Below are this week’s non-criminal Ontario Court of Appeal decisions. There is an interesting administrative law decision in the labour context (EllisDon) involving the admissibility of business records and ancient documents which may be of interest to evidence law buffs in addition to lawyers practicing labour and administrative law. The Mason Homes decision is a reminder that even a case as seemingly simple as terminating a lease and suing for rent is more complicated than it seems and that counsel should always keep the provisions of the Commercial Tenancies Act in mind when advising both landlords and tenants. Other areas of law covered this week include family law and full indemnity costs awards, jurisdiction under the CCAA over insolvent foreign companies, costs in medical malpractice cases, municipal law and the enforceability of agreements between municipalities and developers regarding the provision of sewage capacity, wills and estates, condominium law arbitrations, the liability of public authorities in the summary judgment context, and insurance law. Wishing everyone a nice weekend.
[Feldman, MacFarland and Epstein JJ.A.]
V. Sasso, W. H. Keller and J. A. Horvat, for the appellant
Martini, M. Shulgan and M. Marusic, for the respondent
Keywords: Municipal Law, Municipal Act, 2001, Subsection 86(1), Development Control, Municipal Contracts, Contract Interpretation, Sattva Capital Corp v Creston Moly Corp, Remoteness of Damages
The Town of Lakeshore (“Lakeshore) and 1298417 Ontario Limited (“129”), a developer, entered into a Subdivision Agreement in which Lakeshore undertook to provide capacity in its sewage system to 129’s proposed development.
Subsequently, the parties entered into a Supplementary Agreement that provided for an enhancement to the town’s sewage system. The agreement stated that the enhancement would increase the capacity available to 129’s proposed development, which would be “expressly reserve[d]” for the benefit of that subdivision.
When Lakeshore provided another developer with access to the enhanced sewage capacity prior to the completion of the 129’s development, 129 sued Lakeshore for breach of contract. 129 argued that the Subdivision Agreement promised them a sewage system monopoly in that part of town until the subdivision was fully developed.
Lakeshore argued that the scope of its promise was limited to providing 129 with sufficient sewage capacity to complete its development. Lakeshore argued in the alternative that the agreement was ultra vires, as the granting of a monopoly would conflict with its statutory obligations under subsection 86(1) of the Municipal Act, 2001 (the “Act”). The trial judge agreed with 129’s interpretation of the Supplementary Agreement, that it was entitled to exclusive use of the sewage capacity pending completion of the development.
The trial judge further rejected Lakeshore’s ultra vires argument, finding as fact that there was insufficient sewage capacity for both developers. As a result, the trial judge held that Lakeshore’s obligations to provide the other developer with sewage capacity were not triggered under subsection 86(1) of the Act.
The trial judge awarded 129 $2,423,860 in damages, based on profits that the competing developer purportedly realized from commercial tenancies. There was a “reasonable probability” that 129 would have had the benefit of those commercial tenancies, as there were no other commercial leasing options available in the area.
(1) Did the trial judge err in interpreting the Supplementary Agreement?
(2) Did the trial judge err in holding that the agreement was not ultra vires due to it conflicting with Lakeshore’s obligations under subsection 86(1) of the Act?
(3) Did the trial judge err in his assessment of damages?
Appeal allowed. Action dismissed. The damages claimed by the respondent are too remote and not compensable.
per Feldman J.A. and MacFarland J.A.
(1) Yes. The Supplementary Agreement did not grant a monopoly to 129. The trial judge erred by reading in isolation the words that appear to grant a monopoly, rather than construing the clause as a whole, giving full effect to the words used, and considering the surrounding circumstances and intention of the parties. When looking at the entire clause, it is clear that Lakeshore promised not to grant another development any of the capacity required for the full development of 129’s subdivision. Accordingly, Lakeshore did not breach the Supplementary Agreement.
(2) Yes. The trial judge erred in his conclusion that granting a sewer capacity monopoly to the exclusion of other developers is not ultra vires an Ontario municipality.
(3) Yes. Although not necessary to decide, the trial judge erred in awarding damages that were too remote and not compensable. On that basis alone, the judgment would be set aside and the action dismissed.
per Epstein J.A. (concurring in result)
(1) No. Although the trial judge may have erred in taking into account the subjective intention of the parties as evidenced through previous drafts of the agreement, the trial judge came to the correct conclusion that Lakeshore did promise 129 a monopoly over sewage capacity in the existing system. The words are unambiguous.
(2) No. A municipality’s obligation to provide a building with a sewage public utility under subsection 86(1) of the Act is triggered where there is sufficient capacity for handling sewage from the building. In determining whether a sewage system’s remaining capacity is sufficient to grant a request for supply, a municipality must be able to take into account both capacity that is currently being used, as well as capacity that has been reasonably allocated into the future.
Only the last portion of the impugned provision is ultra vires because it imposes a blanket restriction on Lakeshore’s ability to provide sewage capacity to others. This conflicts with Lakeshore’s statutory obligations under subsection 86(1) of the Act. As a result of the “severability clause”, it is appropriate to sever the ultra vires portion of the otherwise valid Subdivision Agreement. The revised agreement promises 129 sufficient sewage capacity to enable it to complete St. Clair Shores. This promise is enforceable. Lakeshore’s provision of sewage capacity to the other development did not deprive 129 of substantially the whole benefit of the revised agreement.
(3) Yes. The trial judge erred in his determination of damages. The trial judge did not provide an analysis as to whether the loss of commercial leases to otherwise lawful competition was the type of loss was reasonably contemplated by the parties. Instead, his analysis was devoted to causation and quantifying the loss. The type of damages 129 sought was too remote and unrecoverable.
[Cronk, Gillese and Rouleau JJ.A.]
Sylviette Brown, in person
David Elman, for the respondents
Keywords: Civil Procedure; Motion to Quash Appeal; Jurisdiction; Interlocutory Motion
Facts: The respondents in the underlying appeal moved to quash the current appeal on the basis that the order sought to be appealed is interlocutory rather than final. The order appealed was that of a Superior Court judge denying an adjournment and setting a date for argument of the respondents’ pending motion to strike the appellant’s statement of claim.
Issues: Whether the order sought is interlocutory rather than final.
Decision: Motion allowed. Appeal quashed.
The type of order involved did not affect the substantive merits of the dispute between the parties or their final rights. The order, therefore, was clearly interlocutory in nature and any appeal from it is to the Divisional Court with leave, rather than to the Court of Appeal.
[Hoy A.C.J.O., Epstein and Hourigan JJ.A]
David Sloan, for the appellant
David J. McGhee, for the respondent
Keywords: Wills, Life Interest, Proprietary Interest, Fraudulent Assignment, Fraudulent Conveyances Act
Caterina Policelli died bequeathing a life interest in her house to her son, Philip Policelli. Philip Zita, a judgement creditor of Mr. Policelli, sought various forms of relief for the purpose of securing an interest in the house. The application judge dismissed the appellant’s claims describing them as an effort to rewrite the will; the court held it had no authority to override the testator’s wishes in these circumstances.
(1) Did the applications judge err in finding the appellant had no interest in the house?
(1) No. For the appellant to have a claim to an interest in the house, he had to demonstrate that Mr. Policelli was given a proprietary interest in the home, or that the appellant was a creditor of Ms. Policelli. If the first factor was present, the appellant may have been able to claim an equitable interest in the home. If the second factor were present, the appellant may have been able to resort to the Fraudulent Conveyances Act to prevent the deceased from avoiding her creditors. However, Mr. Policelli was only given a life interest in the home. This did not grant Mr. Policelli a right to the house itself; therefore the appellant could have no higher right. Additionally, since Ms. Policelli was never indebted to the appellant, a disposition of her estate did not constitute a fraudulent assignment and the appellant was not a creditor within the meaning of s.2 of the Fraudulent Conveyances Act. No miscarriage of justice transpired in this case. Simply put, Mr. Policelli’s interest in the house; namely, his right to use it, is beyond the appellant’s reach.
[Hoy A.C.J.O., Epstein and Hourigan JJ.A.]
Macklin and N.G. Wilson, for the moving party
C. Francis, for the responding parties
Real Property Law, Condominium; Arbitration, Arbitration Act, 1991, ss. 10(1), 10(2), Appointment of Arbitrator, Motion to Quash Appeal, Order Appointing Arbitrator not Appealable
The moving party, Toronto Standard Condominium Corporation No. 2130 (“Condominium Corporation”), was the condominium corporation for a residential condominium in a complex called Maple Leaf Square. The complex was owned by York Bremner Developments Limited (the “Declarant”). A hotel in the complex was leased by York Bremner Hotel Corporation Leaseholds Limited (“Leasing”). Cadillac Fairview Corporation Limited (“Cadillac”) was described as the Declarant’s agent, appointed to be the common facilities manager of the complex. The Declarant, Leasing and Cadillac, were the appellants on this appeal.
A number of disputes arose between the parties. Pursuant to an arbitration clause in a Complex Reciprocal Agreement (the “CRA”), the Condominium Corporation initiated arbitration proceedings by a notice of arbitration and commenced overlapping proceedings in court. Pursuant to the CRA, the Declarant and Leasing were required to advise within 10 days whether or not they accepted the proposed arbitrator. They did not respond, and Condominium Corporation brought an application seeking the appointment of an arbitrator.
On the application, Declarant and Leasing argued that none of the issues in the notice of arbitration fell within the ambit of the arbitration clause in the CRA. Therefore, there was no point in appointing an arbitrator. The application judge disagreed, finding that at least one issue arguably fell within the jurisdiction of the arbitrator. An arbitrator was appointed. The arbitrator adjudicated two of the six issues over which he determined he had jurisdiction. The Condominium Corporation withdrew one of the other issues and a further issue was adjourned. The remaining two issues were set to be determined in January of 2015.
The responding parties appealed the application judge’s decision to appoint an arbitrator and to refer all the issues in the notice of arbitration to the arbitrator. The Condominium Corporation moved to quash the appeal.
The Arbitration Act, 1991, s. 10(2) barred the responding parties’ attempt to appeal the application judge’s appointment of the arbitrator. This case was distinguishable from Brennan v Dole (2005), 11 B.L.R. (4th) 169 (Ont C.A.). The responding parties in this case were not without a remedy. They had appealed the arbitrator’s ruling on the issue of jurisdiction to the Superior Court of Justice pursuant to the Arbitration Act, 1991, s. 17(8).
[Cronk, Gillese and Rouleau JJ.A.]
Newton Wong and V. Ross Morrison for the appellant
Kristen Muszynski and M. McCaw, for the respondent
Keywords: Summary Judgment, No Genuine Issue for Trial, Bad Faith, Public Health Inspector Immunity, Health Protection and Promotion Act, ss. 95(1)
Facts: This is an appeal from a judgment dated March 18, 2014, which granted a motion for summary judgment and dismissed the claim of Toronto Sun Wah Trading Inc. (the “appellant”) against Jerry Zalewski (the “respondent”).
The appellant is a bean sprout producer. Its sprouts were linked to an outbreak of salmonella in 2005. The respondent was a public health inspector at the relevant time. He was directed, by his superiors, to investigate the salmonella outbreak. The appellant was identified as a supplier of bean sprouts linked to the salmonella outbreak. Ultimately, the appellant recalled its sprouts and disposed of over 3,700 pounds of them.
The appellant then brought a claim for damages against the respondent and others. The essence of its claim against the respondent was that he had been negligent in the way in which he carried out his role, as a public health inspector, in the salmonella investigation, and that he had defamed the appellant by making false or misleading statements to the public regarding the source of the salmonella outbreak.
The respondent brought a motion for summary judgment, claiming that as a public health inspector he was statutorily immune from liability based on ss. 95(1) of the Health Protection and Promotion Act, R.S.O. 1990, c. H.7 (“HPPA”). To raise a genuine issue requiring a trial on the issue of the respondent’s liability, the appellant had to provide some evidence which, if believed, could constitute bad faith. The motion judge found that there was no such evidence.
Issue(s): Did the motion judge err in finding that there was no genuine issue requiring a trial on the question of whether the respondent had acted in bad faith?
Held: Appeal dismissed.
Before the motion judge, the appellant relied on Finney v. Barreau (Québec), 2004 SCC 36,  2 S.C.R. 17, for the proposition that bad faith does not always require intentional harm and that serious carelessness or recklessness can constitute a lack of good faith. The motion judge acknowledged that Finney appears to expand the definition of bad faith, but stated that it was important that Finney be understood within its specific context.
The issue in Finney was whether the Barreau, through delay and a failure to act to restrain a particular lawyer from engaging in the practice of law, had failed in its fundamental purpose of protecting the public. The Supreme Court found that the Barreau’s virtually complete absence of diligence meant that its conduct was not up to the standards imposed by its fundamental mandate. The motion judge noted that the situation in Finney was very different from the present case in which the respondent was alleged to have acted negligently while pursuing his mandate to protect the public.
The motion judge found, even assuming that the expanded definition of bad faith applied, the appellant had not produced any evidence which, if believed, could constitute recklessness to the point of abuse of power or the breakdown of the orderly use of authority. The court found no error in the motion judge’s application of the governing legal principles to his factual findings and his conclusion that there was no genuine issue requiring a trial in respect of the respondent.
The appellant also relied on Sparks (Litigation Guardian of) v. Ontario, 2010 ONSC 4234, a case involving a provision in the Ministry of Correctional Services Act, R.S.O. 1990, c. M.22, similar to ss. 95(1) of the HPPA. The motion judge did not find Sparks to be of assistance in resolving this case because Sparks involved a Rule 21 motion, which requires the court to accept as true the facts alleged in the pleading unless they are patently ridiculous or based on assumptions or speculative conclusions. In the present case, the issue was not the sufficiency of the pleading, but rather whether there was a genuine issue for trial concerning the respondent’s entitlement to the statutory immunity under ss. 95(1) of the HPPA.
[Cronk, Gillese and Rouleau JJ.A.]
A.A. Farrer and D.F. MacDonald, for the appellant
Tushinski and E.J. Adams, for the respondents
Keywords: Insurance Law, Insurance Act, section 267.12, Motor Vehicles, Leased Vehicles
On appeal from the order of Justice Thomas McEwen of the Superior Court of Justice dated April 8, 2014.
(1) Did the application judge err in holding that section 267.12 of the Insurance Act precludes a lessee from coverage under a lessor’s insurance policy beyond the $1 million cap on liability?
(2) If yes, then are the leasing company, driver of the leased vehicle, and owner of the other vehicle “insureds” under the standard SPF 7 excess insurance policy, such that the excess policy responds to a claim against the driver as an unnamed insured?
Holding: Appeal dismissed.
(1) No. The liability of a lessor and its insurer is limited to a maximum of $1 million by reason of section 267.12.
(2) The above is dispositive of the appeal and there is no need to decide the additional interpretive question raised by the appellants.
[Feldman, MacPherson and Hourigan JJ.A.]
Paul J. Pape and Tanya A. Pagliaroli, for the appellants
Nina Bombier and Katie Pentney, for the respondents, Dr. Indira Chandran, Dr. Sheldon Girvitz and Dr. Jordan Bohay
William D.T. Carter, Ewa Krajewska and Logan Crowell, for the respondent, William Osler Health Centre
Keywords: Medical Malpractice, Costs, Tragic Circumstances, Reasonableness of Appeal
Facts: This was an appeal from the order Justice Frank N. Marrocco of the Superior Court of Justice, dated April 22, 2013, with reasons reported at 2013 ONSC 2013.
Issues: Whether costs should be awarded.
Decision: No costs awarded.
Reasoning: Given the tragic circumstances of this case and the reasonableness of the appeal, which raised bona fide legal issues, no costs were awarded.
[Hoy A.C.J.O., Epstein and Hourigan JJ.A.]
Sergio Grillone, for the appellants
Martin Smith and Desneiges Mitchell, for the respondent
Keywords: Summary Judgment, Rules of Civil Procedure, R. 20.04(2.1), Deference
Facts: The appellants argued that the motion judged erred in the exercise of his discretion in finding that he could avoid the need for a trial by using the expanded fact-finding powers under subrules 20.04(2.1) and (2.2). The appellants also argued that the Court should have interfered with the partial indemnity costs awarded by the motion judge.
Holding: Appeal dismissed.
Reasoning: The decision of a motion judge to exercise the fact-finding powers under subrule 20.04(2.1) attracts deference. The motion judge did not misdirect himself or come to a decision that was so clearly wrong that it resulted in an injustice. In addition, there was no reason to interfere with the costs award.
[Sharpe J.A., In Chambers]
Rebecca Huang, Brent McPherson and Martine S.W. Garland for the moving parties, CanaSea PetroGas Group Holdings Limited.
Shawn T. Irving and Andrea Lockhart for the respondent Equity Ventures International Holdings Limited.
Pamela L.J. Huff and Matthew Kanter for the respondent, Blue Energy Holdings Limited
Keywords: Insolvency, Companies’ Creditors Arrangement Act, Statutory Jurisdiction, Jurisdiction Simpliciter, Leave to Appeal
The moving parties are five affiliated companies, the “CanSea Group”. They applied for and obtained without notice an Initial Order under the Companies’ Creditors Arrangement Act (CCAA). The Initial Order was subsequently set aside and the moving parties seek leave to appeal from that judgment setting aside the Initial Order. The respondents were creditors of one of the moving parties, a Singaporean company that owed them $13 million. The respondents had the Initial Order set aside on the grounds that the CCAA court lacked statutory jurisdiction over the Singaporean company as well as lacking jurisdiction simpliciter. The moving parties seek leave to appeal on the basis that they were denied procedural fairness before the application judge. They characterize the application judge’s reasons for setting aside the Initial Order as being their failure to make full and frank disclosure on their ex parte application, and argued that they could have satisfied the judge that disclosure was adequate if they had been put on notice that full and frank disclosure was the issue.
(1) Is a single judge able to hear the motion for leave to appeal?
(2) Should leave to appeal be granted?
Motion Dismissed. Costs to respondents.
(1) Yes, it is clear from the wording of s.13 of the CCAA that a motion for leave to appeal in a CCAA proceeding may be heard by a judge of the court or by the court. While the usual practice is to bring a CCAA leave motion before a panel in writing, there is no proper basis shown upon which a single judge must decline to hear the motion.
(2) No, the moving parties failed to make their case for granting leave to appeal. The court disagreed that the application judge set aside the Initial Order on purely procedural grounds. Rather, the true basis for setting aside the Initial Order was the finding that the evidence showed that the real debtors in the proceeding were Singaporean companies that had very little connection to Canada. The Initial Order was granted on the basis of findings that upon closer examination of the record, and the benefit of argument from the creditors, led to different conclusions. The moving parties were not taken by surprise. The test for leave to appeal in insolvency proceedings is stringent where it involves the exercise of discretion as to the assessment of competing interests and the availability of protections under the CCAA. The court held this case was one in which deference was owed to the CCAA judge and where leave to appeal should be refused. It was for the CCAA judge to assess the evidence as to the nature of the debts, the nature of the financial relationship between the various components of the CanaSea Group and the degree of connection between the alleged insolvency and Canada. There was ample evidence in the record to support his findings. Simply because the debtor Singapore companies are part of a larger group under the umbrella of a Canadian holding company did not mean they could claim the benefit of the CCAA in relation to debt incurred in Singapore that is subject to Singaporean law.
[MacFarland, LaForme and Lauwers JJ.A.]
R. Lebi and S. Wahl, for the appellants, Ontario Sheet Metal Workers’ and Roofers’ Conference and International Brotherhood of Electrical Workers, Local 586
Marvy, for the appellants, Ontario Labour Relations Board
A.J. Lenczner, Q.C. and M.D. Contini for the respondent, EllisDon Corporation
Keywords: Administrative Law, Judicial Review, Ontario Labour Relations Board, Standard of Review, Dunsmuir v New Brunswick, Reasonableness, Ontario Labour Relations Act, sections 48(12)(f), 111(2)(e), 151(2), Admissibility of Evidence, Business Records, Ancient Documents
Facts: The appellant unions appealed the decision of the Ontario Divisional Court, which held that their working agreement (the Sarnia Working Agreement or “SWA”) with the respondent was inadmissible as evidence in an Ontario Labour Relations Board (“OLRB”) hearing. The SWA requires EllisDon to only hire sheet metal and electrical contractors who were unionized. If enforceable province-wide, EllisDon maintains that it will be the only contractor in the province with that restriction, which will significantly impact its ability to be competitive. The appellants also appealed the Divisional Court’s ruling that they were permanently estopped from enforcing the SWA throughout the province of Ontario with respect to their labour relations.
The case was first heard by the OLRB, which held that the SWA was admissible evidence in the hearing, and that the appellants were only estopped for two years from the date of its decision from enforcing it throughout Ontario. The case first arose due to separate grievances by the appellants against the respondent in Ottawa and Hamilton, regarding the latter’s hiring of sub-contractors, who then employed non-unionized workers in those jurisdictions. Specifically, the appellants claimed that this violated their province-wide bargaining rights under the SWA, which gets its geographic reach from s. 151(2) of the Ontario Labour Relations Act (“OLRA”). Therefore, even though the SWA was signed in Sarnia in relation only to local unionized employees, the appellants claimed the OLRA gave the agreement geographic reach throughout Ontario. The OLRB agreed with this argument and held that the SWA was breached by the respondent.
(1) Did the Divisional Court err in concluding that the SWA was inadmissible as evidence in an OLRB hearing?
(2) Did the Divisional Court err in varying the two year estoppel remedy granted by the OLRB?
(2a) Did the OLRB reasonably find that an estoppel was warranted?
(2b) Is the two year estoppel granted by the OLRB an appropriate duration?
The appeal was allowed, the OLRB’s decisions were restored, and costs of $10,000 were awarded to the appellants.
(1) Yes. The standard of review of the OLRB’s decisions is one of reasonableness, which requires a high degree of deference. Applying this standard, the Court of Appeal found that the OLRB’s decision was reasonable, and that there was nothing unreasonable in its chain of reasoning in its ultimate conclusion that the SWA was admissible evidence. In addition, it was found that the OLRB’s reasons fell within the description provided by the Supreme Court in Newfoundland Nurses– they allow a reviewing court to “understand why the tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes.” In this regard, the Court of Appeal found that the OLRB implicitly invoked its discretion under sections 48(12)(f) and 111(2)(e) of the OLRA, which allow it to admit evidence that the Board “in its discretion considers proper, whether admissible in a court of law or not.” Furthermore, it was found that the OLRB’s decision to admit the SWA under section 35 of the Canada Evidence Act as a business document, or under the ancient records exception to the hearsay rule, are more exacting legal standards than those present in the above-note sections of the OLRA. Therefore, the Court of Appeal found that it was reasonable to infer that the OLRB would have invoked its discretionary authority under the OLRA to admit the SWA as necessary evidence, even if the SWA failed to meet the stricter admissibility requirements for a business document or ancient record. In sum, the OLRB properly admitted the SWA into evidence.
(2) Yes. The OLRB’s order was restored.
(2a) Yes. The OLRB’s decision that the appellants were estopped from enforcing the SWA for two years was warranted, and is entitled to a high degree of deference. This decision was well supported by the evidence, as the OLRB sufficiently reviewed the facts and found that a representative of the appellants told a representative of the respondent that, although he could not publicly promise to restrict the application of the SWA to the Sarnia area, the unions would not actively enforce it throughout Ontario. The respondent then relied on this representation, thereby abandoning its efforts to seek the creation of legislation that would have restricted the geographic scope of the SWA to Sarnia. Based on these findings, the OLRB concluded that this change was prejudicial to the respondent, because the company lost an opportunity to obtain legislative change.
(2b) Yes. The standard of judicial review of a remedy granted by the OLRB is reasonableness, and therefore it is to be accorded a high degree of deference. Furthermore, on judicial review, the court is only justified in substituting its remedy for one granted by the OLRB in exceptional circumstances. Applying this standard, the Court of Appeal found that the OLRB carefully considered all relevant factors and the full range of available remedies in reaching its decision to grant a two year estoppel against the appellants. This two year estoppel was found to fall within a range of possible and acceptable outcomes, “which are defensible in respect of the facts and law”, consistent with the standard outlined in Dunsmuir.
[Cronk, Gillese and Rouleau JJ.A.]
R.J. Wrubel, for the appellant
Towlson, for the respondent
Keywords: Family Law, Minutes of Settlement, Primary Residence, Best Interests of the Child, Material Change in Circumstances
Facts: The appellant mother appeals the order of Sloan J. of the Superior Court, which ordered the two children of the marriage to move from Lindsay, Ontario to Waterloo, Ontario and also ordered that their primary residence would be changed to the respondent father if the appellant failed to move her residence to Waterloo.
(1) Did Sloan J. err in finding that a material change in circumstances occurred, which warranted a fresh consideration of the primary residence of the children?
(2) Even if a material change in circumstances occurred, did Sloan J. err in ordering a change in the primary residence of the children from the appellant to the respondent?
The appeal was allowed and the matter was remitted to the Ontario Court of Justice for a new hearing. The appellant was entitled to $5,000 in costs for the appeal.
(1) No. The record supported that a material change in circumstances occurred, which warranted a review of the court order that originally granted primary residence of the children to the appellant. Specifically, the order was reviewable after three months, and continued residence with the appellant was contingent upon her finding employment in Waterloo and then relocating there with the children. After three months, the appellant had not done so, and therefore a material change in circumstances occurred.
(2) Yes. Sloan J. and the lower court both failed to conduct any fact finding or analysis on the issue of whether a change in primary residence from the appellant to the respondent was in the best interests of the children. Specifically, both courts failed to conduct this analysis based on an up to date evidentiary record at the time the initial court order was reviewed.
[Cronk, Gillese and Rouleau JJ.A.]
Alan L. Rachlin, for the appellant
Shawn Stringer, for the respondent
Keywords: U Rules of Civil Procedure, rules 1.04, 5.04(2) and 26.01, Adding a Party, Novel Question of Law, Amendment of Pleadings
Facts: This case involved an appeal to a single judge of the Divisional Court from a Master’s decision denying the appellant’s motion under rules 1.04, 5.04(2) and 26.01 of the Rules of Civil Procedure for an order adding the respondent insurer as a named party defendant in the main action.
The appeal judge upheld the Master’s ruling, albeit for different reasons. In so doing, the appeal judge, without prior notice to the parties, determined a key contractual interpretation issue under various factual scenarios that he posited. If accepted, the appeal judge’s interpretation was conclusive of the coverage dispute between the parties.
Issue(s): Did the appeal judge err in denying an application to amend the pleadings and add the respondent issuer as a party to the main action?
Held: Appeal allowed.
The court found that although it was open to the Divisional Court judge to determine whether the appellant’s proposed coverage claim against the respondent was tenable at law, it was not open to him to finally adjudicate on a novel question of law under a paradigm not disclosed to the parties and where the underlying relevant facts had yet to be determined. The proper focus of the inquiry before the appeal judge was whether the requested amendment should be allowed based on the governing principles for a pleadings amendment of this kind.
Similarly, the court determined that the Master’s ruling on the amendment motion cannot stand. The requested pleadings amendment should be allowed. There is no suggestion that the respondent insurer will suffer any prejudice as a result of the proposed amendment that cannot be compensated for in costs. Nor does the respondent any longer claim that the applicable limitation period has expired.
[Hoy A.C.J.O., Epstein and Hourigan JJ.A.]
Gemmink, for the appellant
B.S.J. Cumming, for the respondents
Real Estate Law. Commercial Leasing. Commercial Tenancies Act. sections 18 and 19, Pleading Statutes. Assignment. Breach of Condition. Re-entry. Abandonment
The respondents operated a deli in a unit of a strip mall pursuant to a lease with the appellant. In November 2004, the respondents assigned their lease to a third party without the appellant’s consent. The third party went into possession of the deli for approximately 20 days starting in early December 2004 and paid the December rent. The third party then vacated the premises.
On January 5, 2005, the appellant advised the respondents that they were in default because of an “unapproved transfer” of the lease. The appellant requested the respondents to remedy the default within 24 hours and pay the current month’s rent plus three additional months’ rent by the close of business on January 7, 2005.
On January 12 or 13, 2005, the appellant changed the locks on the unit. On January 20, 2005, the appellant wrote to the respondents purporting to terminate the lease, effective immediately. The appellant then commenced an action to recover the balance of rent owing under the lease. In their statement of defence, the respondents admitted that re-entry to the unit by the appellant occurred on January 20, 2005.
After the trial, the trial judge asked the parties to make submissions on ss. 18 and 19 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 (the “Act”). Section 18(1) provides that a landlord may re-enter the premises if rent remains unpaid for 15 days or more. Section 19(2) provides that a right of re-entry for a breach of any condition in a lease, other than the payment of rent, is only enforceable if the lessor provides the lessee a notice specifying the particular breach and requiring the lessee to remedy or compensate for the breach, and the lessee fails to do so within a reasonable amount of time.
After receiving the parties’ submissions, the trial judge dismissed the appellant’s action. He held that the respondents’ failure to plead the Act did not preclude the court from considering the statute. The trial judge further held that re-entry occurred when the locks were changed on January 12 or 13, 2005, and that he was not bound by the respondents’ admission that re-entry occurred on January 20, 2005. Since the 15-day period provided for in s. 18 had not expired at the time of re-entry, the appellant had forfeited its right to sue for the balance of rent by terminating the lease early. Furthermore, the January 5, 2005 letter did not provide the respondents with adequate notice under s. 19 to rectify the deficiency resulting from the unapproved transfer.
Appeal allowed in part.
The trial judge was correct in concluding that the respondents’ failure to plead the Act did not preclude its consideration. The trial judge was permitted to consider applicable statutes. However, he erred in his analysis and application of the Act. He should have considered whether the premises were abandoned when re-entry occurred. When premises have been abandoned, immediate re-entry by a landlord does not prejudice its ability to claim for the rent outstanding. No evidence on the issue of abandonment was adduced at trial. The trial judge should have permitted the parties to call further evidence on the issue of abandonment in order to establish a proper evidentiary foundation and conduct a proper analysis of the application of the Act.
The Court of Appeal ordered a new trial on the application of the Act, including, but not limited to, a consideration of whether the premises had been abandoned.
The appellant was entitled to its costs on the appeal, but given that it was not entirely successful, a $10,000 reduction was warranted.
[Sharpe, Rouleau and Pardu JJ.A.]
Gleason and R. Liu, for the appellants
Corsianos, for the respondent
Keywords: Appellate Procedure, Notice of Appeal, Time for Filing, Extension of Time
Did the motion judge err in refusing to grant an extension of time for filing the notice of appeal?
Appeal allowed. Motion judge’s order set aside. Order granting an extension of time to file a notice of appeal granted.
The motion judge erred in finding there was no proper evidence that the moving party had formed an intention to appeal before the expiry of the appeal period. The affidavit of the solicitor of the moving party attested that he was instructed to appeal immediately. The respondent offered no evidence of prejudice if an extension were granted. The proposed appeal has sufficient merit to warrant an extension of time.
[Blair, Juriansz and Epstein JJ.A.]
Gary S. Joseph and Rebecca Winninger, for the appellant
Lisa Ludmer, acting in person
Rebecca Grosz, for the third party respondent
Keywords: Family Law, Income Calculation, RRSP, Federal Child Support Guidelines, sections 16 and 17, Spousal Support, Divorce Act, s. 15.2(4), Lump Sum Adjustment, Family Law Act, s. 7, Interference with Access, Children’s Law Reform Act, s. 35, Invasion of Privacy, Costs, Full Indemnity
After 20 years of marriage, Lisa and Brian Ludmer separated. Mr. Ludmer brought this appeal from the order of Justice Michael A. Penny of the Superior Court of Justice with respect to financial and property issues arising out of the marriage, including child and spousal support and the equalization of family property. The appeal also dealt with a separate proceeding commenced by Mr. Ludmer against a former neighbour, Gary Spira, for invasion of privacy, intentional infliction of mental distress and for injunctive relief under s 35 of the Children’s Law Reform Act (CLRA). The trial judge dismissed these claims and awarded costs plus disbursements to Mr. Spira.
(1) Did the trial judge err:
(a) in calculating the parties’ income;
(b) in determining spousal support on both a compensatory and needs basis;
(c) in failing to adjust his lump sum spousal support award for tax consequences, present value discounting, and future contingencies;
(d) in allocating s 7 expenses to Mr. Ludmer for the year 2005.
(2) Was there any merit in the action against Mr. Spira for:
(a) Injunctive relief under s 35 of the CLRA;
(a) Intentional infliction of mental distress;
(b) Invasion of privacy.
(3) With respect to costs, did the trial judge err in:
(a) ordering Mr. & Ms. Ludmer to bear their own costs; and
(b) ordering costs in the Spira action against Mr. Ludmer.
Decision: Appeal Dismissed
1(a) No. Mr. Ludmer led evidence that the business deductions claimed for his one-person law practice were proper for income tax purposes. The trial judge held that “[t]he fact that a business expense is ‘legitimate’ for tax purposes does not mean that the same deduction is reasonable for support purposes”. Mr. Ludmer agreed with this general proposition but argued that the trial judge erred in arbitrarily arriving at a 50 percent threshold for business expenses in relation to gross income. The Court rejected this argument. The trial judge determined that to allow the full amount of Mr. Ludmer’s claim for business expenses was unreasonable for support purposes because it was not a fair barometer of the income level that fairly and reasonably reflected the compensation available to Mr. Ludmer to pay support. It concluded that the fairest and simplest way to determine Mr. Ludmer’s business expenses, for support purposes, was to find that Mr. Ludmer’s business expenses could not reasonably exceed 50 per cent of gross revenue. The Court held that this approach was open to the trial judge and that there was no basis for interference with it.
In 2007-2008 both parties cashed in their RRSPs. Mr. Ludmer also took issue with the trial judge’s exclusion of both parties’ RRSP proceeds from the calculation of their income for support purposes. The Court found that the trial judge had the discretion to do this on the basis of sections 16 and 17 of the Federal Child Support Guidelines.
1(b) No. The trial judge was justified in awarding spousal support on both compensatory and needs-based grounds. He considered and applied the relevant law in this respect, and made findings of fact that were supported on the record. The trial judge considered “the condition, means, needs and other circumstances of each spouse” in determining whether Ms. Ludmer was entitled to spousal support and, if so, the quantum to be awarded in line with s. 15.2(4) of the Divorce Act.
1(c) No. Mr. Ludmer objected to the lump sum award for spousal support because the trial judge did not adjust the $432,000 amount for tax consequences, present value considerations, and future contingencies. The Court found that the trial judge recognized that there was support in the authorities for adjusting a lump sum representing future support payments for such factors. However, he concluded that in the circumstances of this case, such an adjustment was not needed. The Court found this to be a reasonable conclusion.
1(d) No. The trial judge did not allocate any of the s. 7 expenses for the year 2005 – $84,751.97 – to Ms. Ludmer. Mr. Ludmer argued that that was an error. Mr. Ludmer had no income in 2005. He funded the s. 7 expenses through loans made to him by his father. In the trial judge’s view, s. 7 expenses of almost $85,000 in a year when Mr. Ludmer had zero income (and Ms. Ludmer only $66,809) were simply not reasonable when “this couple could not possibly have afforded [them] on the basis of their own incomes”. The fact that the expenses were funded entirely through family assistance opened up the issue of apportionment and enabled the trial judge to look beyond the parties’ respective incomes. Requiring Ms. Ludmer to reimburse Mr. Ludmer for those payments, in the circumstances, was not appropriate. The Court held that it was reasonable for the trial judge to come to this conclusion.
2(a) No. Mr. Ludmer commenced a claim against Mr. Spira for relief under s. 35 CLRA for wrongful interference with his access rights. He did not pursue that relief at trial because Mr. Spira stopped his conduct and the children were, by that time, adults. The court held that it would not entertain and determine a claim that was not pursued at trial.
2(b) No. The court noted that no separate tort action exists for the intentional infliction of mental distress based upon interference with a parent’s access rights. Relief in relation to such conduct is now incorporated in s. 35 of the CLRA. Mr. Ludmer did not pursue his s. 35 claim at trial and could not do so on appeal.
2(c) No. The trial judge correctly identified the elements of the invasion of privacy cause of action and found it to be of no merit on the facts. There was no basis to interfere with this finding.
3(a) No. A trial judge has a broad discretion in awarding costs, both as to quantum and as to payor and recipient. There was no error in law or principle with the trial judge’s decision with respect to costs as between Mr. and Ms. Ludmer.
3(b) No. The trial judge found that Mr. Spira was entirely successful in the third party action. While Mr. Ludmer had made offers to settle, Mr. Spira had done so as well, and Mr. Spira’s offer – which was not accepted – was more favourable than the result obtained by Mr Ludmer in the third party action. Rather than finding Mr. Spira’s conduct inappropriate, as he had declined to do at trial, the trial judge found that the claim against Mr. Spira “was a form of intimidation and punishment for ‘siding’ with [Ms. Ludmer] in the dispute”, that the claims had “no hope of success”, and that they “were instituted for emotional and purely strategic purposes” and “to inflict emotional and financial harm”. He concluded that Mr. Spira was entitled to costs on a full indemnity basis. The court highlighted the trial judge’s broad discretion to award costs and found no error in the award.
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