Canada: Ontario Court Of Appeal Summaries (May 1-5, 2017)

Last Updated: May 12 2017
Article by John Polyzogopoulos

Good afternoon.

There were quite a few substantive civil decisions this week, particularly in family law.

In Halliwell, the Court discussed in detail the difficult issue of applying the Spousal Support Advisory Guidelines to high income cases (over $350,000). It also canvassed the "double dipping" issue discussed in Boston v Boston, in this case, in the context of the equalization of a business rather than a pension. The support order was reduced and no double-dipping was found.

In Dagg, the Court decided a moot appeal that had been settled. It held that where a spouse is designated an irrevocable beneficiary of a life insurance policy as security for support payments owing, the irrevocable beneficiary is entitled to the insurance proceeds to cover all present and future support obligations owing as of the date of death, and any clawback under s. 72 of the Succession Law Reform Act in favour of a competing dependant of the deceased will only apply to any surplus insurance proceeds after the irrevocable beneficiary's entitlement is satisfied in full.

In addition to other family law decisions, other topics covered included wrongful dismissal, wills and estates, breach of contract, contractual interpretation, occupier's liability and mortgages. We also summarized a decision involving state mutual assistance in criminal matters where the documents seized for use in a foreign criminal proceeding were of a sensitive commercial nature. The court detailed the process for obtaining such orders, but ordered no special terms to protect the confidentiality of the information, citing the Treaty obligations of the foreign state as providing sufficient protection for the accused's commercial secrets.

Have a nice weekend.

Civil Decisions:

Concentra Financial Services Association v. Rawling, 2017 ONCA 348

[Juriansz, Pepall and Miller JJ.A.]

Counsel:

M. S. Deverett, for the appellant

B. Frydenberg, for the respondent

Keywords: Contracts, Debtor-Creditor, Mortgages, Fraud, Summary Judgment

Facts:

The appellant appeals from the October 4, 2016 judgment granting summary judgment to the respondent and ordering the appellant to pay approximately $311,000 on account of a mortgage debt. In addition, the motions judge dismissed the appellant's counter-claim seeking a refund of the payments he had made to the respondent on the mortgage.

The motions judge found that the appellant was a direct participant in the shady transaction in issue. The true owner of the property was Edwards but he could not qualify for a mortgage. The appellant therefore put himself forward as the face of the purchase. He obtained a letter verifying his income from his place of employment, he supplied Canada Revenue Agency ("CRA") notices of assessment to the respondent and signed all documents knowing that he would be taking title and signing the mortgage in favour of the respondent.

Significantly, the appellant was paid $5,000 for his participation knowing that he was assuming the risk of payment if Edwards failed to make payments on the mortgage. In September 2015, the mortgage went into default and the respondent sued and subsequently moved for summary judgment. The appellant brought a cross-motion for summary judgment on his counter-claim. The motions judge granted the summary judgment motion requested by the respondent and dismissed that of the appellant.

The appellant appeals from the October 4, 2016 judgment granting summary judgment to the respondent and ordering the appellant to pay approximately $311,000 on account of a mortgage debt.

Issues:

(1) Did the motions judge fail to apply rule 20.02 because the respondent did not provide evidence of a witness with personal knowledge of the contested facts?

a. Did the motion judge err in not drawing an adverse inference against the respondent as a result?

b. Did the motion judge err in failing to sanction the respondent for its failure to produce relevant documents?

(2) Is a mortgage based on a fraudulent agreement of purchase and sale unenforceable?

Holding:

Appeal dismissed with costs on a substantial indemnity scale fixed in the amount of $11,911.31.

Reasoning:

(1) No. Rule 20.02 is discretionary and not mandatory. The motions judge considered the appellant's argument and dismissed it, noting that there was no real dispute on the facts and no dispute that the appellant had signed the mortgage. Approximately three weeks prior to the hearing of the summary judgment motions, the respondent produced its entire file to the appellant. There was no evidence that the respondent had actual knowledge of a mortgage fraud prior to advancing funds. Moreover, even if the respondent could and should have uncovered the fraud prior to advancing funds, given the appellant's active participation, the respondent's role would not provide a defence to the appellant.

(2) No. There is no suggestion here that the vendor was not paid for the purchase of the property in the appellant's name or that the mortgage proceeds given by the respondent were not used to fund the purchase of the property. The appellant was not an innocent party and the transfer and the mortgage are valid instruments. Moreover, no declaration that the mortgage was unenforceable was sought by the appellant in its counterclaim.

Halliwell v Halliwell, 2017 ONCA 349

[Gillese, Pepall and Roberts JJ.A.]

Counsel:

P. Amey, for the appellant

R. Bickle, for the respondent

Keywords: Family Law, Spousal Support, Spousal Support Advisory Guidelines (SSAGs), Incomes Over $350,000, Entitlement, Net Family Property, Equalization, Double Recovery, Boston v Boston, 2001 SCC 43, Joint Family Venture, Kerr v Baranow, 2010 SCC 10

Facts:

By order dated January 8, 2016 and September 26, 2016 (the "Order"), pursuant to the Family Law Act, Martin Halliwell, the appellant, was ordered to pay Toni Halliwell, the respondent: $3,047,061.47 for the equalization of net family property (net of credits for the advances already made) in equal annual instalments, over five years, with interest at 3% per annum; $28,978 per month for spousal support commencing January 1, 2016, based on imputed annual income of $1,000,000 for the appellant; and arrears of retroactive spousal support in the amount of $1,106,887.85, reduced by 40% for income tax, payable by January 8, 2017. The appellant challenged all three parts of the order.

Prior to their separation, after a major setback when the appellant lost his job in 1994, the parties' standard of living improved as companies they owned and operated prospered. They enjoyed an affluent lifestyle. When the parties separated in June 2009, their daughter had left home and their son continued to live with the respondent in the matrimonial home. The appellant moved to the parties' recreational home. After separation, the appellant started various new corporations and purchased a number of commercial and residential properties. From the time the parties separated until October 2010, the respondent continued to receive about $11,500 per month along with benefits as an administrator of the companies. In October 2010, the appellant abruptly relieved her of most of her responsibilities for the businesses, changed the locks on the premises, and informed her that he no longer would allow her to work on the premises. Her income from the companies dropped first to $7,000, then to $5,000 per month.

After these events, the respondent commenced the proceedings at issue (the "Application"). Pursuant to a 2011 consent order, the appellant has since paid interim spousal support of $10,000 per month. Pursuant to a court order, he also paid $135,000 as an advance equalization payment. The trial judge found the appellant's lifestyle did not change much after separation; on the other hand, the respondent had to significantly adjust her lifestyle after separation. The trial judge also found the respondent had acted responsibly in pursuing employment opportunities after separation.

The parties went to trial to determine issues of spousal support, retroactive spousal support, and equalization. The appellant owned 100% of the shares in HA. HA owns shares in HC Matcon Inc. ("Matcon"), an Ontario corporation, and in HCM Contractors Inc ("HCM"), an Alberta corporation. At all material times, the appellant was the president of the corporations. A man named Ron Amos, or his holding companies, had a shareholder interest in Matcon and HCM equal to that of HA. In addition, HA held a minority shareholder interest in RWH Engineering ("RWH"). The appellant's income was generally earned from the operations of Matcon and HCM, which paid consulting fees and dividends to HA. Dividends to HA were converted to shareholder loans. In turn, HA paid management fees and dividends to the appellant. At the time of trial, HA held the following minority shareholder interests: Matcon – 44%; HCM – 39.9%; and RWH – 30%.

With respect to the value of the companies and equalization, the trial judge identified four main differences in the expert valuators' approaches to valuation: (1) their approach (capitalized cash flow vs EBITDA); (2) their choice of multiple; (3) their treatment of the White Mud project; and (4) the appellant's expert's deduction of $1.6M in the 2008 income. The trial judge gave extensive reasons for preferring Mr. Sciannella's approach to the valuation of Matcon and HCM over that of Mr. Ross. The trial judge found that HCM had a low value of $2.35M and a high value of $2.5M. The resulting adjustment to HA led to a low value of $5.7M and a high value of $5.9M. Considering the contingencies the trial judge alluded to, relative to capitalization and changes in the market, for net family property purposes, he used the low value for each value and for the notional tax. The trial judge accepted the tax calculations provided by the respondent. The trial judge found that the appellant's NFP was $6,491,129.11 and the respondent's NFP was $555,375.50.

With respect to spousal support, the trial judge set out the legal principles underlying spousal support in Moge v Moge. He also noted the factors and objectives that he had to consider in determining spousal support, according to the Divorce Act, RSC 1985 c. 3 (2nd Supp). He referred to the Spousal Support Advisory Guidelines (SSAGs) for the proposition that applying these principles is highly individual and discretionary.

With respect to the appellant's income, the trial judge began by referring to s 16 of the Child Support Guidelines, O Reg 391/97 (CSGs) for the general rule that income is determined using the sources of income set out under the heading "Total Income" in the T1 General form issued by the Canada Revenue Agency ("line 150 income").The trial judge then invoked ss 17(1) and (2) and s 19 of the CSGs to consider the appellant's income over the previous three years and to impute income in order to arrive at a fair assessment of the appellant's actual available income. The trial judge relied on s 19(1)(g) of the CSGs for the power to impute income to a spouse who "unreasonably deducts expenses from income". The trial judge noted that taking money out of a company is a matter of choice made by the directors and shareholders and the court must look at those choices, in determining income for support purposes, with a discerning eye that balances factors that include sometimes complicated considerations of business viability with a payor's duty to maximize available income for support purposes. With respect to business viability, the court must look at such things as company banking covenants, economic upturns and downturns, the degree of capitalization that a particular company requires, and future growth. He noted that the experts agree that there is often a significant element of subjectivity when determining the impact of these considerations on income analysis or the valuation of the company. The trial judge determined that the appellant's average income for the three-year period prior to trial was $1,000,925.34 per annum.

The trial judge noted that for a payor spouse with an income above the SSAGs ceiling of $350,000, the ceiling does not operate as a hard cap; the formulas give way to discretion; the analysis is fact specific; and the SSAGs ranges remain relevant. He quoted from jurisprudence which says that in balancing the factors in a long-term marriage, where the payor's income is above $350,000, the SSAGs recommendation is that the payment of spousal support range between 37.5% and 50% of the gross income difference between the spouses. Based on the amounts the trial judge determined to be the appellant's income, and imputing no income to the respondent, the SSAGs formula generates a mid-range support figure of $35,052 per month and a low-end figure of $30,028 per month. The trial judge noted that the lower figure of $30,028 would result in a net disposable income to the respondent of 36%. The trial judge ordered $30,028 per month payable retroactive to the date of the Application. The trial judge imputed employment income of $35,000 per year to the respondent with a start date of January 1, 2016. As of that date, he reduced the quantum of spousal support to $28,978 per month, amounting to what he said was 38.1% of the net disposable income.

The trial judge noted the general rule against double recovery, an issue that arises most often when a pension has been equalized (Boston v Boston, 2001 SCC 43). This was not a case in which a pension had been equalized. The trial judge distinguished a pension from business assets that continue to produce income without devaluing the assets themselves. The trial judge held that it was not proper to consider double recovery "when dealing with assets that are not liquidating assets or special assets of the nature of a pension." In his view, there was no double recovery.

Issue:

1. Whether the trial judge erred in his determination of equalization in:

i. His acceptance of a similar multiple for HCM as Matcon in assessing the income approach to its value; and

ii. Valuing the various assets in accordance with the respondent's position without any explanation.

2. Whether the trial judge erred in his determination of the quantum of spousal support in:

i. Imputing income to him of $1 million per year;

ii. his application of the SSAGs to the extent that the appellant's income exceeded its $350,000 ceiling;

iii. Taking the three-year average unadjusted for one extraordinary year (2013); and

iv. Failing to apply the principle of "double dipping" to the appellant's business income, having regard to the equalization payment derived from the business.

3. What is the proper quantum of spousal support?

Holding:

Appeal allowed, in part.

Reasoning:

As preliminary issues, the Court of Appeal commented on the trial judge's analysis relating to "joint family venture"; and the appellant's complaint about several of the trial judge's findings of fact.

Joint Family Venture

The trial judge was correct in ultimately resolving the financial issues that divided the parties based on the provisions of the FLA. However, before turning to those provisions, the trial judge first determined whether the businesses amounted to a joint family venture, as that term is used in Kerr v Baranow, 2010 SCC 10, where the Supreme Court used the concept of joint family venture to quantify a monetary award to remedy unjust enrichment arising from the separation of non-married couples who do not enjoy the protective provisions of Part 1 of the FLA. The trial judge erred by beginning his analysis with the question of joint family venture. He should simply have had recourse to the FLA. For married couples, application of the FLA equalization provisions is the starting point for addressing inequities arising from marriage breakdown.

Impugned Findings of Fact

The appellant took issue with several of the trial judge's findings. The Court of Appeal noted that it owed deference to a trial judge's factual findings and was not to disturb them absent palpable and overriding error. Despite having questioned the validity of certain factual findings, the appellant stated in his factum that the findings were not relevant to any of the issues decided on the Application below. In light of that concession, such findings cannot be overriding. An overriding error is an error that is sufficiently significant to vitiate the challenged findings of fact. The appellant must demonstrate that the error goes to the root of the challenged finding of fact such that the fact cannot safely stand in the face of that error.

1. Did the trial judge err in his determination of equalization? No.

i. Using a similar multiple

The Court of Appeal disagreed with the appellant's submission that it was unreasonable for the trial judge to have used a similar multiple for HCM as for Matcon. The trial judge rejected Mr. Ross' choice of a multiple because it could not be justified on the evidence before the court. Mr. Ross had not provided a reasonable explanation for the multiple that he chose. It was not reasonable to use very different multiples for HCM and Matcon, as Mr. Ross did in his valuation. Matcon and HCM were in the same business, had the same management team and expertise, and used the same engineers. The trial judge's reasons for using a similar multiple for HCM as for Matcon were compelling.

ii. Valuing assets

The Court of Appeal held that the appellant's complaint that the trial judge erred by valuing various assets based on the respondent's position without explanation was unfounded. The trial judge gave compelling reasons for preferring Mr. Sciannella's valuation of the assets and for rejecting that of Mr. Ross.

The appeal as against the equalization order was dismissed.

2. Did the trial judge err in the spousal support award? Yes.

Standard of Review

The standard of review on all matters relating to support is highly deferential. Appellate courts should not interfere with support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or the award is clearly wrong: Hickey v Hickey, [1999] 2 SCR 518 at paras 11-12.

The Relevant Provisions for Determining Income

The starting point for determining income under the SSAGs is the definition of income under the Federal Child Support Guidelines (SSAGs, s 3.3.2). Those guidelines and the CSGs are virtually identical: Mason v Mason, 2016 ONCA 725. Section 16 of the CSGs sets out the general rule that income is determined using the sources of income set out under the heading "Total Income" in the T1 General form issued by the Canada Revenue Agency ("line 150 income"). Sections 17 and 18 permit a court to depart from line 150 income when the court is of the opinion that the determination of the spouse's line 150 income would not be the fairest determination of income. Section 17(1) allows a court to consider patterns or fluctuations in a spouse's income over the last three years. Section 18 allows the court to add all or part of the pre-tax corporate income for the most recent taxation year to a corporation of which a spouse is a shareholder to that spouse's income. Section 19 addresses imputing income to a spouse and sets out a non-exhaustive list of circumstances in which income may be imputed, including when the spouse unreasonably deducts expenses from income.

i. The Amount of Income Imputed to the Appellant

The Court of Appeal did not give effect to this ground of appeal, noting that, in essence, the appellant was attempting to reargue, on appeal, his position at trial. The expert evidence that the appellant put forward at trial emphasized the various factors he now relies upon in support of his contention that less income should be imputed to him. The trial judge rejected that expert evidence, which he was entitled to do. As the trial judge noted, s 19(1)(g) does not require establishing that the spouse acted improperly or outside the norm in deducting expenses. Such deductions may be permissible from a tax perspective. There was ample evidence at trial that the appellant had personal expenses that were paid by his businesses. The trial judge was entitled to impute some additional income to the appellant pursuant to s 19(1)(g). The only question was how much. The trial judge preferred much of the respondent's expert's evidence and gave reasons for that preference. He explained that the major difference between the two experts' approaches to income analysis was that the respondent's expert attributed income from each of the companies to HA and then attributed the income from HA to the appellant. The appellant's expert, on the other hand, attributed income to the appellant only from a subset of the companies – he did not attribute any income from Matcon, HCM or RWH. As the appellant's expert put it, he attributed income only from "majority companies." The trial judge rejected this approach. The trial judge accepted the respondent's expert's evidence that the businesses were profitable and growing – Matcon and HCM had increased in value significantly since separation. He also noted that the appellant was able to continue to fund an extravagant lifestyle and had sufficient monies to purchase additional properties within his corporations and to expand his new business ventures. The trial judge noted that both experts agreed that there was significant income available in 2012 and 2013 and that the appellant himself gave evidence that he had access to $1.3 million in 2013. He found that evidence to be more consistent with the respondent's expert's opinion as expressed in his evidence and his report.

The trial judge took the appellant's expert's point that more money should be allowed for capital requirements and growth in a competitive and fluctuating market. He applied a 20% discount to the respondent's expert's estimate and arrived at a number squarely between the two experts' assessments. His approach to imputing income could not be faulted.

ii. Application of the SSAGs formula to income above the ceiling

The Court of Appeal agreed with the appellant's contestation of the trial judge's use of the SSAGs formula to fix a spousal support amount of $29,000-30,000 per month based on his imputed income of $1,000,000. The Court held that an individualized, fact-specific analysis requires a consideration of the effects of the equalization payment. The trial judge failed to fully consider the effects of the equalization payment, beginning with the question of entitlement. In so doing, he erred in principle.

Entitlement

The application of the SSAGs formulas, whether under or above the ceiling, requires a preliminary consideration of entitlement. The entitlement question then informs the approach to be taken in applying the SSAGs. As stated at s 3.2.2 of the SSAGs, the advisory guidelines do not deal with entitlement. They were drafted on the assumption that the current law of spousal support, post-Bracklow, continues to offer a very expansive basis for entitlement to spousal support. Effectively, any significant income disparity generates an entitlement to some support, leaving amount and duration as the main issues to be determined in spousal support cases. The basis of entitlement is important, not only as a threshold issue, but also to determine location within the formula ranges or to justify departure from the ranges as an exception. Section 3.2.2 of the SSAGs recognizes that entitlement plays two different important roles in determining spousal support. First, entitlement is a threshold issue. Second, entitlement determines location within the formula ranges or to justify departure from the ranges.

Entitlement – the Threshold Question

The trial judge addressed entitlement as a threshold issue. After concluding that the businesses did not qualify as joint family ventures, the trial judge stated that an equitable sharing of the economic consequences of this long term marriage should be achieved in this case. The trial judge was of the view that such an equitable distribution can be achieved by the proper calculation of the equalization payment and by an order of spousal support "characterized by both compensatory and needs-based within the context of their standard of living."

It was clear that the trial judge addressed the threshold question of entitlement and concluded that despite the sizeable equalization payment, the respondent was entitled to spousal support. Residual entitlement to spousal support in this case could be compensatory, non-compensatory or some combination of the two: Bracklow v Bracklow, [1999] 1 SCR 420 at para 49. The Court of Appeal understood the trial judge to have determined that entitlement to a spousal support order, in addition to the equalization order, was both compensatory and non-compensatory. The trial judge found that the respondent had a strong claim to compensation based on the role she played in the marriage and in supporting the appellant's advancement. The trial judge also found that the appellant had the means to pay spousal support, the respondent's lifestyle had significantly decreased after separation, and there was a great disparity in the standards of living that each enjoyed post-separation.

Entitlement – Application of the SSAGs formula

However, entitlement considerations must also inform the application of the SSAGs formula. The trial judge did not do this. After acknowledging the existence of the $350,000 ceiling, the trial judge chose to apply the SSAGs formula based on the full amount of the appellant's imputed income. The effects of the equalization payment had to inform the trial judge's approach to income levels in this case. Above the $350,000 ceiling, an additional formula range is created, and appropriate income inputs range anywhere from $350,000 to the full income amount. Entitlement is important to determine location within that range.

The SSAGs provide at s 11.1 that after the payor's gross income reaches the ceiling of $350,000, the formulas can no longer be applied automatically. At the same time they make clear that $350,000 is not a cap and spousal support can, and often will, increase for income above that ceiling.

While the trial judge was justified in making an award of spousal support that was both compensatory and non-compensatory, in setting the quantum, he needed to take into consideration the fact that the equalization payment went some considerable distance towards satisfying both bases for the award. As he did not, the use of the full $1,000,000 as an income input – in other words, the choice of an income input at the highest point within the suggested income range – was an error in principle.

iii. Taking the three-year average

The Court of Appeal disagreed with the appellant's contention that the trial judge's application of a three-year average to produce an annual income of $1,000,000 unfairly overstated his income (there was a single lucrative contract in 2013 that resulted in non-recurring income of $1,600,000 – the appellant argued including this amount in the average resulted in unfairness).

Section 17(1) of the CSGs allows a court to consider patterns or fluctuations in a spouse's income over the last three years. Where the spouse is a corporate shareholder, s 18(1)(a) permits the court to consider whether all or part of the pre-tax income of the corporation should be included in the spouse's annual income. In Mason, at paras 159-169, the Court of Appeal held that the three-year review of a spouse's income is not limited to line 150 income but can also capture corporate income.

The Court of Appeal was not persuaded that the trial judge erred in considering income over the last three years. While it is true that the appellant's expert's evidence was that the income from 2013 was unrepresentative, the trial judge accepted the respondent's expert's evidence that the businesses were profitable and growing. There was no evidence that large jobs such as the one that made 2013 a success would not continue to arise. Where a spouse's income fluctuates significantly due to the inherent unpredictability of income from business interests, the averaging approach can certainly be appropriate. In Mason, the Court of Appeal concluded that it would be appropriate to average the husband's income over the last three years. In all the circumstances, the Court of Appeal saw no error in the trial judge having averaged the appellant's last three years of income.

iv. Double "Dipping" (Recovery)

The appellant argued that given the equalization award of over $3,000,000, any income attributed to already-equalized assets should be excluded from income for the purpose of calculating spousal support. Related to this, the appellant argued that potential investment income available on the $3,000,000 equalization payment should be attributed to the respondent over and above the imputed income of $35,000 from 2016 onwards. The Court of Appeal gave effect to this ground of appeal as it related to imputing investment income on the equalization payment once it is received.

The trial judge considered the issue of "so-called" double-dipping and the Supreme Court's statement in Boston v Boston, 2001 SCC 43 that where practicable, the court should focus on the portion of the payor's income and assets which have not been a part of the equalization or division of matrimonial assets when the payee spouse's continuing need for support is shown. In Boston, that meant focusing on the portion of the pension that was earned following the date of separation and not included in the equalization of net family property. However, as the trial judge noted, the Supreme Court in Boston differentiated pension income from business income or income from an investment. The trial judge correctly held that double recovery of the kind contemplated in Boston is not a concern in a case such as this where the assets involved in equalization are not liquidating assets or special assets of the nature of a pension. At the same time, the Court of Appeal agreed with the appellant that investment income on the equalization payment of $3,000,000 should be attributed to the respondent once it is in her hands.

Since the trial judge's order provides for equalization payments to be made from 2016-2020, investment income on the equalization payments should be attributed to the respondent in assessing the appropriate quantum of support. The Court of Appeal considered what rate of return should be applied for imputing investment income to the respondent in the context of a determination of spousal support. In Greenglass v Greenglass, 2010 ONCA 675, when asked to determine such a rate, the Court of Appeal stated that it should look at what is "a reasonable rate a prudent investor might be able to earn at the relevant time". In ordering the appellant to make the equalization payment over five years, the trial judge required the appellant to pay post-judgment interest at the rate of 3% per annum. The Court of Appeal held that 3% is also a reasonable rate of return to attribute to the equalization payments.

3. Determining Spousal Support Afresh

The Equalization Payment

The Court held that the equalization payment in excess of $3,000,000 should be viewed as going some distance towards addressing the respondent's compensatory basis for entitlement. The respondent's needs and means must also be viewed in light of the equalization payment. The trial judge focussed on the respondent's significantly diminished standard of living after marriage breakdown. However, that reflected her financial status before any payment of equalization. After receipt of the equalization payment, the respondent's means will be substantially increased and her need will be substantially decreased. While the appellant's means are considerable they will be affected both by the requirement that he make the equalization payment (over five years) and also by the fact that significant additional income has been imputed to him.

Investment Income

There are two types of income that must be attributed to the respondent in addition to her imputed employment income: post-judgment interest on the unpaid equalization payments, and investment income on the equalization payments as the respondent receives them. As has been noted, the trial judge recognized the former but erred by failing to take into consideration the latter.

Calculating Spousal Support

The Court established a flat spousal support rate that itself takes into consideration the various effects of the equalization payment. This approach promotes finality for the parties. The Court noted that the preferable approach was to depart from the strict application of the SSAGs to the full $1,000,000 of imputed income to the appellant. The Court would account for the effects of the equalization payment on entitlement, as well as the necessary attribution of investment income to the respondent, by applying the SSAGs formula instead to an income of $675,000. This amount is halfway between the ceiling and the imputed income of $1,000,000: an approach suggested as a reasonable mid-point by the SSAGs, in discussing income over $350,000. In the Court's view, this approach fairly achieves the desired effect of providing both compensatory and non-compensatory aspects of support.

The SSAGs range for support outputs is based on 1.5-2% of the difference between the spouses' gross income for each year to a maximum range of 37.5-50% for marriages of 25 years or longer. The Court applied the low end of this range, 37.5%, to the gross income difference from January 2016 forward, when the trial judge imputed $35,000 of employment income to the respondent. This resulted in 37.5% x $640,000 = $240,000 annually or $20,000/month.

From the date of the Application until January 2016, the trial judge did not impute any employment income to the respondent. Applying 37.5% to a gross income difference of $675,000 resulted in a figure of $253,125 per year or $21,094 per month of spousal support. The Court rounded the figure to $21,000/month.

Ernikos v. Ernikos, 2017 ONCA 347

[Doherty, Benotto and Trotter JJ.A.]

Counsel:

F. Wood and A. Zubair, for the appellant

J. B. Rodrigues, for the respondent, Anastasios Ernikos

H. W Reininger, for the respondent, Antonia Ernikos

Keywords: Family Law, Separation Agreements, Reconciliation, Net Family Property, Equalization, Matrimonial Home, Resulting Trust

Facts:

The parties were married in 1997. They separated in 2006. In March 2007, they settled all matters arising out of their marriage and incorporated the terms into Minutes of Settlement. Pursuant to the terms of the Minutes of Settlement, the appellant (wife) transferred her ownership in the matrimonial home to the respondent (husband).

The parties reconciled at the end of May 2007. In August 2007, the wife received a $135,000 disability payment from her insurance company and deposited it into the husband's bank account. He, in turn, paid the household bills. In 2010, the husband transferred ownership of the former matrimonial home to his mother (also a respondent).

The parties separated in 2013. The wife sought an equalization of net family property and an interest in the former matrimonial home on the basis of a resulting, implied or constructive trust.

The trial judge held that the Minutes of Settlement precluded any future equalization payment and that the wife had failed to establish any trust interest in the former matrimonial home.

Issues:

1. Did the trial judge err in not considering the validity of the Minutes of Settlement because it was not pleaded?

2. Did the trial judge err in finding that the division of property under the agreement survived reconciliation?

3. Did the trial judge improperly dismiss her trust claim?

Holding: Appeal Dismissed.

Reasoning:

1. No. The trial judge confirmed – on several occasions – that the wife was not challenging the validity of the agreement; rather, she was challenging whether it was complied with. Second, the wife presented no facts that would support a claim under s. 56(4) of the Family Law Act. That section sets out when a court can set aside a separation agreement and provides a two-step process:

Step 1: The court considers if there was non-disclosure; if a party did not understand the agreement; or if the agreement should be set aside otherwise in accordance with the law of contract.

Step 2: If any of the circumstances in Step 1 exist, then the court determines if it is appropriate to exercise its discretion to set aside the agreement.

These criteria were not addressed in evidence. The wife was given the opportunity to amend her pleadings and present the evidence and chose not to. The validity of the separation agreement was therefore not in issue at trial and there is no error in the trial judge's determination of this issue.

2. No. The Minutes of Settlement provide that, upon reconciliation, the transfers or payments made would remain valid and that no party would be entitled to an equalization of net family property under the Family Law Act. The common law rule is that a separation agreement becomes void upon reconciliation of the parties. In Sydor v. Sydor (2003), 178 O.A.C. 155, the Court of Appeal determined that parties could contract out of the common law. If they specifically state their intentions to have a separation agreement survive reconciliation, the agreement is not rendered void.

3. No. There is no evidence that the wife transferred money to the husband's mother. A claim for a resulting trust – if it exists at all – would be against the property in the husband's name. However, at trial the wife did not put forth a claim for a beneficial interest in the bank account or other property owned by the husband, nor did she present evidence to support it. There was no evidence of an intention on her part to retain a beneficial interest in the funds.

MacKay v. Starbucks Corporation, 2017 ONCA 350

[Laskin, Feldman and Hourigan JJ.A.]

Counsel:

B. Roti, for the appellant

M. Tkatch and B. K. Opalinski, for the respondent

Keywords: Torts, Negligence, Occupier's Liability, Slip and Fall, Occupiers' Liability Act, R.S.O. 1990, c. O.2, Duty of Care, Standard of Care, Bongiardina v. York (Regional Municipality)

Facts:

Following a trial by judge and jury, the jury found that the place where the respondent fell was on an ice-covered municipal sidewalk at the entrance to a patio in front of Starbucks. In a ruling before the case went to the jury, the trial judge held that Starbucks was an occupier of that part of the sidewalk and therefore owed the respondent a duty of care. The jury found that Starbucks breached its duty of care as an occupier of the sidewalk.

The trial judge's finding that Starbucks was an "occupier" of that portion of the sidewalk, within the meaning of the Occupiers' Liability Act (the "Act"), was a ruling of mixed fact and law. This is an appeal of that ruling.

Issues:

(1) Did the trial judge err in her conclusion that Starbucks was an occupier, within the meaning of theAct, of the area of the sidewalk leading to its patio, where the respondent slipped and fell?

(2) If that finding was in error, did Starbucks nevertheless owe a common law duty of care to the respondent?

Holding:

Appeal dismissed.

Reasons:

(1) No. The definition of an "occupier" in the Act makes clear, there can be more than one occupier of the same premises. This includes municipal sidewalks: Bongiardina v. York (Regional Municipality) ("Bongiardina").

Although occupiers of both residential and commercial properties are often subject to municipal by-laws that obligate them to clear the ice and snow on public sidewalks that surround their property, that obligation is not sufficient to make them occupiers of the sidewalk within the meaning of the Act.

The trial judge's finding that Starbucks was an occupier of the sidewalk was not based simply on its efforts to clear snow and ice from the sidewalk at the entrance to its patio. Her ruling rested expressly on the combined effect of her factual findings, and her application of the Act and the case law to those findings. Her ruling, therefore, is in no way inconsistent with Bongiardina.

Therefore, it was open to the trial judge to conclude that Starbucks was an occupier within the meaning of the Act of the portion of the municipal sidewalk at the threshold of its patio entrance where the jury must have found that the respondent actually fell.

(2) No. The respondent argued, in the alternative, that if the appellant were not found to be an occupier within the meaning of the Act, it should nevertheless be found negligent based on a breach of a common law duty of care that continues to exist together with the statutory duty. The section of the Act that addresses this issue directly is s. 2, which states as follows:

2. Subject to section 9, this Act applies in place of the rules of the common law that determine the care that the occupier of premises at common law is required to show for the purpose of determining the occupier's liability in law in respect of dangers to persons entering on the premises or the property brought on the premises by those persons.

As stated above, the section states that it replaces the previous common law rules that determined the nature of the duty of care owed by an occupier of premises to different sorts of visitors to the premises with one single duty of care. That duty is to make the premises reasonably safe, and it is owed by an occupier of the premises to anyone who enters the premises. The work of the definition of occupier is to determine the extent of the premises for which the occupier has the statutory duty of care.

The only duty is the statutory duty that is owed by a person who meets the definition of occupier under the Act. As Klar writes in Tort Law, 5th ed. (Toronto: Carswell, 2012) at p. 627: "[i]t seems irrefutable that the legislation was intended to be exclusive and comprehensive, in so far as the liability of occupiers is concerned." As a result, no common law duty of care arises in this case.

Morreale v. Romanino, 2017 ONCA 359

[Strathy C.J.O., Gillese and Pardu JJ.A.]

Counsel:

M. W. Pilon, for the appellant

N. A. Porco, for the respondent

Keywords: Wills and Estates, Inter Vivos Gifts, Undue Influence, Presumption, Geffen v Goodman Estate, [1991] 2 SCR 353, Independent Legal Advice

Facts:

Nicola Ruccia and Lavina Ruccia had two children: daughters Giustina Morreale (the "appellant") and Elisabeth Romanino (the "respondent"). At the time of trial, the appellant was 64 years of age and the respondent was 59. The appellant left her parents' home when she was 20 to get married. She had a good relationship with her parents. There was a falling out between Mr Ruccia and the appellant's husband in 2003. The respondent lived with her parents all of her life, even after she married in 2003. She cared for them and this caregiving increased as the Ruccias aged.

In 1995, the Ruccias executed mirror wills, leaving everything to one another on death. The wills provided that when the survivor died, two thirds of the Ruccias' interest in a property on Beck Drive was to go to the respondent (who already had a one-third interest in the property) and one third was to go to the appellant. The residue of the Ruccias' estate was to be divided equally between their two daughters.

Following the Ruccias' deaths, the appellant learned that her parents had made an inter vivos gift of their only significant capital asset to her sister, the respondent. That asset was their equity in a property on Beck Drive in which they had lived, together with the respondent and her husband.

The Ruccias did not have an interest in the Beck Drive property at the time of their deaths because it had been sold in 2006. Prior to its sale, title to the Beck Drive property was joint, with the Ruccias owning a 2/3 interest and the respondent owning a 1/3 interest. When the Beck Drive property was sold, the Ruccias used their equity in the property towards the purchase of a property on Russell Stover Court. The Ruccias continued to live with the respondent and her husband at that property until their deaths. Title to the Russell Stover property was taken in the joint names of the respondent and her husband alone – the Ruccias were not on title. There was no evidence that the Ruccias received independent legal advice on the sale of the Beck Drive property or the purchase of the Russell Stover property.

The appellant started the proceeding at issue, in which she alleged that the gift of the Ruccias' equity in the Beck Drive property to the respondent was the result of undue influence. The action was dismissed. The trial judge referred to the relevant legal principles in Geffen v Goodman Estate, [1991] 2 SCR 353, noting that the equitable doctrine of undue influence was developed not to save people from the consequences of their own folly but to save them from being victimized by other people. She also observed that, while it is natural to presume that influence will exist in a relationship in which trust and confidence is reposed in the donee by the donor, the factual underpinning of the process leading up to the gift must be examined in the context of equity protecting the "weak or momentarily weak", not from bad bargains, but from the abuse of trust, confidence or power." The trial judge found that the circumstances and the respondent's relationship with her parents had the capacity to create undue influence. However, she found that the presumption of undue influence did not arise because it was not possible "to find any specific act of coercion or domination that would lead to a presumption of undue influence." The trial judge further concluded that even if the presumption did arise, based on her findings of fact, the presumption was rebutted.

Issue:

Whether the trial judge erred in

(1) concluding that the presumption of undue influence did not arise because she found "no specific act of domination or coercion" on the part of the respondent; and

(2) giving an inadequate analysis of why, if the presumption did arise, it had been rebutted.

Holding:

Appeal dismissed.

Reasoning:

1. The Presumption of Undue Influence did not Arise

The Court of Appeal agreed with the appellant's challenge of the trial judge's statement that in these circumstances, and despite the "special" relationship that existed, it was not possible to find any specific act of coercion or domination that would lead to a presumption of undue influence. The appellant submitted that this was an error in law on the part of the trial judge because there is no need for a finding of "a specific act of coercion or domination" in order for the presumption to arise.

The Court of Appeal noted that it is important to distinguish between the presumption of undue influence and actual undue influence. In this case, the trial judge was addressing the question of whether the presumption of undue influence arose, not whether there had been undue influence exerted by the respondent over her parents. There is no need for a finding of a specific act of coercion or dominion in order for the presumption to arise. Whether a person's free will was overborne by an act of coercion or fraud is a question of actual undue influence: Keljanovic Estate v Sanseverino (2000), 186 DLR (4th) 481 (Ont CA).

In the case of voluntary gifts, whether the presumption of undue influence arises begins with an examination of the relationship between the parties. The first question to be addressed, in all cases, "is whether the potential for domination inheres in the nature of the relationship itself". This test embraces those relationships that equity has already recognized as giving rise to the presumption, including parent and child. However, while the test embraces relationships that have been recognized as giving rise to the presumption, it is not enough to simply show that such a relationship exists. Even for such relationships, the presumption does not arise unless it has been established that there is the potential for one person to dominate the will of another. The test requires the trial judge to consider the whole of the relationship between the parties to see if there is the potential for domination, rather than looking for a specific act of coercion or domination.

Despite the impugned statement of the trial judge, the Court of Appeal did not interfere with the trial judge's determination that the presumption did not arise in this case. The trial judge saw Mr. Ruccia as the dominant party in the financial transactions between the Ruccias and the respondent. The trial judge made no error in concluding that the presumption of undue influence did not arise in this case.

2. If the presumption arose, it had been rebutted

In finding that the presumption had been rebutted, the trial judge did not place undue reliance on Mr. Ruccia's strong personality. It is correct that the trial judge took into consideration the undisputed evidence that Mr. Ruccia was a strong-willed man "to the very end", who played a dominant role in the family. He was acutely aware of his financial affairs and as between him and his wife, he was in charge of all financial matters and made all financial decisions. The Court of Appeal saw nothing inadequate in the trial judge's analysis, which included her consideration of Mr. Ruccia's nature and personality.

The Court of Appeal also rejected the appellant's contention that the trial judge's analysis fell short because she failed to draw an adverse inference from the respondent's failure to call the lawyer who acted for the Ruccias and the respondent on the sale of the Beck Drive property and the purchase of the Russell Stover property. The contention could not stand in light of the fact that independent legal advice is not required in order to rebut the presumption of undue influence: Bank of Montreal v Duguid (2000), 47 OR (3d) 737 (CA).

J.J. v. C.C., 2017 ONCA 357

[Juriansz, Pepall and Miller JJ.A.]

Counsel:

Hilary Goodman and Timothy P. Gronfors, for the appellant

Peter Harrison, for the respondent

Keywords: Family Law, Custody, Child Support, Material Change in Circumstances, Gordon v. Goertz, Evidence, Children, Sealing Orders

Facts:

The appellant father and respondent mother, who had never married, had a child. They consented to a detailed 17-page final order dated September 19, 2012, that provided for joint custody, set out parenting principles, and provided for a parenting coordinator. An earlier final order dated August 20, 2009 ordered the father to pay child support in the amount of $220 a month. Both orders were issued by the Superior Court of Justice, Family Court in Barrie.

The mother brought a motion to change the 2009 order to increase the child support payments. The father brought a motion to change the 2012 order to alter the child's primary residence from the mother's home in Owen Sound to his apartment in Toronto, and to give him final decision-making authority on all matters concerning the child. The motions to change were brought in Owen Sound, as the mother with whom the child lived had moved to Grey County. After a seven-day trial, the trial judge granted the mother's motion and dismissed the father's. The father appealed.

Issues:

1. Did the trial judge err by conducting a judicial interview with the 10-year-old child?

2. Did the trial judge err by finding there had been no material change in circumstances that justified a variation in custody or residency?

3. Did the trial judge err in ordering the increased child support retroactive to January 2012 rather than to June 3, 2014, the date of the motion to change?

Holding:

Appeal allowed, in part.

Reasoning:

(1) No. The father amended his motion on the third day of trial to change the child's residence. The mother sought an adjournment. The trial judge refused the adjournment, considering any additional delay to be against the best interests of the child, and proposed interviewing the child himself. The father consented. The trial judge ordered the transcript of the judicial interview sealed. The father requested it be unsealed but the court found it unnecessary to do so. Given the father's late amendment, that determining the child's views in some other fashion would have occasioned delay not in her best interests, and the father's consent, the court rejected the father's contention the trial judge erred in interviewing the child himself.

(2) No. The father argued that the end of Parenting Coordination and the friction between the parents constituted the change in circumstances. In finding no material change in circumstances, the trial judge considered and applied the correct test as described in Gordon v. Goertz.

As the trial judge noted, the 2012 order contemplated the end of Parenting Coordination. It provided that the parents should return to the Parenting Coordinator for mediation/arbitration after parenting coordination had expired. The court agreed with the trial judge that the end of Parenting Coordination was not a material change and that this argument failed. It could not be said the parenting plan had failed as the father had not resorted to the avenues for resolving conflict that the 2012 order provided. The court did not accept the father's submission that the trial judge erred by finding there had not been a change of circumstances in the custody and residency of the child.

(3) In relation to child support, the father had conceded at trial that there had been a change in circumstances because his income had increased. He points out that in this case he has diligently complied with the 2009 support order, there is no evidence he did not disclose the increases in his income, and the mother made no earlier request for an increase in the support payments.

In making the final order, the trial judge set off against the retroactive child support arrears owed by the father an unpaid $27,000 costs award made against the mother by the court in Barrie in January 2009. Subsequently, the mother had filed for bankruptcy in 2010, and the Bankruptcy Court had ordered her to pay 50% of that outstanding costs order. The trial judge had no basis for setting off the entire costs award, rather than 50% of the costs award, against the total retroactive child support arrears. The court allowed the appeal and varied the order below so that increased child support payments are retroactive to June 3, 2014, the date of the motion to change, and set off only 50% of the outstanding costs award against those arrears.

Marshallzehr Group Inc. v. Callidus Capital Corporation, 2017 ONCA 371

[Doherty, Benotto and Trotter JJ.A.]

Counsel:

S. Schwartz, for the appellant

J. G.Murdoch, for the respondent

Keywords: Endorsement, Real Property, Mortgages, Forbearance Agreements

Facts: The appellant (mortgagee) is appealing the decision of the application judge based on the fact that the application judge misinterpreted the terms of a forbearance agreement.

Issue: Did the application judge misinterpret the terms of the forbearance agreement, the crucial document in this case, and did he draw certain unreasonable factual inferences from the totality of the evidence?

Holding: Appeal dismissed

Reasoning: No. After the forbearance agreement was in place, the mortgagor had virtually no control over the property. The application judge did not misread the forbearance agreement, which had the following effects:

" the mortgagee had control over the sale of the property

" the mortgagee had control over whether any capital improvements could be made on the property

" the mortgagee had effective control over the ongoing relationship with the tenant in the building

" the mortgagee had control over the cash flow generated by the property. Any funds received by the mortgagor were held in trust for the mortgagee under the terms of the forbearance agreement. Those funds had to be deposited into the designated blocked account and at that point became the property of the mortgagee

The application judge was correct in the factual findings that the purpose of this forbearance agreement was for Callidus (the mortgagee) to obtain complete control of the property and the business operation of Cheese Factory and related corporations. The critical term of the agreement was the enhanced security not previously available to BMO. The court was not persuaded this was merely a situation of rent payments going to the mortgagee. Callidus controlled every decision, including lease renewal, repairs and marketing.

Kielb v. National Money Mart Company, 2017 ONCA 356

[Rouleau, Pepall and Roberts JJ.A.]

Counsel:

Danny Kastner and Gregory Ko, for the appellant

Susan Crawford and Angela Wiggins, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Damages, Non-Discretionary Bonus, Contracts, Interpretation, Sattva Capital Corp. v. Creston Moly Corp, Unconscionability, Titus v. William F. Cooke Enterprises Inc.

Facts:

In 2008, the appellant lawyer entered into an employment contract with the respondent. A non-discretionary bonus was found by the trial judge to be an integral component of the appellant's compensation. The parties' employment contract contained a bonus plan clause (the "limitation clause") that provided that the bonus did not accrue and was only earned and payable on the pay-out date.

The contract also included a termination clause which provided that the company was entitled to terminate the appellant's employment without cause, provided that:

(i) the Company shall give you written notice of such termination as required by the ESA, which notice may be effective immediately (in which case you will be provided with pay in lieu of notice); and

(ii) the Company shall, within 10 business days from the date of giving such notice, or pay in lieu thereof, pay to you 4 (four) weeks per year of service and pro-rated for partial years of service (the "Termination Payment"), inclusive of any amounts paid in clause (i) above, in return for your execution of a full and final release of any and all claims by you as against the Company, Dollar or any related entities. You agree to accept the Termination Payment in full satisfaction of all entitlements arising from such termination, whether under statute, contract or common law, including entitlement to reasonable notice.

The respondent's fiscal year runs from July 1 to June 30 and the bonus payout date for 2010 was September 17, 2010. The respondent terminated the appellant without cause on April 21, 2010 and paid him two weeks' notice in satisfaction of the appellant's statutory entitlement under the Employment Standards Act ("ESA"). In the absence of a signed release, the respondent refused to pay the appellant the additional six weeks' base salary referenced in subparagraph (ii) of the contract.

At trial, the appellant argued that the limitation clause was unenforceable due to its ambiguous and contradictory nature and because it also contravened the ESA. The trial judge rejected these arguments.

Issues:

(1) Did the trial judge err in his interpretation of the employment contract and termination clause as unambiguous?

(2) Did the trial judge err in finding the termination clause enforceable?

Holding:

Appeal dismissed.

Reasoning:

(1) No. He construed the employment contract and found the limitation clause to be unambiguous. The clause was to be read in its entirety and, as such, it was clear that if the bonus pay-out date fell within the appellant's notice period, the respondent would honour its requirements. Moreover, even if the appellant had opted for the negotiated eight week notice period, the notice period would have ended on June 16, 2010, before the bonus pay-out date, and the appellant would not have earned or have been eligible to receive the bonus payment.

Applying the principles in Sattva Capital Corp. v. Creston Moly Corp., and recognizing that the trial judge had the opportunity to consider the full factual matrix, the court saw no reason to interfere with the trial judge's interpretation. The parties did not purport to contract out of or otherwise waive the appellant's statutory entitlements, which would have been void pursuant to s. 5(1) of the ESA. Rather, in clear and unambiguous language, the parties agreed that the appellant would be paid his entitlements under the ESA.

The contract was also clear and unambiguous that the appellant's statutory entitlements included those bonus payments that would have been earned and paid out within the appellant's statutory notice period under the ESA. It was open to the parties to agree how and when any bonus was declared, earned, accrued and would be payable. There was no basis to interfere with the trial judge's finding that no bonus entitlement had accrued by or on the date of termination, nor did it accrue during the notice period under the terms of the contract or the provisions of the ESA. The court would, therefore, not give effect to this ground of appeal.

It was also open to the trial judge to dismiss the appellant's arguments based on unconscionability and public policy. The provisions relating to the bonus were freely negotiated by the appellant. In any event, the appellant failed to meet the four part test for unconscionability set out in Titus v. William F. Cooke Enterprises Inc.

(2) No. The appellant argues he is entitled to his common law notice period, which he calculates as six months. This issue was neither pleaded nor argued at trial. Indeed, at trial, the appellant sought to enforce his contractual entitlement to notice on termination in the amount of eight weeks. The evidentiary record is lacking and it would be prejudicial to the respondent to permit the appellant to advance this argument at this late stage. The court would not give effect to this ground of appeal and it was therefore unnecessary to address common law reasonable notice.

Com Dev Ltd. and Routes Astroengineering Ltd. v. Microsat Systems Canada Inc., 2017 ONCA 372

[Doherty, Benotto and Trotter JJ.A.]

Counsel:

Douglas D. Langley, for the appellant

Evert Van Woudenberg, for the respondents

Keywords: Contracts, Mutual Repudiation

Facts:

This is a factually complicated contractual dispute. The trial judge heard about 12 days of highly technical evidence. His detailed reasons span 189 paragraphs and are found at 2016 ONSC 289. The appellant submits that while it was open to the trial judge to conclude that the appellant had repudiated the contract in March 2009, the trial judge erred in failing to consider, much less find, that the respondent had also breached the contract by his conduct after March 2009 and before the repudiation as found by the trial judge in February 2010. He suggests that the question was raised on the evidence and had to be determined by the trial judge to properly adjudicate the claim. Counsel categorizes the failure to address this material issue as an error in law.

The second argument advanced by the appellant assumes that only the appellant was in breach, but argues that even on that basis, the trial judge had to take into account, by way of set-off or otherwise, the many deficiencies in the work performed by the respondent.

The third argument refers to a payment of $22,369, made in relation to what was referred to as "Milestone 14C", involving a specific battery component. Counsel for the appellant submits that the respondent's failure to deliver the required test results constituted a failure to comply with a prerequisite to payment under Milestone 14C. Counsel notes that in relation to other milestones in which tests results were not delivered, the trial judge found against the respondent's claim. He submits that the same reasoning compels the rejection of the claim for $22,369 in respect of Milestone 14C.

In the particular case of milestone 14C, the trial judge found that the required testing had been done and that the battery component had successfully passed the test. In fact, the trial judge did not make a finding one way or the other as to whether the results had been forwarded. In his view, the evidence was uncertain on that point. The trial judge did conclude, however, that but for the appellant's actions, the report referable to the completed testing would inevitably have been forwarded to the appellant.

Issues:

(1) Should the trial judge have considered this as a case of mutual repudiation of the contract?

(2) Should the trial judge have taken into account, by way of set-off or otherwise, the many deficiencies in the work performed by the respondent?

(3) Did the trial judge err in not finding against the respondent's failure to deliver the required test results which may have constituted a failure to comply with a prerequisite to payment under Milestone 14C?

Holding:

Appeal dismissed.

Reasoning:

(1) No. In the court's view, the trial judge did address the respondent's conduct between March 2009 and February 2010. He described the respondent's continuing efforts to fully comply with the agreement and he rejected the argument that the delays in performance of the agreement constituted a breach of any term of the agreement. Those were factual findings which were open to the trial judge and the court was not shown any basis upon which to interfere with that factual finding.

(2) No. The trial judge properly addressed deficiencies by considering whether the amounts were owed under the particular milestones described in the contract. His approach is fully set out in his reasons and accurately summarized at paras. 186 and 187 of his reasons. His findings are fact-intensive and the court saw no ground upon which to interfere with any of those findings.

(3) No. It was open to the trial judge to make this finding. The trial judge's finding in respect of Milestone 14C is distinguished from his findings in respect of some of the other milestones because in those cases (e.g. Milestones 10 and 12) the trial judge made a finding that the respondent had failed to do the necessary work or to have the necessary testing completed. In the case of Milestone 14C, the work was done and the tests were there to be read by the appellant. This distinction explains the different conclusions reached by the trial judge. The court did not accept the argument that there is any inconsistency in his finding in relation to Milestone 14C and his finding in relation to the milestones in respect of which testing was not done.

Belgium v. Suthanthiran, 2017 ONCA 343

[Laskin, Gillese and Watt JJ.A.]

Counsel:

S. C. Hutchison and M. R. Gourlay, for the appellants

J. G. Johnston, for the respondent

Keywords: Criminal Law, Mutual Legal Assistance in Criminal Matters Act, Search Warrants, Sending Orders, Confidential Business Information

Facts:

Best Theratronics ("Best" or "Best Canada") is in the business of cancer diagnosis and treatment. Among other things, Best manufactures cyclotrons, machines that produce radioactive isotopes for use in radiation therapy.

Krishnan Suthanthiran ("Suthanthiran") founded Best and owns the company. Suthanthiran also heads an international group of companies all in the business of providing medical equipment and supplies. The companies involved in this appeal, Best Canada and Best Medical Belgium Inc. ("BMB Inc."), are part of this international group.

Belgian authorities believe that three transactions involving a loan and the purchase and sale of two cyclotrons were criminal offences in the Kingdom of Belgium ("Belgium"). Belgium sought assistance from Canada under the mutual legal assistance treaty between the two countries. On behalf of Belgium, counsel for the Attorney General of Canada obtained a search warrant under s. 12 of the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp) ("MLACMA"). The warrant authorized the search of Best's offices in Canada for records relating to what Belgium regarded as the criminal transactions. The premises were searched and records seized.

Suthanthiran says that the records seized under the search warrant included documents that contain a vast array of commercially sensitive information, such as material about the design and manufacture of cyclotrons. This information, of an inestimable value to Best's competitors, is of little value in the potential criminal prosecution.

Belgium sought a sending order under s. 15(1) of MLACMA. Best wanted the order tailored, by the inclusion of appropriate terms and conditions, to ensure that a state-owned competitor of Best did not get access to the commercially sensitive information included in the seized documents.

A judge of the Superior Court of Justice made the sending order, but declined to attach any terms or conditions restricting access to the documents to those involved in the criminal prosecution. Best and Suthanthiran sought and obtained leave to appeal on a single question of law.

Issue: Did the application judge err in law by refusing to impose terms and conditions within the Sending Order that would minimize the risk that the applicants' confidential information would be unnecessarily and inappropriately disclosed to third parties?

Holding: Appeal Dismissed.

Reasoning: No. The sending hearing judge did not err in failing or refusing to impose terms and conditions in the sending order to minimize the risk that confidential, commercially sensitive information in the materials seized under warrant was not inappropriately or unnecessarily disclosed to Best's Belgian competitor in related civil proceedings.

The sending judge did not err in failing to include terms limiting the disclosure and use of the seized material. This is not to say that parties cannot craft appropriate terms and conditions to attach to a sending order. The Treaty contemplates the imposition of conditions. Under Article 10, the Requesting State shall observe any conditions imposed by the Requested State in relation to seized documents. The Act, which gives effect to this Treaty, also contemplates discretion to impose terms and conditions, as demonstrated by the language of s. 15(1)(b) and s. 16. Appropriate terms would do more than merely repeat the protections already afforded to the parties by the Treaty and would not frustrate the purposes of the Act.

The Nature of Mutual Legal Assistance

Mutual legal assistance is a relationship between the governments of sovereign states. It is a relationship born of a desire on the part of both states to improve the effectiveness of both countries in the investigation, prosecution and suppression of crime through cooperation and mutual legal assistance in criminal matters.

The Purpose of MLACMA

Treaties between sovereign states require legislation to implement them domestically. MLACMA is domestic legislation that implements various treaties or other arrangements on mutual legal assistance. It sets out the procedure for assistance and cooperation to help treaty partners in their detection and investigation of crime. Among other things, it provides ways for Canada's treaty partners to obtain information from Canadian sources to assist in investigations undertaken by the treaty partner: Russian Federation v. Pokidyshev (1999), 138 C.C.C. (3d) 321 (Ont. C.A.), at paras. 15-16.

As a domestic statute, MLACMA is subject to the usual rules of statutory interpretation, which require courts to look to the words of the statute, the scheme of the Act as a whole and Parliament's intention and purpose in its passage of the legislation: Pokidyshev, at para. 14.

Requests for Assistance

A treaty partner, like Belgium, which seeks legal assistance, institutes its petition by a Request to the Minister of Justice, the central authority in Canada, under para. 1 of Article 15 the Treaty. The Request will describe, among other things, the nature of assistance sought: Treaty, Article 14.

Implementing the Request

When a Request for mutual legal assistance is received, the Minister deals with it in accordance with the Treaty and MLACMA: MLACMA, s. 7(2). Where the Request is for or includes a search and seizure, and the Minister approves the Request, the Minister provides a "competent authority", as defined in s. 2(1) of MLACMA, with the documents and information necessary to apply for a search warrant: MLACMA, s. 11(1).

Issuing the Search Warrant

Search warrants may be granted by a judge of the Superior Court of Justice on an ex parte application by the competent authority designated by the Minister. The evidentiary support for the application is an information on oath which must satisfy certain statutory requirements: MLACMA, ss. 11(2) and 12(1). The judge who issues the warrant may attach conditions to its execution, including but not only, conditions relating to the time or manner of its execution: MLACMA, s. 12(2).

The Report to the Issuing Judge

The officer who executes the search warrant issued under MLACMA is required to make a report about its execution, including a general description of the records or things seized under the warrant, and file that report with the issuing court at least five days before the hearing to consider the execution of the warrant: MLACMA, s. 14(1). The Minister is entitled to a copy of the report forthwith after its filing: MLACMA, s. 14(2).

The Sending Hearing

Section 15 of MLACMA governs the hearing fixed by the judge who issued the warrant to consider the execution of the warrant and the report of the peace officer who executed it. For ease of reference, the term "sending hearing" is generally applied to this hearing.

The sending hearing judge must first decide whether the warrant was executed according to its terms and conditions, or whether there is some other reason why what was seized should not be sent to the Requesting Treaty Partner. To inform this decision, the sending hearing judge is required to consider the representations of the Minister, the competent authority, the person from whom the things were seized under the warrant and anybody else who claims to have an interest in anything seized: MLACMA, s. 15(1).

Including Terms and Conditions in the Sending Order

A sending hearing judge who decides to send records or things to the Requesting Treaty Partner is authorized to impose any terms or conditions the judge considers desirable in the sending order. Among the terms are those necessary to give effect to the request; to preserve and return to Canada any record or thing seized; and to protect the interests of third parties: MLACMA, s. 15(1)(b).

Inclusion of terms or conditions is discretionary. The enabling language is the permissive "may", not the presumptive or mandatory "shall": United States of America v. Price, 2007 ONCA 526, 225 C.C.C. (3d) 307, at para. 16. However, this discretion to include terms and conditions is not unbounded. It must be exercised in a way that:

i. comports with the language and overall purpose of MLACMA;

ii. is consistent with the objectives and principles that underlie MLACMA in its broadest sense;

iii. is consonant with the purpose of a sending order; and

iv. accords with the principles of statutory interpretation of criminal legislation.

Supervision of Use of Material Sent

Two provisions govern disclosure and use of materials sent to the Requesting Treaty Partner. First, the Treaty. Article 17 of the Treaty prohibits Belgium from disclosing or using information or evidence furnished for purposes other than those stated in the Request without the prior consent of the Minister as the central authority of the Requested State.

Second, the Act. Section 16 of MLACMA prohibits implementation of a sending order under s. 15 until the Minister is satisfied that the Requesting State has agreed to comply with any terms imposed in respect of the sending abroad of the record or thing.

Dagg v. Cameron Estate, 2017 ONCA 366

[Doherty, Brown and Miller JJ.A.]

Counsel:

P.M. Epstein, A.M. Franks, M.H. Twyman, for the appellants

C.D. Freedman, for the respondents

Keywords: Family Law, Support, Dependants, Succession Law Reform Act, RSO 1990, c. S.26, Part V, s. 72, Life Insurance, "Claw Back" Provision, Mootness

Facts:

At issue was the interpretation of the so-called "claw back" provision found in s. 72 of the Part V Succession Law Reform Act. This provision operates to "claw back" into the net estate of a deceased "any amount payable under a policy of insurance effected on the life of the deceased and owned by him or her." Section 71(1)(f) has implications for other dependants of a deceased who, at the time of death, were receiving spousal or child support pursuant to orders made under family law legislation. This is because the Family Law Act and the Divorce Act authorize a court to require a payor of support to designate a support recipient as the irrevocable beneficiary of a policy of life insurance. As a result, competing claims may arise to the proceeds of a life insurance policy he owned: a claim asserted by a spousal or child support recipient who, by court order, was designated the irrevocable beneficiary of the policy; and a claim advanced by a different dependent under the SLRA.

The appellant Anastasia married Stephen in 2003. They had two children, Derek and Meaghan. In 2010, Stephen took out a life insurance policy in which he named Anastasia the beneficiary. They were separated in 2012. Stephen was required to pay monthly child and spousal support by way of an order by Justice Roswell on February 27, 2013, and then a consent order to vary made by McCarthy J on July 5 2013.

A few months after the separation in 2012, Stephen began seeing the respondent Evangeline. Evangeline became pregnant, and told Stephen around the time of the McCarthy Order, in July 2013. Stephen was diagnosed with cancer in November 2013. He died soon after. Evangeline's child was born in February 2014, about three months after Stephen's death.

On November 11, 2013, Stephen executed a Last Will and Testament and a Canada Life Title form. Each document amended the beneficiary designation on the Policy as follows: Anastasia 10%, Derek 17%, Meaghan 19%, Evangeline 53%. While Stephen was in the hospital, Anastasia learned of the change of beneficiary and brought a motion seeking to restore her designation as sole beneficiary. She deposed that Stephen was $18,000 in arrears on his support obligations.

Nelson J heard Anastasia's motion on November 20, 2013. He restored Anastasia as the 100% beneficiary. Canada Life made the ordered change effective November 20, 2013. Stephen died three days later at the age of 48. He left an insolvent estate.

In March 2014, Evangeline applied under Part V of the SLRA for dependant's relief. The trial judge determined that Evangeline was a "spouse" of Stephen. He concluded that the Policy formed part of Stephen's estate, and found that since Anastasia had no security interest in the life insurance policy, she could not be characterized as a "creditor". The Divisional Court dismissed Anastasia's appeal, concluding the trial judge correctly determined Stephen owned the policy. The court went on to hold that Anastasia's irrevocable beneficiary designation did not give her "creditor rights" within the meaning of s. 72(7) of the SLRA.

Anastasia's position was that the entire $1 million in life insurance proceeds belong to her. She argued that the beneficiary designation in the Rowsell Order ousts the operation of the dependants' support provisions in Part V of the SLRA.

Evangeline argued that a proper interpretation of s. 72(7) of the SLRA would see Anastasia receive amount of proceeds sufficient to satisfy Stephen's support obligations under the Orders.

The parties settled but urged the Court to hear the appeal given the broad implications in family and estate law of the Divisional Court's judgment. The Court addressed the mootness issue and found that there was strong public interest in the resolution of the legal issues raised by the appeal, thus the Court exercised its discretion to determine the issues despite mootness.

Issues:

Where a support payor owns a life insurance policy and has been required by court order to name the spousal or child support recipient as the irrevocable beneficiary of the policy, upon the payor's death what rights does the support recipient have to the policy's proceeds in the face of a competing claim by another dependant of the deceased brought under part V of the SLRA?

Holding: Appeal allowed.

Reasoning:

Where, as here, the dispute between the parties has disappeared, the court still retains the discretion to proceed to hear the merits of the appeal: Borowski v. Attorney General for Canada, [1989] 1 S.C.R. 342, at p. 353. The exercise of that discretion is guided by a consideration of the presence or absence of the three rationales underpinning the mootness doctrine: (i) whether the issues can be well and fully argued by parties who have a stake in the outcome; (ii) the concern for judicial economy; and (iii) the need for the court to remain alive to the proper limits of its law-making function in order to avoid intrusions into the role of the legislative branch. The court determined that the test was satisfied and excercised its discretion to decide the appeal despite its mootness.

Section 72 operates to prevent arrangements that jeopardize the maintenance of the deceased's dependants. Section 72(7) expressly preserves the rights of creditors in such transactions. There was no dispute between the parties that the Policy was a "transaction effected by the deceased before his...death" within the meaning of s. 72 of the SLRA. As a result, the proceeds were deemed to form part of Stephen's net estate. What was in dispute was the extent of Anastasia's rights as a creditor of the deceased under s. 72(7).

The obligation to make support payments under the Divorce Act or the FLA creates a debtor-creditor relationship. The estate of the support payor may be liable for past and future obligations. Evangeline conceded that Anastasia was a general, unsecured creditor of the estate. The courts below interpreted s. 72(7) as applying only to secured creditors.

The Court accepted Anastasia's submission that the Divisional Court erred in holding she did not fall within s. 72(7) unless she was a secured creditor. The Divisional Court's interpretation ran counter to the plain language of s. 72(7) which extended its reach to any creditor of the deceased in any transaction with respect to which the creditor has rights.

The Court concluded that s. 72(7) of the SLRA excluded from the claw back the amount of the policy's proceeds required to satisfy the deceased's court-ordered spousal or child support obligations – past and future – existing at the time of his death where, by court order, the support recipient has been designated as the irrevocable beneficiary under the policy.

The Rowsell and McCarthy Orders operated to make the proceeds of the Policy available to Anastasia, as a spousal and child support recipient and the Policy's designated beneficiary, to satisfy the past, current and future support obligations of Stephen existing at the time of death, and calculated in accordance with the terms of the support orders in place at the time of his death. Anastasia thereby became a creditor of Stephen for the purposes of s. 72(7) of the SLRA with the right to look to the Policy's proceeds to satisfy those support obligations. S. 72(7) operated to remove the claw back of s. 72(1) the amount of the Policy's proceeds required to satisfy those support obligations of Stephen to Anastasia and their children.

Duffus v. Frempong-Manso, 2017 ONCA 360

[Juriansz, Lauwers and Hourigan JJ.A.]

Counsel:

M. Sirivar, for the appellant

E. Lenkinski, for the respondent

Keywords: Family Law, Child Support, Imputed Income, Ontario Child Support Guidelines, s. 9, s. 16, s. 18(1) and (2), Variation, Divorce Act, s. 17 (6.1), Doyle v. Doyle

Facts:

The parties were never married. They have one child who was sixteen years of age. In 2012, the parties conducted a lengthy trial before Wildman J., which resulted in a consent order (the "Wildman Order"), which dealt with both access and child support. The Wildman Order provided that child support would be payable for only ten months of the year because the child spent equal time with the appellant over the two summer months.

The appellant swore a financial statement that was before the court when it made the Wildman Order. In that statement, he swore that he was T4 employee, with no additional income. Contrary to his sworn statement, and unbeknownst to the respondent and Wildman J., the appellant was diverting income through 1858910 Ontario Inc. (the "Corporation"). For 2011, his income was $61,740 greater than the $285,652.55 that was disclosed in his financial statement.

Despite his success in obtaining an order based on an artificially low level of income, the appellant brought two motions to change child support payments. The respondent opposed the motions and brought a cross-motion for an order that the appellant's income from all sources be considered for child support purposes. She also sought clarification regarding access provisions.

The motion judge found that the appellant was "evasive and non-compliant with his disclosure obligations." In particular, he noted that the appellant did not disclose any interest in the Corporation until January 20, 2014.

Issues:

1) Did the motion judge err in calculating the corporate income attributable to the appellant?

2) Did the motion judge err in changing a pre-existing order, which provided for payment of child support over ten months, to a new order that required child support to be paid over twelve months?

Holding:

Appeal allowed, in part.

Reasoning:

1) Yes. The starting point for calculating annual income, as found in s. 16 of the Ontario Child Support Guidelines, O. Reg. 391/97 ("CSGs"), is a payor's "total income," also known as "line 150" income. Where, however, in the court's view, the line 150 income does not fairly reflect the money available for payment of child support, s. 18(1) permits the court to consider all or part of the pre-tax income of a corporation or an amount commensurate with services provided. Any amounts paid by a corporation as salaries, wages, management fees or other payments that are non-arm's length are presumptively added into the corporate income pursuant to s. 18(2).

The motion judge rejected the calculations in the appellant's expert's report on the basis that those calculations were informed by unsupported information provided by the appellant. For example, the expert report accepted the appellant's claim that he was only a 50 percent shareholder in the Corporation. In calculating the appellant's income, the motion judge took the approach under ss.18(1) and (2) of adding to the Corporation's pre-tax income all amounts paid by the Corporation as salaries, wages or management fees, or other payments or benefits that are non-arm's length.

While this overall approach was appropriate, there was a clear error in its execution in relation to the loan amounts. The motion judge attributed corporate loans to the appellant as income to the appellant under s. 18(1); however, at para. 94 of his reasons the motion judge found that the appellant had repaid the loans. Loans that were repaid should not have been attributed to the appellant as income.

The appellant raised several other alleged errors on the part of the motion judge. The Court rejected any alleged error, save the loan error, as giving rise to a palpable and overriding error warranting appellate intervention. "This is part of the risk the appellant incurred in providing inadequate disclosure to the court as well as inaccurate information to his expert."

2) No. When the appellant brought his motions to change, the Court was obliged to consider any variation in accordance with the CSGs: Doyle v. Doyle, 2006 BCCA 128at para. 11 and s. 17 (6.1) of the Divorce Act, R.S.C. 1985 c. 3.

Pursuant to s. 9 of the CSGs, for a parent to meet the 40 percent threshold warranting a set-off of child support, the parent must exercise a right of access for "not less than 40 percent of the time over the course of year." The appellant's submission was inconsistent with s. 9. If accepted it would permit a set-off based on equal time with both parents over the two summer months that does not meet the annual 40% threshold required by s.9.

It was not open to the appellant to pick and choose the portions of the CSGs he wanted to apply to his case. The motion judge made an order consistent with s.9 of the CSGs.

Civil Endorsements:

Da Graca v. Prouse, 2017 ONCA 261

[Juriansz, Pepall, Miller JJ.A.]

Andria Da Graca, acting in person

D. Silver, for the respondent

Keywords: Torts, Negligence, Solicitors, Summary Judgment, Limitations Act, 2002

Criminal Decisions:

R. v. Allahyar, 2017 ONCA 345

[Gillese, van Rensburg and Brown JJ.A.]

G. Gross-Stein, for the appellant

S. Porter, for the respondent

Keywords: Criminal Law, Speeding, s. 128 Highway Traffic Act, s. 7 Charter, Crown Disclosure

Gajewski (Re), 2017 ONCA 354

[Laskin, Watt and Hourigan JJ.A.]

G. Choi, for the appellant

A. Szigeti and J. Berger, for the respondent Bartosz Gajewski

G. A. MacKenzie for the Person in Charge of the Centre for Addiction and Mental Health

Keywords: Criminal Law, Unsupervised Entry into Community, Protection of Public Safety, Criminal Code, Part XX.1

R. v. Badran, 2017 ONCA 353

[Weiler, Feldman and Huscroft JJ.A.]

M. Moon and L. Gensey, for the appellant

J. Nemler, for the respondent

Keywords: Criminal Law, Fraud, Sentencing, Evidence, Experts, Circumstantial Evidence, Charge to Jury

R v. Marchesan, 2017 ONCA 355

[Gillese, Huscroft and Trotter JJ.A.]

N. Jamaldin, for the appellant

C. Tier, for the respondent

Keywords: Criminal Law, Break and Enter, Assault, Death Threats, Guilty Plea, Misapprehension of Evidence, Credibility Findings

R. v. Baharloo, 2017 ONCA 362

[Gillese, van Rensburg and Brown JJ.A]

J. R. Presser and A. Menchynski, for the appellant

K. M. Healey, for the respondent

Keywords: Criminal Law, Drug Trafficking, Ineffective Assistance of Counsel, Conflict of Interest, Duty of Loyalty

R. v. Duwyn, 2017 ONCA 367

[Gillese, Huscroft and Trotter JJ.A]

N. Gorham, for the appellant

C. Harper, for the respondent

Keywords: Criminal Law, Assault, Criminal Harassment and Mischief to Property

R. v. Reeves, 2017 ONCA 365

[LaForme, Rouleau and Brown JJ.A]

M. Campbell, for the appellant

B. Greenshields, for the respondet

Keywords: Criminal Law, Warrantless Seizure, Child Pornography, Charter Violation, Unreasonable Search or Seizure

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