Canada: Court Of Appeal Summaries (October 6 To 10, 2014)

Last Updated: October 17 2014
Article by John Polyzogopoulos

Good afternoon.  This week's OCA Summaries include an interesting decision for our corporate/commercial followers on when a guarantor has a right to seek contribution from his or her co-surety when the first guarantor made payment even though there was no default by the borrower nor demand for payment by the bank.  Other subjects include oppression in the context of day to day operators overpaying themselves for more than two decades to the detriment of a silent partner, summary judgment in the discoverability and med-mal contexts, vexatious litigants, fraudulent conveyances, setting aside administrative dismissals for delay, a priority dispute between a condo corporation and a mortgagee with respect to common expense arrears, and child welfare, one of which is very rare, in that the CAS was found to have been overzealous in seeking the protection of the children when it was not warranted.  This week, the Court also dismissed the appeal from the Superior Court's refusal to certify as a class action an overtime pay claim against CIBC.

Wishing everyone an enjoyable Thanksgiving long weekend.

Brown v Canadian Imperial Bank of Commerce, 2014 ONCA 677

[Doherty, Epstein and Benotto JJ.A.]

J. Ptak, E. Karp and J. Brown, for the appellants
P.D.S. Jackson, L.M. Plumpton, S.E. Whitmore, J.C. Field and E.C. Jamieson, for the respondents

Keywords: Class Actions, Class Proceedings Act, 1992, ss. 5(1)(c), Certification Motion, Common Issue, Overtime Pay

Facts: This was an appeal from the dismissal of a motion to certify a class action claiming overtime pay.

At the certification motion, the plaintiffs proposed a class definition consisting of employees who had worked for the respondents after 1996 and who held the job titles of Analyst, Investment Advisor ("IA") or Associate Investment Advisor ("AIA"). The motion judge dismissed the motion, concluding that eligibility for overtime pay could not be determined on a common basis for all members of the proposed class. Absent a common issue on the question of eligibility for overtime pay, the claim could not be certified under s. 5 of the Class Proceedings Act, 1992 ("CPA").

On appeal to the Divisional Court, the plaintiffs narrowed the proposed class, excluding Analysts as well as IAs and AIAs who had supervisory or managerial responsibilities. The Divisional Court dismissed the appeal. The Court placed considerable reliance on the analysis in McCracken v Canadian National Railway Co., 2012 ONCA 445 ("McCracken"), holding that despite the considerable narrowing of the proposed class, the determination of eligibility for overtime pay remained an employee-specific inquiry that was not amenable to resolution as a common issue. The Court agreed with the motion judge that none of the other proposed common issues rendered the claims suitable for certification.

Issue: Should this action be certified as a class proceeding?

Decision: No.  Appeal dismissed.

Reasoning: The outcome of the certification motion turned on ss. 5(1)(c) of the CPA and, specifically, whether eligibility for overtime pay could be certified as a common issue. The appellants argued that eligibility for overtime pay raised a common issue. They argued that the job level designations and job titles used by CIBC were sufficient to distinguish between those with significant autonomy and/or managerial and supervisory responsibility (i.e. employees who were not entitled to overtime pay) from those who had no such autonomy or responsibilities (i.e. employees who were entitled to overtime pay).

In considering the above argument, there was no material misapprehension of the evidence by the motion judge or by the Divisional Court. The motion judge's findings were consistent with and supported by the evidentiary record. There was no evidence to support the appellants' position that CIBC used its employees' job level designations and job titles as bright line rules governing their eligibility for overtime pay. The CIBC guidelines made plain that a final determination of eligibility was based on the employment functions, duties and responsibilities of the particular employee and not his or her job title or classification.

Nor did the motion judge or the Divisional Court err in the legal analysis relevant to whether eligibility for overtime pay was a common issue. Doherty J.A. reviewed the case law that has developed and the principles to be applied in determining whether an issue satisfies the "common issue" requirement of ss. 5(1)(c) of the CPA. The Court in McCracken emphasized that the common issue inquiries under ss. 5(1)(c) will be evidence-driven. Sufficient commonality exists only where the evidence establishes some basis in fact to find that the functions, responsibilities and duties of all of the employees in the putative class are sufficiently similar that the classification of those employees as eligible or ineligible for overtime pay could be made for the class as a whole and without regard to the specific circumstances of individual employees. As in McCracken and in this case, the evidence showed a wide variability in the autonomy, duties and responsibilities of employees having the same job title or classification. The decision in Rosen v BMO Nesbitt Burns Inc., 2013 ONSC 2144 was distinguishable.

The motion judge and Divisional Court properly focused the common issue inquiry on the degree of variability of those job characteristics that were germane to the characterization of the employee as managerial/supervisory for the purposes of overtime pay eligibility. The common issue inquiry did not require identification of the "similarity of the primary functions" of the proposed class members.

Furthermore, the Divisional Court did not err in holding that the motion judge had not improperly engaged in an assessment of the ultimate merits of the plaintiffs' claim. The motion judge engaged in a factual inquiry to the extent required by ss. 5(1)(c) of the CPA and went no further than that.

Finally, the courts below did not err in failing to certify any of the other proposed common issues. Following the analysis in McCracken, it was clear that without a common issue of eligibility for overtime pay, the resolution of the other proposed common issues involving the terms of the employment contract would only minimally advance the litigation. In addition, two of the other proposed common issues were necessarily tied to the common issue of eligibility for overtime pay, and thus were also incapable of resolution on a class-wide basis.

Children's Aid Society of the Region of Halton v. E.M., 2014 ONCA 688

[Cronk, MacFarland and LaForme JJ.A]

Diane B. Skrow, for the respondent Children's Aid Society of the Region of Halton
Elizabeth McCarty and Kristin Knoepfli, for the respondent the Office of the Children's Lawyer

Keywords: Family Law, Adoption, Openness Order, Crown Wardship, Child and Family Services Act

Facts:  The appellant appeals from the order of Trimble J. of the Superior Court of Justice dated July 18, 2014, quashing the appellant's appeal from the openness order granted by Zisman J. of the Ontario Court of Justice dated March 28, 2014, under the Child and Family Services Act (the "Act"), pertaining to the appellant's biological daughter, S.K.  S.K. is now almost 15 years of age and has been in protection under the Act since 2008 – a period of approximately 6 years. The appellant argues that S.K.'s placement for adoption and, inferentially, her prior Crown wardship, are illegal and should be set aside and that S.K. should be placed with members of her extended maternal family.

Issue: Did the appellate judge err in quashing the appellant's appeal from the openness order?

Decision: No. Appeal dismissed.

Reasoning: The court noted that placement cannot be determined at an openness hearing.  In addition, nothing on the record established any defect in S.K.'s adoption proceedings.

The appellant's arguments in support of her challenge to S.K.'s adoption and the openness order have already been considered on several occasions by various judges of the Ontario Court of Justice and the Superior Court of Justice.  She has been unsuccessful throughout.  The court believed that the appellant was attempting to relitigate core issues concerning her daughter's placement already determined by the courts.

The appeal judge of first instance carefully considered the background to this litigation and the grounds advanced by the appellant for reversal of the openness order and S.K.'s placement for adoption.  The appeal judge also correctly concluded that there appears to be no statutory authority under the Act for an appeal of an openness order.  In any event S.K. was believed by the court to be unprepared to consent to a more expansive openness order.  In contrast, she did consent to her adoption by her adoptive parents and to the terms of the openness order.  Contrary to her submission, the appellant's consent to the openness order was not required.  The court determined that these considerations were fatal to the appeal.

Furthermore, the appeal judge referred expressly to the test for quashing an appeal and undertook an assessment of the merits of the appellant's appeal.  Although he stated that it was "plain and obvious" that the appellant's appeal could not succeed, his reasons, read as a whole, confirm that he directed himself to the governing test for quashing an appeal and applied it properly to the facts before him.

Economopoulos (Re), 2014 ONCA 687

[Hoy A.C.J.O., Gillese and Lauwers JJ.A]

Montgomery Shillington, for the appellants Constantine (Gus) Economopoulos and 1551666 Ontario Inc.
Sean Flaherty, for the respondent Vida Prijic

Keywords: Leases, Mortgages, Estates, s. 2 of the Fraudulent Conveyances Act, Encumbrancers, Partition Act, Rule 66.02 Rules of Civil Procedure, Form 66A

Facts:  This is an appeal from a decision granting a motion for a declaration that a lease was fraudulent within the meaning of the Fraudulent Conveyances Act (FCA), and void ab initio. The court noted that the facts in this case were extremely complicated and convoluted.

In the mid-1990s, Gus Economopoulos and his cousin, Peter Nicolopoulos owned a property in Woodstock, Ontario (the Property). On March 5, 1999, Gus Economopoulos granted a mortgage over his half-interest, and his half interest in the property to Nicholas Bulut.

On July 27, 1999, Art Nicolopoulos and Peter Nicolopoulos started an application for the sale of the property pursuant to the Partition Act. In response, Granger J. issued an order (the "2000 Order") mandating that the Property be sold, under the direction of the referee, on such terms as the referee deemed appropriate and "free of the claims of encumbrancers, if any, who have consented to the sale, and subject to the claims of encumbrancers who have not consented to the sale." The order was never registered on title and no party ever applied for a certificate of pending litigation based on it.

Peter Economopoulos (Gus's brother) had a mortgage on Bulut's ownership interest in the property. He enforced the mortgage by selling Bulut's interest in the property by power of sale to 15516666 Ontario Limited (155 Ontario). Peter Nicolopoulos transferred his interest in the property to Anjoca Holdings Inc. (Anjoca).

On December 1, 2006, Gus Economopoulos, who was the tenant on the property, entered into a lease with landlords, Anjoca Holdings Inc. (Anjoca) and 155 Ontario. The lease was not registered until 2012.

By 2009, Bulut's mortgage had been assigned to Vida Prijic, Bulut's spouse. In 2011, 155 Ontario brought a motion for summary judgement, seeking a declaration that the mortgage formerly held by Bulut, but at that point held by Prijic, had been paid. Justice T. David Little in an endorsement dated October 12, 2011, said he would dismiss the motion. However, no order was ever issued. As part of his endorsement, Little J. recommended that the referee appointed pursuant to the 2000 Order quickly dispose of the property.

In 2012, Anjoca and 155 registered Gus Economopoulos's lease on the property.

The parties to this action wished to sell the property to pursuant to Little J.'s recommendation. However, there was concern over the term "encumbrancers" in the 2000 Order. Prijic brought a motion seeking a declaration that would allow her to sell the property free and clear of encumbrances registered subsequent to the 2000 Order. She also sought a determination of the appropriateness and validity of the lease.

The motion judge found the lease to be fraudulent, and registered on title in violation of Little J.'s "order." She held it to be a manoeuver designed to frustrate the sale of the property. She also found that the term "encumbrancers" in the 2000 Order was only meant to refer to then-existing encumbrancers.


(1) Did the motion judge err in setting aside the lease on the basis that it was fraudulent within the meaning of the FCA?

(2) Did the motion judge err in interpreting "encumbrancers" in the 2000 Order as only referring to then-existing encumbrancers?

Decision: Appeal Allowed.


(1) Yes. The motion judge erred for three reasons. First, the appellants did not receive appropriate notice that a determination would be made under the FCA at the motion hearing. Second, the determination that the Lease was fraudulent, within the meaning of s 2 of the FCA, required a trial. Section 2 of the FCA requires that a conveyance be made with intent to defeat, hinder, delay or defraud creditors or others. A trial was required to determine whether the plaintiff had proven the fraudulent intent of the debtor. Third, the Court questioned the badges of fraud relied upon by the motion judge. The Court also questioned two negative inferences drawn by the motion judge. First, the motion judge drew a negative inference based on a pre-incorporation contract. Anjoca executed the 2006 lease before it was incorporated. The Court found that this is a common practice that should not draw a negative inference. Second, the motion judge found that registering the Lease on title was a "violation of Little J.'s order." There was no order by Little J. before the court; there was only an endorsement.

(2) Yes. First, the wording of the 2000 Order was taken almost word-for-word from Form 66A. Rule 66.02 of the Rules of Civil Procedure states that a judgement for partition or sale "shall be in (Form 66A)". Because the Rules of Civil Procedure is the source of Form 66A, Form 66A is essentially subordinate legislation. There is nothing in the wording of Form 66A that restricts "encumbrancers" to only those in existence at the time the order of partition or sale is made.

Second, the Partition Act extends a statutory right to seek from a court partition or sale of the land by those who have possession, or an immediate right to possession, of that land. Courts can only refuse to make such an order in circumstances of malice, oppression or vexatious intent. Form 66A provides protection for the "those other parties interested in the land" who are encumbrancers by making the sale of the land subject to their claims, if they do not consent to the sale. The fact that such encumbrances arise or are registered after a sale order has been made does not render them unworthy of the protection of Form 66A.

Collins v. Cortez, 2014 ONCA 685

[Weiler, Laskin and van Rensburg JJ.A.]

W. G. Scott, for the appellant
A. Camporese, for the respondent

Keywords:  Summary Judgment, s. 5 Limitations Act, 2002, Discoverability, Pleadings

Facts: The respondent brought a motion for summary judgment on the basis that the appellant's action was commenced more than two years after the motor vehicle accident, and was hence statute-barred. In her affidavit responding to the summary judgment motion, the appellant stated she did not realize she had a claim for non-pecuniary loss until she received X-ray results indicating the severity of her injuries.

The motion judge granted the motion for summary judgment, holding that the appellant ought to have pleaded the material facts relevant to discoverability in her statement of claim.

Issue:  Did the motion judge err in holding that discoverability ought to be addressed in a statement of claim?

Decision: Appeal allowed. Summary judgment set aside. Extension of time and leave granted the appellant to file and deliver a reply with respect to discoverability.

Reasoning:  Yes. The motion judge erred in holding the appellant was required to plead the material facts relevant to discoverability in her statement of claim, as the expiry of a limitation period is a defence and need not be anticipated by a plaintiff. The material facts relevant to discoverability are properly pleaded in a reply. The motion judge ought to have considered the evidentiary record on the motion.

Can-Win Leasing (Toronto) Limited v. Moncayo, 2014 ONCA 689

[Feldman, Lauwers and Strathy JJ.A.]

Licio E. Cengarle, for the appellant
Rafael Moncayo, acting in person
Alan S. Cofman, appearing as duty counsel

Keywords: Law of Guaranty, Surety, Guarantor, Right to contribution from Co-Surety or Co-Guarantor

Facts: Mr. Irwin was the sole shareholder of the appellant, Can-Win Leasing (Toronto) Limited. Mr. Moncayo, the respondent, and Mr. Irwin were 50-50 shareholders in Can-Win Truck Sales Inc. ("Can-Win Truck"). Together, Mr. Irwin, the respondent and the appellant guaranteed a debt of Can-Win Truck to the Royal Bank of Canada ("RBC").

Mr. Irwin became concerned about the state of Can-Win Truck's business and by January 2008, he wanted to close the business, while the respondent wanted to continue it. In March 2008, Mr. Irwin took over both Can-Win Truck and a related venture, R&R Leasing Inc. (R&R), to the exclusion of the respondent. Mr. Irwin wrote a note to the respondent saying that he had arranged with RBC to have the sole signing authority, so he could control the financials and get the company back on its feet. Mr. Irwin, through Can-Win Leasing, paid down $500,000 of RBC's loan to Can-Win Truck in August 2008. However, there was no evidence that Can-Win Truck was at any time in default under the loan agreement or that RBC was seeking to terminate the agreement. There was also no evidence of any demand by RBC on Can-Win Truck or any of its guarantors.

The trial judge found that Mr. Irwin took the unilateral action to pay down Can-Win Truck's debt, and did so in his own interest. Mr. Irwin claimed that he was getting a lot of pressure from RBC, and he was worried that the bank would foreclose on the property pledged as security for Can-Win Leasing's guarantee. However, the trial judge held that the voluntary act by Mr. Irwin "was not reasonably necessary for the survival of Can-Win Truck and that the business was salvageable" and therefore his claim against the respondent to contribute his share of the amount paid to RBC was dismissed.

In March 2009, RBC assigned the Can-Win Truck debt and security to Can-Win Leasing, based on Can-Win Leasing's promise to pay the balance of $178,000 before March 31, 2009. The payment of debt by Can-Win Leasing and the assignment of the debt to it took place without any notice to the respondent. Can-Win Leasing made a demand on the respondent for his "share" of the loan. The trial judge found that the payment by Can-Win Leasing was not reasonably necessary for the survival of Can-Win Truck because Can-Win Truck was salvageable and therefore the claim against the respondent for contribution was dismissed.

Issue:  In what circumstances is a surety entitled to seek contribution from its co-surety in the absence of a default by the principal debtor, and whether those circumstances existed in the present case. Therefore, was this a case in which the primary obligor's default was so imminent that the surety was entitled to take unilateral action?

Decision:   Appeal dismissed.

Reasoning:  No to the question posed above. Can-Win Leasing was acting solely as a volunteer and had no right of contribution from its co-sureties. The guarantees were payable on demand, but RBC made no demand. The absence of a demand on the surety was evidence that the primary debtor was not in default. Requiring a surety to give notice of its intentions to its co-sureties, and to give them an opportunity to participate in the discharge of an obligation, promotes the efficient winding up of the business and the equitable allocation of its outstanding liabilities.

Can-Win Leasing argued that the financial condition of R&R was irrelevant and ought not to have been considered in determining that Can-Win Truck was salvageable. The trial judge held that R&R's financial condition should have been considered as both companies had identical officers, directors and shareholders. The majority of the Court found that the trial judge was entitled to find the R&R evidence both relevant and probative to determine whether Can-Win Leasing had established that the business was unsalvageable. This supported that the discharge of the loan by Can-Win Leasing was premature and prejudicial to the respondent.

There is policy rationale in place for allowing a co-surety to "stop the bleeding" when failure of the business is inevitable, or where there has been a verbal demand. However, there is also a potential for abuse when default is not imminent, and that abuse occurred here.

Dissenting [Lauwers J.A.]


(1) Is a demand by the creditor an essential prerequisite to a surety's right to pay the creditor and seek contribution from a co-surety?

(2) Was Can-Win Leasing's payment to RBC premature and prejudicial to the respondent?


(1) No.  The absence of a demand by a lender has not been treated as displacing a surety's right of indemnity from the principal debtor. Lauwers J.A. referred to Stimpson v. Smith where it was unanimously held that the absence of a formal demand does not displace the right of contribution. Further reference was made to Thomas v. Notts Incorporated Football Club Ltd., where it was stated that "the surety who reaches an arrangement with the creditor which is not disadvantageous to his co-surety is not thereafter deprived of his entitlement to contribution".

Lauwers J.A. found that the respondent knew that Can-Win Truck's finances were in decline and that Mr. Irwin's personal assets were most significantly at risk. Mr. Irwin effectively provided to RBC, directly and indirectly through Can-Win Leasing, total security in excess of $4.1 million, while the respondent provided $900,000. In addition, the respondent was in no position to take the necessary steps to salvage the business himself. Therefore, the respondent had ample notice that a demand was virtually inevitable. Lauwers J.A. found that deference was not warranted and the motion judge made a palpable and overriding error when he based his decision on the mistaken assumption that Mr. Irwin was legally required to continue to finance Can-Win Truck. Mr. Irwin had significantly more at stake than the respondent; he was entitled to make the unilateral decision to stop the financing of the company.

(2) No.  A surety seeking to avoid contribution must establish prejudice. If there is no prejudice, then the surety seeking to avoid contribution will have been enriched by the impugned payment, and the objective of contribution – being the prevention of unjust enrichment in the context of a common obligation – will be defeated. As per Stimpson, "the surety who reaches an arrangement with the creditor which is not disadvantageous of his co-surety is not thereafter deprived of his entitlement to contribution". The respondent did not establish that he suffered prejudice as a result of the payments made by Can-Win Leasing to RBC, apart from the obligation to pay his share. Without the right of contribution, the respondent would be unjustly enriched at the expense of Can-Win Leasing.

Mr. Irwin was within his rights to conclude that the business was not viable, and to take steps to protect his assets. The trial judge committed a palpable and overriding error by substituting his business judgment for the business judgment of Mr. Irwin, whose assets were most at risk.

The trial judge further erred in basing his conclusion that Can-Win Truck was salvageable, in part, on the state of affairs of R&R, a distinct business entity. As for RBC's assignment of debt, when Can-Win Leasing made its demand on the respondent, it stood in the shoes of RBC as its assignee, and was entitled to make the demand for payment.

König v. Hobza, 2014 ONCA 691

[Hoy A.C.J.O., Gillese and Lauwers JJ.A.]

Sarit E. Batner and Justin H. Nasseri, for the appellants
Ronald Flom, for the respondent

Keywords: Oppression remedy, Shareholders, Directors' Compensation, Substantial Indemnity Costs

Facts: The respondent, Klaus-Peter König, was a silent investor in 1669051 Nova Scotia Limited, formerly East West Plastics & Electric Products Limited ("East West"). He was the only shareholder of East West not involved in its management and operation. The respondent and one of the managing directors (the appellants) agreed that the respondent would invest $100,000 in East West and be entitled to a 10% interest in it. He told the respondent that when East West made a profit, it would remain in the company or the respondent would receive a 10% share. Although there had been no discussion of the respondent's money being a loan, the $100,000 was provided to East West as a shareholder loan.

The Managing Directors set their compensation yearly, in arrears, following the end of the fiscal year. In doing so, they considered revenues and expenses in the prior year, as well as East West's tax position and bank covenants. By agreement, each received the same amount of compensation in each year. Among other things, the respondent claimed that the Managing Directors – as officers and directors of East West and, through TJK Enterprises Limited ("TJK"), shareholders – awarded themselves excessive compensation over a period of 22 years. The respondent argued that this conduct breached his reasonable expectations and warranted an oppression remedy. The trial judge agreed, and found the appellant managing directors jointly and severally liable for damages.

The trial judge agreed that two aspects of the appellants' conduct – the lack of financial disclosure and the excessive compensation – warranted an oppression remedy. The trial judge concluded that the excess compensation the Managing Directors received over the period between 1993 and 2007 (15 years) was a breach of the respondent's reasonable expectations as a shareholder and was unfairly prejudicial and unfairly disregarded the respondent's interests as a shareholder. The trial judge found that it was significantly in excess of what was fair and reasonable during the period. And because the Managing Directors were shareholders, when they paid themselves excess compensation, it effectively amounted to a dividend.


(1) Did the trial judge err by fixing fair market compensation for each year?

(2) Did the trial judge err by not approaching the calculations on a net basis over the full 22-year period?

(3) Did the trial judge err in finding that the appellants' failure to make financial disclosure warranted an oppression remedy, or in awarding substantial indemnity costs?

Decision: Appeal allowed in part. The trial judge erred by not calculating the Managing Directors' over-compensation on a net basis over the entire 22-year period at issue and would accordingly reduce damages to $187,453.51, and prejudgement interest thereon to $37,336.12. While the court did not interfere with the award of costs on a substantial indemnity basis, the court did reduced the quantum of damages, and thus returned the questions of the quantum of those costs and the cost consequences of Rule 49.10 to the trial judge for reconsideration. 


(1) Did the trial judge err by fixing fair market compensation for each year?  No.

First, the court noted that it cannot fairly be said that the experts unanimously testified that compensation is reasonable simply if it falls anywhere within the identified percentile range of the accepted market survey results for the benchmarked position for a year. The trial judge's approach of treating the range merely as a starting point in determining fair compensation is supported by the record. The trial judge had before him expert evidence that he should not simply accept a range and should make a specific determination of fair market compensation.

Second, it was agreed by all parties that setting executive compensation is a complex and imprecise exercise. The court concluded that the trial judge provided satisfactory reasons as to how, in conducting this imprecise exercise, he arrived at specific amounts for each year. The trial judge did not merely supplant directors' business judgment as to what, within a range, was fair and reasonable executive compensation. Instead, here, no business judgement was exercised. The trial judge engaged in the exercise that the Managing Directors had failed to undertake.

(2) Did the trial judge err by not approaching the calculations on a net basis over the full 22-year period?  Yes.

East West began as a small start-up. Its Managing Directors were under-compensated in its early years. Their higher rates of compensation when East West matured would in part effectively have recompensed them for lack of compensation during the early years.  The trial judge therefore erred in principle by not calculating whether, and by what amount, the Managing Directors were over-compensated by reference to the entire 22-year period at issue. By not doing so, the trial judge failed to consider the payments in later years in light of the under-compensation and give the Managing Directors credit for the amount by which they were under-compensated in East West's early years, and as a result, overstated the respondent's damages.

The lesser amount however, does not warrant disturbing the trial judge's conclusion that the payment of the excess compensation breached the respondent's reasonable expectations, and unfairly prejudiced or unfairly disregarded the respondent's interests. The Managing Directors did not consider whether it was fair and reasonable for the work done.

(3) Did the trial judge err in finding that the appellants' failure to make financial disclosure warranted an oppression remedy, or in awarding substantial indemnity costs?  No.

The court concluded that the trial judge was correct when he found the appellants' conduct to be oppressive. The respondent was the only shareholder who was not also a director and officer; he had been told that whenever East West made a profit, it would remain in the company or he would receive 10% of it; over the 22-year period no distributions had been paid to shareholders; the financial statements the respondent was provided with in the early years disclosed the Managing Directors' compensation as a line item; the respondent had made inquiries about the level of compensation paid to the Managing Directors; and some of the financial statements he was provided with were misleading because they only disclosed part of the Managing Directors' compensation.

The trial judge properly instructed himself as to the varying scale of wrongful conduct reflected in the terms "oppression", "unfairly prejudicial" and "unfairly disregards" – with oppression, a "wrong of the most serious sort" at one end, and "unfair disregard" at the other whether a shareholder has a reasonable expectation, and whether the actions of a corporation are oppressive, unfairly prejudicial to or unfairly disregard the interests of a shareholder are essentially questions of fact. The trial judge makes a fully-supported finding of deliberate high-handed conduct: the refusal to provide information to the respondent about compensation paid to the Managing Directors when asked.

Furthermore, the appeal court will interfere with an award of substantial indemnity costs only if it is satisfied that the trial judge erred in principle or that the costs award is plainly wrong: Ford Motor Co. of Canada v. Ontario (Municipal Employees Retirement Board) (2006), 17 B.L.R. (4th) 169 (Ont. C.A.), at para. 12. The trial judge properly instructed himself that a finding of oppression does not always attract substantial indemnity costs, and, having characterized the appellants' conduct as outrageous, egregious and reprehensible, determined that their conduct was sufficient to justify an award of substantial indemnity costs. A trial judge cannot be expected to address every argument in his or her costs endorsement. The trial judge's costs decision set out the reasons why he determined that substantial indemnity costs were appropriate in this case and on appeal the court did not find that the trial judge's decision to award substantial indemnity costs was plainly wrong.

Faklan v Niewiadomski, 2014 ONCA 697

[Strathy CJO, Rouleau and Hourigan JJ.A.]

P.R. Sweeny, for the plaintiff/appellant
R.B. Lilly, for the defendants/respondents

Keywords: Administrative Dismissal for Delay,  Setting Aside Dismissal, Reid v Dow Corning Corp, Contents of Affidavit, Rules of Civil Procedure, Rule 39.01(4)

Facts:  The appellant appealed the motion judge's order refusing to set aside the Registrar's dismissal of his action for delay.

Decision Appeal dismissed.

Reasoning:  There was no basis on which to interfere with the motion judge's discretionary decision. The motion judge correctly identified the applicable test in Reid v Dow Corning Corp (2001), 11 CPC (5th) 809, rev'd (2002), 48 CPC (5th) 93. It was open to him to conclude that the assertions in the appellant's solicitor's affidavit as to the cause of the dismissal, the length of delay, and the absence of prejudice, were devoid of any evidentiary foundation. The affidavit failed to state the source of the information, contrary to Rule 39.01(4) of the Rules of Civil Procedure. It was open to the motion judge to find that the appellant had not discharged the onus on a party seeking to set aside the dismissal of the action.

Persaud v Rzadki, 2014 ONCA 693

[Strathy CJO, Rouleau and Horrigan JJ.A.]

L. Pydiah, acting in person
A. L. Marrison, for the respondent

Keywords: Summary Judgment, Expert Reports, Medical Malpractice

Facts: The motion judge granted summary judgment dismissing the appellant's claim, finding there was no genuine issue requiring a trial. This finding was based on the expert reports tendered by the respondents opining that here was no breach of the standard of care.

On appeal, the appellants were unable to secure contradictory evidence, though they hoped to be able to retain an expert before trial who would contradict the findings of the respondent's experts.

Issue:  Did the motion judge err in granting summary judgment?

Decision: No.  Appeal dismissed. No order as to costs.

Reasoning:  No. Where an expert's report is not filed in a malpractice claim, the court can infer that the party is unable to obtain one. In the face of uncontradicted expert evidence, the motion judge correctly concluded that the claim could not succeed.

Children's Aid Society of London and Middlesex v. C.D.B., 2014 ONCA 692

[Cronk, Gillese and Tulloch JJ.A.]

S. Hassan and H. Hassan, for the moving party C.D.B.
D.A. Wowk, for the responding party Children's Aid Society of London and Middlesex
L.D.B., appearing in person as the responding party
J. Long, for the responding party The Children's Lawyer

Keywords: Child Protection Application, Children's Aid Society, Child and Family Services Act - s. 37, Child Custody Application, Divorce Proceedings, Motion to Quash Appeal

Facts: This case involves a motion brought by C.D.B. to quash the Children's Aid Society's ("C.A.S.") appeal of the trial judge's dismissal of its child protection application. In addition, the trial judge, as part of L.D.B.'s divorce and custody proceedings, granted custody of the two youngest children of the marriage to the father C.D.B.

On appeal, the C.A.S. seeks an order that all three children of the marriage were in need of protection within the meaning of s. 37 of the Child and Family Services Act (the "Act"). The C.A.S. also asks for three things on appeal: a disposition to be made in the best interests of the youngest child of the marriage, in the alternative that an order be made requiring a new protection hearing of the youngest child, or in the further alternative, that a new protection hearing be ordered regarding all three children before a different trial judge.

Issue: Is there any basis for declaring any of the children of the marriage to be children in need of protection under the Act, either now or at the time of commencement of the child protection application in 2010?

Decision: C.D.B.'s motion to quash the appeal of C.A.S. was allowed.

Reasoning: No. The trial judge found that the C.A.S. failed to demonstrate that any of the children were in need of protection from C.D.B. as of the date of his decision. His decision was based on numerous factual findings, credibility assessments, and the evaluation of the evidence as a whole, all of which attract a highly deferential standard of review. Furthermore, the C.A.S. has not introduced any evidence of any current protection concerns regarding any of the children (ie as of the date of the appeal). The primary relief sought by the C.A.S. is a determination that the children were in need of protection almost four years ago, when it commenced the child protection application. This issue is now moot. The C.A.S.'s bald assertion that the children are in current need of protection is insufficient to establish any present need for a child protection order.

Canada (Attorney General) v Mennes, 2014 ONCA 690 

[Feldman, Lauwers and Strathy JJ.A.]

Emilius Margareta Marcus Mennes, in person
Ayesha Laldin for the respondent

Keywords: Vexatious Litigant, s. 140 Courts of Justice Act, Reasonable Apprehension of Bias, Natural Justice, Cross-Examination on Affidavit, Rule 39.02(1)

Facts: The appellant is an inmate, and was declared to be a vexatious litigant in the Federal Court in 2004. He was served with a vexatious litigant application in the courts of Ontario by the respondent in January 2012. The appellant was found to be a vexatious litigant in the courts of Ontario under s. 140 of the Courts of Justice Act.  He appealed the order declaring him a vexatious litigant.


(1) Did the conduct of the proceedings by the application judge give rise to a reasonable apprehension of bias or a denial of natural justice?

(2) Did the application judge err in law by denying the appellant the opportunity to cross-examine the respondent on her affidavit or by limiting the appellant's responding affidavit to 5 pages?

(3) Did the application judge err in law in finding the appellant to be a vexatious litigant?

Decision: Appeal dismissed.


(1) No, the interventions of the application judge could not and did not create a reasonable apprehension of bias, nor was there a denial of natural justice. The test for reasonable apprehension of bias was reaffirmed in Chippewas of Mnjikaning First Nation v Chiefs of Ontario as "what would an informed person, viewing the matter realistically and practically- and having thought the matter through- conclude. Would he think that that it is more likely than not that the decision maker, whether consciously or unconsciously, would not decide fairly". The grounds for reasonable apprehension of bias must be substantial and the test is objective and fact specific. There is a strong presumption that judges do conduct themselves fairly and impartially.  Although in this case the application judge was very involved in asking questions and giving directions, the court held it was in order to structure the proceedings and to understand what needed to be decided procedurally. The court found that the appellant was given full opportunity to address the order or proceedings and the cross-examination of the respondent, and although he did not like or agree with the judge's decisions, those decisions were reached fairly.

(2) No, the judge's conclusion that the application would proceed without cross-examination was open to him and was entitled to deference. Additionally there was no reason why the appellant would have needed to file a longer affidavit. When an affidavit is submitted in support on a motion or application, the general rule is that the responding party has a right to cross-examine on that affidavit under rule 39.02(1). However the right to cross-examine on an affidavit is always subject to the court's discretion to control its own process. In this case the court found that the affidavit consisted of an uncontroversial recitation of proceedings initiated and discontinued by the appellant, the appellant was requesting an unreasonable period of 55 days to prepare for and conduct the cross-examination, and the appellant could address any incompleteness in the affidavit by filing his own material. The court also found that the application judge had limited the appellant's affidavit to 5 pages to ensure it contained only relevant information pertaining to the respondent's affidavit, and had there been a need to file a lengthier affidavit he would have been allowed to do so.

(3) No, there was no error in the application judge's conclusion. The application judge gave full and careful reasons for his ruling that the appellant is a vexatious litigant and is prohibited from commencing further proceedings without leave of the court. He reviewed the appellant's conduct in commencing 14 proceedings and seven appeals in the Ontario courts after he was declared a vexatious litigant by the Federal Court and prohibited from litigating there without leave. The court held these proceedings had no merit and could not proceed. The court noted that the appellant's misuse of the justice system constituted disrespect for and an abuse of the administration of justice.

Toronto Standard Condominium Corporation No. 1908 v. Stefco Plumbing & Mechanical Contracting Inc., 2014 ONCA 696

[Blair, Pepall and Hourigan JJ.A.]

Jonathan H. Fine and Yadvinder S. Toor, for the appellant
No one appearing for the respondent, Stefco Plumbing & Mechanical Contracting Inc.
Doug A. Bourassa, for the intervening party, Business Development Bank of Canada

Keywords: Mortgagee, Condominium Corporation, Condo Fees, Common Expenses, Default, Lien, Priority Dispute Between Mortgagee and Condominium Corporation, Standard of Review, Condominium Act

Facts: The appellant, Toronto Standard Condominium Corporation No. 1908 ("Toronto Standard"), commenced an application for an order that the respondent, Stefco Plumbing and Mechanical Contracting Inc., ("Stefco"), the owner of two condominium units, pay the full arrears of its outstanding condominium common expenses, plus interest and collection costs. Stefco had failed to pay nearly $50,000 in common expenses to Toronto Standard, dating back to 2009.  Stefco had also granted first mortgages over the units to the Business Development Bank of Canada ("BDC"). Stefco defaulted on the mortgages and BDC sold the units by power of sale, suffering a deficit of hundreds of thousands of dollars. Stefco did not participate in the application or participate in the appeal. The central issue in the court below was the priority between Toronto Standard and BDC.

Section 85 of the Condominium Act (the Act) provides that if an owner defaults on common expenses, a lien arises in favor of the condominium corporation against the owner's unit for such expenses. This lien expires three months after the default that gave rise to the lien occurred, unless the condominium corporation registers a certificate of lien. The condominium corporation must also give written notice of its lien to every encumbrancer whose encumbrance is registered against title to the unit. Section 86 of the Act gives the lien priority over all registered encumbrances, regardless of when they were registered.

Toronto Standard did not register its lien until September 20, 2012, meaning that its lien only covered arrears from July 2012 onwards.

Pursuant to s 134(5) of the Act, if a condominium corporation obtains an award of damages or costs against an owner or occupier of the unit, the damages or costs shall be added to the common expenses for the unit. Toronto Standard attempted to use s 134 to claim the arrears in common expenses as damages, and have the damages added to the common expenses payable by Stefco. If successful, Toronto Standard could then register a lien for the full amount of the arrears, which would stand in priority over BDC thanks to s 86 of the Act.

The application judge rejected this revival strategy because no notice was given and the equities favored the mortgagee. Toronto Standard appealed this decision.


(1) What is the standard of review of the application judge's decision?

(2) Can a condominium corporation's claim for common expenses constitute a claim for damages under s 134 of the Act?

Decision: Appeal Dismissed


(1) The granting of a remedy under s 134(3) of the Act is within the discretion of the application judge, who is obliged to consider what is fair and equitable in the circumstances of the case. The jurisdiction of an appellate court to review the exercise of a judicial discretion is very limited. The appellate court will generally not interfere unless the judge applied the wrong legal standard or based his or her conclusion on irrelevant factors, or factors to which he or she attached inappropriate weight. The application judge made a legal error in her implicit finding that unpaid common expenses can constitute damages under s 134 of the Act. The application judge approached the issue by reviewing the scheme of the Act and then determining that the revival strategy was not fair and equitable. The correct approach was to first determine whether a claim for common expenses as damages could be made under s 134. If the answer to that question was no, there was no necessity to consider whether it was fair and equitable to permit the revival strategy.

(2) No. Permitting a condominium corporation's claim for common expenses to constitute a claim for damages under s 134 of the Act is contrary to the legislative purpose of the Act, the scheme of the Act and is not consistent with the wording of s 134.

First, s 86 of the Act grants the condominium corporation a powerful tool by creating a priority for the collection of common expenses. However, the use of that tool is conditional on the condominium corporation fulfilling its obligation to register its lien and provide notice. These limitations represent a balancing by the legislature of rights between owners, tenants, mortgagees and the corporation itself. The revival strategy ignores this legislative balance. Therefore the revival scheme is inconsistent with the purpose of the Act.

Second, the revival scheme is also inconsistent with the scheme of the Act. For example, it would allow a condominium corporation to ignore its obligation to register a lien under s 85(2) of the Act, safe in the knowledge that it could always assert its lien rights later and still claim priority.

Third, the revival scheme is not consistent with the language of s 134(5), which states that "damages or costs" awarded to a condominium corporation are to be "added to the common expenses." This subsection draws a distinction between damages and common expenses. There is nothing in the subsection that indicates an intention on the part of the legislature to permit common expenses to be classified as damages so that they can then be reclassified back to being common expenses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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