Canada: Court Of Appeal Summaries (September 19 – 23, 2016)

Last Updated: September 27 2016
Article by John Polyzogopoulos

There were four substantive civil decision released this week. The first, Sturino v. Crown Capital Corporation is a priority dispute in the receivership context. The second, Iroquois Falls Power Corporation v. Ontario Electricity Financial Corporation   involved a motion to stay a Superior Court order pending the determination of a leave application to appeal to the Supreme Court of Canada (the stay was denied). The third, Silva v. John Doe involved a Brazilian citizen, who was denied the ability to make a claim against the Motor Vehicle Accident Claims Fund after he was hit by an unidentified motorist while crossing the street because he was living in Canada illegally. Finally, the fourth case, 2405416 Ontario Inc v 2405490 Ontario Limited involved an option to purchase a property and a question as to the ensuing rent owed.

Civil Decisions (click on the case name to read the summary)

Sturino v. Crown Capital Corporation, 2016 ONCA 688

Keywords: Endorsement, Real Property, Mortgages, Enforcement, Receiverships, Bankruptcy and Insolvency Act, s. 243(1), Receiver's Fees, Priority, Courts of Justice Act, s. 101

Iroquois Falls Power Corporation v. Ontario Electricity Financial Corporation, 2016 ONCA 687

Keywords: Appeals, Stay Pending Appeal, Courts of Justice Act, s. 7(5), Supreme Court Act, Serious Issue to be Tried, Irreparable Harm

Silva v. John Doe, 2016 ONCA 700

Keywords: Insurance Law, Motor Vehicle Accident Claims Act, s. 25(1), Compensation, Statutory Interpretation, Burden of Proof, Ordinary Residency,  Immigration Law, Immigration and Refugee Protection Act, Civil Procedure, Summary Judgment

2405416 Ontario Inc v 2405490 Ontario Limited, 2016 ONCA 696

Keywords: Real Estate, Commercial Lease, Condition Precedent

Civil Decisions

Sturino v. Crown Capital Corporation, 2016 ONCA 688

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

Counsel:

Quance, for the appellant

Jaskiewicz, for the respondent

Keywords: Endorsement, Real Property, Mortgages, Enforcement, Receiverships, Bankruptcy and Insolvency Act, s. 243(1), Receiver's Fees, Priority, Courts of Justice Act, s. 101

Facts:

Crown Capital Corporation (the "Owner") acquired the property at issue (the "Property"). The appellant, Canada Investment Corporation, subsequently acquired an assignment of the first mortgage on the Property, which it assigned to Fenfam Holdings Inc on the same date as security for a loan. The loan was for a principal amount less than that of the first mortgage. Within months, the Owner defaulted under the second mortgage. The second mortgagee, Frank Sturino, issued a Notice of Sale but the Owner made no attempt to make payment.

The second mortgagee applied for the appointment of a court-appointed receiver over the Property. He asserted that the Owner and the appellant may be related and that the director, president and secretary of the Owner were linked to allegations of mortgage fraud. A draft of the order appointing the receiver was circulated to all affected stakeholders. The respondent was appointed as receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act, and s. 101 of the Courts of Justice Act.

The appointment order granted the respondent a first charge over the Property to secure its reasonable fees and expenses, subject and subordinate only to the interest of Fenfam, as transferee, of the mortgage registered against the Property (the "Fenfam Interest"). The Property was sold and the respondent sought an order for the distribution of funds. It submitted that only the amount secured by the assignment of the first mortgage to Fenfam should be paid to it before payment of the fees and expenses secured by the respondent's charge. The appellant argued that the entire first mortgage, and not just the amount that secured the loan from Fenfam, ranked in priority to the respondent's charge under the appointment order. The motion judge rejected this argument.

He concluded that the provision in the appointment order making the respondent's fees and expenses subordinate only to the "interest of Fenfam, as transferee, of the mortgage ..." meant that the respondent's charge was subordinate only to Fenfam's financial interest in the first mortgage. He reasoned that if the intent were to make the respondent's fees subordinate to the entire first mortgage, the words "... the interest of Fenfam, as transferee, of ..." would be entirely unnecessary. In his view, it was clear that the transfer to Fenfam was as security for a loan, and not a complete transfer to Fenfam of the first mortgage.

Issue:

Did the motion judge err in his interpretation of the order appointing the respondent receiver regarding real property?

Holding:

Appeal dismissed.

Reasoning:

No. The court agreed with the motion judge that the transfer to Fenfam was as security for a loan and not a complete transfer of the mortgage. The charge terms specifically provided that the appellant assigned the mortgage to Fenfam as security for the loan. The Court of Appeal also agreed with the motion judge's interpretation of Murray J.'s prior appointment order.

Iroquois Falls Power Corporation v. Ontario Electricity Financial Corporation, 2016 ONCA 687

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

Counsel:

J.D. T. Pinos, E. Larose and S. Voudouris, for the respondent (appellant on appeal), Ontario Electricity Financial Corporation

D.G. Douglas and H. K. Pessione, for the applicants Iroquois Falls Power Corporation, Cochrane Power Corporation, N-R Power and Energy Corporation, Algonquin Power (Long Sault) Partnership and N-R Power Partnership and Kirkland Lake Power Corporation

Smith and N. Kennedy, for the applicants Lake Superior Power Limited Partnership, Beaver Power Corporation, Carmichael Limited Partnership and Algonquin Power (Nagamami) Limited Partnership

Zacher, for the applicants Cardinal Power of Canada, L.P. and MPT Hydro L.P.

Keywords: Appeals, Stay Pending Appeal, Courts of Justice Act, s. 7(5), Supreme Court Act, Serious Issue to be Tried, Irreparable Harm

Facts:

Ontario Electricity Financial Corporation ("OEFC") brought a motion under s. 7(5) of the Courts of Justice Act to vary Justice Gillese's order dismissing its motion to stay a portion of certain Superior Court orders pending determination of its application for leave to appeal to the Supreme Court of Canada. The portions of the order at issue require OEFC to pay $180 million to the respondents.

Issues:

(1) Did Justice Gillese err in dismissing OEFC's motion to stay portions of Superior Court orders pending determination of its application for leave to the Supreme Court of Canada?

Holding:

Appeal dismissed.

Reasoning:

No. Justice Gillese properly implemented the stringent leave requirements in the Supreme Court Act by applying the three-part test for obtaining a stay pending appeal. Justice Gillese rightfully held that the Supreme Court of Canada was unlikely to grant leave. Further, there was no basis to interfere with her rejection of OEFC's argument that irreparable harm will result if the stay is not granted.

Silva v. John Doe, 2016 ONCA 700

[Cronk, Rouleau and Huscroft JJ.A.]

Counsel:

Nelson, for the appellant

Friendly, for the respondent, the Superintendent of Financial Services

Keywords: Insurance Law, Motor Vehicle Accident Claims Act, s. 25(1), Compensation, Statutory Interpretation, Burden of Proof, Ordinary Residencys,  Immigration Law, Immigration and Refugee Protection Act, Civil Procedure, Summary Judgment

Facts:

In April 2011, the appellant was struck by an unidentified motorist while he was crossing a Toronto street. He sustained multiple personal injuries as a result of the accident. The appellant is a Brazilian citizen. At the time of the accident, he had been living in Ontario, illegally, for approximately nine years. After the accident, the appellant applied for refugee status in Canada. A new deportation order was issued on October 12, 2011. His refugee application was denied in April 2013. The deportation order took effect in June 2013 and the appellant returned to Brazil where he currently lives.

At the time of the accident, the appellant did not have motor vehicle or other insurance to respond to a claim for damages in respect of his injuries sustained in the accident. He therefore sued the unidentified driver ("John Doe") and the Superintendent of Financial Services (the "Superintendent") under the Motor Vehicle Accident Claims Act (the "Act") for compensation from the Motor Vehicle Accident Claims Fund (the "Fund"). The Superintendent defended the action on the basis that the appellant's claim was statute barred by reason of s. 25(1) of the Act. That section prohibits payments from the Fund to non-Ontario residents save in specified circumstances.

The motion judge concluded that the appellant was not "ordinarily resident" in Ontario at the time of the accident within the meaning of s. 25(1) of the Act and that his claim against the Fund was therefore precluded. Accordingly, the motion judge dismissed the appellant's motion for summary judgment and, hence, his claim against the Fund, and granted the Superintendent's companion motion for summary judgment.

Issue:

  1. Did the motion judge err by applying the wrong test for determining ordinary residency under s. 25(1) of the Act?
  2. Did the motion judge err by relieving the Superintendent of his onus of proof and evidentiary burden under s. 25(1)?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The motion judge recognized, correctly, that for the purpose of s. 25 of the Act, residency must be determined as of the date of the relevant motor vehicle accident. Further, to defend against the appellant's claim based on s. 25(1), the Superintendent bore the onus of establishing that s. 25(1) precluded the appellant's access to the Fund. In this context, and contrary to the appellant's submission, the motion judge held that the Superintendent was not required to establish that the appellant was ordinarily resident in Brazil or some other specific foreign jurisdiction. Rather, in the motion judge's view, the Superintendent "[bore] the onus of proving that the [appellant] was not ordinarily resident in Ontario".

The Court of Appeal agreed with the motion judge that on a plain reading, s. 25(1) distinguishes between Ontario and non-Ontario residents. The Act contains no language requiring proof of the precise jurisdiction outside Ontario in which a Fund claimant was ordinarily resident at the time of the accident in question. The key to the engagement of s. 25(1) is whether the claimant ordinarily resided in Ontario or in a jurisdiction outside Ontario at the time of the accident. Basic logic dictates that proof that a claimant did not ordinarily reside in Ontario at the time of the accident in question, as conceded in this case, necessarily means that the claimant's ordinary residence was outside the jurisdiction of Ontario at the relevant time.

The Court of Appeal further agreed with the motion judge that to successfully invoke s. 25(1), the Superintendent was required to establish that the appellant did not ordinarily reside in Ontario on the date of the accident. On the motion judge's uncontested factual findings, the Superintendent met this onus.

The Court of Appeal was satisfied that the motion judge fully considered all the relevant factors bearing on the appellant's ordinary residency. In doing so, he recognized that de facto physical presence in Ontario, even if continuous, does not automatically establish ordinary residency in Ontario for the purpose of access to the Fund. The appellant was present in Ontario illegally, was subject to deportation on discovery and had already been deported once. His continuing and knowing unlawful presence in Ontario, his failure to challenge his initial deportation order and his failure to seek to regularize his status in Ontario at any point prior to the date of the accident, weighed heavily against the conclusion that he ordinarily resided in Ontario within the meaning of s. 25(1) at the time of the accident.

(2) No. The Court of Appeal also rejected the appellant's contention that the motion judge relieved the Superintendent of his onus of proof or improperly lowered his evidentiary burden under s. 25(1). The motion judge clearly recognized the Superintendent's burden under s. 25(1) and concluded that it had been properly discharged on the facts of this case. This holding was open to the motion judge on the evidentiary record before him.

2405416 Ontario Inc v 2405490 Ontario Limited, 2016 ONCA 696

[Gillese, Rouleau and Brown JJ.A.]

Counsel:

Aiello, for the appellants

Renihan, for the respondent

Keywords: Real Estate, Commercial Lease, Condition Precedent

Facts:

At issue was a sub-lease for commercial premises in Toronto. The appellant landlord, 2405416 Ontario Inc ("416") submitted that the application judge erred in finding the tenant, 2405490 Ontario Limited ("490") was entitled to exercise an option in the sub-lease to purchase the property on which the premises are located. 490 cross-appealed arguing the application judge erred in denying it damages for rent it was required to pay the landlord after the date on which its purchase of the property should have closed.

Enza Badali owned the property at issue. Her son, Salvatore, operated an adult entertainment body rub business from the premises under the name Blue Pearl. Blue Pearl entered into an Asset Purchase Agreement ("APA") with Elliott Stone to sell Blue Pearl's business. Stone incorporated 490 to assume the rights and obligations of the purchaser under the APA.

The APA contained a condition precedent to closing, for the benefit of the purchaser, that the purchaser enter into a lease of the building with the property owner. It was to be a term of the lease that in the first two years of the purchaser's occupancy of the property it would have an option to purchase the property for $800,000. To give effect to this provision of the APA, Enza Badali leased the building to the appellant, 416, a related companyand 416 sub-leased the building to the purchaser/tenant, 490. The sub-lease was for a five year term. The demise of the lease and the duty to pay rent was conditional on the completion of the APA between the tenant 490 and Blue Pearl.  If the APA failed to be completed, 490 and  416 would be relieved of their obligations.

The Toronto Licensing Tribunal did not approve the sale of Blue Pearl until June 19, 2014. The APA closed that day. A year later, the purchaser/tenant 490 notified that it wished to exercise its option to purchase the property. 416 and Enza Badali took the position that 490 was not entitled to exercise the option because it was in default under the sub-lease, alleging failure on the part of 490 to pay rent when due and owing.

416 applied to terminate the sub-lease and purchase 490's business. 490 commenced a counter-application seeking a declaration that it was entitled to purchase the property pursuant to the option, as well as damages for monthly rent it paid from August, 2015, the date it said the purchase of the property should have closed, until the actual closing of the property purchase.

The application judge dismissed 416's application, and granted a declaration that 416 and Enza were required to sell the property to 490 under the option, but dismissed 490's claim for damages on the basis of unfairness to 416 (i.e. 490 would have a very long period of rent-free occupation).

Issue:

(1) Did the application judge err in finding that 490 was entitled to exercise the option to purchase the property?

(2) Did the application judge err in denying 490 damages for rent it was required to pay the landlord after the date on which its purchase of the property should have closed?

Holding:

Appeal and cross-appeal dismissed.

Reasoning:

(1) No. The key issue was when 490 was required to start paying rent under the lease. The application judge interpreted the sub-lease to mean that 490's obligation to pay rent would not start until it obtained the transfer of the licence for the business it was purchasing under the APA. That did not occur until June 19, 2014 when the Toronto Licensing Tribunal approved the sale and the APA closed. 490 was therefore entitled to exercise the option to purchase.

(2) No.  490 bore the burden of identifying for the application judge the correct legal principles governing its claim and adducing the evidence required to establish and quantify its claim of damages. The record discloses that 490 did neither.  The Court was also not persuaded that the application judge applied a wrong principle of law to 490's claim.

Civil Endorsements

Wolfson Law Professional Corporation v. Muti, 2016 ONCA 694

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

Counsel:

  1. Charland, for the moving party (respondent in appeal)
  2. Pochmurski, for the responding party (proposed appellant)

Keywords: Civil Procedure, Enforcement of Orders, Writ of Possession, Appeals, Extension of Time, Ex Parte

Auciello v. Mahadeo, 2016 ONCA 701

[Cronk, Rouleau and Huscroft JJ.A.]

Counsel:

Auciello, in person

Stieber, for the respondent Jan Perkins

Juda, for the respondent David Wagman

Valitsky, for the respondent Gail Mahadeo

Keywords: Endorsement, Civil Procedure, Rules of Civil Procedure, Rule 21, Motion to Strike, No Reasonable Cause of Action. Abuse of Process

Estrada v. Estrada, 2016 ONCA 697

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

Counsel:

Estrada, acting in person

Fordjour, for the respondent

Keywords: Endorsement, Family Law, Adjournments, Khimji v. Dhanani, [2004] 69 O.R. (3d) 790 (C.A.)

Khelifa v. Ontario Corporation Number 1358584 (Gloucester-Church Mansions Limited), 2016 ONCA 698

[Laskin, Feldman and Hourigan JJ.A.]

Counsel:

Adair and J. Hernaez, for the appellant

Abogado and A. Honickman, for the respondents

Keywords: Endorsement, Negligence, Personal Injury

Kermani v. Hung-Fung-Yuen Products Corp., 2016 ONCA 695

[Hoy A.C.J.O., Lauwers and Benotto J.A.]

Counsel:

Kermani, in person

Jonathan Ng, for the respondents

Keywords: Contracts, Agreements of Purchase and Sale of Land, Privity of Contract, Summary Judgment, No Reasonable Cause of Action, No Genuine Issue Requiring Trial

Criminal Endorsement

R v. Khimji v. Dhanani, 2016 ONCA 699

[Doherty, Pepall and Hourigan JJ.A.]

Counsel:

Halfyard, for the appellant

Jones, for the respondent

Keywords: Endorsement, Criminal Law, Evidence, R. v. Villaroman, 2016 SCC 33

Criminal Decisions

R v. Marton, 2016 ONCA 691

[Laskin, Sharpe and Miller JJ.A.]

Counsel:

McKee, for the appellant

No one appearing for the respondent

Keywords: Criminal Law, Summary Convictions, Substituted Service

R c. Ebanda, 2016 ONCA 692

[Weiler, Blair and van Rensburg]

Counsel:

Ebanda in person

Cowle, for the respondent

Keywords: Criminal Law, Confessions, Sentencing

Ontario Review Board Endorsements

Afemui (Re), 2016 ONCA 689

[Gillese, Rouleau and Brown JJ.A.]

Counsel:

Perez, for the appellant

A.Hotke, for the respondent Crown

Warner, for the respondent Person in Charge of the Centre for Addiction and Mental Health

Keywords: Endorsement, Ontario Review Board, Mental Health, CAMH, Absolute Discharge, Not Criminally Responsible

Elbehiry (Re), 2016 ONCA 693

[Gillese, Rouleau and Brown JJ.A.]

Counsel:

McCuaig, for the appellant

Doherty, for the respondent Crown

MacKenzie, for the Person in Charge of the Centre for Addiction and Mental Health

Keywords: Endorsement, Ontario Review Board, Travel Discharge, CAMH

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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