Following are the summaries for this past week's civil decisions of the Court of Appeal for Ontario.
Although it was a short week, the Court released a couple of decisions that may be of interest to our readers. For a great summary of the principles governing a motion for security for costs on appeal, see Brown J.A.'s analysis in Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine.
For those interested in contractual interpretation disputes, the Court set aside a partial summary judgment order and substituted an order dismissing the respondents' action for breach of contract and negligent misrepresentation in Environs Wholesale Nursery Ltd. v Environs Landscape Contracting Ltd., a case involving an Asset Purchase Agreement for the sale of tree farm assets. The Court also dealt with the proper interpretation of a lease governing a rooftop, and certain rights of way for operating a solar power generation project, in Nissa Corporation v. Enviro Park Solar Ltd. Both referred to the SCC's decision in Sattva.
Unfortunately, we do not have any inside information on whether a certain basketball player will be returning to the Toronto Raptors next year, but maybe that decision will be released next week!
[Hourigan, Paciocco and Fairburn JJ.A.]
G. Sanders and A. Mar, for the appellants
J. Vlasis and J. Elcombe, for the respondent
Keywords: Labour and Employment, Payroll Tax, Temporary Workers, Placement Agencies, Tripartite Employment Relationship, Employer Health Tax Act, RSO 1990, c E.11, Public Service Employment Act, SC 2003, c 22, ss. 12 & 13, Financial Administration Act, RSC 1985, c F-11, Pointe-Claire (City) v. Quebec (Labour Court),  1 SCR 1015, IBM Canada Ltd. v. Ontario (Minister of Finance), 2008 ONCA 216, 89 OR (3d) 641, International Brotherhood of Electrical Workers, Local 586 v. Dare Personnel Inc.,  OLRB Rep. 935 (Ont. LRB), aff'd  OLRB Rep. 1014 (Ont. CJ (Div. Ct.))
The appellants are placement agencies based in Ottawa who supply temporary workers to the Public Service of Canada and federal agencies under agreements between the appellants and the Government of Canada. When clients put out a call for temporary workers, the appellants identify appropriately qualified persons from their inventory of candidates, ascertain the person's willingness to apply, and negotiate an hourly rate of pay for the placement. The appellants' primary function is to pay the worker and administer the payroll, on the basis of time sheets signed off by the client, and client manages and directs the workers while they carry out their assignment. However, both the appellants and the client may be involved in dealing with performance or discipline issues.
The respondent issued assessments directing the appellants to pay an employer health tax under the Employer Health Tax Act ("EHTA"). The appellants appealed to the Superior Court of Justice, arguing that they were not obliged to pay the tax because they were not the employers of the workers placed with their clients for temporary work.
In affirming the assessments, the appeal judge recognized that he was bound by the Supreme Court's "comprehensive and flexible approach" to determine whether an employment relationship exists. That approach was provided for in Pointe-Claire (City) v. Quebec (Labour Court),  1 S.C.R. 1015 and was subsequently adopted by the Ontario Court of Appeal in the context of the EHTA in IBM Canada Ltd. v. Ontario (Minister of Finance), 2008 ONCA 216.
(1) Did the appeal judge err in his interpretation of the EHTA?
(2) In the alternative, did the appeal judge err in his consideration of the evidence?
(1) No. The appeal judge undertook a comprehensive review of all of the circumstances in concluding that the appellants were employers for EHTA purposes. There was no error in his analysis.
The appellants' first submission was that instead of answering the real issue of whether the appellants were employers for the purposes of the EHTA, the appeal judge wrongly determined the appellants' liability by default because he was of the view that someone must be the employer and chose between them and the Government of Canada. The workers, appellants, and the Government of Canada were involved in a tripartite relationship where the appellants and the Government of Canada each possessed some of the traditional attributes of an employer. The whole point of the analysis provided for in IBM is to determine the employer for EHTA purposes in such a tripartite arrangement. On the facts of this case, that had to be either the appellants or the Government of Canada.
The two-part test mandated by IBM first requires determination of whether an employment relationship existed and then whether the putative employers paid remuneration. The appellants argued that the appeal judge improperly focused on the fact that they paid remuneration, however this argument was rejected. The Court found that the appeal judge properly considered the issue of who paid remuneration as part of his analysis of whether an employment relationship existed. He did not rely on this fact exclusively. He carefully reviewed the statutory context including the provisions of the EHTA, noting that the legislation provides that the employer is the party who pays remuneration to the employee. Additionally, ss. 12 and 13 of the Public Service Employment Act, and the Financial Administration Act are inconsistent with the notion of the Government of Canada being the employer of the workers.
The appeal judge also analyzed the factual circumstances surrounding the tripartite relationship. The appellants were the only parties who had contractual relationships with the workers and the contractual documentation with the Government of Canada made clear that it was the government's intention that the workers be the employees of the placement agencies.
The appellants' second submission was that the appeal judge ignored a previous decision of the Ontario Labour Relations Board that held that they were not employers of the workers for labour legislation purposes. The Court found that no error of law was made as the appeal judge considered but declined to follow that decision. The Court agreed with the appeal judge's reasoning and affirmed that it was possible to find that a placement agency was an employer for taxation purposes and not labour relations purposes.
(2) No. The appellants and the Government of Canada each appeared to possess some of the traditional attributes of an employer, as is typical in a tripartite arrangement. The trial judge explicitly referenced recruitment, payroll administration, discipline issues, testing, and security clearances. After an analysis of all of the factors, the trial judge determined that the appellants were the employers, not the Government of Canada. As the appeal judge did not misapprehend the evidence or fail to consider any relevant factor, no error was made.
[Feldman, Paciocco and Fairburn JJ.A.]
C.G. Paliare and T.H. Lie, for the appellants
MacKenzie and B. MacKenzie, for the respondents
Keywords: Contract Law, Principles of Contractual Interpretation, Agreement of Purchase and Sale, Representations and Warranties, Breach Of Contractual Warranty, Negligent Misrepresentation, Practical Investigations, Economically Feasible Investigations, Pre-Contractual Representations, Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246, Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12, Actuate Canada Corp. v. Symcor Services Inc., 2016 ONCA 217, Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460, Opron Construction Co. v. Alberta (1994), 151 A.R. 241 (Q.B.)
The appellants, Environs Landscape Contracting Ltd., and its officer and director, appeal a partial summary judgment order that they are liable for "breach of contractual warranty and/or negligent misrepresentation" to the respondents, Environs Wholesale Nursery Ltd., and its officers and directors.
That liability finding arose from an Asset Purchase Agreement (the "APA") relating to the sale of tree farm assets to the respondents. Attached to the APA was a "tree inventory" produced by the appellants, which contained inaccurate facts.
In July of 2012, the appellants accepted a conditional offer from the respondents to purchase the business assets. The conditional offer provided for a due diligence period during which the respondents were entitled to inspect the business assets and declare the offer to be null and void if not satisfied.
The respondents were provided with the tree inventory, setting out what the appellants believed to be the type, size and location of the saleable trees. The respondents were given access to the business, attending with an arborist. The arborist could have spent as much time as desired examining the plant stock, but only spent one and a half to two hours inspecting the trees.
The tree inventory attached to the APA noted 236,341 saleable trees on the business property. However, when the respondents conducted a post-closing count, they concluded there were 83,106 fewer saleable trees. The respondents contended that this shortfall was a breach of a material representation made by the appellants in the APA.
(1) Did the motion judge err in finding that the APA contained at least a representation respecting the number of saleable trees?
(2) Did the motion judge err in finding liability for negligent misrepresentation?
(1) Yes. The Court found that the motion judge committed an extricable error of law by failing to apply the principles of contractual interpretation to s. 3.1(13) of the APA. Section 3.1(13) reads as follows:
3.1(13) Inventories. The Purchasers acknowledge and agree that through the due diligence process they have satisfied themselves as to the quantity and quality of all plant material, which has been inspected by the Purchasers' own consultant.
The Court found that the motion judge did not determine what this material provision meant in the contract as a whole, and assigned it no meaning. The Court reminded us that in discharging the responsibility to interpret a contract, a judge must interpret a contract "as a whole and...accord an interpretation to the contested provisions that assigns meaning to each and avoids rendering one or more of them ineffective": Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246; Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12; Actuate Canada Corp. v. Symcor Services Inc., 2016 ONCA 217.
The Court went on to add that although the tree inventory is specific as to the number, location and species of trees, when the inventory is read with the APA as a whole, it is clear that it is not a representation or warranty. Instead, the due diligence inspection is contemplated to protect the respondents' expectations regarding the number of trees.
The plain language of s. 3.1(13) drives this conclusion. It reconfirms that the respondents used the due diligence process afforded to them.
The appellants also submitted that the motion judge erred in law by relying upon Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460 and Opron Construction Co. v. Alberta (1994), 151 A.R. 241 (Q.B.) for the proposition that a full investigation clause cannot be relied upon to defeat a representation where the investigation provided for is not practical or economically feasible.
The Court found that those cases deal with full investigation clauses in construction contracts, and do not purport to hold the same principle in simple agreements of purchase and sale. However, even in the event that they do apply to simple agreements of purchase and sale, the Court found that the respondents submitted no evidence establishing that it was not practical or economically feasible for the respondents to conduct a full inspection. The respondents relied on affidavit evidence that it was not practical to perform a count of the individual trees. The Court emphasized that there was no evidence that the respondents could not use other means other than an individual tree count to satisfy themselves of the accuracy of the inventory.
Lastly, the Court found that the conclusion that an inability to count the trees makes it impractical and economically unfeasible to conduct an independent examination creates a paradox in the logic of the motion judge's decision. The respondents' entire action was based upon their claim that the tree inventory attached to the APA was a literal representation of the number of saleable trees. Therefore, a finding that it is not practical to achieve such a count supports the appellants' argument that a warranty or representation of the number of saleable trees could not reasonably have been intended.
(2) Yes. The Court first emphasizes that the motion judge's negligent misrepresentation finding was accompanied by no actual analysis. Specifically, it was not clear whether that finding was premised on pre-contractual representations made during negotiations, or arose from a belief that breach of a contractual representation automatically sustains a negligent misrepresentation tort claim.
The Court expanded on this finding by stating that neither theory of liability could succeed. The "entire agreement" clause in the APA ensures that any pre-contractual misrepresentations cannot sustain a finding of negligent misrepresentation. Additionally, the finding that the tree inventory was not a contractual representation bars any claim that it is nonetheless a tortious misrepresentation.
[van Rensburg, Hourigan and Huscroft JJ.A.]
P.R. Jervis and G. Nayerahmadi, for the appellant
Levine and N. Rozario, for the respondent
Keywords: Lease, Roof Equipment, Solar Generation System, Right of Access, Contractual Interpretation, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53
The appellant, Nissa Corporation ("Nissa"), inherited a lease between the respondent, Enviro Park Solar Ltd., (the "Tenant") and 1809765 Ontario Limited ("180 Ontario"), the original landlord, when it purchased two properties in Napanee, 61A and 60A Enviro Park Lane ("61A" and "60A") from the Business Development Bank of Canada, the mortgagee in possession of the property. The lease governed the rooftop and certain rights of way at 61A for the purpose of operating a solar power generation project. The Tenant and 180 Ontario were both controlled by Karl Hollett when the lease was entered into.
Nissa disputed the validity of the lease and the Tenant brought an application seeking declarations that: (i) the lease was effective and binding on the parties to the lease and their successors; (ii) the Tenant was the owner of certain equipment on the premises; and (iii) Nissa had wrongly prevented the Tenant from accessing the property. Nissa took the position that the roof lease had been terminated prior to its purchase of the property, or in any event, after the expiry of the cure period. All three declarations were granted in November 2017, along with a damages award due to Nissa's failure to allow the Tenant to access the property and resulting loss of solar power production.
Nissa brought a second application, taking the position that the manner in which the solar generation system had been installed did not comply with the terms of the lease and that additional rent was therefore owing. The application judge ordered that Nissa was required to maintain the Tenant's connection to the local electrical utility system via the transformer in the building across the street, at 60A Enviro Park Lane – a building not mentioned in any part of the lease – and that it was not entitled to receive any additional rents for that connection. The application judge ordered, further, that the Tenant had the right to install inverters in the electrical room of the building at 61A.
(1) Did the application judge err by reading a positive covenant into the lease, requiring it to provide the Tenant with access to the transformer at 60A Enviro Park Lane?
(2) Did the application judge err in interpreting the lease as permitting the Tenant to install and operate inverters inside the building at 61A, in essence allowing conduct of the former landlord to overwhelm the express terms of the lease?
Appealed allowed in part.
(1) Yes. The application judge erred in law by reading the lease as requiring that a connection to the transformer at 60A be maintained.
The application judge concluded that although the lease did not refer specifically to 60A, context provided that the Tenant had the right to connect to the electrical utility system via the transformer that was located at 60A. She stated the solar project was central to the lease, as demonstrated by the provision in s. 5(a) that the Tenant satisfy itself of the ability to connect to the electrical utility system as a Tenant's condition in the lease.
The Court noted the application judge's focus on s. 6(d), which gives the Tenant a right to make necessary connections to the local electrical utility system, and s. 11(b), which provides that the landlord covenants "not to initiate or conduct or carry on maintenance or other activities" that it knows or reasonably should know would adversely affect the solar energy project. The Court explained that the application judge treated ss. 6(d) and 11(b) as extending the leasehold interest to include 60A, but in doing so she failed to give effect to all of the relevant provisions in the lease, including the definitions of Property, Building, Roof, Roof Area and Project. These definitions operate to clearly limit the leasehold interest to 61A.
Additionally, the Court held that the negative language in s. 11(b) precluding the Landlord from engaging in activities that adversely affect the solar energy project cannot be construed as creating an easement, right-of-way or other interest in land not subject to the lease. The application judge erred in relying on the language of this negative covenant to enlarge the description of the leasehold interest to include 60A, despite the definitions that clearly limit the leasehold interest to 61A.
(2) No. The application judge's interpretation of the lease as permitting the Tenant to install inverters inside the building at 61A reveals no error and is entitled to deference.
The application judge had concerns about the reliability of Mr. Hollett's evidence, but ultimately rejected it on the basis of her finding that it went beyond what Sattva permitted. She made no error in doing so. Although in the unusual circumstances of this case the lease was entered into by related corporations, both of which were controlled by Mr. Hollett, his affidavit is evidence about the subjective intentions of the parties, and is impermissible on this account. It was also opinion evidence as to how the lease ought to be interpreted. The application judge provided cogent reasons in support of her conclusion rejecting the argument that s. 2(b) does not permit inverters to be installed anywhere other than the Roof. By its terms, s. 2(b)(i) provided that Connecting Equipment, which included inverters, may be connected in places other than the Roof. The language of s. 2(b) was very broad and included provisions designed to facilitate the operation of a solar power system, which necessarily involved the connection of the solar panels on the Roof to equipment that exited the Building in order to connect to the electrical utility system. Thus, the application judge interpreted the right of way broadly rather than narrowly – as more than simply a right of access to the Roof.
[Lauwers, van Rensburg and Trotter JJ.A.]
D.J. Wyjad, for the appellants
M.M. Miller, for the respondents
Keywords: Real Property; Public Roads; Doctrine of Dedication and Acceptance; Doctrine of Neighbourly Tolerance; Affidavit Evidence; Contradictory Evidence; Municipal Act, RSO 1990, c. M.45; Reed v Town of Lincoln (1974), 6 OR (2d) 391 (CA).
In 2009, the appellants purchased two parcels of land in an unorganized township, meaning that it has no municipal government. Their land was only accessible by a road that is partially on public land and partially on private land. As a condition of the sale, the appellants were to acquire written permission from the owners of the private roadway (the respondents) for access, but they never obtained such permission and waived the condition.
The appellants sought a declaration that the road is a public highway, or in the alternative that it is a common road or an access road and an injunction preventing the respondents from closing or barricading the road.
The claim that the road had become a public road was dismissed by the motion judge. The appellants relied on s. 261 of the Municipal Act, which in essence states that when a road is built using public funds or public labour, or if the owner of the road designates it for public use, the road becomes a public road. The appellants argued all three of these possible criteria before the motion judge but all the arguments were rejected.
The appellants only appeal on the third argument, the dedication and acceptance argument.
(1) Did the motion judge err in finding that the possibility that the province may become an owner through dedication and acceptance militated against a finding of a public road by dedication and acceptance?
(2) Did the motion judge err in finding that the relationship between the respondents and the road was one of 'neighbourly tolerance' not of dedication and acceptance?
(3) Did the motion judge fail to consider or misunderstand affidavit evidence?
(4) Did the motion judge err in classifying the varying affidavit evidence as contradictory?
(1) No. The discussion of the province's potential ownership was only brought up after a conclusion was reached by the motion judge that dedication and acceptance had not been made out on the evidence. Since this discussion did not inform the conclusion of the motion judge, it is not appealable and so the court dismissed this issue without further discussion.
(2) No. Neighbourly tolerance is the idea that where a claimant proves the owner of a private road had an intention to dedicate the road to the public, and this intention is then carried out and accepted by the public, the road will become a public one.
The concept of 'neighbourly tolerance' was introduced in Reed. In that case, the judge stated that an intention to dedicate a road to public access should not be readily inferred from use of the road by members of the public, particularly in rural communities where normal road infrastructure is not present. In cases like that, it is more likely a courtesy, or a neighbourly tolerance rather than an intention to dedicate.
While Reed is distinguishable on its facts, the court was satisfied that the motion judge considered the history of use of the road and was not satisfied that the use went beyond neighbourly acceptance. There is nothing in the jurisprudence that suggests a prolonged period of use indicates an intention to dedicate. While it may be a factor, it is not determinative and the motion judge made no error in his finding on the issue.
(3) No. The argument on this point related to evidence of the original land owner of all the lands in the area. Over time, he parcelled off the land to various owners (including the respondents). At each of these sales, he indicated the road was a public road. The respondents, upon purchasing the land, sought an easement for access. The Court found that this action indicated it was not a public road otherwise an easement would not have been needed. The initial owner also had options available to him to expressly declare the road public but chose not to do so. He was a Roads Commissioner in the area and so was well aware of his options but chose not to pursue them. The appellants submit that this, along with other similar evidence on the issue was misunderstood by the judge and wrongly dismissed.
The Court was satisfied with the motion judge's assessment of the evidence and found no clear or overriding error to warrant appellate intervention on the finding of fact.
(4) No. The appellants submitted that the motion judge erred in classifying certain evidence as contradictory as it related to the determination of an intent to dedicate. They also submit the judge weighed certain pieces of evidence too heavily in his assessment. The court dismissed this argument as it was essentially a finding of fact. Further, they agreed with the classification of the evidence as contradictory.
Regarding the question of placing too much weight on certain evidence, the Court found the motion judge's decision was not determined by the evidence in question, but was merely one of the factors considered in arriving at the decision. There was no error to override.
[Brown, Roberts and Zarnett JJ.A.]
S.K. Multani, for the appellant
R.M. Gordner, for the respondent
Keywords: Family Law, Child Support, Motion to Vary Child Support Order, Retroactive Reduction in Child Support, Three-Year Rule, Date of Effective Notice, Divorce Act, R.S.C. 1985 c. 3, s. 17(1), Federal Child Support Guidelines, s. 14(c), D.B.S. v. S.R.G., 2006 SCC 37, Gray v. Rizzi, 2016 ONCA 152
The appellant appeals the motion judge's order allowing the respondent's request under s. 17(1) of the Divorce Act, R.S.C. 1985 c. 3, to vary and retroactively reduce a 1996 child support order. Respondent seeks leave to cross-appeal from the cost order awarded to the appellant.
The parties were married in 1983 and had two daughters, in 1988 and 1989, respectively. The parties separated in 1994 and were divorced in 1996. The parties' divorce judgment provided for custody of the parties' two daughters to the appellant and required the respondent to pay child support in the amount of $115 per week per child. The respondent's child support obligations ended in 2012 when the children ceased to be "children of the marriage" under the Divorce Act.
However, by 2012, the respondent had fallen into substantial arrears of child support. While his taxable income was in decline from 1997 onwards, he did not commence a motion to change the order with respect to his child support obligations until November 2016. By this time, the arrears with interest amounted to more than $170,000. He made few payments and the Family Responsibility Office was required to compel payment of the respondent's support obligations.
From 2001 to 2016, the respondent left Canada without notifying the Family Responsibility Office of his whereabouts and income during his absence.
At the respondent's November 2016 motion to vary the original order, the motion judge relied on s. 14(c) of the Federal Child Support Guidelines. The motion judge found that the coming into force of the Guidelines in 1997, subsequent to the original child support order, constituted a "change of circumstances," which permitted a variation order under s. 17(4) of the Divorce Act. As such, the motion judge recalculated the arrears and reduced them to $41,642.
(1) Did the motion judge err in failing to apply the principles articulated in D.B.S. v. S.R.G., 2006 SCC 37 and Gray v. Rizzi, 2016 ONCA 152?
Yes. The Court began its analysis by finding that the motion judge was correct in determining that the enactment of the Guidelines constituted a change in circumstances that permitted the respondent to seek a variation. However, the motion judge made a critical error in concluding that the respondent was entitled "as of right" to a retroactive reduction extending years into the past without any consideration of the principles set out in D.B.S. and Gray, including the application of the "three-year rule".
The factors articulated by the Supreme Court in D.B.S. were intended to serve as general principles applicable, with appropriate adaptation, to retroactive support variations. The Court emphasized that these principles apply irrespective of whether the variation order is sought for a retroactive decrease or increase in the quantum of child support.
In Gray, the Court clarified that the four factors governing retroactive support orders identified in D.B.S., subject to exceptional circumstances, should be adapted to apply to applications to decrease support retroactively:
- Whether there was a reasonable excuse as to why a variation in support was not sought earlier;
- The conduct of the payor parent;
- The circumstances of the child; and
- Any hardship occasioned by a retroactive award
The Court in Gray also endorsed the general rules from D.B.S. that the date of effective notice should serve as the date to which the award should be retroactive and that it usually will be inappropriate to make a support award retroactive to a date more than three years before the formal notice was given ("Three-Year Rule").
In specific cases of requests to retroactively reduce child support, the Court in Gray identified two overarching considerations. The first is that the best interests of the child is the paramount issue. Second, there must be a distinction made between requests for a reduction based on a current inability to pay, and arrears arising from a change in financial circumstances that affected the payor's ability to make the payments as they became due. The former case will generally not result in a reduction unless the payor can demonstrate, on a balance of probabilities, that he or she cannot and will not ever be able to pay the arrears.
Finally, the Court in Gray set out seven key factors of the D.B.S. analysis to guide a court in deciding whether to grant retroactive relief, the date of retroactivity, and the appropriate quantum of relief. The factors are as follows:
- The nature of the obligation to support, whether contractual, statutory or judicial;
- The ongoing needs of the support recipient and the child;
- Whether there is a reasonable excuse for the payor's delay in applying for relief;
- The ongoing financial capacity of the payor and, in particular, his or her ability to make payments towards the outstanding arrears;
- The conduct of the payor, including whether the payor has made any voluntary payments on accounts of arrears, whether he or she has cooperated with the support enforcement authorities, and whether he or she has complied with obligations and requests for financial disclosure from the support recipient;
- Delay on the part of the support recipient, even a long delay, in enforcing the child support obligation does not, in and of itself, constitute a waiver of the right to claim arrears; and
- Any hardship that may be occasioned by a retroactive order reducing arrears or rescinding arrears, or by an order requiring the payment of substantial arrears
In light of these factors, the Court found that the respondent was not entitled to a retroactive variation order more than three years from November 17, 2016, the date he commenced his motion.
The respondent failed to make full and accurate financial disclosure. The respondent has been, at best, a recalcitrant payor who over 23 years made few support payments, particularly when he was absent from the country for 15 years. Through his conduct, the respondent has placed a substantial financial burden on his family.
The respondent has not discharged his onus to explain his significant failure to make support payments and his delay in proceeding with his application to vary. Outside of a 1998 request to the appellant to consider a reduction of his support obligations, which was rejected, the respondent took no steps to further his request to reduce his obligations between 1998 and 2016. In short, the respondent unreasonably failed to do anything for 18 years.
[Brown J.A. (Motions Judge)]
Zvulony, for the appellants
Barton, for the respondents
Keywords: Defamation, Security for Costs on Appeal, Frivolous, Vexatious, Automatic Stay, Rules of Civil Procedure, r. 63.01(5), r. 61.06(1)(a)(b)(c), r. 56.01, r. 56.01(1)(d)(f), Libel and Slander Act, s. 12
The appellants, Health Genetic Center Corp. o/a Health Genetic Center and Yuri Melekhovets, brought a defamation action against the respondents, Peter Aldhous and Reed Business Information Ltd. The appellants alleged that an article in the New Scientist Magazine that questioned the reliability of a blood paternity test they marketed defamed them. After a 13-day hybrid trial, the trial judge dismissed their action and awarded costs to the respondents in the amount of $1,478,766.64. The appellants appeal the dismissal of their action and the award of costs.
Prior to trial, the appellants paid into court $300,000 as security for costs. The respondents now move for an order requiring the appellants to pay more: (i) $85,000 as security for the costs of the appeal; and (ii) $1,178,766.64 as security for the costs awarded at trial. Alternatively, the respondents seek an order lifting the automatic stay of the cost award pursuant to r. 63.01(5) of the Rules of Civil Procedure. The respondents contend security for costs should be ordered for two main reasons: (i) the appeal is frivolous and vexatious; and (ii) the appellants have insufficient assets to pay the costs of the appeal and the trial. The respondents rely upon a combination of rr. 61.06(1)(a), (b) and (c), r. 56.01, including rr. 56.01(1)(d) and (f), and s. 12 of the Libel and Slander Act.
(1) Should the respondents be granted an order for security of costs?
(2) Should the automatic stay under rule 63.01(5) in respect of the trial cost award be lifted?
Motion dismissed. Appeal allowed in part for costs.
(A) The respondents did not establish the elements set out in r. 61.06(1)(a). An order for security of costs on appeal under r. 61.06(1) is not a routine order. Yaiguaje v. Chevron Corporation, 2017 ONCA 827 summarizes the principles governing a motion for security for costs on appeal, as articulated in Pickard v. London Police Services Board, 2010 ONCA 643. Rule 61.06 is permissive, not mandatory. In an appeal, there is no entitlement to an order for security for costs. Even where the requirements of the rule have been met, a motion judge has discretion to refuse to make the order. The "overarching principle to be applied to all the circumstances is the justness of the order sought".
In ascertaining whether "there is good reason to believe that the appeal is frivolous and vexatious", the court need not reach a definitive conclusion. The case law indicates that in order to satisfy the "frivolous and vexatious" element of r. 61.06(1)(a), the moving party must demonstrate two matters. First, the moving party must show that there is "good reason" to believe that the appeal appears to be devoid of merit. Second, the moving party must demonstrate that there is something that supports the conclusion that the appeal is "vexatious" in the sense that it is taken to annoy or embarrass the respondent or has been conducted in a vexatious manner.
The Court determined that the appeal was not vexatious. The appellants engaged the process of the court to seek a remedy for what they considered to be untruthful and damaging statements about their reputation, as was their statutory right. The Court was not persuaded that the appeal was devoid of merit.
(B) On its face, s. 12(1) deals with security for costs in an action, not on an appeal. Whether the language of r. 61.06(1)(b) is sufficient to make s. 12(1) applicable to an appeal is not a matter on which the Court needed to make any definitive pronouncement for the simple reason that the Court regarded that statutory language as functionally equivalent to r. 61.06(1)(a)'s use of the terms "frivolous" and "insufficient assets". Since the respondents have not met those requirements of r. 61.06(1)(a), that finding applies equally to their claim based on s. 12 of the Libel and Slander Act through r. 61.06(1)(b).
(C) The Court saw no "other good reason" to order security for the costs of the appeal, considering the appellant had disclosed the location and value of his residential realty in Ontario, filed copies of notices of assessment for his personal tax returns and financial statements of the corporate appellant, paid all costs ordered in this proceeding (save for the award of trial costs in respect of which they seek leave to appeal), and posted $300,000 by way of security for costs.
(2) No. The court must be satisfied that, taking all circumstances into account, it would be in the interests of justice to lift the stay. Recent jurisprudence indicates that a court should have regard to three principal factors: (i) the financial hardship to the respondent if the stay is not lifted; (ii) the ability of the respondent to repay or provide security for the amount paid; and (iii) the merits of the appeal. The stay has been lifted where a plaintiff is suffering financial hardship, particularly in personal injury and family law cases, or has a well-founded fear that the appellant is dissipating or divesting assets to avoid payment. However, even where such factors are present, the plaintiff must satisfy the court that the prejudice of maintaining the stay outweighs the risk of subjecting the appellant to the uncertainties of recovery if the appeal is successful.
First, the respondents did not provide evidence that they would suffer financial hardship in the event the automatic stay is not granted. The respondents filed three affidavits from two of their lawyers; none contained evidence of any financial hardship to the respondents in the event the stay is not lifted.
Second, the respondents did not establish the conditions set out in rr. 61.06(a), (b) or (c) for entitlement to an order for security of costs. Had they met those conditions and further demonstrated that the justice of the case supported ordering security for costs, the respondents could then submit that security for costs should cover not only the costs of the appeal, but also the "costs of the proceeding": r. 61.06(1). Since they have not met those conditions under r. 61.06(1), the Court strongly questioned whether it remains open to them to seek security for "the costs of the proceeding" by asking the court to allow them to execute on the costs judgment that is the subject of an appeal. The Court was not prepared to grant them relief via an indirect route when they did not satisfy the conditions of the direct route.
SHORT CIVIL DECISIONS
[Hourigan, Paciocco and Fairburn JJ.A.]
Slan, for the respondent
Keywords: Family Law, Joint Custody, Child Support Payments, Sale of the Matrimonial Home, Equalization, Appeal for Delay, Failure to Comply with Terms, Jurisdiction, Reasonable Costs
[Brown J.A. (Motions Judge)]
Battick, for the appellant
Sheppard, for the respondent
Keywords: Motion to Extend Time to Appeal, Landlord and Tenant Board, Reid v. College of Chiropractors of Ontario, 2016 ONCA 779, Residential Tenancies Act, 2006, S.O. 2006, c. 17, s. 5(2), s. 210
[Huscroft, Trotter and Zarnett JJ.A.]
J. Kennaley, for the appellant
Rance, for the respondent
Keywords: Appeal Book Endorsement
[Hourigan, Paciocco and Fairburn JJ.A.]
Turton, for the appellant
Rotenberg, for the respondent
Keywords:Appeal Book Endorsement
[Hourigan, Paciocco and Fairburn JJ.A.]
Sidney, for the appellant
Zeitz, for the respondent
Keywords: Damages, Life Insurance Policy, Negligence, Summary Dismissal of the Action, Capacity to Bring Claim, Ancillary Orders, Motion to Grant Leave, Bankruptcy and Insolvency Act, Courts of Justice Act
[Brown J.A. (Motions Judge)]
Achtemichuk, for the appellant
Weiler, for the respondent
Keywords: Order for Interim Release Pending New Trial, Assault with a Weapon, Aggravated Assault, Assault, Bail Application, Immigration Detention, Pre-Trial Release, Criminal Code, s. 679(7.1), s. 520, R v. Manasseri, 2017 ONCA 226, Concurrent Jurisdiction
[Sharpe, Brown and Roberts JJ.A.]
J.T. Sloan, for the appellant
Phillips and A. Mamikon, for the respondent
Keywords: Moot appeals; Habeas Corpus ; Civil vs Criminal Proceedings; Costs; Corrections and Conditional Release Act, S.C. 1992, c. 20 Mission Institution v. Khela, 2014 SCC 24,  S.C.R. 502; R. v. Campbell, 2010 ONSC 6619; Oliver v. Attorney General (Canada), 2010 ONSC 6431; Re Ange,  3 O.R. 153 (C.A.)
[Doherty, MacPherson and Benotto JJ.A.]
Xynnis, for the appellant
Whitford, for the respondent
Keywords: Criminal Law, Sexual Assault, Invitation to Sexual Touching, Sexual Interference, Jury Trial, Jury Instructions, Evidence, Credibility, Consent, Acquittal, Criminal Code, s. 653.1, R. v. Pittiman, 2006 SCC 9, R. v. A.W.B., 2015 ONCA 185
[Hoy A.C.J.O., Hourigan and Paciocco JJ.A.]
Cunningham, for the appellant
Schwartz, for the respondent
Keywords: Criminal Law, Fraud Over $5,000, Self-Represented, State-Funded Counsel, Fair Trial, Rowbotham Application, Evidence, Criminal Code, ss.686(2), 686(8) Canadian Charter of Rights and Freedoms, s.11(b), Criminal Proceeding Rules for the Superior Court of Justice (Ontario), SI/2012, R. v. Rowbotham (1998), 25 O.A.C. 321 (C.A.), Browne v. Dunn (1893), 6 R. 67 (H.L.), R. v. Jordan, 2016 SCC 27, R. v. Rabba (1991), 3 O.R. (3d) 238 (C.A.), R. v. Pearson,  3 S.C.R. 620
[Juriansz, Watt and Harvison Young JJ.A.]
Furgiuele, for the appellant
Derwa, for the respondent
Keywords: Criminal Law, Possession of a Firearm, Breach of Firearm Prohibition Order, Search Warrant, Informant, Reasonable Expectation of Privacy, Canadian Charter of Rights and Freedoms, ss.8, 24(2), R v. Debot,  2 S.C.R. 1140, R v. Lowe, 2018 ONCA 110, R v. Edwards,  1 S.C.R. 128, R. v. Jones, 2017 SCC 60
[Brown, Miller and Trotter JJ.A.]
P.J. Ducharme, for the appellant
Webb, for the respondent
Keywords: Impaired Operation of a Motor Vehicle Causing Death, Operating a Motor Vehicle with over 80 mg of Alcohol per 100 ml of Blood, Driving While Impaired Causing Bodily Harm, Charter of Rights and Freedoms, s. 8, s. 10(b), Right to Counsel, Warrantless Seizure, Blood Samples, R v. Culotta, 2018 SCC 57
[Sharpe, Simmons and Fairburn JJ.A.]
Derstine and R. Remigio, for the appellant
Papadopoulos, for the respondent
Keywords: Sexual Assault, First Degree Murder, Identity, Misapprehension of Evidence, Jury Instruction, Circumstantial Evidence, R v. Griffin, 2009 SCC 28, R v. Villaroman, 2016 SCC 33, Post-Offence Conduct
[Doherty, MacPherson and Benotto JJ.A.]
MacIsaac and S.G. Cameron, for the appellant
Lai, for the respondent
Keywords: Fraud, Involuntary Guilty Plea, Intellectual Disability, Uninformed Guilty Plea, Miscarriage of Justice, R v. Quick, 2016 ONCA 95, Criminal Code, s. 686(8)
[Watt, Tulloch and Lauwers JJ.A.]
Pillay, for the appellant
Egan, for the respondent
Keywords: Criminal Law, Trafficking Cocaine, Surveillance, Search Incident to Arrest, Circumstantial Evidence, Reasonable Doubt, Reasonable Inference, Sufficiency of Reasons, R v. Villaroman, 2016 SCC 33
[Feldman, van Rensburg and Huscroft JJ.A.]
Olusoga, acting in person
Dineen, duty counsel
Hotke, for the respondent
Keywords: Criminal Law, Sexual Assault, Threatening Death, Breach of Solicitor-Client Privilege, Rule in Browne v. Dunn, Adverse Inference, Criminal Code, s. 683(1)(a)(iii), Appearance of Unfairness, Public Confidence in the Administration of Justice, Miscarriage of Justice
[Watt, Tulloch and Lauwers JJ.A.]
Moustacalis and C. Cole, for the appellant
Brienza, for the respondent
Keywords: Criminal Law, Fraudulent Transactions; Doctrine of Willful Blindness; Actual Knowledge
[Doherty, MacPherson and Benotto JJ.A.]
Marshman, for the appellant
Shaikh, for the respondent
Keywords: Criminal Law; Sexual Assault of a Minor; Character Evidence;Collusion; Uneven Scrutiny of Evidence
[Doherty, MacPherson and Benotto JJ.A.]
M.J. Webb, for the appellant
Gilliam, for the respondent
Keywords: Criminal Law; Drug-Offences; Possession for the Purpose of Tracking; Possession of Proceeds of Crime; Illegal Search and Seizure; Judicial Summary of Information to Obtain a Search Warrant; R v Garofoli,  2 SCR 1421; Fitness of Sentence; Validity of a Search Warrant; R v Reid, 2016 ONCA 524
ONTARIO REVIEW BOARD
[Sharpe, Brown and Roberts JJ.A.]
F. Embry, for the appellant
Shin, for the respondent, Attorney General of Ontario
A. Zampronga, for the respondent, Southwest Centre for Forensic Mental Health Care St. Joseph's Health Care London
Keywords: Ontario Review Board, Not Criminally Responsible, Theft Under $5,000, Conditional Discharge, Criminal Code, s. 672.54, Winko v. British Columbia (Forensic Psychiatric Institute),  2 S.C.J. No. 31, Abdikarim (Re), 2017 ONCA 793, Beam (Re), 2018 ONCA 532
[Doherty, MacPherson and Benotto JJ.A.]
S.F. Gehl, for the appellant
Teed, for the respondent
Keywords: Ontario Review Board, Risk of Serious Harm to the Public, Conditional Discharge
[Watt, Tulloch and Lauwers JJ.A.]
Mudry, for the appellant
Paine, for the respondent Attorney General of Ontario
Blackburn, for the respondent Person in Charge of Waypoint Centre for Mental Health Care
Keywords: Ontario Review Board, First Degree Murder, Criminal Code, s. 672.54, s. 672.81
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