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12 May 2024

Court Of Appeal Summaries (May 6 – 10, 2024)

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Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 6, 2024.
Canada Litigation, Mediation & Arbitration

Good morning.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 6, 2024.

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In Croke v. VuPoint System Ltd., the Court upheld the dismissal of a wrongful dismissal case on the basis that the employment contract had been frustrated. The defendant employer's only customer was Bell Canada, and during COVID-19, the employer required internet and telephone line technicians to be vaccinated. The plaintiff refused to vaccinate and was terminated. The employer successfully argued that the vaccination policy was a “supervening event” that radically altered the contract, unforeseen at the time of contracting, and outside the employer's control. On that basis, the contract was frustrated and the employer was excused from performing (and therefore excused from being liable for termination pay).

In Kolapully v. Myles, the plaintiff was injured by a TTC bus, leading to a lengthy legal battle. The TTC fought the case vigorously, arguing the plaintiff was a malingerer. The decision discusses the admissibility of expert evidence and the calculation of damages in light of collateral benefits.

In US Steel Canada Inc (Re), the Ontario Court of Appeal dismissed Stelco Inc.'s motion for leave to appeal an order enforcing a reconveyance agreement, affirming the lower court's authority to impose specific performance and contractual terms under the CCAA without party consent.

7868073 Canada Ltd. v. 1841978 Ontario Inc.  dealt with restrictive covenants and misappropriation of corporate opportunities. The clauses in question were not found void as being an unreasonable restraint of trade.

Other topics included summary judgment and the striking of pleadings for failure to comply with a production order and for being frivolous and vexatious.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Kolapully v. Myles, 2024 ONCA 350

Keywords:  Contracts, Insurance, Motor Vehicle Accidents, Damages, Collateral Benefits, Statutory Accident Benefits, Deductibility, Double Recovery, Civil Procedure, Evidence, Admissibility, Expert Evidence, Damages, Costs, Insurance Act, R.S.O. 1990, c. I.8, s. 267.8, Ontario Evidence Act, S.O. 1990, c. E.23, s. 35, 52, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1), Statutory Accident Benefits Schedule, s. 35, 12(4)(c), Rules of Civil Procedure, r. 57.01, R. v. Mohan, [1994] 2 S.C.R. 9, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, Bruff-Murphy v. Gunawardena,  2017 ONCA 502, R. v. J.(J.-L.), 2000 SCC 51, Frye v. United States, 293 F. 1013 (U.S. D.C. Ct. App., 1923), Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (U.S. Cal., 1993), R. v. St. Amand, 2014 ONCJ 800, R. v. Munoz Hernandez, 2013 ONSC 4257, Mole and Mole v. Manwell, 2017 ONSC 3357, Meade v. Hussein, 2021 ONSC 7850, Legree v. Origlieri, 2021 ONSC 7650,  Marcoccia v. Gill, 2007 CanLII 11322 (Ont. S.C.), Hornick v. Kochinsky, 2005 CanLII 13784 (Ont. S.C.), Gutfriend v. Case, 2022 BCSC 2055, Bolduc v. Stratton, 2022 BCSC 1168, R. v. Krause (1986), 54 C.R. (3d) 294 (S.C.C.), R. v. F.(C). 2017 ONCA 480, Walker v. Ritchie  (2005), 197 O.A.C. 81 (C.A.), Cadieux v. Cloutier, 2018 ONCA 903, Meyer v. Bright (1993), 15 O.R. (3d) 129 (C.A.), Brown v. Bouwkamp (1976), 12 O.R., (2d) 33, Bannon v. McNeely, [1998] 38 O.R. (3d) 659 (C.A.), Gilbert v. South (2015), 2015 ONCA 712, Basandra v. Sforza (2016), 130 O.R. (3d) 466 (C.A.), and El-Khodr v. Lackie (2017), 139 O.R. (3d) 659, Gurniak v. Nordquist, 2003 SCC 59, Brad-Jay Investments Ltd. v. Szijjarto, [2006] O.J. No. 5078 (C.A), leave to appeal refused, [2007] S.C.C.A. No. 92, Young v. Young, [1993] 4 S.C.R. 3, Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771

2275518 Ontario Inc. v. The Toronto-Dominion Bank  , 2024 ONCA 343

Keywords:  Civil Procedure, Summary Judgment, Viva Voce Evidence, Third-Party Claims, Rules of Civil Procedure, r. 20.04(2.2), Hryniak v Mauldin, 2014 SCC 7, Ayr Farmers Mutual Insurance Company v Wright, 2016 ONCA 789, Rizzo & Rizzo Shoes Ltd (Re), [1998] 1 SCR 27

Flight (Heritage Painters & Services) v. Bank of Nova Scotia  , 2024 ONCA 370

Keywords:  Bankruptcy and Insolvency, Civil Procedure, Striking Pleadings, Security for Costs, Frivolous and Vexatious Proceeding, Conversion, Breach of Contract, Negligence, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, Rules of Civil Procedure, rr. 21.01(b), 21.01(3)(b), and 25.11, 61.06(1)(a) or (b), Yaiguaje v Chevron Corporation, 2017 ONCA 827, Heidari v Naghshbandi, 2020 ONCA 757, Schmidt v Toronto-Dominion Bank (1995), 24 OR (3d) 1 (CA)

Croke v. VuPoint System Ltd., 2024 ONCA 354

Keywords:  Contracts, Employment, Wrongful Dismissal, Defences, Frustration, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Fraser Health Authority v. Hospital Employees' Union (Tracy London Termination), 2022 CanLII 91089 (B.C.L.A.), Cowie v. Great Blue Heron Charity Casino, 2011 ONSC 6357 (Div. Ct.), Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2021 ONCA 201, Flieger v. New Brunswick, [1993] 2 S.C.R. 651, Munoz v. Sierra Systems Group Inc., 2016 BCCA 140, Cowie v. Great Blue Heron Charity Casino, 2011 ONSC 6357 (Div. Ct.)

U.S. Steel Canada Inc. (Re), 2024 ONCA 363

Keywords:  Bankruptcy and Insolvency, Contracts, Real Property, Remedies, Specific Performance, Civil Procedure, Leave to Appeal, Companies' Creditors Arrangement Act, RSC, 1985, c. C-36, Stelco Inc (Re) (2005), 75 OR (3d) 5 (CA), US Steel Canada Inc et al v The United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union et al, 2022 ONSC 6993, US Steel Canada Inc (Re), 2023 ONCA 569, Nortel Networks Corporation (Re), 2016 ONCA 332

7868073 Canada Ltd. v. 1841978 Ontario Inc., 2024 ONCA 371

Keywords:  Contracts, Interpretation, Licenses, Restrictive Covenants, Non-Competition Agreements, Enforceability, Restraint of Trade, Indefinite Contracts, Termination, Corporations, Directors, Fiduciary Duties, Corporate Opportunities, Misappropriation, Civil Procedure, Costs, Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, Tank Lining Corp. v. Dunlop Industrial Ltd.  (1982), 40 O.R. (2d) 219 (C.A.), Warner Brothers Pictures Inc. v. Nelson, [1936] 3 All E.R. 160 (K.B.), MEDIchair LP v. DME Medequip Inc., 2016 ONCA 168, Martin v. ConCreate USL Limited Partnership, 2013 ONCA 72, Elsley v. J.G. Collins Ins. Agencies Ltd., [1978] 2 S.C.R. 916, Payette v. Guay inc., 2013 SCC 45, M & P Drug Mart Inc. v. Norton, 2022 ONCA 398, Mroz v. Mroz, 2015 ONCA 171, Conseil Scolaire Catholique Franco-Nord v. Nipissing Ouest (Municipalité), 2021 ONCA 544, Veolia ES Industrial Services Inc. v. Brulé, 2012 ONCA 173, leave to appeal refused, [2012] S.C.C.A. No. 229, GasTOPS Ltd. v. Forsyth, 2009 CanLII 66153 (Ont. S.C.), aff'd 2012 ONCA 134, Galambos v. Perez, 2009 SCC 48, Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Gen. Div.), Can. Aero v. O'Malley, [1974] S.C.R. 592, John D. McCamus, The Law of Contracts, 3rd ed. (Toronto: Irwin Law, 2020)

Short Civil Decisions

Roe v. Roe, 2024 ONCA 349

Keywords:  Wills and Estates, Costs, Tire Corporation, Limited v. Eaton Equipment Ltd., 2024 ONCA 25, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Algra v. Comrie Estate, 2023 ONCA 811

Mouralian v. Groleau, 2024 ONCA 342

Keywords:  Contracts, Real Property, Agreements of Purchase and Sale of Land, Equitable Remedies, Relief from Forfeiture, Civil Procedure, Appeals, Fresh Evidence, Stockloser v. Johnson, [1954] 1 Q.B. 476 (C.A.)

Kanata Utilities Ltd. v. 1414610 Ontario Inc. (MAG Eastwood Construction), 2024 ONCA 367

Keywords:  Civil Procedure, Documentary Discovery, Orders, Enforcement, Striking Pleadings, Costs, Rules of Civil Procedure,  r 30.08(2), Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310

Gray v. Gray, 2024 ONCA 375

Keywords:  Wills and Estates, Estate Trustees, Removal, Trustee Act, R.S.O. 1990, c. T.23, s 38, Evidence Act, R.S.O. 1990, c. E.23, s 13, Westover Estate v. Jolicouer, 2024 ONCA 81

Bank of Nova Scotia v. Curtis, 2024 ONCA 374

Keywords:  Civil Procedure, Appeals, Extension of Time, Courts of Justice Act, RSO 1990, c C 43, s 7(5), Hililmount Capital Inc. v. Pizale, 2021 ONCA 36

Pyper v. Goble, 2024 ONCA 372

Keywords:  Civil Procedure, Vexatious litigants, Courts of Justice Act, RSO 1990, c C 43, s 140

CIVIL DECISIONS

Kolapully v. Myles, 2024 ONCA 350

[Lauwers, van Rensburg and Thorburn JJ.A.]

Counsel:

C. Townsend and Max Luburic, for the appellants

M. Dahab and A. Kaur, for the respondent

J. Obagi and E. Quigley, for the intervener Ontario Trial Lawyers Association

J. Tausendfreund and D. Zuber, for the intervener Canadian Defence Lawyers

Keywords:  Contracts, Insurance, Motor Vehicle Accidents, Damages, Collateral Benefits, Statutory Accident Benefits, Deductibility, Double Recovery, Civil Procedure, Evidence, Admissibility, Expert Evidence, Damages, Costs, Insurance Act, R.S.O. 1990, c. I.8, s. 267.8, Ontario Evidence Act, S.O. 1990, c. E.23, s. 35, 52, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1), Statutory Accident Benefits Schedule, s. 35, 12(4)(c), Rules of Civil Procedure, r. 57.01, R. v. Mohan, [1994] 2 S.C.R. 9, White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, Bruff-Murphy v. Gunawardena,  2017 ONCA 502, R. v. J.(J.-L.), 2000 SCC 51, Frye v. United States, 293 F. 1013 (U.S. D.C. Ct. App., 1923), Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (U.S. Cal., 1993), R. v. St. Amand, 2014 ONCJ 800, R. v. Munoz Hernandez, 2013 ONSC 4257, Mole and Mole v. Manwell, 2017 ONSC 3357, Meade v. Hussein, 2021 ONSC 7850, Legree v. Origlieri, 2021 ONSC 7650,  Marcoccia v. Gill, 2007 CanLII 11322 (Ont. S.C.), Hornick v. Kochinsky, 2005 CanLII 13784 (Ont. S.C.), Gutfriend v. Case, 2022 BCSC 2055, Bolduc v. Stratton, 2022 BCSC 1168, R. v. Krause (1986), 54 C.R. (3d) 294 (S.C.C.), R. v. F.(C). 2017 ONCA 480, Walker v. Ritchie  (2005), 197 O.A.C. 81 (C.A.), Cadieux v. Cloutier, 2018 ONCA 903, Meyer v. Bright (1993), 15 O.R. (3d) 129 (C.A.), Brown v. Bouwkamp (1976), 12 O.R., (2d) 33, Bannon v. McNeely, [1998] 38 O.R. (3d) 659 (C.A.), Gilbert v. South (2015), 2015 ONCA 712, Basandra v. Sforza (2016), 130 O.R. (3d) 466 (C.A.), and El-Khodr v. Lackie (2017), 139 O.R. (3d) 659, Gurniak v. Nordquist, 2003 SCC 59, Brad-Jay Investments Ltd. v. Szijjarto, [2006] O.J. No. 5078 (C.A), leave to appeal refused, [2007] S.C.C.A. No. 92, Young v. Young, [1993] 4 S.C.R. 3, Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771

facts:

The respondent, S.K., was struck by a TTC bus while crossing the street at Ellesmere Road and Nielson Road in Toronto on March 6, 2012. The appellant, L.M., was driving the bus and is a TTC employee. K has sought relief in a number of forums over a lengthy period of time. All of her claims have been vigorously resisted by the TTC on its own behalf and for M. It appeared that the TTC considered K to be a malingerer and considered all the decisions to the contrary in the long litigation litany to be mistaken in whole or in part, including the jury verdict, the trial motions, and the costs decisions under appeal.

On December 3, 2013, K started an action for general and specific damages claiming that she suffered serious and permanent physical and psychological impairment. K also initiated a proceeding before the Licence Appeal Tribunal (“LAT”). In January 2018, the LAT found she was catastrophically impaired according to the Statutory Accident Benefits Schedule (the “SABS”). The TTC applied for reconsideration, which was denied. K applied for arbitration at the Financial Services Commission of Ontario. On March 9, 2018, Arbitrator Barrington found she was entitled to non-earner benefits under the SABS.

After a six-week trial in 2022, the jury awarded K $175,000 in non-pecuniary damages and $200,000 in damages for past loss of income. The jury apportioned the degree of negligence at 25% to K and 75% to the appellants. The trial judge determined that the amount K had received for non-earner benefits under the SABS – about $95,000 – was not to be deducted from the damages award for past income loss under s. 267.8 of the Insurance Act. The TTC appealed.

issues:

  1. Did the trial judge err in admitting the results of the Single Photon Emission Computed Tomography (“SPECT”) Scan?
  2. Did the trial judge err in refusing to allow the respondents to introduce the attendant care claims forms into evidence?
  3. Did the trial judge err in her jury instructions on causation and the calculation of damages?
  4. Are non-earner benefits deductible from an award for loss of income under s. 267.8 of the Insurance Act?
  5. Did the trial judge make errors in her costs award?

holding:

Appeal allowed, in part.

reasoning:

  1. No.

There are two steps in the test to admit expert evidence. The first is the threshold requirement, and the second engages the judge's discretionary, gatekeeper function. The threshold requirement has four elements for admissibility: the evidence must be relevant; it must be necessary in assisting the trier of fact; no other evidentiary rule should apply to exclude it; and the expert must be properly qualified. At the second, gatekeeping step, the trial judge must weigh the potential risks and benefits of admitting the evidence in order to decide whether the potential benefits justify the potential harm to the trial process that might flow from the admission of the expert evidence. Daubert holds that the reliability of expert opinion premised on novel or contested science depends on the reliability of the underlying scientific methodology. The Court adopted the Goudge factors as a useful framework for trial judges to use in assessing the reliability of expert opinions based on novel or contested science. However, scientific techniques that are commonly used and reliable enough for clinical purposes might nonetheless be treated as novel when used for forensic or evidentiary purposes.

The TTC's expert, Dr. RY, admitted his lack of expertise and knowledge during cross-examination, leading the trial judge to find that his evidence should be given little weight. This would have affected both the threshold decision on admissibility and the weight the jury would have given to the SPECT scan evidence. The trial judge was clearly alive to her gatekeeping role and the applicable legal principles. She ultimately admitted Dr. S's report into evidence and permitted Dr. M to speak to it but ordered the summary portion to be fully redacted. The trial judge distinguished Meade on several bases, most particularly on the academic support Dr. M provided for the use of SPECT scans as a diagnostic tool to confirm or to add information to a provisional diagnosis.

This was a discretionary decision by the trial judge that was adequately explained. It was plain from her reasons that the trial judge kept in mind the governing principles for the admission of contested science and the need to balance the prejudicial effect and probative value of the evidence. However, it was not to be interpreted as finding that SPECT scans are reliable in detecting traumatic brain injury; the admissibility and use of the evidence was determined by the trial judge applying the proper principles.

  1. No.

The attendant care forms were not relevant to a fact in issue. What was important was whether the attendant care claim was ultimately put to the jury. The claim was not pursued and the way the blank forms were completed and processed were not relevant. There was also no error in the trial judge's conclusion that the forms were not relevant generally to K's disability claim.

A matter is collateral where it is “not determinative of an issue arising in the pleadings or indictment or not relevant to the matters which must be proved for the determination of the case.” The trial judge's decision not to allow the attendant care forms to be put to K and explored further in her evidence was a reasonable exercise of her discretion under the collateral facts rule. First, the evidence about how the forms were signed and used by someone in a fraud would have diverted the jury down an exercise far from the task before it. Second, the trial judge was well placed to assess the balance of probative value and prejudicial effect in view of her awareness of the other evidence that was to be adduced. Third, this evaluation was fair and accurate, since the TTC's case included an attack on K's credibility on the substantive evidence before the jury. Fourth, the exclusion of the attendant care forms did not deprive the TTC of its line of attack on K's credibility or leave the jury with a distorted perception.

The jury was well equipped to make the credibility findings and knew its task. The trial judge did not err in the exercise of her discretion in refusing to admit the blank attendant care forms into evidence.

  1. No.

There was no error in trial judge's instruction correcting the error of K's counsel in referring to “material contribution” as the applicable test for causation. The charge directly addressed and corrected the erroneous statements that were put to the jury and clearly set out the proper law on causation. The fact that the TTC's counsel accepted the proposed correction and did not request a re-charge reinforced its adequacy. The trial judge's correction of the closing statement of K's counsel that the calculation of non-pecuniary damages should be done on a per diem basis clearly identified the offending comments, explained why they were incorrect, and instructed the jury not to follow them.

  1. Yes.

The result in Walker was overruled by the court in Cadieux and was therefore not binding on the trial judge. The trial judge did not consider the important changes to s. 267(8) of the Insurance Act and the legislature's introduction of silos into the text of s. 267(8), and the trial judge's failure to consider this context led her into error. The Walker court found that non-earner benefits were not only unrelated to income loss but were in fact most akin to general damages, but this reasoning was in error, was rejected by the Cadieux court, and should not be followed. The trial judge erred in characterizing as mere obiter the court's inclusion of non-earner benefits in the silo of income replacement benefits which are to be deducted from a tort award for loss of income. She noted correctly that Cadieux made no reference to Walker. However, the court accepted the inclusion of non-earner benefits in that silo as proposed in the appellant's factum in Cadieux. The trial judge was required to deduct the amount that K had received for non-earner benefits under the SABS.

  1. No.

The governing test is that leave to appeal costs awards is exceptional and will not be granted “save in obvious cases where the party seeking leave convinces the court there are ‘strong grounds upon which the appellate court could find that the judge erred in exercising his discretion'.” The trial judge expressly considered the relevant r. 57.01 factors but held that they did not call for a reduction in the costs award. She was entitled to exercise her discretion not to reduce the award, in part because of the impact of the “fraud lens” on the length and complexity of the trial. There was ample basis to find that the TTC took the “fraud lens” view. The prerequisite for awarding costs of the LAT hearing is a reduction of damages flowing from the LAT disposition, not a deduction. It was open to the trial judge under s. 131(1) of the Courts of Justice Act to award “costs of and incidental to a proceeding”.

The trial judge made no error in concluding that K's successful pursuit of the catastrophic impairment designation, which gave her access to funds for medical, rehabilitation, attendant care, and housekeeping costs, narrowed the scope of her tort action and reduced the amount of damages recoverable against the TTC. The deductibility of the non-earner benefits added to the force of this argument. It was open to the trial judge to order that the TTC pay K's costs of the LAT hearing.

2275518 Ontario Inc. v. The Toronto-Dominion Bank, 2024 ONCA 343

[Fairburn A.C.J.O., Simmons J.A. and Daley J. (ad hoc)]

Counsel:

E. Karp and I. Literovich, for the appellants

M. J. van Zandvoort and J. Suttner, for the respondent

Keywords:  Civil Procedure, Summary Judgment, Viva Voce Evidence, Third-Party Claims, Rules of Civil Procedure, r. 20.04(2.2), Hryniak v Mauldin, 2014 SCC 7, Ayr Farmers Mutual Insurance Company v Wright, 2016 ONCA 789, Rizzo & Rizzo Shoes Ltd (Re), [1998] 1 SCR 27

facts:

This appeal was from a motion for summary judgment granted in favour of TD Bank against the appellants and the Guarantors who had defaulted on a loan. The Guarantors claimed their lawyer's failure to properly register the bank's security prevented TD from enforcing the guarantees. Despite extensive legal proceedings and a mini-trial featuring testimony from key parties in January 2023, the motion judge determined there was no genuine issue requiring a full trial and dismissed the misrepresentation and other defences. The judge also ruled that the third-party claim did not obstruct the summary judgment, leading to this appeal.

issues:

  1. Did the motion judge err by ordering oral evidence from a non-party, J.S, in violation of r. 20.04(2.2) of the Rules of Civil Procedure?
  2. In the alternative, did the motion judge err by making findings of fact and credibility relating to the appellants' third-party claim against J.S, thereby creating a risk of inconsistent findings of fact and effectively granting partial summary judgment?
  3. In the further alternative, did the motion judge err by granting summary judgment in the main action prior to the determination of the third-party claim, thereby prejudicing the appellants' interests?

holding:

Appeal dismissed.

reasoning:

  1. No.

The appellants argued that the motion judge erred by allowing a non-party, J.S, to testify during the mini-trial proceeding in violation of r. 20.04(2.2). The appellants submitted that a motion judge's jurisdiction to order oral evidence on a mini-trial was limited to ordering evidence from only the parties themselves. They said that a mini-trial was not intended to be a trial that included a parade of witnesses testifying about multiple issues. The Court noted that r. 20.04(2.2) contained no limitation, such as the one advanced by the appellants, restricting the jurisdiction of the court to order evidence on a mini-trial from non-parties. On its face, the rule states that oral evidence can be “presented” by one or more parties. It does not state that evidence can only be given by parties. Furthermore, the modern approach to statutory interpretation supports that r. 20.04(2.2) permits oral evidence from non-parties if it aids in reaching a fair and just decision. Thus, the Court dismissed the first ground of appeal.

  1. No.

The second ground of appeal challenged the decision to let J.S testify during the mini-trial, arguing it was inappropriate while a third-party proceeding against him was outstanding. The appellants contended that this could lead to inconsistent fact findings, particularly since the motion judge made conclusions that may have affected the third-party negligence claim against J.S without having all relevant evidence. The Court upheld the use of enhanced fact-finding processes, emphasizing the summary judgment's role in promptly resolving creditor claims without genuine trial issues. The Court found that the negligence claim against J.S did not intersect materially with TD Bank's claims, allowing for separate proceedings without conflicting outcomes.

  1. No.

The Court affirmed that the motion judge correctly determined that it was just to grant summary judgment after a mini-trial, having fully considered the extensive evidence and complexities of the case. The trial, including all necessary witness testimony and examinations, was deemed efficient and appropriate. Furthermore, the appellants had ample opportunity to integrate their third-party claim into the main action for simultaneous resolution, but chose not to. Thus, their later objections to the process were dismissed, as they had previously declined to seek adjustments that could have addressed any procedural concerns.

Flight (Heritage Painters & Services) v. Bank of Nova Scotia, 2024 ONCA 370

[Gomery J.A. (Motions Judge)]

Counsel:

J. Wahba, for the moving party

T. Vasdani, for the responding party

J. Squire, for the third party

Keywords:  Bankruptcy and Insolvency, Civil Procedure, Striking Pleadings, Security for Costs, Frivolous and Vexatious Proceeding, Conversion, Breach of Contract, Negligence, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, Rules of Civil Procedure, rr. 21.01(b), 21.01(3)(b), and 25.11, 61.06(1)(a) or (b), Yaiguaje v Chevron Corporation, 2017 ONCA 827, Heidari v Naghshbandi, 2020 ONCA 757, Schmidt v Toronto-Dominion Bank (1995), 24 OR (3d) 1 (CA)

facts:

B.F sought to reinstate his lawsuit against the Bank of Nova Scotia, which was dismissed under rules 21.01(b), 21.01(3)(b), and 25.11 of the Rules of Civil Procedure by Koehnen J. His legal struggles involved several lawsuits related to funds misappropriated by his ex-spouse, J.L. B.F's initial lawsuit against J.L was dismissed due to his status as an undischarged bankrupt. Subsequent actions included a dismissed claim against his bankruptcy trustee and an unresolved lawsuit where B.F alleged negligence by the trustee. Additionally, a default judgment B.F obtained in a trustee-initiated lawsuit was not enforceable without consent from the Court, and his attempt to enforce this judgment was later denied as the action was found time-barred. Finally, B.F initiated a lawsuit against the Bank of Nova Scotia, claiming damages for conversion, breach of contract, and negligence.

issues:

Should B.F be required to post security for its costs of the appeal?

holding:

Motion granted.

reasoning:

Yes.

Rule 61.06(1)(a) empowers the Court to order security for costs where there was good reason to believe that the appeal was frivolous and vexatious and that the appellant had insufficient assets in Ontario to pay the costs of the appeal.

The Court found that B.F's appeal appeared to be frivolous and vexatious. B.F's appeal had no merit. B.F attacked the motion judge's findings without explaining in any meaningful way why they were wrong. He contended that, in declining to grant J.L any costs, the motion judge recognized that she “may well have engaged in inappropriate transactions”. But the question was not whether or not B.F could prove that J.L misappropriated funds but rather whether his action against the Bank based on that alleged misappropriation was time-barred. B.F argued that his appeal could succeed because the Bank had not abandoned its third-party claim against J.L. The Court found that the third-party claim did not amount to a concession that the action had any merit.

Second, B.F acknowledged that he did not have sufficient assets in Ontario to pay the Bank's costs. Thus, the Court found that the Bank had met the criteria in r. 61.06(1)(a), and that it was just to order B.F to post security for costs. The Bank also sought an order for security for costs under r. 61.06(1)(b), which allowed the Court to order security for costs where such an order could be made under s. 56.01. However, given the Court's conclusions under r. 61.06(1)(a), the Court concluded that it need not consider those submissions.

Croke v. VuPoint System Ltd., 2024 ONCA 354

[Pepall, Sossin and Dawe JJ.A.]

Counsel:

D. Share and N. Goldhawk, for the appellant

E. Campbell and C. Phelps, for the respondent

Keywords:  Contracts, Employment, Wrongful Dismissal, Defences, Frustration, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Fraser Health Authority v. Hospital Employees' Union (Tracy London Termination), 2022 CanLII 91089 (B.C.L.A.), Cowie v. Great Blue Heron Charity Casino, 2011 ONSC 6357 (Div. Ct.), Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2021 ONCA 201, Flieger v. New Brunswick, [1993] 2 S.C.R. 651, Munoz v. Sierra Systems Group Inc., 2016 BCCA 140, Cowie v. Great Blue Heron Charity Casino, 2011 ONSC 6357 (Div. Ct.)

facts:

The appellant, A.C., was employed by the respondent, VuPoint Systems Ltd. (“VuPoint”), as a technician. VuPoint is in the business of installing residential satellite TV and “smart home” internet services. Its main customers are Bell Canada and Bell ExpressVu (collectively, “Bell”), which provide more than 99% of VuPoint's income. All of the appellant's work was for Bell and it was undisputed that there was no other work VuPoint could provide to the appellant.

In 2021, Bell implemented a mandatory vaccination policy, following which VuPoint adopted its own vaccination policy. The appellant refused to comply with the VuPoint Policy by disclosing his vaccination status, which was deemed to mean that he was unvaccinated. Consequently, pursuant to the Bell Policy, he was not eligible to continue working as a technician providing services for Bell customers. VuPoint terminated the appellant's employment, and he brought a wrongful dismissal action.

The motion judge dismissed the action, finding that the appellant's employment contract was frustrated by the implementation of the Bell Policy. The appellant appealed that finding, arguing that the motion judge should not have applied the doctrine of frustration and, in the alternative, that the application of frustration in this case was incorrect.

issues:

  1. Did the motion judge err in law in holding that the employment contract was frustrated by the appellant's voluntary conduct?
  2. Did the motion judge err in fact or in law in holding that the “supervening event” was not contemplated at the time of contracting?
  3. Did the motion judge err in law in finding that the “supervening event” was outside of VuPoint's control?
  4. Did the motion judge err in finding that the appellant received a “clear and unambiguous” warning that his vaccination status would result in termination?

holding:

Appeal dismissed.

reasoning:

  1. No.

A party alleging frustration must establish that there was a “supervening event” that: (i) radically altered the contractual obligations; (ii) was not foreseeable and for which the contract does not contemplate; and (iii) has not been caused by the parties.

The appellant argued that the frustration in this case stemmed from his voluntary decision not to comply with the Policy, and therefore the third criteria above was not met. He relied on Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, where this court held that “a contract is not frustrated if the supervening event results from a voluntary act of one of the parties.” On this view, according to the appellant, an employee's voluntary conduct should be dealt with through the law of just cause, whereby termination of employment is considered an extreme measure. The appellant asserted that applying frustration to his voluntary choice not to comply with the Policy would allow parties to tailor their behaviour, in effect, to induce frustration.

The motion judge, in applying Fraser Health Authority, did not specifically address whether the appellant's voluntary choice to remain unvaccinated prevented the doctrine of frustration from being brought into play. However, in the Court's view, it did not. This was not a case where the conduct of the appellant in fact frustrated the employment contract. Rather, the Court accepted, as did the motion judge, that the Bell Policy was the supervening event which frustrated the contract.

The letter informing VuPoint of the Bell Policy, dated September 8, 2021, made no reference to the conduct of employees, nor was the conduct of individual employees relevant for the application of the Bell Policy. Under the Bell Policy, it did not matter whether a person conducting field service work for Bell chose not to get vaccinated, could not obtain vaccinations in their region or could not get vaccinated due to medical or religious factors. The effect of the Bell Policy, from VuPoint's position, was akin to that of a new regulatory requirement: absent vaccination, VuPoint's employees were ineligible to work on Bell projects, which was nearly all of VuPoint's work.

Whether an employee affected by such a supervening event can or will seek once again to become qualified (or, in this case, vaccinated), was not relevant to a threshold determination of whether the doctrine of frustration was applicable. This was because it is not the employee's choice or conduct that renders them unable to work but, rather, the introduction of the new requirement that they do not satisfy. In other words, it is the new requirement that is the supervening event.

The evidence before the motion judge also indicated that the appellant's termination may have been revoked had he responded that he intended to become vaccinated. VuPoint's openness to allowing the appellant to rectify his ineligibility to continue to perform services for Bell did not lead to a finding that the frustration of the employment contract in this case was self-induced. However, that was clearly not the case here. The motion judge found that the appellant had not advised VuPoint that he intended to become vaccinated, despite his awareness that termination could result from non-compliance with the Policy. Furthermore, VuPoint had no knowledge of the timeline of the Bell Policy and there was no evidence in the record that the vaccination requirement would be simply a temporary or short-lived measure.

The Court held that it was not realistic to have expected VuPoint to have “bargained with Bell Canada for more discretion over matters of health and safety”, as the appellant argued. The Bell Policy was plainly motivated by a reasonable concern relating to the COVID-19 pandemic and that its customers may not want unvaccinated installation technicians entering their homes. The Court concluded that frustration was available to the motion judge, irrespective of the appellant's conduct.

  1. No.

The motion judge found that the Bell Policy was unforeseen and not contemplated by either party when they entered into the appellant's employment contract in 2014. The appellant argued that the motion judge erred in reaching this conclusion. Frustration cannot arise if the parties contemplated the supervening event at the time of contracting. In the appellant's view, business exigencies are not normally considered unforeseen events giving rise to frustration, and the Bell Policy constituted such a business exigency brought about by Bell's rights set out in the Supply Agreement between Bell and VuPoint.

Furthermore, the appellant argued that the Supply Agreement, signed prior to the announcement of the Bell Policy in 2021, contemplated that Bell could implement new “health and safety requirements.” As the supervening event in this case was Bell's decision to change its health and safety requirements by requiring COVID-19 vaccination on the part of VuPoint employees conducting work for Bell, he argued that this was a foreseeable exercise of contractual power. As a result, according to the appellant, the doctrine of frustration did not apply.

In the Court's view, the motion judge's finding that the Bell Policy was an unforeseen circumstance was entitled to deference. The cases relied on by the appellant did not support the broad exception for business exigencies claimed by the appellant. In neither case was frustration raised by the parties, nor did the court in either case perform an analysis of the doctrine of frustration. Neither case has been relied on for this proposition, nor has either case been referred to in other authorities where the doctrine of frustration was raised and analysed.

Furthermore, the 2021 Supply Agreement was not relevant to the analysis of foreseeability. The focal point of the foreseeability analysis is 2014, when the employment contract was signed. The 2021 Supply Agreement was not in place at this time and there is nothing in the record establishing what agreement was in place between Bell and VuPoint in 2014.

The Court rejected the appellant's argument with respect to the foreseeability of the Bell Policy and whether it was contemplated by the parties.

  1. No.

The appellant argued that the supervening event was not the Bell Policy but rather VuPoint's choice to respond to the Bell Policy by terminating his employment. The Bell Policy required those performing work for Bell to be vaccinated, but it did not require the appellant to be terminated. Where the employer's response is a dismissal, it should be subject to a just cause analysis. The appellant emphasized that VuPoint could have taken other non-disciplinary action, such as suspension without pay. It also could have given him notice of termination without cause and offered him an opportunity to mitigate his damages by becoming fully vaccinated, which would have enabled him to continue to work. The appellant's argument was that, in effect, his termination was framed as frustration of contract after the fact but, in reality, was a termination for just cause. Further, according to the appellant, if the motion judge's reasoning in this case was affirmed, employers would be able to use frustration as an alternative ground for any termination for cause related to ongoing misconduct, such as absences, tardiness, or negligence.

The Court rejected the appellant's argument. Frustration of contract is a “no fault” termination of the contract. Where frustration is established, it has the effect of discharging the agreement, thereby releasing the parties from any further obligation to perform. It follows that remedies applicable to misconduct, such as progressive discipline, suspension or warnings, have no application in the context of frustration.

The possibility that an employee might be able to rectify the disruption to an employment contract caused by a supervening event is relevant to the analysis of whether the supervening event results in “a radical change to the fundamental obligations of the contract.” Similarly, determining how information about a disruption should be conveyed to an employee in the context of a particular supervening event, or how an employee should inform an employer of an intent to rectify their ineligibility to continue employment, if possible, also would relate to a determination of whether there has been a radical change. In the case at bar, however, these questions do not arise, as the appellant clearly was aware of the Bell Policy, refused to comply, knew that termination could result and never signaled any intent to become vaccinated.

Accordingly, the motion judge correctly identified the Bell Policy as the supervening event and concluded that the Policy was not foreseeable and radically altered the contractual obligations of the parties. There was no evidence in the motion record that VuPoint had any control over Bell's decision to implement the Policy. The termination of the appellant's employment was simply the inevitable result of this finding and of VuPoint's corresponding entitlement to treat the contract as at an end.

  1. No.

The motion judge found that the appellant was provided with two weeks' working notice and that he was therefore aware of the consequences of non-compliance with the Policy for at least that two-week period. The motion judge considered a letter from the appellant to his supervisor at VuPoint dated October 9, 2021, stating that the appellant would not disclose his vaccination status due to privacy laws and claiming that VuPoint was discriminating against him by terminating his employment for his decision to not become vaccinated. The motion judge found that this letter was a “clear and unequivocal” statement that the appellant would not comply with the Policy in the future.

The appellant argued that he did not receive an adequate warning that non-compliance with the Policy would result in termination. The appellant argued that the October 9th letter was written from this perspective – he believed his employment to be over, so he stood to lose little by committing to his position of non-compliance with respect to the Policy. According to the appellant, the letter was post-termination evidence that could not be used to determine whether there has been frustration.

In the Court's view, the motion judge ascribed more significance than needed to the appellant's October 9th letter in response to the notice of termination. Whether the appellant's communication with VuPoint was clear or ambiguous, and indeed whether or not he communicated with VuPoint at all on this date, would have no bearing on the frustration analysis, which is to be conducted based on the information known at the point of termination: in this case, when the notice of termination letter was sent on September 28, 2021.

In any event, there was other evidence supporting that the appellant knew termination could result from non-compliance, such as the evidence that he was aware of the Policy and the need to be vaccinated, he knew there was no work he could perform without the vaccination, he began looking for other work after being advised of the Policy, and he specifically looked for a position that did not require a vaccine.

The Court was satisfied that when VuPoint sent its termination letter on September 28, 2021, it was entitled to conclude that there had been a radical alteration of its employment contract with the appellant. VuPoint's Policy, which it implemented on September 10, 2021, required employees to advise VuPoint of their “vaccination status”. There was no evidence that the appellant ever told VuPoint that he was either fully or partially vaccinated, despite the fact that he was aware of the Policy. In short, this was not a situation where VuPoint knew that the appellant's inability to work on Bell installation projects because he could not or would not provide proof of vaccination would be only temporary and relatively brief, and that the employment relationship would accordingly not be radically altered.

U.S. Steel Canada Inc. (Re), 2024 ONCA 363

[Roberts, Trotter and George JJ.A.]

Counsel:

G. R. Hall and J. D. Gage, for the appellant, Stelco Inc.

C. G. Smith, D. Ionis, K. B. Johnstone, R. Jaipargas and X. Yan, for the respondent, DGAP Investments Ltd.

Keywords:  Bankruptcy and Insolvency, Contracts, Real Property, Remedies, Specific Performance, Civil Procedure, Leave to Appeal, Companies' Creditors Arrangement Act, RSC, 1985, c. C-36, Stelco Inc (Re) (2005), 75 OR (3d) 5 (CA), US Steel Canada Inc et al v The United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union et al, 2022 ONSC 6993, US Steel Canada Inc (Re), 2023 ONCA 569, Nortel Networks Corporation (Re), 2016 ONCA 332

facts:

Stelco Inc, the moving party, sought leave to appeal the order issued on December 12, 2023, by the CCAA supervisory judge (“the motion judge”) under the Companies' Creditors Arrangement Act  (CCAA). This was part of a contentious legal battle between Stelco Inc. and DGAP Investments Ltd. concerning a reorganization agreement. Specifically, the conflict revolved around a parcel of land Stelco Inc was obligated to return to LandCo under a reconveyance agreement dated June 5, 2018, but failed to do so. The issue centered on the failure of Stelco Inc and LandCo to finalize an agreement on shared facilities and easements necessary for the property's operation, as required by the reconveyance agreement. Consequently, DGAP could not complete its land purchase from LandCo. The motion judge partially granted DGAP's motion, rejecting Stelco Inc's proposed easements that were not compliant with the agreement and declined to enforce DGAP's proposed easement form. However, the motion judge held that, absent an agreement by a stipulated date, the court retained the authority to impose terms and conditions to bring about the reconveyance of the DGAP Parcel. Stelco Inc sought leave to appeal.

issues:

  1. Did the motion judge err in concluding that the Superior Court had the power, in the circumstances of the case, to create and impose the shared facilities and/or reciprocal easement agreements required by s. 4.1(m) of the Reconveyance Agreement notwithstanding the absence of the moving party's consent?
  2. Did the motion judge err in concluding that s. 4.1(m) of the Reconveyance Agreement precluded the moving party from negotiating terms in the shared facilities and/or reciprocal easement agreements required by s. 4.1(m) of the Reconveyance Agreement?

holding:

Motion dismissed.

reasoning:

1 & 2) No.

The Court noted that leave to appeal was granted sparingly in CCAA proceedings and only where there were serious and arguable grounds that were of real and significant interest to the parties. The criteria for granting leave include: (1) whether the proposed appeal was prima facie meritorious or frivolous; (2) whether the points on the proposed appeal were of significance to the practice; (3) whether the points on the proposed appeal were of significance to the action; and (4) whether the proposed appeal would unduly hinder the progress of the action.

The Court found that the proposed appeal was not prima facie meritorious. The Court ruled that the motion judge's interpretation of the Reconveyance Agreement deserved deference, and the moving party had not demonstrated any plausible errors in the interpretation. On the contentious legal issue of whether a Court can impose an agreement on a non-consenting party under section 11 of the CCAA, the court referred to its prior decision in U.S. Steel Canada Inc. et al. v. The United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union et al,  where it was decided that the Court could enforce specific performance of the Reconveyance Agreement regardless of unresolved issues under Article 4.1(m). It was also noted that during a previous motion, as cited in U.S. Steel Canada Inc. (Re), both parties conceded that a Commercial List judge could determine the necessary agreements if no mutual agreement was reached, indicating inconsistency in the moving party's position opposing reconveyance.

Regarding the appeal's relevance to legal practice, the Court found that while the interpretation of the Reconveyance Agreement was not of broad significance, the issue of a Court imposing contracts on non-consenting parties carried potential importance to the CCAA community. In terms of the appeal's significance to the specific legal action, the Court recognized the relevance of the dispute to both parties involved but did not heavily emphasize this factor, as it was generally expected in appeal situations. The Court highlighted that further delays caused by the appeal were undesirable. The moving party had been in continuous breach of a previous court order from December 2022 to perform specific reconveyance obligations, which had been outstanding since 2018. The Court emphasized the urgency of concluding the transaction, as detailed delays were already affecting the proceedings adversely.

7868073 Canada Ltd. v. 1841978 Ontario Inc., 2024 ONCA 371

[Fairburn A.C.J.O., Simmons J.A. and Daley J. (ad hoc)]

Counsel:

M. Milne-Smith, for the appellant/respondent by way of cross-appeal(COA 22-CV-0384) and respondent/respondent by way of cross-appeal (COA 23 CV-0587), GS

H. Book and W. McLennan, for the respondents/respondents by way of cross-appeal (COA-22-CV-0384) and appellants/respondents by way of crossappeal (COA-23-CV-0587), Vacuum Metallizing Limited, RL, JS and 1841978 Ontario Limited

M. L. Whelton, E. Hiutin and M. Coker, for the respondents/appellants by way of cross-appeal (COA-22-CV-0384 & and COA 23 CV-0587), 7868073 Canada Ltd., 1841979 Ontario Limited, 1636833 Ontario Inc., Architectural Coatings Solutions Inc., Transreflect Inc., Low Risk Logistics Inc., IM and WK

Keywords:  Contracts, Interpretation, Licenses, Restrictive Covenants, Non-Competition Agreements, Enforceability, Restraint of Trade, Indefinite Contracts, Termination, Corporations, Directors, Fiduciary Duties, Corporate Opportunities, Misappropriation, Civil Procedure, Costs, Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, Tank Lining Corp. v. Dunlop Industrial Ltd.  (1982), 40 O.R. (2d) 219 (C.A.), Warner Brothers Pictures Inc. v. Nelson, [1936] 3 All E.R. 160 (K.B.), MEDIchair LP v. DME Medequip Inc., 2016 ONCA 168, Martin v. ConCreate USL Limited Partnership, 2013 ONCA 72, Elsley v. J.G. Collins Ins. Agencies Ltd., [1978] 2 S.C.R. 916, Payette v. Guay inc., 2013 SCC 45, M & P Drug Mart Inc. v. Norton, 2022 ONCA 398, Mroz v. Mroz, 2015 ONCA 171, Conseil Scolaire Catholique Franco-Nord v. Nipissing Ouest (Municipalité), 2021 ONCA 544, Veolia ES Industrial Services Inc. v. Brulé, 2012 ONCA 173, leave to appeal refused, [2012] S.C.C.A. No. 229, GasTOPS Ltd. v. Forsyth, 2009 CanLII 66153 (Ont. S.C.), aff'd 2012 ONCA 134, Galambos v. Perez, 2009 SCC 48, Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Gen. Div.), Can. Aero v. O'Malley, [1974] S.C.R. 592, John D. McCamus, The Law of Contracts, 3rd ed. (Toronto: Irwin Law, 2020)

facts:

This appeal concerned two actions tried together involving RL and his former business associates. Mr. L held himself out as an expert in powder-coating substrates. He started two powder-coating business ventures after being fired from Alliance Surface Finishing Inc and transferred the business of the second venture to a third venture. The first action involved a License Agreement granting certain “Licensed Rights” in perpetuity to L's powder-coating knowledge to 7868073 Canada Ltd. L, along with investors IM and WK, formed, and through their respective holding companies, held equal shares in, 786, the Licensee under the License Agreement. 786 owned the shares of two other companies, collectively referred to as “ACS”. The venture failed. L then formed a new joint venture, Powder Coating Solutions Inc. (PCS), with JS and GS. ACS and three others commenced an action, alleging L breached the License Agreement and fiduciary duties. In a separate action, GS alleged L and JS misappropriated PCS' powder-coating business.

In the ACS action, the trial judge rejected the claim that License Agreement was invalid and unenforceable or had been terminated and found that L breached fiduciary duties. She assessed profits to be disgorged of $2,501,986. The trial judge concluded that the GS action was moot and dismissed it.

issues:

  1. Did the trial judge err in holding that the License Agreement was valid and enforceable?
  2. Did the trial judge err in finding that the License Agreement was not terminated?
  3. Did the trial judge err in finding that L owed the ACS plaintiffs fiduciary duties after leaving ACS?
  4. Did the trial judge err in concluding that L breached his contractual and fiduciary obligations by misappropriating corporate opportunities of ACS?
  5. Should the ACS plaintiffs be granted leave to appeal the trial judge's costs award, and, if leave was granted, should the caps on the costs liability of JS, Vacuum Metallizing and GS be set aside?

holding:

Appeal of the ACS judgment and cross-appeal dismissed. Appeal in the GS action dismissed.

reasoning:

  1. No.

First, the appellants argued that the trial judge erred in failing to consider whether the License Agreement was void ab initio as a restraint of trade. While there is no doubt that restraint of trade principles may apply to a restrictive covenant applicable after the termination of a licensing agreement, the appellants proffered no authority to support their argument that restraint of trade principles applied to the License Agreement prior to termination or cancellation in accordance with its terms.

The principle in Warner Brothers that “[w]here, as in the present contract, the covenants are all concerned with what is to happen whilst the defendant is employed by the plaintiffs and not thereafter, there is no room for the application of the doctrine of restraint of trade” was more appropriate to the question whether restraint of trade principles should apply during the currency of the License Agreement. The restrictions on competing prior to cancellation or termination of the License Agreement were neither unreasonable to him nor contrary to public policy. That such restrictions existed made sense in the context of the business arrangement that was negotiated. L participated in the negotiations, agreed to the terms of the License Agreement, and was not hampered by inequality of bargaining power.

Assuming, without deciding, that restraint of trade principles applied, the License Agreement was reasonable between the parties and with reference to the public interest. Notwithstanding its broad geographic scope and the limits it placed on selling, distributing and putting to use the Licensed Rights, the License Agreement was temporally limited in the sense that it was subject to cancellation and termination by the Licensor, and restricted L from competing with ACS only during its currency. It did not purport to restrain him from using the Licensed Rights after its termination and went no further than necessary to protect the legitimate interests of 786, the party in whose favour it was granted.

GS also argued the trial judge erred in determining that a worldwide license in perpetuity of knowledge or know-how was permissible. An appeal is not the forum for parties to raise issues not raised in the court below. The trial judge held that the License Agreement was not void as against perpetuity. The appellants did not challenge her finding in that respect on appeal nor did they challenge on appeal her finding that the License Agreement was not unconscionable.

  1. No.

The submissions focused on three emails/letters. Addressing an email from K to contacts and potential customers of ACS and ASF, as the trial judge observed, it was not open to ACS under the terms of the License Agreement to terminate it. In any event, the fact that ACS advised its contacts and potential customers that it agreed with L's statement that he was no longer working with ACS did not demonstrate an intention to release him from his obligations under the License Agreement. This conclusion was also consistent with the fact that L continued to hold shares in 786 after his departure.

Mr. L and GS both purported to exercise the cancellation and termination rights contained in ss. 4 and 5 of the License Agreement in two other letters. The trial judge stated that no evidence was adduced to show that any of the events triggering termination had occurred and clarified that the appellants had not proven ACS was insolvent. There was no error in the trial judge's conclusions that the License Agreement was not terminated by any of the three e-mails/letters.

  1. No.

The trial judge's finding that L's fiduciary duties continued after he left ACS was a finding of mixed fact and law and was entitled to deference on appeal. ACS' agreement with ASF did not eliminate ACS' vulnerability vis-à-vis L. ACS remained vulnerable to L and he continued to hold power and discretion in relation to ACS, because he took with him, and continued to exploit following his departure, the knowledge and expertise he licensed to 786.

Contrary to the appellants' submissions, L's situation was not similar to that of a departed employee whose relationship with his former employer has terminated. Following his departure from ACS, L continued to be bound by the terms of the License Agreement. His continuing fiduciary obligations flowed, in part, from the continuing existence of that agreement, the continued power and discretion he held vis-à-vis ACS and his former partners because of his knowledge and expertise, and their vulnerability to him as a result of that knowledge and expertise. The February 14, 2012 e-mail was not enough to demonstrate that L was relieved of his fiduciary duties was not enough to demonstrate that L was relieved of his fiduciary duties.

  1. No.

The trial judge found that L breached his contractual and fiduciary obligations by misappropriating corporate opportunities that belonged to ACS (the RM2 contract and sale of three powder-coating machines), for the benefit of PCS/Vacuum Metallizing. The trial judge relied on principles set out in Can. Aero v. O'Malley for her analysis. She also accepted and quoted from a passage of Can. Aero setting out the principle that determining whether there has been a breach of fiduciary duty is a case-specific exercise requiring consideration of a variety of potential factors. “Ripeness” of the opportunity is not determinative but only one potential factor.

The trial judge considered several factors to be important in determining whether there was a sufficient causal nexus between L's breach of fiduciary duty and profits earned on the RM2 contract. The trial judge found as a fact that the RM2 opportunity (including the RM2 contract and the sale of a powder-coating machine to RM2) was not a fresh initiative for Mr. Langlois. It was L's relationship with R, the principal of Inline Fiberglass, nurtured over the duration of L's tenure at ACS, which led to the RM2 opportunity.

There was no error in the trial judge's application of the law to the facts of this case. While the passage from Can. Aero specifies that a fiduciary is precluded from usurping “a maturing business opportunity”, it indicated as well that a fiduciary is precluded from taking advantage of an opportunity “where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.” Significantly, in this case, the License Agreement had not been cancelled or terminated when the appellants took advantage of the RM2 opportunities.

  1. No.

The basis for capping the awards of costs was obvious from the judgment that was awarded and the trial judge's endorsement on costs. The ACS plaintiffs did not meet the high threshold for obtaining leave to appeal a discretionary costs award.

SHORT CIVIL DECISIONS

Roe v. Roe, 2024 ONCA 349

[Tulloch C.J.O, Hourigan and Dawe JJ.A.]

Counsel:

B. Donavan and N. Kochman, for the moving party/responding party by way of cross-motion, RMR

N. Mukherjee and A. Rogerson, for the respondent/moving party by way of cross-motion, RSR

D. N. Delagran, for the responding party/responding party by way of cross motion, RCR

Keywords:  Wills and Estates, Costs, Tire Corporation, Limited v. Eaton Equipment Ltd., 2024 ONCA 25, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Algra v. Comrie Estate, 2023 ONCA 811

Mouralian v. Groleau, 2024 ONCA 342

[Roberts, Trotter and George JJ.A.]

Counsel:

K. Coombs, for the appellant

M. Morden, for the respondent

Keywords:  Contracts, Real Property, Agreements of Purchase and Sale of Land, Equitable Remedies, Relief from Forfeiture, Civil Procedure, Appeals, Fresh Evidence, Stockloser v. Johnson, [1954] 1 Q.B. 476 (C.A.)

Kanata Utilities Ltd. v. 1414610 Ontario Inc. (MAG Eastwood Construction), 2024 ONCA 367

[Roberts, Trotter and George JJ.A.]

Counsel:

M. Diegel, for the appellants

M. Benson, for the respondent

Keywords:  Civil Procedure, Documentary Discovery, Orders, Enforcement, Striking Pleadings, Costs, Rules of Civil Procedure,  r 30.08(2), Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310

Gray v. Gray, 2024 ONCA 375

[Roberts, Trotter and George JJ.A.]

Counsel:

J. Vickery, for the appellant Rowan A. Gray

G. Dara, for the respondents LEG, LEG, AOG and KAG

Keywords:  Wills and Estates, Estate Trustees, Removal, Trustee Act, R.S.O. 1990, c. T.23, s 38, Evidence Act, R.S.O. 1990, c. E.23, s 13, Westover Estate v. Jolicouer, 2024 ONCA 81

Bank of Nova Scotia v. Curtis, 2024 ONCA 374

[van Rensburg, Sossin and Dawe JJ.A.]

Counsel:

G.C., acting in person

D. Rankin, for the responding party

Keywords:  Civil Procedure, Appeals, Extension of Time, Courts of Justice Act, RSO 1990, c C 43, s 7(5), Hililmount Capital Inc. v. Pizale, 2021 ONCA 36

Pyper v. Goble, 2024 ONCA 372

[Roberts, Trotter and George JJ.A.]

Counsel:

T.G., acting in person

K. Shimon and N. Platte, for the respondents

Keywords:  Civil Procedure, Vexatious litigants, Courts of Justice Act, RSO 1990, c C 43, s 140

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.

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