Canada: Ontario Court Of Appeal Summaries (January 29 – February 2)

Last Updated: February 5 2018
Article by John Polyzogopoulos

Good afternoon,

Following are summaries of all civil decisions released this week by the Court of Appeal for Ontario.

In Rutman v. Rabinowitz, 2018 ONCA 80, the Court canvassed the law of internet defamation and damages.

In Phoenix Interactive Design Inc. v. Alterinvest II Fund L.P., 2018 ONCA 98, the Court confirmed that the four-part test test set out in Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573, rather than the two-part test set out in Morrison v. Coast Finance Ltd. (1965), 55 D.L.R. (2d) 710 (B.C. C.A.) is the applicable test in Ontario.

In The Dominion of Canada General Insurance Company v. State Farm Mutual Automobile Insurance Company, 2018 ONCA 101, the Court held that the standard of review applicable of SAB arbitral decisions is reasonableness.

Additional topics covered this week included relief from forfeiture in the commercial leasing context, the scope of the OMB's authority to vary Official Plans passed by municipalities, and breach of contract in the RFP context.

I would like to invite all of our readers to attend the Top Appeals of 2017 CLE that my partner, Lea Nebel and I will be co-chairing with Justice Epstein of the Court of Appeal. The CLE has been scheduled as a casual evening/dinner program at the OBA offices on Toronto Street to take place on Monday, February 26, 2018. In-person registration will be at 5:30, dinner will be served at 6, and the formal program will run from 6:30 to 8pm. For those who cannot attend in person, you can participate via live webcast. Please see the program agenda for further details and to register.

There are three decisions being featured. The first is Moore v Sweet, 2017 ONCA 182, which relates to the remedy of constructive trust. That case will be heard by the Supreme Court on February 8. Counsel on that matter, David M. Smith and Jeremy Opolsky, have agreed to participate in our panel discussion. The second case is Presidential MSH Corporation v. Marr Foster & Co. LLP, 2017 ONCA. That case canvassed, summarized and clarified the law regarding when the "appropriate means" analysis under s. 5(1)(a)(iv) of the Limitation Act, 2002, can be applied to delay the start of the running of the basic two-year limitation period. Counsel for the parties on that matter, Allan Sternberg, Daniella Murynka and Michael Girard, will be our panelists. The law in this area is continuing to evolve. The third decision featured is Hodge v Neinstein, 2017 ONCA 494. That case has certainly received the attention of the plaintiffs' personal injury bar and the media and has, no doubt, been a catalyst behind the Law Society's efforts to develop a standard form contingency fee agreement and disclosure obligations aimed at providing better information to clients. Counsel for the class plaintiffs, Peter Waldmann, will be joined on our panel by Bevin Shores and Audrey P. Ramsay, who are involved with the OBA and the Law Society working groups looking at this issue.

Wishing everyone a nice weekend.

John Polyzogopoulos

Blaney McMurtry LLP

Tel: 416 593 2953

Civil Decisions

Houle v. St. Jude Medical Inc., 2018 ONCA 88

[Simmons, Roberts and Nordheimer JJ.A.]


Brandon Kain and Vladimira Ivanov, for the moving parties/respondents

Margaret Waddell, for the responding parties/appellants and proposed class counsel

Benjamin Zarnett and David Lederman, for Bentham IMF Capital Limited

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory Orders, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), s. 19(1)(b), Class Actions, Funding Agreements


The appellants, Shirley and Roland Houle, appealed from the order of Justice Paul Perrell of the Superior Court of Justice dated August 29, 2017. The moving parties, St. Jude Medical Inc. and St. Jude Medical Canada, Inc., brought this motion to quash the appeal on the basis that the order in issue was an interlocutory, not final, order and thus was only appealable to the Divisional Court with leave.

The plaintiffs were proposed representative plaintiffs in a proposed class action. The proposed representative plaintiffs and proposed class counsel sought third party litigation funding from Bentham IMF Capital Limited ("Bentham"). The proposed representative plaintiffs, proposed class counsel and Bentham entered into a funding agreement dated August 6, 2017 (the "Funding Agreement") under which Bentham agreed to pay a portion of the legal fees and disbursements for the proposed class action on certain terms.

The proposed representative plaintiffs brought a motion seeking approval of the Funding Agreement and for an order that would make the Funding Agreement binding on all putative class members. The motion judge conditionally approved the Funding Agreement, subject to certain changes being made to certain of its terms, failing which the approval motion would be dismissed. The proposed representative plaintiffs, proposed class counsel and Bentham all objected to the required changes. As a result, rather than make the changes to the Funding Agreement, they appealed the conditional approval order. In apparent recognition that there might be an issue over jurisdiction, appeals were taken both to the Court of Appeal and by way of a motion for leave to appeal to the Divisional Court.

The moving parties contended that the order in issue was an interlocutory order, therefore any appeal lies to the Divisional Court with leave (Courts of Justice Act, R.S.O. 1990, c. C.43, s. 19(1)(b)), and should be quashed. The responding parties contended that the order was final and thus the appeal lies to the Court of Appeal (Courts of Justice Act, s. 6(1)(b)).


(1) Should the appeal be quashed on the basis that the order in issue is an interlocutory order, and not final order, and thus is only appealable to the Divisional Court with leave?

Holding: Motion granted.


(1) Yes. The court explained that there is no definition in the Courts of Justice Act as to what constitutes a final order and decisions on this issue have not always followed a consistent approach for determining whether an order is final or interlocutory.

In support of their position, the moving parties pointed to various decisions that have dealt with this issue and which have held that the following are all interlocutory orders in the context of class proceedings: orders for security for costs, carriage orders, and orders denying approval of a settlement.

However, the court explained that the issue in this case is complicated by the fact that two of the parties appealing the conditional approval order are not, strictly speaking, parties to the proceeding. Where "non-parties" are involved, the question of whether an order is final or interlocutory is made more difficult.

Nonetheless, the court held that the order in issue here did not finally dispose of the rights of proposed class counsel and Bentham. The motion judge did not dismiss the approval motion. Rather, his order conditionally approved the Funding Agreement, subject to certain revisions being made to it. Subject to making the required revisions, the proposed representative plaintiffs, proposed class counsel and Bentham got what they had asked the motion judge for – approval of the Funding Agreement.

However, the responding parties decided not to revise the Funding Agreement, and, as a result, their motion for approval was dismissed. In that respect, the order here is akin to other forms of conditional orders, such as an order for security for costs. Where security for costs is ordered, if the security is not posted, the proceeding may come to an end. Nevertheless, the order requiring that security be posted is still an interlocutory order.

Thus, the court held that the order in issue was an interlocutory order, only appealable to the Divisional Court with leave. The appeal was therefore quashed.

North Elgin Centre Inc. v. McDonald's Restaurants of Canada Limited, 2018 ONCA 71

[Pepall, Hourigan and Brown JJ.A.]


Ronald G Slaght, Andrew Parley and Margaret Robbins, for the appellant

Martin P Zarnett, for the respondent

Keywords: Real Property, Commercial Leases, Options to Renew, Waiver, Petridis v. Shabinsky, 35 O.R. (2d) 215 (H.C.)


On March 11, 1997, the appellant, McDonald's Restaurants of Canada Ltd. ("McDonald's"), as tenant, and North Elgin Centre Inc. ("North Elgin"), as landlord, entered into a twenty-year commercial lease (the "Lease"), which was a ground lease in respect of lands in Richmond Hill, Ontario upon which McDonald's built and renovated a restaurant. The parties agreed that the original term of the Lease would end on March 10, 2017.

The Lease included an option to renew for two consecutive additional terms of ten years each. There was no dispute that McDonald's gave proper notice of its intention to renew the Lease prior to the expiry of the original term. However, the application judge held that the renewal provision required McDonald's to do more than simply provide notice of its intention to renew. She found that because the parties had not agreed on a rental rate at least nine months before the end of the original term, McDonald's was obliged under the Lease to either refer the issue to arbitration or revoke its intention to renew.

McDonald's failed to take either action. The application judge found, therefore, that the Lease was uncertain as to a material term — the rental rate. Accordingly, the parties were left without an enforceable agreement. She went on to find that because the parties were engaged in negotiations, North Elgin waived its right to insist on strict compliance with the terms of the renewal provision. However, she also found that North Elgin later revoked its waiver and reverted to its strict legal rights. As a result, the application judge held the doctrine of waiver did not apply and the Lease was at an end. McDonald's appealed.


(1) Did the application judge err in finding that North Elgin revoked its waiver?

Holding: Appeal allowed.


(1) Yes. The application judge made a palpable and overriding error of mixed fact and law in finding that the waiver had been revoked. The principle of waiver provides that if one party leads another party to believe that its strict legal rights under a contract will not be insisted upon, intending that the other party will act upon that belief and the other does so, then the first party may not afterwards insist on its strict legal rights when it would be inequitable to do so: Petridis v. Shabinsky, 35 O.R. (2d) 215 (H.C.), at para. 20. Further, for the revocation of a waiver to be effective, it must provide reasonable notice to the receiving party: Petridis, at para. 20. To qualify as reasonable, the notice must make clear that the party who granted the waiver will insist upon the strict enforcement of its legal rights. The notice must also afford the opposite party an opportunity to cure any defect resulting from its reliance on the waiver.

The correspondence between the parties did not indicate that North Elgin would be insisting upon the strict enforcement of its legal rights. There was no clear revocation of the waiver. Because the waiver was not properly revoked, the issue of fair market rental rates shall be referred to arbitration.

Richmond Hill (Town) v. Elginbay Corporation, 2018 ONCA 72

[MacFarland Watt and Benotto JJ.A.]


Earl A. Cherniak, Q.C., Cynthia Kuehl, Ira T. Kagan, David Winer and Alexandra DeGasperis, for the appellants Elginbay Corporation and Zamani Homes (Richmond Hill) Ltd.

Jeffrey E. Streisfield, for the appellants Haulover Investments Limited, Yvonne Worden and Robert Salna Holdings Inc.

Barnet H. Kussner and Kim Mullin, for the respondent the Corporation of the Town of Richmond Hill

Stan Floras, for the respondent the Ontario Municipal Board

Robert G. Doumani, for the intervener the Corporation of the City of Mississauga

Nadia Chandra, for the intervener the Corporation of the Town of Oakville

Andrea Wilson-Peebles, for the intervener the Corporation of the City of Markham

Bruce Engell, for the intervener the Corporation of the City of Vaughan

Keywords: Municipal Law, Official Plans, Planning Act, Section 42, Ontario Municipal Board, Jurisdiction


In July 2010, the Town adopted a new Official Plan (OP) which provided at s.3.1.8.a.ii that the required parkland conveyance for residential developments was the greater of (1) five per cent of the proposed development, and (2) one hectare per 300 dwelling units proposed. This was challenged by numerous parties before the Ontario Municipal Board (OMB).

Ultimately, the OMB ordered that the following underlined words be added to s.3.1.8.a.ii of the OP:

up to 1 hectare of land for each 300 dwelling units proposed for residential development, as may be specified by by-law in accordance with section 42(3) of the Planning Act, provided that in no case shall the amount of land required to be conveyed for park or other public recreational purposes exceed the equivalent of 25% of the land proposed for development.

The 25% cap was at issue before the Divisional Court and on this appeal.

The Divisional Court unanimously found that the OMB erred in law by determining that it had the authority to modify the OP by approving a policy which imposes a lower maximum different than as provided for in subsection 42(3) of the Planning Act, namely "1 hectare per 300 dwelling units". The developer appealed.


(1) Was the OMB authorized under s. 42 of the Planning Act (the "Act"), either alone or in conjunction with s. 17(50), to impose the cap?

(2) Did the Divisional Court err in determining that the OMB's powers were different and lesser than the Town's adoption powers respecting the Town's OP, such that the Town alone could self-impose a specific parkland dedication rate?

Holding: Appeal dismissed.


(1) No. The OMB is a creature of statute, and can only do what the legislature has empowered it to do through various statutory provisions. The only proviso to the authority bestowed on the municipality under s. 42 of the Planning Act is found in s. 42(4): there must be an OP "in effect" in the municipality and it must contain "specific policies dealing with the provision of lands for park or other public recreational purposes and the use of the alternative requirement."

Section 42(1) gives the municipality the specific power to require, by by-law, a developer of residential land to convey land in an amount not exceeding five percent to the municipality for parkland. This by-law is not appealable to the OMB. Section 42(3) then says that the by-law that s.42(1) authorizes the municipality to make and that is not appealable to the OMB may require "that land be conveyed ... at a rate of one hectare for each 300 dwelling units proposed or at such lower rate as may be specified in the by-law."

While there can be no question that for matters within its jurisdiction the OMB has very broad powers, none of these provisions bestows jurisdiction on the OMB to set the rate under that provided for in s. 42(3).

As a matter of statutory interpretation, it is presumed that the provisions of legislation are meant to work together as part of a functional whole. Section 42 deals with conveyance of land for park and recreational purposes under Part V of the Act. Section 17(50) falls under Part III of the Act and is a more general provision setting out the OMB's powers on appeal (or transfer of an OP). The appellants' interpretation that s. 17(50) authorizes the OMB to set the rate of land conveyance cannot be reconciled with the fact that s. 42 provides that where a municipality determines to use the alternative requirement, that it will do so by way of a bylaw that is not appealable to the OMB. In contrast, the Divisional Court's interpretation gives effect to both provisions.

(2) No. The OMB's power to act as the original decision maker could have acted does not confer on it the power to interfere in specific circumstances where the legislature has limited its ability to do so.

Kaymar Rehabilitation Inc. v. Champlain Community Care Access Centre, 2018 ONCA 76

[Pepall, Hourigan and Brown JJ.A.]


Monica Song and Scott McLean, for the appellant

Joel Richler, Robin Linley and Brittiny Rabinovitch, for the respondent

Keywords: Contracts, Breach of Contract, Requests for Proposal, Non-Compliant Bids


In late 2003, the respondent, Champlain Community Care Access Centre ("Champlain"), issued a request for proposals ("RFP") for the provision of physiotherapy, occupational therapy, and social work services (the "Therapy Services"). Champlain intended to split the work between two service providers. The RFP attracted four bidders, including the appellant, Kaymar Rehabilitation Inc. ("Kaymar").

In the result, Kaymar was not one of the two successful bidders. In 2005, Kaymar commenced this action against Champlain and the two successful bidders, Cota Comprehensive Rehabilitation and Mental Health Services ("COTA") and Carefor Health and Community Services ("Carefor"), formerly the Victorian Order of Nurses, Ottawa-Carleton Branch. Kaymar claimed that the successful bidders did not have compliant bids and that it should have been awarded the contracts.

Kaymar's action as against COTA and Carefor was dismissed following a summary judgment motion. Kaymar's action against Champlain proceeded to trial and was also dismissed. The trial judge awarded Champlain costs of $1,864,000.00, some of which were calculated on a substantial indemnity basis. Kaymar appeals the dismissal of its action against Champlain and seeks leave to appeal the cost award.


(1) Did the trial judge err in interpreting the RFP documents in a way that entitled Champlain to expand the scope of a bidder's qualifying experience to include those who lacked experience in providing Therapy Services?

(2) Did the trial judge err in holding that Carefor submitted a compliant bid?

(3) Should leave to appeal the cost award be granted and should the costs be reduced?

Holding: Appeal dismissed. Appeal on costs allowed, in part.


(1) No. The trial judge's interpretation was reasonable. Section 2.2 of the RFP clearly gave priority to information contained in the Data Sheet over that in any other schedule. By its terms, s. 1.3(1) of Schedule C recognized that priority. It stated an applicant shall provide evidence that it had been "actively engaged in the services as described in the Data Sheet [in] a community setting or, if set out in the Data Sheet the required equivalent experience..." The "experience equivalents" section of the Data Sheet opened the door to bids from applicants that had experience in providing "professional services", even though they did not have experience in providing Therapy Services.

(2) No. The trial judge did not err in finding Champlain could broaden the "experience equivalents" in the RFP to encompass "professional services".

(3) Yes, leave to appeal costs should be granted. Given the length of the proceeding, the serious nature of the allegations, the complexity of the issues, the length of the trial, and Champlain's unqualified success at trial, the Court concluded that a fair and reasonable award of partial indemnity costs of the action to Champlain is $1,675,000.00, and reduced the costs accordingly.

Rutman v. Rabinowitz, 2018 ONCA 80

[Cronk, Huscroft and Nordheimer JJ.A.]


Helen A. Daley and Michael Finley, for the appellants Moishe Bergman and Artcraft Company Inc.,

John J. Adair, for the appellant Saul Rabinowitz

Matthew P. Sammon and S. Jessica Roher, for the respondent

Keywords: Torts, Defamation, Libel, Concerted Action Liability, Vicarious Liability, Damages, Standard of Review, General Damages, Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, Aggravated Damages, Punitive Damages, Whiten v. Pilot Insurance Co., 2002 SCC 18


The respondent, Ronald Rutman, a Toronto chartered accountant and businessman, was subjected to an orchestrated internet defamation campaign specifically designed to harm his personal and professional reputations. The campaign involved postings on the internet of numerous defamatory allegations, including that he had engaged in tax fraud and was a thief and a cheat. The allegations were entirely without substance. The defamatory statements were made by the appellant, Saul Rabinowitz, who admitted liability at trial. The trial judge found the appellants, Moishe Bergman and Artcraft Company Inc., jointly and severally liable for the defamation. Rabinowitz and Bergman were Rutman's long-time business associates. Rabinowitz managed Artcraft Limited, a company owned by Rutman. Bergman was responsible for sales. The internet defamation campaign included social media postings impersonating Rutman using fake email addresses and sending defamatory emails about Rutman from anonymous addresses to his friends, family and business associates.

At trial, Bergman denied that he participated with Rabinowitz in the publishing of those statements and Artcraft denied any responsibility for Rabinowitz's actions. The trial judge found that the words complained of were defamatory, were about Rutman, and were published to a third party. The trial judge awarded: $200,000 in general damages as against all three defendants; $200,000 in aggravated damages; $250,000 in punitive damages as against Rabinowitz; and $50,000 in punitive damages as against Bergman.

Rabinowitz appeals the trial judge's damages awards. Bergman and Artcraft appeal from the joint and several liability holding against them. In the alternative, they seek to reduce the quantum of the general damages award to $25,000. Bergman also seeks to set aside the punitive damages awarded against him.


(1) Did the trial judge err by misconstruing the test for concerted action liability?

(2) Did the trial judge err by inferring Bergman's knowledge of the internet defamation campaign?

(3) Did the trial judge err by misconstruing the test for the vicarious liability of Artcraft?

(4) Did the trial judge err in assessing damages?

Holding: Appeal dismissed.


(1) No. Concerted action may occur in a variety of ways. Generally, it involves a common design or conspiracy. Canadian authorities suggest that concerted action liability arises when a tort is committed in furtherance of a common design or plan, by one party on behalf of or in concert with another party. The trial judge was correct to hold that the test for concerted action liability was made out in respect of Bergman. That Bergman did not publically approve or repeat the defamatory statements at issue does not absolve him from liability for Rabinowitz's tortious conduct. Bergman was not merely a passive or silent observer of the internet defamation campaign. There was ample evidence at trial to support the trial judge's conclusion that there was a common design between Bergman and Rabinowitz to cause harm to Rutman. It was not necessary for the trial judge to find that Bergman was an active participant in the internet defamation campaign from the outset in order to attract joint and several liability. The trial judge found that Bergman was aware of the campaign at least by the end of April 2009 and was willing to use it to his potential advantage. Bergman did not simply agree with or acquiesce in Rabinowitz's campaign. To the contrary, on the trial judge's factual findings, he was involved in authorizing the use of Artcraft equipment and personnel to facilitate the defamation campaign.

(2) No. The trial judge's appreciation of the evidence and his fact-finding are entitled to deference from this court. His factual findings can be disturbed by a reviewing court only if they are tainted by palpable and overriding error. No such error has been established here. It was open to the trial judge on the evidentiary record to conclude there were sound reasons for disbelieving Bergman's claim that he never agreed to Rabinowitz's defamation campaign, and was unaware of it until April 2009.

(3) No. The trial judge considered and rejected the same arguments Bergman and Artcraft raise on appeal regarding Artcraft's vicarious liability. The trial judge found that Rabinowitz and Bergman were the controlling shareholders, directors, and directing minds of Artcraft, and that they authorized the use of company equipment and employees to perpetrate the internet defamation campaign and to try to conceal their involvement in it.

(4) No. In the leading case of Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, the Supreme Court of Canada addressed the standard of appellate review applicable to a jury's award of general damages in a defamation case, stating: "the assessment of damages is 'peculiarly the province of the jury'" and "an appellate court is not entitled to substitute its own judgment as to the proper award for that of the jury merely because it would have arrived at a different figure." A different and less deferential standard applies to appellate review of a jury award of punitive damages. Appellate review in these circumstances is based upon the court's estimation as to whether the impugned award serves a rational purpose. Drawing on Whiten v. Pilot Insurance Co., 2002 SCC 18, if an award of punitive damages, together with the compensatory damages awarded, "produces a total sum that is so 'inordinately large' that it exceeds what is 'rationally' required to punish the defendant, it will be reduced or set aside on appeal". The court also relied upon the Newfoundland Court of Appeal's decision in Farrell v. St. John's Publishing Co., [1986] N.J. No. 19 (CA), which states that "In assessing damages in a libel action, a judge, sitting without a jury, has a great deal of latitude and the Court of Appeal will not readily interfere with his award unless it is satisfied that he arrived at his figure either by applying a wrong principle of law or through a misapprehension of the facts or that the amount awarded was so extremely high or so low as to make it an entirely erroneous estimate of the damages."

The appellants argued that there was insufficient evidence of actual harm to Rutman. It is trite law that general damages in libel cases are presumed from the very publication of the false statement. The injured plaintiff bears no obligation to prove actual loss or injury. Special damages for pecuniary loss are rarely claimed in libel actions and are often exceedingly difficult to prove, resulting in them being grouped with general damages. The inability to point to specific reputational harm is not an admission that such harm did not occur, and the injurious effects of defamatory statements regarding a professional are particularly acute.

The pernicious effect of defamation on the internet, or "cyber libel", distinguishes it, for the purposes of damages, from defamation in another medium. Consequently, while the traditional factors to be considered in determining general damages for defamation remain relevant (for instance, the plaintiff's conduct, position and standing, the nature and seriousness of the defamatory statements, the mode and extent of publication, the absence or refusal of any apology or retraction, the whole conduct and motive of the defendant from publication through judgment, and any evidence of aggravating or mitigating circumstances), they must be examined in light of the internet context of the offending conduct. In the trial judge's reasons, he recognized, correctly, the purposes of compensatory damages in libel cases, as well as the traditional considerations relevant to assessing the quantum of such damages, listed above. They also confirm he appreciated the requirement that the analysis of the damages occasioned by the extensive internet defamation campaign.

Factors such as the broad nature of the allegations, how widely they were spread, and the reason the defamation was carried out, militated towards a significant general damages award. The trial judge considered the controlling principles for the awarding of general compensatory damages in an internet defamation case, and applied them to the facts as he found them. The quantum of general damages that he awarded to achieve the purposes of such an award was well within his discretion and was amply supported by the evidentiary record.

Similarly, there was no basis to fault the trial judge for his award or quantification of aggravated damages. The trial judge, for clear and detailed reasons, found that the insidious nature of Rabinowitz's conduct compounded Rutman's suffering and angst; that Rabinowitz acted maliciously, motivated by anger and personal business self-interest; that his motives and conduct, including his "malevolence and spite" and the "manner of committing the wrong", aggravated the injury done to Rutman, including to his dignity and pride; and that Rabinowitz admittedly acted to cause additional harm to Rutman. On these findings, which also are not challenged on appeal, a significant aggravated damages award was clearly justified.

As the courts have repeatedly emphasized, libel cases are particularly fact-sensitive and, in that sense, each is unique. In fashioning his damages awards, the trial judge appreciated that, for this reason, a comparison with awards in other libel cases was of little assistance. Although Rabinowitz relies on several libel cases in which the amount of the compensatory damages awarded was lower than that awarded here, other libel cases reveal compensatory damages awards in amounts higher than those awarded by this trial judge. The variability in the amount of compensatory damages awarded in Canadian libel cases does not mean that the award in this case is "incoherent", as Rabinowitz argues. Rather, it underscores the highly fact-sensitive and unique nature of each libel case. Given all the factors at play , including Rabinowitz's admitted misconduct, the nature of the defamatory statements, and their impact on Rutman, no other libel case is especially instructive, let alone controlling, on the issue of the quantification of damages.

The trial judge's reasons confirm that he appreciated the purposes of punitive damages, their exceptional nature, the need to be fair to both sides, and the basis for Rabinowitz's contention at trial that any award of punitive damages as against him should be limited to $25,000 to $50,000. The trial judge's reasons belie the contention that he ignored or failed to apply the governing principles concerning punitive damages. His reasons make it abundantly clear that he was cognizant of these principles and properly applied them to the facts of this case. It cannot be said that the quantum of the punitive damages awarded as against Rabinowitz was irrational, given the underlying objectives of such damages.

Phoenix Interactive Design Inc. v. Alterinvest II Fund L.P., 2018 ONCA 98

[Pepall, Lauwers and Huscroft JJ.A.]


G Benchetrit and M Kril-Mascarin, for the appellant/respondent by way of cross-appeal

R F Leach and M A Polvere, for the respondents/appellants by way of cross-appeal

Keywords: Contracts, Interpretation, Debtor-Creditor, Commercial Loans, Bonus Payments, Enforceability, Unconsionability, Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573, Morrison v. Coast Finance Ltd. (1965), 55 D.L.R. (2d) 710 (B.C. C.A.), Barclays' Bank PLC v. Metcalfe & Mansfield Alternative Investments VII Corp., 2013 ONCA 494,Interest, Criminal Interest Rate, Criminal Code, R.S.C. 1985, c. C-46, s.347, Crown Corporations, Business Development Bank, Ultra Vires, Business Development Bank of Canada Act, S.C. 1995, c. 28


The appeal involves the principles applicable to the calculation of a bonus that the respondents promised to pay to the appellant on the sale of the respondents' company. The application judge determined that the bonus payable amounted to $242,552.79, and not $888,462.78, as claimed by the appellant. She dismissed the respondents' claim that no bonus was payable because it allegedly in contravention of the criminal rate of interest, was unconscionable, or was ultra vires the objects of the appellant, the Business Development Bank of Canada ("BDC").

BDC and other financial institutions established the appellant, Alterinvest II Fund L.P. ("ALP"), to provide subordinate debt and equity financing to small and medium sized businesses in Canada. The respondent, Phoenix Interactive Design Inc. ("Phoenix"), was seeking such financing. Kyle MacDonald was the founder of Phoenix, and its President and Chief Executive Officer. She was also the principal of the respondent, 1932780 Ontario Inc. ("193"), (together with Phoenix, the "Phoenix parties"), which was formed in March 2015 as the amalgam of a number of predecessor companies. In November 2010 ALP offered Phoenix a loan for $2.25 Million with a November 23, 2015 Maturity date to refinance an existing $1.25 Million loan and meet additional working capital needs. The loan had a fixed interest rate of 12.8% per annum and monthly royalties commencing February 2011. In the loan agreement, Phoenix and 193's predecessors were described as the "Borrowers". The parties agreed that ALP would be paid a bonus if any of the Borrowers were sold. The provision provided that if 50% or more of any Borrower was sold, then a bonus of 1% of net proceeds, after transaction costs, would be payable notwithstanding repayment of the credit facilities. The provision was in force until the maturity date. The loan agreement also precluded sale or reorganization of any of the Borrowers without ALP's consent.

In 2014 Phoenix was approached with an offer. In February 2015, MacDonald met with ALP to advise that negotiations were underway for the sale of Phoenix. She also advised that the Phoenix parties were not willing to pay ALP the bonus in accordance with the loan agreement because she believed that the fee would be disproportionate to the amount outstanding on the loan. ALP disagreed and then on March 5 2015 Phoenix paid the full amount of $408,944.66 that was outstanding under the loan agreement for principal, fees, and royalties. This did not include the bonus.

Prior to the closing of the stock purchase transaction, 193's predecessor companies amalgamated to form a new company, 1926723 Ontario Inc. ("Targetco"). Phoenix Interactive International Inc. ("Holdco"), which was owned by MacDonald, held all the shares in Targetco. Targetco issued dividends totaling $50 million on March 10 and 11, 2015. In satisfaction of the dividends, Targetco issued promissory notes totaling $50 million to Holdco. On March 13, 2015 Phoenix was sold to a company called Diebold for $92.5 Million. The $50 million debt under the promissory notes from the pre-closing reorganization, plus an additional $5.125 million of debt (representing income tax liabilities), formed part of the purchase price and were repaid by the purchaser on the date of closing.

The Parties were unable to agree on the amount of the bonus payable to ALP The Phoenix parties argued that the bonus calculation should not include the $55.125 million, whereas ALP argued that those funds formed part of the proceeds of sale and therefore should be included in the bonus calculation.


(1) Should the bonus calculation include the sum of $55.125 million

(2) Is the bonus contrary to s. 347 of the Criminal Code, which sets out the criminal rate of interest?

(3) Is the bonus unconscionable?

(4)Is the bonus ultra vires BDC's legislated mandate?


Appeal dismissed.


(1) Yes. First, the purchase price between the Phoenix parties and Diebold was $92.5 million. Phoenix conceded that the $55.125 million debt was repaid by the purchaser and was received by Phoenix on the closing of the sale to the purchaser. Second, the establishment of the debt of $55.125 million was created by the Phoenix parties as part of the pre-sale reorganization. No such reorganization was permitted pursuant to the loan agreement absent ALP's consent and no consent was either requested or received. In accordance with Barclays' Bank PLC v. Metcalfe & Mansfield Alternative Investments VII Corp., 2013 ONCA 494, a party is precluded from taking advantage of and benefitting from a state of affairs caused by its own wrongdoing. The Phoenix parties acknowledged that the $55.125 million was paid to them on the closing of the sale transaction from the sale consideration received from the purchaser. At its heart, that sum formed part of the proceeds of disposition on account of the sale to the purchaser. The Court of Appeal found that it would be a strange result if Phoenix's obligation to pay the bonus was reduced or eliminated due to their tax minimization manoeuvres, which contravened the terms of the loan agreement, did not actually reduce the amount they received, and formed part of the consideration for the sale to the purchaser.

(2) No.The Phoenix parties submit that the bonus was contrary to s. 347 of the Criminal Code. Specifically, they take issue with the applications judge's conclusion that the outstanding loan amount did not have a zero balance when Diebold bought Phoenix because the bonus payment was still owing. They argue that the bonus payment was not an existing obligation because it was based on a future event – the sale of Phoenix – that was uncertain at the time the loan was prepaid. The Court of Appeal found that the application judge correctly decided that the loan agreement required payment of the bonus regardless of any prepayment in advance of the loan's maturity date. Therefore, the bonus was owing and there was no zero balance. This conclusion is based on the application judge's reliance on s. 4.6(a) of the loan agreement, which states that the "obligation to pay the bonus will survive prepayment." Furthermore, the prepayment was made on March 5, mere days before the Phoenix sale closed on March 13. The Phoenix parties cannot fairly argue that the obligation to pay the bonus was some uncertain future obligation.

The "voluntariness principle" suggests that a legal credit agreement does not become illegal as a result of a voluntary prepayment. Phoenix made a voluntary prepayment during the term of the loan. This payment was not required by ALP; it was entirely within the control of Phoenix. The Phoenix parties cannot rely on the prepayment to argue that when Phoenix was subsequently sold, the bonus was illegal because ALP purported to charge an effective annual interest rate that was infinite on a loan balance of zero.

(3) No. Phoenix argued that the applications judge erred because she applied the four-part test from Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573 rather than the two-part test from Morrison v. Coast Finance Ltd. (1965), 55 D.L.R. (2d) 710 (B.C. C.A.). The Court of Appeal disagreed. First, Titus is the law in Ontario. It was decided in 2007 by the Court of Appeal and re-affirmed in subsequent decisions. The Court of Appeal for Ontario has not endorsed the 1965 Morrison test. Second, the Morrison test consists of two elements: (a) an inequality in the position of the parties, arising out of the ignorance, need or distress of the weaker party; and (b) the substantial unfairness of the bargain that is obtained by the stronger party. Even if the Morrison test were applicable, Phoenix has not established that this test was met.

(4) No.Phoenix argued that BDC may only structure loans that are in accordance with the objects set out in ss. 4(1) and 4(2) of its enabling legislation, the Business Development Bank of Canada Act, S.C. 1995, c. 28 (the "BDC Act"). These objects are to "support Canadian entrepreneurship by ... raising funds or capital" and to "give particular consideration to the needs of small and medium-sized businesses". The Phoenix parties submitted that the bonus provision did not advance BDC's objects because the bonus constituted a "cash grab" that was detrimental to Canadian entrepreneurship. The Court of Appeal disagreed. The bonus provisions were not ultra vires. First, the objects listed were not violated. Second, subsections 14(1)(a) and 22(b) of the BDC Act provide BDC with the power to "make loans and investments" and "determine and charge interest and any other form of compensation for services [it] provides in the exercise of its powers under this Act". A plain reading of these provisions indicates that Parliament conferred broad discretion upon BDC in the exercise of its powers under the BDC Act. It was therefore open for BDC to negotiate the rate of return and the loan structure that it did.

The Dominion of Canada General Insurance Company v. State Farm Mutual Automobile Insurance Company, 2018 ONCA 101

[Hoy, A.C.J.O., van Rensburg and RobertsJJ.A.]


M K Donaldson, for the appellant, State Farm Mutual Automobile Insurance Company

D Strigberger and T W Gillibrand, for the respondent, The Dominion of Canada General Insurance Company

N Colville-Reeves and J Brimfield, for the appellant, Dominion of Canada General Insurance Company (Travelers)

T L Brooks and A Alfano, for the respondent, Belairdirect Insurance

Keywords: Insurance Law, MVA, SABS, Arbitration, Standard of Review, Reasonableness, Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Intact Insurance Company v. Allstate Insurance Company of Canada, 2016 ONCA 609, Insurance Act, R.S.O. 1990, c.18, s. 268 (2), Statutory Accident Benefits Schedule , O. Reg 34/10 and 283/95, Arbitration Act, 1991, S.O. 1991, c.17


These two appeals were heard together because they give rise to the same main issues: the standard of review applicable to insurance arbitral decisions resolving priority disputes arising from the statutory accident benefits regime under the Insurance Act, R.S.O. 1990, c. I.8, and statutory and contractual interpretation issues affecting the priority question. Both appeals involve arbitral decisions concerning the interpretation of "insured person" under s. 3(1) of the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 ("SABS"), as applied to the particular provisions of the claimants' respective insurance policies. The question is whether the claimants, who were both listed as excluded drivers on their parents' automobile policies, were covered for SABS when not driving the vehicles to which their driving exclusions applied. This will determine which insurer has first priority to respond to the claimants' SABS claims.

Under s. 3(1) of the SABS, an "insured person" is defined as "any person specified in the policy as a driver of the insured automobile". In the arbitration that was the subject of the State Farm appeal ("State Farm arbitration"), the arbitrator found that an excluded driver can be an "insured person" under the SABS. The appeal judge applied a standard of correctness and overturned the arbitrator's decision. In the arbitration leading to the Dominion appeal ("the Dominion arbitration"), the arbitrator was also of the view that an excluded driver can be an "insured person" under the SABS. However, he concluded that he was bound by the appeal decision in the State Farm appeal. The appeal judge, who was not similarly bound, applied a reasonableness standard to the arbitrator's underlying reasoning and found that his original interpretation was reasonable.


(1) What is the appropriate standard of review of the arbitrators' decisions?


State Farm appeal allowed. Dominion appeal dismissed.


Prior to considering the issue, the Court of Appeal determined that the standard of review applicable to the appeal judges' determination of the standard of review is a correctness standard.

(1) The standard of review of the arbitrators' decisions is reasonableness. The decision in Intact Insurance Company v. Allstate Insurance Company of Canada, 2016 ONCA 609 involved an insurance arbitrator's determination of a priority dispute between two insurers concerning the payment of statutory accident benefits. To resolve this issue, the arbitrator had to determine whether the claimants were principally dependent for financial support on the insured, their mother's new partner. This required the arbitrator to make factual findings concerning the relationship between the claimants and the insured, in accordance with the arbitrator's interpretation of the relevant insurance policy and statutory provisions. The Court of Appeal in Intact found that in cases such as this, even an extricable question of law is reviewed on a reasonableness standard. This standard of review recognizes the expertise of insurance arbitrators. It was further noted that where a decision-maker is interpreting its home statute, or statutes closely connected to its function, there is a presumption that a reasonableness standard will apply.

Dominion argued that the reasoning in Intact should not apply because it involved a question of mixed fact and law rather than a pure question of law. The Court of Appeal did not accept this contention. The Court found that Dominion's characterization of Intact as a fact-driven case was too narrow. In addition, the depiction of the standard of review dispute as simply one of choosing between "a mixed fact and law exercise" or "an extricable legal error", without regard for the nature of the decision-maker, was explicitly rejected by the Court in Intact. Furthermore, the Supreme Court also recently confirmed in Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 that while the nature of the question (whether legal, factual, or mixed) is dispositive of the standard of review applicable to appeals from civil litigation judgments by courts, it is not dispositive in the context of commercial arbitral awards by specialized arbitrators.

The Court of Appeal also distinguished both Intact and the present appeal from the Supreme Court decision of Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37. The Court stated that in Ledcor, unlike in Intact, there was no expert arbitral decision-maker involved. Rather, the court in Ledcor was dealing with an appeal from a trial judge's interpretation of a standard form contract. In Ledcor, the Supreme Court articulated the interpretation of a standard form contract as an exception to the rule that contractual interpretation by a specialized arbitrator is a question of mixed fact and law subject to deferential review on appeal. The court held that an appeal from a trial judge's interpretation of a standard form contract, that has precedential value and does not require engagement with any meaningful factual matrix, is a question of law that should be reviewed for correctness. In Ledcor, the court was not assessing a specialized arbitrator's interpretation of the home statute and the exercise of specialized expertise, which would have given rise to a deferential standard of review.

Here the Court found that neither appellant had identified an exceptional question that would serve to rebut the reasonableness standard. Accordingly, the standard of review should have been reasonableness.

Short Civil Decisions

Andrews v. Andrews, 2018 ONCA 81

[Pepall, Hourigan and Brown JJ.A]


A Semaan, for the appellant

L Di Pierdomenico, for the respondent

Keywords: Family Law, Child Support, Striking Pleadings

Mohawks of the Bay of Quinte v. Brant, 2018 ONCA 82

[Laskin, Sharpe and Fairburn JJ.A]


Andrew Clifford Miracle, In Person

Roger Horst, for the respondent

Keywords: Aboriginal Law, Contracts, Creditor-Debtor, Evidence

Ontario (Provincial Police) v. Assessment Direct Inc., 2018 ONCA 78

[Doherty, LaForme and Paciocco JJ.A]


J Patton, for the applicants

R Shekter and K Wong, for the respondents

E Dann, for the referee

Keywords: Constitutional Law, Freedom from Unreasonable Search and Seizure, Litigation Privilege

Allingham (R.C. Allingham Construction) v. Perrault, 2018 ONCA 92

[Sharpe, LaForme and van Rensburg JJ.A]


C H Culic, for the appellants

C E Wright, for the respondent

Keywords: Contracts, Interpretation, Evidence, Witnesses, Credibility, Expert Opinions

Bank of Montreal v. Serpa, 2018 ONCA 94

[Simmons, Roberts and Nordheimer JJ.A]


Paul Serpa, in Person

C Staples, for the respondent

Keywords: Contracts, Debtor-Creditor, Dismissal for Delay

Galati v. Galati, 2018 ONCA 93

[Simmons, Roberts and Nordheimer JJ.A]


M A Cummings, for the appellant

no one appearing for the respondent

Keywords: Family Law, Divorce, Uncontested Trial

Levesque v. Crampton Estate, 2018 ONCA 75

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


J B Barnes, for the respondent/appellant on the appeal

S Cavanagh, for the moving party/ respondent on the appeal

Keywords: Motion for Reconsideration

Reece v. Toronto (Police Services Board), 2018 ONCA 91

[Sharpe, LaForme and van Rensburg JJ.A]


D Zarek, for the respondent, Certas Direct Insurance Company, improperly named as Desjardins General Insurance

N Kolos, for the respondent, Toronto Police Services Board

Keywords: Torts, Fraud, Racial Profiling, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B

Berkley Insurance Company v. Rob Piroli Construction Inc., 2018 ONCA 74

[Laskin, Sharpe and Fairburn JJ.A]


M Shulgan, for the appellant

S Ingram, for the respondent

Keywords: Appeal Book Endorsement

Blair v. (Re), 2018 ONCA 97

[Doherty, Pepall and Brown JJ.A]


H Chaiton, for the moving party, Patricia Virc

Finley Lawrence Blair, the responding party, appearing in-person

Keywords: Bankruptcy and Insolvency, Bankruptcy and Insolvency Act, s. 193

Turtle Creek Landscape Inc. v. Summit Auto Brokers Inc., 2018 ONCA 95

[Sharpe, LaForme and van Rensburg JJ.A]


L Reece, for the appellant

S Cadili, for the respondent

Keywords: Civil Procedure, Summary Judgment, Hryniak v. Mauldin, 2014 SCC 7

Ontario Review Board Decisions

LePage (Re), 2018 ONCA 89

[Hoy A.C.J.O., MacPherson and Rouleau JJ.A]


S E Fraser, for the appellant

C Tier, for the respondent

J Blackburn, for the Person in Charge, Waypoint Centre for Mental Health Care

Keywords: Review Board, Criminal Law, Mental Health Law, Criminal Code s. 672.78(3)(b), Amicus Curiae

Criminal Decisions

R v. F.H.L., 2018 ONCA 83

[Watt, Epstein and Brown JJ.A]


P Giancaterino and M Sciarra, for the appellant

A Cappell, for the respondent

Keywords: Publication Ban, Criminal Law, Sexual Assault, Sentencing, R. v. Gladue, [1999] 1 S.C.R. 688, Gladue Principles

R v. Kazenelson, 2018 ONCA 77

[Simmons, Lauwers and Pardu JJ.A]


B H Greenspan and L P Strezos, for the appellant

D Krick, for the respondent

Keywords: Criminal Law, Criminal Negligence, Workplace Accident, Sentencing

R v. Rocha, 2018 ONCA 84

[Hoy A.C.J.O., MacPherson and Rouleau JJ.A]


P J I Alexander, for the appellant

Tanit Gilliam, for the respondent

Keywords: Criminal Law, Possession, Cocaine, Trafficking, Property Obtained by Crime, Canadian Charter of Rights and Freedoms, Search and Seizure, R. v. Garofoli, [1990] 2 S.C.R. 1421, R. v. Debot, [1989] 2 S.C.R. 1140

R v. Berry, 2018 ONCA 86

[Hoy A.C.J.O., Sharpe and Rouleau JJ.A]


A Moustacalis, for the appellant

N Dennison, for the respondent

Keywords: Criminal Law, Aggravated Assault, Evidence, Adverse Inferences, Eyewitness Testimony

R v. Duffy, 2018 ONCA 90

[Hoy A.C.J.O., MacPherson and Rouleau JJ.A]


M Adams, for the appellant

L Kinahan, for the respondent

Keywords: Criminal Law, Aggravated Assault, Obstruction of Justice, Circumstantial Evidence, Directed Verdict of Acquittal

R v. D.A., 2018 ONCA 96

[Doherty, LaForme and Paciocco JJ.A]


M Sandler and A Ross, for the appellant

A Hotke, for the respondent

Keywords: Publication Ban, Criminal Law, Sexual Offences, Unreasonable Delay, R. v. Jordan, 2016 SCC 27

R v. Gibson, 2018 ONCA 79

[Hoy A.C.J.O., Sharpe and Rouleau JJ.A]


B Snell, for the appellant

M Campbell, for the respondent

Keywords: Publication Ban, Criminal Law, Production of Records

R v. K.L., 2018 ONCA 100

[MacFarland, Pardu and Benotto JJ.A]


P Calarco, for the appellant

R Young, for the respondent

Keywords: Publication Ban, Criminal Law, Evidence, Credibility

R v. Brownlee, 2018 ONCA 99

[Rouleau, Pepall and Miller JJ.A]


J N Pepper, for the appellant

A Hotke, for the respondent

Keywords: Criminal Law, Theft, Possession of Property Obtained by Crime, Sufficiency of Reasons, R. v. W.(D.), [1991] 1 S.C.R. 742, Kienapple v. R., [1975] 1 S.C.R. 729

R v. Correia, 2018 ONCA 104

[Juriansz, Watt and Miller JJ.A]


S O'Connell, for the appellant

C Harper, for the respondent

Keywords: Criminal Law, Aggravated Assault, Mischief of Property, Dangerous Operation of a Motor Vehicle, Sentencing

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