Court Of Appeal Summaries (September 19 – 23, 2022)

Good afternoon.

Following are this week's summaries of the Court of Appeal for Ontario for the week of September 19, 2022.

In Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., the Court dismissed an appeal of an application judge's finding that a Notice of Termination of a commercial lease pursuant to a demolition clause was not effective to terminate the lease because the landlord had not yet obtained a demolition permit prior to issuing its Notice of Termination. The Court rejected the landlord's argument that the commencement of asbestos abatement prior to obtaining a demolition permit constituted "the commencement of the demolition process" within the meaning of the lease. Justice Roberts dissented, determining that the application judge's interpretation of the lease as patently unreasonable.

Other topics this week included damages for wrongful dismissal and whether a costs award could include disbursements incurred for mandatory mediation, and security for costs.

Have a nice weekend,

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., 2022 ONCA 658

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, , Demolition Clauses, Building Code Act, 1992, S.O. 1992, c. 23, O. Reg. 278/05 under the Ontario Health and Safety Act, R.S.O. 1990, c. O.1, s. 6(1), Goodyear Canada Inc. v. Burnhamthorpe Square Inc. (1992), 41 O.R. (3d) 321, 166 D.L.R. (4th) 625 (C.A.), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd., [1997] 2 W.L.R. 945, [1997] A.C. 749 (H.L.), Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, Arnold v. 2261324 Manitoba Ltd. (1994), 97 Man. R. (2d) 216, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37

Pavlov v. The New Zealand and Australian Lamb Company Limited , 2022 ONCA 655

Keywords: Employment Law, Wrongful Dismissal, Damages, Civil Procedure, Costs, Disbursements, Mandatory Mediation, Rules of Civil Procedure, Rule 24.1, Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), Paquette v. TeraGo Networks Inc., 2015 ONSC 4189, Saltsov v. Rolnick, 2010 ONSC 6645

Short Civil Decisions

Ducharme Estate v. Thibodeau , 2022 ONCA 661

Keywords: Civil Procedure, Security for Costs, Frivolous and Vexatious, Rules of Civil Procedure, R. 61.06(1)(a), Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine, 2019 ONCA 576

CIVIL DECISIONS

Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., 2022 ONCA 658

Feldman, Roberts and Favreau JJ.A

Counsel:

S. Zucker and N. J. Tourgis, for the appellant

B. M. Jenkins, for the respondent

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, , Demolition Clauses, Building Code Act, 1992, S.O. 1992, c. 23, O. Reg. 278/05 under the Ontario Health and Safety Act, R.S.O. 1990, c. O.1, s. 6(1), Goodyear Canada Inc. v. Burnhamthorpe Square Inc. (1992), 41 O.R. (3d) 321, 166 D.L.R. (4th) 625 (C.A.), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd., [1997] 2 W.L.R. 945, [1997] A.C. 749 (H.L.), Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, Arnold v. 2261324 Manitoba Ltd. (1994), 97 Man. R. (2d) 216, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37

facts:

In August 2015, the respondent tenant entered into an amending agreement that extended their five-year-term lease for a further seven years, expiring on January 31, 2023. The lease was subsequently assigned by the owner to the appellant landlord when it purchased the building. The appellant's intention in purchasing the building was to tear it down and develop the property as a condominium complex. By October 2019 there were 20 tenants remaining in the building and they were all given 6 months' written notice to vacate on October 31, 2019 through a Notice of Termination.

On or around April 24, 2020, the respondent learned that the appellant had not obtained any permits to demolish or to substantially renovate the building. While no permit was required to conduct asbestos abatement, York Demolition Corp. had received authorizations necessary to commence the abatement removals. The respondent brought an application for a declaration that the lease had not been terminated by the Notice of Termination because the appellant had not obtained a demolition permit. The landlord brought a cross-application that the lease was terminated by the tenant's breaches of lease before April 30, 2020, by transferring the lease without consent to a corporation and breaching use restrictions. In furtherance of the cross-application, the landlord sent out notices of default giving the tenant a time limit to rectify the breaches, with the following covering letter:

As a result of the position you have taken with our application, we are delivering two notices of default. These notices of default are without prejudice to our position that the lease has been terminated as a result of the Notice of Termination dated October 31, 2019.

The issue for the application judge was whether the asbestos abatement, which did not require a permit or authorization, constituted the 'commencement of the demolition process'. The application judge considered s. 8(2) of the Building Code Act which provided that the chief building official in a municipality shall issue a demolition permit unless the demolition would contravene the Act, the building code or "any other applicable law". Section 6(1) of O. Reg. 278/05 under the Ontario Health and Safety Act, R.S.O. 1990, c. O.1 ("OHSA") provides: [T]he demolition of all or part of machinery, equipment, a building, aircraft, locomotive, railway car, vehicle or ship shall be carried out or continued only when any asbestos containing material that may be disturbed during the work has been removed to the extent practicable.

The application judge found that because s. 6 of the OHSA regulation was not one of the listed applicable laws in s. 1.4.1.3(1) of O. Reg. 332/12, non-compliance with that regulation does not prevent the issuance of a demolition permit. The application judge also rejected the appellant's argument that asbestos abatement constituted "the commencement of the demolition process" within the meaning of s. 15.05 [Termination on Demolition clause] of the lease. In interpreting s. 15.05 of the lease, the application judge found that by applying a common-sense, practical approach as required by Sattva, the correct conclusion was that having chosen to name "demolition" in the Notice of Termination as the reason for requiring vacant possession, the landlord was required to obtain a demolition permit in order to comply with the notice. He added that to hold otherwise would constitute a rewriting of the contract. As a result, the application judge concluded that the Notice of Termination was not effective and the lease therefore continued as valid and subsisting after April 30, 2020.

The application judge turned to the landlord's cross-application and found that the landlord's subsequent notices of termination also did not have the effect of terminating the lease. He found that although subsequent notices were delivered by the landlord under a cover letter stating 'without prejudice' to its position that the lease had been terminated by the Notice of Termination under the demolition clause, they were nevertheless intended to operate with prejudice, and therefore had the effect of recognizing that the lease remained in effect after April 30, 2020 and constituted a waiver of the Notice of Termination under the demolition clause.

issues:

1. Did the application judge err in fact or in law by finding that the Notice of Termination did not comply with s. 15.05 of the lease and was therefore ineffective to terminate the lease as of April 30, 2020?

holding:

Appeal dismissed.

reasoning:

1. No.

The Court found that the sole issue was whether the landlord had complied with the second sentence of s. 15.05 which required the landlord to obtain "all requisite permits and authorizations for the commencement of such redevelopment, reconstruction or demolition". The application judge took three approaches: (1) he determined that compliance with the asbestos abatement requirement of s. 6 of the OSHA regulation was not required before a demolition permit could be obtained (2) he found that asbestos abatement was not "the commencement" of the demolition process within the meaning of s. 15.05 and (3) he found that because the landlord had relied on demolition as opposed to redevelopment as the reason for requiring vacant possession in the Notice of Termination, it therefore had to have a demolition permit in order to comply.

The Court found that the first approach was not on appeal by the landlord thus, on the record before the Court, the landlord was not prevented from obtaining the demolition permit by April 30, 2020, had it sought to do so. The Court found that on second approach in the application judge's interpretation of "the commencement", attracted a standard of review being the deferential standard applied to questions of mixed fact and law. In any event, The Court agreed with the application judge's conclusion that asbestos abatement is not the commencement of demolition. The word commencement must be read in the context of the sentence, which is the obtaining of permits to allow demolition to commence. In that context, commencement is the first step in the demolition process that is permitted to occur because the requisite permit has been obtained. On the third approach, the Court found that the application judge made no error in giving effect to the words used in the Notice of Termination including the word demolition. While the tenant was well aware that the project was being redeveloped before the end of its lease term, the tenant was entitled to rely on the words of the notice in conjunction with the protection contained in s. 15.05 of the lease that a permit was required to be in place before the notice could be effective.

The Court summarized that the correct approach to interpreting a notice to vacate a commercial lease is fairness rather than technicality. That approach requires the court to consider and assess what the respondent would have understood about the intent and effect of the Notice of Termination in conjunction with s. 15.05 of the lease. The Court found that while the respondent knew that redevelopment including demolition of the building was imminent, it also knew that no demolition permit had yet been obtained. It was not unfair to require the appellant to comply with its obligations under the demolition clause of the lease so that the respondent would know that vacant possession was actually required by the date in the notice.

Dissenting (L.B. Roberts J.A.):

Justice Roberts did not agree that the appellant's Notice of Termination under s. 15.05 of the lease was ineffective. In her view, the application judge erred in his interpretation of the lease as applied to the factual circumstances of this case by holding that demolition of the building, including the premises leased by the respondent ("the building"), did not commence with the asbestos abatement and by failing to determine when demolition did commence.

In her view, the application judge's finding that the asbestos abatement was not the commencement of the demolition process was patently unreasonable. This finding had no evidentiary foundation and contradicted the unchallenged evidence that he did not reject, but appears to have accepted – that the asbestos abatement was the first stage of the demolition process.

Pavlov v. The New Zealand and Australian Lamb Company Limited , 2022 ONCA 655

Gillese, Huscroft, Sossin J.A

Counsel:

McGinnis and S. Ramsay, for the Appellant

Fisher and K. Sebag, for the Respondent

Keywords:Employment Law, Wrongful Dismissal, Damages, Civil Procedure, Costs, Disbursements, Mandatory Mediation, Rules of Civil Procedure, Rule 24.1, Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), Paquette v. TeraGo Networks Inc., 2015 ONSC 4189, Saltsov v. Rolnick, 2010 ONSC 6645

facts:

The Respondent was the Appellant's Director of Marketing Communications and Public Relations. The Respondent was terminated without cause on May 28, 2020. At the time, the Respondent was 47 years old and had been employed by the Appellant for three years. The Respondent had earned $131,943 per year plus benefits, and was eligible to receive an annual bonus of 15% of his base salary. He had received such bonus in his previous years of employment. Following the Respondent's termination, he applied for over 100 jobs and retained a private career coach. Despite his efforts, the Respondent remained unemployed at the time of trial.

At trial, the judge, based on the Respondent's age, position, duties, and level of renumeration, and prevailing economic uncertainties, awarded the Respondent damages equal to ten months' notice. The trial judge also concluded that the Respondent was entitled to amounts reflecting the value of the bonus and benefits he would have received during the notice period. The trial judge awarded the Respondent $50,000 plus costs and disbursements of $4,560.28. The Appellant appealed the trial judge's damage award, as well as the trial judge's inclusion of disbursements incurred at mandatory mediation in the costs award.

issues:

1. Did the trial judge err in applying the length of notice factors in accordance with Bardal?
2. Did the trial judge err in including the pro-rata entitlement to the bonus?
3. Did the trial judge err in awarding disbursements for the costs incurred by the respondent in retaining a mediator?

holding:

Appeal dismissed.

reasoning:

1. and 2. No.

The Court held that there was no merit to the appellant's arguments on appeal. The aspects of the trial judge's decision challenged by the Appellant were all findings of mixed fact and law entitled to deference. The Appellant had raised no palpable or overriding error (or error of any kind) in relation to the trial judge's analysis or conclusions.

3. No.

The Appellant challenged a portion of the $4,560.28 in disbursements awarded that related to the cost of a mediator to conduct a mandatory mediation required under r. 24.1 of the Rules. The Appellant argued that because the parties agreed to retain a mediator with experience in labour and employment disputes who was not a member of the approved mediation roster, any additional costs incurred were voluntary and thus not properly included in the costs award.

The Appellant relied on Saltsov v. Rolnick, where it was held that voluntary mediation was not properly part of a costs award. The Court rejected this submission, and agreed with the Respondent that Saltsov has no application to the context of mandatory mediation. Accordingly, it was within the discretion of the trial judge to approve the Respondent's disbursements in relation to that mandatory mediation.

SHORT CIVIL DECISIONS

Ducharme Estate v. Thibodeau, 2022 ONCA 661

Paciocco J.A. (Motion Judge)

Counsel:

O.D. Thomas, for the moving party

Rastorp and C. Dookie, for the responding party

Keywords: Civil Procedure, Security for Costs, Frivolous and Vexatious, Rules of Civil Procedure, R. 61.06(1)(a), Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine, 2019 ONCA 576

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