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Good afternoon.
Following are this week’s summaries of the Court of Appeal for Ontario for the week of December 18, 2023.
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The headline decision this week was Baker v Blue Cross Life Insurance Company of Canada. The respondent, who suffered a stroke at only age 38 and was denied long-term benefits by her insurer, Blue Cross, sued for bad faith. The jury found in favour of the respondent, awarding her retroactive benefits, aggravated damages for mental distress, and $1.5 million punitive damages due to Blue Cross’s misconduct. The trial judge also awarded her full indemnity costs. The Court upheld the jury’s punitive damages award and the trial judge’s award of costs (the latter on different grounds).
In Boal v. International Capital Management Inc., a class action, the Court allowed the appeal and held that the courts below had erred in refusing to certify this class proceeding. The claim disclosed a reasonable cause of action for breach of fiduciary duty by the defendant investment advisors in recommending and selling certain factoring investments to their clients.
BelairDirect Insurance Company v. Continental Casualty Company was a priority/coverage dispute between automobile insurance companies regarding third party liability coverage for a leased vehicle’s driver.
Carleton Condominium Corporation No 519 v Ottawa-Carleton Standard Condominium Corporation No 656 is a dispute between condominiums on responsibility for the cost of repairing infrastructure located on one condo’s property but that supplies power to both. The Court dismissed an appeal from the lower court’s decision finding in favour of the plaintiff condo corp in unjust enrichment.
Cardillo v Medcap Real Estate Holdings Inc. involves leave to appeal an order made in bankruptcy.
Grillone (Re) is another bankruptcy decision, this one involving a lawyer.
Other topics covered this week included striking pleadings as disclosing no reasonable cause of action, vexatious litigants, sale of goods and commercial leases.
Wishing everyone all the best of the holidays and a Merry Christmas to those celebrating.
John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Table of Contents
Civil Decisions
BelairDirect Insurance Company v. Continental Casualty Company, 2023 ONCA 834
Keywords: Contracts, Settlements, Formation, Intention to Create Binding Legal Relations, Waiver, Insurance, Automobile, Coverage, Third-Party Liability, Priority Dispute, Insurance Act, R.S.O. 1990, c. I.8, Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, Colistro v. Tbaytel, 2019 ONCA 197, leave to appeal refused, [2019] S.C.C.A. 173
Boal v. International Capital Management Inc., 2023 ONCA 840
Keywords: Breach of Fiduciary Duty, Knowing Assistance of Breach of Fiduciary Duty, Knowing Receipt of Trust Property, Civil Procedure, Class Proceedings, Certification, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 7, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, Hollick v. Toronto (City), 2001 SCC 68, Hodge v. Neinstein, 2017 ONCA 494, Frame v. Smith, [1987] 2 S.C.R. 99, Hunt v. TD Securities Inc. (2003), 66 O.R. (3d) 481 (C.A.)
Carleton Condominium Corporation No 519 v Ottawa-Carleton Standard Condominium Corporation No 656, 2023 ONCA 848
Keywords: Real Property, Condominiums, Common Elements, Unjust Enrichment, Condominium Act, 1998, S.O. 1998, c. 19, Kerr v Baranow, 2011 SCC 10, TSCC No 1633 v TSCC No 1809 and Baghai Development Ltd, 2017 ONSC 1372
Grillone (Re), 2023 ONCA 844
Keywords: Contracts, Debtor-Creditor, Bankruptcy and Insolvency, Lifting of Automatic Stay, Civil Procedure, Appeals, Security for Costs, Adjournments, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s 195, Courts of Justice Act, R.S.O. 1990, c. C.43., s 7(5), Rules of Civil Procedure, r. 61.05(1), 61.05(5), 39.02(1), 39.02 (2), Palmer v. The Queen, [1980] 1 S.C.R. 759, After Eight Interiors Inc. v. Glenwood Homes Inc., 2006 ABCA 121, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, Royal Bank of Canada v. Bodanis, 2020 ONCA 185, Toronto Dominion Bank v. Amex Bank of Canada, 1996 ABCA 128, Health Genetic Center Corp. v. New Scientist Magazine, 2019 ONCA 968
Baker v Blue Cross Life Insurance Company of Canada, 2023 ONCA 842
Keywords:Contracts, Insurance, Long-Term Disability, Coverage, Bad Faith, Punitive Damages, Civil Procedure, Offers to Settle, Full Indemnity Costs, Courts of Justice Act, RSO 1990, c C43, s 143, Rules of Civil Procedure, r. 49, Wade v CNR, [1978] 1 SCR 1064, Hill v Church of Scientology of Toronto, [1995] 2 SCR 1130, Whiten v Pilot Insurance Co, 2002 SCC 18, Whiten v Pilot Insurance Co (1999), 41 OR (3d) 641 (CA), Brad-Jay Investments Limited v Village Developments Limited (2006), 218 OAC 315 (CA), More v 1362279 Ontario Ltd (Seiko Homes), 2023 ONCA 527, Algra v Comrie Estate, 2023 ONCA 811, EM v Reed et al (2003), 171 OAC 145 (CA), Clarington (Municipality) v Blue Circle Canada Inc, 2009 ONCA 722, Hunt v TD Securities Inc (2003), 66 OR (3d) 481 (CA), König v Hobza, 2015 ONCA 885
Cardillo v. Medcap Real Estate Holdings Inc., 2023 ONCA 852
Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeals, Leave to Appeal, Constitutional Law, Division of Powers, Doctrine of Paramountcy, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193, Rules of Civil Procedure, 61.16(2.2), Re Ravelston Corp. (2005), 24 C.B.R. (5th) 256 (Ont. C.A.), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, TFP Investments Inc. (Trustee of) v. Singhal (1991), 3 C.B.R. (3d) 225 (Ont. C.A.), Robson (Re) (2002), 33 C.B.R. (4th) 86 (Ont. C.A.), Global Royalties Limited v. Brook, 2016 ONCA 50, Bending Lake Iron Group; IceGen Inc., Re, 2016 ONCA 902, Downing Street Financial Inc. v. Harmony VillageSheppard Inc., 2017 ONCA 611, B&M Handelman Investments Limited v. Drotos, 2018 ONCA 581, Comfort Capital Inc. v. Yeretsian, 2019 ONCA 1017, Royal Bank of Canada v. Bodanis, 2020 ONCA 185, Cosa Nova Fashions Ltd. v. The Midas Investment Corporation, 2021 ONCA 581, Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 202, McEwen (Re), 2020 ONCA 511, Dal Bianco v. Deem Management Services Limited, 2020 ONCA 488, Ontario (Provincial Police) v. Assessment Direct Inc., 2017 ONCA 986
Short Civil Decisions
Thompson v. Herschel Rescue and Training Systems, 2023 ONCA 845
Keywords: Civil Procedure, Summary Judgment, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Cook v. Joyce, 2017 ONCA 49, Truscott v. Co-operators General Insurance Company, 2023 ONCA 267
Butler v. Kia Canada Inc., 2023 ONCA 853
Keywords:Contracts, Sale of Goods, Damages, Civil Procedure, Simplified Procedure, Costs, Sale of Goods Act, R.S.O. 1990, c. S.1
Deng v. Han, 2023 ONCA 846
Keywords:Punitive Damages, Civil Procedure, Appeals, Monetary Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 6(1)(b)(i), 19(1)(a) and 110, Harte-Eichmanis v. Fernandes, 2012 ONCA 266
Robson v. Law Society of Ontario, 2023 ONCA 860
Keywords: Civil Procedure, Vexatious Litigants, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, r. 2.1, Scaduto v. Law Society of Upper Canada, 2015 ONCA 733, Simpson v. Chartered Professional Accountants of Ontario, 2016 ONCA 806
Bellwoods Brewery Inc. v. 1896841 Ontario Limited, 2023 ONCA 851
Keywords:Contracts, Real Property, Commercial Leases, Damages
CIVIL DECISIONS
BelairDirect Insurance Company v. Continental Casualty Company, 2023 ONCA 834
[Simmons, Paciocco and Thorburn JJ.A.]
Counsel:
- A. Morrison, for the appellant
- Miller, for the respondent
Keywords: Contracts, Settlements, Formation, Intention to Create Binding Legal Relations, Waiver, Insurance, Automobile, Coverage, Third-Party Liability, Priority Dispute, Insurance Act, R.S.O. 1990, c. I.8, Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, Colistro v. Tbaytel, 2019 ONCA 197, leave to appeal refused, [2019] S.C.C.A. 173
facts:
The issues on this appeal arose from a priority/coverage dispute between automobile insurance companies with respect to third party liability coverage for the driver/lessee of a leased vehicle who was sued as a result of his involvement in a motor vehicle accident.
The Continental Casualty Company issued a policy of insurance that included third party liability coverage for the lessee/driver, Mr. S. BelairDirect Insurance Company (“Belair”) did not. Continental contended that the application judge erred in holding that it, rather than Belair, was the priority insurer under s. 277(1.1) of the Insurance Act (the “Act”) and had a duty to defend the lessee/driver in the underlying personal injury action.
issues:
- Did the application judge err in failing to find that Belair entered into a binding agreement with Continental to abandon any priority dispute concerning coverage?
- Did the application judge err in failing to find that there was a binding partial settlement agreement with respect to priority and coverage based on Belair’s consent to an order dismissing the personal injury action against the car rental company?
- Did the application judge err in failing to find that Belair had waived its right to dispute priority?
- Did the application judge err in failing to award costs thrown away to Continental?
- Did the application judge err in failing to rely on caselaw decided under the statutory accident benefit priority regime set out in O. Reg. 283/95 (the “SABS priority regime”), by analogy, to find that Belair had accepted priority?
holding:
Appeal dismissed.
reasoning:
- and 2. No
Belair did not enter into any form of binding agreement (including any partial settlement) with Continental to abandon any priority or coverage dispute.
Belair’s adjuster’s advice to Continental’s counsel and the initial correspondence between counsel left no doubt that Belair’s initial agreement to “release” WTH from the action, or consent to an order dismissing the personal injury action against WTH without costs, was conditional on the plaintiffs agreeing to limit their claim to $1,000,000. Belair’s counsel and plaintiffs’ counsel were at an impasse. Continental failed to establish that Belair’s counsel was abandoning the condition attached to his consent.
The correspondence between counsel was about extricating WTH from the action. In counsel’s correspondence there was no discussion about which of Belair or Continental was responsible for defending Mr. S. There was no indication that the correspondence that the parties were ad idem about abandoning any priority/coverage dispute.
- No
Given the unchallenged circumstance that Belair was mistaken in its initial belief that Mr. S was insured under his mother’s policy at the time of the accident, Continental could not demonstrate that the requirements of waiver were satisfied. Waiver requires “full knowledge of rights” and “an unequivocal and conscious intention to abandon them”. Belair’s mistaken belief that Mr. S was covered under its policy could not constitute full knowledge of its rights.
- No
There were no “strong grounds” in the case that would support granting leave to appeal costs. In any event, Continental did not seek leave to appeal costs.
- No
There is no similar regulation to that governing the SABS priority regime applicable to priority/coverage disputes among tort insurers and the policy implications differed. The rule applicable in the SABS context exists to ensure prompt payment of SABS benefits by preventing priority disputes from delaying payment. The urgency is less pressing in the tort context. For priority disputes relating to tort liability, the principles on which Continental sought to rely (contract, estoppel, waiver) were properly applicable.
Boal v. International Capital Management Inc., 2023 ONCA 840
[Gillese, Trotter and Coroza JJ.A.]
Counsel:
Milosevic and G. Myers, for the appellant RLB
D.F. O’Connor and S.M. Grayson, for the respondents International Capital Management Inc., JoS, JaS, 1361655 Ontario Inc., 1634792 Ontario Inc., 2029984 Ontario Ltd., and 2029986 Ontario Ltd.
Keywords: Breach of Fiduciary Duty, Knowing Assistance of Breach of Fiduciary Duty, Knowing Receipt of Trust Property, Civil Procedure, Class Proceedings, Certification, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 7, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, Hollick v. Toronto (City), 2001 SCC 68, Hodge v. Neinstein, 2017 ONCA 494, Frame v. Smith, [1987] 2 S.C.R. 99, Hunt v. TD Securities Inc. (2003), 66 O.R. (3d) 481 (C.A.)
facts:
Starting in 2001, JoS acted as the appellant, RLB’s investment advisor. His brother, JaS, was also an investment advisor and registered mutual fund salesperson. The S brothers conducted business through their jointly-owned investment management company, International Capital Management Inc. (“ICM”).
In 2014, JoS presented RLB with an opportunity to invest in promissory notes in Invoice Payment Systems Corp. (“IPS”). IPS is a factoring company that purchases other businesses’ accounts receivable at a discount. ICM was the exclusive agent for the IPS promissory notes (the “IPS Notes”). The S brothers sold IPS Notes to certain of their ICM clients whom they had specifically selected.
The S brothers and other of their immediate family members owned 75% of the IPS shares, through their holding companies and companies owned by them or their family members. RLB alleged that JoS did not disclose that information to her. She also alleged he did not advise her that the IPS Notes were a high-risk investment and, instead, misled her about the nature and risks of investing in IPS.
RLB purchased an IPS Note for $101,224.26 on May 20, 2014.
In late 2016, RLB received a letter from ICM telling her that the Mutual Fund Dealers Association of Canada (“MFDA”) ordered certain terms and conditions against it. RLB learned of various orders the MFDA was seeking against the S brothers, including that they cease any regulated activity relating to ICM and IPS due to their failure to comply with the MFDA rules and by-laws (the “2016 MFDA Investigation”). She also learned of the allegedly undisclosed information described above. RLB further learned that the S brothers had received referral fees equal to 2% of the total amount invested by ICM clients in IPS Notes.
The MFDA entered into a settlement agreement with ICM and the S brothers (together, the “S Defendants”) in June 2018 (the “2018 MFDA Settlement Agreement”). The S Defendants were severely disciplined by the regulator. The S Defendants’ admissions included: between 2006 and 2016, they sold or facilitated the sale of at least $25,800,000 of investments in a non-arm’s length company (IPS) to at least 170 ICM clients; they engaged in conduct that gave rise to conflicts of interest which they “failed to address by the exercise of responsible business judgment influenced only by the best interests of the clients”; they recommended that at least 170 ICM clients purchase investments distributed by two non-arm’s length companies without conducting adequate due diligence to know the products; and, they did not maintain sufficient records to demonstrate they had complied with the obligation to “Know-Your-Client” and ensure the recommended products and orders obtained from clients were suitable.
Additionally, the MFDA reasons for decision from the settlement hearing, dated July 13, 2018, indicated that, not including what they earned as IPS shareholders, holding companies controlled by the S brothers earned around $3,000,000 in commissions from the sales of the IPS Notes to ICM clients in IPS Notes.
RLB started a proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the “CPA”) in 2017. The proposed class consisted of approximately 170 ICM clients who purchased IPS Notes from the S Defendants (the “Proposed Class”). In the third amended statement of claim (the “Claim”), as against the S Defendants, RLB claimed for breach of fiduciary duty to the Proposed Class. RLB moved to have the action certified (the “Certification Motion”).
The Certification Motion was dismissed, principally because the certification judge viewed the Claim as failing to disclose a cause of action for breach of fiduciary duty on a class-wide basis. Based on that view, the certification judge also held that the Claim did not satisfy the common issues and preferable procedure criteria. In addition, because the claims of knowing assistance and knowing receipt were dependent on the existence of a trust or fiduciary relationship, he held they too failed.
RLB appealed that order to the Divisional Court. The majority of that court held that it failed to meet the Hodgkinson requirements for establishing an ad hoc fiduciary relationship.
issues:
Did the majority of the Divisional Court err in holding that the Claim did not disclose a cause of action for breach of fiduciary duty on a class-wide basis.
holding:
Appeal allowed.
reasoning:
Yes.
The professional rules governing the S Defendants were but one fact supporting the claim that, when the Proposed Class members purchased IPS Notes, there was a fiduciary relationship between them and their financial advisors, and those advisors were acting in breach of their fiduciary duties. The certification judge erred in principle in failing to consider those other facts in conjunction with the S Defendants’ breaches of professional rules.
Hodgkinson v. Simms makes clear that the existence of industry standards is an important factor in determining whether there is an ad hoc fiduciary relationship between a professional investment advisor and their client. However, the Claim in this case did not rely solely on the fact that in selling IPS Notes to the Proposed Class, the S Defendants breached – in many ways – the professional rules and regulations to which they were subject. Taken as a whole, in the Claim, the appellant pleaded that her investment relationship, and that of each member of the Proposed Class, with the S Defendants, was one of vulnerability, trust, and reliance, in which the S Defendants undertook to act in their clients’ best interests.
The Claim pleaded that it was the practice of the S Defendants to prepare and monitor financial plans for each member of the Proposed Class and that they undertook to make investment recommendations based on the clients’ best interests. It pleaded that the S Defendants solicited investment in the IPS Notes by the Proposed Class members and recommended that they purchase the IPS Notes.
By reviewing the Proposed Class members’ financial plans and choosing to whom to recommend the “opportunity” to invest in the IPS Notes, the S Defendants unilaterally exercised their discretion in respect of the Proposed Class members. The S Defendants controlled all information concerning the IPS Notes and chose what to reveal about IPS and the IPS Notes to the Proposed Class members, rendering them vulnerable to the S Defendants’ exercise of discretion. The investments made by each Proposed Class member, on the advice of their financial advisor, affected that person’s legal or practical interests.
In the 2018 MFDA Settlement Agreement, the S Defendants admitted to the common method used to sell the IPS Notes, and their common breaches in so doing. These admissions were pleaded as showing an abuse of their discretion and to demonstrate that they profited from their conflict of interest.
The relationships between the S Defendants and the members of the Proposed Class appeared to be long-standing: they were selected from the roster of existing S Defendants’ clients, by the S brothers. As La Forest J. points out in Hodgkinson, the Proposed Class members had the right to expect that their professional advisors would act in their best interests, to the exclusion of all other interests, because the contrary had not been disclosed to them. That is, the Proposed Class members had the right to trust their financial advisors.
The investment “opportunity” was brought to the appellant and the other members of the Proposed Class by the S Defendants. As La Forest J. states in Hodgkinson, they should not have needed to protect themselves from the advice and recommendation of their financial advisors.
The Proposed Class members were vulnerabl, due to the information imbalance between them and their advisors. The information they received was controlled by the S Defendants. The Proposed Class members relied on the S Defendants for the accuracy of that information, including about the risk level associated with the purchase of the IPS Notes. The knowledge that the S Defendants were bound by professional rules and codes of conduct requiring them to act in their clients’ best interest created reasonable expectations on the part of the clients and created an environment in which they were vulnerable.
The focus of the Claim was not that the entire relationship between the Proposed Class members and the S Defendants was a fiduciary one: it was that there was a fiduciary relationship between the S Defendants and the Proposed Class members in relation to the sale of the IPS Notes to the Proposed Class members.
Carleton Condominium Corporation No 519 v Ottawa-Carleton Standard Condominium Corporation No 656, 2023 ONCA 848
[Hourigan, Miller and Nordheimer JJ.A.]
Counsel:
A. Casalinuovo and J. Wright, for the appellant
R. Escayola and G. Macpherson, for the respondent
Keywords: Real Property, Condominiums, Common Elements, Unjust Enrichment, Condominium Act, 1998, S.O. 1998, c. 19, Kerr v Baranow, 2011 SCC 10, TSCC No 1633 v TSCC No 1809 and Baghai Development Ltd, 2017 ONSC 1372
facts:
This was a dispute between two condominium corporations, 656 and 519, over the replacement of an electric switchgear (ESG) in an electrical vault located on 519’s premises, which supplies electricity to both. 656 had an easement for accessing the vault but refused to contribute to the replacement cost, arguing that maintenance of the ESG, though it serviced 656, was the sole financial responsibility of 519 under its Declaration. 519’s application for 656’s contribution, based on unjust enrichment, was successful, as the application judge found all elements of unjust enrichment satisfied: 656’s enrichment by receiving electricity, 519’s deprivation from no payment, and no juristic reason for the enrichment. 519 appealed.
issues:
Did the application judge err in finding that all of the elements of unjust enrichment were satisfied?
holding:
Appeal dismissed.
reasoning:
No. The Court found that although the appellant disputed that it received any benefit from the ESG, that argument was untenable. The application judge appropriately applied the two-step framework for determining the presence or absence of a juristic reason set out in Kerr v Baranow. 656 argued that the application judge erred in finding that there was no juristic reason for the enrichment. These were the same arguments rejected by the application judge. With respect to the argument that 519 had a statutory obligation to maintain and repair the ESG for the benefit of 656 without compensation, the Court agreed with the application judge’s analysis. With respect to the argument that the absence of a cost-sharing agreement constituted a juristic reason, the Court again saw no error in the application judge’s conclusion. Furthermore, TSSC No. 1633 was distinguishable on the basis that it dealt with a claim for a contribution to the maintenance of a shared driveway that was subject to an easement.
Grillone (Re), 2023 ONCA 844
[Brown J.A. (Motions Judge)]
Counsel:
K.D. Kraft, M. Bacal and M.A. Freake, for the moving party/respondent, Bluecore Capital Inc.
S. Grillone, for the responding party/appellant, acting in person
Keywords: Contracts, Debtor-Creditor, Bankruptcy and Insolvency, Lifting of Automatic Stay, Civil Procedure, Appeals, Security for Costs, Adjournments, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s 195, Courts of Justice Act, R.S.O. 1990, c. C.43., s 7(5), Rules of Civil Procedure, r. 61.05(1), 61.05(5), 39.02(1), 39.02 (2), Palmer v. The Queen, [1980] 1 S.C.R. 759, After Eight Interiors Inc. v. Glenwood Homes Inc., 2006 ABCA 121, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, Royal Bank of Canada v. Bodanis, 2020 ONCA 185, Toronto Dominion Bank v. Amex Bank of Canada, 1996 ABCA 128, Health Genetic Center Corp. v. New Scientist Magazine, 2019 ONCA 968
facts:
In December 2018, Bluecore entered into a loan agreement with Mr. G. and his law firm. The purpose of the loan was to provide litigation/disbursement funding to Mr. G.’s law practice. Mr. G. also signed a personal guarantee for the repayment of up to $1 million of the amounts owing under the loan agreement. As of the date of the bankruptcy application, Bluecore claimed to be owed the principal loan amount of approximately $1.332 million, plus accrued interest and fees.
The trial judge granted an application for a bankruptcy order against Mr. Grillone.
On November 1, 2023, Bluecore served a notice of motion to lift the automatic stay of the Bankruptcy Order pursuant to s. 195 of the Bankruptcy and Insolvency Act (“BIA”) or, alternatively, an order requiring Mr. G. to post security for costs of the appeal. In its factum filed on November 29, 2023, Bluecore clarified that it sought security for costs in the amount of $20,000.
Although the parties agreed on December 13, 2023 as the hearing date for Bluecore’s motion as well as on a timetable for the delivery of motion materials, procedural skirmishing subsequently ensued between the parties. At the hearing before the Court on December 13, Mr. G. sought to adjourn Bluecore’s motion for a month to enable him to file further responding materials.
issues:
1. Should Mr. G.’s request for an adjournment of Bluecore’s motion for a month to enable him to file further responding materials be granted?
2. Should Bluecore’s motion to lift the stay of the Bankruptcy Order under BIA s.195 be granted.
holding:
Adjournment denied. Motion granted.
reasoning:
- No.
The Court’s refusal to grant Mr. G. an adjournment of Bluecore’s motion was informed, in part, by the procedural history to date of the appeal as well as the litigation strategy he adopted on this appeal. Raising serious doubts as to whether Mr. Grillone’s appeal constituted a serious request to review the reasons of the trial judge or merely a device to stall the enforcement of the Bankruptcy Order.
Mr. G did not serve an appellant’s certificate respecting evidence with his notice of appeal. He did not file proof that he ordered a transcript of all oral evidence that the parties have not agreed to omit within 30 days after filing the notice of appeal. As well as, not taking any steps to perfect his appeal in accordance with the Rules since filing his notice of appeal
The parties agreed to a December 13 hearing date for Bluecore’s motion, as well as to a timetable for the filing of motion materials and cross-examination thereon. The timetable required Mr. G. to file responding materials by November 13, 2023.
Mr. G.’s request for an adjournment was not a proper one. By November 2, he had agreed to a timetable that would culminate in a hearing of the lift stay motion on December 13 and under which he agreed to file responding motion materials by November 13. He did not do so. That was his choice.
Further, it was not open to Mr. G., on the one hand, to fail to satisfy cost orders made by this court yet, on the other hand, seek an indulgence from the Court in the form of an adjournment of a motion brought by a party in whose favour those cost orders were made.
- Yes.
An applicant that seeks to cancel a BIA s. 195 stay bears the burden of establishing compelling reasons to support a cancellation: After Eight Interiors Inc. v. Glenwood Homes Inc., 2006 ABCA 121, at para. 5. The BIA s. 195 jurisprudence identifies several factors courts should consider when dealing with a request to lift an automatic stay:
- The appellant’s litigation conduct, including whether the appellant is diligently prosecuting the appeal;
- The merits of the appeal;
- The relative prejudice to the parties of cancelling the stay.
- However, while all or part of the tripartite test may be relevant, the discretion granted by BIA 195 is broader. Accordingly, a contextual approach is appropriate that considers all the facts of the case, not merely those that engage the tripartite test, and the interests of justice generally.
Lack of diligent prosecution
On October 12, 2023, Mr. G. did not take the requisite initial steps to perfect by filing a certificate of evidence or proof that he had ordered the relevant transcripts. Instead, he took collateral steps before he began to perfect his appeal. His lengthy list of preliminary collateral steps led the Court to conclude that Mr. G. had no present intention of pursuing his appeal diligently. The Court’s assessment was that Mr. G. wanted to consume court resources and time in dealing with side-issues instead of reviewing the Bankruptcy Order below. It would be unjust to permit Mr. G. to prosecute an appeal under the protection of an automatic stay while failing to comply with earlier orders of this court.
The merits of the appeal
Mr. G. sought to advance very weak grounds of appeal. His grounds of appeal could be divided into two categories.
The first category sought, in effect, a retrial of all material findings the trial judge made in concluding that Mr. G. had committed an act of bankruptcy and that Bluecore had demonstrated a bankruptcy order should issue. Where the grounds alleged errors of fact, for the most part the notice of appeal offered little insight into the specific factual errors the trial judge allegedly committed. His allegations about of the misapplication of statutory provisions or the “special circumstances” test were difficult to reconcile with the detailed reasoning provided by the trial judge on those issues. Those grounds constituted very weak grounds of appeal.
The Second category related to a procedural issue regarding the marking of an exhibit. By way of background to this category of grounds of appeal, two versions of the loan agreement between Bluecore and Mr. G. emerged at trial: the so‑called Long and Short Version Loan Agreements.
Despite the extensive arguments fashioned by Mr. G. on the motion about how the Long and Short Version Loan Agreements were managed at trial, there was no contention on his part that the full version of the loan agreement he executed with Bluecore did not support the trial judge’s conclusion that he was indebted to Bluecore under the loan agreement, which he candidly admited signing.
Relative prejudice
Based on Mr. G.’s litigation approach to this appeal, if the automatic stay was not lifted Mr. G. would have continued to pursue the aggressive (and wasteful) litigation approach described by the trial judge, to the prejudice of Bluecore and his other creditors.
Baker v Blue Cross Life Insurance Company of Canada, 2023 ONCA 842
[Hourigan, Zarnett and George JJ.A.]
Counsel:
P. J. Pape and M. McGowan, for the appellant
G. Adair and S. Birman, for the respondent
L. M. Plumpton and J. T. Weyman, for the intervener Canadian Life & Health Insurance
Association Inc.
Keywords: Contracts, Insurance, Long-Term Disability, Coverage, Bad Faith, Punitive Damages, Civil Procedure, Offers to Settle, Full Indemnity Costs, Courts of Justice Act, RSO 1990, c C43, s 143, Rules of Civil Procedure, r. 49, Wade v CNR, [1978] 1 SCR 1064, Hill v Church of Scientology of Toronto, [1995] 2 SCR 1130, Whiten v Pilot Insurance Co, 2002 SCC 18, Whiten v Pilot Insurance Co (1999), 41 OR (3d) 641 (CA), Brad-Jay Investments Limited v Village Developments Limited (2006), 218 OAC 315 (CA), More v 1362279 Ontario Ltd (Seiko Homes), 2023 ONCA 527, Algra v Comrie Estate, 2023 ONCA 811, EM v Reed et al (2003), 171 OAC 145 (CA), Clarington (Municipality) v Blue Circle Canada Inc, 2009 ONCA 722, Hunt v TD Securities Inc (2003), 66 OR (3d) 481 (CA), König v Hobza, 2015 ONCA 885
facts:
The respondent suffered a stroke while exercising in October 2013. At the time of the incident, she was 38 years old and was the Director of Food Services, Environmental, and Porter or Transport Services at Humber River Hospital as an employee of Compass Group Canada.
The respondent had a disability insurance policy through her employer. After the incident, the respondent was paid short-term disability benefits until January 2014, when she was cut off by Blue Cross. After an internal appeal, Blue Cross reinstated the benefits on March 7, 2014.
After 30 weeks, when her eligibility for short-term disability benefits had elapsed, the respondent sought long-term disability benefits. The respondent was paid two years of long-term “own occupation” benefits. During this period, Blue Cross stopped the payment of long-term disability benefits in August 2015 and reinstated it on March 23, 2016, after the respondent went through an internal appeal. The respondent was then denied long-term “any occupation” benefits.
Having exhausted Blue Cross’ appeal process, the respondent commenced an action for “any occupation” benefits, along with aggravated and punitive damages. The trial took 22 days, and the jury returned a verdict in favour of the respondent as follows: (a) a declaration that she was totally disabled within the meaning of Blue Cross’ long-term disability benefits policy; (b) retroactive benefits to the date of the trial in the amount of $220,604.00; (c) aggravated damages for mental distress of $40,000; and (d) punitive damages in the amount of $1,500,000. The trial judge awarded full indemnity costs in the amount of $1,083,953.50.
issues:
1) Did the jury err in awarding punitive damages and the amount awarded?
2) Did the trial judge err in awarding full indemnity costs?
holding:
Appeal dismissed.
reasoning:
1) No.
The Court analyzed the jury’s punitive damages award.
(a) Standard of Review
Counsel for Blue Cross suggested that the standard of review for a jury’s punitive damages award was correctness, but this was not supported by Canadian jurisprudence. Appellate courts generally take a deferential approach to jury verdicts due to their lack of detailed reasoning. However, they have more discretion in reviewing punitive damages, focusing on whether the amount awarded was also rationally connected to the evidence and the purposes of punitive damages.
(b) Entitlement to Punitive Damages
The jury was instructed on the exceptional circumstances needed for punitive damages, focusing on high-handed or reprehensible misconduct. The key issue was whether Blue Cross’ actions met the punitive damages criteria. The evidence supported an award, showing a pattern of Blue Cross’ misconduct in handling the claim, suggesting more than just good faith errors.
(c) Quantum
The amount of punitive damages, set at $1.5 million, was deemed appropriate. It was designed to punish, denounce, and deter future misconduct by Blue Cross. The systemic nature of Blue Cross’ claims handling justified the significant amount, necessary to ensure meaningful deterrence against such large corporations. The Court found no reason to interfere with the jury’s decision on the amount of punitive damages.
2) No.
The trial judge awarded the respondent full indemnity costs totaling $1,083,953.50, purporting to create a new exception to usual costs principles. She applied costs jurisprudence from duty to defend cases that provide that insureds should be fully indemnified, and deliberately did not rely on Blue Cross’ conduct or the respondent’s settlement offer in coming to the costs decision. The Court found that this was a significant departure from standard practice, and granted leave to appeal the costs order. The trial judge’s decision to create a new category for automatic full indemnity costs was in error. The basis for the award was set aside. However, the Court acknowledged that Blue Cross’ misconduct in this case and failure to accept a generous offer to settle, justified full indemnity costs in this case. Accordingly, the Court dismissed the costs appeal and upheld the full indemnity costs awarded by the trial judge.
Cardillo v. Medcap Real Estate Holdings Inc., 2023 ONCA 852
[Brown J.A.]
Counsel:
Jaffe and E.S. Peritz, for the moving parties
F.S. Turton, for the responding parties/appellants Medcap Real Estate Holdings Inc., JC, 2503866 Ontario Inc., 1869541 Ontario Inc. and Bodypro Gym Inc.
M.S. Myers and M. Krygier-Baum, for the respondents Bennington Financial Corp., SW, Physiomed Health Holdings Inc. and Heffner Investments Limited
Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeals, Leave to Appeal, Constitutional Law, Division of Powers, Doctrine of Paramountcy, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193, Rules of Civil Procedure, 61.16(2.2), Re Ravelston Corp. (2005), 24 C.B.R. (5th) 256 (Ont. C.A.), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, TFP Investments Inc. (Trustee of) v. Singhal (1991), 3 C.B.R. (3d) 225 (Ont. C.A.), Robson (Re) (2002), 33 C.B.R. (4th) 86 (Ont. C.A.), Global Royalties Limited v. Brook, 2016 ONCA 50, Bending Lake Iron Group; IceGen Inc., Re, 2016 ONCA 902, Downing Street Financial Inc. v. Harmony VillageSheppard Inc., 2017 ONCA 611, B&M Handelman Investments Limited v. Drotos, 2018 ONCA 581, Comfort Capital Inc. v. Yeretsian, 2019 ONCA 1017, Royal Bank of Canada v. Bodanis, 2020 ONCA 185, Cosa Nova Fashions Ltd. v. The Midas Investment Corporation, 2021 ONCA 581, Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 202, McEwen (Re), 2020 ONCA 511, Dal Bianco v. Deem Management Services Limited, 2020 ONCA 488, Ontario (Provincial Police) v. Assessment Direct Inc., 2017 ONCA 986
facts:
This motion raises the issue of the authority of a single judge of the Court hearing motions to determine the availability of appeal rights under s. 193 of the Bankruptcy and Insolvency Act.
Riley Farber Inc., the trustee in bankruptcy of Medcap Real Estate Holdings Inc., moves for orders that the appellants, (i) do not enjoy an automatic right of appeal under BIA ss. 193(a) or (c) from the October 30, 2023 order of the Commercial List motions judge (the “Order”), (ii) require leave to appeal that Order, and (iii) should be denied such leave. The Trustee submits that as a single judge of an appellate court, the motion judge has the authority to grant the orders sought. The appellants disagree.
Medcap was adjudged bankrupt on December 6, 2021. Its appeal of the bankruptcy order was dismissed. The appellant JC is Medcap’s principal. Medcap’s largest known asset is a commercial building located in Hamilton (the “Property”). Five mortgages are registered against the Property. The Property’s main tenant is the appellant, Bodypro Gym. There also exists a lease of the Property to the appellant 1869541 Ontario Inc. (“186”).
The motion judge succinctly stated the issue raised before her on the competing motions as: [H]ow, where and when the 250 Mortgage Dispute underlying both the Foreclosure Action and the TUV Motion should be adjudicated. On their appeal, the appellants sought to set aside the motion judge’s procedural directions so that all aspects of the 250 Mortgage Dispute remain in Hamilton for adjudication and the Trustee’s TUV Motion is heard in Hamilton, not in the Toronto bankruptcy proceeding. She did not determine any substantive rights of the parties. She merely directed where the adjudication of the parties’ respective rights in the 250 Mortgage Dispute should take place.
The trustee moved for directions.
issues:
Can a single judge of the Court of Appeal hear motions to determine the availability of appeal rights under s.193 of the Bankruptcy and Insolvency Act?
holding:
Motion granted.
reasoning:
Yes.
The jurisprudence establishes a well-accepted practice that a single judge of the Court of Appeal dealing with motions involving orders made under the BIA has the authority to determine whether a party has a right of appeal under BIA ss. 193(a)-(d) or whether the party requires leave to appeal under BIA s. 193(e) and, if leave is required, whether leave should be granted.
In Robson (Re) (2002), Feldman J.A., sitting as a single judge, expressed no reservation about her authority to determine on a motion whether a right to appeal without leave existed. She regarded the earlier decision in TFP Investments as determining the applicability of BIA ss. 193(a) and (c) in the circumstances of that case. The decision in Robson (Re) was later followed by Strathy C.J.O. in Global Royalties Limited v. Brook, where he wrote, at para. 17, that: “A judge of this court has jurisdiction to make an order directing that the appellant does not have a right to appeal pursuant to s. 193(b) of the BIA: see [Robson (Re)]”. Since the release of the Pine Tree Resorts decision in 2013, the approach applied by Blair J.A. has been employed by single judges hearing BIA s. 193 motions.
The appellants ignored that body of case law and the established practice of the Court. As well, they did not point to any cases of the Court that have held a single judge lacks such authority. Instead, they contend their argument is supported by a body of case law regarding who can decide issues about the jurisdiction of the Court, as well as r. 61.16(2.2) of the Rules of Civil Procedure.
The appellants point to two cases for the proposition that only a panel of three judges can decide whether an appeal is within the jurisdiction of the Court: Dal Bianco v. Deem Management Services Limited and Ontario (Provincial Police) v. Assessment Direct Inc. Neither case involved an appeal from an order made under the BIA. This motion does not concern whether the Court of Appeal has jurisdiction to hear an appeal from the Order, which was made by a judge of a Superior Court of Justice in a bankruptcy proceeding. The Court has jurisdiction to hear such an appeal; BIA s. 193 clearly says so: “Unless otherwise expressly provided, an appeal lies to the Court of Appeal from any order or decision of a judge of the court in the following cases …”
As to the Rules of Civil Procedure, the appellants submitted that r. 61.16(2.2) precludes a single judge of the Court from determining the availability of appeal rights under BIA s. 193. Section 193(e) of the BIA expressly authorizes a single judge of an appellate court to determine whether leave to appeal should be granted, where leave to appeal is required. Under BIA s. 193(e) a single judge determines whether a party should be permitted to initiate an appeal. The judge does not determine an extant appeal. For that reason, an order denying leave to appeal would not fall within the language of r. 61.16(2.2) as the single judge does not “finally determine an appeal”.
The ordinary rules of procedure for provincial superior courts of justice and appeal courts must be understood, interpreted, and applied to appeals from orders made under the BIA in a way that is not inconsistent with the BIA and the Bankruptcy and Insolvency General Rules. That result is required by the constitutional doctrine of paramountcy. Just as any conflict between BIA s. 193(e) and CJA s. 7(3) must be resolved in favour of the federal provision, so too must any conflict between BIA s. 193(e) and r. 61.16(2.2) of the Ontario Rules of Civil Procedure. Rule 61.16(2.2) cannot affect the authority of a single judge to hear and determine a motion for leave to appeal under BIA s. 193(e) because that section of the BIA expressly vests such authority in a single judge.
The Court held that such an application of r. 61.16(2.2) would conflict with the operation of BIA s. 193 and, as a result, would offend the doctrine of paramountcy. Since BIA s. 193(e) authorizes a single judge to grant leave to appeal “in any other case”, for a single judge to decide whether to grant leave, the judge must first determine whether the order or decision of the court below concerns “any other case” than those enumerated in BIA ss. 193(a)-(d). If the order or decision falls into one of the cases identified in ss. 193(a)-(d), then no leave is required as no “other case” exists in respect of which the single judge could exercise the leave power conferred by BIA s. 193(e). It follows that determining whether a party has a right of appeal under BIA ss. 193(a)-(d) is a necessary preliminary step in the judicial process of deciding whether to exercise the statutory authority conferred by BIA s. 193(e) on a single judge to grant leave.
SHORT CIVIL DECISIONS
Thompson v. Herschel Rescue and Training Systems, 2023 ONCA 845
[Gillese, Trotter and Coroza JJ.A.]
Counsel:
T., acting in person
Murphy and N. V. Allen, for the respondent
Keywords: Civil Procedure, Summary Judgment, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Cook v. Joyce, 2017 ONCA 49, Truscott v. Co-operators General Insurance Company, 2023 ONCA 267
Butler v. Kia Canada Inc., 2023 ONCA 853
[Hourigan, Miller and Nordheimer JJ.A.]
Counsel:
M. Switzer, for the appellant
M. Keenberg and J. Hand, for the respondents
Keywords:Contracts, Sale of Goods, Damages, Civil Procedure, Simplified Procedure, Costs, Sale of Goods Act, R.S.O. 1990, c. S.1
Deng v. Han, 2023 ONCA 846
[Roberts, Sossin and Dawe JJ.A.]
Counsel:
S. Greaves, for the respondent/moving party
D. H., acting in person
Keywords:Punitive Damages, Civil Procedure, Appeals, Monetary Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 6(1)(b)(i), 19(1)(a) and 110, Harte-Eichmanis v. Fernandes, 2012 ONCA 266
Robson v. Law Society of Ontario, 2023 ONCA 860
[Roberts, Paciocco and Monahan JJ.A]
Counsel:
M. Citak and D. Hirbod, for the appellant
J. Renihan and L. Rennie, for the respondent
Keywords:Civil Procedure, Vexatious Litigants, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, r. 2.1, Scaduto v. Law Society of Upper Canada, 2015 ONCA 733, Simpson v. Chartered Professional Accountants of Ontario, 2016 ONCA 806
Bellwoods Brewery Inc. v. 1896841 Ontario Limited, 2023 ONCA 851
[Roberts, Paciocco and Monahan JJ.A]
Counsel:
Citak and D. Hirbod, for the appellant
Renihan and L. Rennie, for the respondent
Keywords: Contracts, Real Property, Commercial Leases, Damages
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