Here are this week's summaries of the civil decisions of the Court of Appeal for Ontario.
In Presley v Van Dusen, the Court of Appeal yet again dealt with discoverability. The case reviews the elements for analyzing discoverability under section 5 of the Limitations Act, 2002, including the "appropriate means" test, and discusses what kind of professional relationships may give rise to reasonable reliance.
In McDowell v. Fortress Real Capital Inc., the Court of Appeal overturned in part a motion judge's decision to strike out the claims of a proposed class proceeding for various allegations of misconduct. In so doing, the Court canvassed the law relating to personal liability for corporate acts, the sealed contract rule and the rights of beneficiaries of a trust to assert the claims belonging to the trustee.
Other topics covered this week included contractual interpretation, conflict of laws and costs in the family law context.
Finally, my partner, Lea Nebel, and I invite you to our third annual Top Appeals CLE, which will take place at the OBA, 20 Toronto Street, Toronto, on Monday, February 25. It is a three hour dinner program beginning at 5pm, which will also be available by live webcast for those who cannot attend in person.
Eliot Kolers, David Thompson and Katherine Di Tomaso will be our panelists on the first set of cases: Gillham v Lake of Bays and Mega International v Yung, and other decisions dealing with discoverability, appropriate means, and discoverability as it relates to claims for contribution and indemnity.
Tim Danson, Mark Wiffen and Peter Downard will discuss Platnick v Bent, Pointes Protection Association and the "Anti-SLAPP Sextet".
Last, but certainly not least, Glenn Chu of the City of Toronto, Yashoda Ranganathan of MAG and Donald Eady will discuss the high-profile, real-time, high-stakes constitutional litigation that was the City of Toronto v Attorney-General (reduction of wards from 47 to 25).
The full program agenda can be found here. Please join us for what promises to be a very interesting evening.
[Hourigan, Miller and Trotter JJ.A.]
B.J. Smith, for the appellant
W.G. Woodward, for the respondents
Keywords: Contracts, Interpretation, Insurance, Coverage, Standard of Review, Canadian Universities' Reciprocal Insurance v. Halwell Mutual Insurance Co. (2002), 61 OR (3d) 113, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, The Wawanesa Mutual Insurance Company v. Bell,  SCR 581, Wood v Krebs, 2004 CarswellOnt 3590
A woman owned a cottage property which was her sole residence from the late 1980s or early 1990s, until she moved to a nursing home. Although she never resumed full-time residence at the house, her three adult children and their families all continued to use it as a cottage. She would occasionally stay there with them. At all relevant times she was the sole owner. The owner was also the sole named insured under a Homeowners policy provided by Intact.
The policy provided coverage not only for the named insured, but also for all the insured's relatives "while living in the same household" as the named insured. It covered liability from unintentional bodily injury or property damage arising from an insured's "personal actions anywhere in the world." It covered not only the insured's primary residence, but also the insured's "seasonal and other residences," provided that these premises were listed on the Coverage Summary page.
The respondents – the owner's son, his wife, and their daughter – were defendants in an action brought by the family of a man who drowned at the house. The appellant (the owner's estate) was also a defendant. The plaintiffs' claim was settled by the adult son's insurer, TD Insurance. TD moved for summary judgment, seeking a declaration that Intact was bound to defend and indemnify all defendants against the plaintiffs' claims. The motion was granted, and the judge ordered a declaration that the respondents were insured under the Intact policy. The motion judge also ordered that Intact indemnify TD for half of the value of the settlement with the plaintiffs.
Central to the motion judge's analysis was her finding that the respondents were not visitors to the house. She noted that the son attended at the house when he wished and cared for it as an owner would, later taking an ownership interest in it. The motion judge adopted reasoning from Canadian Universities' Reciprocal Insurance v. Halwell Mutual Insurance Co. that "household" can have a flexible meaning, and that "the meaning must be gleaned from interpreting its use in the policy of insurance using the rules of interpretation of contracts and of insurance policies, including that any ambiguity is to be resolved in favour of the insured." She reasoned that in the "context of this policy and this property ... [the respondents] are included in [the owner's] 'household'."
(1) Did the motion judge err by basing her analysis of the meaning of "household" on the adult son's attitude towards the house, rather than his relationship with the owner?
(2) Did the motion judge err in her interpretation of the term "dwelling" in the Intact policy?
(3) Did the motion judge err in her interpretation of Canadian Universities?
(4) Did the motion judge err by reaching a commercially unreasonable conclusion?
The Court first addressed the standard of review, concluding that each of the issues warranted a correctness standard. There was no meaningful factual matrix, and since the household clause formed part of a standard form homeowner's insurance policy, its interpretation had precedential value for other insurance policies.
(1) Yes. The inquiry into the son's relationship to the house was not the ultimate question. That inquiry was only relevant to the extent that it shed light on the further question of his relationship with the owner. The son's use of the house was relevant to the question of whether the house was his residence. If the only question was whether the house was his seasonal residence, there might be no basis to interfere with the motion judge's finding that he was more than a visitor.
However, the Court observed that although "household", in ordinary speech, can refer either to a residence or a type of community, in the context of insurance law it is the latter. Canvassing the case law on this point, the Court remarked that although a household is not synonymous with a family, the existence of a household is evidenced by the extent to which its members share the intimacy, stability, and common purpose characteristic of a functioning family unit. What is essential is not how the household is structured, but the degree to which the choices and actions of all members of the household are motivated by "an interest in the life of all that gives it a unity".
Further, a household is constituted not only by its members' patterns of living with each other, but also by their settled intentions. A person can maintain membership in a household despite lengthy absences from a common residence, provided there is continued self-identification as a member of the household, with a settled intention to return to the common residence.
With this understanding of "household" in mind, the Court rejected the respondents' argument that "household" should be interpreted broadly because it was contained within the coverage clause of the Intact policy. Whether a case involves a coverage clause may influence the result in borderline cases, but the Court found that this was not such a case. The facts were inconsistent with the respondents being members of the household, as understood according to the relevant case law.
Lastly, the Court rejected the respondents' alternative argument that, on the basis of the Court of Appeal's prior decision in Wood v. Krebs, they should be understood to be members of both their household in the city as well as members of the owner's household at the cottage property. The Court emphasized that Wood did not stand for the general proposition that an adult can be a member of both his own household and that of a parent in the context of a family cottage. Additionally, the Court rejected the respondents' argument that the criteria for determining the existence of a household should be altered for vacation properties, that the "integration" requirement should be relaxed to the degree of integration needed for families to share a vacation property, and that "permanence" should be understood as an ongoing pattern of occasional use for recreational purposes. As noted, this argument had no basis in the existing jurisprudence.
In view of the above, the Court concluded that the respondents were not members of the owner's household, and as such, were not entitled to coverage under the Intact policy. Given the Court's finding on this issue, it declined to address issues (2) through (4).
[Rouleau, van Rensburg and Benotto JJ.A.]
J. Renihan, for the appellants
M. Polvere, for the respondent
Keywords: Contracts, Interpretation, Enforceability, Real Property, Agreements of Purchase and Sale of Land, Restrictive Covenants, Rights of First Refusal, Salah v. Timothy's Coffees of the World Inc., 2010 ONCA 673, The Canada Trust Company v. Browne, 2012 ONCA 862, Weyerhaeuser Company Limited v. Ontario (Attorney General, 2017 ONCA 1007
Goodlife Fitness Centres Inc. ("Goodlife") agreed to purchase from R.T., principal of Lifestyle Family Fitness Centre Inc. ("LFF"), LFF. R.T., through his company Rock Developments Inc. ("RDI"), also owned various other properties. Emails exchanged a year prior to LFF's sale closing revealed that the parties discussed restrictive covenants on three properties owned by R.T, which would have prevented the use of these properties for fitness facilities.
R.T. was prepared to provide restrictions on two of the properties (the "Two Properties"), but not on one because he planned to sell it (the "Property"). After deciding not to sell the Property, R.T. told Goodlife that the co-owners of the Property would not agree to provide the same restrictive covenants on the Property. Goodlife advised that it would move forward provided that it received a right of first refusal ("ROFR") with respect to any offers to lease the Property.
The three agreements at issue between Goodlife and R.T. were: (1) a Non-Competition and Non-Solicitation Agreement (the "NCA"); (2) an agreement creating restrictive covenants with respect to the Two Properties which prevented the use of such properties for fitness facilities; and (3) a ROFR in favour of Goodlife with respect to the Property. The NCA was signed on November 30, 2014, and the ROFR was signed the following day. The NCA expires on November 30, 2019. The ROFR provided that, if a competing fitness facility offered to lease the Property, Goodlife had the option to lease on the same terms, and if Goodlife declined, R.T. could lease the premises to the offeror.
In July 2018, RDI negotiated a lease with Movati Athletic (Group) Inc. ("Movati") for the construction of a fitness facility on the Property. Goodlife was provided notice in accordance with the ROFR but declined to exercise it. RDI entered into the lease with Movati. Goodlife brought an application seeking a declaration that the Movati lease was void because it violated the NCA's terms and an injunction requiring R.T. to abide by the NCA's terms and conditions.
The application judge reviewed the negotiations leading up to the signing of the closing documents, made findings of fact with respect to the meaning of the NCA and the ROFR, and rejected the argument that the ROFR granted the right to lease the Property to Movati during the term of the NCA. Based on the email exchanges during negotiations and the timing of the signing of each agreement, the application judge held that: the NCA took precedence over the ROFR and that the ROFR was intended to "supplement" the NCA by "adding an additional layer of protection" for Goodlife; for the first five years the two agreements worked together to prevent anyone other than Goodlife from operating a fitness facility on the Property, unless Goodlife provided its written consent; and that RDI was enjoined from doing any work in connection with the Movati lease that would violate the NCA.
(1) Did the application judge err in his interpretation of the agreements?
(1) Yes, the application judge erred in his interpretation of the agreements for three reasons. First, neither the NCA nor the ROFR suggested that one was paramount over the other. The NCA and ROFR required R.T. to abide by the NCA's terms with an obligation to provide Goodlife with a ROFR should the Property be leased to a competing fitness facility.
Second, the application judge misunderstood what the negotiations actually said, giving rise to a palpable and overriding error of fact. The email exchange made it clear that R.T. refused to grant the requested restrictive covenant over the Property. The ROFR was agreed to as a substitute for the restrictive covenant and specifically contemplated a lease to a fitness facility.
Third, the application judge erred in relying on the negotiations to interpret the agreements. A court must have regard to the underlying contract negotiation, but not the subjective evidence of the parties' intentions. The words of the agreement govern. Negotiation evidence cannot be used to do indirectly that which contract interpretation principles do not permit doing directly.
In this case, the ROFR contemplated that RDI may have leased the Property to a fitness facility. By relying on negotiations to interpret the ROFR, the application judge made findings of fact that were both erroneous and not open to him. The application judge effectively superseded the plain wording of the agreement and rendered the ROFR meaningless. Since RDI had the right to lease the Property to Movati, it also had the right to provide the services normally provided as a landlord. To have prevented RDI from preparing the Property as part of a legitimate lease would have resulted in a commercial absurdity and would have indirectly invalidated the Movati lease.
[Brown, Paciocco and Zarnett JJ.A.]
T. J. McCarthy and R. J. Campbell, for the appellant
K. Arvai, for the respondents
Keywords: Torts, MVA, Civil Procedure, Jurisdiction, Conflict of Laws, Choice of Law, Pre-Trials, Contracts, Settlements, Consensus Ad Idem, Rules of Civil Procedure, Rule 50.08(3), Insurance Act, R.S.O. 1990, c. I-8, Chomos v. Economical Mutual Insurance Co. (2002), 61 O.R. (3d) 28 (C.A.)
The respondent was injured in 2005 in a motor vehicle accident in Las Vegas, Nevada. All claims arising from the accident have been settled, with the exception of her entitlement against the appellant to benefits under the OPCF 44R Endorsement in her Ontario motor vehicle insurance policy.
During a June 30, 2016 pre-trial, counsel for the appellant and counsel for the respondents expressed agreement before the pre-trial judge that Ontario law applied to their dispute. Both counsel signed a Rule 50.08(3) certificate confirming their understanding of the contents of the pre-trial conference report that recorded: "The choice of law issue is resolved – Ontario law applies". The application of Ontario law would mean that the potential recovery for damages would be limited by provisions in the Insurance Act, R.S.O. 1990, c. I-8. If Nevada law applied those statutory limits would not operate.
However, the view that the threshold and collateral benefit provisions of the Ontario Insurance Act would apply was contrary to the Court of Appeal's decision in Chomos v. Economical Mutual Insurance Co. According to Chomos, properly interpreted, s. 10 of the OPCF 44R Endorsement provides that questions of threshold and collateral benefits are issues of liability to be governed by the law of the place where the accident occurred, in this case, Nevada.
In his affidavit, the appellant's counsel explained that he thought Chomos had been wrongly decided. The respondent's counsel was unaware of Chomos but, once he learned of it, he stated that he was of the view that Nevada law should apply.
The appellant took the position that the parties had reached a binding "litigation agreement" on June 30, 2016, requiring Ontario law to be used. The respondents disagreed and brought a motion to determine the law to be applied. The appellant also brought a cross-motion seeking a declaration that the choice of law question was resolved by binding litigation agreement and that Ontario law was to be used. The motion judge dismissed the appellant's cross-motion and declared that Nevada law would apply.
The appellant appealed on the basis that the motion judge's decision that the parties had not reached a binding litigation agreement was "both legally incorrect and reliant upon incorrect principles of law", and should be overturned based on a correctness standard. It sought a declaration that, as agreed between the parties, Ontario law applied.
(1) Did the motion judge err in deciding that the parties did not reach a binding litigation agreement?
(1) No. What occurred on June 30, 2016 was not a litigation agreement, but rather an admission by the respondents' counsel based on a misunderstanding of the law. The exchange of correspondence relating to the applicable law does not reflect a negotiation. The relevant communications did nothing more than express competing views about the applicable law. The parties would have had no reason to negotiate for the application of Ontario law, since the application of Ontario law would clearly prejudice the respondents' interests.
The respondents' counsel was not intending to enter into a litigation agreement, but rather, simply making an admission. Accordingly, there was no consensus ad idem between the parties to enter a binding agreement to apply Ontario law.
The fact that the respondents' counsel signed the June 30, 2016 pre-trial conference report certificate does not prove otherwise. A pre-trial conference report is a case management tool. According to the terms of Rule 50.08(3), when parties sign a pre-trial conference report certificate, they are confirming their understanding of the report and acknowledging their obligation to be ready to proceed. They are not entering into a binding litigation agreement with the other party.
[Sharpe, Juriansz and Roberts JJ.A.]
J. Chen, for the appellants
M.D. Swindley and Z. Flemming-Giannotti, for the respondent Van Dusen Excavating
A. Robineau, for the respondent Leeds, Grenville and Lanark District Health Unit
Keywords: Contracts, Negligence, Civil Procedure, Limitation Periods, Discoverability, Appropriate Means, Limitations Act, 2002, S.O. 2002, c. 24 Sched. B, ss. 5(1)(a), 5(1)(a)(iv), 5(1)(b), 5(2), Gillham v. Lake of Bays (Township), 2018 ONCA 667, Kudwah v. Centennial Apartments, 2012 ONCA 777, Har Jo Management Services Canada Ltd v. York (Regional Municipality), 2018 ONCA 469, 407 ETR Concession Co v. Day, 2016 ONCA 709, leave to appeal refused,  SCCA No 509, Presidential MSH Corp v. Marr, Foster & Co LLP, 2017 ONCA 325, Brown v. Baum, 2016 ONCA 325, Chelli-Greco v. Rizk, 2016 ONCA 489, YESCO Franchising LLC v. 2261116 Ontario Inc, 2017 ONSC 4273, Barrs v. Trapeze Capital Corp, 2017 ONSC 5466, Miaskowski v. Persaud, 2015 ONCA 758, Sampson v. Empire (Binbrook Estates) Ltd., 2016 ONSC 5730, Tapak v. Non-Marine Underwriters, Lloyd's of London, 2018 ONCA 168
In 2010, the appellants retained the respondent company (the "Contractor") to install a septic system. The respondent organization (the "Health Unit") approved the proposed system. There were immediate problems with the system, which recurred each spring. In 2011, smell began to emanate from the system. The appellants called the Contractor and it appeared to fix the problem by replacing a failed sewage pump.
In 2012, smell was emanating from the system again. The Contractor advised that the cause was an unusually wet year and that many property owners were having the same problem. In 2013, there was smell and effluent from the system, although it was otherwise functioning well. The Contractor advised the appellants that the problem could be remedied by applying a load of sand to a portion of the septic bed. The Contractor assured that it would return to perform that work.
The appellants and the Contractor had ongoing discussions regarding the sand. The appellants believed that the Contractor would come with the sand to fix the problem. The Contractor came in fall 2013 but the appellants were not home and the property could not be accessed. The Contractor failed to come again in spring 2014 because of excessive mud. The Contractor did not attend the property in winter 2014 notwithstanding that the appellants plowed the snow to provide it access to the property. In 2015, the appellants called the Health Unit, which resulted in an inspection by the supplier of the system and the Contractor. The Contractor took samples of the effluent. In June 2015, the Health Unit condemned the system and issued an Order to Comply requiring the system's replacement.
The appellants commenced an action in Small Claims Court in August 2015. The trial judge found that by spring 2013, when there was smell and effluent from the system, a reasonable person would have discovered the claim under s. 5 of the Limitations Act, 2002. The trial judge did not consider the s. 5(1)(a)(iv) criterion as to when the appellants did know or should have known that a proceeding would be an appropriate means to remedy their claim. The trial judge also found that there was insufficient evidence to rebut the presumption under s. 5(2) that the plaintiff knew all the matters referred to in s. 5(1)(a), without consideration of s. 5(1)(a)(iv). The Divisional Court judge upheld the trial judge's decision. The Divisional Court judge rejected the contention that the trial judge erred by failing to consider s. 5(1)(a)(iv).
(1) Did the trial judge and the Divisional Court judge err in law by failing to conduct a proper analysis under s. 5(1)(a)(iv)?
(2) Was it appropriate for the appellants to delay bringing an action against the Contractor?
(3) Was it appropriate for the appellants to delay bringing an action against the Health Unit?
(1) Yes, the trial judge and the Divisional Court judge erred in law by failing to conduct a proper analysis under s. 5(1)(a)(iv). A determination under s. 5(1)(b) as to the date a reasonable person would have discovered the claim requires consideration of all four "matters referred to in clause (a)". The findings under s. 5(2) could not stand because there was no consideration of s. 5(1)(a)(iv). Consideration of when a proceeding was an appropriate means to remedy a claim is an essential element in the discoverability analysis and a failure to consider it is an error of law.
(2) Yes, it was appropriate for the appellants to delay bringing an action against the Contractor. The purpose of s. 5(1)(a)(iv) is to deter needless litigation. If a legal proceeding is inappropriate, the start date for the commencement of the limitation period is postponed beyond the date on which the constitutive elements of the claim are discovered.
There are two guiding principles on the effect of assistance by a defendant to eliminate loss. First, a legal proceeding against an expert professional may not be appropriate if the professional is attempting to resolve the loss. Second, a legal proceeding may be inappropriate in cases where the plaintiff is relying on the superior knowledge and expertise of the defendant.
In this case, the Contractor was licensed to install septic systems. The appellants contracted with him because of his special training and expertise. There was expertise on which the appellants reasonably relied. Reasonable reliance is not limited to strictly professional relationships, such as doctors or accountants.
The Contractor attempted to fix the problem by replacing a pump and then assured the appellants that the problem could be remedied with a load of sand. The Contractor also assured that it would attend at their property to fix the problem. The appellants were engaged in ongoing discussions and took actions to enable him access to the property. The appellants reasonably relied on these assurances. These assurances led the appellants to a reasonable belief that the problem could be remedied without recourse to litigation. Thus, s. 5(1)(b) was satisfied.
The threshold to displace the presumption in s. 5(2) is relatively low. The appellants relied on the Contractor's assurance that the problem with the system was readily fixable and that the Contractor would fix it. The trial judge did not consider this when applying the s. 5(2) presumption. The appellant's reliance on the Contractor's assurance was enough to rebut the presumption under s. 5(2).
The appellants did not know, and as required under s. 5(1)(b), a person in their situation would not reasonably have known, that a proceeding would be an appropriate means to seek a remedy until, at the earliest, winter 2014. The appellants still reasonably expected the Contractor to come up to this point, evidenced by the clearing of snow to provide access to the property. Since the action was commenced in August 2015, it was well within the basic two-year limitation period and was not statute-barred.
(3) Yes, it was appropriate for the appellants to delay bringing an action against the Health Unit. Discoverability is decided on the basis of what the plaintiff knew or ought to have known. It is not decided on the basis of fault or who is responsible for gaps in the plaintiff's knowledge. The appellants did not know that a proceeding against the Contractor was an appropriate remedy and they could not have known that a proceeding was appropriate against the Health Unit at an earlier date. Otherwise, the appellants would have had to commence a claim against the Health Unit at a time when they reasonably believed that the problem was readily fixable and the Contractor was going to fix it. Once it became clear that the Contractor could or would not fix the problem, it was appropriate for the appellants to bring a claim against both the Contractor and the Health Unit. Since the claim against the Health Unit was added within the basic two-year limitation period, it was not statute-barred.
[Strathy C.J.O., Lauwers and Zarnett JJ.A.]
R.G. Doumani and V. Simkic, for the appellants
M.J. Swan, for the Grand River Conversation Authority
T.D. Barclay and H. McIvor, for the respondent Ministry of the Environment and Climate Change
Keywords: Real Property, Environmental Law, Municipal Law, Statutory Interpretation, Standard of Review, Ontario Water Resources Act, R.S.O. 1990, c. O.40, s. 53(6.1), Building Code Act, 1992, S.O. 1992, c. 23, Building Code, O. Reg. 332/12, Environmental Protection Act, R.S.O. 1990, c. E.19, Tenant Protection Act, 1997, S.O. 1997, c. 24, Planning Act, R.S.O. 1990, c. P.13, s. 46, 71, Putnam v. Grand River Conservation Authority,  ORHTD No 12, aff'd, (2006), 210 O.A.C. 191 (Div Ct), Canadian National Railway Co. v. Canada (Attorney General), 2014 SCC 40, Housen v. Nikolaisen, 2002 SCC 33, Sarnia (City) v. River City Vineyard Christian Fellowship of Sarnia, 2015 ONCA 494, Montreal (City) v. 2952-1366 Quebec Inc., 2005 SCC 62, Rizzo & Rizzo Shoes Ltd. (Re),  1 S.C.R. 27, Chieu v. Canada (Minister of Citizenship and Immigration), 2002 SCC 3, R. v. Inco Ltd. (2001), 54 O.R. (3d) 495 (CA), Ingles v. Tutkaluk Construction Ltd., 2000 SCC 12, Ost v. Turnbull (1977), 81 D.L.R. (3d) 161 (Alta SC (App Div)), Fletcher v. Township of Southgate (1 March 2014), Ruling No 03-52-950 (Building Code Commission), Re Kelley and Redmond (1979), 26 O.R. (2d) 417 (HC (Div Ct))
The appellants, two cottage associations, entered into a dispute with the Ministry of the Environment (the "MOE") over the regulatory regime applicable to the construction and operation of the cottagers' sewage systems. If the Ontario Water Resources Act (the "OWRA") applied, the MOE had jurisdiction and an expensive Environmental Compliance Approval ("ECA") had to be obtained for each cottage sewage system, with the possibility of replacement or repair of the systems being required. If the Building Code Act applied, the local municipalities had jurisdiction.
The applicable regime was determined by the total design capacity of the sewage systems(s) located on a particular "lot or parcel of land", an expression found in the OWRA, s. 53(6.1). Systems with a design capacity in excess of 10,000 litres per day ("lpd") are generally subject to the OWRA. While the individual cottage sewage systems were less than 10,000 lpd, the systems on each of the five registered parcels at issue had a design capacity of more than 10,000 lpd.
The land on which the cottages were situated was not covered by a formal plan of subdivision. The cottages were located on five parcels of land registered under the Ontario Land Registry System. The five parcels were owned by the Grand River Conservation Authority (the "GRCA"). Each cottage had its own sewage system. The question was whether the relevant "lot or parcel of land" for the purposes of determining total design capacity was one of the five parcels registered on title, or the individual cottage lots described in each cottager's lease with the GRCA. Resolution of this question depended on the interpretation of the word "lot or parcel of land".
The GRCA leased to the public cottage sites on the shorelines of two lakes under a "Cottage Lot Program". There were approximately 733 cottage sites within two conservation areas. Each cottage had its own separate lease with the GRCA. Under the lease, each cottager was responsible for their own sewage and water systems. The "Cottage Lot Program" was developed without either a registered plan of subdivision or a registered survey of the five parcels.
The application judge dismissed the appellants' application, finding that the cottages were subject to the OWRA. The application judge reasoned that "lot or parcel of land" referred to land for which title could be "legally conveyed" from one party to another. In addition, "lot or parcel of land" referred to a lot or parcel "legally recognized for municipal and planning law purposes". The application judge found that each cottage was not located on a lot, thus the cottages were collectively located within five parcels of land.
The application judge rejected the argument that the appellants could rely on the informal descriptions of their lots contained in their leases, because this would promote arbitrariness, rather than certainty. It would enable any private landowner to avoid compliance with the OWRA by informally subdividing their land into random "lots". The application judge found that this would undermine the legislative purpose of the OWRA.
Ultimately, the application judge held that each cottage was not located on a separate "lot" and that the cottages were collectively located on five "parcels" of land. Thus, he found that the 733 cottages fell within the jurisdiction of the OWRA.
(1) Did the application judge err in holding that the appellants' sewage systems were subject to the OWRA?
(1) No. The purpose of the OWRA is "to provide for the conservation, protection and management of Ontario's waters and for their efficient and sustainable use, in order to promote Ontario's long-term environmental, social and economic well-being". This purpose is accomplished by prohibiting the discharge of pollutants that can impair water quality and by the regulation of sewage disposal and sewage works, among other operations. Broad protection is necessary because the damage caused by polluted waters may not be immediately apparent and impairment may be caused by the accumulation of pollutant materials over time.
The purpose of the BCA and the Building Code, O Reg 332/12 is to "protect the health and safety of the public by enforcing safety standards for all construction projects". The municipal regime is contemplated by the OWRA, s. 53, which regulates tracts of land that produce a larger volume of sewage in a regulatory framework that focuses on the broader environmental impact of sewage on water and watercourses, rather than on construction-level requirements only. This is in keeping with the expertise of the MOE and the recognized need to consider the collective impact of multiple sources of pollution on the environment.
The scheme and purpose of the OWRA is to regulate the construction and operation of sewage works in order to protect the environment and the public. It entrusts the regulation of "smaller" systems to municipalities under the BCA and "larger" systems to the MOE. The dividing line is based on the design volume of daily sewage flow on a "lot or parcel of land".
The application judge correctly interpreted "lot or parcel of land" in s. 53 of the OWRA to mean a lot or parcel of land that is legally recognized for municipal and planning law purposes, and for which title can be conveyed from one party to another. He correctly observed that permitting the appellants to rely on the descriptions in their leases, a purely private contractual division of the larger registered parcels, would promote arbitrariness rather than certainty, thereby undermining the purpose of the OWRA.
The application judge's interpretation of the legislation advanced the purpose of the OWRA by ensuring that high volume sewage systems were subject to the regulatory oversight of the MOE, under the OWRA. By virtue of its mandate and experience, the MOE was well-equipped to determine the cumulative effect of the operation of several hundred sewage systems on the local environment and to ensure the protection of both the cottagers and the environment.
The ECA process enables the MOE to impose conditions on the construction and operation of sewage works, to ensure that the works are built in accordance with prescribed construction standards, and that the works are operated in the manner in which they were described and for which approval was granted, in order to ensure the ongoing protection of the environment in the public interest.
[Strathy C.J.O., Feldman and Brown JJ.A.]
K. Sherkin and M. Wine, for the appellants
J. Devereux and J. Teskey, for respondents Fortress Real Capital Inc., Fortress Real Developments Inc., Jawad Rathore and individual respondent V.P.
M. Kremer and Z. Yehia, for respondent Empire Pace (1088 Progress) Ltd.
L. Parliament and L. Ray, for respondents Adi Developments (Link) Inc. and Adi Development Group Inc. (incorrectly named in the title of proceedings as Adi Developments Inc.)
Keywords: Contracts, Real Property, Mortgages, Interpretation, Sealed Contract Rule, Trusts, Civil Procedure, Class Proceedings, Standing, Striking Pleadings, No Reasonable Cause of Action, Land Registration Reform Act, R.S.O. 1990, c. L.4, s. 13, Rules of Civil Procedure, Rule 21, ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. (1995), 26 OR (3d) 481 (CA), Friedmann Equity Developments Inc v. Final Note Ltd., 2000 SCC 34, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53
The appellants were induced to invest in four mortgages promoted by two of the corporate respondents. Two mortgages were in default, but certain terms of the mortgages purported to preclude the investors or their trustees from enforcing the mortgages. The other mortgages were removed from title through power of sale proceedings and protection proceedings under the Companies' Creditors Arrangements Act. As a result, newly-incorporated companies linked to the initial corporate respondents became the owners of the lands, free from the mortgages.
The appellants brought class proceedings against the individuals and corporations who had sold the investments, two principals of the respondent companies who were directors and officers of those companies, the lawyer who had purportedly provided independent legal advice to the appellants, the trustees who held the appellants' investments, and the mortgagors who granted the mortgages. The appellants sought a remedy for the loss of their investments.
The appellants alleged that the proposed defendants failed to disclose, or misled them about, key information regarding the development projects, particularly in relation to the risks of investing. They sought to enforce the two remaining mortgages, either directly or indirectly through the trustees, to rescind contracts relating to the investments, and to obtain damages for breach of fiduciary duty, breach of contract, misrepresentation, and negligence. Eight of the defendants in the four class actions brought motions to strike the pleaded claims against them under Rule 21 of the Rules of Civil Procedure. Four of those motions were settled, and four proceeded.
The motion judge dismissed three of the claims and did not grant leave to amend. Those were: 1) the claims against the individual respondents who were directors and officers at the relevant times; 2) the claims against the respondent mortgagor of one of the remaining syndicated mortgages; and 3) the claims against the respondent mortgagor and guarantor of the other remaining syndicated mortgage.
The motion judge dismissed the claims against the individual respondents without leave to amend in all four proposed class actions, finding that the pleadings failed to plead material facts to show that their conduct was tortious in itself or that it exhibited a separate identity of interest from that of their corporations. He found that the pleadings did not disclose a reasonable cause of action against the individual respondents in their personal capacity.
The motion judge also dismissed the actions against the corporate respondents for enforcement of the mortgages on two bases, and refused leave to amend. First, the appellants did not have standing to enforce the mortgages, as they were sealed contracts to which the appellants were not parties. Second, even if the appellants could step into the shoes of their trustees and sue to enforce the mortgages in equity, their rights would be no better than those of the trustees, who were barred by the standstill provisions in the mortgage documents from enforcing the mortgages without the written approval of prior-ranking secured lenders.
The motion judge found that it was unclear how a mortgage could be enforced in a class action where some of the investors might opt out. He concluded that no purpose would be served by granting leave to amend because the appellants would already have pleaded the consent of the prior-ranking lenders if it existed. Further, it was clear from the documents incorporated into the pleadings that the standstill provisions contained in the mortgage documents had been adequately disclosed to the appellants and the parties to the Loan Agreements. He also made a finding that no additional consideration from the corporate respondents was necessary for the inclusion of the standstill provisions. He concluded that the mortgages were not enforceable and dismissed the actions against the corporate respondents, without leave to amend.
(1) Did the motion judge err in law by striking out the personal claims against the individual respondents as disclosing no reasonable cause of action?
(2) Did the motion judge err in law by finding that the sealed contract rule prevented the appellants from enforcing the syndicated mortgages at common law?
(3) Did the motion judge err in law by finding that the appellants could not enforce the syndicated mortgages in equity through a class proceeding?
Appeal allowed in part.
(1) No. The Court first observed that a director or officer of a corporation will not be personally liable for actions taken on behalf of the corporation unless some of their conduct is tortious in itself or exhibits a separate identity of interest from that of the corporation. On that basis, the Court agreed with the motion judge that the appellants' allegations did not provide any particulars of tortious conduct separate from that of the respondent companies, nor did any of the pleadings contain sufficient particularity to be able to identify any such conduct.
The Court similarly rejected the appellants' submission that because the pleadings claimed fraud, deceit and dishonesty by one of the corporate respondents, and because the two individual respondents knew or ought to have known about it, their permitting this conduct therefore made it such that the pleadings disclosed a proper cause of action. The Court noted that without specifically pleaded allegations of fraud, deceit or dishonesty by the individual respondents, it was impossible to assess whether the alleged misconduct could lead to a finding of liability.
Lastly, the Court observed that there was no pleaded legal basis for a personal claim against the two individuals, and as such, the facts here were insufficiently similar to those of prior case law on which the appellants relied. The Court concluded that there was no basis to grant leave to amend, as the pleadings had been amended a number of times. If there were any relevant allegations, they would have been made already.
(2) No. The Court affirmed that the motion judge was correct in referring to s. 13 of the Land Registration Reform Act, which provides that a mortgage that is not executed under seal has the same effect for all purposes as if it had been executed under seal. As a result, the sealed contract rule applied to the mortgages in this case, and that rule dictated that only the signatories to a contract under seal may sue or be sued on it.
Further, the Court rejected the appellants' argument that the sealed contract rule applied only to undisclosed principals. Contrary to the appellants' submission, the Supreme Court of Canada in Friedmann Equity Developments Inc v. Final Note Ltd. confirmed that the rule applies to both types of principal. Since the appellants were disclosed principals, the sealed contract rule applied. Therefore, the motion judge correctly found that the sealed contract rule prevented the appellants from suing to enforce the mortgages at common law.
(3) Yes. The Court recognized that where a trustee is party to a sealed contract but takes no steps to enforce the other party's obligations, the beneficiaries may enforce the trustee's rights in equity by bringing an action and including the trustee as a party. That equitable right is based on the law of trusts, not the law of contract, and therefore is not an exception to the sealed contract rule. Further, the rule does not create a relationship between the beneficiary and the contracting third party. Thus, the third party may not use the rule to sue the beneficiary, and, when the beneficiary sues to enforce the contract, the beneficiary is asserting the trustee's rights alone.
The Court affirmed the motion judge's interpretation of the mortgages, finding that the trustees, having granted the specific standstill provisions in the respective mortgages, would not themselves be able to enforce those mortgages without the written consent of the prior-ranking mortgagees in accordance with the terms of the standstill provisions.
The Court further affirmed the motion judge's findings that in an equitable enforcement action, the appellants could not challenge the interpretation and enforceability of the standstill provision. The standstill provision's meaning was plain, and it required the prior consent of the senior security holders to any proceeding enforcing the lenders' security. Based on the pleadings and the documents incorporated by reference into the pleadings, the standstill provision was adequately disclosed to the parties to the Loan Agreements as well as to the appellants.
However, the Court observed that the motion judge erred in proceeding according to Rule 21 of the Rules, which led to him dismissing the claims against the corporate respondents as bound to fail in law. To reach the necessary findings in order to support a dismissal, the motion judge was required to make findings of fact, which took the matter outside the scope of Rule 21.
Specifically, the motion judge made three findings which required an evidentiary basis: 1) that properly interpreted, the standstill provision in the mortgages barred the appellants from enforcement; 2) that the standstill provision in the mortgages was adequately disclosed to the parties to the Loan Agreements; and 3) that the standstill provision in the mortgages was adequately disclosed to the appellants.
As the first finding was a matter of contractual interpretation, it was therefore a question of mixed fact and law and the parties were consequently entitled to lead evidence regarding the surrounding circumstances of the contract's formation or its context to aid in its interpretation. The latter two findings were clearly factual, and the appellants were again entitled to lead evidence on these points. Further, the Court rejected the motion judge's finding that the standstill provision was adequately disclosed; although the provision was referred to in most of the key documents, it was worded in different ways. In one instance the provision was referred to as "to [be] entered into... as shall be reasonable in the circumstances": the question of what was reasonable was one of law, to be determined following evidentiary findings.
Lastly, the Court concluded that the motion judge was correct in refusing to strike the claim because the appellants had a very small interest in the loans and because some investors could opt out of the proposed class action.
[Hoy A.C.J.O., van Rensburg and Pardu JJ.A.]
M. Tweyman, for the appellant
S. Kirby and W. Abbott, for the respondent
Keywords: Family Law, Civil Procedure, Appeals, Costs, Family Law Rules, O.Reg 114/99, Rule 24(1)
In a previous decision, the Court of Appeal allowed an appeal and varied the spousal support arrangement at issue between the appellant and the respondent. The Court also set aside the trial judge's order requiring the appellant to pay the respondent one half of the proceeds of the sale of the matrimonial home. The Court fixed the costs of appeal and invited the parties to provide written submissions.
The appellant sought costs of $30,000, arguing that she was substantially successful at trial, her settlement offer was much more reasonable than the respondent's, and the costs she was seeking were both reasonable and proportionate. The respondent argued that the parties should bear their own costs because success was divided, and the appellant should not be rewarded for her bad faith conduct in withholding court-ordered financial disclosure about her employment. The respondent also argued that the appellant's offer to settle contained no element of compromise on the termination of support payments, and argued that the amount of costs sought by the appellant was too high and approaching full recovery of her actual legal costs.
(1) Was the appellant entitled to costs?
(2) Was there anything in the conduct of either party that enhanced or reduced the appellant's claim for costs?
(3) Did the appellant engage in bad faith conduct sufficient to disentitle her to costs?
(4) Was the amount sought by the appellant too high?
Costs to appellant of $24,000.
(1) Yes. The Court found that the appellant was the more successful party and was presumptively entitled to her costs under Rule 24(1) of the Family Law Rules, O.Reg 114/99. At trial, the respondent sought an order terminating spousal support as of a certain date, while the appellant relied on the parties' agreement for indefinite support at a particular amount. Although the appellant's argument that this amount for spousal support should not be reduced did not prevail, she was successful in that her continued entitlement to some support was recognized.
(2) No. There was nothing in the conduct of the parties that enhanced or reduced the appellant's claim for costs. Both parties exchanged written offers to settle that contained an element of compromise. Neither party beat their offer.
(3) No. The appellant did not engage in bad faith conduct sufficient to disentitle her to costs. While the appellant was at fault for not providing complete financial disclosure from the start of the proceedings, this was not a case of egregious non-disclosure.
(4) Yes. The amount sought by the appellant was too high. The amount of $23,068.10 that the costs of the trial were fixed at on consent was a useful benchmark to determine reasonable and proportionate costs consistent with both parties' expectations. Accordingly, the Court of Appeal fixed the appellant's costs at $24,000.
SHORT CIVIL DECISIONS
[MacPherson, Brown and Nordheimer JJ.A.]
L. Lochner, in person
H. Freeman, for the respondent
Keywords: Endorsement, Appeal Dismissed
[Rouleau, Pardu and Benotto JJ.A.]
Y. Montague, acting in person
A. Davidson and A. Vaiay, for the respondent
Keywords: Jury Trials, Leave to Appeal, Fresh Evidence, Rules of Civil Procedures, Rule 59.06(2)
[Rouleau, van Rensburg and Benotto JJ.A.]
J. Willmot, in person
S. Barton and N. Carew, for the Law Society of Ontario
T. Jemec, for the Ontario General of Ontario
Keywords: Endorsement, Noting in Default, Rules of Civil Procedure, Rules 2.1.01 and 19.02(1)
[Rouleau, van Rensburg and Benotto JJ.A.]
J. Kaufman, B. Adams and D. Blesko, for the appellants
J. Spotswood and A. Norwood, for the respondents
Keywords: Restitution, Unjust Enrichment, Contracts, Reasonable Expectations, Damages, Skibinski v. Community Living British Columbia, 2012 BCCA 17
[Simmons, Lauwers and Trotter JJ.A.]
V. Bayly, for the respondent
I. McLean, for the appellant
Keywords: Criminal Law, Sufficiency of Reasons, R. v. Sheppard,  1 SCR 869
[Doherty, Miller and Trotter JJ.A.]
E. Dann and J. Shanmuganathan, for the appellant
J. Streeter, for the respondent
Keywords: Criminal Law, Publication Ban, Immigration Law, Evidence, Credibility, Criminal Code, ss. 137 and 184.2, Canadian Charter of Rights and Freedoms, ss. 8 and 24(2), R. v. Zaher, 2014 ONSC 7565, R. v. Zaher, 2017 ONSC 582
[Simmons, Lauwers and Trotter JJ.A.]
Z. Ahmad, in person
A. Hotke, for the respondent
Keywords: Criminal Law, Criminal Harassment, Restitution Orders
[Rouleau, Pepall and Huscroft JJ.A.]
A. K. Kapoor and D. C. Achtemichuk, for the appellant
T. Gillian and K. Ramchand, for the respondent
Keywords: Criminal Law, Trafficking, Jury Trials, O'Connor Application, Controlled Drugs and Substances Act, S.C. 1996, c. 19, Regulation SOR/97-234, R. v. O'Connor,  4 S.C.R. 411, R. v. Cinous, 2002 SCC 29, R. v. McNeil, 2009 SCC 3
[Simmons, Lauwers and Trotter JJ.A.]
J. Stone, in person
L. Daviau, as duty counsel
L. Schwalm, for the respondent
Keywords: Criminal Law, Sexual Assault, Evidence, Credibility, Collusion
[Simmons, Lauwers and Trotter JJ.A.]
D. Wang, in person
L. Daviau, as duty counsel
G. Choi, for the respondent
Keywords: Criminal Law, Break and Enter, Assault, Sentencing
[Feldman, Lauwers and Nordheimer JJ.A.]
J. Rosen and L. Daviau, for the appellant
M. Perlin, for the respondent
Keywords: Criminal Law, Publication Ban, Sexual Interference, Evidence, Cross-Examination, Fresh Evidence, R. v. Lyttle, 2004 SCC 5, R. v. Palmer,  1 S.C.R. 759
[Hourigan, Pardu and Harvison Young JJ.A.]
G. Henderson, for the appellant
M. Bernstein, for the respondent
Keywords: Criminal Law, Identity Fraud, Unreasonable Search and Seizure, Incidental to Arrest, Reasonable Expectation of Privacy, Sentencing, Canadian Charter of Rights and Freedoms, ss. 8 and 24(2), R. v. Balendra, 2016 ONSC 5143, R. v. Tuduce, 2014 ONCA 547, R. v. Fearon, 2014 SCC 77, R. v. Grant, 2009 SCC 32
[Doherty, Miller and Trotter JJ.A.]
G. Jenner, for the appellant
J. Hanna, for the respondent
Keywords: Criminal Law, Publication Ban, Sexual Offences, Sentencing, Criminal Code, ss. 686(1)(a)(i), 718.2(a)(ii.1), 718.2(a)(iii), and 726
[Feldman, Lauwers and Nordheimer JJ.A.]
R. Litkowski, for the appellant
K. Rawluk, for the respondent
Keywords:Criminal Law, Counseling to Kidnap, Counseling to Rob, R. v. Hamilton, 2005 SCC 47
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