Court Of Appeal Summaries (August 29, 2022 – September 2, 2022) - Civil Law

Good afternoon,

Following are this week's summaries of the Court of Appeal for Ontario for the week of August 29, 2022.

In Breen v. Lake of Bays (Township), the Township was found liable to the current owners for negligent inspection of their cottage back in 1989-91.

In First National Financial GP Corporation v Golden Dragon Ho 10 Inc., the Court determined that a mortgagee of a closed mortgage does not have a common law right to accelerated interest. The terms of the mortgage govern, and the terms of this mortgage did not provide for accelerated interest in the event of a default by the mortgagor.

Other topics included two wrongful dismissal cases and security for costs.

We hope everyone had a wonderful Labour Day long weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferriera
Blaney McMurtry LLP
416.597.4895 Email

Civil Decisions

Shedletsky v. EQ Advertising Group Ltd. , 2022 ONCA 619

Keywords: Contracts, Commercial, Share Purchase Agreement, Employment, Interpretation, Wrongful Dismissal, Termination Without Cause, Civil Procedure, Summary Judgment, Constructive Dismissal, Extricable Error, Commercial Reasonableness, Rules of Civil Procedure, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

Bowen v. JC Clark Ltd. , 2022 ONCA 614

Keywords: Contracts, Employment, Interpretation, Implied Terms, Wrongful Dismissal, Termination Without Cause, Damages, Discretionary Bonus, Performance Bonus, Bain v. UBS, 2016 ONSC 5362, aff'd 2018 ONCA 190, Greenberg v. Meffert (1985), 18 D.L.R. (4th) 548 (Ont. C.A.), Chann v. RBC Dominion Securities Inc. (2004), 34 C.C.E.L. (3d) 244 (Ont. S.C.)

Di Nunzio v. Di Nunzio , 2022 ONCA 618

Keywords: Civil Procedure, Appeals, Security for Costs, Rules of Civil Procedure, r.61.06(1)(a) and (c), Vout v. Hay, [1995] 2 S.C.R. 876, Pickard v. London Police Services Board, 2010 ONCA 643, York University v. Markicevic, 2015 ONCA 651, Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine, 2019 ONCA 576, Tucker v. Jones, [1916] 53 S.C.R. 431, Politzer v. Metropolitan Homes Ltd., [1976] 1 S.C.R. 363

First National Financial GP Corporation v. Golden Dragon Ho 10 Inc., 2022 ONCA 621

Keywords: Bankruptcy and Insolvency, Receiverships, Vesting Orders, Priority Dispute, Anti-Deprivation, Contracts, Real Property, Mortgages, Interpretation, Accelerated Interest, Civil Procedure, Default Judgments, Costs, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3., s. s.244, First National Financial GP Corporation v. Golden Dragon Ho 10 Inc.and Golden Dragon Ho 11 Inc., 2019 ONSC 6127, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Re Belyon Properties Ltd. and Kelcey, [1968] 2 O.R. 257 (C.A.), Salah v. Timothy's Coffees of the World Inc., 2010 ONCA 673, Saperstein v. Royal Trust Corporation of Canada (1988), 24 B.C.L.R. (2d) 114 (C.A.), Bankruptcy of CAF +, 2013 ONSC 2749, 3 C.B.R. (6th) 123, NJS Midtown Portfolio Inc. v. CMLS Financial Ltd., 2020 ONSC 3973, 1186708 Ontario Inc. v. Attara Developments Limited, 2013 ONSC 3137, 1951584 Ontario Inc. v. Northern Bear Golf Club Inc., 2021 ABCA 91, Re Shankman and Mutual Life Assurance Co. of Canada (1985), 52 O.R. (2d) 65 (C.A.), Energy Fundamentals Group Inc. v. Veresen Inc., 2015 ONCA 514, Ford Homes Ltd. v. Draft Masonry (York) Co. Ltd. (1984), 43 O.R. (2d) 401 (C.A.), M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619

Breen v. Lake of Bays (Township), 2022 ONCA 626

Keywords: Torts, Duty of Care, Proximity, Anns/Cooper Test, Standard of Care, Reasonableness, Causation, Damages, Liability of Public Authorities, Building Inspections, Property Law, Latent Defects, Building Code Act, 1992, S.O. 1992, c. 23, Building Code, O. Reg. 419/86, Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L.), Cooper v. Hobart, 2001 SCC 79, Ingles v. Tutkaluk Construction, 2000 SCC 12, Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, Charlesfort Developments Limited v. Ottawa (City), 2021 ONCA 410, Housen v. Nikolaisen, 2002 SCC 33, Ingles and Rothfield v. Manolakos, [1989] 2 S.C.R. 1259, Galaske v. O'Donnell, [1994] 1 S.C.R. 670, The Queen v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205, Clements v. Clements, 2012 SCC 32, Allen M. Linden et al, Canadian Tort Law, 12th ed. (Markham, Ont.: LexisNexis, 2022)

H.M.B. Holdings Limited v. Antigua and Barbuda, 2022 ONCA 630

Keywords: Civil Procedure, Private International Law, Conflict of Laws, Jurisdiction, Foreign Judgment, Default Judgments, Ricochet Judgments, Enforcement, Comity, Real and Substantial Connection, Limitation Periods, Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5, s.3(b), s. 3(g), Land Acquisition Act, 1958, c. 233, Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28, Limitation Act, S.B.C. 2012, c. 13, s. 7, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 4, H.M.B. Holdings Ltd. v. Antigua and Barbuda, 2021 SCC 44, Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, Beals v. Saldanha, 2003 SCC 72, Chevron Corp. v. Yaiguaje, Spencer v. The Queen, [1985] 2 S.C.R. 278, Janet Walker, Castel & Walker: Canadian Conflict of Law, loose-leaf (2020-Rel. 82-9), 6th ed., Vol. 1 (Toronto: LexisNexis Canada Inc., 2021)

Short Civil Decisions

Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 620

Keywords: Appeal, Civil Procedure, Costs

Wilkshire v. 2055495 Ontario Inc. (Miska Trailers), 2022 ONCA 624

Keywords: Appeal, Civil Procedure, Costs

Leigh v. Rubio, 2022 ONCA 627

Keywords: Order, Appeal, Costs, Delay, Rules of Civil Procedure, r. 24(1)

Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 629

Keywords: Appeal, Costs, Prejudgment Interest, Compound Interest, Allocation of Trial Costs, Delay, Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650, 355 D.L.R. (4th) 333

LIV Communities v. Kasi, 2022 ONCA 631

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Damages, Civil Procedure, Default Judgments, Setting Aside, Business Name Act, R.S.O. 1990, c. B. 17

Iris Technologies Inc. v. Rogers Communications Canada Inc., 2022 ONCA 634

Keywords: Contracts, Arbitration Agreements, Civil Procedure, Jurisdiction, Leave to Appeal, Arbitration Act, 1991, S.O. 1991, c. 17. ss.17(7), 17(8), 17(9), and 45-50.1, International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5, United Mexican States v. Burr, 2021 ONCA 64

CIVIL DECISIONS

Shedletsky v. EQ Advertising Group Ltd., 2022 ONCA 619

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

Counsel:

M.P. Gottlieb and P. Underwood, for the appellants

K. Prehogan and M. Skrow, for the respondents

Keywords: Contracts, Commercial, Share Purchase Agreement, Employment, Interpretation, Wrongful Dismissal, Termination Without Cause, Civil Procedure, Summary Judgment, Constructive Dismissal, Extricable Error, Commercial Reasonableness, Rules of Civil Procedure, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

facts:

The respondents sold all shares of their business, Tapped Network, to the appellants with the price paid partly in shares of the appellants and partly through an earnout mechanism which provided for the payment of up to $1.4 million over the following two years. The appellants agreed to employ two of the respondents for two years to help with the integration of the purchased business into the appellants' existing business. In turn, the respondents were able to continue to manage the operations and maximize their earnout payments. The respondents' employment agreements formed a part of the share purchase agreement ("SPA"). The SPA contained two pertinent provisions to this dispute: 1) an accelerated capital provision which stipulated that if the respondents were terminated without cause after the first anniversary of the closing but before the second, one half of the $1.4 million capital payment would become payable; and 2) where there was an unprofitable quarter, a termination for cause event would be triggered and the respondents could be terminated with cause and without any penalty or impact on the capital payments. On March 31, 2020, the respondents were furloughed due to the COVID-19 pandemic. Respondent E, alleged constructive dismissal on April 14, 2020 and two months later the appellants terminated E, claiming it was pursuant to the Unprofitable Quarter Provision. The motion judge granted the respondents' motion for summary judgment. The appellants raised several grounds of appeal.

issues:

(1) Did the motion judge err in his interpretation of the Unprofitable Quarter Provision in accordance with the "win-win" or "lose-lose" intention of the parties?

(2) Did the motion judge err in his interpretation of the Unprofitable Quarter Provision by reading in a provision which required the appellants to explicitly state that it was terminating E's employment for cause?

(3) Did the motion judge err by failing to consider whether his interpretation of the SPA was commercially reasonable or gave rise to a commercial absurdity?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court did not give effect to any of the appellants' grounds of appeal. The motion judge's interpretation of a contract was entitled to deference in the absence of an extricable error, and there was no such error. The motion judge emphasized that giving effect to the "win-win" purpose of the provision would nullify the clear wording of the contract, which stated "if [the respondents] are terminated without cause..." As the Unprofitable Quarter Provision was not exercised within E's termination, he was not terminated with cause under that provision. Although the appellants attempted to rely on the Unprofitable Quarter Provision to terminate E's employment with cause in June 2020, the motion judge found that E was, as a matter of fact, terminated without cause on March 31, 2020.

(2) No.

There was no extricable error in the motion judge's interpretation of the Unprofitable Quarter Provision. The motion judge did not read in a provision which required EQ Advertising to explicitly state that it was terminating E's employment for cause. The motion judge identified the employment contract which appended the SPA and contrasted the Unprofitable Quarter Provision which would have been triggered by termination with cause and the Accelerated Provision would have been triggered by a without cause termination. The Court held that it was open to the motion judge to conclude that the SPA required EQ Advertising to terminate E "for cause" to avoid triggering the Accelerated Provision.

(3) No.

The motion judge did not err by failing to consider the commercial reasonableness of his interpretation of the SPA. The motion judge interpreted the provisions with their purpose in mind and the result was commercially reasonable. Further, the appellants' proposed interpretation of the agreement would have led to commercial absurdity, as their interpretation would result in any termination during an Unprofitable Quarter – whether with or without cause – would not trigger the Accelerated Provision.

Bowen v. JC Clark Ltd., 2022 ONCA 614

[Feldman, George and Copeland JJ.A.]

Counsel:

S.J. Erskine and F. Dickson, for the appellants

J.G. Knight and L.J. Freitag, for the respondent

facts:

The appellants were portfolio managers of a hedge fund. The hedge fund was acquired by the respondent in late 2012. As part of the acquisition, the appellants were hired by the respondent as portfolio managers for the fund. They worked at the respondent company from December 3, 2012 until July 16, 2014, when their employment was terminated on a without-cause basis. At the time of their termination the appellants were each given two weeks' salary plus $577 in lieu of notice. The appellants commenced an action against the respondent seeking over $1.3 million in performance fees that they claimed were owed as a term of their employment for the portion of 2014 that they worked before their termination. The trial judge dismissed their claim.

The appellants challenged the trial judge's finding that their only entitlement to a percentage of the performance fees of the fund was through a side agreement with MB, the lead portfolio manager of the fund, who had been the owner of the fund prior to its acquisition by the respondent. The side deal involved MB paying the appellants a percentage of the performance fee but was silent as to any entitlement to performance fees. In particular, the appellants challenged the trial judge's finding that they were not entitled to an additional 30% of performance fees of the fund pursuant to employment agreements with the respondent. They also challenged the trial judge's ruling that they were not entitled to argue their entitlement to a discretionary bonus under a specific term in their employment agreements because the claim was insufficiently pleaded.

issues:

(1) Did the trial judge err in finding that the appellants were not entitled to a percentage of the performance fees of the fund as an implied term of their employment agreements?

(2) Did the trial judge err in refusing to consider the appellants' claim that they were entitled to a discretionary bonus under their employment agreements on the basis that the claim was insufficiently pleaded and argued?

holding:

Appeal allowed in part.

reasoning:

(1) No.

The Court agreed with the trial judge's finding that the appellants were aware of the arrangement that they would be paid a share of the performance fees of the fund through MB, rather than directly by the respondent, at the time that they signed their employment agreements. A plain reading of the employment agreements signed by the appellants, in the circumstances known to the parties at the time, revealed that the performance fees were not owed to the appellants by the respondent under the terms of those agreements. The Court held that the appellants agreed to the terms as characterized by the respondent – they had knowledge that they would be paid a share of the performance fees only through MB, and possessing this knowledge, they signed the employment agreements that did not provide for any performance fees to be paid by the respondent to the appellants.

The Court concluded that the trial judge's findings were neither unfair nor inconsistent with industry practice. It was not relevant that other portfolio managers were paid performance fees on a 40/30/30 formula. The appellants were paid a share of the performance fees of the fund; however, the manner of their payment was structured differently because the fund that the appellants managed had recently been acquired and because of the structure of that acquisition. Accordingly, the appellants were not entitled to a share of performance fees of the fund directly from the respondents.

(2) Yes.

The Court found that the trial judge erred in refusing to allow the appellants to argue their entitlement to a discretionary bonus under the employment agreements. In the Court's view, the issue was sufficiently pleaded in the amended statement of claim and was sufficiently raised in the submissions and evidence at trial. Although the respondent objected at trial and maintained its objection on appeal, the Court was not persuaded that there was any unfairness to the respondent in allowing the appellants to advance their claim to a discretionary bonus.

The Court stated that the amended statement of claim could have been clearer. However, the pleadings and the positions taken at trial made clear that the appellants were seeking not only a percentage of the performance fees of the fund, but also whatever discretionary bonus they were entitled to under paragraph 5 of the employment agreements.

The Court then went on to consider the quantum of discretionary bonus the appellants were entitled to. The Court rejected the respondent's position that the employment agreement allowed for a totally unconstrained level of discretion when determining such bonuses and accepted the appellants' position that the discretionary bonus amounts should be calculated based on those bonuses given to similarly situated employees.
The Court held that to the extent that evidence asserted an unconstrained discretion on the respondent with respect to awarding bonuses, it was inconsistent with the obligation to exercise that discretion in a fair and reasonable manner. Accordingly, the Court picked two similarly situated employees, and found their bonuses had been in the realm of $200,000. The Court held that in light of the evidence that the discretionary bonuses were awarded based on corporate performance, individual performance, and considering that it was clear that the respondent allocated significant sums to discretionary bonuses for portfolio managers for the 2014 year; and considering the remarkable returns of the fund for the period in 2014 when the appellants were still managing the fund, the appellants were entitled to a bonus pro-rated for the seven months the appellants worked in 2014. The awarded bonus was therefore $115,000.

Di Nunzio v. Di Nunzio, 2022 ONCA 618

[Hoy J.A. (Motion Judge)]

Counsel:

M. S. Deverett, for the moving party/the respondents

B. D. Arkin and T. Nguyen, for the responding party/the applicant

facts:

The respondent brought a motion for an order requiring the appellant to post $25,000 for security for costs of an appeal and $111,395.45 for costs of an application, within 30 days, failing which the appeal be dismissed. In the alternative, the respondent requested a declaration that there was no mutuality of remedies, together with an order that the appellant must elect, within 30 days of the order, to either relinquish their claims for costs or post the security for costs. The respondent relied on r. 61.06(1)(a) and (c) of the Rules of Civil Procedure.

issues:

(1) Did the respondent meet the threshold requirements under r. 61.06(1)(a) or (c) to obtain an order for security for costs of the appeal?

holding:

Motion dismissed.

reasoning:

(1) No.

R. 61.06(1)(a) and (c) provide as follows: (1) In an appeal where it appears that, (a) there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal; ...; or (c) for other good reason, security for costs should be ordered, a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just.

The motion judge found that the threshold requirement of r. 61.06(1)(a) or (c) were not made out. With respect r. 61.06(1)(a), the Court reiterated that a frivolous appeal is one that is readily recognizable as devoid of merit: Pickard v. London Police Services Board, 2010 ONCA 643, at para. 19; York University v. Markicevic, 2015 ONCA 651, at paras. 32, 33. The Court held that the appellant's appeal of their mother's will was not readily recognizable as devoid of merit and that there was no obvious bad faith motivation. The Court noted that a low chance of success is not in itself sufficient to find an appeal vexatious.

With respect r. 61.06(1)(c), the Court held that the respondent's novel argument of "lack of mutuality", essentially asserting that the disparity in financial resources or circumstances of the parties constitutes 'for other good reason' to grant security for costs was not accepted and would significantly broaden the scope of r. 61.06(1).

First National Financial GP Corporation v. Golden Dragon Ho 10 Inc., 2022 ONCA 621

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

Counsel:

T. Conway and K. Caron, for the appellant (C68855) / respondent (C69031), Liahona Mortgage Investment Corporation

Eric Golden and Chad Kopach, for the respondent (C68855 & C69031), First National Financial GP Corporation

M. Diegel, for the respondents (C68855) / appellants (C69031), Golden Dragon Ho 10 Inc. and Golden Dragon Ho 11 Inc.

D. Preger, for the receiver, Deloitte Restructuring Inc.

facts:

Golden Dragon Ho 10 Inc. ("GDH 10") and Golden Dragon Ho 11 Inc. ("GDH 11") owned two adjoining residential apartment buildings at 345 Barber Street and 347 Barber Street in Ottawa (the "Properties"). GDH 10 owned 347 Barber (an affordable housing complex) and GDH 11 owned 345 Barber. The Properties were interconnected, sharing among other things, a lobby and an elevator, and for all intents and purposes could not be sold separately.

GDH 10 and GDH 11 (collectively "Golden Dragon") had purchased the Properties in May 2016, and assumed from First National ("FN") three closed commercial mortgages that had been granted to FN in 2007 and 2008 by the previous corporate owner of the Properties: a first mortgage secured over 345 Barber Street; a first mortgage secured over 347 Barber Street; and a second mortgage secured over 347 Barber Street (collectively, the "FN Mortgages"). The FN Mortgages were 20-year closed commercial mortgages, and the principal amounts totalled approximately $7.5 million.

The FN Mortgages precluded subsequent mortgages over the Properties without FN's consent. However, without FN's knowledge or consent, on August 19, 2016, Golden Dragon granted to Liahona Mortgage Investment Corporation ("Liahona") a second mortgage over 345 Barber Street in the principal amount of $2,900,000.00. (the "Liahona second mortgage").

Golden Dragon defaulted under the Liahona Second Mortgage shortly after it was granted. In April 2017, Liahona issued a notice of sale, and obtained a default judgment in June 2017 for approximately $ 3 million, together with judgment for possession of 345 Barber Street.

Beginning in June 2017, the FN Mortgages went into unremedied default. In August 2017, FN made a formal demand that Golden Dragon pay the arrears, and cure the non-monetary defaults under the FN Mortgages. FN commenced an application to appoint Deloitte Restructuring Inc. ("Deloitte") as the interim receiver of the Properties, as the defaults had been caused by Golden Dragon attempting to convert the Properties into student housing without FN's consent, and running out of funds to complete the renovations.

The Order issued September 22, 2017 appointing Deloitte as Interim Receiver (the "Appointment Order") included a term that FN "shall be deemed to be protecting its security, shall not be deemed to have resorted to realizing upon its security over the [Properties], and the equitable right of redemption in respect of the Applicant's mortgages over the [Properties] shall not be triggered".

By December 2018, Deloitte had repaired and stabilized the Properties.

Following stabilization of the Properties, the rents being collected by Deloitte were sufficient to pay its costs, as well as the payments owed under the FN Mortgages, but there would be no excess cashflow from the Properties to make any payments to Liahona for many years.

Liahona, whose second mortgage was only over 345 Barber, inquired of FN whether it would consent to Liahona bringing a motion expanding the Appointment Order to allow a sale by Deloitte of both Properties.

FN, which was still owed approximately $1.8 million in future interest, agreed on certain conditions, including that Liahona's Order expanding the Appointment Order (the "Expanded Powers Order") contain the same term as the Appointment Order that FN "shall be deemed to be protecting its security, shall not be deemed to have resorted to realizing upon its security over the [Properties], and the equitable right of redemption in respect of the Applicant's mortgages over the [Properties] shall not be triggered". Liahona brought its motion and obtained the Expanded Powers Order on May 21, 2019.

Deloitte eventually secured an offer for purchase, but on the Sale Approval and Vesting Order Motion, FN opposed the motion to approve the sale of the Properties when Liahona alleged that the future interest owing under the FN Mortgages was not payable.

FN argued that its agreement to have Deloitte sell the Properties was premised on it receiving, from the sale proceeds, payment of future interest to the end of the terms of its closed FN Mortgages, which it referred to as "yield maintenance penalties". FN submitted that, if it was precluded from receiving the yield maintenance penalties, it wished to maintain its mortgages in place until the end of their terms or until the properties were sold by Golden Dragon.

The judge on the Sale Approval and Vesting Order Motion allowed the sale of the Properties, and directed a trial on whether future interest under the FN Mortgages was payable.

The issue at trial was "whether the terms of the FN charges over the Properties entitle FN to the Yield Maintenance claimed as a result of the early repayment of its charges." The trial judge found that FN had a common law entitlement to accelerated interest; therefore, FN was entitled to be paid a prepayment of accelerated interest on the FN Mortgages, calculated in accordance with the yield maintenance formula as defined in the FN Mortgages. Furthermore, the common law anti-deprivation rule did not apply because FN's claim to accelerated interest stemmed from a common law rule rather than a contractual term.

Liahona and Golden Dragon appealed the common law entitlement to accelerated interest and the imputation of the implied contractual term into the FN Mortgages that entitled FN to accelerated interest. Golden Dragon also appealed from the order approving the court-appointed receiver's costs (the "costs order"), arguing that those costs were unwarranted because the receiver's attendance at trial was not necessary.

issues:

(1) Did the trial judge err in finding that FN had a common law entitlement to accelerated interest under the FN Mortgages?

(2) Did the trial judge err by implying a contractual term into the FN Mortgages that entitled FN to accelerated interest?

(3) Did the trial judge err in awarding costs to the Receiver?

holding:

Appeal allowed in part.

reasoning:

(1) Yes.

The trial judge erred in his application of the relevant legal principles and failure to interpret the mortgage contracts in their entirety. Instead of completing the requisite contractual analysis of the FN Mortgage terms, the trial judge considered FN's claim only as a common law claim for accelerated interest without regard to and divorced from all of the relevant provisions of the FN Mortgages. It was an error to find that there is a standalone common law entitlement, divorced from the contractual provisions of the mortgage contract, to accelerated interest for a mortgagee under a closed mortgage.

The Court of Appeal held that there is no standalone common law principle that can be applied independently of a holistic interpretation of the particular mortgage contract in issue. Any rights flow from the contract. The Court noted that the common law recognizes contractual rights bargained for by the parties and stated that the trial judge should have looked at all the terms of the FN Mortgages before turning to the common law. This is because the FN Mortgages did include clauses providing for early discharge, and FN's entitlements, both in the event Golden Dragon was not in default, and in the event that it was and the mortgages were discharged from title. The former included FN's entitlement to accelerated interest in the defined form of "yield maintenance" where Golden Dragon was not in default; the latter provided only for payment of principal and accrued interest owed up to default, but no accelerated interest.

The Court noted that the mortgage terms that entitled FN to accelerate the principal amounts outstanding upon any default by Golden Dragon did not provide for any entitlement to accelerated interest in the event of any default by Golden Dragon. Rather, the only interest to which FN bargained an entitlement on Golden Dragon's default is the interest accrued to the date of default. The Court further stated that these provisions specifically addressed the circumstances of the early discharge of the FN Mortgages upon Golden Dragon's default but did not include accelerated interest, and instead provide only for principal, accrued interest to the date of default, and costs. Accordingly, the contractual provisions distinguished this case from those referenced by the trial judge that dealt only with a mortgagee's entitlement on the early discharge of closed mortgages with no similar contractual provisions as in this case before the Court. The Court found that the trial judge erred by failing to address these provisions and considering their effect.

(2) Yes.

The Court of Appeal found that implying a term was an error because it was inconsistent with the express terms of the FN Mortgages and, it was not necessary to give the FN Mortgages business efficacy.

The Court rejected FN's policy concerns that acceding to Liahona's arguments would render closed commercial mortgages a fiction, and that it would allow a mortgagor with a closed mortgage to avoid its obligations under the closed mortgage by granting a second mortgage and then defaulting to allow the second mortgagee to appoint a receiver, or alternatively that it would permit secured obligations under a closed mortgage to be avoided by way of bankruptcy. The Court held that this case involved the interpretation of specific contractual terms agreed upon by the parties. As a result, this outcome is tied to the specific facts of this case and the parties' specific mortgage agreements, as well as the manner in which the trial of the issue was defined. FN's submissions in this regard were rejected as amounting to a speculative "floodgate" argument.

(3) No.

Golden Dragon did not raise any objection to Deloitte's attendance until making costs submissions. The Court agreed with the trial judge that the time for such a discussion was prior to the trial of the issues. Moreover, the Court of Appeal agreed with the trial judge's conclusion that Deloitte's presence was warranted, as it was in keeping with its role as an officer of the court in these receivership proceedings.

Breen v. Lake of Bays (Township), 2022 ONCA 626

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

Counsel:

S. Steiber, for the appellant

D. Morin and P. Reinitzer, for the respondents

facts:

In 1989, the respondents, EB and JB, purchased a cottage in the Township of the Lake of Bays (the "Township"). A building permit was issued for the cottage in 1989, and construction took place between 1989 and 1991. In this time, the Township's chief building inspector conducted three inspections, none of which noted deficiencies. The Township considered the project closed in 1993. Upon purchase, the respondents obtained a home inspection report, which noted some minor cracks in the foundation and decay in the structural elements. It further attributed some water infiltration to drainage issues at the rear of the cottage, which the respondents remedied.

In 2012, the respondents planned an addition to the cottage. However, an engineer's report revealed significant issues with the building, including serious water infiltration and structural issues. The respondents claimed that these issues should have been flagged before the Township issued a building permit.

The trial judge found that the Township had breached its duty of care to the respondents, and that it had failed to meet the appropriate standard of care in a number of respects. He further found that a number of the respondents' damages were caused by the Township's negligence. Damages were awarded in the amount of $361,875.33. The Township argued that the trial judge applied a standard of care that amounted to strict liability. Furthermore, the Township argued that the trial judge committed both extricable errors of law and palpable and overriding errors of fact.

issues:

(1) Did the trial judge err by finding that the Township owed the respondents a duty to inspect without a request from the builder?

(2) Did the trial judge err by imposing the burden of proof on the Township to prove that the building permit was properly issued?

(3) Did the trial judge err by applying an excessively strict standard of care?

(4) Did the trial judge err in finding that the Township's breaches of its duty of care caused the respondents to suffer damages for which the Township was responsible?

holding:

Appeal allowed in part.

reasoning:

(1) No.

The Township argued that it could not be faulted for failing to conduct a final inspection because it was not legislatively required to do so. The relevant inspections did not become a requirement until Bill 124 was passed in 2001, which amended the Building Code Act. Even though the inspection was not mandatory, the trial judge found that the Township owed a duty of care to not negligently exercise its power to grant a building permit and conduct proper inspections. The trial judge did not err in this analysis. As subsequent purchasers, the respondents were entitled to rely on the Township to show reasonable care in inspection of the progress of the construction. In light of the purpose of the Building Code Act, which is public safety, anything less than this entitlement would render the building permit and inspection process meaningless. Therefore, the Township breached the standard of care when it declared the construction of the cottage closed without conducting further inspections.

(2) No.

Building plans are required to issue a building permit. At trial, the Township could not introduce these plans into evidence because they were allegedly destroyed in a fire. The Court held that the finding of the trial judge that the plans did not exist did not equate to the burden of proof being on the Township. It was simply a finding of fact based on ample evidence, and the Township did not show palpable and overriding error.

(3) No, except with respect to the stairs and insulation.

The trial judge found the Township liable for five major deficiencies. With two exceptions, the Court held that the trial judge properly analyzed these deficiencies in light of the ordinary and reasonably prudent building inspector to determine whether they should have been noticed. This was not an overly strict standard of care.

However, with respect to the stairs and insulation, the Court held that the standard of care applied by the trial judge was too exacting. The trial judge faulted the Township for failing to discover every latent defect. In doing so, he raised the negligence threshold from unreasonable conduct to imperfect conduct. This was an extricable error of law.

(4) No.

The Township argued that waiving the final inspection was unreasonable, and liability for the defects that would have been found fell on the respondents. The Court agreed with the trial judge in not giving effect to this argument. The Court further held that any earlier final inspection would have made no material difference in calculating damages since causation was only determined to exist for costs to remedy and rectify Building Code violations, and an earlier inspection would not have found fewer deficiencies. Therefore, the trial judge did not err in his causation analysis.

H.M.B. Holdings Limited v. Antigua and Barbuda, 2022 ONCA 630

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

Counsel:

L. Caylor, N. Butz and R. Agarwal, for the appellant

S. Tenai and S. Sood, for the respondent

facts:

The respondent, the Attorney General of Antigua and Barbuda ("Antigua"), expropriated property owned by the appellant, HMB Holdings Ltd. ("HMB"), located in Antigua and Barbuda and the Privy Council awarded compensation of approximately US$26.6 million plus interest for the expropriation. Antigua paid part, but not all, of the compensation amount. HMB subsequently brought an action in British Columbia ("BC") to recognize and enforce the Privy Council judgment. Antigua did not defend the action and HMB obtained a default judgment recognizing and enforcing the Privy Council judgment in BC. HMB brought an application to enforce the judgment in Ontario pursuant to the Reciprocal Enforcement of Judgments Act and was unsuccessful at first instance, before the Court of Appeal and before the Supreme Court. HMB then commenced an action in the Ontario Superior Court to recognize and enforce the BC Judgment in Ontario pursuant to the common law. The motion judge dismissed the action in Ontario on the basis that there was no real and substantial connection between BC and the underlying action in Antigua and Barbuda.

issues:

(1) Did the motion judge err in dismissing HMB's action to recognize and enforce the BC Judgment in Ontario at common law?

holding:

Appeal dismissed.

reasoning:

(1) No.

It was an error in principle for the motion judge in this case to focus on whether there was a real and substantial connection between BC and the original dispute in Antigua and Barbuda, or between BC and the parties, for the purpose of deciding whether the BC Judgment should be recognized and enforced in Ontario. The Court held that this approach did not accord with the original focus of the BC court's inquiry of whether the Privy Council Judgment should be recognized and enforced in BC.

The Court noted that while there are a handful of cases where Canadian courts have permitted ricochet judgments, those cases do not directly address the court's legal authority for doing so at common law. Generally, the common-law test for the recognition and enforcement of foreign judgments does not contemplate the viability of ricochet judgments between Canadian provinces. In Beals v. Seldanha, the court confirmed that the real and substantial connection test applies to the process by which Canadian courts may recognize and enforce judgments by courts in foreign jurisdictions. More recently, in Chevron Corp. v. Yaiguaje, the SCC reaffirmed that the real and substantial connection test applies to the recognition and enforcement of foreign judgments by Canadian courts: the enforcing court has jurisdiction over the defendant as long as there was effective service on the defendant against whom recognition and enforcement is sought, as the role of the enforcing court is to facilitate enforcement. The Supreme Court's discussion in Chevron regarding the difference between an original foreign judgment and a recognition and enforcement judgment is the key to determining whether a court in Ontario should recognize and enforce the BC Judgment at common law.

When the court in BC granted the BC Judgment, it decided that the Privy Council Judgment should be recognized and enforced in BC in accordance with its laws; it did not decide whether the Privy Council Judgment should be enforced in any other jurisdiction. At this stage, the focus is on whether the enforcing court should allow recognition and enforcement of the foreign judgment in its local jurisdiction. As between BC and Ontario, the issue of comity does not arise when considering whether a court in Ontario should enforce the BC Judgment.

Comity encourages enforcing courts to show respect for judgments from other jurisdictions. However, comity also gives due regard to the legislative choices within the enforcing jurisdiction. The Court held that in the present case, had the recognition and enforcement of the original foreign judgment been sought in Ontario, Antigua would have been able to rely on the Ontario Limitations Act, 2002 as a defence, as the two-year limitation period in Ontario had lapsed by the time the application was brought in BC, where there is a ten-year limitation period.

Whether recognition and enforcement should proceed depends entirely on the enforcing forum's laws. HMB argued that it should not be precluded from seeking sequential recognition and enforcement in other jurisdictions when the first judgment does not yield sufficient assets. In doing so, HMB argued it should not be subject to the limitation period being connected to the initial judgment but rather it should be attached to the most recent judgment. However, allowing the appellant to proceed as it desires could enable it to extend the applicable limitation period. This improperly circumvents Ontario's legislative choice to have a two-year limitation period and deprives the respondent of a legitimate defence that it would otherwise have in Ontario.

If HMB were to pursue a common-law action for direct recognition and enforcement of the Privy Council Judgment in Ontario, it would be for the court in that context to decide the limitation period issue, including whether discoverability may play a role in deciding that issue. At this stage, the court found that the BC judgment should not be recognized and enforced in Ontario, as the common-law test for recognition and enforcement of original foreign judgments does not apply to ricochet judgments. The issue of whether the Reciprocal Enforcement of Judgments Act permits the registration of recognition and enforcement judgments (ricochet judgments) from other provinces was not at issue on this appeal, and was not decided. In any event, the decisions that suggest this is permissible has no applicability to the issue of whether one province should recognize and enforce a ricochet judgment from another province at common law.

SHORT CIVIL DECISIONS

Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 620

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

Counsel:

H. Radomski, A. Brodkin, N. De Luca and J. Topolski, for the appellants

M. Richard, A. Gloor and R. Johnston, for the respondent

Keywords: Appeal, Civil Procedure, Costs

Wilkshire v. 2055495 Ontario Inc. (Miska Trailers), 2022 ONCA 624

[Miller, Nordheimer and Sossin JJ.A.]

Counsel:

K. Marshall and H. Levitt, for the appellant

P. Quinlan and C. Boyd, for the respondent

Keywords: Appeal, Civil Procedure, Costs

Leigh v. Rubio, 2022 ONCA 627

[Bennotto, Zarnett and Thorburn JJ.A.]

Counsel:

M. B. L., acting in person

A. V. Deven, for the respondent

Keywords: Order, Appeal, Costs, Delay, Rules of Civil Procedure, r. 24(1)

Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 629

[Lauwers, Roberts and Nordheimer JJ.A.]

Counsel:

J. C. Lisus and Z. Naqi, for the appellant

D. Kloeze and A. Mortimer, for the respondent

Keywords: Appeal, Costs, Prejudgment Interest, Compound Interest, Allocation of Trial Costs, Delay, Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650, 355 D.L.R. (4th) 333

LIV Communities v Kasi, 2022 ONCA 631

[Miller, Nordheimer and Sossin JJ.A.]

Counsel:

M. Tufman, for the appellant

C. Yamashita, for the respondent

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Damages, Civil Procedure, Default Judgments, Setting Aside, Business Name Act, R.S.O. 1990, c. B. 17

Iris Technologies Inc. v. Rogers Communications Canada Inc, 2022 ONCA 634

[Miller, Nordheimer and Sossin JJ.A.]

Counsel:

R. Stephenson and P. Davis, for the moving party

P. Mantas and G. Cyr, for the responding party

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 29, 2022 – September 2, 2022)
Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

Canada: Court Of Appeal Summaries (August 29, 2022 – September 2, 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 (August 29, 2022 – September 2, 2022)
Blaney's Appeals