Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the weeks of September 7 to 11 and September 14 to 18, 2020.
The past two weeks saw ten substantive decisions released by the Court of Appeal. Topics covered included bankruptcy & insolvency, contracts (freight), enforcement of letters of request by foreign courts, family law and insurance, as well as the usual procedural decisions relating to extensions of time and appellate jurisdiction.
Wishing everyone an enjoyable weekend.
Blaney McMurtry LLP
[Lauwers, Brown and Nordheimer JJ.A.]
Shastri and D. Winer for the moving party, Gin-Cor Industries.
Wadden, C. Armstrong and A. Harmes for the responding party, DEL Equipment Inc.
Keywords: Bankruptcy and Insolvency, Unjust Enrichment, Set-Off, Civil Procedure, Leave to Appeal, Companies Creditors' Arrangement Act, RSC 1985, c. C-36, Stelco Inc., (Re) (2005), 75 OR (3D0 5 (CA)., Kerr v Baranow, 2011 SCC 10.
DEL and Gin-Cor entered into a management agreement under which Gin-Cor assumed management control of DEL's operations. Two years later, the parties terminated the agreement. After terminating the agreement, one of DEL's customers accidentally paid an invoice in the amount of $874,107.08 into Gin-Cor's account pursuant to old payment instructions. DEL immediately requested the funds upon learning of the mistake, but Gin-Cor refused, taking the position that Gin-Cor was entitled to retain the funds as a set-off against other obligations owing to it from DEL.
DEL was then granted protection under the CCAA, with outstanding liabilities totalling $1.5 million, including amounts owed to Gin-Cor. The motion judge in the CCAA proceedings ordered Gin-Cor to pay the funds to their lawyers pending further direction from the court. The parties each proceeded to bring a motion asserting their entitlement to the funds. The motion judged found that Gin-Cor had been unjustly enriched, and could provide no juristic reason for such enrichment. As a result, the motion judge ordered the funds be paid to DEL and pending the payment of the funds, they were to be held in constructive trust.
Gin-Cor sought leave to appeal the motion decision.
(1) Should leave to appeal be granted?
No. Leave to appeal in the context of CCAA proceedings should only be granted sparingly. In Stelco (Re), the Court of Appeal held that leave to appeal will only be granted where there are "serious and arguable grounds that are of real and significant interest to the parties", which is to be determined by considering whether: (i) the proposed appeal is prima facie meritorious or frivolous; (ii) the issue on the proposed appeal is of significance to the practice; (iii) the issue on the proposed appeal is of significance to the proceeding; and (iv) the proposed appeal will unduly hinder the progress of the proceeding.
For factor (i), Gin-Cor submitted that the motion judge erred in holding that set-off was not a juristic reason to defend their enrichment in this case. The leading authority on unjust enrichment is the Supreme Court of Canada's decision in Kerr v Baranow, 2011 SCC, which provides a two-step analysis of "juristic reason". The juristic reason analysis focuses on whether there is a reason for the enriched party to keep the enrichment. The claimants must establish that there is no established reason for the enrichment, at which point the onus shifts to the defendant to establish whether a new juristic reason should be established. The Court of Appeal found that the motion judge correctly performed the analysis and Gin-Cor raised no viable argument to cast doubt on that decision and as a result, found that the appeal was not prima facie meritorious.
The Court of Appeal recognized that the appeal was significant to both of the parties under factor (ii), but found that there was no significance to the practice under factor (iii), because the motion involved applying well-established factors and analysis to a set of facts. The Court also found factor (iv) to be neutral as each party raised reasonable arguments as to why the appeal would or would not impact the progress of the CCAA proceedings.
Ultimately, the Court of Appeal held that because the appeal was neither prima facie meritorious nor did it raise an issue of significance to the practice, the high bar for granting leave to appeal in the CCAA context was not met. Leave to appeal was therefore refused.
Sky Clean Energy Ltd. (Sky Solar (Canada) Ltd.) v Economical Mutual Insurance Company, 2020 ONCA 0588
[Strathy C.J.O., Lauwers and van Rensburg JJ.A.]
Rebecca Huang, for the appellant
Marcus B. Snowden and Pearl Rombis, for the respondent
Keywords:Contracts, Interpretation, Insurance, Coverage, Commercial General Liability Insurance, Additional Insureds, Meaning of "Arising Out Of The Operations Of", Duty of Good Faith, Civil Procedure, Costs, Vernon Vipers Hockey Club v. Canadian Recreation Excellence (Vernon) Corp., 2012 BCCA 291, Amos v. Insurance Corp of British Columbia,  3 S.C.R. 405, Lumbermens Mutual Casualty Co. v. Herbison, 2007 SCC 47, Citadel General Assurance Co. v. Vytlingam, 2007 SCC 46, Waterloo (City) v. Economical Mutual Insurance Co., 2006 CanLII 43498 (Ont. S.C.), Great Atlantic & Pacific Co. of Canada Ltd. v. Economical Mutual Insurance Co., 2013 ONSC 7200, Oliveira v. Aviva Canada Inc., 2017 ONSC 6161, Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), Canadian Pacific Ltd. v. Matsqui Indian Band,  1 S.C.R. 3
The appellant, Sky Clean Energy Ltd. ("Sky"), is a developer of solar energy projects. Sky entered into contracts with Marnoch Electrical Services Inc. ("Marnoch") for the construction of two such projects. Pursuant to these contracts, Marnoch agreed to name Sky as an insured under its comprehensive general liability insurance policy with the respondent, Economic Mutual Insurance Company ("Economical"). However, the insurance certificates issued to Sky by Marnoch's insurance broker provided that Marnoch's liability insurance applied to Sky "but only with respect to liability arising out of the operations of Marnoch".
Fires occurred at both projects, and as a result, Sky incurred liabilities for remediation costs and loss of revenue. It settled these liabilities and then sought to recover those damages, first against Marnoch, then against Economical. The trial judge found that the design of the solar systems which caused the fire were Sky's responsibility. Marnoch played no role in the decisions to purchase or install the faulty equipment used at the two project locations. Therefore, the trial judge concluded that Sky's liability did not "arise out of the operations" of Marnoch.
(1) Did the trial judge err in interpreting the insurance policy and in finding that Sky's liability did not "arise out of the operations" of Marnoch?
(2) Did the trial judge err in finding that Sky's claim was barred by a breach of Condition Four of the policy or, alternatively, in failing to grant relief from forfeiture?
(3) Did the trial judge err in finding that Economical had not breached its duty of good faith and declining to award punitive damages?
(4) Did the trial judge err in awarding excessive costs?
(1) Did the trial judge err in interpreting the insurance policy and in finding that Sky's liability did not "arise out of the operations" of Monarch?
No. This issue turns on the interpretation of the words "arising out of the operations". Referring specifically to the decision in Vernon Vipers Hockey Club v. Canadian Recreation Excellence (Vernon) Corp., 2012 BCCA 291, the trial judge noted that "arising out of" means more than simply a "but for" test and requires an "unbroken chain of causation" and "a connection that is more than merely incidental or fortuitous." In Vernon, the Court followed several leading Supreme Court decisions that similarly interpreted the words "arising out of" and "arising from", including: Amos v. Insurance Corp of British Columbia,  3 S.C.R. 405; Lumbermens Mutual Casualty Co. v. Herbison, 2007 SCC 47; and Citadel General Assurance Co. v. Vytlingam, 2007 SCC 46.
The British Columbia Court of Appeal in Vernon also considered the meaning of the word "operations", and found that it "is a word of sufficiently broad meaning as to include the creation of a situation, or circumstance, that is connected in some way to the alleged liability. It does not necessarily imply an active role by the named insured in creation of the liability event." The Ontario Court of Appeal found the approach in Vernon, which the trial judge adopted, to be consistent with Ontario precedents, namely: Waterloo (City) v. Economical Mutual Insurance Co., 2006 CanLII 43498 (Ont. S.C.); Great Atlantic & Pacific Co. of Canada Ltd. v. Economical Mutual Insurance Co., 2013 ONSC 7200; and Oliveira v. Aviva Canada Inc., 2017 ONSC 6161.
In short, the Court agreed with the trial judge's finding that Marnoch's connection with the failure of the electrical equipment was "merely incidental". While the fire would not have occurred but for the fact that Marnoch ordered and installed the equipment in the course of its operations under the contracts, the proposition in Vernon requires a stronger connection. Ultimately, the decision to select and approve the equipment to be installed in the projects rested with Sky, and Sky chose and approved the equipment that failed. The Court found that Marnoch was little more that a bystander to the decisions of Sky. While Marnoch's role was sufficient to satisfy a "but for" connection to Sky's liability, it was crucially insufficient to cross the threshold into a connection "more than merely incidental or fortuitous".
(2) Did the trial judge err in finding that Sky's claim was barred by a breach of Condition Four of the policy or, alternatively, in failing to grant relief from forfeiture?
Due to the Court's conclusion on the first issue, it was unnecessary to consider this issue.
(3) Did the trial judge err in finding that Economical had not breached its duty of good faith and declining to award punitive damages?
No. Sky contended that Economical breached its duty of good faith by: (a) initially denying coverage without conducting an investigation; (b) interpreting the Additional Insured Endorsement too narrowly and ignoring the judicial interpretation in cases like Great Atlantic; and (c) failing to follow its own claims procedures, as it did not appoint an adjuster or investigate Sky's losses.
In regard to the first argument, the trial judge found that Economical's delay did not rise to the level of bad faith. Second, he found that the Great Atlantic case was materially different in that it involved allegations of negligence against the additional insured and the named insured, while in the present case, Sky did not allege negligence against Marnoch. Third, the trial judge found that Economical had an objectively reasonable basis on which to deny coverage and was not required to make further investigations. This was due to the fact that by the time Sky made a claim under the policy, Economical knew that the equipment had been selected by Sky, not Marnoch. The Court of Appeal agreed with the trial judge on all three findings.
(4) Did the trial judge err in awarding excessive costs?
No. The Court reiterated that a trial judge's award of costs is entitled to a high degree of deference, and unless the trial judge considered irrelevant factors, failed to consider relevant factors, or reached an unreasonable conclusion, an appellate court must respect the decision. The Court found that the trial judge appropriately considered the reasonable expectations of the parties, and that because the issues were clearly important to the parties, the claim was prosecuted and defended with vigour. In a claim with considerable amounts at stake such as this, a plaintiff can reasonably expect the defendant to mount a thorough defence. Just as the plaintiff can expect to receive substantial costs if successful on those claims, it can expect to pay a substantial costs award if unsuccessful. Therefore, the Court found that the trial judge's costs award was fair and reasonable.
[Huscroft, Zarnett and Coroza JJ. A.]
Peel and G. Karayannides, for the appellants
Hume, M. Gehlen and R. Reynolds, for the respondents
Keywords: Contracts, Carriage, Demurrage, Unjust Enrichment, Canada Transportation Act, SC 1996, c10, Canadian National Railway v. Neptune Bulk Terminals (Canada) Ltd., 2006 BCSC 1073, Canadian National Ry. Co. v. Canadian Industries Ltd.,  3 D.L.R. 621 (Ont SC), aff'd  O.W.N. 452 (CA), aff'd  SCR 591, Canadian Pacific Ltd. v. Canada (National Transportation Agency) and Canadian Millers Association,  2 FC 809, aff'd  1 SCR 319, Canadian National Railway v. Canada (Attorney General), 2014 SCC 40, Grand Trunk Ry. Co. of Canada v. McMillan,  16 SCR 543, 2484234 Ontario Inc. v. Hanley Park Developments Inc., 2020 ONCA 273, Housen v. Nikolaisen, 2002 SCC 33, Moore v. Sweet, 2018 SCC 52, North-West Line Elevators Association et al. v. Canadian Pacific Railway and Canadian National Railway et al.,  SCR 239, Norfolk & Western Railway Co. v. Great Lakes Brick & Stone Ltd., 1995 CanLII 7408 (Ont Ct J), N.Y. Central R. Co. v. Joseph Dolan & Sons Ltd.,  1 DLR 817 (Ont CA), Railink Canada Ltd. (Southern Ontario Railway) v. Fedmar Limited, 2009 CanLII 15893 (Ont Sup Ct), Saint John Tug Boat Co. Ltd. v. Irving Refinery Ltd., 1964, SCR 614, Simpson v. 603418 Ontario Inc., 2018 ONSC 5156 (Div Ct), Turner, Dennis & Lowry Lumber Co. v. Chicago, M & St. P. Ry. Co., 271 U.S. 259 (1926)
The respondent, Parrish and Heimbecker Limited ("P&H"), entered into an agreement with Canadian National Railway ("CN") to ship grain by rail from Western Canada to Ontario. CN carried the grain for much of the rail journey. Pursuant to an agreement CN had with the appellant, Goderich-Exeter Railway Company Limited ("GEXR") carried the grain on its final leg, along the GEXR operated Guelph Line to a facility ("the Shantz Station") where it was unloaded. The Shantz Station is owned by the respondent Shantz Station Terminal Ltd. ("SSTL"), a subsidiary of P&H.
GEXR obtained the right to operate a railroad on the Guelph Line, which is a rail line owned by CN, under a 20-year lease term. CN and GEXR entered into a contract which gave CN the right to contract with shippers to carry freight over its own lines and onward to points on the Guelph Line, even though GEXR was the operator of the Guelph Line. The contract contained a provision which provided that GEXR would have the right to publish tariffs or enter into contracts governing incidental services to "normal interline movements", including for demurrage.
CN entered into a Memorandum of Understanding (the "MOU") with P&H, to which GEXR was not a party. The MOU contemplated that P&H would ship grain from Western Canada to a terminal that it would construct, using CN as carrier, with the terminal being built on the Guelph Line. The MOU was an agreement solely between CN and P&H, and among other things it reflected "CN's assurances to P&H that only CN would invoice P&H for demurrage".
GEXR sent invoices to P&H claiming payment of demurrage for occasions when the time taken to unload railcars at the Shantz Station exceeded the "free time" in the GEXR tariffs. P&H refused to pay them, asserting that under its agreement with CN, only CN was entitled to charge it for demurrage.
GEXR claimed that its railcars were detained for longer than the "free time" stipulated in tariffs it had issued while the respondents unloaded them at the Shantz Station, and that, as the shippers of the grain, the respondents were liable to pay demurrage. The appellants sought judgment against the respondents for $378,074.
(1) Did the trial judge err in finding that there is no entitlement to demurrage in the absence of a contract?
(2) Did the trial judge err in finding that there was no implied contract between the appellant and respondent?
(3) Did the trial judge err in finding that there was no unjust enrichment?
(1) No. There is strong authority for the proposition that, at common law, a shipper's obligation to pay freight charges - that is, charges for the movement of traffic - is based on a contract with the carrier. Demurrage, as "one of those rates or charges...[that] relates to the movement of traffic" is a subset of freight charges (Canadian National Railway v. Neptune Bulk Terminals (Canada) Ltd., 2006 BCSC 1073). The provisions of the Canada Transportation Act, SC 1996, c10 (the "CTA") also do not authorize the charging of demurrage to non-contracting parties. Although a railway is entitled to payment of lawfully payable rates in exchange for service it is obliged to provide, the entitlement to payment must be from a person who has contracted, expressly or impliedly, to have the railway carry or deliver freight.
(2) No. There were two express contracts in place, one between CN and P&H to which GEXR was not a party, and one between CN and GEXR to which neither respondent was a party. Courts have recognized that in this type of situation, privity of contract may exist only between the shipper (the respondents) and the originating carrier (here, CN) and not between the shipper and the connecting or destination carrier (here, GEXR): (Grand Trunk Ry. Co. of Canada v. McMillan),  16 SCR 543; Canadian National Ry. Co. v. Canadian Industries Ltd.,  3 D.L.R. 621 (Ont SC), aff'd  O.W.N. 452 (CA), aff'd  SCR 591. This was not a case of the use of services coupled with silence about the terms on which they were offered. It was open to the trial judge to find, on all the facts, that there was no implied acceptance of GEXR's terms, that no meeting of the minds had been objectively manifested, and thus to refuse to find an implied contract.
(3) No. The evidence does not establish such a claim, because it does not establish any enrichment of the respondents or corresponding deprivation of GEXR, let alone one that occurred without juristic reason. GEXR carried grain to the Shantz Station pursuant to its agreement with CN in exchange for haulage fees from CN. The circumstances fall well outside the notion that some benefit was conferred on the respondents "which justice does not permit one to retain", the notion that lies at the heart of the doctrine of unjust enrichment.
[van Rensburg, Pardu and Huscroft JJ.A.]
J. Pape and B. Noga, for the appellant A.M.H
R. Rothstein and M. Zalevfor the respondent R.S.D
Keywords: Family Law, Domestic Contracts, Separation Agreements, Child Support, Civil Procedure, Appeals, New Issues on Appeal, Family Law Act, R.S.O. 1990, c. F.3, ss. 54 and 55, Kaiman v. Graham, 2009 ONCA 77, Petersoo v. Petersoo, 2019 ONCA 624, Van Delst v. Hronowsky, 2020 ONCA 329
This case involved an appeal from an order of the motion judge declaring that the Settlement Agreement signed by the parties constituted a binding separation agreement. The parties separated in 2003 and have one child, E, who has disabilities that will cause her to be a dependant for life.
The Settlement Agreement, signed in 2015, resolved all issues of child support and barred the parties from making future claims against each for child support. The Settlement Agreement was not made into a final order, however the parties continued to comply with its terms and governed their relationship in accordance with it for several years.
Paragraph 22 of the Settlement Agreement required that an expert review the provisions made for child support. The parties jointly retained an expert from 2015-2017, where the expert made a number of specific recommendations for amendments to the Settlement Agreement. The parties did not reach an agreement on amendments; thus, in May 2018 the appellant took the position that the Settlement Agreement was not binding. The respondent brought a motion for judgment declaring that the Settlement Agreement constituted a binding separation agreement. The motion judge declared that the Settlement Agreement constituted a binding separation agreement.
The appellant challenged the motion judge's decision on two bases. First, the motion judge erred in failing to interpret paragraph 22 as a "simple" condition that contained an implied right to terminate the agreement if E's ODSP eligibility was found to be at risk. Second, the motion judge erred in failing to exercise her discretion to refuse to enforce the Settlement Agreement, given the prejudice caused to E by the risk of her ODSP eligibility. Neither of these arguments were made before the motion judge.
(1) Is the 2015 Settlement Agreement a binding separation agreement?
Yes. The court rejected both of the appellant's arguments and stated that appellants are generally not permitted to raise new issues on appeal. The court was also not satisfied that the interests of justice should allow the appellant to do so in this case.
Regarding the appellant's first argument, the court held that a right to terminate the agreement could not be lightly implied by para 22 and that there was no evidence that the appellant had purported to exercise this right. Further, this matter was not raised before the motion judge, so no relevant findings were made.
Regarding the appellant's second argument, the court stated that the courts discretion not to enforce a settlement is limited given the importance of certainty in the resolution of family disputes. Further, the appellant offered no reason to show that a better result would be achieved to provide for E's support if the Settlement Agreement were set aside and the matter proceeded to trial. In the absence of a factual record, there is no basis for the court to find that the agreement is not in E's best interests.
[van Rensburg, Pardu and Huscroft JJ.A.]
E.K. Rayson, for the applicant E.M. (appellant/respondent by way of cross-appeal/moving party)
A. Virk, for the respondent M. M. (respondent/appellant by way of cross-appeal/responding party)
Keywords: Family Law, Equalization of Net Family Property, Spousal Support, Child Support, Arrears, Post-Judgment Interest, Leave to Appeal Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 129(1), Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31, ss. 1, 6(7), Child Support Guidelines, O. Reg. 391/97, s. 16, sched. III, Family Law Rules, O. Reg. 114/99, r. 24(8), Brad-Jay Investments Ltd. v. Village Developments Ltd. (2006), 218 O.A.C. 315 (C.A.)
The parties are divorced. Following a trial in 2014, the applicant (former husband) was ordered to pay to the respondent (former wife) an equalization payment of nearly $1.8 million, a retroactive lump sum child support of $150,000, retroactive lump sum spousal support of $136,760 and periodic spousal support of $7,500 per month until the equalization and retroactive support was fully paid. The applicant was also ordered to pay post-judgment interest calculated at three percent as well as costs in favour of the respondent. The applicant failed to make the payments required by the judgment.
In 2015, a consent order was issued varying some aspects of the trial judge's order. At that time, the applicant was ordered to pay $322,000 to the respondent to comply with the trial costs order as well as interest of two percent on payments in default under that order.
In 2018, the respondent brought a motion for financial disclosure to try to enforce the judgment. At the same time, the applicant brought a motion requesting the court's direction regarding credits to reduce the outstanding equalization payment and interest owed. The applicant was ordered to pay $1.3 million towards the equalization payment judgment of 2014 and the $12,000 that remained unpaid on the costs awarded by the trial judge to the respondent. By July 1, 2019, the applicant had done both.
At the July 2019 hearing, the motion judge accepted the respondent's calculation of the outstanding equalization payment and post-judgment interest, totalling $266,907.79. The applicant's position that his monthly spousal support payments of $7,500 should be credited against either of the outstanding amounts was rejected. Interestingly, the respondent was ordered to pay the applicant retroactive child support, to be set off against the outstanding equalization and post-judgment interest payments she was owed.
(1) Was the motion judge correct to refuse to credit the periodic spousal support payments against the post-judgment interest accruing on the outstanding equalization payment?
(2) Was the motion judge correct in calculating post-judgment interest on the equalization payment payable by the applicant to the respondent?
(3) What is the correct amount of post-judgment interest owed on the arrears of spousal and child support, and the correct amount of costs payable to the respondent?
Motion for Leave to Appeal Costs:
(4) Was the applicant entitled to appeal the award of costs made against him by the motion judge?
Applicant's appeal dismissed. Respondent's cross-appeal allowed.
(1) Yes. Disputing the amounts owing on the equalization payment or seeking a reduction of the amount on account of spousal support paid does not mean post-judgment interest ceases to be payable on the amounts ordered.
(2) Yes. The decision by the trial judge was clear. The applicant was to pay post-judgment interest on the equalization payment at the rate of three percent and was also to pay periodic spousal support until the equalization payment was made in full. The motion judge was not hearing an appeal of the trial decision, and was therefore correct to use the trial judge's ruling as the basis for determining the parties' obligations.
(3) The respondent submitted that, in calculating income for the purpose of determining child support payable by a payor who is also a recipient of spousal support, the total income must be adjusted by deducting the spousal support received, pursuant to the Child Support Guidelines. The applicant paid the $12,000 balance of the costs award against him, but the respondent argued an additional $766.03 remained outstanding. The applicant was also ordered in 2014 to pay retroactive child and spousal support, which was not paid until 2018. For that reason, the respondent claimed post-judgment interest of both those amounts.
Section 129(1) of the Courts of Justice Act provides that money owing under an order, including costs, bears interest at the post-judgment interest rate, calculated from the date of the order. The court found there was no reason why the respondent was not entitled to interest on the late payment of costs or support in accordance with the trial judge's order, and therefore the respondent was entitled to enforce such payment.
Pursuant to ss.1 and 6(7) of the Family Responsibility and Support Arrears Enforcement Act, as well as the consent order of 2015, the Family Responsibility Officer was the proper authority to enforce the payment of $18,000 interest on child support arrears and $8,976.17 interest on spousal support arrears.
With respect to retroactive child support obligations, a recalculation of the respondent's income resulted in an amount of $10,200 payable by the respondent to the applicant, rather than the $69,819 ordered by the motion judge.
Motion for Leave to Appeal Costs:
(4) No. The applicant sought leave to appeal the award of costs made against him by the motion judge, in the sum of $111,372.17. The motion judge concluded that the applicant took active steps to delay and frustrate compliance with the final order of the trial judge. Such behaviour was characterized as unreasonable and in bad faith. Leave to appeal is granted sparingly, and the court was not convinced there were "strong grounds upon which the appellate court could find that the judge erred in exercising his discretion" (Brad-Jay Investments Ltd. v. Village Developments Ltd. (2006), 218 O.A.C. 315 (C.A.)).
[Lauwers, Brown and Nordheimer JJ.A.]
J. Goldblatt, J. Katz, for the appellant
J. Morse and D. Trafford, for the respondent H.P.
W. Fogarty and P. Masic, for the respondents I.P. and L.P.
Keywords: Conflict of Laws, Civil Procedure, Letters of Request, Evidence Act, R.S.O. 1990, c. E.23, s. 60, Canada Evidence Act, R.S.C. 1985, c. C-5, s. 46, Rules of Civil Procedure, Rule 25.11(b), Gulf Oil Corporation v Gulf Canada Ltd et al,  2 SCR 39, R v Zingre,  2 SCR 392, Presbyterian Church of Sudan v Taylor, (2006), 275 DLR (4th) 512 (Ont CA), Lantheus Medical Imaging Inc v Atomic Energy of Canada Ltd, 2013 ONCA 264, Re Friction Division Products, Inc and E.I. Du Pont de Nemours & Co Inc et al (No 2) (1986), 56 OR (2d) 722 (HC), Fecht v Deloitte & Touche (1996), 28 OR (3d) 188 (Gen Div), Treat America Ltd v Nestlé Canada Inc, 2011 ONCA 560, Presbyterian Church of Sudan v Talisman Energy Inc, 2005 ABQB 920, AstraZeneca LP v Wolman, 2009 CarswellOnt 7787 (SC), Pecarsky v Lipton Wiseman Altbaum & Partners,  OJ No 2004 (SC), Aker Biomarine AS v KGK Synergize Inc, 2013 ONSC 4897, Ontario Public Service Employees Union Pension Fund (Trustees of) v Clark (2006), 270 DLR (4th) 429 (Ont CA), France (Republic) v De Havilland Aircraft of Canada Ltd (1991), 3 OR (3d) 705 (CA), Johnson v Marzouca, 2016 ONCA 298, Oticon v Gennum Corp, 2010 ONSC 1638, Scoular Co v Detlefsen, 2016 ONSC 4001
The respondents both owned a home in a "private" community in Florida. Following a disagreement, the respondent, H.P., received hate letters falsely accusing him of crimes. These letters were also sent to the respondent's family, friends and clients (the "hate mail campaign"). The respondent, H.P., believed the respondents I.P. and L.P. were orchestrating the hate mail campaign and he commenced an action against them in the Florida Courts.
After discovering that the appellant, an Ontario resident, was also involved in the hate mail campaign, the respondents filed a joint motion in the Florida Court for a letter of request seeking the Superior Court of Ontario's assistance in obtaining evidence from the appellant. The Florida Court issued an initial Request for International Assistance; however, the appellant did not comply. The respondents then commenced an application in the Ontario Superior Court of Justice ("Ont. SCJ") in February 2018 to enforce the Initial Letter of Request.
In August 2018, the respondents returned to the Florida Court which granted two Letters of Request: one in favour of the respondents I.P. and L.P. and the other in favour of both of the respondents (the "Second Letters of Request"). The judge heard the two applications to enforce the Second Letters of Request.
The application judge made an order giving effect to the Letters of Request addressed to the Ontario Superior Court of Justice from a Florida Court. The Order of the judge did three things: (i) it gave effect to the Second Letters of Request; (ii) it provided some directions regarding the implementation of the Second Letters of Request, including the scope of documentary production; and (iii) it set out the procedure for the disposition and review of electronic devices belonging to the appellant that are in the possession of the Toronto Police Service. The appellant sought to appeal the Order.
(1) Did the application judge err by:
a) concluding that the appellant's evidence was not otherwise obtainable?
b) finding that the Second Letters of Request did not impose an undue burden on the appellant?
c) holding that the documents sought were identified with reasonable specificity?
d) failing to go behind the Second Letters of Request to identify defects in the process before the Florida Court that led to their issuance?
(2) Should leave to appeal the Costs Order be granted?
Appeal dismissed. Motion for leave to appeal the Costs Order denied.
At the outset, the Court recognized the governing principles applicable when an Ontario Court considers a request for assistance from a foreign tribunal. The principle to be applied in considering a request for assistance is recognition of the comity of nations: that one sovereign nation voluntarily adopts or enforces the laws of another out of deference, mutuality, and respect. As a result, a foreign request is to be given full force and effect unless it is contrary to the public policy or otherwise prejudicial to the sovereignty of the jurisdiction to which the request is directed. The Court has held that orders originating from the United States should be given full faith and credit unless to do so would be contrary to the interests of justice or infringe on Canadian sovereignty.
To balance the need for comity against the possible infringement of Canadian sovereignty the application judge was required to consider the following factors:
(1) Whether the evidence sought was relevant;
(2) Whether the evidence sought was necessary for trial and would be adduced at trial, if admissible;
(3) Whether the evidence was not otherwise obtainable;
(4) Whether the order sought was contrary to public policy;
(5) Whether the documents sought were identified with reasonable specificity;
(6) Whether the order sought was not unduly burdensome, having in mind what the relevant witnesses would be required to do, and produce, were the action to be tried in Ontario.
The decision to grant or refuse a foreign request is a matter of judicial discretion, to which deference must be given in the absence of a demonstrated error in principle by the Court below.
(1) a) Did the application judge err in concluding that the appellant's evidence was not otherwise obtainable?
No. The appellant argued that the judge failed to consider that the appellant's evidence had become compellable by the respondents when his appeal in the Florida Action had been turned down. The Court found that the application judge did consider the effect of the dismissal of the appellant's Florida appeal, but that the application judge discounted the significance of that dismissal. The Court found no palpable or overriding error in the application judge's finding that the appellant was "loath" to appear in the United States to give a deposition and that, by his actions, had made it clear that he was unwilling to respond to the procedures of the Florida Court. Furthermore, the "fresh evidence" brought to the Court shed no definitive light on whether the appellant would appear for deposition in the Florida proceedings; nor had the appellant filed any evidence to explain how a Florida Court could compel an Ontario resident to give evidence in a Florida action.
The appellant also argued that many of the documents sought were "otherwise obtainable" by other measures. The application judge reasoned that hate mail and conspiracy are not generally made accessible by those involved. The judge held that the nature of the Letters of Request made clear the intention of the Florida Court to shed light on the full breadth of the allegations. The judge found that a failure to enforce them on the basis that any of this information was otherwise available would undermine that purpose. The Court found no error in the judge's finding that the information sought through these Letters of Request was not otherwise obtainable.
(1) b) Did the application judge err in concluding that the Second Letters of Request did not impose an undue burden on the appellant?
No. Since his jurisdictional appeal had been dismissed, the appellant argued that he must now submit to two rounds of pre-trial discovery through two different procedures: first as a party in the Florida proceedings; then, pursuant to the Second Letters of Request. The Court saw no merit in this submission. The Court agreed with the judge that the appellant's evidence in respect of the issues in the Florida Main Action was "not otherwise obtainable" because his actions, motions and appeals made it clear that he was unwilling to respond to the procedures of the Florida Court.
(1) c) Did the application judge err in concluding that the Second Letters of Request identified the documents with reasonable specificity?
No. The appellant argued that the Second Letters of Request were overbroad because they lacked any temporal limitation and required the production of irrelevant documents. The Court agreed with the judge's findings that the evidence being sought was limited to documents relevant to the allegations concerning the hate-mail campaign as set out in the pleadings for the Florida Action.
The appellant also argued that the revisions the application judge made to the scope of documentary production exceeded the scope of his power to give directions. The Court disagreed and found the application judge's exercise of discretion was reasonable in the circumstances.
(1) d) Did the application judge err by failing to decline recognition of the Second Letters of Request because of defects in the Florida Court's process?
No. The appellant contended that the Second Letters of Request were issued as a result of a flawed process in the Florida Court; and that the application judge erred by not examining the Florida Court's process. The Court found no merit in this ground of appeal. The Court applied the principle that an Ontario Court should give full faith and credit to the orders and judgments of a U.S. Court unless it is of the view that to do so would be contrary to the interests of justice or would infringe Canadian sovereignty. The application judge examined the process used by the Florida Court and considered the appellant's complaint. However, the judge's reasons clearly disclose that he was not persuaded that the process tainted the Second Letters of Request such that it would be contrary to the interests of justice to enforce them. The Court agreed, stating that comity requires that flexible rules be applied to such procedural differences. A Canadian Court must balance any possible infringement of Canadian sovereignty with the natural desire to assist foreign Courts.
(2) Should Leave to Appeal the Costs Order be Granted?
No. The application judge ordered that each party was required to bear its own costs. The appellant contended that the application judge tethered the costs determination to the outcome of the Florida proceedings, effectively awarding "costs in the cause" for a proceeding that was not before him. The appellant also argued that the judge erred by departing from the general principle that non-party respondents to applications to enforce letters of request are entitled to receive their costs on an elevated scale regardless of the outcome of the enforcement application. The Court did not find that the application judge tethered the Costs Order to the outcome of the Florida proceedings. Rather, the judge explained why the conduct of each party made it difficult for him to determine who was entitled to costs. Additionally, the jurisprudence did not establish any bright line rule regarding the award of costs on successful applications to enforce letters of request. Consequently, the application judge did not err in principle in awarding no costs, nor was his Costs Order wrong.
[van Rensburg, Pardue and Huscroft JJ.A.]
L. Ciotoli, for the appellants 1843538 Ontario Inc., c.o.b. Mississauga Collison Centre, and/or MC, FW and RW
D.I. Reisler and R. Tapp, for the respondent
Keywords: Breach of Contract, Breach of Duty of Honest Performance of a Contract, Unjust Enrichment, Torts, Fraud, Fraudulent Misrepresentation, Conspiracy, Ex Turpi Causa, , Trespass, Civil Procedure, Striking Pleadings, Rules of Civil Procedure, Rules 21, 25, Hall v Hebert,  2 SCR 159, British Columbia v Zastowny, 2008 SCC 4
The respondent's insurer conducted an independent investigation to study fraud in the auto-collision industry. The respondent claimed that the appellants included parts on their appraisal to be repaired that did not require repair and deliberately damaged the vehicles to perform additional repairs. The respondent sought damages for fraudulent misrepresentation, breach of duty of honest performance, unjust enrichment, trespass, conspiracy to commit fraud, investigative costs, and punitive and exemplary damages. The appellants appealed from the order of the motion judge dismissing their motion to dismiss the respondent's claim under Rule 21 and striking paragraphs of their statement of defence and counterclaim under Rule 25 of the Rules of Civil Procedure.
(1) Did the motion judge err in permitting the respondent's
claim to proceed?
(2) Did the motion judge err in refusing to strike the respondent's claims for the costs of its investigation and punitive damages?
(3) Can the pleadings be amended?
Appeal allowed in part.
(1) No. The Court found that the motion judge did not err in finding that it was not plain and obvious the respondent had either committed criminal mischief or an act of fraud and misrepresentation warranting the application of the ex turpi causa doctrine. The Court held that these findings were entitled to deference and there was no basis to interfere with them.
(2) No. The Court found that the motion judge properly concluded that these were novel claims that should not be determined on a Rule 21 motion.
(3) Yes. The Court granted the appellants leave to amend the statement of defence and counterclaim. The motion judge found that certain paragraphs of the statement of defence and counterclaim should be struck because a civil defence of entrapment had not been recognized and, even if it were recognized, it was plain and obvious that the conduct of the respondent did not meet the standard for entrapment. The appellants argued that these paragraphs did not plead entrapment and used the word "entrapping" only to describe the nature of the investigation conducted by the respondent. The appellants only wanted to plead the defence of ex turpi causa. The Court found that it was apparent from the motion judge's reasons that he contemplated that the appellants could continue to raise the defence of ex turpi causa.
[Gillese, Lauwers and Benotto JJ.A]
C.B. self-represented as the appellant
M. Jeske for the respondent Attorney General of Canada
R. Mann for the respondent Her Majesty the Queen in Right of Ontario
Keywords: Civil Procedure, Appeals, Extension of Time, Rules of Civil Procedure, Rule 2.1
The moving party asked the court to set aside the decision of the Motion Judge for an extension of time to file a Notice of Appeal. In 2017 the appellant commenced an action ("2017 action") against his physicians, the Queensway Carleton Hospital and the federal and Ontario Crowns for negligence, negligent misrepresentation, breach of contract and breach of s.7 of the Charter and various sections of the Criminal Code. In 2019, the defendants were successful on a motion to strike the action, without leave to amend.
The moving party commenced a second action in 2018 ("2018 action"). The 2018 action was subsequently dismissed, as the judge concluded that the statement of claim in the 2018 action was "substantially identical" to the 2017 action. The moving party brought a motion to extend the time to file a Notice of Appeal with respect to the decision on January 15, 2020, which was dismissed by a single judge of the Court in February 2020. The moving party asked a panel to reconsider the decision refusing an extension of time.
(1) Should the moving party be granted an extension of time to file a Notice of Appeal?
(1) No. The Court held that there was no basis to disturb the motion judge's decision. While the Court accepted the appellants explanation that the delay arose from the fact that he found it difficult to comply with the legal requirements because he is self-represented and still ill, the Court found that the motion judge articulated and applied the correct legal principles and that there was no merit to the proposed appeal. Further, the court stated that the decision of a single judge of the Court of Appeal to deny an extension of time to file a Notice of Appeal is a discretionary matter and is given considerable deference by a panel of the Court.
In coming to this conclusion, the motion judge had stated that the appellant had shown no evidence of an intention to appeal within the statutory time-limit and had offered no explanation for the six-week delay in commencing an appeal. Although the delay had not caused any prejudice, the motion judge found there was "no merit" to the appeal.
[Gillese, Lauwers and Benotto JJ.A.]
K.A., acting in person
Paul Wearing, for the respondents
Trevor Guy, for Human Rights Tribunal of Ontario
Keywords: Civil Procedure, Striking Pleadings, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, Rule 2.1.01
The appellant made a complaint against the respondents to the Human Rights Tribunal of Ontario ("HRTO") in 2014, in addition to bringing a civil action seeking damages. At the appellant's request, the HRTO deferred the complaint process until the civil action was completed. The civil action was settled in 2017, and the terms of the settlement included the appellant's agreement not to pursue further claims against the respondents. However, in 2019, the appellant filed a Notice of Application with the Superior Court of Justice claiming damages because the respondents did not respond to his complaint to the HRTO. The respondents and the HRTRO brought a motion seeking dismissal of the Superior Court application. The motion judge, finding the appellant's actions to be frivolous, dismissed the application.
(1) Did the motion judge err in dismissing the appellant's application without first inviting submissions from him?
(1) No. Rule 2.1.01(3) of the Rules of Civil Procedure provides a motion judge with the discretion to dismiss a claim without inviting submissions. The Court agreed with the motion judge's conclusion that the appellant's Notice of Application did not plead a cause of action against either the HRTO or the respondents, and therefore lacked any legal basis or merit. As such, the Court concluded that the motion judge made no error in exercising his discretion under Rule 2.1.01(3).
[Juriansz, Tulloch and Jamal JJ.A.]
R. Brendan Bissell, for the moving party, the receiver, Crowe Soberman Inc.
David T. Ullmann and Brendan Jones, for the responding party, D. Dal Bianco
Harold Rosenberg, for the responding party, Deep Foundations Contractors Inc.
Edward L. D'Agostino, for the responding party, Kieswetter Excavating Inc.
No one appearing for OneSpace Unlimited Inc.
Jeffrey A. Armel, for the responding party, EXP Services Inc.
Eric Gionet, for the responding party, Maxion Management Services Inc.
Keywords: Bankruptcy and Insolvency, Receiverships, Priority, Construction Law, Construction Liens, Civil Procedure, Appeals, Jurisdiction, Federal Paramountcy, Bankruptcy and Insolvency Act, RSC 1985, c. B-3, ss. 193, 243(1), 249, Construction Act, RSO 1990, c. C.30, ss. 71(1), 78, Courts of Justice Act, RSO 1990, c. C.43, s. 101, Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283, Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, Comfort Capital Inc. v. Yeretsian, 2019 ONCA 1017, RREF II BHB IV Portofino, LLC v. Portofino Corporation, 2015 ONCA 906
A receiver was appointed in respect of the debtor's property by order of the Ontario Superior Court under s. 243(1) of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act. The receiver moved for directions on whether the lien claimants or the mortgagee had priority to the proceeds of sale of the debtor's property. The motion judge ruled that the construction lien claimants had priority. A dispute subsequently arose regarding the correct appeal route from the motion judge's order.
Does an appeal from the impugned order of the Ontario Superior Court in receivership lie to the Court of Appeal of Ontario under s. 193 of the Bankruptcy and Insolvency Act or to the Divisional Court under s. 71(1) of the Construction Act?
The Court of Appeal. The operative question to determine the appeal route is whether the order under appeal was one granted in reliance on jurisdiction under the Bankruptcy and Insolvency Act. Where that has occurred, the appeal provisions of that statute apply. If the Bankruptcy and Insolvency Act is one of the sources of jurisdiction for the order under appeal, an appeal from an order made under it necessarily implicates a provision sourced in that Act. Thus, the appropriate appeal route is to the Court of Appeal. Even if provincial law is also a source of jurisdiction for the order under appeal and provides for a different appeal route, federal paramountcy resolves any such conflict in favour of the appeal route under the Bankruptcy and Insolvency Act.
The receiver had authority to seek the court's directions under s. 249 of the Bankruptcy and Insolvency Act and paragraph 34 of the receivership order. Under these sources of authority, the receiver moved for directions regarding the discharge of its powers and duties. The agreed statement of facts on the motion stated the receiver had made certain distributions, but had not been able to distribute the remaining funds from the sale of the debtor's property due to competing priority claims between the construction lien claimants and the mortgagee.
The motion judge provided directions on the priority dispute. The motion was brought partly under the Bankruptcy and Insolvency Act in an "APPLICATION UNDER Section 243(1) of the Bankruptcy and Insolvency Act and Section 101 of the Courts of Justice Act".
The mere act of styling the motion in the receivership does not give automatic access to the appeal routes under the Bankruptcy and Insolvency Act. Rather, the jurisdiction of the court is governed by the substance of the order made. In this case, the substance of the order was in proceedings authorized by the Bankruptcy and Insolvency Act, as it responded to a motion for the court's directions brought under s. 249 to assist with distributing the remaining funds in the receivership. Therefore, s. 249 of the Bankruptcy and Insolvency Act was a proper source of jurisdiction for the court's order.
[Gillese, Lauwers and Benotto JJ.A.]
S. Blake and D. Polla, for the respondent/ moving party
B. Ries, J. Myers, and M. Daly for the appellants/ responding parties
K.A. Ley, M. Melchers, and J.J. Hoffer, for the Federation of Rental Housing Providers of Ontario, participating party pursuant to the order of Pepall J.A.
Keywords: Residential Tenancies, Moratorium on Eviction Orders, Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Courts of Justice Act, RSO 1990, c C.43, ss. 6(1)(b), 19(1)(b), McClintock v Karam, 2017 ONCA 277, Hendrickson v Kallio,  OR 675 (CA)
Due to the COVID-19 pandemic, eviction orders were suspended. The appellants sought to be recognized as class representatives for vulnerable tenants seeking to avoid eviction. They requested an urgent case conference to deal with the scheduling of their application. On July 6, 2020, the Chief Justice ordered that the moratorium on evictions - ordered in March 2020 - would end on July 31, 2020. The appellants brought a motion seeking an interim stay of the order of July 6, 2020 until their motion to set aside the order of the Chief Justice can be heard. On August 2, 2020, the motion judge dismissed the appellants' motion for an interim stay.
The respondent Attorney General for Ontario (AGO) moved for an order quashing the appeal on the basis that the order appealed from is interlocutory and the Court lacked jurisdiction. The appellants submitted that the order finally determined the issues raised and was thus final.
(1) Was the order of the motion judge interlocutory?
(1) Yes. The Court found that the order was interlocutory; therefore, the Court had no jurisdiction to hear the appeal. An order is interlocutory if the merits of the case remain to be determined. The motion judge specifically stated that he was "not deciding the motion on its merits". The Court did not agree with the appellants that the motion judge finally determined the issue of jurisdiction and disposed of the substantive rights of the individual appellants. The appeal involved an interim stay pending an interim motion in an application. The motion to set aside the Chief Justice's order remained outstanding.
SHORT CIVIL DECISIONS
[Gillese, Brown and Paciocco JJ.A.]
H. Chaiton and A.L. Rachlin, for the moving party, Traders
J.Y. Obagi, for the responding parties, B.L.C et al.
[Brown J.A. (Motion Judge)]
S.B., acting in person
A. Prewer, for the responding party
Keywords:Family Law, Civil Procedure, Appeals, Extension of Time, Costs, Leave to Appeal
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