Court of Appeal Summaries (October 27 to 31, 2014)

Hello everyone.  Following are this week’s Ontario Court of Appeal Summaries.  Topics covered this week include contract law in the real estate and employment law contexts, oppression remedies and related tax consequences, estates, civil contempt and a reminder of the monetary jurisdiction of the Court of Appeal.

Happy Halloween and please watch out for children!

John Polyzogopoulos

Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416.593.2953
http://www.blaney.com/lawyers/john-polyzogopoulos


Ariston Realty Corp v Elcarim Inc
, 2014 ONCA 737

[Juriansz, LaForme and Lauwers JJ.A.]

Counsel:
D.A. Taub and E. Gersh, for the appellants/respondents by way of cross-appeal
B.B. Skolnik, for the respondent/appellants by way of cross-appeal

Keywords:

Contract Law, Real Estate, Contract Interpretation, Listing Agreement, Holdover Clause, Commission, Quantum Meruit, Director and Officer Liability

Facts:

The appellants and respondents by cross-appeal were two real estate investment firms (“Elcarim”) and their sole officer and director (“Mascall”). The respondents and cross-appellants were a real estate brokerage firm (“Ariston”) and a commercial real estate broker and principal at the firm (“Natale”).

Elcarim and Ariston entered into a listing agreement for the sale of a property owned by Elcarim. The agreement provided the following holdover clause:

“I agree to pay you a commission of 5% of the sale price of my property on completion of any sale … effected during the currency of this agreement from any source whatsoever, or on any sale … effected within six months after the expiry of this agreement with any party to whom you or your representatives or co-operating brokers have introduced my said property during the term of this agreement, provided you have notified me in writing prior to the expiry of this agreement of the name of such party you or your representatives or co-operating brokers have introduced to the property….”[Emphasis added.]

Ariston introduced Context Development Inc. (“Context”) to Mascall, but did not provide written notification that it had introduced Context to the property. Three and a half months after the listing agreement expired, Context signed an agreement of purchase and sale of the property. Ariston submitted an invoice to Elcarim for commission on the sale. Elcarim did not pay and Ariston commenced an action for payment.

The trial judge found that Natale and Context’s broker (“Struys”) had introduced Context to Mascall for the purpose of discussing the property during the term of the listing agreement. The trial judge held that Ariston’s failure to provide written notice of Context’s introduction to Mascall was of no significance. She held Elcarim and Mascall personally, liable for the unpaid commission, together with interest.

Holding:

Appeal allowed. Cross-appeal allowed, in part.

Issues:
(1) Did Ariston introduce Context to the property, as required to claim commission under the terms of the listing agreement?

(2) If yes, is Ariston’s failure to provide Elcarim with written notice of the introduction a bar to its claim for commission under the listing agreement?

(3) If yes, is Ariston instead entitled to compensation from Elcarim on the basis of quantum meruit?

(4) Is Mascall personally liable for any compensation owed by Elcarim to Ariston?

Reasoning:

(1) Given Ariston’s failure to provide written notice of the alleged introduction, discussed below, Juriansz J.A. felt he did not need to determine whether the introduction requirement was satisfied.

(2) Contracts are to be interpreted in accordance with the intentions of the parties, as evidenced by the words used, and in light of the underlying context of the agreement. The trial judge misinterpreted the holdover clause to require that Elcarim was aware Ariston introduced Context to the property, regardless of whether written notice of the introduction was provided. In doing so, she effectively replaced the requirement of written notice with a requirement of actual notice. Such an interpretation did not accord with sound commercial principles and good business sense. The requirement of written notice, rather than actual notice, is intended to promote commercial certainty and to reduce the potential for litigation. The provision of written notice was a condition precedent to Ariston’s entitlement to commission on a sale executed after the expiry of the listing agreement.

(3) Ariston could not claim its commission on the basis of quantum meruit for services provided pursuant to the listing agreement during the term of the agreement. Such services were governed by the agreement. The existence of the agreement was a juristic reason for refusing Ariston’s claim for its commission on the basis of quantum meruit. However, Ariston could claim reasonable compensation for the services provided after the expiry of the listing agreement. The trial judge found that Natale continued to assist Elcarim after the expiry of the listing agreement. Elcarim accepted these services with full knowledge that the listing agreement had expired and that Natale expected to be paid for its efforts to close the deal with Context. Juriansz J.A. valued the services provided by Natale after the listing agreement expired at $20,000.

(4) The trial judge erred in ruling that Mascall was personally liable for payment of the commission. There was no basis for doing so. While Mascall was no doubt the directing mind of Elcarim, the evidence fell far short of establishing that she had acted in pursuit of some interest separate from that of the corporations, as required for her to be found personally liable.

Tags:

Real Estate, Contract Interpretation, Listing Agreement, Holdover Clause, Commission, Quantum Meruit, Director and Officer Liability
Legg v. Simcoe Muskoka Catholic District School Board, 2014 ONCA 745

[Cronk, MacFarland and LaForme JJ.A.]

Counsel:
M. Sclisizzi and H. K. Pessione, for the appellant
S. J. Moreau and L. Sheffield, for the respondent

Keywords: Employment Law, Employment Agreement, Indemnity Clause, Contract Interpretation, Meaning of “Proceeding”, Workplace Investigation

Facts:

The respondent was the Director of Communications and Public Affairs at the appellant School Board. In response to complaints that the respondent’s expense claims were fraudulent, the School Board suspended the respondent from her position pending the results of an investigation.

The respondent sought payment of her ongoing legal fees from the School Board pursuant to the “Indemnity for Errors and Omissions” provision in her employment contract.

The School Board unsuccessfully argued that the respondent was not entitled to indemnity because the indemnity clause did not apply to workplace investigations, or alternatively, the exception to the indemnity clause was engaged in this case.

Issues:

(1) Did the application judge err in determining that a workplace investigation is a “proceeding” within the meaning of the indemnity clause?

(2)  Did the application judge err in determining that the exception to the indemnity clause did not apply?

Holding:
Appeal dismissed.

Reasoning:

(1) No. There is case law that suggests that a “proceeding” is not restricted to encompass only legal actions or regulatory proceedings. If the School Board wished to restrict the application of the indemnity clause, it ought to have done so in more precise language.

(2) No. In order to invoke the exclusion for dishonest conduct, the School Board would need to raise a prima facie case against the respondent, and the evidence led by the School Board on this issue was inadmissible. The applications judge did not err in refusing to conduct an inquiry into the merits of this allegation. Pursuant to the employment contract, the appropriate forum in which to determine the merits of this allegation was before an arbitrator.

Tags:
Employment Law, Employment Agreement, Indemnity Clause, Contract Interpretation, Meaning of “Proceeding”, Workplace Investigation

Toronto Standard Condominium Corporation No. 2095 v. West Harbour City (I) Residences Corp., 2014 ONCA 738

[Laskin, Rouleau and Epstein JJ.A.]

Counsel:
T. McRae and J.D. Vellis, for the appellant

R.P. Hoffman, H. Herskowitz and S. Adamski, for the respondent

Keywords:
Costs

Facts:
This was an appeal from the judgment of Justice David L. Corbett of the Superior Court of Justice dated September 23, 2013, with reasons reported at 2013 ONSC 5987.

Holding:
Costs endorsed.

Reasoning:

By agreement of the parties, costs were awarded to the respondent in the amount of $15,000.00 inclusive of disbursements and applicable taxes.

Tags:
Costs

Lester v. Bond, 2014 ONCA 749

[MacFarland, LaForme and Lauwers JJ.A.]

Counsel:
R. Lester, acting in person
E.V. Woudenberg, for the respondent

Keywords:
Real Property, Encroachment, Retaining Wall, Dominant tenement

Facts:
The application judge found that the retaining wall (which was the subject of the appellants’ claim) encroached at most 0.74 metres and at its least 0.64 metres, into the right of way. The application judge held that the 1998 retaining wall, which replaced and continued an earlier wall in the same location, part of which was built by the City on its property, did not create a substantial obstruction to the appellants’ rights pursuant to the 1916 grant. The real problem, the application judge found, was created by the “pinch point” at the north end of the right of way on City property.

Holding:
Appeal dismissed.

Reasoning:
The application judge’s findings were well-supported by the evidence and are owed deference. The Court agreed with the application judge’s reliance on Devaney v. McNab (1921), 69 D.L.R. 23 (Ont. C.A.) where it was held that the factual basis must be assessed when examining whether or not there has been a substantial interference with the dominant tenement holders’ rights.

Tags:
Real Property, Encroachment, Retaining Wall, Dominant Tenement

 

Leggat v Jennings, 2014 ONCA 754

[Feldman, Juriansz, and Rouleau JJ.A]

Counsel:
S.F. Laubman and L. Epstein, acting in person
N.S. Rabinovitch and K. McCulloch, for the respondents

Keywords:
Corporate Law, Oppression Remedy, Sale Process Order, Parties, Tax

Facts:

A sale process was ordered for a car dealership as part of an oppression remedy claim. The court accepted the respondent’s position that for sale purposes the two corporations being sold could no longer be parties to the litigation. Both parties stated in affidavits that their intent in agreeing to a sale process was that it would not affect or prejudice anyone in the litigation. The appellant appealed, arguing that there were tax reasons why any damages for oppression should be paid to and flow through the corporation and not directly to the plaintiffs.

Issues:

(1) Did the motions judge err in removing the corporations as parties to the main action for the purposes of the sale?

Holding:

Appeal dismissed.

Reasoning:

(1) No. It was clearly the intent of both parties and the motions judge that there be no effective prejudice as a result of the sale process order. The practical effect of the tax consequences could be achieved by expert calculation without actually flowing the payment of damages through a party corporation.

Tags:
Corporate Law, Oppression Remedy, Sale Process Order, Parties, Tax

 

Susin v. Susin, 2014 ONCA 733

[Hoy A.C.J.O., Feldman and Blair JJ.A.]

Counsel:
R. Klotz, for the appellant
M.A. Hoy, for the respondent

Keywords:
Law of Estates, Estate Litigation, Civil Contempt, Fines, Passing of Accounts, Proper Venue, Personal Service, Rules of Civil Procedure , Rules 2.03, 60.11

Facts:
Dorino Susin (“Dorino”) appeals from the motion judge’s order declaring him in contempt and dismissing his motion for a passing of accounts in his father’s estate to take place in Brampton. This case involves an ongoing and bitter estate dispute between two sets of siblings, with one side represented by Dorino and the other by Fermino Susin (“Fermino”). The motion judge, Ramsay J., ordered that a passing of accounts was not appropriate given the current stage in the estate litigation, and also sided with seven previous court orders that Welland, Ontario was the appropriate jurisdiction for the passing of accounts. Ramsay J. also declared Dorino in contempt of court and included four orders as part of this declaration: (a) that he be committed to prison for three days; (b) that he pay a fine to the estate in the amount of $10,000; (c) that he be prohibited from taking any further steps in this proceeding or in any proceedings to which Fermino or Habibur Rahman (“Rahman”) are parties, except for an appeal from the present order; and (d) that he pay costs of the motions to the estate on a full indemnity basis.

Issues:

(1) Should the motion judge’s order refusing to pass accounts at this time be overruled?

(2) Is the finding that Dorino is in contempt of court supported in the record?

(3) Should the contempt order be set aside because Dorino was not personally served with the contempt cross-motion?

(4)(a) Did the motion judge err in imposing a fine of $10,000 payable to the estate as opposed to the province of Ontario?

(4)(b) Should the motion judge’s order imposing a $10,000 fine against Dorino be set aside?

(5) Is the motion judge’s order prohibiting Dorino from taking any further steps in the proceeding or in any proceedings to which Fermino or Rahman are parties (except for an appeal from his order) too broad?

Holding:
The appeal was allowed in part and neither party was awarded costs of the appeal.

Reasoning:

(1) No. The motion judge’s exercise of discretion in refusing to order the passing of accounts should not be interfered with, as he had two reasonable bases for this order. First, the trustees could not pass the final accounts at that stage because there are still significant debts owing to the estate, and the estate also continued to incur legal costs given the ongoing legal battles between the parties. Second, it had been repeatedly held by several different Superior Court judges that Welland was the appropriate venue for dealing with matters relating to the estate. Therefore, Dorino’s motion to have a passing of accounts held in Brampton was inappropriate and had already been litigated repeatedly.

(2) Yes. Even if Dorino’s conduct cannot be characterized as a breach of a court order, the motion judge was correct in resorting to the common law power to commit him for contempt in the circumstances. Specifically, Dorino’s conduct constituted an act done that was intended to, or was likely to, interfere with or obstruct the fair administration of justice. In the circumstances of this case, Dorino already knew based on three previous court orders that Welland was the appropriate venue for the passing of accounts, but he still brought another motion to conduct a passing of accounts in Brampton. Furthermore, his actions were vindictive as he intended to harass the opposing beneficiaries represented by Fermino, and he did so even though he was already warned in open court that he could face imprisonment if he brought another motion on this issue.

(3) No. Even though the respondents failed to serve Dorino personally with their motion materials in accordance with the Rules of Civil Procedure, the purpose of personal service has been met in this case and there has been no substantial wrong or miscarriage of justice. Specifically, Dorino had full knowledge of the cross-motion brought by the respondents to hold him in contempt of court, as he filed an affidavit in response to Fermino’s affidavit on this issue. Furthermore, he personally attended the motion and had an opportunity to address the contempt motion, but failed to make any submissions. In sum, the proceedings leading up to the contempt finding, including a warning in open court that he risked imprisonment if he brought another motion to pass accounts, afforded Dorino adequate procedural fairness and did not deprive him of a fair hearing.

(4)(a) Yes. The case of SNC-Lavalin Profac Inc. v. Sankar, 2009 ONCA 97, demonstrates that a fine imposed for civil contempt of court ought not to be payable to a party in the action but, rather, to the Provincial Treasurer.

(4)(b) Yes. A fine was not necessary in this case to meet the goals of deterrence and the need to stress the importance of respect for the court’s process.  The sentence of three days’ imprisonment was more than sufficient to ensure that Dorino respects the court’s process, and a fine acted as a double sanction and was unnecessary.

(5) Yes. The scope of the motion judge’s order goes beyond what is reasonably necessary and constitutes an error in principle. The order constitutes an absolute prohibition on Dorino’s ability to have any further involvement in this estate proceeding, which is too broad, and should be amended to allow him involvement if the court grants him leave.

Tags:
Law of Estates, Estate Litigation, Civil Contempt, Fines, Passing of Accounts, Proper Venue, Personal Service, Rules of Civil Procedure , Rules 2.03, 60.11

Coady v Barrie, 2014 ONCA 751

[Juriansz, Rouleau and van Rensburg JJ.A.]

Counsel:
M. Coady, acting in person
J.J. Cardill, for the respondents

Keywords:
Law of Estates, Estate Trustee

Facts:
This was an appeal from the judgment of Justice Brian W. Abrams of the Superior Court of Justice dated February 6, 2014.

Holding:
Appeal allowed in part.

Reasoning:
The parties agreed the appeal should be allowed in part. Neither the motion judge’s finding that there was no bequest to the appellant of any interest in the cottage, nor his dismissal of the appellant’s claim for damages should be dismissed. The motion judge erred in leaving the estate in limbo. Upon noting the respondents were prepared to renounce being trustees of the estate, the motion judge should have made an order removing them and appointing the appellant. The Court could not make an order as to the appellant’s entitlement to the farm property as it did not know all the circumstances. The respondents were ordered to pass accounts and to cooperate in transferring responsibility for the estate to the appellant.

Costs of the motion of $12,500 were awarded to the respondent. No costs were awarded on the appeal.

Tags:
Law of Estates, Estate Trustee

Hoffman v. Subject (Subject Woodwork & Trim), 2014 ONCA 750

[Juriansz, Rouleau and van Rensburg JJ.A.]

Counsel:
J.K. Postnikoff, for the appellant
R. Subject, acting in person

Keywords:
Contract Law, Breach of Contract, Home Renovations, Proof of Damages, Monetary Jurisdiction of the Court of Appeal, Courts of Justice Act, ss. 19(1.2)(a)

Facts (Note: As this appeal was quashed for lack of jurisdiction, the underlying facts and issues were derived from the lower court decision):
The plaintiff wanted to renovate her kitchen.  She had heard good things from a co-worker about the defendant’s work, and the two of them met.  They cobbled together a series of contracts over the course of the project.  These contracts are unclear and reflected, to limited degrees, changes in the scope of the work as the project evolved.  Adding to the confusion were a number of unwritten agreements that involved some of the work being undertaken by the plaintiff and other sub-contractors. Both sides acknowledged that the written agreements did not contain all of the items at issue.

The plaintiff’s complaints were numerous.  They were:

1)      the floor being ‘out of level’;

2)      related and separate problems with the kitchen cabinets;

3)      a lack of structural support in the roof/ceiling; and

4)      ventilation and barrier issues in the ceiling.

The lower court found that in the absence of being able to rescind the contract, the plaintiff would be held to the strict proof of her damages.  A plaintiff is not entitled to a judgment for the payment of money unless he or she has proven all of the three following elements:

1)      liability (in contract, or tort, or both);

2)      the existence of damages;

3)      the cost of repairing or undoing those damages (quantum).

The plaintiff in this case, with one exception, had only proven the first two elements of her claim with regard to some of the supplies and work agreed upon.  Those two elements, without the third, were inadequate to entitle her to a judgment requiring the defendant to pay her money.  It is inadequate to simply say that she was quoted “approximately $56,000.00” to rectify the deficiencies.  The plaintiff did not put into evidence that estimate or those estimates leading to that number, nor did she call the the trades who had provided those estimates.  She did not break the figure down into its materials and services components, nor indicate whether any of the originally supplied materials were to be reused or, if not, why not.

Issue(s):
Did the Superior Court Judge err in not awarding the plaintiff damages given the lack of evidence in support?

Held:
Appeal is quashed.

Reasoning:
Subsection 19(1.2)(a) of the Courts of Justice Act applies ($50,000 floor for appeals to be eligible to go to the Court of Appeal) and this court is without jurisdiction.

Tags:
Contract Law, Breach of Contract, Home Renovations, Proof of Damages, Monetary Jurisdiction of the Court of Appeal, Courts of Justice Act, ss. 19(1.2)(a)

 

Mikitchook v. John, 2014 ONCA 729

[Laskin, Gillese and Pardu JJ.A.]

Counsel:
No one appearing for the appellant
No one appearing for the respondent

Keywords:
Costs, Leave to Appeal, Non-Attendance

Facts:
This matter is an appeal from the order of Justice John R. Sproat of the Superior Court of Justice dated March 14, 2014.

Holding:
Leave to appeal costs is refused.

Reasoning:

Neither party appeared. There is no basis to interfere with the costs award.

Tags:
Costs, Leave to Appeal, Non-Attendance

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

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