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Good evening.

Following are our summaries of the past week’s civil decisions of the Court of Appeal for Ontario. The Court delivered a flurry of year-end decisions ahead of the holidays.

In Duggan v Durham Region Non-Profit Housing Corporation, the Court overruled the Divisional Court and found that Rule 6.1.01 of the Rules of Civil Procedure ousts the court’s inherent jurisdiction to bifurcate a trial without the consent of the parties. The decision involves a very detailed discussion of the law as it existed before this rule was amended in 2008, and the important role that stare decisis plays in our legal system.

In Louis v. Poitras, a jury notice in a personal injury case was struck so that the trial could proceed without a jury in light of the COVID-19 pandemic. Jury trials have been suspended and the matter is seven years old. The Divisional Court set aside the motion judge’s order. The Court of Appeal stayed the Divisional Court’s order. While a judge should not easily strike a jury notice, once the discretion to do so is exercised, such a decision should not be lightly interfered with lightly, particularly in the current context of a pandemic. The Court was very concerned with addressing delay in the court system caused by the pandemic. The judge-alone trial of the matter is scheduled for February 2021, and the Court will hear the motion for leave to appeal and the appeal together on an expedited basis, presumably in time to allow the trial to proceed as scheduled in the event that the appeal is allowed.

In Hoang v. Mann Engineering Ltd., a judgment-debtor sued a judgment-creditor after he was fired by his employer following garnishment proceedings taken by the creditor against the debtor that involved the employer. The Court unsurprisingly found that a judgment-creditor does not owe a duty of care to a judgment-debtor in those circumstances.

Other topics covered this past week included family law (spousal support in a high income case and quashing appeal for non-compliance with a support order), stay pending appeal, professional negligence (lawyers and accountants), constructive dismissal in a sale of business context, receiverships in the securities law and mortgage enforcement contexts, and amending pleadings to allege a new cause of action mid-trial.

We will not be releasing summaries next week. Accordingly, I would like to wish everyone a happy and healthy holiday season and a Merry Christmas to everyone celebrating.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Aluma Systems Inc. v Resolute FP Canada Inc., 2020 ONCA 0792

Keywords:Breach of Contract, Damages

Bielanski v Mundenchira, 2020 ONCA 0811

Keywords: Torts, Professional Negligence, Solicitors, Real Property, Defect in Title, Severance, Damages, Housen v. Nikolaisen, 2002 SCC 33

Duggan v Durham Region Non-Profit Housing Corporation, 2020 ONCA 0788

Keywords: Civil Procedure, Bifurcation of Proceedings, Jury Trials, Non-Jury Trials, Inherent Jurisdiction, Statutory Interpretation, Standard of Review, Stare Decisis, Ratio Decidendi, Obiter Dictum, Rules of Civil Procedure, Rule 6.1.01, Courts of Justice Act, ss. 138, Bondy-Rafael v Potrebic, 2015 ONSC 3655 (Div. Ct.), leave to appeal to Ont. CA refused, Hyrniak v Mauldin, 2014 SCC 7, TELUS Communications Inc. v Wellman, 2019 SCC 19, Bell ExpressVu Ltd. Partnership v Rex, 2002 SCC 42, Kovach (Litigation Guardian of) v Kovach, 2010 ONCA 126, leave to appeal refused, [2010] SCCA No. 165, Elcano Acceptance Ltd. v Richmond, Richmond, Stambler & Mills, 55 OR (2d) 56 (CA), Baxter Student Housing Ltd. v College Housing Co-operative Ltd., [1976] 2 SCR 475, Civil Justice Reform Project: Summary of Findings & Recommendations (Toronto: Ontario Ministry of the Attorney General, 2007) (“Osborne Report”), R v Rose, [1998] 3 SCR 262, Carter v Canada (Attorney General), 2015 SCC 5, R v Puddicombe, 2013 ONCA 506, R v Henry, 2005 SCC 76

Louis v Poitras, 2020 ONCA 0815

Keywords: Civil Procedure, Jury Trials, Striking Jury Notices, Leave to Appeal, Stay Pending Leave to Appeal, COVID-19, Insurance Act, R.S.O. 1990, c. I.8, Courts of Justice Act, R.S.O. 1990, c. C.43, Rules of Civil Procedure, rr. 61.03.1 and 63.02(1)(b), RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.), BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, Sault Dock Co. Ltd. v. Sault Ste. Marie (City) (1972), [1973] 2 O.R. 479 (C.A.), Cowles v. Balac (2006), 83 O.R. (3d) 660 (C.A.), leave to appeal refused, [2006] S.C.C.A. No. 496, Kostopoulos v. Jesshope (1985), 50 O.R. (2d) 54 (C.A.), leave to appeal refused, [1985] S.C.C.A. No. 93, Higashi v. Chiarot, 2020 ONSC 5523, Belton v. Spencer, 2020 ONSC 5327, Jiang v. Toronto Transit Commission, 2020 ONSC 5727, MacDougall v. Sisley, 2020 ONSC 6632, Girao v. Cunningham, 2020 ONCA 260, R. v. Jordan, 2016 SCC 27, Hryniak v. Mauldin, 2014 SCC 7, MacLeod v. Canadian Road Management Company, 2018 ONSC 2186

Hoang v Mann Engineering, 2020 ONCA 0808

Keywords: Torts, Negligence, Duty of Care, Foreseeability, Garnishment, Abuse of Process, 168872 Ont. Inc. v. Maple Leaf Foods Inc., 2020 SCC 36, Cooper v. Hobart, 2001 SCC 79, Rankin v. J.J., 2018 SCC 19

Ontario Securities Commission v Money Gate Mortgage Investment Corporation, 2020 ONCA 0812

Keywords: Securities Law, Unregistered Dealing in Securities, Bankruptcy and Insolvency, Receiverships, Priority, Real Property, Mortgages, Validity, Civil Procedure, Advice and Directions, Summary Judgment, Partial Summary Judgment, Securities Act, R.S.O. 1990, c. S.5, ss. 129 (1) and (2), Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, Land Titles Act, R.S.O. 1990, c. L.5, ss. 78 (4) and (4.1), Polywheels Inc. (Re), 2010 ONSC 1265, 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702 (Div. Ct.), Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, Re Urbancorp Cumberland 2 GP Inc., 2017 ONSC 7649, Hryniak v. Mauldin, 2014 SCC 7

Plese v Herjavec, 2020 ONCA 0810

Keywords: Family Law, Spousal Support, Compensatory Support, Needs-Based Support, Standard Of Review, Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 15.2, Spousal Support Advisory Guidelines, Halliwell v. Halliwell, 2017 ONCA 349, Ballanger v. Ballanger, 2020 ONCA 626, Hickey. Hickey, [1999] 2 S.C.R. 518, Miglin v. Miglin, 2003 SCC 24

7084421 Canada Ltd. v Vinczer, 2020 ONCA 0829

Keywords: Contracts, Debtor-Creditor, Mortgages, Civil Procedure, Default Judgment, Setting Aside, Stay Pending Appeal, Jurisdiction, Self-Represented Corporations, Security for Costs, Writs of Possession, Courts of Justice Act, s. 110, Rules of Civil Procedure, Rules 15.01(2), 60.1(2), 63.01(1), 63.02(1), 63.03(5)

Abu-Saud v Abu-Saud, 2020 ONCA 0824

Keywords: Family Law, Spousal Support, Civil Procedure, Quashing Appeals, Orders, Non-Compliance, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(3), Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31, Family Law Rules, O. Reg. 114/99, Rules 1(8)(e), 2(2), 2(3)(b), Dickie v. Dickie, 2007 SCC 8, Brophy v. Brophy (2004), 180 O.A.C. 389 (C.A.), Siddiqui v. Anwar, 2018 ONCA 965, Cosentino v. Cosentino, 2017 ONCA 593

C & K Mortgage Services Inc. v Camilla Court Homes Inc., 2020 ONCA 0817

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Equitable Interests, Mortgages, Priority, Bankruptcy and Insolvency, Receiverships, Armadale Properties Ltd. v. 700 King Street (1997) Ltd. (2001), 25 CBR (4th) 198 (Ont SC)

McGuinty v 1845035 Ontario Inc. (McGuinty Funeral Home), 2020 ONCA 0816

Keywords: Contracts, Employment, Sale of Business, Constructive Dismissal, Fundamental Breach, Condonation,,  Damages, Potter v New Brunswick (Legal Aid Services Commission), 2015 SCC 10, Persaud v Telus Corporation, 2017 ONCA 479, Belton  v Liberty Insurance Co. of Canada (2004), 72 OR (3d) 81 (CA), R v Lohrer, 2004 SCC 80, Martin v Goldfarb (1990), 41 OR (3d) 161 (CA), leave to appeal refused, [1998] SCCA No. 516, Ruston v Keddco Mfg. (2011) Ltd., 2018 ONSC 2919, aff’d 2019 ONCA 0125

Polla v Croatian (Toronto) Credit Union Limited, 2020 ONCA 0818

Keywords: Torts, Negligence, Misrepresentation, Civil Procedure, Amending Pleadings, New Causes of Action, Irreparable Prejudice, Limitation Periods, Standard of Review, Limitations Act, 2002, s. 4, Credit Unions and Caisses Populaires Act, 1994, S.O. 1994, c. 11, s. 82, Rules of Civil Procedure, Rule 26.01, Blueberry River First Nation v. Lair, 2020 BCCA 76, Strathan Corporation v. Khan, 2019 ONCA 418, Longo v. MacLaren Art Centre, 2014 ONCA 526, Tuffnail v. Meekes, 2020 ONCA 340, Klassen v. Beausoleil, 2019 ONCA 407, 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, Ivany v. Financiere Telco Inc., 2011 ONSC 2785, Rabb Construction Ltd. v. MacEwen Petroleum Inc., 2018 ONCA 170, P.M. Perell & J.W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis Canada, 2020)

Short Civil Decisions

JGB Collateral v Rochon, 2020 ONCA 0804

Keywords: Contracts, Real Property, Mortgages, Farmers, Civil Procedure, Summary Judgment, Farm Debt Mediation Act, S. C. 1997, c. 21, ss. 21, 5

Murray v 8165246 Canada Inc., 2020 ONCA 0832

Keywords: Civil Procedure, Appeals, Fresh Evidence, Litigation Privilege, Directions, Facta, Appeal Management Conferences, “Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario”, (March 1, 2017), s. 7.2.6

CIVIL DECISIONS

Aluma Systems Inc. v Resolute FP Canada Inc., 2020 ONCA 0792

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

Counsel:

C. Willson for the appellant, Aluma Systems Inc.

R.W. Johansen for the respondent, Resolute FP Canada Inc.

Keywords: Breach of Contract, Damages

facts:

The appellant (plaintiff) is a seller and lessor of scaffolding equipment. The respondent (defendant) operates a pulp and paper mill. The appellant rented scaffolding equipment and provided other services to the respondent for approximately 17 years. However, in May 2014, the respondent terminated the appellant’s services and hired a new supplier.

The appellant brought an action against the respondent for damages, including: the costs of demobilizing and shipping the rented scaffolding; rental charges for some of the scaffolding between the time it was taken down and its return to the appellant; and damage to the contaminated blow tank scaffolding caused by the respondent.

At trial, the judge dismissed the claim for demobilization and shipping costs, but allowed the claim for the rental charges, and allowed a portion of the claim for the contamination. After hearing extensive evidence, the trial judge concluded that 40% of the scaffolding had to be scrapped, so he applied that percentage to the overall value of the equipment, as provided by one of the appellant’s witnesses.

The appellant claimed that the trial judge made a legal error in his assessment of damages for the contaminated blow tank scaffolding. The appellant claimed that since the contaminated portions of the scaffolding could not be separated from the uncontaminated portions, it should have been awarded damages based on 100% of the value of the scaffolding.

issues:

Did the trial judge err in his determination of damages?

holding:

Appeal dismissed.

reasoning:

No. The Court agreed with the trial judge that the appellant bore the onus of proving its damages, and the evidence was conflicting. The trial judge was required to do the best he could to quantify the monetary damages so that the appellant could be put in the position it would have been in, but for the respondent’s breach of contract.

The court did not agree with the appellant’s claims that the trial judge made a palpable and overriding error in failing to recognize that all of the blow tank scaffolding had to be scrapped as a result of contamination, based on evidence presented by the appellant’s expert witness. The trial judge’s findings of fact and conclusion that damages should be assessed on the basis that 40% of the blow tank scaffolding would have to be scrapped was fully supported by the evidence. The trial judge did the best he could, given the quality of the evidence.


Bielanski v Mundenchira, 2020 ONCA 0811

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

Counsel:

H.S. Mann, for the appellants

J.R.G. Cook and S.K. Gfeller, for the respondent

Keywords: Torts, Professional Negligence, Solicitors, Real Property, Defect in Title, Severance, Damages, Housen v. Nikolaisen, 2002 SCC 33

facts:

In 2005, the respondent acted as solicitor for the appellants in the purchase of their home. Through an oversight in the legal description of the property, instead of receiving a conveyance of one severed 50-foot wide lot from the vendors, the appellants became the registered owners of an un-severed 100-foot wide lot, which included the property where the vendors continued to live.

The error was eventually rectified in 2012 following the respondents obtaining a consent to sever the property, as well as settling an application filed by the vendors to have their property transferred back to them.

The central issue at trial was whether the respondent’s breach of the duty of care caused any damage or loss to the appellants and, if so, the amount of the damages. The appellant claimed damages which included: (a) $235,000 for the reduction in the value of their property due to the title defect; (b) $66,784 in carrying costs for the property from the original listing date until it was subsequently sold; (c) $390,000 in “business losses” as a result of the equity of the property being tied up between 2009-2012 and the lost opportunity to use the money to invest; (d) interest on the property taxes they had recovered from the vendors as part of the settlement; (e) fees paid to the respondent and costs paid by the appellants to the new purchasers of the property; and (f) damages for aggravation and mental distress in the sum of $200,000.

The trial judge elected to award only $5,000 in damages, which represented the refund of a retainer the appellants paid to the respondent in respect of the litigation with the vendors.

issues:

Did the trial judge err in awarding damages of only $5,000?

holding:

Appeal dismissed.

reasoning:

Did the trial judge err in awarding damages of only $5,000?

No. The Court did not find any palpable and overriding error in the trial judge’s conclusions that warranted setting aside the decision. The trial judge’s decision was entitled to deference.

Specifically, the trial judge concluded that the damages claimed by the appellant were not reasonably foreseeable, supported by the evidence, or caused by the respondent’s error. First, the trial judge concluded that he was provided with no evidence to suggest that the delay in selling the property, and the alleged reduction in value, were in fact due to the title defect. Instead, the evidence seemed to suggest that the delay in selling the property was more properly attributed to the appellants’ unreasonable valuation.

Second, the trial judge noted that evidence seemed to suggest that the appellants were aware of the title defect long before they had made the decision to list the property for sale. Third, the trial judge declined to accept evidence given by a business valuator regarding the appellants’ business losses, as proper “expert evidence”. The Court found that the trial judge properly applied the test for the admission of expert evidence. Critically, the evidence provided by the business valuator was based largely on assumptions with no verification of figures.

The balance of the claims similarly failed for lack of evidence, and the trial judge added that the respondent was not liable for the interest on property taxes that were reimbursed by the vendors, as these amounts ought to have been recovered from the vendors themselves. The Court concluded that the appellants had demonstrated no error in any of the trial judge’s conclusions.


Duggan v Durham Region Non-Profit Housing Corporation, 2020 ONCA 0788

[Feldman, Fairburn and Nordheimer JJ.A.]

Counsel:

T.J. Hanrahan and M.A. Harper, for the appellants

D.G. Boghosian, A. Allen, and S.S. Taylor, for the respondent

Keywords: Civil Procedure, Bifurcation of Proceedings, Jury Trials, Non-Jury Trials, Inherent Jurisdiction, Statutory Interpretation, Standard of Review, Stare Decisis, Ratio Decidendi, Obiter Dictum, Rules of Civil Procedure, Rule 6.1.01, Courts of Justice Act, ss. 138, Bondy-Rafael v Potrebic, 2015 ONSC 3655 (Div. Ct.), leave to appeal to Ont. CA refused, Hyrniak v Mauldin, 2014 SCC 7, TELUS Communications Inc. v Wellman, 2019 SCC 19, Bell ExpressVu Ltd. Partnership v Rex, 2002 SCC 42, Kovach (Litigation Guardian of) v Kovach, 2010 ONCA 126, leave to appeal refused, [2010] SCCA No. 165, Elcano Acceptance Ltd. v Richmond, Richmond, Stambler & Mills, 55 OR (2d) 56 (CA), Baxter Student Housing Ltd. v College Housing Co-operative Ltd., [1976] 2 SCR 475, Civil Justice Reform Project: Summary of Findings & Recommendations (Toronto: Ontario Ministry of the Attorney General, 2007) (“Osborne Report”), R v Rose, [1998] 3 SCR 262, Carter v Canada (Attorney General), 2015 SCC 5, R v Puddicombe, 2013 ONCA 506, R v Henry, 2005 SCC 76

facts:

The appellants appealed from a decision of the Divisional Court dismissing an appeal of an order bifurcating the issues of liability and damages in a personal injury case. When the appellant was four years old, he fell off a balcony and suffered severe brain injuries. The balcony was a part of the home the appellant’s family leased from the respondent. Some years later, the appellants brought a motion to extend the three-year period to set the action down for trial, so that they may wait for the appellant’s condition to stabilize and have a better understanding of damages. The respondent’s opposed the motion but also argued in the alternative that the damages and liability issues be bifurcated under rule 6.1.01 of the Rules of Civil Procedure (the “Rules”).

The Master granted the appellant’s motion to adjourn but only on the question of damages, and granted the respondent’s request for bifurcation. The appellants appealed this order because rule 6.1.01 requires the consent of the parties. The Superior Court dismissed the appeal because while rule 6.1.01 required consent of both parties, the rule did not oust the inherent jurisdiction of a court to order bifurcation in judge-alone trials. The appellants further appealed to the Divisional Court, with leave.

The majority of the Divisional Court dismissed the appeal and upheld the bifurcation order. The majority was of the opinion that the rule expanded the court’s ability to bifurcate jury trials with consent, but did nothing to oust the court’s inherent jurisdiction to bifurcate non-jury trials, as existed before the rule was implemented. The majority also held that they were not bound by a 2015 decision of the same court in Bondy that addressed the application of rule 6.1.01 to jury and non-jury trials because that case involved a jury trial and so to the extent comments were made on non-jury trials, they were made in obiter. The majority finally grounded its decision in reliance on Hryniak, wherein the Supreme Court of Canada stated that adjudicating disputes is illusory unless it is also accessible, meaning proportionate, timely and affordable.

Of note, the dissenting judge of the Divisional Court found that courts have no authority to bifurcate a trial, jury or non-jury, without consent of the parties because rule 6.1.01 had “occupied the field”, thus ousting the court’s inherent jurisdiction.

issues:

Does rule 6.1.01 limit a court’s ability to bifurcate a trial only on consent in both jury and non-jury trials, or does the court retain its inherent jurisdiction to bifurcate a non-jury trial over the objection of one or both parties?

holding:

Appeal allowed.

reasoning:

Yes, rule 6.1.01 limits a court’s ability to bifurcate a trial only to situations of consent.

As this was a matter of statutory interpretation, the standard of review was correctness. Bell ExpressVu Ltd. Partnership v Rex outlined the principles to be applied, citing Driedger’s Construction of Statutes: “Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.”

Wording of the Rule

Rule 6.1.01 reads as follows: “[w]ith the consent of the parties, the court may order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages.” The majority of the Divisional Court held that the rule should be interpreted to differentiate between jury and non-jury trials, however, the Court of Appeal found no language in the provision that supported that conclusion. Rather, the provision applies to a “proceeding”, defined as an action or application.

Purpose and Context of the Rule

Understanding the state of law prior to a rule’s enactment can give important context to understanding the purpose of a rule. Prior to the enactment of rule 6.1.01 in 2008, the power to bifurcate a trial was found in the inherent jurisdiction of the courts. In Elcano Acceptance, the Court of Appeal explained the power to bifurcate a trial in stating that “the court had the inherent jurisdiction to exercise its discretion to bifurcate a non-jury trial, including ordering separate hearings to determine liability and damages.” The power was to be narrowly circumscribed and exercised in the interest of justice. However, the inherent jurisdiction to bifurcate without consent was not extended to jury trials, as this would conflict with the statutory right to trial by jury. Jury trials could be bifurcated if both parties consented.

With this background in mind, the Court cited at length the Osborne Report, a report prepared in 2007 as part of a consultation on changes to the civil justice system in Ontario. The Civil Rules Committee adopted the recommendations of the report and enacted rule 6.1.01 to prescribe the situations in which a proceeding can be bifurcated. The rule went beyond the report’s recommendations in adding the prerequisite of consent and in doing so, confirmed the state of the law for jury trials, but circumscribed the inherent jurisdiction for non-jury trials by requiring consent of the parties.

Interaction Between Rule 6.1.01 and Inherent Jurisdiction

The majority of the Divisional Court found that the language of the rule was not sufficiently clear and precise to oust the inherent jurisdiction of the courts and that the use of the word ‘may’ makes the rule permissive, not mandatory and thus the rule does not state that bifurcation can only occur with consent. The Court of Appeal found that both of these conclusions were reversible errors of law.

Addressing the issue of permissive language, the Court of Appeal found that the interpretation of the Divisional Court conflated the meaning of ‘may’ in the context of the provision. Properly read in its context, the use of ‘may’ gives a judge residual discretion to not bifurcate the proceedings, even where the parties consent. This reflect the principle found in s. 138 of the Courts of Justice Act, which states that multiplicity of proceedings should be avoided when possible.

Rule 6.1.01 explicitly requires consent of the parties. To hold that a court retains inherent jurisdiction to bifurcate a proceeding absent consent would violate the principle that inherent jurisdiction cannot be exercised so as to conflict with a statute or rule (see Baxter). Further, to suggest there is a distinction to be drawn between jury and non-jury trials is in direct conflict with the unambiguous direction that the rule applies to all proceedings. In regards to the Divisional Court’s holding that the language was not sufficiently clear, the Court of Appeal suggested clarity can be tested by considering how a self-represented litigant would read the rule – if there is a rule that on its face speaks to the issue and contains no exception, a self-represented litigant would be surprised to find out that the court retained some inherent jurisdiction to contradict that rule.

Overall, given the wording of the rule, the background and purpose of the enactment of the rule and the principles governing the interaction between statutory provisions and inherent jurisdiction, the Court of Appeal found that the majority of the Divisional Court had incorrectly interpreted rule 6.1.01.

Additional Considerations: Judicial Efficiency

The Court of Appeal rejected the Divisional Court’s reliance on Hryniak in support of its determination. The Civil Rules Committee explicitly determined that fairness in the context of bifurcation requires consent, as there are many legitimate reasons a party may not consent. The Civil Rules Committee already considered these policy issues when drafting the rule and it was inappropriate for the Divisional Court to try and reintroduce different policy considerations.

Stare Decisis

The Court of Appeal also took the opportunity to clarify aspects of stare decisis, particular the extent to which comments made in obiter are binding on subsequent decisions of courts of the same or lower jurisdiction. In reaching its decision, the majority of the Divisional Court found that it was not bound by a previous decision of that same court in Bondy because the comments on non-jury trials were made in obiter, because that case involved a jury trial and so the ratio must only apply to jury trials.

While certain comments made in obiter are merely persuasive and not binding, this is not true of all comments. The Court of Appeal considered its previous decision in R v Puddicombe, wherein the Court of Appeal city R v Henry, a decision of the Supreme Court. The following passage from Henry is illustrative of the issue: “All obiter do not have, and are not intended to have, the same weight. The weight decreases as one moves from the dispositive ratio decidendi to a wider circle of analysis which is obviously intended for guidance and which should be accepted as authoritative. Beyond that, there will be commentary, examples or exposition that are intended to be helpful and may be found to be persuasive, but are certainly not ‘binding’…”. Where the obiter is integral to the analysis underpinning the ratio, the obiter will be binding.

Applying these principles to Bondy, the Court of Appeal found that the Divisional Court in that case undertook one single analysis of all proceedings, both jury and non-jury. As a result, the discussion as it related to non-jury trials was either not made in obiter, because it was part of one, indivisible analysis, or, in the alternative, if the discussion was in obiter, it was integral to the analysis and was thus binding either way.

There are two situations in which stare decisis will not apply: i) where a new legal issue is raised; and ii) where there is a change in the circumstances or evidence that fundamentally shifts the parameters of the debate (See Carter). The Court of Appeal was of the opinion that neither of these situations applied to the case at hand.

The doctrine of stare decisis is integral to our legal system, and by departing from its own previous decision in Bondy, the Divisional Court erred by failing to follow the doctrine.


Louis v Poitras, 2020 ONCA 0815

[Brown J.A. (Motion Judge)]

Counsel:

J.Y. Obagi and E. A. Quigley for the moving parties, F. L. and M. L.

B. Marta and A. Cottreau, for the responding party, Security National Insurance Company

J. Griffiths for the responding party, TD Insurance Meloche Monnex

Keywords: Civil Procedure, Jury Trials, Striking Jury Notices, Leave to Appeal, Stay Pending Leave to Appeal, COVID-19, Insurance Act, R.S.O. 1990, c. I.8, Courts of Justice Act, R.S.O. 1990, c. C.43, Rules of Civil Procedure, rr. 61.03.1 and 63.02(1)(b), RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.), BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, Sault Dock Co. Ltd. v. Sault Ste. Marie (City) (1972), [1973] 2 O.R. 479 (C.A.), Cowles v. Balac (2006), 83 O.R. (3d) 660 (C.A.), leave to appeal refused, [2006] S.C.C.A. No. 496, Kostopoulos v. Jesshope (1985), 50 O.R. (2d) 54 (C.A.), leave to appeal refused, [1985] S.C.C.A. No. 93, Higashi v. Chiarot, 2020 ONSC 5523, Belton v. Spencer, 2020 ONSC 5327, Jiang v. Toronto Transit Commission, 2020 ONSC 5727, MacDougall v. Sisley, 2020 ONSC 6632, Girao v. Cunningham, 2020 ONCA 260, R. v. Jordan, 2016 SCC 27, Hryniak v. Mauldin, 2014 SCC 7, MacLeod v. Canadian Road Management Company, 2018 ONSC 2186

facts:

The moving party Plaintiffs move for a stay of the Divisional Court’s order dated November 16, 2020 (the “DC Order”), and an order reinstating the defendants’ jury notices pending the hearing of the Plaintiffs’ motion for leave to appeal to the Court of Appeal under Rules 61.03.1 and 63.02(1)(b) of the Rules of Civil Procedure.

One of the Plaintiffs was involved in a motor vehicle collision in Ottawa on May 9, 2013. Two actions have resulted: a tort action and an accident benefits action. Jury notices have been filed in each action. The defendant, TD Insurance Meloche Monnex (“TD Insurance”), issued the insurance policy in the accident benefits action. That policy was underwritten by the defendant Security National Insurance Company (“Security National”).

The trial of the tort action was scheduled for May 2018, however it was adjourned because Plaintiffs’ counsel was in trial on another matter. As a result of a subsequent trial management conference, the two actions were ordered tried together in a 10-week jury trial commencing April 20, 2020. Due to COVID-19, the trial date was then lost.

In July 2020, the Plaintiffs moved for an order striking the jury notices in both actions. The motion judge granted the order on September 9. The motion judge then ordered the trial to proceed in three-week tranches and directed the parties to attend the next Trial Scheduling Court to obtain the first available date for trial. At a case conference on October 9, 2020 the first three-week tranche of the trial was scheduled to commence on February 22, 2021.

The Defendants successfully obtaining leave to appeal the motion judge’s order to the Divisional Court. The Divisional Court allowed the appeal. It concluded that the motion judge had exercised his discretion to strike out the jury notices in an arbitrary fashion, and the effect of the DC Order was to reinstate the jury notices in both actions. The Divisional Court stated that the appeal was granted “without prejudice to the motion [to strike] being renewed whenever information is available to be considered by the court as to either prejudice to the parties or the overall administration of justice”.

The Plaintiffs filed a notice of motion for leave to appeal the DC Order to the Court, and brought this motion to stay the DC Order pending the outcome of the leave motion.

issues:

(1) Whether the motion for a stay of the DC Order should be granted?

(2) Whether the motion for leave to appeal should be heard orally on an expedited basis?

holding:

Motion granted.

reasoning:

(1) Yes. The stay should be granted. The principles applicable on a motion to stay pending appeal come from RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311:

  • Is there a serious question to be tried (i.e., to be determined on the appeal);
  • Will the moving party suffer irreparable harm if the stay is not granted; and
  • Does the balance of convenience favour granting the stay?

Since this was a stay motion a motion for leave to appeal rather than pending an appeal, consideration must also be given to the principles governing applications for leave to appeal from orders of the Divisional Court set out in Sault Dock Co. Ltd. v. Sault Ste. Marie (City) (1972), [1973] 2 O.R. 479 (C.A.) (the “Sault Dock Principles”).

Factor #1: Serious question to be determined

(a) Assessing the serious question to be tried (RJR-MacDonald): The Court agreed with the Plaintiffs’ submission that there was a serious question to be tried, namely: whether there was any basis in fact or law for the Divisional Court to (a) conclude that the motion judge acted “arbitrarily” in granting the Plaintiffs’ motion to strike the jury notice and (b) interfere with the exercise of discretion by a Superior Court judge who found that justice would be better served by striking the jury notice.

The Court stated that appellate review of the exercise of a judge’s discretion to dispense with a jury is limited. To justify appellate intervention, it must be shown that the motion judge’s “discretion was exercised arbitrarily or capriciously or was based upon a wrong or inapplicable principle of law” (Kostopoulos v. Jesshope (1985), 50 O.R. (2d) 54 (C.A.), leave to appeal refused, [1985] S.C.C.A. No. 93).

The Court found it difficult to reconcile the findings of the Divisional Court with the motion judge’s reasons discussing the availability of civil jury trials in Ottawa. The motion judge clearly explained the information he was relying on and the Divisional Court was prepared to accept information of a similar nature. As well, the motion judge stated that it was “unknown when or how a new jury trial may be heard.” The Court stated that this statement by the motion judge was correct at the time of the motion; correct at the time of the Divisional Court hearing; and correct today.

Further, the Court found it is difficult to understand how the Divisional Court could conclude that there was no foundation for a determination by the motion judge that the delay created by the pandemic caused any prejudice to the parties such that the jury notice could be struck. The Court here held that to the contrary, it was clear from the motion judge’s reasons that the Plaintiffs had already waited seven years since the collision for the trial of their actions and, in light of the impact of the pandemic on local court operations, it was not known when or how a new jury trial might be heard. Based on that foundation, the motion judge found that “the real and substantial prejudice arises simply by reason of delay”. The Court held that that was a legally permissible finding, and that delay in obtaining a date for a civil jury trial can, by itself, constitute prejudice and justify striking out a jury notice.

(b) Sault Dock Principles: The question then was whether the Plaintiffs met the “serious question” threshold in the context of a motion for leave to appeal.

Before granting leave to appeal, the Court of Appeal had to be satisfied that the matter will present an arguable question of law or mixed law and fact requiring of the Court consideration of matters such as the following:

(a) the interpretation of a statute or Regulation of Canada or Ontario including its constitutionality;

(b) the interpretation, clarification or propounding of some general rule or principle of law;

(c) the interpretation of a municipal by-law where the point in issue is a question of public importance;

(d) the interpretation of an agreement where the point in issue involves a question of public importance.

As well, the Court will also consider cases where special circumstances would make the matter sought to be brought before the Court a matter of public importance or would appear to require that in the interest of justice leave should be granted – such as the introduction of new evidence, obvious misapprehension of the Divisional Court of the relevant facts or a clear departure from the established principles of law resulting in a miscarriage of justice.

The Court felt there were strong grounds to believe that the serious question the Plaintiffs raised satisfied the Sault Dock test in two respects. First, the serious question advanced by the Plaintiffs arguably fell within the Sault Dock category of an “obvious misapprehension of the Divisional Court of the relevant facts.” Second, the serious question raised by the Plaintiffs also arguably engaged a matter of public importance that the Court should consider in the interest of justice. The statutory right to a civil jury trial was a qualified right, subject to the power of the court to order an action to proceed without a jury.

The Court acknowledged that while a court should not interfere with the right to a jury trial in a civil case without just cause or cogent reasons, a judge considering a motion to strike out a jury notice has broad discretion to decide whether the moving party has shown that justice to the parties will be better served by the discharge of the jury. This broad discretion is currently being influenced by two factors – the COVID-19 impact on courts and the court system’s mindset of “complacency” and a willingness to tolerate excessive delays. The Court further acknowledged that it must react to the realities facing civil litigants and the civil justice system.

The Court held that when looking at the current court system and the realities of COVID-19, the serious question for appeal advanced by the Plaintiffs raised a matter of public importance. The Court phrased the question as: are intermediate appellate courts agents of change in shifting away from the justice system’s culture of complacency toward delay, or is their task simply to protect the status quo? The Court stated that these are not merely questions of public importance raised by the Plaintiffs’ motion for leave to appeal; they are existential questions about the future viability of Ontario’s civil justice system. Thus, the Court held that the serious question raised by the Plaintiffs meets the threshold test on a stay motion set by RJR-MacDonald, applied in light of the Sault Dock principles.

Factor #2: Irreparable Harm

The Court was satisfied that the Plaintiffs had demonstrated that if a stay was not granted, they would likely lose their February 22, 2021 trial date and the trial of their actions would be adjourned for an uncertain and, at present, incalculable length of time. As a result, they would suffer irreparable harm.

The irreparable harm stage of the analysis focuses on the harm the moving party may suffer if the stay is not granted. The Plaintiffs have demonstrated that, if the trial date is vacated, they will suffer non-compensable loss caused by the further deferral of the adjudication of their claim for loss of income. Section 267.5(1) of the Insurance Act limits the damages for income loss “before the trial of the action” to 70% of the gross income lost. That “cap” would continue until the trial commences on some uncertain, unknowable future date.  That further loss caused by a postponement of the February 22, 2021 trial could not by recovered by the Plaintiffs. Further, based on the current situation with COVID-19, civil jury trials remain suspended until further notice. Thus, the Court was satisfied that the Plaintiffs had demonstrated that they will suffer irreparable harm if a stay is not granted.

Factor #3: Balance of Convenience

The Court was satisfied that the harm the Plaintiffs will suffer favours granting the requested stay.

Balance of convenience requires a determination of which of the two parties will suffer the greater harm from the granting or refusal of the stay, pending a decision on the merits.

The Court acknowledged that the statutory right to a civil jury trial under s. 108 of the Courts of Justice Act is a qualified, but not an absolute, statutory right. In this case, the Defendants were responding to the Plaintiffs’ effort to preserve a date for a trial before a judge alone, however the Defendants did not explain, in specific functional terms, what litigation disadvantage they might suffer if their rights were adjudicated by an impartial and independent judge instead of by an impartial and independent jury. The Court held that the absence of evidence of a litigation disadvantage, when weighed against the irreparable harm the Plaintiffs will suffer if the scheduled trial date was vacated, led the Court to conclude that the balance of convenience overwhelmingly favoured granting the requested stay.

The three elements of the RJR-MacDonald test should be considered in light of the overarching consideration of whether it is in the interests of justice to grant a stay. The Court had no hesitation in concluding that it was in the interests of justice to grant a stay of the DC Order.

(2) Yes. The Court ordered the motion for leave to appeal proceed on an expedited schedule, and to be heard orally at the same time, and by the same panel, as the appeal.

The scheduled February 22, 2021 trial date was the key to this conclusion, as there was insufficient time between now and then for the Plaintiffs’ proposed appeal to proceed under the normal timelines. The leave to appeal could be heard in the ordinary course before the trial date, however, if the panel granted leave, standard appeal scheduling would not generate an appeal hearing before the trial date. Further, the issue of civil jury trial scheduling during the continuation of the pandemic had been raised in several cases and may require consideration by the Court before the pandemic ended.


Hoang v Mann Engineering Ltd., 2020 ONCA 0808

[Doherty, Lauwers and Miller JJ.A.]

Counsel:

K.M.H., appearing in person

T. Flett and D. Hassell, for the respondents

Keywords: Torts, Negligence, Duty of Care, Foreseeability, Garnishment, Abuse of Process, 168872 Ont. Inc. v. Maple Leaf Foods Inc., 2020 SCC 36, Cooper v. Hobart, 2001 SCC 79, Rankin v. J.J., 2018 SCC 19

facts:

As a result of the dismissal of the appellant’s wrongful dismissal claim in 2014, the respondent was awarded costs. In 2016, the respondent brought a motion in the garnishment proceedings seeking, among other things, an order requiring the appellant’s new employer to pay the appellant’s debt. The employer was not separately represented. The appellant appeared and made submissions referable to both his and the employer’s position. The endorsement was silent about the enforcement order but allowed the garnishment to proceed. Counsel for the respondent prepared a draft order. The order issued as drafted by the respondent included an enforcement order requiring the employer to pay to the respondent the entire amount of the judgment debt owed by the appellant.

The employer became aware of the enforcement order when the respondent brought a motion to vary the order. On the return of that motion, the president of the employer filed an affidavit indicating the appellant had assumed responsibility for the garnishment proceedings. The president alleged he had been misled by the appellant on many matters relating to the garnishment. The employer was prepared to comply with the garnishment order, but asked the master to set aside the enforcement order. The master accepted this position and set aside the enforcement order on the basis of mistake. The employer terminated the appellant about a month later.

The appellant sued the respondent in negligence for damages arising out of his dismissal. The appellant alleged that but for the improper obtaining of the enforcement order by the respondent, his employer would not have come to the opinion the appellant had misled and lied and would not have fired him. The appellant also alleged that since his job was the source of his potential payment of the debt, his employment was “an asset” to the respondent. This, said the appellant, established the requisite relationship between the appellant and the respondent necessary to impose a duty of care in the garnishment proceedings on the respondent in respect of the appellant’s ongoing employment. Finally, the appellant alleged his termination was a reasonably foreseeable consequence of the respondent obtaining the enforcement order against the employer.

The respondent moved for summary judgment. The appellant brought a cross-motion for summary judgment. The motion judge granted the respondent summary judgment and dismissed the appellant’s action and the cross-motion. Although the appellant’s statement of claim advanced only a negligence claim, the motion judge treated the appellant’s claim as if it included a claim based on the tort of abuse of process. The motion judge, after reviewing the transcripts of the proceedings before the master, and the terms of the endorsement, was satisfied that the order should not have contained the enforcement order requiring the employer to pay the appellant’s debt. The motion judge found no triable issue in respect of either the negligence claim or the abuse of process claim. The appellant appealed from that order.

issues:
  1. Did the motion judge err in determining that there was no triable issue on the question of whether the respondent owed a duty of care to the appellant?
  2. Did the motion judge misapprehend the evidence?
  3. Did the motion judge err in speculating as to the cause of the appellant’s termination?
  4. Did the motion judge wrongly suggest that the tort of abuse of process applied only if the appellant showed that the respondent owed a duty of care to the appellant?
holding:

Appeal dismissed.

reasoning:
  1. Did the motion judge err in determining that there was no triable issue on the question of whether the respondent owed a duty of care to the appellant?

No. The court was satisfied that the appellant’s negligence action was properly dismissed on the basis that the evidence did not give rise to a triable issue on the question of whether the respondent, in the course of pursuing the garnishment proceedings, owed a duty of care to the appellant. The appellant submitted that, because his job was “an asset” to the respondent, in that it was a potential source of the payment of the appellant’s debt, the respondent owed the appellant a duty of care in respect of that “asset”. In effect, the appellant argued, a judgment creditor, who is seeking to realize on a judgment through garnishment proceedings, owes a duty of care to the debtor to take all reasonable steps to avoid causing harm to the debtor’s ongoing employment. The appellant acknowledged this was a novel duty of care. Neither the specific duty, nor any analogous one had ever been recognized in the Canadian law of negligence.

When a negligence claim is advanced based on a novel duty of care, the courts determine whether that duty exists using a two-step process. The first step looks to the nature of the relationship and the foreseeability of the harm caused. These two factors, both of which address proximity, determine whether a prima facie duty of care is established. At the second step, the court looks to residual policy considerations which warrant negating the prima facie duty of care established at the first step.

The Court was satisfied that there was no prima facie duty of care. The evidence did not establish the requisite proximity between the appellant and the respondent. The Court found that there was no relationship between them other than the relationship of a judgment creditor using a garnishment proceeding in an effort to realize on the debt owed by a judgment debtor. The adversarial relationship inherent in the litigation process was antithetical to the kind of relationship that gives rise to a duty of care. The Court held that there was nothing in the relationship that could justify placing an obligation on the respondent to take reasonable steps to protect the appellant’s ongoing employment from any possible negative consequences flowing from the respondent’s conduct of the garnishment proceedings.

Despite this finding, the court continued in its analysis of the first step of the test with respect to foreseeability. The Court held that, on the evidence, there was no basis upon which the respondent knew, or ought to have known, its actions would cause the employer to believe the appellant had misled the employer throughout the garnishment proceedings. Without that knowledge, it was not reasonably foreseeable the employer would fire the appellant after the respondent obtained the enforcement order. Consequently, the kind of damage alleged by the appellant was not a reasonably foreseeable consequence of obtaining the enforcement order.

Although the second step of the duty of care analysis was not required, the Court commented that policy considerations pointed strongly away from recognizing the duty of care advanced by the appellant.

  1. Did the motion judge misapprehend the evidence?

No. The motion judge referred to the respondent abandoning the claim for an enforcement order “in the course of the hearing”. The motion judge was referring to the submissions made by counsel for the respondent, in which he appeared to abandon any request for an enforcement order, focussing instead on the garnishment order. The Court did not read the comment by the motion judge as speaking to the respondent’s actions after the enforcement order was obtained.

  1. Did the motion judge err in speculating as to the cause of the appellant’s termination?

No. The appellant argued that there was no evidence to support the motion judge’s findings that the appellant was fired for “surreptitious conduct”. The respondent’s statement of defence alleged the appellant’s actions caused his own termination. The Court held that judges on summary judgment motions are permitted to draw reasonable inferences; and there was evidence before the motion judge from which it could be inferred that the appellant’s actions caused his own dismissal. The Court held that, since the appeal on the duty of care was being dismissed, it was not necessary to decide whether an inference was appropriately made.

  1. Did the motion judge wrongly suggest that the tort of abuse of process applied only if the appellant showed that the respondent owed a duty of care to the appellant?

Yes. The tort of abuse of process is premised on an improper use of the civil justice process. The Court held that the concept of a duty of care had no role to play in the abuse of process analysis. Although the motion judge accurately identified the elements of the tort, later in his reasons he wrongly indicated a duty of care was also an element of an abuse of process claim. Assuming the motion judge erred in law in describing the elements of the tort of abuse of process, the Court found that error could not advance the appellant’s appeal. The appellant did not advance a claim based on the tort of abuse of process. The Court held that any misstatement of the elements of that tort by the motion judge could not prejudice the appellant.


Ontario Securities Commission v Money Gate Mortgage Investment Corporation, 2020 ONCA 0812

[MacPherson, Zarnett and Jamal JJ.A]

Counsel:

E. Karp, for the non-party appellant

M. Poliak, for the respondent in its capacity as court-appointed receiver

Keywords: Securities Law, Unregistered Dealing in Securities, Bankruptcy and Insolvency, Receiverships, Priority, Real Property, Mortgages, Validity, Civil Procedure, Advice and Directions, Summary Judgment, Partial Summary Judgment, Securities Act, R.S.O. 1990, c. S.5, ss. 129 (1) and (2), Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, Land Titles Act, R.S.O. 1990, c. L.5, ss. 78 (4) and (4.1), Polywheels Inc. (Re), 2010 ONSC 1265, 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702 (Div. Ct.), Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, Re Urbancorp Cumberland 2 GP Inc., 2017 ONSC 7649, Hryniak v. Mauldin, 2014 SCC 7

facts:

Money Gate Mortgage Investment (“Money Gate”) was a mortgage investment corporation that lent money secured by residential and commercial mortgages. Between August 2014 and April 2017, in order to fund its activities, it raised approximately $11 million from multiple investors by selling them preferred shares. However, Money Gate was not registered with the Ontario Securities Commission (“OSC”) in any capacity.

In April 2017, the staff of the OSC (“Staff”) commenced an investigation of Money Gate, an affiliated corporation, and two individuals, B.K and P.K., (the “K’s”), who were Money Gate’s directors and officers. In November 2018, the OSC applied for the appointment of a receiver of Money Gate. The affidavit in support of the application stated that as at November 2, 2018, Money Gate’s loan portfolio consisted of nine outstanding loans, the majority of which were in default, and that the portfolio had a realizable value that was significantly less than the amounts Money Gate had raised from investors. On November 6, 2018, an order was made appointing the respondent as receiver in relation to all of the assets, undertaking and properties of Money Gate, including any mortgages in favour of Money Gate.

One of the mortgages that Money Gate held at the time of the receivership was the 254 Mortgage. Using funds that had been raised from investors, Money Gate advanced $611,000 to 254’s lawyers on May 29, 2017. On June 5, 2017, the 254 Mortgage, signed by 254’s sole director, was registered as a second mortgage against property owned by 254 on Dovercourt Road, Toronto (the “Dovercourt Property”), charging that property in favour of Money Gate as security for the repayment of the loan.

On May 15, 2017, 254’s sole shareholder, P. K, executed a resolution (the “Resolution”) amending its Articles by restricting 254’s ability to borrow or grant a mortgage without the consent of a majority of its shareholders voting at a meeting, or the consent in writing of all of its shareholders. On May 24, 2017, the appellant acquired 50% of the shares of 254.

On July 4, 2018, on the application of Money Gate, a receiver was appointed over the Dovercourt property. In January 2019, the Dovercourt property was sold, with court approval. From the proceeds, the first mortgagee and the expenses of sale were paid. The balance—the Sale Proceeds—were to be paid to the Money Gate receiver, to be held pending a court order for distribution. The Sale Proceeds ultimately received by the Money Gate receiver ($556,078.73) were significantly less than the amount of investor-provided funds ($611,000) that were originally advanced under the 254 Mortgage, and the amount owing by 254 on that mortgage at the time of the property sale ($768,161.45).

In order to determine if it could distribute the Sale Proceeds to investors, the Money Gate receiver brought a motion seeking advice and directions of the court. The motion judge granted the Money Gate receiver’s request that the 254 Mortgage be declared valid and enforceable on a summary fashion, and directed that the Sale Proceeds could be released for distribution.

issues:

(1) Did the motion judge lack the authority, on a motion for advice and directions, to grant what was effectively summary judgment?

(2) Did the motion judge err in deciding that the 254 Mortgage was valid and that the sale proceeds should be available for distribution without ordering a trial?

(3) Did the motion judge inappropriately grant partial summary judgment?

holding:

Appeal dismissed.

reasoning:

(1) No. The motion was for advice and directions brought in a receivership proceeding. This gave the motion judge the power to decide the merits of the dispute about the validity of the 254 Mortgage, and the entitlement to the Sale Proceeds, in a summary way without a trial, following an approach modelled upon that used on motions for summary judgment. The context and purpose of the receivership supported that conclusion. The Money Gate receiver was appointed under statutory authority that aims at the protection of the best interests of a company’s creditors and security holders. The receiver’s broad powers, to bring in Money Gate’s assets and to hold them for distribution, were in the service of that purpose.

The 254 Mortgage was ostensibly an asset of Money Gate. The Sale Proceeds had been paid over to the Money Gate receiver. The Money Gate receiver was entitled to advice and directions of the court as to whether the asset—the Sale Proceeds representing a recovery under the 254 Mortgage—was properly available for distribution in light of the appellant’s claim.

The case of Re Urbancorp Cumberland 2 GP Inc., 2017 ONSC 7649, did not support the appellant’s position. In that decision, it was held that if the Monitor had power to bring proceedings, they can be brought summarily. Here, the Money Gate receiver was expressly given the power, in the receivership order, to initiate, prosecute and defend proceedings with respect to Money Gate or its assets. The Money Gate receiver was not simply attempting, under the guise of a motion for advice and directions, to exercise a power it did not have.

The summary judgment process is designed to be a means to adjudicate and resolve disputes without undue process and protracted trials, and thus avoid unnecessary expense and delay: Hryniak v. Mauldin, 2014 SCC 7. Second, summary judgment is designed to be a fair and just process to resolve a dispute and apply the relevant legal principles to the facts as found. In motions seeking a final decision that are not formally motions for summary judgment, the summary judgment procedure provides useful assistance by analogy: Polywheels Inc. (Re), 2010 ONSC 1265.

(2) No. The motion judge’s essential finding, that there was no genuine issue that required a trial, was unassailable. The Money Gate receiver’s position that the 254 Mortgage was valid and the Sale Proceeds should be available for distribution was firmly rooted in uncontested facts. Money Gate advanced $611,000 to 254 as a loan, and it was not repaid. The 254 Mortgage was signed by 254’s sole director and registered against property owned by 254. The Sale Proceeds were funds available to the second mortgage holder, and thus were paid to the Money Gate receiver.

The motion judge found that there was no evidence of fraud. The principal of the appellant who filed an affidavit did not mention fraud. By analogy to summary judgment, the appellant was required, by affidavit or other evidence, to set out specific facts showing a genuine issue requiring a trial. It was required to put its best foot forward. A mortgage that is registered is valid and enforceable according to its nature and intent unless it is a “fraudulent instrument”: Land Titles Act, R.S.O. 1990, c. L.5 (“LTA”), ss. 78 (4) and (4.1). In any event, the fraud that the appellant alleged was perpetrated on it would not impugn the validity of the 254 Mortgage. The 254 Mortgage was given by 254, the owner of the property charged, not by a non-existent person. It was executed by 254’s sole director. No signature was forged: 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702. Absent fraud, the appellant’s position that the 254 Mortgage lacked its consent as required by the Resolution landed even farther from the statutory requirement of a “fraudulent instrument”. Moreover, the motion judge properly found that the appellant did consent to the 254 Mortgage. She rooted her finding in the evidence of the appellant’s principal on cross-examination that he consented subject to a condition, and in emails produced by the appellant that referred to the second mortgage transaction proceeding. Her interpretation of this evidence was reasonable, namely that there was a consent, and that fulfilment of the condition of the consent—a payment by 254 to the appellant out of the loan proceeds—did not affect the validity of the loan transaction between 254 and Money Gate.

(3) No. The motion judge’s decision resolved the entire dispute between the appellant and the Money Gate receiver concerning the validity of the 254 Mortgage and the Sale Proceeds. The fact that the appellant commenced an action in early 2019 against the Money Gate receiver and others did not make this determination a partial one, in the sense of resolving part of an action while the remainder proceeded. The action against the Money Gate receiver, commenced without leave, was correctly considered a nullity as against the receiver by the motion judge, who also noted that the appellant had not proceeded at all with the action since its commencement. A material risk of inconsistent results was not present. Directing a trial and waiting for the appellant to proceed with its long dormant claim against others would involve delays and would not be cost-effective, judicious or expeditious. Nor would it be consistent with the goals of the receivership. The principles that limit the grant of partial summary judgment are aimed at avoiding proceeding in a manner that will not be cost effective, judicious or expeditious because overlapping issues will proceed to trial: Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369.


Plese v Herjavec, 2020 ONCA 0810

[Strathy C.J.O., Brown and Huscroft JJ.A.]

Counsel:

B.R.G. Smith, C. Johnston and H. Niman, for the appellant

L.H. Pawlitza and A.N. Black, for the respondent

Keywords: Family Law, Spousal Support, Compensatory Support, Needs-Based Support, Standard Of Review, Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 15.2, Spousal Support Advisory Guidelines, Halliwell v. Halliwell, 2017 ONCA 349, Ballanger v. Ballanger, 2020 ONCA 626, Hickey. Hickey, [1999] 2 S.C.R. 518, Miglin v. Miglin, 2003 SCC 24

facts:

The parties separated after 24 years of marriage. By the time of their separation, the parties had accumulated substantial assets and enjoyed a significant income. The respondent commenced family law proceedings involving five main issues, chief among them being equalization of net family property, spousal support and child support. Following a trial, the trial judge ordered the appellant to make an equalization payment of $2,689,558 in lump sum, a spousal support payment of $125,000 per month to the respondent, and child support in the amount of $14,233 per month, from May to August inclusive, for each year the parties’ youngest daughter remained in university.

In making the order for spousal support, the trial judge noted that the “overarching criterion” was a determination of what was “reasonable”, having regard to the “conditions, means and other circumstances of the parties”. The trial judge also expressly noted that she was required to consider the factors ad objectives of a spousal support orders, as outlined in s. 15.2 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.).

In her analysis, the trial judge did consider multiple factors set out in s. 15.2(4) of the Divorce Act, including: (a) the length of time that the spouses cohabited; the functions performed by each spouse during the cohabitation; and (c) whether there were any orders, agreements or arrangements relating to the support of either spouse. Related to these factors, the trial judge made several findings of fact. Some of the more significant facts included that the marriage was a lengthy one, that the parties worked as a “team” and that the respondent’s contributions were pivotal in allowing the appellant’s business ventures to grow and prosper.

The trial judge then moved on to consider the objectives of a spousal support order, as outlined in s. 15.2(6) of the Divorce Act. These include: (a) recognizing any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportioning between the spouses any financial consequences arising from the care of any child of the marriage; (c) relieving any economic hardship of the spouses arising from the breakdown of the marriage; and (d) insofar as possible, promoting the economic self-sufficiency of each spouse within a reasonable period of time. Again, the trial judge made several key findings of fact related to these objectives. These included the disparity in the parties’ respective “capital bases” of assets, and the fact that the appellant’s capital assets enabled him to earn significantly more income relative to the capital assets of the respondent. Also of importance was the fact that the appellant’s encouragement of the respondent to withdraw from her career once his businesses began to prosper and focus on the upbringing of the children significantly diminished her capacity to earn future income.

In consideration of the above factors and objectives, the trial judge concluded that the respondent was entitled to support. The inquiry then shifted to determining the appropriate amount of support. On this issue, the trial judge noted neither need alone nor blind application of the Spousal Support Advisory Guidelines (“SSAGs”) determine the appropriate amount of spousal support, nor its duration, as the correct process is to take a much more nuanced approach. The fact that the parties here were exceptionally high income earners made the nuanced approach even more relevant.

The trial judge ultimately found that $125,000 per month was an appropriate order in the circumstances. Although the amount was significantly lower than any of the SSAGs scenarios, and that it gave the respondent about 39% of the parties’ net disposable income, the trial judge saw it as a “reasonable balancing of the economic consequences of the end of the marriage, coupled with reasonable compensation for the respondent, over and above simply meeting her monthly needs”. The trial judge made the order for an indefinite duration, noting there was nothing on the respondent’s horizon to indicate that her need for, or entitlement to, spousal support would change in the future.

issues:

(1) Did the trial judge err in her assessment of the respondent’s needs and means?

(2) Did the trial judge err in her determination of spousal support by failing to apply, or incorrectly applying, the Court’s decision in Halliwell v. Halliwell, 2017 ONCA 349, and the SSAGs?

(3) Did the trial judge err in her order for indefinite spousal support by refusing to stipulate a termination date or review terms?

holding:

Appeal dismissed.

reasoning:

Before addressing any of the issues raised above, the Court briefly noted the standard of review applicable in this case. Specifically, the standard of review on all matters relating to support is highly deferential, as summarized in Ballanger v. Ballanger, 2020 ONCA 626. An appellate court is not permitted to overturn a support order simply because it would have reached a different result, and should only interfere with support orders if the reasons disclose an error in principle, a significant misapprehension of the evidence, or if the award is clearly wrong (Hickey v. Hickey, [1999] 2 S.C.R. 518).

(1) Did the trial judge err in her assessment of the respondent’s needs and means?

No. The Court confirmed that the trial judge correctly understood the law in her finding that a spousal support inquiry is driven by both compensatory and non-compensatory considerations (Miglin v. Miglin, 2003 SCC 24). In that respect, the Court noted that the appellant’s submissions seemed to be preoccupied with assessing the respondent’s need, rather than acknowledging that a large portion of the respondent’s support was attributed to compensatory entitlement factors.

In any event, the appellant’s submissions regarding the trial judge’s alleged erroneous assessment of the respondent’s needs did not come anywhere close to satisfying the “palpable and overriding” error threshold necessary to overturn a support order. The Court concluded that the trial judge evaluated a wide array of evidence, and was entitled to weigh the evidence in the respondent’s favour accordingly, based on her assessment of the facts. The Court emphasized that there is a higher evidentiary burden to meet when the support award is substantially or exclusively determined in accordance with the recipient’s “needs”. However, in this case, the significant compensatory element meant that the evidentiary burden was somewhat relaxed, and that this further supported the view that the appellant had not demonstrated palpable and overriding error on the part of the trial judge.

(2) Did the trial judge err in her determination of spousal support by failing to apply, or incorrectly applying, the Court’s decision in Halliwell v. Halliwell, 2017 ONCA 349, and the SSAGs?

No. On this point, the appellant asserted that in cases where a payor’s income exceeds $350,000, the Halliwell decision requires the court to calculate the payor’s income based on the mid-way point between the SSAGs “cap” and the payor’s income. The Court rejected this interpretation of Halliwell. The correct interpretation of that decision is that it simply emphasizes what the SSAGs have always stated, “above the $350,000 ceiling, an additional formula range is created: appropriate income inputs range anywhere from $350,000 to the full income amount. Entitlement is important to determine a location within that range”. Given that the Halliwell range includes, at the upper end, the use of the full amount of the payor’s income, the award was well within the appropriate range.

(3) Did the trial judge err in her order for indefinite spousal support by refusing to stipulate a termination date or review terms?

No. The appellant argued that the indefinite support order, and the fact that it was binding on the appellant’s estate, meant that there could be no review of the order. The Court aptly rejected this argument, stating that the indeterminate nature of the order simply meant that no termination date was specified in advance. The appellant reserved the right to seek a review should a material change occur in either or his or the respondent’s circumstances.


7084421 Canada Ltd. v Vinczer, 2020 ONCA 0829

[Brown J.A. (Motion Judge)]

Counsel:

G.A., acting in person and on behalf of the moving party, 7084421 Canada Ltd.

A.V., acting in person

Keywords: Contracts, Debtor-Creditor, Mortgages, Civil Procedure, Default Judgment, Setting Aside, Stay Pending Appeal, Jurisdiction, Self-Represented Corporations, Security for Costs, Writs of Possession, Courts of Justice Act, s. 110, Rules of Civil Procedure, Rules 15.01(2), 60.1(2), 63.01(1), 63.02(1), 63.03(5)

facts:

The respondent loaned significant sums of money to the appellants on the security of two properties. The loan agreement was remarkably one-sided and was a bad deal for the appellants, however, they were desperate for money and entered into it. Shortly thereafter, they went into default. The respondents sued for repayment and possession of the properties. The appellants failed to file a statement of defence and default judgment against them was signed by the Registrar.

On the appellants’ subsequent motion to set aside the default judgment, the judge found that the appellants’ reasons for not filing a defence were weak, they offered no explanation for the delay in bringing their motion to set aside the judgment and for the most part, they raised no arguable defence. The only valid defence they raised were for certain charges collateral to the debt that the respondent was seeking.

The judge refused to set aside the default judgment, but did vary some of its terms as it related to the collateral charges. The appellants than appealed to the Divisional Court, which was the wrong court because the amount at issues was well in excess of $1 million. However, the Divisional Court accepted the appeal. Upon accepting the appeal, the Registrar issued a certificate certifying that the varying order of the Superior Court was stayed, however, the certificate was prepared by the self-represented appellant and contained a major error. The certificate did not state, as required by Rule 63.03(5), whether the stay was under Rule 63.01(1) (the automatic stay of an order for the payment of money) or by order under Rule 63.02(1). Because of the nature of the order, the automatic stay did not apply, and so the appellants needed an order from a judge to stay the order, which they did not obtain. Thus, the certificate was issued in error.

The appellants then brought an ex parte motion to stay the eviction the respondents were attempting to effect pending the appeal. The motion judge recognized the appeal had been brought before the wrong court and therefore transferred it to the Court of Appeal. The motion judge also noted that the certificate was an order of the Superior Court and was thus binding until it was set aside, which it had not been, thus a stay was not needed. This was an error, as a certificate is not an order. However, because the certificate was issued in error, a stay was not available regardless of the motion judge’s misapprehension of the law.

Once the appeal was finally transferred to the Court and the numerous procedural anomalies and errors were resolved, the respondents brought the motion at hand.

issues:

(1) Representation of the Parties;

(2) Review of the motion judge’s order;

(3) Security for Costs;

(4) Dismissal of the Appeal;

(5) Setting aside the certificate;

(6) Writ of possession for the mortgaged properties.

holding:

Motion granted in part.

reasoning:

(1) Representation of the parties

The president and sole shareholder of the respondent corporation sought leave under Rule 15.01(2) to represent the corporation. His motion materials were quite focused, and as a former paralegal, the Court of Appeal was satisfied that he would be a suitable representative, and so ordered.

The respondent also sought an order that certain appellants be represented or removed from the appeal. The Court was not willing to order this, as they were parties to the default judgment and named appellants. However, the appellants in question were elderly and the Court was concerned they may not be aware of the proceedings and so ordered that they must sign any materials that were filed on the appeal.

(2) Review of the motion judge’s order

The respondent sought an order granting an extension of time to serve a motion to review the motion judge’s order. However, as it was an order of a sitting judge of the Divisional Court, the Court of Appeal had no jurisdiction to grant the relief sought.

(3) Security for Costs

The respondent sought an order for security for costs, however, as the respondent was self-represented, their legal costs would be minimal. Further, they did not file a bill of costs and so there was no basis on which the Court of Appeal could order security for costs.

(4) Dismissal of the Appeal

The respondents sought an order dismissing the appeal. While the motion judge for the Court of Appeal recognized an issue in his jurisdiction to grant the order, he did not feel it necessary to address. Instead, the motion judge found that setting a date for the perfection of the appeal to be a more suitable remedy. The motion judge found the appellants’ delay in perfecting their appeal to be unacceptable and so set a date for which the appeal must be perfected by. If it is not, the appellants will be barred from filing any materials without leave and at that point the respondents may move in writing before a panel of the Court for dismissal.

(5) Setting Aside the Certificate

As stated above, the certificate was issued in error as it contained a fatal procedural flaw. The certificate was thus set aside. The motion judge left it open for the appellants to bring a motion under Rule 63.02(1) to obtain an order a judge staying the subject order, at which point a certificate may be issued if the order is granted.

(6) Writ of Possession

The respondent sought a writ of possession of the mortgaged properties. A court may grant leave to issue a writ of possession only where all persons in actual possession of any part of the land have received sufficient notice of the proceedings in which the order was obtained. There was no evidence that persons actually in possession of the properties were notified or served with any documents from the proceedings and so leave to issue a writ of possession was refused.


Abu-Saud v Abu-Saud, 2020 ONCA 0824

[Strathy C.J.O., Huscroft and Roberts JJ.A.]

Counsel:

S. E. Hassan, for the moving party

W. R. Clayton, for the responding party

Keywords: Family Law, Spousal Support, Civil Procedure, Quashing Appeals, Orders, Non-Compliance, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(3), Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31, Family Law Rules, O. Reg. 114/99, Rules 1(8)(e), 2(2), 2(3)(b), Dickie v. Dickie, 2007 SCC 8, Brophy v. Brophy (2004), 180 O.A.C. 389 (C.A.), Siddiqui v. Anwar, 2018 ONCA 965, Cosentino v. Cosentino, 2017 ONCA 593

facts:

The moving party moved to quash the appeal of her former spouse, the responding party, based on his ongoing and wilful breach of court orders that he pay ongoing and arrears of spousal support. Rather than making any attempts at compliance, in response to the moving party’s motion to quash his appeal, the responding party attempted to bring before the appellate court a cross-motion to stay the trial judge’s order.

issues:

1. Should the appeal be quashed?

2. Should the responding party be permitted to bring a cross-motion to stay the trial judge’s order be granted?

holding:

Motion granted. Cross-motion dismissed.

reasoning:
  1. Should the appeal be quashed?

Yes. The Court agreed with the moving party that the responding party’s breach of the trial judge’s order and the Court’s order dated May 22, 2020 was deliberate, relentless, and indefensible. It was common ground that the Court has jurisdiction to quash or dismiss an appeal in the face of non-compliance with a support order. Moreover, the Court has consistently refused to hear from defaulting appellants or entertain their appeals where the record shows continuing disobedience with court orders. Quashing or dismissing an appeal for non-compliance is not automatic. Factors to be considered by the Court in determining whether to exercise its discretion to quash an appeal include: the wilfulness of the breach; the amount of arrears; the excuse for the breach; and the efforts to correct the breach. The Court reiterated that an order for support is not optional.

All these considerations unequivocally favoured the moving party and her motion to quash the appeal. A review of the relevant factual and procedural chronology of these proceedings clearly demonstrated that the responding party had deliberately undertaken, without lawful justification, whatever step he could to avoid his support obligations to the moving party.

  1. Should the responding party be permitted to bring a cross-motion to stay the trial judge’s order be granted?

No. The responding party had admittedly, unabashedly, and unjustifiably breached the orders of the trial judge and the Court. He had always been represented by counsel and never expressed confusion about what the court orders meant. Before being faced with the present motion to quash his appeal, he had never attempted to stay the trial judgment. The Court concluded that the responding party chose not to pay the amount of court-ordered spousal support because he simply did not want to. The Court found that the responding party was inexcusably in breach of court orders that he pay spousal support to his former wife. The Court condemned his behaviour in the strongest terms.


C & K Mortgage Services Inc. v Camilla Court Homes Inc., 2020 ONCA 0817

[Strathy C.J.O., Huscroft and Roberts JJ.A.]

Counsel:

R. Macklin and W. Jiang, for the appellant

D. Preger, for the respondent C & K Mortgage Services Inc.

E. Golden, for the receiver of the respondents Camilla Court Homes Inc. and Elite Homes Inc.

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Equitable Interests, Mortgages, Priority, Bankruptcy and Insolvency, Receiverships, Armadale Properties Ltd. v. 700 King Street (1997) Ltd. (2001), 25 CBR (4th) 198 (Ont SC)

facts:

The appellant entered into an agreement of purchase and sale (“APS”) to purchase a residential unit in a condominium project for $1,758,000. He paid a deposit of $500,000, of which $100,000 was paid in trust to the real estate broker, and the remaining $400,000 was paid directly to the developer to assist in timely completion of construction. At the time of sale, the property was subject to a first mortgage given by the respondent owner, Camilla Court Homes, to the respondent mortgagee, C&K Mortgages. The mortgagee had agreed to provide partial discharges of the $4.55 million loan subject to satisfaction of specific conditions. The APS was entered into without the knowledge or authorization of C&K Mortgages. It provided that the agreement was “subordinate to and postponed to any mortgage(s) arranged by the Vendor”. The developer then informed C&K Mortgages it was seeking a discharge of the mortgage to complete the sale of the property to the appellant, and that the sale proceeds of $1.78 million would be short $400,000 because those funds had been used to cover ongoing construction and development activity.

C&K Mortgages applied to have a receiver appointed over the assets of Camilla Court and Elite Homes. At the application hearing, it was found that the first mortgage could not be paid in full from the sale proceeds and there were additional construction liens registered on title. An interim order was issued. A receiver was appointed to finance the remaining construction and market and sell the properties. This order effectively froze the status quo and precluded the sale of the property to the appellant from closing on the scheduled date. The appellant did not appeal the order, but the receiver later decided to disclaim the APS.

The appellant then moved for an order requiring the receiver to complete the APS rather than disclaim it. He asserted he had an equitable or proprietary interest in the property for $500,000, the amount of his deposit. The motion judge dismissed the appellant’s motion. In short, the motion judge found that the appellant did not have an equitable or proprietary interest in the property that would negate the legal priority of C&K Mortgages, nor did the equities justify subordinating the respondent’s legal priority. If the receiver had not disclaimed and had instead completed the APS, the appellant would have benefited at the expense of the respondent, whose interest in the property was secured. The motion judge also pointed out that the appellant’s ability to challenge the order was limited, as he did not appeal the receivership order.

issues:

Did the motion judge err by dismissing the appellant’s motion for an order directing that the court-appointed receiver refrain from disclaiming the APS and requiring the APS to be completed?

holding:

Appeal dismissed.

reasoning:

No. Assuming the appellant had obtained a purchaser’s lien, certain clauses within the APS operated to prelude him from obtaining an interest in the property and rendered his interest subordinate to that of C&K Mortgages. The appellant stated that the motion judge misapprehended his position, and his argument was that the APS had been breached, not terminated, when the receiver failed to close the sale on time. He also asserted that this breach freed him from the effect of the aforementioned clauses within the APS. The Court disagreed. The inability to close on the scheduled date did not mean that the impugned clauses no longer applied but the rest of the contract did, such that the appellant could continue to seek an order for specific performance of the agreement.

The appellant argued his case was similar to Armadale Properties Ltd. v. 700 King Street (1997) Ltd. In that case, the purchaser paid the entire amount owing under the APS by way of deposit, moved into the property prior to the closing date, and spent money on improvements and moving expenses. In those circumstances, the court held that sale to a bona fide purchaser prior to the bankruptcy was valid and the receiver could not disclaim the contract. In the present appeal, the facts were different. There was no evidence that the $500,000 deposit or any portion thereof went into the property the appellant sought to purchase.

In closing, the Court succinctly summarized these proceedings as follows:

The bottom line is this: The appellant purchased land that was subject to a prior mortgage. The property could not be conveyed to him unless the mortgage was redeemed in accordance with its provisions… A purchaser’s lien would put the appellant in no better position against the respondent mortgagee. The mortgage properly takes precedence.


McGuinty v 1845035 Ontario Inc. (McGuinty Funeral Home), 2020 ONCA 0816

[Strathy C.J.O., Brown and Huscroft JJ.A.]

Counsel:

E.O. Gionet and S.A. Lucenti, for the appellant

S. Yousefi, for the respondent

Keywords: Contracts, Employment, Sale of Business, Constructive Dismissal, Fundamental Breach, Condonation,,  Damages, Potter v New Brunswick (Legal Aid Services Commission), 2015 SCC 10, Persaud v Telus Corporation, 2017 ONCA 479, Belton  v Liberty Insurance Co. of Canada (2004), 72 OR (3d) 81 (CA), R v Lohrer, 2004 SCC 80, Martin v Goldfarb (1990), 41 OR (3d) 161 (CA), leave to appeal refused, [1998] SCCA No. 516, Ruston v Keddco Mfg. (2011) Ltd., 2018 ONSC 2919, aff’d 2019 ONCA 0125

facts:

The respondent was an employee of the appellant funeral home. The funeral home had been in the respondent’s family for three generations, but when his brother became unable to work, the respondent sold the business to the appellants. As part of that sale, the parties entered into a 10 year consulting agreement wherein the respondent would remain the General Manager of the funeral home. The agreement provided for a base salary, allowance for a company vehicle, commissions on certain pre-arranged funeral packages and health benefits. The agreement also included a 10 year non-competition agreement following its termination, but contained no early termination rights.

Shortly after the respondent began work under the agreement, issues began to arise in the relationship. Eventually, the appellant ceased the respondent’s right to use the company vehicle. Believing the respondent to have destroyed files from the funeral home, the appellant changed the locks without notice. Shortly thereafter, the respondent went to the funeral home to deliver a medical note saying he was taking a two week leave for health reasons, only to find the doors locked. He was able to deliver the note during working hours the next day, and also confirmed that he was taking medical leave, not stepping down from his position. At the expiry of his two week leave, he delivered a further note from his doctor saying he was off work indefinitely until work issues were resolved, as these were causing depression and anxiety.

A few weeks later, the respondent attended the funeral home for a family member’s funeral. He noticed that his office had been relocated into the kitchen and his picture, which had hung alongside pictures of the previous generations of family owners, had been removed from the entranceway. After the funeral, the respondent sent a letter to the appellants outlining his concerns and stating he wished to resolve the issues so they could all get back to work. A few months later, the appellants terminated the respondent’s health benefits, claiming he was on an unapproved leave. Roughly 18 months later, the respondent filed a statement of claim for constructive dismissal.

At trial, the judge ultimately found that the respondent had been constructively dismissed. The appellant’s course of conduct as a whole would have led a reasonable person in the respondent’s position to conclude that the appellant no longer intended to be bound by the terms of the agreement. The salient aspects of the course of conduct included requiring a subordinate employee to track the respondent’s work hours, failure to pay certain commissions, removal of the respondent’s photograph and changing the locks to the funeral home. While it took the respondent nearly two years to bring a claim, the trial judge was not satisfied that this passage of time amounted to condonation. The respondent did not return to work precisely because of the appellant’s conduct and so could not be said to have accepted the new terms of the relationship.

The funeral home appealed, citing what it believed to be several errors in the trial judge’s decision.

issues:

(1) Did the trial judge err in finding that the respondent had not condoned the course of conduct of the appellant?

(2) Did the trial judge err in misapprehending or failing to consider certain evidence?

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

holding:

Appeal dismissed.

reasoning:

The law for constructive dismissal is well established and was not in dispute. In Potter, the Supreme Court of Canada established two ways in which an employee can be constructively dismissed: i) if the employer breaches an essential term of the employment contract; or ii) where a course of conduct by the employer establishes that it no longer intends to be bound by the employment contract.

(1) Did the trial judge err in finding that the respondent had not condoned the course of conduct of the appellant?

No.

Where an employee condones the employer’s conduct that founds a breach under either branch of the Potter test, constructive dismissal will not be found. Essentially, when faced with such conduct, the employee has an election to make – either continue working under the new terms or accept the contract as terminated and sue. A claim that an employee condoned the conduct is a defence to an otherwise successful constructive dismissal claim and the onus is on the employer to establish condonation.

The employee must make their election within a reasonable period time after the conduct, however, ‘reasonable’ in this context is extremely vague and very fact-specific. Condonation can usually be inferred where the employee returns to work and continues to work without objection. Returning to work alone is not determinative however, as employees must be given reasonable time to assess the new conditions and to attempt to resolve any issues. However, in cases such as the one at hand, where the employee never returns to work, this inference becomes much harder to draw.

The appellant argued that since the trial judge found the respondent had condoned the fundamental breach of rescinding access to the company vehicle, the respondent must have condoned the whole course of conduct. The Court of Appeal rejected this argument, as the claims related to different branches of the Potter test. The vehicle allowance was a breach of a fundamental term under the first branch, while the course of conduct was a breach under the second. It is not incompatible to find condonation of the first branch while finding the opposite under the second.

In fact, the respondent made clear that he was trying to resolve the issues. He sent several letters and had several conversations with the appellant in pursuit of this reconciliation, which ultimately proved unfruitful. The question then became whether the respondent’s acceptance of the breach came after too long of a period to be considered reasonable. Again, while the inference of condonation can be drawn where the employee continues to work for a lengthy period, the inference is harder to draw when the employee never returns, particularly when the absence was caused by the conduct in question.

The trial judge found that the appellant’s conduct had caused depression and anxiety in the respondent, which prevented him from returning to work. This prevented a finding of condonation. The Court held that this decision was one of fact and was thus the trial judge’s decision to make. The decision was well grounded in the evidence and the appellant raised no reason to interfere. The respondent had worked in the family business for 30 years before selling it, and the sale was conditioned on the agreement. The agreement was to ensure the respondent could continue the only work he had ever known until he reached retirement age. The time the respondent took to make his election must be considered in light of this background and in light of his mental health issues caused by the appellant.

(2) Did the trial judge err in misapprehending or failing to consider certain evidence?

No.

The appellant argued two errors: i) that the trial judge ignored evidence; and ii) the trial judge failed to make a necessary finding of fact.

Ignored Evidence

The appellant argued that the trial judge ignored the evidence of three employees who testified that certain alleged events that created a toxic workplace did not occur. The Court dismissed this argument, as misapprehension must go to the substance of the matter, not the detail, and it must be material rather than peripheral. A trial judge need not make findings on every matter in dispute to provide a meaningful decision. The trial judge ultimately found that the appellant’s behaviour was not oppressive or humiliating and so the evidence relating to these issues became peripheral. It was thus not an error to not consider this evidence and therefore, there was no misapprehension.

Necessary Finding of Fact

The appellant conceded that a trial judge need not address every matter, but argued that in this case, he failed to make a necessary determination on an issue that could have changed the outcome of the trial. In particular, the appellant argued that the trial judge failed to resolve conflicting evidence over a phone call and meeting that the appellant said occurred during the course of the conduct. On this phone call, the appellant alleged that the respondent was in tears and distraught while apologizing and asking to return to work. A few hours later, the respondent showed up at the funeral home and repeated the same sentiments, but was in a visibly disturbed stated. The respondent denied that this occurred.

The appellant suggested these events showed that the respondent had, in fact, condoned the breach, as he was willing to return to work. The trial judge recited this evidence, suggesting that it was relevant to the question of condonation. Having raised the conflict, the trial judge should have resolved it, or explained why it was not necessary to resolve. The failure to do so was an error. However, the Court found that this error did not undermine the finding that the respondent did not condone the course of conduct. The issue was the respondent’s inability to return to work. While he may have preferred to return to work if the situation could have been remedied, it never was. The mere expression of a desire to return to work, relatively early in the dispute, was not a material fact and so while the trial judge erred, the error did not justify the Court intervening.

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

The appellant argued that the trial judge erred in its assessment of damages in three ways: i) the value of vehicle and fuel allowance; ii) the calculation of commissions on pre-arranged funeral packages; and iii) the calculation of health benefits.

Vehicle Allowance

The trial judge relied on evidence of the respondent that prior to the sale of the business, annual vehicle costs were between $12,000 and $15,000. The trial judge took the low end of this range to calculate damages. This was an issue well within the respondent’s knowledge and the appellant did not raise any evidence to dispute it, thus, the assessment was reasonable.

Commissions

While the trial judge did rely on an estimate of commissions that would be payable over the term of the agreement, the nature of the commission made this estimate necessary. There is no way to know how many people who have pre-arranged funerals will actually die during the remaining term of the agreement, thus entitling the respondent to a commission and so an estimate had to be relied upon. The trial judge used the monthly commissions earned during a previous period for which payroll records were available to estimate future commissions. This was reasonable.

Health Benefits

The trial judge rejected the respondent’s argument that health benefits should be approximated at 15% of salary, opting to find that 10% was more reasonable. This approach was consistent with ample previous jurisprudence. Further, it was the appellant who had access to the information that could prove that the actual costs were otherwise, but failed to lead any such evidence. Thus, the trial judge’s assessment of damages was reasonable.


Polla v Croatian (Toronto) Credit Union Limited, 2020 ONCA 0818

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

Counsel:

B.S., for the appellant

F.E.P. Bowman, D.B.B. Stewart and D. Dutt, for the respondents Z.J., S.P.K., S.B., A.J., M.M. A.M., I.R. and J.S.

S.E. Dawe, for the respondent R.L.B. LLP

Keywords: Torts, Negligence, Misrepresentation, Civil Procedure, Amending Pleadings, New Causes of Action, Irreparable Prejudice, Limitation Periods, Standard of Review, Limitations Act, 2002, s. 4, Credit Unions and Caisses Populaires Act, 1994, S.O. 1994, c. 11, s. 82, Rules of Civil Procedure, Rule 26.01, Blueberry River First Nation v. Lair, 2020 BCCA 76, Strathan Corporation v. Khan, 2019 ONCA 418, Longo v. MacLaren Art Centre, 2014 ONCA 526, Tuffnail v. Meekes, 2020 ONCA 340, Klassen v. Beausoleil, 2019 ONCA 407, 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, Ivany v. Financiere Telco Inc., 2011 ONSC 2785, Rabb Construction Ltd. v. MacEwen Petroleum Inc., 2018 ONCA 170, P.M. Perell & J.W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis Canada, 2020)

facts:

The appellant sued various parties to recover his lost investment of $5 million in the respondent credit union (the “Credit Union”). The action proceeded to trial against the individual respondents, who were members of the Credit Union’s board of directors and external auditors, in respect of claims for misrepresentation in an offering statement, pursuant to the Credit Unions and Caisses Populaires Act, 1994, S.O. 1994, c. 11 (the “Act”), as well as common law negligence.

After three weeks of trial, the appellant sought to amend his amended statement of claim to allege misrepresentation in the offering statement that was not previously pleaded, arguing that it was not until midway through the trial that he discovered that some of the mortgage loans being made by the Credit Union were based on the price in the purchase and sale agreements, rather than on independent appraisals.

The parties agreed to proceed with the trial and argue the motion to amend at the trial’s conclusion as part of their closing submissions. By the end of the trial, it was clear that the appellant’s original claims of common law and statutory misrepresentation negligence were not going to succeed. Accordingly, the appellant’s closing submissions made it clear that he only sought to pursue the statutory misrepresentation claim set out in the proposed amended pleading.

The trial judge ultimately refused leave to the appellant to amend the pleading. This decision was made on the basis that the proposed amendment asserted a new claim for statutory misrepresentation, which was statute-barred as a result of an expired limitation period. In any event, the trial judge commented that the respondents would be irreparably prejudiced if the proposed amendment was permitted.

In her reasons, the trial judge found that the proposed amendment alleged an entirely separate misrepresentation or failure to disclose, and that it was not “part and parcel of the dealings” already described in the existing amended statement of claim.

Further, the trial judge concluded that the misrepresentation referred to in the proposed amendment was discoverable since 2012, when the appellant received the Credit Union’s 2002 credit policy, which clearly disclosed that agreements of purchase and sale could be used to assess property values. Relatedly, a reasonable person would have assumed that the 2002 credit policy was in effect during the impugned time. Accordingly, the two-year limitation period under s. 4 of the Limitations Act, 2002, had expired.

As a final point, the trial judge concluded that the respondents, who had defended the action for eight years, would suffer irreparable prejudice if the amendment was allowed, which would enable the appellant to evolve his claim to address different acts by the defendants based on an entirely new theory of the case.

issues:

Did the trial judge err in concluding that the proposed amendment was the pleading of a new claim which was statute-barred?

holding:

Appeal dismissed.

reasoning:

No. The Court began its analysis by noting the standard of review. Because the trial judge’s conclusion that the proposed amendment asserted a new claim was a question of law, it was subject to the “correctness” standard (Blueberry River First Nation v. Lair, 2020 BCCA 76; Strathan Corporation v. Khan, 2019 ONCA 418). The conclusion that the applicable limitation period had expired was a question of mixed fact and law, and was subject to a “palpable and overriding error” standard (Longo v. MacLaren Art Centre, 2014 ONCA 526). Finally, the conclusion regarding the assessment of irreparable prejudice was similarly a question of mixed fact and law, and subject to the same “palpable and overriding error” standard (Tuffnail v. Meekes, 2020 ONCA 340).

The Court went on to comment on the applicable test regarding the amendment of pleadings. The general rule, under Rule 26.01 of the Rules of Civil Procedure, is that an amendment shall be granted at any stage of a proceeding on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. As per the case law, the expiration of a limitation period in respect of a proposed new claim is a form of non-compensable prejudice, where leave to amend to assert the new claim should be refused (Klassen v. Beausoleil, 2019 ONCA 407). Further, the test in 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848 made it clear that an amendment to a statement of claim will be refused if it seeks to assert “a new cause of action” after the expiry of the applicable limitation period.

The analysis therefore hinges on whether the proposed amendment in fact sought to assert a “new cause of action”. The Court defined a “cause of action” as “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person” (Ivany v. Financiere Telco Inc., 2011 ONSC 2785). The Court also adopted insight from academic authors, observing that “a new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon” (P.M. Perell & J.W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis Canada, 2020), at pp. 220-21).

Although the Court noted that pleadings must be read generously in favour of the proposed amendment (Rabb Construction Ltd. v. MacEwen Petroleum Inc., 2018 ONCA 170), the question in this case was whether the respondents would have reasonably understood, from the amended statement of claim and the particulars provided on discovery, that the appellant was pursuing a claim in respect of the matter addressed by the proposed amendment.

In answering this question, the Court accepted the trial judge’s conclusion that although the factual circumstances or “matrix” were broadly connected, the original pleading alleged that the misrepresentation was a failure to disclose frauds, while the proposed amendment was based on an entirely different act of the respondents and a separate failure to disclose. Specifically, the existing claim was for statutory misrepresentation under the Credit Unions and Caisses Populaires Act, 1994. It was not, as the appellant contended, a statutory claim in respect of a misleading offering statement. The existing pleading did not contain the factual matrix needed to support the claim asserted in the proposed amendment.

As a final point, the Court agreed with the trial judge’s finding that the alleged misrepresentation was discoverable in 2012 due to the appellant’s receipt of the 2002 credit policy. Because the trial judge’s conclusion was fully supported by the evidence, the Court saw no reason to interfere with this conclusion.

Due to the sufficiency of the foregoing conclusions in disposing of the appeal, the Court did not analyze the issue of irreparable prejudice.


SHORT CIVIL DECISIONS

JGB Collateral v Rochon, 2020 ONCA 0804

[Rouleau, Hoy and Hourigan JJ.A.]

Counsel:

J. P. M. Collings, for the moving party D. J. H. R.

T. Simmonds, for the moving party J. R.

M. Ouanounou and C. Fox, for the responding party

Keywords: Contracts, Real Property, Mortgages, Farmers, Civil Procedure, Summary Judgment, Farm Debt Mediation Act, S. C. 1997, c. 21, ss. 21, 5

Murray v 8165246 Canada Inc., 2020 ONCA 0832

[Brown J.A. (Motion Judge)]

Counsel: 

C.L. Spry and M. Bookman, for the moving parties

I. Ellyn and K.J. Manning, for the responding parties

Keywords: Civil Procedure, Appeals, Fresh Evidence, Litigation Privilege, Directions, Facta, Appeal Management Conferences, “Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario”, (March 1, 2017), s. 7.2.6


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.