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Good evening.

Below are the civil decisions released by the Court of Appeal for Ontario this week.

In Alectra Utilities Corporation v. Solar Power Network Inc, the Court confirmed that where a contract contains an arbitration clause that expressly denies the possibility of appeal from the arbitral award, the arbitrator’s jurisdiction is not limited to findings that are reasonable or correct. In other words, the arbitrator has the right to be wrong, and being wrong does not mean that the arbitrator exceeded their jurisdiction.

In College of Optometrists of Ontario v. Essilor Group Inc, the Court addressed the scope of provincial legislative authority in respect of regulating out-of-province eyewear retailers. In interpreting the relevant statutes and regulations governing optometry and opticianry in Ontario, the Court concluded that Ontario’s regulatory scheme could not apply to out-of-province parties such as the appellant (which was based out of Quebec but was selling eyewear to Ontarians out of BC). The Court found that there was not a sufficient connection between the activity of the vendor and Ontario and set aside the application judge’s decision that had prohibited Essilor from selling eyewear into Ontario. The Court noted that applying the Ontario legislation to out-of-province suppliers would effectively sanction the creation of a monopoly over the importation of prescription eyewear into Ontario from other provinces. Perhaps the Supreme Court will take interest in this case, with its blend of issues of public importance – from the interprovincial sale of goods through ecommerce, to the protection of public health through regulated health professions, to the constitutional issue of the scope of provincial legislative jurisdiction.

Other topics covered this week included summary judgment in a breach of contract case, assessments of solicitors’ accounts, and wilful blindness in the context of a fraud claim.

Wishing everyone a safe and enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email


Table of Contents

Civil Decisions

College of Optometrists of Ontario v. Essilor Group Canada Inc., 2019 ONCA 265

Keywords: Commercial Law, Sale of Goods, Regulated Health Professions, Optometrists, Opticians, Constitutional Law, Inter-Provincial Trade and Commerce, Provincial Jurisdiction, Sufficient Connection, Statutory Interpretation, Regulated Health Professions Act, 1991, SO 1991, c 18, Optometry Act, 1991, SO 1991, c. 35, Opticianry Act, 1991, SO 1991, c 34, Health Professions Act, RSBC 1996, c. 183, Optometrists Regulation, BC Reg. 33/2009, Opticians Regulation, BC Reg 118/2010, Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, Wadden v. College of Opticians of Ontario, (2001) 207 DLR (4th) 72, (Ont CA)

Herman v. Goldman, Sloan, Nash and Haber LLP, 2019 ONCA 250

Keywords: Contracts, Solicitor and Client, Accounts for Services Rendered, Assessments, Special Circumstances

Wescom Solutions Inc. v. Minetto, 2019 ONCA 251

Keywords: Torts, Fraud, Knowing Receipt, Wilful Blindness, R. v. Malfara (2006), 211 O.A.C. 200 (CA), R. v. Sansregret, [1985] 1 SCR 570

Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254

Keywords: Contracts, Interpretation, Arbitration Agreements, Jurisdiction, Arbitration Act, 1991, S.O 1991, C 17, Mexico v. Cargill, Incorporated, 2011 ONCA 622, C.U.P.E. v. N.B. Liquor Corporation, [1979] 2 SCR 227

Vandenberg v. Wilken, 2019 ONCA 262

Keywords: Real Estate, Civil Procedure, Summary Judgment, Hryniak v. Mauldin, 2014 SCC 7, Butera v. Chown, Cairns LLP, 2017 ONCA 783

Crescent Hotels and Resorts Canada Company v. 2465855 Ontario Inc., 291 ONCA 268

Keywords: Contracts, Termination, Breach, Civil Procedure, Summary Judgment, Fact-Finding Powers, Rules of Civil Procedure, Rule 20.04(2.1), Hryniak v Mauldin, 2014 SCC 7, Guarantee Company of North America v Gordon Capital Corp., [1999] 3 SCR 423

Short Civil Decisions

Asghar v. Alon, 2019 ONCA 249

Keywords: Torts, Defamation

Saint Luke Lutheran Church v. McGregor, 2019 ONCA 261

Keywords: Civil Procedure, Capacity to Sue, Standing

Rivers v Waterloo Regional Police Services Board, 2019 ONCA 267

Keywords: Civil Procedure, Striking Pleadings, Jurisdiction, Police Services Act, RSO 1990, c. P.15, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929

Criminal Decisions

R. v. Imona-Russel, 2019 ONCA 252

Keywords: Criminal Law, Aggravated Sexual Assault, Sexual Assault, Assault with a Deadly Weapon, Assault Causing Bodily Harm, Right to a Fair Trial, R. v. Rowbotham, (1998) 25 O.A.C. 321, Rowbotham Application

R. v. Barry, 2019 ONCA 257

Keywords: Criminal Law, Theft, Victim Surcharge, R. v. Boudreault, 2018 SCC 58

R. v. Nurse, 2019 ONCA 260

Keywords: Criminal Law, First Degree Murder, Evidence, Admissibility, Hearsay, Exceptions to Hearsay Rule, Dying Declarations, R. v. Khelawon, 2006 SCC 57, R. v. Badgerow, 2014 ONCA 272, leave to appeal refused, [2014] S.C.C.A. No. 254, Canadian Charter of Rights and Freedoms, s. 24(2)

R. v. Campbell, 2019 ONCA 258

Keywords: Criminal Law, Impaired Driving Causing Death, Criminal Code, s. 255(3), Canadian Charter of Rights and Freedoms, ss. 7 and ss. 8, R. v. Graveline, 2006 SCC 16, R. v. Grant, 2009 SCC 32

R. v. Forrester, 2019 ONCA 255

Keywords: Criminal Law, Drug Trafficking, Evidence, Alibi, Controlled Drugs and Substances Act, S.C. 1996, c. 19, s. 5(1), R. v. Richards, 2017 ONCA 424

R. c. J.P.G., 2019 ONCA 256

Keywords: Droit Criminel, Criminal Law, Exploitation Sexuelle, Sexual Exploitation, Assistance Inefficace d’un avocat, Ineffective Assistance of Counsel, Droits Linguistiques, Language Rights, Code Criminel, Criminal Code, ss 153(1) and 530, Canadian Charter of Rights and Freedoms, Charte canadienne des droits et libertés, s 14, R. c. Beaulac, [1999] 1 R.C.S. 768

G. v. Ontario (Attorney General), 2019 ONCA 264

Keywords: Criminal Law, Sexual Assault, Sex Offender Registry, Defences, Not Criminally Responsible by Reason of Mental Disorder, Christopher’s Law (Sex Offender Registry), 2000, S.O. 2000, c. 1, Sex Offender Information Registration Act, S.C. 2004, c. 10, Canadian Charter of Rights and Freedoms, ss. 7 and ss. 15, R. v. Khawaja, 2012 SCC 69


CIVIL DECISIONS

College of Optometrists of Ontario v. Essilor Group Inc., 2019 ONCA 265

[Juriansz, Brown and Huscroft JJ.A.]

Counsel:

J. Lisus, H. Book and P. Underwood, for the appellant

L. Rothstein, J. Killey, and D. Rosenbluth, for the respondents

Keywords: Commercial Law, Sale of Goods, Regulated Health Professions, Optometrists, Opticians, Constitutional Law, Inter-Provincial Trade and Commerce, Provincial Jurisdiction, Sufficient Connection, Statutory Interpretation, Regulated Health Professions Act, 1991, SO 1991, c 18, Optometry Act, 1991, SO 1991, c. 35, Opticianry Act, 1991, SO 1991, c 34, Health Professions Act, RSBC 1996, c. 183, Optometrists Regulation, BC Reg. 33/2009, Opticians Regulation, BC Reg 118/2010, Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, Wadden v. College of Opticians of Ontario, (2001) 207 DLR (4th) 72, (Ont CA)

Facts:

In 2014, the appellant — a company with a Quebec head office and whose online business was conducted in British Columbia — acquired a company that sold contact lenses and eyeglasses online to Ontario customers. Shortly thereafter, the respondents wrote a joint letter to the appellant alleging that it was engaged in unlawful behaviour “by dispensing prescription eyewear through the Internet to Ontario consumers without involving an Ontario-licensed health care provider.” Discussions ensued amongst the parties, but no agreement was reached.

The respondents brought an application alleging the appellant breached s. 27 of the Regulated Health Professions Act, 1991 (“the RHPA”) by accepting orders for prescription eyewear online and shipping eyewear to patients in Ontario. The respondents sought a declaration that the appellant had breached s. 27, and an injunction prohibiting the appellant from engaging in such dispensing “except where the dispensing is performed by a Member [of the respondents] or a Member’s delegate”. The respondents did not file any evidence of specific harm to any of their members, instead relying on the presumption that if a person performs a controlled act in contravention of RHPA s. 27, harm to the public is presumed.

The application judge granted the declaration and injunction, making two key findings. First, he held that “[i]n substance [the appellant is] dispensing eyewear to those who require corrective lenses to assist with less than perfect vision”; and second, with respect to the applicability of provincial legislation to out-of-province defendants (such as the appellant), that a sufficient connection existed between Ontario and the appellant’s conduct to fall within the prohibition contained in s. 27 of the RHPA.

Issues:

(1) Did the application judge err in finding that the appellant performed the “controlled act” of “dispensing” in Ontario within the meaning of the RHPA?

(2) Did the application judge err in finding that a sufficient connection existed between appellant’s provision of eyewear and Ontario so as to bring it within the ambit of the RHPA?

Holding:

Appeal allowed.

REasoning:

(1) No. The Court began by detailing the exact nature of the appellant’s business model. Via the Ontario subsidiary that it acquired in 2013, the appellant’s online retail business was based in British Columbia and operated in accordance with British Columbia laws and regulations. Located in British Columbia were the subsidiary’s head office and management team, its lab, its distribution centre, and its warehouse. Where a customer in Ontario bought prescription eyewear online from the subsidiary, only two steps in the transaction touch upon Ontario: (i) the customer entered the order online from a device in Ontario; and (ii) the appellant’s subsidiary arranged for the delivery of the eyewear to the customer at a location in Ontario.

Next, the Court reviewed the regulatory scheme under which the appellant operated in British Columbia. Prior to 2010, the appellant’s subsidiary (hereafter referred to as “the appellant”) operated afoul of the provincial regulatory scheme, and in fact was prohibited by court order from selling or dispensing contact lenses online to individuals in British Columbia. In 2010, however, the British Columbia government amended the relevant legislation to permit persons who were not registered optometrists and opticians to dispense corrective eye glass lenses and contact lenses, as long as two main conditions were met. Importantly, those regulations specifically defined “dispense” as “design, prepare, fit, adjust, verify or supply”.

First, the person must possess either: a) a copy of a customer’s “authorizing document” for corrective eyeglasses, or a “contact lens record” for contact lenses; or (b) the information in an “authorizing document” or “contact lens record” accompanied by a statement from the customer certifying the existence and accuracy of the “authorizing document” or “contact lens record”. Second, the person dispensing the prescription would be allowed to rely on a prescription written by an optometrist or qualified medical practitioner outside of British Columbia.

The Court then observed that the structure of Ontario’s regulatory scheme was similar to that of British Columbia. Two statutes define the scope of optometry and opticianry: The Optometry Act and the Opticianry Act. The former defines optometry as “the assessment of the eye and vision system and the diagnosis, treatment and prevention of (a) disorders of refraction; (b) sensory and oculomotor disorders and dysfunctions of the eye and vision system; and (c) prescribed diseases”. The latter defines opticianry as “the provision, fitting and adjustment of subnormal vision devices, contact lenses or eye glasses”.

With respect to the RHPA, the Court noted that the concept of a “controlled act” in the RHPA operates to restrict the performance of specific health care acts to members of recognized professional health care bodies or their delegates. Specifically, s. 27 established the proscription against persons who are not members of the respondents from performing a “controlled act”. In contrast to British Columbia, the Ontario regulatory scheme did not define the term “dispense”.

Looking at the case law, the Court noted that in Wadden v. College of Opticians of Ontario it had previously interpreted “dispensing” in the Opticianry Act as meaning the preparation (but not fabrication), adaptation, and delivery of eye glasses. However, the Court cautioned that Wadden was decided before the rise of online purchasing, and accordingly, the Court’s discussion of “dispensing” then did not foresee the possibility of online purchases.

Looking next at the optometrists’ and opticians’ respective standards of practice, the Court noted that for the former, the only step requiring a patient’s personal attendance is the “fitting or adjusting the spectacles to the patient”. Similarly, the latter set of standards mandates that the delivery of the prescription eyewear be done in person. As the Court observed, it was this requirement that was the point of conflict between the parties.

Finally, the Court turned to the application judge’s reasons. First, it rejected the finding that placing an order constituted a “controlled act”, because it is performed by the customer and not the appellant. Since the prohibition in s.27 of the RHPA is directed at health care suppliers and not at customers, this action therefore could not be contrary to the RHPA. Relatedly, however, the Court rejected the appellant’s argument that selling eyewear and contact lens could be distinguished from “dispensing”, since as a matter of common experience, the dispensing of prescription eyewear involves the commercial sale of a product.

Second, the Court agreed with the application judge’s finding that delivery constituted a “controlled act”. Put simply, the transaction would remain incomplete until delivery was made, and the customer/patient would not obtain the benefit of the prescription until received. Thus, the Court upheld the finding that the appellant was performing a “controlled act”, but cautioned that this in itself was not sufficient to demonstrate that the appellant had violated the RHPA.

(2) Yes. The Court noted that this appeal raised the constitutional issue of whether the appellant’s connection to Ontario was sufficient to support the application of Ontario’s regulatory scheme to an out-of-province entity such as the appellant. While initial formulations of the principle of territorial legislative restriction focused on physical presence in a territory, later formulations put more focus on the relationships among the enacting territory, the subject matter of the law, and the person sought to be subjected to its regulation. The Court observed that there is no single standard defining what constitutes a sufficient connection; whether a sufficient connection exists depends largely on context. The territorial limits on the scope of the provincial legislative authority relate to the conduct that the provincial regulator can regulate, in this case the “controlled acts” under the RHPA.

The Court rejected both parties’ arguments regarding the degree of connection necessary to demonstrate a sufficient connection, noting that the Supreme Court’s judgment in Unifund Assurance Co. v. Insurance Corp. of British Columbia requires a qualitative analysis that does not simply look at the number of relevant acts. Reiterating that the application judge incorrectly concluded that an Ontario customer placing an online order constitutes part of a “controlled act”, the Court stressed that the RHPA was not simply legislation to regulate the nature and quality of health care services. As noted, it contained a strongly commercial aspect, and it was this aspect that predominated in respect of the appellant’s connection to Ontario. Relatedly, the application judge incorrectly characterized the 2010 amendments to British Columbia’s regulatory scheme as changing its purpose from protecting health care to enhancing competition and consumer choice; in actual fact, the evidentiary record did not disclose any shift in legislative purpose.

Given the above, and given that the appellant operated out of British Columbia in completing all of the relevant steps (except for delivery) necessary for compliance with the British Columbia regulatory regime (itself largely similar to the Ontario regime), the Court concluded that delivery in and of itself could not establish a sufficient connection upon which to apply the RHPA.

The Court then rejected the respondents’ argument that the appellant’s sole bricks-and-mortar store in Ontario was evidence of a sufficient connection insofar as the physical store funnelled customers into the online store to complete purchases via in-store computers. Noting that the physical stores required being referred to a registered optician before completing a purchase, the Court concluded that the appellant’s in-store regulatory-compliant transactions could establish the sufficient connection required to apply the RHPA.

Next, the Court assessed the respondents’ “sufficient connection by omission” argument, in which the respondents argued that because the British Columbia regulatory regime did not require the appellant to conduct any fitting or adjustment of the delivered product, the appellant ran afoul of the Ontario regime’s requirement for a fitting or adjustment of the delivery product and therefore established a sufficient connection to Ontario. The Court noted that this argument was based on the view that beyond simply asking whether there was a connection between Ontario and the steps the appellant actually performed, the sufficient connection analysis should also take into account the broader health protection purposes of the RHPA.

The Court rejected this argument, finding that it would essentially prohibit Ontarians from purchasing prescription eyewear online from another province, where the supplier has complied with that province’s regulatory regime, unless delivery of the product were channelled through an Ontario optometrist or optician. Applying the constitutional principle of territorial limits on the scope of provincial legislative authority in that way would in effect sanction the creation of a monopoly over the importation of prescription eyewear into Ontario from other provinces.

Lastly, the Court rejected other jurisprudence on which the application judge relied in reaching his decision. Reviewing several decisions briefly in turn, the Court distinguished each decision from the present appeal.

In view of all of the foregoing, the Court therefore concluded that although the appellant’s act of delivering orders to customers within Ontario constituted a “controlled act” under the RHPA, the RHPA did not apply because the mere act of delivery did not establish a sufficient connection between the appellant and Ontario. Rather, the mere act of delivery had primarily a commercial aspect, not a health care one.

Herman v. Goldman, Sloan, Nash and Haber LLP, 2019 ONCA 250

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

Counsel:

J. McReynolds, for the appellants

C. Kellowan, for the respondent

Keywords: Contracts, Solicitor and Client, Accounts for Services Rendered, Assessments, Special Circumstances

Facts:

The appellants were clients of the respondent law firm for a number of years. In early 2017, the appellants sought to assess 33 accounts on the basis that they were dissatisfied with the services provided and that they were overcharged. The appellants asserted that, notwithstanding that their application for assessment was commenced more than 12 months after the accounts were issued, there were special circumstances warranting the assessment because they had only received the accounts in 2016, as a package, together with a letter of demand. They also argued, as additional special circumstances, that they were unsophisticated, that the amount at issue was high, and that they had grown increasingly dissatisfied with the services provided by the respondent.

The application judge rejected the appellants’ arguments and concluded that there were no special circumstances that would justify an assessment of the subject accounts. In particular, she did not accept that they had not received any of accounts until 2016. She also noted that there was no evidence of the appellants having expressed dissatisfaction with the services when they were provided, and that the appellants, who were both lawyers and business people, were sophisticated and would have known to raise issues with the accounts at the time they were rendered.

Issues:

(1) Did the application judge err in rejecting the appellants’ claim that they had not received the respondents’ accounts at the time they were sent?

(2) Did the application judge err in failing to properly consider all of the special circumstances, and in particular the amount of money that was in dispute?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The Court noted that since this was a finding of fact, it therefore could only be reversed based on a palpable and overriding error by the application judge. The Court found no such error.

The application judge explained why she had reached this conclusion. The application judge rejected the appellants’ assertion that because the accounts contained an incomplete New York address, rather than the appellants’ home address, they must not have received them. She accepted that bills sent in 2016 were computer-generated, but that the original bills, which were produced in evidence, were primarily addressed to the appellants’ home address, in some cases to a Toronto business address, and an email address the appellants did not dispute was their own. The application judge concluded that the appellants’ blanket assertion they did not receive any bills sent to their home and email addresses did not have an air of reality.

The Court also disagreed that the application judge based her decision on the sheer volume of accounts. What was relevant was that the appellants denied having received any of the accounts, a position that the application judge found not to be credible in view of the fact that a large number of the original bills were addressed to their home and email addresses.

(2) No.  The Court was satisfied that the application judge considered all of the possible special circumstances, and that her reasons were responsive to the appellants’ arguments.

Wescom Solutions Inc. v. Minetto, 2019 ONCA 251

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

Counsel:

J. Russo and D. Milivojevic, for the appellants

J. Brown and M. Wright, for the respondent

Keywords: Torts, Fraud, Knowing Receipt, Wilful Blindness, R. v. Malfara (2006), 211 O.A.C. 200 (CA), R. v. Sansregret, [1985] 1 SCR 570

Facts:

The personal appellant was sued in relation to purchases of Apple computer products from another defendant at trial, in which it was alleged that he knew or was wilfully blind to the fraudulent means by which the other defendant obtained the products. The total value of the Apple products was $6.2 million. The personal appellant purchased them from the other defendant with cash, generally meeting in parking lots. The other defendant was the accounting manager of the respondent. In January 2011, she began purchasing the products through fraudulent use of the respondent’s corporate credit card. She then sold the products for her own personal gain.

The parties agreed on the issues to be determined at trial, and that agreement was reflected in a court order directing the trial of the following issues: (1) Whether the personal appellant knew or was willfully blind to the fact that he was purchasing stolen goods or goods fraudulently obtained; and (2) If the personal appellant in fact knew or was willfully blind, whether this applied to all the transactions or just transactions after a certain date.

The trial judge considered the nature and development of the sales relationship between the personal appellant and the other defendant. He divided the sales scheme into three temporal phases. The trial judge found the personal appellant was not wilfully blind during Stage 1, was wilfully blind during Stage 2, and had actual knowledge during Stage 3 that the products were stolen goods or were fraudulently obtained. He awarded damages to the respondent, plus interest, for the products purchased by the personal appellant during Stages 2 and 3.

Issues:

(1) Did the trial judge err by applying an objective standard to the appellants’ wilful blindness, rather than a subjective standard?

(2) Did the trial judge err in making credibility findings against the personal appellant?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The Court agreed with the appellants that the trial judge engaged in an objective analysis. Indeed, as part of his wilful blindness analysis, he stated that wilful blindness is made up of two components: a) In circumstances that arouse the suspicions of a reasonable and honest person that are strong or sufficient enough to raise a duty to inquire; and b) Whether someone in that person’s position chooses to remain deliberately ignorant to the knowledge that inquiry would reveal.

The respondent submitted that the objective analysis was appropriate because this was a “knowing receipt” case. It is true that knowing receipt can be proven not only by establishing actual knowledge or wilful blindness, but also by establishing “constructive knowledge” using objective criteria. However, in this case, the agreed issues for the trial judge were whether the personal appellant had actual knowledge or was willfully blind to the fact that he was purchasing stolen goods or goods fraudulently obtained by the other defendant. The trial judge was not asked to consider whether the personal appellant as a reasonable person would have been alerted to a potential breach of trust.

The Court found that the trial judge erred in law in his articulation of the concept of wilful blindness. As stated by the Court in R. v. Malfara, “Where wilful blindness is in issue, the question is not whether the accused should have been suspicious, but whether the accused was in fact suspicious.” In short, a finding of wilful blindness, which has the same elements in criminal and civil proceedings, involves a subjective focus on the workings of a defendant’s mind.

Nevertheless, the Court found that the trial judge did not err in concluding that the personal appellant was wilfully blind. It was clear from his reasons that the trial judge made findings of fact that established on a subjective standard that the personal appellant was wilfully blind. Those findings established that the personal appellant knew that the products were probably stolen or obtained by fraud, but that he made a deliberate choice not to investigate. This conduct met the definition of wilful blindness articulated in R. v. Sansregret, which arises when a “person who has become aware of the need for some inquiry declines to make the inquiry because he does not wish to know the truth.” Therefore, despite the trial judge’s error in defining wilful blindness, the Court rejected this ground of appeal.

(2) No. The Court was not persuaded that the trial judge erred in his credibility analysis. He made adverse credibility findings against the personal appellant during Stages 2 and 3. These findings were well rooted in the evidence, including the fact that the personal appellant asked the other defendant a second time in Stage 2 whether the products were legitimate while they were trading in a much higher volume, and the fact that the personal appellant saw invoices in Stage 3 that showed, among other things, that the respondent was purchasing the products at full retail price.

Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254

[Hourigan, Benotto and Huscroft JJ.A.]

Counsel:

S. Bieber and N. Read-Ellis, for the appellant

G. MacKenzie and B. MacKenzie, for the respondent

Keywords: Contracts, Interpretation, Arbitration Agreements, Jurisdiction, Arbitration Act, 1991, S.O 1991, C 17, Mexico v. Cargill, Incorporated, 2011 ONCA 622, C.U.P.E. v. N.B. Liquor Corporation, [1979] 2 SCR 227

Facts:

The parties entered into an agreement (the “Agreement”) in which the respondent was to finance solar power projects. The appellant was to develop and finance the projects. The appellant would apply for contracts from the Ontario government and would earn income by receiving revenue from construction and operational/maintenance services, in addition to a share of residual profits. The parties were awarded several contracts. The respondent offered to purchase the appellant’s interest, but no agreement was reached. The respondent issued a notice, purportedly exercising its discretion to end the Agreement. Delivery of the notice terminated the parties’ relationship, depriving the appellant of the contracts’ value. The appellant invoked the Agreement’s arbitration clause, challenging the respondent’s right to deliver notice and seeking damages for lost profit for alleged breach of contract. The respondent counterclaimed for amounts paid to the appellant.

The arbitrator found that although the respondent could deliver a notice “in its sole discretion” under the Agreement, that discretion had to be exercised in good faith. The respondent could not rely on the allegation that certain conditions precedent could not be satisfied, because it had not fulfilled its obligation to use commercially reasonable efforts to finalize the required documents. The arbitrator also found the respondent to be dishonest in its claim that the economic return was insufficient, as no attempt had been made to calculate the rate of return. Further, the respondent’s assertion that it did not wish to develop the projects was untrue in light of its ongoing negotiations to purchase the appellant’s interest.

The arbitrator rejected the respondent’s argument that the appellant was barred from claiming lost profits as damages. The Agreement required each party to indemnify the other with respect to breaches of covenants, but also provided that the indemnifier shall not be liable for damages for lost profit. The arbitrator found that the appellant’s claim was not for breach of a covenant – it was for improper exercise of the right to issue notice. The arbitrator concluded that he could award lost profits because the resolution process for indemnity claims under the Agreement was separate from the arbitration process, which contemplated the award of damages without regard to the more limited concept of damages that applied in the indemnity claims resolution process.

The appellant brought an application to enforce the arbitrator’s award. The respondent brought an application to set aside the award, relying in particular on s. 46(1)3 of the Arbitration Act, 1991. That subsection provides that a court may set aside an arbitration award if the award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.

The application judge noted that the Agreement provided that there was to be no appeal from the arbitrator’s decision. However, he described the issues raised on the application as jurisdictional and stated that interpretation of the Agreement was necessary in order to resolve them. The application judge considered the standard of review under s. 46(1)3. Although he was inclined to the view that the appropriate standard was reasonableness rather than correctness, he found it unnecessary to determine the matter because he would reach the same decision regardless.

The application judge found that the arbitrator did not exceed his jurisdiction in concluding that the Agreement imposed a duty of good faith on the respondent’s exercise of its discretion to issue a notice. The arbitrator was required to interpret the relevant provision in order to determine whether he had jurisdiction to hear the issue, and his interpretation was correct.

However, the application judge concluded that the arbitrator’s finding that he could award damages for loss of profits was unreasonable because it was based on two unreasonable findings. First, the arbitrator unreasonably found that the limitation on damages in s. 5.3(3) of the Agreement did not limit his authority to award damages set out in s.7.1. Second, the arbitrator unreasonably found that the claim for breach of the duty of good faith was not a breach of a covenant.

Issues:

(1) Did the application judge err by failing to appreciate the distinction between a narrow review on a true question of jurisdiction versus a broader review on the merits?

Holding:

Appeal allowed.

Reasoning:

(1) Yes. The Court began by noting that because the Agreement expressly excluded the possibility of appealing from the arbitrator’s award, the only basis for the respondent to challenge the award was under s. 46(1) of the Arbitration Act, 1991. In particular, the Court noted the applicability of subsection 46(1)3 to this appeal, which stipulates that a court may set aside an arbitral award if “the award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement”. In brief, the Court remarked that s. 46(1)3 requires arbitrators to act within the bounds of the authority granted by the agreement pursuant to which they are appointed. Section 46(1)3 is not an alternate appeal route.

Next, the Court remarked upon the difficulty that Canadian courts have faced in identifying jurisdictional questions, due in large part to how elastic the concept of “jurisdiction” is; indeed, this problem manifested in the context of the arbitral award in dispute here. In response to the respondent’s argument that the arbitrator had no jurisdiction to award damages for lost profits because his authority was limited by the terms of Agreement (which precluded liability for such damages), the Court observed that this line of reasoning would mean that any unreasonable or mistaken interpretation of an agreement could be characterized as resulting in an excess or loss of jurisdiction. On this approach, arbitration awards that are not subject to appeal would, nevertheless, be vulnerable to being set aside for jurisdictional error. This, however, is not the law in Ontario.

Turning to the application judge’s decision, the Court found that the application judge ignored the relevant provision of the Agreement that conferred a plenary jurisdiction on the arbitrator. Instead, the application judge took a much narrower view of the arbitrator’s jurisdiction as a result of emphasizing the wrong provisions of the Agreement. This led to the incorrect conclusion that an arbitration award that is not subject to appeal must be set aside because, in essence, the arbitrator had only the jurisdiction to make an award that was reasonable or correct. In fact, as a result of the provision in the Agreement which foreclosed the possibility of an appeal from the arbitral award, it was within the arbitrator’s jurisdiction to make an unreasonable or incorrect award. The arbitrator’s award was therefore enforced.

Vandenberg v. Wilken, 2019 ONCA 262

[Feldman, Pepall and Roberts JJ.A.]

Counsel:

M. A. Polvere, for the appellants

D. J. Kirwin, for the respondents

Keywords: Real Estate, Civil Procedure, Summary Judgment, Hryniak v. Mauldin, 2014 SCC 7, Butera v. Chown, Cairns LLP, 2017 ONCA 783

Facts:

The parties were involved in a failed real estate transaction that the appellants refused to close because of numerous allegations against the respondent purchasers. The respondents brought an action for specific performance of the sale of the appellants’ farm property, alternatively claiming damages for breach of the agreement. The respondents moved for summary judgment enforcing the agreement of purchase and sale and granting specific performance. Following service of the summary judgment motion, the appellants delivered a statement of defence and counterclaim, and issued a third party claim against the real estate agents – who represented both the appellants and the respondents on the transaction – claiming that the agents exerted undue pressure on the appellants and forced them to enter into the agreement, making it unconscionable.

The motion judge granted summary judgment declaring the agreement of purchase and sale valid, but denied the remedy of specific performance and ordered a trial regarding damages. The motion judge made a number of adverse findings of credibility against the appellants with respect to their interactions with the real estate agents. He also determined that the evidence did not “establish any prospect of a finding of an unconscionable transaction”, and “even if a court could find that the agents misrepresented the effect of signing back the counter-offer, the [appellants’] remedy l[ay] against the agents, not the innocent [respondents]”.

Issues:

(1) Did the motion judge err by granting partial summary judgment?

Holding:

Appeal allowed.

Reasoning:

(1) Yes. While the Court recognized that the motion judge was endeavouring to give effect to “the shift in culture” directed by the Supreme Court in Hryniak v. Mauldin, he nevertheless failed to fully to do what was fully required of him.

Specifically, the motion judge failed to consider whether, in granting partial summary judgment, there was a) a risk of duplicative or inconsistent findings at the trial of the counterclaim and third-party claim, and b) whether granting partial summary judgment was advisable in the context of the litigation as a whole. Referencing its prior decision in Butera v Chown, Cairns LLP, the Court observed that “A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.”

In this appeal, none of these factors were present. First, the issues were not readily bifurcated, as the appellants’ allegations of unconscionability were inextricably intertwined with (and therefore affected the determination of) the validity of the agreement. Moreover, the motion judge made numerous findings of credibility concerning the appellants and their relationship with their real estate agents that were the core of the counterclaim and third party claim. The motion judge’s findings would either constrain the trial judge or lead to the risk of inconsistent findings at trial.

Further, in the light of the appellants’ assertions of a disability that in part grounded their allegations of unconscionability, it was incumbent on the motion judge to consider whether in those circumstances, oral evidence was required to determine the issues of credibility on which the decision turned. Finally, the motion judge’s order did not result in the issues ultimately being dealt with in an expeditious and cost effective manner: the partial summary judgment did not dispose of the respondents’ damages claim, the counterclaim or the third party claim.

Crescent Hotels and Resorts Canada Company v. 2465855 Ontario Inc., 2019 ONCA 268

[Lauwers, Benotto and Brown JJ.A]

Counsel:

D. Woodfield, M. Karabus and H. Vettyvel, for the appellant

T. Pinos and C. Cohen, for the respondent

Keywords: Contracts, Termination, Breach, Civil Procedure, Summary Judgment, Fact-Finding Powers, Rules of Civil Procedure, Rule 20.04(2.1), Hryniak v Mauldin, 2014 SCC 7, Guarantee Company of North America v Gordon Capital Corp., [1999] 3 SCR 423

Facts:

The appellant (the “Owner”) owned a hotel and entered into a Hotel Management Agreement (the “Agreement”) with the respondent (the “Manager”) for a term of 10 years. One year later, the Owner terminated the Agreement, alleging that they had cause under the Agreement to do so. The Manager brought an action alleging that the Owner lacked cause to terminate the Agreement and was required to pay the Manager an early termination fee. The motion judge granted summary judgment in favour of the Manager.

Issues:

(1) Did the motion judge err in principle by weighing evidence without expressly invoking her evidence-assessment powers?

(2) Did the motion judge err in interpreting the phrase “in any material respect” in the Agreement?

(3) Did the motion judge err by accepting an unsubstantiated hearsay allegation in the Manager’s evidence regarding the temporary appointment of an interim manager?

(4) Did the motion judge err in failing to find the Manager breached the Agreement with respect to the appointment of a permanent general manager?

(5) Did the motion judge err in in failing to find that the Manager breached the budget-preparation provisions of the Agreement?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The motion judge should have acknowledged that she was utilizing her evidence assessment power but this was not an error in principle that would merit appellate intervention. The Owner argued that the motion judge erred in principle because, having stated that she was not exercising her evidence-assessment powers under r. 20.04(2.1) of the Rules of Civil Procedure, she in fact did so by writing in her reasons that she had weighed the evidence contained in the affidavits. The Court stated that under r. 20.04(2.1), in determining whether there is a genuine issue requiring a trial, a judge may exercise several evidence-assessment powers: weighing the evidence; evaluating the credibility of a deponent; and drawing any reasonable inference from the evidence. These powers are presumptively available to a motion judge; they are not exceptional; and they may be exercised provided their use is not against the interests of justice: Hryniak v Mauldin, 2014 SCC 7 at paras. 66 and 67.

The Court found that that where a judge weighs the evidence filed on a summary judgment motion the judge should acknowledge candidly that she is exercising her r. 20.04(2.1) powers and then go on the explain the basis for any resulting findings of fact. The reasons of the motion judge disclose she used these powers and the better course would have been for her to make such an acknowledgment.

(2) Yes. The motion judge misinterpreted the term “in any material respect” in the Agreement, but the Court found that a reading of the motion judge’s reasons as a whole led to the conclusion that the error did not affect her analysis regarding the breaches alleged by the Owner. Section 12.11(a) of the Agreement defined events of default as including the failure of a party to “perform, keep or fulfill a covenant…in any material respect”, and the continuance of such a failure for more than 30 days after receipt of notice was an event of default. The Owner submitted that the motion judge erred in interpreting “in any material respect” in the Agreement as requiring that a breach rise to the level of one that “goes to the root of the contract” in order for the Owner to assert it as an event of default. The motion judge held that material breach was one that is material, substantial and goes to the root of the contract per Guarantee Company of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, at para. 44. As applied to the covenants in the Agreement, it would be a breach that deprived the Owner of the entirety of all benefits of the contract or the very thing the parties contracted for.

The Court found that the motion judge’s contractual interpretation analysis ignored the very language of s. 12.11(a)(i) of the Agreement, which contemplated that a party could assert, as an event of default, the failure to perform a covenant, yet the defaulting party could cure the breach upon receipt of a notice of event of default. Breaches capable of being cured under s. 12.11(a)(i) therefore could include ones far less serious than a breach going to the root of the contract. However, after reviewing each of the alleged breaches, the motion judge concluded that the Owner had failed to prove any of the breaches. Since these findings were anchored firmly in the record and in the language of the Agreement, they were free from reversible error.

(3) No. The Court did not accept this ground of appeal. The Owner submitted that the motion judge erred by accepting an unsubstantiated hearsay allegation in the Manager’s evidence that the interim manager of the hotel appointed by the Manager during the first few months of the Agreement was not working in Canada illegally. The Owner alleged that the interim manager did not have the necessary working visa when she was in this position and relied on this as an event of default to terminate the Agreement.

The Court rejected this ground of appeal for two reasons. First, it found that the Owner’s affidavit did not disclose the source of the information supporting her assertion that she learned the interim manager never secured proper Canadian work documentation. In contrast, the Manager’s affidavit disclosed the source of his information that a representative of the Manager would have written to Canadian immigration authorities regarding the interim manager’s temporary employment. Secondly, when the Owner gave notice of default, there was no event of default left to cure because the interim manager’s tenure had ended four months earlier.

(4) No. The Court found that the motion judge’s findings were supported by the record. The Owner submitted that the motion judge erred in failing to find that the Manager breached the Agreement in appointing a general manager who they alleged was unqualified for the position. The Court rejected this, concluding that the motion judge’s finding that it was the Owner’s final decision to hire the general manager was fully supported by the record and clearly showed the Owner approved of the hiring. Secondly, the Owner contended that the Manager failed to fire the general manager in a timely manner, but the Court found that the evidence did not support that assertion. The Manager accepted the Owner’s insistence that the general manager be fired within the 30-day cure period.

(5) No. The Court found no error in the motion judge’s finding that the Owner approved the 2016 budget. On cross-examination, the Owner’s representative clearly admitted that the 2016 budget was ultimately approved. Furthermore, by the terms of the Agreement the Owner could not rely on its own refusal to approve the Plan as an event of default to terminate the Agreement.


SHORT CIVIL DECISIONS

Asghar v. Alon, 2019 ONCA 249

[Lauwers, Brown and Benotto JJ.A.]

Counsel:

S. Asghar, in person

I. MacKinnon, for the respondent

Keywords: Torts, Defamation

Saint Luke Lutheran Church v. McGregor, 2019 ONCA 261

[Lauwers, Benotto and Brown JJ.A.]

Counsel:

P. Ghosh, for the appellant

J. Griffiths, for the respondents

Keywords: Civil Procedure, Capacity to Sue, Standing

Rivers v Waterloo Regional Police Services Board, 2019 ONCA 267

[Simmons, Juriansz and Miller JJ.A.]

Counsel:

R. D. Elliott and H. S. Fairley, for the appellants

E. Mamay and E. S. C. Cheng, for the appellants

J. H. Bennett, for the respondent Waterloo Regional Police Services Board

C. Jones, for the respondent Waterloo Regional Police Association

J. Martin and G. Hawe, for the respondent Waterloo Regional Police Association

Keywords: Civil Procedure, Striking Pleadings, Jurisdiction, Police Services Act, RSO 1990, c. P.15, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929


CRIMINAL DECISIONS

R. v. Imona-Russel, 2019 ONCA 252

[Lauwers, Pardu and Paciocco JJ.A]

Counsel:

W. Imona-Russel, self-represented

L. Paine, for the respondent

Keywords: Criminal Law, Aggravated Sexual Assault, Sexual Assault, Assault with a Deadly Weapon, Assault Causing Bodily Harm, Right to a Fair Trial, R. v. Rowbotham, (1998) 25 O.A.C. 321, Rowbotham Application

R. v. Barry, 2019 ONCA 257

[Hoy A.C.J.O., Doherty and Zarnett JJ.A.]

Counsel:

E. Hilzenrat, for the appellant

C. Suter, for the respondent

Keywords: Criminal Law, Theft, Victim Surcharge, R. v. Boudreault, 2018 SCC 58

R. v. Nurse, 2019 ONCA 260

[Doherty, Brown and Trotter JJ.A.]

Counsel:

C. Verner, for the appellant Marlon Nurse

D. Doucette and A. Furgiuele, for the appellant Darryl Plummer

R. Schwartz and M. Flanagan, for the respondent

Keywords: Criminal Law, First Degree Murder, Evidence, Admissibility, Hearsay, Exceptions to Hearsay Rule, Dying Declarations, R. v. Khelawon, 2006 SCC 57, R. v. Badgerow, 2014 ONCA 272, leave to appeal refused, [2014] S.C.C.A. No. 254, Canadian Charter of Rights and Freedoms, s. 24(2)

R. v. Campbell, 2019 ONCA 258

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

Counsel:

S. Magotiaux, for the appellant

I. B. Kasper, for the respondent

Keywords: Criminal Law, Impaired Driving Causing Death, Criminal Code, s. 255(3), Canadian Charter of Rights and Freedoms, ss. 7 and ss. 8, R. v. Graveline, 2006 SCC 16, R. v. Grant, 2009 SCC 32

R. v. Forrester, 2019 ONCA 255

[Strathy C.J.O., Rouleau and Miller JJ.A.]

Counsel:

S. Alexander Taraniuk, for the appellant

B. G. Puddington, for the respondent

Keywords: Criminal Law, Drug Trafficking, Evidence, Alibi, Controlled Drugs and Substances Act, S.C. 1996, c. 19, s. 5(1), R. v. Richards, 2017 ONCA 424

R. c. J.P.G., 2019 ONCA 256

[La juge en chef adjointe Hoy, les juges Rouleau et Roberts]

Counsel:

D. Parry, pour l’appelant

P. G. Cowle, pour l’intimée

Keywords: Droit Criminel, Criminal Law, Exploitation Sexuelle, Sexual Exploitation, Assistance Inefficace d’un avocat, Ineffective Assistance of Counsel, Droits Linguistiques, Language Rights, Code Criminel, Criminal Code, ss 153(1) and 530, Canadian Charter of Rights and Freedoms, Charte canadienne des droits et libertés, s 14, R. c. Beaulac, [1999] 1 R.C.S. 768

G. v. Ontario (Attorney General), 2019 ONCA 264

[Doherty, van Rensburg and Hourigan JJ.A.]

Counsel:

M. A. Swadron, S. M. Latimer and J. Weiss, for the appellant

S. Z. Green, for the respondent, Attorney General for Ontario

R. Lee and A. Law, for the respondent, Attorney General for Canada

C. Zwibel and R. De Luca, for the intervener, Canadian Civil Liberties Association

A. Szigeti and Andrew Menchynski, for the intervener, Empowerment Council

E. Dann, for the intervener, Criminal Lawyers Association

Keywords: Criminal Law, Sexual Assault, Sex Offender Registry, Defences, Not Criminally Responsible by Reason of Mental Disorder, Christopher’s Law (Sex Offender Registry), 2000, S.O. 2000, c. 1, Sex Offender Information Registration Act, S.C. 2004, c. 10, Canadian Charter of Rights and Freedoms, ss. 7 and ss. 15, R. v. Khawaja, 2012 SCC 69

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, construction, environmental contamination, product liability, debtor-creditor, insolvency and other business litigation. He also handles professional discipline and professional negligence matters, as well as complex estates and matrimonial litigation. In addition, John 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.