Hello again everyone. This was a relatively light week for the Court of Appeal. Only five non-criminal decisions were released. Four related to real property issues (adverse possession, leases, failed closings, mortgages, writs of possession and title insurance). The other related to the costs of a motion and appeal in the context of setting aside administrative dismissals. The Hazelton Lanes decision is a black mark on the administration of justice. It is an unfortunate and stark reminder to trial counsel of the importance of proper and timely documentary disclosure and cooperation and communication between counsel to focus on what is relevant to ensure that cases are tried fairly and efficiently. In this case, as the Court of Appeal said, the trial “spiralled out of control” and went from a 3 day trial to a 50 day trial without being decided on the merits. The end result is that the parties will now have to do it all over again.
Wishing everyone a fine weekend.
[Hoy A.C.J.O, Epstein and Hourigan JJ.A.]
Y. Barre, for the appellant
G. Gryguc, for the respondents
Keywords: Stay, Writs of Possession, Vendor Take-Back Mortgages, Extension of Time to Appeal
Facts: On June 14, 2013, Justice Firestone granted judgment to the respondent mortgagees on two vendor take-back mortgages subject to a reference report. On June 10, 2014, Pardu J.A. dismissed the moving party’s motion for: (i) leave to appeal to the Court of Appeal; (ii) an order extending the time to appeal the judgment and the report; and (iii) stays of enforcement of the judgment and the writs of possession pending the appeal. On June 26, 2014, Justice Matlow in the Divisional Court dismissed the appellants’ motion to have the writs of possession stayed on the basis that the material filed did not support the relief claimed. The moving parties brought a motion to the Court of Appeal returnable on August 6, 2014, seeking an order extending the time to appeal the judgment, the reference report, and the order of Justice Matlow. They did not attend on the return date and the motion was dismissed as abandoned by Pardu J.A. The moving parties now bring a motion seeking a review of the order of Pardu J.A. dated August 6, 2014. They submit that the motion had been adjourned and should not have been on the list on that date.
Issue: Did the motion judge err in dismissing the request to extend the time to appeal?
Held: Motion dismissed.
No. The court found that the record did not permit them to understand what happened on August 6, 2014. However, the court considered the merits of the underlying motion, and determined that there were none. The request for an extension of time to appeal the judgment and reference had already been denied by Pardu J.A. and it was found that there were also no grounds to order a stay of the writs of possession or judgment as there is no appeal pending. In any event, the court stated that the properties have been sold.
[Laskin, Pepall and Pardu JJ.A.]
J.H. McNair, for the appellant
J.W. Makins, for the respondent
Keywords: Administrative Dismissals, Setting Aside, Costs, Varying Costs
The appellant successfully appealed a motion judge’s refusal to set aside the administrative dismissal of its action. After the hearing of the appeal, the Court observed that the Registrar had dismissed the appellant’s action prior to the deadline set out in the status notice. The appellant was awarded costs “in the agreed sum of $8,000.”
The respondent moves to vary the costs award, arguing that not only should costs not follow the event, but also that it should be awarded the costs originally granted to it as the successful party on the original motion. The respondent argues that had the appellant brought the premature dismissal to the respondent’s attention, the respondent would have consented to the setting aside of the administrative dismissal, and the appeal would have been unnecessary.
The respondent further argued that the respondent did not agree to costs fixed at $8,000, and that it should have been given an opportunity to make submissions on costs.
Issue: Do the above circumstances justify a departure from the usual rule that costs should follow the event?
Holding: Appeal dismissed.
No. Either party could have discovered that the dismissal was untimely. Had the respondent noticed, it could have consented immediately to the relief sought. The Court found that the respondent did agree to the quantum of costs.
[Strathy C.J.O., Feldman and Lauwers JJ.A.]
H. A. Swartz, for the appellan
A. M. Kennedy, for the respondent
Keywords: Real Property Law, Title Insurance, Title Defect, Marketable Title
The appellant’s claim against his title insurer was dismissed on a motion for summary judgment. The motion judge held that, according to the wording of the policy, the previous use of the land as a marijuana grow-op did not constitute a “title defect” or make the title “unmarketable.”
Issue: Did the motion judge err in holding that the title insurer was not liable to cover the appellant’s loss?
Holding: Appeal dismissed.
No. The motion judge’s conclusion that this was not a title defect is unassailable. Even assuming that the land was unmarketable, the title was marketable and was unencumbered by defects that would permit a purchaser to refuse to perform a contract of sale. This conclusion is consistent with authority from the U.S. that comments that the purpose of title insurance is not to protect the insured against loss arising from physical damage to property.
[Sharpe, Simmons and Benotto JJ.A.]
M.A. Davis, R.D. Davis and R. Macdonald, for the appellants
W.A. Chalmers, for the respondents
Judges, Trial, Reasonable Apprehension of Bias, Contempt of Court, Mareva Injunctions, Mid-Trial Directions
This appeal arose out of the trial of a commercial action between the appellants/defendants, 1707590 Ontario Limited (“170”) and its sole shareholder, officer and director, John Faraci (“Faraci”), and the respondents/plaintiffs, Hazelton Lanes Inc. (“Hazelton”) and its controlling shareholder and directing mind, Stephen Chan (“Chan”). The dispute involved a variety of claims. These were: against 170 for rental arrears, breach of a lease and declaration of a validly terminated lease, and against Faraci for disputed legal fees and a real estate transaction that failed to close. The counter-claims by the appellants/defendants included a declaration that the version of the lease governing the relationship between Hazelton and 170 was that set out in Schedule “A” to the statement of defence and counterclaim (which included handwritten amendments), and declarations and other relief concerning the allegedly improper termination of the lease between Hazelton and 170.
Rather than the scheduled 3 days, the trial lasted about 50 days of court time, consisting of about 30 days of evidence and about 20 days of motions. Nothwithstanding the length of the trial, the matter was not ultimately decided on the merits.
During Faraci’s cross-examination, the trial judge, Matlow J., interjected and made comments that Faraci’s evidence “defie[d] common sense” and was “gobbledygook”. In addition, during the cross-examination, respondents’ counsel obtained 19 mid-trial directions from the trial judge requiring the appellants to obtain, produce and organize for respondents’ counsel masses of documents that had never previously been requested.
On a subsequent day at trial, in response to a request for a mid-trial costs order, the trial judge suggested that the respondents bring a motion for a Mareva injunction. The next court date, the trial judge granted the respondents’ ex parte motion to amend their statement of claim to add five new defendants and several new causes of action. The respondents’ request for an ex parte Mareva injunction against all appellants was also granted. The trial judge later ordered Faraci to “comply fully with all orders directed to him throughout the trial” within 8 days, failing which the respondents could renew their previous motion for an order finding the appellants to be in contempt of court.
Subsequently, the appellants brought a motion for leave to appeal the order to “comply fully” and brought a motion to stay the order. The stay motion was dismissed. The appellants then brought a motion seeking to set aside the order, asking the trial judge to recuse himself, and seeking a mistrial. The trial judge dismissed the motion. The trial judge later commented adversely on Faraci’s credibility and that of an added defendant. Then, on the contempt motion, the trial judge found the appellants in contempt for failing to comply with his previous orders, and ordered them to pay $35,000 into court as security for costs of the motion. On the respondents’ subsequent motion, the trial judge struck out the appellants’ statement of defence and counterclaim for failing to make the $35,000 payment into court as required under his order. The trial judge later granted to the respondents partial default judgment on several claims. In addition, the trial judge awarded the respondents costs of the action fixed on a substantial indemnity basis in the amount of $650,000.
The appellants appealed from all these orders made during the trial.
Holding: Appeal allowed. A new trial was ordered before a different trial judge.
At least three aspects of the trial judge’s conduct, taken together, gave rise to a reasonable apprehension of bias:
(1) The trial judge made statements and findings during the trial indicating that he had prejudged Faraci’s conduct and credibility. Namely, these were: the trial judge’s interjections and adverse comments on Faraci’s credibility during Faraci’s cross-examination; his suggestion that respondents’ counsel bring a Mareva injunction motion; and his findings on the Mareva injunction motion and a related ruling that Faraci had engaged in a fraudulent scheme to divest himself of assets. Excerpts of the relevant portions of Faraci’s cross-examination and the trial judge’s interjections were included in Appendix “B” of the Court of Appeal’s reasons.
(2) The trial judge made 19 directions for mid-trial production of masses of documents that had not previously been requested and the relevance and probative value of which had not been established. He should have taken a more realistic and proportionate approach to production. Much more modest directions would have sufficed. If such documents were not produced, it would have been open to the trial judge to draw an adverse inference from their non-production. Instead, the trial judge directed and oversaw production of masses of documents mid-trial, without analyzing the potential relevance or probative value of the documents at issue and without considering the impact of his directions on trial efficiency and fairness. The breadth and lack of relevance of the documents created an appearance that the trial judge was disdainful of the appellants and was prepared to accede unquestioningly to respondents’ counsel’s production requests. A consolidated summary of the trial judge’s 19 directions was included in Appendix “A” of the Court of Appeal’s reasons.
(3) The trial judge found that Faraci and 170 were in contempt for failing to “comply fully” with the 19 mid-trial directions. The ruling contained no analysis of the extent to which Faraci and 170 had complied or of the validity of their reasons for any non-compliance. The trial judge’s failure to consider Faraci’s evidence and his failure to conduct a direction by direction analysis of compliance suggests more than mere inadvertence or misapprehension. Rather, his treatment of the issue demonstrates he had become aligned with the respondents.
Although an appellate court will generally require a complete trial record to determine whether a claim for reasonable apprehension of bias has been made out, there was no complete trial record in this case because the trial was not completed. Furthermore, the Court of Appeal rejected respondents’ counsel’s submission that a more complete trial record would demonstrate why the trial judge’s 19 mid-trial directions were necessary and appropriate. The respondents had not identified specific aspects of the trial that would justify the trial judge’s actions or detract from the appellants’ claim of a reasonable apprehension of bias.
Regarding costs, all parties contributed to the trial spiralling out of control. In these circumstances, no costs were awarded for the trial or for the appeal.
[Blair, Juriansz & Rouleau JJ.A.]
T. Green, for the appellants
J.Y. Obagi, for the respondents
Keywords: Real Property Law, Adverse Possession, Boundary Dispute, Neighbours
Facts: This case is an appeal of the judgment of Abrams J. granting an order vesting title to the disputed land to the respondents. Specifically, it was held at trial that the Grays acquired title by adverse possession to a narrow strip of land lying between their property and the Guerard’s property.
Issue: Did Abrams J. err in his order vesting title to the disputed land to the respondents?
Holding: The appeal was dismissed and the respondents were entitled to costs on a partial indemnity basis.
No. Abrams J. did not err in his order, as he made clear findings of fact supported by the record, and applied the correct principles of law to those facts. He properly observed that the Grays proved that, through the occupation of their predecessors, their possession of the disputed land was of the same nature and substance as when the lands were first registered in the Land Titles system. On appeal, the appellants raised a new argument that a finding of adverse possession did not entitle the respondents to the full width of the disputed land. It was found that it was too late for this argument to be considered. The appellants previously consented to the use of a survey at trial to determine the extent of the boundaries of land, and they did not present any evidence to the contrary on the issue.
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