Canada: Court Of Appeal Summaries (October 20 To 24, 2014)

Last Updated: October 28 2014
Article by John Polyzogopoulos

Below are this week's summaries. Topics include: calculation of damages in the motor vehicle accident context, application of principles of contractual interpretation, dismissal of a class action against the former Nortel, summary judgement motions relating to the Insurance Act and the Statutory Accident Benefits Schedule, court approval of fees charged by a receiver in a Bankruptcy proceeding, warranty agreement dispute by purchasers of new condominiums, a variation of a costs award in the context of contempt of court, and actionable encroachment over a right-of-way. Have a nice weekend.

Fulcher v Conklin, 2014 ONCA 710

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

Counsel:

D.S. Thompson, for the appellant

L. Rachlin, for the respondent

Keywords: Personal Injury, Motor Vehicle Accident, Damages, Loss of Income

Facts:

The respondent suffered a spinal injury following a motor vehicle accident involving the appellant. The respondent was one of two primary business partners at a company called Novitherm.

The appellant argues that the trial judge erred in her assessment of the respondent's past and future loss of income. In particular, the appellant argues that the trial judge should not have made an award on the basis of ownership income because there was no evidence that the respondent was paid on the basis of his ownership interest in Novitherm. The appellant argues that the respondent's damages should have been limited to nominal damages, as there was no business valuation nor any business records that would assist the trial judge in calculating damages.

Further, the appellant argues that the trial judge erred in finding an employer-employee relationship between the respondent and Novitherm, and should have thus disallowed the per quod claim.

Issue:

  1. Did the trial judge err in her assessment of the respondent's past and future loss of income?
  2. Did the trial judge err in finding that the respondent was an employee of Novitherm?

Holding: Appeal dismissed.

Reasoning:

  1. No. Determining the amount for loss of earning capacity is a complex issue of mixed fact and law on which the trial judge is owed considerable deference. There was ample evidence to show that the respondent's compensation was correlated to the overall performance of the company. It was reasonable for the trial judge to infer that the company had lost business as a result of the respondent's impaired ability to work. A business valuation was unnecessary in this case because the respondent was not claiming for the loss of potential sale value of the business.
  2. No. The characterization of an employer-employee relationship is a question of fact on which the trial judge is owed substantial deference. The trial judge made no palpable and overriding error in concluding that the per quod claim was available.

Rana v. Unifund Assurance Company, 2014 ONCA 711

[Epstein, van Rensburg and Benotto JJ.A.]

Counsel:

Kris Rana, appearing in person
Evelyn Ten Cate, for the respondent

Keywords: Statement of Claim, Small Claims Court, Reasonable Apprehension of Bias, Costs

Facts: This was an appeal from an order requiring the appellant to file a fresh Statement of Claim.

Issues:

  1. Did the motion judge err by refusing to transfer the claim from Small Claims Court to the Superior Court?
  2. Did the motion judge err by creating a reasonable apprehension of bias?
  3. Did the motion judge err by making no order as to costs?

Holding: Appeal Dismissed.

Reasoning:

  1. No. The appellant's Small Claims Court Claim was improper because it included references to settlement discussions; there were procedural issues that were avoided with a fresh claim; and the appellant was in no way prejudiced by being required to file a fresh statement of claim in Superior Court. The Court has jurisdiction over its own process and it was within the motion judge's discretion to make the order she did.
  2. No. There was nothing in the record to create an apprehension of bias.
  3. No. The motion judge was entitled to deference on the issue of costs.

De Beers Canada Inc. v. Ootahpan Company Limited, 2014 ONCA 723

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

Counsel:

Shawn K. Faguy, for the appellant

Christopher R. Dunn, for the respondent Ootahpan Company Limited

Joanna F. Reznick, for the respondent R.L.P. Machine & Steel Fabrication Inc.

Keywords: Contractual interpretation, Bell Canada v. The Plan Group, Subrogation

Facts: The motion judge dismissed the appellant's claims on summary judgment because the contractual arrangements between the claimants made it clear that the appellant's insurance policy was for the benefit of all those engaged in appellant's diamond mine project.

Holding: Appeal dismissed.

Reasoning: In interpreting the contractual arrangements between the parties, the Court applied the principles of contractual interpretation set out in Bell Canada v. The Plan Group, 2009 ONCA 548. Therefore, (a) the contract must be interpreted as a whole, with a view to giving meaning to all its terms; (b) the intention of the parties must be determined in accordance with the words they have used; (c) the factual matrix must be considered; and (d) the contract must be interpreted in a manner that accords with sound commercial principles and good business sense.

The contracts between the parties required the appellant to obtain insurance to protect it and its contractors and subcontractors against, among other things, risks of transportation in respect of property "whilst being transported on land". The contractors and subcontractors were to be included as additional named insureds. The insurance was also to contain a waiver of subrogation against any entity connected with the project. These provisions could be inferred as an undertaking to obtain insurance for the benefit of the appellant's contractors and subcontractors and a waiver of claims in respect of losses covered by such insurance. Furthermore, the insurance policy obtained by the appellant provided that the insurer would acquire no rights of recovery expressly waived by the insured prior to the loss. This gave full effect of the appellant's contractual undertaking.

Because the appellant waived liability for losses covered by its insurance policy (with the agreement of the insurer), the insurer had no right of subrogation. Other provisions set out in the contract could not override the waiver of subrogation.

Holley v Northern Trust Company, 2014 ONCA 719

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

Counsel:

Peter R. Jervis, Joel P. Rochon and Remissa Hirji, for the appellant

Jeff Galway and Nicole Henderson, for the respondent Northern Trust Company, Canada

Christine Lonsdale and Richard Lizius, for the respondent Royal Trust Company

Keywords: Proposed Class Action, Rule 21 motion, Class Proceedings Act 1992, Limitations Act, Companies Creditors Arrangement Act, Nortel proceeding,

Facts:

The appellant's proposed class action was dismissed on a rule 21 motion. The judge found that a court approved settlement, granted in the course of Nortel's Companies Creditors Arrangement Act (CCAA) proceedings, had released the respondents from all claims based on constructive fraud, and that the pleading did not disclose a cause of action for common-law fraud. Additionally the claims were statute barred under the Limitations Act. The appellant appealed this decision, arguing that it was only when the Monitor's 51st report was released on August 27, 2010, that she acquired the information to make her claim. This was precisely two years after she issued her notice of action on August 27, 2012.

Issues:

  1. Did the motions judge err in finding the claims statute-barred?

Holding: Appeal dismissed.

Reasoning:

  1. No, the appellant knew the factual basis for her constructive fraud and common-law fraud claims against the respondents at the latest in March of 2010, and both her claims were statute-barred. In March 2010 the appellant filed materials in the Nortel CCAA proceeding, and it was apparent she understood that she had a potential cause of action against the respondents at that time. The court held that the appellant was clearly aware of the legal basis for her claim as a result of the Monitor's 39th report, and her factum filed at a March 2010 hearing demonstrated that she believed litigation was the appropriate remedy. The court held that the appellant was beyond the two-year limitation period when she filed her notice of action on August 27, 2012.

Liu v. The Bagg Group, 2014 ONCA 718

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

Counsel:

W.S. Liu, acting in person

A.C. McLachlan and J. Mathewson, for the respondent The Bagg Group, et al.

Keywords: Motion for Summary Judgment, Dismissal of Claim, Jurisdiction, Appeal of Costs Award

Facts: This case involves an appeal of the motion judge's decision which granted the respondent's motion for summary judgment dismissing the appellant's claim, and dismissed the appellant's motion for summary judgment.

Issues:

  1. Did the appellant provide sufficient evidence to support her claim?
  2. Did the motion judge err in the quantum of its cost award to the respondent?

Holding: The appeal was dismissed and the motion judge's costs award to the respondent was upheld.

Reasoning:

  1. No. The appellant provided no evidence to support her claim that the respondent, an employment agency, was contractually obligated to forward her job application for a specific position, or that it committed an actionable wrong by failing to forward it. The motion judge did not err in its decision, and there is no evidence that the motion was procedurally unfair.

    Furthermore, the Court of Appeal lacked jurisdiction to hear the appellant's appeal of the dismissal of its own motion for summary judgment. This part of the underlying decision was an interlocutory order which required the appellant to seek leave to appeal in the Divisional Court. Regardless of the appellant's error, her claim was properly dismissed on the respondent's motion for summary judgment.
  2. No. The motion judge did not err in awarding $10,000 in costs against the appellant. This is a discretionary matter in which the motion judge is entitled to deference.

Mader v South Easthope Mutual Insurance Company, 2014 ONCA 714

[Weiler, Hourigan and Pardu JJ.A.]

Counsel

Oostdyk, for the appellant

Keay, for the respondent, South Easthope Mutual Insurance Company

Keywords:
Summary Judgment, Rule 20, Hryniak v Mauldin, deference on summary judgment motion, Insurance Act, s. 279, s. 280, s. 281, s. 282, s. 283, motor vehicle accident, Statutory Accident Benefits Schedule, Automobile Insurance Regulation, mandatory mediation, Financial Services Commission of Ontario, settlement agreement, bad faith, mental distress, Arsenault v Dumfries Mutual Insurance Co., Courts of Justice Act, s. 19(1)(b), interlocutory order, leave to appeal

Facts:
The appellant was injured in a single vehicle accident. She claimed that she was no longer able to work and began receiving income replacement benefits on August 1, 2002, pursuant to the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, O. Reg. 403/96. On April 24, 2003, the appellant received a notice of stoppage of benefits and a request for assessment by the respondent insurer, claiming that she was able to resume her pre-accident employment. The appellant disagreed and requested a Designated Assessment Centre ("DAC") assessment in order to determine her entitlement to income replacement benefits. Before the DAC assessment took place, the appellant signed a full and final release in exchange for a $3,000 lump sum payment, releasing the respondent from any obligation to pay accident benefits. The appellant alleged that she felt that she had no choice but to accept the settlement and sign the release.

The appellant commenced an action claiming, inter alia, that she was entitled to income replacement benefits for life and that the respondent had breach its duty of good faith and caused her mental distress by unlawfully terminating these benefits. The respondent informed the appellant that she was statutorily obliged to repay the settlement funds received and to file her dispute for mediation at the Financial Services Commission of Ontario ("FSCO") before commencing her action.

The appellant brought a motion for partial summary judgment and a declaration that she was entitled to income replacement benefits until the respondent complied with its alleged obligation to provide the requested DAC assessment. The respondent also moved for summary judgment, alleging that the appellant's action was statute barred because the appellant did not repay her settlement funds and file for mediation prior to commencing litigation.

The motion judge dismissed the appellant's motion for partial summary judgment and granted the respondent's motion for summary judgment dismissing the appellant's claim. The motion judge found that ss. 279(1) and 281(2) of the Insurance Act, R.S.O. 1990, c I-8 (the "Act"), together required an insured person to seek mediation of a dispute in respect of accident benefits before commencing a court proceeding. Section 9.1(8) of the Automobile Insurance Regulation, R.R.O. 1990, Reg. 664 (the "Regulation") also required the appellant to return the money received as consideration for the settlement, before commencing mediation.

The motion judge also dismissed the appellant's claim for damages for mental distress and bad faith, finding that these claims were "in respect of" her entitlement to accident benefits under s. 279(1) of the Act, and therefore subject to the mandatory mediation requirements of the Act. Additionally, the mental distress and bad faith claims were not independent causes of action, but flowed from the respondent's alleged breach of the insurance policy. Since the respondent had not been found in breach of its obligations and the appellant's claim for payment of income replacement benefits had accordingly been dismissed, there was no basis for the claims of mental distress and bad faith.

Issues:

  1. Did the motion judge err in granting the respondent's motion for summary judgment?
  2. Did the motion judge err in dismissing the appellant's motion for partial summary judgment?

Holding: Appeal dismissed.

  1. Reasoning:
    (1) No. Following Hryniak v Mauldin, 2014 SCC 7, absent an error in law, the exercise of powers by a motion judge under the new summary judgment rule attracts deference. There was no basis for appellate interference.

    Mediation is central to the statutory scheme under the Act for resolving disputes between insured persons and their insurers. It is a statutory precondition to an insured bringing court proceedings. Without mediation, the court has no jurisdiction to hear the appellant's claim. The appellant had disputed the validity of the settlement agreement, and therefore fell under an exception to the FSCO mediation procedure, which ordinarily does not permit mediation where a settlement agreement is in place.

    Furthermore, pursuant to the Regulation, in order to rescind the settlement the appellant was required to deliver written notice to the office of the insurer and repay the settlement funds. The repayment of settlement funds was also required in order to commence mediation. The appellant had not fulfilled either of these statutory preconditions. Appellant's counsel's assertion that payment was available was not evidence.

    Regarding the appellant's claim for mental distress and bad faith, Hourigan J.A. concluded, following Arsenault v Dumfries Mutual Insurance Co. (2002), 57 OR (3d) 625 (CA), that these claims flowed from the denial of the appellant's benefits. At their essence, they were nothing more than a claim that the appellant had been wrongly denied benefits. As such, they were "in respect of" the denial of her benefits, were caught by the procedural rules in ss. 280 to 283 of the Act, and the appellant was required to bring these claims to an FSCO mediation. This was reinforced by s. 282(10) of the Act, which allows an arbitrator to make an award for claims related to the manner in which benefits are administered.
  2. No. The Court of Appeal had no jurisdiction to hear the appellant's appeal from the order dismissing her motion for summary judgment. The denial of the appellant's motion for partial summary judgment was an interlocutory order, from which, pursuant to the Courts of Justice Act, R.S.O. 1990, c. C-43, s. 19(1)(b), an appeal lies to the Divisional Court, with leave. Only if leave was obtained from the Divisional Court could the appeal be combined with an appeal to the Court of Appeal in the same proceeding. Even if the appellant was in the right court, all of her claims were properly dismissed on the respondent's summary judgment motion.

Sagan v. Dominion of Canada General Insurance Company, 2014 ONCA 720

[Epstein, van Rensburg and Benotto JJ.A.]

Counsel:

Sean Oostdyk, for the appellant

Joyce Tam, for the respondent

Keywords: Limitation period, Insurance, Insurance Act, Motor Vehicle Accident

Facts: The appellant was in a car accident in March 2008. The same month he advised his insurer of his claim. The insurance company sent him a package that included an application form known as OCF 1. The package also included a disability certificate known as OCF 3.The appellant filed the application (OCF 1) for accident benefits (that included a claim for non-earner benefits) but did not file a disability certificate (OCF 3). The respondent sent the appellant a denial of the claim in April 2008. In April 2011 the appellant sought to apply for mediation with respect to the denial of his claim submitted in 2008. The respondent took the position that the two-year limitation period had expired. An action was commenced but was dismissed on a motion for summary judgment. The appellant appeals the summary judgment on the basis of section 35(2) of the Regulations under the Insurance Act (the SABS regime). The appellant asserts that the time does not start to run until there is a denial of a valid claim; namely, one that includes a disability certificate, and since the appellant's claim did not include a disability certificate, it was not a valid claim.

Issue: Did the motion judge err by determining that the limitation period started to run from the time that the claim was denied?

Holding: No. Appeal dismissed.

Reasoning:

The court noted that the Regulation cannot be interpreted in this manner for 2 reasons:

  1. A plain reading of section 35(2) provides that the disability certificate is to be filed with the application for benefits. The disability certificate is not the application. In addition, section 35(6) provides for claims to be considered in cases where there is no disability certificate filed at all.
  2. The statutory regime is designed to ensure timely submission and resolution of accident benefits. It is not in keeping with this overall purpose to suggest that a claimant can delay the start of the limitation period – perhaps indefinitely – by not submitting a disability certificate.

Senos v. Karcz, 2014 ONCA 726

[Juriansz, Pepall and Strathy JJ.A.]

Counsel

Franks, M. Zalev and M. Sager, for the appellant

McCarthy and E. Sadvari, for the respondent

Keywords: Successful Appeal, Costs Endorsement

Facts:

The appellant was successful on the underlying appeal and the matter was remitted for trial. The parties then made cost submissions on the appeal.

Holding: The costs award from the Divisional Court is set aside. The appellant is entitled to have costs of this appeal fixed at $10,000, inclusive of disbursements and all applicable taxes.

Reasoning:

There is no reason to depart from the presumption that the successful appellant is entitled to costs.

Akagi v. Synergy Group (2000) Inc., 2014 ONCA 731

[Laskin, Gillese and Pardu JJ.A.]

Counsel:

William C. McDowell and Jamie J.W. Spotswood for the moving parties/appellants Vincent Villanti and Integrated Business Concepts Inc.

Jonathan C. Lisus and James Renihan, for the moving parties/appellants RV Inc. and Student Housing Canada Inc.

Shannon M. Puddister, for the responding party Ravendra Chaudhary

Terry Corsianos, for the responding party Trent Akagi

Jim Patterson and Ruth Promislow, for the Court-Appointed Receiver J.P. Graci & Associates Ltd.

Keywords: Dismissal for Delay, Counsel's Inadvertence

Facts: The appellants initially moved before a single judge of the Court of Appeal to set aside Registrar's Order to dismiss a case for delay. The Court of Appeal motion judge dismissed the motion because the reason for the delay had not been satisfactorily explained. The appellants appealed that dismissal.

Issues: Whether the Court should extend the time to perfect.

Holding: Appeal Granted

Reasoning:

Fresh evidence indicated that it was the conduct of counsel appearing on the motion that led to its dismissal. Counsel did not put forward evidence of their clients' intentions to pursue the appeal as quickly as possible, nor did counsel give the motion judge an explanation for the delay. New evidence presented by new counsel indicated that the delay was caused by unsuccessful efforts to consolidate various orders into a single record and to co-ordinate the preparation of appeal materials with lawyers for other parties. Moreover, the motions judge was not directed to a jurisdictional issue relating to the scope of a Receiver's authority and the Receiver's ability to obtain a certificate of pending litigation. The Court held that counsel's inadvertence should not prejudice a client's cause.

HSBC Bank Canada v. Lechier-Kimel, 2014 ONCA 721

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

Counsel:

No one appearing for the applicant

No one appearing for the respondent

Jonathan H. Wigley, for the court-appointed receiver, Zeifman Partners Inc.

Michael G. McQuade, for the objector, Dr. Morris Goldfinger

Keywords: Receivership, Bankruptcy, Court Approval of Fees

Facts: Ms. Lechier-Kimel is an insolvent person whose major asset was a home located in Toronto (the "Property"). HSBC Bank Canada ("HSBC") held the first mortgage on the Property in the amount of approximately $9 million. Dr. Goldfinger held the second mortgage in the amount of approximately $5 million. Between 2010 and 2013, the Property was listed for sale, starting at a listing price of over $23 million and eventually dropping to approximately $14 million. On April 18, 2013, HSBC successfully applied to the Ontario Superior Court, Commercial List, for the appointment of Zeifman Partners Inc. as receiver of the Property, as well as the associated personal property of Ms. Lechier-Kimel, under s. 243 of the Bankruptcy and Insolvency Act.

The receiver brought a motion for court approval of an auction process to sell the Property. The motion judge approved the auction process and the suggested reserve price of $10 million. The receiver then brought a motion seeking an order cancelling the auction and permitting the sale of the Property for $12 million to buyers who wished to avoid the auction. The motion judge declined to grant the order, finding that the acceptance of the offer would damage the integrity of the sale process. The auction was held and the Property was sold for an effective price. The receiver brought a motion seeking approval of its fees and its legal expenses, including fees incurred in negotiating the sale that was not approved by the court and in bringing the unsuccessful motion to abandon the auction process. The motion judge approved most of the receiver's fees, but denied $30,000 in fees for the receiver and $20,000 in legal costs for its counsel. The motion judge held that these amounts were incurred by the receiver as part of an ill-considered motion brought by the receiver, and thus were not reasonable expenses for which the receiver could claim reimbursement.

The receiver appeals the disallowance by the motion judge, arguing that its fees were fair and reasonable in the circumstances. The receiver submits that the motion judge made three palpable and overriding errors: (a) failing to consider the general principle that a receiver's business decisions are to be afforded deference by the court; (b) failing to consider the factual context in which the receiver was operating; and (c) overemphasizing the integrity of the auction process and failing to give sufficient consideration to the need for flexibility.

Issue: Did the motion judge err in finding that the fees were not fair and reasonable?

Holding: No. Appeal dismissed.

Reasoning:

First, while courts will show deference regarding the business decisions of receivers, the procedure for reviewing a receiver's conduct of a receivership is not the same as that for reviewing the reasonableness of its fees. Notably, while the objecting party bears the burden of showing a receiver's business decisions are unreasonable, the receiver bears the burden of proving that its fees are fair and reasonable. Thus the deference to which the receiver's business decisions are owed does not insulate its accounts from review to determine if they are fair and reasonable.

Second, nothing in the motion judge's reasons indicates he was not cognizant of, and did not take into account, the factual context in which the receiver was operating. Also, the motion judge was a seasoned Commercial List judge who has considerable experience dealing with court appointed receivers.

Finally, the motion judge did not overemphasize the integrity of the auction process, nor did he fail to give sufficient consideration to the need for flexibility. A number of circumstances led the motion judge to conclude that safeguarding the integrity of the sale process was paramount, including: the receiver's previous representations that an auction would be the best method to sell the Property; the receiver's deviation from the approved sale format almost immediately after the court order was issued and undertaking significant work without seeking court approval; the proposed sale price which was only 20 per cent above the reserve price; and the receiver's pursuit of a course of action that would likely only benefit HSBC.

Toronto Standard Condominium Corporation No. 2095 v. West Harbour City (I) Residences Corp., 2014 ONCA 724

Laskin, Rouleau and Epstein JJ.A.

Counsel:

Thomas McRae and John De Vellis, for the appellant

Richard P. Hoffman, Harry Herskowitz and Sabrina Adamski, for the respondent

Keywords: Declarant, Condo Corporation, Sections 37(1) and 56 of the Condominium Act, Ontario New Home Warranties Plan Act, Tarion Warranty Corporation, Peel Condominium Corp. No. 417 v. Tedley Homes Ltd.

Facts: The respondent, West Harbour (I) Residences Corp. is the declarant of the condominium registered as Toronto Standard Condominium Corporation No. 2095 (the "appellant"). The appellant's first board of directors, appointed by the respondent, adopted By-Law No. 2 resulting in the appellant entering into a warranty agreement with the respondent. The agreement limited the respondent's warranties regarding the common elements of the appellant to the statutory warranties provided in the Ontario New Home Warranties Plan Act ("ONHWP Act"). The agreement also prevented the appellant from making any warranty claim in respect of the common elements except through the process established by Tarion Warranty Corporation, which administers the ONHWP Act.

After the appellant's new board of directors were elected by the purchasers of the individual units, the appellant brought an application seeking a declaration that both By-Law No. 2 and the warranty agreement were invalid on the grounds that enacting the by-law and entering into the warranty agreement were beyond the authority of the board of directors that the respondent elected. The appellant also claimed that the by-law and agreement were unreasonable and thus inconsistent with the Condominium Act ("Act").

The warranty agreement and By-Law No. 2 were disclosed in the respondent's disclosure statement, and the agreements of purchase and sale that the respondent entered into with the original purchasers. The application judge noted that the "by-law and [warranty] agreement were registered on title to the condominium project, to give notice to all prospective purchasers of condominium units that the liability of the developer to the condominium corporation was limited." The respondent claimed that all the purchasers were represented by counsel.

The application judge dismissed the appellant's application and found that "[n]othing in the Act, the ONHWP Act, or any other provincial legislation, prevents a developer from limiting its liability in respect to common elements."

Issues:

  1. Is By-Law No. 2 ultra vires because it is not within the enumerated subject matters of the permissible by-laws provided for in s. 56 of the Act, and is inconsistent with the Act and the appellant's declaration?
  2. Is By-Law No. 2 unreasonable?

Holding: Appeal dismissed.

Reasoning:

  1. Is By-Law No. 2 ultra vires? No.

    1. Does the by-law fall within one of the powers listed in s. 56(1) of the Act? Yes.

      By-Law No. 2 provides a framework within which the condominium corporation would deal with any and all outstanding work and construction deficiencies. The decision by the board of directors appointed by the respondent to limit the corporation's options to making claims within the Tarion process was clearly an exercise in the governance of the corporation's affairs. A by-law that governs the way in which the corporation is to advance such claims, whether it is adopted by the current board or by the declarant-appointed board, is authorized by s. 56(1)(p) of the Act, so long as it is not otherwise contrary to the Act or the declaration.
    2. Is the by-law otherwise contrary to the Act or to the declaration? No.

      Sections 89 and 90 of the Act and paragraph 10.1 of the declaration impose obligations on the appellant to repair and maintain the property. The by-law and warranty agreement only impose limits on the options that the appellant may have to pursue the respondent and seek recovery of any costs it may incur in carrying out its repair and maintenance obligations. The by-law and warranty agreement do not confine the appellant's repair and maintenance obligations; they simply restrict to a certain extent the manner in which the appellant will manage its resources and fund any repair and maintenance costs.
    3. Is By-Law No. 2 invalid because, in passing it, the directors appointed by the respondent breached their statutory obligations? No.

      Section 37(1) of the Act creates a standard of care that applies to directors and officers and describes circumstances in which directors and officers of condominium corporations may be held personally liable for their acts. The appellant failed to cite any case law in which s. 37(1) forms the basis for finding that a particular by-law or resolution of a condominium board was ultra vires.

      In implementing the structure determined by the respondent, the initial directors were not acting as fiduciaries for the purchasers of condominium units. The Court referred to Peel Condominium Corp. No. 417 v. Tedley Homes Ltd. (1997), 35 O.R. (3d) 257 (C.A.) and found that the directors' role was to "organize the affairs of the condominium in the manner anticipated by the declaration and agreed to by the purchasers of the individual units" (provided the directors were acting within the limits imposed by the Act).

      By-Law No. 2 and the warranty agreement entered into by the board of directors appointed by the respondent did not contravene the Act. They were both disclosed to the individual unit purchasers and the by-law was placed on title giving notice to the world of its terms. There was no basis for finding that the by-law was ultra vires.
  2. Is By-Law No. 2 unreasonable? No.

    Through the disclosure and terms in the agreements of purchase and sale, the original purchasers were made aware of precisely what warranty came with their purchase. By-Law No. 2 was registered on title to give notice to all prospective purchasers.

Boily v Carleton Condominium Corporation 145, 2014 ONCA 735

[Epstein, Lauwers and Pardu JJ.A]

Counsel:

Janice B. Payne for the appellants Dan Litchinsky, Avis Miller, Jean-Guy Bourgeois and Carol Smale

Antoni Casalinuovo and Patricia Elia, for the appellant, Carleton Condominium Corporation 145

Rodrigue Escayola and Jocelyn Duquette, for the respondent, Juan Escudero

Keywords: Costs Endorsement, Contempt of Court, Substantial Indemnity, Partial Indemnity, rule 49.10 of the Rules of Civil Procedure, Boucher v Public Accountants Council (Ontario), Einstoss v Starkman, Joint and Several Liability.

Facts:

The respondents are owners of condominium units in the appellant condominium complex. The individual appellants were its board of directors at all material times. The respondents challenged the appellants' decision to install landscaping that differed from the previous landscaping following extensive repairs to the garage beneath the complex. On June 29, 2011, Beaudoin, J ordered the appellants to restore the landscaping to its previous design. In defiance of that order, the individual appellants authorized the installation of new landscaping. In a March 8th 2013 judgement, Beaudoin, J found the appellants in contempt of court and ordered the individual appellants to personally bear the expense of restoration, estimated at approximately $400,000. In separate reasons, the motions judge ordered the individual appellants to pay the respondents' costs of the motion on a substantial indemnity basis, together with disbursements. This amounted to $109,598. August 6, 2014 the Court of Appeal allowed an appeal in part where the finding of contempt was dismissed and the sanction was varied. Instead of paying to restore the original design, the individual appellants were ordered to pay a $7500 fine to the Carleton Condominium Corporation 145. The parties were invited to make costs submissions as to the costs of the underlying contempt motion. The Carleton Condominium Corporation 145 asked that the motion judge's costs award not be disturbed. The individual appellants argue the amount of costs awarded should be reduced, and an award on a substantial indemnity basis is not warranted.

Issues:

  1. Should the motion judge's cost award be varied?

Holding: Partial indemnity costs awarded in favor of the respondents, in the amount of $35,000 inclusive of disbursements and applicable taxes.

Reasoning:

  1. Yes, the motion judge's cost award was set aside. The court agreed with the individual appellants that costs should not be paid on a substantial indemnity scale. In Einstoss v Starkman the court held that a finding of contempt does not, on its own, justify an award of costs on an elevated scale. Elevated costs are warranted in two circumstances. First, under the operation of an offer to settle under rule 49.10 of the Rules of Civil Procedure, and second where the losing party has engaged in behavior worthy of sanction. In this case, neither an offer to settle nor the individual appellants' conduct justifies an award of costs on a substantial indemnity basis. They should be awarded costs on a partial indemnity basis. The court held that after applying the principles from Boucher v Public Accountants Council (Ontario), the costs award of $35,000 reasonably responded to the expectations of the parties. Each appellant was held to be responsible, on a joint and several basis, for one fifth of the award.

Weidelich v. de Koning, 2014 ONCA 736

[Doherty, Laskin and Epstein JJ.A.]

Counsel:

H.J. Ash, for the appellants

Shastri and D. Winer, for the respondents

Keywords: Actionable Encroachment on Private Right-of-Way, Ancillary Rights, Declaration for Removal of Permanent Structure on Right-of-Way, Substantial Interference with Right-of-Way

Facts:

The appellants are four homeowners whose lands back onto a shared private laneway that is used to access their respective garages. The laneway traverses lands owned by each of these homeowners, as well as the respondent's lands. These lands are subject to a private right-of-way, described in each of their property's title documents as being subject to vehicular ingress and egress. The specific dispute is concerned with an addition constructed by the respondent, which only encroaches onto its respective portion of the right-of-way. After the addition was constructed, the appellants applied for declarations that the respondents not obstruct the right-of-way, and that they had certain ancillary rights including the use of the right-of-way for snow removal. The appellants also sought an order requiring the respondents to remove all structures built on the right-of-way. The application judge dismissed the appellants' application, which forms the subject of the current appeal.

Issues:

  1. Did the application judge err in dismissing the appellant's application?

Holding: The appeal was dismissed and the respondents were entitled to $12,000 in costs.

Reasoning:

  1. No. The application judge was correct in finding that the appellants failed to establish an actionable encroachment. Jurisprudence clearly demonstrates that an encroachment on a private right-of-way is actionable only where the encroachment substantially interferes with the dominant owner's ability to use the right-of-way for a purpose identified in the grant. The appellants failed to establish a substantial interference with any reasonable use granted in the right of way- the ability to use the laneway for vehicular ingress and egress. The appellants expressly admitted that the respondent's addition does not affect their ability to drive to and from their garages along the laneway.

    The appellants' argument that the respondent's encroachment is actionable even if it does not interfere with the uses specific in the grant of the right-of-way is not supported in the case law. Furthermore, the case law does not support their argument that an encroachment by a permanent structure is a substantial interference, whether or not the encroachment actually interferes with the dominant owner's reasonable use. Unless the language in the grant of the right-of-way is broad enough, such that any permanent structure encroaching on it constitutes substantial interference with the reasonable uses that it sets out, then the encroachment is not actionable. The grant of the right-of-way in the appellant's case does not include broad enough language, such as "at all times and for all purposes", to support this argument.

    In terms of the ancillary rights of snow removal claimed by the appellants, the record did not contain sufficient facts to support their argument.

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Authors
John Polyzogopoulos
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8 Nov 2018, Conference, Toronto, Canada

This year’s program is entitled “An Analysis of Fidelity Claims for the Modern World.” The program will address important substantive and practical issues germane to today’s fidelity claims handling.

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