Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good afternoon.

Below are our last summaries of 2020, which include all civil decisions released by the Court of Appeal for Ontario for the weeks of December 21 and 28, 2020.

Topics covered included human rights in the employment context, the refusal to enforce a foreign letter of request in the family law context, a breach of contract decision in the real estate development context issued by the Court in French (summarized by us in English), interveners in the administrative law context (ancillary fees at Ontario colleges and universities) and a decision in respect of the administration of a claims process in a receivership.

On another note, please mark down April 27, 2021, from 5:30-7:45pm in your calendars for our fifth annual “Top Appeals” CLE, which will take place via Zoom again. I am very pleased to announce that Justice Benjamin Zarnett will be co-chairing the event with me and Chloe Snider of Dentons. We are in the process of reviewing and deciding on the top appeals of the year, so if anyone has any suggestions, please let us know. In the meantime, please register for the program by visiting the OBA’s website.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Longueépée v. University of Waterloo, 2020 ONCA 830

Keywords:Administrative Law, Judicial Review, Standard of Review, Reasonableness, Patent Unreasonableness, Human Rights, Discrimination, Duty to Accommodate, Undue Hardship, Human Rights Code, R.S.O. 1990, c. H.19, s. 34, s. 11, s. 45.8, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Dunsmuir v. New Brunswick, 2008 SCC 9, British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Groia v. Law Society of Upper Canada, 2016 ONCA 471, Ball v. McAulay, 2020 ONCA 481, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3. S.C.R. 3, Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15

Glegg v. Glass, 2020 ONCA 833

Keywords: Family Law, Custody, Torts, Intentional Interference with Custodial Rights, Intentional Infliction of Emotional Distress, Civil Procedure, Private International Law, Conflict of Laws, Documentary Discovery, Foreign Letters of Request/Letters Rogatory, Enforcement, Solicitor-Client Privilege, Litigation Privilege, Public Policy, Rules of Civil Procedure, Rule 38.09.1(1), Blank v. Canada (Minister of Justice), 2006 SCC 39, R. v. Zingre, [1981] 2 S.C.R. 392, Frame v. Smith, [1987] 2 S.C.R. 99, Maranda v. Richer, 2003 SCC 67, Descôteaux et al. v. Mierzwinksi, [1982] 1 S.C.R. 860, Gulf Oil Corporation v. Gulf Canada Ltd. et al., [1980] 2 S.C.R. 39, Treat America Ltd. v. Nestlé Canada Inc., 2011 ONCA 560, R.G. v. K.G., 2017 ONCA 108, Perlmutter v. Smith, 2020 ONCA 570, Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, Young v. Tyco International of Canada Ltd., 2008 ONCA 709, Presbyterian Church of Sudan v. Taylor, (2006), 275 D.L.R. (4th) 512 (Ont. C.A.), France (Republic) v. De Havilland Aircraft of Canada Ltd., (1991), 3 O.R. (3d) 705 (C.A.), O.G. v. R.G., 2017 ONSC 6490, Re Friction Division Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et al. (No. 2), (1986), 56 O.R. (2d) 722 (H.C.), Fecht v. Deloitte & Touche, (1996), 28 O.R. (3d) 188 (Gen. Div.), aff’d (1997) 32 O.R. (3d) 417 (C.A.), Re Westinghouse Electric Corporation and Duquesne Light Co. (1977), 16 O.R. (2d) 273 (H.C.)

1750738 Ontario Inc. c. 1750714 Ontario Inc., 2020 ONCA 836

Keywords: Contracts, Real Property, Interpretation, Oral Contracts, Essential Terms, Part Performance, Exclusion Clauses, Corporations, Shareholder Agreements, Adoption of Pre-Incorporation Contracts, Remedies, Specific Performance, Civil Procedure, Costs, Offers to Settle, Ontario Business Corporations Act, RSO 1990 c B.16, s. 21(2), Rules of Civil Procedure, Rule 49.10, Modern Paving Ltd v. Donovan Homes Ltd., 2011 NLCA 39, Bawitko Investments Ltd v. Kernels Popcorn Ltd. (1991), 79 DLR (4th) 97 (Ont CA), Credit Security Insurance Agency Inc v. CIBC Mortgages Inc. (2006), 268 DLR (4th) 725 (Ont SC), aff’d 2007 ONCA 287, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Matic et al. v. Waldner et al., 2016 MBCA 60, UBS Securities Canada Inc v. Sands Brothers Canada Ltd, 2009 ONCA 328, Singh v. Trump, 2016 ONCA 747, Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, DLG & Associates v. Minto Properties Inc., 2015 ONCA 705, Douez v. Facebook Inc., 2017 SCC 33, Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, de Montigny v. Brossard (Succession), 2010 SCC 51, Beswick v. Beswick, [1968] AC 58 (HL), Gasparini et al. v. Gasparini et al. (1978), 20 OR (2nd) 113 (Ont CA), Smith v. Inco Limited, 2013 ONCA 724, Seaton v. Bolton, 2007 CanLII 46250 (Ont SC), Niagara Structural Steel (St Catharines) Ltd. v. WD Laflamme Ltd., 1987 CanLII 4149 (Ont CA), GHL Fridman, The Law of Contract in Canada, 6th ed (Toronto, Thompson Reuters Canada Ltd, 2011)

Canadian Federation of Students v. Ontario (Colleges and Universities), 2020 ONCA 842

Keywords: Administrative Law, Colleges and Universities, Ancillary Fees, Civil Procedure, Interveners, Friends of the Court, Rules of Civil Procedure, Rule 13.02, Canadian Charter of Rights and Freedoms, s. 2(b), Canadian Federation of Students v. Ontario, 2019 ONSC 6658, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), Wilson v. British Columbia (Superintendent of Motor Vehicles), 2015 SCC 47

Manthadi v. ASCO Manufacturing, 2020 ONCA 839

Keywords: Contracts, Solicitor and Client, Solicitor’s Liens, Solicitors’ Act, s. 34(1), Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 7(2) and (3), Weenen v. Biadi, 2018 ONCA 288, Dalcor Inc. v. Unimac Group Ltd., et al, 2017 ONSC 945, Foley v. Davis, 1996 CanLII 1145 (Ont. C.A.)

Comfort Capital Inc. v. Yeretsian, 2020 ONCA 846

Keywords: Bankruptcy and Insolvency, Receiverships, Claims Process, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 243(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Coast Capital Savings Credit Union v. Symphony Development Corp., 2011 BCSC 333, DBDC Spadina Ltd. v. Walton, 2015 ONSC 5608, Lilydale Cooperative Limited v. Meyn Canada Inc., 2019 ONCA 761

Short Civil Decisions

1632093 Ontario Inc. (Turn-Key Projects) v. York Condominium Corporation No. 74, 2020 ONCA 843

Keywords: Civil Procedure, Appeals, Palpable and Overriding Error, Costs, Rules of Civil Procedure, Rule 29

Krieser v. Garber, 2020 ONCA 840

Keywords: Civil Procedure, Appeals, Motions, Costs

Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 849

Keywords: Costs Endorsement

CIVIL DECISIONS

Longueépée v. University of Waterloo, 2020 ONCA 830

[Strathy C.J.O., Lauwers and van Rensburg JJ.A.]

Counsel:

F. Cesario and A.P. Cohen, for the appellant

D. Baker and L. Lepine, for the respondent R.L.

B.A. Blumenthal and J. Tam, for the respondent Human Rights Tribunal of Ontario

Keywords: Administrative Law, Judicial Review, Standard of Review, Reasonableness, Patent Unreasonableness, Human Rights, Discrimination, Duty to Accommodate, Undue Hardship, Human Rights Code, R.S.O. 1990, c. H.19, s. 34, s. 11, s. 45.8, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Dunsmuir v. New Brunswick, 2008 SCC 9, British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Groia v. Law Society of Upper Canada, 2016 ONCA 471, Ball v. McAulay, 2020 ONCA 481, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3. S.C.R. 3, Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15

facts:

The individual respondent brought an application to the Human Rights Tribunal of Ontario (the “HRTO”) alleging discrimination under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19 (the “Code”) against the University of Waterloo (the “University”). Specifically, the respondent alleged that the University discriminated against him on the basis of his disabilities by refusing him admission.

Several years before applying to the University, the respondent had attended Dalhousie University (“Dalhousie”), where he achieved grades well below the minimum threshold for admission to the University as a transfer student. However, satisfied that the respondent’s Dalhousie grades were rendered at a time when the respondent had undiagnosed disabilities, the University convened an Admissions Committee to give special consideration to his application. The Admissions Committee was provided with an application package consisting of academic transcripts, information about the respondent’s volunteer work, medical reports, and reference letters. Nevertheless, the Admissions Committee ultimately concluded that the application did not demonstrate the respondent’s ability to succeed at university, and opted to refuse admission.

When the respondent brought an application to the HRTO, the Vice Chair of the HRTO concluded that the respondent did in fact have a “disability” within the meaning of the Code, and that the respondent was discriminated against in the admissions process. Having made a finding of prima facie discrimination, the Vice Chair then identified the issue to be determined as whether the University accommodated the respondent in the admissions process to the point of undue hardship, pursuant to s. 11 of the Code.

The Vice Chair agreed with the respondent’s submission that the duty to accommodate has both procedural and substantive components. The Vice Chair concluded that the University met its procedural duty to accommodate by considering the respondent’s application despite it being submitted late, not being submitted through the normal OUAC process, and after all the student positions in the faculty had been filled. Further, the University convened a meeting of the Admissions Committee to consider the application due to the extenuating circumstances.

The Vice Chair similarly concluded that the University also met its substantive duty to accommodate. It was noted that the ultimate question to be determined under the Admissions Committee’s inquiry was whether the respondent demonstrated that he would in fact be successful in his academic studies. The Vice Chair observed that the University was entitled to rely on the respondent’s past academic performance, and could not be expected to presume that the respondent would now be successful in university merely because his Dalhousie grades were unaccommodated due to his undiagnosed disabilities. Further, the Vice Chair rejected the argument that the Admissions Committee should have also involved the University’s Accessibility Services department. This argument, in the opinion of the Vice Chair, would require universities to involve accessibility services in every admission application made by a student with a disability, and in this case would effectively require one university to sit in review of how another university accommodated its students.

The Vice Chair of the HRTRO dismissed the respondent’s application alleging discrimination by the University.

The respondent then made a judicial review application to Divisional Court. The Divisional Court first confirmed that the applicable standard of review was reasonableness. The Divisional Court then went on to refer to the three-part test in British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868 (“Grismer”) that applies when a requirement or standard has been shown to be prima facie discrimination. The responding party must prove on a balance of probabilities that: (a) it adopted the standard for a purpose that is rationally connected to the function being performed; (b) it adopted the standard in good faith, in the belief that it is necessary for the fulfillment of the purpose; and (c) the standard is reasonably necessary to accomplish its purpose, in the sense that the defendant cannot accommodate persons with the characteristics of the claimant without incurring undue hardship.

There was no difficulty in establishing the first two elements of the Grismer test. However, on the third element, the Divisional Court noted that the Admissions Committee had professed an “accommodation dialogue”, but the dialogue was “firmly anchored to the very grades which the Admissions Committee implicitly, if not expressly, recognized as not being reflective of the respondent’s abilities. In other words, the admission decision was anchored to the grades the respondent obtained at Dalhousie, notwithstanding that all parties were in agreement that those grades were obtained at a time when the respondent had undiagnosed disabilities.

Due to the fact that the Dalhousie grades could not be interpreted free from their discriminatory effect, the University either had to assess the respondent’s candidacy without recourse to those grades, or establish that it would result in undue hardship for it to do so. The Divisional Court concluded that the University failed to do either. Further, related to the latter course of action, the Divisional Court noted that the Vice Chair made an implicit observation of undue hardship (in her aside on the tantamount requirement of conducting in-depth assessments of every application from a person with a disability) notwithstanding the fact that undue hardship was never advanced as an argument by the University, and that there was no evidence on the record to support such a conclusion. This reinforced the Divisional Court’s conclusion that the HRTO erred in its decision. The Divisional Court ultimately set aside the HRTO’s decision, and opted to remit the matter to the Admissions Committee for consideration by a process consistent with the court’s reasons.

issues:

(1) Did the Divisional Court appropriately identify “reasonableness” as the standard of review or is the standard of review post-Vavilov “patent unreasonableness”?

(2) Did the Divisional Court correctly apply the standard of review?

(3) If the Vice Chair’s decisions were properly set aside, did the Divisional Court err in its remedy in sending the matter back to the Admissions Committee rather than to the HRTO?

holding:

Appeal allowed in part.

reasoning:

(1) Did the Divisional Court appropriately identify “reasonableness” as the standard of review or is the standard of review post-Vavilov “patent unreasonableness”?

Yes. The Divisional Court appropriately identified the standard of review. This issue was slightly complicated by the fact that in between the Divisional Court’s decision, and before this appeal was heard, the Supreme Court released its decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. Accordingly, the HRTO submitted that its decisions should be reviewed under the “patent unreasonableness” standard, which is the standard of review under s. 45.8 of the Code. However, the Court declined to comment on whether the statutory standard of review under s. 45.8 of the Code should be given effect post-Vavilov. The Court also opted not to undertake an analysis of whether a “patent unreasonableness” review would be materially different from a review for “reasonableness”.

The Court justified these conclusions on the basis that these issues should be decided in a case where the standard of review makes a difference as to the outcome. In this case, the Court concluded that the result would be the same under both standards of review.

(2) Did the Divisional Court correctly apply the standard of review?

Yes. The majority in Vavilov described the review for reasonableness as one that focuses on the decision actually made, the rationale for the decision, and the outcome. According to Vavilov, “a reasonable decision is one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker”. In order to successfully challenge a decision on a reasonableness standard, the flaws in the decision must be sufficiently significant to render the decision unreasonable.

In its analysis, the Court endorsed the three-part Grismer test applied by the Divisional Court. The Court similarly reinforced the notion that the duty to accommodate has both procedural and substantive elements. Although there is often overlap, the procedural element is typically tied to the process adopted in providing accommodation. The substantive element, on the other hand, often refers to the steps taken to implement the actual accommodation to the point of undue hardship.

The Court noted that the Vice Chair’s conclusion that the University met the procedural component was rooted in the Admissions Committee opting to conduct an individualized assessment of the respondent’s application. The Court did not point out any patent deficiencies in this particular conclusion on its own. However, the issues arose when it was considered in conjunction with the Vice Chair’s related conclusion that the University also met the substantive component. Particularly, this conclusion was made despite the fact that there was no evidence to suggest the Admissions Committee actively engaged with the variety of materials provided with the respondent’s application, or that the decision was ultimately based on anything but the respondent’s unaccommodated grades. In the opinion of the Court, this put the Vice Chair’s two conclusions at odds with one another. The “holistic approach” that the Admissions Committee supposedly undertook, which was relied on in finding that the procedural element was met, was in conflict with the conclusion that the exclusive evaluation of past academic performance in fact discharged the substantive element.

This led to the conclusion that the Vice Chair’s reasons did not reflect an internally coherent chain of analysis justified by the facts. Without resolving these contradictory findings, the conclusion as a whole was unreasonable. The Court noted that the Vice Chair effectively bypassed the final step of the Grismer test. Reasonable accommodation could not take the form of simply applying the discriminatory grade standard to the respondent’s unaccommodated grades. If the University sought to do so, it would have to establish undue hardship.

Again, related to the point of undue hardship, the Court similarly agreed with the Divisional Court’s conclusion that the Vice Chair’s reasons implied the existence of undue hardship, despite the University never relying on such a defence. The University was certainly entitled to advance a defence based on undue hardship, but would have to discharge the corresponding burden of leading evidence on such issue (Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15). In this case, the Vice Chair was effectively deciding an issue on which no evidence was led. This further reinforced the finding that the decision of the HRTO was unreasonable.

(3) If the Vice Chair’s decisions were properly set aside, did the Divisional Court err in its remedy in sending the matter back to the Admissions Committee rather than to the HRTO?

Yes. The majority in Vavilov held that “where a decision reviewed by applying the reasonableness standard cannot be upheld, it will most often be appropriate to remit the matter to the decision maker to reconsider the decision.” However, the court added the caveat that declining to remit a matter may be appropriate where it is evidence that a particular outcome is inevitable and remittance would serve no useful purpose.

The Court concluded that although the conclusion is inevitable that the University discriminated against the respondent, the appropriate remedy was not to bypass the HRTO. The Court commented that in these “early post-Vavilov days”, it is preferable to return the matter to the HRTO for its further disposition so that it may fashion the remedy that, in its opinion, would promote compliance with the Code.


Glegg v. Glass, 2020 ONCA 833

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

Counsel:

J. Zibarras, for the appellant

J.R.G. Cook and J. Beesley, for the respondent L.G.

I. McKellar, for the respondents C.D. and Christen Seaton Burrison Hudani LLP

Keywords: Family Law, Custody, Torts, Intentional Interference with Custodial Rights, Intentional Infliction of Emotional Distress, Civil Procedure, Private International Law, Conflict of Laws, Documentary Discovery, Foreign Letters of Request/Letters Rogatory, Enforcement, Solicitor-Client Privilege, Litigation Privilege, Public Policy, Rules of Civil Procedure, Rule 38.09.1(1), Blank v. Canada (Minister of Justice), 2006 SCC 39, R. v. Zingre, [1981] 2 S.C.R. 392, Frame v. Smith, [1987] 2 S.C.R. 99, Maranda v. Richer, 2003 SCC 67, Descôteaux et al. v. Mierzwinksi, [1982] 1 S.C.R. 860, Gulf Oil Corporation v. Gulf Canada Ltd. et al., [1980] 2 S.C.R. 39, Treat America Ltd. v. Nestlé Canada Inc., 2011 ONCA 560, R.G. v. K.G., 2017 ONCA 108, Perlmutter v. Smith, 2020 ONCA 570, Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, Young v. Tyco International of Canada Ltd., 2008 ONCA 709, Presbyterian Church of Sudan v. Taylor, (2006), 275 D.L.R. (4th) 512 (Ont. C.A.), France (Republic) v. De Havilland Aircraft of Canada Ltd., (1991), 3 O.R. (3d) 705 (C.A.), O.G. v. R.G., 2017 ONSC 6490, Re Friction Division Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et al. (No. 2), (1986), 56 O.R. (2d) 722 (H.C.), Fecht v. Deloitte & Touche, (1996), 28 O.R. (3d) 188 (Gen. Div.), aff’d (1997) 32 O.R. (3d) 417 (C.A.), Re Westinghouse Electric Corporation and Duquesne Light Co. (1977), 16 O.R. (2d) 273 (H.C.)

facts:

The appellant and Ms. V married in 1998, separated in 2001, and divorced in 2002. Their daughter, O, was born in 1999. Pursuant to a separation agreement in 2001, mother and father had joint custody of O and each agreed to live within a stipulated distance of Oakville until she turned 18.

In 2013, Ms. V and Mr. P moved to Florida. O visited her mother in Florida in 2014, at which time she was 15 years old. Following O’s arrival in Florida, Ms. V’s Ontario counsel wrote the appellant to advise that O did not want to return to Ontario and had enrolled in a Florida high school.

In 2014, the appellant commenced litigation against his ex-wife in Ontario and Florida that resulted in O’s return to Ontario. After, when O turned 16 years old, she sought and obtained an order from an Ontario court that she had withdrawn from her parents’ control.

In 2018, the appellant commenced a proceeding in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida (the “Florida Court”) against Ms. V and Mr. P (the “Florida Action”). The appellant’s Verified Complaint asserted two counts against his ex-wife and her husband: (i) intentional interference with custodial rights granted by Ontario court orders, including orchestrating the daughter’s proceedings for a declaration that she was free from parental control; and (ii) intentional infliction of emotional distress resulting from the alleged interference in the appellant’s custodial rights, including the violation of Ontario court orders.

In 2019, the appellant sought and obtained two letters of request from the Florida Court seeking the assistance of Ontario courts to secure the production of documents for use in the Florida Action (the “Letters of Request”). Specifically, the Letters of Request sought production of documents from two former lawyers for Ms. V, LS and CD, as well as from lawyers who had acted for O, LG and Justice for Children and Youth (“JFCY”).

Later in 2019, the appellant commenced an application seeking to enforce the Letters of Request against LS, JFCY, LG and CD, together with her law firm, Christen Seaton Burrison Hudani LLP. The application was withdrawn against LS, whilst responding materials were filed by the remaining respondents. Cross-examinations were conducted of the appellant, CD, and JFCY’s executive director.

Prior to the return of the application, the appellant reached a settlement with LS and CD in which he agreed to withdraw the application against LS, and in which CD agreed not to oppose the application provided the redaction of privileged information applied to all categories of documents. On the return of the application, the application judge was informed that the appellant was withdrawing the application against LS and CD was not opposing the proceeding. It did not appear that the application judge was told the terms of the settlement.

On the return of the application, the appellant also sought an adjournment of the proceeding against JFCY. The application judge refused to adjourn the application against JFCY unless the entire application was adjourned. The appellant, in his application as against LG, was relying on information from the affidavit and cross-examination of JFCY and the positions being taken by the parties were intertwined. The appellant then advised that he was withdrawing his application with prejudice against JFCY.

The application then proceeded against LG, CD, and her law firm. The application judge dismissed the application. He concluded that it would be against public policy to enforce the Letters of Request for two reasons. First, it would offend public policy to enforce letters of request from a foreign court “in aid of a cause of action that is forbidden in Ontario.” Second, he concluded that the application should be dismissed because it interfered with solicitor-client privilege and client confidentiality, notions fundamental to the administration of justice and to the Canadian legal system.

issues:

(1) Did the application judge conduct the hearing in a procedurally unfair manner?

(2) Did the application judge err in his public policy analysis?

holding:

Appeal dismissed.

reasoning:

(1) Did the application judge conduct the hearing in a procedurally unfair manner?

No. The appellant was not denied procedural fairness in the hearing before the application judge. Although the appellant criticized the application judge for referring to the evidence of Ms. B from JFCY, the appellant referred to her affidavit and cross-examination at paras. 33, 61 and 71 of his main factum. This quite understandably led the application judge to describe the positions being taken by the parties as “intertwined”. As well, one exhibit to the appellant’s affidavit in support of the application was his Verified Complaint in the Florida Action, to which were attached several of the Ontario and Florida custody orders. The responding materials filed by CD and JFCY reproduced some of the other orders made in those proceedings. It was open to the application judge to consider all of the orders to gain an accurate understanding of the events that led to the issuance of the Letters of Request.

The appellant’s submission that the application judge could only refer to materials that the appellant had listed in the Confirmation Form he filed for the return of the application was not accepted. Rule 38.09.1(1) of the Rules of Civil Procedure requires the party who makes an application on notice to give the registrar, at least three days before the hearing date, a confirmation of application using Form 38B. If no confirmation is given, the application will not be heard except by order of the court: r. 38.09.1(2). Regional practice may modify the content of a confirmation form. As is apparent from the language on the Toronto Region’s modified confirmation form, the document operates as a device that assists court staff in the Civil Scheduling Unit to identify the materials that should be delivered to the judge hearing an application or motion. The form does not act as some sort of administrative constraint on a judge’s discretion to determine the materials that are in fact relevant to the decision he has to make.

Appellant’s counsel did not dispute the proposition that on the return of the application, no party asked the application judge to disregard specific materials. Further, in considering whether to enforce letters of request, a judge must determine “whether the request imposes any limitation or infringement on Canadian sovereignty and whether justice requires an order for the taking of commission evidence”: Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, at para. 59. To make that determination, a judge must understand the circumstances that led to the issuance of the letters of request. That is especially so in the unusual circumstances presented by this case, where extensive litigation in Ontario preceded the initiation of the foreign proceeding in which the Letters of Request were issued.

(2) Did the application judge err in his public policy analysis?

No. The application judge made no error in his decision to refuse the foreign request. The decision to grant or refuse a foreign request is a matter of judicial discretion to which the Court must give deference in the absence of a demonstrated error in principle by the court below, which would include a misapprehension of or failure to take into account the evidence, or a clearly wrong or unreasonable result: Presbyterian Church of Sudan v. Taylor, (2006), 275 D.L.R. (4th) 512 (Ont. C.A.) at paras. 19 and 30; Perlmutter v. Smith, 2020 ONCA 570, at para. 26; Young v. Tyco International of Canada Ltd., 2008 ONCA 709, at para. 27.

The application judge’s conclusion on solicitor-client privilege was not obiter. His reasons were clear that it was a discrete basis on which he dismissed the application as contrary to public policy. Second, the application judge aptly rejected the appellant’s contention that he was not seeking documents protected by solicitor-client privilege as “sophistry”.

No evidence was placed before the application judge that either of the two clients – Ms. V or O, had consented to the release of the documents or information sought. On their face, the documents sought in the subpoenas attached to the Letters of Request were presumptively protected by solicitor-client privilege or fell within the ambit of the principle of litigation privilege. While litigation privilege usually ends when the litigation ends, it continues where litigants or related parties remain locked in what is essentially the same legal combat: Blank v. Canada (Minister of Justice), 2006 SCC 39 at para. 34. Related litigation includes separate proceedings that involve the same or related parties and arise from the same or a related cause of action, or proceedings that raise issues common to the initial action and share its essential purpose. The history of the parties’ custody litigation provided support for the application judge’s observation that O’s withdrawal of her application for child support did not bring a ceasefire to the family battles. As well, the history and character of the litigation strongly suggested that, for the purposes of determining whether litigation privilege continued to apply, the Florida Action would constitute litigation related to the terminated Ontario proceedings.

In the circumstance of this case, it was not necessary to consider the issue of whether an Ontario court can refuse to enforce letters of request on the ground that the foreign cause of action is not one recognized in Ontario. It was not necessary since the application judge did not err in declining to enforce the Letters of Request on the other public policy ground – namely, because they would improperly interfere with solicitor-client privilege and confidentiality. That was a sufficient basis on which to dispose of the appeal.


1750738 Ontario Inc. c. 1750714 Ontario Inc., 2020 ONCA 836

[van Rensburg, Benotto and Thorburn]

Counsel:

J.G. Saikaley, G. Poliquin and M.P. Dupont, for the appellants

S.C. Reitano, for the respondent

Keywords: Contracts, Real Property, Interpretation, Oral Contracts, Essential Terms, Part Performance, Exclusion Clauses, Corporations, Shareholder Agreements, Adoption of Pre-Incorporation Contracts, Remedies, Specific Performance, Civil Procedure, Costs, Offers to Settle, Ontario Business Corporations Act, RSO 1990 c B.16, s. 21(2), Rules of Civil Procedure, Rule 49.10, Modern Paving Ltd v. Donovan Homes Ltd., 2011 NLCA 39, Bawitko Investments Ltd v. Kernels Popcorn Ltd. (1991), 79 DLR (4th) 97 (Ont CA), Credit Security Insurance Agency Inc v. CIBC Mortgages Inc. (2006), 268 DLR (4th) 725 (Ont SC), aff’d 2007 ONCA 287, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Matic et al. v. Waldner et al., 2016 MBCA 60, UBS Securities Canada Inc v. Sands Brothers Canada Ltd, 2009 ONCA 328, Singh v. Trump, 2016 ONCA 747, Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, DLG & Associates v. Minto Properties Inc., 2015 ONCA 705, Douez v. Facebook Inc., 2017 SCC 33, Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, de Montigny v. Brossard (Succession), 2010 SCC 51, Beswick v. Beswick, [1968] AC 58 (HL), Gasparini et al. v. Gasparini et al. (1978), 20 OR (2nd) 113 (Ont CA), Smith v. Inco Limited, 2013 ONCA 724, Seaton v. Bolton, 2007 CanLII 46250 (Ont SC), Niagara Structural Steel (St Catharines) Ltd. v. WD Laflamme Ltd., 1987 CanLII 4149 (Ont CA), GHL Fridman, The Law of Contract in Canada, 6th ed (Toronto, Thompson Reuters Canada Ltd, 2011)

facts:

This decision is in French.

M. Leclair, a home builder who operated Les Habitations Leclair Inc., sought to develop a housing estate of approximately 100 residential lots in Limoges, ON. He needed investors so that he could purchase the land. His stepfather M. Lacroix, the respondent, agreed to invest in the project. A disagreement arose as to whether an oral contract had been formed and, if yes, the terms of that oral contract. According to M. Lacroix, he was only interested in investing if his share of the lots to be built were transferred to Maisons Lacroix Homes Inc. for construction. According to M. Leclair, M. Lacroix was offered “2 or 3 lots per year”, which he accepted.

Subsequently, M. Leclair found additional investors: 1750714 Ontario Inc. (“714”), 1751917 Ontario Inc. (“917”), and 6888631 Canada Inc. (“631”). The fourth investor was 1750738 Ontario Inc. (“738”), operated by M. Lacroix. Each investor contributed 25% toward the total investment. A holding company, 1750739 Ontario Inc. (“739”), was incorporated to carry out the project. To secure a mortgage, the mortgagee required the investors to sign a shareholder agreement. This was prepared by a lawyer and contained a standard exclusion clause, relating to “the organization and affairs of the Corporation and/or the sale of any Shareholders’ shares of the Corporation.” The documents were in English, and the lawyer did not receive input from M. Lacroix prior to drafting.

Following approval of the subdivision by the municipality, the lots were distributed 75% to Habitations Leclair and 25% to Maisons Lacroix. Once construction was underway, 714, 917 and 631 criticized Maisons Lacroix for selling their homes cheaper and for their construction methods. The other investors imposed financial conditions upon Maisons Lacroix. As a result of the disagreements, 714, 917 and 631 terminated the business relationship with Maisons Lacroix.

At trial, the respondent submitted that the appellants, 714, 917 and 631, violated the terms of the oral contract when they decided to stop the transfer of 25% of the lots to Maisons Lacroix. The trial court decided that an oral contract existed between M. Leclair and M. Lacroix, a condition of M. Lacroix’s investment was that a number of lots equal to his participation in the project would be built by Maisons Lacroix, 738 could continue the action on its part, and the shareholder agreement did not negate the effect of the previous oral contract. The trial court ordered specific performance of the contract, binding the appellants to the orders.

issues:

(1) Did the trial judge err in concluding there was an oral contract while the material terms of this alleged contract were too uncertain, or in adding implicit conditions to the contract?

(2) Did the trial judge err by failing to interpret the exclusion clause in the agreement, or concluding that the clause had the effect of terminating the contract?

(3) Did the trial judge err by ordering specific performance of the contract?

(4) Did the trial judge err by enforcing the orders against 714, 917, and 631?

(5) Alternatively, should leave to appeal the order for costs and the amended order be granted?

holding:

Appeal dismissed.

reasoning:

(1) Did the trial judge err in concluding there was an oral contract while the material terms of this alleged contract were too uncertain, or in adding implicit conditions to the contract?

No. Determining the existence of an oral contract and the certainty of its terms are mixed questions of fact and law considering the factual matrix as a whole. Non-essential terms and details do not have to be settled in order for legal effect to be given to the reasonable expectation of the parties. The facts to be considered depend on the context of the contract. It is also important to know whether the parties acted as if they were bound by an agreement.

In this case, the trial judge concluded that M. Lacroix undertook to participate in financing the subdivision project on an equal basis with the other investors and, in return, Maisons Lacroix was to be the chosen contractor to build houses on a number of lots equal to M. Lacroix’s share in the project. Those were the essential terms. It was not necessary to know the precise number of lots or the future sale price of each home for the agreement to be binding. The other investors were informed of the essential terms and accepted them when 739 was incorporated. Furthermore, when the time came to distribute the lots to the contractors, 739 distributed 25% of the lots to Maisons Lacroix in accordance with the oral contract. The Court held that no palpable and overriding error was committed by the trial judge in concluding there was an oral contract between M. Leclair and M. Lacroix because the essential terms were precise and certain.

(2) Did the trial judge err by failing to interpret the exclusion clause in the agreement, or concluding that the clause had the effect of terminating the contract?

No. Contractual interpretation consists of determining the objective intention of the parties following a fact-driven analysis. In conducting such analyses, courts have considered the language used in the entire agreement, the relationship of the parties when the contract was formed, the sophistication of the parties, the nature of the negotiations, and the language of other terms of the contract. An exclusion clause cannot have the effect of excluding substantive elements of a pre-existing contractual agreement unless it can be demonstrated that the clause was specifically brought to the attention of the party renouncing his rights.

The trial court noted that the exclusion clause was not brought to the attention of M. Lacroix, the wording of the clause made no mention of the intention to set aside the oral contract, all parties were aware of his limited knowledge of English, he did not have independent legal advice prior to signing the shareholder agreement, and there was no explanation of the clause and its importance. In preparing the shareholder agreement, counsel simply incorporated information into an English precedent. None of the shareholders expressly asked to include the clause and no discussion of the clause took place before signing. As it was clear from the facts that the clause was never brought to the attention of M. Lacroix or 738, the analysis ended there. The trial court also determined that if the exclusion clause applied, the only explanation would be that 714, 917 and 631 included it intending to take advantage of M. Lacroix by depriving him, for no consideration, of the benefit they knew was the primary reason for his investment. The Court agreed, finding no error by the trial judge in not interpreting the exclusion clause, or not finding that it terminated the oral contract.

(3) Did the trial judge err by ordering specific performance of the contract?

No. The object of redress for breach of contract is to return the affected party to the position it would have been in had the contract been performed. Specific performance can be ordered when the object of the agreement is unique or irreplaceable. Since it is a discretionary remedy, an appellate court should not interfere with the trial court’s decision unless it committed an error in principle or was clearly wrong. Ordering specific performance is indicated when the contract is for the benefit of a third party.

M. Lacroix testified that he agreed to invest only to benefit Maisons Lacroix. He became an investor in the project through 738, which suffered prejudice as a result of 739’s decision to cease doing business with Maisons Lacroix. The subdivision project was a unique opportunity for investors and builders in the Limoges, ON area. It was also the only long-term, complex real estate development wherein 738 could pass on 25% of the lots to Maisons Lacroix. The trial court therefore accepted that 738 was entitled to continue the action, that damages were inadequate, and that it would be impossible to quantify damages. The obligation to distribute 25% of the lots to Maisons Lacroix by applying the same conditions as those imposed upon Habitations Leclair was clear and created no obstacles to judicial supervision. The Court therefore found no error in the trial judge’s decision to order specific performance.

(4) Did the trial judge err by enforcing the orders against 714, 917, and 631?

No. Enforcement of the orders upon 714, 917 and 631 flowed from the trial judge’s conclusion that all investors must be bound by the judgment. All investors in 739 were aware of the 75/25 spit and agreed to be bound by the oral contract at the time 739 was incorporated. 739 then ratified the oral contract by adopting “action[s] or conduct signifying [739’s] intention to be bound” by the oral contract within the meaning of s. 21(2) of the Ontario Business Corporations Act. Finally, 714, 917 and 631, were represented by the same lawyers as 739. Therefore, the Court found no error by the trial judge.

(5) Alternatively, should leave to appeal the order for costs and the amended order be granted?

No. Absent an error in principle or a manifest error in the granting of costs, a high level of deference must be given to a court of first instance. The respondent, 738, had presented an offer to settle the action. The appellants declined the respondent’s offer, and also made no offer to settle. Therefore, 738 had no choice but to proceed to trial. At trial, the respondent received judgment more favourable than the terms of its Rule 49.10 offer to settle. The trial court did not make any reviewable error in applying Rule 49.10, and correctly ordered that costs be paid by 714, 917 and 631.


Canadian Federation of Students v. Ontario (Colleges and Universities), 2020 ONCA 842

[Fairburn A.C.J.O. (Motion Judge)]

Counsel:

S.S. Mathai, K. Chatterjee, A. Sinnadurai and B. Kettles, for the appellant

M. Wright, L. Century and G. Philipupillai, for the respondents

D. Elmaleh and A. Rosenberg, for the proposed intervener B’nai Brith of Canada League for Human Rights

E. Krajewska, T. Markin and M. Chowdhury, for the proposed intervener University of Toronto Graduate Students’ Union

P. Hrick and D. Rakic, for the proposed interveners S.P. and Guelph Queer Equality

M.P. Tunley and J.P. Saville, for the proposed interveners Canadian Journalists for Free Expression, Centre for Free Expression, Canadian Association of Journalists, PEN Canada, World Press Freedom Canada and Canadian Association of University Teachers

R.A. Centra and L. Pearce, for the proposed interveners the University of Ottawa, Queen’s University at Kingston, the Governing Council of the University of Toronto, the University of Waterloo, and the University of Western Ontario

D. Kastner and V. Vaitheeswaran, for the proposed intervener the Association for Canadian Clinical Legal Education

Keywords: Administrative Law, Colleges and Universities, Ancillary Fees, Civil Procedure, Interveners, Friends of the Court, Rules of Civil Procedure, Rule 13.02, Canadian Charter of Rights and Freedoms, s. 2(b), Canadian Federation of Students v. Ontario, 2019 ONSC 6658, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), Wilson v. British Columbia (Superintendent of Motor Vehicles), 2015 SCC 47

facts:

In 2018, the Ontario Cabinet required the Minister of Training, Colleges and Universities to direct publicly-funded colleges and universities to allow students to opt out of ancillary fees related to student associations, products and special services. In 2019, the Minister issued the “Student Choice Initiative”, which was incorporated in policy directives for colleges and guidelines for universities. The Initiative categorized student fees into either essential mandatory fees or non-essential optional fees. The respondents on appeal brought an application for judicial review to the Divisional Court seeking to quash the directives underlying the Initiative. The Court granted the application and quashed the directives on the basis that they were inconsistent with the statutory scheme respecting the governance of universities and colleges. The appellant, Ontario, has been granted leave to appeal that decision.

Pursuant to Rule 13.02 of the Rules of Civil Procedure, six moving parties sought leave to intervene as friends of the court in a pending appeal from the Divisional Court’s decision in Canadian Federation of Students v. Ontario, 2019 ONSC 6658. The appellant consented to the motions for leave to intervene brought by B’nai Brith of Canada League for Human Rights (“B’nai Brith”) and the University of Toronto Graduate Students’ Union (“UTGSU”). The appellant took no position respecting the proposed interventions by the Start Proud and Guelph Queer Equality (collectively, the “LGBTQ+ Coalition”), the University of Ottawa, Queen’s University, the Governing Council of the University of Toronto, the University of Waterloo, and the University of Western Ontario (collectively, the “Universities”), and the Association for Canadian Clinical Legal Education (“ACCLE”). The appellant opposed the proposed intervention by the Canadian Journalists for Free Expression, the Centre for Free Expression, the Canadian Association of Journalists, PEN Canada, World Press Freedom Canada, and the Canadian Association of University Teachers (collectively, the “Coalition”). The appellant argued that the Coalition sought to raise new issues on appeal.

issues:

(1) Should intervener status be granted to each of the proposed interveners?

holding:

Motions granted.

reasoning:

(1) Should intervener status be granted to each of the proposed interveners?

Yes. Beginning with the consents, the Court held that, in light of their prior contributions as friends of the court before the Divisional Court, and the parties’ positions, intervener status as friends of the court was granted to B’nai Brith and UTGSU.

Turning to the unopposed interventions, the Court considered multiple criteria in deciding whether to grant leave to intervene, including: the general nature of the case, the issues that arose, and the contribution that the intervener could make to those issues without doing an injustice to the parties. The Court found that this appeal raised issues that had a far-reaching impact and that each proposed intervener had an interest that was engaged in the pending appeal. The Court was satisfied that each of the proposed interveners had useful and important contributions to make on appeal and would provide perspectives that would not be offered by the parties. As reflected in the parties’ positions respecting the proposed interveners of the LGBTQ+ Coalition, Universities and ACCLE, the Court held that no injustice to the parties would result from the motions being granted.

The Court then considered the opposed motion to intervene brought by the Coalition. The Coalition contended that it had a distinct perspective to bring to the appeal. The Coalition stated that it would argue that, when viewed through the lens of the free expression values in section 2(b) of the Charter of Rights and Freedoms and purposes that underlie Ontario’s legislative scheme for the governance of universities and colleges, the Divisional Court’s interpretation of the applicable legislation was correct and should be upheld.

The appellant argued that the Coalition’s motion to intervene should be dismissed because the Divisional Court did not characterize the governing legislation as ambiguous, nor did it use s. 2(b) of the Charter as an interpretive aid. The appellant emphasized that Charter values may only be used as an interpretive aid where there is a genuine ambiguity in the legislation. The appellant argued that, as the Divisional Court did not find ambiguity in the legislation, and neither party had argued that an ambiguity existed, the Coalition’s s. 2(b) argument reflected a new issue on appeal. Permitting the Coalition to raise this argument at this late stage would, according to Ontario, work an unfairness to the parties.

The Court did not agree with the appellant’s submissions. The appeal raised the issue of the proper interpretation of legislation affecting the governance of universities and colleges. The appropriateness of using s. 2(b) of the Charter as an interpretive tool was not a new legal issue, but rather was a new argument being introduced to support the Divisional Court’s interpretation of the applicable legislative provisions. The appellate court may conclude that the relevant provisions were ambiguous even though the Divisional Court did not, and even though the parties were not arguing that the legislation is ambiguous. Were the court to reach this conclusion, it was not beyond the realm of possibility that s. 2(b) of the Charter could be considered as an interpretive tool to resolve the ambiguity. The Court held that the Coalition’s submissions may be of assistance to the Court in conducting the interpretive exercise demanded by this appeal. Additionally, since the parties would have an opportunity to respond, no prejudice would result from the Coalition’s participation as a friend of the court.


Manthadi v. ASCO Manufacturing, 2020 ONCA 839

[Thorburn J.A. (Motions Judge)]

Counsel:

J.S. Contini, for the moving party

R. Mann, for the responding parties

Keywords: Contracts, Solicitor and Client, Solicitor’s Liens, Solicitors’ Act, s. 34(1), Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 7(2) and (3), Weenen v. Biadi, 2018 ONCA 288, Dalcor Inc. v. Unimac Group Ltd., et al, 2017 ONSC 945, Foley v. Davis, 1996 CanLII 1145 (Ont. C.A.)

facts:

J. S. Contini Law Professional Corporation (“Contini”), the former solicitor for the responding parties ASCO Manufacturing and N. M., brought two companion motions for solicitors’ liens. In the ASCO claim, Contini sought a lien on the costs awarded to his then client, ASCO Manufacturing, when his client’s appeal was allowed. In the N.M. claim, Contini sought a lien on the costs awarded to his then client, N.M., when the appeal brought by the opposing party was dismissed, and when the $150,000 that the opposing party had paid into court was ordered to be paid out with costs, in a related appeal.

issues:

(1) Should a solicitor’s lien be issued?

holding:

Motions granted.

reasoning:

(1) Should a solicitor’s lien be issued?

Yes. The Court held that without a solicitor’s lien, there was a significant risk N.M. would not or may not be willing and or able to pay the moving party’s receivables. The Court has the jurisdiction to issue a lien over accounts pursuant to s. 34(1) of the Solicitors’ Act or pursuant to the Court’s inherent jurisdiction. In order for the Court to order such a lien, the solicitor must demonstrate that the fund exists, the property was recovered or preserved through the efforts of the solicitor, and there is some evidence that the client cannot or will not pay the fees. In deciding whether to grant a solicitors’ lien, the court must balance the circumstances and equities of each case.

In each of the moving party’s claims, the Court noted that there was a fund in existence. ASCO conceded that the full sum was recovered or preserved through the efforts of Contini and N.M. conceded that the costs award was recovered through the instrumentality of Contini. Both respondents also claimed that during the course of their litigation, they paid Contini more than the amounts sought, and Contini had failed to show that either respondent could not or would not pay Contini’s fees.

The Court found that the moving party correctly noted that prior payments for other steps in the litigation were not relevant to this motion, as there was a fund recovered that was available to protect Contini’s unpaid receivables. The amounts could therefore be subject to a solicitor’s lien to secure those funds, pending resolution of their dispute. Moreover, in both cases, the Court found that the moving party had adduced evidence to support his claim that the responding parties could not or would not pay his fees.

In the case of the ASCO appeal, prior to the hearing of the appeal, express representations were made that Contini’s receivables would be paid. Only after the appeal was allowed and arrangements made to receive the costs award did the responding party ASCO refuse to pay the moving party’s receivable, and indicated that they intended to assess his invoices. In the N.M. appeal, prior to receipt of the funds recovered through the instrumentality of Contini, express representations were made to Contini that his receivables would be paid and he continued to work on the appeals. Moreover, after the appeal was dismissed and the $150,000 paid out of court, N.M. resiled from the position that Contini’s receivable would be paid. He refused to pay it and instead suggested that he intended to assess his invoices. Only after these motions were brought did the responding parties take the position that the moving party should accept their counsel’s undertakings to hold the funds in trust in lieu of a solicitor’s lien, and suggested there was no evidence they could not or would not pay the moving party’s fees.

For these reasons, the Court held that, without a solicitor’s lien, there was a significant risk N.M. would not pay the moving party’s receivables. The undertaking provided by N.M. and his counsel afforded none of the protections of a solicitor’s lien in the event that N.M. or his counsel failed to abide by the undertaking or other creditors asserted claims against the monies presently held in trust by counsel. It was therefore unreasonable to expect the moving party to rely on such an undertaking in lieu of a solicitor’s lien.


Comfort Capital Inc. v. Yeretsian, 2020 ONCA 846

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

Counsel:

J. Zibarras, for the appellant

D. Bourassa, for the respondents

Eric Golden and Elsir Tawfik, for the court-appointed receiver

Keywords: Bankruptcy and Insolvency, Receiverships, Claims Process, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 243(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Coast Capital Savings Credit Union v. Symphony Development Corp., 2011 BCSC 333, DBDC Spadina Ltd. v. Walton, 2015 ONSC 5608, Lilydale Cooperative Limited v. Meyn Canada Inc., 2019 ONCA 761

facts:

A receivership order was made in February 2018. Properties under receivership were sold and proceeds were recovered. The applicants held first mortgages against six properties owned by the debtors. Various related corporations, including CIC, held subsequent mortgages on the six properties. Around the time of the receivership, a principal of CIC and related corporations who held subsequent mortgages on the properties was charged with fraud. Resulting publicity led to Mareva-like claims being advanced in the receivership to freeze surplus proceeds arising from the sale of any of the six properties. A claims process was established on consent under which claimants could prove a direct claim against one of the subsequent mortgagee corporations on a balance of probabilities, entitling the claimant to a pro rata unsecured claim against surplus proceeds to which the particular mortgagee corporation was entitled.

The Scollard action arose out of a power of sale conducted by CIC in 2014, which yielded proceeds of $5.86M. CIC held the first mortgage on the Scollard property. The Stanbarr claimants held eleven subsequent mortgages. Following the Scollard sale, CIC failed to account to the Stanbarr claimants for the proceeds of sale. CIC held a second mortgage on the Caldwell property, one of the six aforementioned properties. The receivership sale of that property yielded surplus proceeds to which CIC was entitled. In June 2018, the Stanbarr claimants moved in the receivership for an order requiring the Receiver to pay the surplus proceeds from the Caldwell sale into court to meet its claim arising out of the Scollard action. At a hybrid trial of that action, the Stanbarr claimants successfully challenged the validity of the notice of sale as the notice was not served on them, and the amount claimed was inflated by over $1.1M in expenses CIC claimed it incurred before obtaining an assignment on the first mortgage. The trial judge did not, however, determine the final amount owing on the mortgage as of the date of closing. As a result, the Stanbarr claimants did not obtain a money judgment against CIC arising out of this trial.

Regarding the Receivership proceedings, CIC and the Stanbarr claimants agreed that the funds that would otherwise have been paid by the Receiver to CIC from the Caldwell sale would be paid into court to the credit of the Scollard Action, obviating the need for a Mareva injunction. In its Tenth Report to the court, the Receiver determined that CIC could have been entitled to $4.85M from the Scollard proceeds, leaving a balance of $920,000 owing to the Stanbarr claimants. The Receiver recommended that the Caldwell surplus proceeds of $785,000 belonging to CIC, which had already been paid into court, should be paid to the Stanbarr claimants. The motion judge accepted this recommendation.

issues:

(1) Did the motion judge err by making an order in Stanbarr’s favour for payment when it never submitted a claim by way of statement of claim and only moved for a Mareva injunction?

(2) Did the motion judge err by holding that the onus was on the party disputing the Receiver’s recommendation?

(3) Did the motion judge err by accepting the Receiver’s recommendation that a finding in the Scollard trial judge’s reasons was dispositive of the Stanbbarr claim when the final amount owing under the CIC mortgage in the Scollard action was left as an outstanding issue yet to be determined in a further proceeding in the Scollard action?

(4) Because the claims process only included claimants who sought a Mareva injunction against CIC to freeze funds payable to CIC and held by the Receiver, was there prejudice to the rights of any creditors of CIC who were not part of the process, including any judgment creditors who may have filed a writ of execution with the sheriff?

holding:

Appeal dismissed.

reasoning:

(1) Did the motion judge err by making an order in Stanbarr’s favour for payment when it never submitted a claim by way of statement of claim and only moved for a Mareva injunction?

No. A party making a claim to surplus proceeds would have to prove on a balance of probabilities that it had a direct claim against CIC. Both Stanbarr and CIC relied on affidavits from the Mareva stage of the proceedings, which was resolved by the payment into court. The only remaining issue was the determination of the claims. This was a consent process and it was clear that Stanbarr’s participation was based on its claim to the surplus of the Caldwell property sale. The consent procedure was followed and there was no need for a statement of claim.

(2) Did the motion judge err by holding that the onus was on the party disputing the Receiver’s recommendation?

No. The onus of proof on the claimant was for the purpose of the Receiver’s report and recommendation. On review, the onus shifted to the party disputing that recommendation to show sufficient reasons why it should not be followed. A court should only intervene in the case of an error or law or a palpable and overriding error of fact. The motion judge applied the correct onus on review.

(3) Did the motion judge err by accepting the Receiver’s recommendation that a finding in the Scollard trial judge’s reasons was dispositive of the Stanbbarr claim when the final amount owing under the CIC mortgage in the Scollard action was left as an outstanding issue yet to be determined in a further proceeding in the Scollard action?

No. At the outset of trial in the Scollard action, the parties agreed that the issue of CIC’s entitlement to pre-assignment expenses related to the first mortgage would be determined by the trial judge. The trial judge found that the $1.1M expense claim was invalid, but left the determination of the amount to a future hearing as the validity of post-assignment expenses had not yet been adjudicated. CIC argued that the issue of quantifying pre-assignment expenses was not finalized at trial but left for a future hearing, meaning that the Caldwell proceeds could not be paid out of court to the Stanbarr claimants in this claims process.

Using the findings from the Scollard trial, the Receiver was able to precisely calculate the amount of the invalid pre-assignment expenses, which CIC did not challenge in the claims process. As there was no appeal from the trial judge’s decision on the issue of the pre-assignment expenses, the quantification based on her findings was res judicata and barred from re-litigatoin by issue estoppel. The only issues left for a future hearing were quantification of post-assignment expenses and determination of the final amount owing to CIC on the Scollard mortgage. The motion judge made no error by accepting the Receiver’s recommendation that the surplus funds from the Caldwell sale be paid to the Stanbarr claimants in respect of their claim against CIC in the Scollard case.

(4) Because the claims process only included claimants who sought a Mareva injunction against CIC to freeze funds payable to CIC and held by the Receiver, was there prejudice to the rights of any creditors of CIC who were not part of the process, including any judgment creditors who may have filed a writ of execution with the sheriff?

No. Claims of other potential creditors of CIC who did not seek a Mareva injunction to preserve funds collected by the Receiver of a debtor of CIC were not barred by this claims process. The only effect was that these creditors would not have access to CIC’s Caldwell funds. In its written submissions, CIC advised it had solvency issues. So, to protect the rights of any judgment creditor of CIC that filed a writ of execution with the sheriff, the Court directed the Receiver to pay the funds out of court to the Stanbarr claimants after conducting a bankruptcy search and determining there were no writs of execution filed against CIC. If writs were filed, the Receiver would then be able to return the issue of entitlement or priority to the motion judge.


SHORT CIVIL DECISIONS

1632093 Ontario Inc. (Turn-Key Projects) v. York Condominium Corporation No. 74, 2020 ONCA 843

[Tulloch, Miller and Paciocco JJ.A.]

Counsel:

A. Casalinuovo, for the appellant/respondent by way of cross-appeal

M. Simaan and R. Gandotra, for the respondent/appellant by way of cross-appeal

Keywords: Civil Procedure, Appeals, Palpable and Overriding Error, Costs, Rules of Civil Procedure, Rule 29

Krieser v. Garber, 2020 ONCA 840

[Doherty, Hoy and Jamal JJ.A.]

Counsel: 

P.W. Kryworuk and J.R.W. Damstra, for the appellants M.N. and Nealon Wood Products Ltd.

A.I. Schein and S. Schreiber, for the appellants A.G., M.G. and S.G.

K. Prehogan and L. Boritz, for the respondent

Keywords: Civil Procedure, Appeals, Motions, Costs

Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 849

[Huscroft, Zarnett and Coroza JJ.A.]

Counsel: 

P.J. Pape, for the appellants

J.C. Lisus, A. Winton and V.A. Calina, for the respondents

Keywords: Costs Endorsement


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.

Print:
EmailTweetLikeLinkedIn
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.