Good evening.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of March 7, 2022.

In Ernst & Young Inc. v. Aquino, the court upheld the application judge's decision to grant the orders the Bondfield monitor and trustee in bankruptcy requiring payments made at undervalue to be repaid.  In coming to its decision, the Court applied the corporate attribution doctrine.

In Crosslinx Transit Solutions General Partnership v. Ontario (Economic Development, Employment and Infrastructure), the Court allowed an appeal from the application judge's determination that COVID-19 safety protocols imposed on the contractor building the Eglinton Crosstown line at the beginning of the pandemic triggered an inquiry under the construction contract that might result in an extension of time to complete the project (thereby avoiding significant financial penalties arising from the delay). In allowing the appeal, the Court noted that the project was already a year behind schedule before the pandemic began.

In Thermal Exchange Service Inc. v. Metropolitan Toronto Condominium Corporation No. 1289,  the Court applied the "appropriate means" test under ss. 5(1)(a)(iv) of the Limitations Act, 2002 and related case law to a collection matter. The assurances of the debtor (a condo corp) that the invoices for HVAC repairs would be honoured after collection from the individual unit owners was analogized to the cases where a plaintiff postpones bringing an action because of assurances from a defendant who has a superior understanding of the problem that they will remedy the matter, such that litigation will not be necessary. The condo corp unsuccessfully argued on appeal that it was merely stringing the creditor along, and that this did not extend the limitation period.

In Hunter v. King, an MVA case, the Court held the trial judge had the authority to send a jury selected in Brampton to a trial heard in Kitchener.

Continental Casualty Company v. Chubb Insurance Company of Canada  is a lengthy and complicated decision involving a SABS priority dispute.

In Cheung v. Samra, the Court allowed the appeal from a trial judge's judgment in a medmal case that ignored the jury's verdict. In answering questions put to it by the trial judge, a jury is not obligated to provide detailed answers and reasons for those answers.

Other topics included extension of time to perfect appeals, striking pleadings for want of jurisdiction in an employment dispute covered by a collective bargaining agreement, and agreements of purchase and sale of land.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Crosslinx Transit Solutions General Partnership v. Ontario (Economic Development, Employment and Infrastructure), 2022 ONCA 187

Keywords: Contracts, Interpretation, Construction, COVID-19, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 134(1) and (4), Occupational Health and Safety Act, R.S.O. 1990, c. O.1, R. v. Clark, 2005 SCC 2, Housen v. Nikolaisen, 2002 SCC 33, Crosslinx Transit Solutions General Partnership v. Ontario Infrastructure and Lands Corporation, 2021 ONSC 5905, Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447

Thermal Exchange Service Inc. v. Metropolitan Toronto Condominium Corporation No. 1289 , 2022 ONCA 186

Keywords: Contracts, Construction, Debtor-Creditor, Civil Procedure, Limitation Periods, Discoverability, Appropriate Means, Assurances, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, ss. 5(1)(a)(iv) and 5(2), Presley v. Van Dusen, 2019 ONCA 66, Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325

Hunter v. King , 2022 ONCA 190

Keywords: Torts, MVA, Civil Procedure, Jury Trials, Place of Trial, Jury Selection, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 14, Jurors Act, R.S.O. 1960, c.199, Rules of Civil Procedure, Rule 1.07(4), R. v. Singh, 2018 ONSC 1532, Ontario v. Criminal Lawyers' Association of Ontario, 2013 SCC 43, Louis v. Poitras, 2021 ONCA 49, Kapoor v. Kuzmanovski, 2018 ONSC 4770, R. v. Kapoor (1990), 52 C.C.C. (3d) 41 (Ont. H.C.), R. v. Parmar et al. (1987), 61 O.R. (2d) 132 (Ont. H.C.), Eastside Pharmacy Ltd. v. British Columbia (Minister of Health), R. v. Reid, 2016 ONCA 524, 2019 BCCA 60, Letourneau v. Ottawa Bronson Construction Ltd. et al., [1970] 1 O.R. 24, Bonello v. Gores Landing Marina (1986) Ltd., 2017 ONCA 632 Gordon D. Cudmore, Civil Evidence Handbook, loose-leaf, 4th ed. (Toronto: Thomson Reuters Canada Ltd., 2022)

Continental Casualty Company v. Chubb Insurance Company of Canada , 2022 ONCA 188

Keywords: Insurance, Statutory Accident Benefits, Priority Dispute, Arbitration, Standard of Review, Insurance Act, R.S.O. 1990, c.I.8 s. 268, Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10, O. Reg. 283/95 (Disputes Between Insurers), s. 2.1(6), Arbitration Act, 1991, S.O. 1991, c. 17, s. 7(1), O. Reg. 283/95, Automobile Insurance Rate Stability Act, 1996 (Bill 59), Axa Boreal Assurances v. Co-operators Insurance Co. (2000), 50 0.R. (3d) 395 (C.A.), The Dominion of Canada General Insurance Company v. Federated Insurance Company of Canada (Arbitrator Densem – October 31, 2012), The Dominion of Canada General Insurance Company v. Lombard Insurance Company(McLean), 2013 CarswellOnt 19270, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1, ACE INA Insurance v. Co-operators General Insurance Company (2009), 79 M.V.R. (5th) 312 (Ont. S.C.), Kingsway General Insurance Company v. Gore Mutual Insurance Company, 2012 ONCA 683, Echelon General Insurance Company v. Co-operators General Insurance Company, 2015 CarswellOnt 20908, Jevco Insurance Company v. Chieftain Insurance Company (Arbitrator Samworth – March 11, 2016), Co-operators General Insurance Company v. Certas Home & Auto Insurance Company (Arbitrator Cooper – April 2019)

Cheung v. Samra , 2022 ONCA 195

Keywords: Torts, Negligence, MedMal, Standard of care, Causation, Trials, Jury Verdicts, Judgments, Rules of Civil Procedure, Rule 52.08, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 108(4), (5) and (6), Stilwell v. World Kitchen Inc., 2014 ONCA 770, McLean v. Knox, 2013 ONCA 357, R. v. Corbett, [1988] 1 S.C.R. 670; R. v. Suzack (2000), 30 C.R. (5th) 346 (Ont. C.A.), Wade v. C.N.R., [1978] 1 S.C.R. 1064, Surujdeo v. Melady, 2017 ONCA 41, Lang v. McKenna (2000), 135 O.A.C. 304, Jarbeau v. McLean, 2017 ONCA 115, Teskey v. TTC (2003), 3 C.P.C. (6th) 181, Salter v. Hirst, 2010 ONSC 3440, aff'd 2011 ONCA 609, ter Neuzen v. Korn, [1995] 3 S.C.R. 674

Donovan v. Waterloo (Police Services Board) , 2022 ONCA 199

Keywords: Labour and Employment, Collective Bargaining Agreements, Human Rights, Discrimination, Settlements, Civil Procedure, Striking Pleadings, Jurisdiction, No Reasonable Cause of Action, Frivolous, Vexatious and Abuse of Process, Reasonable Apprehension of Bias, Police Services Act, R.S.O. 1990, c. P.15, Rules of Civil Procedure, r. 21.01(3)(a), 21.01(1)(b), 21.01(3)(d), 59.06(1), 37.13(2)(a), Donovan v. (Waterloo) Police Services Board, 2019 ONSC 818, Donovan v. Waterloo Regional Police Services Board, 2019 ONCA 845, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, Desgrosseillers v. North Bay General Hospital, 2010 ONSC 142, Skof v. Bordeleau, 2020 ONCA 729, St. Anne Nackawic Pulp & Paper v. CPU, [1986] 1 S.C.R. 704, McCracken v. Canadian National Railway Company, 2012 ONCA 445

Ernst & Young Inc. v. Aquino , 2022 ONCA 202

Keywords: Bankruptcy and Insolvency, Transfers Undervalue, Fraudulent Conveyances, Monitors, Trustees in Bankruptcy, Corporations, Doctrine of Corporate Attribution, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 96, 97, Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36, s. 36, Rules of Civil Procedure, Rule 38.10(b), Fraudulent Conveyances Act, R.S.O. 1990, c. F. 29, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, Freeman v. Pope (1870), L.R. 5 Ch. App 538, Urbancorp Toronto Management Inc. (Re), 2019 ONCA 757, Purcaru v. Seliverstova, 2015 ONSC 6679, Montor Business Corp. (Trustee of) v. Goldfinger, 2013 ONSC 6635, Juhasz Estate v. Cordiero, 2015 ONSC 1781, R. v. Théroux, [1993] 2 S.C.R. 5, Canadian Dredge & Dock Co. v. The Queen, [1985] 1 S.C.R. 662, DBDC Spadina Ltd. v. Walton, 2018 ONCA 60, Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25, Bulut v. Brampton (City), 48 O.R. (3d) 108 (C.A.), Bhasin v. Hrynew, 2014 SCC 71, C.M. Callow Inc. v. Zollinger, 2020 SCC 45, CWB Maxium Financial Inc v. 2026998 Alberta Ltd, 2021 ABQB 137, Hutchingame Growth Capital Corporation v. Independent Electricity System Operator, 2020 ONCA 430, Deloitte & Touche v. Livent Inc.(Receiver of), 2017 SCC 63, King Insurance Finance (Wines) Inc. v. 1557359 Ontario Inc. (Willowdale Autobody Inc.), 2012 ONSC 4263

Sabatino v. Posta Ital Bar Inc. , 2022 ONCA 208

Keywords: Corporations, Oppression, Civil Procedure, Appeals, Jurisdiction, Perfection, Extension of Time, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, ss. 248, 255, Jadhav v. Jadhav, 2020 ONCA 19, Issasi v. Rosenzweig, 2011 ONCA 112, Duca Community Credit Union Ltd. v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), Denomme v. McArthur, 2013 ONCA 694, Derakhshan v. Narula, 2018 ONCA 658, Reid v. College of Chiropractors of Ontario, 2016 ONCA 779, Wardlaw v. Wardlaw, 2020 ONCA 286, Sutherland Lofts Inc. v. Peck, 2017 ONCA 803, Henderson v. Henderson, 2014 ONCA 571, Aljawhiri v. Pharmacy Examining Board of Canada, 2019 ONCA 798

Jeff Day Hospitality Inc. v. Heritage Conservation Holdings, Canada, Inc. , 2022 ONCA 201

Keywords: Contracts, Interpretation, Implied Terms, Real Property, Agreements of Purchase and Sale of Land, Purchase Price Abatements, Deficiencies, Ontario Water Resources Act, R.S.O. 1990, c. O.40, s. 53, Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619, Perkins v. Sheikhtavi, 2019 ONCA 925

Short Civil Decisions

Ever Fresh Direct Foods Inc. v. Jamia Islamia Canada Ltd., 2022 ONCA 185

Keywords: Civil Procedure, Dismissal for Delay, Certificates of Pending Litigation

Crown Capital Private Credit Fund v. Mill Street & Co. Inc., 2022 ONCA 194

Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193, Ravelston Corp. (Re) (2005), 24 C.B.R. (5th) 256(Ont. C.A.), James Henry Ting (Re), 2021 ONCA 622

Iqbal v. Mansoor , 2022 ONCA 198

Keywords: Civil Procedure, Costs, Motions, Leave to Appeal, Extension of Time, Orders, Reconsideration, Machado v. Ontario Hockey Association, 2019 ONCA 210

Taylor v. David , 2022 ONCA 200

Keywords: Civil Procedure, Summary Judgment, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 15, Family Law Act, R.S.O. 1990, c. F.3., s. 61(1)

2651171 Ontario Inc. v. Brey , 2022 ONCA 205

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Costs, Rules of Civil Procedure, Rules 49.10(1), 57.01, Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 58 O.R. (2d) 773 (C.A.), Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), Bargman v. Rooney (1998), 30 C.P.C. (4th) 259 (Ont. Gen. Div.), Toronto Dominion Bank v. Leigh Instruments Ltd. (Trustee of), [1998] O.J. No. 4221 (Gen. Div.), Hamilton v. Open Window Bakery Ltd., 2004 SCC 9

1250140 Ontario Inc. v. Bader , 2022 ONCA 197

Keywords: Real Property, Civil Procedure, Limitation Periods, Summary Judgment, Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 23(1), Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74, Equitable Trust v. Marsig, 2012 ONCA 235, Zabanah v. Capital Direct Lending Corp., 2014 ONCA 872

Maio v. Kapp Contracting Inc., 2022 ONCA 196

Keywords: Civil Procedure, Settlements, Pierringer Agreements, Rules of Civil Procedure, Rule 21, Endean v. St. Joseph's General Hospital, 2019 ONCA 181, Taylor v. Canada (Health), 2009 ONCA 487

Ahmed v. DePaulis , 2022 ONCA 206

Keywords: Civil Procedure, Appeals, Non-Attendance, Lawyer of Record, Removal

Khorramshahi v. Iranpour, 2022 ONCA 210

Keywords: Civil Procedure, Motions, Notice of Appeal, Extension of Time, Orders, Rules of Civil Procedure, rr. 3.01(1)(d), 16.01(4)(b)(iv), 61.04(1), Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Bobel v. Humecka, 2021 ONCA 757

CIVIL DECISIONS

Crosslinx Transit Solutions General Partnership v. Ontario (Economic Development, Employment and Infrastructure) , 2022 ONCA 187

[Rouleau, van Rensburg and Roberts JJ.A.]

Counsel:

S. Vogel, P. Wardle, J. Gardner and C. Labiris, for the appellants

M. Sammon, A. Wheeler and J. Chan, for the respondents

Keywords: Contracts, Interpretation, Construction, COVID-19, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 134(1) and (4), Occupational Health and Safety Act, R.S.O. 1990, c. O.1, R. v. Clark, 2005 SCC 2, Housen v. Nikolaisen, 2002 SCC 33, Crosslinx Transit Solutions General Partnership v. Ontario Infrastructure and Lands Corporation, 2021 ONSC 5905, Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447

facts:

The Crosstown LRT project involves the construction and maintenance of a 19-kilometre light rapid transit line of which 10 kilometres will be underground. The Project Agreement (the "Agreement") calls for the construction to be completed by a substantial completion date as defined in Schedule 1 to the Agreement. There are significant penalties if the respondents are unable to meet this substantial completion date. However, the Agreement contains provisions that allow the respondents in certain prescribed circumstances to claim extensions of time and compensation. One of the prescribed circumstances, as per Section 62.1 of the Agreement, is in the case of an "Emergency", which is defined by the Agreement to include "any situation ... (b) which gives rise to an emergency, as determined by any statutory body...".

By the time the Ontario government declared a state of emergency because of the global COVID-19 pandemic in March 2020, the project was already about a year behind schedule. While construction of public infrastructure projects were deemed to be an essential service, the industry saw significant health and safety procedures imposed. The respondents took the position in their correspondence with the appellants that the COVID-19 pandemic was an Emergency that required them to implement additional or overriding procedures that slowed down construction. They urged the appellants to declare an emergency pursuant to s. 62.1(c) of the Project Agreement, to direct the respondents to take "additional and overriding procedures" to protect health and safety pursuant to s. 62.1(c) of the Project Agreement, and thereby initiate a Variation Enquiry under Schedule 22 of the Project Agreement in connection with the additional and overriding procedures. The appellants refused.

The application judge granted judgment declaring that the COVID-19 pandemic was an "Emergency" under the relevant terms of the Project Agreement; that the appellants had required compliance with "additional or overriding procedures in response to the COVID-19 pandemic to protect public health and worker safety"; and that the appellants had a contractual obligation to provide the respondents with a Variation Enquiry. The application judge concluded that the appellants had notified the respondents by means of a March 25, 2020 email that they required compliance with additional and overriding COVID-19 health and safety procedures.

On appeal, the appellants contended that s. 62.1 of the Agreement was not triggered, and that the parties were not required to engage in a Variation Enquiry that could result in an extension of time to substantially complete the project.

issues:

(1) Did the application judge make a palpable and overriding error that the internal March 25, 2020 email notified the respondents under s. 62.1(c) that they required compliance with additional or overriding procedures?

(2) Did the application judge err in focusing on the March 29 protocol, which at its highest prescribed "best practices" and not mandatory measures?

(3) Did the application judge err in his interpretation of the Project Agreement with respect to the parties' contractual allocation of risk?

(4) Did the application judge err in failing to give effect to the respondents' obligation to comply with Applicable Law?

holding:

Appeal allowed.

reasoning:

The Court determined that it was only necessary to consider the question of whether the application judge made a palpable and overriding error in finding that the appellants had, by their March 25, 2020 email, notified the respondents under s. 62.1(c).

(1) Yes.

The standard of review for palpable and overriding error is well-established.

Appellate courts may not interfere with the findings of fact made and the factual inferences drawn by the trial judge, unless they are clearly wrong, unsupported by the evidence or otherwise unreasonable. The imputed error must, moreover, be plainly identified. And it must be shown to have affected the result. "Palpable and overriding error" is a resonant and compendious expression of this well-established norm.

The application judge clearly and obviously erred in finding that the subject email was sent to the respondents. This was an internal email that was never directed or sent to the respondents. The application judge's error was also overriding. Central to the application judge's determination that s. 62.1(c) had been triggered was his finding that the appellants, by the March 25 email, notified the respondents that they required compliance with additional or overriding procedures.

The Court also provided reasons for disagreeing with the respondent's argument that the application judge's finding that they were notified as required by s. 62.1(c) can be supported by substituting the March 25, 2020 internal email with the appellants' April 21, 2020 letter that was sent to the respondents. That is, in this letter, the appellants stated that they did not require any additional and overriding procedures in addition to those the respondents had already undertaken to comply with their health and safety obligations required by law. Further, there was no evidence as to whether the April 21, 2020 letter complied with the notice requirements under s. 61.1(a) of the Agreement.

Thermal Exchange Service Inc. v. Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186

[Doherty, Miller and Sossin JJ.A.]

Counsel:

R. B. Cohen, for the appellant

N. H. Roth, for the respondent

Keywords: Contracts, Construction, Debtor-Creditor, Civil Procedure, Limitation Periods, Discoverability, Appropriate Means, Assurances, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, ss. 5(1)(a)(iv) and 5(2), Presley v. Van Dusen, 2019 ONCA 66, Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325

facts:

From 2002 to 2015, the respondent, Thermal Exchange Service Inc. ("Thermal Exchange"), serviced the HVAC units in the building of the appellant, Metropolitan Toronto Condominium Corporation No. 1289 (the "Condo Corp"), at 168 Simcoe St. in Toronto. Each of Thermal Exchange's invoices stated that payment was due within 30 days from the date of the invoice. However, the Condo Corp typically made payment much later than this – often 300 days later.

Thermal Exchange had several conversations with the Condo Corp's property manager about the outstanding invoices wherein she indicated she "was working on it". In October of 2015, Thermal Exchange thought a demand letter from their lawyer might stir the Condo Corp into action. However, in November of 2016, the property manager advised Thermal Exchange that the Condo Corp was not responsible for paying the invoices, and that "the invoices are charge-backs to the unit owners for payment once they receive the copy of the invoice." Thermal Exchange subsequently brought an action in August of 2017.

Thermal Exchange's understanding was that it was contracting with the Condo Corp rather than the individual unit owners. At trial, the Condo Corp. conceded the contractual relationship, and accepted that but for the limitations defence, it would be liable to pay the invoices. However, at all relevant times the Condo Corp's property manager operated on a different understanding, which was only communicated to Thermal Exchange in 2016.

The Condo Corp's sole defence at trial was that Thermal Exchange brought the action out of time, and the action was barred by the Limitations Act, 2002. The trial judge concluded that Thermal Exchange would not have known a proceeding was an appropriate means to seek a remedy until October of 2015, when it realized it would have to instruct its counsel to commence legal proceedings, and accordingly, the action was not statute-barred. The Condo Corp appealed.

issues:

(1) Did the trial judge err in her application of the legal principles in Presley v. Van Dusen?

(2) Did the trial judge err in finding that the claim was first discoverable as of the date of the demand letter in October 2015?

(3) Did the trial judge err in finding that the running account suspended the commencement of the limitation period?

(4) Did the trial judge err in applying the wrong standard to Thermal Exchange to rebut the presumption under ss. 5(2) of the Limitations Act, 2002?

(5) Did the trial judge err in not considering the defence of laches?

holding:

Appeal dismissed.

reasoning:

(1) No.

Under subsection 5(1)(iv) of the Limitations Act, the trial judge found that the date Thermal Exchange knew that a "proceeding would be an appropriate means to seek to remedy [the loss]" was when they instructed their counsel to send a demand letter in October 2015. Further, the trial judge found that the nature of the commercial relationship between Thermal Exchange and the Condo Corp was that there was a single running account and whenever Thermal received funds from the Condo Corp, it was credited to that account. Accordingly, the trial judge accepted that Thermal Exchange sincerely believed the Condo Corp was dealing in good faith and that the property manager's assurances meant the invoices would eventually be paid.

The trial judge relied on the case of Presley v. Van Dusen, and found that the property manager's assurances were analogous to the class of cases summarized in Presley v. Van Dusen, drawing on Presidential MSH Corp. v. Marr, Foster & Co. LLP, where a plaintiff postpones bringing an action because of assurances by a defendant (who has a superior understanding of the problem) that the defendant can remedy the matter, such that litigation would not be necessary.

The Court held the trial judge's reliance on Van Dusen was not in error. Analogous to the situation in Van Dusen, the Condo Corp created a barrier to Thermal Exchange receiving payment, prevented Thermal Exchange from understanding the nature of the problem, and led Thermal Exchange to believe that it would take care of the problem.

(2) Yes.

The Court held the trial judge erred in finding the limitation period began to run in October 2015 when Thermal Exchange instructed a demand letter to be sent. However, that conclusion did not assist the Condo Corp. The Court held the correct commencement of the limitation period was later, in November 2016, when the Condo Corp informed Thermal Exchange of its position that it was not obligated to pay the invoices.

(3) No.

The Court held the trial judge's finding that the Condo Corp had a running account with Thermal Exchange was supported by the evidence and the practice of batch invoicing, and open to her on the record.

(4) No.

The Condo Corp submitted the trial judge erred in law by applying the wrong standard for Thermal Exchange to meet to rebut the presumption under s. 5(2) (that a plaintiff is presumed to have discovered a claim on the date the act or omission on which the claim is based took place, unless they prove otherwise). The trial judge described the onus as "very low", and the Condo Corp pointed to case law which characterized the onus as "relatively low". The Court held that nothing in the litigation turned on the distinction between the two modifiers.

(5) No.

The Court held the laches argument could not have succeeded given the trial judge's factual findings with respect to the limitation period defence. The trial judge found that it was reasonable for a person in the position of Thermal Exchange to rely on the assurances of the property manager and hold off on commencing an action. Having made that finding, a laches defence was not available.

Hunter v. King , 2022 ONCA 190

[Feldman, MacPherson and Lauwers JJ.A.]

Counsel:

R. Trenker, for the appellant

D. Patton and S. Koljuskov, for the respondent

Y. Ranganathan, for the intervener Attorney General of Ontario

Keywords: Torts, MVA, Civil Procedure, Jury Trials, Place of Trial, Jury Selection, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 14, Jurors Act, R.S.O. 1960, c.199, Rules of Civil Procedure, Rule 1.07(4), R. v. Singh, 2018 ONSC 1532, Ontario v. Criminal Lawyers' Association of Ontario, 2013 SCC 43, Louis v. Poitras, 2021 ONCA 49, Kapoor v. Kuzmanovski, 2018 ONSC 4770, R. v. Kapoor (1990), 52 C.C.C. (3d) 41 (Ont. H.C.), R. v. Parmar et al. (1987), 61 O.R. (2d) 132 (Ont. H.C.), Eastside Pharmacy Ltd. v. British Columbia (Minister of Health), R. v. Reid, 2016 ONCA 524, 2019 BCCA 60, Letourneau v. Ottawa Bronson Construction Ltd. et al., [1970] 1 O.R. 24, Bonello v. Gores Landing Marina (1986) Ltd., 2017 ONCA 632 Gordon D. Cudmore, Civil Evidence Handbook, loose-leaf, 4th ed. (Toronto: Thomson Reuters Canada Ltd., 2022)

facts:

On March 14, 2012, the appellant's vehicle was struck from behind by the respondent's vehicle while stopped at a red light in Brampton. The respondent admitted liability and the issue for trial was damages for loss of income. The jury returned a verdict in favour of the respondent and did not award damages.

The notice of appeal, as amended, raised three grounds: the court lacked authority to send a jury selected in Brampton to a trial convened in Kitchener; the trial judge erred in admitting photographs of the damage to the appellant's vehicle; and the trial judge erred in his instructions to the jury on the appellant's pre-existing medical conditions. The latter two grounds of appeal were later abandoned.

The appellant argued that the jury was not properly constituted because it was selected in Brampton for a Kitchener trial; accordingly, the judgment must be set aside, and a new jury trial convened.

issues:

(1) Did the Court lack authority to send a jury selected in Brampton to a trial covered in Kitchener?

(2) Was an order transferring the trial of an action from one location to another not final but interlocutory and, therefore, leave to appeal on that issue should have been sought from the Divisional Court under s. 19 of the Courts of Justice Act?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court accepted the view expressed in Singh and Kapoor that the optimal arrangement was that the jury was to be selected from the panel drawn from the place the trial is to be heard. But that optimal situation must yield to circumstantial practicalities.

Regional Senior Judge Daley knew the limits of his authority, which he recited in Kapoor. The Court did not accept the interpretation placed upon his language in Kapoor by appellant's counsel, that the only appropriate and lawful course is to conduct the jury selection in the judicial centre where the case is to be tried. The language actually used by Daley R.S.J. was not exhaustive of his lawful authority to deal with local circumstances.

No one was better placed to allocate local court resources than the Regional Senior Judge. The Court declined to second-guess the decision of Daley R.S.J. or that of Trimble J. Indeed, the fresh evidence filed by the Attorney General demonstrated the ongoing challenges faced by local courts in holding jury trials where there are space restrictions posed by pandemic distancing rules, although this case preceded the pandemic.

Alert to the fact that there had been no objection to the trial arrangements by trial counsel, making this an issue raised for the first time on appeal, appellant's counsel framed his argument around the test set out by Watt J.A. in R. v. Reid:

A party who seeks to escape the grip of the general prohibition against raising issues for the first time on appeal must meet or satisfy three preconditions:

  • the evidentiary record must be sufficient to permit the appellate court to fully, effectively and fairly determine the issue raised on appeal;
  • the failure to raise the issue at trial must not be due to tactical reasons; and
  • the court must be satisfied that no miscarriage of justice will result from the refusal to raise the new issue on appeal.

The appellant emphasized the third element of the test. He argued that there was a miscarriage of justice because the lack of jurisdiction meant that justice would not appear to have been done in view of the Kapoor ruling. The Court rejected the argument. The trial of a Brampton action about an accident that occurred in Brampton by a jury selected from the Brampton panel and not from a Kitchener panel would not be seen by a reasonable person as a miscarriage of justice. The only practical negative effect of the trial location in Kitchener that counsel could muster on questioning was that some of the jurors, perhaps not all, might have had a longer commute to the court. This was no basis for declaring a miscarriage of justice.

The argument made by appellant's counsel was technical, and was rooted in this court's decision in Letourneau v. Ottawa Bronson Construction Ltd. et al.. The case stands for the proposition that where a civil jury is constituted in breach of the Jurors Act, the trial is a nullity even if it proceeds without objection. This seemed axiomatic, but use of Letourneau in this case by appellant's counsel presupposed that Daley R.S.J.'s decision in Kapoor had similar force. As the Court noted earlier, it did not.

(2) No.

Any rulings in the course of a trial process leading to a judgment merged in the final judgment and were fully within this court's jurisdiction: see Bonello v. Gores Landing Marina (1986) Ltd.

Continental Casualty Company v. Chubb Insurance Company of Canada , 2022 ONCA 188

[MacPherson, Simmons and Nordheimer JJ.A]

Counsel:

J. R. Frost and J. Filice, for the appellant

M. Donaldson and S. Chung, for the respondent

Keywords: Insurance, Statutory Accident Benefits, Priority Dispute, Arbitration, Standard of Review, Insurance Act, R.S.O. 1990, c.I.8 s. 268, Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10, O. Reg. 283/95 (Disputes Between Insurers), s. 2.1(6), Arbitration Act, 1991, S.O. 1991, c. 17, s. 7(1), O. Reg. 283/95, Automobile Insurance Rate Stability Act, 1996 (Bill 59), Axa Boreal Assurances v. Co-operators Insurance Co. (2000), 50 0.R. (3d) 395 (C.A.), The Dominion of Canada General Insurance Company v. Federated Insurance Company of Canada (Arbitrator Densem – October 31, 2012), The Dominion of Canada General Insurance Company v. Lombard Insurance Company(McLean), 2013 CarswellOnt 19270, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1, ACE INA Insurance v. Co-operators General Insurance Company (2009), 79 M.V.R. (5th) 312 (Ont. S.C.), Kingsway General Insurance Company v. Gore Mutual Insurance Company, 2012 ONCA 683, Echelon General Insurance Company v. Co-operators General Insurance Company, 2015 CarswellOnt 20908, Jevco Insurance Company v. Chieftain Insurance Company (Arbitrator Samworth – March 11, 2016), Co-operators General Insurance Company v. Certas Home & Auto Insurance Company (Arbitrator Cooper – April 2019)

facts:

The issues on the appeal arose out of a priority dispute between insurers concerning liability for statutory accident benefits ("SABS") where the SABS claimant had basic mandatory SABS coverage under one policy and both basic mandatory and optional enhanced SABS coverage under another policy.

In July 2015, P.E., suffered catastrophic injuries when he was hit by a pickup truck while jogging near his cottage. He was the President and CEO of a forestry products company. He had basic mandatory SABS coverage under his personal automobile insurance policy issued by Chubb Insurance Company of Canada. Additionally, his company had optional enhanced SABS coverage under a fleet policy issued by Continental Casualty Company for his company's vehicles. After the accident, Continental denied both that the policy provided optional enhanced SABS coverage and that P.E. had coverage under the policy. P.E. claimed basic mandatory SABS from Chubb. Chubb initiated a priority dispute, claiming that Continental was the insurer liable to pay SABS to P.E.

P.E.'s company was the "named insured", however the Statutory Accident Benefits Schedule- Effective September 1, 2010, O. Reg. 34/10 expands the scope of the named insured for a "company car" as a person at the time of an accident where the insured vehicle "is being made available for individual's regular use by a corporation".

In April 2018, an arbitrator found that P.E. was the named insured under the Chubb policy and a "deemed named insured" under the Continental policy because he met the "regular use" requirements. The arbitrator further held that absent misinformation provided by Continental, P.E. would have elected to receive SABS from Continental, the optional enhanced SABS insurer, and that P.E. was entitled to re-elect in the circumstances. Continental was therefore the priority insurer under the s. 268 priority of payment rules and obliged to pay P.E. both basic mandatory and optional enhanced SABS.

The Superior Court appeal judge (the "SCAJ") found the arbitrator's finding that P.E. met the regular use requirements in s. 3(7)(f) of the SABS Schedule unreasonable. Although P.E. had access to and control over company vehicles, he had never used any of such vehicles. The SCAJ concluded that P.E. was not a deemed named insured under the Continental policy and therefore he could not elect under the s. 268 priority of payment rules to claim SABS from Continental, and that therefore Chubb was the priority insurer under those rules. The SCAJ found that Continental was obliged to pay both basic mandatory SABS and optional enhanced SABS to P.E. under the terms of OPCF 47. Over Chubb's objections, the SCAJ went on to consider whether Chubb, as the priority insurer under the s. 268 priority of payment rules, was obliged to indemnify Continental for basic mandatory SABS payments Continental was required to make, an issue not raised in Continental's notice of appeal. Relying on an arbitrator's decision, the SCAJ found that an OPCF 47 endorsement does not displace the s. 268 priority of payment rules. The SCAJ accordingly set aside the arbitrator's order and declared that:

  • Continental must pay both basic mandatory SABS and optional enhanced SABS to the SABS claimant;
  • Continental is responsible for the cost of all optional benefits provided;
  • Continental is entitled to reimbursement from Chubb for the cost of basic mandatory SABS benefits paid to the SABS claimant by Continental and all expenses associated with administering those benefits.

Chubb was granted leave to appeal to the Ontario Court of Appeal on February 28, 2020.

issues:

(1) Did the SCAJ err in overturning the arbitrator's finding that P.E. met the regular use requirement in s.3(7)(f) of the SABS Schedule and was therefore a deemed named insured under Continental's policy?

(2) Did the SCAJ err in finding that, as the priority insurer under the s. 268 priority rules, Chubb was obliged to indemnify Continental for basic mandatory SABS payments made to P.E. under OPCF 47?

holding:

Appeal allowed.

reasoning:

(1) No.

Given the apparent purpose of the company car or regular use provision, the Court found it difficult to conceive that the legislature intended to make the corporate insurer the customary first avenue of recourse for SABS for a corporate owner/executive who has never used a corporate vehicle. The Court concluded that the arbitrator made at least a palpable and overriding error in failing to give effect to the evidence that P.E. had never used any of the corporate vehicles and in finding that P.E. met the regular use requirement in s. 3(7)(f) of the SABS Schedule and was therefore a named insured under Continental's policy.

(2) Yes.

To answer the question, it was necessary to review the OPCF 47, s. 227 of the Act, Financial Services Commission of Ontario ("FSCO") Bulletins A-17/96 and A-10/97, and the SCAJ's reasons. OPCF 47 is clear in requiring the optional enhanced SABS insurer to pay both basic mandatory and optional enhanced SABS. Second, contrary to the SCAJ's conclusion and the Echelon arbitrator's reasons, it can be concluded that OPCF 47 displaces the s. 268 priority rules. That is because OPCF 47 is inconsistent with those rules and because s. 227(2) of the Act makes OPCF 47 effective in accordance with its terms even though it may be inconsistent with the s. 268 priority rules. Section 268(2) of the Act specifies the insurer against which a person may have recourse for SABS in particular circumstances. Section 268(3) requires that insurer to pay SABS. Fundamentally, both s. 268 of the Act and OPCF 47 address who must pay SABS in particular circumstances. They do not address reimbursement. Any right of reimbursement arises only where one insurer has paid SABS when another insurer has the obligation to pay. Third, on their face, the s. 268 priority rules and s. 268(3) of the Act (and s. 2(4) of the SABS Schedule) make an insurer liable to pay SABS; they do not make an insurer liable to pay basic mandatory SABS alone. Fourth, two arbitration decisions, neither of which was brought to the SCAJ's attention, have made comments critical of the Echelon arbitrator's analysis and support the conclusion that OPCF 47 displaces the s. 268 priority rules.

It was concluded that the SCAJ erred in holding that liability for SABS can be bifurcated under s. 268(2) of the Act. Therefore, his order requiring Chubb to reimburse Continental for the cost of basic mandatory SABS payments and all expenses associated with administering those benefits was set aside. In the result, Continental was liable to pay the mandatory and optional enhanced SABS.

Cheung v. Samra , 2022 ONCA 195

[Simmons, Pardu and Brown JJ.A.]

Counsel:

G. MacKenzie and H. Elmaleh, for the appellants

D. A. Cruz and M. S. Bridges, for the respondents

A. Wood and L. Maclean, for the intervener Canadian Chiropractic Protective Association

B. A. Macfarlane, for the intervener Ontario Trial Lawyers Association

Keywords: Torts, Negligence, MedMal, Standard of care, Causation, Trials, Jury Verdicts, Judgments, Rules of Civil Procedure, Rule 52.08, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 108(4), (5) and (6), Stilwell v. World Kitchen Inc., 2014 ONCA 770, McLean v. Knox, 2013 ONCA 357, R. v. Corbett, [1988] 1 S.C.R. 670; R. v. Suzack (2000), 30 C.R. (5th) 346 (Ont. C.A.), Wade v. C.N.R., [1978] 1 S.C.R. 1064, Surujdeo v. Melady, 2017 ONCA 41, Lang v. McKenna (2000), 135 O.A.C. 304, Jarbeau v. McLean, 2017 ONCA 115, Teskey v. TTC (2003), 3 C.P.C. (6th) 181, Salter v. Hirst, 2010 ONSC 3440, aff'd 2011 ONCA 609, ter Neuzen v. Korn, [1995] 3 S.C.R. 674

facts:

At the 35th week of the pregnancy, R. C. was diagnosed as suffering from intrauterine growth restriction (IUGR). Babies with IUGR are at risk of serious complications, including asphyxia, abnormal fetal heart rate, cerebral palsy and developmental delay. Repeated tests indicated this condition worsened over the following weeks, but the mother was sent home on April 21, 2006. She returned on April 22, 2006 with vaginal bleeding, and an emergency C-section followed.

R. C. was born in very poor condition, and had almost no heartbeat for 28 minutes. Her first breath was at 30 minutes. R. C. suffered a seizure at 2.5 months old and serious disabilities became evident. She has severe brain damage, hypotonic cerebral palsy, and developmental delay. She cannot walk, talk or eat and must be fed through a tube. She needs help with every activity.

A jury concluded that, by failing to advance the delivery to an earlier date, the defendant physicians failed to meet the standard of care required of doctors looking after pregnant patients, and that this failure caused R. C.'s disabilities. The trial judge concluded that there was evidence capable of supporting the jury's decisions, but refused to enter judgment in accordance with the verdict on the ground that the particulars of causation given by the jury were insufficient and failed to explain the physiological mechanism of the injury.

issues:

(1) Did the trial judge err in law by refusing to grant judgment in accordance with the verdict?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The trial judge erred in refusing to give effect to the jury verdict.

A trial judge can disregard the jury verdict only if:

  1. There is no evidence to support the jury finding; or
  2. The jury gives an answer to a question which cannot in law provide a foundation for a judgment.

There were two essential findings that the jury made to find the defendant physicians liable in negligence:

  1. That they did not live up to the standard of care; and
  2. That that failure caused the injuries, on the balance of probabilities.

There was no basis to doubt the integrity of the verdict of the jury or set it aside. There is a presumption that the jury's answers are the result of a proper consideration of the evidence and adherence to the trial judge's charge. This presumption continues to have force whether or not a jury is asked to give reasons or particulars for its findings.

The jury made an unambiguous finding that, but for the breach of the standard of care, R. C. would not have sustained brain damage. There was an evidentiary basis for the verdict. The answers did not indicate that the jury's reasoning was clearly erroneous simply because their answers failed to indicate the physiological mechanism of injury. The trial judge did not ask the jury to identify the "mechanism of injury" or the sequence of events and injuries that led to R.C.'s brain damage. The jury was not instructed that if it concluded causation had been proven, that it was to list all their reasoning paths. It was also not necessary that each juror come to a firm or the same conclusion about the mechanism of injury.

The jury understood that it was to be brief. Jurors are lay persons who cannot be expected to craft reasons with the detail expected of the judiciary. Jury deliberations are not transparent. There is an element of inscrutability to every jury verdict.

There was no basis to conclude that the jury proceeded on any erroneous premise or was confused or mistaken as to the instructions given to it. The answers given were not tainted by doubt or ambiguity. Whether a jury verdict is perverse or unreasonable is a matter for appellate courts, not for the trial judge. The trial judge did not have a discretion to refuse to give judgment in accordance with the verdict given by the jury.

Donovan v. Waterloo (Police Services Board) , 2022 ONCA 199

[Strathy C.J.O., Roberts and Sossin JJ.A.]

Counsel:

K. L. D., acting in person

D. B. Jarvis and C. Yiu, for the respondents

Keywords: Labour and Employment, Collective Bargaining Agreements, Human Rights, Discrimination, Settlements, Civil Procedure, Striking Pleadings, Jurisdiction, No Reasonable Cause of Action, Frivolous, Vexatious and Abuse of Process, Reasonable Apprehension of Bias, Police Services Act, R.S.O. 1990, c. P.15, Rules of Civil Procedure, r. 21.01(3)(a), 21.01(1)(b), 21.01(3)(d), 59.06(1), 37.13(2)(a), Donovan v. (Waterloo) Police Services Board, 2019 ONSC 818, Donovan v. Waterloo Regional Police Services Board, 2019 ONCA 845, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, Desgrosseillers v. North Bay General Hospital, 2010 ONSC 142, Skof v. Bordeleau, 2020 ONCA 729, St. Anne Nackawic Pulp & Paper v. CPU, [1986] 1 S.C.R. 704, McCracken v. Canadian National Railway Company, 2012 ONCA 445

facts:

This was an appeal from the motion judge's order pursuant to r. 21.01(3)(a) of the Rules of Civil Procedure dismissing this action for lack of jurisdiction.

The appellant was a former police officer, employed by the respondent Waterloo Regional Police Services Board (the "Board"). Her employment was subject to the terms of a collective agreement. The respondent Bryan Larkin ("Larkin") was the Chief of Police.

The respondents originally brought a motion to strike this action on three grounds: (i) r. 21.01(1)(b) (no reasonable cause of action); (ii) r. 21.01(3)(a) (no jurisdiction over the subject matter); and (iii) r. 21.01(3)(d) (frivolous or vexatious or an abuse of process). Doi J. (the "original motion judge") dismissed the action under r. 21.01(1)(b), without leave to amend. While the other two grounds were fully argued before the original motion judge, he did not rule on them.

On October 25, 2019, the Court allowed the appellant's appeal from the order of the original motion judge, set aside the order dismissing the action and granted the appellant leave to amend her statement of claim as against Larkin: Donovan v. Waterloo Regional Police Services Board, 2019 ONCA 845. No issues had been raised before the Court with respect to the grounds that were not addressed by the original motion judge and the Court did not address those grounds in its 2019 decision.

The statement of claim had gone through four iterations, the current being a Fresh as Amended Statement of Claim, discussed below. Pursuant to the Court's order, the appellant filed an Amended Statement of Claim on January 29, 2020.

Shortly thereafter, counsel for the respondents sought directions from the original motion judge concerning the two issues that had not been addressed by his order. He determined that a fresh motion should be brought before another judge, pursuant to r. 59.06(1) of the Rules of Civil Procedure (sometimes referred to as the "slip rule").

The appellant subsequently filed a Fresh as Amended Statement of Claim on November 23, 2020. The motion to dismiss the action for want of jurisdiction was heard by a different judge (the "second motion judge") on February 23 and March 1, 2021. In reasons released April 19, 2021, the second motion judge dismissed the action on the ground that the essential character of the dispute involved the appellant's employment, which had been covered by a collective agreement and was subject to the dispute resolution and arbitration provisions of that agreement: referring to Weber v. Ontario Hydro; and Desgrosseillers v. North Bay General Hospital.

issues:

(1) Was the motion not properly before the second motion judge because it could have been addressed by way of a r. 59.06 motion brought before the original motion judge and prior to the appeal, by filing a cross-appeal to the Court, or filing a r. 59.06 motion to the Court?

(2) Did the Superior Court of Justice have jurisdiction over the appellant's claims?

(3) Were the respondents acting in bad faith by failing to raise the issue of jurisdiction in a timely way?

(4) Did the second motion judge raise a reasonable apprehension of bias?

(5) Did the second motion judge err in failing to convert the motion before him to a motion for judgment "as the best way to achieve the most just, most expeditious, and least expensive result", in accordance with r. 37.13(2)(a) of the Rules of Civil Procedure?

holding:

Appeal dismissed.

reasoning:

(1) No.

As the issue of jurisdiction was not addressed by the original motion judge or by either party on the previous appeal to the Court, there was no impediment to raising it on this appeal.

The matter was properly before the second motion judge, although not pursuant to the "slip rule". Rather, a remedy was available under r. 59.06(1) of the Rules of Civil Procedure, "to ... obtain other relief than that originally awarded". Alternatively, it was open to the respondents to bring a free-standing motion to raise the issue of the Court's jurisdiction, given the delivery of the Fresh as Amended Statement of Claim.

(2) No.

The second motion judge did precisely what the authorities required. He searched for the "essential character" of the dispute and found that the agreement that the appellant entered into with the Board on June 8, 2017 (the "Resignation Agreement") was executed in the ambit of the collective agreement and took its essential character from the collective agreement. It was the product of a negotiated agreement of all outstanding employment matters between the parties. The Court saw no error in this characterization.

In Skof, explicit provisions of the memorandum of agreement unequivocally provided that the collective agreement did not apply to the appellant in that case, other than with respect to his salary and benefits, while he was on a leave of absence as the president of the Ottawa Police Association. As a result, there was no question that the grievance procedure under the collective agreement was not available to him.

Here, there was no evidence that the appellant would be permitted to invoke the grievance procedure now that she was no longer an employee. The collective agreement was silent with respect to this issue. Moreover, the Resignation Agreement provided that upon her resignation, she ceased "to be an employee of the Board for any and all purposes at law whatsoever".

The record did not permit the Court to decide this issue. An arbitrator was best placed to interpret the collective agreement and the Resignation Agreement and determine whether the appellant was precluded from invoking the grievance procedure to pursue her remedies.

(3) No.

As the Court found that the respondents were entitled to have the issue of jurisdiction determined, this submission failed.

(4) No.

Due to a "Zoom bombing" incident that occurred on the first motion day where explicit images were shared (alleged to have occurred due to the appellant sharing the Zoom link), prior to the March 1, 2021 hearing, the Regional Senior Judge gave directions that the Zoom details of the March 1, 2021 hearing were not to be published or distributed without the prior written order of the presiding judge or the Regional Senior Judge.

On the basis of the foregoing, the appellant stated that she "believes that she was wrongfully blamed for the 'Zoom bombing' incident", and that this resulted in an apprehension of bias against her because the second motion judge decided in favour of the respondents, which was a "marked departure from established legal principles."

Asserting that a judge has departed from the law because of bias against a litigant was a very serious allegation. Although the appellant was self-represented, her written materials and oral submissions demonstrated a high level of sophistication. She clearly appreciated the meaning and consequences of her words. In this case, there was no evidentiary basis for the allegation, and it could be described as "spurious". Her submission therefore failed.

(5) No.

The short answer to this submission was that this was not fully argued before the second motion judge, and it would not have been appropriate for him to grant it in these circumstances, nor would it be appropriate to grant on this appeal: see McCracken v. Canadian National Railway Company.

Ernst & Young Inc. v. Aquino , 2022 ONCA 202

[Lauwers, Coroza and Sossin JJ.A.]

Counsel:

M. Citak and C. Junior, for the appellants J. A. and 2304288 Ontario Inc.

G. Corsianos, for the appellant M. C.

T. Corsianos, for the appellants G. A. and L. C.-C.

B. Belmont, for the appellant 2104664 Ontario Inc.

A. Merskey, E. Cobb and S. Taylor, for the respondent Ernst & Young Inc., in its capacity as Court-Appointed Monitor of Bondfield Construction Company Limited

J. Opolsky and C. Gilchrist, for the respondent KSV Restructuring Inc. in its capacity as Trustee-in-Bankruptcy of 1033803 Ontario Inc. and 1087507 Ontario Limited

Keywords: Bankruptcy and Insolvency, Transfers Undervalue, Fraudulent Conveyances, Monitors, Trustees in Bankruptcy, Corporations, Doctrine of Corporate Attribution, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 96, 97, Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36, s. 36, Rules of Civil Procedure, Rule 38.10(b), Fraudulent Conveyances Act, R.S.O. 1990, c. F. 29, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, Freeman v. Pope (1870), L.R. 5 Ch. App 538, Urbancorp Toronto Management Inc. (Re), 2019 ONCA 757, Purcaru v. Seliverstova, 2015 ONSC 6679, Montor Business Corp. (Trustee of) v. Goldfinger, 2013 ONSC 6635, Juhasz Estate v. Cordiero, 2015 ONSC 1781, R. v. Théroux, [1993] 2 S.C.R. 5, Canadian Dredge & Dock Co. v. The Queen, [1985] 1 S.C.R. 662, DBDC Spadina Ltd. v. Walton, 2018 ONCA 60, Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25, Bulut v. Brampton (City), 48 O.R. (3d) 108 (C.A.), Bhasin v. Hrynew, 2014 SCC 71, C.M. Callow Inc. v. Zollinger, 2020 SCC 45, CWB Maxium Financial Inc v. 2026998 Alberta Ltd, 2021 ABQB 137, Hutchingame Growth Capital Corporation v. Independent Electricity System Operator, 2020 ONCA 430, Deloitte & Touche v. Livent Inc.(Receiver of), 2017 SCC 63, King Insurance Finance (Wines) Inc. v. 1557359 Ontario Inc. (Willowdale Autobody Inc.), 2012 ONSC 4263

facts:

Bondfield was a construction company that operated in the Greater Toronto Area and elsewhere. Its affiliate, 1033803 Ontario Inc., commonly known as Forma-Con, was in the concrete forming business. Bondfield and Forma-Con were part of the Bondfield Group, a full-service group of construction companies. By 2018, the Bondfield Group was in financial trouble. Bondfield's bonding company, Zurich Insurance Company Ltd., engaged Ernst & Young Inc. to review the financial situation of the Bondfield Group. This eventually led Bondfield to start proceedings under the Companies' Creditors Arrangement Act ("CCAA") on April 3, 2019. The court appointed Ernst & Young Inc. as the monitor, and KSV Restructuring Inc. as the trustee in bankruptcy of FormaCon. The monitor and the trustee discovered that Bondfield and Forma-Con had illegitimately paid out tens of millions of dollars to J. A. and several of the other appellants under a false invoicing scheme. Both the monitor and the trustee brought applications for various forms of declaratory relief, the monitor under a combination of s. 36.1 of the CCAA and s. 96 of the BIA and the trustee under the latter only.

The application judge granted the declarations the monitor sought concerning the Bondfield false invoicing scheme and required the Bondfield parties to repay $21,807,693 on a joint and several liability basis (other than C.-C.-, whose liability was limited to $88,008). The application judge granted the declarations the trustee sought concerning the Forma-Con false invoicing scheme, and required the Forma-Con respondents to repay $11,366,890 on a joint and several liability basis (other than 664 Ontario, whose liability was limited to $90,400, and C.-C., whose liability was limited to the value of the cheques paid by the Forma-Con suppliers).

issues:

(1) Did the application judge err in finding that s. 96 of the BIA could be used by the monitor and the trustee to recover the money J. A. and his associates took from Bondfield and Forma-Con?

(2) Are the defences of legal and equitable set-off available to J. A. and the other appellants who claim them?

(3) Did the application judge err in finding 664 Ontario to be part of the false invoicing scheme?

(4) Should the application judge have converted the applications into an action, or, if not, have required a trial on the financial position of Bondfield and Forma-Con?

holding:

Appeal dismissed.

reasoning:

(1) No.

Section 96 of the BIA permits trustees to seek a court order voiding a transfer by the debtor to another party at "undervalue", which is an improvident transaction from the debtor's perspective.

In order to require J. A. and the other beneficiaries of the false invoicing scheme to repay the money they took under s. 96(1)(b)(ii)(B) of the BIA, the monitor and the trustee had to prove two elements: first, J. A. and the other participants were not dealing with Bondfield and Forma-Con at arm's length; and second, at the time they took the money (during the statutory review period), they "intended to defraud, defeat or delay a creditor" of Bondfield or Forma-Con. The first element was amply established by the evidence. The focus was on the latter.

While it might be clear that J. A. and the other participants intended to defraud Bondfield and Forma-Con, this does not immediately lead to the conclusion that they also intended at that time to defraud the creditors of Bondfield and FormaCon. The application judge was able to bridge this gap by imputing J. A.'s fraudulent intention to the debtors, Bondfield and Forma-Con, and on that basis found that it could be said that "the debtor intended to defraud, defeat or delay a creditor". J. A. and his associates disputed liability under s. 96 on two grounds. The first was that their fraudulent acts were not carried out at a time when Bondfield and Forma-Con were financially precarious. The second was that the fraudulent intentions cannot be imputed to Bondfield and FormaCon. These are the two main issues addressed in this appeal.

The application judge took a pragmatic view on the totality of the evidence. She found that during the review periods, both Bondfield and Forma-Con were experiencing increasing financial difficulties, to the knowledge of J. A., who carried on with the false invoicing scheme. She inferred that he did this with the intent to defeat the companies' creditors. The Court stated that it owed deference to the application judge's findings of fact and findings of mixed fact and law, and that the appellants had not established any palpable and overriding errors nor legal errors with these findings.

In regards to the application judge imputing the fraudulent intention of J. A. in the false invoicing scheme to Bondfield and Forma-Con, and finding that the trustee and the monitor could pursue the repayment of the funds taken from the fraudsters under the BIA, this involved the application of the doctrine of corporate attribution. Thus far, the corporate attribution doctrine has been applied in the fields of criminal and civil liability. Until now, courts have yet to consider the doctrine in the bankruptcy and insolvency context under s. 96 of the BIA, making this a case of first impression.

The Court considered three principles from the Livent and Canadian Dredge cases to guide the application of the corporate attribution doctrine in this setting: 1) the court is sensitive to the context established by the field of law in which an imputation of intent to a corporation is sought to be made; 2) the court recognizes that the attribution exercise is grounded in public policy. The underlying question was who should bear the responsibility for the [impugned] actions of the corporation's directing mind. The policy factors that weigh in favour of imputing to a corporation the wrongdoing intent of its directing mind flow from the "social purpose" of holding the corporation responsible; 3) these principles "provide a sufficient basis to find that the actions of a directing mind be attributed to a corporation, not a necessary one".

In the context of bankruptcy, the Court reframed the test for imputing the intent of a directing mind to a corporation: The underlying question here is who should bear responsibility for the fraudulent acts of a company's directing mind that are done within the scope of his or her authority – the fraudsters or the creditors? Permitting the fraudsters to get a benefit at the expense of creditors would be perverse. The way to avoid that perverse outcome is to attach the fraudulent intentions of J. A. to Bondfield and Forma-Com in order to achieve the social purpose of providing proper redress to creditors, which is the core aim of s. 96 of the BIA.

(2) No.

G.A.:

G.A. asserted that he was owed US$3.75 million as his fee for introducing the Bondfield Group to Deutsche Bank, who considered providing the Group a credit facility of US$150 million. He claimed a set-off for that amount against any order for repayment of the proceeds of the false invoicing scheme. However, he provided no documentary or corroborating evidence in support of his alleged claim against the Bondfield Group in this amount. The application judge rejected this claim on the basis of factual findings to which the Court owed deference. There was no palpable and overriding error, nor error of law, with respect to these findings.

J.A.:

J. A. asserted that his liability for any s. 96 repayments should be reduced by a total of $19,009,987. This amount was made up of the following: 1) the alleged amount of his shareholder's loan to Bondfield; 2) the difference between the inflows and outflows of cash between J. A.'s holding company, 230, and Bondfield during the review period; 3) the amount he argued would account for HST input credits on the sums found to be transfers at undervalue. The Court determined: 1&2) providing a set-off under s. 97(3) BIA would effectively reward him for his fraudulent actions; 3) this was a new issue raised for the first time on appeal and was therefore not considered.

(3) No.

The application judge's conclusion was well-supported. Although 664 Ontario said that the work related to consulting services on the Hawkesbury hospital project. However, the Trustee was not able to find, and 664 Ontario did not produce, any internal records to corroborate that a service was provided for the value received. Further, the invoice that was submitted was consistent with the other false invoices and was solicited by an individual who had no responsibility in the area in which 664 Ontario was operating. The Court determined that 664 failed to discharge its evidentiary burden of answering the case put forward by the trustee. It was open to the application judge to draw the adverse inferences she did. There was no palpable and overriding error or error of law.

(4) No.

The Court agreed that it was open to J. A. to pursue his father and siblings elsewhere. Further, the participation of all three directing minds was not necessary to trigger s. 96 liability on the part of one of them. While J. A. asserted that expert evidence and cross-examination about the "true financial condition" of each company "at the time of each impugned transaction" was required, there was enough evidence to support the application judge's conclusion: "The totality of the evidence demonstrates a pattern of an intent by [J. A.], on behalf of each of BCCL and Forma-Con to defraud, defeat or delay the creditors of BCCL and Forma-Con." There was no palpable and overriding error or error of law.

Sabatino v. Posta Ital Bar Inc., 2022 ONCA 208

[Pepall J.A. (Motions Judge)]

Counsel:

D. Morawetz and J. Lo Faso, for the appellant

D. Rosenbluth, for the respondents

Keywords: Corporations, Oppression, Civil Procedure, Appeals, Jurisdiction, Perfection, Extension of Time, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, ss. 248, 255, Jadhav v. Jadhav, 2020 ONCA 19, Issasi v. Rosenzweig, 2011 ONCA 112, Duca Community Credit Union Ltd. v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), Denomme v. McArthur, 2013 ONCA 694, Derakhshan v. Narula, 2018 ONCA 658, Reid v. College of Chiropractors of Ontario, 2016 ONCA 779, Wardlaw v. Wardlaw, 2020 ONCA 286, Sutherland Lofts Inc. v. Peck, 2017 ONCA 803, Henderson v. Henderson, 2014 ONCA 571, Aljawhiri v. Pharmacy Examining Board of Canada, 2019 ONCA 798

facts:

The applicant bought this motion for an extension of time to perfect their appeal. The applicant maintained that around Christmas he lost confidence in his former lawyers and began looking for a new one. He retained his current lawyers on January 6, 2022, but stated that they have not had an opportunity to review the file. He maintained that the delay has been brief and the respondents will suffer no prejudice to his knowledge if the extension is granted.

The order under appeal dismissed an oppression application under the Ontario Business Corporations Act. Section 255 of that Act states that "[a]n appeal lies to the Divisional Court from any order made by the court under this Act."

Both counsel agreed that the appeal should be in Divisional Court but urged the Court to address the other issues. The parties advised that they would be bound by the result and if the respondents were unsuccessful on the issues other than jurisdiction, they would consent to a late filing in the Divisional Court.

The Court addressed the other issues.

issues:

(1) Should the applicant be granted an extension of time to perfect their appeal?

holding:

Motion dismissed.

reasoning:

(1) No.

In considering whether to grant an extension, the Court noted the court has generally considered the following factors: (i) whether the appellant formed an intention to appeal within the relevant period; (ii) the length of, and explanation for, the delay; (iii) prejudice to the respondent; and (iv) the merits of the appeal. The overarching principle is that an extension should be granted if the justice of the case so requires.

The Court held that, while the respondents asserted strong arguments in response to those of the applicant, the Court was not be prepared to conclude that the justice of the case precluded an extension of time to permit the applicant to have his appeal adjudicated.

However, the Court ultimately concluded the appeal was meritless because, as the parties conceded, the court had no jurisdiction to hear it. But for that difficulty, the other factors would favour the grant of an extension of time. Accordingly, the motion was dismissed.

Jeff Day Hospitality Inc. v. Heritage Conservation Holdings, Canada, Inc., 2022 ONCA 201

[Simmons, Harvison Young and Zarnett JJ.A.]

Counsel:

J. Chen and A. Quinn, for the appellant

C. Hammond, for the respondent

Keywords: Contracts, Interpretation, Implied Terms, Real Property, Agreements of Purchase and Sale of Land, Purchase Price Abatements, Deficiencies, Ontario Water Resources Act, R.S.O. 1990, c. O.40, s. 53, Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619, Perkins v. Sheikhtavi, 2019 ONCA 925

facts:

The appellant appealed from a judgment that required it to perform its obligations under an Agreement of Purchase and Sale of land ("APS"). In the APS, the appellant agreed to sell a hotel property to the respondent for a purchase price of $1,375,000. The judgment required the appellant to close the sale in accordance with the terms of the APS. The judgment also authorized the respondent to hold back $500,000 from the purchase price pending determination of the cost of rectifying certain deficiencies, which the application judge held were the responsibility of the appellant.

issues:

(1) Contract Formation Issue: Did the application judge err in finding that the parties had actually concluded an agreement on all terms in the APS?

(2) Implied Term Issue: Did the application judge err in failing to find the respondent was in breach of the APS on the agreed closing date because the first mortgage it had arranged exceeded a limit on such financing found in an implied term of the APS?

(3) Deficiencies Issue: Did the application judge err in finding the repair of certain deficiencies to be the appellant's responsibility under the APS?

holding:

Appeal allowed in part.

reasoning:

(1) No.

The application judge concluded that the appellant accepted the terms in the APS in their entirety. The Court found that finding was open to him.

Acceptance is constituted by conduct of the recipient that a reasonable person, in the position of the offeror, would consider constituted acceptance. The "Confirmation of Acceptance" unequivocally communicated that all of the terms in the further revised offer presented on January 20, 2020 were accepted, thus forming the APS. Moreover, both parties and their agents acted on the basis that a binding APS had been reached on January 20, 2020. The position that no agreement had been reached on January 20, 2020 was not taken by the appellant until after there was a failure to close on February 3, 2021, and litigation had ensued.

(2) No.

The Court found no basis to interfere with the application judge's conclusion. It was open to the application judge to find on the evidence that no custom or usage supporting the implication of an implied term that the first mortgage could not exceed $875,000 had been established, and that no other basis for implying such a term existed.

The narrow circumstances under which terms may be implied based on business efficacy or the officious bystander test are concerned with the presumed intentions of the actual parties. They are not an invitation for a court to revise an agreement to make it accord with what reasonable parties might have done. Although it may have been wise for the appellant to have sought such a term before agreeing to the APS, it did not do so, despite having been professionally advised. The APS does not lack business efficacy without such a term, nor is it obvious that the respondent, if asked by the officious bystander, would have answered that such a term was included. The parties' express terms indicated a contrary answer. The parties included specific provisions about the second mortgage and its relationship to the first without including the limit the appellant says should now be implied.

Moreover, the Court did not find any error in the application judge having referred to the entire agreement clause as a factor in deciding whether the implied term accorded with the presumed intentions of the parties, who stated that their entire agreement was to be found in the express terms of the APS.

(3)

The application judge dealt with three main categories of deficiencies and held that each was the responsibility of the appellant under the APS: (1) the foundation wall; (2) the dining room fire separation, kitchen exhaust, and fire suppression system; and (3) the septic system. The Court found no errors in the application judge's conclusions that the appellant was responsible for the deficiencies relating to the foundation wall and the septic system. However, the Court found that the application judge had made a palpable and overriding error with respect to his interpretation that para. 5(h) of the APS made the appellant responsible for deficiencies relating to the dining room fire separation, kitchen exhaust, and fire suppression system.

First, the application judge appears to have read para. 5(h) as though it referred to a specific work order that addressed the dining room fire separation concern. However, the work order specifically referenced in the last sentence of para. 5(h) referred to the ventilation and fire suppression system, not to the dining room separation issue. The application judge did not identify any other basis upon which remedying this deficiency would be the appellant's responsibility under the APS. Second, the application judge appears to have read the paragraph as saying that the appellant was aware of the work order referred to in its last sentence, but not to say that the respondent was aware of the order, which is what the last sentence expressly acknowledged.

SHORT CIVIL DECISIONS

Ever Fresh Direct Foods Inc. v. Jamia Islamia Canada Ltd., 2022 ONCA 185

[Simmons, Harvison Young and Zarnett JJ.A.]

Counsel:

H. Bahadur and Y. Huang, for the appellant

A. Farooq and S. Balcharan, for the respondent

Keywords: Civil Procedure, Dismissal for Delay, Certificates of Pending Litigation

Crown Capital Private Credit Fund v. Mill Street & Co. Inc., 2022 ONCA 194

[Feldman, Tulloch and Miller JJ.A.]

Counsel:

M. Simaan, for the appellants, 997322 Ontario Inc., M. M. and A. M.

S. Kukulowicz, T. Frankel and M. Sassi for the respondent, A. Farber & Partners Inc.

Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193, Ravelston Corp. (Re) (2005), 24 C.B.R. (5th) 256(Ont. C.A.), James Henry Ting (Re), 2021 ONCA 622

Iqbal v. Mansoor , 2022 ONCA 198

[Fairburn A.C.J.O., Trotter and Thorburn JJ.A.]

Counsel:

M. I., acting in person

No one appearing for the responding parties

Keywords: Civil Procedure, Costs, Motions, Leave to Appeal, Extension of Time, Orders, Reconsideration, Machado v. Ontario Hockey Association, 2019 ONCA 210

Taylor v. David , 2022 ONCA 200

[van Rensburg, Nordheimer and Harvison Young JJ.A.]

Counsel:

I. Aniekwe, for the appellants

E. S. Baum, for the respondents

Keywords: Civil Procedure, Summary Judgment, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 15, Family Law Act, R.S.O. 1990, c. F.3., s. 61(1)

2651171 Ontario Inc. v. Brey , 2022 ONCA 205

[Rouleau, van Rensburg and Roberts JJ.A.]

Counsel:

J.F. Lalonde and L. Benoit, for the appellant

M. V. Peters and M. Miklaucic, for the respondent, P. B.

M. Swindley, for the respondent, Grapevine Realty Inc.

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Costs, Rules of Civil Procedure, Rules 49.10(1), 57.01, Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 58 O.R. (2d) 773 (C.A.), Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), Bargman v. Rooney (1998), 30 C.P.C. (4th) 259 (Ont. Gen. Div.), Toronto Dominion Bank v. Leigh Instruments Ltd. (Trustee of), [1998] O.J. No. 4221 (Gen. Div.), Hamilton v. Open Window Bakery Ltd., 2004 SCC 9

1250140 Ontario Inc. v. Bader , 2022 ONCA 197

[Fairburn A.C.J.O., Trotter and Thorburn JJ.A.]

Counsel:

H. P.L. Whiteley, for the appellant

A. Hora, for the respondent

Keywords: Real Property, Civil Procedure, Limitation Periods, Summary Judgment, Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 23(1), Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74, Equitable Trust v. Marsig, 2012 ONCA 235, Zabanah v. Capital Direct Lending Corp., 2014 ONCA 872

Maio v. Kapp Contracting Inc., 2022 ONCA 196

[Fairburn A.C.J.O., Thorburn and Favreau JJ.A.]

Counsel:

D. Eichler and E. L. Crochetiere, for the appellant

M. R. Kestenberg, for the respondents

Keywords: Civil Procedure, Settlements, Pierringer Agreements, Rules of Civil Procedure, Rule 21, Endean v. St. Joseph's General Hospital, 2019 ONCA 181, Taylor v. Canada (Health), 2009 ONCA 487

Ahmed v. DePaulis , 2022 ONCA 206

[van Rensburg, Nordheimer and Harvison Young JJ.A.]

Counsel:

No one appearing for the appellants

E. Blau, former counsel for the appellants

S. M. Citak and D. Hirbod, for the respondents

Keywords: Civil Procedure, Appeals, Non-Attendance, Lawyer of Record, Removal

Khorramshahi v. Iranpour , 2022 ONCA 210

[Roberts J.A. (Motions Judge)]

Counsel:

F. K., acting in person

S. I., acting in person

Keywords: Civil Procedure, Motions, Notice of Appeal, Extension of Time, Orders, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Bobel v. Humecka, 2021 ONCA 757, Rules of Civil Procedure, rr. 3.01(1)(d), 16.01(4)(b)(iv), 61.04(1)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.