Court Of Appeal Summaries (July 17 – 21, 2023) - Civil Law

Good evening.

Following are this week's summaries of the Court of Appeal for Ontario for the week of July 17, 2023.

In the most interesting decision of the week, Bunker v Veall, the appellants appealed an order declaring that a proposed payment, if made by the respondent executors to a Dubai law firm in partial satisfaction of a Dubai judgment, would violate s. 83.03(b) of the Criminal Code because the judgment was rendered in favour of a corporation with an alleged connection to a terrorist group. In allowing the appeal, the Court held that the court below erred in law in granting the declaration. The court had no jurisdiction to do so. Its declaration would not be binding on a prosecutor, who may have very different evidence to work with.

In YG Limited Partnership and YSL Residences Inc. (Re), the Court held that the limited partners of a limited partnership did not have standing to oppose claims made in bankruptcy. The limited partners had no direct economic interest in such claims and did not even control the debtor, which is controlled by the general partner. The Bankruptcy and Insolvency Act spells out who has standing, which is typically the claimant, the trustee in bankruptcy and the debtor.

In D.L. v. E.C. a mother made a dependant's support claim against the deceased's estate. The deceased believed he was the father of the mother's child, but it turned out that he was not (he never found out before he died). The lower court dismissed the application on the basis that the deceased had no "settled intention" to treat the child as his own. It also ordered substantial indemnity costs against the mother for having advanced a "false narrative". The Court dismissed the mother's main appeal related to the dependant support claim, but allowed the appeal on the issue of costs. There was no basis to have awarded costs against the mother on a substantial indemnity scale. The costs were therefore reduced to a partial indemnity scale.

Canada v Georgiou is technically a criminal law decision, but it relates to the forfeiture of property, so we thought it would be interesting to summarize for our mostly civil litigation readership. The moving party's son was convicted of serious fraud and securities violations in the US and was serving a lengthy prison sentence. The US government had a forfeiture order and sought to enforce it against his property here in Canada. The moving party sought leave to appeal the dismissal of her application seeking a declaration that she had a 100% interest in $9.3 million, and that the funds were not subject to the forfeiture order. In dismissing the moving party's motion for leave to appeal, the Court concluded that the moving party's proposed appeal fell within s.35 of the Mutual Legal Assistance in Criminal Matters Act, and that she could appeal only if she satisfied the test for leave in s. 35. The Court held that the moving party did not raise "a question of law alone" that would warrant leave to appeal. The decision below was fact-driven and the proposed appeal related to factual, not legal issues.

In Sebastiano v. Brunello Imports Inc., the court found an order that followed a summary judgment, which directed that funds paid into the court to the credit of the respondent be paid out to him, was an interlocutory order and thereby quashed the appeal for want of jurisdiction.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

Sebastiano v. Brunello Imports Inc., 2023 ONCA 487

Keywords: Contracts, Real Property, Mortgages, Enforcement, Civil Procedure, Settlements, Appeals, Jurisdiction, Final or Interlocutory, Collateral Attack, Abuse of Process, Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375

Canada (Attorney General) v. Georgiou, 2023 ONCA 495

Keywords: Criminal Law, Forfeiture of Property, Trust Property, Statutory Interpretation, Civil Procedure, Relief from Forfeiture, Appeals, Leave to Appeal, Evidence, The Rule in Browne v Dunn, Fresh Evidence, Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30, sections 9.3 and 9.4 and 35, Criminal Code, sections 2 and 462, Canada (Attorney General) v Georgiou, 2018 ONCA 320, Browne v Dunn (1893), 6 R. 67 (H.L.), Ontario (Provincial Police) v Assessment Direct Inc., 2017 ONCA 986, Dal Bianco v Deem Management Services Limited, 2020 ONCA 488, R v Viscomi, 2014 ONCA 765, Rizzo & Rizzo Shoes Ltd. (re), [1998] S.C.R. 27, National Corn Growers Assn v Canada (Import Tribunal), [1990] 2 S.C.R. 1324, United Kingdom v Ramsden (1996), Ont. C.A., R v Kachkar, 2014 ONCA 560, R v M.S., 2003 SCC 11, Amonite v A.P. Plasman Corp., 2014 ONSC 1705, Palmer v The Queen, [1980] 1 S.C.R. 759

YG Limited Partnership and YSL Residences Inc. (Re), 2023 ONCA 505

Keywords: Bankruptcy and Insolvency, Proposals, Limited Partnerships, Civil Procedure, Standing, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 37, 50(1) and 135(3-4), Limited Partnership Act, R.S.O. 1990, c. L. 16, Rules of Civil Procedure, Rule 37.14(1), Ivandaeva Total Image Salon Inc. v. Hlembizky (2003), 63 O.R. (3d) 769 (C.A.), Fontaine v. Canada (Attorney General), 2018 ONCA 1023, Kucor Construction & Developments & Associates v. Canada Life Assurance Co. (1999), 41 O.R. (3d) 577 (C.A.), Re McEwen, 2021 ONCA 566, Romspen Investments Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, Canada (A.G.) v. Rassell, 1999 ABCA 232, 237 A.R. 137

D.L. v. E.C., 2023 ONCA 494

Keywords: Wills and Estates, Intestacy, Succession, Pension, Dependants' Support, Settled Intention, Beneficiaries, Costs Awards, Substantial Indemnity Costs, Succession Law Reform Act, R.S.O. 1990, c. S.26, Child, Youth and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1, s. 87(8), Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), Chartier v. Chartier, [1999] 1 S.C.R. 242, Young v. Young, [1993] 4 S.C.R. 3, Iannarella v. Corbett, 2015 ONCA 110, 1588444 Ontario Ltd. v. State Farm Fire and Casualty Company, 2017 ONCA 42, Lewis v. Lewis, 2017 ONCA 690

Bunker v. Veall, 2023 ONCA 501

Keywords: Wills and Estates, Trusts, Estate Trustees, Advice and Direction, Illegality, Civil Procedure, Jurisdiction, Criminal Code, R.S.C. 1985, c. C-46, s. 83.03(b), Trustee Act, R.S.O. 1990, c. T.23, s. 60(1), Rules of Civil Procedure, r. 14.05(3), Bryton Capital Corp. GP Ltd v CIM Bayview Creek Inc., 2023 ONCA 363, London Health Science Centre v R.K. (1997), (Ont. S.C.), Bentley v Maplewood Seniors Care Society, 2014 BCSC 165, Transport North American Express Inc. v New Solutions Financial Corp., 2004 SCC 7, Gook Country Estates Ltd. v Quesnel (City of), 2008 BCCA 407

Short Civil Decisions

Pine Glen Thorold Inc. v. Rolling Meadows Land Development Corporation, 2023 ONCA 489

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Applications, Trial of Issues

Locke v. Murphy, 2023 ONCA 497

Keywords: Family Law, Civil Procedure, Summary Judgment

YG Limited Partnership and YSL Residences Inc. (Re), 2023 ONCA 504

Keywords: Bankruptcy and Insolvency, Civil Procedure, Standing, Motions, Prematurity, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3

Vangar Properties Inc. v. Belmar Roofing Inc., 2023 ONCA 506

Keywords: Contracts, Construction, Negligence

Grady v. Grady, 2023 ONCA 507

Keywords: Wills and Estates, Costs

CIVIL DECISIONS

Sebastiano v. Brunello Imports Inc., 2023 ONCA 487

[Miller, Paciocco and Coroza JJ.A.]

Counsel:

E. Bisceglia, for the appellants

S. Schwartz and D. Marr, for the respondent

facts:

The appellants obtained a loan from the respondent, which was secured by a mortgage against the appellants' matrimonial home and a condominium. The appellants defaulted on the loan in November 2019, and in 2020 the mortgage matured. The respondent commenced an action for the debt, seeking possession of the matrimonial home and the condominium. The appellants did not file a statement of defence and on April 26, 2021, the respondent obtained default judgment granting possession of the matrimonial home.

Subsequently, the appellants sought court approval to sell the matrimonial home themselves. To facilitate the sale, they filed an application on June 21, 2021, for an order discharging the respondent's mortgage against the matrimonial home on terms, and seeking a declaration that the respondent had foreclosed on the condominium in satisfaction of the mortgage. The court refused to hear the matter on the basis that the application constituted a collateral attack on the default judgment and was therefore an abuse of process.

The appellants filed a motion to set aside the default judgment. The parties negotiated a consent order which ordered that the motion was abandoned. The consent order also provided that:

(1) the appellants were "permitted to issue an application for relief concerning [the condominium]";

(2) the matrimonial home could be sold pursuant to an agreement of purchase and sale dated June 29, 2021, and the home would remain in possession and control of the appellants until that sale;

(3) the net proceeds of sale would be "paid into Court to the credit of the within action until further court order";

(4) upon payment of the net sale proceeds into court, the respondent would discharge the mortgage against the matrimonial home; and

(5) the mortgage would remain a charge over the condominium and over the net proceeds of sale paid into court, "subject to further Order of the Court".

The appellants did not take any further steps to schedule the hearing of the application contemplated in the consent order. A year after the consent order, the respondent brought a motion for an order directing that the funds paid into court to the credit of his action be paid out to him. The appellants contested the motion. The motion judge ordered the funds be released.

issues:

Does the court have jurisdiction to hear the appeal?

holding:

Appeal quashed.

reasoning:

No. The order appealed from was interlocutory.

The appellants argued that the order under appeal was final. They submitted that the substantive nature of the order was evident in that the motion judge made determinations about their substantive rights.

The respondent argued that the order under appeal was interlocutory. The default judgment obtained by the respondent was a final determination of a debt owing, and the entitlement to realize on security. The respondent argued that the order appealed from that funds were to be paid into court and stand in place of the property secured by the mortgage resolved no substantive issue in the litigation and was therefore interlocutory.

The Court found that the order under appeal was interlocutory and that it did not have the jurisdiction to hear the appeal. The ultimate question of whether the respondent foreclosed on the condominium in satisfaction of the mortgage debt, or whether he was liable in damages to the appellants for improvident realization of the mortgage, had not been fully adjudicated.

Although the motion judge stated at several places in his reasons that the improvident realization claim was not before him, some of his comments appeared to stray into opining on the subject matter of the appellant's application.

Read as a whole, the reasons were clear that: (1) the motion judge was only considering these issues in the context of the argument that the funds ought not be paid out to the respondent, (2) these claims against the respondent were not before him for adjudication, and (3) the claims that the respondent had breached a deal he had with the appellants and was liable for improvident realization were still live claims in another proceeding.

The motion judge concluded that the appellants could no longer challenge the enforceability of the mortgage against the matrimonial home. That entitlement was determined when the default judgment was issued. The default judgment had not been set aside, and there was no outstanding motion to set it aside. The Court found there can be no collateral attack on that judgment in another proceeding and the order appealed from was interlocutory – it simply executed a determination made in an earlier proceeding.

Parenthetically, because of the terms of the consent order, the appellants are not precluded from pursuing their application against the respondent for allegedly breaching an agreement they say he made with them to foreclose on the condominium in satisfaction of the mortgage debt, for improvident realization, and for breaching a duty of good faith. But the potential success or failure of that proceeding, if it is eventually heard, has no bearing on the finality of the default judgment, nor the interlocutory order to release the funds paid into court as security for the mortgage debt.

Canada (Attorney General) v. Georgiou, 2023 ONCA 495

[Zarnett J.A.]

Counsel:

V. Sasso and J. Horvat, for the moving party

R. Lee, for the responding party

facts:

The moving party applied for relief from forfeiture under s. 9.4(9) of the Mutual Legal Assistance in Criminal Matters Act (the "Act"). Her application concerned $9.3 million, held in Canada, in respect of which a United States court had made a forfeiture order on the basis that the funds belonged to her son, whom that court had convicted of serious criminal offences. The Act was engaged as Canadian authorities were asked to enforce the U.S. court's order.

The moving party sought a declaration that she had a 100% interest in the funds and that her interest was not subject to the forfeiture order, as well as an order that the funds be paid to her. The application judge dismissed the application. By this motion, the moving party sought leave to appeal the application judge's order. She also sought, in the alternative, directions that she may appeal the application judge's order as of right.

issues:

Was leave to appeal required?
Should leave to appeal have been granted?

a. Did the application judge err in relying on pleadings in a separate civil proceeding in support of a foundational finding that there was no oral agreement and/or trust concerning the sharing of profits with the moving party as a beneficiary?

b. Did the application judge err in failing to comprehend the evidence of a written trust arrangement signed for the benefit of the moving party?

3. Was the test for the introduction of fresh evidence met?

holding:

Motion dismissed.

reasoning:

Yes.

Although the moving party's notice of motion asked for leave to appeal under s. 35 of the Act, in her factum on the motion and in oral argument she advanced the alternate position that she had an appeal as of right.

The question of whether an appeal is within the jurisdiction of the Court is a question for a panel, not for a single judge on a motion for directions. Only a panel may quash an appeal over which the Court has no jurisdiction. However, where a motion for leave to appeal is brought before a single judge as required by some statutes, such as the Act, it implicitly raises the question of whether the provision permitting an appeal with leave applies to the appeal that the party seeks to bring. A judge should not consider whether leave should be granted if the provision providing for an appeal with leave does not apply to the proposed appeal. To determine whether the provision applies, the motion judge must interpret the provision, which, in this case, is s. 35 of the Act, and be satisfied that the appeal falls within it. On that limited basis, the Court turned to the question of whether the moving party's proposed appeal fell within s. 35 of the Act.

The Court stated that the key question for determining the applicability of s. 35 is whether the order of the application judge was made "under" the Act. The Court held that, on its face, s. 35 was directly applicable to the moving party's proposed appeal. The relief sought was expressly sought under the Act, and the motion judge's decision denying that relief was therefore an order or decision under the Act.

The moving party argued, however, that the application judge's order was made under s. 462.42(4) of the Criminal Code, entitling her to an appeal as of right. She relied on the parties' agreement before the application judge that ss. 462.42(1) and (4) governed the application. The Court rejected this submission, holding that the application judge's order was made "under" the Act within the meaning of s. 35, not under the Criminal Code. The parties' agreement before the application judge, that certain Criminal Code provisions governed, was relevant to ascertaining the criteria that the moving party had to satisfy to obtain relief under the Act. It did not mean that her application, or any resulting order, was made other than under the Act. It could not alter the appeal route from a decision on her application.

The Court also rejected the moving party's references to the Criminal Code provisions in s. 9.4(9) of the Act. Read in context with the rest of s. 9.4, the purpose of s. 9.4(9)'s reference to Criminal Code provisions is to provide individuals who have valid interests in property subject to foreign forfeiture orders with similar, but not identical, relief proceedings as those found in the Criminal Code for individuals who have valid interests in property subject to domestic forfeiture orders. Recognizing that the procedure for enforcing foreign forfeiture orders does not mirror domestic proceedings, and that different interests exist in each context, the text of s. 9.4(9) expressly provides that the Criminal Code provisions apply, subject to "any modifications that the circumstances require". The Court held that this qualification clearly suggested that not every component of these Criminal Code provisions will be applicable.

The Court held that section 9.4(9) must be interpreted by examining the statutory text in its entire context and in its grammatical and ordinary sense, in harmony with the statute's schemes and objects. And given that the Act is domestic legislation enacted for the purpose of implementing Canada's international obligations, the provision should be interpreted purposively with a view to fulfilling these obligations. The Court explained that one of the purposes of the Act is to "provide the widest measure of mutual legal assistance in criminal matters in a prompt and efficient manner".

Providing limited appeal routes is one manner in which this purpose is achieved. Reading the language of s. 9.4(9) as not incorporating the Criminal Code appeal provisions was consistent with the objects of the Act, and with the Act as a whole, given the unambiguous language of s. 35 that requires leave to appeal for any order or decision made under the Act.

Accordingly, the Court concluded that the moving party's proposed appeal fell within s.35 of the Act and that she could appeal only if she satisfied the test for leave in s. 35.

2. No.

An applicant for leave under s. 35 of the Act must (a) identify a true question of law, and (b) show that leave ought to be granted to address it. On the latter requirement, relevant considerations are whether the question raised is: (i) settled by authority, (ii) of importance generally or great importance to the parties specifically, and (iii) is meritorious or frivolous. The Court stated that it will also consider whether an appeal will cause prejudice, including to the requesting state.

a. Did the application judge err in relying on pleadings in a separate civil proceeding?

The moving party's complaint regarding this issue stemmed from the application judge's references to a statement of defence filed by defendants in a civil proceeding in which it was claimed that the moving party was not paid what she was entitled to.

The defendants in the civil proceeding did not give evidence on the application. Yet, according to the moving party, the application judge relied on the defendants' statement of defence in various ways as though it was evidence. The moving party characterized this as an error of law involving a breach of the rule in Browne v. Dunn, as it allowed the responding party to proffer competing evidence to impeach the credibility of the moving party without giving the opportunity to respond in cross-examination.

The Court held that the moving party's framing of this issue was based on a misunderstanding of how the application judge used the defendants' pleading. The moving party's argument depended on the application judge having given evidentiary treatment to the assertions in the defendants' pleading, using them as evidence in preference to, or to diminish the credibility of, the moving party's sworn evidence. But as the moving party acknowledged, the application judge specifically reminded himself that the defendants' pleading was not evidence.

The application judge's conclusion that the moving party had not met her onus of proving the $9.3 million belonged to her turned on his factual determinations. The Court held that the moving party cannot appeal, under s. 35 of the Act, on anything other than a question of law. When the application judge's use of the defendants' pleading was properly characterized, it became clear that the moving party's first issue did not raise "a question of law alone" that would warrant leave to appeal.

b. Did the application judge err in failing to comprehend the evidence of a written 2008 trust arrangement signed for the benefit of the moving party?

On this issue, the moving party pointed to the presence, in the record, of a document dated November 1, 2008, entitled "The Sedona Capital Trust", under which the moving party was one of 11 beneficiaries. She maintained that the application judge ignored this document in coming to his conclusion that there was no evidence that "the [defendants] generally intended to settle a trust in favour of [the moving party]".

The fact that the application judge did not mention this document did not mean that it was ignored. A judge is not required to refer to each item of evidence, and "[t]he failure to mention a piece of evidence does not in and of itself constitute a question of law".

The Court stated that the Sedona Trust document was not, on its face, inconsistent with the application judge's finding that there was no evidence that the defendants intended to settle a trust in favour of the moving party. The document does not give the moving party, as a beneficiary, an interest in the $9.3 million paid out in 2012. The document does not identify the trust property beyond a sum of $100. And, the Court held, it gave the trustee absolute discretion over distributions to beneficiaries, rather than fixing an entitlement of one of them, the moving party, to a specific payment.

The moving party's attempt to connect the document to the $9.3 million that was paid in 2012 depended on the evidence of the moving party's son. But the application judge did not accept his evidence. The effect to be given to the Sedona Trust document on the issue of whether the moving party had a 100% interest in funds paid in 2012 by APP Capital, ostensibly under a Compensation Agreement with her son, was not, nor did it involve, a question of law alone.

3. No.

There moving party did not establish that the evidence she sought to introduce as fresh evidence – a statement from a previous case – was not available to her through the exercise of due diligence before the hearing of her application. The moving party could have called the defendant from that case as a witness on the application if she believed the defendant had evidence that would assist her case. But most fundamentally, the information could at most bear on factual issues and would not make either of the issues the moving party sought to raise questions of law alone for which leave to appeal should have been granted. The test for the introduction of fresh evidence was therefore not met.

YG Limited Partnership and YSL Residences Inc. (Re), 2023 ONCA 505

[Huscroft, Miller and Paciocco JJ.A.]

Counsel:

D. Palter and A. Soutter, for the appellants, YongeSL Investment Limited Partnership, 2124093 Ontario Inc., SixOne Investment Ltd., E&B Investment Corporation, and TaiHe International Group Inc.

H. Murray, for the respondent, CBRE Limited

R. Schwill and M. Milne-Smith, for the respondent, KSV Restructuring Inc.

facts:

YSL Residences Inc. ("YSL") was the registered owner of the "YSL project", a condominium development, acting as bare trustee for YG Limited Partnership. As a result of financial difficulties with the YSL project, YSL and YG Limited Partnership filed notices of intention to make a joint liquidation proposal pursuant to s. 50(1) of the Bankruptcy and Insolvency Act ("BIA"). The Limited Partners filed two applications challenging the proposal and were given standing by Dunphy J. to do so at the sanction hearing. The Limited Partners succeeded in that challenge and the proposal was denied.

A second proposal transferring the YSL project to Concord Properties Development Corp. was subsequently approved. Under the terms of that proposal, Concord agreed to pay $30.9 million to the Proposal Trustee to fund creditors. Article 5.05 of the approved proposal provided that the Limited Partners were entitled to any residual funds held by the Proposal Trustee after final distribution to the creditors. However, the extent of recovery for the Limited Partners came to depend upon the claims of three creditors, including a real estate broker, CBRE Limited, a respondent in this appeal. If allowed, it would reduce the Limited Partners potential recovery by that amount.

The Proposal Trustee concluded the fastest way to approve the claim would be to permit CBRE's appeal to proceed unopposed. However, the Limited Partners, whose interest lay in CBRE's proof of claim failing, sought to oppose CBRE's appeal, arguing that they had standing. They alternatively sought relief pursuant to s. 37 of the BIA. The motion judge denied the Limited Partners standing to appear at CBRE's motion, held that the Limited Partners were not "persons aggrieved" within the meaning of s. 37 of the BIA, and allowed CBRE's appeal.

issues:

Did the motion judge err in denying the Limited Partners standing?
Did the motion judge err in concluding that CBRE had proven its claim?

holding:

Appeal dismissed.

reasoning:

The Court was not persuaded by the Limited Partners' primary submission that based on general common law principles of standing the motion judge erred by denying them the right to standing, as their economic interests would be affected by the CBRE appeal decision.

First, the Limited Partners did not have a direct economic interest in CBRE's claim. By virtue of its constating partnership agreement and the Limited Partnership Act, the business of a limited partnership is managed by its general partner. The limited partners enjoy the economic benefits from the partnership through their contractual relationship with the general partner, and not through direct legal rights tenable against debtors or creditors of the partnership. As a result, the direct economic interest at stake during CBRE's appeal belonged to the partnership, an economic interest that is to be exercised by the General Partner even where the outcome of the appeal could ultimately inure to the financial benefit of the Limited Partners. Limited Partners lacked the direct economic interest in the proceeding's outcome required to support a claim of standing.

Second, the Court was persuaded that the general standing principles that the Limited Partners invoked did not apply during proof of claim appeals under s. 135(4) of the BIA. Although the BIA does not speak explicitly to "standing" at proof of claim appeals, s. 135(4) is explicit in granting the authority to appeal the disallowance of a "claim" to "the person to whom the notice was provided." Subsection 135(3) stipulates that the notice of disallowance contemplated by s. 135(4) is provided to "the person whose claim ...was disallowed" by the trustee. Under the terms of s. 135(4), it is therefore CBRE that has standing to address the disallowance of its claim, not the Limited Partners.

The Court was not persuaded by the Limited Partners' argument that s. 135(4) is relevant only to who can bring an appeal. The Court was satisfied that the Legislature intended that equity owners of the debtor, such as limited partners, would not have a right of standing, for two reasons:

First, the BIA processes, including the process for appealing proof of claim decisions, are "between the trustee, the creditor claimant and the debtor." This reflects the relevant direct interests at stake and safeguards the purpose of the BIA for summary and expeditious procedures. If equity owners had automatic rights of standing in creditor claim appeals, it would impose notice requirements and have time implications that are contrary to the interest in the prompt and effective disposition of BIA claims.

Second, the right of standing the Limited Partners claim was not intended. Section 135(5), addressing the right of appeal where a proof of claim is allowed, limits the right of appeal to "the creditor or the debtor" which, as the motion judge found, would exclude the Limited Partners. If equity owners of a debtor nonetheless had a right of standing to participate in such appeals, it would be an irrationally fickle right. They could not appeal a trustee's decision approving a creditor's claim because of s. 135(5) but could, fortuitously, join in an appeal by another if that appeal happens to be launched.

When considering the statute as a whole, s. 37 of the BIA was also important. To the extent that the BIA contemplates conferring standing on others to participate in the processes between the trustee, debtors and creditors, s. 37 provides the mechanism, limiting the right to apply to a person "aggrieved by any act or decision of the trustee". The BIA is a complete code governing the bankruptcy process" (Re McEwen).

The Court also rejected the Limited Partners' submission that the motion judge's assessment of standing was tainted by a mistaken belief that the CBRE appeal was brought under s. 135(5) instead of s. 135(4). The Court was satisfied from his reasons that he considered standing under s. 135(5) for completeness, and in any event, his ultimate decision did not rest on his analysis of s. 135(5). Therefore, the motion judge did not err in denying standing arising from their economic interest in the outcome. No such right exists.

The Court also rejected the Limited Partners' submission that the motion judge erred in finding that the Limited Partners could not seek relief under s. 37 because they are not "aggrieved by any act or decision of the trustee". That determination is a decision of mixed fact and law, reviewable on a "palpable and overriding error" standard. The outcome he arrived at was in keeping with recognition that any interest the Limited Partners could assert in the outcome of the appeal was indirect, and tenable through the General Partner who they empowered to act on their behalf in managing claims made by creditors of the Limited Partnership.

Finally, the Court also rejected the Limited Partners' submission that the motion judge erred by not observing the principles of judicial comity in not following the Dunphy J. decision. It was unnecessary to explore the reach and effect of the principles of judicial comity or to comment on whether Dunphy J. was correct in effectively granting the Limited Partners standing at the sanction hearing. The Dunphy J. decision did not address the same issue that was before the motion judge.

As the Limited Partners' first ground of appeal for standing was dismissed by the Court, it was unnecessary to consider the second ground of appeal regarding CBRE's proof of the claim.

D.L. v. E.C., 2023 ONCA 494

[Doherty, Feldman and Roberts JJ.A.]

Counsel:

B. J. Kurpis, for the appellant

P. J. Kraemer, for the respondents

facts:

These proceedings arise out of the death of B.L. and the resulting dispute over the proceeds from his pension from employment. B.L. died without making a will. The claimants to B.L.'s pension are the named beneficiaries, D.L. and A.L-G., his mother and sister respectively, and E.C., who sought an order for dependant support on behalf of her child, P.C.L., under s. 58 of the Succession Law Reform Act, R.S.O. 1990, c. S.26 ("SLRA").

E.C. and B.L. had been involved in an on again off again romantic relationship for about 8 years before B.L.'s unexpected and tragic death from a drug overdose on March 20, 2019. B.L. was 26 years old at the time of his death and was working as an ironworker. At the time that E.C. conceived P.C.L. in December 2017, she and B.L. were romantically involved with other individuals. Towards the end of her pregnancy in April 2018, E.C. approached B.L. for assistance. They lived together in a motel for a couple of months. B.L. attended the hospital when E.C. gave birth to P.C.L. on July 23, 2018.

P.C.L. was born in July 2018. In September 2018, B.L. moved into E.C.'s parents' home, where she and P.C.L. were living. E.C.'s parents were the primary financial support of E.C. and P.C.L. While E.C. and B.L. continued to parent P.C.L., both E.C. and B.L.'s mothers were initially listed as custodial parents. However, B.L.'s mother was removed from her position as a custodial parent, and B.L. briefly had his right to see P.C.L. revoked in August 2018 due to continued drug use. In January 2019, B.L. was ejected from E.C.'s parents' home and lived with his sister until his death in March 2019.

On P.C.L.'s birth and baptismal certificates, B.L. was named as P.C.L.'s father. He named E.C. and P.C.L. as beneficiaries on his life insurance. He instructed his employer to add E.C. and P.C.L. as dependants on his medical insurance. He wrote to substitute E.C. and P.C.L. as the beneficiaries to his pension, but he had used the wrong form and took no further steps to effect this change.

The application judge concluded that E.C. had not met her onus under s. 58 of the SLRA to demonstrate that P.C.L. was a dependant of B.L. He determined that E.C. and B.L. were not common law spouses and that, as the ordered DNA tests demonstrated, P.C.L. was not the biological child of B.L. Nor was he persuaded that B.L. had demonstrated "a settled intention" to treat P.C.L. as a child of his family in accordance with the expanded definition of "child" under s. 57(1) of the SLRA. While the evidence showed a basic intention on the part of B.L. to treat P.C.L. as his child, the application judge held it was not "a settled intention". The application judge found that B.L. believed P.C.L. was his biological child and that E.C., who, at the time she conceived P.C.L., "knew that either: i) B.L. was not the father, or that ii) B.L. may not be the father" of P.C.L., did not disabuse B.L. of his misunderstanding. He concluded that "[h]ad E.C. been forthright and honest with B.L. about the parentage, the eight months may have been a sufficient time frame to have allowed for the settled intentions to be manifested." The application judge ordered substantial indemnity costs against E.C. She appealed.

issues:

Did the application judge err in his consideration of "settled intention"?
Did the application judge err in awarding "elevated costs"?

holding:

Appeal allowed in part.

reasoning:

The Court saw no reversible error in the manner in which the application judge considered the question of B.L.'s knowledge of whether he was P.C.L.'s biological father. The Court held that while it would have been preferable if the application judge had expressly addressed the uncontroverted evidence that B.L. had suspicions as to whether he was P.C.L.'s biological father, the existence of those suspicions did not preclude the application judge's finding that B.L. believed he was P.C.L.'s biological father during the very short time that he was involved in her young life.

The Court stated that none of the case law submitted by E.C. prohibited the consideration of B.L.'s knowledge of P.C.L.'s parentage as a factor in the court's consideration of whether he had a settled intention to treat her as his child. It was a question of weight to be given to that factor in the particular circumstances of the case.

The Court stated that which factor will figure more predominantly in the analysis of whether a person has "a settled intention" to treat a child as his or her own will therefore depend on the circumstances of the case. The Court stated that as the application judge correctly noted, this was a fact-driven exercise. In the circumstances of this case, the state of B.L.'s knowledge was a relevant but not determinative factor because of the very short time period involved and the limited evidence of B.L.'s relationship with P.C.L. The Court held that the application judge did not consider it to the exclusion of other relevant factors, including P.C.L.'s need for support and her relationship with B.L. as manifested in the very short time they were together.

The Court held that the application judge's determination that E.C. did not demonstrate that B.L. had shown a settled intention to treat P.C.L. as a child of his family was open to him on the record. The evidence of B.L.'s intention was arguably ambiguous. While, as the application judge noted, some of the evidence, such as B.L.'s name on the birth and baptismal certificates, pointed towards intention, other evidence, such as B.L.'s lack of financial support of P.C.L., the very short time he lived with her, and his failure to follow through on adding E.C. and P.C.L. as his pension beneficiaries once he was no longer living with them, suggested no settled intention. The Court held that it was up to the application judge to weigh this evidence.

2. Yes.

The Court held that there was no basis for an award of substantial indemnity costs in the circumstances of this case. The Court held that costs on the elevated scale of substantial indemnity costs may only be warranted where a claimant's success surpasses an offer to settle (inapplicable here), or a party engages in egregious conduct. Such egregious conduct includes "misconduct by a party or its counsel, or where the proceedings are clearly vexatious, frivolous, or an abuse of process". The Court saw no basis for the application judge's conclusion that E.C. and her mother had advanced "a false narrative" or otherwise engaged in the kind of egregious conduct that warranted an award of costs on a substantial indemnity scale. Thus, the Court set aside the application judge's cost award and instead granted the respondents their costs on a partial indemnity basis.

Bunker v. Veall, 2023 ONCA 501

[Feldman, Benotto and Roberts JJ.A.]

Counsel:

R. Frater, K.C., and Y. Park, for the appellants

A. Kreaden and H. Mohamadhossen, for the respondents

facts:

The respondents are the Executors of their father's estate, who was a lawyer and the founder of a law firm (the "Firm") in Dubai. The respondents reside in Canada and all funds belonging to the estate are held in a Scotiabank account in Toronto. The appellants practiced law in Dubai with the father of the respondents prior to his death and continued to operate the Firm in Dubai.

The order appealed from was a declaration that a proposed payment, if made by the respondent Executors to the Firm in connection with a Dubai judgment obtained by Sorinet Aviation Ltd. and Sorinet General Trading LLC ("the Sorinet Entities") against the Firm, would violate s. 83.03(b) of the Criminal Code, R.S.C. 1985, c. C-46 because the Sorinet Entities had an alleged connection to a terrorist group. The proposed payment by the Executors would be in satisfaction of an agreement with the Firm to pay 50% of the Dubai judgment.

The Executors successfully obtained a declaration of illegality by way of application under r. 14.05(3) of the Rules of Civil Procedure for the opinion, advice, direction or order of the court. The appellants, who continue to operate the Firm, appealed the declaration of illegality and also sought leave to appeal the costs order against them.

The Dubai proceedings arose after the father passed away, at which point the Sorinet Entities brought a legal proceeding in Dubai against the Firm. Sorinet Aviation Ltd. had previously retained the Firm to purchase aircraft for travel demands in Iran. After Sorinet Aviation Ltd.'s principal and majority shareholder revealed that he intended to seize and operate the aircraft in Iran, contrary to international sanctions, the Firm terminated their relationship and retained a portion of the funds that had been provided by Sorinet Aviation Ltd. as an indemnity in the event that Sorinet Aviation Ltd. were to make any derogatory statements about the Firm. The Sorinet Entities brought the legal proceeding against the Firm when the Firm forfeited the indemnity amount.

The Dubai Court of First Instance granted judgment to the Sorinet Entities against the Firm for damages exceeding US $1,000,000 for unlawfully retaining the indemnity amount. The judgment was upheld on appeal by the Dubai Court of Appeal and the Dubai Court of Cassation.

issues:

Did the application judge err in declaring that any payment by the Executors under the Dubai judgment would be contrary to s. 83.03(b) of the Criminal Code due to possible connections between the Sorinet Entities and an alleged terrorist group?

holding:

Appeal allowed.

reasoning:

Yes.

The Court held that, while procedurally an estate may seek the advice of the court including declarations of right under r. 14.05(3) of the Rules of Civil Procedure, that rule does not give the court jurisdiction. It is a procedural rule only.

Rule 14.05 assumes jurisdiction exists, and provides a means by which to engage that jurisdiction. A court must have jurisdiction independent of r. 14.05 before it can consider the appropriate vehicle for bringing the matter forward, whether by application or action.

In addition, s. 60(1) of the Trustee Act allows a trustee, guardian or personal representative to apply to the Superior Court of Justice "for the opinion, advice or direction of the court on any question respecting the management or administration of the trust property or the assets of a ward or a testator or intestate."

These types of applications are intended to assist, and in some cases provide legal protection to the trustee against the beneficiaries for actions to be taken by the trustee in the administration of the trust or estate. However, to the extent that such declarations or opinions relate to what steps a prosecutor may take or what findings a court may make in a criminal prosecution against the trustee, they do not provide protection to the trustee from the court or a prosecutor because they do not bind those decision makers.

Because in this context the court on the application cannot make a binding declaration of legality, courts have held that they will not give a declaration that is intended by the parties to interfere with prosecutorial discretion or to provide immunity from prosecution.

The Court stated that this was what was being requested in this application. Section s. 83.03(b) of the Criminal Code makes it an offence for any person to "directly or indirectly...provide[s]...or make[s] available property or financial or other related services...(b) knowing that, in whole or part, they will be used by or will benefit a terrorist group."

The Dubai judgment that was owed by the Firm was to entities that were alleged to have connections to a purported terrorist group. When the respondents began to prepare to pay what they acknowledged was their 50% share of the judgment, they became concerned that by doing so, they may run afoul of s. 83.03(b). The respondents then sought a declaration from the Superior Court that the payment would be illegal and in breach of the section.

The appellants took the position that the payment would not contravene the section and would be legal. The application judge agreed with the respondents.

One of the main arguments the appellants raised on appeal was that the evidence on the application was not sufficient to make a finding of illegality, as it consisted in large part of newspaper articles and other hearsay regarding the alleged terrorist connections of the judgment creditors. The Court stated that this argument demonstrated another reason why the Court will not make the requested declaration: it would be based only on the record before the Court. However, a prosecutor would base any prosecution decision on the evidence available to the prosecution, which could be entirely different.

The Court stated that, therefore, a declaration, if made, could offer no true protection to the respondents, and would not serve the purpose contemplated by s. 60(1) of the Trustee Act or r. 14.05(3) of the Rules of Civil Procedure.

Although part of the issue sought to be resolved through the application was the interpretation of s. 83.03(b) of the Criminal Code, the other part was findings of fact based on the record and, in particular, whether the money would in fact be used by, or give benefit to, a terrorist group. This was not a situation where an offence could be easily discerned because significant facts were not in dispute, such as where an agreement contains a criminal rate of interest.

The Court held that where the court is asked to assess facts on a contested record and determine whether the facts as found would constitute an offence, what is requested is not an opinion but rather findings of fact based on evidence that may or may not form part of the record at a trial. In this case, where fear of a criminal prosecution under the Criminal Code was at issue, that trial would be a criminal trial based on charges laid.

In this case, a declaration would not have had any utility: it would not have been binding on a prosecutor; and, being based on a specific evidentiary record, it could not even have had persuasive effect where a prosecutor had different evidence as the basis to indict.

Finally, the parties argued that the legality issue would have to be determined by an Ontario court in a civil proceeding such as an action to enforce the agreement by the estate to pay 50% of the Dubai judgment. Therefore, the parties argued that the Court should have proceeded to decide the issue on appeal. The Court rejected that submission, both factually and legally. The issue for the parties was whether there was a procedure that would allow them to effect payment on the contract without risking the engagement of s. 83.03(b) of the Criminal Code.

In the result, the Court set aside the declaration of illegality, holding that the court below erred in law by exercising its discretion to decide whether a payment would constitute an offence under the Criminal Code, requiring a determination both of disputed facts, including facts going to mens rea, the interpretation of s. 83.03(b) of the Criminal Code, and the application of the facts in the context of proof beyond a reasonable doubt.

SHORT CIVIL DECISIONS

Pine Glen Thorold Inc. v. Rolling Meadows Land Development Corporation, 2023 ONCA 489

[Huscroft, Miller and Paciocco JJ.A.]

Counsel:

A. Blumenfeld and D. Tuteja, for the appellant

M. Klaiman, for the respondents

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Applications, Trial of Issues

Locke v. Murphy, 2023 ONCA 497

[Miller, Harvison Young and Favreau JJ.A.]

Counsel:

O. Vinton, for the appellant

J. Cook and D. Hirbod, for the respondent S. M.

M. Bélanger, for the respondent F. S.

A. Bakaity, for the respondent V. S.

Keywords: Family Law, Civil Procedure, Summary Judgment

YG Limited Partnership and YSL Residences Inc. (Re), 2023 ONCA 504

[Huscroft, Miller and Paciocco JJ.A.]

Counsel:

D. Palter and A. Soutter, for the appellants, YongeSL Investment Limited Partnership, 2124093 Ontario Inc., SixOne Investment Ltd., E&B Investment Corporation, and TaiHe International Group Inc.

R. Schwill and M. Milne-Smith, for the respondent, KSV Restructuring Inc.

M Dunn, S. Stothart, C. Fox, and B. Tee, for the respondent, M. A.

Keywords: Bankruptcy and Insolvency, Civil Procedure, Standing, Motions, Prematurity, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3

Vangar Properties Inc. v. Belmar Roofing Inc., 2023 ONCA 506

[Miller, Harvison Young and Favreau JJ.A.]

Counsel:

B. Kelly and Philip Moser, for the appellant

M. Kelly, for the respondent

Keywords: Contracts, Construction, Negligence

Grady v. Grady, 2023 ONCA 507

[Feldman, Benotto and Roberts JJ.A.]

Counsel:

H. Nesathurai and G. Perinot, for the appellant

W. Melnychuk, for the respondent

Keywords: Wills and Estates, Costs

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.

Canada: Court Of Appeal Summaries (July 17 – 21, 2023)
Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

Canada: Court Of Appeal Summaries (July 17 – 21, 2023) Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

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Canada: Court Of Appeal Summaries (July 17 – 21, 2023)
Blaney's Appeals