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Following are this week’s summaries of the Court of Appeal for Ontario for the week of October 24, 2022.

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In Johnson v Ontario, the Court allowed the appeal and found that in refusing the appellant’s request for an extension of time to opt out of a class action, the motion judge did not articulate or apply the correct test. The test for an extension to opt out of a class proceeding requires the class member to show that their neglect in complying with the court-imposed deadline is excusable and that an extension will not result in prejudice to the class, the defendant, or the administration of justice. The Court found that a proper application of the test and consideration of the relevant factors in this case indicated that the extension of the deadline to opt out should have been granted.

In Hummel Properties Inc. v. Niagara-on-the-Lake (Town), the Court considered an appeal regarding the legality of an interim control by-law restricting the division of land. The Court found that the interim control by-law was illegal as it sought to control the division of land, as opposed to the use of land subject to it. Further, the Court held that the application judge, who had dismissed the application, made overriding errors throughout his analysis, resulting in his findings being set aside and the Court remitting the matter to be tried again.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
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Ines Ferreira
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Table of Contents

Civil Decisions

Johnson v. Ontario , 2022 ONCA 725

Keywords: Torts, Crown Liability, Negligence, Charter Breaches, Civil Procedure, Class Proceedings, Opting-out, Extension of Time, Class Proceedings Act, 1992, S.O. 1992, c. 6, s 27.1(4), ss. 8, 9, 12, 13, 17, 27(2)(a), 27(3), Limitations Act, 2002, S.O. 2002, c. 24 s. 5(1)(b), Young v. London Life Insurance Co., [2002] O.J. No. 5971 (S.C.), 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2013 ONCA 279, Cannon v. Funds for Canada Foundation, 2014 ONSC 2259, Re PaineWebber Limited Partnerships Litigation, 147 F. (3d) 132 (2d Cir. 1998), Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993), Gregg v. Freightliner Ltd., 2012 BCSC 415, Johnson v. Ontario, 2021 ONCA 650, 1176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 62 O.R. (3d) 535 (S.C.J.), Canada Post Corp. v. Lépine, 2009 SCC 16, 3113736 Canada Ltd. v. Cozy Corner Bedding Inc., 2020 ONCA 235, Airia Brands Inc. v. Air Canada, 2017 ONCA 792

Hummel Properties Inc. v. Niagara-on-the-Lake (Town), 2022 ONCA 737

Keywords: Municipal Law, Land Use Planning, Interim Control By-Laws, Validity, Bad Faith, Illegality, Real Property, Subdivision Control, Torts, Misfeasance in Public Office, Fraudulent Misrepresentation, Negligent Misrepresentation, Planning Act, R.S.O. 1990 c. P.13, s. 34, s. 38, Municipal Act, 2001, S.O. 2001 c. 25, s. 273, Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 35 O.R. (3d) 321 (C.A.), TRG-KFH (Lakeside) Inc. v Muskoka Lakes (Township), 2019 ONCA 443, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Luxor Entertainment Corp. v. North York (City) (1996), 27 O.R. (3d) 259 (Gen. Div.), Pedwell v. Pelham (Town) (2003), 174 O.A.C. 147, Grosvenor v. East Luther Grand Valley (Township), 2007 ONCA 55, Sumac Ridge Wind Inc. v. Kawartha Lakes (City), 2016 ONCA 496, Quay West v. Toronto (City), [1989] O.J. No. 3072, Shell Canada Ltd. v. Barrie (City) Chief Building Official, 1992 CarswellOnt 514, Manchester v. North York (City) Chief Building Official (1994), 18 O.R. (3d) 540 (Div. Ct.), London (City) v. RSJ Holdings Inc., 2007 SCC 29, Re Burlington (City) Interim Control Re By-law 4000-589 (1988), 22 O.M.B.R. 233, Re Niagara-on-the-Lake (Town) Interim Control By-law 2049-89, [1990] O.M.B.D. No. 320, Woolford v. Etobicoke (City) (1991), 25 O.M.B.R. 289

Short Civil Decisions

1854329 Ontario Inc. v. Cairo , 2022 ONCA 744

Keywords: Breach of Contract, Real Property, Agreements of Purchase and Sale, Deposits, Remedies, Damages, Relief from Forfeiture, Towne Meadow Development Corporation v. William Choo Chong (1993), 30 R.P.R. (2d) 228 (Gen. Div.), Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490, Stockloser v. Johnson, [1954] 1 Q.B. 476 (C.A. (Eng))

Performance Analytics v. McNeely , 2022 ONCA 731

Keywords: Civil Procedure, Settlements, Disclosure Obligations, Remedies, Stays, Handley Estate v. DTE Industries Limited, 2018 ONCA 324, Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2022 ONCA 66, Waxman v. Waxman, 2022 ONCA 311, Poirier v. Logan, 2022 ONCA 350, Chu de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467


CIVIL DECISIONS

Johnson v. Ontario , 2022 ONCA 725

[Roberts, Miller and Zarnett JJ.A]

Counsel:

M. R. Sharp, N. S. Barkhordari, and N. S. Gosa, for the appellant D.P.
R. Bambers and L. Brost, for the respondent, His Majesty the King in Right of Ontario
J. Bradford, for the respondents, G.J., M.S., T.H.
A. Eckart and J. Kalajdzic, for the intervener The Class Action Clinic at the University of Windsor, Faculty of Law

Keywords: Torts, Crown Liability, Negligence, Charter Breaches, Civil Procedure, Class Proceedings, Opting-out, Extension of Time, Class Proceedings Act, 1992, S.O. 1992, c. 6, s 27.1(4), ss. 8, 9, 12, 13, 17, 27(2)(a), 27(3), Limitations Act, 2002, S.O. 2002, c. 24 s. 5(1)(b), Young v. London Life Insurance Co., [2002] O.J. No. 5971 (S.C.), 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2013 ONCA 279, Cannon v. Funds for Canada Foundation, 2014 ONSC 2259, Re PaineWebber Limited Partnerships Litigation, 147 F. (3d) 132 (2d Cir. 1998), Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993), Gregg v. Freightliner Ltd., 2012 BCSC 415, Johnson v. Ontario, 2021 ONCA 650, 1176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 62 O.R. (3d) 535 (S.C.J.), Canada Post Corp. v. Lépine, 2009 SCC 16, 3113736 Canada Ltd. v. Cozy Corner Bedding Inc., 2020 ONCA 235, Airia Brands Inc. v. Air Canada, 2017 ONCA 792

facts:

In 2013 and 2016, the respondents G. J. and M.S., and T.H., each commenced a proposed class proceeding against the respondent Her Majesty the Queen in Right of Ontario (“Ontario”). Each was certified as a class proceeding – and the actions were consolidated.

The class on behalf of whom the consolidated class action was brought consists of all persons who were incarcerated at the Elgin-Middlesex Detention Centre (“EMDC”) between January 1, 2010 and May 18, 2017. The consolidated class action sought declaratory relief and damages for alleged negligence and violations of the Canadian Charter of Rights and Freedoms arising from conditions at, and the operation and management of, EMDC during that class period.

On March 22, 2018, the court approved the notice and a plan to disseminate it (the “Notice Plan”). The Notice Plan contemplated a short form of notice that was to be published in two London, Ontario newspapers, and a long form of notice that was to be (i) posted on class counsel’s website; and (ii) sent, using regular mail, to the “last known address of each class member”.

The long form of notice advised that class members who wanted to participate in the class action are automatically included and did not have to do anything at that time. The long form of notice provided that a class member who “opts out will not be entitled to participate in the class action”, and that to pursue or continue an individual action against Ontario with respect to the issues raised in the class action, a class member was required to opt out. It advised that in order to opt out, the class member had to complete and return an opt-out form, available from class counsel, by June 20, 2018 (the “Deadline”).

The appellant resided with his father at the Parkside Drive address before he was incarcerated at EMDC. He gave that address to EMDC staff upon his admission, and it was entered on Ontario’s Offender Tracking Information System (“OTIS”) as his primary residence. Although Ontario was aware that the appellant transferred to the Joyceville Assessment Unit (“JAU”) in Kingston, Ontario in August 2017, it does not keep track of subsequent inmate movement while in federal custody. The appellant denied actually receiving or seeing either of the Notices, or knowing about the class proceeding, at any time before the opt-out Deadline.

On April 27, 2020, before he was aware of the consolidated class action, the appellant commenced an individual action against Ontario and employees of EMDC, as well as against the Attorney General of Canada and employees of JAU. By letter dated June 5, 2020, counsel for Ontario wrote to the appellant’s counsel, stating that the individual action overlapped with the consolidated class action and the appellant had not opted out of the consolidated class action by the Deadline.

Asserting that he first became aware of the consolidated class action as a result of the June 5, 2020 letter, the appellant moved for an extension of time to opt out. The motion judge dismissed the appellant’s request. The motion judge rejected the argument that the notice sent to the appellant had not been sent in accordance with the Notice Plan because it was sent to Parkside Drive when Ontario was aware he was in custody and had been transferred to JAU. He held that Parkside Drive was the last known address as that term was used in the Notice Plan.

The motion judge also found the appellant would not have opted out by the Deadline even if he had received the notice advising of his right to do so. He referred to the fact that the appellant had not addressed that issue in his affidavit, and had said on cross-examination that if the notice of certification was brought to his attention, he would not have filed his own lawsuit. The motion judge also found that the appellant’s implicit assertion that he could not reasonably have known of his cause of action until the fall of 2018 to be unsupported by any evidence.

issue:

(1) Did the motion judge commit a reversible error in denying an extension of time to the appellant to opt out of an ongoing class proceeding so that he could continue an individual action he commenced before he knew that there was a class proceeding?

holding:

Appeal allowed.

reasoning:

Yes.
The test for an extension to opt out of a class proceeding requires the class member to show that their neglect in complying with the court-imposed deadline is excusable and that an extension will not result in prejudice to the class, the defendant, or the administration of justice. This test, previously recognized at the Superior Court level in Ontario in Young v. London Life Insurance Co., [2002] O.J. No. 5971 (S.C.), balances the important role the right to opt out plays in the class proceedings scheme with the importance properly attributed to court-imposed deadlines.

The Court found that in refusing the appellant’s request for an extension of time to opt out, the motion judge did not articulate or apply this test; he did not consider the issues of excusable neglect or prejudice referenced in Young. His approach to the discretion to extend was accordingly too narrow. The Court found that a proper application of the test and consideration of the relevant factors indicated that the extension should have been granted.
The excusable neglect/no prejudice test adopted in Young was derived from PaineWebber, a case decided under the United States Federal Rules of Civil Procedure, which govern federal civil proceedings including class proceedings. The court in PaineWebber explained that a party seeking an extension of time to opt out must show that the entire period of delay, from the missed deadline to opt out through the making of the request for an extension, was the result of excusable neglect. It described excusable neglect as an elastic concept that may be found even in circumstances of carelessness and omissions within the class member’s control, as long as good faith and a reasonable basis for non-compliance are present. The PaineWebber court further explained that the court would also consider the degree of prejudice to the opposing party that would flow from granting the extension.

The Court noted the importance of the opt-out right and of the deadline for opting out are both properly respected when a court grants extensions only where (i) the delay in opting out is due to excusable neglect – in good faith and with a reasonable basis – and (ii) the court has considered whether any prejudice will accrue to participating class members, the defendant, or the integrity of the process, from permitting the late opt-out. This approach ensures that in a justifiable case a class member who does not want to be part of the class proceeding may have their litigation autonomy restored. But it also respects the need to ensure the court’s processes – its orders – are taken seriously, and that those who have planned and taken their courses of action on the strength of them do not suffer any prejudice.
The Court found that since the appellant did not actually receive the Notices, and provided a reasonable basis for the delay in actually requesting an opportunity to opt out, the evidence about what he would have done had he received the Notices was of little value, and ought not to have been used as it was by the motion judge. The appellant was not required to prove he would have opted out based on what he knew at the Deadline. The question was whether the fact that he did not opt out then, but was requesting an exercise of discretion to do so late, was the result of excusable neglect. The motion judge’s reference to the test under s. 5(1)(b) of the Limitations Act, 2002 was not germane to that question.

The Court found no indication that granting the appellant an extension would cause prejudice to the integrity of the process or the administration of justice. Class counsel did not oppose the appeal, a strong indicator that an extension of the time for the appellant to opt out would occasion no prejudice to the class and Ontario did not point to any prejudice it would suffer.


Hummel Properties Inc. v. Niagara-on-the-Lake (Town) , 2022 ONCA 737

[Lauwers, Nordheimer and Zarnett JJ.A.]

Counsel:

B. Gover and J. Safayeni, for the appellant

T. H. Hill, for the respondent

A. Sherrard and A. Parley, for the interveners Niagara Home Builders’ Association and Ontario Home Builders’ Association

Keywords: Municipal Law, Land Use Planning, Interim Control By-Laws, Validity, Bad Faith, Illegality, Real Property, Subdivision Control, Torts, Misfeasance in Public Office, Fraudulent Misrepresentation, Negligent Misrepresentation, Planning Act, R.S.O. 1990 c. P.13, s. 34, s. 38, Municipal Act, 2001, S.O. 2001 c. 25, s. 273, Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 35 O.R. (3d) 321 (C.A.), TRG-KFH (Lakeside) Inc. v Muskoka Lakes (Township), 2019 ONCA 443, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Luxor Entertainment Corp. v. North York (City) (1996), 27 O.R. (3d) 259 (Gen. Div.), Pedwell v. Pelham (Town) (2003), 174 O.A.C. 147, Grosvenor v. East Luther Grand Valley (Township), 2007 ONCA 55, Sumac Ridge Wind Inc. v. Kawartha Lakes (City), 2016 ONCA 496, Quay West v. Toronto (City), [1989] O.J. No. 3072, Shell Canada Ltd. v. Barrie (City) Chief Building Official, 1992 CarswellOnt 514, Manchester v. North York (City) Chief Building Official (1994), 18 O.R. (3d) 540 (Div. Ct.), London (City) v. RSJ Holdings Inc., 2007 SCC 29, Re Burlington (City) Interim Control Re By-law 4000-589 (1988), 22 O.M.B.R. 233, Re Niagara-on-the-Lake (Town) Interim Control By-law 2049-89, [1990] O.M.B.D. No. 320, Woolford v. Etobicoke (City) (1991), 25 O.M.B.R. 289

facts:

In November 2018, the then Lord Mayor-Elect of Niagara-on-the-Lake directed Town staff to draft an interim control by-law under s. 38 of the Planning Act (the “Act”). The interim control by-law was enacted by the town’s council on December 5, 2018, with an additional by-law coming into force in November 2020. The alleged purpose of the by-law, from the point of view of the council, was to prevent the uncontrolled development of the Old Town that might adversely affected the Town’s historical character. The appellant had submitted a development application for six townhouse condominium dwelling units at a vacant site outside of the built-up areas of the Old Town but within the area to which the by-law applied. The Town had been undertaking a number of studies in support of the development, but work was halted when the by-law came into force.

The appellant made several informal attempts to get the by-law repealed, as he believed the true target of the by-law was not his development, but the proposed “Randwood Lands” development located elsewhere in the Town. After informal efforts to get the by-law repealed failed, the appellant brought an application under s. 273 of the Municipal Act, 2001, to quash the by-law for illegality and bad faith. The application also claimed damages for misfeasance in public office and fraudulent and negligent misrepresentation, and asked for a trial to be ordered to determine the amount of damages. The application judge dismissed the application.
Both by-laws were repealed on June 22, 2020, after the commencement of the application, but prior to its dismissal by the application judge.

issues:

(1) Did the application judge err in finding that the interim control by-laws were a moot issue because the challenged by-laws had been repealed?
(2) Were the by-laws illegal because they did not relate to “land use”, as required by s.38 of the Planning Act?
(3) Were the by-laws illegal because they infringed s.38(7) of the Planning Act, which prohibits a municipality from applying a second interim control by-law to land to which another such by-law applies?
(4) Was the initial by-law adopted by an illegal process?
(5) Was the initial by-law passed in bad faith?
(6) If the answer to any of these issues is in affirmative, what remedy, if any, flows to the appellant?

holding:

Appeal allowed.

reasoning:

(1) Yes
The Court found that the application judge erred in ruling that the issue of legality was moot. The application judge took the position that the legality issues were moot because the challenged by-laws had been repealed. The Court held that this was an error, as the application continued to have relevance to the appellant’s outstanding civil claim for damages.

(2) Yes
The appellant argued that the Town acted illegally by enacting an interim control by-law that prohibited the subdivision of land, because s. 38(1) of the Act only gives municipalities authority to pass interim control by-laws “prohibiting the use of land”. The appellant argued that the subdivision of land is not properly interpreted to be a “use of land”.

The Court found that the application judge erred when he asserted that “Condominium approval is a land use”. No legal basis was given for this assertion, and the Court found it was not consistent with the Act and associated caselaw. The Court determined that the Town had no authority to control the subdivision of land by means of an interim control by-law. In coming to this conclusion, the Court first applied the principles of statutory interpretation to the Act. The Court found that land use under Part V of the Act was treated differently than the division of land, which is dealt with under Part VI of the Act. Section 38 of the Act authorizes a municipality to pass an interim control by-law regarding land use. The Court stated that the context within which s. 38 operates is set by s. 34, which is the first section in Part V and is the linchpin of land use controls. The balance of s.34(1) did not address the division of land.

Further, the Court, citing Equity Waste Management of Canada Corp. v. Halton Hills (Town), found that the purpose of interim control by-laws was to allow a municipality breathing space to rethink its land use policies by suspending development that may conflict with any new policy. However, if a by-law is enacted by a municipality for an improper purpose, that is, not for the statutory purpose for which the power was granted, the by-law is illegal and may be set aside by the court.

Applying this interpretation to the by-law at issue, the Court determined that the by-law’s provisions were designed to prohibit the subdivision of land, which would include the creation of condominiums. This finding was reinforced by the fact that the by-law cited s.50 and s.53 of the Planning Act. The Court stated that as these sections are found in Part VI of the Act governing land division, not Part V, in which s. 38 authorizes interim control by-laws only for land use purposes, the by-law was enacted for the improper purpose of controlling the division of land.

(3) Yes
The Court found that the application judge erred in asserting that two interim control by-laws could have effect over the same lands so long as the by-laws were for different purposes. Section 38(7) of the Act contains the following prohibition: “Where an interim control by-law ceases to be in effect, the council of the municipality may not for a period of three years pass a further interim control by-law that applies to any lands to which the original interim control by-law applied.” The Court held that the application of more than one interim control by-law to a piece of land was not consistent with the terms of s. 38(7).

The Court found that even if the subject matters of the two interim control by-laws were radically dissimilar, the municipality may not enact the second unless it complies with s. 38(7) of the Planning Act. As the by-laws failed to comply with s.38(7) of the Act, the Court quashed the interim control by-law on the basis of illegality.

(4) Yes
The appellant argued that the procedure leading to the interim control by-law’s first enactment breached the Town’s procedural by-law. The meeting in question was first announced publicly on December 4, 2018. Under the Town’s procedural by-law, a special meeting had to be “announced no later than the Thursday prior to the Meeting except in the case of an emergency.” The application judge rejected this argument, finding that the Lord Mayor was entitled to call an emergency meeting on December 5th as interim control is by its nature urgent. The application judge did not address the appellant’s argument that the notice of the meeting was inconsistent with the principles reviewed by the Supreme Court in RSJ Holdings, because it was deficient and lacked transparency.

The Court held that the application judge gave little consideration to the appellant’s arguments, and set aside his findings that the process leading to the adoption of the by-law was not illegal.

(5) Yes
The Court found that it was common ground that a by-law passed in bad faith is void for illegality. The Court set aside the application judge’s finding that there was no bad faith, as that rested on the three overriding errors discussed in issues 1-3 above, and on his inadequate analysis of the process leading to the by-law’s enactment.

(6) Remitted to Superior Court
The Court dealt with the issue of the appellant’s available remedies in its disposition. The Court directed a trial of the issues of the appellant’s claims of negligent misrepresentation and misfeasance in public office, to be initiated by fresh pleadings in the form of statements of claim and defence, to be completed in the ordinary course of a civil action. The Court permitted the issues of whether the process leading to the adoption of the initial interim control by-law was illegal, and whether there was bad faith in its enactment, to be litigated afresh.


SHORT CIVIL DECISIONS

1854329 Ontario Inc. v. Cairo , 2022 ONCA 744

[Simmons, Benotto and Favreau, JJ.A.]

Counsel:

N. C. Murkar, for the respondent
B. S. Greenberg, for the appellants

Keywords: Breach of Contract, Real Property, Agreements of Purchase and Sale, Deposits, Remedies, Damages, Relief from Forfeiture, Towne Meadow Development Corporation v. William Choo Chong (1993), 30 R.P.R. (2d) 228 (Gen. Div.), Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490, Stockloser v. Johnson, [1954] 1 Q.B. 476 (C.A. (Eng))

Performance Analytics v. McNeely , 2022 ONCA 731

[Lauwers, Roberts and Trotter JJ.A.]

Counsel:

A. J. MacDonald, for the appellants
S. Dewart and B. Hughes, for the respondents

Keywords: Civil Procedure, Settlements, Disclosure Obligations, Remedies, Stays, Handley Estate v. DTE Industries Limited, 2018 ONCA 324, Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2022 ONCA 66, Waxman v. Waxman, 2022 ONCA 311, Poirier v. Logan, 2022 ONCA 350, Chu de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467


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.