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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 April 10, 2023.

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100 Bloor Street West Corporation v. Barry’s BootCamp Canada Inc. is a commercial lease interpretation case regarding the landlord’s allocation of property taxes between the various leased units in the building.

Baffindland Iron Mines LP v. Tower-EBC G.P./S.E.N.C. is an arbitration case dealing with whether there were appeal rights.

Pham v. Qualified Metal Fabricators Ltd. is a wrongful dismissal case arising out of a layoff during the pandemic. The appeal from a summary judgment was allowed and the matter was remitted back to the Superior Court for a trial of the issues.

Quantum Dealer Financial Corporation v. Toronto Fine cars and Leasing Inc. is a debtor-creditor case. The respondent finances used car fleets. The appellants were the used car dealership borrower, and its principals. The cars were sold in a fire sale and the proceeds were not remitted to the lender, in breach of trust. The respondent obtained summary judgment against the borrower and its principals for, among other things, knowing assistance of breach of fiduciary duty and knowing receipt of trust property. The Court allowed the appeal, holding that a rejection of the appellants’ evidence was not enough to support a finding of knowing assistance and knowing receipt. There had to be some positive evidence to support such findings.

Wishing everyone an enjoyable weekend and a Happy Easter to those of the orthodox faith.

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

Table of Contents

Civil Decisions

Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C. , 2023 ONCA 245

Keywords: Contracts, Interpretation, Presumption of Consistent Expression, Construction, Arbitration Agreements, Appeal Rights, Arbitration Act, 1991, S.O. 1991, c. 17, ss. 45(1) and ss. 45(2), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Rules of Arbitration of the International Chamber of CommerceHillmond Investments Ltd. v. Canadian Imperial Bank of Commerce (1996), 29 O.R. (3d) 612 (C.A.), Denison Mines Ltd. v. Ontario Hydro (2001), 56 O.R. (3d) 181 (C.A.), Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Healy v. Gregory (2009), 75 C.C.P.B. 178 (Ont. S.C.), Labourers’ International Union of North America, Local 183 v. Carpenters and Allied Workers Local 27 (1997), 34 O.R. (3d) 472 (C.A.), Interactive E-Solutions JLT & Anor v. O3b Africa Ltd., [2018] EWCA Civ 62, Yorkville North Development Ltd. v. North York (City) (1988), 64 O.R. (2d) 225 (C.A.), Fuller v. Aphria Inc., 2020 ONCA 403, Kim Lewison, The Interpretation of Contracts, 4th ed. (London, U.K.: Smith & Maxwell, 2007),  J. Brian Casey, Arbitration Law of Canada: Practice and Procedure, 3rd ed. (Huntington, N.Y.: JurisNet, 2017)

Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255

Keywords: Contracts, Employment, Wrongful Dismissal, Constructive Dismissal, Layoffs, Implied Terms, Condonation, Civil Procedure, Summary Judgment, Genuine Issue Requiring Trial, Employment Standards Act, 2000, S.O. 2000, c. 41, ss. 5(2), 8(1), 56, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134, Rules of Civil Procedure, r. 20.04(2), Manthadi v. ASCO Manufacturing, 2020 ONCA 485, Singh v. Concept Plastics Limited, 2016 ONCA 815, Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831, Stolze v. Addario (1997), 36 O.R. (3d) 323 (C.A.), Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076, Michalski v. Cima Canada Inc., 2016 ONSC 1925, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, Miranda v. Respiratory Services Limited, 2022 ONSC 6094, Bevilacqua v. Gracious Living Corporation, 2016 ONSC 4127, Kurt v. Idera Inc., 2016 ONSC 3799, Hefkey v. Blanchfield, 2020 ONSC 2438, Martellacci v. CFC/INX Ltd. (1997), 10 C.P.C. (4th) 143, Greaves v. Ontario Municipal Employees Retirement Board (1995), 129 D.L.R. (4th) 347, McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816, Belton v. Liberty Insurance Co. of Canada (2004), 72 O.R. (3d) 81, Andrews v. Allnorth Consultants Ltd., 2021 BCSC 1246, Muntean v. Enablence Canada Inc., 2016 ONSC 923

100 Bloor Street West Corporation v. Barry’s BootCamp Canada Inc., 2023 ONCA 247

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Civil Procedure, Appeals, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ledcor Construction Ltd. v Northbridge Indemnity Insurance Co., 2016 SCC 37, Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7

Quantum Dealer Financial Corporation v. Toronto Fine Cars and Leasing Inc., 2023 ONCA 256

Keywords: Torts, Fraud, Breach of Fiduciary Duty, Knowing Assistance of Breach of Fiduciary Duty, Knowing Receipt of Trust Property, Civil Procedure, Summary Judgment,Evidence, Credibility, Inferences, Rules of Civil Procedure, r. 20.04(2.1), Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Garcia, 2020 ONCA 412, Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, Waxman v. Waxman, (2004) 186 O.A.C. 201 (C.A.), Haynes v. Haynes, 2017 BCCA 131, Malak v. Hanna, 2019 BCCA 106, Eileen Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014)

Short Civil Decisions

Tewari v. Singh, 2023 ONCA 249

Keywords: Employment Law, Wrongful Dismissal, Civil Procedure, Default Judgments, Rules of Civil Procedure, r. 59.06(1)

NDrive, Navigation Systems S.A. v. Zhou, 2023 ONCA 239

Keywords: Civil Procedure, Interlocutory Orders, Mareva Injunctions, Appeals, Jurisdiction, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 19, NDrive, Navigation Systems v. Zhou et al., 2021 ONSC 7366, NDrive, Navigation Systems v. Zhou, 2021 ONSC 7772, NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 602, Hendrickson [Hendrickson v. KalIio, [1932] O.R. 675 (C.A.), Drywall Accoustic v. SNC Lavalin, 2020 ONCA 375, Ball v. Donais (1993), 13 O.R. (3d) 322 (C.A.), Sun Life Assurance Co. of Canada v. York Ridge Developments Ltd., 1998 CarswellOnt 4534 (C.A.)

Yan v. Cortes, 2023 ONCA 248

Keywords: Torts, Defamation, Constructive Discrimination, Harassment, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action

Goberdhan v. Knights of Columbus, 2023 ONCA 269

Keywords: Civil Procedure, Appeals, Reply Factums, Arbitration, Arbitration Act, 1991, S.O. 1991, c. 17, s 7(6), Rules of Civil Procedure, r. 61.03.1(11), Criminal Appeal Rules, r. 40(8), Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 4


CIVIL DECISIONS

Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245

[Zarnett, Thorburn and Copeland JJ.A.]

Counsel:

K. Thomson, S. Campbell, A. Hassan, M. Littlejohn, A. Alexander and T. May, for the appellants

I. Nishisato, H. Meighen, E. Peters and S. Gagné, for the respondent

Keywords: Contracts, Interpretation, Presumption of Consistent Expression, Construction, Arbitration Agreements, Appeal Rights, Arbitration Act, 1991, S.O. 1991, c. 17, ss. 45(1) and ss. 45(2), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Rules of Arbitration of the International Chamber of CommerceHillmond Investments Ltd. v. Canadian Imperial Bank of Commerce (1996), 29 O.R. (3d) 612 (C.A.), Denison Mines Ltd. v. Ontario Hydro (2001), 56 O.R. (3d) 181 (C.A.), Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Healy v. Gregory (2009), 75 C.C.P.B. 178 (Ont. S.C.), Labourers’ International Union of North America, Local 183 v. Carpenters and Allied Workers Local 27 (1997), 34 O.R. (3d) 472 (C.A.), Interactive E-Solutions JLT & Anor v. O3b Africa Ltd., [2018] EWCA Civ 62, Yorkville North Development Ltd. v. North York (City) (1988), 64 O.R. (2d) 225 (C.A.), Fuller v. Aphria Inc., 2020 ONCA 403, Kim Lewison, The Interpretation of Contracts, 4th ed. (London, U.K.: Smith & Maxwell, 2007),  J. Brian Casey, Arbitration Law of Canada: Practice and Procedure, 3rd ed. (Huntington, N.Y.: JurisNet, 2017)

facts:

BIM and TEBC entered into two virtually identical contracts in 2017 that provided for TEBC to perform earthworks for BIM’s construction of a railway to transport ore from its mine on Baffin Island, Nunavut, to a nearby port.

The contracts were primarily Fédération Internationale des Ingénieurs-Conseils (“FIDIC”) standard form construction contracts which the parties modified in respect of certain matters. The dispute resolution provisions of the contracts, which included provisions that constituted their arbitration agreement, were not modified from the FIDIC form.

The dispute resolution provisions of the contracts provided three pathways to resolution of a dispute. Either party was entitled to refer a dispute to a Dispute Adjudication Board (“DAB”), which the contracts deemed not to be an arbitration. In some circumstances, the DAB’s decision would be “final and binding”. The contracts also provided that a dispute could be settled amicably. If there was a dispute that was neither the subject of a final and binding decision of a DAB nor had been settled amicably, such dispute was to be “finally settled” by arbitration.

Rule 35(6) of the Rules of Arbitration of the International Chamber of Commerce (“ICC”), which the application judge found had been incorporated into the contracts, provided: “Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.”
The dispute that gave rise to the arbitration award at issue arose from BIM’s 2018 termination of the contracts due to delays. TEBC commenced the arbitration in 2018, and filed a statement of claim in 2019, challenging BIM’s right to terminate the contracts and claiming damages arising from the termination. The arbitration of that dispute took place pursuant to the ICC Rules before a three-member tribunal: M. Goldstein (the Tribunal President), J. Keefe (the arbitrator nominated by TEBC) and the Honourable I. Binnie (the arbitrator nominated by BIM). It concluded with a December 9, 2020 majority award by Messrs. Goldstein and Keefe and a partial dissent by Mr. Binnie, with a final award on costs in May 2021.

The application judge described the question of whether the contracts precluded an appeal on a question of law as the preliminary issue on BIM’s application for leave to appeal under s. 45(1) of the Arbitration Act.

The application judge accepted TEBC’s argument that the parties had contracted out of all rights of appeal by s. 20.6 of the contracts, given its reference to disputes being finally settled by arbitration, as well as by virtue of the incorporation of ICC Rule 35(6) into the contracts. In light of his decision that the contracts precluded appeals, the application judge stated that he did not “intend to address BIM’s submission in respect of its request for leave and, in particular, the alleged legal errors it has raised in respect of the Majority Award”. He dismissed BIM’s application for leave to appeal.

TEBC argued that there was no right to appeal to the Court from the application judge’s denial of leave to appeal on the basis that the Arbitration Act itself was silent on any right to appeal from a denial of leave to appeal, and that the general rule was that there is no appeal to the Court from a refusal of leave to appeal by the Superior Court.

However, BIM argued that the application judge’s interpretation of the arbitration provisions of the contracts was subject to appellate review on a standard of correctness, given that the provisions are standard form. BIM also argued that no deference was owed to the application judge’s interpretation because it was the product of extricable legal errors.

issues:

(1) Did the application judge fail to properly apply the contractual principle known as the presumption of consistent expression?

(2) Did the application judge err in not applying the principle that apparently inconsistent terms in a contract are to be reconciled in accordance with the priority of terms to which the parties have expressly agreed?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court found that the application judge did not fail to properly apply the presumption of consistent expression. The Court clarified that the presumption of consistent expression should not be seen to bar the use of differently worded but mutually reinforcing phrases which can only be understood to have the same meaning. The Court agreed with the application judge that the presumption did not require “finally settled” to have a different meaning from “final and binding”. The ordinary and grammatical meaning of “finally settled” by arbitration, when situated in the context of the contracts’ dispute resolution provisions, clearly meant no further recourse by way of appeal, in the same way as “final and binding” would.

(2) No.

The Court held that the application judge was correct in finding that the terms were not inconsistent and, as such, the principle did not apply. The Court explained that, before the interpretive principles concerning reconciling apparently inconsistent terms are to be applied, the terms must be apparently inconsistent in the sense, for example, of one appearing to say “yes” while the other appears to say “no” to the same question. The Court noted that s. 20.6 of the contracts was properly interpreted to preclude appeals, just as the wording of the ICC Rule 35(6) did.


Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255

[Brown, Trotter and Paciocco JJ.A.]

Counsel:

D. Vaughan and J. Pinkus, for the appellant

C. Ashton and S. Malhotra, for the respondent

Keywords: Contracts, Employment, Wrongful Dismissal, Constructive Dismissal, Layoffs, Implied Terms, Condonation, Civil Procedure, Summary Judgment, Genuine Issue Requiring Trial, Employment Standards Act, 2000, S.O. 2000, c. 41, ss. 5(2), 8(1), 56, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134, Rules of Civil Procedure, r. 20.04(2), Manthadi v. ASCO Manufacturing, 2020 ONCA 485, Singh v. Concept Plastics Limited, 2016 ONCA 815, Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831, Stolze v. Addario (1997), 36 O.R. (3d) 323 (C.A.), Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076, Michalski v. Cima Canada Inc., 2016 ONSC 1925, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, Miranda v. Respiratory Services Limited, 2022 ONSC 6094, Bevilacqua v. Gracious Living Corporation, 2016 ONSC 4127, Kurt v. Idera Inc., 2016 ONSC 3799, Hefkey v. Blanchfield, 2020 ONSC 2438, Martellacci v. CFC/INX Ltd. (1997), 10 C.P.C. (4th) 143, Greaves v. Ontario Municipal Employees Retirement Board (1995), 129 D.L.R. (4th) 347, McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816, Belton v. Liberty Insurance Co. of Canada (2004), 72 O.R. (3d) 81, Andrews v. Allnorth Consultants Ltd., 2021 BCSC 1246, Muntean v. Enablence Canada Inc., 2016 ONSC 923

facts:

The appellant is a welder who began his employment with the respondent on October 16, 2000. When he was laid off, he was 51 years old and had worked for the respondent for almost 20 years. The respondent suffered significant financial losses as a result of the global pandemic. As a result, in March 2020, the respondent laid off 31 of its 140 employees including 11 of its 18 welders, one of whom was the appellant. The appellant was provided with a Layoff Letter, which stated that it was necessary to put him on temporary layoff for 13 weeks. The Layoff Letter appeared to be signed by the appellant. On June 2, 2020, the layoff was extended by the respondent for a period of “up to 35 weeks”. It was extended again on September 23, 2020, and again on December 9, 2020 until September 4, 2021.
In December 2020, the appellant consulted a lawyer. On December 22, 2020, the appellant’s counsel wrote to the respondent to advise that he was bringing a claim for wrongful dismissal. On December 24, 2020, the respondent replied, saying that the appellant signed a document agreeing to the layoff and that he hoped the appellant could be recalled in a few weeks.

The appellant brought a claim for wrongful dismissal. The respondent brought a motion for summary judgment to dismiss the claim on the basis that the appellant had agreed to or condoned the layoffs. After originally taking the position that summary judgment was appropriate, the appellant changed his position shortly before the hearing. Nonetheless, the motion judge granted summary judgment dismissing the claim for wrongful dismissal.

issues:

(1) Did the motion judge err in granting summary judgment?

(2) Was there a genuine issue requiring trial?

holding:

Appeal allowed.

reasoning:

(1) Yes.

Although the appellant had originally agreed to have the claim determined by summary judgment, this position changed prior to the hearing. Therefore, summary judgment could only be granted if there was no genuine issue requiring a trial. Due to the fact that the motion judge operated on the mistaken belief that the parties had agreed to proceed with summary judgment, he did not determine whether it was fair and just to proceed summarily. Furthermore, the motion judge did not acknowledge that the appropriateness of proceeding by summary judgment was in dispute. The Court stated that this was an error in principle.

Next, the Court stated that it was not clear that there was no genuine issue requiring a trial. This finding was based on the fact that the appellant had not cross-examined the respondents, conducted examinations for discovery, or had a full opportunity to adduce evidence. Most importantly, the motion judge appeared to base his decision on an incorrect view of the applicable law on constructive dismissal, layoffs, and implied terms. Therefore, the Court allowed the appeal of the summary judgment decision.

(2) Yes.

Pursuant to s. 134 of the Courts of Justice Act, the Court may make any decision that ought to have been made by the lower court being appealed from. Therefore, it was necessary to determine if there was a genuine issue requiring a trial. The potential issues that may require a trial were whether there was an implied term in the appellant’s employment contract which permitted layoffs such that there was not a constructive dismissal, and whether the appellant condoned the layoffs.

Constructive dismissal can be established by either (i) the employer’s breach of an essential term of the employment contract, or (ii) a course of conduct by the employer that establishes that it no longer intends to be bound by the employment contract. Absent an express or implied term in an employment agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment contract that constitutes constructive dismissal.

The fact that a co-worker had been previously laid off does not create a legal basis for the employer to impose a layoff on the employee. The right to impose a layoff as an implied term must be notorious, even obvious, from the facts of a particular situation. Furthermore, even though layoffs up to 35 weeks can be permitted through s. 56 of the Employment Standards Act (“ESA”), the ESA does not displace greater contractual or common law rights and protections. In other words, the fact that a layoff was conducted in accordance with the ESA “is irrelevant to the question of whether it is a constructive dismissal”.

The respondent argued that it had an implied right to lay off the appellant due to its past practice of laying off employees in 2009. The respondent further claimed that by September 2020, most of the respondent’s welders had been recalled and the appellant was therefore “undoubtedly aware” that he would soon be recalled. The Court rejected this argument, repeating that the layoff of other employees does not imply a contractual term into the contract of another employee. The Court held that the respondent did not meet its onus to prove that there was an implied term, and thus failed to show that there was no genuine issue requiring a trial on this point.

Next, the respondent argued that the appellant condoned the layoff, which was a defence to a claim of constructive dismissal. Condonation requires a determination that, viewed objectively, the employer would believe at the time that the employee “consented freely to the change”.

The Court stated that, on the record before him, the motion judge erred in determining that there was no genuine issue regarding condonation. First, even if the appellant did in fact sign the Layoff Letter, there was no evidence that this was any more than an acknowledgment of the terms of the layoff. Second, the fact that the appellant contacted a lawyer is not evidence that he had knowledge of the ramifications of the layoff or consented to the layoff. In fact, he received legal advice after the layoff had been extended multiple times, and he asserted his claim just days after contacting the lawyer. Third, the evidence did not permit the conclusion that the appellant’s failure to object constituted condonation. However, in considering the effect of the appellant’s silence in the face of these layoffs, the motion judge made two key extricable legal errors: (1) he failed to consider that an employee is permitted reasonable time to assess contractual changes before they are forced to take an irrevocable legal position, and (2) there was no evidence of a positive action constituting the condonation, which is a requirement.

Accordingly, the Court concluded that there was no evidence capable of supporting the motion judge’s conclusion that the wrongful dismissal action should be dismissed. On the contrary, on the evidence before the Court, there was a live issue as to whether there was condonation. The action was remitted back to the Superior Court for a trial of the issues.


100 Bloor Street West Corporation v. Barry’s BootCamp Canada Inc., 2023 ONCA 247

[Lauwers, Paciocco and Thorburn JJ.A.]

Counsel:

M. Dunn and K. Cohen, for the appellant

H. Wolch, S. Thiele and S. Longo, for the respondent

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Civil Procedure, Appeals, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ledcor Construction Ltd. v Northbridge Indemnity Insurance Co., 2016 SCC 37, Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7

facts:

Barry Bootcamp Canada Inc. (“BB”) negotiated a commercial leasehold agreement with 100 Bloor Street West Corporation (“100 Bloor”) to rent a “standard unit” premises (the “rental premises”), which carried a lower square-foot rent than a “superior unit”, which have ground floor frontage on Bloor Street.

The lease was a “triple net lease” under which BB agreed to pay “base rent” as well as “operating expenses” and “realty taxes”. BB drafted the “Realty Taxes” calculation clause, which provided alternative methods of calculating the realty taxes that BB must pay, depending upon whether the “Taxing Authority” assesses the rental premises separately. If the Taxing Authority does so, then that separate assessment was to be used. But if the Taxing Authority does not assess the rental premises separately, and instead provides a single tax bill for the entire building, then the lease provided that “the Landlord shall determine, in its sole and unfettered discretion, the portion of the Realty Taxes attributable to the Leased Premises using such method of determination which the Landlord shall choose” (what the Court called the “discretionary attribution subclause”).

The City of Toronto (the Taxing Authority), issued a global realty tax bill to 100 Bloor, using a “Current Value” assessment determined by the Municipal Property Assessment Corporation (“MPAC”). Since the City of Toronto did not impose taxes separately for BB’s rental premises, the parties agreed that 100 Bloor was entitled to determine BB’s share of realty taxes using the discretionary attribution subclause.

100 Bloor attributed realty taxes to BB using the Proportionate Share calculation which it based on the percentage that BB’s space comprised of the total retail space in the building, an 11.878% share. Given that BB’s space was less valuable, if 100 Bloor had used the Current Value assessment of BB’s rental premises, BB would be liable to pay a lower share of the realty taxes, between a 4.06 and 5.06% share. The application judge held that 100 Bloor’s Proportionate Share method of ascribing realty tax was one that the lease reasonably permitted.

issues:

Did the application judge commit an extricable error of law by erroneously identifying the purpose of the discretionary attribution subclause, thereby applying a mistaken assessment of reasonableness?

holding:

Appeal dismissed.

reasoning:

No.

The Court held that this was a negotiated lease, not a standard form contract. The factual matrix of the lease was specific to the parties, and its interpretation had no precedential value. Absent an extricable error of law, the review of the application judge’s interpretation of this lease must therefore have been conducted using a palpable and overriding error standard of review.

The application judge accurately stated the legal test for the reasonable exercise of discretion and measured the reasonableness of 100 Bloor’s exercise of discretion against the purpose he identified for the discretionary attribution subclause. BB’s argument that the application judge committed an extricable error of law by identifying the “function” of the discretionary attribution subclause instead of its “purpose” was no more than an expression of disagreement with the purpose the application judge identified.

The application judge’s conclusion was reasonable. The discretionary attribution subclause, which BB negotiated and drafted, described 100 Bloor’s discretion in the widest possible terms, as “sole and unfettered”. Moreover, the evidence showed that the Proportionate Share calculation is a commonly used method for sharing retail taxes in commercial leases. The language in the lease was anything but clear in demanding that 100 Bloor must use its discretion to attempt to identify the taxes that have been imposed against the premises, instead of using the commonly employed Proportionate Share calculation.

First, the discretionary attribution subclause was only triggered if realty taxes for the leased premises were not separately assessed. It was not clear how taxes imposed against the premises were to be calculated where no such assessment had been made.

Second, the lease used inconsistent terms in describing the relationship between realty taxes and the premises. Clearer language would have been needed throughout the lease to sustain BB’s position that the attribution must represent an attempt to quantify the realty taxes imposed against the premises.

Third, the fact that the “Occupancy Costs” clause used the term “Proportionate Share of Operating Expenses” but spoke only of the “Tenant’s share of Realty Taxes” without using the modifier “proportionate”, did not support an inference that realty taxes were not to be quantified by proportionate share. Adding the modifier “proportionate” to the description of the general obligation to pay realty taxes would have provided an inaccurate description of the realty taxes owed where units are separately assessed. The Court noted that the term “proportionate” was reserved in the occupancy costs clause to describe operating expenses and was not included when describing the realty tax obligation. The Court held that this contrast could not have been taken as indicating that realty taxes cannot be proportionate.


Quantum Dealer Financial Corporation v. Toronto Fine Cars and Leasing Inc., 2023 ONCA 256

[Pepall, Trotter and Thorburn JJ.A.]

Counsel:

A. Crawley and M. Fournie, for the appellants

T. Frankel, C. Selby and A. Cressman, for the respondents

Keywords: Torts, Fraud, Breach of Fiduciary Duty, Knowing Assistance of Breach of Fiduciary Duty, Knowing Receipt of Trust Property, Civil Procedure, Summary Judgment,Evidence, Credibility, Inferences, Rules of Civil Procedure, r. 20.04(2.1), Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Garcia, 2020 ONCA 412, Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, Waxman v. Waxman, (2004) 186 O.A.C. 201 (C.A.), Haynes v. Haynes, 2017 BCCA 131, Malak v. Hanna, 2019 BCCA 106, Eileen Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014)

facts:

The respondents were engaged in the business of financing used car inventories. The appellant, Toronto Fine Cars and Leasing Inc. (“TFC”), was a used car dealership. The appellant, DSD, was a director, officer, and the controlling shareholder of TFC.

The appellant, CG, was married to DSD and joined TFC in 2013. She had signing authority on TFC’s bank accounts. The appellant, JG, was the sole officer, director, and shareholder of 2564523 Ontario Inc. (“256”). JG was married to the appellant, GW, who worked for the Toronto Transit Commission (the “G Defendants” or “appellants”).

In 2014, DSD and TFC entered into lending and security agreements with the respondents. Each company financed different portions of TFC’s inventory. Between October 25 and 26, 2016, representatives of the respondents visited the TFC dealership. The premises appeared to be abandoned. The respondents alleged that DSD sold almost all of the cars overnight, likely at deeply discounted prices (the “fire sale”).

The lending and security agreements between the parties required DSD and TFC to hold all monies derived from the sale of vehicles in trust for the benefit of the respondents. However, no funds were remitted to after DSD and TFC liquidated its inventory. The respondents alleged that DSD and TFC, in conjunction with the other appellants, dissipated these funds through overseas and non-arm’s length transactions.

The respondents also alleged that a sum of $175,000 that CG claimed to have received from the sale of the matrimonial home was actually derived from DSD’s fraud. The Court noted that the sale of the matrimonial home closed before the vehicles were liquidated in the late-October fire sale.

The respondents also alleged that the newspaper CYV was at the heart of DSD’s scheme to launder funds derived from the fire sale. JG bought this business in March 2017. The respondents alleged that DSD was the beneficial owner of the newspaper and ran the business using JG as the putative owner to misappropriate funds.

The respondents brought a motion for summary judgment against the appellants. The motion judge rejected the evidence of each of the appellants and inferred liability from these findings. On the summary judgment motion, the G Defendants were found liable for the torts of knowing assistance in a breach of fiduciary duty and knowing receipt of trust funds arising from that breach.

issues:

(1) Did the motion judge err in drawing unwarranted inferences supporting liability based on a rejection of the appellant’s evidence?

(2) Did the motion judge err in finding that the appellants were in receipt of the funds misappropriated by DSD, or that any of them were aware of his dishonest dealings with the respondents?

(3) Did the motion judge err by engaging in speculative and stereotypical reasoning?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The Court found that the motion judge drew unwarranted inferences supporting liability (i.e., knowledge of and participation in DSD’s wrongdoing) based on his mere rejection of the appellants’ evidence. The Court held that the motion judge had considered the evidence of the G Defendants as a package, rather than considering whether the evidence against each of them established the torts of knowing assistance and/or knowing receipt. Further, the Court found that the motion judge’s rejection of the appellants’ evidence was sometimes anchored in unwarranted assumptions about human behaviour.

The Court acknowledged that the transfer of $175,000 to JG and the transfer of the vehicle to GW were suspicious financial moves. The Court found that these events led the respondents and the motion judge to focus on the expenditure of funds. However, the Court stated that the fundamental focus should have been on the source of the funds.

The Court then considered whether the funds were connected to DSD’s breach of fiduciary duty to the respondents; whether any of the appellants were aware of this breach; and whether any one of them assisted DSD in his wrongdoing. The Court held that properly considered, the evidence fell short of answering these questions, and that the appellants’ liability rested on little more than “guilt by association” with DSD.

(2) Yes.

The Court, citing

Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Garcia, set out the elements of the tort of knowing assistance of breach of fiduciary duty:

(1) a fiduciary duty; (2) a fraudulent and dishonest breach of the duty by the fiduciary; (3) actual knowledge by the stranger to the fiduciary relationship of both the fiduciary relationship and the fiduciary’s fraudulent and dishonest conduct; and (4) participation by or assistance of the stranger in the fiduciary’s fraudulent and dishonest conduct.

The Court noted that the knowledge requirement encompasses actual knowledge, recklessness, or wilful blindness. Further, a stranger’s knowledge must be of the existence of a trust or fiduciary relationship and knowledge of the breach of the fiduciary duty that arises from the wrongful conduct of the fiduciary.

The appellants’ main submission was that there was no direct evidence before the motion judge to prove that they were in receipt of the funds misappropriated by DSD, or that any of them were aware of his dishonest dealings with the respondents. The Court agreed, and held that the motion judge erred by improperly drawing inferences of liability based largely on the rejection of the appellants’ evidence.

The Court noted that evidence rejected by a trier of fact has no evidentiary value and cannot be used as a basis for findings of fact. The Court held that the motion judge’s conclusions on liability relied on the mere rejection of the appellants’ evidence, CG’s in particular. The Court found that there was no attempt to take the next step to determine whether independent evidence could support the conclusion that the rejected evidence was fabricated or concocted for the purpose of avoiding liability.

In the result, the Court held that the motion judge’s erroneous method of reasoning resulted in him making positive findings on the elements of knowing receipt and knowing assistance based on mere disbelief.

(2) Yes.

The Court held that the motion judge engaged in speculative and stereotypical reasoning as it related to some of the evidence. The motion judge had stated that the arrangements made between CG and DSD made “no sense from a family law perspective”. The Court held that the motion judge had erred by imputing this specialized knowledge to CG. This reasoning was also based on conjecture that CG settled her affairs in this way because she knew that DSD would take care of her. Moreover, this theory was at odds with the motion judge’s alternative conclusion that the $175,000 came from the fire sale. Accordingly, the Court held that there was no evidence to support either supposition.

The Court also found that the rejection of GW’s evidence could not, standing alone, translate into knowledge of DSD’s wrongdoing.


SHORT CIVIL DECISIONS

Tewari v. Singh, 2023 ONCA 249

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

Counsel:

G.T., acting in person

B. Sachdeva, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Civil Procedure, Default Judgments, Rules of Civil Procedure, r. 59.06(1)

NDrive, Navigation Systems S.A. v. Zhou, 2023 ONCA 239

[Lauwers, Paciocco and Thorburn JJ.A.]

Counsel:

C. Groper, for the moving parties

S.Z., acting in person

Keywords: Civil Procedure, Interlocutory Orders, Mareva Injunctions, Appeals, Jurisdiction, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 19, NDrive, Navigation Systems v. Zhou et al., 2021 ONSC 7366, NDrive, Navigation Systems v. Zhou, 2021 ONSC 7772, NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 602, Hendrickson [Hendrickson v. KalIio, [1932] O.R. 675 (C.A.), Drywall Accoustic v. SNC Lavalin, 2020 ONCA 375, Ball v. Donais (1993), 13 O.R. (3d) 322 (C.A.), Sun Life Assurance Co. of Canada v. York Ridge Developments Ltd., 1998 CarswellOnt 4534 (C.A.)

Yan v. Cortes, 2023 ONCA 248

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

Counsel:

N.X.Y.Y., acting in person
S. Libman and L. Libman, for the respondent

Keywords:Torts, Defamation, Constructive Discrimination, Harassment, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action

Goberdhan v. Knights of Columbus, 2023 ONCA 269

[Nordheimer J.A. (Motion Judge)]

Counsel:

T. Carsten and G. Di Sauro, for the moving party

J.P. McCoy, for the responding party

Keywords: Civil Procedure, Appeals, Reply Factums, Arbitration, Arbitration Act, 1991, S.O. 1991, c. 17, s 7(6), Rules of Civil Procedure, r. 61.03.1(11), Criminal Appeal Rules, r. 40(8), Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 4



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.