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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 March 1 to 5, 2021.

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In 1062484 Ontario Inc. v. McEnery, a lawyer defaulted on two loans and the lawa firm he was associated with was also sued. The lawyer was found not to be a partner and the firm was therefore found not liable for the debt. The Court upheld the motion judge’s “boomerang order” wherein she granted summary judgment in favour of the firm and dismissed the appellants’ claims against it, even though the firm had not brought a cross-motion seeking such relief.

In Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), a product liability case, the Court allowed the appeal on the basis that the motion judge incorrectly applied the doctrines of res judicata, cause of action estoppel, issue estoppel, and abuse of process.

In Dhatt v. Beer, the Court dismissed an appeal from a judgment granting specific performance of an agreement of purchase and sale of land and substantial indemnity costs after an uncontested trial following the trial judge’s refusal to grant an adjournment.

There were several family law decisions. In dismissing the appeal in Booth v Bilek, the Court held that the trial judge did not err either in finding that full equalization would be unconscionable, or in her exercise of discretion in setting the appropriate payment at 10% of the amount that would fully equalize the parties’ net family properties.

Lenihan v. Shankar involved a family law custody and relocation case in which the Court ordered for security for costs and refused to stay the custody and relocation order pending appeal. The Court noted that while it is especially rare to award security for costs in a child-related matter, this case was one of those exceptional circumstances.

Manchanda was another family law decision.

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.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

1062484 Ontario Inc. v. McEnery, 2021 ONCA 129

Keywords: Partnerships, Liability, Civil Procedure, Summary Judgment, Boomerang Orders, Partnerships Act, R.S.O. 1990, c. P.5, ss. 2, 11-12, 15, 15(1), Housen v. Nikolaisen, 2002 SCC 33, Hryniak v. Mauldin, 2014 SCC 7, Continental Bank Leasing Corp. v. Canada, [1998] 2 SCR 298, Dawson v. Halpenny Insurance Brokers Ltd., 2017 ONSC 4487, Meridian Credit Union Limited v. Baig, 2016 ONCA 150, King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215, Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, Drummond v. Cadillac Fairview Corporation Limited, 2019 ONCA 447, Moore v. Wienecke, 2008 ONCA 162

Booth v. Bilek, 2020 ONCA 128

Keywords: Family Law, Equalization of Net Family Property, Unequal Division, Unconscionability, Family Law Act, R.S.O. 1990, c. F.3, ss. 5(1), 5(6), Serra v. Serra: 2009 ONCA 105, Gomez v. McHale, 2016 ONCA 318, Zheng v. Xu, 2019 ONSC 865

Davidson (Re), 2021 ONCA 135

Keywords: Bankruptcy and Insolvency, Family Law, Property of the Bankrupt, Civil Procedure, Appeals, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss 38, 163 & 193, Re Ravelston Corp. (2005), 24 C.B.R. (5th) 256 (Ont. C.A.), 2403177 Ontario Inc. v. Bending Lake Iron Group Ltd., 2016 ONCA 225, Enroute Imports Inc. (Re), 2016 ONCA 247, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Re Zammit (1998), 3 C.B.R. (4th) 193 (Ont. Gen. Div.), Re Jolub Construction Ltd. (1993), 21 C.B.R. (3d) 313 (Ont. Gen. Div.)

Dhatt v. Beer, 2021 ONCA 137

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Remedies, Specific Performance, Civil Procedure, Trials, Adjournments, Substantial Indemnity Costs, Rules of Civil Procedure, Rule 52.02, Statement of Principles on Self-represented Litigants and Accused Persons (2006), Dhatt v. Beer, 2020 ONCA 545, Khimji v. Dhanani (2004), 69 O.R. (3d) 790 (C.A.), Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 56 O.R. (3d) 341 (S.C.), Pintea v. Johns, 2017 SCC 23, Morwald-Benevides v. Benevides, 2019 ONCA 1023

Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141

Keywords: Torts, Negligence, Product Liability, Civil Procedure, Striking Pleadings, Res Judicata, Cause of Action Estoppel, Issue Estoppel, Abuse of Process, Rules of Civil Procedure, Rule 21.01(3)(d), Simone Estate v. Cheifetz (2005), 201 O.A.C. 120 (C.A.), Salasel v. Cuthbertson, 2015 ONCA 115, The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Henyen v. Frito Lay Canada Ltd. (1999), 45 O.R. (3d) 776 (C.A.), Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63

Lenihan v. Shankar, 2021 ONCA 142

Keywords: Family Law, Custody and Access, Civil Procedure, Appeals, Security for Costs, Stay Pending Appeal, Rules of Civil Procedure, Rule 61.06(1), Henderson v. Wright, 2016 ONCA 89, Morwald-Benvenides v. Benvenides, 2017 ONSC 3786, RJR-McDonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311

Manchanda v. Thethi, 2021 ONCA 127

Keywords: Family Law, Spousal Support, Property, Remedies, Constructive Trust, Vesting Orders, Family Law Rules, O Reg 114/99, Rules 1(8.4), 2, 24(12)(a), Family Law Act, R.S.O. 1990, c. F. 3, ss. 5(6), 9(1)(d), Divorce Act, R.S.C. 1985 c. 3, s. 15.2(6), Manchanda v. Thethi, 2016 ONCA 909, Abu-Saud v. Abu-Saud, 2020 ONCA 824, Dickie v. Dickie, 2007 SCC 8, Murphy v. Murphy, 2015 ONCA 69, Leskun v. Leskun, 2006 SCC 25, Cunha v. Cunha (1994), 99 B.C.L.R. 93 (S.C.), Meade v. Meade (2002), 31 R.F.L. (5th) 88 (Ont. S.C.), Purcaru v. Purcaru, 2010 ONCA 92, Mullin v. Sherlock, 2018 ONCA 1063, Titova v. Titov, 2012 ONCA 864, Martin v. Sansome, 2014 ONCA 14

Short Civil Decisions

Banerjee v. Mathoo, 2021 ONCA 140

Keywords: Family Law, Property, Matrimonial Home, Net Family Property, Civil Procedure, Offers to Settle, Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711, M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619

Capone v. Fotak, 2021 ONCA 144

Keywords:Family Law, Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), Hopkins v. Kay, 2014 ONCA 514


CIVIL DECISIONS

1062484 Ontario Inc. v. McEnery, 2021 ONCA 129

[Roberts, Zarnett and Sossin JJ.A.]

Counsel:

C.G. Carter, for the appellants

S. Cavanagh and R.S. Brown, for the respondents Williams McEnery and Williams Litigation Lawyers

No one appearing for the respondent, PM

Keywords: Partnerships, Liability, Civil Procedure, Summary Judgment, Boomerang Orders, Partnerships Act, R.S.O. 1990, c. P.5, ss. 2, 11-12, 15, 15(1), Housen v. Nikolaisen, 2002 SCC 33, Hryniak v. Mauldin, 2014 SCC 7, Continental Bank Leasing Corp. v. Canada, [1998] 2 SCR 298, Dawson v. Halpenny Insurance Brokers Ltd., 2017 ONSC 4487, Meridian Credit Union Limited v. Baig, 2016 ONCA 150, King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215, Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, Drummond v. Cadillac Fairview Corporation Limited, 2019 ONCA 447, Moore v. Wienecke, 2008 ONCA 162

facts:

This was a consolidated appeal from two summary judgments, one brought by the appellant 1062484 Ontario Inc. (“106 Ontario”) and one by the appellant 1770650 Ontario Inc. (“177 Ontario”). The respondent, Williams McEnery, now Williams Litigation Lawyers (the “Firm”), is a civil litigation boutique in Ottawa, ON. The respondent PM was a lawyer who shared space with the Firm.

106 Ontario sued for recovery of outstanding amounts under two loans issued in favour of PM. 177 Ontario alleged that it provided funds to PM to be used to pay off and discharge a mortgage. The mortgage remains registered on title. 177 Ontario sought to recover the amount advanced plus costs incurred to maintain the mortgage in good standing. Both 106 Ontario and 177 Ontario alleged that both PM and the Firm were liable as PM was dealing as, or was held out to be, a partner of the Firm.

The motion judge granted summary judgment in favour of the appellants as against PM, but dismissed the appellants’ motions for summary judgment as against the Firm. The motion judge also granted summary judgement in favour of the Firm, dismissing the appellants’ actions against the Firm. Specifically, the motion judge found that PM was not a partner of the firm and that the respondents conducted “two distinct businesses.” Therefore, the Firm was not liable for the actions of PM. Her findings were based on a close reading of the Firm’s partnership agreement, Law Society filings, accounting records, and other documentary evidence. Further, since no credit was given to PM in reliance of his allegedly being held out as a partner of the Firm, liability under s. 15 of the Partnerships Act (the “Act”) could not be established.

issues:

(1) Did the motion judge err by dismissing the appellants’ motions for summary judgment against the Firm?

(2) Did the motion judge err by granting summary judgment in favour of the Firm when the Firm had not brought a cross-motion seeking such relief?

holding:

Appeal dismissed.

reasoning:

(1) No. Under the Act, a firm may be liable for the wrongful act or omission of a partner, or for a partner’s misapplication of money. After assessing the parties’ objective intentions, the motion judge found that PM was not a partner of the Firm, and that the Firm was not liable for PM’s actions. Citing the Supreme Court in Continental Bank, she stated “the fact that parties hold themselves out as partners may be evidence of their intention to carry on business in common under a partnership, but this alone would not have the effect of validating the existence of a partnership”. The appellants submitted that the motion judge misconstrued the test for a “business in common”, and argued that if individuals presented to the world a common business enterprise with a view to profit, then that was sufficient to constitute a partnership. The Court disagreed, finding the motion judge committed no palpable and overriding error in her identification and application of the test as to whether PM was a partner of the Firm.

The appellants also submitted that PM was a partner within the meaning of s. 15(1) of the Act. The motion judge focused her analysis on whether the appellants had subjectively relied on their belief that PM was a partner with the Firm in their respective dealings with him. She acknowledged there was evidence in the record that the decision-makers involved in the impugned transactions relied on their belief that PM was a partner of the Firm. However, the motion judge did not accept this evidence and the Court saw no basis on which to interfere with her findings of fact on this issue.

(2) No. In a “boomerang” order, the party that brought a motion for summary judgment ends up with a summary judgment order against itself. The motion judge relied on several Ontario Court of Appeal decisions that have held that a motion judge has the authority to grant summary judgment in a party’s favour where no motion for summary judgment has been filed by that party. She also considered case law in which a boomerang order was held not to be appropriate, but found that the factors did not apply to the circumstances of the present case. The Court found no error in the motion judge’s application of the authorities. The Court agreed with the motion judge that summary judgment was a “timely, affordable, and proportionate procedure” in this case, and saw no basis on which to disturb her findings.


Booth v. Bilek, 2020 ONCA 128

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

Counsel:

P. D. Slan, for the appellant

S. M. Philbert, for the respondent

Keywords: Family Law, Equalization of Net Family Property, Unequal Division, Unconscionability, Family Law Act, R.S.O. 1990, c. F.3, ss. 5(1), 5(6), Serra v. Serra: 2009 ONCA 105, Gomez v. McHale, 2016 ONCA 318, Zheng v. Xu, 2019 ONSC 865

facts:

The parties, who were married, separated after just over four years of cohabitation. The issue on appeal was the equalization of net family property. Typically, s. 5(1) of the Family Law Act sets the default rule that upon marriage breakdown, the spouse whose net family property is the lesser of the two is entitled to equalization. This presumption can only be displaced where equalization would be unconscionable, as assessed using the criteria set out in s. 5(6). The trial judge found that an award of full equalization would be unconscionable, given: (1) the extent to which the appellant’s net family property derived from gifts from the respondent; (2) the disproportion between full equalization and the duration of cohabitation, and (3) the fact that the respondent was almost the sole financial contributor to the property owned by the parties. The trial judge awarded the appellant 10% of the full amount that would equalize the parties’ net family properties.

issues:

(1) Did the trial judge err in concluding that full equalization would be unconscionable under s. 5(6) of the Act and that 10% of the full equalization payment would be just and equitable?

holding:

Appeal dismissed.

reasoning:

(1) No. The trial judge did not err in concluding that full equalization would be unconscionable. The trial judge found that the appellant had benefitted from the short marriage, made little contribution to the acquisition and maintenance of the matrimonial home, and received a sizeable benefit from its sale. The trial judge also found that the difference between the parties’ net family properties was attributable almost entirely to the growth of the respondent’s investments over the course of the marriage. The trial judge correctly observed that the threshold for unconscionability under s. 5(6) of the Act is high and not satisfied by a finding of mere unfairness. She considered the relevant criteria, applied them to the facts before her, and came to a reasonable conclusion.

Having concluded that full equalization would be unconscionable, the trial judge ordered the respondent to pay the appellant 10% of the full amount of equalization. The appellant argued that the trial judge did not explain how she arrived at that figure, and that the reasons in this respect prevented meaningful appellate review. Furthermore, the appellant argued that the trial judge did not give appropriate weight to the length of the marriage, and the appellant proposed a formula for calculating the equalization. The Court found that, although applying a mathematical formula based on the length of the marriage provided the benefit of certainty, neither the Act nor relevant case law required the judge to do so. The trial judge did not err in her exercise of discretion in setting the appropriate payment at 10% of the amount that would fully equalize the parties’ net family properties. The trial judge’s came to a reasoned conclusion flowing from the findings that preceded it. Her findings gave an ample basis for understanding why she chose not to apply a mathematical formula.


Davidson (Re), 2021 ONCA 135

[MacPherson, Gillese and Nordheimer JJ.A.]

Counsel:

S. N. Zeitz and R. Schliemann, for the appellant

B. Jaffe and E. S. Peritz, for the respondents

Keywords: Bankruptcy and Insolvency, Family Law, Property of the Bankrupt, Civil Procedure, Appeals, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss 38, 163 & 193, Re Ravelston Corp. (2005), 24 C.B.R. (5th) 256 (Ont. C.A.), 2403177 Ontario Inc. v. Bending Lake Iron Group Ltd., 2016 ONCA 225, Enroute Imports Inc. (Re), 2016 ONCA 247, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Re Zammit (1998), 3 C.B.R. (4th) 193 (Ont. Gen. Div.), Re Jolub Construction Ltd. (1993), 21 C.B.R. (3d) 313 (Ont. Gen. Div.)

facts:

The appellant was a creditor and former spouse of the bankrupt. The appellant sought to have a house whose registered owner was the bankrupt’s mother but in which the bankrupt resided to be included as an asset in the bankrupt’s estate.

When the Trustee refused to pursue that claim, the appellant sought leave to commence his own proceedings for that relief. Meanwhile, however, the appellant had consented to an order in the concurrent family law proceedings which provided that the property shall not form part of the bankrupt’s property, assets or estate for any purpose.

The Registrars in Bankruptcy and subsequently, the appeal judge, dismissed the appellant’s motion for leave to commence a proceeding under s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”).

issues:

(1) Did the Registrars in Bankruptcy and appeal judge err in not granting the appellant leave to commence a proceeding under s. 38 of the BIA?

holding:

Appeal dismissed.

reasoning:

(1) No. Assuming that the appellant had a right of appeal under s. 193(c) of the BIA, there was no error in the the conclusion of the Regitrars in Bankruptcy and appeal judge in denying the appellant leave to commence a proceeding under s. 38 of the BIA.  The appellant was attempting to do indirectly what he had expressly agreed not to do in the family law proceedings; which was to bring the property into his bankrupt former spouse’s assets.

The request to commence a proceeding under s. 38 of the BIA is a discretionary remedy and requires that the creditor show that there is some merit to the proposed claim. Here, the appellant failed to establish the threshold merit to the proceeding.


Dhatt v. Beer, 2021 ONCA 137

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

Counsel:

D. P. Lees and Z. Silverberg, for the appellants

A. Herschorn, for the respondents, M.D. and K.D.

S. L. Rosenberg, for the respondents, J.B. and Re/Max West Realty Inc.

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Remedies, Specific Performance, Civil Procedure, Trials, Adjournments, Substantial Indemnity Costs, Rules of Civil Procedure, Rule 52.02, Statement of Principles on Self-represented Litigants and Accused Persons (2006), Dhatt v. Beer, 2020 ONCA 545, Khimji v. Dhanani (2004), 69 O.R. (3d) 790 (C.A.), Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 56 O.R. (3d) 341 (S.C.), Pintea v. Johns, 2017 SCC 23, Morwald-Benevides v. Benevides, 2019 ONCA 1023

facts:

When the appellants refused to close the Agreement of Purchase and Sale of Land, the Dhatt respondents (the “respondents”) sued for specific performance. The appellants argued that the Agreement was invalid and brought a third party claim against their real estate agent, J.B., and his brokerage. The trial judge granted the respondents specific performance and dismissed the third party claim (the “Judgment”). The trial judge later appointed a lawyer to act for the appellants and close the transaction (the “Transaction Order”). The appellants appealed both the Judgment and the Transaction Order. Zarnett J.A. refused to stay the Judgment and Transaction Order pending appeal. The respondents took possession of the property, but the closing of the transaction awaited the disposition of the appeals.

issues:

Did the trial judge err in:

  1. refusing to grant the appellants an adjournment of the trial?
  2. granting the respondents specific performance?
  3. awarding substantial indemnity costs against them?
holding:

Appeal dismissed.

reasoning:
  1. Did the trial judge err in refusing to grant the appellants an adjournment of the trial?

No. The appellants argued that the trial judge erred in refusing an adjournment on the first day of trial and refusing their subsequent requests on medical grounds. The Court disagreed.

(a) The Governing Principles

A judge may postpone or adjourn a trial to such time and place, and on such terms, as are just. The principles governing a trial judge’s exercise of discretion were set out in Khimji v. Dhanani. In exercising this discretion, the trial judge should balance the interests of the plaintiff, defendant and the administration of justice in the orderly processing of trials and the need to effectively enforce orders. Appellate intervention is limited and only justified where a trial judge fails to take account of relevant considerations and if the decision is contrary to the interests of justice. The trial of the present action was subject to the “Consolidated Practice Direction for Civil Actions, Applications, Motions and Procedural Matters in the Toronto Region”. Section 71 of that Practice Direction deals with trial dates, stating that: “Once trial dates are set, there will be no adjournments of the trial except in extenuating and exceptional circumstances.”

(b) The Refusal of the Adjournment Request on the First Day of Trial

The appellants were initially represented by counsel until their lawyer got off record due to non-payment of legal fees. A week before trial, the appellants retained a lawyer with the limited mandate of requesting an adjournment (the “Adjournment Counsel”). On the first day of trial, that lawyer explained his limited mandate and made it clear that even if an adjournment was granted, the appellants would likely be self-represented. Essentially, the appellants were requesting an indefinite adjournment to no fixed date. The trial judge refused to grant an adjournment. The appellants submitted that the trial judge erred because it was only their first request for an adjournment, and the denial of an adjournment was inconsistent with the trial judge’s duty to self-represented litigants to acquaint them with courtroom procedure and the rules of evidence so that they received a fair trial. The Court saw no merit to either submission.

First, there is no presumptive entitlement to one adjournment, and as the Practice Direction stated, an adjournment will only be granted “in extenuating and exceptional circumstances.” Second, although a trial judge does have a duty to ensure self-represented parties receive a fair trial, a self-represented litigant’s refusal to comply with orders and failure to use time granted by the court to find a lawyer, may weigh against that litigant’s request for an adjournment. As well, self-represented persons are expected to familiarize themselves with the relevant practices and procedures and respect the court process. The appellants had been given lengthy advance notice of the trial date and ample time to retain a lawyer; the appellants retained a lawyer at the last minute only for the purpose of seeking an adjournment; they did not propose a new date; they failed to comply with court orders; and they made no reasonable effort to prepare their case. Thus, the Court saw no error in the trial judge’s refusal to grant an adjournment on the first day of trial.

(c) The Refusal to Grant Further Adjournment Requests

The appellants brought further adjournment requests based on their medical conditions. The self-represented appellants either left, or were not present, for the second, third, and fourth days of trial due to anxiety and other issues. After the appellants were not present on the third day of trial, the trial judge directed that the trial proceed, concluding that the appellants were attempting to delay the trial further. The trial judge re-considered her decision and arranged for her ruling to be sent to the appellants, together with a direction that they attend the next day when the trial would proceed, with or without them. The trial resumed on the fourth day, with the appellant wife attending, but not her husband. The appellant wife presented a doctor’s note stating that she could not proceed due to anxiety. The trial judge directed that the trial proceed as anxiety was common for many participants and the appellants had attempted multiple times to delay the proceedings.

On appeal, the appellants submitted that their medical circumstances on the second, third, and fourth days of the trial were extenuating and exceptional, and the trial judge erred by failing to grant them an adjournment. The Court disagreed. The trial judge proceeded in a measured way, affording the appellants fair opportunities to explain their situation. The trial judge’s endorsements disclose that she reviewed all the medical documentation provided by the appellants and took that information into account when assessing the interests of all parties. The Court saw no basis to intervene.

  1. Did the trial judge err in granting the respondents specific performance?

No. The appellants submitted that the trial judge erred in granting specific performance because the property was not unique and the respondent’s losses could be remedied by an award of damages. The Court disagreed. In determining whether to grant specific performance, the fundamental question is whether the plaintiff has shown that the land rather than its monetary equivalent better serves justice. In determining this, courts typically examine three factors: (i) the nature of the property; (ii) the inadequacy of damages; and (iii) the behaviour of the parties. Whether a property is unique is only one of several factors. The trial judge applied the governing principles and her conclusions were supported by the evidence. She found that the respondents had shown that the property had unique qualities and that damages would not be an adequate remedy given the fact the appellants lacked sufficient funds to pay a damages award. The Court refused to interfere with the trail judge’s decision.

  1. Did the trial judge err in awarding substantial indemnity costs against them?

No. The appellants submitted that the trial judge did not provide reasons for awarding substantial indemnity costs. The Court disagreed. The trial judge explained why she awarded substantial indemnity costs: (i) the appellants attempted to delay or prolong the proceeding; and (ii) the appellants’ failure to close the transaction and failure to appear at trial were without justification and egregious. The Court saw no error by the trial judge, nor were the costs unreasonable in the circumstances.


Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141

[Pepall, Benotto and Coroza JJ.A.]

Counsel:

J.T. Curry, S. Rollwagen and S. Bittman, for the appellants

M.G. Bawolska and K.L. Denny, for the respondent

Keywords: Torts, Negligence, Product Liability, Civil Procedure, Striking Pleadings, Res Judicata, Cause of Action Estoppel, Issue Estoppel, Abuse of Process, Rules of Civil Procedure, Rule 21.01(3)(d), Simone Estate v. Cheifetz (2005), 201 O.A.C. 120 (C.A.), Salasel v. Cuthbertson, 2015 ONCA 115, The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Henyen v. Frito Lay Canada Ltd. (1999), 45 O.R. (3d) 776 (C.A.), Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63

facts:

In 2013, a fire allegedly caused by a heat recovery ventilation unit (“HRV”) destroyed the home of the plaintiffs. The plaintiffs commenced an action against the manufacturer of the HRV (the respondent in this appeal), who in turn issued a third-party claim against the manufacturer of the HRV’s motor component (the appellant in this appeal).

Shortly before the trial was scheduled to commence, the respondent brought a motion under Rule 21.01(3)(d) of the Rules of Civil Procedure to strike the appellant’s defences on the basis of res judicata and abuse of process. Specifically, the respondent alleged that the Quebec Superior Court and Quebec Court of Appeal had already decided the legal and factual issues between the respondent and appellant in earlier proceedings (the “Quebec Action”). Those proceedings related to a similar house fire that occurred in 2007, also involving an HRV manufactured by the respondent with a motor component manufactured by the appellant.

The motion judge granted the motion, and struck the appellant’s defences based on res judicata and abuse of process.

issues:
  1. Did the motion judge apply the correct test under Rule 21.01(3)(d)?
  2. Did the motion judge err in striking the appellant’s defences on the basis of cause of action estoppel?
  3. Did the motion judge err in striking the appellant’s defences on the basis of issue estoppel?
  4. Did the motion judge err in striking the appellant’s defences on the basis of abuse of process?
holding:

Appeal allowed.

reasoning:
  1. Did the motion judge apply the correct test under Rule 21.01(3)(d)?

No. When a party moves under Rule 21.01(3)(d) to strike pleadings on the basis of res judicata or abuse of process, that party bears the onus of satisfying the “plain and obvious” test – specifically, by establishing that it is plain, obvious and beyond doubt that the plea cannot succeed (Simone Estate v. Cheifetz (2005), 201 O.A.C. 120 (C.A.)). Importantly, a court should only invoke its authority under Rule 21.01(3)(d) in the “clearest of cases” (Salasel v. Cuthbertson, 2015 ONCA 115).

The Court concluded that the motion judge did not identify or apply the above test for striking a pleading pursuant to Rule 21.01(3)(d). According to the Court, this was not the “clearest of cases”.

  1. Did the motion judge err in striking the appellant’s defences on the basis of cause of action estoppel?

Yes. The principle of res judicata is comprised of two main branches: cause of action estoppel and issue estoppel. Cause of action estoppel prohibits a litigant from bringing an action against another party when that same cause of action has been determined in earlier proceedings. Cause of action estoppel also prevents a party from re-litigating a claim that could have been raised in an earlier proceeding.

The four-part test for cause of action estoppel was set out in The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354: (i) there is a final decision of a court of competent jurisdiction in a prior action; (ii) the parties to the subsequent litigation were parties to, or in privy with the parties to the prior action; (iii) the cause of action in the prior action is not separate and distinct; and (iv) the basis of the cause of the action and the subsequent action was argued or could have been argued in the prior action, if the parties had exercised reasonable diligence.

The Court essentially concluded that it was not plain and obvious that the facts that would form the basis for the apportionment of liability between the appellant and respondent in this action are substantially the same as they were in the Quebec Action. As examples, the Court highlighted certain facts and events that had transpired since the occurrence of the 2007 incident in Quebec, which of course could not have been considered by the courts in the Quebec Action. Accordingly, the third component of the cause of action estoppel test could not be met.

While this finding alone was sufficient to dispose of the appeal, the Court noted that the motion judge also erred in her analysis with respect to the fourth component of the cause of action estoppel test.

  1. Did the motion judge err in striking the appellant’s defences on the basis of issue estoppel?

Yes. Issue estoppel, the second main branch of res judicata, applies to prohibit re-litigation of an issue that has already been decided in an earlier proceeding, even where the cause of action is different in the two proceedings.

The three-part test for issue estoppel was set out in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44: (i) the same question has been decided; (ii) the judicial decision which is said to create estoppel was final; and (iii) the parties to the judicial decision or their privies were the same persons as to the parties to the proceedings in which the estoppel was raised.

In this case, the Court found that the motion judge erred in her analysis with respect to the first pre-condition highlighted above. The “same question” test was described in Henyen v. Frito Lay Canada Ltd. (1999), 45 O.R. (3d) 776 (C.A.) as follows, “…this requirement of issue estoppel is met only if on careful analysis of the relevant facts and applicable law the answer to the specific question in the earlier proceeding can be said to determine the issue in the subsequent proceeding.”

By finding that it was at least arguable that the factual foundation between the Quebec Action and Ontario action had changed, the Court concluded that it was not plain and obvious that the respondent satisfied the “same question” test.

  1. Did the motion judge err in striking the appellant’s defences on the basis of abuse of process?

Yes. The doctrine of abuse of process can apply where the requirements of res judicata are not met, but where the litigation would violate the principles of judicial economy, consistency, finality, and integrity of the administration of justice. Re-litigation carries serious detrimental effects and should be avoided unless absolutely necessary to enhance the credibility and effectiveness of the adjudicative process as a whole (Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63).

Due to the fact that the motion judge’s findings of abuse of process were tethered to her findings of cause of action estoppel, the Court was quick to conclude that the motion judge had correspondingly erred with respect to the finding of abuse of process. Specifically, the motion judge’s reasons emphasized that the appellant was attempting to raise defences which had already been determined in the Quebec Action on the basis of almost identical facts. However, as noted above, the Court disagreed that the facts between the two actions were actually identical. Essentially, it was not plain and obvious that the appellant’s defences were abusive.


Lenihan v. Shankar, 2021 ONCA 142

[Benotto J.A. (In Chambers)]

Counsel:

A. Chris and J. Hunt-Jones, for the moving party/responding party

I.S., acting in person

Keywords: Family Law, Custody and Access, Civil Procedure, Appeals, Security for Costs, Stay Pending Appeal, Rules of Civil Procedure, Rule 61.06(1), Henderson v. Wright, 2016 ONCA 89, Morwald-Benvenides v. Benvenides, 2017 ONSC 3786, RJR-McDonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311

facts:

K.L. and I.S. are the parents of a two-year-old child, M. After I.S. became pregnant, the relationship between K.L. and I.S. broke down. From the beginning of M.’s life, K.L. and I.S. have been engaged in contentious custody litigation.

Following a four-week trial, the trial judge awarded sole custody of M. to K.L., and granted him the right to move to Oregon, his place of residence, to raise M. with the support of his extended family.

issues:

(1) Should K.L.’s motion for security for costs of the appeal be granted?

(2) Should I.S.’s motion for a stay pending appeal be granted?

holding:

Motion for security for costs granted. Motion for stay pending appeal dismissed.

reasoning:

(1) Should K.L.’s motion for security for costs be granted?

Yes. Rule 61.06(1) of the Rules of Civil Procedure provides that security for costs may be ordered when it appears that: (a) there is good reason to believe that the appeal is frivolous and vexatious, and that the appellant has insufficient assets in Ontario to pay the costs of the appeal; (b) an order for security for costs could be made against the appellant under Rule 56.01; or (c) for other good reason.

The Court noted that it is especially rare to award security for costs in a child-related matter. However, this case was one of exceptional circumstances.

With respect to the frivolous and vexatious nature of I.S.’s appeal, the Court cited the trial judge’s findings on the credibility of I.S. during the trial, which were all strongly supported by the evidence. Both in and outside of the custody litigation that has spanned the entirety of M.’s life, the trial judge found that I.S. had engaged in erratic, despicable, and fraudulent behaviour. In short, the award of sole custody to K.L. was strongly supported as truly being in the best interests of M. Accordingly, the Court saw little chance of this result being overturned, consequently making I.S.’s appeal frivolous and vexatious (Henderson v. Wright, 2016 ONCA 89).

The Court further noted that I.S. appeared to have no assets in Ontario available to pay the costs of the appeal, and that I.S.’s deceitful and fraudulent conduct also constituted “other good reason” for ordering security for costs. Also cited as “other good reason” was the impact of the litigation on the life of M., and the fact that M.’s best interests would not be served by the continuation of the proceedings (Morwald-Benvenides v. Benvenides, 2017 ONSC 3786).

(2) Should I.S.’s motion for a stay pending appeal be granted?

No. The test for a stay of judgment pending appeal is the three-part test set out in RJR-McDonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311. In accordance with this test, the appellant has the burden of demonstrating that: (1) there is a serious question to be determined on appeal; (2) the appellant would suffer irreparable harm if the stay is denied; and (3) the balance of convenience favours granting a stay.

Again citing the gravity of I.S.’s egregious conduct, the Court concluded that there was no serious issue to be tried, that the balance of convenience favoured M. remaining in Oregon with his father and family, and that the best interests of M. would be adversely impacted if a stay was granted.


Manchanda v. Thethi, 2021 ONCA 127

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

Counsel:

S. P. Kirby and G. S. Joseph, for the appellant

R. H. Parker, Q.C., for the respondent

Keywords: Family Law, Spousal Support, Property, Remedies, Constructive Trust, Vesting Orders, Family Law Rules, O Reg 114/99, Rules 1(8.4), 2, 24(12)(a), Family Law Act, R.S.O. 1990, c. F. 3, ss. 5(6), 9(1)(d), Divorce Act, R.S.C. 1985 c. 3, s. 15.2(6), Manchanda v. Thethi, 2016 ONCA 909, Abu-Saud v. Abu-Saud, 2020 ONCA 824, Dickie v. Dickie, 2007 SCC 8, Murphy v. Murphy, 2015 ONCA 69, Leskun v. Leskun, 2006 SCC 25, Cunha v. Cunha (1994), 99 B.C.L.R. 93 (S.C.), Meade v. Meade (2002), 31 R.F.L. (5th) 88 (Ont. S.C.), Purcaru v. Purcaru, 2010 ONCA 92, Mullin v. Sherlock, 2018 ONCA 1063, Titova v. Titov, 2012 ONCA 864, Martin v. Sansome, 2014 ONCA 14

facts:

This matter involved a high conflict matrimonial litigation, which gave rise to countless court attendances resulting in multiple court orders. The matter eventually proceeded to an uncontested trial, which the respondent was permitted to attend as an observer. The appellant appealed various aspects of the trial judge’s disposition of her claims.

issues:
  1. Was the respondent entitled to make submissions on appeal?
  2. Did the trial judge allow the respondent to participate indirectly?
  3. Did the trial judge err in failing to recognize a constructive trust in the appellant’s favour?
  4. Did the trial judge fail to acknowledge that “loss of opportunity” factors were not the only factors to be considered in a compensatory spousal support claim?
  5. Did the trial judge err in dismissing the appellant’s request for a vesting order?
holding:

Appeal dismissed.

reasoning:
  1. Was the respondent entitled to make submissions on appeal?

No. The appellant submitted that the respondent should not be permitted to participate in the appeal due to being a “serial” violator of court orders including being in default of over $40,000 of court ordered costs. The Court held that the respondent was not entitled to make submissions on appeal as his default was both deliberate and willful.

  1. Did the trial judge allow the respondent to participate indirectly?

No. The court may deal with a party’s failure to follow the rules by striking out all documents filed by that party. In this case, the respondent’s documents had been struck for failure to make proper disclosure. The appellant argued the trial judge imposed an unfair evidentiary burden on her and erred in failing to draw adverse inferences against the respondent. The appellant relied on the principle in Meade v. Meade, which states that where disclosure is inadequate and inferences must be drawn, they should be in favour of the compliant party. The appellant also submitted that the trial judge failed to recognize that once the respondent’s documents were struck, the documents of the compliant party should be accepted. She cited three instances where the trial judge failed to accept her documents. In doing so, the appellant argued that the trial judge permitted the respondent to “re-enter the proceeding”.

The Court disagreed. The consequences of striking out documents does not automatically exclude the defaulting party; rather, it removes the party’s entitlement to notice and participation. The court may nevertheless permit participation to the extent it assists the court. The striking of the respondent’s documents did not mean the trial judge was compelled to accept the appellant’s evidence at face value. In an uncontested trial, the trial judge was entitled to probe the appellant’s evidence to ensure a just result. The Court found that the trial judge did not impose an unfair burden on the appellant. On the contrary, he wanted to be satisfied that his findings of fact were based on credible and reliable evidence. The trial judge’s approach appropriately reflected the court’s obligation to guard against the risk of factual errors in the face of only one party’s evidence.

  1. Did the trial judge err in failing to recognize a constructive trust in the appellant’s favour?

No. The appellant conceded that a division of property is usually governed by the net family property statutory scheme, but sometimes a party may seek the equitable remedy of a constructive trust. The appellant submitted that the trial judge should have recognized that a trust was created through unjust enrichment because of her contribution to the rental property. The appellant submitted that her contributions were ignored. The Court disagreed and found that the trial judge considered the appellant’s submissions and held that this was not an exceptional case to find a constructive trust. Any unfairness that might have otherwise arose out of unequal contribution could have adequately been addressed by the equalization of net family property.

  1. Did the trial judge fail to acknowledge that “loss of opportunity” factors were not the only factors to be considered in a compensatory spousal support claim?

No. The appellant submitted that compensatory support should also address sacrifices and contribution. The appellant contributed to the rental business and argued that the trial judge failed to recognize these contributions and articulated a narrow definition for compensatory support. The trial judge found that the appellant failed to establish an entitlement to spousal support on compensatory or other grounds. The Court gave deference to his conclusion.

  1. Did the trial judge err in dismissing the appellant’s request for a vesting order?

No. The appellant sought an order that the respondent’s property be transferred to her in satisfaction of the judgment. In rejecting this relief, the trial judge reasoned that such an order would constitute a windfall because the value of the property exceeded the amount of the judgment. The appellant submitted that the trial judge should have imposed a partial charge on the property and conceded that this option was not proposed to the trial judge. In refusing to interfere with the exercise of his discretion, the Court held that the trial judge could not be faulted for failing to grant a remedy that was not requested at trial.


SHORT CIVIL DECISIONS

Banerjee v. Mathoo, 2021 ONCA 140

[Fairburn A.C.J.O., Miller and Zarnett JJ.A.]

Counsel:

O. Niedzviecki and Y. Elsohemyfor, the appellant

S. Sack and A. Acri, for the respondents

Keywords: Family Law, Property, Matrimonial Home, Net Family Property, Civil Procedure, Offers to Settle, Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711, M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619

Capone v. Fotak, 2021 ONCA 144

[Fairburn A.C.J.O., Miller and Zarnett JJ.A.]

Counsel:

H. Niman and J Liew, for the applicant

G.S. Joseph, B. Moher, and V. Li, for the respondent

Keywords:Family Law, Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), Hopkins v. Kay, 2014 ONCA 514

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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.