Court Of Appeal Summaries (April 25 - 29, 2022) - Civil Law

Good afternoon.

These are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of April 25, 2022.

In Medcap Real Estate Holdings Inc. (Re), the Court determined that the application judge did not err in the exercise of his discretion and dismissed the appellant's appeal of the bankruptcy order. The appellant did not establish either of the predicate factors that could justify refusing an otherwise proven bankruptcy application. It did not show that it was able to pay its debts, nor did it show any other sufficient cause why no bankruptcy order should be made.

In Martin v. 11037315 Canada Inc., the Court allowed the appeal in part, set aside the default judgment for foreclosure over a property, and ordered a trial of the issue whether the appellant, who had bought the property from the mortgagee out of foreclosure, was a bona fide purchaser for value without actual notice that the respondent was occupying the property and may have had a claim to set aside the default judgment for foreclosure.

Other topics covered this week included residential tenancies, the duty to defend in a title insurance matter, the appointment of a receiver in the securities regulation context, the collection and remittance of retail sales tax, mining royalty interests as interests in land that run with the land.
Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

Smith v. Youthlink Youth Services, 2022 ONCA 313

Keywords: Administrative Law, Standard of Review, Real Property, Residential Tenancies, Statutory Interpretation, Residential Tenancies Act, 2006, S.O. 2006, c. 17, ss 5(k), 5.1, 210, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, White v. Upper Thames River Conservation Authority, 2022 ONCA 146, SOL-45003-14 (Re), 2014 CanLII 52441 (ON LTB)

Medcap Real Estate Holdings Inc. (Re), 2022 ONCA 318

Keywords: Bankruptcy and Insolvency, Applications for Bankruptcy Orders, Acts of Bankruptcy, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 37, 38, 42(1)(j), 43(1), 43(7), 71, Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36., Ivaco Inc. (Re) (2006), 83 O.R. (3d) 108 (C.A.), Cowper-Smith v. Morgan, 2017 SCC 61, Emms (Re), [2003] O.J. No. 4961, 484030 Ontario Ltd. (Re) (1992), 8 O.R. (3d) 243 (Gen. Div.), Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, Bankruptcy and Insolvency Law of Canada, loose-leaf (2022-Rel. 4), 4th ed. (Toronto: Thomson Reuters, 2009), Frank Bennett, Bennett on Bankruptcy, 23rd ed. (Toronto, Lexis Nexis: 2021)

Enterprise Rent-A-Car Canada Company v. Ontario (Finance), 2022 ONCA 327

Keywords: Tax, Retail Sales Tax, Retail Sales Tax Act, R.S.O. 1990, c. R.31, s. 18, Excise Tax Act, R.S.C. 1985, c. E-15, Housen v. Nikolaisen, 2002 SCC 33, Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336

Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 326

Keywords: Contracts, Interpretation, Real Property, Interests in Land, Mining Rights, Royalty Interests, Rules of Civil Procedure, Rule 20.01, Bank of Montreal v. Dynex Petroleum Ltd., 2002 SCC 7, Third Eye Capital Corp. v. Dianor Resources Inc., 2018 ONCA 253, Blue Note Mining Inc. v. Fern Trust (Trustee of), 2008 NBQB 310, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Weyerhauser Co. v. Ontario (Attorney General), 2017 ONCA 1007, Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corp., 2021 ONCA 592, Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Re Canadian National Railways and Canadian Pacific Ltd. (1978), 95 D.L.R. (3d) 242, (B.C.C.A.), aff'd, [1979] 2 S.C.R. 668, Thunder Bay (City) v. Canadian National Railway Co., 2018 ONCA 517, Geoff R. Hall, Canadian Contractual Interpretation Law, 4th ed. (Toronto: LexisNexis, 2020)

Martin v. 11037315 Canada Inc., 2022 ONCA 322

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Mortgages, Remedies, Foreclosure, Bona Fide Purchaser for Value Without Notice, Civil Procedure, Default Judgments, Setting Aside, Land Titles Act, R.S.O. 1990, c. L.5., s. 78(4), Rules of Civil Procedure, Rule 59.06, Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244, Thomas Farrell at al. v. John Kavanagh et al., 2020 ONSC 8154, 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702 (Div. Ct.), Babbie v. Petryczka (1975), 8 O.R. (2d) 718 (C.A.), Winters v. Hunking, 2017 ONCA 909, Ontario Housing Corp. v. Ong, (1987), 58 O.R. (2d) 125 (H.C.), Corbor v. Oakshott (1913), 13 D.L.R. 528 (Alta. S.C.), Gowling Lafleur Henderson LLP, Recovery Services Group, Marriott and Dunn: Practice in Mortgage Remedies in Ontario, loose-leaf (2021-Rel. 7), 5th ed. (Toronto: Thomson Reuters Canada, 2020), Canning v. Avigdor, [1961] O.W.N. 59 (Ont. C.A.), Blonski v. Jarmakowicz (1957), 9 D.L.R. (2d) 66 (Ont. H.C.), Diguillo v. Boland (1958), 13 D.L.R. (2d) 510 (Ont. C.A.), United Trust Co. v. Dominion Stores Ltd., [1977] 2 S.C.R. 915, Manias v. Norwich Financial Inc., 2008 ONCA 532, MacIsaac v. Salo, 2013 ONCA 98, MacIsaac v. Salo, citing Durrani v. Augier (2000), 50 O.R. (3d) 353 (S.C.J.), 719083 Ontario Ltd. v. 2174112 Ontario Inc., 2013 ONCA 11, aff'g 2012 ONSC 3815, Gold v. Rosenberg, [1997] 3 S.C.R. 767, Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, Tang v. Xpert Credit Control Solutions Inc., 2022 ONSC 1493

1152729 BC Ltd v. Chicago Title Insurance Company Canada, 2022 ONCA 321

Keywords:Contracts, Insurance, Title Insurance, Coverage, Duty to Defend, Rules of Civil Procedure, Rule 25.06(9), Panasonic Eco Solutions Canada Inc. v. XL Specialty Insurance Company, 2021 ONCA 612, 466 D.L.R. (4th) 276, Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, Wi-Lan Inc. v. St. Paul Guarantee Insurance Company, 2005 ABCA 352, [2006] 7 W.W.R. 458, leave to appeal refused, [2005] S.C.C.A. No. 548, Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, Kerr v. Baranow, 2011 SCC 10, Moore v. Sweet, 2018 SCC 52, Chicago Title Insurance Company v. 100 Investment Limited Partnership, 355 F. 3d 759 (4th Cir. 2004), Security Title Guarantee Corporation of Baltimore v. 915 Decatur St. NW, LLC, 2019 WL 6728449 (D.D.C.), Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, 1540039 Ontario Limited v. Farmers' Mutual Insurance Company (Lindsay), 2012 ONCA 210, 110 O.R. (3d) 116

Ontario Securities Commission v. Go-To Developments Holdings Inc., 2022 ONCA 328

Keywords: Securities Regulation, Enforcement, Receiverships, Procedural and Natural Justice, Adjournments, Civil Procedure, Appeals, Fresh Evidence, Securities Act, R.S.O. 1990, c. S.5, s. 126(1), Bank of Montreal v. Cadogan, 2021 ONCA 405, Penner v. Niagara (Regional Police Services Board), 2013 SCC 19

Short Civil Decisions

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2022 ONCA 331

Keywords: Contracts, Agency Agreements, Debtor-Creditor, Defences, Set-Off, Public Policy, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Uber Technologies Inc. v. Heller, 2020 SCC 16

Capsey v. Whiteside, 2022 ONCA 333

Keywords: Torts, Negligence, Occupier's Liability, Evidence, Credibility, Occupiers' Liability Act, R.S.O. 1990, c. O.2

Tewari v. McHenry, 2022 ONCA 335

Keywords: Civil Procedure, Striking Pleadings, Privilege, Absolute Privilege, Leave to Amend, Ontario Labour Relations Board

Derenzis v. Johnson, 2022 ONCA 323

Keywords: Civil Procedure, Striking Pleadings, Leave to Amend, Fraud, Breach of Contract, Negligence, Limitation Periods, Normart Management Ltd. v. West Hill Redevelopment Co. Ltd. (1998), 37 O.R. (3d) 97 (C.A.)

Overtveld v. Overtveld, 2022 ONCA 332

Keywords: Civil Procedure, Appeals, Extension of Time, Costs

Loojune v. Loojune, 2022 ONCA 334

Keywords: Wills and Estates, Guardianship, "Best Interests" Test, Management of Property, Fraud, Bias

Hemchand v. Toronto Community Housing Corporation, 2022 ONCA 330

Keywords: Civil Procedure, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, Rule 2.1, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733

Farej v. Fellows, 2022 ONCA 342

Keywords: Civil Procedure, Appeals, Orders, Courts of Justice Act, s. 134(7), Farej v. Fellows, 2022 ONCA 254

CIVIL DECISIONS

Smith v. Youthlink Youth Services, 2022 ONCA 313

[Doherty, Huscroft and Harvison Young JJ.A.]

Counsel:

M. Birdsell, Z. Shariff, and C. Millgate for the appellant, L.S

L. Rosen and C. Catelin, for the respondent, YouthLink Youth Services

L. Naidoo, for the intervener, Landlord and Tenant Board

facts:

The appellant was admitted into a transitional housing program operated by the respondent YouthLink, a registered charity that provides a range of programs and services to people aged 16-21. She was admitted on December 8, 2019 with a discharge date set for one year later, December 7, 2020. However, she was discharged after approximately one month.

The appellant was discharged from the program early because YouthLink alleged that she had failed to follow the program's rules and expectations. In particular, YouthLink was concerned that the appellant's failure to comply with COVID-19 directives and requirements posed a risk to the health and safety of other residents, as well as their staff. Despite being advised not to return to the premises until completing a period of self-isolation, the appellant returned on March 30, 2020. YouthLink staff called for the police and the appellant was removed.

The appellant applied to the Landlord and Tenant Board (the "Board") for an order to determine whether the protections of the Residential Tenancies Act (the "Act") applied to the YouthLink program. The Board concluded that the Act did not apply to the program. The Board's decision was then confirmed by the Divisional Court, and the appellant appealed with leave to the Ontario Court of Appeal.

issues:

(1) Did the Divisional Court err by failing to follow and apply the governing principles of statutory interpretation?

(2) Did the Divisional Court err by failing to consider and apply the definition of transitional housing?

(3) Did the Divisional Court err by failing to properly consider and weigh the remedial purpose of the Act?

(4) Did the Divisional Court err by failing to take into account the legislature's intent and purpose for introducing s. 5.1 to the Act?

(5) Did the Divisional Court err by failing to consider the appellant's arguments with respect to the evidentiary issues before the Board?

holding:

Appeal dismissed.

reasoning:

(1), (2), (3), (4), (5)
The standard of review was correctness, as leave to appeal under s. 210 of the Act is restricted to appeals on questions of law. Correctness review empowers the court to substitute its view for that of the administrative actor. The court should, of course, consider the legal analysis of the administrative actor, but it does not defer to it; the decision concerning the interpretation of the Act belongs to the court.

All five issues argued on appeal were related to one question: whether section 5(k) of the Act continued to exempt the YouthLink program from the Act. The Court found that it did.

Section 5(k) is concerned with transitional housing. Although that concept is not defined in the Act, the nature of transitional housing in that section can be discerned from the terms of the exemption. Transitional housing is not concerned with simply the provision of short-term accommodation; rather, it is concerned with the provision of short-term accommodation for the purpose of receiving rehabilitative or therapeutic services. The duration of the accommodation is either fixed or tied to completion of an individual's particular program, following which that individual will transition to another housing option.
Having regard to the text, context, and purpose of the legislation, the Court concluded that rehabilitative and therapeutic services in s. 5(k) must be interpreted as including not only medically-related services but also a broader range of support services including counselling and case management – services that are designed to establish the ability for individuals to transition to independent accommodation. In short, SOL-45003-14 (Re), relied on by the Board in support of its interpretation of s. 5(k), was correctly decided.

The Court also rejected the appellant's argument that s. 5.1 of the Act reflects an intention to give s. 5(k) a different interpretation which creates a new regime governing transitional housing with which YouthLink and other transitional housing providers must comply in order to be exempt from the Act. The Court stated that s. 5.1 expands the exemptions to the Act significantly. It does so by including programs longer than one year in duration; programs that need not include rehabilitative or therapeutic services; and programs that may be accompanied by services that are not necessarily provided by the housing provider. The Court agreed that there is some overlap between ss. 5(k) and 5.1, but stated that nothing in s. 5.1 alters the operation of s. 5(k); a provider of services may be exempt from the Act by operation of one provision but not the other. Thus, the Board and the Divisional Court correctly held that even if s. 5.1 establishes a new, more comprehensive scheme for the regulation of transitional housing that overlaps to some extent with s. 5(k), the operation of s. 5(k) is not precluded on that account. Further, the Legislature's decision not to amend s. 5(k) but, instead, to preserve its operation regardless of s. 5.1 must be given effect.

Medcap Real Estate Holdings Inc. (Re), 2022 ONCA 318

[Trotter, Zarnett and Favreau JJ.A.]

Counsel:

F.S. Turton, for the appellant

I.Y. Lavrence and R. Allan, for the respondents

facts:

The respondents Groia & Company Professional Corporation ("Groia") and Anne Wilson ("Wilson"), together with three other entities – Bennington Financial Corp. ("Bennington"), Heffner Development Group (Brampton) Limited ("Heffner") and Physiomed Health Holdings Inc. ("Physiomed") – brought applications for a bankruptcy order against the appellant, Medcap Real Estate Holdings Inc. ("Medcap"), pursuant to s. 43(1) of the Bankruptcy and Insolvency Act (the "BIA").

The application judge dismissed the applications of Bennington, Heffner, and Physiomed. He granted the applications of the respondents Groia and Wilson and made a bankruptcy order against the property of Medcap. He appointed A. Farber & Partners as trustee.

Medcap appealed the bankruptcy order on a single ground. It submitted that the application judge erred in failing to exercise his discretion to dismiss the application even though the prerequisites to the making of a bankruptcy order – a debt owing to an applicant of at least $1,000 and the commission of an act of bankruptcy within six months of the commencement of the application – had been proven.

Medcap made three arguments as to why the Court should interfere: (i) that the application judge erred in not finding that Medcap had the ability to pay its debts; (ii) that he erred in failing to find the application was brought for an improper motive; and (iii) that he erred in failing to appreciate that a bankruptcy order would serve no purpose

issues:

(1) Did the application judge err in failing to exercise his discretion to dismiss the application even though the prerequisites to the making of a bankruptcy order had been proven?

holding:

Appeal dismissed.

reasoning:

(1) No.

Ability to Pay Debts

The application judge did not err in rejecting Medcap's argument. An application for a bankruptcy order is not merely for the benefit of the applicant creditor, but rather for all creditors. Arrangements between the applicant creditor and the debtor will not justify the withdrawal or dismissal of a bankruptcy application unless the court is satisfied that the debtor is solvent and other creditors will not be prejudiced by the withdrawal or dismissal: Bankruptcy and Insolvency Law of Canada.

To meet the test of an ability to pay debts as contemplated in s. 43(7), the focus must be on all of the debts. A debtor is required to lead evidence sufficient to establish what all of its debts are and also of its ability to pay them – in other words, that it is solvent.

Medcap did not lead such evidence. It did not establish its overall financial position, who all of its creditors were, and why its resources were sufficient to satisfy each of them. Medcap was not entitled to ask the Court to assume that its only creditors were those discussed in the evidence, given that it did not endeavour to meet its onus of showing its overall financial position.

Nor could a conclusion that Medcap had the ability to pay its debts be drawn simply from payments to some creditors, such as Wilson and Groia, since Medcap did not show that such payments were made by it or from its own resources, or by taking on obligations it had the ability to satisfy.

Improper Motive

The existence of a motive is a question of fact. The application judge considered, and rejected, the suggestion that there was such an ulterior motive.

This finding was open to the application judge on the record, and the Court saw no basis to interfere with it.

No Purpose to a Bankruptcy

A debtor who has (a) committed an act of bankruptcy consisting of not paying debts as they generally come due, and (b) failed to lead evidence to satisfy the Court that it has the ability to pay its creditors bears a very heavy onus to show that a bankruptcy would nonetheless serve no purpose. The application judge did not err in finding that Medcap had not fulfilled that onus.

Although secured creditors stand largely outside the BIA process, Medcap had not shown either the non-existence of unsecured creditors, or that the value of its property that is subject to security does not exceed the secured claims. Accordingly, it has not shown that a BIA liquidation cannot serve a purpose.

Although Medcap complained that the application judge did not properly consider the situation at its Upper Wentworth property, the Court saw no error. The application judge noted that a maturing secured debt on that property was not paid by Medcap but by a related party who took an assignment of the security. He also noted that the only tenant of the property was a non-arm's length entity. Viewed from the standpoint of the protection of creditors, these facts were relevant to the question of whether Medcap had shown that matters should simply continue to be left in its hands.

Similarly, the Court saw no error in the application judge's consideration of events at Medcap's Centennial Parkway property, including various litigation positions Medcap had taken with creditors. The application judge described these as raising serious concerns as they fell outside the bona fide raising of claims and defences. That finding was open to him to make.

Enterprise Rent-A-Car Canada Company v. Ontario (Finance), 2022 ONCA 327

[van Rensburg and Roberts JJ.A. and Tzimas J. (ad hoc)]

Counsel:

M.G. Williams and E.R. Potter, for the appellant

L. Patyk and D. Irvine, for the respondent

facts:

During an audit period from August 1, 2011 to July 31, 2015 ("the audit period"), Enterprise Rent-A-Car Canada Company ("Enterprise"), under its GST/HST number, remitted to the CRA as HST the taxes charged and collected on the insurance products sold to its customers. Its invoices to its customers bore its GST/HST number and set out the amount charged as HST.

On May 28, 2015, the Ministry of Finance ("the Ministry"), wrote an email to K. C. (the Vice President of Business Management and Canadian Operations for Enterprise) wherein the Ministry indicated that it was unable to find an active retail sales insurance premium tax account for Enterprise after June 30, 2010. The Ministry wrote that "Your company has been collecting RST on behalf of insurers and you were obligated to remit it to the Ministry.... let me know whether the taxes were filed with CRA in error (as has happened in many instances) and action can be taken to remedy the situation."

In an email response dated May 29, 2015, K. C. stated: "I believe we have in fact been remitting the ORST (Premium Tax) in our HST (CRA) returns. You mention below there is a remedy, can you advise."

The Minister carried out four assessments and determined the amount owing as RST to be $1,477,947.45 plus interest of $438,408.82. Enterprise filed a notice of objection dated April 20, 2018, with respect to each of the assessments. Enterprise was unsuccessful in its objection, and subsequently appealed to the Superior Court and brought a motion for summary judgment on the primary basis that HST was collected and that RST was not collected.

The motion judge determined that Enterprise had erroneously remitted what was in fact RST to the CRA as HST. He based his conclusion primarily on the email exchange between K. C. and the Ministry, which the motion judge characterized as an admission that Enterprise was charging, collecting, and remitting RST during the audit period.

Enterprise appealed from the motion judge's decision and submitted that the motion judge erred in law by answering the wrong question. According to Enterprise, the analysis undertaken by the motion judge did not answer the question of which tax Enterprise in fact collected during the audit period but, instead, the question of which tax Enterprise thought it was collecting during the audit period

issues:

(1) Did the motion judge err in law by answering the wrong question?

(2) Which tax did Enterprise collect?

holding:

Appeal allowed.

reasoning:

(1) Yes.

While initially and correctly stating the question to be determined, the motion judge did not answer it. Rather, the motion judge focused on what tax Enterprise believed it was collecting, which he based primarily on K. C.'s email exchange with the Ministry.

The Court held that by focusing on Enterprise's belief through K. C.'s evidence, the motion judge answered the wrong question and fell into error. Enterprise's belief was not dispositive of the analysis about which tax Enterprise was in fact collecting. This was not a case where the taxpayer deliberately charged, collected, and remitted the wrong tax to the wrong government ministry. Rather, Enterprise's collection and remittance of HST to the CRA, instead of RST to the Ministry, was a product of error or confusion as to which tax should be collected.

(2) HST.

The Court held the evidence of the actions that Enterprise in fact carried out was uncontroverted. As a result of the tax harmonization in July 2010, Enterprise's internal tax team determined that HST and not RST was payable on the three insurance products in issue: 8% on two of them and 13% on the third. As a result, Enterprise changed its invoicing practices and internal controls to charge, collect, and remit HST on those insurance products. As of the effective date of harmonization, Enterprise closed its provincial tax accounts and updated its invoices to no longer show PST but instead showed HST, along with its GST/HST number. It did not register or open an RST account with the Ministry. There is no question that Enterprise duly remitted all the taxes collected to the CRA as HST during the audit period. The amounts so charged and collected by Enterprise were reported and remitted to the CRA in Enterprise's HST returns under Enterprise's GST/HST number.

The evidence clearly established that during the audit period Enterprise was charging, collecting, and remitting HST to the CRA. The Court held it would make absolutely no sense that Enterprise would knowingly charge, collect, and remit RST to the CRA. Rather, it would have complied with its obligations under the Retail Sales Tax Act and its regulations to charge, collect, and remit RST to the Ministry.

The parties agreed that the only basis for the Minister's assessments in this case was under s. 18 of the Retail Sales Tax Act, which permits assessments of the "tax collected". The "tax collected" by Enterprise was not RST but HST. Accordingly, the Minister had no basis to assess the "tax collected" by Enterprise.

Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 326

[Lauwers, Huscroft and Coroza JJ.A.]

Counsel:

Z. Levy and H. Skinner, for the appellant

D. Sischy and B. Pascutto, for the respondent

facts:

The appellant Detour Gold Corporation is the registered owner of certain mining claims and leases in Northern Ontario. It acquired its interest from Conquest Resources Inc. The respondent, Prism Resources Inc., sued Detour for a declaration that it has a valid and enforceable royalty interest in Detour's mining claims and leases in two properties. The motion judge granted summary judgment, concluding that Prism's royalty interest was an interest in land under the principles of law set by the Supreme Court.

issues:

(1) Did the motion judge make palpable and overriding factual errors?
(2) Did the motion judge err in her approach to the governing law in Dynex?
(3) Did the motion judge err in her approach to contractual interpretation? That is, did the motion judge make improper use of the evidence of the "surrounding circumstances", which she permitted to "overwhelm" the text of the 2004 Letter Agreement?
(4) Did the motion judge err in taking into account the post-transaction conduct of the parties?

holding:

Appeal dismissed.

reasoning:

The motion judge's chain of reasoning led her to conclude: "In all the circumstances, I am satisfied that the Letter Agreement created a property interest which runs with the lands in question". The appellant was unable to demonstrate any error in her methodology or chain of reasoning, nor any error in principle or palpable and overriding error of fact.

(1) No.

The appellant asserted that the motion judge clearly erred when she said, "Prism ultimately acquired a 100% interest in the Properties". The court disagreed with the appellant's position, stating that this argument did not fit with other statements in the reasons that showed the motion judge's complete and accurate grasp of the true situation. The appellant also argued that the motion judge made a similar error when she said that at the time of the 2004 Letter Agreement "Conquest was the owner". Again, the court disagreed with this argument, stating that this demonstrated that the motion judge knew throughout that the issue was about an interest in an interest. The latter is further supported at para. 30 when she said "Conquest could make such payments on its behalf, whereupon Conquest's interest in Prism's interest in the Property would increase..." (emphasis added).

(2) No.

The appellant argued that "[t]he 2004 agreement does not state that Prism's interest was 'in the land' or contain any other language conveying an intention to create a right that would bind future owners of the Properties. The Dynex case recognized that a "royalty interest" or an "overriding royalty interest" can be an interest in land under two conditions: first, if "the language used in describing the interest is sufficiently precise to show that the parties intended the royalty to be a grant of an interest in land, rather than a contractual right to a portion of the oil and gas substances recovered from the land"; and, second, if "the interest, out of which the royalty is carved, is itself an interest in land". The Court stated that the motion judge was well-aware of the reasoning in Dynex, noting, at para. 18: "The ruling in Dynex specifically changed the law to bring it in line with industry practice, to permit a royalty that consists of a right to payment of profits to be an interest in land". After specifying the two-part test in Dynex, the motion judge said, at para. 19: "There is no issue in this case that the second part of the test set out in Dynex is satisfied in that the property interest claimed by Prism has been carved out of Conquest's property interest". Further, the court noted "contractual terms are not necessarily determinative of whether an interest in land was intended; the language does not require magic words to demonstrate the parties' intention".

(3) No.

In simplified terms, the Court stated that the governing principles of contractual interpretation revolve around text, context, and purpose. Importantly, that the "surrounding circumstances", as noted in the Sattva case, "must never be allowed to overwhelm the words of that agreement" and cannot be used "to deviate from the text such that the court effectively creates a new agreement". The Court stated that it believed the motion judge to have been careful in instructing herself on the proper use of the evidence of the surrounding circumstances according to the Supreme Court of Canada in Sattva. The surrounding circumstances the motion judge considered were set out in the evidence the parties filed and over which they argued. While the appellant further argued that the motion judge erred in her use of the interpretative principle of commercial reasonableness, the court stated that the use of "commercially reasonable" is implicit in the Supreme Court's logic for contractual analysis and is also a basic to the interpretation of commercial contracts.

(4) No.

Unlike the factual matrix, which "relates solely to events at the time of contract formation," evidence of which is "admissible in every case," evidence of the parties' subsequent conduct is only admissible in certain circumstances. If, after considering the text and the factual matrix, the contract remains ambiguous, then subsequent conduct evidence may be admitted to help resolve that ambiguity. This is not to say that the probative value of such does not come without risk, and therefore a court must carefully consider how much weight to assign to conduct subsequent to contractual formation. The Court determined that the motion judge was scrupulous in her self-instruction on the use to which subsequent conduct could be put, including the Court's decision in Shewchuk. Her analysis did engage with the factual question of whether there was an ambiguity. Immediately after pointing this ambiguity out, the motion judge dealt with surrounding circumstances, which she was entitled to consider under Sattva, even without an ambiguity. It was only after this methodology that the motion judge turned to the subsequent conduct. After doing so, the motion judge came to the determination that the subsequent conduct showed that Prism's royalty interests were considered by Conquest, and hence by its contracting party, Detour, to be a permitted encumbrance. The Court further pointed out that the motion judge expressly noted that Conquest's subsequent conduct on which Prism relied did not have the dangers referred to by the Court in Shewchuk because the conduct occurred before any dispute between Prism and Detour, so "it could not possibly have been contrived to benefit Prism in this proceeding (that is referring to the dangers that can be associated with relying on subsequent conduct)."

Martin v. 11037315 Canada Inc., 2022 ONCA 322

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

Counsel:

P. Robson and S. Chhina, for the appellants

D. Van Sickle, for the respondent

M. Whiteley and M. Dhaliwal, for the non-party 1614358 Ontario Ltd.

K. Randhawa, for the non-party R.S.P.

facts:

The appellants appealed from an order of Gibson J. dated December 23, 2020, setting aside a default judgment for foreclosure and possession of charged property dated November 20, 2019.

The appellant, 11037315 Canada Inc. ("1103"), was the chargee who obtained the default judgment for foreclosure. The appellant, 2670082 Ontario Corp. ("267"), purchased the property from 1103 for $425,000 under an agreement of purchase and sale dated December 5, 2019.

The respondent, K.M., was the owner/chargor of the subject property prior to the November 20, 2019 default judgment for foreclosure.

The December 23, 2020 order setting aside the default judgment for foreclosure also contained terms requiring that the subject property be sold, that the net proceeds of sale in excess of $425,000 be paid to K.M., and that the appellant chargee, 1103, pay to K.M. the difference between $425,000 and the amount 1103 claimed in its statement of claim as owing on its charge.

issues:

(1) Did the application judge err in setting aside the default judgment for foreclosure and possession of the property?

(2) Did s. 78(4) of the Land Titles Act preclude the Court from interfering with 267's title?

holding:

Appeal allowed in part.

reasoning:

(1) No.

The application judge's reasons demonstrated that he fully considered the factors set out in Winters v. Hunking and concluded that the equities in favour of setting aside the default judgment outweighed the equities against doing so. The application judge acknowledged that K.M. made a mistake in failing to consult a lawyer promptly after being served with the statement of claim. Nonetheless, the Court agreed with his conclusion that, overall, the evidence on the application overwhelmingly demonstrated that the equities favoured setting aside the default judgment.

In particular, the evidence showed that 1103 proceeded with the foreclosure and sale with great haste in a manner that concealed that K.M. was at risk of losing her significant equity in the property and further, that 1103 and 267 made a bargain that effectively split K.M.'s significant equity in the property between the two companies.

Subject to what the Court had to say about s. 78(4) of the Land Titles Act and the application judge's finding that 267 was not a bona fide purchaser for value without notice (which would not affect the decision to set aside the default judgment as against 1103), the Court saw no palpable and overriding error in the application judge's findings of fact, no error in principle in his reasoning and no other basis on which to interfere with his discretionary decision to set aside the default judgment based on equitable principles.

Further, the Court saw no error in the application judge's alternative conclusion that the default judgment for foreclosure and possession should be set aside because it was irregularly obtained.

(2)

Because the Court concluded that s. 78(4) of the Land Titles Act was not raised in the court below, the Court was not persuaded the application judge's finding was necessarily an error in the context in which it was made. The "without notice" component of bona fide purchaser for value without notice can refer to actual and/or constructive notice depending on the context.

As s. 78(4) was not raised before him, the application judge was not required to determine whether any exception to its application existed. In particular, he was not required to consider the specific issue whether 267 had actual notice at the time of purchasing the property that K.M. was occupying the property and may have had a claim to set aside the default judgment for foreclosure. In the circumstances, his finding that the principal of 267 or 267 had constructive knowledge that foreclosure judgments can be set aside did not preclude a finding of actual knowledge when the issue was considered in relation to s. 78(4) of the Land Titles Act.

The Court considered the record to assess whether it was in a position to determine whether 267 was a bona fide purchaser for value without notice such that it qualified for the protection of s. 78(4) of the Land Titles Act. The Court concluded that it was not.

267 submitted that, in purchasing the property, it relied on the default judgment for foreclosure and that its solicitor examined the judgment and underlying statement of claim to confirm that the foreclosure was carried out properly. It claimed it had no notice of any defect or irregularity in the foreclosure proceeding and "discover[ed] that the owners prior to the Foreclosure were still occupying the property" on a visit to the property after the purchase was completed.

However, to assess whether 267 had actual notice that K.M. was occupying the property and may have had a claim to set aside the foreclosure judgment, it was necessary to consider the inferences arising from the circumstances in which the purchase was arranged, how it was handled, what 267 knew about the property and the terms and conditions of sale. In the Court's view, there were issues arising from the evidence given by the principal of 267 about these matters.

The totality of this evidence raised questions about what 267 or the principal of 267 knew about the true value of the property, who was occupying it and whether the occupant may have had a claim to set aside the default judgment for foreclosure.

In all the circumstances, the Court concluded there should be a trial of the issue whether 267 was a bona fide purchaser for value without notice that K.M. was occupying the property and may have had a claim to set aside the default judgment for foreclosure. Once this issue has been decided, the presiding judge can determine whether 267 is entitled to the protection of s. 78(4) of the Land Titles Act.

1152729 BC Ltd v. Chicago Title Insurance Company Canada, 2022 ONCA 321

[Feldman, Pepall and Tulloch JJ.A.]

Counsel:

T. Evangelidis and D. S. Fisher, for the appellant

P. Robson, for the respondent

Keywords: Contracts, Insurance, Title Insurance, Coverage, Duty to Defend, Rules of Civil Procedure, Rule 25.06(9), Panasonic Eco Solutions Canada Inc. v. XL Specialty Insurance Company, 2021 ONCA 612, 466 D.L.R. (4th) 276, Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, Wi-Lan Inc. v. St. Paul Guarantee Insurance Company, 2005 ABCA 352, [2006] 7 W.W.R. 458, leave to appeal refused, [2005] S.C.C.A. No. 548, Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, Kerr v. Baranow, 2011 SCC 10, Moore v. Sweet, 2018 SCC 52, Chicago Title Insurance Company v. 100 Investment Limited Partnership, 355 F. 3d 759 (4th Cir. 2004), Security Title Guarantee Corporation of Baltimore v. 915 Decatur St. NW, LLC, 2019 WL 6728449 (D.D.C.), Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, 1540039 Ontario Limited v. Farmers' Mutual Insurance Company (Lindsay), 2012 ONCA 210, 110 O.R. (3d) 116

facts:

The appellant insurer provided the respondent insured with title insurance on a property in Bradford, which the insured purchased under a power of sale from 9706151 Canada Ltd. ("970"). The former owner, CS, who had defaulted on his mortgage to 970, sued the insured and 970, seeking (i) a declaration that the sale to the insured was invalid, (ii) an order setting aside the sale, (iii) a certificate of pending litigation, and (iv) other relief. The insured called on the insurer to defend the action. The previous owner's amended statement of claim asked the court to set aside the sale and claimed, in the alternative, a remedy for unjust enrichment. The insurer initially agreed to defend the claim, but with a reservation of rights based on two exclusions in the policy for risks created by the insured or risks known to the insured, but not the insurer, on the date of the policy.

After the pleading containing a statement of defence, counterclaim, and crossclaim was delivered on behalf of the insured, it lost title to the property when the property was sold again by power of sale. Once the insured was no longer on title to the property, the insurer advised the insured that it no longer had a duty to defend or indemnify it. The insured then brought an application for an order that the insurer's duty to defend continued even though it no longer owned the property, because CS's action included a claim against the insured for damages and once the insurer undertook the defence, the policy did not allow it to resile from the defence of the action.

On the application, counsel for the insurer conceded that, although the insured no longer had title to the property, if the amended statement of claim also claimed damages against the insured, the insurer's duty to defend would remain in place. Therefore, the issue before the application judge was whether the amended statement of claim did contain a claim for damages against the insured. If it did, the duty to defend continued.

The application judge found that, giving the amended statement of claim a "generous" reading, it contained a claim for damages against the insured. As a result, the duty to defend continued. The insurer appealed.

issues:

(1) Did application judge err by finding that the amended statement of claim included a claim for damages against the insured, based on five errors of law;

considering the allegations made in the insured's statement of defence;
applying the wrong principles of interpretation and in particular, applying a fanciful rather than a reasonable reading of the pleading;
failing to use Rule 25.06(9) of the Rules of Civil Procedure to assess whether the amended statement of claim sought damages based on unjust enrichment against the insured;
erring in the interpretation of available remedies for unjust enrichment; and
considering extrinsic evidence in the interpretation of the claim?

holding:

Appeal dismissed.

reasoning:

(1) No.

There was no error in the application judge's analysis or conclusion that the amended statement of claim could reasonably be read to include a claim for damages against the insured. The duty to defend continued in this case, even though the insured no longer owned the property.

The pleading by the claimant against the insured is what triggers the duty to defend. If the facts alleged in the pleading would, if true, require the insurer to indemnify, then the insurer has the duty to defend. The pleadings are to be interpreted broadly, with any doubt to be resolved in favour of the insured. Where the claim alleges facts that might fall within coverage, the duty arises.

Considering the allegations made in the insured's statement of defence

The reasons of the application judge made it clear that she determined the meaning and effect of the amended statement of claim based only on that pleading, then looked at the statement of defence, and found confirmation, because it was drafted by counsel representing the insurer. She emphasized that the response by counsel appointed by the insurer was not determinative of the meaning of the amended statement of claim, but only a factor to be considered. As her finding did not turn on the pleading in the statement of defence, it was not an error.

2. Applying the wrong principles of interpretation and, in particular, applying a fanciful rather than a reasonable reading of the pleading

The application judge's analysis of the claims in the amended statement of claim represented a reasonable and realistic view of that pleading. When the application judge referred to a "generous reading", that was another way of saying she was giving the allegations "the widest latitude". Within that parameter, the reading must be reasonable and not fanciful. Had counsel retained by the insurer for the insured believed that once the insured no longer owned the property, there was no other claim against it left in the amended statement of claim, counsel could have moved on behalf of the insured to have the action dismissed against it. That was not done because it would not have been successful.

3. Failing to use Rule 25.06(9) of the Rules of Civil Procedure to assess whether the amended statement of claim sought damages based on unjust enrichment against the insured

The insurer was incorrect that, because CS did not seek a specific amount of damages from the insured, his pleading did not seek a monetary remedy from it, and, to find otherwise, would endorse non-compliance with Rule 25.06(9).

The pleading claims a constructive trust and a remedy for unjust enrichment, both of which could involve the payment of money, depending on the circumstances, which would include the state of and availability of the property. While the amended statement of claim does not explicitly seek monetary damages for unjust enrichment, it does specifically plead that the insured was unjustly enriched by improperly acquiring the property at a "deep discount". The pleading quantifies the damages as the difference between the sale price and the fair market value of the property.

4. Erring in the interpretation of available remedies for unjust enrichment

There was no merit to the insurer's argument that, because the property was CS's home, a proprietary remedy would be more appropriate than a monetary one. A monetary remedy is viewed as the primary remedy for unjust enrichment. A constructive trust will only be ordered if the plaintiff first establishes that a monetary remedy would be inadequate. Even if it was not the primary remedy, damages are an available remedy for unjust enrichment, depending on the circumstances at the time of judgment.

5. Considering extrinsic evidence in the interpretation of the claim

The insurer objected to the application judge considering the fact that the insured no longer owned the property after the amended statement of claim was delivered, and relying on that fact to find that damages would be the only available remedy for unjust enrichment. The claims in the pleading for unjust enrichment and constructive trust over the proceeds of the sale could be read to include claims against the insured, the remedy for which can be damages. Therefore, it was not necessary for the application judge's interpretive analysis to consider the subsequent sale of the property. If it was an error to do so, it was a harmless error.

Ontario Securities Commission v. Go-To Developments Holdings Inc., 2022 ONCA 328

[Gillese, Miller and Coroza JJ.A.]

Counsel:

G. Azeff and M. Faheim, for the appellants

R. P. Steep, E. Hoult, S. D'Souza and B. Stapleton, for the respondent

I. Aversa and T. Dolny, for KSV Restructuring Inc.

facts:

The Ontario Securities Commission (the "Commission") had been investigating the appellants for breaches of securities law. O. F. was the principal of Go-To Developments Holdings Inc., and according to the Commission, O. F. was the directing mind of the other appellants, including Go-To Spadina Adelaide Square LP ("Adelaide LP"). The Commission investigation revealed that undisclosed payments were made to O. F. resulting in misappropriation and improper use of Adelaide LP funds.

On December 19, 2021, an application to appoint a receiver and manager over Go-To Developments Holdings Inc. and the other related companies was heard. Counsel for O. F. sought an adjournment so that O. F. could retain new counsel and file responding material. The Commission opposed the adjournment request.

The application judge denied the adjournment and granted the application appointing a receiver and manager. The application judge explained that, based on the allegations against O.F., the interests of the investors made it necessary to deal with the application rather than adjourn it and leave O. F. in charge. The application judge also stated it was his view that O. F. had sufficient notice to file material.

The appellants appealed the Receivership Order.

issues:

(1) Did the application judge err in denying the appellant's adjournment request?

(2) Did the application judge err in admitting the transcripts of O. F.'s examination in the Commission investigation?

holding:

Appeal dismissed.

reasoning:

The Commission applied for the admission of fresh evidence on the appeal, consisting of two reports of the receiver and further evidence of the appellants' actions since the Receivership Order. The Court admitted the fresh evidence as it held it was credible, not available when the application was heard, and relevant.

(1) No.

The decision of whether to grant an adjournment will be set aside only where the judge misdirected him or herself or was so clearly wrong as to amount to an injustice. The Court held the application judge did not misdirect himself.
Far from being "clearly wrong", the Court held the fresh evidence showed that the application judge's concerns about O. F.'s conduct were justified. The application judge denied the adjournment and made the Receivership Order based on concerns O. F.'s ability to operate Go-To in a manner compliant with securities laws and to protect the investors. The fresh evidence demonstrated further misconduct and self-dealing after O. F. was served with the application materials.

The Court also held it was significant that the application judge was satisfied that O. F. had sufficient notice of the application and time to respond.

(2) Declined to address.

The Court declined to address the issue of the application judge's reliance on the transcripts of O. F.'s examination in the Commission investigation, as the appellants raised the issue for the first time on appeal.

Because the issue was not raised below, there was no adequate record on which the Court could consider and decide it. The Court held the Commission may well have adduced evidence on the matter; the parties would have had the opportunity to squarely argue the matter in the context of an appropriately constructed record; and the application judge would have decided the matter and given reasons for that decision.

SHORT CIVIL DECISIONS

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2022 ONCA 331

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

S. Schwisberg, for the appellant

J-S. Schoenholz and A. Paquette, for the respondent

Capsey v. Whiteside, 2022 ONCA 333

[Fairburn A.C.J.O., Paciocco and Sossin JJ.A.]

Counsel:

W. W., acting in person as the appellant

W. C. Wolfe, acting for the respondent

Keywords: Torts, Negligence, Occupier's Liability, Evidence, Credibility, Occupiers' Liability Act, R.S.O. 1990, c. O.2

Tewari v. McHenry, 2022 ONCA 335

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

G. T., acting in person as the appellant

D. Iny and M. Anderson, for the respondents

Keywords: Civil Procedure, Striking Pleadings, Privilege, Absolute Privilege, Leave to Amend, Ontario Labour Relations Board

Derenzis v. Johnson, 2022 ONCA 323

[Gillese, Miller and Caroza JJ.A]

Counsel:

O.G. Barnwell, for the appellant

L. Hickman, for the respondents

Overtveld v. Overtveld, 2022 ONCA 332

[Lauwers, Nordheimer and Zarnett JJ.A.]

Counsel:

G. F. Windsor, for the moving parties

G. J. Tighe, for the responding parties Blaney McMurtry LLP and T. MacDonald, and as agent for the responding parties C.R., MBC Law PC, R.R., Borden Ladner Gervais LLP, K.M., D.S.-S., Norton Rose Fulbright LLP, J.M., Cavanaugh LLP, S.S., M.R., Merovitz Potechin LLP, Y.V. and C.M.

A. Posno, for the responding parties J.O., T.O. and G.K.

J. Warwick, for the responding party Logan Katz LLP

K.W. Nash, for the responding party L.B.

Keywords: Civil Procedure, Appeals, Extension of Time, Costs

Loojune v. Loojune, 2022 ONCA 334

[Fairburn A.C.J.O., Pepall and Sossin JJ.A.]

Counsel:

N. L., acting in person as the appellant

S. Jones, for the respondent Office of the Public Guardian and Trustee

No one appearing for the respondent D.L.

Keywords: Wills and Estates, Guardianship, "Best Interests" Test, Management of Property, Fraud, Bias

Hemchand v. Toronto Community Housing Corporation, 2022 ONCA 330

[Benotto, Miller and Copeland JJ.A.]

Counsel:

R.H., acting in person as the appellant

D.L., for the respondent Toronto Community Housing Corporation

M. Chung, for the respondent Attorney General of Ontario

Keywords: Civil Procedure, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, Rule 2.1, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733

Farej v. Fellows, 2022 ONCA 342

[Doherty, Miller and Sossin JJ.A]

Counsel:

J.J. Adair, J.V. Katz, D. Embury, D.M. Pacheco and B. Di Domenico, for the appellants

P.W. Kryworuk and J.R.W. Damstra, for the respondent

Keywords: Civil Procedure, Appeals, Orders, Courts of Justice Act, s. 134(7), Farej v. Fellows, 2022 ONCA 254

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.

Canada: Court Of Appeal Summaries (April 25 - 29, 2022)
Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

Canada: Court Of Appeal Summaries (April 25 - 29, 2022) Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

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Canada: Court Of Appeal Summaries (April 25 - 29, 2022)
Blaney's Appeals