Good afternoon.

Please find below our summaries of the civil decisions released by the Court of Appeal for Ontario during the week of August 24 to 28, 2020. There was a plethora of decisions released.

The headliner last week was undoubtedly Duffy v. Canada (Senate). Senator Duffy was acquitted of criminal charges relating to the scandal surrounding the claiming of expenses relating to his residence and the $90,000 he received from Nigel Wright of the PMO’s office that he used to repay the taxpayers. Senator Duffy sued the Canadian Senate for malicious prosecution and other alleged misfeasance. In a lengthy decision, the Court concluded that the Senate is immune from suit with respect to these issues because of parliamentary privilege. The motion judge’s decision dismissing the claim for want of jurisdiction was therefore upheld.

In Rukavina v. Ottawa (Police Services Board), the Court held that a claim for false arrest and other torts by a former police officer against his police force was not a dispute that was subject to the collective bargaining agreement and was therefore not outside the court’s jurisdiction.

In OZ Merchandising Inc. v. Canadian Professional Soccer League Inc. appellant’s counsel was refused leave to exceed the Court’s 30-page limit for factums in order to file an over 500 page, or in the alternative, a 125 page factum.

Other topics covered included family law (transferring appeal to another court), extension of time to appeal in an OSC matter, vexatious litigants, agreements of purchase and sale of land, child protection, stay of an order for specific performance pending appeal, stay of an order authorizing the destruction of files in the Indian Residential School Settlement and the remedy of a constructive trust in an oppression and breach of fiduciary duty case.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email


CIVIL DECISIONS

Bernard v. Fuhgeh , 2020 ONCA 529

[Paciocco J.A. (Motion Judge)]

Counsel:

WF, acting in person

MB, acting in person

Keywords: Family Law, Custody and Access, Final Orders, Motion to Change, Material Change in Circumstances, Civil Procedure, Appeals, Jurisdiction, Transfer, Motion to Quash, Frivolous, Vexatious, Abuse of Process, Vexatious Litigants, Courts of Justice Act, R.S.O. 1990, c. C-43, ss. 110, 140, Family Law Rules, O. Reg 114/99, Rules of Civil Procedure, Rule 2.1.01, Scaduto v. Law Society of Upper Canada, 2015 ONCA 733, Cheung v. Samra, 2018 ONCA 923, White v. Garrow, [2011] O.J. No. 6482 (C.A.), Dunnington v. 656956 Ontario Ltd. (1992), 9 O.R. (3d) 124 (Div. Ct.), Lukezic v. Royal Bank of Canada, 2012 ONCA 350

facts:

This was a custody and access dispute. One party moved to transfer the appeal to the Divisional Court. The other moved to have the appeals dismissed on the basis that it was frivolous, vexatious or an abuse of process.

issues:
  1. Should the appeal be transferred to the Divisional Court?
  2. Should the appeal be dismissed as frivolous, vexatious or an abuse of process?
holding:

Motions dismissed.

reasoning:
  1. No. In exercising its discretion on whether to transfer an appeal to another court, the Court will consider the merits of the proposed appeal, any undue prejudice to the responding party as a result of further delay and whether the moving party moved expeditiously upon becoming aware that jurisdiction was in dispute. In this case, given the moving party’s appropriate concessions, there was no merit to the appeal. There would also be undue prejudice to the responding party in responding to a meritless appeal and in the further attendant delay. The motion to transfer was therefore dismissed.
  2. No. In order to obtain a vexatious litigant declaration, a party must move by way of originating process under s. 140 of the Courts of Justice Act, not by way of motion. There was no serious request for a vexatious litigant ruling in this case.

Ontario Securities Commission v. Bluestream Capital Corporation , 2020 ONCA 530

[Paciocco J.A. (Motion Judge)]

Counsel:

Mark A. Ross and Eric Brousseau, for the moving party

Ian K. Latimer and Asad Ali Moten, for the responding party

Keywords: Civil Procedure, Appeals, Extension of Time, Rules of Civil Procedure, Rule 3.02, Enbridge Gas Distributions Inc. v. Froese, 2013 ONCA 131, Kefeli v. Centennial College of Applied Arts & Technology, [2002] O.J. No. 3023 (C.A.), Transportaction Lease Systems Inc. v. Spire Freezers Ltd., 2011 ONSC 5509

facts:

Bluestream Capital Corp (“Bluestream”) had been used as a vehicle of fraud by PB. The respondent, the Ontario Securities Commission (“OSC”), obtained a disgorgement order against Bluestream so that it could attempt to recoup funds for PB’s victims.

Camerlengo Holdings Inc. is a closely held family holding company. During its investigation, the OSC discovered that Camerlengo Holdings Inc. lent $200,000 to Bluestream. The OSC issued a notice of garnishment to Camerlengo Holdings Inc. for this amount. A garnishment hearing was scheduled before Schreck J. The sole ground of opposition offered by Camerlengo Holdings Inc. at that hearing was that losses suffered by members of the C family, as victims of the frauds, should be set off against Camerlengo Holding Inc.’s debt to Bluestream.

In April 2018, Schreck J. denied the set-off defence, declaring that Camerlengo Holdings Inc. owed $200,000 to Bluestream and must pay that amount to the Sheriff. Camerlengo Holdings Inc. did not appeal that decision.

Discussions were undertaken between C and the OSC about recovery of the debt. On October 24, 2018, OSC counsel notified C that the OSC would obtain the records of Camerlengo Holdings Inc. and go after any improper transactions. A judgment debtor examination was held in November 2018. In December 2019, after further investigation, the OSC commenced a civil action against C and his wife. The OSC alleged, among other things, that the June 1996 conveyance by C of his interest in the matrimonial home to his spouse was a fraudulent conveyance, that C wrongly commingled personal and corporate funds, and that he improperly disbursed funds through Camerlengo Holdings Inc. for his benefit and the benefit of his wife. This activity allegedly included the false identification of the Bluestream loan deposit as a shareholder advance by C to Camerlengo Holdings Inc., declaring illegal dividends, and paying funds from Camerlengo Holdings Inc. to himself, his wife and others, to the prejudice of creditors.

Camerlengo Holdings Inc. now brings a motion pursuant to Rule 3.02 of the Rules of Civil Procedure to extend the time within which Camerlengo Holdings Inc. can appeal Schreck J.’s decision of April 2018.

issues:

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

holding:

Motion dismissed.

reasoning:

No. While not in and of itself fatal, the moving party had no intention to appeal within the time period within which to appeal. This is an important consideration unless the explanation for an intention to appeal mitigates its absence. The explanation advanced in this case does not do so. C made a tactical decision not to appeal Shreck J’s decision because he believed it to be pointless and the decision unenforceable because Camerlengo Holdings Inc. had no assets and was therefore judgment-proof. Moreover, the over two year delay would prejudice the OSC, whose efforts were being undertaken on behalf of victims of fraud.

As to the merits of the proposed appeal, while arguable, Schreck J’s decision was not obviously incorrect. Whether the loan was payable and therefore Camerlengo Holdings Inc. was subject to garnishment was not an issue raised before Schreck J. In any event, lower court authority to the effect that a party was not subject to garnishment if the loan they owed to the judgment debtor was not yet due and payable (Transportaction Lease Systems Inc. v. Spire Freezers Ltd. , 2011 ONSC 5509) was not binding on the Court, and there was no appellate authority holding that this was the case. The court in Transportaction Lease Systems specifically left open the possibility that another judge may come to a different decision where there are allegations of fraudulent transactions or conveyances taken. In this case such allegations have been made.

Finally, in deciding where the interests of justice lie, the Court declined to find that setting aside longstanding transactions with respect to C’s matrimonial home would be inequitable. That would require prejudging of the OSC’s fraudulent conveyance action, which the Court was not prepared to do. If the Court was to get into the business of considering the equity of the OSC’s action, it would also have to consider the fact that unless the OSC succeeds, C may receive a windfall. As the sole shareholder of Camerlengo Holdings Inc., he will have had the benefit of a $200,000 loan that the corporation never had to repay.


Aurora (Town) v. Lepp , 2020 ONCA 528

[Huscroft, Zarnett and Coroza JJ.A.]

Counsel:

Charles A. Painter, for the appellant

RL, acting in person

Keywords: Torts, False Arrest, False Imprisonment, Misfeasance in Public Office, Malicious Prosecution, Civil Procedure, Striking Pleadings, Vexatious Litigants, Procedural and Natural Justice, Reasonable Apprehension of Bias, Appeals, Fresh Evidence, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 140(1), Rules of Civil Procedure, Rule 2.1.01, Peoples Trust Co. v. Atas, 2019 ONCA 359, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, leave to appeal refused, [2015] S.C.C.A. No. 488, Khan v. Law Society of Ontario, 2020 ONCA 320, Neufeld v. Neufeld, 2020 ONCA 395, R. v. S.(R.D.), [1997] 3 S.C.R. 484, Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, Ojeikere v. Ojeikere, 2018 ONCA 372, Palmer v. The Queen, [1980] 1 S.C.R. 759, Sengmueller v. Sengmueller (1994), 17 O.R. (3d) 208 (C.A.)

facts:

The respondent, RL, issued a 27-page Statement of Claim in the Superior Court of Justice against several parties including the appellant, the Corporation of the Town of Aurora (“Aurora”). In that claim, RL asserted (among other things) that numerous parties, including Aurora, had committed the torts of false arrest, false imprisonment, misfeasance in public office, and malicious prosecution. In addition to the Superior Court claim, RL had also initiated several other claims in the Small Claims Court.

Aurora brought an application before the Superior Court of Justice seeking that RL be declared a vexatious litigant pursuant to s. 140(1) of the Courts of Justice Act (the “CJA”). Aurora also brought a motion to have RL’s claim dismissed under Rule 2.1.01 of the Rules of Civil Procedure as being a proceeding that “appears on its face to be frivolous or vexatious or otherwise an abuse of the process of the court.”

The application judge refused to declare RL a vexatious litigant or to dismiss his claim on that basis, but did streamline RL’s claim, remained seized of the matter and ordered strict case management. He ordered no costs.

issues:

1. Did the application judge err by:

a. failing to declare RL a vexatious litigant pursuant s. 140(1) of the CJA;

b. failing to dismiss RL’s claim under r. 2.1.01 of the Rules;

c. displaying a reasonable apprehension of bias during the hearing; and

d. failing to order that Aurora should receive full indemnity costs in the amount of $30,668.07?

2. Should the parties be permitted to adduce fresh evidence?

holding:

Appeal dismissed. Leave to appeal costs granted. Appeal on costs allowed.

reasoning:

1.

a. No. First, the application judge properly focused on the Statement of Claim in his written reasons because one of the essential aspects of Aurora’s argument was that RL’s action was vexatious and abusive. Therefore, in assessing whether RL had instituted a vexatious proceeding against Aurora under s. 140(1)(a) of the CJA, the application judge was required to examine the claim and determine whether the pleadings were vexatious. Second, the application judge turned his mind to the Small Claims Court proceeding and imposed a condition on RL to abandon that proceeding before he could continue in Superior Court. Finally, the application judge did not ignore RL’s conduct in the proceeding. The application judge noted that RL had conducted himself in a troubling matter and indicated that this type of conduct would not be tolerated by the court. Rather than designating RL a vexatious litigant under s. 140(1) of the CJA, the application judge concluded that aggressive case management of the proceeding would achieve the most “expeditious, just, and least expensive” determination of the merits of the litigation. There was no basis to interfere with his decision.

b. No. Rule 2.1 is not for close calls and “should be limited to the clearest of cases where the abusive nature of the proceeding is apparent on the face of the pleading and there is a basis in the pleadings to support the resort to the attenuated process”. Judges should be cautious about allowing parties to have recourse to Rule 2.1, except where it is “plain and obvious on the face of the pleading” that the action is frivolous, vexatious or an abuse of process. The application judge carefully examined RL’s claim. He recognized that although some of the allegations and pleadings were outrageous and should be struck, there were pleadings with respect to the torts of false arrest, false imprisonment, and misfeasance in public office that a court could recognize as legitimate, even if RL’s conduct was troubling. The application judge properly took a cautious approach and the Court saw no error in his decision to permit RL’s action to proceed to the extent he did.

c. No. The submission that the motion judge displayed bias was devoid of merit. Allegations of judicial bias should not be made lightly. The application judge, like all judges, benefits from a strong presumption of judicial fairness, impartiality, and integrity that is not easily displaced. There was nothing in the record that can be seen as evidence of prejudgment or bias on his part.

d. Yes. The application judge erred in denying Aurora costs on the basis that success was divided. Although RL’s action was permitted to proceed and he was not declared a vexatious litigant, the application judge disregarded Aurora’s “overall success”. The practical effect of the application judge’s decision was that RL’s claim was trimmed down considerably and there was a condition imposed that restricts him from initiating any further motion, action, or proceeding against Aurora, its elected officials, employees, former employees, or legal counsel, without first obtaining leave of this court. Although it did not obtain the designation it sought under s. 140(1), Aurora was, nevertheless, the more successful party because it obtained aggressive case management of a pared-down claim as well as an order restricting further litigation. Therefore, Aurora was entitled to $15,000 in costs of the application, just under half the full indemnity amount it sought.

2. No. Notwithstanding that the parties had agreed not to object to the fresh evidence proposed by the other, the admissibility of fresh evidence was still a matter for the Court to determine. The evidence proposed by both parties does not meet the test for the introduction of fresh evidence.


Bilotta v. Booth , 2020 ONCA 522

[Huscroft, Zarnett and Coroza JJ.A.]

Counsel:

Christopher Lee, for the appellants

Julian Binavince, for the respondents

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Damage to Property, Insurance, Implied Terms, Duty of Good Faith, Wile v. Cook, [1986] 2 S.C.R. 137, Bhasin v. Hrynew, 2014 SCC 71

facts:

The vendors appeal from the order of the application judge declaring that they breached their agreement of purchase and sale with the purchasers, requiring them to return the purchasers’ $30,000 deposit, and permitting the purchasers to proceed to trial for any additional damages they may have suffered. The failure of the transaction was precipitated by flood damage that had occurred at the property after the agreement of purchase of sale was entered into and before closing.

issues:

Did the application judge err:

  1. in finding that implied terms were part of the standard form agreement of purchase and sale;
  2. in failing to consider whether breach of the implied terms permitted termination of the agreement;
  3. in finding that the vendors breached the agreement; and
  4. in finding that the vendors breached the duty of good faith.
holding:

Appeal allowed.

reasoning:
  1. No. The insurance clause in a standard form agreement of purchase and sale of land provides that the vendor remains at risk with respect to damage to the property until closing, and shall hold all insurance proceeds in trust for the parties, as their interest may appear, and the purchaser is entitled to either terminate the agreement in the event of “substantial damage” or close and take the insurance proceeds. Pursuant to the insurance clause, the agreement of purchase and sale includes an implied term in order to facilitate the purchaser in making an informed election whether to complete the purchase or terminate the agreement.
  2. No. In some cases, there may be a legitimate dispute about the nature or scope of damage to a property – about whether or not it is “substantial” and so gives rise the buyer’s election under the insurance clause. In such circumstances, the seller may be required to provide the buyer with a reasonable opportunity to inspect in order to determine whether the election arises. But that was not this case. The purchasers were advised on July 6, the day prior to closing, that the insurer had issued a cheque for $14,745.65 to cover the flood damage (in addition to a $500 deductible) and were provided with the insurer adjuster’s report describing the repairs required and the additional costs. They knew, or ought to have known, that the damage was not substantial – a matter they conceded on appeal. As a result, there was no election to be made between terminating the agreement or accepting the insurance proceeds and closing: the election arose only in the event of substantial damage having occurred. For this reason, the purchasers did not require a reasonable time to assess their position. There was no election to be made under the insurance clause because there was no substantial damage.
  3. Yes. The purchasers’ offer to close was contingent on obtaining a $50,000 reduction in the agreed price, and their alternative offer to close after the repairs had been completed was contingent on their right to inspect the property and to renegotiate the purchase price if they were not satisfied. Neither offer was accepted by the vendors. As a result, the agreement remained on foot and the vendors were entitled to insist on performance in accordance with its terms. The purchasers were required to close. The purchasers are the ones who repudiated the contract – not the vendors. They were advised of the insurance monies that had been paid, provided with the insurance adjuster’s report describing the required repairs and the additional costs, and twice offered extensions of the closing. Their refusal to accept an extension of the closing followed by their failure to close was a clear repudiation of the contract. The vendors were entitled to accept this repudiation and terminate the contract or reject it and keep the contract alive. They elected to accept it and terminate the contract and did so.
  4. No. The application judge’s finding that the vendors acted in bad faith was not supported by the record and could be upheld. That finding would not have permitted the vendors to terminate the contract in any event. The vendors acted reasonably, even assuming that they could have informed the purchasers of the damage earlier than they did. After they informed the purchasers of the flood and the insurance details, the vendors made two offers to extend the closing on terms that were reasonable and that protected the purchasers’ contractual interests. Neither offer was accepted by the purchasers, who attempted to change the agreement.

Bruce Grey Child and Family Services v. A.M., 2020 ONCA 525

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

Counsel:

A.M., acting in person

Cory B. Deyarmond for the respondent, Bruce Grey Child and Family Services

Elizabeth McCarty and H. Jane Robertson for the respondent, Office of the Children’s Lawyer

Keywords: Family Law, Child Protection, Crown Wardship, Custody and Access, In Loco Parentis, Civil Procedure, Standing, Fresh Evidence, Child, Youth and Family Services Act, S.O. 2017, c. 14, Sched. 1, ss. 74(1), 74(3), 104(2), 121(1), G.(C.) v. H.(J.), 1989 CanLII 8899 (ONCA), leave to appeal refused, [1990] S.C.C.A. No. 60, Children’s Aid Society of Waterloo v. JLS, 2018 ONSC 7412

facts:

The appellant seeks access to R, who was placed with a foster family. The appellant was involved with R’s family since R was born, and there were periods where he lived with R and R’s biological mother. The mother supported the appellant’s request for access. The Children’s Aid Society and Office of the Children’s lawyer both opposed the appellant’s request for access.

issues:
  1. Does the appellant have standing to appeal to the Superior Court of Justice?
  2. Did the Superior Court judge erred in upholding the trial judge’s decision not to issue an order granting the appellant access to R?
  3. Should the Court order access by the appellant to R based on fresh or new evidence?
holding:

Appeal dismissed.

reasoning:
  1. Yes. The appellant was a party to the lower court proceeding, and the Society and OCL did not object to his standing. Although the court below did not explicitly make a finding on the appellant’s standing (which should explicitly be done), the appellant may have qualified under ss.74(1) and 121(1)(b) of the CYFSA as “any parent of the child”, and therefore he had standing for the purposes of this appeal.
  2. No. The trial judge held that there was no “beneficial and meaningful relationship between them” since the appellant had had no access to R since R was apprehended in 2015. The appeal judge was correct in holding that the best interests of the child were paramount and that in this case, that there was no error made, and that nothing in the fresh evidence on that appeal would have changed the appropriateness of the orders made in respect of R’s best interests.
  3. No. There was nothing in the fresh or new evidence that changed the appropriateness of the trial judge’s initial orders with respect to R’s best interests. The fresh evidence demonstrated that, while R is fond of the appellant, over a now extended period, he has expressed a preference to move forward with his adoption without an ongoing relationship with the appellant.

OZ Merchandising Inc. v. Canadian Professional Soccer League Inc., 2020 ONCA 532

[Roberts J.A. (Motion Judge)]

Counsel:

Rose A. Faddoul and Nicholas Karnis, for the moving party

Jordan Goldblatt, for the responding parties, Eastern Ontario District Soccer Association and the Ontario Soccer Association

Frank Costantini, for the responding party, Canadian Soccer Association

Keywords: Civil Procedure, Appeals, Factums, Leave to Exceed 30 Page Limit, Rules of Civil Procedure, Rules 61.09(4), 61.11, 61.12, 61.12(8), Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario, (March 1, 2017), s. 11.7(4), 11.7(5), Chief Mountain v. Canada (A.G.), 2012 BCCA 69, 317 B.C.A.C. 50, R. v. Van Wissen, 2016 MBCA 108, Brown v. Lowe, 2000 BCCA 635, R. v. Port Chevrolet Oldsmobile Ltd., 2008 BCCA 443, Saint John (City) v. Saint John Firefighters’ Association, International Association of Fire Fighters, Local 771 (2010), 362 N.B.R. (2d) 327 (C.A.), Canada v. General Electric Capital Canada Inc., 2010 FCA 92, Michail v. Ontario English Catholic Teachers’ Assn. (4 September 2018), Toronto, M49554 (Ont. C.A.), Michail v. Ontario English Catholic Teachers’ Association, 2018 ONCA 950, JJM Construction Ltd. v. Sandspit Harbour Society, [1998] B.C.J. No. 3383 (B.C.C.A.), Talwar v. Grand River Hospital Board of Directors, 2018 ONSC 6112 (Div. Ct.), R. v. Henderson (W.E.), 2012 MBCA 93

facts:

The appellant sought leave to file a factum of just under 125 pages after initially serving a factum 500 pages in length, over 300 of which were appendices.

issues:

Should the appellant be granted leave to exceed the 30 page limit for the length of facta?

holding:

Motion dismissed.

reasoning:

No. The maximum length of appellate facta is 30 pages. The 30-page limit is not a suggestion or a starting point. It “has been set with a view to reasonably complex cases – simpler cases can often be dealt with adequately in much shorter factums”. The Rules stipulate the need for concise statements of the facts and law in the facta submitted by appellants and respondents. The purpose of the 30-page limit is “to focus counsel on the issues and not have a factum that goes on, and in fact, wanders”.

Relief from compliance with the 30-page limit for appellant and respondent facta requires leave of the court. Leave is exceptional and granted sparingly in special circumstances. While a party must be permitted to present its whole case effectively, this does not take away from the requirement of conciseness and the duty of efficiency to the court. The 30-page limit for facta is imposed to keep appeals manageable, efficient and cost-effective for the litigants and the court. The overarching question is whether the extension is required in the interests of procedural fairness and justice “to advise the other side of the issues in dispute so it can prepare properly for the appeal and to assist the division of the Court that hears the appeal to deal effectively with the issues”. The fact that the appeal raises important and complicated questions of fact or law, there are numerous grounds of appeal, the underlying proceedings have been ongoing for many years, or the trial was lengthy, does not automatically justify an extension of the page limit. These circumstances inform many appeals that are nevertheless contained within the 30-page factum limit.

While the Court gave significant weight to the assessment of counsel for the moving party that a longer factum was required, the difficulty was that the materials and submissions simply contained general statements about the complexity of the legal and factual issues, the number of grounds in the notice of appeal, and the fresh evidence that the moving party will seek leave to file in order to present its narrative of events. The Court was unable to discern from a review of the materials before it the necessity of an extended factum for the moving party to properly present its appeal. To permit the moving party to file a 125-page factum would be oppressive to the respondents and unhelpful to the panel hearing this appeal. As the moving party fairly acknowledged, there was much repetition in the factum, as well as references to the trial transcripts and other materials, that could be easily excised. Furthermore, as the responding parties submit, portions of the proposed factum relate to matters not before the trial judge, including fresh evidence and a request to change the venue of the trial. The Court saw no reason why, with concise writing and thoughtful editing, the moving party could not present its appeal within the 30-page limit prescribed by the Practice Direction. The moving party’s submission that the 60 or so grounds in its notice of appeal cannot be fairly treated within the 30-page limit was not a determinative consideration. The moving party’s choice to raise numerous grounds of appeal does not serve as the kind of exceptional circumstance that justifies exceeding the 30-page limit. Such a “shotgun approach to appellate advocacy” was to be decried Courts expect counsel to be of assistance in the appellate process. They expect counsel not to waste the court’s valuable resources by simply dumping the appeal on the court’s lap. Counsel are expected to have sufficient confidence to prioritize their arguments, to separate the wheat from the chaff and to provide fully developed arguments on what should be the real points for appellate review. Not only is this in the best interests of their clients; it is in the best interests of the administration of justice.


Pohl v. Palisca , 2020 ONCA 531

[Feldman, Fairburn and Nordheimer JJ.A.]

Counsel:

Marc Munro, for the appellant

Hedy Epstein, for the respondents

Keywords: Breach of Contract, Share Purchase Agreements, Employment Agreements, Wrongful Dismissal, Corporations, Oppression, Ontario Business Corporations Act, R.S.O. 1990, c. B. 16, s. 248, 2082825 Ontario Inc. v. Platinum Wood Finishing Inc. (2009), 96 O.R. (3d) 467 (Div. Ct.), Walters v. Harris Partners Ltd., [2001] O.J. No. 1560 (S.C.)

facts:

The appellant owned a milling production company named Die-Metric Tools Inc. (“DMT”). In an agreement signed on August 9, 2010, the appellant sold DMT to Palcam Technologies Ltd. That same day, the appellant signed an agreement giving his written approval for Palcam Technologies to assign its contractual rights and obligations over to Palcam Solutions Inc. The respondent P was the principal and operating mind of both Palcam Technologies and Palcam Solutions. The appellant and P signed an employment agreement. P signed as the new president and CEO of DMT. The appellant agreed to work for DMT for two years. He was there to promote the goodwill of DMT with suppliers, vendors and bankers, but did not retain any decision-making powers.

Until new financing was arranged, the appellant remained personally liable as guarantor for DMT’s operating line of credit loan. Things did not go well for DMT. Less than two months after the agreement had been signed, the bank froze the line of credit because it discovered that DMT’s ownership had changed. Within days of that occurring, P discharged the appellant from his employment with DMT and, within a short time of that, P had DMT assigned into bankruptcy. This left the appellant personally exposed on the remaining amount owing on the line of credit. The appellant claimed for damages for breach of contract and oppression pursuant to s. 248 of the Business Corporations Act, R.S.O. 1990, c. B. 16 (“OBCA”), wrongful dismissal and punitive damages.

The trial judge found a total amount of $225,297.20 had been misdirected from DMT to Palcam Technologies Ltd. This constituted a breach of the implied term of fair and honest dealing in the contract between the Palcam entities and the appellant. As the president, sole director and operating mind of DMT, P was found to be jointly and severally liable with the Palcam entities. In the alternative, the trial judge also found that the appellant was entitled to the same relief under s. 248(2) of the OBCA. Being personally responsible for the DMT line of credit, the trial judge concluded that the appellant was a creditor of DMT and, as such, he had a reasonable expectation that the line of credit would be paid down. The trial judge found that, instead of paying down the DMT line of credit, P improperly sent monies to the benefit of the Palcam entities.

The trial judge dismissed all other claims for breach of the agreement, wrongful dismissal and punitive damages. Therefore, out of a claim involving a total request for damages in the amount of over $1,700,000, the appellant was awarded $225,297.20 in addition to prejudgment and post-judgment interest calculated in accordance with the rate that the bank was charging the appellant on the guarantee. That judgment has been satisfied.

issues:

Did the trial judge err in:

  1. failing to address the express term of the contract that imposed an unconditional obligation to pay the appellant a minimum of $750,000 for his shares;
  2. failing to appreciate that the basis of the claim relating to lost employment was rooted in an oppression remedy, rather than contract; and
  3. failing to award punitive damages?
holding:

Appeal allowed in part.

reasoning:

1. Yes. Section 9 of the contract was clear on its face that, at a minimum, whether the company was making a profit or not, $750,000 was owing to the appellant “immediately” at the five-year mark. Read contextually, the sole purpose of s. 9 was to ensure that a minimum payment of $750,000 was given to the appellant for the shares, and that payment had to be made at the latest within five years of closing. While the respondents argue that the factual matrix behind the contract supported the interpretation that nothing was owing given that the business failed, the Court did not agree. While the Court accepted that the respondents purchased the appellant’s shares in a struggling business with the intention of making it profitable again, the contract still reflected the purchase of a business. It would simply make no sense for the appellant to give his business away, while remaining personally liable for the line of credit. The benefit to him, and the way to keep things honest, was the requirement that at least $750,000 would be paid by the five-year point. That is the factual matrix against which the August 9, 2010 agreement was struck. While the Court agreed with the trial judge that this was not a claim for breach of contract that could result in the full purchase price being awarded to the appellant, a payment of $750,000 was required on the plain wording of s. 9.

2. No. Based upon his conclusion that the appellant had been fired for something he did not do, the trial judge concluded that he had been wrongfully dismissed. Even so, the trial judge concluded that the appellant could not succeed in his claim for wrongful dismissal because his employment contract was with DMT, which was bankrupt. Accordingly, the appellant had to prove his wrongful dismissal claim in the bankruptcy of DMT for the amounts he was entitled to under that contract and he could not, in law, “enforce that breach of employment contract against the named defendants.”

The appellant argued that dismissing his claim for wrongful dismissal on this basis was in error because the claim was not founded in contract but in an oppression remedy. The appellant emphasized that compensation for lost employment can be within the scope of the oppression remedy, the key question being whether the case “is an oppression claim with a wrongful dismissal component” or a “wrongful dismissal claim that happens to have an oppression component to it”.

The Court saw no error in how the judge decided the matter. Even if this claim was one rooted in an oppression remedy, it could not have succeeded. The appellant was no longer an officer, director, shareholder or owner of DMT at the time that he was dismissed from DMT. Moreover, his employment was not terminated because of a pattern of oppressive conduct, but because his employer thought that he had triggered a chain of events that resulted in the bank freezing DMT’s line of credit. While the trial judge concluded as a fact that this was not true, the trial judge’s reasons make clear that there was no oppressive conduct linked to the appellant’s dismissal. As the trial judge found, “this was not a nefarious scheme hatched by P and his companies to strip DMT of its assets and to simply allow it to go into bankruptcy.” Rather, the trial judge found “ample evidence” of significant efforts having been made to try and make the company viable and profitable again. He specifically found that the respondents were under no obligation to get refinancing. In any event, they did try.

3. No. There was no error in the trial judge’s conclusion that the respondents’ conduct “falls short of the high handed, harsh, vindictive, reprehensible and malicious conduct required” to award punitive damages. The trial judge’s decision was owed deference in this regard and there was no basis to interfere.


Rukavina v. Ottawa (Police Services Board), 2020 ONCA 533

[Watt, Trotter and Fairburn JJ.A.]

Counsel:

Jonathan Lisus, Christopher Grisdale, and Zain Naqi, for the appellants

Kirk Boggs and Naida Marotta, for the respondents

Keywords: Torts, Malicious Prosecution, Misfeasance in Public Office, Conspiracy, Deceit, Negligence, Labour Law, Police Services, Collective Bargaining Agreements, Civil Procedure, Striking Pleadings, Jurisdiction, Amending Pleadings, Police Services Act, R.S.O. 1990, c. P.15, ss. 113(5), Conduct and Duties of Police Officers Respecting Investigations by the Special Investigations Unit, O. Reg. 267/10, s. 3(1), Rules of Civil Procedure, Rule 21.01(3)(a), Tran v. University of Western Ontario, 2015 ONCA 295, Adelaide Capital Corp. v. Toronto Dominion Bank, 2007 ONCA 456, Piko v. Hudson’s Bay Co., 41 O.R. (3d) 729 (C.A.), McNeil v. Brewers Retail Inc., 2008 ONCA 405, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, Regina Police Assn. Inc. v. Regina (City) Board of Police Commissioners, 2000 SCC 14, Abbott v. Collins (2003), 64 O.R. (3d) 789 (C.A.), Heasman v. Durham Regional Police Services Board, 204 O.A.C. 283 (C.A.), DiNunzio v. City of Hamilton, 2010 ONSC 3631, aff’d 2011 ONCA 65, leave to appeal refused, [2011] S.C.C.A. No. 110, Odhavji Estate v. Woodhouse, 2003 SCC 69

facts:

A few months after the appellant, MR, was appointed to the position of Acting Staff Sergeant in charge of the tactical unit of the Ottawa Police Service, he commanded a training exercise involving a hostage-taking scenario where an explosive device, referred to as a “hydro cut”, was used. The detonation created a fireball that resulted in injuries to paramedics and two police officers. Some of the injuries were serious in nature.

The Special Investigations Unit (“SIU”) was notified of the incident and an investigation ensued. Numerous interviews took place and, ultimately, the appellant was charged with criminal negligence causing bodily harm and breach of a legal duty to use reasonable care while having an explosive substance under his care and control under ss. 221 and 80 of the Criminal Code. Crown counsel later stayed those charges because, contrary to what some of the respondents allegedly told the SIU investigators, the hydro cut had been operated in accordance with the long-standing practice of the Ottawa Police Service.

The appellant sued the respondents (three police officers with whom he worked, a superior officer, the then Chief of Police, and the Ottawa Police Services Board) for, among other things, malicious prosecution and misfeasance in public office. He claimed that the respondents knowingly and maliciously conspired together to provide false information to the SIU and to suppress relevant information, all of which led to: (a) the criminal charges being laid; and (b) a delay in those charges being stayed by Crown counsel. The officers are said to have abused their positions as public officials when they deceived the SIU.

The respondents brought a motion under Rule 21 of the Rules of Civil Procedure, to dismiss the claim for want of jurisdiction. The motion judge concluded that the essential character of the appellant’s claim was “workplace centered” and, therefore, it was governed under the exclusive jurisdiction of the collective agreement by which he was bound and the disciplinary regime under the Police Services Act (“PSA”).

Accordingly, the motion was granted and the claim was dismissed. In dismissing the action, the motion judge distinguished prior Court of Appeal decisions that had determined that employers reporting employees to the police, thereby triggering police investigations and criminal charges, were matters falling outside of workplace disputes.

issues:

Whether the motion judge erred in determining that the essential character of the appellant’s claim is one that is governed exclusively by the collective agreement and the PSA, thereby ousting the jurisdiction of the court.

holding:

Appeal allowed.

reasoning:

Yes. The motion judge erred in how he arrived at the conclusion that this was a “workplace centred” action. The motion judge misconstrued the essential character of the claim. When properly construed, the essential character of the claim falls outside the reach of the collective agreement and the PSA. While the difficulties between the appellant and respondents may well have their genesis in the workplace, and they may have had disputes in the workplace, by the time that an independent police investigation was underway, this was no longer a “workplace dispute”. The alleged conduct that occurred after the involvement of the SIU did not fall within the scope of either the collective agreement or the PSA. Accordingly, the court had jurisdiction over the subject matter of the action.

When it comes to collective agreements, a mandatory arbitration clause – such as in this case – will “generally confer exclusive jurisdiction on labour tribunals to deal with all disputes between the parties arising from the collective agreement”: Weber v. Ontario Hydro, [1995] 2 S.C.R. 929. However, there is no special “police rule”. Like all other cases, the question is whether the dispute is, in its “essential character”, one that “arises either expressly or inferentially out of the collective agreement”.

The alleged facts underpinning the legal complaint, as opposed to its legal characterization, determine the dispute’s essential character. The scope of the collective agreement then determines whether the essential character – that is, the true nature of the dispute – is cloaked in its terms: Therefore, like all other contexts, to determine the essential character of a dispute within a policing context and whether it is covered by the collective agreement, the court first looks to the factual matrix within which the allegations rest.

Part V of PSA governs complaints and disciplinary proceedings for police officers. It addresses how complaints are made and investigated, the procedural mechanism by which complaints are resolved, the nature of hearings and appeals, and the range of outcomes available if misconduct is found. However, the Court did not agree with the respondents’ submission that the grievance and discipline scheme that applies to police officers in Ontario was intended to create a complete substantive and procedural code, leaving no gaps for residual jurisdiction in the courts. There was no support for the proposition that, as a matter of law, the court’s jurisdiction is necessarily ousted for the purposes of any dispute that may involve police officers. The authorities relied upon by the respondents demonstrated the opposite. The Court then referred to some of those authorities to demonstrate that they all involved true workplace-centred disputes.

This case was not like the ones cited by the respondents. It is neither a labour relations dispute nor a disciplinary matter. At its core, it involves allegations that point to the improper influence of a criminal investigation that took place entirely outside of the workplace. The Superior Court is the only place where the appellant’s claim can be adjudicated.

The ultimate goal is to determine whether, based on all of the alleged facts, the essential character of the dispute is covered by the collective agreement. In essence, does the dispute arise, explicitly or implicitly from the “interpretation, application, administration or violation of the collective agreement”? The motion judge erred in failing to approach the matter in accordance with that legal framework. Although he stated the correct legal test, he ultimately erred by looking to the legal characterization of the dispute to define its essential character. This was an extricable legal error reviewable on the standard of correctness.

The allegations made in the statement of claim were not allegations of unfair workplace treatment. The appellant is alleging that he was wrongfully charged with criminal offences after his fellow officers lied to the SIU and that his superior officers acted in a manner that continued to mislead the SIU. The allegations do not pertain to discipline. At their highest, these are allegations of criminal activity, knowingly and intentionally misleading a criminal investigation. That being the essential character of the claim, the question became whether it fell within the exclusive jurisdiction of the collective agreement. It did not.

The motion judge erred when he rejected two prior decisions of the Court which held that by reporting employees to the police, the employer jettisoned the matters outside the catch frame of the collective agreement. While the motion judge was right that there were some distinguishing features between this case and those, they were features that did not impact the result.

Even if the underlying allegations could have been dealt with as a complaint under the PSA, that did not impact the court’s jurisdiction. There is nothing about a matter being dealt with under the PSA that would or should oust a private claim.


Fontaine v. Canada (Attorney General), 2020 ONCA 540

[Pepall J.A. (Motion Judge)]

Counsel:

Joanna Birenbaum and Chris Grisdale, for the moving party National Centre for Truth and Reconciliation

Catherine A. Coughlan and Brent Thompson, for the responding party Attorney General of Canada

Stuart Wuttke and Jeremy Kolodziej, for the responding party the Assembly of First Nations

Catherine Boies Parker and John Trueman, for the responding party the Chief Adjudicator

Keywords: Indian Residential Schools Settlement Agreement, Civil Procedure, Stay Pending Appeal, Directions, Fontaine v. Canada (Attorney General), 2014 ONSC 4585, aff’d 2016 ONCA 242, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Zafar v. Saiyid, 2017 ONCA 919, Longley v. Canada (Attorney General), 2007 ONCA 149

facts:

This motion for a stay and various procedural directions arises in the context of the Indian Residential Schools Settlement Agreement (“IRSSA”). The IRSSA resulted in the establishment of the Independent Assessment Process (“IAP”), under which former students who suffered physical, sexual, or psychological abuse could claim compensation. The IAP is administered by the Indian Residential Schools Adjudication Secretariat (the “Secretariat”) under the direction of the Chief Adjudicator.

Over 38,000 claims have been processed in the IAP and over $3 billion disbursed to former students. The Secretariat uses a database known as SADRE to case-manage the IAP claims. The IAP is coming to an end, and the Secretariat is to be closed and all claims adjudicated by March 31, 2021.

Before Perell J., the Eastern Administrative Judge, the Chief Adjudicator sought directions on the disposition of certain records (“Non-Claim Records”) held by the Secretariat. He made a proposal to archive most of them with the appellant, the National Centre for Truth and Reconciliation (“NCTR”). This proposal was supported by the appellant and others, but not by the respondent, the Attorney General of Canada (“Canada”).

A number of orders have been made by the supervising courts in the course of the administration of the IRSSA. Three that are the subject matter of the stay motion have ordered that the SADRE database be destroyed. These courts have also issued various sunset orders governing the orderly closure of the IAP claims process, the expiry of the Chief Adjudicator’s mandate, and the wind-up of the Secretariat. The process to effect the destruction of SADRE could begin on December 31, 2020, and the Secretariat itself is to close on March 31, 2021.

The appellant appealed from one of the orders and asked that: the Static Reports be included in the Adjudicator’s Final Report; the Chief Adjudicator be permitted to generate further aggregate Static Reports from the SADRE database, subject to the requirement that these Reports not identify any IAP claimants or alleged perpetrators; and the Static Reports could be archived with the appellant, Library and Archives Canada, or any other archive. In a nutshell, the appellant’s primary position on appeal is that invaluable information will be permanently lost if the Static Reports are destroyed. Canada’s position is that the appellant’s request to halt the destruction of SADRE is non-justiciable, a collateral attack on the In Rem order already made, and amounts to re-litigation.

issues:

Should the order authorizing the destruction of SADRE be stayed pending appeal?

holding:

Motion dismissed.

reasoning:

No. On a motion for a stay pending appeal, the court is to consider: whether the appeal raises a serious question to be tried; whether an applicant would suffer irreparable harm in the absence of a stay; and the balance of convenience. The overarching consideration is whether the interests of justice call for a stay.

In this case, a stay is unnecessary, since the parties consent to an expedited appeal and the order under appeal preserves the SADRE databased until December 30, 2020. A stay was therefore unnecessary if the appeal is heard and decided before the end of the year.

The Court expedited the appeal to be heard on time and made orders regarding the filing of materials, exchange of facta and contents of the facta.


Dhatt v. Beer , 2020 ONCA 545

[Zarnett J.A. (Motion Judge)]

Counsel:

David P. Lees and Zachary Silverberg, for the moving parties

Arnie Herschorn and Sepideh K. Nassabi, for the responding parties Mandeep Dhatt and Kulwinder Dhatt

Serena L. Rosenberg, for the responding parties Jay Brijpaul and Re/Max West Realty Inc., Brokerage

Keywords: Breach of Contract, Real Property, Agreements of Purchase and Sale of Land, Remedies, Specific Performance, Civil Procedure, Stay Pending Appeal, Rules of Civil Procedure, Rule 63.02, M & M Homes Inc. v. 2088556 Ontario Inc., 2020 ONCA 134, Zafar v. Saiyid, 2017 ONCA 919, Khimji v. Dhanani (2004), 69 O.R. (3d) 790 (C.A.), Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.)

facts:

The trial judgment declared that an Agreement of Purchase and Sale of land between the appellants as vendors and the respondents as purchasers was valid and binding. It awarded the respondent purchasers specific performance of the Agreement, gave the appellant vendors 120 days from the date of the decision to vacate the Property, and dismissed a third party claim that the appellants had brought against their real estate agent.

The trial judgment awarded costs of the action to the purchasers and agent, to be paid (deducted) from the purchase price.

A subsequent order of the trial judge gave directions concerning the carrying out of the trial judgment. Among other things, it appointed a lawyer for the appellants with respect to the sale of the Property and gave him authority to take certain steps relating to their obligations to complete the sale, ordered the appellants to forthwith deliver up vacant possession of the Property, and granted leave to a firm of bailiffs to secure vacant possession of the premises by August 31, 2020. The appellant vendors appealed from the trial judgment and the subsequent order and moved to stay the orders pending appeal.

issues:

Should the judgment ordering specific performance be stayed pending appeal?

holding:

Motion dismissed.

reasoning:

No. The overarching consideration in whether to grant an application for a stay pending appeal is whether doing so is in the interests of justice. Three factors are considered: (1) whether, on a preliminary assessment, the appeal raises a serious question, recognizing that this is a “low threshold”; (2) whether the applicant would suffer irreparable harm if the application were refused; and (3) the balance of convenience, namely which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits. The factors are not watertight; the strength of one may compensate for weakness on another.

A trial judge enjoys a wide discretion as to whether to grant an adjournment of a civil trial, a discretion that is to be exercised judiciously, taking into account relevant factors. On appeal that exercise of discretion is reviewed on a deferential standard. Moreover, findings of fact are subject to a deferential standard of review on appeal.

While accepting that the appeal, which focussed on the trial judge’s refusal to grant an adjournment of the trial, does not fall below the low merits threshold, it cannot be considered as having the strength necessary to overcome the weakness on the irreparable harm and balance of convenience factors. The appellants’ case for a stay is weak on both of those factors.

Regarding irreparable harm, the costs awards are automatically stayed and may not be enforced, pending the disposition of the appeal. The respondents have not sought a lifting of the automatic stay. Therefore, the appellants are already protected from this form of harm. The respondents gave an undertaking to the Court that they “will not deal with the property pending disposition of the appeal”. The right to effective relief as a result of a successful appeal will therefore not be lost, as the Property will remain in the ownership of parties who are before the court.

Turning to the balance of convenience, the appellants argued that if the stay is not granted they will incur “transaction costs” in having to move out of the Property and in finding another place to live, and then, if the appeal is allowed, in moving back into the Property. In the interim they will be without their home during the COVID-19 pandemic. No estimate of the “transaction costs” was provided. The Court agreed that there would be inconvenience to the appellants in this scenario, but the inconvenience would be temporary, and the length of it is, in some measure, within the power of the appellants to minimize, in that they were free to take steps to expedite the perfection of their appeal, and thus advance the potential hearing date of the appeal.

More importantly, the inconvenience of moving out and finding alternate accommodations flows directly from the result of the trial, which on a motion for a stay pending appeal is to be treated as prima facie correct. The appellants were aware of that result from the time of the trial judge’s decision of May 1, 2020, and have had the opportunity to plan accordingly.

On the other hand, granting the stay would delay the respondents in obtaining ownership of a property the trial judge found to be uniquely suited to their purposes. The evidence discloses that the respondents have arranged financing to close the purchase conditioned on the closing occurring on August 31, 2020. There was no evidence about whether or not the financing commitment could be extended to a new closing date if a stay were granted and the appeal ultimately dismissed; that new date would be uncertain given that the appeal is at a very early stage. The appellants offered their undertaking to be responsible for any damages caused by the stay, but the trial judge noted that they have other creditors. The balance of convenience did not favour the granting of a stay.


Duffy v. Canada (Senate), 2020 ONCA 536

[Strathy C.J.O., MacPherson and Jamal JJ.A.]

Counsel:

Lawrence Greenspon and Tina H. Hill, for the appellant

Maxime Faille, Guy Régimbald and John J. Wilson, for the respondent, the Senate of Canada

Alexander Gay and Sanam Goudarzi, for the respondent, the Attorney General of Canada

Keywords: Torts, Malicious Prosecution, Misfeasance in Public Office, Unjust Enrichment, Charter Damages, Constitutional Law, Parliamentary Privilege, Waiver, Civil Procedure, Striking Pleadings, Jurisdiction, Frivolous, Vexatious, Abuse of Process, No Reasonable Cause of Action, Constitution Act, 1867, 18, 30 & 31 Victoria, c. 3 (U.K.), s. 31, Canadian Charter of Rights and Freedoms, ss. 7, 11(d), 12, Parliament of Canada Act, R.S.C., 1985, c. P-1, ss. 4, 19.1(3), (4), 19.3, 19.5(1), 19.6(1), Rules of Civil Procedure, Rule 21.01(3)(a), 21.01(3)(d) and 25.11, 21.01(1)(a) and (b), Canada (House of Commons) v. Vaid, 2005 SCC 30, Chagnon v. Syndicat de la fonction publique et parapublique du Québec, 2018 SCC 39, Housen v. Nikolaisen, 2002 SCC 33, Canada (Board of Internal Economy) v. Boulerice, 2019 FCA 33, leave to appeal refused, [2019] S.C.C.A. No. 103, Villeneuve v. Legislative Assembly et al. , 2008 NWTSC 41, Filion c. Chagnon, 2016 QCCS 6146, aff’d, 2017 QCCA 630, Mikisew Cree First Nation v. Canada (Governor General in Council), 2018 SCC 40, Ontario v. Rothmans et al., 2014 ONSC 3382, Lavigne v. Ontario (Attorney General) (2008), 91 O.R. (3d) 728 (Sup. Ct.), Gagliano v. Canada (Attorney General), 2005 FC 576, aff’d, 2006 FCA 86, Canada (Deputy Commissioner, Royal Canadian Mounted Police) v. Canada (Commissioner, Royal Canadian Mounted Police), 2007 FC 564, Prebble v. Television of New Zealand Limited, [1994] 3 NZLR 1, [1995] 1 A.C. 321 (P.C.), R. v. Duffy, 2016 ONCJ 220, R. v. Bunting (1885), 7 O.R. 524 (H.C. (Q.B. Div.)), Reference re Secession of Quebec, [1998] 2 S.C.R. 217, Manitoba Provincial Judges Assn. v. Manitoba (Minister of Justice), [1997] 3 S.C.R. 3, Roncarelli v. Duplessis, [1959] S.C.R. 121, Conseil des Ports Nationaux v. Langelier et al., [1969] S.C.R. 60, Roman Corp. v. Hudson’s Bay Oil & Gas Co., [1973] S.C.R. 820, R (on the application of Miller) v. The Prime Minister, [2019] UKSC 41, Canada (Deputy Commissioner, Royal Canadian Mounted Police) v. Canada (Commissioner, Royal Canadian Mounted Police), 2007 FC 564, R. v. Connolly (1891), 22 O.R. 220 (H.C. (Comm. Pl.))

facts:

Senator Mike Duffy sued the Senate of Canada for over $7 million, alleging that the Senate acted unlawfully in how it investigated, prosecuted, and suspended him from the Senate for allegedly claiming inappropriate expenses as a senator and by then accepting funds from the Prime Minister’s Chief of Staff, Mr. Nigel Wright, to reimburse the Senate for those expenses. Senator Duffy was later charged criminally and tried for fraud, breach of trust, and accepting a bribe, but was acquitted by the Ontario Court of Justice.

Senator Duffy alleged that representatives from the Prime Minister’s Office (“PMO”) and individual senators interfered with the Senate’s investigation into his expenses for improper and purely political purposes. This, he says, led to the Senate’s decisions to suspend him, to deny him income and other benefits he says he was entitled to as a senator, and to refer matters to the RCMP for criminal investigation. Senator Duffy also alleges that the Attorney General of Canada is liable for wrongs committed by the RCMP in negligently investigating and wrongly laying criminal charges against him.

The motion judge granted the Senate’s motion to dismiss the action as against it for lack of jurisdiction based on parliamentary privilege. She held that four established categories of parliamentary privilege apply: the Senate’s parliamentary privileges to discipline its members and administer its internal affairs, and its privileges over parliamentary proceedings and freedom of speech. Senator Duffy appealed.

issues:
  1. Did the motion judge err in ruling that the impugned actions of the Senate fall within the scope of established categories of parliamentary privilege?
  2. Did the motion judge err in ruling that parliamentary privilege applies to the Senate’s allegedly unlawful conduct?
  3. Did the motion judge err by failing to address the necessity of the categories of parliamentary privilege claimed?
  4. Did the motion judge err by failing to reconcile the Senate’s parliamentary privilege with the Charter?
  5. Did the motion judge err in ruling that the Senate had not waived its parliamentary privilege?
holding:

Appeal dismissed.

reasoning:

1. No. In applying the standard of review of correctness, the Court determined that Senator Duffy’s claims against the Senate trench on matters that fall within the scope of the Senate’s established parliamentary privileges. The courts therefore lack jurisdiction to adjudicate these claims. These matters fall within the exclusive competence of the Senate to adjudge according to its own rules. This conclusion respects the separation of powers between the courts and the legislative branch of government and provides the Senate with the autonomy it needs to discharge its constitutional role in our democracy.

Parliamentary privilege has been part of Canadian constitutional law since Confederation. The privilege, which is enjoyed by the Senate, the House of Commons, and the provincial legislative assemblies, helps maintain the constitutional separation of powers between the legislative, executive, and judicial branches of government and thus promotes the “constitutional equilibrium” of Canada’s democracy: Canada (House of Commons) v. Vaid, 2005 SCC 30. Parliamentary privilege does this by shielding certain areas of legislative activity from judicial or executive review, thereby giving “the legislative branch of government the autonomy it requires to perform its constitutional functions”: Chagnon v. Syndicat de la fonction publique et parapublique du Québec, 2018 SCC 39. When parliamentary privilege applies, it deprives the courts of jurisdiction over the privileged matter and confers an immunity from civil claims.

There are four parliamentary privileges that the Senate established apply in this case. The Senate has an established parliamentary privilege to discipline its members. Second, the Senate possesses an established parliamentary privilege to administer its internal affairs, including by deciding how to allocate parliamentary resources for members’ allowances and benefits. Third, the Senate enjoys an established parliamentary privilege over proceedings before the Senate. Finally, the Senate benefits from an established parliamentary privilege over freedom of speech. The Court reviewed the authorities that confirmed each of these privileges in detail.

2. No. While the trial judge in Senator Duffy’s criminal trial, Vaillancourt J., described some of the conduct from within the PMO as “unacceptable” and “driven by deceit”, he made no findings of criminality against anyone inside the PMO or Senate, because those persons were not on trial.

Even if it was assumed that the claim alleges criminality, Senator Duffy’s argument that parliamentary privilege does not protect criminal conduct within the Senate is cast too broadly. When framed more precisely, the argument cannot defeat the Senate’s claim of privilege.

The issue is not whether Senator Duffy has alleged criminal conduct in the Senate. The issue is whether he has alleged an “ordinary crime” in the Senate. Has he impugned conduct connected with a proceeding in Parliament? And would raising these issues in the ordinary courts call into question decisions taken by the Senate and its committees on matters intended to be under the exclusive cognizance of the Senate and its committees?

The conduct that Senator Duffy impugns here is not an “ordinary crime”, such as theft. The alleged unlawful or potentially criminal interference by the PMO with the CIBA and the decisions of the Senate are integrally connected with proceedings in Parliament – the Senate’s investigation, deliberations, and decisions regarding Senator Duffy’s expenses and benefits as a senator. Raising these issues before the courts would unavoidably call into question the disciplinary and internal decisions taken by the Senate and the CIBA on matters that ordinarily fall within established categories of parliamentary privilege.

Accordingly, even if Senator Duffy has pleaded criminality in his civil action, the courts have no jurisdiction to adjudicate these allegations.

There is also no support for Senator Duffy’s contention that the rule of law permits the courts to scrutinize the legality of conduct within Parliament if that conduct is otherwise protected by parliamentary privilege. The Court reviewed the decisions cited by Senator Duffy in support of this contention, and disagreed that they supported his position.

The Court hastened to add that this conclusion does not imply that parliamentary privilege is anathema to the rule of law. To the contrary: parliamentary privilege does not create a gap in the general public law of Canada but is an important part of it. Nor does this leave Senator Duffy without remedies. Instead, he must pursue his remedies before the Senate, which has its own power of judicature according to its own rules.

This conclusion does not absolve the Senate of accountability for its actions. This is because while legislative assemblies are not accountable to the courts for the ways in which they exercise their parliamentary privileges, they remain accountable to the electorate.

3. No. The Court did not agree with Senator Duffy’s contention that all claims of federal parliamentary privilege must now meet the necessity test. There is thus no need to inquire into the necessity of federal parliamentary privileges – the “main body” of which are legislated – because the constitutional status of those privileges has been put beyond question by express constitutional and legislative enactments in s. 18 of the Constitution Act, 1867 and s. 4 of the Parliament of Canada Act.

In any event, if it were necessary to decide the point, the Court would conclude that each of these four categories of parliamentary privilege continues to meet the necessity test. The established privileges of discipline of members, control over internal affairs and parliamentary proceedings, and freedom of speech are all deeply rooted in the history of parliamentary privilege. Each privilege helps preserve the Senate’s independence and promotes the workings of representative democracy. They allow the Senate to proceed fearlessly and without outside interference in discharging its constitutional role in enacting legislation and acting as a check on executive power. If the courts could be asked to adjudicate the Senate’s day-to-day administration of these matters, the Senate’s autonomy as a legislative body and its freedom to do its legislative work with dignity and efficiency would be undermined.

4. No. The Supreme Court has repeatedly held that where parliamentary privilege applies, the legislative body holding the privilege has the exclusive competence to adjudicate an alleged breach of the Charter. The courts have no jurisdiction to review Senator Duffy’s claim that the Senate breached his Charter rights. Any remedy Senator Duffy seeks against the Senate must be pursued with the Senate.

5. No. Even if parliamentary privilege can be waived – which the Court felt it did not need to decide in this case – the Court concluded that because of the institutional and constitutional character of parliamentary privilege, any waiver would require an express statement, either in legislation or possibly in a parliamentary resolution that clearly and unambiguously waives the privilege. The Court agreed with the motion judge that Senator Duffy’s amended statement of claim pleads no express, clear, and unambiguous waiver by the Senate of its parliamentary privilege. Merely referring the matter to the RCMP for criminal investigation in this case would not meet the required standard for waiver of parliamentary privilege. The Senate should be able to refer matters to the appropriate authorities for criminal investigation without fear that doing so will jeopardize its constitutional independence from the other branches of government.


Vellenga v. Boersma , 2020 ONCA 537

[Tulloch, van Rensburg and Zarnett JJ.A.]

Counsel:

Blair W.M. Bowen, for the appellants

Marc Munro, for the respondent

Keywords: Corporations, Directors, Breach of Fiduciary Duty, Oppression, Remedies, Constructive Trust, Civil Procedure, Limitation Periods, Laches, Real Property, Civil Procedure, New Argument on Appeal, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, ss. 134(1), 248, Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 4, Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, Wilson v. Alharayeri, 2017 SCC 39, Waterstone Properties Corporation v. Caledon (Town), 2017 ONCA 623, Kaiman v. Graham, 2009 ONCA 77, Beardsley v. Ontario (2001), 57 O.R. (3d) 1 (C.A.)

facts:

The appellant, Dr. B, and the respondent, Mr. V, operated a dairy farm together. They operated as equal partners from 1989 until 1995, when they incorporated under Maple Pond Farm Limited (the “Corporation”). Dr. B and Mr. V were equal shareholders and directors of the Corporation. The second appellant, Mrs. B (Dr. B’s wife), was appointed as treasurer.

In 1999, the Corporation sold the farm’s milk quota and the net proceeds (just over $1 million) were used to purchase a property, known as the Boundary Lake Property. However, instead of ownership being held by the Corporation, it was held by the appellant corporation, Weijs Investment Corp. (“Weijs Investment”), which was wholly owned by Mrs. B. Dr. B’s reason for doing this was that he claimed he was owed money by the Corporation in excess of the net proceeds of sale of the milk quota.

Five years later, Mr. V commenced an application seeking, among other things, an oppression remedy under s. 248 of the OBCA. Among other things, he sought an order declaring that the Boundary Lake Property was the property of the Corporation, on the basis that the Corporation’s funds were used for its purchase.

The trial judge found that the Corporation’s funds had been used to purchase the Boundary Lake Property, in breach of Dr. B’s fiduciary duty. He found the documents produced by Dr. B to evidence the debt to him were not valid and had not been signed by Mr. V. Dr. B was therefore found not entitled to cause the Corporation to “loan” the proceeds of sale to Weijs Investment. He declared that the property was held by Weijs Investment in trust for the Corporation. Dr. B and Mrs. B appealed.

issues:
  1. Did the trial judge err in finding that Dr. B breached his fiduciary duty?
  2. Did the trial judge err in imposing a constructive trust over the Boundary Lake Property?
  3. Was Mr. V’s claim for a constructive trust statute-barred under s. 4 of the Real Property Limitations Act?
  4. Did the trial judge err in his costs award?
holding:

Appeal dismissed.

reasoning:

1. No. There was no error that would justify appellate intervention. The trial judge adopted the correct legal approach and properly considered the documentary evidence, as well as the evidence of the various witnesses. It was within his purview to accept Mr. V’s evidence that he had never signed the agreements of purchase and sale or the demand note, particularly in light of the other evidence.

The trial judge was also entitled to find that the alleged interest-free loan by the Corporation to Weijs Investment was invalid. Not only was there no legitimate basis for the loan, there was no evidence of loan documents, a promissory note or Mr. V’s agreement.

2. No. There are four conditions that should generally be satisfied where a court imposes a constructive trust for wrongful conduct: (1) The defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced, in relation to the activities giving rise to the assets in his hands; (2) The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant in breach of his equitable obligation to the plaintiff; (3) The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure that others like the defendant remain faithful to their duties; and (4) There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case; e.g., the interests of intervening creditors must be protected.

The Court rejected the appellants’ argument that the breach of fiduciary duty did not result in them having obtained an identifiable asset. The trial judge found that the Boundary Lake Property was purchased with the Corporation’s funds. There was no basis to overturn that finding.

The Court also rejected the argument that the imposition of a constructive trust prejudices Weijs Investment. Pursuant to the trial judge’s order, when the Boundary Lake Property is sold by the Corporation, Weijs Investment will receive proceeds consistent with its contribution to the property.

The Court rejected the argument that the declaration of trust awards a windfall to Mr. V. The trust preserves the interest on behalf of the Corporation, not Mr. V. Pursuant to the trial judge’s order, Mr. V will be entitled to his share of the value of that asset when it is sold.

The Court did not agree that the trial judge erred in imposing the constructive trust on the basis that a monetary remedy would have been sufficient. The trial judge was entitled to find that the appellants’ acquisition of the Boundary Lake Property with misappropriated corporate funds justified an order declaring that the property is held in trust for the Corporation. This is in line with the deterrent and remedial functions of constructive trusts arising from wrongdoing and breach of fiduciary duty. A constructive trust may be awarded to ensure that others like the defendant remain faithful to their duties.

The Court did not accept the appellants’ arguments that Mr. V had unclean hands, such that he was not entitled to a remedy of constructive trust. The trial judge made no finding of unclean hands, and there was no basis to make such a finding. There was also an insufficient connection between the allegations of unclean hands and the remedy granted. Once the property is sold, accounts will be taken and each party will be entitled to their respective share of the proceeds.

3 .No. Section 4 of the Real Property Limitations Act creates a ten-year limitation period for an action to recover land.

Mr. V first commenced his application in 2004, five years after the acquisition of the property. While the claim to a constructive trust was not added until 2015 by way of amendment, the limitation period argument was not raised at trial and was only first raised on appeal.

Appellate courts will not generally entertain entirely new issues on appeal, as it is unfair to spring a new argument upon a party at the hearing of an appeal in circumstances in which evidence might have been led at trial if it had been known that the matter would be an issue on appeal. The court’s discretion is to be guided by the balancing of the interests of justice as they affect all parties. It was not in the interests of justice to grant leave. Mr. V first commenced his application in 2004 and later amended his claim in 2015 to specifically include a trust claim. The application was not heard until 2018. The appellants had more than enough time to consider and raise this argument. They provided no persuasive reason to explain their failure to do so. Furthermore, the expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded. While this matter was commenced by way of application and did not involve formal pleadings, the key point is that the limitation argument was not raised at any time prior to this appeal.

4. No. Leave to appeal costs was denied. It is well-established that leave to appeal costs is sparingly granted. The trial judge made no error in principle, nor was the result plainly wrong. The trial judge provided cogent reasons, considering various factors, including: the nature of the application, the history of the litigation, the reasonableness of counsel’s conduct, as well as the reasonable expectations of the parties.


SHORT CIVIL DECISIONS

Nanda v. McEwan , 2020 ONCA 535

[Strathy C.J.O., Tulloch and Coroza JJ.A.]

Counsel:

Kevin J. Scullion, for the appellants

Ivanna Iwasykiw, for the respondent

Keywords: Costs

Jonas v. Elliott , 2020 ONCA 542

[Pepall J.A. (Motion Judge)]

Counsel:

James May, for the moving parties

Robert Smith, for the responding parties City of Stratford and CG

Keywords: Civil Procedure, Appeals, Perfection, Extension of Time, Issasi v. Rosenzweig, 2011 ONCA 112, Duca Community Credit Union Limited v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), Mortazavi v. University of Toronto, 2013 ONCA 66

Ontario (Attorney General) v. Persons Unknown , 2020 ONCA 541

[Pepall J.A. (Motion Judge)]

Counsel:

Benjamin Ries for the moving parties, HN, IG and the Advocacy Centre for Tenants Ontario

Domenic Polla for the responding party, Attorney General for Ontario

Kristin Ley, for the responding party, the Federation of Rental Housing Providers of Ontario

Keywords: Residential Tenancies, Eviction, Moratorium, COVID-19, Civil Procedure, Appeals, Motion to Quash, Jurisdiction, Expedited Hearing

Walia v. 2155982 Ontario Inc., 2020 ONCA 538

[Huscroft, Zarnett and Coroza JJ.A.]

Counsel:

Pathik Baxi, for the appellant

Gregory Weedon and Melissa Truong, for the respondents

Keywords: Costs


PROVINCIAL OFFENCES

Ontario (Labour) v. Cobra Float Service Inc., 2020 ONCA 527

[Watt, Harvison Young and Coroza JJ.A.]

Counsel:

Nader Hasan and Caitlin Milne, for the appellant

Wes Wilson and Graeme Adams, for the respondent

Keywords: Provincial Offences, Occupational Health and Safety, Constitutional Law, Right to Speedy Trial, Stay of Proceedings, Jurisdiction, New Issue on Appeal, Canadian Charter of Rights and Freedoms, s. 11(b), Occupational Health and Safety Act, R.S.O. 1990, c. O.1, s. 25(1)(c), Provincial Offences Act, R.8.0. 1990, c. P.33, s. 121, 131, R. v. Jordan, 2016 SCC 27, R. v. Bosley, 1992 CarswellOnt 125 (Ont. C.A.), R. v. Cobra Float Service Inc. (July 23, 2019), Toronto, M50411 (Ont. C.A.), R v. Conway, 2010 SCC 22, Orgaworld Canada Ltd. v. Ontario (Environment and Climate Change), 2014 ONCA 654, Guindon v. Canada, 2015 SCC 41, Popack v. Lipszyc, 2016 ONCA 135, R. v. Roach, 2009 ONCA 156, R. v. L.G., 2007 ONCA 654, R. v. Rabba (1991), 64 C.C.C. (3d) 445 (Ont. C.A.)


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.