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Good afternoon.

Following are this week’s summaries of the civil decisions of the Court of Appeal for Ontario for the week of December 5, 2022.

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In Tar Heel Investments Inc. v. H.L. Staebler Company Limited, the Court considered whether the tort of conversion could be applied to intangible property such as the information in a book of business alleged by an employer to have been stolen by a departing employee. The Court held that it was not settled law that conversion could be applied to such property, finding that even if it were applicable, the trial judge had not made the necessary factual findings to satisfy the elements of the tort.  The Court ordered a new trial on this and the other causes of action.

2505243 Ontario Limited (ByPeterandPaul.com) v. Princes Gates Hotel Limited Partnership is a contractual dispute between a commercial landlord (“PG”) and respondent tenant (“250”). In early 2020, 250, which operated two hotel restaurants at the new Hotel X at Exhibition Place, sought to dissolve its contracts with PG, as traffic in the hotel was low and the restaurants were not doing well. PG ignored these requests. In March 2020, due to COVID, PG shut down its hotel without consulting 250 while also entering into discussions with another food provider. PG also refused to work with 250 to apply for COVID relief. PG terminated its contract with 250 for failure to pay rent and 250 brought an action for breach of contract. The trial judge found that the lease contracts had been terminated by PG in bad faith and awarded the trustee of 250 (which had since gone bankrupt), over $7 million dollars in reliance damages and over $2 million in employee compensation damages. PG appealed the trial judge’s analysis and damages award. The Court held that the trial judge’s analysis and conclusion were consistent with the law and determined that there was no error in awarding reliance (tort) damages for breach of contract rather than expectation (contract) damages. An injured party may elect to claim reliance damages rather than expectation damages when expectation damages cannot be proven.

Jonas v. Jonas, is a dispute about the interpretation of a Will, and in particular, with the meaning and application of Latin term ‘per stripes’. The Court agreed with the application judge’s finding that the testator’s intention was to create two classes of beneficiaries (children and grandchildren).

There were also two family law cases, one dealing with the enforcement of letters of request/letters rogatory to obtain financial information about the husband’s Ontario corporations, and the other an extension of time to appeal from a judgment granted at an uncontested trial after the husband’s pleading had been struck for non-compliance with court orders.

Have a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Ines Ferriera
Blaney McMurtry LLP
416.597.4895 Email

Table of Contents

Civil Decisions

Adler v. Deloitte Touche Tohamtsu, 2022 ONCA 855

Keywords: Family Law, Civil Procedure, Documentary Discovery, Financial Disclosure, Private International Law, Conflict of Laws, Foreign Orders, Enforcement, Letters Rogatory, Canada Evidence Act, R.S.C. 1995, c. C-5, s. 46(1), Evidence Act, R.S.O. 1990, c. E.23, s. 60(1), Actava TV, Inc. v. Matvil Corp, 2021 ONCA 105, Presbytarian Church of Sudan v. Rybiak, [2006] 275 D.L.R. (4th) 512 (Ont. C.A.), Perlmutter v. Smith, 2020 ONCA 570, Michel v. Graydon, 2020 SCC 24

Tar Heel Investments Inc. v. H.L. Staebler Company Limited, 2022 ONCA 842

Keywords: Employment Law, Breach of Fiduciary Duty, Departing Employees, Unfair Competition, Property Law, Intangible Property, Client Lists, Ownership, Torts, Conversion, King v. Merrill Lynch Canada Inc., 2005 CanLII 43679 (Ont. S.C.), Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, [1996] 3 S.C.R. 727, Del Giudice v. Thompson, 2021 ONSC 5379, Mann Engineering Ltd. v. Desai, 2021 ONSC 7580, Utilebill Credit Corporation v. Exit It Contract Consulting Inc., 2022 ONSC 2307, Brant Avenue Manor Ltd. Partnership v. Transamerica Life Insurance Co. of Canada (2000), 48 O.R. (3d) 363 (S.C.), Canivate Growing Systems Ltd. v. Brazier, 2020 BCSC 232, Lac Minerals v. International Corona Resources Ltd., [1989] 2 S.C.R. 574

Jonas v. Jonas, 2022 ONCA 845

Keywords: Wills and Estates, Wills, Interpretation, Civil Procedure, Appeals, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, Rules of Civil Procedure, r. 57, Saunders v. Vautier (1841), 41 E.R. 482 (Eng. Ch. Div.), Housen v. Nikolaisen, 2002 SCC 33, Trezzi v. Trezzi, 2019 ONCA 978, Dice v. Dice Estate, 2012 ONCA 468, Re Harrington, [1985] O.J. No. 1046 (H.C.)

Fatahi-Ghandehari v. Wilson, 2022 ONCA 858

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Civil Procedure, Appeals, Extension of Time, Rules of Civil Procedure, r. 59.06(2), r. 61.04(1), Fatahi-Ghandehari v. Wilson, 2022 ONSC 4799, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Lamothe v. Ellis, 2022 ONCA 789, Peerenboom v. Peerenboom, 2020 ONCA 240, Hilton v. Hilton, 2021 ONCA 29

2505243 Ontario Limited (ByPeterandPaul.com) v. Princes Gates Hotel Limited Partnership, 2022 ONCA 859

Keywords: Contracts, Commercial Leases, Duty of Good Faith and Honest Performance, Damages, Reliance Damages, Expectation Damages, Civil Procedure, Trials, Witnesses, Exclusion Orders, Commercial Tenancies Act, R.S.O. 1990, c. L.7, s. 82., Callow Inc. v. Zollinger, 2020 SCC 45, PreMD Inc. v. Ogilvy Renault LLP, 2013 ONCA 412

Short Civil Decisions

Ash v. Ontario (Chief Medical Officer), 2022 ONCA 849

Keywords:Administrative Law, Judicial Review, Mandamus, Civil Procedure, Appeals, Directions, Requests to Admit, Rules of Civil Procedure, r. 51.02, Orlan Karigan & Associate Ltd. v. Hoffman (2000), 52 O.R. (3d) 235 (S.C.)

Nader v. University Health Network, 2022 ONCA 835

Keywords: Contracts, Interpretation, Employment, Severance, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

MBM Intellectual Property Law LLP v. Drizen, 2022 ONCA 847

Keywords: Costs, Substantial Indemnity


CIVIL DECISIONS

Adler v. Deloitte Touche Tohamtsu, 2022 ONCA 855

[Simmons, Benotto and Favreau JJ.A.]

Counsel:

D. Cowling and A. Boissonneau-Lehner, for the appellants

J. Wadden and J. Manger, for the appellants
S. Laubman and C. Pizzo, for the respondent

Keywords:Family Law, Civil Procedure, Documentary Discovery, Financial Disclosure, Private International Law, Conflict of Laws, Foreign Orders, Enforcement, Letters Rogatory, Canada Evidence Act, R.S.C. 1995, c. C-5, s. 46(1), Evidence Act, R.S.O. 1990, c. E.23, s. 60(1), Actava TV, Inc. v. Matvil Corp, 2021 ONCA 105, Presbytarian Church of Sudan v. Rybiak, [2006] 275 D.L.R. (4th) 512 (Ont. C.A.), Perlmutter v. Smith, 2020 ONCA 570, Michel v. Graydon, 2020 SCC 24

facts:

K.A and the respondent were engaged in divorce proceedings in California. K.A alleged that the respondent had a complex web of corporations that he used to shield his substantial income. Several of these corporations were located in Canada.  The respondent was a sole or majority shareholder in four of the corporate appellants. He also had a 33% interest in SkyPower, a corporation based in Toronto.

The respondent had failed to comply with court orders requiring disclosure. K.A sought Letters Rogatory to obtain information required for her claims for property, spousal support and child support. Accordingly, the California court issued two Requests for International Judicial Assistance. The respondent delivered materials on behalf of several corporations and himself, and most of the corporate respondents entered into agreements with K.A or did not oppose the relief sought in the application.

K.A issued an application in Ontario to enforce the letters rogatory issued in California, which required production from the corporate appellants and the respondent’s assistant. The application judge ordered the letters be recognized. The respondent sought to appeal on behalf of the four corporate appellants as well as SkyPower.

issues:

(1) Did the application judge err in hearing the application because the respondent and SkyPower were not served?

(2) Did the application judge apply the incorrect test in recognizing the letters rogatory?

holding:

Appeal dismissed.

reasoning:

(1) No

The Court held that even though the respondent was not a formal respondent in the underlying application, he was given standing in both California and Ontario to make submissions on behalf of himself and the corporate entities. Further, the Court held that the application material had been properly served on SkyPower as it had been served on the respondent, the CEO of SkyPower.

(2) No

The Court noted that a letter rogatory is a request from a judge to the judiciary of a foreign country for the performance of an act which, if done without the sanction of the foreign court, would constitute a violation of that country’s sovereignty. In this case, the request is for production of documents from corporations in Canada. The Court stated that the decision to grant or refuse such a request is a matter of judicial discretion, entitled to deference, with the appropriate standard of review for the grant of letters rogatory being palpable and overriding error.

The Court observed that the authority to enforce letters rogatory was set out in the Canada Evidence Act, s. 46(1) and the Evidence Act, s. 60(1). Citing Perlmutter v. Smith, the Court held that there were six factors to be addressed when deciding whether to enforce letters rogatory:

  • Is the evidence sought relevant?
  • Is the evidence sought necessary for trial and will it be adduced at trial if admissible?
  • Is the evidence sought not otherwise obtainable?
  • Is the order sought contrary to public policy?
  • Are the documents sought identified with reasonable specificity?
  • Is the order sought not unduly burdensome, having in mind what the relevant witnesses would be required to do and produce if the action was tried here?

The Court, relying on Actava TV, Inc. v. Matvil Corp, stated that there were three further elements to the enforcement of letters rogatory: (1) comity, (2) public policy of the jurisdiction to which the request is directed, and (3) the absence of prejudice to the sovereignty of the citizens of that jurisdiction. The Court further noted that courts have refused to order testimony for use in foreign proceedings:

  • where a request for production of documents was vague in general;
  • where discovery was sought against a non-party to a litigation in violation of local laws of civil procedure; and
  • where the main purpose of the examination was to serve as a “fishing expedition”.

The respondent submitted that the application judge erred by finding the production relevant; by failing to recognize a fishing expedition; and by putting the burden on him to prove that the documents were not “otherwise obtainable” and thus the decision was inconsistent with Actava.

The Court held that the obligation of financial disclosure in family law litigation was basic, and the requirement was immediate and absolute. Accordingly, the Court agreed with the application judge’s finding that the production ordered was consistent with Ontario law and was relevant to the California proceedings as the documents dealt with the respondent’s business interests. The Court also found that this was not a “fishing expedition”, as the disclosure of these documents was a normal part of the disclosure process.

The Court rejected the respondent’s submission that that application judge had reversed the onus on the respondent and required him to prove that the documents in question were otherwise obtainable. The Court held that the record showed there were multiple attempts, court orders and sanctions in play to obtain disclosure, showing that the documents were not otherwise obtainable.

Finally, the Court rejected the respondent’s submission that the application judge had run afoul of the decision in Actava. The Court held that the application judge addressed the criteria for granting letters rogatory by considering the record, public policy, and independently considering whether the requests complied with Ontario’s legal requirements.


Tar Heel Investments Inc. v. H.L. Staebler Company Limited, 2022 ONCA 842

[Huscroft, Nordheimer and Copeland JJ.A]

Counsel:

P. A. N. Gupta and J. Gallichan, for the appellants/respondents by way of cross-appeal

S. Gleave and B. Needham, for the respondent/appellant by way of cross-appeal

Keywords: Employment Law, Breach of Fiduciary Duty, Departing Employees, Unfair Competition, Property Law, Intangible Property, Client Lists, Ownership, Torts, Conversion, King v. Merrill Lynch Canada Inc., 2005 CanLII 43679 (Ont. S.C.), Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, [1996] 3 S.C.R. 727, Del Giudice v. Thompson, 2021 ONSC 5379, Mann Engineering Ltd. v. Desai, 2021 ONSC 7580, Utilebill Credit Corporation v. Exit It Contract Consulting Inc., 2022 ONSC 2307, Brant Avenue Manor Ltd. Partnership v. Transamerica Life Insurance Co. of Canada (2000), 48 O.R. (3d) 363 (S.C.), Canivate Growing Systems Ltd. v. Brazier, 2020 BCSC 232, Lac Minerals v. International Corona Resources Ltd., [1989] 2 S.C.R. 574

facts:

The appellant, L.A., worked in the transportation industry where she developed a book of business while working at the Kimberly & Associates brokerage. When she joined the corporate predecessor to the respondent she brought clients with her (the “Kimberly book”). During her tenure with the respondent, the appellant developed another book of business (the “TRIP book”), and the principal of the respondent augmented the TRIP book by transferring transportation clients and their corresponding premiums into it to help sustain the TRIP book in its initial years. In 2015, the respondent was purchased by another firm. The appellant was unhappy with the sale and subsequently sold a combined book of business that included the Kimberly book as well as the TRIP book to the appellant Staebler and, concurrently, commenced employment with it.

The respondent brought a claim against the appellants seeking, amongst other relief, damages for conversion, breach of and inducing breach of contract, breach of confidence, and breach of, inducing breach of, and knowingly assisting in breach of fiduciary duty.

The trial judge found that the appellant was entitled to sell the Kimberly book to Staebler because she had never sold it to the respondent. However, the trial judge found that the appellant never owned the TRIP book and by selling it she had committed the tort of conversion. The trial judge did not address the other causes of actions asserted. Considering damages, the trial judge calculated damages based on the value of the TRIP book at the time of conversion, the appellants were held jointly and severally liable.

issues:

Appeal

(1) Did the trial judge err by finding that the sale of the TRIP book constituted conversion?

Cross-Appeal

(1) Did the trial judge err by failing to find that the appellant had converted the Kimberly book, as an employer presumptively owns a book of business absent an agreement to the contrary?

(2) Did the trial judge err in failing to find that the appellant owed a duty of good faith to the respondent?

(3) Did the trial judge err in failing to find a duty of loyalty, good faith, and confidence owed by the appellant to the respondent?

holding:

Appeal allowed.

Cross-appeal allowed.

reasoning:

Appeal

(1) Yes

The Court noted that the trial judge’s conclusion that the Kimberly book belonged to the appellant “[b]y default” led him to conclude that she was entitled to sell the Kimberly book to Staebler. The Court found that there was no basis to assume ownership of the Kimberly book noting that the trial judge did not make any findings as to the former Kimberly clients’ relationship with the respondent . In fact, the Court found that the trial judge had accepted that the appellant was an employee of the respondent, and did not work under the independent broker support network model, suggesting that the former Kimberly clients had a client relationship with the respondent as opposed to the appellant.

The Court noted that the “evolving nature” of the Kimberly book, as it continued to change over the years the appellant worked for the respondent, raised another problem as to ownership. The trial judge had stated that the appellant “owned” the Kimberly book at the time of sale, but qualified that ownership by stating “to the extent that it can be properly identified”. The Court found that the information in the Kimberly book appeared to have been comingled with information in the TRIP book.

Cross-Appeal

(1) Yes

The Court noted that the trial judge’s conclusion that the Kimberly book belonged to the appellant “[b]y default” led him to conclude that she was entitled to sell the Kimberly book to Staebler. The Court found that there was no basis to assume ownership of the Kimberly book noting that the trial judge did not make any findings as to the former Kimberly clients’ relationship with the respondent . In fact, the Court found that the trial judge had accepted that the appellant was an employee of the respondent, and did not work under the independent broker support network model, suggesting that the former Kimberly clients had a client relationship with the respondent as opposed to the appellant.

The Court noted that the “evolving nature” of the Kimberly book, as it continued to change over the years the appellant worked for the respondent, raised another problem as to ownership. The trial judge had stated that the appellant “owned” the Kimberly book at the time of sale, but qualified that ownership by stating “to the extent that it can be properly identified”. The Court found that the information in the Kimberly book appeared to have been comingled with information in the TRIP book.

(2) Yes

The Court found that the trial judge had given few reasons for why the appellant did not owe a fiduciary duty. In particular, the trial judge found that the respondent’s claim that she was a fiduciary was inconsistent with its position that she was a mere employee, and that neither managerial responsibilities nor titles were sufficient to establish a fiduciary duty. The Court accepted that there were difficulties with the trial judge’s analysis and, accordingly, ordered a new trial to determine whether or not a fiduciary duty was owed by the appellant.

(3) Yes

The Court held that the trial judge had erred when he considered the other causes of action to be dependant on the tort of conversion. The Court found that each required separate findings in accordance with the law that governed them. Because the trial judge’s decision did not make findings on the various causes of action, the Court held it could not make findings required on the state of the record and ordered a new trial on all causes of actions.


Jonas v. Jonas, 2022 ONCA 845

[van Rensburg, Sossin and Copeland JJ.A]

Counsel:

E. Baron, for the appellant M. Y.

D. L. Stephens and J. L. Karjanmaa, for the respondent Office of the Children’s Lawyer

S. Popovic-Montag, for the respondent Estate Trustees of the Estate of S. J.

Keywords: Wills and Estates, Wills, Interpretation, Civil Procedure, Appeals, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, Rules of Civil Procedure, r. 57, Saunders v. Vautier (1841), 41 E.R. 482 (Eng. Ch. Div.), Housen v. Nikolaisen, 2002 SCC 33, Trezzi v. Trezzi, 2019 ONCA 978, Dice v. Dice Estate, 2012 ONCA 468, Re Harrington, [1985] O.J. No. 1046 (H.C.)

facts:

S.J., the deceased, was survived by his common law spouse, and his four children, including the appellant. As of the date of death, the deceased had four grandchildren. The deceased’s common law spouse and two daughters (excluding the appellant) were appointed Estate Trustees. The Office of the Children’s Lawyer (“OCL”) represented the interests of S.J’s grandchildren and unborn and unascertained beneficiaries to the estate. At the heart of the appeal was the proper interpretation of the clause in the Will dealing with the residue of the estate. The appellant challenged the interpretation of that clause undertaken by the application judge.

With respect to the distribution of the 40 percent of the residue, the children had received a partial distribution from the estate which they each, except for the appellant, agreed constituted their 40 percent share. The dispute related to the remaining 60 percent of the residue, and in particular the meaning of the term “in equal shares per stirpes” in the context of the residue clause. The Estate Trustees brought an application seeking the court’s opinion, advice, and direction regarding the appropriate distribution. The application judge was presented with six different possible interpretations.

The appellant’s view before the application judge was that all of the residue (including the 60 percent) should be divided equally among the children. That is, according to the appellant, if a child had no children on the vesting date (10 years after the date of death), the child will receive one-quarter of the total residue, being a quarter of the 40 percent allocation (10 percent) and a quarter of the 60 percent allocation (15 percent). Any grandchildren alive on the vesting date will receive an equal share of their parent’s share of the 60 percent.

The application judge disagreed with the appellant’s interpretation of the residue clause and preferred that proposed by the OCL, holding that the whole 60 percent shall be divided equally among the grandchildren alive on the date of death plus any grandchildren or great grandchildren born by the vesting date. She also found that the rule in Saunders v. Vautier applied, such that these funds will be available to each beneficiary as of the vesting date and upon reaching the age of 18.

The appellant appealed the judgment of the application judge interpreting the Will. The appellant also appealed the costs order of the application judge. The appellant was the daughter of the deceased, S.J., who was a senior lawyer with experience in wills and estates who died on March 26, 2018 (“the date of death”).

issues:

(1) Did the application judge err in interpreting the residue clause in the Will?

holding:

Appeal dismissed.

reasoning:

(1) No

The relevant clause in the Will read as follows:

I DIRECT my trustees to divide the rest, residue and remainder of my estate as follows: forty per cent (40%) to be divided equally among my children who shall survive me and sixty per cent (60%) to be divided equally between my grandchildren and my great grandchildren (if any) who shall survive me or be born within ten years of my decease, in equal shares per stirpes. Provided that the share to my grandchildren shall be kept and invested by my trustee and used for the support of such grandchildren and for their education and then paid to each of them upon such grandchild attaining the age of 40.

The Court found the application judge properly relied on the “armchair rule” in instructing herself on the process for interpreting the Will, as set out in Dice v. Dice Estate. The Court noted that courts must determine a testator’s intention as ascertained from the language that was used and the will as a whole. Where the intention cannot be ascertained from the plain meaning of the language used, a court may consider the surrounding circumstances known to the testator when making the will.

The Court noted that the application judge’s preference for the OCL interpretation of per stirpes as a “gift over” was based on the testator’s intention to create two classes of beneficiaries and to ensure an equal distribution within those classes. The appellant’s interpretation of per stripes would have frustrated this intention.

The Court further stated that the OCL submitted case law that made clear that where a testator fails to identify which generation forms the stirpes, the court must look at the language of the will for context. The Court held that the application judge took this approach in determining that per stirpes in the context of the Will in this case reflected an intention to benefit the living grandchildren, and any other grandchildren or great grandchildren born within the vesting period, equally. The Court determined that the application judge chose the interpretation proposed by the OCL because it most closely conformed to her assessment of the testator’s intention, reading the Will as a whole at the time it was made.

The Court found that the application judge’s costs award was open to her under s. 131 of the Courts of Justice Act, and r. 57 of the Rules of Civil Procedure. The Court found no basis on which to interfere with the application judge’s exercise of discretion in apportioning the costs as she did between the appellant and the estate.


Fatahi-Ghandehari v. Wilson, 2022 ONCA 858

[Zarnett J.A. (Motion Judge)]

Counsel:

S. Chhina, as agent for the moving party, SW

J. J.D. MacKenzie, for the responding party, SFG

K. Lewis, for the proposed intervener EW

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Civil Procedure, Appeals, Extension of Time, Rules of Civil Procedure, r. 59.06(2), r. 61.04(1), Fatahi-Ghandehari v. Wilson, 2022 ONSC 4799, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Lamothe v. Ellis, 2022 ONCA 789, Peerenboom v. Peerenboom, 2020 ONCA 240, Hilton v. Hilton, 2021 ONCA 29

facts:

The moving party, SW, moved for an extension of time to appeal the decision of LeMay J., dated May 19, 2021 (the “May 2021 Judgment”). The May 2021 Judgment directed SW pay the responding party, SFG, substantial spousal support, an equalization payment, and costs.

The May 2021 Judgment was rendered after an uncontested trial in which SW did not participate. By a court order made in September 2018 (the “September 2018 Order”), SW’s pleadings had been struck out and an uncontested hearing had been directed in which SW was denied permission to participate, after he was found in contempt for failure to make full financial disclosure in violation of court orders. The September 2018 Order was not successfully appealed.

On June 18, 2021, SW served a notice of appeal seeking to appeal the May 2021 Judgment. But he did not serve an appellant’s certificate respecting evidence in a timely manner and SFG did not accept late service. Service of both was required to properly commence the appeal. No steps were taken to pursue any appeal of the May 2021 Judgment until the present motion before the Court.

In the meantime, SW alleged that SFG “made numerous fraudulent and falsified submissions” to obtain the May 2021 Judgment and SW brought a motion before Justice LeMay under r. 59.06(2)1 of the Rules of Civil Procedure.

On August 19, 2022, Justice LeMay dismissed the r. 59.06 motion. He considered that some of SW’s allegations had been raised and rejected earlier in the proceedings, and any proposed new evidence could have been put forward earlier by the exercise of due diligence. SW filed an appeal from that dismissal. If the time for his appeal from the May 2021 Judgment is extended, DW asked that both appeals be joined together.

SW requested an adjournment (SFG opposed) of the motion to extend for three reasons: (1) SW wished to cross-examine SFG on the affidavit she delivered in opposition of this motion; (2) SW wanted the Court’s assistance in obtaining the lower court’s record of proceedings to show SFG’s alleged fraud; and, (3) SW wanted an opportunity for his mother to be able to intervene.

issues:

(1) Should the Court permit the moving party’s request for adjournment?

(2) Should the Court permit the moving party’s motion to extend the time to appeal?

holding:

Motion dismissed.

reasoning:

(1) No

The Court rejected SW’s adjournment request as it was not satisfied that: (1) the cross-examination was pursued on a timely basis; (2) this appeal or motion was the appropriate process for SW to pursue the allegations that the May 2021 Judgement was obtained by fraud; and, (3) time for participation by SW was a reason for an adjournment.

(2)

The Court clarified that on a motion to extend the time to appeal, the overriding principle is whether the justice of the case warrants an extension. Relevant considerations by the Court include: whether the party requesting the extension formed an intention to appeal within the relevant time period, the length of and explanation for the delay, prejudice to the responding party arising from the delay, and the merits of the proposed appeal.

The Court accepted that SW had an intention to contest the May 2021 Judgment, as he sought to appeal it, and that he continued his intention to challenge the judgment through his motion under r. 59.06 and his appeal of that motion. However, the Court held that the justice of the case did not warrant an extension of time for SW to appeal the May 2021 Judgment given that the May 2021 Judgment was unopposed and his grounds for appeal were duplicative to the grounds raised on the motion to set it aside, which had been dismissed. The Court found that entertaining the proposed appeal would not be in the interests of justice because it would create a multiplicity of proceedings and would permit continuing proceedings after an uncontested trial.


2505243 Ontario Limited (ByPeterandPaul.com) v. Princes Gates Hotel Limited Partnership, 2022 ONCA 846

[MacPherson, Miller and Copeland JJ.A.]

Counsel:

G. MacKenzie, P. Carey and P. Martin, for the appellant/respondent by way of cross-appeal

R. Sutton, E. Anschuetz and L. Rennie, for the respondent/appellant by way of cross-appeal

Keywords: Contracts, Commercial Leases, Duty of Good Faith and Honest Performance, Damages, Reliance Damages, Expectation Damages, Civil Procedure, Trials, Witnesses, Exclusion Orders, Commercial Tenancies Act, R.S.O. 1990, c. L.7, s. 82., Callow Inc. v. Zollinger, 2020 SCC 45, PreMD Inc. v. Ogilvy Renault LLP, 2013 ONCA 412

facts:

The appellant, Princes Gates GP Inc. (“PG”), was the commercial landlord of the respondent tenant, 2505243 Ontario Limited (“250”). The appellant owned and operates Hotel X in Toronto which opened March 20, 2018. The respondent offered food services and operated two restaurants, Petros and Maxx’s, in the hotel. It did this pursuant to a food and beverage services agreement (“FBA”) and two leases (the “Agreements”).

On March 20, 2018, Hotel X opened and 250 opened the restaurant Maxx’s. The parties immediately began to have issues due to low occupancy rates. PG was critical of 250’s management and food service causing PG to unilaterally change the way it paid event deposits to 250 in November 2019, which had a serious impact on 250’s cash flow.

By early 2020, meetings were held between the parties and on February 13, 2020, the principal of 250 sent a letter to PG that said: “We would like to immediately begin the negotiation to dissolve our contracts.” On February 20, 2020, 250’s principal sent another letter, suggesting the parties negotiate an amicable exit. At trial, PG’s principal described the letter as “talking about nothing” and stated that 250’s principal had “lost his way”.

In March 2020 the pandemic arrived and PG shut down Hotel X without consulting 250. PG insisted that the lease required 250 to continue to pay rent, even though its restaurants were closed.

In April 2020, PG commenced discussions with a new food and beverage provider to replace 250. On May 30, 2020, PG sent a Letter of Intent (“LOI”) to the new provider with respect to a food and beverage partnership with the hotel. PG did not inform 250 of this development.

On June 3, 2020, the signed LOI was circulated to senior management at the hotel which was to be kept confidential. The execution of the corollary agreements was conditional on the dissolution of PG’s Agreements with 250.

On July 2, 2020, PG’s counsel wrote to 250 and terminated its Agreements with them, based on a breach by way of 250’s failure to pay rent. 250 brought an action against PG grounded in breach of contract. After an eight-day trial, the trial judge found that the Agreements had been terminated by PG in bad faith since a) PG permitted 250 to believe that it was “business as usual” all the while negotiating with Harlo with a clear intention to replace 250; b) PG terminated the Agreements without notice, which had drastic and foreseeable consequences including compensation for 250’s 200 employees who were working at the Hotel at the time; and c) PG’s reliance on 250’s lack of response to the February 27, 2020 letter to justify all of its actions was disingenuous.  On the issues of damages, the trial judge found that PG pay the Trustee of 250, now in bankruptcy proceedings, $7,124,524.92 in reliance damages and $2.063M in employee compensation damages.

PG appealed the trial judge’s analysis and conclusion on liability of damages.

issues:

(1) Did the trial judge err by concluding that it had improperly terminated 250’s lease because 250 refused to pay rent?

(2) Did the trial judge err by concluding that, after the pandemic arrived and the hotel was closed, it was unreasonable for PG to refuse to assist 250 with a potential application for relief under the Canada Emergency Commercial Rent Assistance Program (the “CECRA”)?

(3) Did the trial judge err by making a finding of bad faith against PG?

(4) Was 250 in such financial failure that it suffered no damages, even if PG wrongfully terminated their relationship?

(5) Did the trial judge err by awarding $2,063,000 in damages for claims to be potentially and consequentially made against 250 by its former employees, who lost their jobs when PG terminated its Agreements with 250?

(6) Did the trial judge err by not declaring a mistrial when it became known that three of the respondent’s proposed witnesses had been watching the trial unfold for six days by Zoom, in one of its law firm’s boardrooms?

holding:

Appeal dismissed.

reasoning:

(1) No

The Court found that the trial judge was emphatic on this issue, concluding that PG contributed to 250’s financial difficulties and owed 250 far more than 250 owed PG for missed rent payments after the pandemic set in and found no fault with this analysis, especially in the context of a pandemic, for which PG closed the hotel and restaurants. Accordingly, PG’s own actions contributed to 250’s inability to pay rent.

(2) No

The Court held that at a moment of great difficulty for both the hotel and restaurants, caused by the pandemic, the CECRA provided a golden opportunity for substantial economic relief for both entities. The Court stated that under the CECRA, PG would have received 75 percent of the required rent which would have significantly reduced its concern that 250 could not and/or would not pay its rent once the pandemic hit and the hotel and restaurants closed.

The Court noted that PG’s reason for not applying for CECRA, and/or not supporting an application by 250, was that 250 was not eligible because its income was above the $20 million threshold. PG insisted, in the middle of a pandemic and staring huge government financial support right in the face, that 250 obtain an independent CPA’s opinion about its revenue. In light of 250’s T2 filing for 2019, stating its revenue was $17,557,618. The Court stated that PG’s insistence on independent verification was grossly unfair. Thus, the Court held that PG contributed to 250’s failure to pay rent.

(3) No

The Court found no error in the trial judge’s finding that PG misrepresented its intention to continue the parties’ agreements. The Court,  turning to Callow Inc. v. Zollinger to set out the context and contours for the role of good faith in contract interpretation, quoting the following passage: “[W]here the failure to speak out amounts to active dishonesty in a manner directly related to the performance of the contract, a wrong has been committed and correcting it does not serve to confer a benefit on the party who has been wronged.”.

The Court noted that the trial judge’s decision stated “It is clear in this case that the Hotel knew that 250 intended to stay on and continue with its contract. Despite this, it continued with serious negotiations with Harlo even to the point of making staff introductions […] The process was kept entirely secret from 250. The fact that the Hotel continued to communicate with 250 as late as the morning of July 2, 2020, as if nothing had changed was, I find, a breach of the duty of good faith in contract by way of misleading by inaction.”

Accordingly, the Court concluded that the trial judge’s analysis and legal conclusion were entirely consistent with Callow.

(4) No

PG submitted that 250’s trade debt and lack of assets necessarily meant that even if 250 could have financially survived until the end of its Agreements, it would never have made a profit. It would have lost money. PG claimed that the trial judge put 250 in a better position than if it had completed its contracts.

The Court held that the trial judge did not err by awarding reliance (tort) damages, rather than expectation (contractual) damages, and was cautious in her calculation of 250’s reliance damages. The Court, relying on PreMD Inc. v. Ogilvy Renault LLP held that an injured party may elect to claim reliance damages rather than expectation damages when expectation damages cannot be proven. Accordingly, the Court found no error in the methodology which led to an award of $7,124,524.92.

(5) No

PG submitted that the trial judge erred by awarding $2,063,000 in damages for claims to be potentially and consequentially made against 250 by its former employees, who lost their jobs when PG terminated its Agreements with 250.

The Court rejected the submission and found that the trial judge had simply provided a separate head of damages that formed part of the overall compensatory damages claimed, together with a cap on the potential total award.

(6) No

PG contended that the trial judge erred by not declaring a mistrial when it became known that three of the respondent’s proposed witnesses had been watching the trial unfold for six days by Zoom, in one of its law firm’s boardrooms.

The Court held that neither party sought an order excluding witnesses. In her mistrial ruling, the trial judge said that, although she found the situation concerning, it was not so egregious that it would require the extreme remedy of either a mistrial or the striking of evidence. After the trial, the trial judge noted in her judgment the same. The Court deferred to the trial judge as “she was in the best position to make this call.”


SHORT CIVIL DECISIONS

Nader v. University Health Network, 2022 ONCA 856

[Gillese, Benotto and Harvison Young JJ.A.]

Counsel:

D. Whitten and J. Jagpal, for the appellant

M. Quinlan, for the respondent University Health Network

M. S. Henry and E. Creelman, for the respondent Ontario Health

Keywords: Contracts, Interpretation, Employment, Severance, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

Ash v. Ontario (Chief Medical Officer), 2022 ONCA 849

[Zarnett J.A. (Motion Judge)]

Counsel:

J. A., acting in person

M. Saad, for the responding party

Keywords: Administrative Law, Judicial Review, Mandamus, Civil Procedure, Appeals, Directions, Requests to Admit, Rules of Civil Procedure, r. 51.02, Orlan Karigan & Associate Ltd. v. Hoffman (2000), 52 O.R. (3d) 235 (S.C.)

MBM Intellectual Property Law LLP v. Drizen, 2022 ONCA 847

[Simmons, van Rensburg and Favreau JJ.A.]

Counsel:

K.D., acting in person

D. Lanfranconi, for the respondent

Keywords: Costs, Substantial Indemnity


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 over 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 over two decades of experience handling a wide variety of litigation matters. John assists clients with matters ranging from appeals, to injunctions, to corporate, partnership, breach of contract, construction, environmental contamination, product liability, debtor-creditor, insolvency and other business litigation. He also handles complex estates and matrimonial litigation involving disputes over property and businesses, as well as professional discipline and professional negligence matters for various types of professionals. In addition, John represents amateur sports organizations in contentious matters, and also advises them in matters of internal governance. John can be reached at 416-593-2953 or jpolyzogopoulos@blaney.com.