There were several substantive civil decisions released this week.
Topics covered included family law (spousal and child support), employment law, religious organizations, administrative law (OSC), standing to oppose a settlement entered into by a party under a disability , limitation periods, and contempt for breach of Mareva orders.
[Juriansz, Lauwers and Hourigan JJ.A.]
J. M. Wishart, for the appellants
P. J. Cronyn, for the respondent
Keywords: Endorsement, Torts, Breach of Confidence, Trade Secrets, Civil Procedure, Summary Judgment, Limitation Periods, Discoverability, Limitations Act, 2002
The respondent brought an action claiming the appellants improperly used confidential and proprietary information the respondent had disclosed to them in 2002. The respondent filed its action on September 9, 2011. The appellants moved under r. 20 to strike the claim on the basis that it was statute-barred by the Limitations Act, 2002.
In their motion, the appellants also sought orders declaring that the evidence on discovery of Kenneth Poisson, the principal of the respondent, would be binding on the respondent for all purposes, irrespective of the source of his knowledge, and could be used for all purposes against the interests of the respondent. The reason for that is that Mr. Poisson was also a principal of MetaData, a company associated with the respondent, and on behalf of MetaData had provided consulting services to the appellants and had access to information allegedly relevant to the discoverability of the respondent's claim.
The motion judge issued an order granting the respondent partial summary judgment dismissing the appellants' limitations defence, and adjourning the portion of the motion related to the examination for discovery of Mr. Poisson.
The appellants appeal from the motion judge's dismissal of their limitations defence.
(1) Did the motion judge err by determining that the respondent's claim was not statute-barred?
(2) Did the motion judge err in law in her application of the "reasonable diligence" test?
(1) No. The motion judge found that even if no distinction were made between Mr. Poisson's knowledge acquired through MetaData and the respondent, the respondent's obligation to exercise due diligence in the investigation of its potential claim against the appellants was not triggered prior to April, 2009. Further, she found that to the extent Mr. Poisson was exposed to the appellants' affairs through his work as a MetaData consultant, "that exposure was not sufficient to constitute actual notice of a claim against [the appellants] or to trigger an obligation on the part of [the respondent] to exercise due diligence in the investigation of the potential claim against [the appellants]."
The motion judge was called upon to consider a large and complex record and make findings. There was an evidentiary basis for all of her findings. It is not the function of the Court of Appeal to reweigh the evidence.
(2) No. The appellants argue that the motion judge excused the respondent from making earlier inquiries that it refrained from making in order to avoid damaging its business prospects. However, the Court of Appeal states that the above submission is based on isolated sentences of the motion judge's reasons taken out of context. In considering all the circumstances, the motion judge had to consider the particular position of Mr. Poisson, who was subject to a non-disclosure agreement while working as a consultant to the appellants and other clients. She recognized the importance in the industry that individual consultants not breach confidentiality agreements into which they had entered. The record contained Mr. Poisson's explanation why it was not until the appellants returned the respondent's two demo servers that he discovered Cisco software that was potentially based on the respondent's proprietary specification. He then embarked on a technical inquiry in breach of his confidentiality agreement. The motion judge accepted Mr. Poisson's statement of the importance of his reputation with respect to confidentiality and his explanation of his ability to have discovered the respondent's potential claim against the appellants at a date earlier than September 11, 2009.
Accordingly, the Court of Appeal was satisfied that the record supported the motion judge's finding that the respondent, exercising reasonable diligence, could not have discovered its claim until September 11, 2009.
[Rouleau, van Rensburg and Miller JJ.A.]
A. Parley and E. Lederman, for the appellant, The Cash House Inc., and the non-parties, Osman Khan and 2454904 Ontario Inc.
P. W. G. Carey and C. R. Lee, for the respondent
Keywords: Civil Procedure, Contempt of Court, Breach of Orders, Sentencing, Incarceration, Costs, Substantial Indemnity
The respondent, Trade Capital Finance Corp is in the business of purchasing accounts receivable. It alleged that it was defrauded of approximately $6,500,000 in a sophisticated scheme in which it unknowingly purchased fictitious accounts receivable. It alleges that the majority of its lost funds were eventually deposited in bank accounts owned by the appellant, The Cash House Inc., a financial services company in the business of making payday loans, cashing third party cheques, and providing foreign exchange services. Cash House is owned by 2454904 Ontario Inc ("245"), which in turn is owned by Osman Khan.
On May 6, 2015, the respondent obtained a Mareva Order freezing the assets of named defendants, including Cash House, and ordering financial disclosure. Cash House, 245 and Khan (collectively "the appellants"), were later found to be in contempt of the Mareva Order. Khan was sentenced to 90 days incarceration, and the statement of defence and crossclaim of Cash House was struck.
The appellants appealed the finding of contempt, the sanction of incarceration, and the striking of the statement of defence and crossclaim of Cash House.
(1) Whether the motion judge erred by finding the Mareva Order to be clear and unambiguous;
(2) Whether the motion judge erred by failing to correctly apply the test for striking a pleading;
(3) Whether the motion judge erred by providing insufficient reasons;
(4) Whether the motion judge erred by ordering a custodial sentence for the contempt;
(5) Whether the motion judge erred by failing to allow the appellants an opportunity to make submissions before awarding costs on a substantial indemnity basis.
(1) No. The elements of civil contempt, as summarized in 2363523 Ontario Inc v Nowack, 2016 ONCA 951, leave to appeal to SCC requested, are as follows:
A party seeking to establish civil contempt must prove that (a) the order alleged to have been breached states clearly and unequivocally what should and should not have been done; (b) the party alleged to have breached the order had actual knowledge of it; and (c) the party allegedly in breach intentionally did the act the order prohibits or intentionally failed to do the act the order compels. A judge retains an overriding discretion to decline to make a contempt finding where the foregoing factors are met where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order. The burden on a party seeking a contempt order is to establish the above elements by proof beyond a reasonable doubt.
An ambiguity in an order is to be resolved in favour of the person said to have breached the order.
The motion judge made no error in concluding that the use of a 245 account for the operations of Cash House was a breach of the Mareva Order, which prohibited the appellants from "dealing with the assets" of Cash House. The non-disclosure of the 245 account was also a breach of the requirement in the Mareva Order to provide particulars of Cash House's worldwide assets whether owned directly or indirectly. Referring to the Mareva Order's requirement for Cash House to submit to examinations under oath within thirty days of the delivery by Cash House of sworn statements or by such later date as may be confirmed by Plaintiff's counsel of record, the Court of Appeal held that the motion judge made no error. A Mareva Order does not want for clarity simply because it does not concretize every particular of a party's obligations. It need not do so. The order was made in the context of a self-governing legal profession with settled norms of practice. There can be no suggestion that the appellants, represented by counsel, did not understand their obligations.
(2) No. The appellants argued that the motion judge erred by striking the defence and crossclaim at the first instance, and thus using it as a remedy of first resort. However, that argument was contradicted by the procedural history of the motion, which indicated that the motion judge adjourned the hearing of the motion to strike for two months to provide the appellants with time to comply with court orders. He found that they did not do so.
With respect to the appellants' argument that the motion judge failed to consider whether a less extreme remedy would suffice, the Court noted that the motion judge chronicled the history of the appellants' contempt and specifically addressed the need to provide a remedy that is proportionate to the misconduct, expressing concern about turning the action into a default proceeding. He made the order without prejudice to Cash House moving for leave to amend after satisfying the court that the contempt has been purged.
The appellants also argued that the motion judge misapprehended the requirement that he assess the merits of the defence in order to consider whether the interests of justice warranted another method of sanction, and improperly imposed an evidentiary burden on the appellants to establish the legitimacy of the defence. The statement of defence and crossclaim, however, amounted to little more than a bare denial. The motion judge was justified in concluding that the merits of the defence were weak. There was no misapprehension of the test. The motion judge placed no burden on the appellants to establish their defence.
The appellants also argued that the motion judge considered only the goal of sanctioning the appellants, and failed to consider the overarching objective that the Rules of Civil Procedure be interpreted so as to secure the just determination of each civil proceeding on its merits. The Court held that there was no merit to that submission. Cash House was one among many defendants in the same action. Where one defendant among many does not comply with its procedural obligations, it hinders and delays the expeditious determination of the overall proceeding.
Finally, with respect to the appellants' argument that the motion judge failed to give Cash House one last chance, the motion judge found that Cash House had a lengthy history of non-compliance with the Mareva Order. Even in striking the defence and crossclaim, Cash House has been permitted to move for leave to amend after it had complied. The motion judge did not err by not providing for further indulgence.
(3) No. With respect to the Contempt Order, the reasons, when read in conjunction with the written record that was before the court, disclose all that is needed to be known for the purposes of appellate review, and for the purposes of enabling the appellants to understand their obligations. Reasons are given in context and must be understood in that context. The motion judge set out in detail the submissions of the appellants and the respondent, and accepted the respondent's arguments as superior. It was not necessary in this context that he do anything more than this.
With respect to the motion to strike the appellants' statement of defence and crossclaim, none of the defects that the appellants alleged had any merit. The record supported the motion judge's conclusion.
(4) No. The motion judge found that the appellants breached the Mareva Order continuously. The appellants' production obligations under the Mareva Order were not satisfied. The motion judge made no error in principle. He did not, as the appellants argued, overemphasize punishment, or lose sight of the purpose of contempt sanctions, namely to secure compliance. To the contrary, the intermittent nature of the custodial sentence was expressly intended to facilitate compliance with disclosure obligations.
(5) No. The costs award was imposed as a sanction for contempt, pursuant to rule 60.11(e). The quantum of the costs remained to be assessed. This penalty was available to the motion judge under rule 60.11(e). The requirement that costs be assessed provides the appellants with an opportunity to make submissions on quantum.
[Juriansz, Lauwers and Hourigan JJ.A.]
C. Lawrence, for the appellant
D. Vaughan, for the respondent
Keywords: Employment Law, Wrongful Dismissal, Mitigation, Evans v. Teamsters Local Union No. 31
The respondent was 51 years old and was employed as the defendant's director of purchasing. He had been employed by the appellant for about 19 years and received a salary of about $82,000 with some additional benefits.
The appellant sought to restructure and decided to terminate the respondent without cause. The appellant provided the respondent with a "severance offer" and a "new employment offer".
The severance offer required him to sign and return a full and final release in exchange for which he would be provided with eight weeks' written notice in accordance with the requirements of the Employment Standards Act, 2000, and providing him with an additional payment of 12 weeks' severance. In the new employment offer he received on the same day, the respondent was offered a permanent full-time position as the supervisor of service at a salary of more than 20% less than his current salary for doing the same work. The respondent did not accept either offer.
The summary judgment motion judge granted the plaintiff damages for wrongful dismissal based on a 17 month notice period. Although the appellant did not challenge the length of the notice period, it argued that the respondent failed to mitigate.
Did the motion judge err in finding that the respondent was not obliged to accept the offer and therefore had not failed to discharge his duty to mitigate?
No. The Court held that the motion judge made no error in finding on the facts of this case that a reasonable person was not obliged to accept a term risking waiver of the wrongful dismissal claim.
The Court quoted Bastarache J. at para 30 in Evans v. Teamsters Local Union No. 31, 2008 SCC 20: "This Court has held that the employer bears the onus of demonstrating both that an employee has failed to make reasonable efforts to find work and that work could have been found (Red Deer College v. Michaels,  2 SCR 324). Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity."
Therefore, the Court agreed with the trial judge, who stated: "There is no obligation on the plaintiff to effectively risk handing the defendant a full and final release through the backdoor and under the guise of mitigation efforts."
[Juriansz, Lauwers and Hourigan JJ.A.]
C. Linthwaite, for the appellants
G. M. Sidlofsky, for the respondents
Keywords: Endorsement, Charities and Not-for-Profit Organizations, Religious Organizations, Religious Organizations' Lands Act, Membership
The appellant, Torah V'Avodah Congregation (hereinafter "TVA"), is a religious organization under the Religious Organizations' Lands Act. Legal title to the premises – the subject of the dispute – is held by the trustees of TVA. The parties do not agree about who are members of TVA or how membership should be determined.
The motion judge ordered that the bulk of the application proceed to trial with a direction that the parties attempt settlement after full documentary production and discovery, and consider resolving the issues at a hybrid application/trial of issues.
The motion judge declared a meeting of TVA held November 16, 2013, to be invalid and set aside the results of the meeting. Two resolutions had purportedly been passed at the meeting. The first purported to remove the individual respondents as trustees of TVA and to replace them with a new slate of trustees. The second resolution purported to close the membership of TVA. The motion judge set aside these resolutions and declared the original trustees were the trustees of TVA. The motion judge held proper notice of the meeting was not given.
Did the motion judge err by not ordering the entire application to proceed to trial?
Yes. He ought not to have finally determined that the November 16, 2016 meeting and the resolutions passed thereat were invalid before the more fundamental questions were determined. The question of membership is more fundamental and has the potential to affect most of the other questions. For example, if the individuals who are named as original trustees are not members of TVA, they would not have the capacity to be trustees.
The motion judge also took into consideration that the appellants chose a method of giving notice which they knew would have little chance of reaching the respondents. The correctness of the motion judge's conclusion that notice as stipulated by the statute was inadequate is open to considerable debate, but it is a debate the court would not resolve to decide the appeal. The question would be better decided on a full record.
The court set aside paragraphs 1, 2, 3, and 4 of the motion judge's order, and added to the issues listed in paragraph 8 the questions: whether proper notice of the November 16, 2016 meeting was given and whether the resolutions passed at the meeting are valid. The court was satisfied the motion judge intended to preserve the status quo with the original trustees in office pending trial and therefore, did not disturb paragraphs 5 or 7 of his order.
[Juriansz, Lauwers and Hourigan JJ.A.]
P.P. E. DuVernet, for the appellants
S.C. Hutchison, S. Walker and D. J. Ferris, for the respondent
Keywords: Administrative Law, Securities, Ontario Securities Commission, Standard of Review, Reasonableness, Procedural and Natural Justice, Fair Hearing, Sufficiency of Reasons
In 2007, the Commission issued a notice of hearing against MRS Sciences Inc. and the individual appellants alleging various breaches of the Securities Act arising from a scheme to sell shares in a high return venture fund. The merits hearing took place in 2009 before Commissioners Patrick LeSage and Carol Perry. On February 2, 2011, the panel released its decision holding that the appellants had sold securities without being registered as dealers and traded securities without a prospectus. The Commissioners dismissed all other allegations.
On February 10, 2011 and February 14, 2011 respectively, Commissioner LeSage and Commissioner Perry's five-year appointments to the Commission expired. In May 2011, the Secretary to the Commission informed the parties that the Commissioners' terms had expired and that neither would be scheduled to preside over the sanctions hearing. The appellants objected and brought a preliminary motion challenging the jurisdiction of the differently constituted sanctions panel to preside over the sanctions hearing. That motion was dismissed by the Commission on December 6, 2011.
In January 2012, the appellants filed a notice of appeal and a notice of application for judicial review of the Commission's decision on the panel composition issue. In December 2012, the Divisional Court dismissed the appeal and quashed the application for judicial review as premature. The Rules of Procedure of the Ontario Securities Commission (the "Commission") contemplate two phases in a proceeding before it: (1) a merits hearing, where the Commission makes findings about alleged breaches of the Securities Act, R.S.O. 1990, c. S.5; and (2) a sanctions hearing, where the Commission decides what sanctions and costs, if any, are appropriate.
On appeal, the Divisional Court was unanimous that the Commission's decision should be reviewed on a reasonableness standard, but it split on the outcome. The minority held that the merits hearing and sanctions hearing were two phases of a single proceeding that should have the same decision-maker. The majority held that, while the minority's interpretation was a reasonable one, it was not the only reasonable interpretation. The majority concluded that the Commission's interpretation was also reasonable and, accordingly, dismissed the appeal.
The sanctions hearing proceeded over four days in late 2013 and early 2014. Commission staff adduced transcripts of the merits hearing before the sanctions panel. The appellants objected, arguing that the transcripts should be excluded. The sanctions panel admitted the transcript evidence in a decision dated December 5, 2013.
The appellants appealed the 2011 panel composition decision, the 2013 decision to admit transcript evidence from the merits hearing in the sanctions hearing, and the 2014 sanctions decision to the Divisional Court. Gordon R.S.J., writing in the minority, rejected the appellants' submission that the standard of review was correctness and held that the applicable standard of review was reasonableness.
Molloy and Corbett JJ. agreed with Gordon R.S.J. that the standard of review should be reasonableness.
They also agreed with him that "one possible, and reasonable" conclusion is that the merits hearing and the sanctions hearing are two stages of a single quasi-judicial hearing, such that s. 4.3 of the Statutory Powers Procedure Act ("SPPA") would be operative: see para. 40. However, the majority held that this was not the only reasonable interpretation and that the Commission's interpretation was also reasonable, as was its conclusion that the principles of procedural fairness had not been violated. In support of their finding of reasonableness, the majority cited the logistical challenges the Commission had identified, including that it has a limited number of members who are all appointed to fixed five-year terms. The majority concurred with the decision of Gordon R.S.J. on the transcript and sanctions issues.
1) Are the merits hearing and sanctions hearing together part of a single, quasi-judicial proceeding that must be presided over by the same decision-maker, or is each hearing a distinct proceeding that can be presided over by different decision-makers should the circumstances warrant it?
2) Did the Divisional Court err in not finding that the standard of review is correctness?
3) Should the Commission have admitted the transcripts from the merits hearing?
4) Were the Commission's reasons inadequate?
Holding: Appeal dismissed.
1) Each hearing is a distinct proceeding.
2) No. The issues in this appeal did not fall within one of the few recognized exceptional categories of cases where the presumption of reasonableness is rebutted. The issues surrounding the appointment of a sanctions panel is not an issue of true vires that attracts a correctness standard. Questions of true vires are exceedingly rare, and an administrative body's interpretation of its home statute is presumptively reviewed on a reasonableness standard: Alberta (Information and Privacy Commissioner) v. Alberta Teachers' Association, 2011 SCC 6. There is no doubt that the Commission had jurisdiction over the proceeding against the appellants. The decision on how the Commission chooses to allocate its adjudicative resources in constituting the sanctions panel is a matter that falls squarely within its expertise.
This is not a matter of general importance. Additionally, there is no error in the majority's reasoning that, having regard to the scheme of the SPPA, the Securities Act, the Rules of Procedure of the Commission, and the legislated policy decision to maintain a Commission that is small in number with a rotating composition, the Commission's interpretation was a reasonable one.
There is also no procedural unfairness or breach of natural justice in constituting a different sanctions panel. Nor is the principle of audi alteram partem violated on the facts of this case. The panel that decided the issue of sanctions and costs did so based on the evidence and submissions that it heard on those issues.
3) No. There was no unfairness in admitting transcripts that were relevant to the issues before the sanctions panel. The appellants were free in the sanctions hearing to adduce evidence relevant to the determination of the sanctions and costs, as well as to contest opposing evidence.
4) No. There is no merit to this submission. The reasons were thorough and clearly articulated the panel's decision and the reasoning process behind the decision.
[Simmons, LaForme and Pardu JJ.A.]
P.C. Buttigieg and R.A. Fernandes, for the appellant
H. I. Fogelman and E. L. Chaiton-Murray
Keywords: Family Law, Change Motion, Child Support, , Variation, Material Change in Circumstances, Pensions, "Double-Dipping", Boston v. Boston  2 SCR 413
Facts: The husband and wife were married for 23 years and had three children before divorcing in 2007. They signed a separation agreement providing that the husband would pay child support to the wife until one of certain specified events occurred with respect to any of the children. The agreement also provided that the husband would pay spousal support to the wife, subject to variation based on a material change in circumstances, which could include an increase in the husband's income beyond $145,000, a change in the number of children being supported or the husband's "cessation of employment prior to age 65".
In August 2012, at the age of 53, the husband accepted an early retirement package from his employer under which he resigned from his employment and elected to receive the commuted value of his pension, totaling $1,943,000.07, payable in six installments.
Child support payments were terminated by the husband for the youngest child on December 1, 2012. At that date, the child was 20 years old and had completed her full-time studies. She was one credit short of obtaining a certificate in the program.
The wife brought an application based on a material change of circumstances for further child support and to increase spousal support in light of the pension pay-out received by the husband. The motion judge upheld the termination of child support and ordered an increase in spousal support, although not as much as the wife had been requesting.
The motion judge noted that this was not a case involving proposed "double-dipping" from the assets that had already been part of an equalization process, and that one of the issues for determination was the extent to which the early pension payout had already been equalized. The motion judge found that the capital value of the portion of the husband's pension payout that had not previously been subject to equalization amounted to $575,470 after tax. He concluded that the wife was entitled to claim against only one half of that amount for the purpose of spousal support, which he added to the husband's income, calculated as $57,000 after tax annually, payable over five years. The motion judge chose not to award Guidelines support, instead increasing spousal support payable to the wife under the separation agreement by $2,350 per month, for a total of $5,000 per month, commencing September 2012. In the motion judge's view, while the wife had contributed to the husband's ability to receive the income at issue, there was an element of luck involved with the employer's decision to make the early pension payout available. Moreover, he found that the wife had mismanaged her finances and that her expenses of $88,000 per year were unreasonable.
The wife appealed.
(1) Did the judge err in terminating the child support payments for the parties' youngest child?
(2) Did the motion judge err in determining the additional spousal support payable to the wife based on the husband's increased income due to receiving an early pension payout?
Appeal allowed, in part.
(1) No. The sub-paragraphs in the agreement clearly permitted the husband to terminate child support once she was 18 and ceased full-time attendance at an educational institution. The motion judge's finding that the child was no longer a child of the marriage within the meaning of the Divorce Act was a finding of mixed fact and law, and was therefore entitled to deference.
(2) Yes. The judge erred in principle in his approach and arrived at an amount that was clearly wrong. The judge erred in departing from the Guidelines on the basis of the "good luck" associated with the husband's early pension pay-out, and his finding that the wife had "mismanaged her affairs".
The motion judge found that the Guidelines were not helpful because of some element of luck unrelated to the wife's contributions to the husband's career inherent in the husband's opportunity to obtain the early pension payout. Second, he found that the Guidelines were not helpful because the wife had mismanaged her finances. He found that the wife's economic hardship came not from the breakdown of the marriage, but from her poor use of her equalization payment, and that requiring the husband to pay the wife's debts would not promote economic self-sufficiency. As a result, the motion judge awarded $5,000 per month.
The Court of Appeal held that the motion judge erred because the Guidelines should not be lightly departed from. Without the Guidelines , it is difficult to establish a principled basis for arriving at a figure for spousal support. In the face of strong compensatory basis for entitlement to support, as well as an income increase arising from that same job that the husband occupied throughout the 23 year long marriage, there was no reason to conclude that the underlying assumptions of the Guidelines were not helpful.
The wife was a stay at home mother, and the husband did not dispute that his career flourished in part because the wife assumed responsibility for childcare and household management. Post-separation earnings were achieved at the level which they were in part because of the wife's contribution to the husband's career. The wife did not argue for a Boston v. Boston exception to permit double dipping. Thus, the good fortune of the early pay-out should accrue to both parties.
The wife's expenses were not unreasonable, and she did not "mismanage" her finances. The motion judge cited Boston for the proposition that "where a pension is equalized by way of a lump sum payment, the payee is under an obligation to use those assets in an income-producing way... to create a 'pension' to provide for her future." However, Boston does not require the payee spouse to immediately invest the equalization assets. Instead, she must use them to generate income by the time the pension-holding spouse retires. The wife had no opportunity to comply with this requirement because the husband opted for early retirement.
Given the length of the marriage, her role in the marriage and her age, the wife was entitled to spousal support on a level commensurate with the standard of living the parties enjoyed during the marriage.
[Sharpe, Lauwers and Hourigan, JJ.A.]
A, Stephens, for the appellant
J. Hamilton and P. Ezzatian, for the respondent
Keywords: Real Property, Agreements of Purchase and Sale, Forfeiture of Deposit, Relief from Forfeiture, Unconscionability, Courts of Justice Act, s. 98, Varajao v. Azish, Standard of Review, Deference
The seller, Redstone Enterprises Ltd., sold a warehouse in Brantford to the buyer, Simple Technology Inc., for $10,225,000. The original Agreement of Purchase and Sale provided for a $100,000 deposit. The second deposit was paid after the buyer waived the conditions inserted for the buyer's benefit. At the same time, at the buyer's request, the closing date was postponed. Together, these two deposits valued at $300,000 were referred to as the "Deposit". The parties negotiated the third deposit, referred to as the "Additional Deposit", as a result of the buyer's approval for a marijuana grow-op license taking longer than expected. In exchange for an Additional Deposit of $450,000, the closing date was extended again to December 15, 2015.
The buyer was unable to obtain the Health Canada license or the necessary financing, and failed to close the transaction.
When the buyer failed to complete the transaction, the seller applied for a declaration that it was entitled to be paid the deposit of $750,000, which is being held in trust by CBRE Limited.
The motion judge found there was no legally acceptable justification for the purchaser not to close the transaction. As a result, he agreed that the deposit was to be forfeited to the seller, but he then exercised his equitable jurisdiction under s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and reduced the sum to be forfeited from $750,000 to $350,000.
Did the application judge err in granting partial relief from forfeiture of the deposit to the buyer?
Yes. Regarding the appropriate standard of review, the Court of Appeal stated with respect to s. 98 of the Courts of Justice Act: "equitable authority ... is discretionary and ordinarily attracts this court's deference, except where it is demonstrated the application judge made a legal error or an error in principle or a palpable and overriding error of fact." However, the general standard assumes the application judge explained his reasons in exercising discretion, yet in the present case, those reasons were sparse. Therefore, the Court held it was open to substitute its own decisions on the basis of the facts found by the application judge.
The application judge referred to the test in Varajao v. Azish, 2015 ONCA 218 regarding the forfeiture of a deposit: "1. whether the forfeited deposit was out of all proportion to the damages suffered, and 2. whether it would be unconscionable for the seller to retain the deposit."
The Court stated that because the appellant provided no evidence of damages, it was fair to infer that it suffered none. However, that alone did not render the forfeiture unconscionable. Rather, the analysis of unconscionability requires the court to step back and consider the full commercial context. A finding of unconscionability must be an exceptional one, strongly compelled on the facts of the case.
The Court reviewed case law regarding the enforcement of penalty clauses and cited Justice Sharpe in Peachtree II Associates-Dallas L.P. v. 857486 Ontario Ltd. (2005), 76 O.R. (3d) 362 (C.A.): "Judicial enthusiasm for the refusal to enforce penalty clauses has waned in the face of a rising recognition of the advantages of allowing parties to define for themselves the consequences of breach." Justice Sharpe cited in support Dickson J., who decried the prohibition of penalties and advocated treating both penalties and forfeitures under the rubric of unconscionability.
Although the Court was reluctant to provide a numerical percentage that might be considered reasonable, in the present case, the deposit was slightly more than 7%. The Court further noted that there was no evidence that this was a commercially unreasonable amount. Where there is no gross disproportionality in the size of the deposit, the court must consider other indicia of unconscionability. This was an analysis the application judge did not undertake. By failing to do so, he erred in law.
In considering other indicia of unconscionability, such as inequality of bargaining power, a substantially unfair bargain, the relative sophistication of the parties, the gravity of the breach, and the conduct of the parties, the Court held that the indicia showed no unconscionability in the present case.
[Rouleau, Pepall and Roberts JJ.A.]
J. Covenoho, acting in person
H. Mann, for the respondent
Keywords: Endorsement, Employment Law, Wrongful Dismissal, Employment Standards Act, 2000
The appellant appeals from the dismissal of her motion for summary judgment in her wrongful dismissal action against the respondent, her former employer, as a result of which the motion judge dismissed the appellant's action.
The appellant was employed by the respondent under a one-year fixed term contract. On July 10, 2013, the appellant signed a standard form agreement with the respondent. She commenced her employment on July 15, 2013. By letter dated October 11, 2013, the respondent terminated the appellant's employment without notice or payment in lieu of notice.
The motion judge concluded that as the appellant had been employed for less than three months, she was not entitled to notice under the Employment Standards Act, 2000 ("ESA"), and reasonable common law notice was not required under Article 2.1 of the contract. He also dismissed her claim for damages arising from bad faith in the manner of termination.
Did the motions judge err in dismissing the appellant's summary judgment motion and action on the basis that the respondent was entitled to terminate the appellant's employment under Article 2 of her employment contract?
Yes. The termination provisions contained in Articles 2.1(a) and 2.2 of the contract are contrary to ss. 54, 57 and 58 of the ESA in that they purport to allow the respondent to terminate, without cause, the employment of the appellant, in the event that she had been continuously employed for more than three months, by providing less than the statutory minimum notice period. In determining whether the contract is in compliance with the ESA, the terms must be construed as if the appellant had continued to be employed beyond three months; if a provision's application potentially violates the ESA at any date after hiring, it is void. As such, the termination provisions are void and common law standards apply.
The appellant claims damages in the amount of $56,000, representing her salary for the 40 weeks that remained on her fixed term contract at the time of her employment termination. The motion judge determined that had the appellant's employment not been validly terminated under the contract, he would have found that she was entitled to damages equivalent to her salary for the remainder of the unexpired term of the contract, without deduction for mitigation. Having concluded that her employment was not validly terminated, the Court of Appeal agreed with the motion judge's alternative finding in this regard. The termination provisions being void and of no force or effect, the appellant is entitled to receive the salary that she would have earned for the remaining weeks of her fixed-term contract.
[Rouleau, Pepall and Roberts JJ.A.]
L. Lochner and P.Lochner, acting in person
W. Kim, for the Public Guardian and Trustee
L. Day, for the respondents
Keywords: Endorsement, Civil Procedure, Settlements, Persons Under Disability, Public Guardian and Trustee, Orders, Setting Aside, Rules of Civil Procedure, r. 37.14, r. 39.01(6), Standing, Proprietary Interests, Economic Interests
These proceedings arise out of an altercation between the appellants, George Lochner, and the police, during which George Lochner was tasered by the police. The appellants and George Lochner brought an action for damages against the police. The appellants' claims were dismissed when they failed to attend at the trial of their action.
George Lochner is a person under a disability. The Public Guardian and Trustee is his litigation guardian in the proceedings arising from his altercation with the police. The proposed settlement of George Lochner's claim received court approval by order of Justice D. Wilson and the appellants take issue with the settlement of George Lochner's claim. They brought a motion to set aside the settlement order under r. 37.14, and then brought another motion to set aside that order, this time relying on r. 39.01(6). Both motions were dismissed. The motion judge also ordered that they were prohibited from filing any further motions in the Superior Court absent leave. They appeal from each of the orders.
(1) With respect to the dismissal of the appellants' r. 37.14 motion, did the motion judge err in determining that they had no standing to bring that motion?
(2) With respect to the appellants' r. 39.01(6) motion, did the motion judge err in dismissing their motion as an abuse of process and in ordering that they bring no further motions without leave of the court?
(1) No. Although the Public Guardian and Trustee provided the appellants with a copy of the notice of motion to approve the settlement as a courtesy, neither of the appellants was a party or other person who was affected by the order within the meaning contemplated by r. 37.14(1).
To have standing to challenge the settlement order, the appellants had to demonstrate that their proprietary or economic interests were affected by the order and they failed to meet this burden. The motions judge determined that there was no evidence that the appellants' interests were affected by the settlement order. The court saw no error in the motion judge's finding, which is entitled to deference on appeal.
(2) No. The appellants maintain that the Public Guardian and Trustee failed to make full disclosure before the settlement approval judge. The motion judge correctly concluded that the appellants were attempting to re-assert their challenge to the settlement order and to re-litigate the same issue of standing that was the subject of their first motion, and that their second motion was therefore an abuse of process. Further, there is no basis for the argument that full disclosure was not made.
The appellants were given the opportunity to make their views known to the settlement approval judge and the Public Guardian and Trustee filed a supplementary motion record which included the appellants' arguments and objections to the settlements, and documents that they said were relevant. Finally, there was no error in the exercise of the motion judge's discretion, based on the record before him, to make the order that the appellants bring no further motions without leave.
[Juriansz, Lauwers and Hourigan JJ.A]
B. D. Siegel, for the appellants
M. J. Stangarone and S. Timerman, for the respondent
Keywords: Endorsement, Stays, Final, Interlocutory
[Juriansz, Lauwers and Hourigan JJ.A.]
E. D'Orazio, acting in person
S. Gordian and J. Hunter, for the respondent
Keywords: Endorsement, Rules of Civil Procedure, r. 2.1.01, Res Judicata, Abuse of Process
[Doherty, MacFarland and Rouleau JJ.A.]
J. E. Lilles and S. Johansen, for the appellants, Jones Collombin Investment Counsel Inc.
A. Buchanan, for the respondent, Beverley Collombin
P. Le Vay and C. Di Carlo, for the respondent, David Fickel
Keywords: Endorsement, Contracts, Interpretation
[Feldman, Epstein and Miller JJ.A]
J. L. Davies, for the appellant
E. C.M. Boyle, for the respondent
[Sharpe, Watt and Pardu JJ.A.]
F. Addario, A. Furgiuele and D. Doucette, for the appellant Zdenek "Dennis" Zvolensky
A. K. Kapoor and S. Harland-Logan, for the appellant Ronald Cyr
J. M. Rosen, P. J.I. Alexander and Lindsay Daviau, for the appellant Nashat Qahwash
J. Speyer and A.Wheeler, for the respondent
Keywords: Criminal. First Degree Murder, Joint Criminal Venture, Severance, "Mr. Big" Investigation, Undercover Evidence, Canadian Charter of Rights and Freedoms, s. 7 & s. 8, Jury Instructions, Discreditable Conduct, Intent, Rule in Browne v Dunn, Adoptive Admissions, Crown Closing, Inflammatory, Jurors, Ineligibility, Miscarriage of Justice
[Feldman, Rouleau, and Roberts JJ.A.]
N. Jamaldin, for the appellant
C. Walsh, for the respondent
Keywords: Endorsement, Criminal Law, Importing Cocaine, Border Detention, Border Searches, Charter of Rights and Freedoms, s. 7 and 10(b)
[Doherty, Huscroft and Miller JJ.A.]
N. Jamaldin, for the appellant
P. Cowle, for the respondent
Keywords: Addendum, Criminal Law, Prohibition Order, Duration
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