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Good afternoon.
Following are this week’s summaries of the civil decisions of Court of Appeal for Ontario for the week of March 27 to 31, 2023. There were only two substantive decisions. One was a commercial leasing matter, and the other was a receivership matter.
Wishing everyone an enjoyable weekend.
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John Polyzogopoulos
Blaney McMurtry LLP
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Ines Ferreira
Blaney McMurtry LLP
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Table of Contents
Civil Decisions
Jagtoo & Jagtoo, Professional Corporation v. Grandfield Homes Holdings Limited, 2023 ONCA 214
Keywords: Contracts, Real Property, Commercial Leases, Renewal, Market Rent, Duty of Good Faith, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 133(b), Rules of Civil Procedure, r. 61.03.1(17), Bhasin v. Hrynew, 2014 SCC 71, Empress Towers Ltd. v. Bank of Nova Scotia (1990), 73 D.L.R. (4th) 400, Byers (Litigation Guardian of) v. Pentex Print Masters Industries Inc. (2003), 62 O.R. (3d) 647 (C.A.), Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92
KingSett Mortgage Corporation v. 30 Roe Investments Corp., 2023 ONCA 219
Keywords: Bankruptcy and Insolvency, Receiverships, Sale Process, Civil Procedure, Approval Orders, Appeals, Leave to Appeal, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 193(e), 195, Royal Bank of Canada v. Soundair Corporation (1991), 83 D.L.R. (4th) 76 (Ont. C.A.), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, MNP Ltd. v. Wilkes, 2020 SKCA 66, Re Harmon International Industries Inc., 2020 SKCA 95, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, Impact Tool & Mould Inc. v. Impact Tool & Mould Inc. Estate, 2013 ONCA 697
Short Civil Decisions
Soo Mill and Lumber Company Ltd. v. Pozzebon, 2023 ONCA 215
Keywords: Construction, Costs, Construction Lien Act, R.S.O. 1990, c. C.30
LaRochelle v. Elite Environments Inc., 2023 ONCA 206
Keywords: Breach of Contract, Damages, Unjust Enrichment, Garland v. Consumers’ Gas Co., 2004 SCC 25
Sidiqi v. Ahmadzai, 2023 ONCA 213
Keywords: Family Law, Child Support, Best Interests of the Child, Civil Procedure, Costs, Rules of Civil Procedure, r. 56.01, 61.06
Capone v. Fotak, 2023 ONCA 212
Keywords: Family Law, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 133(b)
Niagara Falls Shopping Centre Inc. v. LAF Canada Company, 2023 ONCA 228
Keywords: Contracts, Interpretation, Commercial Leases, Landlord and Tenant, COVID-19 Restrictions, Civil Procedure, Costs
Halliday-Shaw v. Grieco, 2023 ONCA 226
Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, CRA Clearance Certificates, Holdback, Remedies, Specific Performance, Civil Procedure, Summary Judgment, Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) s. 116, Ching v. Pier 27 Toronto Inc., 2021 ONCA 551, Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52
CIVIL DECISIONS
Jagtoo & Jagtoo, Professional Corporation v. Grandfield Homes Holdings Limited, 2023 ONCA 214
[Tulloch, Thorburn and George JJ.A.]
Counsel:
J. Jagtoo and F. Jagtoo, for the appellant
M. Doyle and S. Jamshidimoghadam, for the respondent
Keywords: Contracts, Real Property, Commercial Leases, Renewal, Market Rent, Duty of Good Faith, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 133(b), Rules of Civil Procedure, r. 61.03.1(17), Bhasin v. Hrynew, 2014 SCC 71, Empress Towers Ltd. v. Bank of Nova Scotia (1990), 73 D.L.R. (4th) 400, Byers (Litigation Guardian of) v. Pentex Print Masters Industries Inc. (2003), 62 O.R. (3d) 647 (C.A.), Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92
facts:
This appeal arises out of an action between a small law firm, the appellant, and its landlord, the respondent. The lease between the appellant and the respondent was set to expire on October 31, 2021, but included a renewal clause which stated that the appellant could renew the lease for three years provided the parties agreed on the basic rent, which was to be based on the then market rate. The parties could not agree on the basic rent. After several months of negotiations, on September 1, 2021, the appellant offered $14 per square foot for a three-year term. A week later, on September 8, 2021, the respondent made a formal offer to settle. The lease would be renewed at $14.50 per square foot for three years, and it would also resolve all issues relating to previous renovations of the property, the thermostat in the rental unit, and the calculation of additional rent. This offer was not accepted, and the lease was not renewed.
In April 2022, the appellant filed an application against the respondent, requesting, among other things, that the court: (a) find that it had jurisdiction to set the market rate for the basic rent; (b) set the market rate and extend the lease for three years; and (c) find that the respondent breached its duty to act in good faith. The application was dismissed because the lease had a “failure clause,” which meant that the respondent could not be compelled to accept a renewal tenancy at a rate that it did not agree to. Unless there was a breach of the duty to act in good faith, which there was not, the court could not set the market rate and extend the lease.
In his costs order, the application judge acknowledged that the respondent, as the successful party, was entitled to its costs and that the respondent should not get costs for an earlier unsuccessful cross-motion to have Mr. J removed as counsel. The application judge ordered partial indemnity costs up to the amount of the respondent’s final offer to settle in September 2022, and substantial indemnity costs thereafter. He held that the appellant’s “decision to reject the September 8th offer and risk so much for so little was remarkable and cannot be condoned or encouraged.” He fixed costs at $40,356.
In addition to responding to the appellant’s motion, the respondent had filed a cross-motion to remove Mr. J as the appellant’s counsel or to compel the appellant to appoint a solicitor of record. The cross-motion was dismissed and the motion judge ordered costs to the appellant on a partial indemnity basis, and at a fraction of what had been requested, because the costs submitted by the appellant were “grossly inflated.” Accordingly, costs were fixed at $2,000.
issues:
(1) Did the application judge err in finding the respondent did not breach its duty to act in good faith?
(2) Did the application judge err in dismissing the appellant’s objection to the respondent’s expert evidence without providing reasons for doing so?
(3) Did the application judge err in refusing to exercise the court’s equitable jurisdiction to compensate the appellant for the cost of renovations?
(4) Did the application judge err in ordering substantial indemnity costs to the respondent for the application?
(5) Should leave to appeal the costs order from the dismissed cross-motion be granted?
holding:
Appeal dismissed.
reasoning:
(1) No.
The Court held that there was no reversible error in the application judge’s reasons and did not interfere with his findings. The Court found that the application judge appreciated and carefully weighed both parties’ evidence, was alive to the parties’ respective final offers to settle, and properly applied the principle of good faith to ultimately find that the respondent was not in breach of the duty of good faith.
(2) No.
The Court found that the application judge did not err in his use of the expert evidence. The application judge’s supplementary reasons expressed that the appellant’s objection to the evidence was rejected because the appellant’s attack on the honesty and credibility of the expert on market rent was “wholly devoid of merit and should not have been made.”
(3) No.
The Court found no reversible error and no basis to interfere with the application judge’s decision as the appellant failed to provide any written submissions on this alternative relief being sought. As a result, it was open to the application judge to dismiss this request for relief.
(4) No.
The Court found that it was reasonable and within the application judge’s discretion to award costs on a substantial indemnity basis following the respondent’s offer to settle for $14.50 per square foot in September 2021.
(5) No.
The appellant sought leave to appeal the costs order from the respondent’s unsuccessful cross-motion by relying on s. 133(b) of the Courts of Justice Act and r. 61.03.1(17) of the Rules of Civil Procedure to join the request for leave with the main appeal as of right. However, the Court found that this was not a proper application of r. 61.03.1(17) because the cross-motion was heard and decided before the application and its dismissal resulted in a final order. Consequently, the Court found that the cross-motion was separate from the application, which was the main proceeding under appeal.
The Court therefore held that is was not permissible for the appellant to join its request for leave to appeal the costs order from the cross-motion with its appeal of the application. Nevertheless, given the lack of prejudice to either party, and for the purpose of expediency, the Court granted the appellant an indulgence and decided the matter, finding that the appellant did not meet the high threshold needed for leave to appeal a costs order to be granted.
KingSett Mortgage Corporation v. 30 Roe Investments Corp., 2023 ONCA 219
[Brown, Trotter and Paciocco JJ.A.]
Counsel:
M. Dunn, for the moving party Receiver, KSV Restructuring Inc.
Mervyn Abramowitz and Lou Brzezinski, for the responding party 30 Roe Investments Corp.
R. Swan, for the respondent KingSett Mortgage Corporation
D. Marr, for the Canadian Imperial Bank of Commerce
R.Z., acting in person in his capacity as a guarantor of the responding party’s debt
Keywords: Bankruptcy and Insolvency, Receiverships, Sale Process, Civil Procedure, Approval Orders, Appeals, Leave to Appeal, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 193(e), 195, Royal Bank of Canada v. Soundair Corporation (1991), 83 D.L.R. (4th) 76 (Ont. C.A.), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, MNP Ltd. v. Wilkes, 2020 SKCA 66, Re Harmon International Industries Inc., 2020 SKCA 95, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, Impact Tool & Mould Inc. v. Impact Tool & Mould Inc. Estate, 2013 ONCA 697
facts:
A Receiver was appointed by the court to take control of the property of the respondent, 30 Roe Investments Corp. (“30 Roe”). The relevant property for the purpose of this proceeding was nine units owned by 30 Roe at the Minto 30 Roe condominium building. On July 18, 2022, the Receiver was granted a Sale Process Approval Order from McEwen J. to proceed with individual unit sales (the “July Sales Order”). 30 Roe submitted that the nine units should be sold en bloc, but this submission was rejected and no appeal was taken from that order.
In January 2023, the Receiver negotiated terms for the sale of two of the nine units and moved for approval of the transaction. 30 Roe once again submitted that the more lucrative avenue to pursue was an en bloc sale. On February 7, 2023, Steele J. approved the transaction, noting that the same argument regarding the en bloc sale had been rejected by McEwen J. On February 23, 2023, 30 Roe served a Notice of Appeal of the Approval Orders. The Receiver then brought this motion for an order quashing the appeal.
The Court first sorted through several procedural matters prior to addressing the motion. One issue was with respect to the responding factum. The individual acting in their capacity as a guarantor of 30 Roe’s debts (the “Guarantor”) had originally instructed counsel not to file responding material. The Guarantor then changed his instructions in open court. The Court stated that it appeared that there was a breakdown in the lawyer-client relationship. Therefore, the Court instructed the Guarantor, if he wished to do so, to file responding material. The Guarantor opted not to do so, and the motion proceeded with the Receiver’s submissions.
issues:
(1) Does 30 Roe have a right to appeal the Approval Orders under s. 193 of the Bankruptcy and Insolvency Act (the “BIA”)?
(2) Should the Court grant leave to appeal pursuant to s. 193(e) of the BIA?
holding:
Motion granted.
reasoning:
(1) No.
30 Roe first argued that it had a right of appeal pursuant to s. 193(a) of the BIA because the point in issue involved “future rights.” The Court noted that future rights has been interpreted to include only future legal rights, as opposed to procedural rights or commercial advantages. In this case, the Notice of Appeal challenged the Approval Orders on the basis of the methodology, or procedure, followed by the Receiver for the unit sale process and alleged commercial disadvantages caused by that process. 30 Roe’s appeal concerned rights that presently existed, not ones that may be exercised in the future.
Furthermore, 30 Roe submitted that an appeal as of right existed under s. 193(c) because the property involved exceeded $10,000 in value. However, the Approval Orders permitted the Receiver to proceed with the transactions in accordance with the authorized listing price. There was no evidence submitted by 30 Roe to suggest that the listing prices were unreasonable or contrary to prevailing market conditions. Therefore, the Court noted that the transactions did not result in a “loss” of value. Instead, the transaction was opposed based on the assertion of the Guarantor that an en bloc sale would generate more value. However, this argument was rejected by both McEwen J. and Steele J. There was no legal basis to advance the argument again after failing to appeal the July and December Approval Orders.
Lastly, 30 Roe argued that s. 193(b) of the BIA was engaged, which has been interpreted to grant a right of appeal where “the decision in question will likely affect another case raising the same or similar issues in the same bankruptcy proceedings” as the provision concerns “real disputes” likely to affect other cases raising the same or similar issues in the same bankruptcy or receivership proceedings. The Court noted that, by failing to appeal and set aside the July and December Approval Orders, 30 Roe lost the legal basis to advance an argument that the Approval Orders – or subsequent approval orders for other individual units – would create a loss of value. Therefore, the Court quashed the appeal.
(2) No.
In considering whether to grant leave to appeal an order under s. 193(e) of the BIA, a court will look to whether the proposed appeal: (i) raises an issue that is of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole; (ii) is prima facie meritorious; and (iii) would unduly hinder the progress of the bankruptcy/insolvency proceedings. The Court held that the required conditions were not met to grant leave to appeal in this case, and noted that doing so may hinder the progress of the receivership and put the approved transactions in jeopardy.
SHORT CIVIL DECISIONS
Soo Mill and Lumber Company Ltd. v. Pozzebon, 2023 ONCA 215
[van Rensburg, Huscroft and George JJ.A.]
Counsel:
M. A. J. Huneault, for the moving parties, F.P., T. P., N. P., and FP Contracting (GP)
G. P. Acton and M. Carella, for the respondents R. A. C., J. C., and R&J Holdings Inc.
M. Mazzuca and B. Masters, for the responding party
Keywords: Construction, Costs, Construction Lien Act, R.S.O. 1990, c. C.30
LaRochelle v. Elite Environments Inc., 2023 ONCA 206
[Benotto, Trotter and Zarnett JJ.A.]
Counsel:
R. J. Kennaley, for the appellants
R. K. Brown, for the respondents A. S. and Elite Environments Inc.
A. Colangelo, for the respondents L. S. and Landscape by Evergreen Ltd.
Keywords: Breach of Contract, Damages, Unjust Enrichment, Garland v. Consumers’ Gas Co., 2004 SCC 25
Sidiqi v. Ahmadzai, 2023 ONCA 213
[Pardu J.A. (Motion Judge)]
Counsel:
A. W. S., acting in person
R. Paritzky, for the moving party
Keywords: Family Law, Child Support, Best Interests of the Child, Civil Procedure, Costs, Rules of Civil Procedure, r. 56.01, 61.06
Capone v. Fotak, 2023 ONCA 212
[van Rensburg, Huscroft and George JJ.A.]
Counsel:
H. Niman and M. DeGroot, for the moving party
Z. F., acting in person
Keywords: Family Law, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 133(b)
Niagara Falls Shopping Centre Inc. v. LAF Canada Company, 2023 ONCA 228
[Gillese, Tulloch and Roberts JJ.A.]
Counsel:
J. Haylock and E. Young, for the appellants
H. Pitch and A. Brunswick, for the respondent
Keywords: Contracts, Interpretation, Commercial Leases, Landlord and Tenant, COVID-19 Restrictions, Civil Procedure, Costs
Halliday-Shaw v. Grieco, 2023 ONCA 226
[Lauwers, Paciocco and Thorburn JJ.A.]
Counsel:
D. Vaillancourt, for the appellant
A. Huff, for the respondents
Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, CRA Clearance Certificates, Holdback, Remedies, Specific Performance, Civil Procedure, Summary Judgment, Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) s. 116, Ching v. Pier 27 Toronto Inc., 2021 ONCA 551, Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52
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.