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Good afternoon.

There were only two civil decisions of any length released by the Court of Appeal this past week, dealing with security for costs of an appeal and variation of spousal support.

However, in J.M.J. Family Trust v. Simcoe Block (1979) Limited, we are reminded that a debtor’s liability for “reasonable” legal fees incurred by a creditor enforcing a commercial agreement is not the same thing as liability for costs under the costs regime under the Rules. Unless the concepts of “full, substantial or partial indemnity costs” are imported into the commercial document, what is “reasonable” in the circumstances is not tied to such concepts.

Have a great weekend, and stay safe.

John Polyzogopoulos

Blaney McMurtry LLP

416.593.2953 Email


Table of Contents

Civil Decisions

Heidari v. Naghshbandi, 2020 ONCA 757

Keywords: Civil Procedure, Appeals, Security for Costs, Frivolous and Vexatious, Rules of Civil Procedure, Rules 61.06(1), Yaiguaje v. Chevron Corporation, 2017 ONCA 0827, Health Genetic Center Corp. v. New Scientist Magazine, 2019 ONCA 0968, York University v. Markicevic, 2017 ONCA 0651, Pickard v. London Police Services Board, 2010 ONCA 0643, Henderson v. Wright, 2016 ONCA 0089, Combined Air Mechanical Services Inc. v. Flesch, 2010 ONCA 0633

Nettleton v. Nettleton, 2020 ONCA 753

Keywords: Family Law, Separation Agreements, Spousal Support, Variation, Material Change in Circumstances, Imputing Income, Pensions, Child Support Guidelines, O. Reg. 391/97, Spousal Support Advisory Guidelines, Boston v. Boston, 2001 SCC 43, Hickey v. Hickey, [1999] 2 S.C.R. 518

Short Civil Decisions

Abbas v. Albohamra, 2020 ONCA 740

Keywords: Family Law, Child Support, Imputing Income, Child Support Guidelines, O. Reg. 391/97

Anderson v. Bubb, 2020 ONCA 746

Keywords: Family Law, Spousal Support, Civil Procedure, Jurisdiction, Attornment, Family Law Act, RSO 1990, c. F.3, Divorce Act, RSC 1985, c. 3

J.M.J. Family Trust v. Simcoe Block (1979) Limited, 2020 ONCA 741

Keywords: Contracts, Debtor-Creditor, Promissory Notes, General Security Agreements, Contractual Liability for Costs of Enforcement, Reasonable Legal Fees, Costs, Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)

Metropolitan Toronto Condominium Corporation No. 590 v. The Registered Owners and Mortgagees of Metropolitan Toronto Condominium Corporation No. 590, 2020 ONCA 749

Keywords: Real Property, Condominiums, Duty to Repair and Maintain

Norris v. Starkman, 2020 ONCA 744

Keywords: Contracts, Solicitor-Client, Legal Fees, Civil Procedure, Assessments, Special Circumstances, Adding Parties, Solicitors Act, R.S.O. 1990, c. S.15, ss. 4, McCarthy Tétrault LLP v. Guberman, 2012 ONCA 0679


CIVIL DECISIONS

Heidari v. Naghshbandi, 2020 ONCA 757

[Jamal J.A. (Motions Judge)]

Counsel:

S.N. Zeitz, for the moving parties

A. Niksich, for the responding party

Keywords: Civil Procedure, Appeals, Security for Costs, Frivolous and Vexatious, Rules of Civil Procedure, Rules 61.06(1), Yaiguaje v. Chevron Corporation, 2017 ONCA 0827, Health Genetic Center Corp. v. New Scientist Magazine, 2019 ONCA 0968, York University v. Markicevic, 2017 ONCA 0651, Pickard v. London Police Services Board, 2010 ONCA 0643, Henderson v. Wright, 2016 ONCA 0089, Combined Air Mechanical Services Inc. v. Flesch, 2010 ONCA 0633

facts:

This was a motion for security for costs under Rule 61.06(1) of the Rules of Civil Procedure. The moving party and the respondent were friends and business partners for a long time. Over the course of this relationship, they made several loans to each other and entered into several transactions, most of which were undocumented. They also made loans to a corporation which they were both shareholders and directors of. These loans were also undocumented. Their relationship eventually soured and litigation over the loans and repayment of the various debts amongst themselves and the corporation.

The responding party to this motion was sued by the moving party and the corporation in 2009. The responding party counterclaimed in both actions for various reasons, but after nearly ten years of litigation, withdrew the counterclaim against the corporation on the eve of trial. At the trial of both the actions, the judge found that the issues turned on credibility and that the defendant (the responding party to this motion) was not credible. The trial judge found in favour of the plaintiffs in both actions, and in doing so, ordered substantial indemnity costs.

The defendant appealed, and the moving party seeks an order for security of costs of the appeal.

issues: 

(1) Should security for costs be granted under Rule 61.06(1)(a) of the Rules of Civil Procedure?

(2) If not, has the moving party established “other good reason” to order security for costs under Rule 61.06(1)(c)?

holding: 

Motion dismissed.

reasoning: 

(1) Should security for costs be granted under Rule 61.06(1)(a) of the Rules of Civil Procedure?

No. The Court first set out several of the governing principles for a motion under Rule 61.06(1), including:
1. Rule 61.06(1) is permissive in that even if the test is met, the motion judge may refuse to grant security for costs, and such orders should not be made routinely;
2. The analysis is a two-step process wherein the moving party must first establish the elements of the test and then the motion judge must “take a step back” and consider the justness of the order, justness to be assessed by considering, among other things, the merits of the appeal, any delay in moving for security for costs, the impact of actionable conduct by the respondent on the available assets of the appellant, access to justice concerns, the public importance of the litigation, and the amount and form of security sought by the moving party; and
3. Whether an order for security for costs is being used as a litigation tactic to prevent a case from being heard on its merits.

Under Rule 61.06(1)(a), the moving party must prove that there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal. “Good reason to believe” means that the motion judge need only make a tentative, not a definitive conclusion on either the merits or sufficiency of assets. The frivolous and vexatious aspect requires the moving party to show that the appeal is frivolous in that it is devoid of merit or with little prospect of success, and vexatious in that it is taken to annoy or embarrass the respondent or conducted in a vexatious way.

Turning to the case at hand, the moving party submitted that the appeal was frivolous as it related only to questions of fact, namely findings of credibility, and raised no arguable error in law. While the Court has previously held that such appeals are frivolous (see Henderson v. Wright) because there is little probability that an appellate panel would overturn such credibility findings, the respondent raised an arguable error of law. At trial, the judge held that several of the loans were actually joint investments, an issue that was not argued by the parties. The responding party submitted this was an error in law. The Court agreed that this was not a frivolous argument on appeal.

On the question of whether the appeal was vexatious, the Court was not satisfied that it was. The moving party pointed out the respondent’s conduct in abandoning a counter-claim after ten years of litigation and that the respondent had defaulted on previous cost orders. However, the Court found that the previous cost order was stayed by the ongoing appeal, and that no costs were explicitly allocated to the respondents’ abandonment of the counterclaim. Further, the Court held that the respondent was appealing to clear its name, overturn the findings of credibility against it, and to challenge amounts of money it now owes under the trial decisions. These are proper reasons to bring an appeal and thus, it was not vexatious.

While the moving party failed to meet its burden under Rule 61.06(1)(a), the Court went on to briefly consider the sufficiency of assets. The respondent provided previous tax returns that showed annual income of around $100,000 per year. This was sufficient to cover the estimated costs of the appeal, therefore insufficiency of assets was not made out.

(2) If not, has the moving party established “other good reason” to order security for costs under Rule 61.06(1)(c)?

No. Under Rule 61.06(1)(c), a court may also award security for costs of an appeal for “other good reason.” While there is no definitive list of what is ‘good reason’, the reason must be consistent with the purposes for ordering security, and must be fairly compelling. Previous cases that have awarded security under this rule involved instances of fraud by the appellant, where the appellant has taken steps to put their assets out of reach of creditors or where the appeal has a low chance of success and while there are sufficient assets, they would be nearly impossible to enforce against. The Court of Appeal held that none of these circumstances existed, and thus found no “other good reason” to award security for costs. The motion was dismissed.


Nettleton v. Nettleton, 2020 ONCA 753

[Feldman, Simmons and Harvison Young JJ.A.]

Counsel:

P. Buttigieg, for the appellant

J. Beaton and B. Barsalou, for the respondent

Keywords: Family Law, Separation Agreements, Spousal Support, Variation, Material Change in Circumstances, Imputing Income, Pensions, Child Support Guidelines, O. Reg. 391/97, Spousal Support Advisory Guidelines, Boston v. Boston, 2001 SCC 43, Hickey v. Hickey, [1999] 2 S.C.R. 518

facts:

The appellant, former wife, appealed from a change order reducing the amount of spousal support payable to her under a separation agreement.

Under the terms of the separation agreement, the respondent was required to pay the appellant $2,750 each month on account of spousal support and $800 for child support. The amount payable for spousal support was subject to variation based on a material change in circumstances, whether foreseeable or not. The separation agreement also provided that spousal support “will be varied upon the husband’s retirement based upon the needs and financial circumstances of both parties at that time” (the “retirement adjustment clause”).

The separation agreement also required the respondent to pay to the appellant two amounts on account of equalization of net family properties: half of the respondent’s pension as of the date of separation using a projected retirement age of 63.5 years; and equalization of the remaining assets. However, when the respondent was only 57 years of age, the plant where he worked was closed and his pension plan was terminated. He found other work within approximately six weeks. In 2009, he received the pension plan payout totaling $581,228.32. He transferred the maximum eligible amount, $419,505.44, into a Locked-in Retirement Account (“LIRA”) and received a cash payout for the balance, including interest, totaling $167,818.

After the respondent’s obligation to pay child support terminated, the respondent continued to pay the appellant more than her initial monthly spousal support. As the separation agreement was not amended, the appellant received part of the monthly payment tax-free.

The respondent notified the appellant he intended to retire, but the parties were unable to agree on a variation of spousal support. Accordingly, the respondent reduced his monthly spousal support payments to $671 based on his calculations of the amount payable under the Spousal Support Advisory Guidelines (“SSAGs”), having regard to his then existing retirement income and the appellant’s income.

The appellant then filed the separation agreement with the court for the purpose of enforcement. In response, the respondent brought a change motion requesting that the spousal support payable under the separation agreement be reduced.

In her response to the change motion, the appellant requested that spousal support continue in the amount specified in the separation agreement, and requested that support for the previous years be recalculated based on the respondent’s income in those years, yielding an order for retroactive support.

The trial judge declined to order retroactive support for a variety of reasons including: the respondent continued to pay child support during the period he was unemployed, raised the quantum of spousal support when he was no longer required to pay child support, assisted the appellant in purchasing a home by co-signing her mortgage and providing her with $10,000, and the respondent’s financial hardship because of his income at the time of trial.

The trial judge ordered that spousal support be reduced as follows, subject to credit for amounts previously paid for the relevant periods: January 1, 2017, $2,181 per month; and commencing January 1, 2018, $1,009 per month. Once the respondent started receiving LIRA income at the age of 72, 42.2 percent would be considered available for calculating spousal support.

issues: 

(1) Did the trial judge err by failing to take account of the 2009 cash payment for retroactive support?

(2) Did the trial judge err by misapprehending the actuarial evidence concerning the respondent’s projected LIRA income?

(3) Did the trial judge err by failing to consider the whole of the evidence including the economic hardship suffered by the appellant and the tools available for imputing income?

holding: 

Appeal dismissed.

reasoning: 

Did the trial judge err by failing to take account of the 2009 cash payment for retroactive support?

No. The trial judge was well aware of the $167,818 pension payout the respondent received in 2009. He noted that the amount netted to about $96,000 after tax, and that the respondent gave evidence about what he had done with the money. Bottom line: at the time of trial in 2018, the money was long gone and did not form part of the respondent’s current income. There was no evidence to support a finding that the respondent knew what would be happening with his pension while he was still under an obligation to pay child support. The trial judge made no error in failing to reach back nine years to impose some form of retroactive support order to account for the fact that, in 2009, the husband had received a one-time cash pension payout, a significant portion of which had already been subject to equalization.

(2) Did the trial judge err by misapprehending the actuarial evidence concerning the respondent’s projected LIRA income? And (3) Did the trial judge err by failing to consider the whole of the evidence including the economic hardship suffered by the appellant and the tools available for imputing income?

No to both. These two issues were interrelated and were therefore, considered together. There was no error in principle or misapprehension of the evidence in the trial judge’s reasons. The trial judge was fully aware of the fact that there was a minimum withdrawal threshold for the LIRA once the respondent turned 72 and that it was open to him, as trial judge, to impute income to the respondent before the respondent began making LIRA or RRIF withdrawals.

The trial judge recognized the minimum nature of the LIRA withdrawal requirements when he noted that the respondent “will be forced to take out a minimum of 5 percent annually upon reaching age 72.” He also implicitly acknowledged his ability to immediately impute income to the respondent when he declined the respondent’s suggestion that 14.05 percent of a notional annual pension income, calculated by the respondent’s actuary ($4,377), be imputed immediately. The trial judge declined this suggestion because he concluded the respondent’s plan to hold off on withdrawals until age 72 would ultimately benefit both parties.

The trial judge was also well aware of the appellant’s dependence on the respondent for income and her demonstrated need for support. He said so explicitly in his reasons. However, he also noted that the appellant had used her equalization payment to purchase a house, that she still had the house at the time of trial and that she had taken no steps to prepare for the respondent’s retirement and resulting reduction in his income and ability to pay spousal support.

The decision to order high end SSAGs support recognized the long-term nature of the marriage as well as the appellant’s needs. The decision to include 42.2 percent of the respondent’s actual LIRA withdrawals in his income to calculate spousal support responded to the appellant’s economic hardship by double-dipping, at least to some extent. The decision not to impute LIRA income earlier or at a higher level than the respondent’s actual withdrawals reflected the trial judge’s overall assessment of the parties’ circumstances.


SHORT CIVIL DECISIONS

Abbas v. Albohamra, 2020 ONCA 740

[Feldman, Simmons and Harvison Young JJ.A.]

Counsel:

R.B. Moldaver (Q.C.), for the appellant

E. Aiaseh, for the respondent

Keywords: Family Law, Child Support, Imputing Income, Child Support Guidelines, O. Reg. 391/97

Anderson v. Bubb, 2020 ONCA 746

[Tulloch, Miller and Paciocco JJ.A.]

Counsel:

M.R. Banasinski, for the appellant/respondent by way of cross-appeal

J. Welsh, for the respondent/appellant by way of cross-appeal

Keywords: Family Law, Spousal Support, Civil Procedure, Jurisdiction, Attornment, Family Law Act, RSO 1990, c. F.3, Divorce Act, RSC 1985, c. 3

J.M.J. Family Trust v. Simcoe Block (1979) Limited, 2020 ONCA 741

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

Counsel:

M. Kestenberg and K. Schoenfeldt, for the appellant

D. Nunes, for the respondents

Keywords: Contracts, Debtor-Creditor, Promissory Notes, General Security Agreements, Contractual Liability for Costs of Enforcement, Reasonable Legal Fees, Costs, Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)

Metropolitan Toronto Condominium Corporation No. 590 v. The Registered Owners and Mortgagees of Metropolitan Toronto Condominium Corporation No. 590, 2020 ONCA 749

[Fairburn A.C.J.O., Juriansz and Nordheimer JJ.A.]

Counsel:

E.S. Lederman and K. Hayden, for the appellant

M.H. Arnold, for the respondents

Keywords: Real Property, Condominiums, Duty to Repair and Maintain

Norris v. Starkman, 2020 ONCA 744

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

Counsel:

P.H.S., acting in person and for the appellant Starkman Professional Corporation c.o.b. Starkman Barristers

D.A.N., acting in person

Keywords: Contracts, Solicitor-Client, Legal Fees, Civil Procedure, Assessments, Special Circumstances, Adding Parties, Solicitors Act, R.S.O. 1990, c. S.15, ss. 4, McCarthy Tétrault LLP v. Guberman, 2012 ONCA 0679


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.