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Good afternoon.

Please find below our summaries of the civil decisions of the Court of Appeal for Ontario for the week of February 15, 2021.

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Bourke is a family law child custody and mobility decision containing a detailed discussion of the law in this area, including ss. 16.92(2) of the Divorce Act, which comes into effect on March 1, 2021. That new provision addresses the “classic double-bind” dilemma that arises in mobility cases (if the parent says they will not move if they do not get custody, then their move is not that necessary; if they say they will move even if they lose custody, then they are bad parents).

In Actava, the Court refused to enforce US letters of request against a stranger to the US litigation carrying on business in Ontario. The foreign plaintiff merely sought the Ontario corporation’s financial information to try to prove its damages by using the Ontario corporation as a “yardstick” for the damages it suffered (arguing that it would have earned a similar profit to the Ontario corporation). The Court determined that the documents sought were not relevant and the request was highly intrusive and infringed on Canadian sovereignty (as such an order would not have been made in an Ontario action against a non-party in Ontario).

In Royal Bank of Canada v. 1643937 Ontario Inc., the Court set aside summary judgment against guarantors on the basis that the motion judge did not adequately explain why she rejected the appellants’ evidence that they thought their collective liability under the guarantees would be $600,000 (rather than each being liable for $600,000, as claimed by the bank).

Drywall Acoustic Lathing and Insulation is a securities class action decision in which the plaintiff sought leave to commence a secondary market misrepresentation claim against Barrick Gold under the Securities Act. In its decision, the Court noted that although it is permissible for a court to assume that one constituent element of a cause of action or legal test has been satisfied, and subsequently dispose of the case on the basis of a different constituent element not being established, this method of legal analysis should be used sparingly in securities class action cases. Both issuers and the public have an interest in the accuracy of disclosure made by public companies, and an analysis whereby a court assumes misrepresentations were made but disposes of a claim on other grounds does nothing to address the possible misrepresentations and restore confidence in the disclosures of the company moving forward.

In Abbasbayli, a wrongful dismissal case, the Court restored some pleadings that may have been awkward but should not have been struck, as they did disclose a reasonable cause of action.

Finally, 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. Justice Benjamin Zarnett will be co-chairing the event with myself and Chloe Snider of Dentons. Following is our excellent slate of decisions and speakers:

2020 Update from the Bench

The Honourable Benjamin Zarnett, Court of Appeal for Ontario

Panel 1 – Advocacy Practice Tips from the Court

Girao v. Cunningham, 2020 ONCA 260

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

Welton v. United Lands Corporation Limited, 2020 ONCA 322

Jordan Goldblatt, Adair Goldblatt Bieber LLP

Sara Erskine, Weintraub Erskine Huang LLP

Panel 2 – Negligently Designed Financial Products – A New Age in Product Liability?

Wright v. Horizons ETFS Management (Canada) Inc., 2020 ONCA 337

Seumas Woods, Blake, Cassels & Graydon LLP

Alistair Crawley, Crawley MacKewn Brush LLP

Elizabeth Bowker, Stieber Berlach LLP

Panel 3 – Developments in Insolvency Law – Priority of Construction Trust Claims and Landlord Claims in Bankruptcy

Urbancorp Cumberland 2 GP Inc. (Re), 2020 ONCA 197

7636156 Canada Inc. (Re), 2020 ONCA 681

Ken Kraft, Dentons LLP

Kevin Sherkin, Miller Thomson LLP

D.J. Miller, Thornton Grout Finnigan LLP

In the meantime, please register for the program by visiting the OBA’s website.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Abbasbayli v. Fiera Foods Company, 2021 ONCA 95

Keywords: Employment Law, Wrongful Dismissal, Unpaid Wages, Corporations, Directors Liability for Unpaid Wages, Oppression, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action, Appeals, Jurisdiction, Final and Interlocutory Orders, Employment Standards Act, 2000, S.O. 2000, c. 41, s. 81, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, ss 131, 248, Rules of Civil Procedure, Rule 21, Courts of Justice Act, R.S.O. 1990, c. C.43, ss 6(2), Ontario Securities Commission v. McLaughlin, 2009 ONCA 280, Buccilli v. Pillitteri, 2016 ONCA 775, Lax v. Lax (2004), 239 D.L.R. (4th) 683 (Ont. C.A.), Azzeh v. Legendre, 2017 ONCA 385, leave to appeal refused, [2017] S.C.C.A. No. 289, 2099082 Ontario Limited v. Varcon Construction Corporation, 2020 ONCA 202, Cooper v. The Laundry Lounge, Inc., 2020 ONCA 166, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Wellington v. Ontario, 2011 ONCA 274, leave to appeal refused, [2011] S.C.C.A. No. 258, Grand River Enterprises Six Nations Ltd. v. Attorney General (Canada), 2017 ONCA 526, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Apotex Inc. v. Eli Lilly and Co., 2015 ONCA 305, leave to appeal refused, [2015] S.C.C.A. No. 291, Tran v. University of Western Ontario, 2015 ONCA 295, Ricci v. Chippingham Financial Group Ltd., 2017 ONSC 6958, Beadle v. Gudgeon Brothers Ltd., 2006 CanLII 2612 (Ont. S.C.), Walls v. Lewis (2009), 97 O.R. (3d) 16 (S.C.), Churchill v. Aero Auction Sales, 2019 ONSC 4766, Downtown Eatery (1993) Ltd. v. Ontario (2001), 200 D.L.R. (4th) 289 (Ont. C.A.), leave to appeal refused, [2001] S.C.C.A. No. 397, Brigaitis v. IQT, Ltd. c.o.b. as IQT Solutions, 2014 ONSC 7, Wilson v. Alharayeri, 2017 SCC 39, Jacobson v. Skurka, 2015 ONSC 1699, Mirshahi v. Suleman, 2008 CanLII 64006 (Ont. S.C.), Janssen-Ortho Inc. v. Amgen Canada Inc. (2005), 256 D.L.R. (4th) 407 (Ont. C.A.), Copland v. Commodore Business Machines Ltd. (1985), 52 O.R. (2d) 586 (S.C., Master), aff’d (1985), 52 O.R. (2d) 586, George v. Harris, [2000] O.J. No. 1762 (S.C.), Huachangda Canada Holdings Inc. v. Solcz Group Inc., 2019 ONCA 649, Foodcor Services Corp. v. Seven-Up Canada Inc., [1998] O.J. No. 2576 (Gen. Div.), Ontario Consumers Home Services Inc. v. EnerCare Inc., 2014 ONSC 4154, Transamerica Occidental Life Insurance Co. v. Toronto-Dominion Bank, [1997] O.J. No. 1 (Gen. Div.), Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 218, Mitchell v. Lewis, 2017 ONCA 105

Bourke v. Davis , 2021 ONCA 97

Keywords:Family Law, Custody and Access, Mobility Orders, Maximum Contact Principle, Best Interest of the Child, “Double-Bind”, Divorce Act, s. 16(10), s. 16.92(2), Children’s Law Reform Act, Gordon v. Goertz, [1996] 2 SCR 27, Hejzlar v. Mitchell-Hejzlar, 2011 BCCA 230, Thompson v. Drummond, 2018 ONSC 1975, Lamont-Daneault v. Daneault, 2003 MBCA 111, Porter v. Bryan, 2017 ONCA 677, Segal v. Segal (2002), 26 R.F.L. (5th) 433 (Ont. C.A.), Spencer v. Spencer, 2005 ABCA 262, Hopkins v. Hopkins, 2011 ABCA 372, Young v. Young (2003), 63 O.R. (3d) 112 (C.A.), Prokopchuk v. Borowski, 2010 ONSC 3833, Maharaj v. Wilfred-Jacob, 2016 ONSC 7925, Newstead v. Hachey, 2018 ONSC 1317

Actava TV, Inc. v. Matvil Corp., 2021 ONCA 105

Keywords: Private International Law, Conflict of Laws, Civil Procedure, Documentary Discovery, Foreign Letters of Request (Letters Rogatory), Sovereignty, Comity, Canada Evidence Act, R.S.C. 1985, c. C-5, s. 46, Ontario Evidence Act, R.S.O. 1990, c. E.23, s. 60, Ontario Rules of Civil Procedure, Rule 30.10, Business Records Protection Act, R.S.O. 1990, c. B.19, Presbyterian Church of Sudan v. Taylor (2006), 215 O.A.C. 140 (C.A.), Hilton v. Guyot, 159 U.S. 113 (1895), The Signe, 37 F. Supp. 819 (E.D. La. 1941), R. v. Zingre, [1981] 2 S.C.R. 392, Gulf Oil Corporation v. Gulf Canada Limited et al. [1980] 2 S.C.R. 39, Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, 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.), Connecticut Retirement Plans and Trust Funds v. Buchan, 2007 ONCA 462, Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, Glegg v. Glass, 2020 ONCA 833, France (Republic) v. De Havilland Aircraft of Canada Ltd. (1991), 3 O.R. (3d) 705 (C.A.), Perlmutter v. Smith, 2020 ONCA 570, Riverview-Trenton Railroad Company v. Michigan Department of Transportation, 2018 ONSC 212, Appeal Enterprises Ltd. v. First National Bank of Chicago (1984), 10 D.L.R. (4th) 317 (Ont. C.A.), Local Court of Stuttgart of the Federal Republic of Germany v. Canadian Imperial Bank of Commerce (1997), 31 O.R. (3d) 684 (Gen. Div.), aff’d 1998 CarswellOnt 1999 (C.A.), British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, Éditions Écosociété Inc. v. Banro Corp., 2012 SCC 18, Cowper Smith v. Morgan, 2017 SCC 61, Bessette v. British Columbia (Attorney General), 2019 SCC 31, Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, Elsom v. Elsom, [1989] 1 S.C.R. 136, Harelkin v. University of Regina, [1979] 2 S.C.R. 561, Liu v. Zhi, 2019 BCCA 427, R. v. Truscott (2006), 216 O.A.C. 217 (C.A.), R. v. J.-L.J., 2000 SCC 51, Girao v. Cunningham, 2020 ONCA 260, Aker Biomarine AS et al. v. KGK Synergize Inc., 2013 ONSC 4897, Treat America Limited v. Nestlé Canada Inc., 2011 ONCA 560, Westinghouse Electric Corp. v. Duquesne Light Co. (1977), 16 O.R. (2d) 273 (H.C.), Optimight Communications Inc. v. Innovance Inc. (2002), 155 O.A.C. 202 (C.A.), Morse Shoe (Canada) Ltd. v. Zellers Inc. (1997), 100 O.A.C. 116 (C.A.), Ontario (Attorney General) v. Ballard Estate (1995), 129 D.L.R. (4th) 52 (Ont. C.A.)

Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund v. Barrick Gold Corporation, 2021 ONCA 104

Keywords: Securities, Misrepresentation, Public Correction, Civil Procedure, Class Proceedings, Leave to Commence Proceedings, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, s. 138.3, s. 138.8, Bank of Montreal v. i Trade Finance Inc., 2009 ONCA 615, aff’d on other grounds, 2011 SCC 26, Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group, 2016 ONSC 5784

Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98

Keywords: Contracts, Debtor-Creditor, Guarantees, Misrepresentation, Civil Procedure, Summary Judgment, Rules of Civil Procedure, Rules 20.04(2.1)-(2.2), 20.04(2)(b), Hryniak v. Mauldin, 2014 SCC 7, Trotter Estate, 2014 ONCA 841, Lesenko v. Guerette, 2017 ONCA 522, 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, Neuberger v. York, 2016 ONCA 191, Gordashevskiy v. Aharon, 2019 ONCA 297, Bank of Nova Scotia v. Zackheim (1983), 3 D.L.R. (4th) 760 (Ont. C.A.), Beer v. Townsgate I Ltd. (1997), 152 D.L.R. (4th) 671 (Ont. C.A.)

Short Civil Decisions

Hernandez v. Hernandez, 2021 ONCA 106

Keywords: Wills and Estates, Passing of Accounts, Civil Procedure, Appeals, Mootness, Borowski v. Canada (Attorney General), [1989] 1 SCR 342

Joo v. Tran, 2021 ONCA 107

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Encumbrances, Utility Easements

Fermar Paving Limited v. Ontario (Transportation), 2021 ONCA 111

Keywords: Contracts, Construction


CIVIL DECISIONS

Abbasbayli v. Fiera Foods Company, 2021 ONCA 95

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

Counsel:

N. Y. Chsherbinin and S. Quigg, for the appellant

M. P. Sammon and S. J. Roher, for the respondents

Keywords:Employment Law, Wrongful Dismissal, Unpaid Wages, Corporations, Directors Liability for Unpaid Wages, Oppression, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action, Appeals, Jurisdiction, Final and Interlocutory Orders, Employment Standards Act, 2000, S.O. 2000, c. 41, s. 81, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, ss 131, 248, Rules of Civil Procedure, Rule 21, Courts of Justice Act, R.S.O. 1990, c. C.43, ss 6(2), Ontario Securities Commission v. McLaughlin, 2009 ONCA 280, Buccilli v. Pillitteri, 2016 ONCA 775, Lax v. Lax (2004), 239 D.L.R. (4th) 683 (Ont. C.A.), Azzeh v. Legendre, 2017 ONCA 385, leave to appeal refused, [2017] S.C.C.A. No. 289, 2099082 Ontario Limited v. Varcon Construction Corporation, 2020 ONCA 202, Cooper v. The Laundry Lounge, Inc., 2020 ONCA 166, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Wellington v. Ontario, 2011 ONCA 274, leave to appeal refused, [2011] S.C.C.A. No. 258, Grand River Enterprises Six Nations Ltd. v. Attorney General (Canada), 2017 ONCA 526, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Apotex Inc. v. Eli Lilly and Co., 2015 ONCA 305, leave to appeal refused, [2015] S.C.C.A. No. 291, Tran v. University of Western Ontario, 2015 ONCA 295, Ricci v. Chippingham Financial Group Ltd., 2017 ONSC 6958, Beadle v. Gudgeon Brothers Ltd., 2006 CanLII 2612 (Ont. S.C.), Walls v. Lewis (2009), 97 O.R. (3d) 16 (S.C.), Churchill v. Aero Auction Sales, 2019 ONSC 4766, Downtown Eatery (1993) Ltd. v. Ontario (2001), 200 D.L.R. (4th) 289 (Ont. C.A.), leave to appeal refused, [2001] S.C.C.A. No. 397, Brigaitis v. IQT, Ltd. c.o.b. as IQT Solutions, 2014 ONSC 7, Wilson v. Alharayeri, 2017 SCC 39, Jacobson v. Skurka, 2015 ONSC 1699, Mirshahi v. Suleman, 2008 CanLII 64006 (Ont. S.C.), Janssen-Ortho Inc. v. Amgen Canada Inc. (2005), 256 D.L.R. (4th) 407 (Ont. C.A.), Copland v. Commodore Business Machines Ltd. (1985), 52 O.R. (2d) 586 (S.C., Master), aff’d (1985), 52 O.R. (2d) 586, George v. Harris, [2000] O.J. No. 1762 (S.C.), Huachangda Canada Holdings Inc. v. Solcz Group Inc., 2019 ONCA 649, Foodcor Services Corp. v. Seven-Up Canada Inc., [1998] O.J. No. 2576 (Gen. Div.), Ontario Consumers Home Services Inc. v. EnerCare Inc., 2014 ONSC 4154, Transamerica Occidental Life Insurance Co. v. Toronto-Dominion Bank, [1997] O.J. No. 1 (Gen. Div.), Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 218, Mitchell v. Lewis, 2017 ONCA 105

facts:

The appellant commenced an action in August 2018 with respect to the termination of his employment for cause on March 26, 2018. He alleged that the corporate respondents were manufacturers of frozen dough and fully baked bakery products and his common employer (which he referred to together as “Fiera”), and that each of the individual respondents was a director and the directing mind and will of one or more of the corporate respondents.

The appellant began working as a security guard at Fiera in 2002, moved to the role of boxing line operator, then to lead hand, and eventually back again to boxing line operator, the position he was in when he was fired. His employment was allegedly terminated for cause on March 26, 2018, after he was accused of punching a colleague’s time card. The appellant pleaded that the time-theft allegation was deliberately false, that Fiera failed to conduct a proper investigation, and that he was dismissed as a reprisal because he had raised concerns about manufacturing, health and safety, and storage requirement violations by Fiera, and he had taken steps to encourage employees to organize a labour union.

In addition to claiming wrongful dismissal damages and punitive damages, the appellant claimed against the individual respondents unpaid vacation pay under s. 81 of the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”) and s. 131 of Ontario’s Business Corporations Act, R.S.O. 1990, c. B.16 (“OBCA”), and relief from oppression under s. 248 of the OBCA.

The motion judge concluded that the appellant did not plead the material facts necessary to establish a cause of action under s. 131 of the OBCA, as it only provides for a director’s liability for debts and services performed and vacation pay accrued and not for severance pay, termination pay, or damages for wrongful dismissal. As for the claim under s. 81 of the ESA, the motion judge observed that the appellant had pleaded that the directors were liable for unpaid vacation pay under this provision, however, no such relief had been claimed in the prayer for relief, and the appellant had not included any material facts addressing any of the statutory requirements to establish the directors’ liability under this section. Accordingly, the motion judge struck these claims without leave to amend.

The motion judge struck the s. 248 OBCA claim, as the appellant did not have standing to make a claim under s. 248, he had not pleaded the necessary material facts to support the claim, and that he had not pleaded his reasonable expectations or that the conduct of the directors affected his ability to recover judgment against the corporate defendants. However, that claim was struck with leave to amend, as the respondents had provided the appellant with a roadmap of what was required to fix the pleading.

After observing that certain paragraphs of the statement of claim contained predominantly evidence, she struck those pleadings. The motion judge also struck other paragraphs as as violating rule 25.11 of the Rules of Civil Procedure.

issues:
  1. Does the Court of Appeal have jurisdiction to hear the appeal?
  2. Did the motion judge err in striking the s. 81 ESA claim without leave to amend?
  3. Did the motion judge err in striking the s. 131 OBCA claim without leave to amend?
  4. Did the motion judge err in striking the s. 248 OBCA claim with leave to amend?
  5. Did the motion judge err in striking paragraphs pursuant to Rule 25.11 with leave to amend?
holding:

Appeal allowed, in part.

reasoning:

(1) Yes. Although s. 255 of the OBCA stipulates that appeals to an order made under the OBCA are to the Divisional Court, s. 6(2) of the Courts of Justice Act, R.S.O. 1990, c. C. 43 permitted the court to take jurisdiction over the appeal of the interlocutory aspects of the order of the motion judge because there were aspects of the order that were final, and therefore appealable to Court of Appeal. The Court may take jurisdiction under s. 6(2) where the issues relating to the final and interlocutory aspects of the order are so interrelated that once the issues arising from the final aspects of the order were before the Court, leave would inevitably have been granted on the issues arising from the interlocutory portions.

(2) No. It was plain and obvious that the appellant’s s. 81 ESA claim could not succeed and was therefore properly struck without leave to amend. Typically, a claim against a director for unpaid wages under s. 81 of the ESA will operate and be enforced within the statutory regime. Assuming, without deciding, that a s. 81 claim could be pursued in a wrongful dismissal action, the appellant failed to set out any material facts in the statement of claim that, if proved, could satisfy any of the statutory preconditions. This defect could not be cured with an amendment.

On a plain reading of the ESA, a director is only liable for an employee’s outstanding unpaid wages under s. 81 in certain prescribed circumstances. The employee must have filed a claim in the employer’s receivership or bankruptcy (under s. 81(1)(a)); an employment standards officer must have made an order that the employer or a director is liable for the wages, which order is not under review (under ss. 81(1)(b) and (c)); or the Labour Board must have issued, amended or affirmed such an order (under s. 81(1)(d)).

(3) Yes. While the pleading was awkward, the appellant pleaded the necessary material facts to support a claim against the individual respondents under s. 131 of the OBCA for unpaid vacation pay. The statement of claim disclosed a reasonable cause of action under s. 131 of the OBCA and the claim should not have been struck. The appellant was granted leave to amend the pleading to clarify that his claim was limited to a claim for vacation pay.

Section 131 provides that the directors of a corporation are jointly and severally liable for up to six months’ wages and for accrued vacation pay for up to one year if (a) the corporation is sued in the action and execution is returned unsatisfied; or (b) the corporation is involved in certain insolvency proceedings and the employee’s claim has been proved. While the s. 131 pleading was too broad, the appellant did plead that he was entitled to three weeks’ vacation pay at the time of his dismissal and that this pay was not received. Further, it was not premature to assert the claim in this action: s. 131(2)(a) contemplates that the corporate employer will be sued in the same action as the director, although the director will not become liable to pay the accrued vacation pay until execution against the corporation is returned unsatisfied.

(4) No. The motion judge did not err in striking the oppression claim under s. 248 of the OBCA with leave to amend. There were insufficient material facts in the statement of claim to establish a claim for oppression under s. 248 of the OBCA. The appellant did not plead his reasonable expectations of the directors or that those reasonable expectations were violated by oppressive corporate conduct. The appellant’s reasonable expectations cannot simply be inferred from his pleadings of what the directors did or failed to do.

It was not sufficient for a terminated employee, as here, to have pleaded that the individual defendants acted oppressively as directors of the corporate defendants, and to claim all of their damages against such individuals, relying on s. 248 of the OBCA. Nor is it sufficient to allege that the directors directed the appellant’s termination, or that they failed to ensure that he received a record of employment.

The necessary elements of an oppression claim were recently articulated by the Supreme Court in Wilson v. Alharayeri, 2017 SCC 39. First, the complainant must identify the reasonably held expectations they claim to have been violated by the conduct at issue. Second, the complainant must show that these reasonable expectations were violated by corporate conduct that was oppressive or unfairly prejudicial to or that unfairly disregarded the interests of any security holder, creditor, director or officer of the corporation. The appellant did not address these elements in his pleading.

(5) Yes. Some paragraphs should be struck with leave to amend; others should not have been struck. The facts pleaded in some of the paragraphs that should not have been struck were relevant to the appellant’s assertion that he was fired, not because of the alleged time-theft, but as a reprisal for having brought certain violations of manufacturing requirements to the attention of management. They pleaded a course of conduct alleged to have culminated in the appellant’s termination as a reprisal for repeatedly raising issues. The references to two other employees were not inflammatory or inserted merely for colour; rather they were part of the pleading that the appellant, after raising issues, was instructed to train other employees to replace him in the lead hand position, resulting in his return to the position of boxing line operator. While it was unnecessary for the appellant to identify the other employees by name in the statement of claim, this did not in itself amount to a pleading of evidence that would require this part of the pleading to be struck.

While it may well have been sufficient for the appellant to have pleaded that he observed, documented, recorded and regularly reported to Fiera’s management violations between the dates indicated, or even a certain number of violations, the list of the various instances was a pleading of particulars, not evidence, and was therefore acceptable.

There was no apparent connection between one of the paragraphs and the appellant’s claim that his employment was terminated as a reprisal for bringing violations to the corporate respondents’ attention. Accordingly, it was appropriate to strike these other allegations of wrongdoing, which were not relevant to the appellant’s wrongful dismissal claim.


Bourke v. Davis, 2021 ONCA 97

[Feldman, Tulloch and Nordheimer JJ.A.]

Counsel:

M.J. Stangarone, for the appellant

R.A. Noll, for the respondent

Keywords: Family Law, Custody and Access, Mobility, Maximum Contact Principle, Best Interest of the Child, Standard of Review, Divorce Act, s. 16(10), s. 16.92(2), Children’s Law Reform Act, Gordon v. Goertz, [1996] 2 SCR 27, Hejzlar v. Mitchell-Hejzlar, 2011 BCCA 230, Thompson v. Drummond, 2018 ONSC 1975, Lamont-Daneault v. Daneault, 2003 MBCA 111, Porter v. Bryan, 2017 ONCA 677, Segal v. Segal (2002), 26 R.F.L. (5th) 433 (Ont. C.A.), Spencer v. Spencer, 2005 ABCA 262, Hopkins v. Hopkins, 2011 ABCA 372, Young v. Young (2003), 63 O.R. (3d) 112 (C.A.), Prokopchuk v. Borowski, 2010 ONSC 3833, Maharaj v. Wilfred-Jacob, 2016 ONSC 7925, Newstead v. Hachey, 2018 ONSC 1317

facts:

The parties married in 2012 and had two sons together. They divorced in August 2018. The respondent re-married in December of 2018 to a man who lived in Washington State and they had a child together in April of 2020. As her new husband could not obtain a visa to live in Canada, the respondent planned to move to the U.S. with their newborn child and the two older children.

The appellant initially brought an application seeking joint and shared custody. The respondent in turn asked for sole custody and an order allowing her to move to the United States with the two children. The parties agreed to an investigation by the Office of the Children’s Lawyer (“OCL”), who recommended that the respondent should have sole custody but not be permitted to move with the children as the frequency of visits with the appellant was more important than the duration of the visits.

At trial, the judge ordered joint and shared custody with final decision-making authority resting with the respondent, but also made an order allowing the respondent to move the children with her to the U.S. The trial judge noted that the respondent had carefully researched the practicalities of the proposed move in a child-focused manner, as well as its implications for the children and for their immediate and extended family. Her proposed plan to maintain the children’s relationship with the appellant was practical and realistic, with blocks of time throughout the year designated for visits to Ontario. She had also considered the significant economic benefits of her new husband’s employment for the family, as well as the available employment opportunities for herself.

issues:
  1. Did the trial judge err in relying on the respondent’s position that she would be moving to Washington with or without the children to determine the best interests of the children?
  2. Did the trial judge err in failing to give effect to the maximum contact principle, and instead focusing on the respondent’s position that she would move with or without the children and the reasons for the move?
  3. Did the trial judge err in rejecting the recommendation of the OCL investigator against the relocation because the investigator failed to consider the scenario where the respondent would move without the children?
  4. Did the trial judge err in giving final decision-making authority to the respondent?
holding:

Appeal dismissed.

reasoning:

Appellate courts are to give considerable deference to the decisions of trial judges on custody and access matters and should not overturn an order in the absence of a material error, a serious misapprehension of the evidence, or an error in law: Segal v. Segal.

The Court of Appeal set out the law governing custody and mobility cases – In Gordon v. Goertz, the Supreme Court set out the governing principles for mobility, including: i) the custodial parent’s view is entitled to great respect, but there is no presumption in their favour; ii) the focus is on the best interests of the child, not the interests and rights of the parents; and iii) more particularly the judge should consider, inter alia: (a) the existing custody arrangement and the relationship between the child and the two parents; (b) the desirability of maximizing contact between the child and both parents; (c) the views of the child; (d) the reason for moving, only in the exceptional case where it is relevant to that parent’s ability to meet the needs of the child; and (e) disruption to the child of a change in custody.

Further, the B.C. Court of Appeal decision in Hejzlar v. Mitchell-Hejzlar, provides four important principles when the access parent opposes relocation: (a) while ss.16(10) of the Divorce Act requires that the court consider maximizing contact between child and parent, it is not an absolute principle, and should only be pursued within the best interests of the child; (b) the authorities generally do not favour the status quo as a “default position” as this is contrary to the principle that presumptions are inappropriate in custody cases; and (c) courts in Canada have discouraged reliance by a judge on any expression by the parent who is seeking to move that he or she will not move if the child cannot accompany him or her.

(1) Did the trial judge err in relying on the respondent’s position that she would be moving to Washington with or without the children to determine the best interests of the children?

No. The appellant submitted that the trial judge placed too much weight on the fact that the respondent would move with or without the children. The appellant in particular asserted that the trial judge erred in his analysis when he failed to consider the amendments to the Divorce Act which will come into force on March 1, 2021, and will include a new s. 16.92(2): “In deciding whether to authorize a relocation of the child, the court shall not consider if the child’s relocation was prohibited, whether the person who intends to relocate the child would relocate without the child or not relocate”. The Court rejected this submission however, as the respondent only mentioned it to suggest that the status quo was not an option. In these circumstances, the trial judge was not only entitled but was obliged to accept the fact that the respondent would be moving to Washington with or without the children and that the status quo was not an option for the court to consider.

(2) Did the trial judge err in failing to give effect to the maximum contact principle?

No. The Court found that the trial judge had in fact considered the maximum contact principal and gave it careful attention. His analysis made it clear that maximizing contact with the appellant was a significant aspect of the respondent’s parenting plan that allowed him to approve the children’s move to Washington.

The trial judge noted that the appellant’s parenting plan was premised on the status quo and did not explain how the children’s relationships with their new sister and the respondent would be maintained. By contrast, the respondent’s plan sought to “maximize the children’s contact” with the appellant. The trial judge accepted that the respondent “had demonstrated a determination to foster the maintenance of a healthy and beneficial relationship” between the appellant and the children.

(3) Did the trial judge err in rejecting the recommendation of the OCL investigator against the relocation because the investigator failed to consider the scenario where the respondent would move without the children?

No. The appellant submitted that the trial judge erred by failing to give weight to the OCL’s recommendation against the relocation of the children, and in particular, to his evidence that it was in the children’s best interests to have regular and frequent contact with the appellant. The appellant relied on Young v. Young, where the court found that the trial judge had failed to take into account the OCL investigator’s recommendations. However, that case was distinguishable because in Young, the trial failed to consider the report at all, whereas in the case at hand, the trial judge carefully considered the OCL’s report. The trial judge accepted some of the recommendations, but found that the evidence at trial contradicted some of the others and so did not follow them. While the OCL report did not consider the possibility of the respondent moving to Washington and the children staying in Ontario, that option was not before the OCL. To the extent that was an issue or an error, the appellant should have raised it when the OCL testified or brought up the possible issue with the trial judge.

(4) Did the trial judge err in giving final decision-making authority to the respondent?

No. The appellant argued that because the trial judge accepted that the parties communicate well on issues surrounding the children, there should have been no final decision-making order imposed. The Court rejected this submission, as the appellant put forward no case law to support her position.

To the contrary, the trial judge cited case law in support of his observation that the parent with primary care and control and the greater responsibility for the children’s upbringing should, in some circumstances such as in this case, have final decision-making power. He also referred to Newstead v. Hachey, where the trial judge noted that giving final decision-making authority to one parent may appear to weaken the effect of the joint custody order, because it is important for children to see that decisions about them are being made collaboratively by both their parents. The trial judge also signalled that the use of the final decision-making authority should be a last resort by stating that the respondent would have final decision-making authority, “if necessary after meaningful consultation”.

The Court accepted this approach and found no error in the trial judge’s decision.


Actava TV, Inc. v. Matvil Corp., 2021 ONCA 105

[Fairburn A.C.J.O., Pepall and Roberts JJ.A.]

Counsel:

C. Cole and A. D. Zavaglia, for the appellant

L. Harper and C. Breadon, for the respondents

Keywords: Private International Law, Conflict of Laws, Civil Procedure, Documentary Discovery, Foreign Letters of Request (Letters Rogatory), Sovereignty, Comity, Canada Evidence Act, R.S.C. 1985, c. C-5, s. 46, Ontario Evidence Act, R.S.O. 1990, c. E.23, s. 60, Ontario Rules of Civil Procedure, Rule 30.10, Business Records Protection Act, R.S.O. 1990, c. B.19, Presbyterian Church of Sudan v. Taylor (2006), 215 O.A.C. 140 (C.A.), Hilton v. Guyot, 159 U.S. 113 (1895), The Signe, 37 F. Supp. 819 (E.D. La. 1941), R. v. Zingre, [1981] 2 S.C.R. 392, Gulf Oil Corporation v. Gulf Canada Limited et al. [1980] 2 S.C.R. 39, Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, 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.), Connecticut Retirement Plans and Trust Funds v. Buchan, 2007 ONCA 462, Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, Glegg v. Glass, 2020 ONCA 833, France (Republic) v. De Havilland Aircraft of Canada Ltd. (1991), 3 O.R. (3d) 705 (C.A.), Perlmutter v. Smith, 2020 ONCA 570, Riverview-Trenton Railroad Company v. Michigan Department of Transportation, 2018 ONSC 212, Appeal Enterprises Ltd. v. First National Bank of Chicago (1984), 10 D.L.R. (4th) 317 (Ont. C.A.), Local Court of Stuttgart of the Federal Republic of Germany v. Canadian Imperial Bank of Commerce (1997), 31 O.R. (3d) 684 (Gen. Div.), aff’d 1998 CarswellOnt 1999 (C.A.), British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, Éditions Écosociété Inc. v. Banro Corp., 2012 SCC 18, Cowper Smith v. Morgan, 2017 SCC 61, Bessette v. British Columbia (Attorney General), 2019 SCC 31, Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, Elsom v. Elsom, [1989] 1 S.C.R. 136, Harelkin v. University of Regina, [1979] 2 S.C.R. 561, Liu v. Zhi, 2019 BCCA 427, R. v. Truscott (2006), 216 O.A.C. 217 (C.A.), R. v. J.-L.J., 2000 SCC 51, Girao v. Cunningham, 2020 ONCA 260, Aker Biomarine AS et al. v. KGK Synergize Inc., 2013 ONSC 4897, Treat America Limited v. Nestlé Canada Inc., 2011 ONCA 560, Westinghouse Electric Corp. v. Duquesne Light Co. (1977), 16 O.R. (2d) 273 (H.C.), Optimight Communications Inc. v. Innovance Inc. (2002), 155 O.A.C. 202 (C.A.), Morse Shoe (Canada) Ltd. v. Zellers Inc. (1997), 100 O.A.C. 116 (C.A.), Ontario (Attorney General) v. Ballard Estate (1995), 129 D.L.R. (4th) 52 (Ont. C.A.)

facts:

In 2018, Actava and the other Actava respondents sued various Russian owners, operators, and producers of television channels (the “Russian TV Channels”) in the United States, for allegedly broadcasting content without proper licenses. The appellant, Matvil, was not a party to Actava’s U.S. action nor did any of the parties to that action make any allegations of wrongdoing against it. Matvil is a private, Ontario-based global streaming service that broadcasts television content, predominantly from Russia, Ukraine, and former Commonwealth of Independent States countries, to customers around the world. Matvil had previously been a defendant in a lawsuit brought by the Russian TV Channels against Actava and Matvil, but Matvil was let out of that action early on after it established that it had the necessary licences. Matvil and Actava also had a referral agreement between each other for a time in which one referred customers to the other.

At the time of the current lawsuit, Actava was in the business of streaming Russian-language TV channels to customers in North America.

To calculate Actava’s damages in the U.S. action, Actava’s U.S. damages expert wanted to calculate Actava’s damages using the “yardstick” method of assessment. Actava hypothesized that its own revenues would have followed an upward trajectory similar to Matvil’s.

Actava successfully moved before the U.S. court for a letter of request (“LoR”), which the court issued. Actava then brought an application in Ontario to enforce the LoR. Matvil contested the application, asserting that it had a legitimate interest in protecting the information sought from competitors. Before the application judge, the only categories of documents sought in the LoR that Matvil contested were its yearly reports of the revenue and/or profits derived by it since 2015 and all documents containing or constituting an appraisal or valuation of Matvil’s business since 2015.

The application judge granted Actava’s application to enforce the LoR. She discussed the factors from Presbyterian Church v Taylor, (2006), 215 O.A.C. 140 (C.A.). She found that the documents sought were relevant, necessary and otherwise unobtainable. She also found that enforcing the LoR would not be contrary to public policy, and that the order sought was not unduly burdensome.

issues:
  1. Did the application judge err in her relevance analysis in enforcing the LoR?
  2. Did the application judge err in not finding that public policy precluded enforcement of the LoR?
  3. Did the application judge err in not considering Canadian sovereignty or whether justice required that the LoR be enforced?
holding:

Appeal allowed.

reasoning:

(1) Yes. The application judge erred in her relevance analysis for several reasons. First, even though it was the case that Actava and Matvil had a short-term referral agreement, the documents requested had nothing to do with the referral agreement. Second, the scope of the request in the LoR was extraordinarily broad. Notably, the request encompassed all of Matvil’s global business. Third, the relevance of the requested evidence was entirely speculative. There was no evidence that Matvil’s revenues, profits, and value increased during the time period requested. Fourth, the purpose of the production request also undercut the request. The existence of damages and the calculation of those damages were separate matters. Actava did not seek production of the evidence to establish that it suffered damages. Nor did it plead that its damages were linked to Matvil’s financial performance, profitability or valuation.

(2) Yes. The risks associated with any such order for Matvil, a non-party to the U.S. litigation, far outweighed any hypothetical benefit to Actava. This incursion into Matvil’s confidential proprietary financial performance and valuation information was clearly wrong and contrary to public policy.

Confidentiality concerns may be considered as part of the public policy analysis. Matvil is a privately-held corporation. It was important to stress the nature of the information sought from Matvil. Financial performance and valuation evidence strike at the heart of a corporation. Nothing could be more confidential and open to abusive use. Although there was a protective order in the U.S. action, it fell short of effectively protecting Matvil’s financial information.

(3) Yes. The application judge did not engage in any real balancing exercise and gave no consideration to Canadian sovereignty or whether justice required that the LoR be enforced and the evidence requested be produced. Comity requires the court to engage in an analysis that takes into account the impact of the proposed order on Canadian sovereignty and whether justice requires that the LoR be enforced and the evidence requested be produced: R. v. Zingre, [1981] 2 S.C.R. 392; Connecticut Retirement Plans and Trust Funds v. Buchan, 2007 ONCA 462; and Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264.

The application judge’s reasons did not mention sovereignty or justice at all, and failed to focus on the prejudice to Matvil — apart from, without any true explanation, summarily dismissing its concerns as overstated and speculative.

The phrase “Canadian sovereignty” encompasses: whether the LoR gives extra-territorial authority to foreign laws that violate Canadian or provincial laws; whether granting the request would infringe on recognized Canadian moral or legal principles; whether the order would impose an undue burden on the individual whose evidence is requested; and whether the order would do prejudice to that individual. Rule 30.10 of the Rules of Civil Procedure, which addresses the production of documents from non-parties in proceedings in Ontario, may provide guidance on whether the other examples as being encompassed by the term “Canadian sovereignty”, have been met. Had a comparable request for production been made in a proceeding in Ontario under r. 30.10, the order would not have been granted. As mentioned, the LoR was extraordinarily broad.


Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund v. Barrick Gold Corporation, 2021 ONCA 104

[Hoy, Brown and Thorburn JJ.A.]

Counsel:

J.P. Rochon, P.R. Jervis and G. Nayerahmadi, for the appellants

K.E. Thomson, L. Sarabia and S.G. Frankel, for the respondents

Keywords: Securities, Misrepresentation, Public Correction, Civil Procedure, Class Proceedings, Leave to Commence Proceedings, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, s. 138.3, s. 138.8, Bank of Montreal v. i Trade Finance Inc., 2009 ONCA 615, aff’d on other grounds, 2011 SCC 26, Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group, 2016 ONSC 5784

facts:

In October 2009, the respondent, Barrick Gold, began work on a multi-billion dollar gold mining project known as Pascua-Lama, located in a region straddling the border of Chile and Argentina. As time passed, the estimated costs of the project rose significantly, largely due to environmental liabilities and pending litigation. In October, the respondent concluded that the project was no longer financially feasible, and made the decision to abandon it, recording a write-off of approximately $5 billion, which in turn had a substantial adverse impact on the share price.

The appellants – the proposed plaintiffs in a putative securities class action – alleged that numerous misrepresentations were made by the appellant in the period spanning from October 2011 to October 2013.

The appellants sought to bring an action under Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5 (“OSA”), specifically pursuant to s. 138.3. Under s. 138.3, a person or company who acquires or disposes of securities during the period between the time when a document containing a misrepresentation is released, and the time when the misrepresentation is publicly corrected has a right of action for damages against the responsible issuer, among others. However, s. 138.8(1) of the OSA requires that an action may not be commenced without first obtaining leave of the court, which must be satisfied that: (i) the action is being brought in good faith; and (ii) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

The motion judge granted the appellants leave to proceed with respect to one of the alleged misrepresentations. However, the motion judge denied the appellants leave to proceed with the balance of their claims. In denying leave, the motion judge concluded that even if the alleged misrepresentations were in fact misrepresentations, they were not “publicly corrected” within the meaning of s. 138.3. As a secondary conclusion, the motion judge also found that four of the alleged misrepresentations were not even arguably misrepresentations.

issues:
  1. Did the motion judge err in principle by effectively assuming the falsity of most of the alleged misrepresentations and determining whether leave to proceed should be granted by focusing on whether the misrepresentations had been publicly corrected?
  2. Did the motion judge err in principle by taking an impermissibly narrow approach to determining whether the alleged misrepresentations were publicly corrected?
  3. Should the Court interfere with the motion judge’s conclusion that the four alleged environmental misrepresentations by omission were not even arguably misrepresentations?
holding:

Appeal allowed in part.

reasoning:

(1) Did the motion judge err in principle by effectively assuming the falsity of most of the alleged misrepresentations and determining whether leave to proceed should be granted by focusing on whether the misrepresentations had been publicly corrected?

No. The Court rejected the position that a motion judge cannot assume that the alleged misrepresentations in fact constituted misrepresentations, and simply deny leave to proceed on the basis that there is no reasonable possibility that a trial court would find that there had been a public correction of those misrepresentations.

The Court gave effect to the respondent’s argument that in several different contexts courts may assume that one constituent element of a cause of action or legal test has been satisfied, but dispose of the case on the basis that a different constituent element has not been established. For example, in claims for unjust enrichment, courts have assumed that there has been an enrichment, but determined the case on the issue of whether there is an absence of juristic reason for the enrichment (Bank of Montreal v. i Trade Finance Inc., 2009 ONCA 615, aff’d on other grounds, 2011 SCC 26).

However, the Court did comment that the foregoing approach should be used sparingly and with great caution, in the interests of protecting market confidence. After all, when an issuer’s disclosures are impugned, both the issuer and its shareholders have an interest in addressing the actual substance of the allegations, and ideally reaching a conclusion that restores confidence in the issuer’s disclosures moving forward. By assuming a misrepresentation, a court is doing little to restore such confidence. Therefore, this approach should largely be reserved in cases where the evidentiary record is especially burdensome, and where there is no material overlap between the evidence relevant to alleged misrepresentation, and the evidence of the context in which the alleged public correction was made.

(2) Did the motion judge err in principle by taking an impermissibly narrow approach to determining whether the alleged misrepresentations were publicly corrected?

Yes. In Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group, 2016 ONSC 5784, the motion judge correctly concluded that the determination of whether a corrective disclosure is corrective depends not only on a semantic analysis of what the public correction means, but also on an analysis of how the words would be understood in an efficient market.

To illustrate this theoretical reasoning, the Court drew on an example from the facts. The appellants alleged that the respondent’s representation that the total construction costs for Pascua-Lama was estimated at $4.7-$5 billion in October 2011 was a misrepresentation because the respondent did not disclose that it had material information indicating that this estimate was neither reasonable nor accurate. The appellants further alleged that the respondent’s subsequent disclosure of a 50-60 percent increase in costs from this estimate, contained in quarterly financial statements from 2012, constituted a public correction.

The Court concluded by noting that the public correction need not specifically identify the omitted material fact or specifically relate the information in the correction to the omitted material fact. Instead, the critical question for the motion judge is whether the alleged public correction was reasonably capable of being understood in the secondary market as correcting what was misleading in the impugned statement. While the Court stopped short of commenting on whether the above example in fact constituted a public correction, it was concluded that the trial judge’s interpretive approach with respect to the alleged public corrections was excessively narrow.

(3) Should the Court interfere with the motion judge’s conclusion that the four alleged environmental misrepresentations by omission were not even arguably misrepresentations?

No. The motion judge grouped three of the four alleged misrepresentations together, and concluded that they all suffered from fatal “chronology issues”. Specifically, the motion judge found that the material facts that the appellants alleged should have been disclosed to make the three representations not misleading only arose after the representations were initially made.

The Court cited s. 1(1) of the OSA, which defines a misrepresentation by omission as “an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made”. With respect to this definition, the Court concluded that the “circumstances in which it was made” portion does not include circumstances which arose after the statement was made. Since the material facts related to the alleged misrepresentation only arose after the impugned representations were made, the respondent could not have been required to state them at the time it made the representations.

With respect to the remaining alleged misrepresentation, the motion judge found that the material facts that the respondent allegedly failed to disclose were not “even arguably required” to make the representation at issue not misleading. In short, the appellants provided no evidence that impugned statements made by the respondent were not genuine, and also noted that the appropriate qualifications were made elsewhere in the documents. Accordingly, the Court saw no basis to interfere with the motion judge’s conclusion.

The Court allowed the appeal in part and returned the issue of whether leave should be granted in respect of certain categories of alleged misrepresentations to the court below for reconsideration.


Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98

[Doherty, Roberts and Harvison Young JJ.A.]

Counsel:

J.C. Lisus and Z. Naqui, for the appellants

J. R. Macfarlane, for the respondent

Keywords: Contracts, Debtor-Creditor, Guarantees, Misrepresentation, Civil Procedure, Summary Judgment, Rules of Civil Procedure, Rules 20.04(2.1)-(2.2), 20.04(2)(b), Hryniak v. Mauldin, 2014 SCC 7, Trotter Estate, 2014 ONCA 841, Lesenko v. Guerette, 2017 ONCA 522, 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, Neuberger v. York, 2016 ONCA 191, Gordashevskiy v. Aharon, 2019 ONCA 297, Bank of Nova Scotia v. Zackheim (1983), 3 D.L.R. (4th) 760 (Ont. C.A.), Beer v. Townsgate I Ltd. (1997), 152 D.L.R. (4th) 671 (Ont. C.A.)

facts:

The appellants, LM, PM, and BM, provided personal guarantees as security for several million dollars in loan advances made by the respondent to their family business, Ottawa Valley Glass Enterprises Ltd. (“OVG”). In 2012, OVG struggled financially and began to default on its loan obligations. The respondent demanded payment from OVG under its various loan agreements and from the appellants under their personal guarantees. The appellants attempted to restructure the business, but OVG made an assignment into bankruptcy in December 2013.

The respondent brought an action to recover over $3 million owing under the guarantees of OVG’s indebtedness. The parties brought competing motions for summary judgment. The parties filed affidavits, but no cross-examinations on the affidavits were held and the parties relied on transcripts from discovery examinations. At discovery, the appellants stated they had met with KB, an account manager with the respondent, to sign their respective personal guarantees. They said that it was never explained that the personal guarantees would be for $600,000 individually. The appellants all testified that they understood the personal guarantees were joint and several, and were limited to $600,000 in total.

The motion judge held that there was no genuine issue requiring a trial and that the personal guarantees were valid and enforceable. She rejected the appellants’ allegations that the respondent, through KB, had misrepresented the scope of the liability under their personal guarantees. She stated that PM provided no particulars of what KB said to him, and that he gave no evidence of his reliance on KB’s representations. Additionally, the guarantees included an entire agreement clause that precluded the appellants from relying on any representations that were not set out in the guarantees themselves. Finally, the motion judge rejected the appellants’ argument that their liability was shared given that each of the appellants signed a separate guarantee that made no reference to a guarantee(s) signed by anyone else.

issues:

Did the motion judge err in granting summary judgment because there was no genuine issue requiring a trial regarding the scope of the appellants’ liability to the respondent under their personal guarantees?

holding:

Appeal allowed.

reasoning:

Yes. The overarching goal of summary judgment is to have “a fair process that results in a just adjudication of disputes.” In an effort to dispose of a case in a summary fashion, there is a risk that motion judges will not properly analyze the evidence before them. That is what occurred in this case.

A motion judge’s determination is generally entitled to considerable deference on appeal. However, the Court found that the motion judge’s analysis was inadequate. According to the analytical framework set out in Hryniak v Mauldin, the motion judge was required to analyze the entire evidentiary record before her to determine whether there was a genuine issue requiring a trial with respect to the appellants’ allegations of misrepresentation and, if so, whether the need for a trial could be avoided by using the enhanced powers under Rules 20.04(2.1) and (2.2) of the Rules of Civil Procedure.

The motion judge did not adequately explain why she rejected the appellants’ and SM’s unchallenged evidence that they gave their guarantees on the understanding that their total obligation was $600,000, joint and several, and that this understanding came from the guarantees themselves and discussions with KB. The Court stated that if this evidence was accepted, it would have supported the appellants’ allegations of misrepresentation. While each piece of evidence by itself may not have been sufficient to establish the appellants’ allegations of misrepresentation, the motion judge was required to consider the evidentiary record as a whole to determine whether, in all of the circumstances of the case, she could decide the material issues in dispute without requiring a trial.

The motion judge further erred in failing to address the absence of evidence by the respondent to challenge the appellants’ evidence. In evaluating PM’s evidence, she simply stated that she could not accept that KB made the misrepresentations. The respondent’s choice not to cross-examine the appellants on their affidavits, and not to tender evidence in response to the appellants’ evidence of misrepresentation, ought to have been taken into consideration by the motion judge before she rejected the appellants’ evidence and accepted the respondent’s position on the key disputed factual issues. While she recited the evidence, she did not weigh it, evaluate it, or make findings of credibility as she was required to do pursuant to Rule 20.04(2.1).

For these reasons, the Court held that appellate intervention was required. The matter was remitted for trial on the narrow issue of determining the amount owing by each appellant to the respondent under their respective personal guarantees.


SHORT CIVIL DECISIONS

Hernandez v. Hernandez, 2021 ONCA 106

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

Counsel:

N. Jomaa, for the appellant

A. R. Leardi, for the respondent

Keywords: Wills and Estates, Passing of Accounts, Civil Procedure, Appeals, Mootness, Borowski v. Canada (Attorney General), [1989] 1 SCR 342

Joo v. Tran, 2021 ONCA 107

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

Counsel:

D. Saverino, for the appellants

J. M. Friedman, for the respondents

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Encumbrances, Utility Easements

Fermar Paving Limited v. Ontario (Transportation), 2021 ONCA 111

[Doherty, Peppall and Thorburn JJ.A.]

Counsel:

E. A. F. Grigg and J. A. LeBer, for the appellant

A. I. Pribetic and A. Redinger, for the respondent

Keywords: Contracts, Construction


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.