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Good afternoon.

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

Off the top, I would like to congratulate our very own Thomas Durcan on successfully representing the respondents in Farmer v. 145 King Street West, 2018 ONCA 525, which resulted in a dismissal of the claim against our clients.

The theme of this week was real property. In an important environmental law decision involving the contamination of lands from dry cleaning solvents, Huang v. Fraser Hillary’s Limited, the Court acknowledged an apparent divergence in the law of nuisance between Canada and England, but confirmed that in the absence of any binding Supreme Court of Canada authority to the contrary, foreseeability is not a necessary element of the tort of nuisance in Canada. The lower court’s decision was upheld and the appeals by both sides were dismissed. This case, along with the Court’s recent decision in Sorbam v. Litwack, 2017 ONCA 850, focuses liability on the polluter, rather than landlords and neighbours through whose lands contamination may pass but who were not themselves the source of the contamination.

In Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, the Court was tasked with determining the proper measure of damages for breach of a commercial lease. The tenant repudiated the lease. In mitigation of its damages, the landlord could not quickly re-let the premises, but also could not afford the carrying costs of the property. It was therefore forced to sell the property. The landlord claimed that it was forced to sell at below market value and claimed, and was awarded, these damages from the tenant. The landlord also claimed, and was awarded, damages for the lost capital appreciation of the property that the landlord would have enjoyed during the balance of the term of the lease. The Court of Appeal set aside both these elements of the damages awarded. Damages for lost capital appreciation were found not to meet the second branch of the two-part Hadley v. Baxendale foreseeability of damage test for breach of contract. It was not in the reasonable contemplation of the parties that the tenant would be responsible for lost capital appreciation upon breach. The Court also did not agree that the evidence supported a finding that the property had been sold for less than fair market value, and accordingly reduced the damage award in that regard as well. The damages were ultimately calculated as the lost rents during the balance of the term of the lease, minus any savings the landlord enjoyed by no longer owning the property (like the interest on its mortgage payments).

In Smiles First Corporation v. 2377087 Ontario Limited (International Union of Painters), the Court granted relief against a landlord’s attempt to terminate Smiles First’s tenancy on the basis that the landlord had not consented to an assignment of the head lease to Smiles First (which also had a sublease with the head tenant). Given that the landlord was not enforcing a right of re-entry, the Court held that this was not a case for relief from forfeiture under section 98 of the Courts of Justice Act, RSO 1990, c C43. Nevertheless, the Court found that Smiles First was entitled to possession until the end of the term of the sublease. The Court found that the application judge erred in law when he concluded that the sublease terminated upon the abandonment of the premises by the head tenant. The Court cited Kowalski and Shoota v. Gale, [1947] 1 DLR 354 (Ont CA) for the proposition that where a tenant surrenders a head lease to the landlord, the subleases with the surrendering tenant survive until the end of their stated terms and do not fall away with the head lease.

Other topics covered this week included the test required to establish a right to a prescriptive easement, striking pleadings without leave to amend, summary judgment in the commercial finance context and the prevailing issue of whether an order is final or interlocutory.

Please feel free to share this blog with friends and colleagues. As always, we welcome your comments and feedback.

I hope everyone is enjoying the weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2053  Email

Table of Contents

Farmer v. 145 King Street West, 2018 ONCA 525

Keywords: Torts, Negligence, Slip and Fall, Motor Vehicle Accident, Civil Procedure, Dismissal for Delay, Langenecker v. Sauvé, 2011 ONCA 903

Huang v. Fraser Hillary’s Limited, 2018 ONCA 527

Keywords: Torts, Nuisance, Negligence, Trespass, Environmental Law, Contamination, Statutory Liability, Environmental Protection Act, Sections 93 and 99(2), Rylands v. Fletcher, (1868) LR 3 HL 330, Smith v. Inco, 2011 ONCA 628, Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13, Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108

Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519

Keywords: Contracts, Real Property, Commercial Leases, Breach of Contract, Repudiation, Damages, Remoteness, Hadley v. Baxendale (1854), 156 ER 145 (UK Ex Ct), Mitigation, Quantification, Fair Market Value, Ticketnet Corp. v. Air Canada (1997), 154 DLR (4th) 271 (CA), Musqueam Indian Band v. Glass, 2000 SCC 52

Smiles First Corporation v. 2377087 Ontario Limited (International Union of Painters), 2018 ONCA 524

Keywords: Contracts, Real Property, Commercial Leases, Assignments, Landlord’s Consent to Assignment, Subleases, Relief from Forfeiture, Courts of Justice Act, RSO 1990, c C 43, s 98, Kowalski and Shoota v. Gale, [1947] 1 DLR 354

Esfahani v. Samimi, 2018 ONCA 516

Keywords: Civil Procedure, Appeals, Jurisdiction, Orders, Final or Interlocutory, Enforcement, Fraudulent Conveyances, Summary Judgment, Bankruptcy and Insolvency, Bankruptcy and Insolvency Act, RSC 1985, c B-3, Fraudulent Conveyances Act, RSO 1990, c F 29, Assignment and Preferences Act, RSO 1990, c A 33, Rules of Civil Procedure, Rule 20.04(4), Rule 20.05(1), Courts of Justice Act, RSO 1990, c C 43, s 19(1)(b)

Carpenter v. Doull-MacDonald, 2018 ONCA 521

Keywords: Real Property, Prescriptive Easements, Real Property Limitations Act, RSO 1990, c L 15, s 31, Henderson v Volk, [1982] OJ No 3138 (CA), 1043 Bloor Inc. v. 1714104 Ontario Inc., 2013 ONCA 91

Brozmanova v. Tarshis, 2018 ONCA 523

Keywords: Torts, Fraud, Civil Procedure, Striking Pleadings, Limitation Periods, No Reasonable Cause of Action, Fresh Step, Limitations Act, SO 2002, c 24, s 5(1), Rules of Civil Procedure, Rules 21.01(1)(a)-(b), Hunt v. Carey Canada Inc., [1990] 2 SCR 959

Rescon Financial Corporation v. New Era Development (2011), 2018 ONCA 530

Keywords: Summary Judgment, Real Property Financing, Fiduciary Duty, Negligence, Reverse Onus, Hodgkinson v. Simms, [1994] 3 SCR 377, Sanzone v. Schechter, 2016 ONCA 566

Sickinger v. Sickinger, 2018 ONCA 526

Keywords: Family Law, Spousal and Child Support, Variation, Calculation of Income, Orders, Disclosure, Roberts v. Roberts, 2015 ONCA 450, Fresh Evidence

For short civil decisions click here

For Ontario Review Board decisions click here

For criminal decisions click here


Civil Decisions

Farmer v. 145 King Street West, 2018 ONCA 525

[MacPherson, LaForme and Roberts JJ.A.]

Counsel:

Antal Bakaity, for the appellant

Thomas Durcan, for the respondents, 145 King Street West and 2748355 Canada Inc.

Jennifer A Reid, for the respondent, JM

Keywords: Torts, Negligence, Slip and Fall, Motor Vehicle Accident, Civil Procedure, Dismissal for Delay, Langenecker v. Sauvé, 2011 ONCA 903

Facts:

This is an appeal from a judgment dismissing the appellants’ action against the respondents. The action arises out of two separate events in 2009 – an alleged slip and fall accident and a motor vehicle accident. After various procedural issues over the years, an order for a timetable was imposed on the parties. There was non-compliance with the timetable, leading the respondents to bring a motion to dismiss the action for delay. The appellant then initiated a motion to amend the timetable. The motions were heard together. The motion judge found that the plaintiff provided no explanation for the delay. The motion judge found that the plaintiff failed to rebut the presumption of prejudice and that there was a substantial risk that there could no longer be a fair trial. The motion judge granted the defendants’ motion to dismiss the action for delay.

Issues:

(1) Did the motion judge err by failing to address first the appellant’s motion to dispense with mediation?

(2) Did the motion judge err by reviewing the entirety of the case as opposed to examining the narrow circumstances of the events subsequent to the imposition of the timetable?

Holding: Appeal dismissed.

Reasoning:

(1) No. It is not clear from the record that the appellant ever made such a motion. In any event, even if it were made and were before the court, the motion judge was entitled to focus on the respondents’ broader motion which also involved consideration of the mediation step in the litigation.

(2) No. The motion judge was obliged to take into account the entire background of the case to put the parties’ motions into their proper context. However, she clearly focussed on the imposition of the timetable in 2015. Indeed, she described it as a “lifeline” that the appellant had failed to grasp.

It was open to the motion judge on this record to conclude that the appellant’s delay was inordinate and inexcusable and that she failed to rebut the presumption of prejudice to the respondents. This gave rise to a substantial risk that a fair trial would not be possible because of the delay: see Langenecker v. Sauvé, 2011 ONCA 903, at paras. 6-7. The motion judge’s findings are entitled to deference. There was no error that would permit appellate intervention.


Huang v. Fraser Hillary’s Limited, 2018 ONCA 527

[Hourigan, Benotto and Fairburn JJ.A.]

Counsel:

Michael S Hebert and Cheryl Gerhardt McLuckie, for the appellant/respondent, EH

Jonathan O’Hara and Michael Rankin, for the appellant/respondent, Fraser Hillary’s Limited

Christopher Reil and Jeremy Rubenstein, for the respondent, DH

Keywords: Torts, Nuisance, Negligence, Trespass, Environmental Law, Contamination, Statutory Liability, Environmental Protection Act, Sections 93 and 99(2), Rylands v. Fletcher, (1868) LR 3 HL 330, Smith v. Inco, 2011 ONCA 628, Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13, Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108

Facts:

Fraser Hillary’s Limited (“Fraser”) has operated a dry cleaning business since 1960. DH is the president and sole director of Fraser. DH is also the owner of a residential property that abuts Fraser’s property. EH owns properties directly adjacent to Fraser, but not abutting DH’s residential property.

During the period 1960 to 1974, solvents used in Fraser’s dry cleaning operations spilled onto the ground. Trichloroethylene (“TCE”) was an ingredient in the dry cleaning solution that Fraser used during this time. The environmental danger caused by this chemical was unknown at that time. In 2003, after environmental reports by the Ministry of Environment and Climate Change (MOECC) confirmed the soil and groundwater in EH’s property have a concentration of TCE that exceeds MOECC standards, EH put Fraser on notice about the contamination of his properties. In 2013, the MOECC concluded that it was not receiving significant communications from Fraser and that its remedial efforts to date did not appear to have had a significant impact on the contamination. Consequently, the MOECC issued two Provincial Officer’s Orders requiring Fraser to retain a qualified person and submit a detailed work plan to remediate the contamination. Fraser did not comply with either order and the MOECC initiated enforcement proceedings against Fraser under the Environmental Protection Act (“EPA”).

EH sued Fraser and DH for damages suffered as a result of the contamination of his property. The trial judge held Fraser liable in nuisance and under the EPA for approximately $1.8 million in damages arising from contamination of EH’s land by pollutants from Fraser’s dry cleaning business. The claim against DH in his capacity as landowner of land adjacent to that owned by Fraser was dismissed.

Both Fraser and EH appealed the decision. Fraser submitted that the trial judge erred in finding it liable, both in nuisance and under the EPA, for the remediation costs. EH’s primary submissions were that the trial judge erred in failing to find Fraser negligent, in failing to find DH liable in nuisance or in negligence, and in his assessment of damages.

Issues:

(1) Did the trial judge err in finding Fraser liable in nuisance?

(2) Did the trial judge err in not finding DH liable in nuisance?

(3) Did the trial judge err in finding Fraser liable under s. 99 of the EPA?

(4) Did the trial judge err in not finding Fraser and/or DH negligent?

(5) Did the trial judge err in not finding Fraser liable in trespass?

(6) Did the trial judge err in his assessment of damages?

Holding: Appeals dismissed.

Reasoning:

(1) No. Fraser argued that the trial judge erred in law by failing to consider whether the environmental damage was reasonably foreseeable as part of his nuisance analysis. The court outlined and acknowledged the divergence in British law from Canadian law and the fact that the law may be evolving in this country. Reasonable foreseeability of harm has been accepted as part of British law in respect of nuisance and in the Rylands v. Fletcher, (1868) LR 3 HL 330 (strict liability) context. However, there has been mixed acceptance of the reasonable foreseeability requirement in this country. To demonstrate this point, the court cited its own decision in Smith v. Inco, 2011 ONCA 628, as well as the Alberta Court of Appeals decision in Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108.

In Smith v. Inco, the court declined to decide whether foreseeability is a requirement under Rylands v. Fletcher, but did observe that compelling reasons exist to require foreseeability of damage as a necessary element. In Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108, the Court followed the Inco decision in upholding the decision to dismiss a class action under the doctrine in Rylands v. Fletcher because the element of foreseeability could not be established. Yet, without discussing whether foreseeability was a necessary element of the nuisance claim, the court permitted certain of the class claimants to pursue their nuisance claims.

The court then noted that the Supreme Court of Canada recently considered the elements of private nuisance in Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13. Nowhere in its analysis did the Court indicate that foreseeability is part of the tort of nuisance. The court concluded that in the absence of any binding Canadian authority, foreseeability is not a necessary part of the tort of nuisance in Canada.  The court stated that “the addition of a foreseeability requirement blurs the distinction between negligence and nuisance.”

(2) No. DH was only sued in his capacity as the owner of the residential property and not as an officer or director of Fraser. The trial judge’s finding that the property in question is not the source of the contaminant is entitled to deference. The court found no error in the trial judge’s conclusion that causation had not been established, and that DH did not subject EH to an unreasonable interference with his use and enjoyment of his properties.

(3) No. The court rejected the argument that the trial judge erred because he retrospectively applied Part X of the EPA. In the court’s view, time does not freeze in 1974 for the purposes of liability under section 99(2) of the EPA. Even if the spills ceased in that year, there was an ongoing obligation under section 93 of the EPA to remediate the damage. That remediation has not been done. Therefore, there is liability under section 99(2)(a)(i) and (ii) because Fraser has not fulfilled a duty imposed on it under Part X of the EPA.

(4) No. The trial judge made a finding of mixed fact and law that Fraser and DH did not breach the standard of care until 2013. He concluded that there had been no appreciable increase in contamination since 2013. The court gave deference to the trial judge’s conclusion that causation had not been established given that there had been no increase in contamination during the relevant time that would have any impact on the requirement for remediation or its associated costs.

(5) No. The trial judge correctly identified that a direct physical intrusion onto EH’s properties was required in order to establish a trespass. He found that the intrusion was not direct because the contaminant entered into the ground, filtered down and was then carried to EH’s properties in the groundwater.

(6) No. The court determined that the trial judge carefully considered the evidence and determined what he felt was the appropriate figure for damages. He was entitled to reject the damages scenarios that he felt were unsuitable in the circumstances. He chose to increase the damages based on evidence about upward adjustments for other similar remediation alternatives in order to compensate EH for the increased costs of remediating to a residential standard. The court saw no palpable or overriding error in his analysis, and accordingly, was not satisfied that there was any basis for appellate interference with the trial judge’s assessment of damages.


Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519

[Pepall, Trotter and Nordheimer JJ.A.]

Counsel:

David R Byers, Patrick G Duffy and Michael Currie, for the appellants

Luisa J Ritacca and Fredrick R Schumann, for the respondent

Keywords: Contracts, Real Property, Commercial Leases, Breach of Contract, Repudiation, Damages, Remoteness, Hadley v. Baxendale (1854), 156 ER 145 (UK Ex Ct), Mitigation, Quantification, Fair Market Value, Ticketnet Corp. v. Air Canada (1997), 154 DLR (4th) 271 (CA), Musqueam Indian Band v. Glass, 2000 SCC 52

Counsel:

The defendants, Delco Wire and Cable Limited (“Delco”) and IEWC Canada Corp. (“IEWC”) repudiated a commercial lease with respect to a property owned by the plaintiff, Saramia Crescent General Partner Inc. (“Saramia”). Subsequent to the repudiation, Saramia sold the property to mitigate its loss. The issue at trial was what amount of damages, if any, were due to Saramia by Delco and IEWC.

At Trial

The trial judge found that Saramia was forced to sell the property following repudiation, because Saramia could not afford the ongoing maintenance and mortgage expenses absent the rental income. The trial judge also found that the sale was not at fair market value and, as a consequence, did not make Saramia whole for the losses sustained as a result of the repudiation.

The trial judge concluded that Saramia not only would have enjoyed the benefit of the lost rental profits under the lease, but would have also enjoyed the capital appreciation of the property. The trial judge concluded that the sale of the property in 2013 did not account for these benefits, which Saramia would have enjoyed had the lease been honoured.

The trial judge accepted the appraised value at December 31, 2015 as $4,465,000. This value was used in the discounted cash flow (“DCF”) analyses to calculate total damages. For the basis of her damages award, the trial judge adopted the scenario that employed the December 31, 2015, appraised value of the property. In this scenario, this price was then projected forward to 2021 at the same assumed growth rate of 2% per year along with the same 2% discounted rate. The trial judge deducted the mortgage break fee amount that Saramia had to pay from the principal amount available for reinvestment for mitigation purposes. She also awarded an amount of contractual interest owing under the lease.

On appeal, the appellants argued that the sale of the property fully mitigated or avoided any damages, and that damages for lost capital appreciation were too remote.

Issues:

(1) What is the proper measure of damages for breach of a commercial lease?

(2) Were the damages for lost capital appreciation too remote?

(3) Were the damages mitigated?

(4) Does the sale of the Property stop damages from accruing beyond the date of the sale?

(5) Are the damages as calculated by the DCF too uncertain?

(6) Was it an error to award the contractual interest amount as damages?

Holding: Appeal allowed.

Reasoning:

(1) The appellants are liable for the rental payments they did not make, subject to Saramia’s duty to mitigate and the expenses Saramia avoided by selling the property. Any “but for” capital appreciation there may have been in the property going forward is not a proper head of damages for which the appellants are liable through their repudiation.

(2) Yes. The test for remoteness is set out in Hadley v. Baxendale (1854), 156 ER 145 (UK Ex Ct). This test states that damages may be recovered if:

(i) in the usual course of things, they arise fairly, reasonably, and naturally as a result of the breach of contract; or

(ii) they were within the reasonable contemplation of the parties at the time of the contract.

The trial judge conflated the two branches of the test set out in Hadley v Baxendale for remoteness of damages. The test under the first branch is objective. The question is not whether the type of loss was foreseeable as arising naturally in this case, but whether, objectively viewed, lost capital appreciation is a type of loss that foreseeably and naturally arises “according to the usual course of things” from the breach of a commercial lease.

With respect to the second branch of remoteness from Hadley v Baxendale, there was nothing in the evidence that would support a conclusion that the parties contemplated, at the time that they entered into or extended the lease, that capital appreciation of the property would be something for which the tenant would be liable to the landlord if the lease was breached.

Therefore, the claimed damages for lost capital appreciation fell outside of both branches of Hadley v Baxendale and were too remote and not recoverable.

(3) No. First, the Court held that the trial judge erred in her interpretation of fair market value (“FMV”). The definition of FMV is well established as being what a seller is willing to accept and a buyer is willing to pay on the open market in an arm’s length transaction (Musqueam Indian Band v. Glass, 2000 SCC 52). That Saramia was forced to sell the property did not disqualify it as a willing seller. Willing, in this sense, refers to the price offered and accepted. Next, there was no evidence to suggest that Saramia sought a price for the property at anything less than what the property was worth. Despite this, the trial judge found the price to have been below FMV. Opinion evidence that had been offered by Saramia’s Vice-President, which could have been self-serving and which was accepted by the trial judge in making this finding, was contradicted by Saramia’s own property appraisal expert. Further, the evidence established that there were three (3) prospective buyers and that the eventual sale price was comparable to other industrial properties in the market.

Nevertheless, the damages were not fully mitigated. This was because the proceeds from the FMV sale of the property did not compensate Saramia for the lost economic value derived from the lease because the lease had, prior to the sale, been repudiated. Moreover, the Supreme Court held previously held in Musqueam Indian Band v. Glass, 2000 SCC 52, that the FMV of land is the exchange value of the land in fee simple and does not include value derived from a lease.

(4) No. The sale of the property by Saramia was not an independent and inevitable event that occurred regardless of the appellants’ repudiation of the contract. The line of reasoning in Canadian Medical Laboratories Ltd. v. Stabile (1997), 98 OAC 3, is thus distinguishable from the facts of this case. Moreover, it would be anathema to the purpose of the mitigation doctrine to hold that a reasonable action taken by the innocent party intended to mitigate damages could be used by the wrongdoer as a means to escape liability. To the extent that a defendant landlord sells leased premises as a reasonable means of mitigating damages following a tenant’s repudiation of a lease, the sale of the leased premises does not bar the landlord’s claim for lost rental payments after the date of sale.

(5) No. DCF calculations are not purely hypothetical or speculative, but are a sufficiently certain means of quantifying damages where the projections constitute a close approximation of what would have occurred on a balance of probabilities: Ticketnet Corp. v. Air Canada (1997), 154 DLR (4th) 271 (CA), at para. 87. However, the appropriate value to use in the DCF calculations was the 2013 sale price, not the 2015 FMV appraisal. There is no basis to depart from the trial judge’s preference for the KPMG method of calculation. It was appropriate of the trial judge to require that the mortgage break fee be deducted from the proceeds of sale for the purpose of the DCF calculations rather than to treat that amount as a separate head of damages.

(6) Yes. The trial judge’s reasons are unclear as to the legal basis for the award of contractual interest. The reasons show that she could have intended either that the contractual interest was a head of expectation damages resulting from a breached contract, or an amount awarded pursuant to the enforcement of a subsisting contract. In both cases, the award was in error. In the case of expectation damages, the trial judge would have had to rely on a submission from Saramia but the trial judge failed to analyze why she accepted the submission, fatally failing in the process by not linking the “what” and “why.” In the contractual enforcement case, Saramia’s acceptance of the appellants’ repudiation of the Lease terminated the contract and thus the trial judge committed an error in law by awarding contractual interest on the basis of continual rent arrears on a contract which was no longer alive. Interest is instead payable in accordance with the Court of Justice Act.

In the result, the appeal was allowed, and the trial judge’s damages award was set aside, to be replaced by a new damages award calculated in accordance with the court’s reasons.


Smiles First Corporation v. 2377087 Ontario Limited (International Union of Painters), 2018 ONCA 524

 

[Epstein, van Rensberg and Brown JJ.A.]

Counsel:

Tanya Walker, for the appellants

Arleen Huggins, for the respondent

Keywords: Contracts, Real Property, Commercial Leases, Assignments, Landlord’s Consent to Assignment, Subleases, Relief from Forfeiture, Courts of Justice Act, RSO 1990, c C 43, s 98, Kowalski and Shoota v. Gale, [1947] 1 DLR 354

Facts:

The respondent, 2377087 Ontario Limited (the “Landlord”), entered into a head lease with 2445855 Ontario Inc. (“244”) (the “Head Lease”). 244 then subleased the premises to Smiles First by letter of intent (the “Sublease”). Disputes arose under both the Head Lease and the Sublease. Smiles First and 244 advised the Landlord that they had entered into a tentative agreement to resolve their disputes. However, their agreement was “contingent on the Landlord’s approval of assigning 244’s Head Lease to Smiles First and/or the Landlord entering into a new head lease with Smiles First.

Two events then occurred. First, 244 executed an assignment of the Head Lease to Smiles First (the “Head Lease Assignment”). This assignment required the Landlord’s Consent, following which 244 would transfer and assign to Smiles First all of its rights under the Head Lease. Neither Smiles First nor 244 asked the Landlord for consent to the assignment.

Second, the Landlord, 244, and Smiles First embarked on negotiations to revise the leasing arrangements for the Premises. The Landlord wanted to enter into a new head lease directly with Smiles First, and 244 wanted nothing more to do with the premises. The Landlord circulated draft Minutes of Settlement and a new form of head lease with Smiles First. Smiles First refused to sign the Minutes of Settlement, taking the position that it was an “official tenant” pursuant to the Head Lease Assignment. The Landlord responded that it had not consented to the Assignment and expected Smiles First to sign a new head lease directly with it. The Landlord took the position that Smiles First now occupied the Premises as “an occupant subject to a month to month term.”

On March 21, 2017 the Landlord gave Smiles First notice that its tenancy would end on April 30, 2017 (the “Notice of Termination”). Smiles First brought an application of relief from forfeiture, which was dismissed. Smiles First appealed.

Issues:

(1) Did the application judge err in concluding the Landlord was not bound by the Head Lease Assignment?

(2) Did the application judge err in refusing to grant Smiles First relief from forfeiture of its tenancy?

Holding:

Appeal Allowed.

Reasoning:

(1) No. This issue turned on: (i) the language of the Head Lease Assignment; (ii) the effect of certain correspondence between the parties’ counsel in October and November 2016; and (iii) the acceptance of rent from Smiles First after November 2016.

The application judge held that the Head Lease Assignment did not operate to assign 244’s interest in the Head Lease to Smiles First and was not effective as against the Landlord because neither Smiles First nor 244 obtained the Landlord’s consent to the Head Lease Assignment, as required by the specific terms of the assignment. Further, the correspondence amongst the parties did not constitute actual or constructive notice to the Landlord of the Head Lease agreement. The Court found those findings were based on a reasonable interpretation by the application judge of the terms of the Head Lease Agreement and Head Lease.

Furthermore, the application judge held that the Landlord’s acceptance of rent from Smiles First did not (i) amount to its recognition of an equitable assignment of the Head Lease; (ii) constitute a waiver of its rights; or (iii) estop the Landlord from asserting those rights. The Court held that the evidence showed that the Landlord’s acceptance of the rent was done during the period of time when it had made clear that Smiles First needed to enter into a new head lease directly with it, and saw no reversible error in the application judge’s analysis.

(2) No. This was not a case for relief from forfeiture under s. 98 Courts of Justice Act, RSO 1990, c C43, as the Landlord was not trying to enforce a right of re-entry of forfeiture. However, Smiles First was still entitled to relief against the Landlord’s attempt to terminate its possession of the premises. The application judge found that 244 abandoned the premises as part of its settlement with the Landlord and that this resulted in the termination of the Sublease. As a matter of law, it did not. Where the tenant surrenders a head lease to the landlord, the subleases created by the surrendering tenant survive until the end of their stated terms: Kowalski and Shoota v. Gale, [1947] 1 DLR 354 (Ont CA), at paras. 32-33. Smiles First was entitled to possession of the Premises until the end of the term of the Sublease on the terms and conditions contained in its Sublease.

Esfahani v. Samimi, 2018 ONCA 516

[MacPherson, LaForme and Miller JJ.A.]

Counsel:

A Landry and E Florjancic, for the appellant

A Zweig, for the respondents

Keywords: Civil Procedure, Appeals, Jurisdiction, Orders, Final or Interlocutory, Enforcement, Fraudulent Conveyances, Summary Judgment, Bankruptcy and Insolvency, Bankruptcy and Insolvency Act, RSC 1985, c B-3, Fraudulent Conveyances Act, RSO 1990, c F 29, Assignment and Preferences Act, RSO 1990, c A 33, Rules of Civil Procedure, Rule 20.04(4), Rule 20.05(1), Courts of Justice Act, RSO 1990, c C 43, s 19(1)(b)

Facts:

DE obtained a judgment in Germany against KS in 2007 and then a judgment in Ontario recognizing the German judgment and its enforceability in the Superior Court. DE received no payments and brought an action in 2011 claiming damages and pleading that KS fraudulently conveyed properties to evade payment.

In November 2013, KS filed an assignment in bankruptcy. The report of the Trustee in Bankruptcy dated July 3, 2014 was served on DE. He did not file any written opposition to the discharge of KS who was discharged from bankruptcy on August 7, 2014.

Also in 2013, DE brought a summary judgment motion but agreed to proceed with the motion as a mini trial. The mini trial was to address a single issue: whether KS engaged in a series of transactions with the intent to defeat, delay, hinder or prejudice DE from receiving payment for the 2011 judgment. In March 2015 the mini trial judge ruled that KS did engage in the described conduct.

In October 2017, the summary judgment from 2013 continued. DE relied on the Fraudulent Conveyances Act, RSO 1990, c F 29, (“FCA“) and the Assignment and Preferences Act, RSO 1990, c A 33, (“APA”) to recover the proceeds of the fraudulent conveyances. KS argued that because he had been discharged from bankruptcy in 2014, there was no “debt” which can form the basis of a judgment. The motion judge held that DE had failed to follow the correct procedure to realize on the amounts owing under the 2009 enforcement judgment. She dismissed DE’s motion, but noted that “[DE] of course still has the simple and direct option of moving under the Bankruptcy and Insolvency Act to pursue the FCA action.”

Issues:

(1) Is the motion judge’s holding a final order?

(2) What is the correct court jurisdiction for this appeal?

(3) Can the appellant pursue the fraudulent conveyance claim in another forum?

(4) Can the appellant pursue other causes of action previously pleaded?

Holding: Appeal quashed.

Reasoning:

(1) No. The summary judgment order is an interlocutory order, not a final order. In dismissing the summary judgment motion, the motion judge did not invoke Rule 20.04(4) or 20.05(1) to determine the final and substantive rights of the parties.

(2) Divisional Court. An appeal of an interlocutory order properly lies in the Divisional Court with that court’s leave pursuant to section 19(1)(b) of the Courts of Justice Act. The Court of Appeal may only transfer an appeal to the Divisional Court if the appeal does not require leave to appeal to that court.

(3) DE can still pursue his fraudulent conveyance claims in Bankruptcy Court.

(4) To the extent the conspiracy claim can be separated from the fraudulent conveyance claim, DE is free to continue his efforts and carry on with it in the Superior Court.

Carpenter v. Doull-MacDonald, 2018 ONCA 521

[MacPherson, LaForme and Roberts JJ.A.]

Counsel:

Robert Kalanda, for the appellant

Sarah Corman and Hilary Brown, for the respondent

Keywords: Real Property, Prescriptive Easements, Real Property Limitations Act, RSO 1990, c L 15, s 31, Henderson v Volk, [1982] OJ No 3138 (CA), 1043 Bloor Inc. v. 1714104 Ontario Inc., 2013 ONCA 91

Facts:

The appellant appeals from the dismissal of her application for a declaration that she holds a permanent easement over part of the respondent’s property.

The appellant and respondent own neighbouring houses. The appellant claims a right of easement over the passageway between the two houses. No easement is registered on title to the appellant’s property. The appellant bases her claim on the historical use exercised by the former owner of the property over the respondent’s property in order to carry out cleaning and repairs.

She submits that the application judge erred in determining that this historical use of the respondent’s property was not “as of right” but was instead granted by permission or licence.

Issues:

(1) Does the appellant have a right of easement over the passageway between the two houses that runs to the backyards?

Holding: Appeal dismissed.

Reasoning:

(1) No. The application judge concluded that the historical usage of the respondent’s property on which the appellant relies was only “modest, infrequent, and intermittent”, and was permitted by the extension of the former owner’s neighbourly good will.

As noted by the application judge, the threshold for meeting the criteria for establishing an easement is high. The application judge carefully reviewed and applied the correct legal principles, including that a prescriptive easement requires the use of the property over which the easement is claimed to be “a claim of right which is continuous, uninterrupted, open and peaceful for a period of twenty years”: see s. 31 of the Real Property Limitations Act, RSO 1990, c L15; and Henderson v Volk, [1982] OJ No 3138 (CA), at para. 12. Moreover, the use or enjoyment of the easement “must not be permissive but, instead, as if the claimant had the right to the easement”: 1043 Bloor Inc. v. 1714104 Ontario Inc., 2013 ONCA 91, at para. 59. The application judge’s characterization of the occasional permissive historical usage of the respondent’s property was open to him on the record.

Brozmanova v. Tarshis, 2018 ONCA 523

[Brown, Huscroft and Trotter JJ.A.]

Counsel:

Richard Parker, for the appellant

Andrew Kalamut, for the respondents

Keywords: Torts, Fraud, Civil Procedure, Striking Pleadings, Limitation Periods, No Reasonable Cause of Action, Fresh Step, Limitations Act, SO 2002, c 24, s 5(1), Rules of Civil Procedure, Rules 21.01(1)(a)-(b), Hunt v. Carey Canada Inc., [1990] 2 SCR 959

Facts:

The appellant appeals an order striking out her statement of claim without leave to amend. In the claim, the appellant sought damages from her former employer of several years. The appellant alleged that the respondent had billed the Ontario Health Insurance Plan (“OHIP”) for treatments of conditions she had never had. OHIP assured her that the entries would be removed but they remained on her record and the appellant has, since before 2010, been unable to obtain health insurance. The motion judge granted the motion to strike on the grounds that the action was commenced outside the applicable limitation period under Rule 21.01(1)(a) of the Rules of Civil Procedure and on the basis that no reasonable cause of action had been disclosed under Rule 21.01(1)(b).

Issues:

(1) Did the motion judge err in striking the statement of claim without leave to amend?

Holding: Appeal dismissed.

Reasoning:

(1) No. Rules 21.01(1)(a) and (b) ask a court to determine a question of law which may dispose of a proceeding. Evidence on such motions is generally prohibited and the pleadings are taken as true (Hunt v. Carey Canada Inc., [1990] 2 SCR. 959). On a Rule 21.01(1)(a) motion, however, the court must ascertain the appropriate day in law on which the claim was discovered under s. 5(1) of the Limitations Act, 2002. Such analysis does not involve a question of law. In some circumstances, allowing a defendant to move under rule 21.01(1)(a) to adjudicate its fact-based defence can be prejudicial to the plaintiff. The respondent’s motion in this case, was, in effect, a motion for summary judgment. That said, the applicant’s counsel did not advance any irregularity in the respondents’ use of rule 21.01(1). The facts pleaded and admissions made by the appellant established that the appellant was statute-barred from advancing the claim. That the damage she discovered in 2009 was not the same damage which she sought recovery for in her action does not matter (Hamilton (City) v Metcalf & Mansfield Capital Corporation). The respondent’s reliance on Rule 21.01(1)(b) (no reasonable cause of action) was misplaced because it had already taken a fresh step by defending the claim and such a motion must be brought before a defence is delivered.

Rescon Financial Corporation v. New Era Development (2011) Inc., 2018 ONCA 530

[MacPherson, LaForme and Roberts JJ.A.]

Counsel:

DK Alderson and A Ottaway, for the appellant

S Crocco and PH Smiley, for the respondents

Keywords: Summary Judgment, Real Property Financing, Fiduciary Duty, Negligence, Reverse Onus, Hodgkinson v. Simms, [1994] 3 SCR 377, Sanzone v. Schechter, 2016 ONCA 566

Facts:

The appellant, New Era Development (2011) Inc. (“New Era”), appeals the summary judgment granted in favour of the respondent Rescon Financial Corporation (“Rescon”) which granted Rescon’s claim and dismissed New Era’s counterclaim against Rescon and its founding principal, EB.

Rescon is a mortgage broker. Rescon claimed $400,000 in fees from New Era for arranging construction financing for a condominium project. New Era denied that it owed fees and submitted on the motion that Rescon failed to perform the terms of the contract between the parties, resulting in $4 million in damages.

In February 2010, RV incorporated New Era which purchased a parcel of land (“the Bristol Lands”) for $2.8 million. In June 2014, RV approached Rescon to arrange about $40 million in financing for the construction and development of the Bristol Lands. On July 8, 2014, RV delivered a signed copy of the retainer agreement between the parties. The parties approached Alterna Savings and Credit Union Limited (“Alterna”) for financing to develop the Bristol Lands. Alterna delivered a Letter of Intent dated September 30, 2014 (the “LOI”), for Construction Financing of the Bristol Project, which was returned with handwritten changes and a cheque for $50,000 payable to Alterna. Rescon obtained a Commitment Letter from Alterna (the “Second Commitment Letter”) proposing a Construction and Development loan of $39 million, as well as a Letter of Credit facility of $1 million on terms that largely reflected the terms found in the Alterna LOI.

After concerns were expressed the Project Monitor regarding the conditions precedent for funding, budget overruns, and mezzanine financing, the relationship between New Era and Rescon began to sour. On June 19, 2015, New Era sent an email to Alterna terminating the Second Commitment Letter. Later that day, Alterna forwarded New Era’s email to Rescon. On July 2, 2015, Rescon sent an email to New Era containing an invoice for $400,000. After further discussions between Rescon and New Era regarding the continuation of their relationship, New Era informed Rescon, via text, that its services were no longer required. New Era refused to pay the $400,000 sought in Rescon’s invoice. Rescon commenced an action. New Era counterclaimed. Rescon’s claim was granted and New Era’s counterclaim was dismissed by way of summary judgment. New Era appealed.

Issues:

(1) Did the motion judge err by finding Alterna’s Second Commitment letter acceptable?

(2) Did the motion judge err by failing to make credibility findings on certain key issues?

(3) Did the motion judge err in rejecting the appellant’s defence of the agent’s breach of duty?

(4) Did the motion judge err in concluding that there was no fiduciary relationship between the parties?

(5) Did the motion judge err in law by determining causation before making findings on the standard of care on the agent’s breach of duty issue and in the absence of any expert evidence filed by the respondents establishing the standard of care?

(6) Did the motion judge err by shifting the onus to the appellant to demonstrate that there was a genuine issue for trial?

(7) Did the motion judge err by dismissing the counterclaim on a summary basis?

Holding: Appeal dismissed.

Reasoning:

(1) No. There is no genuine issue requiring trial regarding whether the Second Alterna Commitment Letter was “an acceptable commitment letter”. New Era had accepted it not only once, but twice.

(2) No. The record before the motion judge discredited RV’s evidence and supported the motion judge’s conclusion.

(3) No. This argument essentially covers the same factual terrain as the first issue and was rejected for the same reasons.

(4) No. The motion judge’s review of the evidence on this issue established clearly that RV was far from being a neophyte shrinking violet in his relationship with EB. Furthermore, the motion judge’s decision on this point was entitled to significant deference: see Hodgkinson v. Simms, [1994] 3 SCR 377, at para. 96.

(5) No. There is no conceivable standard of care analysis that could have made a difference, given that the motion judge correctly found that the respondent did not breach its duty.

(6) No. With the respondents having discharged their evidentiary burden of proving that there was no genuine issue requiring a trial for its resolution, the onus shifted to the appellant to show that the claim had a real chance of success and that there were genuine issues requiring a trial: Sanzone v. Schechter, 2016 ONCA 566, at para. 30. It did not discharge that onus.

(7) No. There was a pronounced overlap between the defence and the counterclaim. The motion judge was not wrong to conclude that the allegations and defences raised in the statement of defence do not raise a genuine issue requiring a trial and so the Counterclaim should be dismissed for the same reason that Rescon’s claim was successful.

Sickinger v. Sickinger, 2018 ONCA 526

[MacPherson, LaForme and Roberts JJ.A.]

Counsel:

Gary S Joseph, for the appellant

Dena N Varah and Katharine Costin, for the respondent

Keywords: Family Law, Spousal and Child Support, Variation, Calculation of Income, Orders, Disclosure, Roberts v. Roberts, 2015 ONCA 450, Fresh Evidence

Facts:

The appellant, RS, appeals the motion judge’s decision dismissing his motion to vary and granting the respondent, PS’ cross-motion. Issues of spousal and child support were decided for RS and PS.

RS brought his first motion to vary to reduce child support and reduce or terminate spousal support. A seven-day trial took place resulting in a final order. He then brought his second motion to vary, which was to be heard on affidavit evidence. It was ordered that RS was to provide current financial disclosure, including his tax returns. Having failed to produce the ordered disclosure, RS sought an adjournment of his second motion to vary. He was in serious default of his obligations to pay support and to make financial disclosure.

RS sought a further adjournment of his second motion to vary. Justice Glustein adjourned the motion and stipulated that no further affidavit material could be filed thereafter. RS did not appeal this order. In spite of this order, RS late-served a financial statement and 13 affidavits on PS. He then brought a Form 14B motion for leave to permit late service of his materials. On a later date, RS purported to serve and file six affidavits, contrary to Justice Glustein’s order that RS did not have a further right of reply. RS then filed a second 14B motion seeking an order that he be permitted the right of reply evidence. The affidavits did not contain RS’ income tax returns.

The motion judge considered the order by Glustein J. She noted the deadline to file any additional materials included his 2015 and 2016 tax returns. She found that RS had not complied with the order. The motion judge denied RS’ 14B motions. She concluded that any materials filed after the deadline would not form part of the motion to vary and would be removed from the court file.

The motion judge dismissed RS’ motion to vary because he had not produced any income tax returns and provided no valid reason for the lack of disclosure. She made further observations and findings.

Regarding an increase in parenting time from 40% to 50%, the motion judge found this was foreseeable at the time and found that there was no material change. The motion judge granted PS’ motion to vary. She found that PS’ financial situation had not changed, but RS’ had.

Issues:

(1) Was RS denied procedural fairness because the motion judge prohibited him from filing his late-filed affidavits?

(2) Was RS denied procedural fairness because the motion judge prohibited him from filing reply evidence?

(3) Did the motion judge err in law when she found that the increase in parenting “was foreseeable” and therefore not a “material change”?

(4) Should RS be granted leave to file his 2015 and 2016 tax returns as fresh evidence on appeal?

Holding: Appeal dismissed.

Reasoning:

(1) No. The record reveals that far from experiencing procedural unfairness, RS has benefitted significantly from several indulgences granted him by the court. The motion judge heard RS’ motion to vary almost three years after he commenced it. At the time, seven different judges dealing with various aspects of the proceeding, including case management, had all ordered RS to produce relevant disclosure.

As the court described it in Roberts v. Roberts, 2015 ONCA 450, at paras. 11-12:

The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.

(2) No. The motion judge made no error in dismissing his motion to file reply evidence late and in non-compliance with a court order. The exercise of her discretion should not be interfered with on appeal, absent an error on her part, which RS did not establish.

(3) No. The motion judge appropriately made her decision based on the record before her. RS has failed to establish any reason for the court to interfere with her comprehensively reasoned decision.

(4) No. The court declined to admit his 2015 and 2016 tax returns as fresh evidence. RS’ income tax returns were not included in any of the affidavits that were served, nor was there any reasonable explanation for their omission. RS ignored disclosure orders for over two years.


Short Civil Decisions

McPeake v. Cadesky & Associates, 2018 ONCA 500

[Juriansz, Benotto and Fairburn JJ.A.]

Counsel:

Geoffrey DE Adair, for the cross-appellant GJ

Sandra E Dawe, for the cross-respondent Cadesky & Associates

Alfred J Esterbauer and Sydney Hodge, for the cross-respondent BS

Yan David Payne and Karen J Sanchez, for BM

Keywords: Endorsement, Appeal Abandoned, Costs


Ontario Review Board Decisions


Beam (Re), 2018 ONCA 532

[Lauwers, Benotto and Miller JJ.A.]

Counsel:

Stephen F Gehl, for the appellant, MB

Logan Crowell, for the respondent, Ontario Shores Centre for Mental Health Sciences

Justin Reid, for the respondent, Attorney General for Ontario

Keywords: Criminal Law, Assault, Assault with Weapon, Not Criminally Responsible, Mental Disorder, Threat to Public Safety, Re Wall, 2017 ONCA 713, Conditional Discharge


Gibson (Re), 2018 ONCA 533

[Lauwers, Benotto and Miller JJ.A.]

Counsel:

Stephen F Gehl, for the appellant, MG

Catherine Weiler, for the respondent, Attorney General for Ontario

Keywords: Criminal Law, Harassment, Not Criminally Responsible, Mental Disorder, Threat to Public Safety, Conditional Discharge



Criminal Decisions

R. v. George-Nurse, 2018 ONCA 515

[MacPherson, Hourigan and Miller JJ.A.]

Counsel:

D George-Nurse, appearing in person

Brian Snell, appearing as duty counsel

Deborah Calderwood, for the respondent

Keywords: Criminal Law, Intentionally Discharging Firearm, Criminal Code, s 244.2(1)(b), Possession of Firearm in Unauthorized Place, Criminal Code, s 94(1), Appeal, Evidence, Circumstantial Evidence, R. v. Villaroman, 2016 SCC 33, Failure to Testify


R. v. Pitamber, 2018 ONCA 518

[Lauwers, Pardu and Huscroft JJ.A.]

Counsel:

Gerald Chan, duty counsel

Leslie Paine, for the respondent

Keywords: Criminal Law, Sentencing, Pre-sentence Custody, No Contact Provision, R. v. Plante, 2018 ONCA 251, Fresh Evidence, Parity Principle


R. v. Biddle, 2018 ONCA 520

[Laskin, Sharpe and Fairburn JJ.A.]

Counsel:

Leo Adler, for the applicant/appellant

Jamie Klukach, for the respondent

Keywords: Criminal Law, Assault, Assault with Weapon, Assault Causing Bodily Harm, Fresh Evidence, Criminal Code, s 696.3(2), R. v. Dixon, [1998] 1 SCR 244


R. v. Boe, 2018 ONCA 531

[Lauwers, Pardu and Miller JJ.A.]

Counsel:

D Boe, appearing in person

Nader R Hasan, appearing as duty counsel

Ian Bell, for the respondent

Keywords: Criminal Law, Possession for Purposes of Trafficking, Possession of Prohibited Weapon, Reasonable and Probable Grounds, Informants


R. v. Hoad, 2018 ONCA 528

[Lauwers, Pardu and Miller JJ.A.]

Counsel:

BJR Hoad, in person

Kevin Wilson, for the respondent

Keywords: Criminal Law, Possession of Marijuana, Seizure and Detention of Property, Jurisdiction, Certiorari


R. v. Turrett, 2018 ONCA 529

[Lauwers, Pardu and Miller JJ.A.]

Counsel:

Gerald Chan, duty counsel

J Turrett, in person

Leslie Paine, for the respondent

Keywords: Criminal Law, Sentencing, Breach of Court Order

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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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 almost two decades of experience handling a wide variety of litigation matters. John assists clients with matters ranging from appeals, to injunctions, to corporate, breach of contract and other business litigation, to estates and matrimonial litigation, and to debtor-creditor and insolvency litigation. John also represents amateur sports organizations in contentious matters and advises them in matters of internal governance. John can be reached at 416-593-2953 or jpolyzogopoulos@blaney.com.