ONTARIO COURT OF APPEAL SUMMARIES (JULY 24 – 28, 2017)

Good afternoon,

Following are the summaries for this week’s civil decisions of the Court of Appeal for Ontario. There were few decisions and nothing particularly noteworthy. Topics covered include the interpretation of the scope of a personal guarantee of corporate debt, agreements of purchase and sale of land, SABs, adjournments and frivolous and vexatious claims.

Have a great weekend.

John Polyzogopoulos
Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416 593 2953
http://www.blaney.com/lawyers/john-polyzogopoulos

Table of Contents

Civil Decisions

Dittman v. Aviva Insurance Company of Canada, 2017 ONCA 617

Lala v. Basman Smith LLP, 2017 ONCA 614

Preiano v. Cirrillo, 2017 ONCA 615

Khan v. Krylov & Company LLP, 2017 ONCA 625

Callidus Capital Corportion v. McFarlane, 2017 ONCA 626

For Civil Endorsements, click here.

For Criminal Decisions, click here.

Civil Decisions

Dittman v. Aviva Insurance Company of Canada, 2017 ONCA 617

[Sharpe, Lauwers and Roberts JJ.A.]

Counsel:

K. Schultz and C. Macauley, for the appellant

M. Gauthier and J. Ross, for the respondent

Keywords: Insurance Law, Statutory Accident Benefits Schedule, s 3

Facts:

The respondent sustained serious burns to her lower body when the entire contents of a coffee cup she ordered at a McDonald’s drive-through spilled as she attempted to transfer the cup from the drive-through window to the cup holder in her vehicle. The motion judge determined that the respondent was impaired as a result of an accident as defined in the Statutory Accident Benefits Schedule and accordingly that she was entitled to statutory accident benefits in accordance with her insurance policy.

Issues:

(1) Did the motion judge err in his application of the Statutory Accident Benefits causation test?

Holding: Appeal Dismissed.

Reasoning:

(1) No. The court held that the motion judge had properly applied the SABs causation test. The use and operation of the respondent’s vehicle was a direct cause of the respondent’s injuries. The court held that these findings were justified on the evidence and met the requirements of the direct causation test prescribed in the SABs regulation. Moreover, the restraint of the seatbelt had increased the exposure of the respondent to the scalding liquid and thereby increased the level of her impairment. The court held that the issue is not what the triggering event of the incident was, but rather, what caused the impairment.

Lala v. Basman Smith LLP, 2017 ONCA 614

[Sharpe, Lauwers and Roberts JJ.A.]

Counsel:

K. W. Fisher, for the appellant

A. Pantel, for the respondent

Keywords: Solicitor and Client, Assessment of Accounts, Procedural Fairness, Adjournments, Igbinosun v Law Society of Upper Canada, 2009 ONCA 484

Facts:

The appellant law firm appealed an order of the motion judge setting aside a report and certificate of assessment. The motion judge had ruled that the assessment officer had erred by failing to grant an adjournment when the respondent client did not attend the first day of a scheduled five-day hearing due to a communication error by court staff and that, as a result, the officer deprived the respondent of her right to a fair hearing.

The respondent had initiated the assessment in February 2014 to question the appellant’s account. At a preliminary appointment, a mediation was scheduled at the respondent’s request. The respondent was ordered to provide the appellant with a list of her issues or concerns regarding the account at least 30 days prior to the mediation. She failed to do so, and she cancelled the mediation one day prior to its schedule date. The assessment office and the appellant made several unsuccessful attempts to contact the respondent to schedule a hearing date. Eventually, in February 2015, the office scheduled a five-day assessment hearing, which due to a backlog was scheduled for one year later, on March 14, 2016. About five days before the assessment hearing was to commence, respondent’s counsel called the assessment office. In her reasons, the assessment officer indicated that she had checked with the staff and determined that respondent’s counsel was told that the assessment would “likely not proceed” on the scheduled date. Respondent’s counsel insisted that he was told that the assessment would not proceed. Due to this miscommunication, on the first day of the hearing, neither the respondent nor her counsel attended. The assessment office spoke to the respondent in the afternoon regarding the miscommunication and the remainder of the first day of hearing was adjourned. The following day, respondent’s counsel attended but the respondent did not. The assessment officer offered to make accommodations but counsel refused to discuss it and insisted that the matter be adjourned. The assessment officer refused, and respondent’s counsel left the hearing. On March 18, 2016, the assessment officer issued oral reasons approving the appellant’s accounts and the report and certificate of assessment.

On March 29, 2016, respondent’s counsel issued and served a notice of motion to oppose confirmation of the report and certificate of assessment. The appellant wrote to respondent’s counsel requesting that the motion be heard at an earlier date and that respondent’s counsel provide materials in support of the motion. No materials were provided and that motion was not heard. The respondent then retained new counsel and, on October 28, 2016, her new counsel issued a new notice of motion to oppose confirmation of the report and certificate of assessment. The motion to oppose confirmation was finally heard on November 17, 2016, and the motion judge ruled that the assessment officer had erred in refusing an adjournment and that the respondent had thereby been denied procedural fairness. The report and certificate of assessment were set aside. The law firm appealed.

Issues:

(1) Did the trial judge err in setting aside the report and certificate of assessment?

Holding: Appeal allowed.

Reasoning:

(1) Yes. The court held that it was clear from the transcript that the assessment officer had been alert to the problems created by the miscommunications, and had been prepared to give the respondent and her counsel the benefit of the doubt. The court found that the assessment officer properly based her decision to refuse the adjournment on her overall consideration of the conduct of both parties, of the inconvenience and cost of a further delay in the assessment, and on the steps that could have been taken to relieve any procedural unfairness to the respondent. The court held that the assessment officer was entitled to take into account the respondent’s failure to provide a list of issues or concerns as ordered to do so, her cancellation of the mediation on one day’s notice, and the fact that in view of the backlog in the assessment office, there would be another lengthy delay in rescheduling the hearing (see Igbinosun v Law Society of Upper Canada, 2009 ONCA 484 at para 37). Respondent’s counsel was not prepared to engage in any discussion or to entertain any possibility other than that the matter be adjourned and he left refusing to participate further in the process. The court held that in the circumstances, it was reasonable for the assessment officer not to accept the only option proposed by the respondent, namely to adjourn and restart the hearing. The court found that the motion judge had failed to give adequate deference to the assessment officer’s decision.

Preiano v. Cirillo, 2017 ONCA 615

[Sharpe, Lauwers and Roberts JJ.A.]

Counsel:

M.Freeman and V. Msi, for the appellants

B. Hahn, for the respondents

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Conditions, Time of the Essence, Specific Performance, Civil Procedure, Determination of Question of Law, Rules of Civil Procedure, R. 21.01(1)(a)

Facts:

The appellant purchasers sued the respondent vendors for specific performance of an Agreement of Purchase and Sale regarding the respondents’ home (the “APS”). The respondents brought a motion for the determination of a question of law under r. 21.01(1)(a) of the Rules of Civil Procedure.

On August 20, 2013, at the time they signed the draft APS by which they offered to buy the respondents’ house, the appellants delivered a $25,000 personal cheque as the deposit to Frank Finelli of Royal LePage, the respondents’ real estate agent. Mr. Finelli told the appellants that the personal cheque would have to be replaced with $25,000 in certified funds if the respondents accepted the APS. On behalf of Royal LePage, Mr. Finelli retained the appellants’ personal cheque although he did not attempt to deposit it.

The parties reached agreement at 12:30 p.m. on August 21, 2013. The APS required the appellants to pay the deposit of $25,000 within 24 hours of the acceptance. They delivered $25,000 in certified funds in the form of a bank draft to the deposit holder, Royal LePage, by 1:53 p.m. on August 23, 2013.  The APS stated that “time shall be of the essence”. Royal LePage provided the appellants with a receipt for their deposit. Six days before the scheduled closing date, counsel for the respondents wrote to the appellants’ real estate lawyer asserting that there was no valid APS because of the late receipt of the deposit.

The motion judge found that, because the bank draft was delivered a day late, there was no APS in effect to be specifically performed and he dismissed the action on that basis. The motion judge also found that the personal cheque was “not capable of yielding funds upon negotiation” because the record of the chequing account, which was admitted by the appellants to be authentic, did not show a balance that could accommodate payment of the cheque.

Issues:

(1) Was it open to the motion judge to dismiss the action because there was no APS in effect?

Holding: Appeal allowed.

Reasoning:

(1) No. The Court of Appeal found that the motion judge’s order must be set aside because the evidentiary record was not sufficient for the motion judge to draw the inference that the cheque was not negotiable. The motion judge made the error of interpreting the admission that the bank statement was authentic as an admission that the appellants did not have the money to pay the cheque, so that upon presentation, it would have been dishonoured by the bank. The Court stated that this additional inference was not open to the motion judge, per Wunsche v. Wunsche, 18 O.R. (3d) 161, [1994] O.J. No. 816 (C.A.), at para. 19 (QL).

The Court of Appeal stated that there was no evidence that the bank would not have honoured the cheque, nor was there evidence in the record as to the appellants’ financial capacity or their arrangements with the bank. However, the Court found that there was evidence that within two days the appellants were able to provide a bank draft in the appropriate amount, and that on this basis alone the order should be set aside. The respondents’ action was restored.

Khan v. Krylov & Company LLP, 2017 ONCA 625

[Pepall, Lauwers and Huscroft JJ.A.]

Counsel:

Zaka Ullah Khan, appellant, acting in person

B. R. Moodie, for the respondent, Krylov & Company

L. Covens, for the respondent, Devry Smith Frank LLP

Keywords: Civil Procedure, Vexatious Litigants, Frivolous and Vexatious Proceedings, Rules of Civil Procedure, r. 2.1.01

Facts:

The motion judge dismissed the appellant’s action under rule 2.1.01 of the Rules of Civil Procedure as being frivolous, vexatious or otherwise an abuse of the process of the court. The respondent, Krylov & Company, represented the appellant in his claim for damages arising from a motor vehicle accident. The respondent, Devry Smith Frank LLP acted for the defendant in that action. The appellant subsequently sued both respondents in the action that is the subject matter of the r. 2.1.01 dismissal. At the heart of this action as asserted by the appellant in the statement of claim is the allegation that both respondent law firms (his own, Krylov, and the defendant’s lawyers, Devry), defrauded the appellant by misappropriating settlement funds (giving him only less than $60,000 and allegedly keeping a further $740,000 or so for themselves) and forging his name to a final release or having him sign such a release without knowledge of its contents.

Issues:

(1) Did the motion judge err is dismissing the appellant’s action under rule 2.1.01?

Holding: Appeal allowed.

Reasoning:

(1) Yes. The court stated that the use of rule 2.1 should be limited to the clearest of cases where the abusive nature of the proceeding is apparent on the face of the pleading and there is a basis in the pleadings to support the resort to the attenuated process. The court held that the pleading alleges that the respondent law firms settled the motor vehicle action for much more than they told the appellant, and pocketed the difference. The court found that as distasteful as this allegation may be, it was not entirely implausible, and that a cautious approach had to be taken. The court held that rule 2.1 is an extremely blunt instrument which must be reserved for the clearest of cases, and is not meant to be an easily accessible alternative to a pleadings motion, a motion for summary judgment, or a trial. Here, the statement of claim bore none of the hallmarks of a vexatious pleading. The court held that nothing on the face of the statement of claim showed the appellant to be a vexatious litigant, nor was there any suggestion in the material that the appellant would abuse the process of the court if he was confronted by other motions such as a motion for summary judgment at the instance of the respondents. The court held the motion judge had erred in truncating the normal process, allowed the appeal and set aside the order of the motion judge.

Callidus Capital Corporation v. McFarlane, 2017 ONCA 626

[Feldman, Gillese and Pepall JJ.A.]

Counsel:
S. Zucker and M.L. Solmon, for the appellant

L.S. Corne and J.D. Leslie, for the respondent

Keywords: Contracts, Debtor-Creditor, Guarantees, Interpretation, Sattva Capital v. Creston Moly, [2014] 2 SCR 663

Facts:

This appeal arises from a summary judgment granted against the appellant. The appellant provided a personal guarantee to the Royal Bank of Canada and PNC Bank on behalf of a technology company called Xchange Technology Group LLC (the “Company”). The respondent, a high-risk distressed debt lender, purchased the Company’s debt from PNC Bank. The appellant’s personal guarantee was then transferred to the respondent.

The Company defaulted on its obligations to the respondent. In June 2013, a forbearance agreement was negotiated between the respondent and the company which would delay enforcement of remedies under the loan agreement. The appellant expressed discontent with fees the respondent was charging, including a US$2.25 million facility fee. At this point, he insisted that he would not be responsible for any Company debt that came from the respondent’s fees.

In conjunction with the forbearance agreement, the appellant’s guarantee was amended. The amended guarantee included provisions to make the appellant step away from management of the Company, and provide the respondent with mortgage security over property that the appellant owned. This amended guarantee was stated to be a continuing guarantee that would cover and secure any ultimate balance owing, and stated that the respondent was not obliged to seek recourse against the borrowers or other persons or the security it held.

In July 2013, the respondent demanded payment from the Company and put the appellant on notice for payment as guarantor. In August 2013, another forbearance agreement was entered into extending the date of debt enforcement for two weeks, and charging the Company a forbearance fee of $250,000. In October 2013, the respondents commenced court proceedings to initiate the sale process of the Company. The Company’s total debt on closing was US$37 million, with US$3 million being owed by the Company to the respondent.

The respondents then brought suit against the appellant on his guarantee and brought a motion for summary judgment. The appellant argued that his guaranteed debt was limited to US$250,000, which accounts for the Company’s total debt minus the respondent’s facility and forbearance fees, as per the amended guarantee signed in June 2013. The appellant was ultimately ordered to pay US$3 million plus interest at 21%, and costs, and now appeals this decision on the basis of the motion judge’s calculation of the amount owing.

Issues:

(1) Did the motion judge err in his calculation of the amount due by the appellant?

Holding: Appeal allowed.

Reasoning:

(1) Yes. In absence of an extricable error of law or a palpable and overriding error of fact, deference is owed to a motion judge’s decision (Sattva Capital v. Creston Moly, 2014 SCC 53, [2014] 2 SCR 663.  The motion judge erred in law by failing to consider the part in the amended guarantee that reduces the Company’s obligations to the respondent. In addition, the motion judge made a palpable and overriding factual and mathematical error in calculating the amount owed by the Company.

The respondent’s position was that all of the outstanding US$3 million that was owed by the Company to the respondent was covered by the appellant’s guarantee, however, this is incorrect. As per the amended guarantee, the appellant’s guarantee did not cover facility and forbearance fees. The total facility and forbearance fees totalled US$2.75 million. Therefore, the amount owed by the appellant is the outstanding amount of US$3 million, less the fees of US$2.75 million. Accordingly, the appeal was allowed and the amount to be paid by the appellant is reduced from US$3 million to US$250,000.

Civil Endorsements

Jo-Zen Investments Limited v Kung Tai Enterprises (Canada) Ltd, 2017 ONCA 616

[Sharpe, Lauwers and Roberts JJ.A.]

Counsel:

F. Wong, for the appellant

E. Sherkin, for the respondent

Keywords: Appeal Book Endorsement, Contracts

Criminal Decisions

v. Tossounian, 2017 ONCA 618

[Juriansz, Pepall and Trotter JJ.A.]

Counsel:

K.L. Bailey, for the appellant

J.S. Joy, for the respondent

Keywords: Criminal Law, Arson, Possession of Incendiary Material for the Purpose of Arson, Unrepresented Litigant, Right to Full Disclosure,  Right to a Fair Trial, Inadequate Assistance by the Trial Judge, Right to Make Full Answer and Defence, Canadian Charter of Rights and Freedoms, ss. 7 and 24(1), R v Dixon, [1998] 1 SCR 244, R v Taillefer, 2003 SCC 70, R v McGibbon (1988), 45 CCC (3d) 334 (Ont CA), Pintea v Johns, 2017 SCC 23, Moore v Apollo Health & Beauty Care, 2017 ONCA 383

R v. Aalami, 2017 ONCA 624

[Strathy C.J.O., Benotto and Miller JJ.A.]

Counsel:                  

G. Lafontaine and R. Golec, for the appellant

S. Porter, for the respondent

Keywords: Criminal Law, Possession of Child Pornography, Making Child Pornography Available, Credibility, Kineapple Principle, Canadian Charter of Rights and Freedoms, ss. 8, 11 and 24(2), R v W (D), [1991] 1 SCR 742, R v Sheppard, 2002 SCC 26, R v Morin, [1992] 1 SCR 771, R v Jordan, 2016 SCC 27, , R v Allen (1996), 92 OAC 345

R v. John, 2017 ONCA 622

[MacPherson, Blair and Watt JJ.A.]

Counsel:

B. Snell, for the appellant

M. Lai, for the responding party

Keywords: Criminal Law, Robbery, Use of an Imitation Firearm, Evidence, Hearsay, Trial Fairness, Sentencing, Pre-Disposition Custody, Canadian Charter of Rights and Freedoms, ss. 7 and 11(b), Truth in Sentencing Act, R v Hamilton, 2011 ONCA 399, R v Lyttle, 2004 SCC 5, R v Cuadra (1998), 125 CCC (3d) 289

R v. Kelly, 2017 ONCA 621

[Feldman, Gillese and Benotto JJ.A.]

Counsel:

J. Kaldas, for the appellant

J. Barrett, for the respondent

Keywords: Criminal Law, First Degree Murder, Mr. Big Operation, Confessions, Jury Instructions, R v Hart, 2014 SCC 52, R v Mack, 2014 SCC 58, R v McIntyre, [1994] 2 SCR 480, R v Johnston, 2016 BCCA 3, R v W(D), [1991] 1 SCR 742

R v. Spence, 2017 ONCA 619

[Juriansz, Pepall and Trotter JJ.A.]

Counsel:

C. Hicks, for the appellant

N. Thomas, for the respondent

Keywords: Criminal Law, First Degree Murder, Intent, Mens Rea, Post-Offence Conduct, Jury Instructions, Criminal Code, ss. 16, 229(a), 231(2) and 745(a), R v Mathisen, 2008 ONCA 747, More v The Queen, [1963] SCR 522, R v Nygaard, [1989]  2 SCR 1074

R v. Wu, 2017 ONCA 620

[Strathy C.J.O., Benotto and Miller JJ.A.]

Counsel:

E. Taché-Green for the appellant/respondent by way of cross-appeal

S. Marinier, for the respondent/appellant by way of cross-appeal

Keywords: Criminal Law, Possession of a Controlled Substance for the Purpose of Trafficking, Reasonableness, Inconsistent Verdicts, Parole Eligibility, Canadian Charter of Rights and Freedoms, s 8, R v Ling, 2012 ONSC 654, R v Villaroman, 2016 SCC 33, R v Uhrig, 2012 ONCA 470

R v. Suarez-Noa, 2017 ONCA 627

[Doherty, Rouleau and Pepall JJ.A.]

 Counsel:

J. Patton and P. G. Cowle, for the appellant

H. Pringle and C. Gill, for the respondent

Keywords: Criminal Law, Second Degree Murder, Manslaughter, Mens Rea, Defences, Provocation, Evidence, Expert Opinions, Admissibility, Criminal Code, ss. 232 and 676, R v Flegel (2005), 196 CCC (3d) 146 (Ont. C.A.), Wexler v The King, [1939] SCR 350, Savard and Lizotte v The King, [1946] SCR 20, R v  Cinous, 2002 SCC 29

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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