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Good morning.

Please find our summaries of last week’s civil decision of the Court of Appeal for Ontario.

In Curriculum Services Canada/Services Des Programmes D’Études Canada (Re), the Court confirmed that once a trustee in bankruptcy disclaims a lease, the landlord is limited to its preferred claim for three months’ accelerated rent, as per the Bankruptcy and Insolvency Act. The landlord was permitted to claim the unpaid balance of its preferred claim as an unsecured creditor, but was not entitled to assert a claim for unpaid tenant inducements that became payable under the lease only upon termination of the lease.
Other cases covered last week included the interpretation of releases, the test for rectification and a pleadings motion in respect of breach of contract and other claims relating to the construction of the athlete’s village for the 2015 PanAm Games in Toronto..
Wishing you all a pleasant week ahead.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Narwal International Limited v. O.M.V. Investments Limited, 2020 ONCA 268

Keywords: Torts, Conspiracy, Fraudulent Misrepresentation, Contracts, Real Property, Commercial Leases, Civil Procedure, Summary Judgment, Striking Pleadings, Abuse of Process, Costs

Wardlaw v. Wardlaw, 2020 ONCA 286

Keywords: Family Law, Civil Procedure, Appeals, Extension of Time, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131

2484234 Ontario Inc v Hanley Park Developments Inc., 2020 ONCA 273

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Equitable Remedies, Rectification, Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56, Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, Dynamic Transport Ltd v O.K. Detailing Ltd, [1978] 2 SCR 1072

Lum v College of Physiotherapists of Ontario, 2020 ONCA 271

Keywords: Civil Procedure, Appeals

The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership, 2020 ONCA 272

Keywords: Contracts, Interpretation, Unjust Enrichment, Quantum Meruit, Real Property, Construction, Tendering, Crown Liability, Torts, Misrepresentations, Breach of Fiduciary Duty, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action, Limitation Periods, Proceedings Against the Crown Act, R.S.O. 1990, c. P.27, s. 2(2)(b), Rules of Civil Procedure, Rule 21.01(1)(b), Ceballos v. DCL International Inc., 2018 ONCA 49, Brozmanova v. Tarshis, 2018 ONCA 523, Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59, Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, Klassen v. Beausoleil, 2019 ONCA 407, Paradis Honey Ltd. v. Canada (Minister of Agriculture and Agri-Food), 2015 FCA 89, Design Services Ltd. v. R., 2008 SCC 22, Martel Building Ltd. v. R., 2000 SCC 60

Curriculum Services Canada/Services Des Programmes D’Études Canada (Re), 2020 ONCA 267

Keywords: Bankruptcy and Insolvency, Real Property, Commercial Tenancies, Commercial Leases, Disclaiming of Lease by Trustee in Bankruptcy, Claims Provable in Bankruptcy, Priority, Preferred Claims, Landlords, Three Months’ Accelerated Rent, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, Bankruptcy Act, R.S.C. 1952, c. 14, Commercial Tenancies Act, R.S.O. 1990, c. L.7, Companies’ Creditors Arrangements Act, R.S.C. 1985, c. C-36, Landlord and Tenant Act, R.S.O. 1927, c. 190, Winding-Up Act, R.S.C. 1927, c. 213, Re Mussens Ltd., [1933] O.W.N. 459 (H.C.), Highway Properties Ltd. v. Kelly, Douglas & Co. Ltd., [1971] S.C.R. 562, Crystalline Investments Ltd. v. Domgroup Ltd., 2004 SCC 3, [2004] 1 S.C.R. 60, Re Gingras Automobile Ltée., [1962] S.C.R. 676, Re Linens ‘N Things Canada Corp. (2009), 53 C.B.R. (5th) 232 (Ont. S.C.), Cummer-Yonge Investments Ltd. v. Fagot et al. (1965), 50 D.L.R. (2d) 25 (Ont. H.C.), Hill v. East & West India Dock Co. (1884), 9 App. Cas. 448 (H.L.), Re Salok Hotel Co. Ltd. (1967), 66 D.L.R. (2d) 5 (Man. Q.B.), aff’d on other grounds (1967), 66 D.L.R. (2d) 5 (Man. C.A.), Titan Warehouse Club Inc. (Trustee of) v. Glenview Corp. (1988), 67 C.B.R. (N.S.) 204 (Ont. H.C.), aff’d 75 C.B.R. (N.S.) 206 (Ont. C.A.), Peat Marwick Thorne Inc. v. Natco Trading Corporation (1995), 22 O.R. (3d) 727 (Gen. Div.), 885676 Ontario Ltd. (Trustee of) v. Frasmet Holdings Ltd. (1993), 99 D.L.R. (4th) 1 (Ont. Gen. Div.), Andy & Phil Investments Ltd. v. Craig (1991), 5 O.R. (3d) 656 (Gen. Div.), Sifton Properties Limited v. Dodson (1994), 28 C.B.R. (3d) 151 (Ont. Gen. Div.), Transco Mills Ltd. v. Percan Enterprises Ltd. (1993), 100 D.L.R. (4th) 359 (B.C.C.A.), Re Vrablik (1993), 17 C.B.R. (3d) 152 (Ont. Gen. Div.), Re TNG Acquisition Inc., 2011 ONCA 535, Century Services Inc. v. Canada (Attorney General), 2010 SCC 60

IAP Claimant H-15019 v. Wallbridge, 2020 ONCA 270

Keywords: Contracts, Interpretation, Settlements, Releases, Torts, Solicitors’ Negligence, Civil Procedure, Striking Pleadings, Frivolous and Vexatious, Abuse of Process, Indian Residential Schools Settlement, Rules of Civil Procedure, Rule 21.01(3)(d), Fontaine v. Canada (Attorney General), 2017 ONSC 2487, Biancaniello v. DMCT LLP, 2017 ONCA 386, Van Patter v. Tillsonburg District Memorial Hospital (1999), 45 O.R. (3d) 223 (C.A.); Owen v. Zosky, [2000] O.J. 4838 (C.A.); Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108

Criminal Decisions

R. v. W., 2020 ONCA 269

Keywords: Criminal Law, Drug Trafficking, Evidence, Unreasonable Search and Seizure, Canadian Charter of Rights and Freedoms, ss. 8 & 24(2), R. v. Lising, 2005 SCC 66, R. v. Grant, [1993] 3 S.C.R. 223, R. v. Waterfield [1963] 3 All E.R. 659, R. v. Chehil, 2013 SCC 49, R. v. MacKenzie, 2013 SCC 50, R. v. Wong, 2017 BCSC 306, R. v. A.M., 2008 SCC 19, R. v. Tessling, 2004 SCC 67, R. v. Le, 2019 SCC 34, R. v. Patrick, 2009 SCC 17, R. v. Plant, [1993] 3 S.C.R. 281, R. v. Collins, [1987] 1 S.C.R. 265, R. v. Grant, 2009 SCC 32, R. v. Flintroy, 2019 BCSC 213

R. v. G., 2020 ONCA 274

Keywords: Criminal Law, Murder, Evidence, Admissibility, Expert Evidence, Jury Instructions, Reasonable Apprehension of Bias, Sentencing, R. v. Gager, 2012 ONSC 388, R. v. Abbey, 2009 ONCA 624, R. v. Mohan, [1994] 2 S.C.R. 9, Imeson v. Maryvale (Maryvale Adolescent and Family Services), 2018 ONCA 888, R. v. Mills, 2019 ONCA 940, R. v. L.K., 2011 ONSC 2562, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, R. v. Calnen, 2019 SCC 6, R. v. Jacquard, [1997] 1 S.C.R. 314, R. v. Lavallee, [1990] 1 S.C.R. 852, R. v. S.A.B., 2003 SCC 60, R. v. White, [1998] 2 S.C.R. 72, R. v. Arcangioli, [1994] 1 S.C.R. 129, R. v. Gager, 2012 ONSC 2712, R. v. Chiasson, 2009 ONCA 789, R. v. Jeanvenne, 2010 ONCA 706, R. v. Dixon, [1998] 1 S.C.R. 244, R. v. McNeil, 2009 SCC 3, R. v. Jackson, 2015 ONCA 832, R. v. Pittiman, 2006 SCC 9, R. v. Shafia, 2016 ONCA 812, Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), 2015 SCC 25, Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 S.C.R. 369, Groia v. Law Society of Upper Canada, 2018 SCC 27, R. v. Shropshire, [1995] 4 S.C.R. 227

R. v. J., 2020 ONCA 280

Keywords: Criminal Law, Sexual Assault, Bail, COVID-19, Criminal Code, s. 679(3)(c), R. v. Oland, 2017 SCC 17, R. v. Morales, [1992] 3 S.C.R. 711, R. v. Fleming, [2015] O.J. No. 4380 (S.C.J.), R. v. Sotomayor, 2014 ONSC 500, R. v. Omitiran, 2020 ONCA 261, R. v. Kazman, 2020 ONCA 251

R. v. S., 2020 ONCA 285

Keywords: Criminal Law, Attempted Murder, Discharging a Firearm, Bail, COVID-19, Criminal Code, ss. 239(1)(a), 244(2)(a), 515(10)(b), 679(3), 684(1), R. v. Daniel Stojanovski and Darko Stojanovski, 2018 ONSC 4243, R. v. Oland, 2017 SCC 17, R. v. Morales, [1992] 3 S.C.R. 711, R. v. Jesso, 2020 ONCA 280, R. v. Saleh, 2019 ONCA 819, R. v. Araya, 2015 SCC 11, R. v. Omitiran, 2020 ONCA 261, R. v. Kazman, 2020 ONCA 251, R. v. Paramsothy, 2020 ONSC 2314

R. v. V., 2020 ONCA 275

Keywords: Criminal Law, First Degree Murder, Fresh Evidence, Youth Criminal Justice Act, S.C. 2002, c. 1, Palmer v. The Queen, [1981] S.C.R. 759, Truscott (Re), 2007 ONCA 575, R. v. F. (W.J.), [1999] 3 S.C.R. 569, R. v. Bradshaw, 2017 SCC 35, R. v. Khelawon, 2006 SCC 57, R. v. Blackman, 2008 SCC 37

R. v. D., 2020 ONCA 278

Keywords: Aggravated Assault, Sentencing

R. v. S., 2020 ONCA 276

Keywords: Breach of Probation, Sentencing, Jump Principle, Assault, Assault with a Weapon, Uttering Threats

 

Ontario Review Board Decisions

Anderson (Re), 2020 ONCA 277

Keywords: Detention Order, Cannabis, Least Restrictive Conditions, Re Sheikh, 2019, ONCA 2019


CIVIL DECISIONS

Narwal International Limited v. O.M.V. Investments Limited, 2020 ONCA 268

[Gillese, Brown and Huscroft JJ.A.]

Counsel:

M. Chapurny, for the appellant

A. Casalinuovo and V. Yee, for the respondents O.M.V. Investments Limited, AE and VE

A. Flesias, for the respondents AutoTrax Tire & Lube Inc., F.C. and LP

Keywords: Torts, Conspiracy, Fraudulent Misrepresentation, Contracts, Real Property, Commercial Leases, Civil Procedure, Summary Judgment, Striking Pleadings, Abuse of Process, Costs

facts:

The appellant, a commercial tenant in a property once owned by the respondent O.M.V., commenced an action against O.M.V. and its principals, and another tenant in the property, the respondent Autotrax and its principals. The action involved claims for breach of contract and various torts in connection with its business.
The respondent O.M.V. and its principals brought a motion for summary judgment and, in the alternative, a motion to strike the action for being an abuse of process. The motion judge found that the issues in the claim were substantially the same as in two small claims actions the appellant had commenced against the respondents, and concluded that issuance of this third action was an abuse of process. He dismissed the action against the respondents. In addition, the motion judge found that the appellant’s claims of conspiracy and fraudulent misrepresentation were “wholly unsubstantiated”. He ordered the appellant to pay costs on a substantial indemnity basis.

issues:

1. Did the motion judge err in concluding that the issues were the same?
2. Did the motion judge err in turning a motion for partial summary judgment motion into a motion for full summary judgment?
3. Did the motion judge err in concluding that the claims of conspiracy and fraudulent misrepresentation were wholly unsubstantiated?
4. Did the motion judge err in awarding substantial indemnity costs?

holding:

Appeal dismissed.

reasoning:

1. No. The motion judge reviewed the pleadings in all three actions and found that the parties were the same and that the claims arose out of issues related to the appellant’s tenancy.
2. No. Although the respondent O.M.V. brought a motion for partial summary judgment, in the alternative it sought to have the appellant’s claim struck as an abuse of process and was successful in doing so. The motion judge did not decide the partial summary judgment application.
3. No. The motion judge made no error in concluding that the claims were wholly unsubstantiated.
4. No. Given that the appeal failed, there was no basis to review the motion judge’s costs order. The appellant was required to seek leave to appeal the motion judge’s costs order and did not do so. The Court would not have granted leave to appeal in any event. The motion judge made no error in awarding costs on a substantial indemnity basis given his findings about the conspiracy and fraudulent misrepresentation claims.


Wardlaw v. Wardlaw, 2020 ONCA 286

[Roberts J.A.]

Counsel:

JW, appearing in person

J. Goldberg, amicus curiae

E. Iacobelli, for the respondent

Keywords: Family Law, Civil Procedure, Appeals, Extension of Time, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131

facts:

The appellant JW appeals both a motion judge’s order (“Motion Appeal”) and a trial judge’s order (“Trial Appeal”). She filed the Motion Appeal in a timely manner but was 43 days’ late filing the Trial Appeal. JW moves for an extension of time to file the Trial Appeal.

issues:

Is it just to grant the motion for an extension of time to file the Trial Appeal?

holding:

Motion dismissed.

reasoning:

No. The appellant clearly had the requisite intention to appeal during the relevant period and adequately explained her delay. There was no evidence of prejudice to the respondent from the delay. However, the Court found that the appellant’s proposed appeal did not have sufficient merit. A lack of merit alone can justify refusing the request (Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131). The appellant failed to raise any arguable issues of reversible error.


2484234 Ontario Inc v. Hanley Park Developments Inc., 2020 ONCA 273

[Tulloch, van Rensburg, and Zarnett JJA]

Counsel:

RP Quance, for the appellant

HJ Alpert and VX, for the respondent

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Equitable Remedies, Rectification, Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56, Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, Dynamic Transport Ltd v O.K. Detailing Ltd, [1978] 2 SCR 1072

facts:

On February 8, 2017, the appellant, 2484234 Ontario Inc. entered into an Agreement of Purchase and Sale (the “February Agreement”) with the respondent, Hanley Park Developments Inc. The February Agreement provided for the appellant to purchase certain lands (the “Development Lands”) from the respondent located in the City of Belleville (the “City”). The respondent had obtained conditional approval of a Draft Plan of Subdivision contemplating 258 residential dwelling units on the Development Lands.

One of the conditions of approval of the Draft Plan of Subdivision was that there be an access road to connect the proposed subdivision on the Development Lands to an existing road which, at the time, ended before it reached the border of the Development Lands. To meet that condition, a road (the “Access Road”) had to be built across a neighbouring property (the “Adjacent Property”) to connect the Development Lands to an existing road.

The respondent owned the Adjacent Property. The Adjacent Property was not included in the lands to be conveyed by the respondent under the February Agreement. Shortly before the February Agreement’s scheduled closing date of March 9, 2017, there were dealings between the parties concerning the Access Road.

On March 6, 2017, it became known to both parties that access to four parts of the Adjacent Property were required for the Access Road. On March 7, 2017, the appellant’s lawyer wrote to the respondent’s lawyer asking if the respondent would be agreeable to selling the Adjacent Property on terms whereby the respondent would have an option to purchase back, for $1.00, “those certain lands of the Adjacent Property which are not required for the Access Road.” The respondent’s lawyer wrote back to the appellant’s lawyer stating that the respondent was not prepared sell the entire Adjacent Property. However, the respondent was prepared to transfer and grant an easement over a portion of the Adjacent Property, on certain conditions, to permit the construction of the Access Road.

On March 9, 2017, the appellant and respondent entered into a formal agreement relating to a transfer and easement over part of the Adjacent Property (the “Transfer Agreement”). The Transfer Agreement referred to Parts 1, 2, 3 and 4 on a draft reference plan that was attached, and defined these parts as the “Property”. It then provided for a number of things to occur in respect of obtaining a severance of those parts from the Adjacent Property.

On March 9, 2017, pursuant to the Transfer Agreement, the respondent granted the appellant a formal easement over Parts 1, 2, 3 and 4 for the construction of a roadway. However, at some point prior to September 9, 2018, the appellant discovered that Part 5 of the Adjacent Property was also required for the Access Road. Upon cross examination, the respondent’s representative conceded he was always aware that without Part 5, Parts 1 to 4 of the Adjacent Property were not sufficient for the Access Road.

On August 27, 2018, pursuant to an alternative option provided for in the Transfer Agreement, the appellant elected that, instead of a severance, the lands that were the subject of the Transfer Agreement should be transferred to the City. On August 30, 2018, the appellant’s lawyer sent an email to the respondent’s lawyer advising that she had sent him a transfer document to effect this transfer. The respondent’s lawyer reviewed the transfer document and discovered that it included Parts 1 to 5 of the Adjacent Property, even though Part 5 was not referenced in the definition of Property in the Transfer Agreement. The respondent objected to this transfer document because of the inclusion of Part 5.

After the respondent refused to execute a transfer document which included Part 5, the appellant, on September 7, 2018, provided a transfer document for the respondent’s execution in favour of the City for Parts 1, 2, 3 and 4. It was not executed, as the respondent took the position that it was entitled to seven business days to sign. The respondent then took the position that the Transfer Agreement became null and void on September 10, 2018, in the absence of a consent to a severance or a transfer to the City having occurred by September 9, 2018.

The appellant commenced an application seeking the equitable remedy of rectification of the Transfer Agreement to include Part 5 and seeking specific performance of the Transfer Agreement, as rectified.

The application was dismissed. The application judge held that the appellant’s claim did not meet parts (iii) and (vi) of the six-part test for rectification applicable to a case of unilateral mistake set out by the Supreme Court of Canada (SCC) in Canada (Attorney General) v Fairmont Hotels Inc:
(i) The parties had reached a prior agreement whose terms are definite and ascertainable;
(ii) The agreement was still effective when the instrument was executed;
(iii) The instrument fails to record accurately that prior agreement; and
(iv) If rectified as proposed, the instrument would carry out the agreement.
(v) The party resisting rectification knew or ought to have known about the mistake; and
(vi) Permitting that party to take advantage of the mistake would amount to ‘fraud or the equivalent of fraud’.

Furthermore, the application judge concluded that the appellant was disentitled to equitable relief because it had not come with “clean hands” by breaching multiple clauses of the Transfer Agreement.

issues:

(1) Did the application judge err in finding that the appellant did not meet part (iii) of the test for rectification?
(2) Did the application judge err in finding that the appellant did not meet part (iv) of the test for rectification?
(3) Did the application judge err in finding that the appellant had “unclean hands” by breaching the Transfer Agreement?

holding:

Appeal allowed.

reasoning:

(1) Yes. Part (iii) of the Fairmont rectification test requires comparing the prior agreement referred to in parts (i) and (ii) of the test with the instrument to be rectified in part (iii) of the test. Although the application judge was clearly satisfied that there was a prior agreement under parts (i) and (ii) of the Fairmont rectification test, she did not expressly identify where the terms of the antecedent agreement were found nor comprehensively describe their content. In the Court’s view, the only document that the application judge could have been referring to as containing the terms of the antecedent agreement, was the letter from the respondent’s lawyer of March 7.

Based on that premise, the Court found that the application judge did not advert to the actual text of the antecedent agreement or identify or apply the appropriate contractual interpretive principles from Sattva Capital Corp v Creston Moly Corp. As a result, her interpretation was not subject to deference by the Court.

While the Court found that the application judge erred by considering the irrelevant subjective intention of the respondent only to convey Parts 1, 2, 3, and 4, the more serious error was her failure to analyze the words that did appear in the letter of March 7 in light of the factual matrix. Specifically, the application judge found that it was the appellant’s understanding, based on the project engineer’s report, that Parts 1 – 4 were “sufficient” for the Access Road that would connect the proposed subdivision on the Development Lands to an existing road to comply with the Draft Plan of Subdivision. Similarly, the easement over these four parts was understood by the appellant as all that was required to achieve the goal of connecting the Access Road to the existing road. On that basis of those findings, the application judge determined that there had been no prior agreement to convey Part 5, and therefore dismissed the application. The application judge’s failure to examine the objective facts known to the parties at the time, including the genesis and aim of the transaction, informed her incorrect conclusion that the Part 5 lands were never discussed or part of the antecedent agreement, and therefore part (iii) of the Fairmont test was not satisfied.

The correct interpretation was that the respondent had promised to convey Parts 1 to 4 on the basis that they were “sufficient” to achieve the goal of connecting the Access Road from the Development Lands to the existing road. The respondent knew they were not sufficient, and that Part 5 was also required. The respondent was therefore obligated to do what was necessary to make them sufficient, which was in its power to do, namely, to include Part 5. The circumstances for implying a term about Part 5 were undoubtedly present. With Part 5, the agreement had business efficacy; without it, the agreement did not. The Court used the “officious bystander test” to conclude that it was obvious that Part 5 would be included if the Parts specified as “sufficient” were not in fact sufficient. The inclusion of Part 5 was an implied term of the parties’ true agreement and the SCC in Dynamic Transport Ltd v O.K. Detailing Ltd allowed for the inclusion of implied terms.

It therefore followed that the Transfer Agreement did not accurately record the parties’ prior agreement of March 7 because it did not include the provisions of the antecedent agreement about Parts 1 to 4 being sufficient according to advice from the project engineer to the respondent, or about the easement facilitating the development of the subdivision—terms which put the risk about such matters on the respondent. Nor did it include the implied term necessary to give the prior agreement business efficacy. This variation between the antecedent agreement and the Transfer Agreement was material to the Court.
Accordingly, the Court was satisfied that rectification was available to add Part 5 to the Transfer Agreement for two reasons:
(i) An obligation about Part 5, as something necessary to the fulfilment of the terms agreed to about sufficiency for the Access Road, was part of the parties’ true agreement and was not filling in something that existed only in the extra-contractual and speculative netherworld of inchoate or unexpressed aspirations; and
(ii) Adding Part 5 was faithful to the way the parties chose to move from the language of the prior agreement—which identified Parts and described their sufficiency—to the Transfer Agreement, which described Parts only without added description as to their functionality regarding the Access Road.

(2) Yes. The Court found that part (vi) of the rectification test was met in these circumstances because the respondent was aware that the lands could only be sufficient with Part 5. Parts 1 to 4 were insufficient if Part 5 was not included. The respondent was aware that the formal Transfer Agreement only referred to Parts 1 to 4. In the Court’s view, the respondent’s explanation for its behaviour, a concern that the appellant might not close the purchase of the Development Lands unless it thought it was getting what it needed for the Access Road, accentuated rather than attenuated the unfair and unconscionable nature of the respondent’s conduct, which was to lead, or knowingly allow, the appellant to think it was getting what it needed.

(3) Yes. The application judge’s finding that the appellant had breached three clauses of the Transfer Agreement, and therefore had “unclean hands”, was premised on an unreasonable reading of the terms of the Transfer Agreement.
First, the Court found that the appellant did not breach Clause 7 because it was entitled, as an alternative to obtaining consent to a severance, to require the respondent to make the transfer to the City. It elected to do so, obtained the City’s consent to a transfer, and provided the respondent with a transfer document to sign to that effect.
Second, the appellant did not breach Clause 3 rendering the Transfer Agreement null and void because the requirement for 7 days to sign was in respect of severance-related documents and specified the time after which the appellant could sign the documents on the respondent’s behalf. It did not apply to documents that were designed to effect the alternative to severance (a transfer to the City).

Finally, the appellant did not breach Clause 5 because the Transfer Agreement required the municipal services to be restored following the severance and construction of the new Access Road, not before the severance. Even though there was to be a transfer to the City rather than a severance, the Access Road was not expected or required to have been constructed before the transfer even occurred. The time for restoring the municipal services had clearly not arrived.


Lum v College of Physiotherapists of Ontario, 2020 ONCA 271

[Gillese, Brown and Huscroft JJA]

Counsel:

L-M. L. acting in person

Joanna Birenbaum for the responding party College of Physiotherapists of Ontario

Kate Deakon for the responding party Unity Health Toronto

Elizabeth Ackman and Sean McGarry for the responding party College of Physical Therapists of British Columbia

Keywords: Civil Procedure, Appeals

facts:

In April 2018, L brought two motions to the court against the defendants for harm she allegedly suffered as a result of “whistleblowing.” In August 2019, Justice Dunphy dismissed the whistleblowing action and barred L from bringing any further proceedings without leave of the Superior Court. In fall of 2019, L attempted to appeal the Dunphy order to the Divisional Court. She was granted an order in September 2019 and had it subsequently revised. She wanted to make oral submissions to amend the order but was refused. By endorsement in October 2910, Corbett J ruled that he had signed L’s order and it had been issued and entered by the Divisional Court back in September 2019 and was settled. L wanted this order set aside, and Tulloch JA dismissed the motion, saying it was for the Divisional Court. L brought the two motions before the court asking that the Tulloch order be dismissed and asking for the requirement to file a copy of the Corbett order to be dismissed.

issues:

The issue is whether Tulloch JA erred in determining that the correct appeal route for L was to a panel of the Divisional Court and not to the Court of Appeal.

holding:

Motions dismissed.

reasoning:

No. An appeal from a single judge of the Divisional Court lies to a panel of the Divisional Court, not the Court of Appeal. Additionally, appeals from interlocutory orders are directed to the Divisional Court.


The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership , 2020 ONCA 272

[Doherty, Brown and Thorburn JJ.A.]

Counsel:

David Moore and Kenneth G.G. Jones, for the appellant

Mark A. Gelowitz and Kevin O’Brien, for the respondents, Dundee Kilmer Developments Limited Partnership, Dundee Realty Corporation, KD Infrastructure L.P., Kilmer Van Nostrand Co. Limited, Infrastructure Ontario and Ontario Infrastructure and Lands Corporation (Formerly Ontario Infrastructure Projects Corporation)

Christopher P. Thompson, for the respondent, Her Majesty the Queen in Right of Ontario

Keywords: Contracts, Interpretation, Unjust Enrichment, Quantum Meruit, Real Property, Construction, Tendering, Crown Liability, Torts, Misrepresentations, Breach of Fiduciary Duty, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action, Limitation Periods, Proceedings Against the Crown Act, R.S.O. 1990, c. P.27, s. 2(2)(b), Rules of Civil Procedure, Rule 21.01(1)(b), Ceballos v. DCL International Inc., 2018 ONCA 49, Brozmanova v. Tarshis, 2018 ONCA 523, Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59, Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, Klassen v. Beausoleil, 2019 ONCA 407, Paradis Honey Ltd. v. Canada (Minister of Agriculture and Agri-Food), 2015 FCA 89, Design Services Ltd. v. R., 2008 SCC 22, Martel Building Ltd. v. R., 2000 SCC 60

facts:

The events underlying this action took place almost a decade ago, in 2011. Since this proceeding’s inception in late 2013, it has progressed no further than a series of challenges to the adequacy of the plaintiff’s pleading. This appeal is from part of the most recent order, made in 2016, that struck out some of the plaintiff’s claims.

The action concerns a dispute about whether the plaintiff, The Catalyst Capital Group Inc. (“Catalyst”), could participate in the financing and development of the Athletes’ Village for the 2015 Toronto Pan/ParaPan American Games (the “Project”). Catalyst pleads that in 2011 it struck a deal to participate in the financing of the Project with a group of the defendants, which it styles as DKD: Dundee Kilmer Developments Limited Partnership, Kilmer Van Nostrand Co. Limited, Dundee Realty Corporation, KD Infrastructure L.P., and John Doe Corporations Partnerships. Catalyst alleges that DKD broke that deal and it seeks significant damages against DKD.

As well, Catalyst seeks significant damages against two Ontario government actors, the Ontario Infrastructure and Lands Corporation/Infrastructure Ontario (collectively “IO”), as well as against the Ontario Crown. IO was responsible for procuring and approving bids for the design, construction, finance, and post-games marketing of the Project. Catalyst alleges that IO made material misrepresentations to it and, together with the Crown, acted tortiously by excluding it from participating in the Project. The damages sought by Catalyst against DKD, IO, and the Crown exceed $110 million. Catalyst commenced two actions (now consolidated) in November 2013 and January 2014: the first against DKD and IO; the second against the Crown. The ensuing six years have seen two separate challenges by the defendants to the adequacy of Catalyst’s statements of claim pursuant to Rule 21.01(1)(b) of the Rules of Civil Procedure. At this point, no statements of defence have been filed.

In disposing of the second challenge in 2016, the motion judge found parts of the pleading adequate, struck out some parts with leave to amend, and struck out other parts without leave to amend. The Divisional Court dismissed Catalyst’s motion for leave to appeal from the part of the motion judge’s order striking out certain claims with leave to amend. This appeal only concerns the part of the motion judge’s order that struck out five of the claims without leave to amend.

issues:

(1) Did the motion judge err in law by adopting too narrow an interpretation of s. 29 of the Funding Term Sheet?
(2) Did the motion judge err in holding that Catalyst failed to plead the required element of an undertaking in support of an ad hoc fiduciary duty?
(3) Did the motion judge err in striking Catalyst’s claims against DKD for unjust enrichment and quantum meruit on the basis that they were statute-barred under the Limitations Act, 2002?
(4) Did the motion judge err in striking out Catalyst’s claims against IO and the Crown for unjust enrichment and quantum meruit?
(5) Did the motion judge err by improperly analogizing Catalyst’s claims to those in Design Services Ltd. v. R., 2008 SCC 22, and Martel Building Ltd. v. R., 2000 SCC 60?
(6) Did the motion judge err in striking out the misrepresentation claim against the Crown because it is conceivable that at trial it could be found that liability for the Governmental Representations could attach to the Crown, but not to IO, thereby bringing the case outside the scope of s. 2(2)(b) of PACA?

holding:

Appeal allowed, in part.

reasoning:

(1) Yes. The court found that when the s. 29 contractual obligation of DKD to negotiate in good faith is read in the context of an oral agreement between the parties, it is not plain and obvious that the interpretation of s. 29 proffered by Catalyst has no reasonable prospect of success. DKD failed to meet the very high burden required to strike out that claim. The court found that the motion judge erred in concluding otherwise, and restored that part of the pleading.

(2) Yes. The court found that a review of Catalyst’s Amended Claim reveals that it substantively pleaded all three elements required to establish the existence of an ad hoc fiduciary relationship. While Catalyst did not use the word “undertaking” to describe DKD’s relationship with it, the Amended Claim essentially pleads that DKD undertook to act in the best interests of Catalyst and forsake the interests of all others in favour of those of Catalyst.

(3) Yes. The motion judge held that the Original Claim against DKD and IO had not pleaded substantially all of the material facts on which the claims of unjust enrichment and quantum meruit were based. That led him to conclude that the Amended Claim asserted new causes of action well beyond the two-year limitation period. The court found that in its Original Claim against DKD and IO, Catalyst pleaded the material facts to support all three elements of unjust enrichment. The required generous reading of the Original Claim against DKD and IO discloses that the claims for unjust enrichment and quantum meruit advanced in the Amended Claim are not new causes of action but, rather, claims for additional forms of relief based on the same facts as originally pleaded. The motion judge erred in striking these claims as statute-barred.

(4) No. Catalyst’s Original Claim against DKD and IO and Original Claim against the Crown failed to plead that either IO or the Crown benefitted from the financial model Catalyst provided to DKD or that Catalyst’s actions provided any economic benefit to IO or the Crown. Consequently, in its Amended Claim, Catalyst is advancing new causes of action, not additional forms of relief on the same facts originally pleaded. The court found that the motion judge correctly held that the claims for unjust enrichment and quantum meruit against IO and the Crown were statute-barred.

(5) No. The court found that the facts pleaded in the present case do not concern the exercise by Ontario government actors of discretionary powers within a regulatory regime. Catalyst’s Amended Claim is devoid of any allegation of the breach of a statutory duty or discretionary power. Instead, the factual context of Catalyst’s claim concerns the process to select the Project’s developer. That process was set out in the RFP, which IO issued as agent for the Crown: RFP, s. 1.1(1). The RFP operated as a “Contract A” in the tendering process framework adopted by the Supreme Court in a series of cases starting with R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] 1 S.C.R. 111.

The Supreme Court has not been prepared to recognize a tort duty of care by an owner to a proponent in the context of a tendering process, in part because the rights and obligations in the Contract A would inform any duty in any event: Martel, at para. 106. In Design Services, the court was not prepared to recognize a duty of care between an owner and the subcontractor of a proponent who had failed in its bid: at paras. 57-58 and 65-67. Recognizing Catalyst’s public law claim as a reasonable cause of action would run counter to both those decisions. The court concluded that the motion judge did not err in striking out Catalyst’s public law claim, without leave to amend, on the ground that that it is plain and obvious that Catalyst’s public law claim would not succeed.

(6) No. The court found that since IO is an agent of the Crown – Ontario Infrastructure and Lands Corporation Act, 2011, s. 3(1) – liability in respect of the misrepresentation cause of action would be “enforceable against a corporation or other agency of the Crown”, thereby bringing the claim pleaded against the Crown squarely within the immunity afforded by PACA s. 2(2)(b): Toronto (City) v. Longbranch Child Care, 2011 ONSC 548, at para. 44.7.


Curriculum Services Canada/Services Des Programmes D’Études Canada (Re), 2020 ONCA 267

[Hoy A.C.J.O., van Rensburg and Roberts JJ.A.]

Counsel:

Catherine Francis, for the appellant

Alex Ilchenko and Monty Dhaliwal, for the respondent

Keywords: Bankruptcy and Insolvency, Real Property, Commercial Tenancies, Commercial Leases, Disclaiming of Lease by Trustee in Bankruptcy, Claims Provable in Bankruptcy, Priority, Preferred Claims, Landlords, Three Months’ Accelerated Rent, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, Bankruptcy Act, R.S.C. 1952, c. 14, Commercial Tenancies Act, R.S.O. 1990, c. L.7, Companies’ Creditors Arrangements Act, R.S.C. 1985, c. C-36, Landlord and Tenant Act, R.S.O. 1927, c. 190, Winding-Up Act, R.S.C. 1927, c. 213, Re Mussens Ltd., [1933] O.W.N. 459 (H.C.), Highway Properties Ltd. v. Kelly, Douglas & Co. Ltd., [1971] S.C.R. 562, Crystalline Investments Ltd. v. Domgroup Ltd., 2004 SCC 3, [2004] 1 S.C.R. 60, Re Gingras Automobile Ltée., [1962] S.C.R. 676, Re Linens ‘N Things Canada Corp. (2009), 53 C.B.R. (5th) 232 (Ont. S.C.), Cummer-Yonge Investments Ltd. v. Fagot et al. (1965), 50 D.L.R. (2d) 25 (Ont. H.C.), Hill v. East & West India Dock Co. (1884), 9 App. Cas. 448 (H.L.), Re Salok Hotel Co. Ltd. (1967), 66 D.L.R. (2d) 5 (Man. Q.B.), aff’d on other grounds (1967), 66 D.L.R. (2d) 5 (Man. C.A.), Titan Warehouse Club Inc. (Trustee of) v. Glenview Corp. (1988), 67 C.B.R. (N.S.) 204 (Ont. H.C.), aff’d 75 C.B.R. (N.S.) 206 (Ont. C.A.), Peat Marwick Thorne Inc. v. Natco Trading Corporation (1995), 22 O.R. (3d) 727 (Gen. Div.), 885676 Ontario Ltd. (Trustee of) v. Frasmet Holdings Ltd. (1993), 99 D.L.R. (4th) 1 (Ont. Gen. Div.), Andy & Phil Investments Ltd. v. Craig (1991), 5 O.R. (3d) 656 (Gen. Div.), Sifton Properties Limited v. Dodson (1994), 28 C.B.R. (3d) 151 (Ont. Gen. Div.), Transco Mills Ltd. v. Percan Enterprises Ltd. (1993), 100 D.L.R. (4th) 359 (B.C.C.A.), Re Vrablik (1993), 17 C.B.R. (3d) 152 (Ont. Gen. Div.), Re TNG Acquisition Inc., 2011 ONCA 535, Century Services Inc. v. Canada (Attorney General), 2010 SCC 60

facts:

The Landlord and Tenant were parties to a ten year and six month term lease dated May 26, 2017 (the “Lease”). On March 29, 2018, and without being in default of its obligations under the Lease, Curriculum made an assignment in bankruptcy. RSM Canada Inc. was appointed trustee. The Trustee occupied the leased premises and paid occupation rent of $25,698.31 to the Landlord. On April 20, 2018, the Landlord filed a Proof of Claim in the bankruptcy. The Landlord claimed $100,558.59 as a preferred claim for three months’ accelerated rent, in accordance with the priority of claims prescribed by s. 136(1)(f) of the Bankruptcy and Insolvency Act (“BIA”). Because the realization of property on the leased premises yielded an amount that was less than the preferred claim ($24,571), the Landlord asserted its right to claim the balance of the unrecovered preferred claim ($75,987.59) as an unsecured creditor.

The Landlord also advanced an unsecured claim in the amount of $4,028,111.23. This represented its claim for rent payable for the balance of the unexpired portion of the term of the Lease, together with amounts for tenant inducements consisting of leasehold improvements provided at the Landlord’s cost under the Lease and free rent for a six-month period. In asserting its rights, the Landlord relied on the Tenant’s obligation under the Lease to make certain payments on bankruptcy, including on termination or disclaimer of the Lease.

Section 16.1 of the Lease provides for events of default, including the bankruptcy of the Tenant. It also provides for the Landlord’s remedies, including: the payment of three months’ accelerated rent; the right to terminate the Lease (with the right to obtain damages for the Landlord’s deficiency for the balance of the term); and upon any termination, including disclaimer, payment of the value of the unpaid amount of any tenant inducements calculated over the unexpired term of the Lease.
On April 23, 2018, the Trustee issued a Notice of Disclaimer of the Lease. Following the disclaimer, the Landlord found a new tenant for the leased premises, effectively mitigating its claim for future rent. On September 19, 2018, the Trustee issued a Notice of Partial Disallowance of Claim, allowing only the Landlord’s preferred claim in the amount of $24,571 (limited to the actual value of the property on the leased premises), and disallowing the Landlord’s unsecured claims.

The Landlord appealed the disallowance of its unsecured claim to the Superior Court of Justice. It confined its appeal to its claims under s. 16.1 of the Lease for tenant inducements in the amount of $203,442.37, including leasehold improvements and free rent, and the balance of the three months’ accelerated rent of $50,289.285, for a total unsecured claim of $253,731.65.

issues:

(1) Is the Landlord entitled to assert a claim for unpaid tenant inducements under the Lease as an unsecured creditor in Curriculum’s bankruptcy?
(2) Is the Landlord entitled to assert the balance of its preferred claim for three months’ accelerated rent as an unsecured creditor in Curriculum’s bankruptcy?

holding:

Appeal allowed in part.

reasoning:

(1) No. The Landlord argued that it should be entitled to claim in Curriculum’s bankruptcy for unpaid tenant inducements under the Lease in the same way that other unsecured creditors can assert claims for contractual damages. The Landlord argued that the principle in Re Mussens was overruled by the Supreme Court’s decision in Crystalline Investments. The Landlord relied on the principle in Highway Properties that a lease creates both an interest in land and gives rise to contractual rights, and its recognition of a landlord’s right to accept a tenant’s termination of a lease and to sue for damages for its breach. The Landlord argued that there was nothing in the BIA or the Commercial Tenancies Act (“CTA”) preventing a landlord from filing an unsecured claim for damages in the estate of a bankrupt tenant, nor was there any principled reason why a landlord should be treated differently from other creditors in a bankruptcy. The Court reviewed the case law and the way that this statutory authority has been interpreted by the courts, and ultimately rejected the landlord’s arguments.

The Court first discussed Crystalline Investments. In Crystalline Investments, the court overturned the principle in Cummer-Yonge Investments that a trustee’s disclaimer can release a guarantor from its obligations under the lease. However, Crystalline Investments did not address, and left intact, the rule articulated in Re Mussens and later cases, that on disclaimer of a commercial lease by its trustee, an Ontario landlord has no claim against a bankrupt tenant arising out of the disclaimer for damages in respect of the unexpired term of the lease; the landlord has only what is specifically provided for – namely, its preferred claim for three months’ accelerated rent.

(a) The principle stated in Re Mussens
The court’s interpretation in Re Mussens of the relevant statutory provisions, and whether they permit a landlord to make a claim for damages for the surrender or disclaimer of the lease in the tenant’s bankruptcy proceedings, was relevant to the present analysis. The Court agreed with the principle that the silence in the Ontario legislation on the question of compensation meant that, after a disclaimer, the landlord had no claim for damages against the tenant in relation to the ending of the lease, and was limited to what it was specifically afforded by the statute. The Court therefore found that Re Mussens stands for the principle that, under Ontario law, the trustee of a bankrupt tenant is permitted by statute to bring an end to the lease and all future obligations of the tenant thereunder, by surrendering possession of the leased premises or disclaiming the lease within three months of the bankruptcy. This principle has been referred to in subsequent cases and in articles and texts dealing with bankruptcy and insolvency and commercial leases.

(b) Crystalline Investments changed the law in Ontario, but not in the way the Landlord contends
The Court rejected the Landlord’s argument that recent cases, including Crystalline Investments, specifically overruled the Re Mussens line of cases, such that a disclaimer does not bring an end to all obligations under the lease.
Re Mussens was applied in a number of cases as authority that, upon disclaimer by a trustee, all obligations in connection with a lease come to an end, not just those of the tenant. In particular, courts have relied on the statement in Re Mussens equating a disclaimer with a mutual surrender of a lease to conclude that the obligations of assignors and guarantors also come to an end with the disclaimer of a lease. The leading case in Ontario articulating this conclusion was Cummer-Yonge Investments. The Court in Cummer-Yonge Investments concluded that on bankruptcy, all of the tenants’ rights and obligations under the lease irrevocably pass to the trustee and “when the trustee subsequently disclaimed that interest, all the rights and obligations which he inherited from the bankrupt were wholly at an end”. For this reason, the guarantee was inoperative. Thereafter there could be no covenants in the lease which the lessee was required to perform, so that the guarantee of the “due performance by the lessee of all its covenants in the lease” was thereupon extinguished.

In Transco Mills Ltd. v. Percan Enterprises Ltd., the British Columbia Court of Appeal concluded that the disclaimer of two assigned leases by an assignee’s trustee in bankruptcy did not end the assignors’ obligations to their landlords. In that case, the assignor tenants made the argument accepted in Cummer-Yonge Investments – that a disclaimer had the same effect as a mutual surrender of a lease, with the result that the obligations of any third party, such as an assignor, would be eliminated. Taylor J.A. observed that, by contrast to the U.K. legislation, there was no statutory or other basis in B.C. for equating the disclaimer of a lease by a trustee to a surrender. As a result, he held that the trustee’s disclaimer did not end the leases for all purposes and that the assignor tenants remained liable for the bankrupt assignee’s failure to pay rent. Ultimately, this approach was followed by the court in Crystalline Investments, which sought to distinguish Cummer-Yonge Investments. The court’s decision in Crystalline Investments was ultimately upheld by the Supreme Court which, in obiter, overruled the Cummer-Yonge Investments holding.

In Crystalline Investments, Carthy J.A., writing for the Court of Appeal, referred to and approved of the reasoning of the British Columbia Court of Appeal in Transco Mills. He also purported to distinguish Cummer-Yonge Investments, on the basis of the difference between a guarantor of obligations under a lease and one who has primary obligations. In this case, the assignor had signed “as principal and not as surety”. The Supreme Court upheld the decision of the court. However, rather than attempting to distinguish the Cummer-Yonge Investments line of cases, Major J., writing for the Supreme Court, examined the issue based on first principles. He concluded that, absent a contractual release from the landlord, the original tenant as assignor under the lease would remain liable on the covenant to the landlord, notwithstanding the insolvency of the assignee and any consequent repudiation of the lease. Major J. observed that, while s. 65.2 focusses on bilateral relationships, such as a simple lease between a landlord and a tenant, the effect of the repudiation does not change in a tripartite arrangement resulting from the assignment of a lease: “In both situations the repudiation must be construed as benefiting only the insolvent”. He observed that “[t]he plain purposes of the section are to free an insolvent from the obligations under a commercial lease that have become too onerous, to compensate the landlord for the early determination of the lease, and to allow the insolvent to resume viable operations as best it can”, and that “[n]othing in s. 65.2, or any part of the Act, protects third parties (i.e. guarantors, assignors or others) from the consequences of an insolvent’s repudiation of a commercial lease”. Major J. specifically rejected the argument that, unless a repudiation under s. 65.2 terminated a lease for all purposes, an assignor’s common law indemnification right against the original tenant could frustrate the BIA. Major J. noted that in such circumstances, the assignor would simply join the other unsecured creditors in the proceedings.

Finally, Major J. confirmed that the same analysis should apply to the Cummer-Yonge Investments facts: “Post-disclaimer, assignors and guarantors ought to be treated the same with respect to liability. The disclaimer alone should not relieve either from their contractual obligations”. Major J. observed that Cummer-Yonge Investments had created uncertainty in leasing and bankruptcy, as drafters of leases attempted to circumvent its holding by playing upon the primary and secondary obligation distinction, and courts performed “tortuous distinctions” in order to reimpose liability on guarantors.

In the present case, the bankruptcy judge concluded, after her own review of Crystalline Investments, that neither the ratio decidendi nor the obiter dicta of that case (overturning Cummer-Yonge Investments) addressed whether a landlord can claim unsecured damages in the bankruptcy proceedings of its tenant upon the disclaimer of a lease by the trustee in bankruptcy. The Court agreed with her analysis and conclusion. In Re Mussens the court equated the legal effect of a trustee’s statutory right of disclaimer to a “mutual surrender” of the lease. Subsequent decisions, invoking that characterization, have reasoned that certain third-party obligations that are linked to the lease come to an end when the lease is disclaimed by the trustee. Although Re Mussens used the language of “mutual surrender”, Taylor J.A. appears to reject that characterization in Transco Mills. In Crystalline Investments, the Supreme Court did not address the issue. Whether or not a disclaimer should be characterized as a mutual surrender, both Re Mussens and Transco Mills are consistent in their treatment of the legal effect of a disclaimer on the obligations of a bankrupt tenant. The key underlying principle that emerges from Crystalline Investments is that the disclaimer of a lease by the tenant’s trustee benefits only the insolvent party.

(c) Highway Properties does not provide a basis for the Landlord’s claim for tenant inducements under the Lease
The Court then addressed the Landlord’s argument based on Highway Properties. The Court explained that the argument that Highway Properties alters the principle stated in Re Mussens, and affords additional remedies to a landlord post-disclaimer, has been rejected in other cases, “and for good reason.” The Court held that Highway Properties recognized that a lease is also a contract, and provided for a landlord’s “fourth option” after a tenant’s repudiation, that of accepting the repudiation, and suing for prospective damages. The case, however, did not address a situation of bankruptcy or insolvency. It also did not change the legal effect of a disclaimer or alter the principle in Re Mussens. The remedies for a tenant’s repudiation do not apply once a trustee has disclaimed the lease. The Court ultimately found that the Landlord’s argument failed to recognize the fundamental distinction between a disclaimer and a repudiation of a lease.

On bankruptcy, the Lease vested in the Trustee and was subject to the various rights and remedies prescribed by the legislation. There was no termination of the Lease that preceded the bankruptcy, and the Landlord’s claim for damages for the loss of the Lease was therefore precluded.

It was suggested that the Landlord’s claim for tenant inducements might be considered an existing or accrued claim because the Landlord seeks to recover money it has already spent (in the nature of a loan to the Tenant) and not damages for the loss of the Lease. The Court found that there was no merit to this argument. The Landlord’s claim is not for the value of the tenant inducements accrued up to the time of bankruptcy. The Landlord has already recovered such amounts in the rental payments it received. The claim is for the value of tenant inducements calculated for the remaining term of the Lease. The entitlement to recoup an amount for tenant inducements arises under the Lease and only “if [the] Lease is terminated due to the default of Tenant, or if it is disclaimed, repudiated or terminated in any insolvency proceedings”. It is a remedy for default, including bankruptcy or disclaimer. In other words, the Landlord had no right to recover such amounts prior to the bankruptcy, when the Lease was immediately vested in the Trustee.

The statutory claim is provided in place or in lieu of any ongoing rights a landlord might have against the tenant under its lease. In Ontario, the landlord has a right to claim for three months’ accelerated rent. While the right can only be exercised if the lease provides for it, the right is one prescribed by statute and does not assume the continued existence or enforceability of the lease.

The Court ultimately rejected the Landlord’s assertion that Curriculum’s bankruptcy and the disclaimer were each events of default under s. 16.1 of the Lease, triggering the rights and remedies provided thereunder. The Court found that the Landlord’s rights and remedies in this case were determined by statute and not by the terms of the Lease. The remedies provided under the Lease for default – even those specifically applicable in bankruptcy or upon disclaimer – simply were not available once the Lease was disclaimed.

(d) The harmonization argument
Finally, the Court addressed the Landlord’s argument that the relevant statutory provisions should be interpreted harmoniously with those that apply to a reorganization under the Companies’ Creditors Arrangements Act, R.S.C. 1985, c. C-36 (the “CCAA”). The Landlord relied on the Supreme Court decision in Century Services Inc. v. Canada (Attorney General), 2010 SCC 60. The Court rejected this argument, finding nothing in Century Services assisted the Landlord in the present appeal. The Landlord’s “harmonization” argument, advocating for the identical treatment of the disclaimer provisions, had no merit where Landlord claims are expressly treated differently in a BIA proposal, under the CCAA and in a bankruptcy.
The Court found that while the CCAA contains provisions that permit the disclaimer of any agreement to which the company is a party, including leases, and specifically provides for a provable claim by a party suffering a loss in relation to the disclaimer, there is no comparable provision that applies to leases disclaimed by a trustee on bankruptcy.
The Court held that the fact that the three insolvency regimes all permit disclaimer but provide for different remedies represents a policy choice by Parliament. In such circumstances, there was no scope for applying the “harmonization” principle, or reading the different provisions as providing for the same remedy. Such an interpretation would render the legislator’s deliberate choice irrelevant.

(2) Yes, the Landlord was entitled to a preferred claim for three months’ accelerated rent. However, the priority of its preferred claim was subject to higher ranking priorities and, under s. 136(1)(f) of the BIA, was limited to the realization from the property on the leased premises. As noted above, the Trustee realized only $24,571 from the sale of the property on the premises leased by Curriculum. In consequence, the Trustee allowed the Landlord’s preferred claim for $24,571, but disallowed the balance.

The Landlord was entitled to rank as an unsecured creditor for the unpaid balance of its preferred claim. This is the plain effect of s. 136(3) of the BIA. See also Re Gingras Automobile Ltée., [1962] S.C.R. 676, at p. 680, where Abbott J., writing for the court, held that the combined effect of the relevant provisions under the Bankruptcy Act, R.S.C. 1952, c. 14 is that a landlord is only entitled to rank as an unsecured creditor for any balance to which it may be entitled under provincial law. Under s. 38 of the CTA, a landlord is entitled to a preferred claim for three months’ accelerated rent.

The Court ultimately concluded that the Trustee ought to have permitted the Landlord to claim the balance of its preferred claim for three months’ accelerated rent ($50,289.28) as an unsecured creditor.


IAP Claimant H-15019 v. Wallbridge , 2020 ONCA 270

[Simmons, Pepall and Trotter JJ.A.]

Counsel:

Geoffrey D.E. Adair, Q.C., for the appellants

W. Cory Wanless, for the respondent

Catherine A. Coughlan, for the Attorney General of Canada

Keywords: Contracts, Interpretation, Settlements, Releases, Torts, Solicitors’ Negligence, Civil Procedure, Striking Pleadings, Frivolous and Vexatious, Abuse of Process, Indian Residential Schools Settlement, Rules of Civil Procedure, Rule 21.01(3)(d), Fontaine v. Canada (Attorney General), 2017 ONSC 2487, Biancaniello v. DMCT LLP, 2017 ONCA 386, Van Patter v. Tillsonburg District Memorial Hospital (1999), 45 O.R. (3d) 223 (C.A.); Owen v. Zosky, [2000] O.J. 4838 (C.A.); Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108

facts:

This is an appeal from the decision of the motion judge dismissing the appellants’ motion to strike or dismiss the respondent’s action against them as frivolous and vexatious and an abuse of process under Rule 21.01(3)(d) of the Rules of Civil Procedure.
The respondent is a member of Fort Albany First Nation and a survivor of St. Anne’s Indian Residential School (“St. Anne’s”). He is also a class member of one of the Indian Residential Schools Survivors’ Class Actions that was settled subject to court approval by the Indian Residential Schools Settlement Agreement (the “IRSSA”). The IRSSA was approved by court order dated December 15, 2006 (the “Settlement Approval Order”). Among other things, the IRSSA established the Independent Assessment Process (“IAP”) as a modified adjudicative process for addressing claims and awarding compensation arising from physical, sexual or psychological abuse suffered by Indian Residential School survivors: Fontaine v. Canada (Attorney General), 2017 ONSC 2487, at para. 57.

The respondent retained the appellant lawyers in 2009 to bring an IAP claim on his behalf. However, his claim was dismissed, as was a subsequent review, because his evidence was found to be insufficiently reliable. After retaining a new lawyer, the respondent successfully obtained significant compensation for what was found to be repeated serious abuse.

On August 31, 2017, the respondent commenced the underlying action against the appellants, another lawyer, and the Attorney General of Canada (“Canada”) for psychological harm he claims he suffered, not because of his mistreatment at St. Anne’s, but rather as the result of being disbelieved, for the initial dismissals of his IAP claim and review, and for having to undergo a further hearing. As against the appellants, the respondent’s action is based on breach of contract, breach of fiduciary duty and negligence. As against Canada, the respondent’s action alleges breaches of Canada’s obligations under the IRSSA, the Settlement Approval Order and related orders to disclose documents and compile reports relating to St. Anne’s prior to his initial IAP hearing and review that were relevant to his IAP claim.

The Settlement Approval Order contained a release and cause of action bar in favour of the Indian Residential Schools Class action defendants and other released organizations (collectively the “Class Action Defendants”). Under paragraph 15 of the Settlement Order, the Indian Residential Schools Class Action class members (the “Class Members”) released the Class Action Defendants, including Canada, from claims “in relation to an Indian Residential School or the operation generally of Indian Residential Schools” (the “paragraph 15 release”). Specifically, in relevant part, the paragraph 15 release stated that each class member released the Class Action Defendants from:

any and all actions, causes of action, common law and statutory liabilities, contracts, claims and demands of every nature or kind available, asserted or which could have been asserted whether known or unknown including for damages, contribution, indemnity, costs, expenses and interest which they ever had, now have or may have hereafter have [sic], directly or indirectly or any way relating to or arising directly or indirectly […] in relation to an Indian Residential School or the operation generally of Indian Residential Schools and this release includes any such claim made or that could have been made in any proceeding including the Class Actions […]

Paragraph 19 of the Settlement Approval Order barred Class Members from commencing proceedings that might give rise to claims for contribution and indemnity or similar relief against Class Action Defendants in relation to the released claims (the “paragraph 19 cause of action bar”). Specifically, in relevant part, the paragraph 19 cause of action bar stated that the Court ordered and declared that each class member:

shall not make any claim or take any proceeding against any person or corporation, including the Crown, in connection with or related to the claims released pursuant to paragraph 15 of this judgment, who might claim or take a proceeding against the Defendants […] for contribution or indemnity or any other relief at common law or in equity or under any other federal, provincial or territorial statute or the applicable rules of court […]

In a motion heard on the same day, Canada moved to have the respondent’s action against it dismissed as an abuse of process based on the paragraph 15 release. In the alternative, Canada requested that the action be stayed pending application to the Eastern Administrative Judge (the “EA Judge”) under the Court Administration Protocol to the Settlement Order. Specifically, Canada asserted that the respondent required leave to commence the action and, in any event, the action had to be initiated by a Request for Directions as it involved implementation or enforcement of the IRSSA.

In separate released reasons, the motion judge held that the respondent’s action against Canada was not barred on the basis of the paragraph 15 release. However, he stayed the action against Canada pending further order of the EA Judge. In this regard, the motion judge found that the respondent’s action against Canada was required to be initiated by a Request for Directions. Canada has not appealed this decision.

In dismissing the appellants’ motion, the motion judge found that the respondent’s action was not barred for two reasons. First, the motion judge found that while the language of the paragraph 15 release included future damages, it did not include future causes of action regardless if they were in some way related to an Indian Residential School or the operation generally of Indian Residential Schools. Second, the motion judge held that even if his interpretation of the language was incorrect, a release of claims for solicitor negligence in the prosecution of the IAP claims could not have been within the contemplation of the parties when the IRSSA was made. The appellants appealed.

issues:

(1) Did the motion judge err in interpreting the paragraph 15 release by failing to consider the words of that paragraph in the context of the IRSSA, which led to the Settlement Approval Order?
(2) Did the motion judge err in interpreting the paragraph 15 release by failing to consider the wording of that paragraph in its entirety?
(3) Did the motion judge err in considering whether a solicitor’s negligence claim was within the contemplation of the parties when the Settlement Approval Order was made?

holding:

Appeal dismissed.

reasoning:

Before turning to address the specific issues on appeal, the Court noted that the appellants acknowledged that the motion judge correctly set out the principles applicable to interpreting a release. Specifically, the motion judge relied on the Court’s decision in Biancaniello v. DMCT LLP, 2017 ONCA 386 (“Biancaniello”). In Biancaniello, the Court set out the following five principles for determining what was in the contemplation of the parties when interpreting a broadly worded release:

1. One looks first to the language of the release to find its meaning.
2. Parties may use language that releases every claim that arises, including unknown claims. However, courts will require clear language to infer that a party intended to release claims of which it was unaware.
3. General language in a release will be limited to the thing or things that were specifically in the contemplation of the parties when the release was given.
4. When a release is given as part of the settlement of a claim, the parties want to wipe the slate clean between them.
5. One can look at the circumstances surrounding the giving of the release to determine what was specifically in the contemplation of the parties.

(1-3) No. The Court held that apart from finding that the paragraph 15 release did not release claims for factual situations that had not yet arisen, the motion judge was further correct in finding that it could not have been within the contemplation of the parties to release Canada from its obligations it was assuming under the IRSSA. As was explained by the Court, the respondent’s claim for psychological harm arose as a result of his evidence being adjudged insufficiently reliable to meet the burden of proof required in an alternative adjudicative process due to Canada’s alleged failure to satisfy its disclosure obligations under the IRSSA. Accordingly, since the respondent’s claim against Canada was not barred by the paragraph 15 release, it followed that the respondent’s claim against the appellants was not barred by the paragraph 19 cause of action bar. The Court held that this was dispositive of the appeal.

In making its determination, the Court held that even if the motion judge’s decision in the Canada motion was not final, Canada attended but chose not to seek the right to participate on appeal. The Court noted, however, that nothing in its reasons should be taken as commenting on the issue of whether the absence of privity of contract would prevent the appellants from relying on the release and cause of action bar: Van Patter v. Tillsonburg District Memorial Hospital (1999), 45 O.R. (3d) 223 (C.A.); Owen v. Zosky, [2000] O.J. 4838 (C.A.); Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108. The parties did not address this issue.


CRIMINAL DECISIONS

R. v. W., 2020 ONCA 269

[Watt, Pardu and Roberts JJ.A.]

Counsel:

Gregory Lafontaine and Saul Moshé-Stenberg, for the appellant
Kevin Wilson and Alexia Bystrzycki, for the respondent
Keywords: Criminal Law, Drug Trafficking, Evidence, Unreasonable Search and Seizure, Canadian Charter of Rights and Freedoms, ss. 8 & 24(2), R. v. Lising, 2005 SCC 66, R. v. Grant, [1993] 3 S.C.R. 223, R. v. Waterfield [1963] 3 All E.R. 659, R. v. Chehil, 2013 SCC 49, R. v. MacKenzie, 2013 SCC 50, R. v. Wong, 2017 BCSC 306, R. v. A.M., 2008 SCC 19, R. v. Tessling, 2004 SCC 67, R. v. Le, 2019 SCC 34, R. v. Patrick, 2009 SCC 17, R. v. Plant, [1993] 3 S.C.R. 281, R. v. Collins, [1987] 1 S.C.R. 265, R. v. Grant, 2009 SCC 32, R. v. Flintroy, 2019 BCSC 213

R. v. G., 2020 ONCA 274

[Pardu, Roberts and Thorburn JJ.A.]

Counsel:

Jill R. Presser and Eric Neubauer, for the appellant JG

Jermaine Gager Catriona Verner, for the appellant CLS

Corey Leonard Smelie Christine Bartlett-Hughes and Amy Alyea, for the respondent

Keywords: Criminal Law, Murder, Evidence, Admissibility, Expert Evidence, Jury Instructions, Reasonable Apprehension of Bias, Sentencing, R. v. Gager, 2012 ONSC 388, R. v. Abbey, 2009 ONCA 624, R. v. Mohan, [1994] 2 S.C.R. 9, Imeson v. Maryvale (Maryvale Adolescent and Family Services), 2018 ONCA 888, R. v. Mills, 2019 ONCA 940, R. v. L.K., 2011 ONSC 2562, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, R. v. Calnen, 2019 SCC 6, R. v. Jacquard, [1997] 1 S.C.R. 314, R. v. Lavallee, [1990] 1 S.C.R. 852, R. v. S.A.B., 2003 SCC 60, R. v. White, [1998] 2 S.C.R. 72, R. v. Arcangioli, [1994] 1 S.C.R. 129, R. v. Gager, 2012 ONSC 2712, R. v. Chiasson, 2009 ONCA 789, R. v. Jeanvenne, 2010 ONCA 706, R. v. Dixon, [1998] 1 S.C.R. 244, R. v. McNeil, 2009 SCC 3, R. v. Jackson, 2015 ONCA 832, R. v. Pittiman, 2006 SCC 9, R. v. Shafia, 2016 ONCA 812, Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), 2015 SCC 25, Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 S.C.R. 369, Groia v. Law Society of Upper Canada, 2018 SCC 27, R. v. Shropshire, [1995] 4 S.C.R. 227

R. v. J., 2020 ONCA 280

[Brown J.A. (Motions Judge)]

Counsel:

Colleen McKeown, for the applicant

Elena C. Middelkamp, for the respondent

Keywords: Criminal Law, Sexual Assault, Bail, COVID-19, Criminal Code, s. 679(3)(c), R. v. Oland, 2017 SCC 17, R. v. Morales, [1992] 3 S.C.R. 711, R. v. Fleming, [2015] O.J. No. 4380 (S.C.J.), R. v. Sotomayor, 2014 ONSC 500, R. v. Omitiran, 2020 ONCA 261, R. v. Kazman, 2020 ONCA 251

R. v. S., 2020 ONCA 285

[Brown J.A. (Motions Judge)]

Counsel:

Geoff Haskell, for the applicants

Charmaine M. Wong, for the respondent

Keywords: Criminal Law, Attempted Murder, Discharging a Firearm, Bail, COVID-19, Criminal Code, ss. 239(1)(a), 244(2)(a), 515(10)(b), 679(3), 684(1), R. v. Daniel Stojanovski and Darko Stojanovski, 2018 ONSC 4243, R. v. Oland, 2017 SCC 17, R. v. Morales, [1992] 3 S.C.R. 711, R. v. Jesso, 2020 ONCA 280, R. v. Saleh, 2019 ONCA 819, R. v. Araya, 2015 SCC 11, R. v. Omitiran, 2020 ONCA 261, R. v. Kazman, 2020 ONCA 251, R. v. Paramsothy, 2020 ONSC 2314

R. v. V., 2020 ONCA 275

[Watt, Fairburn and Zarnett JJ.A.]

Counsel:

Brian H. Greenspan and Naomi M. Lutes, for the appellant

Roger Pinnock, for the respondent

Keywords: Criminal Law, First Degree Murder, Fresh Evidence, Youth Criminal Justice Act, S.C. 2002, c. 1, Palmer v. The Queen, [1981] S.C.R. 759, Truscott (Re), 2007 ONCA 575, R. v. F. (W.J.), [1999] 3 S.C.R. 569, R. v. Bradshaw, 2017 SCC 35, R. v. Khelawon, 2006 SCC 57, R. v. Blackman, 2008 SCC 37

R. v. S., 2020 ONCA 276

[MacPherson, Benotto and Nordheimer JJ.A.]

Counsel:

Jeffrey Fisher, for the appellant

Michael Fawcett, for the respondent

Keywords: Breach of Probation, Sentencing, Jump Principle, Assault, Assault with a Weapon, Uttering Threats


R. v. D., 2020 ONCA 278

[Doherty, Simmons and Pardu JJ.A]

Counsel:

Amy Ohler, for the appellant

Jessica Smith Joy, for the respondent

Keywords: Aggravated Assault, Sentencing


ONTARIO REVIEW BOARD DECISIONS

Anderson (Re), 2020 ONCA 277

[MacPherson, Benotto and Nordheimer JJ.A.]

Counsel:

Terrance Luscombe, for the appellant

Ken Lockhart, for the respondent Her Majesty the Queen

Naveen Hassan, for the respondent Ontario Shores Centre for Mental Health Services

Keywords: Detention Order, Cannabis, Least Restrictive Conditions, Re Sheikh, 2019, ONCA 2019


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…

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.