Court Of Appeal Summaries (August 22, 2022 – August 26, 2022) - Civil Law

Good afternoon.

Following are this week's summaries of the Court of Appeal for Ontario for the week of August 22, 2022.

In Mundo Media Ltd. (Re), the Court refused leave to appeal in a bankruptcy case where a debtor of the bankrupt sought to stay the bankruptcy proceeding in favour of international arbitration. The single proceeding model permits a bankruptcy court to override arbitration agreements.

In 2264052 Ontario Inc. v. Brockville Centre Development Corp., the Court took issue with the trial judge's analysis of the parties' claims at trial and the manner in which the trial unfolded. Specifically, the Court held that the trial judge failed to establish the proper foundation for a fiduciary duty that would establish liability on the appellants. Consequently, the Court determined that, given the lack of analysis of the various causes of action that were advanced, the failure to relate the evidence to them, and certain factual findings that were made by the trial judge which were not borne out the evidence, the reasons of the trial judge did not allow for appellate review. The trial judge's reasons simply failed to properly explain to the parties the basis upon which the trial judge fixed liability on the appellants. A new trial was ordered.

Other topics this week include the court's discretion in hearing a motion for partial summary judgment, condominium oppression and liens to enforce a special assessment, and setting aside default judgments.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferriera
Blaney McMurtry LLP
416.597.4895 Email

Civil Decisions

NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 602

Keywords: Fraud, Punitive Damages, Civil Procedure, Partial Summary Judgment, Costs, Full Indemnity, Limitation Periods, Fraudulent Concealment, Malik v. Attia, 2020 ONCA 787, Envoy Relocation Services Inc. v. Canada (Attorney General), 2013 ONSC 2622, Vandenberg v. Wilken, 2019 ONCA 262, Mason v. Perras Mongenais, 2018 ONCA 978, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Hryniak v. Mauldin, 2014 SCC 7

Mundo Media Ltd. (Re), 2022 ONCA 607

Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Arbitration Agreements, Enforceability, Single Proceeding Model, Appeals, Leave to Appeal, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193 (a) – (e) and 243, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5, UNCITRAL Model Law on International Commercial Arbitration, Sam Lévy & Associés Inc. v. Azco Mining Inc., 2001 SCC 92, [2001] 3 S.C.R. 978, Re: Essar Steel Algoma Inc. Et al, 2016 ONSC 595, Montréal, Maine & Atlantic Canada Co., 2013 QCCS 5194, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Ravelston Corp. (Re) (2005), 24 C.B.R. (5th) 256 (Ont. C.A.), Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, Romspen Investment Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, leave to appeal refused, [2017] S.C.C.A. No. 238, Royal Crest Lifecare Group Inc. (Re) (2004), 181 O.A.C. 115 (C.A.), leave to appeal refused, [2004] S.C.C.A. No. 104, Grant Forest Products Inc. v. The Toronto-Dominion Bank, 2015 ONCA 570, Cosa Nova Fashions Ltd. v. The Midas Investment Corporation, 2021 ONCA 581, Marchant Realty Partners Inc. v. 2407553 Ontario Inc., 2021 ONCA 375, McEwen (Re), 2020 ONCA 511, Automatic Systems Inc. v. Bracknell Corp. (1994), 18 O.R. (3d) 257 (C.A.), Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801, Uber Technologies Inc. v. Heller, 2020 SCC 16, 447 D.L.R. (4th) 179, Rogers Wireless Inc. v. Muroff, 2007 SCC 35, [2007] 2 S.C.R. 921, Canada (Attorney General) v. Reliance Insurance Co. (2007), 87 O.R. (3d) 42 (S.C.), Luscar Ltd. v. Smoky River Coal Ltd., 1999 ABCA 179, 175 D.L.R (4th) 703, leave to appeal application discontinued, [1999] S.C.C.A. No. 381, Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379, P.I.A. Investments Inc. v. Deerhurst Ltd. Partnership (2000), 20 C.B.R. (4th) 116 (Ont. C.A.), Thorne v. College of the North Atlantic, 2022 NLCA 31, 3113736 Canada Ltd. v. Cozy Corner Bedding Inc., 2020 ONCA 235, Roderick J. Wood, Bankruptcy and Insolvency Law (Toronto: Irwin Law, 2009)

MacDonald v. Wentworth Condominium Corporation No. 96, 2022 ONCA 606

Keywords: Real Property, Condominium, Declarations, Reserve Funds, Special Assessments, Oppression, Enforcement, Lien, Condominium Act, 1998, S.O. 1998, c. 19, s. 97(1) and s.97(4), Humphrey v. Mene Inc., 2022 ONCA 531, Doyle v. Zochem Inc., 2017 ONCA 130

FS Partnership/UPI Energy FS v. Mr. Refuel Inc., 2022 ONCA 612

Keywords: Breach of Contract, Civil Procedure, Default Judgments, Setting Aside, Orders, Settling Terms, Varying, Fresh Evidence, Rules of Civil Procedure, r. 3.02(1) and r. 59.04(10), Duffin v. NBY Enterprises Inc., 2010 ONCA 765, Beard Winter LLP v. Shekhdar, 2015 ONSC 4517, R. v. Palmer and Palmer, [1980] 1 S.C.R. 759, Brown v. The Municipal Property Assessment Corp., 2014 ONSC 7137 (Div. Ct.)

2264052 Ontario Inc. (Louch & Louch) v. Brockville Centre Development Corp., 2022 ONCA 610

Keywords: Contracts, Real Property, Mortgages, Duty of Honest Performance, Land Development, Torts, Negligent Misrepresentation, Civil Conspiracy, Fiduciary Duty, Civil Procedure, Reasons for Decision, Reasonable Apprehension of Bias, Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 25.06(8), Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Knoch Estate v. Jon Picken Ltd., [1991] O.J. No. 1394 (C.A.), Wawrzkiewicz v. Integrated Distribution Systems Limited Partnership, 2017 ONSC 1664, Bhasin v. Hrynew, 2014 SCC 71

Short Civil Decisions

Divitaris v. Gerstel, 2022 ONCA 605

Keywords: Civil Procedure, Litigation Guardians, Appeals, Jurisdiction, Final or Interlocutory, Leave to Appeal, Rules of Civil Procedure, r. 7.06(2), Willmot v. Benton, 2011 ONCA 104, Must v. Shkuryna, 2015 ONCA 665, Huang v. Pan, 2017 ONCA 268

Mondal v. Kirkconnell, 2022 ONCA 609

Keywords: Torts, Defamation, Anti-SLAPP, Civil Procedure, Appeals, Hearing Together, Courts of Justice Act, R.S.O. 1990 c. C.43, s. 137.1, Ontario Civil Appeals Practice Direction, s. 11.9, Williams v. Canada (AG), 2007 CarswellOnt 9967 (C.A.), Fairview Donut Inc. v. TDL Group Corp., 2010 ONSC 2845, Moshinsky-Helm v. Helm, 2022 ABCA 32

CIVIL DECISIONS

NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 602

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

COUNSEL:

N. Emblem and C. Maldi, for the appellants
R. Gilliland and C. Groper, for the respondents

FACTS:

The respondent, NDrive is a software company based in Portugal. The appellant, Z owns and controls Aqua Latitude International Limited ("Aqua"), a Hong Kong corporation, and is the sole director of the appellant Aguazion Inc., a Canadian corporation. On March 17, 2010, the respondent, NDrive, entered into a consultancy agreement with Aqua's predecessor. Through Aqua, the appellant helped NDrive establish a business relationship with LG Electronics Inc. ("LG") resulting in NDrive and LG entering a licensing agreement in which LG had the right to license the NDrive software on its mobile phones. Later, NDrive discovered that LG had underreported the number of phones that had NDrive software. NDrive commenced an arbitration, which was overseen by the appellant, Z, on behalf of NDrive. Hakemi & Ridgedale LLP ("H&R") was to assist in the arbitration and receive instructions from Z. NDrive won an arbitral award of US$1,068,085.43, which H&R received. On Z's direction, H&R wired the balance of the award totaling US$851,315.94 to an Aguazion account. NDrive appealed the arbitral decision and Z handled the conduct of the appeal. The appeal was not successful.

NDrive's position was that Z had defrauded it through its conduct during arbitration. On May 4, 2020, the respondent filed a statement of claim, claiming damages of US$958,449.75. The Zhou parties counterclaimed for damages of $5 million. On May 6, 2020, NDrive successfully moved for a Mareva injunction. On March 12, 2021, NDrive brought a motion for partial summary judgment and to dismiss the Z parties' counterclaim.

NDrive was granted partial summary judgment for US$881,170.48 and punitive damages of $200,000. The Z parties' counterclaim was also dismissed. The motion judge found that the appellant had misled NDrive regarding the payment of the arbitral award, failing to keep NDrive properly informed, and acting on behalf of NDrive without authority to do so. In the costs endorsement, the motion judge awarded costs to NDrive in the amount of $230,000 on a full indemnity basis.

ISSUES:

(1) Did the motion judge err in hearing the motion for partial summary judgment, in light of the Court's decision in Malik?

(2) Did the motion judge err in law in granting the partial summary judgment and dismissing the counterclaim?

(3) Did the motion judge err in awarding three sets of compensation to the respondent arising out of the same underlying facts, by awarding the respondent punitive damages and full indemnity costs, and finding that the appellant was not entitled to his 18% under the success fee arrangement?

(4) Did the motion judge err in appreciating the law of fraudulent concealment and its effect on limitation periods?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The motion judge correctly set out the three threshold questions from Malik: 1) demonstrating that dividing the determination of the case into several parts will prove cheaper for the parties; 2) showing how partial summary judgment will get the parties' case in and out of the court system more quickly; and 3) establishing how partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case. The motion judge found that the triage function to which these questions were directed was performed by the case management judge.

The appellants argued that the case management judge did not consider Malik, and that the subsequent shift in the litigation when the respondent parties served a notice of motion for summary judgment required fresh consideration of the Malik questions. The Court did not accept this argument and held that the possibility that the respondents would continue litigation was clearly before the case management judge at the time of the case management decisions. Further, as the motion judge observed in her decision on the motion to vacate, Malik was in fact raised by the appellants at the January 2021 case conference. She expressly addressed Malik when considering the case management judge's analysis of whether the motion should proceed. The appellants were unsuccessful in seeking leave to appeal from the motion judge's refusal to vacate the motion.

The Court found that the motion judge's analysis was thorough, and it was open to her to rely on the case management judge's decisions and earlier analysis in the motion as satisfying Malik. The motion judge emphasized that Malik did not alter the key concerns that informed the determination of whether a partial summary judgment should go forward. The motion judge also acknowledged that even if she granted the partial summary judgment, the appellant parties would remain in the action. She further concluded that the litigation against the two groups of defendants was "factually interrelated but not legally similar." She concluded the likelihood of inconsistent findings would be "negligible."

(2) No.

The appellant failed to establish palpable or overriding error with the motion judge's granting of judgment in favour of the respondents and dismissal of the counterclaim.

(3) No.

The purpose of punitive damages and full indemnity costs differ and there is no bar to a judge deciding that both are appropriate in the circumstances. The Court held that the motion judge's conclusion that the appellant was ineligible for compensation (that is, the success fee arrangement) due to his fraudulent conduct was unrelated both to the punitive damages and to the full indemnity costs.

(4) No.

The motion judge committed no error in dismissing the appellants' claim with respect to fraudulent concealment, which lacked specificity and a sufficient foundation in the record.

Mundo Media Ltd. (Re), 2022 ONCA 607

[Thorburn J.A. (Motion Judge)]

COUNSEL:

M.P. Gottlieb, B. Vermeersch and X.L. Li, for the moving party
S. McGrath, R. Nicholson and S. Clinton, for the responding party

FACTS:

On April 9, 2019, Mundo Media Ltd. ("Mundo) was placed in receivership by the Ontario Superior Court of Justice pursuant to s. 243 of the Bankruptcy and Insolvency Act ("BIA"). The responding party, Ernst & Young Inc. ("E&Y"), is the court-appointed receiver and manager of all assets belonging to Mundo and its subsidiaries.

E&Y brought a motion for an order directing the moving party, SPay Inc. ("SPay"), to pay US$4,124,000 to Mundo for several unpaid invoices, pursuant to contractual agreements that were signed prior to the receivership between Mundo and SPay or its predecessor. SPay sought to stay E&Y's motion on the basis that the agreements contained an international commercial arbitration clause which required all disputes to be resolved by arbitration in New York pursuant to New York law. The motion judge refused SPay's request, holding that the arbitration provisions in the agreements were rendered inoperative by the "single proceeding model" in Ontario.

The motion judge also held that SPay was not a "stranger" to the insolvency proceeding, as it sought to set off some or all the monies owing to Mundo. SPay claimed that the appeal should be allowed to proceed as it met the three-prong test for granting leave to appeal: (i) there was a real prospect of success, as the moving party was a stranger to the bankruptcy and its set-off did not render it an interested party to the proceeding; (ii) the proposed appeal involved an issue of public importance that would provide guidance to receivers, third parties and insolvency courts in addressing the enforceability of international arbitration agreements with third parties where a defence of set-off was raised by the third party; and (iii) the short time required to hear the appeal would not prejudice E&Y.

E&Y submitted that the chances of success were unlikely as SPay's claim should be contemplated by the single proceeding model. E&Y also claimed that the appeal did not involve a matter of general importance and allowing the motion for leave to appeal would result in undue delay and additional costs.

ISSUES:

(1) Should the moving party be granted leave to appeal the motion judge's decision not to stay the receiver's motion for judgment?

HOLDING:

Motion dismissed.

REASONING:

(1) No.

On a motion for leave to appeal under s. 193(e) of the BIA, the moving party must satisfy three criteria. First, the proposed appeal must be prima facie meritorious and must raise legitimately arguable points, to create a realistic possibility of success on the appeal. This assessment needs to be conducted against the backdrop of s. 243 of the BIA, which has been interpreted to give supervising judges a broad mandate to resolve issues in bankruptcy. Second, the proposed appeal must raise an issue or issues of general importance. Third, the proposed appeal must not unduly delay the progress of the proceedings.

The Court found the first ground of the proposed appeal was not prima facie meritorious. SPay claimed that mandatory arbitration provisions should apply absent "very clear language" to the contrary. The Court held that the receiver was appointed by the court and its authority emanated solely from court order, thus, only the court can determine the receiver's powers and obligations. Moreover, although article 8 of Schedule 2 to the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5 ("ICAA") required a stay in favour of an arbitration agreement, the legislation expressly provided room for courts to "find that the agreement is ... inoperative". This express carve-out, read in conjunction with the broad discretion that courts exercise under s. 243 of the BIA in supervising bankruptcy matters, enables bankruptcy courts to preclude the operation of the ICAA by virtue of the operation of the single proceeding model.

Next, the Court found that the proposed ground of appeal was not prima facie meritorious. SPay claimed that it was a stranger to the proceeding because (i) it had not filed a claim against the responding party; and (ii) it proposed to assert a set-off rather than make a claim. The Court held that SPay was a third party to the insolvency proceeding and was also the responding party's largest debtor. Thus, SPay was not a stranger to the bankruptcy because the outcome of its proposed set off would determine both the amount of the responding party's single biggest account receivable and the size of the bankrupt's estate, thereby affecting all other creditors. The Court cited Sam Lévy, at para. 49, noting that the most significant debtor of a bankrupt estate is "[f]ar from being a 'stranger' to the bankruptcy".

The Court found the motion judge's decision was in keeping with the purpose of the single proceeding model as outlined by the Supreme Court – to promote efficiency and maximize returns for creditors – and accords with the jurisprudence that parties should not be allowed to contract out of the single proceeding model where one party may make claims that will seriously adversely affect all creditors. The Court found the motion judge's conclusions rested on findings of fact about the specific situation in which these parties found themselves.

The Court found that the issues of concern raised by the moving party were about the application of the law to the specific facts of the case and were not issues of more general importance. The Court also found that allowing the appeal to proceed would result in undue delay, additional litigation costs and deterioration of the assets of the receivership.

MacDonald v. Wentworth Condominium Corporation No. 96, 2022 ONCA 606

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

COUNSEL:

S. Pulver and E. Jair, for the appellant
M. Mackey and L. Hernandez, for the respondent

FACTS:

The respondent Condominium corporation is the owner of a condominium building in Hamilton, Ontario and the appellant is the owner of one of the twelve building units. Due to the severely deficient reserve fund, as well as the significant structural repairs required to the building, the Condominium levied an additional special assessment of $181,666 on December 29, 2016. These expenditures were required to repair the balcony floors, masonry walls, and the elevator. The appellant's share of this total was $21,765.40. This special assessment was levied without consulting the owners or holding a vote. The Condominium's Declaration provides the Condominium Board with wide discretion, and in particular, Article III 4(a) provides that "[t]he Corporation may by a vote of members" make substantial alterations. The motion judge relied on this provision to conclude that the Declaration was permissive of holding a vote to undertake the proposed repairs but did not require one. The appellant is the only owner who has refused to pay her share of the special assessment. The Condominium sought an order for summary judgment to enforce its lien against the appellant, which was granted by the motion judge. The appellant unit owner appealed.

ISSUES:

(1) Did the motion judge err in finding that the repair work to the balcony floors, masonry, and elevator was remedial in nature, thus falling under the ambit of s. 97(1) of the Condominium Act ("Act")?

(2) Did the motion judge err in his oppression analysis regarding the Condominium's conduct toward the appellant?

(3) Did the motion judge err in failing to require a separate hearing in order to determine the outcome of the summary judgment motion?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The Court found no error in the motion judge's finding that the restoration work fell within the scope of remedial work within the meaning of s. 97(1) of the Act. The motion judge correctly identified that s. 97 of the Act must be read harmoniously and that the "substantial additions or alterations" provision found in s. 97(4) is circumscribed by s. 97(1) of the Act. In effect, s. 97(1) provides that remedial work will not trigger s. 97(4). Accordingly, the Condominium had a duty to manage, maintain, and administer the common elements, and that the motion judge's decision not to apply a restrictive interpretation of the terms "repair and maintenance" was not in error. The Court further stated that it is trite law that a motion judge's reasons must be read as a whole and in context; therefore, the motion's judge's decision to rely on the 2018 Engineering Report, which determined the restoration work that was needed, was valid in consideration of the totality of the evidence.

(2) No.

The motion judge stated that the test for oppression requires evidence to support the claimant's reasonable expectations and to support the claims that the conduct violating the reasonable expectations was "oppressive". The test centered on the arrangement between the parties and whether the impugned conduct violates an applicant's reasonable expectations of that arrangement.

The Court held that the motion judge did not fall into palpable and overriding error in his application of the law of oppression to the set of facts. The motion judge agreed that the appellant had a reasonable expectation that 1) a reserve fund study be completed prior to the levying of a special assessment, and 2) the Board keep minutes from all meetings and more importantly, to keep detailed minutes from meetings where punitive action is sought to lien a unit owner's property knowing full well the hardship and restriction this action can have on a property owner's rights.

However, the motion judge found that the Condominium's conduct failed to rise to the required level of oppressive conduct. First, the motion judge found that the decision to delay a reserve fund study to ensure the special assessment did not evince bad faith, unfairly prejudice, or unfairly disregard sufficient to warrant an oppression remedy. Second, the motion judge found as a matter of fact that the Board minutes were later drafted and provided to the parties. Thus, the question remained whether the lack of minutes rose to the level to grant an oppression remedy. The motion judge rejected this argument. The reasoning and outcome of the Board's decision to seek a lien was obvious, as the appellant remained the only unit owner who refused to contribute funds for the remedial work.

(3) No.

The motion judge correctly concluded that after his finding that the levying of the special assessment was valid, the Board's right and obligation to assess the appellant's unit crystalized. Importantly, the appellant raised no argument at first instance alleging any errors with the lien or Notice of Sale.

FS Partnership/UPI Energy FS v. Mr. Refuel Inc., 2022 ONCA 612

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

COUNSEL:

M. Kersten, for the appellant
M. McMahon, for the respondent

FACTS:

In January 2020, the respondent, FS Partnership, commenced an action against the appellants for breach of contract seeking $1,065,713.32 in damages. None of the appellants filed a Notice of Intent to Defend or a Statement of Defence. The appellants were noted in default and the respondents were granted default judgment against the appellants for $1,013,430.60 in damages, plus interest and costs. The appellants received a copy of the judgment, but did not respond to any of the proceedings until months later. The appellants claimed they were unaware of the default judgment and filed a motion to set it aside. The motion was granted on the terms that an appellant pay the respondent costs within thirty days. The appellant paid the costs six days after the deadline. During an appointment with the motion judge to settle the terms of the order, the appellant asked for an extension of the deadline in the order, however, no formal motion to vary the terms of the order was brought. The motion judge refused to change the deadline set by her initial order.

ISSUES:

(1) Can the appellants bring a motion for fresh evidence?

(2) Did the motion judge act unreasonably in settling the order?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The principles which should be applied to determine the admissibility of fresh evidence are set out in R. v. Palmer and Palmer at p. 775, as follows: (1) the evidence should generally not be admitted if, by due diligence, it could have been adduced at the earlier proceeding; (2) the evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the decision; (3) the evidence must be credible in the sense that it is reasonably capable of belief; and (4) it must be such that if believed it could reasonably, when taken with the other evidence before the decision-maker, be expected to have affected the result (the "Palmer standard").

The appellant's proposed fresh evidence (i.e., that they were never informed of the obligation to pay costs) did not meet the Palmer standard. There was no basis to conclude that the motion judge would have settled her order differently if she had been made aware that the appellant had not been informed of the costs order.

(2) No.

The motion judge's decision was entitled to deference. She properly instructed herself on her narrow authority to change an order. She did not act unreasonably in determining that those narrow grounds did not arise in this case, and in particular that there would be no miscarriage of justice, as other avenues of recourse were open to the appellant (such as moving to vary the terms of the order).

2264052 Ontario Inc. (Louch & Louch) v. Brockville Centre Development Corp., 2022 ONCA 610

[Huscroft, Nordheimer and Copeland JJ.A.]

COUNSEL:

J.W.L. Griffiths and M.G.T. Glass, for the appellants
J.L. McDonald, for the respondents

FACTS:

This case arises out of a mutual land development project in Brockville between the appellants and the respondents. The project involved the sale and transfer of parcels of land from the respondents to the appellants, which were financed with vendor take back mortgages that were personally guaranteed by the principal of the appellant, L&L. L&L also financed the project through construction loans in priority to the vendor take back mortgages. In total, the appellants purchased three blocks of land from one respondent, B, to build triplexes on the property. The parties signed an agreement on July 11, 2011, which was subsequently amended on May 18, 2012. The amendment deleted a restriction on subsequent transfers that was present in the initial agreement and thereby allowed the respondents to freely sell lots to other builders from May 2012 onwards. It did so, and sold Block #2 to S, one of the respondents. Unbeknownst to the appellants, S was owned by B; this led to the first issue between them. In January and March 2013, flooding occurred on the land next to Block #2, which led to another issue between the parties and litigation ensued. The respondents had initially framed their action as one based in negligent misrepresentation, then later added a civil conspiracy claim that alleged a fiduciary duty as a particular of that claim.

The trial judge found in favour of the respondents, awarding a variety of relief including damages and an accounting of monies owing on the mortgages. In doing so, the trial judge found the appellants liable for failing to construct the drainage ditch in a timely manner. The trial judge also found the sale to the appellant, S to be a breach of fiduciary duty. In reaching his conclusions, the trial judge clearly favoured the respondents' evidence over the appellants'.

ISSUES:

(1) Did the trial judge err in his application of the law to the issues between the parties?

HOLDING:

Appeal allowed.

REASONING:

(1) Yes. The trial judge's analysis was lacking with respect to almost all of the issues raised.

The trial judge failed to set out the factors to be considered in deciding whether a fiduciary duty arose between the parties. The factors to be examined in deciding whether a fiduciary duty arises are: (1) the scope for the exercise of some discretion or power; (2) that the power or discretion can be exercised unilaterally so as to affect the beneficiary's legal or practical interests; and (3) a peculiar vulnerability to the exercise of that discretion or power. The trial judge never identified the discretion or power that the appellants exercised over the respondents that would establish the proper foundation for fiduciary duty. The trial judge also never identified the power or discretion that the appellants could unilaterally exercise over the respondents that would affect the respondent's interests. In addition, the trial judge failed to address the fact that a breach of fiduciary duty was never pleaded in the statement of claim as a separate cause of action. It was insufficient that an alleged breach of fiduciary duty was pleaded as a particular of a civil conspiracy claim because breach of fiduciary duty is a stand-alone cause of action and must be pleaded as such.

The trial judge cited the factors in Wawrzkiewicz v. Integrated Distribution Systems Limited Partnership, 2017 ONSC 1664, to find that civil conspiracy was engaged. However, the trial judge failed to engage in an analysis of those factors. Similarly, the trial judge referred to the duty of honest performance established in Bhasin v. Hrynew, 2014 SCC 71. However, his application of the principle was problematic. Although the trial judge stated that the duty of honest performance is not a separate cause of action, he appeared to treat it as one. The trial judge also never directly identified the contract to which the duty of honest performance would relate or how that contract was breached.

The trial judge also referred to a number of additional causes of action including intentional infliction of economic harm and breach of a duty of care. Once again, the trial judge failed to analyze the component parts of these causes of action and how the evidence would sustain any finding in relation them.

In addition, the trial judge essentially bifurcated the trial when he directed counsel to call their evidence on the specific issue of the flooding. As a general proposition, trial judges should leave the presentation of the case to counsel. While trial judges may intervene to ensure that only relevant evidence is being presented and to ensure that trial time is effectively used, those interventions should be rare. It is counsel's responsibility to present their client's case and they should be left to decide how they will best fulfill that responsibility. Bifurcating a trial, especially on the motion of the trial judge alone, is a risky strategy, one that is likely, as this trial demonstrated, to complicate the issues rather than simplify them.

There were also unnecessary comments made during the course of the trial that could be seen to give rise to a reasonable apprehension of bias, although it was unnecessary for the Court to conclude that the comments rose to that level.

In the end result, given the lack of analysis of the various causes of action that were advanced, the failure to relate the evidence to them, and certain factual findings that were made by the trial judge but were not borne out the evidence, the reasons of the trial judge did not allow for appellate review. The trial judge's reasons simply failed to properly explain to the parties the basis upon which the trial judge fixed liability on the appellants. A new trial was required to properly address the issues between the parties.

SHORT CIVIL DECISIONS

Divitaris v. Gerstel, 2022 ONCA 605

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

COUNSEL:

M.L. Solmon and N. Tourgis, for the appellants
J. Zibarras, for the respondents

Mondal v. Kirkconnell, 2022 ONCA 609

[[Lauwers J.A. (Case Management Judge)]]

COUNSEL:

N.J. Tourgis, for the appellants (C70468)
K. Sherkin, for the appellants (C70482)
N.D. Kolos and L. Malatesta, for the respondents (C70468)
M. McMann, for the respondents (C70482)

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 (August 22, 2022 – August 26, 2022)
Blaney's Appeals

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CIVIL DECISIONS

SHORT CIVIL DECISIONS

Canada: Court Of Appeal Summaries (August 22, 2022 – August 26, 2022) Blaney's Appeals

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CIVIL DECISIONS

SHORT CIVIL DECISIONS

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Canada: Court Of Appeal Summaries (August 22, 2022 – August 26, 2022)
Blaney's Appeals