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Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of April 26, 2021.

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In Parliament v. Conley, the Court ordered a new trial in a MedMal case tried before a jury because the doctors’ expert crossed the line by commenting on matters of the credibility of the parties. Even though the plaintiff did not object at the expert’s testimony at trial, the Court was of the view that the trial judge should have excluded it and provided special instructions to the jury to disregard the expert’s oath helping evidence. The failure to do so resulted in a miscarriage of justice necessitating a new trial.

In Dowdall v. Dowdall, the Court upheld the motion judge’s decision refusing to enforce an accepted offer to settle. The appellant accepted the respondent’s offer after he had accepted a new job offer that substantially increased his income. He did not disclose the new income before accepting the offer to settle. The Court held that the offer to settle had been predicated on a different income level of the appellant, and he could not take advantage of his non-disclosure to accept the offer.

In Dia v. Calypso Theme Waterpark, the Court set aside the motion judge’s summary judgment dismissing an assault claim against the respondent. The motion was granted even though the respondent had not filed an affidavit denying any involvement in the assault. The Court was of the view that the motion judge ought to have drawn an adverse inference from the respondent’s failure to submit to cross-examination. Moreover, parts of the police file were put into evidence through a legal assistant’s affidavit, which was not admissible.

Other topics covered this week included contractual misrepresentation, prescriptive easements, an order of no costs to a successful party in a slip and fall matter that involved a novel elder care issue, summary judgment, stay pending appeal of a decision staying an action on the basis of forum non conveniens and wrongful dismissal.

Our Top Appeals of 2020 CLE took place on April 27, 2021. We had over 70 registrants and eleven panelists, and very good feedback from our attendees. Thank you to Justice Zarnett, all of our panelists and our registrants for another successful CLE. The program qualified for 30 minutes of professionalism CPD credit and 2.75 hours of substantive content credit. If anyone would like to register for the program on demand, please visit the OBA’s website.

Wishing everyone celebrating a Happy Greek/Eastern Orthodox Easter.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Parliament v. Conley, 2021 ONCA 261

Keywords: Torts, Negligence, MedMal, Standard of Care, Civil Procedure, Jury Trials, Jury Instructions, Evidence, Credibility, Expert Evidence, Admissibility, Appeals, New Issues on Appeal, Failure to Object at Trial, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, R. v. Mohan, [1994] 2 S.C.R. 9, R. v. Marquard, [1993] 4 S.C.R. 223, R. v. Abbey, 2009 ONCA 624, leave to appeal refused, [2010] S.C.C.A. No. 125, Bruff-Murphy v. Gunawardena, 2017 ONCA 502, leave to appeal refused, [2017] S.C.C.A. No. 343, R. v. Sekhon, 2014 SCC 15, R. v. White, 2011 SCC 13, R. v. Bingley, 2017 SCC 12, Marshall v. Watson Wyatt & Co. (2002), 209 D.L.R. (4th) 411 (Ont. C.A.), Harris v. Leikin Group Inc., 2014 ONCA 479, Maurice v. Alles, 2016 ONCA 287, Arland and Arland v. Taylor, [1955] 3 D.L.R. 358 (Ont. C.A.), G.K. v. D.K., 1999 CanLII 935 (Ont. C.A.), Pietkiewicz v. Sault Ste. Marie District Roman Catholic Separate School Board, 2004 CanLII 874 (Ont. C.A.), Hoang v. Vicentini, 2016 ONCA 723

Wen v. Gu, 2021 ONCA 259

Keywords: Contracts, Breach, Misrepresentation, Frustration, Civil Procedure, Admissions, Rules of Civil Procedure, Rule 51.03, Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, Man Financial Canada Co. v. Keuroghlian, 2008 ONCA 592

Dowdall v. Dowdall, 2021 ONCA 260

Keywords: Family Law, Spousal Support, Material Change in Circumstances, Civil Procedure, Disclosure, Settlements, Enforcement,Appeals, Jurisdiction, Final or Interlocutory, Standard of Review, Deference, Fresh Evidence, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Family Law Rules, Rules 13(15), 18(13)(a) and 18(5), Milos v. Zagas (1998), 38 O.R. (3d) 218 (C.A.), Magnotta v. Yu, 2021 ONCA 185, Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., 2007 ONCA 497, Ballanger v. Ballanger, 2020 ONCA 626, Rick v. Brandsema, 2009 SCC 10

Balogh v. R.C. Yantha Electric Ltd., 2021 ONCA 266

Keywords: Real Property, Rights of Way, Easements, Prescriptive Easements, Road Access Act, R.S.O. 1990, s.1, c. R.34, Highway Traffic Act, R.S.O. 1990, c. H.8, Carpenter v. Doull-MacDonald, 2017 ONSC 7560, aff’d 2018 ONCA 521, Temma Realty Co. Ltd. v. Ress Enterprises Ltd. et al., [1968] 2 O.R. 293 (C.A.), Carlini v. Hammoud, 2011 ONCA 285, 2008795 Ontario Inc. v. Kilpatrick, 2007 ONCA 586, Blais v. Belanger, 2007 ONCA 310

Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267

Keywords: Torts, Occupier’s Liability, Negligence, Slip and Fall, Elder Law, Civil Procedure, Costs, Novelty of Claim, Standard of Review, Deference, Rules of Civil Procedure, Rule 57.01, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Bell Canada v. Olympia & York Developments Ltd., 1994 ONCA 239, Childs v. Desormeaux (2004), 239 D.L.R. (4th) 61 (Ont. C.A.)

UD Trading Group Holding PTE. Limited v. TransAsia Private Capital Limited, 2021 ONCA 279

Keywords: Contracts, Debtor-Creditor, Commercial Lending, Security, Receivables, Guarantees, Enforcement, Unjust Enrichment, Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Stay Pending Appeal, Expedited Appeals, Jurisdiction, Forum Non Conveniens, Forum Selection Clauses, Attornment, Anti-Suit Injunctions, Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario, (March 1, 2017), ss. 12.1(4), BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust, 2011 ONCA 620, 2257573 Ontario Inc. v. Furney, 2020 ONCA 742, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (CA), Heidari v. Naghshbandi, 2020 ONCA 757, Amchem Products Incorporated v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Forbes Energy Group Inc. v. Parsian Energy Rad Gas, 2019 ONCA 372, Young v. Tyco International of Canada Ltd., 2008 ONCA 709, Patterson v. EM Technologies, Inc, 2013 ONSC 5849, Wilson c. Fernand Campeau & Fils Inc., 2020 ONCA 384, Osman v. Markplan Inc., 2018 ABCA 215, Douez v. Facebook, Inc., 2017 SCC 33, ECS Educational Consulting Services Canada Ltd. v. Al Nahyan (2000), 44 C.P.C. (4th) 111, M & M Homes Inc. v. 2088556 Ontario Inc., 2020 ONCA 134, Lilydale Cooperative Ltd. v. Meyn Canada Inc., 2019 ONCA 761, Fraser v. 4358376 Canada Inc., 2014 ONCA 553, T Films S.A. v. Cinemavault Releasing International Inc., 2014 ONSC 4138, 1092072 Ontario Inc. (Elfe Juvenile Products) v. GCan Insurance Co., 2008 CanLII 51922 (Ont. S.C.)

Dia v. Calypso Theme Waterpark, 2021 ONCA 273

Keywords: Torts, Assault, Civil Procedure, Summary Judgment, Evidence, Adverse Inferences, Admissibility, Affidavits, Information and Belief, Hearsay, Crown Brief, Rules of Civil Procedure, Rules 39.01(4), 39.04(2), 20.02(1), and 20.04(2.2), Hryniak v. Mauldin, 2014 SCC 7, Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, Lana International Ltd. v. Menasco Aerospace Ltd. (2000), 50 O.R. (3d) 97 (C.A.), 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 (C.A.), Sanzone v. Schechter, 2016 ONCA 566, 402 D.L.R. (4th) 135, Butera v. Chown, Cairns LLP, 2017 ONCA 783

Nagpal v. IBM Canada Ltd., 2021 ONCA 274

Keywords: Contracts, Employment, Wrongful Dismissal, Short-Term Disability, Resignation, Abandonment, Frustration, Civil Procedure, Summary Judgment, Genuine Issue Requiring Trial, Standard of Review, Question of Mixed Fact and Law, Palpable and Overriding Error, Kieran v. Ingram Micro Inc. (2004), 189 O.A.C. 58 (C.A.), Betts v. IBM Canada Ltd., 2015 ONSC 5298, aff’d 2016 ONSC 2496 (Div. Ct.), Pereira v. The Business Depot Ltd., 2009 BCSC 1178, rev’d on other grounds, 2011 BCCA 361, Duong v. Linmar Corp, 2010 ONSC 3159, aff’d 2011 ONCA 38, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Antonacci v. Great Atlantic & Pacific Company of Canada Ltd. (1998), 35 C.C.E.L. (2d) 1 (Ont. C.J.), aff’d 128 O.A.C. 236 (C.A.), Ciszkowski v. Canac Kitchens, 2015 ONSC 73, Hryniak v. Mauldin, 2014 SCC 7, Leeming v. IBM Canada Ltd., 2015 ONSC 1447, Rahemtulla v. Vanfed Credit Union (1984), 51 B.C.L.R. 200 (S.C.), Cheong v. Grand Pacific Travel & Trade (Canada) Corp., 2016 BCSC 1321

Short Civil Decisions

Segura Mosquera v. Ottawa Public Library, 2021 ONCA 275

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Rules of Civil Procedure, Rule 37.17, Ball v. Donais (1993), 13 O.R. (3d) 322 (C.A.)

Toronto (City) v. Queen-St. Patrick Market Inc., 2021 ONCA 276

Keywords: Contracts, Real Property, Commercial Leases, Relief from Forfeiture, Standard of Review

Bogue v. Miracle, 2021 ONCA 278

Keywords: Contracts, Solicitor-Client, Contingency Fee Agreements, Enforcement, Receiverships, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Indian Act, R.S.C. 1985, c. 1-5, ss. 29, 89, Borden & Elliot v. Temagami First Nation, [2009] 3 C.N.L.R. 30 (Ont. S.C.), Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, Tyendinaga Mohawk Council v. Brant, 2014 ONCA 565, 121 O.R. (3d) 561, R. v. Roach, 2009 ONCA 156, 246 O.A.C. 96

CIVIL DECISIONS

Parliament v. Conley, 2021 ONCA 261

[Huscroft, Nordheimer and Harvison Young JJ.A.]

Counsel:

G. MacKenzie, B. MacKenzie, H.Y. Elmaleh and M.A. Hershkop, for the appellants

D. Cruz, D. Charach and J. Ur, for the respondents

Keywords: Torts, Negligence, MedMal, Standard of Care, Civil Procedure, Jury Trials, Jury Instructions, Evidence, Credibility, Expert Evidence, Admissibility, Appeals, New Issues on Appeal, Failure to Object at Trial, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, R. v. Mohan, [1994] 2 S.C.R. 9, R. v. Marquard, [1993] 4 S.C.R. 223, R. v. Abbey, 2009 ONCA 624, leave to appeal refused, [2010] S.C.C.A. No. 125, Bruff-Murphy v. Gunawardena, 2017 ONCA 502, leave to appeal refused, [2017] S.C.C.A. No. 343, R. v. Sekhon, 2014 SCC 15, R. v. White, 2011 SCC 13, R. v. Bingley, 2017 SCC 12, Marshall v. Watson Wyatt & Co. (2002), 209 D.L.R. (4th) 411 (Ont. C.A.), Harris v. Leikin Group Inc., 2014 ONCA 479, Maurice v. Alles, 2016 ONCA 287, Arland and Arland v. Taylor, [1955] 3 D.L.R. 358 (Ont. C.A.), G.K. v. D.K., 1999 CanLII 935 (Ont. C.A.), Pietkiewicz v. Sault Ste. Marie District Roman Catholic Separate School Board, 2004 CanLII 874 (Ont. C.A.), Hoang v. Vicentini, 2016 ONCA 723

facts:

This appeal involved a medical practice suit. The plaintiff, CP, was diagnosed with severe hydrocephalus when he was four months old and subsequently developed cognitive and physical disabilities. CP was born in August and labour was induced over concerns of his size and he had to be resuscitated at birth. One of the respondent’s was the long-time family doctor of the plaintiffs and saw CP three weeks after he was born and noted that CP’s head circumference was in the 25th percentile and his weight was in the 3rd percentile. On a subsequent visit some six weeks later, head circumference and weight had alarmingly jumped to 90th percentile and 50th percentile respectively. About one month later, CP was taken to a walk-in clinic where he was seen by the second respondent because of a cough. The walk-in doctor made notes regarding CP’s head size and allegedly said CP needed to be taken to an emergency room because of it. One month later, a family friend who was a pediatric nurse commented on CP’s head size and said the doctor she worked for would see CP. CP was diagnosed the severe hydrocephalus and had brain surgery.

CP’s parents sued the two doctors for negligence, claiming that they delayed the diagnoses of CP’s condition, which caused his brain damage. One of the critical aspects at trial, which forms the basis of this appeal was credibility. The respondent doctors claim they made notes of the head size and recommended various follow-up appointments which CP’s parents ignored. The parents claim while they raised concerns over the head size, they were consistently assured there was nothing to be concerned about. At the trial, four experts testified on the issue of the standard of care, three for the plaintiffs and only one for the defendants. The jury ultimately held that both doctors met the standard of care and so the action was dismissed.

The appellants sought a new trial on the basis that the respondent’s expert’s evidence went beyond the scope of his expertise, failed to demonstrate impartiality and usurped the jury’s role of assessing credibility which was critical to the outcome of this case. The appellants highlighted several of his answers he gave during cross-examination. In cross-examination, the respondent’s expert agreed that he ignored CP’s mother’s evidence when he wrote his report, because he did not think it was relevant. He also expressed his opinion that he did not think her memory was accurate, that he had put more weight on the family doctor’s evidence because he had some notes, and that it was inconceivable that the walk-in doctor had not told her to take CP to the emergency room.

The appellants did not object to this testimony at trial, but raised the argument on appeal.

issues:

(1) Did the trial judge err by failing to exclude the expert’s evidence or by failing to provide a specific instruction to the jury?

(2) Is the appellant’s failure to raise the issue at trial fatal to their appeal?

holding:

Appeal allowed.

reasoning:

(1) Did the trial judge err by failing to exclude the expert’s evidence or by failing to provide a specific instruction to the jury?

Yes, the trial judge erred by failing to exclude the expert’s evidence and by failing to provide a specific instruction to the jury.

The appellants submitted that the expert evidence of the respondent should have been excluded in whole or in part because the expert failed to fulfil his duty to be impartial and independent, and that the trial judge erred in failing to so instruct the jury in her charge. The respondents in turn argued that the appellant’s counsel had warned the jury of the alleged issues in their closing address and that the trial judge had given sufficient warnings about the need to assess expert evidence and for the jury to make their own decision.

The Court of Appeal reproduced several germane sections of the expert’s report and cross-examination before moving on to consider the role that expert evidence and trial judges play in civil jury trials and the principles that informed the appeal.

Role of Expert Witnesses and Guiding Principles

Expert evidence carries with it the risk that a jury “will inappropriately defer to the expert’s opinion rather than carefully evaluate it”: White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23. The test for admissibility of expert evidence consists of two steps. First, the proponent of expert evidence must establish that four conditions are met in order to establish its admissibility: relevance; necessity in assisting the trier of fact; absence of an exclusionary rule; and a properly qualified expert. The second stage of the inquiry requires the trial judge to conduct a cost-benefit analysis to determine whether otherwise admissible expert evidence should nevertheless be excluded because its probative value is outweighed by its prejudicial effect. However, the ultimate conclusion as to credibility or truthfulness is for the trier of fact, in this case the jury, and not for experts. The rationale for this policy is that credibility is a notoriously difficult problem, and a frustrated jury may readily accept an expert’s opinion as a convenient basis upon which to resolve its difficulties: see R. v. Marquard, [1993] 4 S.C.R. 223. One of the central dangers of expert evidence is that finders of fact, and juries in particular, may be too ready to rely on experts who appear to be knowledgeable, credible and reliable.

The trial judge’s role does not end once this test is met. The trial judge must protect the integrity of the process by ensuring that the expert does not overstep the acceptable boundaries in giving evidence. The continuing gatekeeping role means that trial judges must not only continue to ensure that the expert’s actual testimony does not overstep the appropriate scope of the expert evidence; they must also ensure that the expert’s testimony continues to be independent in the sense that the expert does not become an advocate for the party by whom they are called.

Application of Principles

The Court of Appeal accepted the argument of the appellant’s that the expert opined on the credibility of the parties in oral testimony, something that should have been left to the jury to do. He exceeded his role as an expert when he opined on the credibility and reliability of the doctors and CP’s mother, for example observing that she was untruthful and could not remember accurately. There was a risk that the members of the jury would accept the expert’s credibility and reliability assessments, rather than assess the evidence of the witnesses and reach their own conclusions.

Second, the expression of an opinion as to the credibility of witnesses is also a breach of the expert’s duty to be independent. It was clear that in some critical instances he was giving evidence about what actually happened, based on his view of the credibility of the witnesses. His testimony extended well beyond expressing opinions based on hypothetical facts he was asked to assume. For these reasons, his evidence was not admissible and to the extent his testimony opined on the credibility of the witnesses, it should have been excluded. These circumstances called for the trial judge to exercise her gatekeeping role and her residual discretion to exclude this evidence.

The Court of Appeal expressly rejected the respondent’s arguments relating to the closing address of the appellant’s counsel and the trial judge’s instructions to the jury. The jury is to take their instructions from the judge, and so the remarks by the appellant’s counsel in closing could not have informed the jury’s understanding of the law. With respect to the trial judge’s charge, the trial judge only made general cautions as to credibility in the “boilerplate” portion of the charge. The trial judge went on to give instructions on the burden of proof, an overview of the facts, and instructions on the legal principles for the standard of care before reviewing the lay witness and expert evidence on standard of care and recapping the instructions on weighing expert opinion. There was no specific caution relating to the respondent expert’s testimony and the need to disregard it – this amounted to an error.

The Court of Appeal noted that the trial judge should have done one of two things, if not both. The first option was to give a mid-trial instruction to the jury to disregard any and ell expressions by the expert as to credibility and reliability. The second option would have been to include a very clear and specific instruction on that point in the final charge to the jury. The failure to so instruct the jury was a serious error on the part of the trial judge, despite the fact that the appellants’ counsel did not ask for either a mid-trial or a closing instruction.

(2) Is the appellant’s failure to raise the issue at trial fatal to their appeal?

No, the appellant’s failure to raise these arguments at trial is not fatal to their appeal.

The respondent’s expert evidence was admitted at the outset of the trial, on consent of the appellants. The appellants did not object during examination in chief, nor did they object to the charge given by the trial judge and the absence of a specific instruction. The appellants objected to another expert’s evidence who was not allowed to testify as a result, and so it was evidently a conscious choice not to object to the expert who was the subject of this appeal. The respondents argued that this failure to argue the issue at trial precluded them from raising the issue on appeal.

The general principle is that a party in a civil case should not bring an appeal on the basis of some aspect of the lower court proceeding to which it did not object: see Marshall v. Watson Wyatt & Co. (2002), 209 D.L.R. (4th) 411 (Ont. C.A.). An appellant cannot ask for a new trial as of right due to an error during the trial when no objection was made on the point at trial. The failure to object at trial shows that it was not important or of sufficient consequence to trial counsel and this weighs heavily on appeal. The exception to this is where the appellate court is satisfied that a new trial is necessary in the interests of justice – the question should focus on whether a substantial wrong or miscarriage of justice has occurred.

The Court of Appeal, turning to the facts of the appeal, noted that it was impossible to know the extent to which the impugned evidence impacted the jury. However, that did not address whether there has been a miscarriage of justice. The Court held that given the centrality of credibility to the case and the absence of a caution about the expert’s evidence, there was a “very real possibility that [his] evidence on credibility and reliability played a significant role in the jury’s decisions…” The Court has a responsibility to protect the integrity of the justice system. The impugned evidence tainted the jury’s verdict and the verdict had to be set aside because of a miscarriage of justice.


Wen v. Gu, 2021 ONCA 259

[Benotto, Miller and Trotter JJ.A.]

Counsel:

Y. Wang and J.G. Hodder, for the appellant

J.H. Stanleigh, for the respondent

Keywords: Contracts, Breach, Misrepresentation, Frustration, Civil Procedure, Admissions, Rules of Civil Procedure, Rule 51.03, Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, Man Financial Canada Co. v. Keuroghlian, 2008 ONCA 592

facts:

The appellant purchased a restaurant from the respondent. The appellant alleged that the respondent made misrepresentations regarding sales revenues, which entitled her to terminate the agreement. The appellant commenced an action alleging fraudulent misrepresentation and frustration. The respondent counterclaimed for breach of contract.

The trial judge held that the appellant breached the contract. He found that the respondent did not make any misrepresentations which induced the appellant into signing the contract, and that the respondent’s statements about revenue and profits were accurate. Further, the trial judge stated that even if the estimate of revenue was inaccurate, the respondent had provided the actual sales receipts to the appellant. Therefore, it was not reasonable for the appellant to have relied on the respondent’s totals when the actual sales records were given to her.

issues:

(1) Did the trial judge err by ignoring the factual admissions when he found there were no misrepresentations?

(2) Did the trial judge err in assigning responsibility to the appellant for not verifying the receipts given to her?

holding:

Appeal allowed.

reasoning:

(1) Did the trial judge err by ignoring the factual admissions when he found there were no misrepresentations?

Yes. The estimates given by the respondent could not be reconciled with the actual sales. These facts had been admitted pursuant to responses to the appellant’s Request to Admit and the testimony of the respondent. The trial judge failed to consider the effect of these admissions, and failed to refer to the admitted facts when he concluded there was no misrepresentation.

(2) Did the trial judge err in assigning responsibility to the appellant for not verifying the receipts given to her?

Yes. The trial judge erred by assigning responsibility to the appellant. He should not have relied upon the appellant’s lack of due diligence to find that there was no fraudulent misrepresentation. A new trial was ordered.


Dowdall v. Dowdall, 2021 ONCA 260

[Feldman, Harvison Young and Thorburn JJ.A.]

Counsel:

A. Franks and G. Pop-Lazic, for the appellant

M.J. Ruhl and A. Timm, for the respondent

Keywords: Family Law, Spousal Support, Material Change in Circumstances, Civil Procedure, Disclosure, Settlements, Enforcement,Appeals, Jurisdiction, Final or Interlocutory, Standard of Review, Deference, Fresh Evidence, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Family Law Rules, Rules 13(15), 18(13)(a) and 18(5), Milos v. Zagas (1998), 38 O.R. (3d) 218 (C.A.), Magnotta v. Yu, 2021 ONCA 185, Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., 2007 ONCA 497, Ballanger v. Ballanger, 2020 ONCA 626, Rick v. Brandsema, 2009 SCC 10

facts:

When the parties separated, they entered a consent order for property division, child support and interim spousal support pending a trial in October 2019. Prior to the trial, the respondent submitted a settlement offer to the appellant fixing spousal support. The October trial did not go ahead and was rescheduled for March 2020. In between October 2019 and March 2020, the appellant changed jobs, which came with a moderate raise, which he disclosed to the respondent. When COVID hit, the March 2020 trial did not proceed either. The appellant also had his pay cut at work by 25% and was told he likely did not have a future at this job. In response to this, he sent a counter-settlement offer to the respondent with a lower support figure, but failed to disclose that he had been offered a new job that was higher paying than his original job before the pay cut.

The next day, the appellant accepted a revised offer of the new job with a salary that was 40% higher than his original job and included a 30% discretionary bonus. The appellant than proceeded to accept the respondent’s initial settlement offer without disclosing his change in circumstances.

The appellant moved to enforce his acceptance of the settlement offer and the motion judge refused to do so because of his intentional non-disclosure. The motion judge found that “[t]he only credible implication” of the appellant’s conduct was that, at the time he accepted the October 2019 offer, “he knew he would be accepting a job that would pay him $280,000 per year.” He noted that the appellant had an obligation to provide the respondent with updated financial information under Rule 13(15) of the Family Law Rules “as soon as he discovered” his last sworn financial statement setting out his income was inaccurate, since the difference in support obligations was material.

issues:

Did the motion judge err in failing to enforce the appellant’s acceptance of the October 2019 settlement offer?

holding:

Appeal dismissed.

reasoning:

Did the motion judge err in failing to enforce the appellant’s acceptance of the October 2019 settlement offer?

No. Conversion of an offer to settle into a court order is a discretionary remedy: see Milos v. Zagas (1998), 38 O.R. (3d) 218 (C.A.). A decision refusing to enforce a settlement is a final decision and so the Court of Appeal is the proper venue for the appeal. However, as a discretionary remedy, the decision of the motion judge is entitled to deference. Where the relevant factors disclosed by the evidence are considered, “an appellate court will not generally interfere with the motion judge’s decision to grant, or not grant, judgment in accordance with an accepted offer.”

Rule 13 of the Family Law Rules provides for extensive financial disclosure, and an ongoing duty to correct or update documents. Rule 13(15) provides that “as soon as a party discovers that a document that he or she has served under this rule is incorrect, incomplete or out of date, the party shall serve on the other party and, if applicable, file, a corrected, updated or new document, as the circumstances require.”

In this case, the motion judge clearly articulated his reasons and why he exercised his discretion not to enforce the settlement – material non-disclosure by the appellant. The Court of Appeal saw no reason to interfere with this decision as the record amply supported that the appellant intentionally did not disclose his new job and accepted the settlement offer on the eve of starting his lucrative new position.

The appellant argued that since the settlement offer was non-variable, the non-disclosure did not matter. The Court rejected this argument. Rule 18(5) gives a person the right to withdraw an offer at any time prior to acceptance because of a change in financial circumstances. While the respondent was willing to take the risk of a change in financial circumstances after the settlement was agreed to, she was entitled to rely on the appellant’s disclosure in making the offer.

The motion judge also found that enforcing the settlement would have been unfair and unreasonable. The appellant sought to challenge this finding by leading fresh evidence as to the respondent’s income. However, the respondent’s income was within the range the motion judge estimated it to be and so the fresh evidence would not have altered the conclusion.

The appellant finally argued that setting aside the settlement would promote litigation and encourage litigants to refuse to be bound by their accepted offers. However, the Court rejected this. Disclosure is a cornerstone of family law, and allowing someone to intentionally fail to disclose material information and accept a stale settlement offer would undermine public confidence. Where both parties have access to the relevant and material information and full disclosure is provided, as required by the Rules, litigation will be minimized.


Balogh v. R.C. Yantha Electric Ltd., 2021 ONCA 266

[Feldman, Harvison Young and Thorburn JJ.A.]

Counsel:

J.G. Saikaley and J. Plotkin, for the appellants

R.A. Leck, for the respondents

Keywords: Real Property, Rights of Way, Easements, Prescriptive Easements, Road Access Act, R.S.O. 1990, s.1, c. R.34, Highway Traffic Act, R.S.O. 1990, c. H.8, Carpenter v. Doull-MacDonald, 2017 ONSC 7560, aff’d 2018 ONCA 521, Temma Realty Co. Ltd. v. Ress Enterprises Ltd. et al., [1968] 2 O.R. 293 (C.A.), Carlini v. Hammoud, 2011 ONCA 285, 2008795 Ontario Inc. v. Kilpatrick, 2007 ONCA 586, Blais v. Belanger, 2007 ONCA 310

facts:

The appellants purchased a piece of land, referred to as “the triangle property,” adjacent to the respondents’ property. The appellants’ land had some water access, but no vehicle access, unless the appellants were entitled to use what was acknowledged at one time to be a private road, referred to as the “red track”, across the respondents’ property. The appellants claimed the right to use the red track on two bases: either because it was an easement that had been acquired under the doctrine of lost modern grant before 1999, when the respondents’ lands were transferred into the Land Titles system, or because it was an access road under the Road Access Act (the “Act”). The trial judge rejected both bases and found that the appellants had no right to use the red track.

issues:

(1) Did the appellants’ predecessors in title acquire an easement by prescription over the red track prior to 1999?

(2) Is the red track an access road under the Road Access Act?

holding:

Appeal dismissed.

reasoning:

(1) Did the appellants’ predecessors in title acquire an easement by prescription over the red track prior to 1999?

Under the doctrine of lost modern grant, an easement by prescription can be established by the owners of the dominant tenement over the affected portion of the servient tenement based on 20 years of continuous, uninterrupted, open and peaceful use of the land without objection by the owner of the servient tenement. The use must be “as of right” meaning that the owner of the servient tenement must have knowingly acquiesced to the establishment of the easement, not just granted permission or a license to use the land. The trial judge found that the appellants had not established an easement based on 20 years of continuous use of the red track. The appellants argued that the trial judge erred in two respects. The first was that the trial judge erred in finding that when the respondents’ predecessors in title asked the appellants to check on the triangle property over the years by crossing the red track, they did not do so as agents. The trial judge found that if the appellants were not acting as agents, then their use of the red track did not count as part of the 20 years of possession by the predecessors in title of the respondents.

The issue turned on the application of two decisions of the Court of Appeal on the agency issue, Temma Realty Co. Ltd. v. Ress Enterprises Ltd. et al., and Carlini v. Hammoud. In Temma, the issue was whether a right of way by easement had been established over a laneway that was used by independent delivery vehicles to access the appellant’s land. The court held that even if the nature of that use would otherwise have met the test to establish an easement, the fact that the truckers were independent of the owner of the dominant tenement meant that they were not under the direction and control of the owner, and their use was not as agent. In Carlini, the appellant’s property had a driveway that had been used by the respondent family. The home of the respondents’ parents was on the lot that originally included the driveway. They later severed the lot and sold the portion with the driveway to their son. The Carlini family continued to use the driveway until the son sold the servient tenement to strangers. The court held that an easement over the driveway had been established well before the sale by the collective use of the driveway by the Carlini family members, not strangers, “for a host of purposes associated with the better enjoyment of the dominant tenement”. The court specifically distinguished Temma on that basis.

The appellants argued that the trial judge erred by rejecting the applicability of the Carlini case. The Court disagreed. The trial judge analyzed the nature of the relationship between the respondents’ predecessor in title and the appellants. She found that the arrangement was that the respondents’ predecessor in title allowed the appellants to use the triangle property, and in exchange, the appellants would keep an eye on it. There were no specific dates or checks and no reporting back to them. Furthermore, the original owners never told the appellants to drive to the triangle property or to use the red track to get there. The trial judge’s conclusion was a finding of mixed fact and law. It was open to her on this evidence, and there was no basis to interfere with it. The trial judge further found that there was no evidence that the respondents’ predecessors knew or ought to have known that the red track was being used to access the triangle property, another essential component of the easement test. Thus, the trial judge found that the evidence was not sufficient to establish a prescriptive easement.

The appellants’ second alleged error in the trial judge’s finding was that her credibility findings were based on alleged misapprehensions of the evidence. A misapprehension of evidence on a key issue can give rise to a palpable and overriding error. However, the Court held that was not the case here and it is not the role of the appellate court to retry factual issues and conclusions reached by the trial judge, especially findings of credibility.

(2) Is the red track an access road under the Road Access Act?

Under the Act, landowners cannot close off an access road except with a court order. The trial judge found that because the definition of access road uses the word “serves”, in the present tense, an access road must be one that exists contemporarily and that a former access road can lose its status by disuse or overgrowth. The trial judge considered two points in time to assess the status of the red track: 2008, when the respondents built a fence across the red track; and 2014, when the appellants purchased the triangle property and took down the fence. She found that the red track was not an access road at either point because it was not in use due to a fence blocking the road or overgrowth.

The trial judge concluded that although the red track may have been an access road at one time, it no longer was by 2005 when the respondents purchased the lot, or in 2008 when the respondents erected the fence. The appellants submitted that the trial judge erred by failing to recognize that the red track was traversable by an all-terrain vehicle, which qualified as a motor vehicle. The Court had already held in previous case law that in order to be an access road, a road must exist contemporarily, i.e., it must serve as “a motor vehicle access road to one or more parcels of land” at the relevant point in time. In this case, the trial judge found that at the relevant points in time the red track was not in use. Because it was overgrown, it was also not, at those points in time, intended for use for the passage of motor vehicles. The Court saw no error in the trial judge’s approach to the law or to her findings of fact and mixed fact and law.


Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267

[Tulloch, Zarnett and Sossin JJ.A.]

Counsel:

T.J. McCarthy and D. Ong, for the appellant

J. Cranney, for the respondent

Keywords: Torts, Occupier’s Liability, Negligence, Slip and Fall, Elder Law, Civil Procedure, Costs, Novelty of Claim, Standard of Review, Deference, Rules of Civil Procedure, Rule 57.01, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Bell Canada v. Olympia & York Developments Ltd., 1994 ONCA 239, Childs v. Desormeaux (2004), 239 D.L.R. (4th) 61 (Ont. C.A.)

facts:

The respondent slipped and fell on the property of the retirement home where she resided, and sued the appellant, the owner of the retirement home. The appellant was successful at trial, but was denied partial indemnity costs by the trial judge.
The trial judge cited three reasons in denying costs to the appellant. First, the fact that the appellant was defended by an insurer amounted to a “David and Goliath” situation. Second, the fact that the insurer never offered a settlement to the respondent was indicative of “hardball” tactics. And third, it was noted that the action related to a growing area of law referred to as “elder care”, and such area was of increasing public importance.

issues:

Did the trial judge err in denying partial indemnity costs to the appellant?

holding:

Appeal dismissed.

reasoning:

Did the trial judge err in denying partial indemnity costs to the appellant?

No. The Court began by noting that an appellate court must take a deferential approach when reviewing a costs award, which are of course discretionary. A costs award may only be set aside if the trial judge has made an error in principle or if the award is “plainly wrong” (Hamilton v. Open Window Bakery Ltd., 2004 SCC 9). Moreover, even where a trial judge has relied on a factor that is unsupported by law, an appellate court should nonetheless exercise deference unless there is nothing in the factual circumstances or argument to independently support the order despite the error(s) (Bell Canada v. Olympia & York Developments Ltd., 1994 ONCA 239).

With respect to the first of the trial judge’s reasons, the trial judge cited no authority for the proposition that the involvement of an insurer could, in and of itself, justify a costs award. The relevant question was how resources are used in litigation, not the mere existence of resources, or the identity of the party who holds them. In other words, unless it could be demonstrated that the insurer abused its resources through reprehensible conduct (i.e. by unnecessarily lengthening proceedings or bringing improper, unnecessary or vexatious motions), the trial judge had no basis in law to justify his award based on the “David and Goliath” characterization. In fact, the Court warned against the pitfalls of stereotyping the proceedings, particularly given that the respondent was well-represented, and called experts on her behalf.

With respect to the second of the trial judge’s reasons, the Court held that a refusal of a party to offer a settlement is not a reason to deny that party costs where the refusal is proven reasonable by the verdict. In this case, the appellant was ultimately successful at trial, and therefore the decision of the insurer to not offer a settlement proved reasonable. This principle is not impacted by the wealth of the party who chose not to make an offer. The Court once again emphasized the importance of not making bare generalizations, particularly with respect to certain reputations that insurers may have. Relevant factors in costs awards generally focus on the conduct of the parties within the particular proceedings, and not on a party’s rumoured reputation for how it chooses to conduct itself in proceedings generally.

Notwithstanding the Court’s finding that the first two reasons amounted to errors in principle, the trial judge’s costs award was nonetheless upheld as a result of the third reason. The third reason could independently support the order regardless of these errors, and therefore engaged the deference owed, as per the principle in Bell Canada. Rule 57.01 of the Rules of Civil Procedure contemplates the court considering the nature, importance, and complexity of issues in exercising its costs discretion. Further, a “novel” issue can support a no costs order as an exception to the general approach that successful parties will receive their costs (Childs v. Desormeaux (2004), 239 D.L.R. (4th) 61 (Ont. C.A.)). On that note, the trial judge was well placed to make the finding that the case raised an important and novel issue, and accordingly his decision was owed deference.


UD Trading Group Holding PTE. Limited v. TransAsia Private Capital Limited, 2021 ONCA 279

[Paciocco J.A. (Motion Judge)]

Counsel:

M.D. Schafler, K. Kraft, A. Basmadijan and R. Curcio, for the moving parties

G.J. Pollack and C. Li, for the responding parties

Keywords: Contracts, Debtor-Creditor, Commercial Lending, Security, Receivables, Guarantees, Enforcement, Unjust Enrichment, Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Stay Pending Appeal, Expedited Appeals, Jurisdiction, Forum Non Conveniens, Forum Selection Clauses, Attornment, Anti-Suit Injunctions, Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario, (March 1, 2017), ss. 12.1(4), BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust, 2011 ONCA 620, 2257573 Ontario Inc. v. Furney, 2020 ONCA 742, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (CA), Heidari v. Naghshbandi, 2020 ONCA 757, Amchem Products Incorporated v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Forbes Energy Group Inc. v. Parsian Energy Rad Gas, 2019 ONCA 372, Young v. Tyco International of Canada Ltd., 2008 ONCA 709, Patterson v. EM Technologies, Inc, 2013 ONSC 5849, Wilson c. Fernand Campeau & Fils Inc., 2020 ONCA 384, Osman v. Markplan Inc., 2018 ABCA 215, Douez v. Facebook, Inc., 2017 SCC 33, ECS Educational Consulting Services Canada Ltd. v. Al Nahyan (2000), 44 C.P.C. (4th) 111, M & M Homes Inc. v. 2088556 Ontario Inc., 2020 ONCA 134, Lilydale Cooperative Ltd. v. Meyn Canada Inc., 2019 ONCA 761, Fraser v. 4358376 Canada Inc., 2014 ONCA 553, T Films S.A. v. Cinemavault Releasing International Inc., 2014 ONSC 4138, 1092072 Ontario Inc. (Elfe Juvenile Products) v. GCan Insurance Co., 2008 CanLII 51922 (Ont. S.C.)

facts:

This was a motion for a stay pending appeal and for an order expediting the appeal. The parties were involved in a complex, multijurisdictional commercial relationship. The responding parties had a loan agreement between themselves, with TransAsia Private Capital Limited (“TAP”) as lender and Rutmet Inc. (“Rutmet”) as debtor which was secured by the receivables of Rutmet. The moving parties are a group of related companies who did business with Rutmet and owed Rutmet money in the form of receivables. P.G. was the principal of the moving parties and had given an individual guarantee of the receivables. Other than Rutmet, none of the parties carried on business in Ontario. The various parties involved were based in the British Virgin Islands, Malaysia, UAE and Singapore. When Rutmet defaulted on its obligations under its loan with TAP, a complicated string of litigation arose, leading ultimately to this appeal.

Litigation History

TAP commenced a receivership action against Rutmet in Ontario to compel disclosure of information that TAP needed to make a claim under Rutmet’s insurance coverage. This action was discontinued once the disclosure was obtained. When insurance coverage was denied, TAP brought an application against the insurer, which remains outstanding.

TAP then took steps to enforce its guarantee from the moving parties by instituting an action in Singapore (the “Singapore Action”). The Singapore Action has been adjourned and delayed multiple times, including when the moving parties sought a stay because Ontario is a more appropriate forum.

P.G. lived in Dubai, and in accordance with UAE law, TAP sent a final demand for payment under the guarantee. P.G. did not comply with the demand and enforcement proceedings were commenced and are in the pre-trial phase (the “UAE Action”).

The moving parties also brought the action in Ontario (the “Underlying Action”). The moving parties’ argument was that TAP had already recouped the money owed to it by Rutmet and sought a declaration that there were no amounts outstanding either as receivables or under the various guarantees. The moving parties also argued that TAP had been unjustly enriched by enforcing its security after having already been paid.

The moving parties brought a motion in the Underlying Action for anti-suit injunctions restraining TAP and Rutmet from continuing the Singapore Action and the UAE Action. TAP brought a cross-motion, seeking a permanent stay of the Underlying Action on the basis of forum non conveniens. The motion judge dismissed the motion and denied the anti-suit injunction. The motion judge granted the order sought by the cross-motion and stayed the Underlying Action on the basis of forum non conveniens. The moving parties appealed from the stay of the Underlying Action. In furtherance of this appeal, the moving parties brought this motion seeking a stay of the motion judge’s decision pending appeal and an expedited appeal.

issues:

(1) Should a stay pending appeal be granted?

(2) Should an expedited appeal be granted?

holding:

Motion denied.

reasoning:

(1) Should a stay pending appeal be granted?

No. Where a party seeks a stay pending appeal, the overarching consideration is whether the interests of justice call for a stay: BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust, 2011 ONCA 620. This analysis is informed by the three factors described in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311: (a) is there a serious question to be determined on the appeal; (b) would the moving party suffer irreparable harm if the stay were refused; and (c) which of the parties would suffer greater harm.

A Serious Issue to be Determined on Appeal

The threshold at this stage is very low and requires that the appeal be neither frivolous nor vexatious. An appeal is “frivolous” when it is devoid of merit or with little prospect of success: Heidari v. Naghshbandi, 2020 ONCA 757. It is “vexatious” if “taken to annoy or embarrass the respondent or conducted in a vexatious manner, including an oblique motive for launching the appeal”: Heidari.

The test for granting an anti-suit injunction and a permanent stay under forum non conveniens are distinct tests. In determining whether to grant an anti-suit injunction, the inquiry is from the foreign court’s perspective. The domestic judge considering the anti-suit injunction is to ask whether, applying Ontario’s principles of forum non conveniens, the court where the action sought to be restrained was commenced could reasonably have concluded there was no alternative forum that was “clearly more appropriate”. If the answer is yes, the decision of the foreign court to assume jurisdiction should not be interfered with: Amchem Products Incorporated v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897.

By contrast, in determining whether a domestic action should be stayed, the domestic court must determine for itself whether there is another forum that is “clearly more appropriate [than the domestic court] for disposing of the litigation and thus ensuring fairness to the parties and a more efficient process for resolving their dispute”. A stay is appropriate only if this is so: Club Resorts Ltd. v. Van Breda, 2012 SCC 17.

The moving parties raised arguments that suggested the motion judge may have conflated or erroneously elided the two tests and so the appeal was not frivolous. The Court of Appeal was also not prepared to find the appeal was brought with oblique motive or to delay or frustrate the enforcement of TAP’s security.

The Court of Appeal also considered the moving parties’ submissions that the seriousness of the issue made up for the weaknesses in the other areas of the RJR-MacDonald test. While the Court of Appeal did not accept this as an outright proposition, it was willing to say that where a preliminary assessment of the merits of the appeal shows it to be strong, this is a proper consideration in deciding whether to grant the stay, given the repeated recognition by the Court that the strength of one RJR-MacDonald factor may compensate for the weakness of others. However, the Court was not convinced that the seriousness of the issue in this case outweighed the weaknesses in other areas.

Firstly, the moving parties’ arguments focused on the motion judge’s failure to conduct a proper forum non conveniens analysis as articulated in Van Breda. However, Van Breda clearly confined itself to tort cases and the case at hand was a contracts dispute. While guidance can still be taken from Van Breda, the failure of the motion judge to make express reference to it was not as significant as the moving parties suggested. Secondly, the various documents signed by the parties had forum selection clauses permitting actions to be brought outside of Ontario. Relying on the decisions in Douez v. Facebook, Inc., 2017 SCC 33, the motion judge held that the parties should be bound by the clause, which stands as a material impediment to the moving parties’ claim that the motion judge erred in permanently staying the Underlying Action.

Irreparable Harm

The moving parties advanced three grounds on which they would suffer irreparable harm if a stay was not granted: (i) litigation disadvantage; (ii) risk of insolvency; and (iii) prejudicing them in the Singapore and UAE Actions by leaving in place the factual findings made by the motion judge pending appeal. The Court of Appeal rejected all three arguments.

(i) Litigation Disadvantage

The moving parties submitted that if the Singapore and UAE actions continued and a stay pending appeal was not granted, the decisions in the Asian courts would render the Underlying Action moot and they would lose the chance to have the merits determined in Ontario and be forced to litigate in multiple jurisdictions. However, there was nothing in place preventing the Singapore Action and the UAE Action from moving forward, whether the stay pending appeal was granted or not. Further, the moving parties had no right to have the litigation conducted in Ontario only, nor was there a legal or normative right to have the Ontario proceedings disposed of first. The foreign actions were commenced first and so the moving parties had no expectation of the Ontario proceedings being resolved first.

Even if the moving parties succeed on their appeal, the risk remained that the foreign courts may render a decision before the merits of the Underlying Action was adjudicated. Further, it was the moving parties who brought the Underlying Action, and so they could not argue that they were being forced to litigate in multiple jurisdictions.

(ii) Risk of Insolvency

The moving parties did not adequately explain how the failure to grant a stay pending appeal would increase or alter their risk of insolvency. Even if they had, the consideration would go both ways – the responding parties could legitimately argue that the risk of insolvency weighed in favour of denying the stay because additional delay could compromise the responding parties’ ability to recover funds or assets from the insolvent debtor.

(iii) Findings of the Motion Judge

The motion judge did not make any factual findings as to the merits of the Underlying Action. Further, even if the motion judge had, her findings were in response to factual claims raised by the moving parties. A party’s decision to voluntarily assume litigation risk does not qualify as irreparable harm: M & M Homes Inc. v. 2088556 Ontario Inc., 2020 ONCA 134.

Balance of Convenience

The Court accepted that the moving parties had taken steps to ameliorate any harm the responding parties may suffer if the stay was granted, however, the steps did not address the further delays to the UAE and Singapore Actions. The foreign actions have been delayed many times leading to financial consequences for the responding parties. Further delay would only worsen this and so the balance of convenience favoured the responding parties.

Other Considerations

The moving parties also argued that the responding parties had attorned to the jurisdiction of Ontario by bringing the receivership proceeding and the application against the insurance company in Ontario. The moving parties did not have standing in either proceeding and both parties did business in Ontario. The Court failed to see how TAP’s decision to bring those proceedings in Ontario demonstrated that they had attorned to the jurisdiction in a separate action predicated on off-shore agreements. Nor did the responding parties’ decision to bring a security for costs motion in this appeal assist the moving parties. Attornment occurs where a party takes steps suggesting they have accepted jurisdiction, which typically are steps to defend the merits of a proceeding. Attornment does not occur when the party takes steps to contest the jurisdiction. The responding parties’ motion for security for costs was a procedural step in the dispute over jurisdiction, not a step to defend the merits.

(2) Should an expedited appeal be granted?

No. Appeals of this kind are to be expedited only where the motion judge is satisfied the urgency of the matter requires an earlier hearing date: Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario, (March 1, 2017), at 12.1(4). The Court of Appeal saw no urgency in this matter. The motion for an expedited appeal was brought as a concession to reduce the harm occasioned by a stay pending appeal. The stay having been denied, there was no reason to expedite the appeal.


Dia v. Calypso Theme Waterpark, 2021 ONCA 273

[Tulloch, Nordheimer and Jamal JJ.A.]

Counsel:

K. Black and K. Day, for the appellants

D. Rana, for the respondent

Keywords: Torts, Assault, Civil Procedure, Summary Judgment, Evidence, Adverse Inferences, Admissibility, Affidavits, Information and Belief, Hearsay, Crown Brief, Rules of Civil Procedure, Rules 39.01(4), 39.04(2), 20.02(1), and 20.04(2.2), Hryniak v. Mauldin, 2014 SCC 7, Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, Lana International Ltd. v. Menasco Aerospace Ltd. (2000), 50 O.R. (3d) 97 (C.A.), 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 (C.A.), Sanzone v. Schechter, 2016 ONCA 566, 402 D.L.R. (4th) 135, Butera v. Chown, Cairns LLP, 2017 ONCA 783

facts:

The appellants were assaulted. The respondent claimed he had nothing to do with the assault. More than five years after the commencement of this action, the respondent brought a motion for summary judgement. In granting the summary judgment motion and dismissing the action against the respondent, the motion judge held that there was no genuine issue requiring trial. The motion judge relied on the fact that none of the appellants identified the respondent as one of the men involved. The motion judge also rejected an argument by the appellants that there might be evidence at trial that could show the respondent was involved. The motion judge stated that on a motion for summary judgment, the responding party may not rely on the prospect of additional evidence that may be tendered at trial. Finally, the motion judge rejected any concern from the fact that this was a partial summary judgment motion. She found that there was no risk of inconsistent findings being made when the balance of the action was tried. The appellants appealed.

issues:

Did the motion judge err in granting the summary judgment motion?

holding:

Appeal allowed.

reasoning:

Did the motion judge err in granting the summary judgment motion?

Yes. The Court held that the motion judge’s conclusion reflected both errors of law and palpable and overriding errors of fact. Given the nature of the claim and the type of evidence, summary judgment was an inappropriate avenue. In addition, the fact that the motion was brought more than five years after the action was commenced was another factor that ought to have weighed into the calculus as to whether a motion for summary judgment was appropriate. Based on the following, the Court allowed the appeal, set aside the judgment below, and, dismissed the summary judgment motion.

The Evidentiary Record

The evidentiary record consisted of photographs of the respondent, the police file, the requests to admit and responses, the accounts of legal expenses, and the examinations for discovery of two of the appellants. The respondent did not file an affidavit and the appellants did not file any evidence in response to the summary judgment motion. The motion judge did not draw an adverse inference from the fact that the respondent did not file an affidavit. The Court held that the motion judge failed to take into account the fundamental rationale for the express provision in Rule 20.02(1) that permits an adverse inference to be drawn, that is, an attempt by the moving party to avoid cross-examination. The fact that the respondent did not make himself available for cross-examination was the type of situation where an adverse inference would have been properly drawn. The respondent sought to have the action dismissed against him on the basis that he was not part of the assault, without providing the appellants with an opportunity to test that contention. The fact that the respondent would not affirmatively attest to his non-involvement ought to have been a matter of significant concern to the motion judge.

The remaining evidence did not establish that there was no genuine issue for trial regarding the central question whether the respondent was part of the assault. The motion judge seemed to have proceeded on the basis that the police file was properly before the court. It was not. Apparently, the parties thought that the statements and reports in the file were admissible hearsay under r. 20.02(1). That approach ignored the requirement under r. 39.01(4), that an affidavit based on information and belief (i.e. hearsay) must state the source of the information and the fact of the belief. The legal assistant’s affidavit did not satisfy that requirement, nor could it have, because the legal assistant was not in a position to properly form a belief as to the accuracy of the information contained in the witness statements and the police reports. With that information removed, it left the motion judge with the photographs of the respondent, the examinations for discovery of two of the appellants, the requests to admit and responses, and the accounts of the respondent’s legal expenses, which were of no probative value by themselves.

None of that evidence provided any foundation for the motion judge to conclude that no genuine issue for trial existed; therefore, was insufficient evidence on which the motion judge could reach “a fair and just determination on the merits”. This was sufficient to allow the appeal.

Burden of Proof and the Risk of Inconsistent Findings

The Court also addressed other aspects of the motion judge’s decision. One was that it was evident that the motion judge reversed the burden of proof from the respondent, who was the moving party, to the appellants as responding parties. This was wrong in law, as the respondent was required to prove that he was not involved in the assault. That was the only way he could show that there was no genuine issue for trial. The fact that both sides to a motion for summary judgment may bear evidentiary burdens does not alter where the burden of proof originates. The motion judge also said that there was no risk of inconsistent findings being made when the balance of the action is tried. The Court noted the risk of inconsistent findings was alive in this case as a blame game could result at trial if the appellants call the other defendants. The motion judge did not consider this.

The Purpose of Summary Judgment

The Court also emphasized that the fundamental purpose of summary judgment is to provide “proportionate, cost-effective and timely dispute resolution”. An unsuccessful summary judgment motion adds both expense and delay to a proceeding. In this case, the proceeding had already taken over five years to get to trial and this motion only exacerbated the situation. The Court suggested that, in such cases, motion judges ought to stand back and consider whether the pursuit of a summary judgment motion is likely to achieve its fundamental purpose.


Nagpal v. IBM Canada Ltd., 2021 ONCA 274

[Doherty, Pepall and Thorburn JJ.A.]

Counsel:

J. Dolman and A. Reid, for the appellant

M.N. Freeman, for the respondent

Keywords: Contracts, Employment, Wrongful Dismissal, Short-Term Disability, Resignation, Abandonment, Frustration, Civil Procedure, Summary Judgment, Genuine Issue Requiring Trial, Standard of Review, Question of Mixed Fact and Law, Palpable and Overriding Error, Kieran v. Ingram Micro Inc. (2004), 189 O.A.C. 58 (C.A.), Betts v. IBM Canada Ltd., 2015 ONSC 5298, aff’d 2016 ONSC 2496 (Div. Ct.), Pereira v. The Business Depot Ltd., 2009 BCSC 1178, rev’d on other grounds, 2011 BCCA 361, Duong v. Linmar Corp, 2010 ONSC 3159, aff’d 2011 ONCA 38, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Antonacci v. Great Atlantic & Pacific Company of Canada Ltd. (1998), 35 C.C.E.L. (2d) 1 (Ont. C.J.), aff’d 128 O.A.C. 236 (C.A.), Ciszkowski v. Canac Kitchens, 2015 ONSC 73, Hryniak v. Mauldin, 2014 SCC 7, Leeming v. IBM Canada Ltd., 2015 ONSC 1447, Rahemtulla v. Vanfed Credit Union (1984), 51 B.C.L.R. 200 (S.C.), Cheong v. Grand Pacific Travel & Trade (Canada) Corp., 2016 BCSC 1321

facts:

The respondent, V.N., was employed by the appellant for 20 years, mostly in various high-level management positions. In 2011, he obtained a new leadership position and began experiencing stress and mental health issues. In March 2013, V.N. advised IBM that he had been recommended to take six weeks off of work by his treating doctors and was referred to Manulife, IBM’s short term disability policy (“STD Policy”) STD Policy administrator.

Under the STD Policy, an employee had to apply for benefits and provide supporting documentation. If the coverage is denied, an employee must either return to work or take steps within one month to appeal the decisions, or they will be presumed to have voluntarily resigned. Manulife denied V.N.’s claim and informed him of his right to appeal but said that if there was no new information, there was no point in appealing.

V.N. contacted his doctors and they confirmed they had nothing additional to provide and so he felt there was no point in appealing. He chose to engage legal counsel, who wrote a letter to IBM advising that V.N. could not return to work, that if additional information became available, they would happily provide it and most importantly, that V.N. had no intention of resigning his position, unless IBM negotiated an appropriate exit package. This letter was not responded to until 6 weeks later, when IBM gave V.N. three options, all predicated on his return to work. If V.N. did not respond within 3 weeks, he would be considered to have voluntarily resigned. V.N.’s lawyer replied stating that V.N. had no intention to resign or be starved into settlement. The date for choosing one of the alternatives passed and IBM sent a final letter stating that it considered V.N. to have abandoned his employment.

V.N. commenced the underlying action against IBM for wrongful dismissal. IBM brought a summary judgment motion for the dismissal of the claim. The motion judge dismissed IBM’s motion and instead granted summary judgment in favour of V.N., as the parties had agreed that if IBM could not successfully establish that V.N. had resigned, abandoned his position or that the contract was frustrated, it would follow that V.N. was wrongfully terminated and only an assessment of damages would remain.

issues:

(1) Did the motion judge make palpable and overriding errors in misapprehending evidence that V.N. had resigned, abandoned his employment or that his contract was frustrated?

(2) Did the motion judge err in holding that the STD Policy was not part of the employment contract and that V.N. was not estopped from denying the enforceability of the STD Policy?

(3) Did the motion judge err in finding that IBM had a duty to further discuss V.N.’s medical condition with him?

holding:

Appeal dismissed.

reasoning:

(1) Did the motion judge make palpable and overriding errors in misapprehending evidence that V.N. had resigned, abandoned his employment or that his contract was frustrated?

No. The Court noted that the findings of the motion judge were entitled to substantial deference on appeal as questions of mixed fact and law. Absent an error in principle or error with regard to a purely legal question, the motion judge’s findings should be reviewed on a palpable and overriding error standard: Hryniak v. Mauldin, 2014 SCC 7. The Court of Appeal addressed the legal test for each of the grounds argued by the appellants, but saw no error in approach or principle by the motion judge that would justify appellate intervention.

Resignation

Resignation must be clear and unequivocal. The evidence must objectively reflect an intention to resign, through words or conduct. Context is important. The totality of the circumstances must be considered: Kieran v. Ingram Micro Inc. (2004), 189 O.A.C. 58 (C.A.).

Given V.N.’s repeated statements through his lawyer that he did not intend to resign, the argument for a resignation was rejected without much discussion.

Abandonment

The test for abandonment is whether the statements or actions of an employee, viewed objectively by a reasonable person, clearly and unequivocally indicate an intention to no longer be bound by the employment contract and, in particular, the implied term of every employment contract that the employee must attend work unless excused or unable: Betts v. IBM Canada Ltd., 2015 ONSC 5298, aff’d 2016 ONSC 2496 (Div. Ct.).

IBM argued that notwithstanding V.N. stating he did not intend to resign, his conduct in failing to appeal Manulife’s decision or to return to work amounted to abandonment and that a reasonable person would view the failure to follow the terms of the STD Policy as such. The motion judge rejected this argument because that conduct could not be looked at in isolation. While V.N. and his lawyer’s conduct was not without fault, they had made many attempts to reach out to IBM and negotiate, which IBM ignored and chose instead to present V.N. with unrealistic alternatives and ultimatums.

The Court of Appeal found that there was no palpable and overriding error in the motion judge’s findings of fact or his conclusion that, viewed objectively, V.N.’s actions do not reflect a clear intention to resign, nor do they indicate an intention to no longer be bound by the employment contract.

Frustration

A contract is frustrated where, without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract: Duong v. Linmar Corp, 2010 ONSC 3159. The determination of whether a temporary incapacity to work constitutes frustration is also contextual. Illness alone is not a frustrating event and one must look at the length of the illness in relation to the duration of the employment contract. Evidence that relates to the post-termination nature and extent of an employee’s disability is permitted only if that evidence sheds light on the nature and extent of the employee’s disability at the time of the employee’s dismissal: Ciszkowski v. Canac Kitchens, 2015 ONSC 73.

IBM argued that at the time of his termination, there was no reasonable likelihood of V.N. returning to work and therefore the contract was frustrated. The motion judge found, and the Court of Appeal affirmed, that IBM had very little information on V.N.’s condition, and made very little effort to obtain any, and so it had no basis to underpin frustration. IBM also sought to rely on evidence that came to light post-termination, and cited Ciszkowski to support its position. The motion judge rejected this argument, because Ciszkowski only applies when the information is relevant to the dismissal date. Since the evidence did not come to the attention of IBM until after, it could not have possibly informed its assertion that the contract was frustrated. Further, the evidence that was before IBM, namely the letters from V.N.’s lawyer, did not show any evidence of illness so severe that V.N. would never return to work. The motion judge’s interpretation of these points was entitled to deference and upheld by the Court.

(2) Did the motion judge err in holding that the STD Policy was not part of the employment contract and that V.N. was not estopped from denying the enforceability of the STD Policy?

No. IBM advanced the argument that by virtue of the STD Policy, V.N. had voluntarily resigned his position. IBM noted that the policy has been upheld by other courts as to relying on non-compliance with the STD Policy to justify dismissal or finding resignation/abandonment. The motion judge held that termination provisions rebutting the common-law entitlement to reasonable notice require clear, express and unambiguous language. The STD Policy could be unilaterally amended by IBM at any time and so there was insufficient common intention to be bound by its terms such that it formed part of the employment contract. This analysis was supported by relevant authority such as Leeming v. IBM Canada Ltd., 2015 ONSC 1447.

The motion judge also held that it was not a necessary determination because even if the STD Policy formed part of the contract, it only created a presumption of resignation and that V.N.’s express statements and other conduct rebutted that presumption.

The Court agreed with the motion judge that it was not necessary to decide whether the STD Policy formed part of the contract. Regardless of whether it forms part of the contract of employment, the presumption contained in the STD Policy could be relevant to a determination of whether Mr. Nagpal in fact clearly and unequivocally resigned his employment, as suggested by the Divisional Court in Betts. However, the presumption must be looked at in the context of the other evidence, and it was open to the motion judge to find that the evidence did not clearly indicate an intention to resign or abandon employment.

Given the finding that it was not necessary to determine whether the STD Policy formed part of the contract, it was not necessary to consider the estoppel arguments.

(3) Did the motion judge err in finding that IBM had a duty to further discuss V.N.’s medical condition with him?

IBM claimed that the motion judge erred by asserting that IBM had a duty to discuss V.N.’s medical condition with him. However, the Court dismissed this submission because the appellant’s submissions took the motion judge’s reasons out of context. The motion judge’s remarks were in the context of his analysis of whether IBM had established resignation or abandonment, and id not speak to a free standing duty on IBM’s part.


SHORT CIVIL DECISIONS

Segura Mosquera v. Ottawa Public Library, 2021 ONCA 275

[Huscroft, Nordheimer and Harvison Young JJ.A.]

Counsel:

G.M.S.M., in person

S.J. Huxley, for the respondent

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Rules of Civil Procedure, Rule 37.17, Ball v. Donais (1993), 13 O.R. (3d) 322 (C.A.)


Toronto (City) v. Queen-St. Patrick Market Inc., 2021 ONCA 276

[Huscroft, Nordheimer and Harvison Young JJ.A.]

Counsel:

J. Larry and D. Rosenbluth, for the appellant

M.A. Wright and G. Thomson, for the respondent

Keywords: Contracts, Real Property, Commercial Leases, Relief from Forfeiture, Standard of Review


Bogue v. Miracle, 2021 ONCA 278

[Benotto, Miller and Trotter JJ.A.]

Counsel:

I.J. Collins, for the appellant A.M.

K.H. Page, for the respondent G.B.

R.J. Reynolds and M. Pretsell, for L.M.S. and V.M.

Keywords: Contracts, Solicitor-Client, Contingency Fee Agreements, Enforcement, Receiverships, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Indian Act, R.S.C. 1985, c. 1-5, ss. 29, 89, Borden & Elliot v. Temagami First Nation, [2009] 3 C.N.L.R. 30 (Ont. S.C.), Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, Tyendinaga Mohawk Council v. Brant, 2014 ONCA 565, 121 O.R. (3d) 561, R. v. Roach, 2009 ONCA 156, 246 O.A.C. 96


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.

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 April 19, 2021.

In Fercan Developments v Canada, the Court confirmed that the plaintiffs who waited until after criminal and civil forfeiture proceedings were concluded before suing the Crown for malicious prosecution and related torts were entitled to do so on the basis that their claims were not discoverable under the “appropriate means” branch of the discoverability test in ss. 5(1)(a)(iv).

In Law Society of Ontario v Diamond the Court upheld the Law Society’s finding of professional misconduct for failure to cooperate with its investigation.

Other topics covered this week included  a priority dispute to the proceeds of sale a matrimonial home between a spouse and a judgment creditor and occupational health and safety.

Our “Top Appeals” of 2020 CLE is finally upon us. Please join us this Tuesday evening, April 27, 2021, from 5:30 to 7:45 pm via Zoom. We are set to have a great turnout. Justice Benjamin Zarnett will be co-chairing the event with me and Chloe Snider. Following is our excellent slate of decisions and panelists:

2020 Update from the Bench

The Honourable Benjamin Zarnett, Court of Appeal for Ontario

Panel 1 – Advocacy Practice Tips from the Court

Girao v. Cunningham, 2020 ONCA 260

OZ Merchandising Inc. v. Canadian Professional Soccer League Inc., 2020 ONCA 532

Welton v. United Lands Corporation Limited, 2020 ONCA 322

Jordan Goldblatt, Adair Goldblatt Bieber LLP

Sara Erskine, Weintraub Erskine Huang LLP

Panel 2 – Negligently Designed Financial Products – A New Age in Product Liability?

Wright v. Horizons ETFS Management (Canada) Inc., 2020 ONCA 337

Seumas Woods, Blake, Cassels & Graydon LLP

Alistair Crawley, Crawley MacKewn Brush LLP

Elizabeth Bowker, Stieber Berlach LLP

Panel 3 – Developments in Insolvency Law – Priority of Construction Trust Claims and Landlord Claims in Bankruptcy

Urbancorp Cumberland 2 GP Inc. (Re), 2020 ONCA 197

7636156 Canada Inc. (Re), 2020 ONCA 681

Ken Kraft, Dentons LLP

Kevin Sherkin, Miller Thomson LLP

D.J. Miller, Thornton Grout Finnigan LLP

There is still time to register for the program by visiting the OBA’s website.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Continue Reading COURT OF APPEAL SUMMARIES (April 19 – April 23, 2021)

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

Good evening.

Please find below our summaries of the civil decisions of the Court of Appeal for the week of April 12, 2021.

Continue Reading

Marshallzehr Group Inc. v. Ideal (BC) Developments Inc. addressed the interpretation of a commitment letter for a commercial loan cancelled by the lender as a result of the borrower’s failure to satisfy the conditions of financing (the postponement of a pre-existing mortgage). At trial, the respondent was awarded certain amounts for its fees and expenses, including the lender’s fee, which was payable out of the amount advanced. The Court of Appeal found for the lender on most issues, including its right to cancel the financing, but it sided with the borrower and determined the lender’s fee had not been earned because no funds were advanced. The result turned on the specific wording of the commitment letter.

Nemchin v. Green dealt with the statutory assignment and trust provisions of section 267.8 of the Insurance Act which required a plaintiff who had been compensated for their injuries by a defendant to assign collateral benefits they received to the defendant’s insurer. The purpose of these provisions is to avoid double-recovery.

Makeeva v. Makeev is a family law decision. The Court allowed the cross-appeal because the trial judge failed to deduct the value of the respondent’s date of marriage assets (a condo that was not a matrimonial home) when calculating the equalization payment to be made.

Please join us on April 27, 2021, from 5:30-7:45pm for our fifth annual “Top Appeals” CLE, which will take place via Zoom. We are set to have a great turnout. Justice Benjamin Zarnett will be co-chairing the event with myself and Chloe Snider of Dentons. Following is our excellent slate of decisions and panelists:

2020 Update from the Bench

The Honourable Benjamin Zarnett, Court of Appeal for Ontario

Panel 1 – Advocacy Practice Tips from the Court

Girao v. Cunningham, 2020 ONCA 260

OZ Merchandising Inc. v. Canadian Professional Soccer League Inc., 2020 ONCA 532

Welton v. United Lands Corporation Limited, 2020 ONCA 322

Jordan Goldblatt, Adair Goldblatt Bieber LLP

Sara Erskine, Weintraub Erskine Huang LLP

Panel 2 – Negligently Designed Financial Products – A New Age in Product Liability?

Wright v. Horizons ETFS Management (Canada) Inc., 2020 ONCA 337

Seumas Woods, Blake, Cassels & Graydon LLP

Alistair Crawley, Crawley MacKewn Brush LLP

Elizabeth Bowker, Stieber Berlach LLP

Panel 3 – Developments in Insolvency Law – Priority of Construction Trust Claims and Landlord Claims in Bankruptcy

Urbancorp Cumberland 2 GP Inc. (Re), 2020 ONCA 197

7636156 Canada Inc. (Re), 2020 ONCA 681

Ken Kraft, Dentons LLP

Kevin Sherkin, Miller Thomson LLP

D.J. Miller, Thornton Grout Finnigan LLP

There is still plenty of time to register for the program by visiting the OBA’s website.

Wishing everyone a safe and pleasant weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Marshallzehr Group Inc. v. Ideal (BC) Developments Inc., 2021 ONCA 229

Keywords: Contracts, Breach, Interpretation, Commercial Reasonableness, Duty of Good Faith and Fair Dealing, Debtor-Creditor, Commercial Lending, Commitment Letters, Conditions, Termination, Damages, Lender’s Fees, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 85 O.R. (3d) 254 (C.A.), Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2017 ONCA 293, Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, Chijindu v. Prudential Property Management, 2014 ONSC 4759

Makeeva v. Makeev , 2021 ONCA 232

Keywords: Family Law, Spousal Support, Child Support, Lump Sum Payments, Imputed Income, Equalization of Net Family Property, Date of Marriage Assets, Reopening of Case, Fresh Evidence, Divorce Act, section 15.3(1), Family Law Act, section 38.1(1)

Nemchin v. Green, 2021 ONCA 238

Keywords: Insurance, Subrogation, Collateral Benefits, Long-term Disability, Statutory Assignment of Rights and Benefits, Statutory Trusts, Civil Procedure, Procedural and Natural Justice, Insurance Act, R.S.O. 1990, c. I.8, Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 267.8, Lewin on Trusts, 19th ed. (London: Sweet & Maxwell, 2015), Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.), Kant v. The Queen, [2001] 2 C.T.C. 2703 (T.C.C.), Bapoo v. Co-Operators General Insurance Co. (1997), 154 D.L.R. (4th) 385 (Ont. C.A.), leave to appeal refused, [1998] S.C.C.A. No. 62, Cadieux v. Cloutier, 2018 ONCA 903, leave to appeal refused [2019] S.C.C.A. No. 63, Carroll v. McEwen, 2018 ONCA 902, Cobb v. Long Estate, 2017 ONCA 717, El-Khodr v. Lackie, 2017 ONCA 716, leave to appeal refused, [2017] S.C.C.A. No. 461, Re Scott, [1948] SASR 193, Frederick v. Aviation & Gen. Ins. Co., [1966] O.J. No. 1064 (C.A.), Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Pugh v. Canada, [2000] T.C.J. No. 585, Bouchard v. Canada, 2008 TCC 408.

Short Civil Decisions

Lengyel v. TD Home and Auto Insurance, 2021 ONCA 237

Keywords: Torts, Negligence, MVA, Civil Procedure, Settlements, Court Approval, Litigation Guardians, Appeals, Jurisdiction, Kavuru (Litigation guardian of) v. Heselden, 2014 ONSC 6718.


CIVIL DECISIONS

Marshallzehr Group Inc. v. Ideal (BC) Developments Inc., 2021 ONCA 229

[Rouleau, Brown and Miller JJ.A.]

Counsel:

M.A. Russell, for the appellants

S. Schwartz, for the respondents

Keywords: Contracts, Breach, Interpretation, Commercial Reasonableness, Duty of Good Faith and Fair Dealing, Debtor-Creditor, Commercial Lending, Commitment Letters, Conditions, Termination, Damages, Lender’s Fees, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 85 O.R. (3d) 254 (C.A.), Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2017 ONCA 293, Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, Chijindu v. Prudential Property Management, 2014 ONSC 4759

facts:

The respondents, Marshallzehr Group Inc. (“MZ”), agreed to advance funds to the appellants, Ideal (BC) Developments Inc. (“Ideal”), for a residential development project under a commitment letter (the “CL”). Under the terms of the CL, MZ was going to syndicate the loan but was not required to advance any funds to Ideal until Ideal had satisfied certain preconditions. Shortly after the CL was executed, the syndicated lenders began to advance funds, but because Ideal had not satisfied the preconditions, MZ transferred the funds to its counsel to be held in trust pending the satisfaction of the preconditions. MZ informed Ideal that interest was beginning to accrue on the funds.

Roughly one month later, MZ notified Ideal that it was terminating the CL because the funding conditions had not been met. One of the predominant issues was that MZ and Ideal could not agree on a postponement and standstill agreement for a pre-existing first mortgage. The pre-funding conditions required the execution of all ancillary agreements including postponements in a form satisfactory to MZ (the “Subordinate Financing Clause”). The parties could never agree on the form of these postponements. No funds were ever advanced to Ideal.

MZ brought this action to recover its fees and expenses and Ideal counter-claimed for damages caused by a wrongful termination of the CL by MZ. MZ moved for summary judgment which was granted in favour of MZ both on the main action and the counter-claim.

issues:

(1) Did the motion judge err in determining that MZ had the right to terminate the CL and thus dismissing the counter-claim?

(2) Did the motion judge err in calculating the fees and expenses to which MZ was entitled to upon cancellation of the CL?

holding:

Appeal allowed in part.

reasoning:

(1) Did the motion judge err in determining that MZ had the right to terminate the CL and thus dismissing the counter-claim?

No. This ground of appeal concerned the motion judge’s interpretation of the contract, the CL. The standard of review was that articulated in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53. Ideal submitted that the motion judge committed an error on an extricable question of law, namely that the motion judge failed to interpret the provisions of the CL as a whole and thus failed to assign meaning to all of the contested terms.

The CL covered two distinct time periods: i) the time between signing the CL and advancing the funds (the pre-closing period); and ii) the time from advancing the funds until the end of the 13 month term of the loan (the post closing period). The conditions to funding related to the pre-closing period whereas the section of the CL dealing with default by Ideal and termination for default (the “Demand and Default Provisions”) related to the post closing period. There was also a general cancellation right in the CL which gave MZ the right to cancel the undrawn portion of the loan at any time, for any reason and without notice.

The crux of Ideal’s arguments was that in order to terminate the CL, MZ needed to rely on the Demand and Default Provisions, which required MZ to notify Ideal of a default and give Ideal an opportunity to remedy the default. Ideal argued that since MZ never gave notice or an opportunity to cure, the termination of the CL was wrongful.

The motion judge held that the cancellation right required MZ to have a reason for cancelling and that MZ’s reason for doing so was that it became apparent that Ideal could not or would not satisfy the pre-funding conditions. Ideal argued on appeal that the Demand and Default Provisions needed to be given meaning and priority. However, the Court of Appeal rejected this submission because the Demand and Default Provisions only applied after funds had been advanced, which was not the case.

Ideal also argued that the cancellation language only entitled MZ to cancel the undrawn portion of the loan, not terminate the CL entirely. The Court rejected this argument as it was commercially unreasonable. At the time MZ advised Ideal it was terminating the CL, no funds had been advanced and so the full value of the loan was undrawn. The effect of cancelling this portion and terminating the CL were the same – Ideal would not receive any money. While the CL’s language may not have been clear, the motion judge’s finding that MZ could terminate the CL gave practical meaning to all the CL’s terms and was commercially reasonable.

Ideal further argued that the Subordinate Financing Clause treated the parties’ inability to resolve the dispute over standstill agreements as a default and thus MZ had to resort to the Demand and Default Provisions. The Court of Appeal rejected this submission as the Subordinate Financing Clause clearly defined two events of default – the failure to agree to resolve the dispute over the standstill was not one of them. The failure by Ideal to provide security documents in a satisfactory form to MZ materially altered the level of risk MZ was taking on and that gave MZ sufficient reason to rely on the cancellation provision.

Ideal’s last argument on this ground focused on good faith and the duty to exercise contractual discretion in good faith. Ideal argued that when MZ unreasonably demanded a permanent standstill agreement in excess of what was required under the CL and terminated the CL without notice, it breached its duty of good faith. Ideal did not advance this argument before the motion judge. On appeal, Ideal also sought to rely on Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7. The Court of Appeal refrained from commenting on the ability of an appellant to argue on appeal a pleaded defence it chose not to pursue at trial or the lateness of the hour at which the appellant raised the issue thus depriving the court of the parties’ submissions on the Wastetech decision.

The Court chose instead to address Wastech directly. The Court observed that while Wastech states that contractual discretion must be exercised reasonably, in light of the purpose for which it was conferred, the decision notes that such a duty of good faith “does not displace the detailed, negotiated bargain as the primary source of justice between the parties”. The Court went on to note that in the case at hand, the pre-conditions to financing and the cancellation right existed to define the level of risk that MZ was willing to take on. When Ideal did not or would not meet the conditions, the level of risk was materially altered and so MZ used the cancellation right for the exact purpose it was given for.

(2) Did the motion judge err in calculating the fees and expenses to which MZ was entitled to upon cancellation of the CL?

Yes, in part. The motion judge’s judgment consisted of three awards: i) standby interest; ii) expenses; and iii) a lender fee. The Court of Appeal addressed each of these awards in turn.

Standby Interest

The CL provided that interest would become payable, among other things, upon termination of the CL without any advances having been made. Ideal argued that since MZ had cancelled the CL, not terminated it under the Demand and Default Provisions, the standby interest was not payable. The Court of Appeal rejected this argument, as the practical effect of cancelling the CL under the cancellation provisions was to terminate the CL without advances having been made. The award for standby interest was affirmed.

Expenses and Good Faith Deposit

MZ was entitled to all reasonable expenses including all legal costs and to retain a $50,000 non-refundable good faith bonus regardless of whether Ideal proceeded with the transaction. Ideal submitted that MZ exercising the cancellation provisions did not constitute Ideal failing to proceed with the transaction. The motion judge held, and the Court of Appeal affirmed that the evidence amply supported the finding that Ideal could not or would satisfy the conditions and that the failure to meet the conditions was conduct sufficient to show that Ideal failed to proceed with the transaction. The award for expenses and the good-faith deposit were upheld.

Lender’s Fee

The CL provided that fees for MZ were to be $396,000 and were to be deducted from the initial advance of funds. The motion judge held that the lender’s fee was recoverable despite Ideal’s argument that the lender fee was clearly only payable once an advance was made. The Court of Appeal agreed with Ideal in that the language saying the fee shall be deducted from the initial advance indicates that the fee was not earned until funds were advanced. MZ relied on Chijindu v. Prudential Property Management, 2014 ONSC 4759, however, the Court of Appeal distinguished that case because it did not involve the same language that the lender’s fee was to be deducted from the advance of funds. As well, in Chijindu, the lender had actually advanced funds. The Court of Appeal held that the motion judge erred in awarding MZ its lender’s fee and thus reduced the damage award against Ideal accordingly.


Makeeva v. Makeev, 2021 ONCA 232

[Rouleau, Brown and Miller JJ.A.]

Counsel:

R. Korytko, for the appellant/respondent by way of cross-appeal

J.W. Bruggeman, for the respondent/appellant by way of cross-appeal

Keywords: Family Law, Spousal Support, Child Support, Lump Sum Payments, Imputed Income, Equalization of Net Family Property, Date of Marriage Assets, Reopening of Case, Fresh Evidence, Divorce Act, section 15.3(1), Family Law Act, section 38.1(1).

facts:

The parties separated after fifteen years of marriage and had two children. At trial, the judge ordered the appellant to pay $905 per month in spousal support to the respondent. The trial judge also ordered the appellant to make an equalization payment. After the judge issued her decision, the appellant attempted to reopen the trial and file fresh evidence. The trial judge dismissed this motion largely on the basis that this evidence would not change her original judgment.

The appellant appealed on several grounds. The respondent cross-appealed the equalization payment calculation.

issues:

(1) Did the trial judge err by allowing the interpreter to continue despite the appellant’s objections?

(2) Did the trial judge err by failing to order a lump sum child support payment?

(3) Did the trial judge err in imputing the respondent’s income at $28,000 per year?

(4) Did the trial judge err in awarding spousal support?

(5) Did the trial judge err by failing to admit the fresh evidence?

(6) Did the trial judge err by failing to deduct the value of a date of marriage asset from the respondent’s net family property?

holding:

Appeal dismissed, cross-appeal allowed.

reasoning:

(1) Did the trial judge err by allowing the interpreter to continue despite the appellant’s objections?

No. The appellant alleges that the incompetency of the interpreter led to inaccuracies and omissions in the translation at trial which were substantial and resulted in an unfair trial. The Court of Appeal rejected this. The appellant’s lawyer only raised the issue on the seventh day of the trial. The trial judge gave the appellant three options on how to proceed. The appellant chose to proceed with the interpreter and was therefore precluded from appealing from that choice.

(2) Did the trial judge err by failing to order a lump sum child support payment?

No. The appellant argued that lump sum child support should have been ordered as the respondent had regularly failed to make periodic payments since separation. The Court of Appeal rejected this argument. The issue was one of mixed fact and law. While lump sum payments are appropriate when there is a real risk that periodic payments will not be made, the appellant did not marshal any evidence to suggest that future non-payment of periodic payments was a risk.

(3) Did the trial judge err in imputing the respondent’s income at $28,000 per year?

No. The appellant argued that the respondent was intentionally underemployed and so greater income should have been imputed to him. The appellant argued that given factors such as age, education, experience and health, income should have been imputed to the respondent in the $60,000 range. Alternatively, since the respondent had previously been a truck driver, his previous income in that role of $50,000 should be imputed.

The Court of Appeal rejected this argument and affirmed the trial judge’s decision. The issue was one of mixed fact and law and the respondent could show no error, let alone a palpable and overriding error to justify intervention. There was no evidence indicating that the respondent could earn anything close to $60,000 as a self-employed electrician servicing only Russian speaking people in the GTA. Further, the respondent had to quit his trucking job in 2008 because of chronic back pain so there was no reason to impute that previous income.

(4) Did the trial judge err in awarding spousal support?

No. The appellant submitted that the trial judge did not give sufficient consideration to s. 15.3(1) of the Divorce Act or s. 38.1(1) of the Family Law Act requiring courts to prioritize child support over spousal support. The trial judge found that the respondent had foregone paid work and career opportunities so the appellant could pursue a nursing degree. The respondent was significantly older than the appellant and working a minimum wage job while the appellant had a prosperous career ahead of her. There was a substantial inequality between their incomes and so the trial judge’s decision to award spousal support in the mid-range of the advisory guidelines was reasonable and entitled to deference.

(5) Did the trial judge err by failing to admit the fresh evidence?

No. The appellant sought to adduce fresh evidence after the trial judge had given her decision but before the final order was given. The trial judge refused to admit the evidence because she was of the opinion that had it been before the court, it would not have changed the decision. The Court of Appeal saw no issue with the trial judge’s decision to reject the fresh evidence.

(6) Did the trial judge err by failing to deduct the value of a date of marriage asset from the respondent’s net family property?

Yes. The respondent owned a condo at the time of the marriage, which was sold and the proceeds reinvested. The trial judge found that the condo was not a matrimonial home, but refused to deduct the value of the date of marriage asset from the respondent’s net family property. The respondent submitted that the failure to deduct it was an error. The Court of Appeal agreed and allowed the cross-appeal. The trial judge ought to have deducted that value of the condo or its sale proceeds from the respondent’s net family property. While the trial judge correctly found that it was not a matrimonial home and addressed the proceeds, the trial judge failed to explain why she did not deduct the value, which was an error.


Nemchin v. Green, 2021 ONCA 238

[Roberts, Trotter and Thorburn JJ.A.]

Counsel:

J.Y. Obagi and E. A. Quigley for the appellant, T.N.

S.G. Ross, T. Macmillan and M. Rodrigues for the respondent, Y.G.

Keywords: Insurance, Subrogation, Collateral Benefits, Long-term Disability, Statutory Assignment of Rights and Benefits, Statutory Trusts, Civil Procedure, Procedural and Natural Justice, Insurance Act, R.S.O. 1990, c. I.8, Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 267.8, Lewin on Trusts, 19th ed. (London: Sweet & Maxwell, 2015), Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.), Kant v. The Queen, [2001] 2 C.T.C. 2703 (T.C.C.), Bapoo v. Co-Operators General Insurance Co. (1997), 154 D.L.R. (4th) 385 (Ont. C.A.), leave to appeal refused, [1998] S.C.C.A. No. 62, Cadieux v. Cloutier, 2018 ONCA 903, leave to appeal refused [2019] S.C.C.A. No. 63, Carroll v. McEwen, 2018 ONCA 902, Cobb v. Long Estate, 2017 ONCA 717, El-Khodr v. Lackie, 2017 ONCA 716, leave to appeal refused, [2017] S.C.C.A. No. 461, Re Scott, [1948] SASR 193, Frederick v. Aviation & Gen. Ins. Co., [1966] O.J. No. 1064 (C.A.), Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Pugh v. Canada, [2000] T.C.J. No. 585, Bouchard v. Canada, 2008 TCC 408.

facts:

This case arose out of a motor vehicle accident involving the appellant and respondent where the appellant sustained serious injuries and became totally disabled. As a result, the appellant was awarded substantial damages against the respondent at trial. The appellant’s injuries also triggered coverage for long-term disability income continuation benefits from Sun Life Assurance Company of Canada (“Sun Life”), her employer’s group benefits insurer. Both the appellant and her employer had contributed to the plan, and as a result, Sun Life deducted and remitted income taxes from its payments to the appellant under the plan.

Following the trial, the respondent brought a motion under s. 267.8(12) of the Insurance Act (the “Act”) to require the appellant to assign her rights to the Sun Life benefits to the respondent’s insurer from the date of the judgment. The trial judge granted the respondent’s request and included an additional order that the appellant “top up” any amount paid from Sun Life to the respondent’s insurer to account for the fact that Sun Life deducted applicable income taxes from its payments to the appellant.

The appellant then appealed the trial judge’s order requiring her to top up the amount of the long-term disability benefits that she assigned to the respondent’s insurer. The appellant did not contest the assignment of her benefits to the respondent’s insurer, rather the appellant argued that the trial judge’s order was contrary to the principles of natural justice and exceeded her jurisdiction because neither party sought the top up that she ordered. Further, the appellant argued that the trial judge erred in her interpretation of s. 267.8 of the Act.

issues:

(1) Was the trial judge’s top up order procedurally unfair and contrary to natural justice?

(2) Did the trial judge err in her interpretation and application of s. 267.8 of the Insurance Act?

holding:

Appeal allowed.

reasoning:

(1) Was the trial judge’s top up order procedurally unfair and contrary to natural justice?

Yes. The Court stated that neither party requested that the trial judge make the top up order, nor did the trial judge request submissions from the parties on the issue of top up. Instead, the Court held that the trial judge resolved the rights of the parties, imposed a burden on the appellant, and provided a remedy to the respondent, “on a theory never pleaded and with respect to which battle was never joined”. Therefore, the Court agreed with the parties’ request that it ought to look at the top up question and the underlying issue of the parties’ respective rights and obligations under the statutory assignment, rather than remitting it to the trial judge for a rehearing.

(2) Did the trial judge err in her interpretation and application of s. 267.8 of the Insurance Act?

Yes. The Court found that the trial judge misinterpreted ss. 267.8(9), (10), and (12)(a)(ii) of the Act and applied the trust and assignment provisions in a manner that was contrary to the plain meaning of the legislative text and its purposes. The trial judge also erred by failing to take into account Sun Life’s withholding and remittance of income tax as a statutory trust and its effect on the appellant’s rights under the plan. The legislative purpose of s. 267.8 is to promote fair compensation to injured plaintiffs and prevent double recovery. However, the Court stated that the effect of the trial judge’s order led to an unfair result for the appellant and ran counter to the principle of full compensation because it imposed a financial burden on the appellant that she would not have incurred if she did not have collateral benefits from Sun Life.

The trust provisions under ss. 267.8(9) and (10)

Subsections 267.8(9) and (10) of the Act impose a statutory trust on the payments that a plaintiff actually receives for the benefit of the defendant or the defendant’s insurer. The trust property in this case consisted of the net after-tax payments that the appellant received pre-assignment from Sun Life from the date of the judgment. The appellant, as trustee, was only required to hold in trust and then pay to the respondent’s insurer these actual payments from Sun Life, which were net of tax.

The Court stated that while the trial judge did not expressly address the application of the trust provisions under ss. 267.8(9) and (10) to the amounts received by the appellant pre-assignment, the effect of the order requiring the deduction of the gross amount of the payments to the appellant under the Sun Life plan since the date of judgment resulted in the deduction of more than the amount of the payments actually received and held in trust by the appellant post trial and pre-assignment. Thus, the Court held that the effect of the order was contrary to the provisions of ss. 267.8(9) and (10).

The assignment provisions under s. 267.8(12)(a)(ii)

Subsection 267.8(12)(a)(ii) of the Act permits a defendant to seek the assignment to its insurer of “all rights in respect of all payments to which the plaintiff who recovered damages is entitled in respect of the incident…under an income continuation benefit plan”. In the Court’s view, the trial judge conflated the entitlement of the respondent’s insurer to the rights to the plan benefits with the mechanism of a specific mode of payment (i.e. an assignment), and therefore failed to apply the assignment provisions under s. 267.8(12)(a)(ii) in a manner consistent with the trust provisions. Therefore, the trial judge effectively concluded that the respondent’s insurer was entitled to collect the appellant’s gross benefits as if they were not taxable or as if the appellant had elected to take the entire taxable sum in hand.

Instead, the Court stated that the correct interpretation is that the respondent’s insurer, as assignee, steps into the shoes of the appellant and acquires the entitlement to the rights to the appellant’s benefits subject to all the equities and obligations existing between the appellant and Sun Life under the plan (Frederick v. Aviation & Gen. Ins. Co., [1966] O.J. No. 1064 (C.A.)). Therefore, the assignment of the appellant’s rights under the plan means that the respondent’s insurer is entitled to a credit for the actual payments that the appellant receives under the plan, which in this case meant net of the taxes withheld by Sun Life. The respondent’s insurer is entitled to take whatever steps necessary, at its own expense and with the appellant’s co-operation, as required under s. 267.8(12)(b), to deal with the issue of the tax withholdings with Sun Life and the CRA. However, the respondent’s insurer is not entitled to receive payments greater than those the appellant received.

The trust and assignment provisions are complementary mechanisms

The Court held that the trial judge’s approach failed to take into account the complementary nature of the trust and assignment provisions in the context of s. 267.8 as a whole for two reasons. First, ss. 267.8(9), (10), and (12) provide for two different mechanisms that work together to achieve the same underlying aim of providing compensation without over-compensation. However, the trial judge’s approach instead introduced a discrepancy between the provisions by having the assignment apply to gross pre-tax amounts when the trust did not. Second, the word “payments” should be given the same meaning in each of ss. 267.8(9), (10) and (12). The “payments” referred to in ss. 267.8(9) and (10) are the payments actually received and held in trust by the appellant. Thus, the word “payments” in s. 267.8(12) must refer to the same payments but to be received under the mechanism of an assignment.

Sun Life’s statutory obligations

The Court held that due to the errors in the interpretation and application of the trust and assignment provisions, this led the trial judge to ignore the effect of Sun Life’s withholding and remittance of income taxes to the CRA from the plan payments pursuant to its statutory obligations. As the appellant’s assignee, the respondent’s insurer has all the same rights as against Sun Life as the appellant, and Sun Life has all the same defences, which may include any statutory obligation on the part of Sun Life to withhold and remit taxes to the CRA from the plan payments.

The Court stated that since Sun Life purports to withhold and remit income taxes pursuant to a statutory obligation to the CRA, this means that those monies are imposed with a statutory trust and do not form part of the payments made under the plan. Therefore, so long as Sun Life withholds and remits taxes pursuant to the statutory trust provisions of the Income Tax Act, the assigned rights of the respondent’s insurer are to the net after-tax payments. The Court held that the respondent and its insurer could not complain of this situation, because had they acceded to the appellant’s request to seek a ruling from the CRA on the tax issue, the issues of quantum and liability for taxes following the assignment could have been ascertained. Since they did not, the respondent’s insurer is only entitled to receive what Sun Life pays.

Further, the Court disagreed with the respondent’s submission that the trial judge’s order causes no prejudice to the appellant because she can simply apply for a tax refund and be in no worse position. The Court stated that it was by no means certain that the CRA would agree that the appellant was entitled to a refund of the taxes remitted by Sun Life, and that the appellant would likely be required to incur considerable expense to ascertain whether the CRA accepted this position. Thus, this would further undermine the purpose of full compensation for the appellant.

In conclusion, the Court held that the trial judge’s order should be amended to provide for the assignment from the date of judgment of the appellant’s rights in respect of all payments under the Sun Life plan to the respondent’s insurer, net of all income tax withholdings, so long as Sun Life continued to withhold and remit income taxes to the CRA from the payments made under its plan. This will continue until the appellant reaches the age of 65 or the respondent’s insurer has been fully reimbursed for its payment of the loss of income damages award, whichever event occurs first.


SHORT CIVIL DECISIONS

Lengyel v. TD Home and Auto Insurance, 2021 ONCA 237

[Tulloch, Nordheimer and Jamal JJ.A.]

Counsel:

G.L., in person/responding party

H. Hogan, for the Public Guardian and Trustee/moving party

No one appearing for the defendant

Keywords: Torts, Negligence, MVA, Civil Procedure, Settlements, Court Approval, Litigation Guardians, Appeals, Jurisdiction, Kavuru (Litigation guardian of) v. Heselden, 2014 ONSC 6718


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