COURT OF APPEAL SUMMARIES (August 28 – September 1)

By John Polyzogopoulos on September 3, 2023

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Good afternoon.
Following are this week’s summaries of the Court of Appeal for Ontario for the week of August 28, 2023.

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I hope everyone is enjoying the last long weekend of the summer.

Chippewas of Nawash Unceded First Nation v. Canada (Attorney General) is a 125-page decision dealing with the claim of the Saugeen Ojibway Nation to submerged lands in Lake Huron and Georgian Bay. The claim was mostly unsuccessful.

In US Steel, the Court refused a stay pending an appeal by DGAP challenging the transfer of certain Stelco lands to special purpose entity. The Stelco insolvency has been ongoing since 2014.

In Covant v. College of Veterinarians of Ontario, a licensed veterinarian was found guilty of professional misconduct by the College of Veterinarians of Ontario for reselling veterinary drugs to human pharmacies in violation of a new regulation. The Court dismissed the appeal, finding that the regulation in question was not vague, and that the vet had been clearly operating a sub-distribution business.

EF Institute for Cultural Exchange Limited is a breach of restrictive covenant case. The action against the departing employee was dismissed by way of summary judgment. The appeal was also dismissed.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

U.S. Steel Canada Inc. (Re), 2023 ONCA 569

Keywords: Bankruptcy and Insolvency, Restructuring, Civil Procedure, Stay Pending Appeal, Companies’ Creditors Arrangement Act, RSC 1985, c. C-35, RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 SCR 311, Longley v Canada (Attorney General), 2007 ONCA 149, International Corona Resources Ltd v Lac Minerals (1986), 21 CPC (2d) 252 (Ont CA), Royal Bank of Canada v Soundair Corp (1991), 4 OR (3d) 1 (CA), Urbancorp Toronto Management Inc. (Re), 2021 ONCA 613

EF Institute for Cultural Exchange Limited v WorldStrides Canada, Inc. , 2023 ONCA 566

Keywords: Contracts, Employment, Restrictive Covenants, Confidentiality Agreements, Civil Procedure, Summary Judgement, Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, Guzzo v. Randazzo, 2015 ONSC 6936

Bon-Star Inc. v First National Financial GP Corporation , 2023 ONCA 567

Keywords: Contracts, Real Property, Mortgages, Prepayment Privileges, Civil Procedure, Adjournments

Bell v Long , 2023 ONCA 563

Keywords: Contracts, Solicitor and Client, Professional Negligence, Civil Procedure, Limitation Periods, Discoverability, Capacity, Summary Judgment, Limitations Act, 2002, S.O. 2002, c. 24, s.7, Deck International Inc. v. The Manufacturers Life Insurance Company, 2012 ONCA 309

Covant v College of Veterinarians of Ontario, 2023 ONCA 564

Keywords: Regulated Professions, Veterinarians, Professional Misconduct, Administrative Law, Judicial Review, Constitutional Law, Charter Rights, Jurisdiction, Veterinarians Act, R.S.O., c. V.3., s. 30(6.1), “Part III – Drugs”, R.R.O. 1990, Reg. 1093, ss. 32(2)(d), 33(1)(a) and 33(2)(d), Regulated Health Professions Act, 1991, S.O. 1991, c. 18., Health Professions Procedural Code, Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 65, [2013] 3 S.C.R. 810, Mussani v. College of Physicians and Surgeons of Ontario (2004), 74 O.R. (3d) 1, Leering v. College of Chiropractors of Ontario, 2010 ONCA 87, Tanase v. College of Dental Hygienists of Ontario, 2021 ONCA 482, Shaulov v. Law Society of Ontario, 2023 ONCA 95, Committee for the Commonwealth of Canada v. Canada, [1991] 1 S.C.R. 139, Clublink v. Town of Oakville, 2018 ONSC 7395, Wainfleet Wind Energy Inc. v. Wainfleet (Township), 2013 ONSC 2194, R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606, Wakeling v. United States of America, 2014 SCC 72, R. v. Heywood, [1994] 3 S.C.R. 761, Law Society of New Brunswick v. Ryan, 2003 SCC 20

Chippewas of Nawash Unceded First Nation v. Canada (Attorney General), 2023 ONCA 565

Keywords: Aboriginal Law, Aboriginal Rights, Water Rights, Aboriginal Title, Sui Generis Fiduciary Duties, Ad Hoc Fiduciary Duties, Honour of the Crown, Remedies, Constructive Trust, Native Title Act 1993 (Cth), 1993/110, Canadian Navigable Waters Act, R.S.C. 1985, c. N-22, Act of Union (British North America Act, 1840, 3 & 4 Vict, c. 35, Indian Act, R.S.C. 1985, c. I-5, Proceedings Against the Crown Act, 1962-63, S.O. 1962-63, c. 109, Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, s 27, Crown Liability and Proceedings Act, S.C. 1952-53, c. 30, Mental Health Act, R.S.O. 1990, c. M.7, Petition of Right Act, S.C. 1875, c. 12, Municipal Institutions Act, S.U.C. 1858, 22 Vic., c. 99, Municipal Act, 2001, S.O. 2001, c. 25, ss. 44, 55, Tsilhqot’in Nation v. British Columbia, 2014 SCC 44, Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, Guerin v. The Queen, [1984] 2 S.C.R. 335, R. v. Van der Peet, [1996] 2 S.C.R. 50, Lax Kw’alaams Indian Band v. Canada (Attorney General), 2011 SCC 56, R. v. Marshal; R. v. Bernard, 2005 SCC 43, Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4, McKie v. The K.V.P. Co. Ltd., [1948] O.R. 398 (H.C.), aff’d [1948] O.W.N. 812 (C.A.), aff’d [1949] S.C.R. 698, Keewatin Power Co. v. Kenora (Town) (1908), 16 O.L.R. 184 (C.A.), Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, R. v. Nikal, [1996] 1 S.C.R. 1013, Commonwealth of Australia v. Yarmirr, [2001] HCA 56, 184 A.L.R. 113, Mitchell v. M.N.R., 2001 SCC 33, Regina v. Meyers, [1853] O.J. No. 204 (U.C. Ct. Com. Pl.), Keewatin Power Co. v. Kenora (Town) (1908), 16 O.L.R. 184 (C.A.), Caldwell v. McLaren, [1884] UKPC 21, 9 A.C. 392, St. Catharines Milling & Lumber Company v. The Queen, [1888] UKPC 70, 14 A.C. 446, Re Provincial Fisheries (1896), 26 S.C.R. 444, Dixson v. Snetsinger (1873), 23 U.C.C.P. 235, Attorney General v. Emerson, [1891] A.C. 649, Ngati Apa v. Attorney-General, [2003] NZCA 117, 3 N.Z.L.R. 643, Restoule v. Canada (Attorney General), 2021 ONCA 779, Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14, Mikisew Cree First Nation v. Canada (Governor General in Council), 2018 SCC 40, Madawaska Maliseet First Nation v. Canada, 2017 SCTC 5, Ross River Dena Council Band v. Canada, 2002 SCC 54, Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, Williams Lake Indian Band v. Canada (Aboriginal Affairs and Northern Development), 2018 SCC 4, Wewaykum Indian Band v. Canada, 2002 SCC 79, Galambos v. Perez, 2009 SCC 48, K.L.B. v. British Columbia, 2003 SCC 51, Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, Beckman v. Little Salmon/Carmacks First Nation, 2010 SCC 53, M.(K.) v. M.(H.), [1992] 3 S.C.R. 6, Feather v. The Queen (1865), 122 E.R. 1191 (K.B.), Matthews v. Ministry of Defence, [2003] UKHL 4, [2003] 1 A.C. 1163, M. v. Home Office, [1993] UKHL 5, [1994] 1 A.C. 377, Dyson v. Attorney-General, [1911] 1 K.B. 410 (Eng. & Wales C.A.), Slark (Litigation Guardian of) v. Ontario, 2010 ONSC 1726, Canada v. Thouin, 2017 SCC 46, Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, Richard v. British Columbia, 2009 BCCA 185, Cloud v. Canada (Attorney General) (2003), 65 O.R. (3d) 492 (Div. Ct.), rev’d (2004), 73 O.R (3d) 401 (C.A.), Seed v. Ontario, 2012 ONSC 2681, Templin v. Ontario, 2016 ONSC 7853, Restoule v. Canada (Attorney General), 2020 ONSC 3932, , aff’d 2021 ONCA 779, 466 D.L.R. (4th) 1, Cloud and Carvery v. Nova Scotia (Attorney General), 2015 NSSC 199, aff’d 2016 NSCA 21, R. v. Sullivan, 2022 SCC 19, Barker v. Barker, 2022 ONCA 567, Rudolph Wolff & Co. v. Canada, [1990] 1 S.C.R. 695, S.M. v. Ontario (2003), 67 O.R. (3d) 97 (C.A.), Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, [2005] 3 S.C.R. 388, Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, Southwind v. Canada, 2021 SCC 28, Moore v. Sweet, 2018 SCC 52, Chippewas of Saugeen First Nation v. Town of South Bruce Peninsula, 2023 ONSC 2056, Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574

Short Civil Decisions

Business Development Bank of Canada v. 170 Willowdale Investments Corp., 2023 ONCA 573

Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeal, Abandonment

Nordik Windows Inc. v. Aviva Insurance Company of Canada, 2023 ONCA 571

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Limitation Periods, Class Proceedings, Class Proceeding Act, 1992 SO 1992, c 6, s 28(1)

CIVIL DECISIONS

U.S. Steel Canada Inc. (Re) , 2023 ONCA 569

[Pepall J.A. (Motions Judge)]

Counsel:

R.B. Bell, E. Y. Fan, L. Sun, and R. Jaipargas, for the moving party, DGAP Investments Ltd.

G. R. Hall, J. Gage, and S. Tanvir, for the responding party, Stelco Inc.

R.B. Swan, R. Sahni, T. Gray, A. Morrison, and D. Saldanha, for the Monitor and Land Restructuring Officer, Ernst & Young Inc.

D. Stampley, for the responding party, USW Local 1005 Employee Life Health Trust and the Pension Deficit Funding Trust

L. Harmer, for the responding party, USW Local 8782 Employee Life Health Trust

A. Hatnay and A. Shamim, for the responding party, Representative Counsel to Non-USW employees and retirees of Stelco Inc. and counsel to the Non-USW Employee Life Health Trust

C. Koopman, for the responding party, LifeWorks (Canada) Limited

facts:

In September 2014, U.S. Steel Canada Inc., now Stelco Inc. (“Stelco”), was granted protection under the Companies’ Creditors Arrangement Act (“CCAA”). In June 2017, the Court approved Stelco’s restructuring plan that provided for Stelco’s transfer of industrial land to a group of special purpose entities designed to hold land (the “Land Vehicle”). The land in the Land Vehicle was then to be sold for the benefit of the Stakeholders. LandCo was a limited partner in the broader limited partnership collectively known as the Land Vehicle Stakeholders.

The moving party, DGAP Investments Ltd. (“DGAP”), sought a stay pending leave to appeal the May 5, 2023 order of the supervising judge, McEwen J. In that order, the supervising judge authorized Ernst & Young Inc., in its capacity as the court appointed interim Land Restructuring Officer of the Land Vehicle (“LRO”), to enter into a Securities Purchase Agreement (“SPA”) with the respondent, Stelco. Under that Agreement, Stelco would acquire all the partnership units of the Land Vehicle.

The supervising judge rejected DGAP’s cross-motion seeking a timetable under which various transactions would take place before the closing of the SPA.

On May 5, 2023, the supervising judge made a second order discharging the LRO and authorizing the Monitor to carry out specified remaining incidental duties. He directed the Monitor to remain engaged as the eyes and ears of the court with respect to the completion of the SPA, but also with respect to the completion of the Reconveyance Agreement and the DGAP Sale Agreement. Once the SPA closed, Stelco and DGAP were to pay the Monitor and its counsel’s fees equally. The order provided for the termination of the CCAA proceeding and release of the Monitor upon completion of those duties.

issues:

1. Based on the merits of the case, was there a serious issue to be determined?

2. Would the moving party suffer irreparable harm if the stay were refused?

3. Based on a balance of convenience, would the parties suffer greater harm from the granting or refusal of the stay pending a decision on the merits?

holding:

Motion dismissed.

reasoning:

1. No.

The supervising judge’s decision in approving the SPA in the absence of a sequencing order was discretionary in nature and largely fact based. Similarly, the supervising judge’s conclusion that he was not prepared to find that Stelco had failed to act in good faith was open to him based on the record before him. Deference was owed to his factual findings absent palpable and overriding error. Lastly, s. 36 of the CCAA applied to a sale of assets by a debtor company and would not appear to be applicable. Although the Court considered the moving party’s case for leave to appeal to be weak on the merits, the Court was not prepared to conclude that it was frivolous or vexatious. Leave to appeal in a CCAA proceeding by its nature often is of some significance to the proceeding.

The Court recognized that the serious issue to be determined threshold was a low one, however, the Court concluded that the moving party did not meet it insofar as it related to leave to appeal in a CCAA proceeding. The supervising judge found that the SPA would benefit the Stakeholders, was consistent with the objectives of the CCAA Plan that was approved, would monetize the Land Vehicle, and would permit the Stakeholders to be paid. His order also permitted the Stakeholders to extricate themselves from the CCAA proceedings which were ongoing since 2014. This included the lengthy, expensive, and acrimonious litigation between Stelco and DGAP.

2. No.

Irreparable harm is harm which cannot be quantified in monetary terms. If the SPA closed before the DGAP Sale Agreement and the reconveyance, DGAP’s concern was that Stelco would use the SPA to upend the DGAP Sale Agreement and avoid its obligation to reconvey. DGAP maintained that the planned development was a once-in-a-generation opportunity that could not be compensated through damages. It argued that if the SPA closed, the Court was hesitant to reverse the intricacies of that agreement. Stelco’s CEO denied that the purpose of the SPA was to upend the DGAP Sale Agreement.

The Court did not accept DGAP’s arguments. If the SPA closed absent DGAP’s requested sequencing order, Stelco would still be bound by its agreements and undertaking. The supervising judge took measures to address DGAP’s concerns and directed that the Reconveyance Agreement be completed as soon as possible. These provisions were designed to mitigate DGAP’s speculative concerns. The Court concluded that consideration of irreparable harm also favoured a dismissal of the motion for a stay.

3. Yes.

The Court stated that the sooner the SPA closed, the sooner the fruits of that agreement would be paid to the aging population of beneficiaries that comprised the Stakeholders. They would be able to exit the protracted and expensive litigation. Monetizing the Land Vehicle’s assets was a key objective of the CCAA Plan. The longer the CCAA proceeding dragged on, the greater the professional fees which were born by the Land Vehicle, a construct designed to benefit these aging individuals. As stated by the supervising judge, there was no allegation that the Stakeholders failed to act in good faith or were in any conflict of interest. Nor was there any evidence that they had acted dishonestly or unreasonably in negotiating the SPA. The balance of convenience favoured a dismissal of the stay motion. The interests of justice did not call for a stay.

EF Institute for Cultural Exchange Limited v. WorldStrides Canada, Inc. , 2023 ONCA 566

[Lauwers, Zarnett and Thorburn JJ.A.]

Counsel:

B. Fromstein, for the appellant
B. Berg and A. Li, for the respondents

Keywords:Contracts, Employment, Restrictive Covenants, Confidentiality Agreements, Civil Procedure, Summary Judgement, Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, Guzzo v. Randazzo, 2015 ONSC 6936

facts:

Mr. C had begun his employment with the appellant in May 2005 and rose to the position of president in October 2011. His Employment Agreement contained a Confidential Information clause and a Restrictive Covenant. After his dismissal, he negotiated and signed a Severance Agreement effective September 30, 2014. Key terms included compliance with the Confidential Information clause of the Employment Agreement; compliance with the Restrictive Covenant; access to outplacement services at the appellant’s expense; and the payment of $225,000 to Mr. C in two tranches, within 30 days of his signing the Severance Agreement and the second on the one-year anniversary, when the one-year Confidentiality Clause expired (the “Non-Compete period”). During the Non-Compete period, Mr. C interviewed and was verbally offered a position as General Manager, which the appellant learned of. Mr. C had started his employment with the respondent one day following the completion of the Non-Compete period. The appellant subsequently sued Mr. C and the respondent.

The motion judge had taken the analytical approach laid out by the Court in Royal Bank of Canada at para 24. The appellant’s key evidence included: an email exchange between the CEO and President of the respondent’s parent company and Mr. C; Mr. C’s resume; notes taken by the respondent’s senior executive JC at the interview in Charlottesville; a May 2015 email from a Respondent regional sales manager, DS,promoting a “massive campaign” to celebrate the 100th anniversary of Vimy Ridge; and an email exchange with a terminated employee of the appellant.

The motion judge had found that this evidence did not amount to any breach of the confidentiality commitments Mr. C made to the appellant: the correspondence with the Respondent CEO and Mr. C’s resume contained no sensitive financial information; JC’s interview notes had not disclosed any breach; there was no evidence linking the respondent’s planning for the Vimy Ridge centennial to Mr. C; and Mr. C’s advice to the former employee was not connected to changes in the terms of her termination, any loss by the appellant, or increased payment to the former employee.

issues:

1. Did the motion judge err by failing to consider the appellant’s arguments that Mr. C breached the Severance Agreement by assisting a competitor during the relevant one-year period?

2. Did the motion judge err in requiring that the appellant prove damages on the appellant’s claim that Mr. C assisted the appellant’s departing employee in negotiating a termination package?

3. Did the motion judge err by reversing the onus on the summary judgment motion?

4. Did the motion judge err by granting summary judgment?

holding:

Appeal dismissed.

reasoning:

1. No

The motion judge was aware of the competition issue by virtue of Mr. C’s conversation with senior vice-president of the respondent about the location of office space in Toronto. The Court considered this a de minimis communication. Furthermore, neither the notes of the interview, which had consisted mostly of questions that would be expected at a job interview, nor the resume, contained the appellant’s “sensitive” confidential information. Non-sensitive information was considered to have little if any impact on competition.

The Court noted that the motion judge had stated that meeting with a prospective future employer that is a competitor is not, on its own, a breach of fiduciary duties: Guzzo at para 27. The Court concluded that the motion judge had properly considered Mr. C’s non-compete obligations.

2. No

The Court noted that the motion judge had considered the issue of Mr. C’s contact with the appellant’s departing employee. Further, given that during subsequent litigation, no evidence had come up that this perfunctory exchange changed the terms of the employee’s termination or resulted in any loss to the appellant, the motion judge had found that it would not be reasonable to consider the de minimus action a breach of Mr. C’s obligations. The Court concluded that the motion judge’s instinct of advice provided by Mr. C was innocuous, if not entirely obvious advice, was sound.

3. No

The motion judge properly understood and applied the onus. The motion judge was alive to the lack of affidavit evidence concerning the meeting with JC, noting that for the “key meeting in Charlottesville…notes (but no evidence) have been produced.” Lastly, the the motion judge addressed the issue of the origin of an email from DS. While the onus was on the respondent on the motion, the respondent’s evidence had met the evidentiary burden to the motion judge’s satisfaction. There was not enough evidence to require a further response, and the Court ultimately deferred to the motion judge’s assessment.

4. No

The appellant argued that the motion judge granted summary judgment when it was not in the interests of justice to do so. This argument was related to the claimed third error, which, having failed, negated this fourth argument. The Court was of the opinion that it was clearly in the interests of justice to grant summary judgment. The Court concluded the expenditure of additional resources by the parties, and the additional use of scarce judicial resources was not warranted in this case.

Bon-Star Inc. v. First National Financial GP Corporation, 2023 ONCA 567

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

Counsel:

A. Camporese, for the appellant
D.P. Preger and D.Z Seifer, for the respondent

Keywords: Contracts, Real Property, Mortgages, Prepayment Privileges, Civil Procedure, Adjournments

facts:

The appellant appeals from an order which declared that a mortgage given by the appellant as mortgagor to the respondent as mortgagee is a closed mortgage with no prepayment privilege and that the mortgage cannot be pre-prepaid without compensating the respondent for lost interest through to maturity.

issues:

1. Did the application judge err in refusing the request for a third adjournment of the proceedings, in requiring it to proceed without counsel, and in appointing Mr. N to act on behalf of the corporation without a request for that relief from the appellant?

2. Did the application judge err in entertaining the respondent’s request for a declaratory relief concerning the terms of the mortgage between the parties?

3. Did the application judge err in making a broad declaration?

holding:

Appeal allowed, in part.

reasoning:

1. No.

The Court concluded that the decision whether to grant an adjournment is a matter of discretion entitled to deference on appeal. The proceeding was set in May 2021 to be heard in September 2021. At the September 2021 hearing date, the appellant had not filed any material. The adjournment to October 18, 2021, and a subsequent adjournment to November 1, 2021, were both peremptory on the appellant. Although the application judge’s decision not to grant a third adjournment of the November 1, 2021 hearing date meant the appellant was required to proceed without counsel, the Court was not persuaded that the application judge erred in refusing to grant a further adjournment or in appointing Mr. N to act for the corporation.

The application judge was aware of Mr. N’s connection to the corporation. In the Court’s view, appointing Mr. N to act for the appellant was preferable to having the matter proceed without anyone to speak for the appellant.

2. No.

The Court held that the application judge did not err in entertaining the respondent’s request for declaratory relief concerning the terms of the mortgage between the parties. The appellant brought a counter-application seeking a declaration concerning amounts owing in the event of a sale of the property subject to the mortgage, rather than challenging the propriety of granting declaratory relief in the court below. Whether there was an existing binding agreement for the sale of the property subject to the mortgage, the appellant had requested a discharge statement for a sale and a dispute existed between the parties concerning whether the subject mortgage could be prepaid and/or prepaid without a penalty.

3. Yes.

The Court held that the application judge erred in making the broad declaration that the mortgage cannot be prepaid without compensating the respondent for lost interest through to maturity. The Court noted that whether the appellant could ever prepay the mortgage without paying an interest penalty would depend on the circumstances then existing, the specific terms of the mortgage at issue, and the negotiation positions of the parties. The Court varied the formal order to reflect this change.

Bell v Long , 2023 ONCA 563

[Lauwers, Zarnett and Thorburn JJ.A.]

Counsel:

M. Bell, acting in person
J.E. Sirdevan, for the respondent

Keywords:Contracts, Solicitor and Client, Professional Negligence, Civil Procedure, Limitation Periods, Discoverability, Capacity, Summary Judgment, Limitations Act, 2002, S.O. 2002, c. 24, s.7, Deck International Inc. v. The Manufacturers Life Insurance Company, 2012 ONCA 309

facts:

The respondent is a lawyer who represented the appellant in a family law motion in 2015. The appellant was unsuccessful on the motion, and subsequently terminated the solicitor-client relationship. In 2016, the appellant brought a motion to change the 2015 order. The appellant commenced the present action in 2020 for solicitor’s negligence in relation to the 2015 motion, more than four years after the appellant terminated the respondent’s retainer. The respondent brought a motion for summary judgment on the basis that the claim was barred by the Limitations Act, 2002.

The appellant presented two responses: (1) that the claim was not discoverable until less than two years before she commenced it; and (2) that the limitation period was suspended by s. 7(1) of the Limitations Act, 2002, as the appellant was incapable of commencing a proceeding by reason of mental disability.

The motion judge found that the order that identified the respondent’s negligence was more than two years before the appellant commenced her action, so it did not assist the appellant in extending the limitation period. The motion judge also found that the Law Society of Ontario’s complaint for professional misconduct had no effect on whether a civil proceeding was appropriate. Finally, the motion judge found that the discovery of new facts because of the respondent’s document production did not affect the limitation period.

issues:

1. Did the motion judge err in determining that the limitation period expired?

2. Did the motion judge err in not extending the limitation period due to a lack of capacity?

holding:

Appeal dismissed.

reasoning:

1. No.

The motion judge made no error of law or palpable and overriding error of fact in reaching their conclusions. The motion judge indicated that the appellant clearly discovered her negligence claim prior to receiving the respondent’s productions. This was evidenced by the fact that she started her action in January 2020 and that the limitation period ceases to run once the claim has been issued.

2. Yes.

Under s.7 of the Limitations Act, 2002, a lack of capacity can extend the limitation period. However, a mere diagnosis is insufficient to show incapacity. There must be specific medical evidence that the party claiming incapacity was unable to conduct litigation at the relevant time. The appellant presented no such evidence. There was no evidence that the appellant was unable to manage her personal or financial affairs or that she required a litigation guardian for her other proceedings. The motion judge identified and applied the correct legal principle and was correct to find that the appellant was capable throughout.

Covant v. College of Veterinarians of Ontario, 2023 ONCA 564

[Benotto, Trotter and Zarnett JJ.A.]

Counsel:

L. Honickman and L. Brown, for the appellant
B. LeBlanc and A. Hountalas, for the respondent

facts:

Dr. C is a veterinarian who is licensed to practice in Ontario. He is the owner and operator of Bayview Seven Animal Hospital (“BSAH”). A panel of the Discipline Committee (“the Committee”) of the College of Veterinarians of Ontario (“the College”) found that Dr. C engaged in professional misconduct by re-selling large quantities of veterinary drugs to human pharmacies, contrary to a newly amended regulation. The Committee imposed a one-month suspension from practice, along with other sanctions and costs. Both dispositions were upheld by the Divisional Court. Dr. C obtained leave to appeal to the Court.

issues:

1. Did the Divisional Court err in failing to find that s. 32(2)(d) of “Part III – Drugs”, R.R.O. 1990, Reg. 1093 under the Veterinarians Act, R.S.O., c. V.3. (the “Regulation”) is unconstitutionally vague and/or overbroad?

2. Did the Divisional Court err in upholding the Committee’s finding that Dr. C engaged in professional misconduct?

3. Did the Divisional Court err in upholding the penalty imposed by the Committee?

holding:

Appeal dismissed.

reasoning:

1. No

Whether rooted in the Charter or in more general rule of law considerations, the Court agreed with the findings of the Committee and the Divisional Court that s. 33(2)(d) of the Regulation is not impermissibly vague, nor is it overbroad.

In R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606, Gonthier J.A. wrote: “[t]he doctrine of vagueness can therefore be summed up in this proposition: a law will be unconstitutionally vague if it so lacks precision as not to give sufficient guidance for legal debate”: at p. 643; see also Wakeling v. United States of America, 2014 SCC 72, [2014] 3 S.C.R. 549, at para. 62. Building on this analysis in Mussani, Blair J.A. wrote that, “unconstitutional vagueness stems from language that is so imprecise neither the individual concerned nor the agency enforcing the provision can determine whether the conduct in question is prohibited or not”: at para. 63.

Section 33(2)(d) does not fun afoul of this standard. The two phrases under attack – “in reasonable quantities” as a result of a “temporary shortage” – provide permissible room for legal debate. The fact that a regulation requires interpretation in the context of a specific factual matrix does not suffice for a finding of vagueness. The impugned phrases are complementary – they inform the content of each other, and in so doing, achieve an acceptable level of clarity. The Court agreed with the observation that, “[b]ased on the context, ‘reasonably limited quantities’ would mean quantities proportionate to the temporary shortage”: at para. 33 of the Divisional Court reasons.

The question of overbreadth was even more straightforward. Returning to Mussani, the question is whether the means chosen by the legislator are “unnecessarily broad, going beyond what is needed to accomplish the governmental objective”: at para. 69, citing R. v. Heywood, [1994] 3 S.C.R. 761. The rationale provided for the amendment by the College’s Council was “to mitigate the risk of veterinarians engaging in the purchase and sale of drugs for purposes other than to ensure a substance required by patients is legitimately available via a pharmacy or another member.” In the Court’s view, the Divisional Court reached the correct conclusion on this issue.

The College has no control over the sales and marketing strategies of private pharmaceutical entities, something that may or may not shift over time. While pharmaceutical companies may refuse to supply human pharmacies with certain drugs, this does nothing to demonstrate that the impugned section of the Regulation captures conduct beyond what is required to achieve the College’s objective. Section 33(2)(d) is sufficiently tailored to its objective of mitigating the risk of re-sale of drugs for certain purposes, regardless of how this may impact pharmacies’ inventories.

Lastly, Dr. C’s conduct did not amount to anything close to being a borderline case. He was engaged in an ongoing sub-distribution enterprise, whereby staff would place orders one day, receive them the next, repackage the products, then wait for them to be picked up by the purchasing pharmacists, who paid a handling fee.

2. No

The allegations against Dr. C concerned a course of conduct involving many similar transactions. The College was not required to prove that any single re-sale amounted to an infringement of s. 33(2)(d).

The evidence was clear, especially from Ms. B, that BSAH was not responding to temporary shortages of drugs; they filled orders without requiring an explanation. And in any event, Ms. C testified that she ordered pharmaceutical products to a keep a supply for future demand. In short, the evidence proved in a clear and convincing manner that the drugs were resold without regard to the requirement of a temporary shortage. As the Committee found, these are concepts that are capable of evaluation on a commonsense basis. As the Committee found, “reasonable quantity” and a “temporary shortage” are concepts that are capable of evaluation on a commonsense basis.

The evidence before the Committee revealed that the pharmaceutical companies were not really concerned with the quantities that were re-sold; instead, they objected to any re-sales at all because this activity hampered their ability to trace their products to end-users, and thereby compromised quality control.

That the manufacturers and distributors of veterinary products had different priorities than the College was of no import for the purposes of this appeal. The value in the evidence from representatives of these entities was in detailing the volume of drugs sold to Dr. C. Combined with the evidence of Ms. Bastos and the pharmacists, it amounted to an overwhelming case against Dr. C that he was infringing the Regulation by engaging in a sub-distribution business.

The pharmacies with whom Dr. C did business never experienced a “temporary shortage.” This is because manufacturers and distributors of veterinary products never sold to pharmacies in the first place. The pharmacies’ arrangements with Dr. C amounted to an end-run around the decisions taken by pharmaceutical companies not to sell animal medicines to human pharmacies, which was behaviour that s. 33(2)(d) forbade Dr. C from engaging in.

The evidence adduced established that Dr. C was aware of the regulatory amendment to s. 33(2)(d). It also proved that he had been warned about his conduct but persisted in his sub-distribution enterprise.

3. No

The Court saw nothing clearly unreasonable, demonstrably unfit, or representing a substantial and marked departure in the Committee’s penalty decision, as upheld by the Divisional Court: see Peirovy, at paras. 56-57; Mitelman, at para. 41. Neither the reasons of the Committee nor the Divisional Court revealed an error in principle.

The most serious component of the sanction was the suspension from practice for a one-month period. Given the nature of Dr. C’s conduct, and his ongoing conduct in the face of numerous red flags, the sanction was appropriate. In imposing the sanction that it did, the Committee also intended to deter other veterinarians from engaging in similar conduct, and at the same time, maintain the public’s confidence in the ability of the College to regulate its members. There was no error in this approach.

The Committee commanded a wide discretion in determining whether the College’s costs should be paid under ss. 30(6.1) of the Act. The Committee reduced what might have otherwise been a greater costs award based on its assessment of the role of both parties in lengthening the proceedings, which was a fair approach. The costs award was reasonable in all of the circumstances.

Chippewas of Nawash Unceded First Nation v. Canada (Attorney General), 2023 ONCA 565

[Lauwers, Pardu and George JJ.A.]

Counsel:

R. Townshend, C. Guirguis, R. Pelletier, J. McNamara, K. Nerland and B. Brookwell, for the appellants (C69830) and the appellants/respondents by way of cross-appeal (C69831) Chippewas of Nawash Unceded First Nation and Saugeen First Nation

M. Beggs, M. McCulloch, B. Ennis, C. Tsang, and S. Voleti, for the respondent (C69830 & C69831) the Attorney General of Canada

D.J. Feliciant, R. Ogden, J. Mc Randall, and J. Le Pan, for the respondent (C69830) and the respondent/appellant by way of cross-appeal (C69831) His Majesty the King in Right of Ontario

M.J. Dougherty and D. McKenna, for the respondent/appellant by way of cross-appeal (C69831), the Corporation of the Township of Georgian Bluffs

facts:

The appellants, the Chippewas of Nawash Unceded First Nation and the Saugeen First Nation, collectively referred to as “SON”, sued Canada and Ontario for a declaration that they have Aboriginal title to submerged lands in a large section of Lake Huron and Georgian Bay, (the “Title Claim”). SON claimed the right to control every aspect of occupation of those waters, consistent with the rights associated with Aboriginal title, and argued that any incursion on that right, whether for national defence, border control, recreation, commerce, or navigation must comply with s.35 of the Constitution Act, 1982. The trial judge dismissed their claim. SON appealed.

SON also sued Canada and Ontario for breach of the promise made by the Crown in 1836, in Treaty 45 ½, to protect SON’s land from encroachments by “the whites” (the “Treaty claim”). SON alleged that the Crown did not fulfill its promise that the Crown misconducted itself during treaty negotiations. As a remedy for the Crown’s breach of fiduciary duty, being the misconduct and failure to act with diligence to fulfill the treaty promise in Treaty 45 ½, SON sought a declaration that it is the beneficial owner, by way of constructive trust, of certain road allowances in the municipalities, including those in active use as public roads.

SON appealed from findings respecting the consequences of Crown misconduct, as well as her conclusion that the treaty promise did not create fiduciary obligations. Ontario appealed the trial judge’s conclusion that the Crown failed to act with sufficient diligence to fulfil the treaty promise. Ontario also asserted that the Crown was immune to suit for any breaches of fiduciary duty.

Finally, the municipalities appealed the trial judge’s refusal to dismiss the action against them.

The Title Claim

In its Title claim, SON sought a declaration of Aboriginal title over a large section of Lake Huron and Georgian Bay surrounding the Bruce Peninsula. At trial, SON argued that the test from Tsilhqot’in, which has been applied to determine claims for Aboriginal title to dry land, should apply to their claim. Ontario and Canada did not agree that the Tsilhqot’in test applied, and in any event, SON could not satisfy the test. On appeal, the parties agreed that Tsilhqot’in establishes the test for proof of Aboriginal title to submerged lands, although Ontario argued that the application of that test should be nuanced by the more general test for Aboriginal rights, of which it is a subset.

The Tsilhqot’in test requires an examination of Aboriginal occupation of land prior to the assertion of British sovereignty and requires that the occupation be sufficient, continuous, and exclusive.

SON’s choice of the boundaries of the area it claimed was not made to reflect physical occupation of that area. Rather, it was made to reflect the reality of the international border in the west and to divide the lake evenly between the First Nations on the north and east sides of the lake. SON’s claim asserted title to the submerged land, with the rights to minerals and other resources that would be associated with that title, the right to exclude others from the space above the land, as well as the right to the things in the water above that land. It did not claim title to the water.

The Treaty Claim

At trial, SON’s Treaty claim had two parts. The first focussed on the implementation of Treaty 45 ½, which was signed in 1836. SON argued, and the trial judge found, that the Crown breached its treaty obligation to protect the Peninsula from settler encroachments. She also found that the Crown breached its honour.

Second, SON challenged the treaty negotiation process and Crown’s conduct leading up to the signing of Treaty 72 in October 1854. At trial, SON submitted that the Crown did not act honourably and that it breached its fiduciary duties. The trial judge found that some of the Crown conduct breached the honour of the Crown. She concluded there was no fiduciary duty.

On appeal, Ontario challenged the trial judge’s findings concerning settler encroachments and her resulting determination that the Crown breached both its obligations under Treaty 45 ½ and the honour of the Crown. SON argued that the trial judge erred in not finding that certain Crown conduct in the leadup to the signing of Treaty 72 also breached the honour of the Crown, and in not concluding that the Crown owed and breached a fiduciary duty. Ontario responded that, if the Court concluded that the Crown owed SON a fiduciary duty, then Crown immunity applied.

The Claims Against the Municipalities

Three municipalities appealed from the trial judge’s refusal to dismiss the action against them. SON’s action against the municipalities was based on the Crown’s alleged breaches of duty to SON before its surrender of lands to the Crown through Treaty 72. SON argued that the surrendered lands should be impressed with an institutional constructive trust by reason of those breaches, and that SON was entitled to follow the lands impressed with that trust into the hands of the municipalities. The trial judge refused to dismiss the action against the municipalities, holding that the issue of whether a municipality had expended money on maintaining any particular road was a property-specific inquiry, more properly dealt with at Phase 2 of the proceedings.

The municipalities also submitted that since the trial judge dismissed the arguments alleging that the Crown breached fiduciary duties owed to SON, the entire foundation of the action against them had crumbled. Further, the municipalities argued that a constructive trust impressed upon the road allowances would, in any case, not be an appropriate remedy.

On appeal, the municipalities renewed their arguments made before the trial judge that the action against them should be dismissed. SON argued that, even if its claims alleging breach of fiduciary duty are ultimately dismissed, there may be some equitable relief available for breaches of treaty and the honour of the Crown and, thus, that a constructive trust entitling SON to the roads and road allowances cannot be foreclosed as a possible remedy for the latter breaches.

issues:

Issues in the Title claim:

1. Did the trial judge confuse the tests for Aboriginal rights and Aboriginal title?

2. Did the trial judge give sufficient weight to the Aboriginal perspective?

3. Did the trial judge fail to take into account the submerged nature of the land claimed?

4. Did the trial judge set too high a threshold for determining control by SON of the claimed land in her application of the Tsilhqot’in test?

5. Did the trial judge misperceive the common law regarding navigable waters and its relationship to Aboriginal title?

6. Should the trial judge have invited further submissions to determine a process as to whether a claim to Aboriginal title to a smaller area could be established?

Issues in the Treaty claim:

1. Did the trial judge err in finding that the Crown breached the honour of the Crown and the treaty promise in Treaty 45 ½ by failing to act with diligence to protect SON’s lands from encroachments by white settlers?

2. Did the trial judge err in finding that certain Crown conduct in the negotiation of Treaty 72 did not breach the honour of the Crown?

3. Did the Crown owe and breach a fiduciary duty to SON?

4. Is the Crown immune to claims for breach of fiduciary duty?

Issues in SON’s claims against the municipalities:

1. Did the trial judge err in not dismissing the action against the municipalities?

holding:

Title Claim appeal allowed, in part. Treaty Claim appeal dismissed. Municipalities’ appeal allowed.

reasoning:

The Title Claim

1. Did the trial judge confuse the tests for Aboriginal rights and Aboriginal title? No.

At the time of the trial, the Tsilhqot’in test had not yet been applied to submerged land. SON urged the trial judge to apply that test to their claim. Since the application of the test to land was novel, the trial judge took the precaution of considering whether the claimed right also met the test for Aboriginal right. The test for an Aboriginal right is different from the test for Aboriginal title.

The Court held that the trial judge correctly applied the test for Aboriginal title, as established in R v. Van der Peet. The trial judge went on later to apply the Tsilhqot’in test for Aboriginal title. The Court further held that the trial judge’s analysis under the umbrella of an Aboriginal rights claim did not taint her analysis of the test for Aboriginal title. As recently reaffirmed by the Supreme Court, Aboriginal title is thus a sub-category of Aboriginal rights.

The Court rejected SON’s argument that the trial judge erred by analyzing their claim for Aboriginal title through the lens of the test for an Aboriginal right.

2. Did the trial judge give sufficient weight to the Aboriginal perspective? No.

The Court held that it was clear from the trial judge’s reasons for judgment that in evaluating SON’s claim to Aboriginal title, she considered the Anishinaabe perspective in many ways.

The trial judge noted that she did not consider the lack of evidence of actual use of the lakebed to be determinative, given SON’s submission that the water and lakebed were regarded by them as one. She reviewed the Creation Story of the Anishinaabe. Water was one of the four levels of creation. She explained that water ceremonies were, and are, very important to the community. They were usually not held on water, except for a specific location at Nochemowenaing. The Nochemowenaing ceremony took place on the water, but other water ceremonies did not have to be held in, or near, the water of the Great Lakes.

The trial judge further found that SON are “a fishing people” and that they have relied heavily on fishing for sustenance, and sometimes for trade and commercial purposes. She concluded that, while fishing was important, it had limited connection to the claimed land.

On appeal, SON argued that the trial judge failed to give sufficient weight to the Aboriginal perspective. SON contended that giving dual weight to the Aboriginal and common law perspectives means assessing physical possession or control in light of how SON’s ancestors conceived of possession and that this modified the standard set by Tsilhqot’in. Tsilhqot’in, however, mandates that there must be a strong physical presence on or over the land claimed and that possession cannot be established based purely on subjective or internal belief.

The Court held that trial judge adequately considered the Aboriginal perspective. The trial judge noted that spiritual connections with the whole Earth or the whole of a territory, land and water, may be relevant to occupation. They were relevant in this case. But they were not sufficient to show occupation of the claim area for the purpose of Aboriginal title.

3. Did the trial judge fail to take into account the submerged nature of the land claimed? No.

SON argued that the trial judge erred by failing to consider the nature of the land claimed and the uses to which it could be put, in light of SON’s ancestors’ manner of living.

The trial judge was aware of the claimants’ ancestors’ way of life. The trial judge acknowledged that actual physical interaction with the lakebed was not determinative, though it was relevant. The trial judge found the physical contact SON had with the lakebed itself was minimal.

The Court held that while not dispositive, the trial judge’s consideration of SON’s interaction with the lakebed was relevant to determining connection. It is the most direct way of establishing occupation, especially in the common law perspective.

The Court also held that there was no doubt that fishing is relevant to both a claim for an Aboriginal right and to Aboriginal title. Ultimately, the Court held that the trial judge appropriately took into account the submerged nature of the land claimed and did not err in her consideration of the importance of fishing to SON’s ancestors.

4. Did the trial judge set too high a threshold for determining control by SON of the claimed land in her application of the Tsilhqot’in test? No.

SON submitted that the trial judge ought to have weighed the evidence about control of the claimed lands differently. The Court held that no palpable and overriding error resulted from the trial judge not being persuaded SON’s submissions.

The trial judge acknowledged SON’s argument “that there was an alliance or co-operative effort among Anishinaabe to take certain steps to control access to the Great Lakes in the 18th century,” but concluded that the evidence did not prove the existence of such an alliance in the 18th or 19th century (or control of all the access points). The trial judge refused to draw the inference that SON controlled the Title claim area. Ultimately, the trial judge concluded that SON had not proven that they, and their ancestors, had satisfied the Tsilhqot’in test. They did not have the control over the Title claim area needed to show exclusivity, nor did they occupy it.

The Court held that the trial judge’s review and assessment of the conflicting evidence was fair and that her findings were not tainted by any palpable and overriding error. She recognized that occupation sufficient to ground Aboriginal title was not confined to specific sites of settlement, but extended to tracts regularly used for hunting, fishing or otherwise exploiting resources.

5. Did the trial judge misperceive the common law regarding navigable waters and its relationship to Aboriginal title?

The trial judge noted that flowing water was incapable of ownership at common law because it is a common resource. She observed that SON’s claim for ownership of the lakebed, the contents of the water, and the right to exclude others from the water above the submerged land, was a claim for exclusivity, an element that was not part of the historical practices SON relied upon. SON relied upon the common law presumption ad medium filum aquae (“as far as the middle of the stream”) to show that the common law would recognize ownership of the bed of a body of water. The ad medium presumption is a common law rule by which the owner of land adjacent to non-tidal waters is presumed to own the waterbed to the midpoint of those waters. The trial judge observed that, whether tidal or non-tidal, navigable waters were subject to the public right of navigation which, she concluded, was incompatible with SON’s claim of exclusivity.

The trial judge reviewed law from the United States, Australia, and New Zealand to assess SON’s argument that whatever portion of the common law right of public navigation is ruled to be a justified infringement of Aboriginal title, it can co-exist easily with Aboriginal title to the beds of navigable waters. The trial judge concluded that the nature of SON’s connection to the claimed land in Lake Huron and Georgian Bay did not translate into title to that submerged land.

The trial judge declined to grant Aboriginal title to the area claimed, citing the fundamental inconsistency between Aboriginal title and common law rights.

In closing argument at trial and on appeal, SON submitted that it would be open to a court to define Aboriginal title by removing from it the right to exclude the public for the purposes of navigation. Ontario argued that it holds sovereign ownership of the lakebed by way of a public trust, for the protection of public interests in navigation and fishing.

The Court held that for the purposes of assessing jurisprudence about title to submerged lands, the Great Lakes are analogous to English tidal waters and that the rule of the English law as to navigable and tidal waters applies to them. The result is a rebuttable presumption of Crown ownership of the lakebed. The Court concluded that not every submerged land will interfere with navigation, and that some instances of Aboriginal title to submerged lands may have no practicable effect on the public right of navigation and may be entirely compatible with it.

The common law has permitted private ownership of discrete areas of property on the seabed or lakebed of tidal waters or waters like the Great Lakes. The Court held that whether or not Aboriginal title to a portion of the Great Lakes is compatible with the right of public navigation cannot be assessed until the extent of Aboriginal title in submerged lands is determined.

6. Should the trial judge have invited further submissions to determine a process as to whether a claim to Aboriginal title to a smaller area could be established? Yes.

At trial, SON made two arguments about changing the physical dimensions of the area to which it claimed Aboriginal title. First, SON amended their pleadings to seek Aboriginal title to “such portions” of the Title claim area, but they did not put forward alternative boundaries in their pleadings or at trial. Second, in closing submissions, SON suggested that the Aboriginal title could be subject to the public right of navigation. SON advanced no alternative boundaries and, therefore, the invitation to change the boundaries was left to guesswork.

The trial judge noted that, in light of the lack of submissions and evidence with respect to Nochemowenaing, she did not have sufficient information to define the area.

SON asked the court to remit the claim to the trial judge for a judgment, after further evidence and submissions, on the question of Aboriginal title to a portion of the Aboriginal title area claimed. The Court acceded to this request.

Issues in the Treaty claim:

The Court held that in arriving at her conclusion that the Crown breached its honour by failing to act diligently, and thereby breached Treaty 45 ½, the trial judge cited and applied the correct legal test and did not misapprehend the evidence.

The trial judge found that the Crown did not act diligently to protect the Peninsula from the encroachment of white settlers. While Ontario contested a number of findings that led the trial judge to conclude that the Crown breached the honour of the Crown and the treaty promise in Treaty 45 ½ by failing to act with diligence to protect SON’s lands from encroachments by white settlers, the Court found no basis to interfere with these findings.

The trial judge examined complaints and considered individual conduct from the historical record. She considered the issue of squatting throughout the province and on the Peninsula. In the end, she found that encroachment on the Peninsula was (1) significant, and (2) an escalating problem.

In terms of what the Crown could and should have done to prevent encroachment, Ontario raised other points related to the trial judge’s alleged error on the significance of squatting. According to Ontario, the different approaches can be explained by the fact that, unlike in the Grand River area, there was not a significant problem with squatting on the Peninsula. It submitted that it was wrong for the trial judge to reach a finding that the Crown breached its honour and the treaty by being reactive, without proactive steps to control encroachment. Ontario further claimed that there was nothing the Crown realistically could have done to prevent the encroachments we know did occur.

The Court held that what the Crown did elsewhere to combat encroachment identified the tools available to the Crown to achieve that purpose and was therefore relevant.

The Court held that the trial judge was correct to look beyond how the Crown treated the property interests of squatters because Treaty 45 ½ already promised the Peninsula to SON. The purpose of the encroachment clause was to protect the Peninsula for SON’s benefit, as a collective, and actual encroachments were barriers to the fulfillment of the Crown’s promise to achieve that purpose. Accordingly, there were no adverse property interests for the Crown to refuse to legally recognize.

Ontario submitted the trial judge erred by treating the requirement to pay attention to the issue of squatting as distinct from the duty to act diligently, and therefore did not take it into account. The Court held that the trial judge did not commit this error. Rather, she treated the duty to act diligently in the fulfillment of a treaty promise as having two components: (i) to pay attention to the problem of squatting, and (ii) to act diligently with the purpose of preventing it.

Finally, Ontario argued that the trial judge erred by suggesting that the Crown could not take competing responsibilities into account when implementing a treaty promise. The Court concluded that the trial judge’s analysis recognized the obvious, which is that the Crown’s honour cannot be compromised by interests that are axiomatically opposed to those that the Crown has promised to protect. The Court ultimately held that there was no basis to interfere with the trial judge’s finding. The trail judge applied the correct legal test and did not misapprehend the evidence.

2. Did the trial judge err in finding that certain Crown conduct in the negotiation of Treaty 72 did not breach the honour of the Crown? No.

SON argued both that the Crown’s negotiator at the time, Oliphant, had the obligations of a fiduciary while negotiating Treaty 72 and that he was obligated to disclose material steps that the Crown should have taken to protect the Peninsula from encroachments. The trial judge found that Oliphant’s conduct did not breach the honour of the Crown.

The Court found no basis to interfere with the trial judge’s findings concerning Oliphant’s conduct in the negotiation of Treaty 72 and her determination that this conduct did not breach the honour of the Crown. The Crown was not under a fiduciary obligation when negotiating Treaty 72.

3. Did the Crown owe and breach a fiduciary duty to SON? No.

The Court agreed with the trial judge that there was no additional fiduciary duty in the circumstances of this case.

SON argued that Treaty 45 ½ created a reserve, which, as such, gave rise to fiduciary duties on the Crown’s part. SON also argued that both the breaches of the honour of the Crown and the Crown’s failure to act with diligence to fulfil the promise in Treaty 45 ½ to protect the Peninsula from encroachment also amounted to breaches of both ad hoc and sui generis fiduciary duties owed by the Crown.

The trial judge noted that, where lands qualify as a “reserve” under the Indian Act, a myriad of statutory provisions under the Act then apply, including many Crown obligations. SON relied on the leading case interpreting the term “reserve” under the Indian Act: Ross River Dena Council Band v. Canada, 2002 SCC 54.

In the appeal, the Court noted that there was obvious difficulty in determining whether, in 1836, the Crown intended to create a reserve within the meaning of detailed legislation that arrived many years later. Despite the plethora of expert evidence at trial, no expert gave focused expert opinion evidence on how reserves were created in what is now Ontario at the relevant time. The question of whether a reserve was created is a question of mixed fact and law. The question of whether Bond Head, as a Crown agent, had the intention to create a reserve is particularly fact-specific. The Court was not persuaded that there was any palpable and overriding error that would justify the Court’s departure from the trial judge’s conclusion that Treaty 45 ½ did not create a reserve.

A fiduciary duty may arise in two circumstances. Crown fiduciary duties to Aboriginal peoples can arise either in accordance with the sui generis test or according to the ad hoc test.

An ad hoc fiduciary duty arises where there is: (1) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiaries; (2) a defined class of beneficiaries vulnerable to the fiduciary’s control; and (3) a legal or substantial practical interest of the beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control.

A sui generis fiduciary duty can arise where the Crown assumes a sufficient amount of discretion over a sufficiently specific Aboriginal interest. The interest must be cognizable, and the Crown’s assumption of discretion must be such that it invokes responsibility in the nature of a private law duty. Where a non-conventional fiduciary duty exists, the Crown is required to act with diligence and in accordance with the honour of the Crown.

The Court held that while a fiduciary relationship between the Crown and Aboriginal peoples exists, there are limits to the circumstances in which a fiduciary duty can be imposed on the Crown.

At trial, SON submitted that, in addition to the obligations arising out of Treaty 45 ½ and the honour of the Crown, the Crown had additional obligations to SON arising from both an ad hoc and a sui generis fiduciary duty. Both Ontario and Canada argued that there was no ad hoc fiduciary duty, but they disagreed about whether there was a sui generis duty. However, they both argued that, if there was a duty, it was not breached. The trial judge ultimately concluded that there was no fiduciary duty owed by the Crown to SON in this case.

The Court concluded that the trial judge did not err in concluding that SON had not established a conventional fiduciary duty. The treaty promise cannot be construed as an undertaking by the Crown to forsake the interests of all others in the province and act exclusively for SON’s benefit, which is an essential element of the conventional fiduciary duty test. The Court further held that the trial judge did not err in rejecting the imposition of a non-conventional fiduciary duty. Here, the imposition of a fiduciary duty would add nothing to the Crown’s obligations to diligently and purposively perform the treaty promise. Where a Crown obligation is grounded in the honour of the Crown, it may not be necessary to invoke fiduciary duties; the Crown is still obliged to comply with its constitutional obligations in a manner consistent with the honour of the Crown.

4. Is the Crown immune to claims for breach of fiduciary duty? No.

In response to SON’s fiduciary duty claims, Ontario pleaded the defence of Crown immunity. The trial judge did not address this defence because she found that the Crown owed no fiduciary duties to SON. The Court noted that a number of cases have concluded that the Crown may be held liable for breaches of fiduciary duty. Those cases include: Seed v. Ontario, Templin v. Ontario, and Restoule v. Canada (Attorney General).

The Court concluded that Ontario was not immune from claims for breach of fiduciary duty in this case. The Court took seriously the Supreme Court’s statement in Mikisew Cree, at para. 33, that reconciliation “is the ‘fundamental objective of the modern law of aboriginal and treaty rights’” (citing Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), and that “[t]he purpose of s. 35 … is to facilitate this reconciliation”. Ontario asked the Court to ignore the principles behind Crown immunity and to keep to a technical approach, which was quite inconsistent with the honour of the Crown, in order to dismiss SON’s fiduciary breach claim on the ground of Crown immunity. The Court concluded that it would be wrong to apply regressive procedural bars to Aboriginal claims for breach of fiduciary duty.

Issues in SON’s claims against the municipalities:

1. Did the trial judge err in not dismissing the action against the municipalities? Yes.

SON relied on Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, to assert that when Treaty 72 was signed, the surrendered lands were impressed with an institutional constructive trust in its favour because of the Crown’s wrongdoing, consisting of Anderson’s inappropriate remarks and the failure to diligently enforce the promise in Treaty 45 ½ to protect SON’s lands from incursions by settlers and trespassers. The Soulos court noted, however, that not all breaches of fiduciary duty give rise to such a remedial constructive trust.

The Soulos court, at para. 45, identified four elements which should generally be satisfied to justify imposition of a constructive trust based on wrongful conduct:

The defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced, in relation to the activities giving rise to the assets in their hands;
The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant in breach of their equitable obligation to the plaintiff;
The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure that others like the defendant remain faithful to their duties; and
There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case (e.g., the interests of intervening creditors must be protected).

The Supreme Court more recently considered principles of equitable compensation in Southwind v. Canada. The SCC noted that the constructive trust is a gains-based remedy, measured by the fiduciary’s gain rather than the plaintiff’s loss. It indicated that, when the Crown breaches its fiduciary duty, the remedy will seek to restore the plaintiff to the position the plaintiff would have been in had the Crown not breached its duty. When it is possible to restore the plaintiff’s assets in specie, a constructive trust and accounting for profits are often appropriate, but when restoring the plaintiff’s assets in specie is not available, equitable compensation is the preferred remedy.

SON also relied upon Moore v. Sweet, for the proposition that a constructive trust can be imposed upon property in the hands of a person who is innocent of any wrongdoing.

The Court concluded that to impress the municipal roads and road allowances with a constructive trust is not an appropriate remedy and the action against the municipalities should be dismissed.

SON argued that the trial judge erred in making findings of causation and, in particular, that these findings should have been left to Phase 2 of the trial. The Court rejected this argument. The trial judge did not err in making these findings. She had to assess all of the circumstances surrounding the signing of both treaties and the effects of the impugned conduct on SON. There was no basis to interfere with the trial judge’s findings as no palpable or overriding error was argued or shown.

The Court was persuaded that equitable compensation, payable by the Crown, would be an effective remedy, taking into consideration the importance SON attached to its lands, surrendered for reasons it considered appropriate. The Court noted that it was not satisfied that “good conscience” demanded that the municipalities’ roads and road allowances be transferred to SON.

The Court ultimately dismissed the claim against the municipalities.

SHORT CIVIL DECISIONS

Business Development Bank of Canada v. 170 Willowdale Investments Corp., 2023 ONCA 573

[van Rensburg, Nordheimer and George JJ.A.]

Counsel:

M. Spence and M. Lici, for the respondent
D. Trafford, for the appellant
B.N. Radnoff, for the intervener 729171 Alberta Inc.
T. Klink, for the Court-appointed Receiver The Fuller Landau Group Inc.]

Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeal, Abandonment

Nordik Windows Inc. v Aviva Insurance Company of Canada, 2023 ONCA 571

[van Rensburg, Nordheimer and George JJ.A.]

Counsel:

C.G. Smith, J.C Mastrangelo, and S. M. Birman, for the moving party Nordik Windows Inc.
A.L.W. D’Silva and G. Zacher, for the responding parties Aviva Insurance Company of Canada, Aviva General Insurance Company and Aviva Canada Inc

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Limitation Periods, Class Proceedings, Class Proceeding Act, 1992 SO 1992, c 6, s 28(1)

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.

COURT OF APPEAL SUMMARIES (August 21 – August 25)

By John Polyzogopoulos on August 26, 2023

Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of August 21, 2023.

Continue Reading

In Sase Aggregate Ltd. v. L, Sase discovered its pit manager apparently stole $2.1 million and pursued a constructive trust claim over a property owned by the manager’s wife, Ms. L., alleging she benefited from the stolen money. The Court found that the application judge did not misstate the law and correctly identified the requirements for unjust enrichment. The Court also determined that Sase failed to adequately trace the funds and establish Ms. L’s connection to the alleged fraudulently obtained proceeds. The appeal was dismissed.
Other topics covered this week included an appeal from a vesting order, appellate jurisdiction in an OBCA case and stay pending appeal.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

Sase Aggregate Ltd. v. L, 2023 ONCA 554

Keywords: Torts, Fraud, Unjust Enrichment, Knowing Receipt, Knowing Assistance, Remedies, Tracing, Constructive Trust, Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, B.M.P. Global Distribution Inc. v. Bank of Nova Scotia, 2007 BCCA 52, 278 D.L.R. (4th) 501, rev’d on other grounds 2009 SCC 15, Re Oatway, [1903] 2 Ch. 356, Peel (Regional Municipality) v. Canada; Peel (Regional Municipality v. Ontario, [1992] 3 S.C.R. 762

Rose-Isli Corp v Smith, 2023 ONCA 548

Keywords: Bankruptcy and Insolvency, Receiverships, Sales Process, Mortgages, Right of Redemption, Mortgages Act, R.S.O. 1990, c. M.40, s. 2, Rose-Isli Corp. v. Frame-Tech Structures Ltd., 2022 ONSC 4135, BCIMC Construction Fund Corporation et al. v. The Clover on Yonge Inc., 2020 ONSC 3659, Royal Bank of Canada v. Soundair Corp., (1991), 4 O.R. (3d) 1 (C.A.), B&M Handelman Investments Limited v. Mass Properties Inc. (2009), 55 C.B.R. (5th) 271 (Ont. S.C.)

Short Civil Decisions

Foglia v. Grid Link Corp, 2023 ONCA 560

Keywords: Corporations, Oppression, Civil Procedure, Appeals, Jurisdiction, Business Corporations Act, R.S.O. 1990, c. B.16, s. 255, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 110, Gustafson v. Johnson, 2017 ONCA 581, Buccilli v. Pillitteri, 2016 ONCA 775

Buffone v. Sokil, 2023 ONCA 558

Keywords: Civil Procedure, Judgments, Enforcement, Writs of Possession, Appeals, Stay Pending Appeal, Mootness

CIVIL DECISIONS

Sage Aggregate Ltd. v L., 2023 ONCA 544

[van Rensburg, Miller and Nordheimer JJ.A.]

Counsel:

C. Carter, for the appellant

J. Montgomery, for the respondent

facts:

The appellant, Sase, owned and operated a gravel pit in Uxbridge, Ontario. In 2021, it discovered evidence that its pit manager, JS, had defrauded the company of more than $2.1 million over a period of several years.

Sase brought an application seeking to recover its stolen funds not against JS, but instead against his wife, the respondent Ms. L. Sase claimed that its stolen funds were used to purchase and renovate a property owned by Ms. L (the “Property”), and sought a constructive trust over the net proceeds from the sale of the Property. It alleged that Ms. L was liable based on the doctrines of knowing receipt, knowing assistance and unjust enrichment.

Ms. L denied knowledge of the fraud. Her evidence was that the payments that she had arranged for the purchase and renovation of the property came from legitimate sources. However, she admitted that, in the course of reviewing banking records, she had discovered that her husband had made payments totalling $177,632.38 using Sase’s funds.
The application judge concluded that, except for the acknowledged amount, Sase had not made out its claims, essentially because: (1) Ms. L had no actual or constructive knowledge of the fraud; (2) Sase was unable to trace the rest of its funds into the Property; and (3) Ms. L used legitimate sources to buy and renovate the Property. Thus, the application judge concluded that the net sale proceeds belonged to Ms. L (minus the $177,632.38 Ms. L admitted came from Sase).

issues:

1. Did the application judge err in finding that the imposition of a constructive trust depends on a finding of a fiduciary relationship and in failing to impose a constructive trust?
2. Did the application judge err in law in finding that the appellant failed to provide sufficient evidence to establish that LS owed his employer a fiduciary duty?
3. Did the application judge err in law in finding that Sase had not properly traced the funds in and out of the joint accounts because “a tracing analysis must follow the funds through as many steps or transfers as necessary to arrive at the conclusion that they are the same funds”?
4. Did the application judge commit a palpable and overriding error in finding that Ms. L did not receive Sase property or benefit from the fraud perpetrated by her husband?

holding:

Appeal dismissed.

reasoning:

1. No

The Court was not persuaded that the application judge misstated the law, as submitted by Sase. The Court did not read the application judge as having required a finding of a fiduciary or trust relationship before she could impose a constructive trust. Indeed, later in her reasons the application judge accurately identified the requirements for a finding of unjust enrichment as: (1) a benefit to the defendant; (2) a corresponding detriment to the plaintiff; and (3) the absence of any juridical reason for the defendant’s retention of that benefit. The balance of her reasons demonstrated that she understood and applied the test for unjust enrichment, including finding that Ms. L was unknowingly unjustly enriched by payments totaling $177,632.38 made by her husband toward the Property using Sase funds. The application judge refused to grant a constructive trust with respect to the balance because Sase had not met its burden to show that its money was used in the acquisition and improvement of the Property.

Sase also contended that there was no law to support the proposition that all Ms. L had to do was prove that she had legitimate, independent sources of funds and that she was required to prove that she provided “valuable consideration”, from her own funds, and not those belonging to her husband.

In the Court’s view, whether Ms. L was “availing herself” of “what had been obtained by the fraud of another” was the very issue in dispute. Sase had the burden of proving that Ms. L had received the proceeds of the fraud – that the funds used to purchase and renovate the Property were its funds – and Ms. L only needed to show that the funds were not Sase’s funds to meet the evidentiary burden placed on her.

2. No

The Court agreed with Sase that the evidence did support the conclusion that L S’s fraudulent actions were in breach of a fiduciary duty he owed to Sase.
However, the Court noted that the application judge’s finding that the appellant had not tendered sufficient evidence to establish that L S owed his employer a fiduciary duty was immaterial to the outcome of the appeal. The application judge rejected Sase’s claims for knowing receipt and knowing assistance because the other elements of these claims ─ knowledge of the duty and the breach, receipt of its proceeds and assistance in the breach ─ had not been made out. She accepted Ms. L’s evidence that she was unaware of her husband’s fraud and found a lack of evidence supporting constructive knowledge (findings which, while not necessarily accepted by Sase, were not challenged on appeal as palpable and overriding errors). She also accepted, on the evidence before her, that Ms. L had not used or received any of the Sase funds for her own benefit.

3. No

The Court noted that the application judge’s statement about the nature of tracing was correct, citing the Supreme Court’s decision in B.M.P.:
Tracing is an identification process. The common law rule is that the claimant must demonstrate that the assets being sought in the hands of the recipient are either the very assets in which the claimant asserts a proprietary right or a substitute for them.
The application judge concluded that, on this evidence, Sase’s evidence was inadequate to prove its assertion that its money was used to purchase and improve the Property. By contrast, in explaining the source of funds used for the purchase and renovation of the Property, Ms. L provided detailed evidence, showing the original source of payments she had arranged and step-by-step how the transfer of funds occurred.

4. No

With respect to the allegation that Ms. L benefited when the funds were deposited into her husband’s account and then a joint she had with her husband, the evidence was that Ms. L had nothing to do with her husband’s account, and rarely used the joint account. There was no evidence linking her to such transfers. Further, in view of the claims Sase was making and the remedy it was seeking – a constructive trust over the proceeds of sale of the Property – the benefit had to relate to the Property itself. Sase was required to show that its money had ended up in the Property and any benefit or enrichment was required to be a tangible benefit: “without a benefit which has ‘enriched’ the defendant and which can be restored to the donor in specie or by money, no recovery lies for unjust enrichment”: Peel (Regional Municipality) v. Canada; Peel (Regional Municipality v. Ontario.

Ms. L provided evidence that was accepted by the application judge that there were legitimate sources of money available to her and that she used those other sources to acquire and renovate the Property. Whether Ms. L benefited from her husband’s fraud was an issue to be determined in the context of Sase’s claims and the remedy it was seeking. Specifically, the question before the application judge was not whether Ms. L benefited in some way from the fraud but whether Sase had demonstrated that she had benefited in that the Sase funds were used to buy and renovate the Property. Given gaps in the evidence, it was still an open question where the stolen funds went

Rose-Isli Corp v Smith, 2023 ONCA 548

[Hourigan, Brown, and Monahan JJ.A.]

Counsel:

J. Wadden, C. Sayao, and T. Milosevic, for the appellants

M. Mednick, for the respondents, Frame-Tech Structures Ltd., FS, Capital Build Construction Management Corp. and 2735447 Ontario Inc.

S. Kour and B. Bissell, for the receiver Ernst & Young Inc.

N. Read-Ellis, for Ora Acquisitions Inc.

facts:

The appellants appealed the approval and vesting order issued by the motion judge that authorized the Receiver to proceed with a sale of the property in the receivership, and a related ancillary order.

The appellants had initially sought to appoint the Receiver over the property, which would engage in a sales process for the property. One of the appellants held a second mortgage on the property. The Receiver secured court approval for the sale process, however, the appellants opposed the sale. The appellants sought an order that would allow them to redeem the first mortgage or be recognized as a successful creditor bidder. The motion judge granted the Receiver’s approval motion and dismissed the appellants’ cross-motion for redemption.

issues:

Did the motion judge err is dismissing the appellant’s cross-motion?

holding:

Appeal dismissed.

reasoning:

No.

One of the applicants for the appointment of a receiver consented to the Appointment Order. Section 9 of the Appointment Order stated that “all rights and remedies against the Company, the Receiver, or affecting the Property, are hereby stayed and suspended except with written consent of the Receiver or leave of this Court”. The Court held that the motion judge was correct to determine that the issue was not whether the appellant had a right to redeem but whether it should be permitted to exercise that right once the court-approved sales process had run its course and the Receiver had entered into an agreement with the successful bidder. The ability of the appellants to exercise a right of redemption had to consider the reality that the property remained subject to an active receivership, which engaged interests beyond those of the second mortgagee.

The Court noted that the motion judge correctly considered the impact of allowing the encumbrancer to exercise its right of redemption on the integrity of a court-approved sales process. The Court noted that if a court-approved sales process has been carried out in a manner consistent with the principles in Royal Bank of Canada v Soundair Corp, a court should not permit a later attempt to redeem to interfere with the completion of the sales process.

The Court concluded that the motion judge correctly identified the interests at play which was required when balancing the right to redeem against the impact on the integrity of the court-approved receivership process. The motion judge’s conclusion that the conduct of the sales process met the Soundair criteria was reasonable and free of palpable and overriding error.

SHORT CIVIL DECISIONS

Foglia v. Grid Link Corp, 2023 ONCA 560

[Lauwers, Zarnett and Thornburn JJ.A.]

Counsel:

N. Wainwright, for the appellants

E. Zablotny, for the respondents

Buffone v. Sokil, 2023 ONCA 558

[Lauwers, Zarnett and Thornburn JJ.A.]

Counsel:

B.L.S, acting in person

J. Friedman, for the respondent/responding party E.A.B

E. Zablotny, for the respondents

W.M.S, acting in person

Keywords: Civil Procedure, Judgments, Enforcement, Writs of Possession, Appeals, Stay Pending Appeal, Mootness

COURT OF APPEAL SUMMARIES (August 14- August 18)

By John Polyzogopoulos on August 20, 2023

Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of August 14, 2023.

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Firstly, we would like to congratulate our firm’s very own, Robert Potts (and his co-counsel, Alan Pratt), for the result obtained in Whiteduck v Ontario. In that case, our clients, the Algonquins of Ontario, sought a declaration that Ontario breached its duty to consult and accommodate their interests before it recognized the Killarney and the Mattawa/Ottawa River Métis communities and gave them unlimited harvesting rights. Our clients’ claim was struck by the motion judge on the basis of a lack of standing. The appeal was allowed. The duty to consult and accommodate gave the Algonquins the necessary standing to bring the action and to claim the consequential relief sought. The Court also found that the Algonquins were free to challenge Ontario’s decision by way of action rather than by way of judicial review.

In Canada Christian College and School of Graduate Theological Studies v. Post-Secondary Education Quality Assessment Board, the Court upheld the Divisional Court’s decision that the Minister’s decisions regarding an application by the appellant to be recognized as a university were reviewable, justiciable, and reasonable. The Court rejected arguments that the Minister’s actions exceeded his authority, emphasizing the permissibility of referring matters to a Board and delaying proclamation according to legislative provisions. The Court also dismissed claims of unfairness, maintaining that the process met fairness standards and that the Minister’s discretion was subject to legitimate constraints.

Benjamin Cochrane Trust (Re) was a passing of accounts case in which parents who were administering their son’s trust funds derived from a personal injury settlement were found not to have properly accounted for the use of the funds and were ordered to pay funds back into the trust. The matter was heard over a 14-day trial involving relatively modest sums.

In Dramel Limited v. Multani, the Court refused a stay of the enforcement of a mortgage over a residential property pending appeal.

In 2110120 Ontario Inc. v. Buttar, the appellants appealed an order dismissing their motion made pursuant to the anti-SLAPP provisions in s. 137.1 of the Courts of Justice Act. The claim was brought by an employer against former employees who were alleged to have made serious defamatory allegations against their former employer in an effort to collect amounts they claimed were owed to them. Although the appellants met their burden under subsection 137.1(3) of the CJA that the Action arose from expressions relating to matters of public interest, the respondents met the burden necessary under subsection 137.1(4) of the CJA to avoid the dismissal of the action because the public interest in having the matter proceed outweighed the public interest in protecting the expression of the employees. There was evidence of malice on the part of the employees.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

Whiteduck v Ontario, 2023 ONCA 543

Keywords: Constitutional Law, Aboriginal Law, Duty to Consult, Duty to Accommodate, Civil Procedure, Pleadings, Motion to Strike, Judicial Review, Rules of Civil Procedure, rr. 5.03(1), 21.01(1)(b)(3)(a), Constitution Act, 1982 s 35(1), Canadian Charter of Rights and Freedoms, Judicial Review Procedure Act, RSO 1990 c J 1 ss 2(1), 6, Federal Courts Act, RSC 1985, c F-7, s 18, Courts of Justice Act, RSO 1990, c C 43, s 138, R. v Powley, 2003 SCC 43, Beckman v Little Salmon/Carmacks First Nation, 2010 SCC 53, Mikisew Cree First nation v. Canada (Governor General in Council), 2018 SCC 40, Haida Nation v. British Columbia (Minister of Forests) 2004 SCC 73, Mikisew Cree First nation v Canada (Minister of Canadian Heritage), 2005 SCC 69, Mitchell v M.N.R., 2001 SCC 33, Restoule v. Canada (Attorney General), 2021 ONCA 779, Nevsun Resources Ltd. v Araya, 2020 SCC 5, Doucet-Boudreau v Nova Scotia (Minister of Education), 2003 SCC 62, Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14, R v Marshall, [1999] 3 S.C.R. 456, Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4, Tsilhqot’in Nation v British Columbia, 2014 SCC 44, Rio Tinto Alcan Inc. v Carrier Sekani Tribal Council, 2010 SCC 43, Rodaro v Royal Bank of Canada, (2002), 59 O.R. (3d) 74, North Slave Métis Alliance v Canada (Indian Affairs and Northern Development), 2017 FC 932, Behn v Moulton Contracting Ltd., 2013 SCC 23, Chilian v Augdome Corp. (1991), 2 O.R. (3d) 696, Lax Kw’alaams Indian Band v Canadian (Attorney General), 2011 SCC 56, Keewatin v Ontario (Minister of Natural Resources) (2003), 66 O.R. (3d) 370, Canada (Attorney General) v TeleZone Inc., 2010 SCC 62, Apotex Inc. v Ontario (Minister of Health) (2000), 10 CPR (4th) 166, Ontario Federation of Anglers and Hunters v Ontario (Minister of Natural Resources and Forestry), 2015 ONSC 7969, Ontario (Attorney General) v Clark, 2021 SCC 18, Ontario Federation of Anglers and Hunters v. Ontario (Natural Resources and Forestry), 2016 ONSC 2806, Zhang v Canada (Attorney General), 2007 FCA 201, Krieger v Law Society of Alberta, 2002 SCC 65, R v Anderson, 2014 SCC 41

Canada Christian College and School of Graduate Theological Studies v. Post-Secondary Education Quality Assessment Board, 2023 ONCA 544

Keywords: Constitutional Law, Administrative Law, Judicial Review, Ministerial Decisions, Justiciability, Procedural Fairness, Legislation Act 2006, S.O. 2006, c. 21, Sched. F., Northern Regional Health Authority v. Horrocks, 2021 SCC 42, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, University of Ontario Institute of Technology v. Ontario (Finance), 2016 ONSC 7741, Roncarelli v. Duplessis, [1959] S.C.R. 121, C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539, R. v. Secretary of State for the Home Department ex p Fire Brigades Union, [1995] UKHL 3 (“Fire Brigades Union”), Authorson v. Canada (Attorney General), 2003 SCC 39, Attorney General of Canada v. Inuit Tapirisat et al., [1980] 2 S.C.R. 735, Canada (Attorney General) v. Mavi, 2011 SCC 30

Dramel Limited v. Multani,, 2023 ONCA 540

Keywords: Contracts, Real Property, Mortgages, Debtor-Creditor, Civil Procedure, Judgments, Enforcement, Writs of Possession, Courts of Justice Act, s. 134(2), Rules of Civil Procedure, r. 63.02(1), RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Starkman v. Home Trust Company, 2015 ONCA 436, Morguard Residential v. Mandel, 2017 ONCA 177

Benjamin Cochrane Trust (Re), 2023 ONCA 546

Keywords: Trusts, Trustees, Passing of Accounts, Compensation, Remedies, Equitable Set-Off, Civil Procedure, Prejudgment Interest, Costs, Trustee Act, R.S.O. 1990, c. T.23, Zimmerman v. McMichael Estate, 2010 ONSC 2947, Birks v. Micklethwait (1864), 33 Beav. 409, The Catalyst Capital Group Inc. v. West Face Capital Inc., 2023 ONCA 381, Toller James Montague Cranston (Estate of), 2021 ONSC 1347, aff’d 2022 ONSC 6636, Steven Thompson Family Trust v. Thompson, 2012 ONSC 7138, Simone v. Cheifetz (2000), 36 E.T.R. (2d) 297 (Ont. C.A.)

2110120 Ontario Inc. v. Buttar , 2023 ONCA 539

Keywords: Torts, Defamation, Civil Procedure, Anti-SLAPP, Courts of Justice Act, RSO, 1990, c c 43, ss 137.1(1)(2)(3)(4)(8), Canada Labour Code, RSC 1985, c L-2, Libel and Slander Act, RSO 1990 c L 12 s 22, Canadian Charter of Rights and Freedoms, s 2(b), 1704604 Ontario Ltd. v Pointes Protection Association, 2020 SCC 22, Singh v Sandhu, (26 January 2022), Sokoloff v Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 730, Grist v TruGrp Inc., 2021 ONCA 309, Veneruzzo v Storey, 2018 ONCA 688, Hansman v Neufeld, 2023 SCC 14, : Bent v Platnick, 2020 SCC 23, Canadian Union of Postal Workers v B’nai Brith Canada, 2021 ONCA 529, Park Lawn Corporation v Kahu Capital Partners Ltd., 2023 ONCA 129, Nanda v McEwan, 2020 ONCA 431, Sokoloff, Grist, and Echelon Environmental Inc. v Glassdoor Inc., 2022 ONCA 391, Dent-X Canada v Houde, 2022 ONCA 414, WIC Radio v Simpson, 2008 SCC 40, Blair v. Ford, 2021 ONCA 841, Hill v Church of Scientology of Toronto, [1995] 2 SCR 1130, Levant v DeMelle, 2022 ONCA 79, Thorman v McGraw, 2022 ONCA 851, Paul v Madawaska Valley (Township), 2022 ONCA 444, Peter A. Downard, The Law of Libel in Canada, 4th ed. (Markham: LexisNexis Canada, 2018), Raymond E. Brown, Brown on Defamation: Canada, United Kingdom, Australia, New Zealand, United States, loose-leaf, 2nd ed., (Toronto: Page: 31 Thomson Reuters, 2017)

Short Civil Decisions

Awad v. Dover Investments Limited , 2023 ONCA 542

Keywords: Civil Procedure, Appeals, Extension of Time, Costs, Machado v. Ontario Hockey Association, 2019 ONCA 210

CIVIL DECISIONS

Whiteduck v Ontario , 2023 ONCA 543

[Fairburn A.C.J.O., Doherty and Lauwers JJ.A]

Counsel:

Robert Potts and Alan Pratt, for the appellants,

J. Madden, A. Saieva-Finnie, P. Seaman, and K. Brown, for the respondents, Métis Nation of Ontario and Métis Nation of Ontario Secretariat Inc.

W. MacLarkey and J. Claydon, for the respondent His Majesty the King in Right of Ontario
S. Luk and B. Brookwell, for the interveners

facts:

The Algonquins of Ontario have been negotiating with Ontario and Canada under a 1994 framework to arrive at a modern-day treaty concerning, among other matters, the harvesting rights of the Algonquins to fish, hunt and trap wildlife resources within the settlement area.

The competing Indigenous interests at the heart of this case resulted from the Supreme Court’s seminal decision in R v Powley. Before Powley, the Algonquins held the only Aboriginal rights to the resources in question under Ontario’s 1991 Interim Enforcement Policy (the “Policy”). After Powley, the Policy was extended to Métis from Métis community recognized in that decision, but not to other Métis. However, in 2017, Ontario recognized six Métis communities including the Killarney and Mattawa/Ottawa River Métis – purportedly under Powley, and extended harvesting rights to them under the 2018 Framework Agreement in a large area that overlaps with the Algonquin settlement area.

The Algonquins sought a declaration that Ontario breached its duty to consult and accommodate their interests before it recognized the Killarney and the Mattawa/Ottawa River Métis communities and gave them unlimited harvesting rights.

issues:

(1) Did the motion judge err in finding that the Algonquins do not have standing to contest Ontario’s recognition of the Killarney and Mattawa/Ottawa River Métis Communities under Powley?

(2) On the assumption that the Algonquins have standing, did the motion judge err in holding that they could pursue their claims by way of an action rather than judicial review?

(3) Did the motion judge err in striking the statement of claim in its entirety with leave to amend some but not all of the claims?

holding:

Appeal allowed, with certain exceptions.

reasoning:

(1) Yes.

The Court first outlined the governing principles that are to be applied to Aboriginal claims: 1) Reconciliation is the purpose of Aboriginal law; 2) Every right must have a remedy; 3) The Crown is bound by the honour of the Crown in all it does respecting Aboriginal rights; 4) The Crown’s duty to consult and accommodate is fundamental; 5) The Crown is the steward of Aboriginal resources; and 6) The court must take a generous approach to pleadings in Indigenous cases.
The Algonquins claimed that Ontario had a duty to consult and accommodate them before making its decision to recognize the Killarney and the Mattawa/Ottawa River Métis communities and to give members of those communities unlimited harvesting rights. The Court noted that this asserted claim must condition a court’s approach to standing.

In the Court’s view, despite the primacy of the claim to the duty to consult and accommodate, the motion judge’s decision turned on her analysis of the Algonquins’ standing to bring the action which is where she fell into error. The motion judge had accepted the Algonquins’ argument that proven s. 35 rights were not required to trigger the duty to consult. The motion judge then turned to the issue of standing, and noted that “[t]he statement of claim, on its face, does not assert any authorization to represent any Métis individuals or groups for the purpose of asserting or demarcating Métis Aboriginal rights.” In the motion judge’s view, only Métis have the status to contest Métis Aboriginal rights; the Algonquins have “no authorization” to “challenge Métis group rights (and seek to eliminate them).” The motion judge also determined that “[the Algonquins] could seek to prove their own rights in this action and assert that their rights have been breached by another group, but they have not done so.” She then struck out the claims for declaratory relief without leave to amend, on the basis of standing.

The Court of Appeal unanimously disagreed and found that the motion judge’s standing analysis was inconsistent with her analysis of the duty to consult and accommodate. Her statement that the Algonquins were required to prove their own rights is not consistent with her statement that a potential for adverse impact suffices to raise the duty to consult and accommodate. In the Court’s view, the Algonquins sought protection for their interests, which might prove out eventually to be rights, and argued that the recognition Ontario afforded to the Killarney and the Mattawa/Ottawa River Métis communities adversely impacts them.

The Court clarified that the question was whether, for the purpose of pleading, the Algonquins had a sufficiently credible claim to an interest in harvesting rights, that is, to fish, hunt and trap wildlife resources, particularly moose, within the Algonquin settlement area to give rise to a duty on Ontario’s part to consult and accommodate them respecting the recognition of harvesting rights for the Killarney and the Mattawa/Ottawa River Métis communities in the same area.
The Court held that the Algonquins’ interest is sufficiently made out to permit the action to proceed on the duty to consult and accommodate.

(2) No.

Ontario argued that the Algonquins were obliged to pursue the case by way of an application for judicial review, not by way of an action. The Court set out four reasons explaining why the Algonquins were not required to seek relief by way of judicial review. First, a claim for breach of the duty to consult can be advanced in an action. As a general principle, a litigating party can select the legal process it wishes to pursue, subject to the Rules of Civil Procedure and to the requirements of the law more generally. Unless the law mandates a certain form of proceeding, the party starting it can choose the legal process to its own advantage. Further, even if a party selects the wrong form of proceeding, striking a claim merely on the basis that a litigant has “adopted the wrong ‘form of action’” might not always be appropriate.

Second, it was understandable that the Algonquins would prefer a trial over judicial review, given the plethora of competing expert reports in which credibility and reliability play key roles.

Third, the language of the Judicial Review Procedure Act. S. 6 requires “an application for judicial review” to be made to the Divisional Court. An “application for judicial review” is defined in s. 2(1) to mean a proceeding “by way of application for an order in the nature of mandamus, prohibition or certiorari” (s. 2(1)1) or a proceeding “by way of an action for a declaration or for an injunction, or both, in relation to the exercise, refusal to exercise or proposed or purported exercise of a statutory power” (s. 2(1)2).

The Court accepted the motion judge’s observation that “[t]he core of the plaintiffs’ case … is that Ontario breached its duty to consult with the plaintiffs.” The exercise of the Crown’s duty to consult is an exercise of its constitutional responsibility, an important vestige of the royal prerogative; in itself, compliance with the duty to consult does not involve the exercise of a statutory power. Decisions made by the Crown resulting from consultation might involve the exercise of a statutory power or a statutory power of decision, but fulfilling or declining to fulfill the duty to consult itself is neither. Ontario’s decision to recognize the Métis communities was made under s. 35 of the Constitution Act, 1982, and not under any statute. Ontario attempted to rely on Telezone for the proposition that a proceeding to set aside an administrative decision must be brought by way of judicial review. However, the Court found that Telezone was not applicable since it dealt with decisions of the federal government, the Federal Court’s jurisdiction under the Federal Courts Act, and the concurrent jurisdiction of provincial superior courts under the Act.

Lastly, the Court found that it would make no sense to force the Algonquins into two lawsuits, one an action for a declaration on the duty to consult, and the other for judicial review of specific decisions. There should only be one proceeding.

(3) Yes.

The Court reminded us that courts must be cautious as to not to foreclose avenues of relief plausibly open to Aboriginal parties whose interests are engaged, particularly in the context of a pleadings motion that engages constitutional issues.

The Court then addressed the remaining issues with the pleadings. First, the Algonquins made submissions invoking the honour of the Crown even though it was not pleaded as noted by the motion judge. She gave the Algonquins leave to amend “to assert that the honour of the Crown informs the duty to consult in this case.” The Court held that she did not err in doing so given the saliency of the honour of the Crown in its actions involving Aboriginal rights under s 35 of the Constitution Act, 1982.

Second, the motion judge struck out para. 2(e) of the statement of claim, which sought an interim and permanent injunction restraining the Métis Nation from issuing harvester cards under the Framework which the Algonquins did not appeal.

Third, the motion judge struck out para. 2(d) of the Statement of Claim, which sought a declaration that Ontario may not extend harvesting rights to the alleged Killarney and Mattawa/Ottawa River Métis communities, or any other alleged Métis communities.

She did so on the basis that: “…it is plain and obvious that the plaintiffs’ challenge to the application of the [Enforcement Policy], resulting in the above declarations, seeks to have the court rule on the exercise of prosecutorial discretion, which is not justiciable”.

The Court noted that the Attorney General’s independence from interference in prosecutorial decisions is a constitutional principle. The Supreme Court has recognized that courts will not interfere with [the Attorney General’s] exercise of executive authority. The Algonquins asked this court to “re-examine the justiciability of Ontario’s Interim Enforcement Policy and recognize it, not as an exercise of prosecutorial discretion, but as an essential component of the Crown’s constitutional and honourable obligations.” In a sense, para. 2(d) did raise the question of prosecutorial discretion somewhat inferentially because one mechanism by which Ontario can open the resource to the Métis Nation harvesters was by declining to prosecute them. The Algonquins argued that the Enforcement Policy, as policy, is inconsistent with the Crown’s constitutional and honourable obligations. The Algonquins invoked the Supreme Court’s decision in R. v. Anderson where the court said: “care must be taken to distinguish matters of prosecutorial discretion from constitutional obligations.” The Court accepted that this was an arguable proposition and should not be struck in a pleadings motion concluding that the motion judge erred in striking para. 2(d) of the statement of claim.

Canada Christian College and School of Graduate Theological Studies v. Post-Secondary Education Quality Assessment Board , 2023 ONCA 544

[Roberts, Trotter and Sossin JJ.A.]

Counsel:

G. MacKenzie and M. Diskin, for the appellant

H. Mackay and R. Ng, for the respondents

S. Choudhry and J. Hartery, for the intervener Canadian Constitution Federation

facts:

In 2020, the Legislature passed Bill 213 granting the appellant, Canada Christian College and School of Graduate Theological Studies (“CCC”), the right to refer to itself as a university and certain degree-granting rights: Better for People, Smart for Business Act, 2020, S.O. 2020, c. 34, Sched. 2. The legislation received Royal Assent on December 8, 2020. The Legislature decided that the amendments would not come into force upon Royal Assent.

The legislation provided that the amendments, including the provision relating to the appellant’s change in status and degree-granting rights, were to come into force on a day to be named by the Lieutenant Governor. The Post-secondary Education Choice and Excellence Act, 2000 (“PSECE”) provides a licensing process which allows institutions to apply to the respondent Minister of Training, Colleges and University for consent to acquire university status and to grant university degrees without the need for the enactment of establishing legislation. Until the passing of the PSECE, institutions could be granted university status exclusively through statutes. The PSECE also established the respondent Postsecondary Education Quality Assessment Board (the “Board”), which makes recommendations concerning applications for ministerial consent.

The respondent Minister of Training, Colleges and Universities recommended against proclaiming the amendments in force following his solicitation of recommendations from the Board. The appellant sought judicial review of both the Minister’s and the Board’s decisions. The Divisional Court dismissed the application.

issues:

1. Did the Divisional Court err in finding that the Minister’s decision not to proclaim the legislation was not justiciable?

2. Did the Divisional Court err in finding that the process applied by the Minister in relation to granting university status to the CCC was intra vires the PSECE?

3. Did the Divisional Court err in finding the hybrid process was procedurally fair?

holding:

Appeal dismissed.

reasoning:

The appellant argued that the Minister’s decision to refer the CCC application to the Board, in effect, created a hybrid approach that exceeded the Minster’s authority under the PSECE, involving both legislation conferring on CCC the status of a university and a distinct process for ministerial approval informed by a recommendation by the Board based on its independent review of CCC’s application. Thus, the appellant argued that the hybrid process was unfair, as it failed to respect the CCC’s legitimate procedural expectations and the process applicable under s. 5 of the PSECE.

The Court found that in reviewing the text, context and purpose of the PSECE, it was clear the Minister was granted a broad discretion over referrals of matters to the Board. There is no statutory bar to a referral of an applicant for “University” status to the Board where there is also legislation conferring that status.

The Court pointed out that the referral to the Board occurred prior to the legislation receiving Royal Assent. The fact that the process continued beyond the date of Royal Assent made the case unusual but did not render it unlawful.

There was no suggestion in the record that proclamation was being taken off the table, or that the question would not be reconsidered if and when the appellant met the threshold set out by the Board and accepted by the Minister for approval. The discretion to determine when proclamation would occur is a power expressly provided through the commencement provision in the PSECE. Exercising this discretion was not ultra vires to the Minister. To the contrary, it was precisely what the commencement provision contemplated. While the Minister’s exercise of this lawful authority was entitled to deference, the power of a minister to defer proclamation was in no way unlimited. The Divisional Court’s reasons did not mean simply that the Minister’s discretion is unfettered, or that it is open to a Minister to decide that legislation once enacted will never be proclaimed, but reiterated the point from Sullivan that not all enacted statutes will in fact be proclaimed. The Court held that it would not be open to a Minister to decide that an enacted statute will never be proclaimed. There was no basis on which to conclude the Minister’s decision was ultra vires or unreasonable.

1. No

The appellant argued that information was withheld by the Board’s Secretariat and by the Board to the Minister. The appellant further submitted that the Board failed to give reasons and made public information which the appellant was advised would be kept private. The respondent argued that no duty of fairness applied, as the Minister’s actions were part of the legislative process.

The Court noted that the setting of a Minister’s decision whether or not to recommend proclamation was distinct from the actions of the Legislature itself, which are not subject to judicial review on fairness grounds. Further, the setting was distinct from executive decision-making over the issuing of regulations and other delegated legislative functions, which also was not subject to the duty of fairness.

The Court felt that it was unnecessary to determine if ministerial discretion with respect to proclaiming legislation generally attracts a duty of fairness.

Assuming, for purposes of this analysis, that a duty of fairness was owed by the Minister to the appellant, the record disclosed that the process followed by the Minister was fair. The appellant was granted extensive opportunity to make submissions to the Board and the appellant’s final responses were before the Board when it made its decision, in addition to the summaries prepared by the Board secretariat.

While the appellant alleged that the Minister somehow “implied” that he would not follow negative recommendations of the Board, it did not constitute a “clear, unambiguous and unqualified” representation required to establish a legitimate expectation. Further, the representation did not promise a different or more rigorous procedure but rather a substantive outcome, which did not constitute a legitimate expectation in Canadian administrative law.

While the 2019 Manual for Private Organizations Applying for Ministerial Consent made clear that the application process through the Board is public, representations were made to the appellant that the Board’s process with respect to the CCC application would remain confidential. It does appear, for example, that the appellant’s full application was published inadvertently. This inadvertent error did not affect the fairness of the process provided to the appellant.

Dramel Limited v. Multani , 2023 ONCA 540

[Sossin J.A. (Motion Judge)]

Counsel:

E. Smolarcik, for the moving parties

M. Robins and K. Leonard, for the responding party

facts:

The appellants, G.M. and S.M., moved for a stay of enforcement proceedings, and specifically a notice to vacate the appellant’s residence (“81 Parkview Hills”). The respondent, Dramel Limited (“Dramel”), held a second mortgage on the appellants’ residence, which had been in default for many years. On March 12, 2018, Dramel obtained a default judgment on the mortgage. The appellants never pursued any attempt to set aside the default judgment.

In separate proceedings, Dramel sought remedies in relation to a mortgage registered on a commercial property owned by the appellants at 1430 Gerrard Street East (the “1430 Mortgage”). The 1430 Mortgage was secured by and registered on five other properties owned by the appellants including 81 Parkview Hills. Chalmers J. found that a forbearance agreement signed by the parties in 2018, acknowledging an aggregate indebtedness of $16,803,723.73, was valid and binding and lifted interim stays on enforcement proceedings. Dramel took steps to obtain possession of the residence with a writ of execution and notice to vacate which prompted the appellants to seek an interim stay of enforcement of the writ of execution issued against 81 Parkview Hills.

issues:

Do appellants meet the test for an interim stay of enforcement proceedings pending the outcome of their appeal, pursuant to r. 63.02 of the Rules of Civil Procedure?

holding:

Motion dismissed.

reasoning:

No. The Court noted that the tests for granting a stay pending appeal under s. 134(2) of the Courts of Justice Act and r. 63(02) are the same. The moving party is required to establish that it is in the interests of justice to impose a stay, given the relative strengths and weaknesses of the following criteria: 1) there is a serious question to be adjudicated on appeal; 2) the moving party would suffer irreparable harm if the relief were refused; and 3) the balance of convenience favours the moving party.

Dramel argued that the enforcement proceedings leading to the writ of execution and notice to vacate related to matters not under appeal. The Court disagreed and held that Chalmers J’s inclusion of 81 Parkview Hills in the aggregate indebtedness to Dramel made it part and parcel of the matters at issue in the appeal and concluded there was a serious question to be adjudicated.

With respect to irreparable harm, the Court noted that where the affected party knew they had no right to remain in their residence for a long period of time, any potential harm was arguably the result of the appellants’ own failure to take reasonable steps to deal with the reality of defaulting on the mortgage. The Court was unable to conclude that the appellants would suffer irreparable harm if forced to vacate the residence.

With respect to the balance of convenience, both the appellants and Dramel had reasonably strong balance of convenience arguments. Ultimately, the Court concluded the balance of convenience did not favour a stay. In light of the analysis of the three-part test for a stay, the interests of justice did not favour a stay.

Benjamin Cochrane Trust (Re), 2023 ONCA 546

[Fairburn A.C.J.O., Simmons and Zarnett JJ.A.]

Counsel:

A. Bloom and J. Karjanmaa, for the appellants/respondents by way of cross-appeal W.C. and C.C.
B. v. Niejenjuis, C. Di Carlo, D. Goudge and S. Ahmad, for the respondent/appellant by way of cross-appeal B.C.
Keywords: Trusts, Trustees, Passing of Accounts, Compensation, Remedies, Equitable Set-Off, Civil Procedure, Prejudgment Interest, Costs, Trustee Act, R.S.O. 1990, c. T.23, Zimmerman v. McMichael Estate, 2010 ONSC 2947, Birks v. Micklethwait (1864), 33 Beav. 409, The Catalyst Capital Group Inc. v. West Face Capital Inc., 2023 ONCA 381, Toller James Montague Cranston (Estate of), 2021 ONSC 1347, aff’d 2022 ONSC 6636, Steven Thompson Family Trust v. Thompson, 2012 ONSC 7138, Simone v. Cheifetz (2000), 36 E.T.R. (2d) 297 (Ont. C.A.)

facts:

The appellants are the parents of the respondent, who suffered a serious brain injury when he was hit by a car in 1996 at the age of 12. The appellants brought an accident benefits claim on their son’s behalf and settled the lawsuit for over $400,000 in 2000. The money was invested in an annuity that made payments to the appellants in trust for the benefit of their son for about 17 years.

The relationship between the appellants and respondent deteriorated over time. Eventually, the respondent alleged that the appellants had mismanaged the trust and they were ordered to pass accounts. The passing of accounts turned into a 14-day trial. The appellants admitted to having administered the trust in cash and had little documentary evidence to show how the trust funds were spent over the 17-year period covered by their statement of accounts. The respondent disputed every single one of the more than 2,000 disbursements claimed.

The trial judge found that the appellants had accounted for $253,144.11 of the $418,675.25 received by the trust during the relevant period of time. This left $165,531.14 unaccounted for. While the appellants claimed $131,038.42 in trustee compensation, the trial judge refused that amount because the trust had been so badly managed. Instead, she found that the appellants were entitled to $15,000 for their time spent administering the trust. She also denied them indemnification for legal costs related to the application to pass accounts.

In the end, the appellants were ordered to repay the trust $150,531.14, plus prejudgment interest in the amount of $53,649.64. The trial judge also ordered that the appellants pay $90,000 in costs in relation to the passing of accounts to the respondent. In total, the appellants have been ordered to pay $294,180.78. The appellants appealed and the respondent cross-appealed.

issues:

1. Did the trial judge err in disallowing reimbursement of properly incurred expenses that were paid by the appellants personally, when the reimbursement of out-of-pocket expenses was permitted under s. 23.1(1)(b) of the Trustee Act?

2. Did the trial judge err in failing to turn her mind to issues of quantum meruit and equitable set-off?

3. Did the trial judge err in denying the appellants indemnity for their legal fees?

4. Did the trial judge err in her calculation of prejudgment interest?

5. Did the trial judge err in ordering the appellants to pay costs to the respondent?

6. Did the trial judge err by passing the accounts and improperly relieving the appellants of their onus?

7. In the alternative, if the appellants met their onus, did the trial judge err by passing the accounts when the appellants breached their duties as trustees?

8. Did the trial judge err in awarding the appellants trustee compensation?

holding:

Appeal and cross-appeal dismissed.

reasoning:

1. No

The Court held that the trial judge’s reasons, read in context, did not reflect a misunderstanding of s. 23.1 of the Trustee Act. Despite the fact that the trial judge made no further explicit reference to s. 23.1, she did in several instances approve disbursements in situations where the appellants had paid expenses personally and then been reimbursed from the trust, which is consistent with what is permitted under s. 23.1(1)(b). In contrast, she did not allow disbursements that were never paid or reimbursed from trust funds. The trial judge’s reasons reflected the framing of the issues in the context of the case. The Court found no legal error.

2. No

The Court held that there was no basis to interfere with the trial judge’s disallowance of the “fictional” disbursements, which were matched by “fictional” loans. In the trial judge’s words, these were “unpaid disbursements included to offset any repayment order” as opposed to amounts “paid by the trust”.
It was only once she had determined the “truth of what happened” – or what disbursements to allow or disallow – that set-off came into play, since set-off was only required if there was a shortfall. Consistent with the appellants’ submissions, after reviewing the disbursements claimed in the statement of accounts, the trial judge went on to consider whether the appellants were entitled to set-off in discussing trustee compensation.

The trial judge determined that the appellants had failed to fulfil their duty as trustees to keep proper accounts. Further, the appellants had acknowledged that they “never expected [their son] or the trust to repay the loans.” These findings of fact, to which deference was owed, undermined the appellants’ suggestion that the trust was unjustly enriched by the services they provided to their son. The Court held that the appellants’ submission was an attack on the trial judge’s findings of fact. In conclusion, the trial judge was alive to the appellants’ position that, if there was a shortfall, there should have been a recognition of the value of the services they provided by means of a set-off.

3. No

The principle laid down in Birks and relied on by the appellants – that trustees should not, generally speaking, be deprived of costs – is premised on the trustee “having done his duty”, and “having faithfully accounted”. The trial judge found that the appellants had failed in their primary duty to account, had rendered accounts that were misleading, and had falsified documentation. She also found that the trial “was unduly long and complicated” because they failed to keep proper accounts and that “[m]ost of the time and expenses associated with th[e] trial could have been avoided” had they fulfilled their duty. The Court chose not to interfere with the trial judge’s decision to require the trustees to pay their legal fees and expenses personally in the circumstances.

4. No

In the Court’s view, there was no reversible error in the trial judge’s decision to rely on the spreadsheet to calculate prejudgment interest, save for one mathematical error raised by the appellants. The appellants should not have been charged prejudgment interest between April 19, 2016 and May 15, 2017, a period during which the respondent effectively had full control of the annuity funds, and it ought to be deducted from the total amount of prejudgment interest. The Court varied the order for prejudgment interest from $53,649.64 to $53,209.63.

5. No

There were not strong grounds to doubt the trial judge’s discretionary costs decision. She explained why the respondent was entitled to costs and why the costs were payable on a partial indemnity scale, and she justified the quantum. In doing so, she took into account the respondent’s conduct, among other factors. The Court found that her decision was entitled to deference.

6. No

The trial judge did not improperly relieve the appellants of the burden on them. Nor did she make guesses in their favour. As was evident from her reasons, she was alive to certain deficiencies in the statement of accounts and the evidence. However, she did not reject the appellants’ evidence wholesale. Rather, she did the laborious work of assessing the evidence before her, deciding what evidence to accept and what evidence to reject, cognizant that the appellants bore the burden of proof.

Second, the trial judge found that “[g]iven the enormity of the account,” it was simply “not feasible to address each disbursement individually.” Instead, she structured her reasons by dealing with categories of disbursements. Within the categories, she addressed particular disbursements, and did not necessarily accept or reject every disbursement. In the Court’s view, she approached her analysis in a logical and reasonable manner in light of the statement of accounts before her. Every judge hearing a passing of accounts need not follow an identical approach or methodology. Depending on the circumstances, it may be appropriate to deal with disbursements by category, as the trial judge did.

7. No

The trial judge was alive to the allegations of misconduct made against the trustees, including the four points that were raised on appeal, and addressed them insofar as they were relevant to the task before her – the passing of accounts. The respondent’s submission misunderstood the nature of the passing of accounts process. Just because a trustee has committed a breach of trust, it does not mean that a court need refuse to pass the accounts writ large. Furthermore, while the trial judge stayed focused on the task at hand, she was very much alive to the allegations of misconduct and addressed them insofar as they were relevant.

8. No

The trial judge took into account the appellants’ failures as trustees in assessing trustee compensation. As noted above, she found that the amount of trustee compensation sought by them was “unreasonable given that they failed to discharge their primary duty to account for the trust funds they received”. Nonetheless, she awarded them a “modest” compensation amount of $15,000, which was the equivalent of less than $900/year (or less than $75/month) over the 17 years.

2110120 Ontario Inc. v. Buttar, 2023 ONCA 539

[Pepall, van Rensburg and Benotto JJ.A]

Counsel:

S. Dewart, I. McKellar and A. Rauff, for the appellants

A J. Kania, for the respondents

J. Esmonde and K. Sier, for the intervener

facts:

The appellants appealed an order dismissing their motion made pursuant to s. 137.1 of the Courts of Justice Act, commonly known as the “anti-SLAPP” provision.

The respondent, 2110120 Ontario Inc. operated a Cargo County Group (“Cargo County”), a trucking company. The appellants worked as drivers for Cargo County for different periods between 2019 and 2020.

After ceasing to work for Cargo County, three of the appellants claimed, under the Canada Labour Code (the “CLC Proceedings”), payment as former employees of Cargo County, for unauthorized deductions, and for unpaid wages, vacation, overtime, termination, and severance pay. In response to the complaints, Cargo County’s principal asserted that the claimants were independent contractors and had been paid amounts due under their contracts. The appellants wanted to be paid immediately and approached several organizations, including NSN, WAC, and the Labour Community Services of Peel, a community legal services organization.

On October 2, 2021, at an event organized by NSN and some of the appellants, a crowd of approximately 250 people marched down the street and gathered in front of the personal respondents’ (“RS”) home. Some attendees carried signs stating that RS was a “thief” and “pay your drivers now”. The appellants held up a banner with a photo of Randeep Sandhu and the words “Chor Alert”, Punjabi for “Thief Alert”. Photographs and videos from the rally on October 2, 2021, were posted on multiple social media platforms.

Between October 6 and 12, 2021, the appellants, with the assistance of WAC, promoted and participated in a “phone zap”, in which hundreds of calls were made to Cargo County during its business hours, and numerous one-star Google reviews and negative comments were posted online. On October 30 and December 4, 2021, further rallies were held outside Cargo County’s business premises.

The respondents commenced an action claiming injunctive relief and damages for a variety of causes of action, including defamation, trespass, breach of privacy and intentional infliction of emotional harm (the “Action”). The appellants moved under s. 137.1 of the Court of Justice Act (“CJA”) to dismiss the Action. The motion judge dismissed the motion, allowing the Action to proceed, and awarded the respondents their costs of the dismissed motion.

issues:

(1) Did the motion judge err in dismissing the anti-SLAPP motion after concluding that the appellants had failed to meet their burden under s. 137.1(3)?

(2) Did the respondents meet their burden under s. 137.1(4) such that the appeal must be dismissed?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

In the Court’s view, the appellants met their burden under s. 137.1(3) of the CJA to establish that the Action arose from expressions relating to a matter of public interest. Section 137.1(3) sets out a “threshold burden. It requires the moving party to establish, on a balance of probabilities, that the proceeding arises from an expression that “relates to a matter of public interest”:

In determining “what the expression was about”, and whether the expression relates to a matter of public interest, the court must consider the broader picture. The expressions were about the business practices of Cargo County and its principals – how they were treating their drivers and whether they were engaging in unfair, exploitative or illegal labour practices. Objectively considered, there was a public interest in the business practices of the respondents, and by extension other businesses engaging vulnerable workers.

(2) Yes.

Under s. 137.1(4) the court must determine whether: (a) there are grounds to believe that, (i) the proceeding has substantial merit, and (ii) the moving parties have no valid defence in the proceeding; and (b) the harm likely to have been suffered by the responding party as a result of the moving party’s expression was sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression.

(a) Section 137.1(4)(a) – Merits-based hurdle

The “grounds to believe” standard is not high; it is more than mere suspicion but less than proof on a balance of probabilities:

(i) 137.1(4)(a)(i) – Substantial Merit

The Court was concerned with the overall merits of the action as it related to an expression in the public interest, and not the individual merits of each cause of action that was pleaded, including any that may be unrelated to the “expression” that was the focus of the anti-SLAPP motion. There were grounds to believe that the Action had substantial merit. The appellants admitted to organizing the October 2 rally, holding placards and banners, and, in some cases, publicizing their actions in real time and otherwise on social media.

(ii) Section 137(4)(a)(ii) – No valid defence

The initial onus was on the appellants to “put in play” their defences. Then the onus turned to the respondents to demonstrate that there was reason to believe that none of the defences of the appellants would succeed.

The initial question was therefore what defences the appellants “put in play”. In both their notice of motion and in their factum filed on the motion, the appellants advanced three defences that they say are supported by the law and the record: (1) justification – that the impugned statements were true at the time they were made; (2) fair comment – that the impugned statements were honestly held opinion; and (3) responsible communication on a matter of public interest – that the impugned statements were communications on a matter of public interest where they had taken reasonable care to ensure the accuracy of what was said. The Court accepted that the appellants “put in play” the three defences. The next step was to assess the three defences.

(1) Defense of Justification
To succeed in the defence of justification, the defendant must establish the substantial truth of the “sting”, or main thrust, of the defamatory words. The judge was satisfied that there was a basis in the record and law to support a finding that the statements that the respondents were “wage thieves” or had “stolen” the appellants wages were not substantially true. Accordingly, the defence of justification could not have been considered to weigh more in favour of the appellants such that it may be considered “valid” under s. 137.1(4)(a)(ii).

(2) & (3) Defences of fair comment and responsible communication on a matter of public interest

Although the elements of the defences were distinct, the Court found that both were defeated by malice. There was evidence to support such a finding based on the presence of an ulterior motive: to intimidate the respondents into paying their claims. There was evidence of recklessness about the truth of the underlying facts, namely that the orders were under appeal and subject to litigation.

(b) Section 137.1(4)(b) – Weighing harm against public interest in expression

The final stage of the analysis under s. 137.1(4) was to balance the harm to the respondents against the public interest in the appellants’ expression.

(i) Harm alleged and public interest in permitting the Action to continue

The appellants asserted that the evidence of harm to the respondents as a result of the impugned statements was “woefully inadequate”. The Court disagreed. The affidavit of PS described in detail the harm the impugned statements and the appellants’ actions caused to Cargo County and to its owners. As such there was a strong public interest in allowing the Action to proceed.

(ii) Public interest in protecting the appellants’ expression

On the other side of the weighing exercise was the public interest in protecting the appellants’ expression. While the impugned expression “relates to” an issue that was of public interest – the potential exploitation of vulnerable workers – its quality and nature, and the motivation behind the expression, reduced its value. In sum, while the appellants’ expression related to a matter of public interest – Cargo County’s labour practices, and by extension the practices of other similar businesses – the appellants employed personal attacks and allegations of criminality for the purpose of obtaining payment of their claims. The quality of the appellants’ speech and their motivation lowered the public interest in protecting such expression.

(iii) Weighing the public interest

The Court concluded that the Action did not have the hallmarks of a SLAPP action. There was no history of the respondents having used litigation, or the threat of it, to silence their critics. Nor was there anything in the record that could support a suggestion that the respondents commenced the Action for a punitive or retributory purpose. The Court saw no chilling effect on future expressions about such matters if the Action proceeded. The respondents established on a balance of probabilities that the likelihood of harm suffered and likely to be suffered as a result of the appellants’ expression was sufficiently serious that the public interest in permitting the Action to continue outweighed the relatively modest public interest in protecting that expression.

SHORT CIVIL DECISIONS

Awad v. Dover Investments Limited, 2023 ONCA 542

[Hourigan, Brown and Monahan JJ.A.]

Counsel:

G. A., acting in person

H. Wolch, for the respondents

Keywords: Civil Procedure, Appeals, Extension of Time, Costs, Machado v. Ontario Hockey Association, 2019 ONCA 210

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Counsel:

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John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

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

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email