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Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of January 9, 2023.

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In Ontario v. Madan, Ontario sued SJM, a senior IT employee with Ontario for fraud. Ontario also sued SJM’s wife and two sons, alleging that the family members were complicit in, and/or beneficiaries of a scheme that defrauded Ontario of millions of dollars. The fraud related to the government’s Support for Families Program, which was commenced in April 2020 to help families with the costs associated with at-home learning necessitated by the pandemic. The appellant family members (“the appellants”) filed separate statements of defence and counterclaimed against Ontario on the basis that it was contributorily negligent in that it failed to take reasonable steps to prevent and limit the frauds perpetrated by SJM. The appellants further alleged that Ontario, as the fraudster’s employer, was vicariously liable for his “wrongful acts” including his invasion of the appellants’ privacy. The court below struck much of their defence and counterclaims as disclosing no reasonable cause of action or defence. The Court upheld that decision.

In Northwinds Brewery Ltd. v. Caralyse Inc., the Court largely upheld the trial judge’s decision finding no default by the Tenant, and that the Tenant had therefore validly exercised an option to extend the Lease for a second five-year term. However, the Landlord was successful on appeal in getting more occupation rent (although Court did not call it “occupation rent”, but rather “non-lease-based rent”) for a part of the common areas that the Tenant was exclusively occupying (a shed the Tenant had installed). The court below had limited “occupation rent” arrears to two years on the basis of the regular two-year limitation period. However, the Court found that the Real Property Limitations Act applied to this claim to “non-lease based” rent arrears, whether it was characterized as rent or damages, since the amount awarded fell within the RLPA’s definition of “rent” as “periodical sums of money charged upon or payable out of land.”

In Assayag-Shneer v. Shneer, the Court confirmed that courts do not have authority under the Divorce Act to amend support orders in the absence of a material change in circumstances. However, courts are entitled to exercise their discretionary power to alter post-judgement interest pursuant to the Courts of Justice Act on arrears for a default of a support order notwithstanding a finding that there is no material change in circumstances. Perhaps most interestingly, the Court determined that the common law doctrine on the non-enforceability of contractual penalties and section 98 of the Courts of Justice Act, which gives a court the power to relieve against penalties and forfeitures, are inapplicable to vary the terms of a consent court order. Once a clause in a settlement is inserted in a consent court order, it cannot be set aside by a court later as penal.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferriera
Blaney McMurtry LLP
416.597.4895 Email

Table of Contents

Civil Decisions

Ontario v. Madan, 2023 ONCA 18

Keywords: Torts, Intrusion Upon Seclusion, Breach of Privacy, Fraud, Conversion, Unjust Enrichment, Negligence, Contributory Negligence, Vicarious Liability, Crown Liability, Remedies, Mareva Injunctions, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action, No Reaasonable Defence, Courts of Justice Act, R.S.O. 1990, c. C.43, S. 98, Civil Remedies Act, 2001, S.O. 2001, c. 28, Crown Liability and Proceedings Act, 2019, S.O. 2019, c. 7, Sched. 17, Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, Man Financial Canada Co. v. Keuroghlian, 2008 ONCA 592, Garland v. Consumers’ Gas Co., 2004 SCC 25, Love v. Turf Management Systems Inc. (1997), 38 B.L.R. (2d) 70 (Ont. Gen. Div.), Jones v. Tsige, 2012 ONCA 32, Owsianik v. Equifax Canada Co., 2022 ONCA 813, Bazley v. Curry, [1999] 2 S.C.R. 534, Evans v. Bank of Nova Scotia, 2014 ONSC 2135, Walters (Litigation Guardian of) v. Ontario, 2017 ONCA 53, Ontario v. Phaneuf, 2010 ONCA 901, Bruno v. Dacosta, 2020 ONCA 602, Francis v. Ontario, 2021 ONCA 197, Just v. British Columbia, [1989] 2 S.C.R. 1228, Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 579, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Darmar Farms Inc. v. Syngenta Canada Inc., 2019 ONCA 789

Assayag-Schneer v. Schneer, 2023 ONCA 14

Keywords: Family Law, Divorce, Support, Orders, Variation, Material Change in Circumstances, Contracts, Minutes of Settlement, Penal Clauses, Setting Aside, , Civil Procedure, Post-Judgment Interest Rate, Variation, Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), ss. 15.2(4)(c), 15.2(6), 17(1), 17(4.1), Courts of Justice Act, R.S.O. 1990, c. C.43., ss. 98, 129, 130, Family Law Rules, O. Reg. 114/99, r. 25(19), Crosbie v. Crosbie, 2012 ONCA 516, L.M.P. v. L.S., 2011 SCC 64, Willick v. Willick, [1994] 3 S.C.R. 670, Robert McAlpine Ltd. v. Byrne Glass Enterprises Ltd., [2001] O.J. No. 3208 (C.A.), Eastwalsh Homes Ltd. v. Anatal Development Corporation et al. (1995), 26 O.R. (3d) 528 (Gen. Div.), Peachtree II Associates – Dallas L.P. v. 857486 Ontario Ltd. (2005), 76 O.R. (3d) 362 (C.A.), Dunlop Pneumatic Tyre Co. Ltd. v. New Garage & Motor Co. Ltd., [1915] A.C. 79, (H.L.), Herskovits v. Herskovits (2001), 17 R.F.L. (5th) 339 (Ont. S.C.)

Sutton v. Sutton, 2023 ONCA 16

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Imputed Income, Civil Procedure, Appeals, Fresh Evidence, Family Law Act, R.S.O. 1990, c. F.3, s. 33(10), Palmer v. The Queen, [1980] 1 S.C.R. 759

Spot Coffee Park Place Inc. v. Concord Adex Investments Limited, 2023 ONCA 15

Keywords: Contracts, Interpretation, Exclusion Clauses, Real Property, Commercial Leases, Torts, Negligent Misrepresentation, Civil Procedure, Appeals, Standard of Review, Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, D.L.G. & Associates Ltd. v. Minto Properties, 2015 ONCA 705, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Corner Brook (City) v. Bailey, 2021 SCC 29, Ontario First Nations (2002) Limited Partnership v. Ontario Lottery Gaming Corporation, 2021 ONCA 592

Northwinds Brewery Ltd. v. Caralyse Inc., 2023 ONCA 17

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Rentable Area, Options to Extend, Right to Exercise, Default, Remedies, Occupation Rent, , Civil Procedure, Limitation Periods, Costs, Partial Indemnity, Proportionality, Reasonable Expectations, Rules of Civil Procedure, r. 57, Limitations Act, 2002, SO 2002, c 24, Sched B, s. 17(1), Real Property Limitations Act, RSO 1990, c L15, Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, Sterling Waterhouse Inc. v. LMC Endocrinology Centres (Toronto) Ltd., 2015 ONSC 3987, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Smith Estate v. Rotstein, 2011 ONCA 491, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.)
Short Civil Decisions

Chiappino & Associates Limited v. 6891799 Canada Inc., 2023 ONCA 22

Keywords: Costs Endorsement

Taylor v. Hanley Hospital Inc., 2023 ONCA 25

Keywords: Costs Endorsement

Kudrocova v. Kronberger, 2023 ONCA 26

Keywords: Family Law, Parenting, Decision-Making, Parental Alienation, Variation, Material Change in Circumstances, De Facto Status Quo

CIVIL DECISIONS

Ontario v. Madan, 2023 ONCA 18

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

C. Du Vernet and C. McGoogan, for the appellants
C. Wayland and A. Huckins, for the respondent

Keywords: Torts, Intrusion Upon Seclusion, Breach of Privacy, Fraud, Conversion, Unjust Enrichment, Negligence, Contributory Negligence, Vicarious Liability, Crown Liability, Remedies, Mareva Injunctions, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action, No Reaasonable Defence, Courts of Justice Act, R.S.O. 1990, c. C.43, S. 98, Civil Remedies Act, 2001, S.O. 2001, c. 28, Crown Liability and Proceedings Act, 2019, S.O. 2019, c. 7, Sched. 17, Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, Man Financial Canada Co. v. Keuroghlian, 2008 ONCA 592, Garland v. Consumers’ Gas Co., 2004 SCC 25, Love v. Turf Management Systems Inc. (1997), 38 B.L.R. (2d) 70 (Ont. Gen. Div.), Jones v. Tsige, 2012 ONCA 32, Owsianik v. Equifax Canada Co., 2022 ONCA 813, Bazley v. Curry, [1999] 2 S.C.R. 534, Evans v. Bank of Nova Scotia, 2014 ONSC 2135, Walters (Litigation Guardian of) v. Ontario, 2017 ONCA 53, Ontario v. Phaneuf, 2010 ONCA 901, Bruno v. Dacosta, 2020 ONCA 602, Francis v. Ontario, 2021 ONCA 197, Just v. British Columbia, [1989] 2 S.C.R. 1228, Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 579, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Darmar Farms Inc. v. Syngenta Canada Inc., 2019 ONCA 789

Facts:

The respondent, His Majesty the King in Right of Ontario (“Ontario”), sued SJM, his wife, SM, and two sons, CM and UM. SM, CM and UM are the appellants (“the appellants”). Ontario alleged that SJM, using his IT position at the Ontario Ministry of Education (the “Ministry”), defrauded Ontario of millions of dollars. Ontario further alleged that the appellants were complicit in, and/or beneficiaries of the fraud. The appellants filed separate statements of defence.

Ontario alleged two fraudulent schemes. The first scheme targeted the Support for Families Program (“SFFP”), to support at-home learning necessitated by the pandemic and administered by the Ministry to provide grants of $200 to $250 per student. Applications were made to the Ministry using the online process that SJM helped develop.

Ontario alleged that between April 2020 and August 2020, SJM and the appellants made thousands of fraudulent applications under the SFFP using fictitious names. The applications were approved and funds paid into one of the over 2,500 bank accounts opened by SJM in his name or names of the appellants. Ontario alleged that payments in excess of 10 million dollars were made into those accounts as a result of the fraudulent applications.

The second scheme alleged that SJM had been paid kickbacks by consultant vendors who obtained contracts with the Ministry. SJM was responsible for selecting vendors and signing off on consultants’ timesheets. Ontario alleged that the kickback scheme had been going on for at least ten years.

Ontario did not allege that the appellants participated in the kickback scheme. However, Ontario alleged that SJM diverted proceeds, directly and indirectly, from the scheme to himself and to the appellants, by way of money payments or by way of property/assets obtained from the proceeds of the scheme. Ontario alleged that SJM and the appellants were unjustly enriched at Ontario’s expense.

The appellants denied any knowledge of, or involvement in, the fraudulent schemes in their statements of defence. The appellants pleaded that Ontario was contributorily negligent in that it failed to take reasonable steps to prevent and limit the frauds perpetrated by SJM. They claimed Ontario’s damages should be reduced to reflect Ontario’s responsibility for the frauds.

The sons, CM and UM, pleaded that their father, SJM, had admitted to them that, without their knowledge or consent, he had deposited proceeds from the SFFP fraud into bank accounts in their names opened for that purpose. The wife, SM, pleaded that she was a victim of SJM’s identity theft, fraud, and “wrongful acts”. The appellants did not crossclaim against SJM.

The appellants did, however, counterclaim against Ontario, alleging that Ontario, as a result of the dishonesty, negligence and ineptitude of its employees, and inadequacy of its computer systems, was largely responsible for losses resulting from the frauds. The appellants claimed that several named employees of Ontario had engaged in various dishonest or negligent acts that had resulted in damage to the appellants. The counterclaims further alleged that Ontario, as SJM’s employer, was vicariously liable for his “wrongful acts” including his invasion of the appellants’ privacy through his use of their private information to open fraudulent bank accounts in their names into which he directed proceeds of the SFFP fraud.

Ontario moved to strike parts of the statements of defence, including the contributory negligence defences advanced by the appellants. Ontario also moved to strike the counterclaims in their entirety, with the exception of a wrongful dismissal claim made by SM. The motion judge struck the contested parts of the statements of defence and the counterclaims. The motion judge also refused leave to amend the pleadings.

Issues:

1) Did the motion judge err in striking the contributory negligence defences?

2) Did the motion judge err in striking the claims in the statements of defence and counterclaims relating to Ontario’s alleged misuse of the Mareva injunction?

3) Did the motion judge err in striking the allegation in the counterclaims that Ontario was vicariously liable for Sanjay’s SJM’s invasion of the appellants’ privacy?

4) Did the motion judge err in striking the allegations in the counterclaims that Ontario was either directly or vicariously liable to the appellants in negligence?

5) Did the motion judge err in not granting leave to the appellants to amend their pleadings?

Holding:

Appeal dismissed.

Reasoning:

(1) No.

The Court explained that the contributory negligence defence advanced by the appellants was predicated on Ontario’s alleged failure to take adequate steps to protect itself from the fraud perpetrated against it. Accordingly, the proposition that a fraudster’s liability for damages flowing from its fraud should be reduced to reflect a victim’s failure to protect itself from the fraud would, if accepted, strongly suggest that if perpetrated against the right victim, crime would indeed pay. However, the Court determined that a victim’s negligence or carelessness affords no defence, partial or otherwise, to an allegation of dishonesty.

Further, the appellants argued that Ontario’s failure to take reasonable steps to protect itself and others from the frauds constituted “misconduct”, which was considered when deciding whether Ontario should be entitled to equitable relief by way of its unjust enrichment claim. To establish unjust enrichment, Ontario must have shown, first, an enrichment of the appellants, second, a corresponding deprivation of Ontario and, third, an absence of a juristic reason for the enrichment.

The Court held that the appellants’ position was untenable in law and that there was no authority to suggest that a plaintiff’s carelessness or negligent conduct can demonstrate the kind of moral turpitude required to justify invoking the “clean hands” doctrine to deny what would otherwise be appropriate equitable relief based on unjust enrichment.

Lastly, the appellants contended that even if Ontario established the requisite criteria, the appellants were entitled to keep at least some of the indirect proceeds of fraud because Ontario failed to take proper steps to protect itself from fraud. The Court reasoned that on this approach, the appellants would become the beneficiaries of a windfall, occasioned by Ontario’s failure to protect itself from SJM’s fraud. The Court rejected this argument and noted that the result as proposed by the appellants would be a permanent financial loss for Ontario, the victim of the fraud, and a windfall gain for the appellants, bystanders to the fraud. That would be the antithesis of equity.

(2) No.

The Court held that the pleadings relating to the Mareva injunction and preservation order were properly struck. First, the appellants did not plead any material facts capable of supporting the claim that Ontario froze funds. The Court further held that without any reference in the pleadings to actual terms of the Mareva injunction or preservation order, there was no basis upon which the appellants could plead that the seizures were in contravention of the terms of the orders. Second, there was no allegation that any of the funds frozen by court order were frozen in violation of the terms of those orders. Finally, the Court held that the appellants’ bald claims that Ontario “abused the authority it obtained from this Honourable Court” and that Ontario “simply grabbed all the money it could find” were properly struck as entirely unsupported by any material facts in the appellants’ pleadings.

(3) No.

The Court reiterated the test for the tort of invasion of privacy, or intrusion upon seclusion which is met when the alleged tortfeasor invades or intrudes upon the private affairs or concerns of another. That invasion or intrusion must be intentional or reckless, and it must be sufficiently serious that a reasonable person would regard the invasion of privacy as highly offensive causing distress, humiliation or anguish: Jones v. Tsige; Owsianik v. Equifax Canada Co. The tort is complete without proof of pecuniary damage. Essentially, the tort of intrusion upon seclusion seeks to protect the integrity and autonomy of one’s personal information through the recognition of one’s right to control access to, dissemination of, and use of one’s private information by others.

The Court noted that, on the facts, as pleaded by the appellants, their right to control access to and use of their private information was compromised by SJM’s dishonest use of information entrusted to him by his family members to open bank accounts as a step to further a scheme to defraud the SFFP. The appellants allege that the use of the information to establish the accounts was an infringement of the appellants’ right to control their private information.

The Court noted that Ontario could only be vicariously liable if Ontario could be said to be legally responsible for SJM’s misuse of the appellants’ private banking information to establish the false accounts as a step in his scheme to defraud. However, the Court found that nothing alleged in the pleadings could support a finding that Ontario should be held vicariously liable for SJM’s invasion of the appellants’ privacy. The Court cited Bazley v. Curry, which dealt with the nature and scope of an employer’s vicarious liability for the actions of its employees to support their finding. Specifically, Bazley determined that “employers may justly be held liable where the act falls within the ambit of the risk that the employer’s enterprise creates or exacerbates”. The Court found that the risk that SJM would misuse private banking information entrusted to him by his family was not a risk “that the employer’s enterprise creates or exacerbates.” Nor was the violation of the appellants’ privacy rights by SJM’s misuse of their private banking information “so connected with the employment that it can be said that the employer has introduced the risk of the wrong”. The Court held that, in fact, there was no connection between SJM’s employment with Ontario and the wrong underlying the intrusion upon seclusion claim.

(4) No.

The motion judge held that under s. 8 of the Crown Liability and Proceedings Act (the “Act”), the Crown could not be held directly liable in tort. The Crown could be held vicariously liable for the tortious acts of its officers, employees or agents. Under the Act, Ontario is liable for torts committed by an officer, employee or agent of the Crown and Ontario’s liability in tort extends only to acts or omissions attributable to an officer, employee or agent of the Crown. Ontario’s tort liability is vicarious and depends on the plaintiff’s ability to prove the tortious conduct or omission of an officer, employee or agent of Ontario. The Court held that the vicarious nature of the Crown’s liability in tort under the Act is clear in s. 8 of the Act.

The Court agreed with the motion judge in its reasons to strike the claims alleging that Ontario was vicariously liable. The Court affirmed that the relationship giving rise to the requisite proximity must be one between identified officers, agents or employees of Ontario (including SJM) and the appellants. It is only if the appellants had properly pleaded the existence of the requisite proximity between identified Crown employees and the appellants that the inquiry could have properly turned to Ontario’s responsibility in law for the acts or omissions of those identified employees. The appellants did not to plead the existence of any special relationship between the appellants and any identifiable officer, agent or employee of Ontario. Instead, the appellants pleaded a “special relationship” with Ontario. The Court ruled that the claim failed on that ground alone.

The transfer of funds into accounts in the names of the appellants could not, on its own, establish the requisite proximity between the appellants and any employee, officer or agent of Ontario. The appellants could not claim proximity while also claiming that that they had no knowledge of the existence of the vast majority of accounts SJM had opened in their names, and no control over, or access to, any of those accounts. The appellants also did not plead any communication or form of contact, direct or indirect, with any employee, officer or agent of Ontario in respect of those accounts. Nor did the appellants claim any involvement in, or knowledge of, the SFFP applications that generated the funds deposited into the accounts. Finally, they did not claim any entitlement, or interest in any of the funds transferred into those accounts under the auspices of the SFFP. The Court concluded that the mere fact that Ontario and the appellants were both cheated by SJM as part of the same scheme did not create a “special relationship” giving rise to a duty of care owed to the appellants by any officer, agent or employee of Ontario.

(5) No.

The Court held that most of the deficiencies in the pleadings were not amenable to any possible amendment. To the extent that any of the pleadings may have been capable of amendment, the Court deferred to the motion judge’s discretion and her refusal to permit any amendment. The appellants had already amended their pleadings once, and they offered no concrete suggestions to the motion judge, or the Court, as to any appropriate amendments that could be made.


Assayag-Schneer v. Schneer, 2023 ONCA 14

[Miller, Zarnett and Coroza JJ.A.]

Counsel:

H.T. Strosberg, K.C. and E. Betts, for the appellant
J.K. Hannaford, for the respondent

Keywords: Family Law, Divorce, Support, Orders, Variation, Material Change in Circumstances, Contracts, Minutes of Settlement, Penal Clauses, Setting Aside, , Civil Procedure, Post-Judgment Interest Rate, Variation, Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), ss. 15.2(4)(c), 15.2(6), 17(1), 17(4.1), Courts of Justice Act, R.S.O. 1990, c. C.43., ss. 98, 129, 130, Family Law Rules, O. Reg. 114/99, r. 25(19), Crosbie v. Crosbie, 2012 ONCA 516, L.M.P. v. L.S., 2011 SCC 64, Willick v. Willick, [1994] 3 S.C.R. 670, Robert McAlpine Ltd. v. Byrne Glass Enterprises Ltd., [2001] O.J. No. 3208 (C.A.), Eastwalsh Homes Ltd. v. Anatal Development Corporation et al. (1995), 26 O.R. (3d) 528 (Gen. Div.), Peachtree II Associates – Dallas L.P. v. 857486 Ontario Ltd. (2005), 76 O.R. (3d) 362 (C.A.), Dunlop Pneumatic Tyre Co. Ltd. v. New Garage & Motor Co. Ltd., [1915] A.C. 79, (H.L.), Herskovits v. Herskovits (2001), 17 R.F.L. (5th) 339 (Ont. S.C.)

Facts:

The parties were divorced by a judgment dated September 13, 1999. The parties entered into Minutes of Settlement (the “Minutes”), following which the court made an order that contained the terms of the Minutes (the “Order”). The Order was made on consent.
Paragraph 2 of the Order provided that the respondent was to pay the appellant a total of $388,000 as spousal support through a series of payments. Paragraph 3 of the Order provided that, upon the respondent’s default, the total amount owing would be doubled, plus $50,000. The respondent first defaulted in February 2001, at which time there was $228,000 outstanding on the Order.

The motion judge identified that, pursuant to s. 17(4.1) of the Divorce Act (the “Act”), a variation to a support order can be made where the court is satisfied that there has been a material change in circumstances. The motion judge found that the respondent had not demonstrated a material change in circumstance to seek a variation of the Order. However, he went on to find that Paragraph 3 of the Order was a “penalty”, and was therefore unenforceable and deleted it from the Order. The motion judge held that a finding of no material change in circumstance does not disentitle the court from finding a penalty clause unenforceable, but cited no authority for this proposition. Lastly, the motion judge varied the post-judgment interest payable on the arrears of spousal support, reducing it from the 6% rate specified in the Order to 3.5% on the ground that there had been a dramatic decline in interest rates and an extensive passage of time since the arrears started accumulating.

Issues:

1) Did the motion judge err in deleting a support provision of the divorce judgement in the absence of a material change in circumstances?

2) Did the motion judge err in varying the post-judgement interest rate on arrears in the absence of a material change in circumstances?

Holding:

Appeal allowed in part.

Reasoning:

(1) Yes.

Pursuant to L.M.P. v. L.S. (“LMP”), s. 17(4.1) of the Act is a threshold question. Accordingly, the Court found that the motion judge could not vary the Order without finding that there was a material change in circumstances. The Court noted that failure to meet the threshold question in s. 17(4.1) of the Act ought to have been dispositive of the motion to vary the Order.

In addition, the Court noted that the motion judged erred in conducting a de novo assessment of Paragraph 3 of the Order, determining it to be an unenforceable penalty. Relying on LMP, the Court noted that the motion judge ought not to consider the correctness of the Order. Rather, it is presumed that the judge who granted the Order knew and applied the law correctly. Furthermore, the Court noted that the common law doctrine of non-enforceability of contractual penalties only applies to contracts, not court orders. The doctrine does apply to family law agreements, however, the parties had the Minutes incorporated in the Order on consent. Therefore, the motion judged erred in applying this doctrine.

(2) No.

The statutory post-judgment interest rate is found at s. 129 of the Courts of Justice Act (the “CJA”). Pursuant to s. 130 of the CJA, a judge has the discretion to change the rate of interest referred to at s. 129. In Crosbie v. Crosbie, the Court found that the statutory post-judgment interest rate should apply unless there are compelling and exceptional reasons to change it. Crosbie further noted that a dramatic decline in interest rates over a period of time was a compelling and exceptional reason to impose a rate other than the statutory one. The Court found that there was no indication in the Act that the threshold question of finding a material change in circumstance had any application to a judge’s discretion to change the statutory post-judgement interest rate.


Sutton v. Sutton, 2023 ONCA 16

[Doherty, Zarnett and Sossin JJ.A.]

Counsel:

J.S., acting in person
M. Ibghi and T. Garton, for the respondent
Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Imputed Income, Civil Procedure, Appeals, Fresh Evidence, Family Law Act, R.S.O. 1990, c. F.3, s. 33(10), Palmer v. The Queen, [1980] 1 S.C.R. 759

facts:

The appellant appealed the judgment and associated costs order that was made in favour of his wife, the respondent, after a trial of family law claims. The trial judge awarded the respondent an equalization payment of $362,703.28, which was to be partially satisfied by a transfer from the appellant’s pension. She also awarded the respondent a lump sum of $199,144 for retroactive and ongoing spousal support. She ordered that the balance of the equalization payment and the lump sum support were to be paid out of the proceeds of the sale of the matrimonial home, which she ordered be listed for sale. She gave the respondent the right to register a charge against the matrimonial home to secure payment of these amounts. The trial judge also awarded the respondent costs of $105,930, and gave her the right to register a charge against the matrimonial home to secure their payment.

The appellant did not call into question the legal principles that the trial judge applied to the facts she found. The appellant questioned the trial judge’s factual findings, pointing to other evidence and explanations that, he submitted, should lead the Court to substitute different factual conclusions for those reached by the trial judge. He also sought to introduce fresh evidence on the appeal.

issues:

(1) Did the trial judge made any reversible error in her credibility findings?

holding:

Appeal dismissed.

reasoning:

(1) No.
The appellant focused his submissions on three main points. First, the appellant challenged the trial judge’s conclusion that the respondent’s income potential was $46,000 per year, an amount she used in determining the quantum of spousal support that she ordered. He argued this amount was based on the respondent working as a personal care support planner, and did not consider her ability to earn income as a real estate agent. The Court rejected this argument and held that the appellant had not shown a palpable and overriding error in the trial judge’s conclusion to impute income to the respondent of $46,000 per year. The Court found the trial judge carefully reviewed the income earning history of both parties. $46,000 was the most the respondent had ever earned in any year prior to 2021, which included the years in which she worked as a real estate agent.

Second, the appellant argued that the trial judge erred when she referred to a list that the appellant gave the respondent during the marriage that set out his expectations of how she was to dress, maintain the home, be satisfied with the lifestyle he provided, take his advice, admire him, and guard his reputation. The appellant says that he introduced the list at trial to show he was working to repair and maintain the marriage and did not realize that the trial judge would use it against him – if he had, he would have introduced an email to show that the list originated from a website the respondent shared with him. He asked that the email (which he described orally in argument) be admitted as fresh evidence on the appeal. The Court noted that fresh evidence is only admitted on an appeal if, among other matters, the fresh evidence is “such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result”: Palmer v. The Queen. The Court found the trial judge’s use of the list as an indicator of the functions performed and expected to be performed by the spouses during the marriage would not have been affected by the proposed fresh evidence in any material way. It is the spousal roles, not their genesis, that give rise to the entitlement to support. The Court did not admit the fresh evidence and rejected this ground of appeal.

Third, the appellant addressed the costs award of the trial judge. At trial, the respondent made submissions and the appellant did not make any submissions in response. The appellant stated in oral argument that he failed to do so because he was appealing the trial judgment. The Court declined to interfere with the trial judge’s discretionary costs award as the appellant had not identified an error in principle in the costs award that would displace the deference owed to the trial judge in these circumstances.

The Court was not satisfied that the trial judge made any reversible error in her credibility findings. A trial judge enjoys a wide discretion over such findings. Although the appellant referred to items of evidence that were not referred to by the trial judge that he submitted should have counted against the respondent’s credibility, the trial judge was not obliged to refer to each item of evidence in concluding about credibility. The Court was also not satisfied that the trial judge made any error in her management of a trial that involved a self-represented litigant that would warrant appellate interference. The record disclosed that the trial judge provided significant assistance to the appellant about both substantive law and procedure. The trial judge did not make any findings that there was an unconscionable course of conduct that was an obvious and gross repudiation of the relationship.


Spot Coffee Park Place Inc. v. Concord Adex Investments Limited, 2023 ONCA 15

[Pepall, Harvison Young and George JJ.A.]

Counsel:

S. Sood and D. Reiter, for the appellant
G.M. Sidlofsky and P. Neufeld, for the respondent

Keywords: Contracts, Interpretation, Exclusion Clauses, Real Property, Commercial Leases, Torts, Negligent Misrepresentation, Civil Procedure, Appeals, Standard of Review, Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, D.L.G. & Associates Ltd. v. Minto Properties, 2015 ONCA 705, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Corner Brook (City) v. Bailey, 2021 SCC 29, Ontario First Nations (2002) Limited Partnership v. Ontario Lottery Gaming Corporation, 2021 ONCA 592

facts:

The respondent, Spot Coffee Park Place Inc. (“Spot Coffee”) was a commercial tenant of the appellant landlord, Concord Adex Investments Limited (“Concord”). The dispute arose regarding an alleged pre-contractual negligent misrepresentation about customer parking at the leased premises, a retail unit at Concord Park Place. In early 2010, the landlord began discussing the possibility of leasing a retail unit at Concord Park Place with the principals of what became Spot Coffee. In Concord’s presentation meeting, its representative showed Spot Coffee a blueprint of an underground parking facility labelled “retail parking” and depicting a customer parking lot. The representative took the principals of Spot Coffee on a site tour and showed them where the customer parking was going to be, assuring Spot Coffee there would be ample parking for its customers.

On September 3, 2010, the parties entered into an Offer to Lease for the commercial premises and, on October 29, 2010, the parties entered into a Formal Lease. Both the Offer to Lease and the Formal Lease contained an entire agreement clause which included language stating that the Offer to Lease and the Formal Lease were the only agreements between the parties relating to the subject matter of the lease.

When Spot Coffee opened its café, it encountered problems with customer parking, as customers had to drive to a different building to park. On May 29, 2013, Spot Coffee abandoned the premises due to the parking challenges causing it to suffer losses.
The trial judge found that Concord owed Spot Coffee a duty of care and acted negligently by making inaccurate and/or misleading representations through its representative regarding the availability of parking. The trial judge reasoned that the entire agreement clause did not preclude Spot Coffee’s claim, as it pertained to the subject matter in the lease only and the parking issue was not mentioned in the lease.

Concord argued that the trial judge failed to consider the lease as a whole, amounting to an extricable error of law reviewable on a correctness standard. Specifically, Concord argued that the trial judge failed to consider articles 3.2 and 6.6(b) of the lease which dealt with parking and formed part of the “subject matter” of the Lease.

issues:

(1) What is the applicable standard of review?

(2) Did trial judge fail to consider the Lease as a whole and err in concluding that the respondent’s claim was not precluded by the language of the entire agreement clause in the Lease?

holding:

Appeal dismissed.

reasoning:

(1)

The Court noted that contractual interpretation involves issues of mixed fact and law, as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix (Sattva). Justice Rothstein in Sattva carved out extricable questions of law from this more limited standard of review stating that “[L]egal errors made in the course of contractual interpretation include ‘the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor’”. The Court noted that applicable standard of review is on a correctness standard. The Court noted that if articles in the Lease were specific and relevant, ignoring them could amount to a failure to read the Lease as a whole and thus could meet the correctness standard of review threshold. In addition, if customer parking was included as part of the ‘subject matter’ of the Lease, a finding to the contrary might amount to a palpable and overriding error.

(2) No.

The Court held that the trial judge did not err in finding that Spot Coffee’s claim was not precluded by the entire agreement clause. The Court noted that the trial judge considered the provision and whether the appellants’ impugned representations related to the subject matter of the Lease. The Court reviewed article 3.2 and 6.6(b) and saw no extricable error of law or any palpable and overriding error. In the absence of any palpable and overriding error or error of law, deference was owed to the trial judge’s interpretation that customer parking was not the “subject matter” of the Lease and that the entire agreement clause did not preclude Spot Coffee’s claim.


Northwinds Brewery Ltd. v. Caralyse Inc., 2023 ONCA 17

[van Rensburg, Sossin and Copeland JJ.A.]

Counsel:

B. Fromstein and A. F. Longo, for the appellant
G. Galati and P. Wallner, for the respondent

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Rentable Area, Options to Extend, Right to Exercise, Default, Remedies, Occupation Rent, , Civil Procedure, Limitation Periods, Costs, Partial Indemnity, Proportionality, Reasonable Expectations, Rules of Civil Procedure, r. 57, Limitations Act, 2002, SO 2002, c 24, Sched B, s. 17(1), Real Property Limitations Act, RSO 1990, c L15, Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, Sterling Waterhouse Inc. v. LMC Endocrinology Centres (Toronto) Ltd., 2015 ONSC 3987, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Smith Estate v. Rotstein, 2011 ONCA 491, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.)

facts:

The appellant, a Landlord, owned a commercial plaza where the respondent, the Tenant, leasing two units (the “Premises”), operated a restaurant, brewpub and retail business. The Lease was for an initial five-year term that began July 1, 2014 (the “Commencement Date”). The Lease provided for annual minimum rent of $12 per square foot, and required the respondent to pay as “additional rent” its proportionate share of annual taxes, maintenance and insurance (“TMI”) and operating costs.

After the Tenant gave notice in October 2018 to extend the Lease for a second five-year terms, the Landlord issued a series of default notices. The Tenant obtained interim and interlocutory injunctions restraining the Landlord from terminating the Lease and interfering with its quiet enjoyment of the Premises. The proceeding was converted into an action.
Several issues proceeded to trial, including: (1) whether the Tenant was in default under the Lease; (2) whether the Landlord was in default; (3) whether the Landlord was entitled to receive rent for (i) the Shed Area and (ii) the mezzanine; (4) whether the Tenant had validly exercised its option to extend the Lease for a second five-year term; and (5) the applicable limitation periods for the various claims.

The trial judge found that it was not until the Tenant served a notice of extension in October 2018 that the Landlord raised any serious concerns, including issues about the Shed Area and mezzanine, and TMI. The trial judge rejected the Landlord’s evidence that it had sent Additional Rent statements to the respondent in each of the years 2015 to 2017 setting out the Tenant’s proportionate share of TMI and operating expenses. He concluded that the Landlord had not proven any rent arrears, any default by the Tenant or any other reason for the Landlord to terminate the Lease, and that the Tenant had validly exercised its option to extend the Lease for a second five-year term. He awarded the Tenant damages for breach of the Landlord’s covenant to repair in the sum of $7,159.04.

The trial judge also concluded that the “Rentable Area of the Premises” did not include the mezzanine, and therefore no rent was payable. As for the Shed Area, the trial judge concluded the Landlord was entitled to receive “non-lease-based rent”. The Landlord was awarded the sum of $1,791.80, and the trial judge declared that the Tenant was to continue paying non-lease-based rent at a rate of $52.70 monthly.

The Tenant was awarded costs on a partial indemnity basis in the sum of $116,516.71.

issues:

(1) Did the trial judge err in his approach to the Shed Area by (a) awarding non-lease-based rent at 50% of the combined rent under the Lease; and (b) applying the two-year limitation period under the Limitations Act, 2002, rather than the six-year limitation period applicable to “rent arrears” under the Real Property Limitations Act (RPLA)?

(2) Did the trial judge err in concluding that the mezzanine was not part of the Rentable Area of the Premises?

(3) Did the trial judge err in concluding that the Tenant had validly exercised its option to extend the Lease?

(4) Did the trial judge err in his award of costs?

holding:

Appeal allowed, in part.

reasoning:

(1) Yes, in part.

The Landlord asserted that the trial judge erred in the amount awarded in respect of the Shed Area. The Landlord argued that the trial judge erred by creating a new contract between the parties when he imposed “non-lease-based rent” at a rate of 50% of the rent payable under the Lease instead of the full rate. The Landlord also contended that the trial judge erred in applying the Limitation Act, 2002: it was entitled to rent arrears retroactive to six years prior to the issuance of the counterclaim pursuant to s.17(1) of the RPLA.
The Court held that the trial judge did not err when he declared the Tenant entitled to continued occupation of the Shed Area. The Court also found that it was not an error to fix the rent for the Shed Area at a rate that was 50% of the combined rent under the lease. The Court held that the trial judge provided for a remedy that protected the status quo and was responsive to the respective interests of the parties. The Court found that the trial judge recognized that the Tenant had installed the shed prior to the Commencement Date under the Lease, and that the shed and the equipment it housed were essential to the respondent’s business. The Court noted that the trial judge recognized the Tenant’s continuing right to exclusively occupy the Shed Area going forward, while also accepting that the Landlord was entitled to future rent as well as arrears of rent.

The Court held that the judge did err in regards to the limitation period issue. The Court found that the judge should have applied the six-year limitation period under the RPLA to the Landlord’s claim for arrears. The Court found that although the Shed Area was not part of the Rentable Area of the Premises, that conclusion did not take it outside of the terms of the RPLA. Instead, the Court held that monthly payments for the exclusive occupation of the Shed Area “fit neatly” within the RPLA’s definition of “rent” as they constituted “periodical sums of money charged upon or payable out of land”.

The Court also denied the Tenant’s arguments that the trial judge had awarded “rent in the nature of a license fee”, taking the award outside of the definition of rent arrears under the RPLA. The Court noted that, as the Tenant had ongoing rights to the Shed Area, independent of the Landlord’s agreement, the award of “non-lease-based rent” was consistent with a lease and not a licence.

Finally, the Court also disagreed with the Tenant’s argument that the trial judge had awarded the Landlord damages. The Court held that the Landlord’s claim was consistently referred to as one for rent arrears, and that was precisely what was ordered. Further, the Court held that even if the arrears could be characterized as a form of damages, the six-year limitation period in s.17 of the RPLA applied to rent arrears as well as damages in respect of rent arrears.

(2) No.

During the fixturing period in early 2014, the Tenant constructed an internal mezzanine that sat above an office and washrooms also installed by the Tenant. The Landlord claimed that the mezzanine increased the Rentable Area of the Premises. The trial judge disagreed.
The Court held that in determining whether the mezzanine was included in the Rentable Area of the Premises, the trial judge properly focused on the wording of the Lease. Based on these provisions, the trial judge held that Rentable Area of the Premises simply meant the “square footage measured at the ground floor encompassed within the walls of the building structure”.

The Court held that in coming to this conclusion the trial judge did not err in referring to the offer to lease. The Landlord had relied on the fact that a mezzanine was specifically excluded from the rentable area in the offer to lease, and that it was not mentioned in the Lease itself, to argue that the mezzanine the Tenant installed was part of the rentable area. The Court held that the trial judge was correct to reject this interpretation, and correctly concluded that since the offer to lease specifically excluded the mezzanine that was onsite before the Tenant made its alterations, the omission of any mention of a mezzanine in the Lease represented a mutual understanding that it was not to be included.

The Court also held that the trial judge was correct to consider the communication between the parties, despite the Landlord’s characterization of them as “irrelevant subsequent conduct”. These communications included: (a) the Tenant providing the Landlord with an architectural drawing in 2014 that measured the Rentable Area of the Premises at 5,106 square feet based on the inside surface of all walls, doors, and windows; (b) the Landlord providing the Tenant its own measurement of the space in July 2015, which bore the notation “Mezzanine: Not Measured (as per client’s instructions)”; and (c) the Landlord’s failure to dispute the Tenant’s 2014 architectural drawings.

The Court found that the trial judge was correct to infer from this conduct that the Landlord had accepted that the mezzanine would not be included in the Rentable Area of the Premises. The Court held that given that Article 3.7 of the Lease expressly contemplated further actions which might affect the size of the Rentable Area of the Premises, these communications between the parties were directly relevant to the determination of whether the mezzanine was included.

(3) No

The Court found that the trial judge had accepted that the Tenant gave notice that was clear, explicit, unambiguous and unequivocal. The trial judge had rejected the argument that the notice was invalid because the Tenant purported to exercise the option on conditions. The Court held that the validity of the notice was not affected by the fact that the Landlord subsequently purported to set out a different rate for Additional Rent. Further, the Court held that the notice was not an attempt to unilaterally fix the Tenant’s proportionate share of the TMI and operating expenses for a second five-year term.

The Court also found that, irrespective of how the Lease contemplated written notice to be given, there was no evidence of the Landlord ever delivering notice or communicating by mail. The Court held that the trial judge was correct to find that email was overwhelmingly the preferred method of communication, and this met the condition in the Lease for communication to be given in writing.

(4) No.

The Landlord asserted that the trial judge erred in principle by not considering its own bill of costs in determining the reasonable expectations of the losing party. The Court disagreed, and found that the trial judge referred to the fact that the parties provided both oral and written submissions on costs, and specifically adverted to the Landlord’s position that the Tenant should recover no more than 50% of the reasonable partial indemnity costs.

The Court held that the trial judge determined a reasonable and proportional amount for costs after considering all relevant factors under r.57 of the Rules of Civil Procedure. Accordingly, the Court found no reversible error in the trial judge’s award of costs to the Tenant or in the amount fixed for reasonable partial indemnity costs. The Court also found that the Landlord failed to meet the test for leave to appeal costs, as they had failed to establish “strong grounds upon which [this court] could find that the judge erred in exercising his discretion.”


SHORT CIVIL DECISIONS

Chiappino & Associates Limited v. 6891799 Canada Inc., 2023 ONCA 22

[Lauwers, Huscroft and Miller JJ.A.]

Counsel:

Z. Rehman, for the appellants
T. Watson, for the respondent

Keywords: Costs Endorsement


Taylor v. Hanley Hospital Inc., 2023 ONCA 25

[Roberts, Miller and Zarnett JJ.A.]

Counsel:

L. Samfiru and L. Cerda, for the appellant
I.A. Johncox, for the respondent

Keywords: Costs Endorsement


Kudrocova v. Kronberger, 2023 ONCA 26

[Roberts, Thorburn JJ.A. and Tzimas J. (ad hoc)]

Counsel:

T. Frederick, for the appellant
M.J. Ruhl and K. Gordon, for the respondent

Keywords: Family Law, Parenting, Decision-Making, Parental Alienation, Variation, Material Change in Circumstances


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.