superior Court.

(2) No. Rule 37.14(4) of the Rules of Civil Procedure provides that a motion under any of the rules to set aside, vary or amend an order of a judge may be made to the judge who made it. The motion can also be made to any other judge presiding in the county where the proceeding was transferred to or commenced. The case of Lac Des Mille Lacs First Nation v. Viherjoki (1996), 50 C.P.C. (3d) 94 (Ont. C.J. (Gen. Div.)) applies rule 59.06(2) and confirms that motions made under it can be made before the original trial judge, or another judge in motions court. Additional cases demonstrate that the law does not require rule 59.06(2)(a) motions to be heard by the trial judge whose judgment the moving party seeks to set aside. However, these cases show that it is usually preferable for the trial judge to hear this type of motion, because he or she is “already familiar with all of the evidence at trial, and is well-suited to expeditiously determine whether the alleged fraud or the new evidence requires the trial judgment to be set aside.”

(2)(a) Mehedi must bring his rule 59.06(2)(a) motion to introduce new evidence before another Superior Court judge in motions court, in the ordinary way. It would be preferable for Mehedi to bring the motion before his trial judge, because he is seeking to undermine findings of credibility made by that judge. However, his trial judge has already declined to hear this motion, and therefore it must be heard by another judge.

Reisman v Reisman, 2014 ONCA 607
[Hoy A.C.J.O., Laskin and Tulloch JJ.A.]
Counsel:
Gary S. Joseph and Serena Lein, for the appellant
Nancy Iadeluca, for the respondent

Keywords: Family Law, Spousal Support, Support Order, Material Change in Circumstances, Cohabitation, Remarriage, Settlement of Order Varied on Appeal

Facts:
In a family law proceeding, the trial judge ordered spousal support until the earlier of ten years or the occurrence of a change in circumstances justifying a reduction or variation in support. The trial judge specified that “the remarriage of the applicant or cohabitation for a period of not less than three years shall constitute a material change in circumstances.” This order was appealed, and on February 11, 2014, the Ontario Court of Appeal ordered the ten year cap on spousal support to be removed and ordered that spousal support be paid for an indefinite period subject to variation or termination on a material change in circumstances. In the appeal decision, the court did not deem that remarriage or cohabitation for three years constituted a material change in circumstances.

The husband now asks the court to place this deeming provision in its order, as it was in the trial court’s order. He contends that if it is not included, he will be prejudiced as he was not given an opportunity to address the issue during argument.

Issue:
Should the appeal court’s order for spousal support include the provision of the trial judge that deemed three years’ remarriage or cohabitation a material change in circumstances?

Holding:
No.

Reasoning:
Remarriage or three years cohabitation may well be or even likely is a material change in circumstances warranting a variation or termination of spousal support. However, the court did not want to fetter the discretion of a trial judge on a future application to vary or terminate support.

Further, the court noted that there would be no prejudice based on the fact that the issue was not expressly dealt with in oral argument. Spousal support was obviously in dispute and either party was free to make submissions on it.

Density Group Limited v HK Hotels LLC, 2014 ONCA 605
[Feldman, MacFarland and Epstein JJ.A.]
Counsel:
Teplitsky, Q.C. for the appellant
M.J. Henderson, for the respondent

Keywords: Rules of Civil Procedure, Summary Judgment, Rule 20, Hryniak v Mauldin, Deference to Factual Findings, Fresh Evidence, Said v Butt, Breach of Fiduciary Duty, Inducing Breach of Contract, Inducing Breach of Trust and Inducing Breach of Fiduciary Duty

Facts:
This appeal arises out of the termination of a co-venture relationship between HK Hotels, LLC (“HKH”) and Density Group Ltd. (“Density”) for the development of a hotel at Exhibition Place in Toronto.

On April 30, 2007, HKH and Density entered into a letter of understanding (“LOU”) in response to a request by the Board of Directors of Exhibition Place (the “Board”) for proposals. The LOU defined the parties as “Co-Venturers” and stated that each would have a 50% ownership interest in the proposed development. The costs and expenses of the pre-development and city approval phases would also be shared 50/50.

The Board accepted the parties’ proposal. In response to the Board’s letter of intent (“LOI”), the Board and HKH entered into a formal LOI, prepared by Density, confirming the parties’ intention to develop the hotel.

In January 2009, Mr. Kallan (“Kallan”), the owner and president of HKH, discovered that Density had been paying itself project management fees without authority or approval. As a result, Kallan informed Density that the relationship with HKH was terminated and informed the Board that HKH wished to continue the hotel project without Density. In the Fall of 2009, a third LOI was executed between the Board and HKH that excluded all references to Density.

Density brought an action, claiming breach of contract, breach of trust and breach of fiduciary duty against HKH, and breach of fiduciary duty, inducing breach of trust, inducing breach of fiduciary duty and breach of contract against Kallan personally.

Kallan brought a motion for summary judgment to dismiss the claims against him. The motion judge, applying Combined Air Mechanical Services Inc. v Flesch, 2011 ONCA 764, concluded that there were no genuine issues regarding Kallan’s personal liability and that the motion should be granted. She found that Kallan did not personally owe a fiduciary duty to Density. She also concluded that the second LOI was not a trust asset – an allegation forming a critical part of Density’s claims against Kallan. Finally, she found that there was no independent tortious or unlawful conduct by Kallan and that he was entitled to rely on the Said v Butt defence.

Issues:
(1) Was a summary judgment motion appropriate in resolving the claims against Kallan given that the claims against HKH will still go to trial?
(2) Did the motion judge make factual errors that tainted her analysis?
(3) Did the motion judge err in failing to determine whether Density had an “interest” in the second LOI as a co-owner?
(4) Did the motion judge err in dismissing the claims against Kallan?
(5) Could Density introduce fresh evidence on appeal?

Holding:
Appeal dismissed.

Reasoning:
(1) Yes. While the Supreme Court of Canada in Hryniak v Mauldin, 2014 SCC 7 recognized that it may not be in the “interest of justice” to grant summary judgment in favour of a single defendant if the matter must still go to trial, in some cases it may be appropriate. The fact that a trial is still necessary is not dispositive. In this case, resolving the issue of Kallan’s personal liability was preferable to him. Ultimately, however, Hryniak made clear that absent an error of law, motion judges are entitled to deference on summary judgment motions in determining whether there is a genuine issue requiring trial.

(2) No. The motion judge did make some factual errors, but none of them, individually or together, were material and it cannot be said that they might reasonably have affected the result.

(3) No. On the summary judgment motion, Density argued that it had an interest in the second LOI and that the nature of the interest was a trust asset. The motion judge was correct in finding that the second LOI was not a trust asset as there was no intention to create a trust.

(4) No. There was no reason to interfere with the motion judge’s finding that Kallan did not owe a fiduciary duty to Density. There was no evidence to suggest that Kallan had relinquished his own self-interest and undertook to act in the best interests of Density.

The finding that Kallan was not liable for inducing HKH to breach its co-venture agreement with Density should not be disturbed. Kallan was entitled to rely on the Said v Butt defence to inducing breach of contract. He acted honestly and in good faith in taking steps to protect HKH’s interests after discovering that Density had paid itself unauthorized fees.

The motion judge did not err in dealing with the inducing breach of fiduciary duty claim and inducing breach of trust claim together. The motion judge’s summary reflects the submissions that Density made to her. Density’s Amended Statement of Claim set out the inducing breach of trust and inducing fiduciary duty claims together. Furthermore, the motion judge’s finding that the second LOI was not a trust asset correctly disposed of both claims.

(5) No. Density did not satisfy the test to admit fresh evidence. The evidence in question was not available at the time the summary judgment motion was argued. However, the interpretation Density put on the evidence was misplaced and ultimately would not affect the result.

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Photo of John Polyzogopoulos John Polyzogopoulos

John has been the editor of Blaneys Appeals since the inception of the blog in the Summer of 2014. He is a partner at the firm with over two decades of experience handling a wide variety of litigation matters. John assists clients with…

John has been the editor of Blaneys Appeals since the inception of the blog in the Summer of 2014. He is a partner at the firm with over two decades of experience handling a wide variety of litigation matters. John assists clients with matters ranging from appeals, to injunctions, to corporate, partnership, breach of contract, construction, environmental contamination, product liability, debtor-creditor, insolvency and other business litigation. He also handles complex estates and matrimonial litigation involving disputes over property and businesses, as well as professional discipline and professional negligence matters for various types of professionals. In addition, John represents amateur sports organizations in contentious matters, and also advises them in matters of internal governance. John can be reached at 416-593-2953 or jpolyzogopoulos@blaney.com.