ONTARIO COURT OF APPEAL SUMMARIES (MARCH 12 – MARCH 16)

Good evening.

Following are summaries of this week’s civil decisions of the Court of Appeal for Ontario. There were some interesting decisions.

In Mars Canada Inc. v. Bemco Cash & Carry Inc., the Court upheld a settlement in which the parties had agreed to refrain from grey marketing Mars bars, finding that the settlement was not an improper restraint on trade.

O’Brien-Glabb v. National Bank of Canada is another example of the impact of “appropriate means” on the discoverability analysis under subsection 5(1) of the Limitations Act, 2002. In this case, the Court upheld the lower court’s order dismissing a summary judgment motion that sought to dismiss the plaintiff’s claim as being statute-barred. The Court found that it was not appropriate for the plaintiff to sue when she first began experiencing allergic symptoms that she suspected were caused by toxic mould in her workplace environment. Rather, it did not become appropriate to commence a claim until a specialist had provided an opinion, three years later, that the symptoms she was experiencing had been caused by toxic mould.

In Stanbarr Services Limited v. Metropolis Properties Inc., a sale of land by way of power of sale was attacked on the basis that the selling first mortgagee did not comply with the notice of sale provisions under the Mortgages Act, by failing to properly serve the notice of sale on all subsequent encumbrancers. The Court concluded that absent proof of actual notice on the part of the purchaser of non-compliance with the Mortgages Act, a purchase by way of power of sale could not be successfully attacked. In coming to that conclusion, the Court held that notice to the purchaser that a subsequent mortgagee had not received a notice of sale was not sufficient to support a finding that the purchaser had actual notice of non-compliance with the Mortgages Act. This was because a mortgagee could comply with the notice provisions of the Mortgages Act without the notice of sale actually coming to the attention of a subsequent encumbrancer. Accordingly, the purchaser in this case did not have actual notice of non-compliance with the Mortgages Act, and was therefore a bona fide purchaser for value without notice of any defect. The appeal from the Superior Court’s order setting aside the sale as defective was therefore allowed.

In an notable insolvency law decision, Third Eye Capital Corporation v. Ressources Dianor Inc./ Dianor Resources Inc., the Court determined that the Superior Court had erred in finding that royalty rights attached to mining rights were not interests in land. In finding that the royalty rights created no interest in land, the Superior Court had granted a vesting order whereby a receiver sold the mining rights to a third party purchaser, free and clear of the royalty rights. The vesting order was not stayed pending appeal and was executed. The Court declined to determine that the appeal was moot because the vesting order had been executed. It held that there was still a possibility that the appeal was not moot. The Court invited further submissions on the issues of whether the Superior Court had jurisdiction to grant the vesting order free and clear of the royalty rights, and also whether or not the appeal was moot. Stay tuned…

In Abrahamovitz v. Berens, the plaintiffs were seeking payment of certain rents that were being withheld from them by the defendant property managers. The defendants refused to pay the rents over because the prior property manager, who had died, had been purportedly promised a portion of those rents by the plaintiffs, evidenced by written acknowledgments. The plaintiffs sued the defendants to recover the rents. The defendants did not claim the rents for themselves. They acknowledged that the rents belonged either to the plaintiffs, or to the estate of the deceased property manager. The defendants moved to interplead the rents into court, and to add the estate of the deceased property manager who had the claim to the rents.

The Superior Court refused to add the estate on the basis that its claim to the rents was statute-barred. In a somewhat curious decision, the Court of Appeal set aside that order and added the estate as a party. The Court found that the limitation period defence against the estate belonged to the defendants, not the plaintiffs. Since the defendants had invited the estate to bring its claim, had moved to add the estate to the action, and had not raised a limitation period defence, the plaintiffs were found to have no right to rely on the defendants’ limitation period defence to deny the adding of the estate as a party.

I have some difficulty with this outcome, as it appears to favour form over substance and may have negative substantive consequences for the plaintiffs. If the defendants have no claim to the rents, then the true contest regarding the entitlement to the rents is between the plaintiffs and the estate, even though they had not sued each other. Presumably, now that the estate has been added as a party, the defendants will be permitted to interplead the funds into court and will be released from the action. In addition, the plaintiffs and the estate will presumably have an opportunity to exchange pleadings. The plaintiffs should be able to assert the limitation period defence to the estate’s claim to the rents. If successful, the parties may well end up where the lower court got them, however, only after spending significantly more resources to get there. If the plaintiffs are now unable to assert a limitation period defence, then they will be faced with a troubling situation in which one of their substantive defences was taken away by a party with no interest in the outcome (the defendants).

Finally, in the odd case of Ferreira v. St. Mary’s General Hospital, substantial indemnity costs were ordered against a lawyer who had unilaterally commenced legal proceedings, without instructions, in order to oppose the decision of her client’s wife and next of kin to withdraw life support from her client. The lawyer was found to have had no authority to take such a step (since her client was incapacitated at the time). The Court determined that the lawyer had acted dishonourably and had seriously interfered with the administration of justice by taking such an unauthorized step.

I hope everyone has an enjoyable weekend.

John Polyzogopoulos

Blaney McMurtry LLP

jpolyzogopoulos@blaney.com

Tel: 416 593 2953

Table of Contents

Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239

Keywords: Contracts, Enforceability, Restraint of Trade, Tank Lining Corp. v. Dunlop Industrial Ltd., (1982), 40 O.R. (2d) 219 (C.A.), Trademarks, Grey Marketing, Civil Procedure, , Hearings, Bifurcation, Bondy-Raphael v. Potrebic, 2015 ONSC 3655 (Div. Ct.), Summary Judgment, Hryniak v. Mauldin, Costs, Substantial Indemnity, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131, Rules of Civil Procedure, rr. 6.1.01.1., 20.04(3), 57.01

O’Brien-Glabb v. National Bank of Canada, 2018 ONCA 242

Keywords:  Torts, Negligence, Employment Law, Workplace Safety, Civil Procedure, Summary Judgment, Limitation Periods, Discoverability, “Appropriate Means”, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, ss. 5(1)(a)(iv)

Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244

Keywords: Real Property, Mortgages, Power of Sale, Notice of Sale, Subsequent Encumbrancers, Bona Fide Purchasers for Value Without Notice of Defect, Actual Notice of Defect, Fraud, Mirror Principle, Mortgages Act, R.S.O. 1990, c. M.40, s. 33, s. 35, s. 35, Land Titles Act, R.S.O. 1990, c. L.5., s. 99(1), s. 99(1.1), Household Realty Corp. Ltd. v. Liu (2005), 205 O.A.C. 141 (C.A.)

Ferreira v. St. Mary’s General Hospital, 2018 ONCA 247

Keywords: Wills and Estates, Substitute Decisions, Incapacitation, Termination of Life Support, Health Care Consent Act, 1996S.O. 1996, Solicitor and Client, Authority to Act, Duty to Act Honourably, Rules of Professional Conduct, Civil Procedure, Standing, Mootness, Transmission of Interest, Orders to Continue, Rules of Civil Procedure, Rule 11.01, Costs, Substantial Indemnity

Third Eye Capital Corporation v. Ressources Dianor Inc./ Dianor Resources Inc., 2018 ONCA 253

Keywords: Bankruptcy & Insolvency, Receiverships, Property Law, Interests in Land, Mining Rights, Royalty Rights, Bank of Montreal v. Dynex Petroleum Ltd., 2002 SCC 7, Civil Procedure, Jurisdiction, Vesting Orders, Appeals, Mootness, Regal Constellation Hotel Ltd., Re (2004), 71 O.R. (3d) 355 (C.A.)Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 243, Courts of Justice Act, R.S.O. 1990 c. C.43, s. 101, Mining Act, R.S.O. 1990, c. M.14., Repair and Storage Liens Act, R.S.O. 1990, c. R.25.

Abrahamovitz v. Berens, 2018 ONCA 252

Keywords: Contracts, Estates, Civil Procedure, Adding Parties, Defences, Limitation Periods, Standing, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 21(1)

Criminal Decisions

Short Civil Decision and Ontario Review Board Decision

Civil Decisions:

Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239

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

Counsel:

  1. T. Summers, for the appellants
    J. and E. Udokang, for the respondent

Keywords: Contracts, Enforceability, Restraint of Trade, Tank Lining Corp. v. Dunlop Industrial Ltd., (1982), 40 O.R. (2d) 219 (C.A.), Trademarks, Grey Marketing, Civil Procedure, , Hearings, Bifurcation, Bondy-Raphael v. Potrebic, 2015 ONSC 3655 (Div. Ct.), Summary Judgment, Hryniak v. Mauldin, Costs, Substantial Indemnity, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131, Rules of Civil Procedure, rr. 6.1.01.1., 20.04(3), 57.01

Facts:

The respondent Mars Canada Inc., an Ontario company, is related to the well-known American candy company. The appellant Aizic Ebert (“Ebert”) owns and controls the corporate appellants, Bemco Cash & Carry Inc. (“Bemco”) and GPAE Trading Corp. (“GPAE”). Through those companies, he sold “grey market” Mars products in Canada. He bought the products in the United States, imported them to Canada, and sold them at a price lower than those offered by the respondent. The law is unsettled as to whether a Canadian trademark holder can prevent this activity.

In about 2006, the respondent discovered that Bemco was selling Mars products in Toronto. It brought an action in the Federal Court. After lengthy negotiations and legal advice, the parties settled the action (the “Bemco Settlement”). Under the Bemco Settlement, Bemco agreed to identify the source of its grey market products. It also agreed that it would not import or sell Mars products in Canada without the respondent’s consent or without obtaining a declaratory judgment in the Superior Court authorizing it to do so. After the settlement, Bemco disclosed that GPAE was its supplier of foreign Mars products.

On disclosure of this information, the respondent demanded that GPAE cease its activities. GPAE agreed to do so. It agreed not to import or sell Mars products in Canada without the respondent’s consent (the “GPAE Settlement”). The GPAE Settlement was to be binding on related companies and their shareholders – that is, Bemco and Ebert.

In 2010, the respondent discovered that foreign products bearing its trademarks were once again being sold in Canada, through another company, in concert with Bemco and GPAE. It brought this action to enforce the Bemco Settlement and the GPAE Settlement and for damages. The appellants defended on the ground, among others, that the settlement agreements were in restraint of trade and, therefore, void.

The respondent brought a motion for summary judgment. It sought declaratory relief and damages. It also sought rectification of the Bemco Settlement, to correct an error in Bemco’s corporate name.

The Bemco Settlement was made in the name of Bemco Confectionary Sales, the company from which Ebert had purchased the business, rather than in Bemco’s proper name. The motion judge found that both parties intended the agreement to be the name of Bemco and granted rectification. That order is not appealed.

The motion judge also found that both Bemco and GPAE had breached their settlement agreements. Bemco by continuing to engage in grey marketing, and GPAE by continuing to import Mars products into Canada. The motion judge rejected the appellants’ argument that the settlement agreements were void as being in restraint of trade.

Having found that the appellants breached the agreements, he directed a reference as to damages pursuant to r. 20.04(3) of the Rules of Civil Procedure. He rejected the appellants’ submission that this was an improper bifurcation of the proceedings without their consent, contrary to r. 6.1.01.1.

In a subsequent endorsement, the motion judge granted costs to the respondent on a substantial indemnity basis, in the amount of $225,000, all inclusive. He found that the appellants “brazenly breached” their settlement agreements, contrived to avoid the settlements they made, raised trivial grounds of argument and made the litigation lengthier and more expensive than it ought to have been.

Issues:

(1) Did the motion judge err in giving effect to the settlement agreements?

(2) Did the motion judge err in directing a reference to determine damages?

(3) Did the motion judge err in principle in awarding substantial indemnity costs as a result of the appellants’ conduct prior to the commencement of the litigation?

Holding: Appeal dismissed.

Reasoning:

(1) No. In Tank Lining Corp. v. Dunlop Industrial Ltd, Blair J.A. stated that the test of restraint of trade requires a four-stage inquiry:

(a) whether the covenant is in restraint of trade;

(b) If so, whether it falls within one of the limited exceptions to the rule that such restraints are void;

(c) whether the restraint can be justified as reasonable in the interests of the parties;

(d) whether it is reasonable with reference to the interests of the public.

The onus is on the party seeking to enforce the covenant to show that it is reasonable in the interests of the parties. The onus is on the party opposing enforcement to show that the covenant is not reasonable in the public interest.

In the circumstances of this case, the respondent has legitimate interests tied to its trademark rights. The appellants have identified no error in the motion judge’s application of Tank Lining. The settlement of the litigation was unquestionably reasonable in the interests of the parties. It resolved their dispute and defined the scope of the parties’ trading rights. It was also reasonable in the public interest. It prevented confusion between the respondent’s trademarked products and the appellants’ improperly labelled grey market products.

(2) No. There was evidence before the motion judge to support a conclusion that the respondent sustained some damages. There was evidence given by the respondent’s witness that every sale of a grey market Mars bar by the appellants represented a loss of a sale by the respondent. As well, the appellants’ own expert testified that the appellants’ sales would “cannibalize” the respondent’s sales.

In any event, the respondent’s action was in breach of contract. The motion judge found that the appellants were in breach of their agreements. He granted a declaration to that effect. Unlike in tort, damages are not an essential element of a cause of action for breach of contract. The plaintiff need only establish the existence of a contract with the defendant and its breach. Having established a valid contract and a breach, the respondent was entitled to damages, even nominal damages. Nominal damages are always available in a breach of contract action.

The appellants also argue, as they did below, that the motion judge had no jurisdiction to bifurcate liability and damages, relying on Bondy-Raphael v. Potrebic and r. 6.1.01, which together provide that consent is required before a court can order separate hearings on issues of liability and damages. The Court of Appeal rejected the appellants’ submission that r. 6.1.01 applies to summary judgment motions. It is inconsistent with r. 20.04(3) and the underlying philosophy of the summary judgment process, described in Hryniak v. Mauldin. Its application would gut the efficacy of summary judgment.

(3) No. The motion judge identified the principles to be applied in fixing costs under s. 131 of the Courts of Justice Act, and considered the factors set out in r. 57.01. He also considered the appellants’ argument that the costs award should have reflected the fact that the respondent advanced several causes of action, some of which it ultimately withdrew.

The motion judge found that the appellants brazenly breached the settlements. They relied on an obvious slip (the misnomer of Bemco) to try to avoid living up to their agreements. Their efforts to undermine the agreements were dishonourable and deserving of censure. They altered a document in a transparent attempt to hide their illicit activities. The appellants have not demonstrated an error in principle in the motion judge’s award of costs. Accordingly, leave to appeal the costs order was not granted.

O’Brien-Glabb v. National Bank of Canada, 2018 ONCA 242

[Feldman, Pardu and Benotto JJ.A.]

Counsel:

  1. Webster, for the appellant
  2. Dallal, for the respondents

Keywords:  Torts, Negligence, Employment Law, Workplace Safety, Civil Procedure, Summary Judgment, Limitation Periods, Discoverability, “Appropriate Means”, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, ss. 5(1)(a)(iv)

Facts:

Natasha O’Brien-Glabb (the respondent) worked for the National Bank of Canada (the Bank). In April 2010, she began experiencing severe allergic symptoms while at work, which she suspected might be from mould or dust at her workplace. Her doctor advised that the symptoms could be due to a condition in her workplace and could be caused by mould. The Bank ultimately confirmed the presence of mould and undertook remedial work. She stopped working at the Bank in 2011. Despite seeing a number of doctors, the respondent was not diagnosed with anything that connected her condition to mould exposure at the Bank. She continued to believe, however, that the two were connected.

In February 2013, the respondent sought out a specialist, Dr. Patel, who concluded that she had a genetic deficiency that impedes her body’s ability to detoxify many toxins, and informed her that her symptoms were caused by exposure to mycotoxins released from toxic mould in the Bank building. The respondent commenced an action against the Bank in July 2013. The Bank brought a motion for summary judgment alleging that the claim was statute-barred because the limitation period began to run in April or June 2010, when the respondent began to experience allergic symptoms. The motion judge dismissed the motion for summary judgment on the basis that the limitation period did not commence until February 2013, when the respondent received the diagnosis from Dr. Patel.

Issues:

(1) Did the motion judge misapprehend the facts, and err in finding the limitation period had not elapsed?

(2) Did the motion judge err in applying the meaning of “appropriate means” set out in s. 5(1)(a)(iv) of the Limitations Act?

Holding: Appeal dismissed.

Reasoning:

(1) No. The respondent was not aware that the mould was the cause of her illness prior to seeing the specialist. There is evidence that she was being investigated for a variety of illnesses other than an allergy to mould. The appellant further alleged that the motion judge erred in finding the limitation period began to run in February 2013 on the basis that the respondent “suffered two separate and distinct injuries arising from the mould in the bank”. It was open to the motion judge on the evidence to make this finding. Until the respondent saw Dr. Patel, she did not know that she had a genetic disorder. According to Dr. Patel, this disorder exacerbated the effects of her exposure to the toxic mould, which included “oxidative stress and damage to various cell membrane of organs and organelle”. He also gives the opinion that these exacerbated effects “cause adverse health effects similar to exposures to hazardous substance[s] that adversely affect various systems in the body”, akin to exposure to toxic chemicals or toxic metals. There was therefore evidence on which the motion judge could conclude that organ damage is a separate and distinct injury from allergic symptoms and that the respondent did not know of that injury until February 2013.

(2) No. The appellant submits that the motion judge erred in concluding that it was not “appropriate” for the respondent to start her action in 2010. It alleges that the motion judge reversed the onus of proof by requiring the appellant to establish that an action would have been appropriate when the allergic symptoms first appeared in 2010 and also that she applied a subjective rather than objective standard to the determination of when a proceeding would be an appropriate means to seek to remedy the injury, loss or damage.

It was the respondent who bore the onus of leading evidence to establish on a balance of probabilities that a proceeding was not appropriate in 2010. However, the motion judge’s reasons, read as a whole, make it clear that she was satisfied the respondent had met this burden. In essence, the motion judge concluded that a reasonable person in the circumstances of the respondent would not have known that a legal proceeding would have been an appropriate remedy for possible exposure to allergens before 2013.

Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244

[Doherty, Pepall and Hourigan JJ.A.]

Counsel:

  1. G. Slaght and D. Glatt, for the appellant/respondent, 2413913 Ontario Limited B Belmont, for the appellants, 2421955 Ontario Inc. and Sai Mohammed
    S. Schwartz, for the respondents/appellants, Stanbarr Services Limited et al
    P. Polster, for the respondent, Ginkgo Mortgage Investment Corporation

Keywords: Real Property, Mortgages, Power of Sale, Notice of Sale, Subsequent Encumbrancers, Bona Fide Purchasers for Value Without Notice of Defect, Actual Notice of Defect, Fraud, Mirror Principle, Mortgages Act, R.S.O. 1990, c. M.40, s. 33, s. 35, s. 35, Land Titles Act, R.S.O. 1990, c. L.5., s. 99(1), s. 99(1.1), Household Realty Corp. Ltd. v. Liu (2005), 205 O.A.C. 141 (C.A.)

Facts:

This case addresses numerous appeals represented by a series of three different dockets (Dockets C61872, C61878 and C61894).

Canada Investment Corporation (“CIC”) was the first mortgagee on property owned by Metropolis Properties Inc. (“Metropolis”) municipally described as 91-93 Scollard Street, Toronto, Ontario (the “Property”). The mortgage was in default and CIC sought to sell the Property under its power of sale rights in its mortgage. At the time, there were eleven subsequent mortgages registered against the Property. The appellant 2413913 Ontario Inc. (“241 Ontario”) purchased the Property pursuant to CIC’s power of sale. The appellant Sai Mohammed is a director of 241 Ontario. The sale closed on June 6, 2014. The pre-sale mortgagees argued that they had never received a notice of sale, as required by the Mortgages Act, R.S.O. 1990, c. M.40, and that the sale was therefore invalid. The trial judge accepted that 241 Ontario was a bona fide purchaser for value of the Property. The issue was whether 241 Ontario was without notice that the sale was defective.

As part of the impugned sale, Ginkgo Mortgage Investment Corporation (“Ginkgo”) provided financing to 241 Ontario and took a first mortgage on the Property. Mr. Mohammed was also involved as a mortgagee, personally or in his role as director of 2421955 Ontario Inc. (“242 Ontario”), in several subsequent post-sale mortgages. Mr. Mohammed and 242 Ontario (the “post-sale subsequent mortgagees”) also appeal.

Issues:

(1) Did the trial judge err in applying the wrong test for actual notice sufficient to defeat a registered interest under the Land Titles Act, R.S.O. 1990, c. L.5?

(2) If the answer to issue 1 is yes, can 241 Ontario rely on its registration of the transfer?

(3) Did the trial judge err in her analysis of the validity of the mortgages registered by the post-sale subsequent mortgagees?

(4) Did the trial judge err in her analysis of the validity of the mortgage registered by Ginkgo?

Holding:

Appeal of 241 Ontario in appeal C61872 allowed.

Appeal of the post-sale subsequent mortgagees in appeal C61894 allowed.

Appeal of the pre-sale mortgagees in appeal C61878 dismissed.

Reasoning:

(1) Yes. Our courts insist on actual notice of a defect. Actual knowledge means just that; the party must actually know about the defect. It is not sufficient that it has become aware of facts that may suggest it should make inquiries: Rose v. Peterkin (1885), 13 S.C.R. 677, at pp. 694-695. Constructive knowledge is insufficient. Thus, the factual analysis in considering a notice argument is limited to a consideration of what the party knew, not what it could have known had it made inquiries. The issue that the trial judge had to determine was whether 241 Ontario had actual knowledge of non-compliance with s. 33 of the Mortgages Act, which mandates the manner of notice of the exercise of a power of sale. The trial judge erred in two respects in her knowledge analysis.

First, she conflated actual knowledge with constructive knowledge. In determining whether a party has actual knowledge of a defect, it is unnecessary and unhelpful to consider whether they received sufficient information to put them on inquiry. That is because receipt of such information does not amount to actual knowledge: Rose, at pp. 694-695. Therefore, whether the party received such information and what steps it took to investigate the situation is wholly irrelevant to the actual knowledge analysis.

The second error in the trial judge’s knowledge analysis was her failure to properly identify the alleged defect in the power of sale process. She found that 241 Ontario had actual notice, noting that “[i]ts counsel received an email [from Mr. Bourassa] that stated flatly that no notice of sale had been received from CIC and any attempt by CIC to sell would be invalid” (para. 112). Section 33 of the Mortgages Act provides for service of a notice of sale by personal service or by registered mail to the party’s usual or last known address, or, where the last known address is shown on the registered instrument under which the party acquired an interest, to that address. Pursuant to s. 34, a notice delivered by mail is deemed to have been given on the day on which it is mailed. It is not a defect in a power of sale process that a notice is not received by the intended recipient; it is only a defect if the notice was not sent in the prescribed manner: Wood v. Bank of Nova Scotia (1980), 29 O.R. (2d) 35 (C.A.), at pp. 36-37. The trial judge erred in finding that 241 Ontario had actual notice of the defect because of Mr. Bourassa’s email, which said that no notice had been received. 241 Ontario had no actual knowledge of a defect, i.e. that the notice was not sent in the prescribed manner. In the court’s view, therefore, the trial judge erred in finding that 241 Ontario had actual knowledge of a defect.

(2) Yes. Sections 35 and 36 of the Mortgages Act do not purport to limit 241 Ontario’s right to rely on the registration of evidence referred to in ss. 99(1) and 99(1.1) of the Land Titles Act. These provisions provide complementary methods of protecting bona fide purchasers for value without notice of a defect in a power of sale proceeding. This interpretation is also consistent with the curtain principle underlying the Land Titles Act, which holds that a purchaser need not investigate the history of past dealings with the land or search behind the title as depicted on the register. The Court of Appeal therefore concluded that 241 Ontario was a bona fide purchaser for value without notice of the defect in the power of sale proceedings and holds good title to the Property.

(3) Yes. With respect to the post-sale subsequent mortgagees, the trial judge found that they were all deemed to have the same knowledge that Mr. Mohammed obtained by reason of his position as a director of 241 Ontario and his involvement with the post-sale subsequent mortgagees. Accordingly, the trial judge’s knowledge analysis was flawed for the same reasons. Therefore, her finding with respect to the validity of these mortgages was set aside. The post-sale subsequent mortgagees were found to have valid encumbrances.

(4) Yes. A proper fraud analysis required the trial judge to consider the amendments to the Land Titles Act enacted after the court’s decision in Household Realty Corp. Ltd. v. Liu (2005), 205 O.A.C. 141 (C.A.). Those amendments introduced the provisions pursuant to which a court is to analyze whether there has been fraud such that the mirror principle is defeated. Given that the trial judge proceeded on the basis that fraud had not been proved, she should have restricted her analysis to whether Ginkgo had actual notice of a non-fraudulent defect. If this were a case where she was considering a fraud argument, a proper analysis had to take into account the post-Household Realty amendments to the Land Titles Act and focus on whether the Ginkgo mortgage was a fraudulent instrument that fell within the exception found in s. 78(4.1).

Ferreira v. St. Mary’s General Hospital, 2018 ONCA 247

[Juriansz, Miller and Nordheimer JJ.A.]

Counsel:

  1. Palmer, for Georgiana Masgras, also acting in person
    D. Jarvis, for the respondent, St. Mary’s General Hospital
    S. Batner, for the respondent, Dr. Christopher Hinkewich

Keywords: Wills and Estates, Substitute Decisions, Incapacitation, Termination of Life Support, Health Care Consent Act, 1996S.O. 1996, Solicitor and Client, Authority to Act, Duty to Act Honourably, Rules of Professional Conduct, Civil Procedure, Standing, Mootness, Transmission of Interest, Orders to Continue, Rules of Civil Procedure, Rule 11.01, Costs, Substantial Indemnity

Facts:

Ms. Masgras, a lawyer, purported to bring this appeal on behalf of Mr. Ferreira. The case revolves around a lawyer’s claim of authority to take steps on behalf of a client who is incapacitated.

In December 2016, Mr. Ferreira was in a motor vehicle accident. He retained Ms. Masgras in respect of his claims for compensation for neck and lower back pain and related injuries.

On July 3, 2017, Mr. Ferreira was found in cardiac arrest at his home. He was provided with life support in the Intensive Care Unit, however his condition continued to deteriorate and there was no prospect of recovery.

On July 6, 2017, Mr. Ferreira’s family decided to remove Mr. Ferreira from life support. During this time, Ms. Masgras became aware of Mr. Ferreira’s condition and urged Mr. Ferreira’s family to reconsider removing Mr. Ferreira from life support.

When the family declined, Ms. Masgras, on her own initiative, challenged the family’s decision and obtained a stop order.

Mr. Ferreira’s condition continued to deteriorate and the stop order was set aside, with costs ordered against Ms. Masgras. Mr. Ferreira was removed from life support and he passed away.

On August 18, 2017, Ms. Masgras appealed and sought to have the order of the reviewing judge set aside. The respondents sought their costs of the application on a substantial indemnity basis against Ms. Masgras personally. The application judge ordered costs against Ms. Masgras, although not on a substantial indemnity basis.

Issues:

(1) Did the reporting judge err in setting aside an interim injunction that prohibited the removal of Mr. Ferreira from life support?

(2) Did the application judge err in ordering costs against Ms. Masgras personally?

Holding: Appeal dismissed.

Reasoning:

(1) No. The court held that the main appeal cannot succeed for two reasons. First, Ms. Masgras had no instructions to bring the appeal. Further, the underlying application was stayed as a result of Mr. Ferreira’s death by virtue of r. 11.01 of the Rules of Civil Procedure, unless and until an order to continue is granted under r. 11.02. No such order had ever been obtained.  Once death occurred, the right to bring the appeal vested in the estate trustee. Consequently, the appeal was improperly constituted as it had not been brought by the estate trustee nor had it been assigned by the estate trustee to Ms. Masgras.

Second, and in any event, the appeal was now moot. Therefore, the court dismissed the main appeal.

(2) No. The Court held that Ms. Masgras had no authority to take the steps that she did. Indeed, the court stated that it was not apparent on the record that Ms. Masgras sought or obtained any form of instructions from any next of kin of Mr. Ferreira, most notably, his wife. Under the Health Care Consent Act, 1996S.O. 1996, c. 2, Sched. A, s. 20, if a person is incapable with respect to treatment, consent may be given by a person designated in the section, one of which is the incapable person’s spouse. In short, the court held that Ms. Masgras breached the basic principles that apply to the conduct of lawyers, particularly their duty to act honourably.

The court fixed costs to be payable by Ms. Masgras on a substantial indemnity basis to the Hospital at $19,885.74 and to Dr. Hinkewich at $11,642.00.

Third Eye Capital Corporation v. Ressources Dianor Inc./ Dianor Resources Inc., 2018 ONCA 253

[Pepall, Lauwers and Huscroft JJ.A.]

Counsel:

  1. J. Matson and R. W. Johansen, for the appellant, 2350614 Ontario Inc.
    S.N. Roy, for the respondent Third Eye Capital Corporation
    D. Chochla, for the receiver of Dianor Resources Inc., Richter Advisory Group Inc.
    D. Contractor, for the monitor of Essar Steel Algoma Inc., Ernst & Young Inc.

Keywords: Bankruptcy & Insolvency, Receiverships, Property Law, Interests in Land, Mining Rights, Royalty Rights, Bank of Montreal v. Dynex Petroleum Ltd., 2002 SCC 7, Civil Procedure, Jurisdiction, Vesting Orders, Appeals, Mootness, Regal Constellation Hotel Ltd., Re (2004), 71 O.R. (3d) 355 (C.A.)Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 243, Courts of Justice Act, R.S.O. 1990 c. C.43, s. 101, Mining Act, R.S.O. 1990, c. M.14., Repair and Storage Liens Act, R.S.O. 1990, c. R.25.

Facts:

Dianor Resources Inc. (“Dianor”) was insolvent. At the request of its lender, the respondent, Third Eye Capital Corporation (“Third Capital”), the court appointed a receiver under s. 243 of the Bankruptcy and Insolvency Act (“BIA”), and s. 101 of the Courts of Justice Act (“CJA”), over the assets, undertaking and property of the debtor, Dianor.

Dianor’s main asset was a group of mining claims. The claims with which this appeal is concerned were subject to, among other things, a “Gross Overriding Royalty” (“GOR”) in favour of a company from which the appellant, 2350614 Ontario Inc. (“235Co”), had acquired the royalty rights. Notices of the agreements granting the GORs were registered on title to the surface rights and the mining rights.

The supervising judge made an order approving a bid process for the sale of Dianor’s mining claims. It generated two bids, both containing a condition that the GORs be terminated or significantly reduced. Third Eye was the successful bidder.

At the request of the receiver, the motion judge approved the sale of the mining claims to Third Eye and granted a vesting order that purported to extinguish the GORs. 235Co did not oppose the sale but asked that the property vested in Third Eye be subject to the GORs.

The motion judge rejected the appellant’s argument that the claims would continue to be subject to the GORs after their transfer to Third Eye. He held that the GORs do not run with the land or grant the holder of the GORs an interest in the lands over which Dianor holds the mineral rights.

The motion judge also held that  ss. 11(2), 100, and 101 of the CJA, gave him “the jurisdiction to grant a vesting order of the assets to be sold to Third Eye on such terms as are just”, including the authority to dispense with the royalty rights. He found the expert’s valuation of the royalty rights to be fair. The receiver paid this amount to 235Co. The funds are being held in trust pending the outcome of this appeal. 235Co also brought a cross-motion claiming payment for a debt owing under the Repair and Storage Liens Act. The motion judge dismissed the cross-motion.

Issues:

(1) Does registration of the vesting order on title render the appeal moot?

(2) Do the GORs constitute interests in land?

(3) If so, did the motion judge have jurisdiction to vest out the GORs?

Holding: The next phase of the appeal, assuming the parties choose to pursue it, requires case management to coordinate written submissions on the issues raised in the reasons and to consider the necessity of oral submissions.

Reasoning:

(1) To be determined. The appellant did not seek a stay of the vesting order pending appeal before the vesting order was registered on title, although it could have done so on a timely basis. Generally, a vesting order cannot be attacked on appeal unless a stay order has been obtained. Third Eye submits that the appeal is moot because the vesting order was “spent” when it was registered (see Regal Constellation Hotel Ltd.).

It cannot be said that the appeal is moot in the particular circumstances of this case. The order is spent, but the remedy for rectification under the LTA may be available to the appellant, provided that several conditions are met:

(a) the motion judge had no jurisdiction to vest out the GORs;

(b) no innocent third party has relied on the title to its detriment; and

(c) the appellant is otherwise entitled to the remedy.

Additional submissions are required before determining whether the appeal is moot. In particular, because the Court of Appeal found that the GORs are interests in land, does the fact that Third Eye had notice of 235Co’s claim affect the application of Regal Constellation?

(2) Yes. Notices of the GORs were registered on title to the patented lands under s. 71 of the LTA and on the unpatented mining claims under the Mining Act. The parties did not treat the fact that 235Co came to hold the GORs as a live issue.

The ruling precedent is the decision of the Supreme Court of Canada in Bank of Montreal v. Dynex Petroleum Ltd, which changed the common law to permit a GOR to achieve status as an interest in land. In that case, Major J.A. adopted the view that Canadian common law should recognize that a “royalty interest” or an “overriding royalty interest” can be an interest in land if:

(a) the language used in describing the interest is sufficiently precise to show that the             parties intended the royalty to be a grant of an interest in land, rather than a contractual right to a portion of the oil and gas substances recovered from the land; and

(B) the interest, out of which the royalty is carved, is itself an interest in land.

In applying the Dynex test, the Court of Appeal found that the appellant’s GORs constituted interests in land that run with the land and are capable of binding the claims in the hands of a purchaser. The motion judge made three legal errors in his analysis. The first error was that he did not examine the parties’ intentions from the royalty agreements as a whole, along with the surrounding circumstances. The motion judge’s second error was in holding that in order to qualify as an interest in land, the royalty agreements had to give the appellant the right to enter the property to explore and extract diamonds or other minerals. The third error was in holding that “the interest, out of which the royalty is carved, is not [an] interest in land” because it is expressed in the Agreements as only a right “to share in revenues produced from diamonds or other minerals extracted from the lands.” The latter two errors came from a misapprehension of the Dynex test.

(3) To be determined. The context for this issue is set by the conclusions the court reached on the issue of mootness. Because the GORs are interests in land, the appeal is not necessarily moot, particularly if the Superior Court did not have jurisdiction to issue the vesting order in these circumstances.

The question must be addressed in additional argument before the panel, specifically on the following issue: Whether and under what circumstances and limitations (including the ones enumerated above) a Superior Court judge has jurisdiction to extinguish a third party’s interest in land using a vesting order, under s. 100 of the CJA and s. 243 of the BIA, where s. 65.13(7) of the BIA; s. 36(6) of the CCAA; ss. 66(1.1) and 84.1 of the BIA; or s. 11.3 of the CCAA do not apply?

Abrahamovitz v. Berens, 2018 ONCA 252

[Laskin, Feldman and Miller JJ.A]

Counsel:

  1. S. Marr and Z. Silverberg, for the appellant, the Estate of Gabriel Zimmerman
    D. P. Jacobs, for the respondents

Keywords: Contracts, Estates, Civil Procedure, Adding Parties, Defences, Limitation Periods, Standing, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 21(1)

Facts:

The respondents, Faigie Abrahamovitz and Frances Spiro, are two of four shareholders of a holding company that owns a commercial property. They brought this action against the defendants, claiming their full share of the annual rental income from the property.

One of the defendants, Megapro Property Management Ltd., has been the manager of the property since late 2009, following the illness and death of the prior property manager, Gabriel Zimmerman. It has collected the rents, but is holding back part of the entitlement of the respondents because of a claim to part of their share of the funds by the Estate of Mr. Zimmerman. That claim is based on two separate Acknowledgements purportedly  signed by each of the respondents in 2002. The Acknowledgements gave Mr. Zimmerman a 25% interest in the respondents’ respective entitlements to the rental and sale proceeds of the property.

In 2011, the respondents sued Megapro and the other defendants for the funds Megapro has been holding back. In 2016, the defendants brought the motion under appeal for an order adding the Estate as a necessary party to the action. The defendants also sought an interpleader order allowing Megapro to pay the funds it is holding into court to await the outcome of the issue of the validity and effect of the Acknowledgements. The Estate participated in the motion, supporting the defendants’ argument that it should be added as a necessary party to the action.

The motion judge dismissed the defendants’ motion on the basis that the Estate’s claim was statute barred, as Mrs. Zimmerman, the Estate trustee, discovered the Acknowledgements in 2010 following her husband’s death. On this appeal, the appellant is the Estate. The defendants did not participate in the appeal.

Issues:

(1) Did the motion judge err in dismissing the motion to add the Estate as a party on the basis that the Estate’s claim was statute barred?

Holding: Appeal allowed.

Reasoning:

(1) Yes. Although the court would not give effect to the submission by the Estate that it was entitled to relief because the statement of defence already pleads its claim, the fact that the defendants have pleaded those facts in order to put the issue of the validity of the Acknowledgements before the court, and did not raise any limitation argument in doing so, meant thatit was an error for the motion judge to find that the Estate’s claim was statute-barred.

In this case, it was neither the pleading nor the position of the defendants, at any time in this litigation, that the Estate’s claim was statute-barred. To the contrary, the defendants were the ones who invited the Estate to assert its claim in 2016, and who initiated the motion to add the Estate as a party to the action when the respondents would not consent to add the Estate. While the defendants never raised any limitations defence, it was the respondents (the plaintiffs) who took the position on the motion that the Estate’s claim was statute-barred. The respondents had no standing to do so. By giving effect to their submission, the motion judge erred in law by treating the respondents as if they were defendants in an action by the Estate.

By approaching the issue on the motion as if it concerned a claim brought by the Estate against the respondents, the motion judge erred in allowing the respondents to assert a limitations defence against the Estate. As the claim of the Estate is against the defendants, the right to raise a limitations defence lies with them, not the respondents.

The Estate is a necessary party to the action to ensure that it will be bound by the court’s determination of the issue of the validity of the Acknowledgements. Otherwise, that issue could be re-litigated with the risk of inconsistent verdicts, if the Estate were to sue the defendants for payment in a separate action. Subsection 21(1) of the Limitations Act, 2002 does not bar the addition of the Estate because, where the defendants have not pleaded a limitations defence, the Estate’s claim against the defendants has not expired.

Criminal Decisions:

R v. Bygott, 2018 ONCA 243

[Rouleau, Huscroft and Fairburn JJ.A.]

Counsel:

A. Furgiuele and C. Barbisan, for the appellant
B. G. Puddington, for the respondent

Keywords: Criminal Law, Fraud, Adjournments

R v. McConnell, 2018 ONCA 241

[Pardu, Benotto and Nordheimer JJ.A.]

Counsel:

R. F. Goddard, for the appellant
L. Bolton, for the respondent

Keywords: Criminal Law, Sentencing, Global Sentence, Post-sentence Rehabilitative Efforts, Credit for terms

R v. B-D.N., 2018 ONCA 248

[Watt, Brown and Huscroft JJ.A.]

Counsel:

S. Friedman, for the appellant
N. Dennison, for the respondent

Keywords: Criminal Law, Sexual Assault, Evidence, Consent, Reasonable Apprehension of Bias

R v. Pun, 2018 ONCA 240

[Pardu, Benotto and Nordheimer JJ.A.]

Counsel:

M. Henein & C. Mainville, for the appellant
R. Young, for the respondent

Keywords: Criminal Law, Fraud, Sentencing, Onus of Proof, Credibility

R v. Tapp, 2018 ONCA 228

[Rouleau, Huscroft and Fairburn JJ.A.]

Counsel:

D. Anber, for the appellant
A. Hotke, for the respondent

Keywords: Criminal Law, Robbery

R v. A.S., 2018 ONCA 249

[Rouleau, Hourigan and Huscroft JJ.A.]

Counsel:

J. Sandler and A. Ross, for the appellant
J. Smith Joy, for the respondent

Keywords: Criminal Law, Sexual Interference, Sexual Exploitation, Sexual Assault, Jury Charge, R. v. W.(D.), [1991] 1 S.C.R. 742

R v. J.H., 2018 ONCA 245

[Simmons, van Rensburg and Nordheimer JJ.A.]

Counsel:

J. Presser and D. Stein, for the appellant
L. Joyal, for the respondent

Keywords: Criminal Law, Evidence, Character, Discreditable Conduct, Similar Fact Evidence, Burden of Proof, R v. Handy, 2002 SCC 56, Sentencing, Global Sentence, Principle of Totality

R v. Rosen., 2018 ONCA 246

[Juriansz, Watt and Miller JJ.A.]

Counsel:

M. Lacy, for the appellant
A. Alvaro, for the respondent

Keywords: Criminal Law, Murder, Evidence, Mens Rea, Ante-Mortem Statements, Jury Charge, Post Offence Conduct

R v. Plante, 2018 ONCA 251

[Pardu, Benotto and Nordheimer JJ.A.]

Counsel:

L. Daviau, duty counsel for the appellant
G. Choi, for the respondent

Keywords: Criminal Law, Sentencing, Enhanced Credit, R v. Summers, 2014 SCC 26, Statutory Release, Provincial System

R v. Colasimone, 2018 ONCA 256

[Laskin, Pepall JJ.A. and Gans J. (ad hoc)]

Counsel:

J. Harbic, for the appellant
M. Lai, for the respondent

Keywords: Criminal Law, Armed Robbery, Sentencing, R v. Orwin, 2017 ONCA 841, Deterrence, Public Safety

R v. Kassam, 2018 ONCA 266

[Feldman, Watt and Paciocco JJ.A.]

Counsel:

M. Hogan, for the appellant
A. Cappell, for the respondent

Keywords: Criminal Law, Fraud, Jordan Application, Rowbatham Application

R v. Tennant, 2018 ONCA 264

[Feldman, Watt and Paciocco JJ.A.]

Counsel:

C. Sewrattan, for the appellant
M. Gaspar, for the respondent

Keywords: Criminal Law, Evidence, R v. Sekhon, 2014 SCC 15, Canadian Charter of Rights and Freedoms, s. 24(2), Grant Factor

Short Civil Decisions and Costs Endorsements:

El-Khodr v. Lackie, 2018 ONCA 250

[Doherty, MacFarland and Rouleau JJ.A.]

Counsel:
J. Y. Obagi and E. A. Quigley, for the moving party
B. A. Percival, Q.C. and J. W. Gibson, for the responding parties

Keywords: Costs, Motion for Reconsideration, Cobb v. Long Estate, 2017 ONCA 717

Perri v. Perri, 2018 ONCA 237

[Pepall, Lauwers and Pardu JJ.A.]

Counsel:

B. Vandebeek, for the appellant
D. Friesen, for the respondent

Keywords: Family Law, Costs Endorsement, Partial Indemnity Costs

Luckevich v. Ivany, 2018 ONCA 254

[Doherty, Paciocco and Nordheimer JJ.A.]

Counsel:

M. Katzman, for the appellant
H. W. Reininger, for the respondents
T. Duncan, for Trustee in Bankuptcy

Keywords: Costs Endorsement, Bankruptcy and Insolvency, Property of Bankrupt, Choses in Action

Boudreau Commercial Contracting Inc. v. Caruana, 2018 ONCA 257

[Hoy A.C.J.O., Juriansz and Miller JJ.A.]

Counsel:

O. D. Thomas, for the appellant
C. J. Bondy and D. Ableser, for the respondent

Keywords: Corporations, Shareholder Loans, Bankruptcy and Insolvency, Civil Procedure, Partial Summary Judgment

Kerzner Estate, 2018 ONCA 258

[Hoy A.C.J.O., Juriansz and Miller JJ.A.]

Counsel:

B. Stajduhar and A. Stajduhar, acting in person
R. Coates, for the respondent

Keywords: Estates, Fresh Evidence, Succession Law Reform Act, R.S.O. 1990, c. S.26

Hampton Securities Limited v. Dean, 2018 ONCA 262

[Fairburn J.A. (Motions Judge)]

Counsel:

S. J. Erskine and D. Barbaree, for the moving party
C. J. Somerville and D. Hooper, for the responding party

Keywords: Costs Endorsement, Stay of Proceedings

Umlauf v. Halton Healthcare Services, 2018 ONCA 265

[Hoy A.C.J.O., Juriansz and Miller JJ.A.]

Counsel:

J. Umlauf, acting in person
N. Rathwell, for the respondents

Keywords: Torts, Crown Liability, Pleadings, Striking Claims, Proceedings Against the Crown Act, R.S.O. 1990, c. P.27, s.7(1), Local Health System Integration Act, 2006, S.O. 2006, c.4, s.35.1, Canadian Charter of Rights and Freedoms

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