Following are this week's summaries of the civil decisions of the Court of Appeal for Ontario.
The decisions were all fairly short. Topics covered included prescriptive easements, breach of contract, family law (support), the approval of a settlement and contingency fee agreement in a personal injury matter and security for costs.
Wishing everyone an enjoyable weekend.
[Juriansz, Hourigan and Thorburn JJ.A.]
S. Beddoe and J. Robinson, for the appellant
G.S. Joseph and A.M. Mastervick, for the respondent
J.J. Neal, for the respondent
Keywords: Family Law, Spousal Support, Child Support, Retroactive Support, Civil Procedure, Appeals, Standard of Review, Hickey v. Hickey,  2 S.C.R. 518
This appeal was brought from the trial judge's orders on spousal support, retroactive spousal support and retroactive child support. The appellant claims that the trial judge made palpable and overriding errors in granting insufficient spousal support and failing to order retroactive spousal support and child support.
The parties separated in 2004. In 2006, the parties agreed on amounts for both child support and spousal support, as well as a division of matrimonial assets. In 2008, however, the appellant applied for an increase in support based on an increase in the respondent's income. A temporary order for an increase was made, as well as an order to pay retroactive support.
The parties later contentiously disputed the issue of spousal and child support over the course of an eight day trial. The trial judge fashioned an order based on average income attributed to the respondent, due to the fact that the respondent's income varied greatly from year to year.
(1) Did the trial judge err in granting insufficient support and failing to order retroactive support?
No. The Court pointed out that the Supreme Court of Canada has instructed appellate courts to afford significant deference to trial judges in cases relating to support orders. Firstly, because the discretion involved in making a support order is best exercised by the judge who heard the parties directly. And secondly, because this approach promotes finality in family law matters.
The Court of Appeal therefore concluded that an appellate court can only interfere with a trial judge's decision if there is a material error such as a serious misapprehension of the evidence, or an error in law. It is not entitled to overturn a support order simply because it would have made a different decision (Hickey v. Hickey,  2 S.C.R. 518).
The Court ultimately found that, in this case, the trial judge heard evidence over an extensive trial. His reasons were adequate and thoughtful, and it was clear that he had considered all of the relevant factors in arriving at his decision. As such, the Court of Appeal found no reason to interfere with the trial judge's decision.
[Strathy C.J.O., Brown and Huscroft JJ.A.]
M. I., acting in person for the appellant/ moving party
D.N.V., for the responding party, B.C.
A.S.D., for the responding parties, 1645112 Ontario Ltd., 1793411 Ontario Ltd., and R.M.
Keywords: Civil Procedure, Appeals, Security of Costs, Breach of Contract, Torts, Fraud, Negligent Misrepresentation, Conspiracy, Professional Negligence, Lawyers, Rules of Civil Procedure, Rules 61.06(1), Yaiguaje v. Chevron Corporation, 2018 ONCA 827
The appellant made claims for events that occurred 11 to 12 years ago including fraud, negligent misrepresentation, conspiracy, and breach of contract against the respondent, R.M. and his companies, in connection with the sale of a property. The appellant also claimed against the defendant, B.C., for allegedly negligent legal services. The claim was dismissed and the trial judge subsequently awarded costs to the respondents. The appellant sought to set aside or vary the order of the motion judge requiring that it post security for costs of the appeal in the amount of $100,000 each.
(1) Should the motion judge's order requiring the appellant to post security for costs in the amount of $100,000 each be set aside or varied?
No. The Court held that the motion judge's order for security for costs rested on two foundations: first, a finding that the merits of the appeal were very much in doubt; and second, a finding that the respondents failed to establish that, despite its apparent impecuniosity, it did not have access to funds.
The motion judge's order was discretionary and entitled to deference. The Court found that the appellant had demonstrated neither an error of law nor an error in principle in the exercise of the motion judge's discretion. The Court found that, while the appeal may not be frivolous or vexatious, it appeared to have a very low prospect of success. The motion judge properly considered whether the appellant had established that it did not have access to funds and would not have been able to pay security for costs. There was evidence that the appellant had funded its litigation at various times by retaining several different lawyers, retaining an expert witness, and paying for the costs of the trial transcripts. In the face of this evidence, the appellant had an obligation to lead evidence that not only showed that it was without assets, but that it also had no access to funds. The appellant failed to do so, and the motion judge properly considered this failure in concluding that security for costs could be awarded.
[Rouleau, Miller and Zarnett JJ.A.]
M. Chamberlain and G. Ganguli for the appellant
Walter Kravchuk, for the respondent
Keywords: Contracts, Technology, Manufacture and Sale, Fresh Evidence, Admissibility, "Palmer Test", Due Diligence, Relevance, Reliability
The appellant, VitaSound Audio Inc. ("VitaSound"), is a technology company in the business of developing personal audio devices. The respondent, Honey Bee (Hong Kong) Ltd. ("Honey Bee"), is in the business of manufacturing electronic devices. They entered into three agreements related to the manufacture and sale of audio devices Honey Bee manufactured using technology developed by VitaSound: a Loan Agreement for which the individual appellants executed personal guarantees, as well as an Investment Agreement and a Commercial Agreement.
VitaSound defaulted on the loan agreement. Honey Bee sued VitaSound for non-payment and the individual appellants pursuant to their personal guarantee. The appellants did not contest liability. However, VitaSound counterclaimed on the basis Honey Bee breached the Investment Agreement after the parties orally amended it. The appellants sought to set off Honey Bee's liability against theirs under the Loan Agreement and personal guarantees.
The trial judge rejected VitaSound's claims regarding oral amendment of the Loan Agreement and alleged breach by Honey Bee, and therefore any entitlement to a set-off from Honey Bee's supposed liability. The trial judge found that the Commercial Agreement had no bearing on the matters in issue under the Loan Agreement or Investment Agreement.
In support of the appeal, the appellants sought to introduce fresh evidence. They alleged that Honey Bee sold units of an audio device in the Asian market, which contradicted Honey Bee's evidence at trial. They argued that this evidence showed that Honey Bee not only misled the trial court, but also triggered an obligation under the Commercial Agreement to advance $500,000 to VistaSound. The appellants sought to set off their liability under the Loan Agreement against any damages for breach of the Commercial Agreement.
(1) Can fresh evidence be introduced on appeal from the trial decision?
(2) Did the trial judge err in not finding that Honey Bee breached the Commercial Agreement?
(3) Did the trial judge err in not finding that Honey Bee breached the Investment Agreement?
Motion and appeal dismissed.
(1) No. The Court applied the Palmer test and concluded the fresh evidence could not be admitted. The first branch of the Palmer test requires that the evidence not have been discoverable at trial through the exercise of due diligence. Emails that allegedly documented the sale of the device by Honey Bee were found after trial, by accident, when reviewing the spam folder of a departed employee's email. The court found these emails were under the control of VitaSound at all times and were discoverable. Accordingly, the due diligence requirement was not satisfied.
The second branch of the Palmer test requires that the evidence be relevant, bearing upon a decisive or potentially decisive issue. The evidence was tendered to establish a breach of the Commercial Agreement and support a claim of set-off. A breach of the Commercial Agreement was never pleaded by the appellants at trial. Additionally, there was no basis in the evidence, including fresh evidence, to support that VitaSound would have been entitled to keep the entirety of the $500,000 advance payment from Honey Bee.
Finally, regarding reliability of the evidence, the fresh evidence consisted of emails from a third party to persons at VitaSound, from whom no direct evidence was elicited. Accordingly, the contents of the emails were hearsay.
(2) No. Performance of the Commercial Agreement was not a live issue at trial, and the trial judge made no error in that regard.
(3) No. The appellants argued that the trial judge ought to have accepted their evidence that the Investment Agreement had been orally amended, such that VitaSound could choose to have Honey Bee's investment obligations be satisfied through the supply of audio units other than those enumerated in these agreements. The Court disagreed. The trial judge gave cogent reasons explaining why he concluded that the Investment Agreement had not been amended, including why he preferred the evidence of Honey Bee. There was therefore no basis for the Court to interfere with the trial judge's decision.
[Juriansz, Hourigan and Thorburn J.J.A.]
N. de Koning, for the appellant, Deutschmann Law Professional Corporation
No one appearing for the respondent, A.K.
Keywords: Contracts, Solicitor and Client, Contingency Fee Agreements, Torts, Negligence, MVA, Settlements, Court Approval, Parties Under Disability, Henricks-Hunter v. 814888 Ontario Inc., 2012 ONCA 496, Wu (Estate) v. Zürich Insurance Company (2006), 268 DLR (4th) 670 (CA), leave to appeal refused,  SCCA No. 289, Aywas v. Kirwan, 2010 ONSC 2278, Re Solicitor,  1 OR 652 (CA)
The respondent was severely injured in a snowmobiling accident and was uninsured at the time. The respondent's sister entered into a contingency fee retainer with the appellant wherein the appellant would receive 15% of any settlement they were able to reach with Aviva for the respondent.
The respondent eventually was found to be a party under disability and the Public Guardian Trustee ("PGT") took control of the respondent's property, pursuant to the Substitute Decisions Act, and as part of this control, entered into a new retainer agreement with the appellant where the contingency fee was set at 10%. The respondent's sister was later named litigation guardian for the matter, and entered into a third retainer agreement on the same terms as the original one.
The appellant eventually reached a settlement with Aviva for $1,200,000. Based on their contingency arrangement, with HST and disbursements, the appellant's portion of the settlement was just over $200,000. The appellant spent a total of 115 hours on the file (including clerk and associate time) and at the agreed upon billing rate, legal fees would have only amounted to approximately $20,000 absent the contingency agreement. The PGT objected to this amount and proposed reduced fees of $180,000 (including HST and disbursements), which the appellant agreed to.
When the settlement was brought to court for approval, the application judge approved the settlement, but further reduced the legal fees award to $60,000 plus HST and disbursements. The appellant appeals this cost order, submitting that while the application judge cited the correct legal test for legal fees in cases involving a party under disability, the application judged erred in applying the test to the case at hand.
(1) Did the application judge err in failing to apply the correct legal test to the determination of whether the legal fees for the accident benefits claim were reasonable?
No. A fee agreement involving a party under disability is not binding until it is approved by the court, and it is a discretionary exercise. Court approval of settlements for persons under disability is founded on the need to protect those who cannot care for themselves, and the court must ensure that the settlement as a whole, including provisions for legal fees are both reasonable and in the interest of the protected party.
Aywas v Kirwan and Re Solicitor were both cited by the court to
identify the factors to be considered when fixing legal fees for a
party under disability:
i) the time expended by the solicitor;
ii) the legal complexity of the matters dealt with;
iii) the degree of responsibility assumed by the solicitor;
iv) the monetary value of the matters in issue;
v) the importance of the matters to the client;
vi) the degree of skill and competence demonstrated by the solicitor;
vii) the results achieved;
viii) the ability of the client to pay;
ix) the client's expectation of the amount of the fee;
x) the financial risk assumed by the solicitor of pursuing the action, including the risk of non-payment, the likelihood of success and the amount of the expected recovery; and
xi) the social objective of providing access to justice for injured parties.
The Court of Appeal reviewed the application judge's analysis and found that not only did the judge cite the correct test and factors, but also discussed the factors relevant to this case when making their decision. In this case, the court noted that while the fees were agreed upon in a fair manner and were fully explained to the litigation guardian and that the appellant was very experienced in the area and obtained a favourable settlement, the issues in this case were not overly complex. Further, the appellants actual costs only amounted to $20,000 and a fee award that was many multiples of that amount was simply not reasonable or in the interest of the respondent.
The Court of Appeal found that it was clear that the application judge addressed and weighed all of the appropriate factors to be considered in deciding whether it would be fair and reasonable to approve the legal fees sought. Accordingly, there was no error and the appeal was dismissed.
[Doherty, Hoy and Jamal JJ. A.]
S. Rayman, C. Harris and S. Spitz for the appellant
P. A. Hertz, for the respondents
Keywords: Real Property, Easements, Land Titles, Watermain, Land Titles Act, R.S.O. 1990, c. L.5, s. 51(2), Municipal Act, 2001 S.O. 2001, ss. 6, 8, 9, Condos Castles Realty Inc. v. Janeve Corp., 2015 ONCA 466, Garfinkel v. Kleinberg and Kleinberg,  O.R. 388 (C.A.), Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 116
The appellant, Paleshi Motors Limited owned property that consisted of two adjacent lots designated as Lots 20 and 21 (the "Paleshi property"). Lot 21 lies immediately to the east of Lot 20. Paleshi Motors acquired Lot 20 in July 1975 and acquired Lot 21 in July 1981. In late 1979 or early 1980, the respondent, the Corporation of the Township of Woolwich ("Woolwich") installed a watermain just inside the eastern boundary of Lot 21. That watermain ran for some 200 feet along Lot 21. Woolwich acknowledged that it was aware the watermain was installed on property it did not own. Woolwich did not seek or obtain the permission of the owner of Lot 21, and did not attempt to enter into any easement agreement with the owner.
Paleshi Motors was acquired by new owners in 2015. None of the owners of the Paleshi property objected to either the installation or maintenance of the watermain until Paleshi Motors, under its new owners, objected in 2017. The Paleshi property was converted to the Land Titles Registry system on September 16, 2002. There was no evidence from anyone who owned the Paleshi property during the 20-year period preceding that date, or from anyone associated with any owner, as to the owner's knowledge of the existence of the watermain, or any arrangement that existed between the owners and Woolwich with respect to the watermain.
In 2019, the present owners of Paleshi Motors brought an application seeking a declaration the watermain was illegally on their property and an order directing the removal of the watermain. At the same time, Woolwich brought an application seeking a declaration it had a prescriptive easement over the Paleshi property for the purposes of operating, maintaining, repairing and replacing the watermain.
The application judge dismissed Paleshi Motors' application, and granted the prescriptive easement sought by Woolwich.
(1) Did the application judge err by concluding the appellants had acquiesced in the use of their property for the watermain during the relevant 20 year period?
(2) Should public authorities not be allowed to claim a prescriptive easement because they could expropriate the property?
(1) No. The application judge correctly identified the prerequisites to the existence of a prescriptive easement. There was no doubt Woolwich's use and enjoyment of the Paleshi property for the purposes of the watermain was continuous, uninterrupted and peaceful during the relevant 20-year period. In reaching the conclusion that the owners of the Paleshi property during the relevant 20 years had acquiesced in the use of their property for the watermain, the application judge drew inferences based on the public nature of the construction in 1970-80, the regular maintenance of the watermain after it was installed, and Paleshi Motors' ownership of the immediately adjacent lot (Lot 20) when construction occurred and maintenance was carried out. In considering whether the owners of Paleshi Motors were aware of the watermain on their property when they purchased Lot 21, the application judge was entitled to conclude the owners exercised reasonable diligence as purchasers when buying Lot 21. Paleshi motors had actual knowledge of the existence of the watermain on their property no later than 1986 based on a document prepared at Paleshi Motors' request in respect of its proposed development of Lot 21 in 1986. Knowledge of the existence of the watermain could be imputed to the owners of the Paleshi property if an ordinary landowner, diligent in the protection of her interests, would have had a reasonable opportunity of becoming aware of the watermain. There is nothing unreasonable, either in the inferences drawn by the application judge, or in his ultimate conclusion that the owners of the Paleshi property had knowledge, actual or imputed, of the existence of the watermain by 1982 and acquiesced in Woolwich's use of their property for that purpose over the next 20 years. Even if the application judge misplaced the ultimate burden of proof, it had no possible effect on his finding Woolwich did not have permission to use the property.
(2) No. Nothing in the case law offers any support for the proposition that public authorities should not be able, as a matter of law, to claim a prescriptive easement because they could have expropriated the property. To the extent the Municipal Act speaks to the issue, it offers support for the power of a municipality to acquire prescriptive easements in the same way as other legal entities. There are policy reasons for distinguishing between public authorities and private landowners insofar as the acquisition of easements by prescription is concerned. However, the fundamental policy underlying the common law's recognition of prescriptive easements applies to all property owners. Whether that policy should apply to all, some, or no public authorities, is a question for the legislature.
[Pepall, Benotto and Coroza JJ.A.]
J. Zibarras, for the appellants/ respondents by way of cross-appeal
C. Shammas and T. Watson, for the respondents/ appellants by way of cross-appeal
Keywords: Breach of Contract, Real Property, Mortgages, Torts, Misrepresentation, Civil Procedure, Appeals, Sufficiency of Reasons
The respondents sold shares of 2402169 Ontario Inc. ("240") to the appellants. The only assets of 240 were a quarry, the licence to operate it and equipment. The terms of the share purchase involved a sale price of $1,610,000, a promissory note and a personal guarantee signed by the appellants, and an agreement to assume the obligations of 240 with respect to three mortgages. The appellants also agreed to indemnify the respondents for all liabilities in connection with the mortgages. Prior to the closing of the transaction, the appellants were given a bill of sale that described the equipment and that it had been acquired on an "as is" condition from a third party. The appellants did not make the payments required, including the payments on the first mortgage.
The respondents brought an action in Newmarket (the "Newmarket action") for damages arising from breach of the agreement. The appellants' defence was that they were induced to enter the agreement by misrepresentations. They also counterclaimed asserting that the respondents had breached the agreement because they failed to deliver equipment that was in working order.
Meanwhile, the individuals who held the first mortgage, A.A. and A.F., brought an action in Toronto (the "Toronto action") against the respondents for payment of the first mortgage. They obtained judgment against the respondents. The respondents brought a third-party action against the appellants for contribution and indemnity.
The two actions became the subject matter of two summary judgment motions heard together. In the Newmarket action, the motion judge granted judgment against the appellants and dismissed their counterclaim. He held that the various agreements were valid, and that the appellants were not induced by misrepresentation. In the Toronto action, the motion judge held that the appellants breached their agreement to assume all obligations and indemnify the respondents in relation to the mortgage. He declared that the respondents were entitled to contribution and indemnity from the appellants for all amounts in relation to the judgment against them.
(1) Did the motion judge err in his interpretation of the agreement by failing to consider the circumstances surrounding the agreement when he concluded that there was no representation in the Agreement that the equipment was in good working order?
(2) Were the respondents' claims in respect of 240 capable of appellate review?
Appeal dismissed. Cross-appeal allowed.
(1) No. The appellants argued that various factors, such as the definition of "equipment" in the agreement and the appellants' intention to use the equipment, support their allegation that the respondents made a misrepresentation that the appellants relied on. The Court did not accept these submissions. The motion judge considered the surrounding circumstances and found that there was no misrepresentation as to the condition of the equipment. The Court held that a plain reading of the agreement supported his conclusion. The Court found no legal error and gave deference to the motion judge's interpretation of the agreement.
(2) No. The Court found this aspect of the appeal was not capable of review as the motion judge provided no reasons for the dismissal of the respondents' claims in relation to 240. There was no consideration of the request for a declaration for an indemnity from 240, be it at law or in equity. The Court therefore remitted the claim against 240 to the motion judge for determination.
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.