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COURT OF APPEAL FOR ONTARIO
CITATION: Fermar Paving Limited v. Ontario
(Transportation), 2021 ONCA 111
DATE: 20210219
DOCKET: C68358
Doherty, Pepall and Thorburn
JJ.A.
BETWEEN
Fermar Paving Limited
Applicant (Appellant)
and
Her Majesty the Queen in Right
of Ontario, as represented by the Minister of Transportation
Respondent (Respondent in Appeal)
Eric A. F. Grigg and James A. LeBer,
for the appellant
Antonin I. Pribetic and Alex Redinger,
for the respondent
Heard and released orally:
February 17, 2021 by Video Conference
On appeal from the judgment of Justice
Jonathon C. George of the Superior Court of Justice, dated April 27, 2020.
REASONS FOR DECISION
[1]
The outcome of the application turned on the interpretation
of interrelated and somewhat complex provisions in standard form agreements
entered into by the parties. The terms of the parties agreement were found in
various documents, all of which were standard in the road construction
industry.
[2]
We are in substantial agreement with the reasons
of the application judge, reported at 2020 ONSC 2603 and, in particular, his
observations at paras. 32 and 43-49. The appeal is dismissed. The respondent is
entitled to costs of the appeal, fixed at $7,100, inclusive of disbursements
and relevant taxes.
Doherty J.A.
S.E. Pepall J.A.
J.A. Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Fitzgerald v. Reaume, 2021 ONCA 330
DATE: 20210518
DOCKET: C68228
Juriansz, Huscroft and Jamal JJ.A.
BETWEEN
Stephen Fitzgerald
Plaintiff (Appellant)
and
Leslie Reaume
Defendant (Respondent)
Michael N. Bergman, for the appellant
Trevor Guy, for the respondent
Heard: May 10, 2021 by videoconference
On appeal from the order of Justice Calum U.C. MacLeod of
the Superior Court of Justice, dated March 2, 2020.
REASONS FOR DECISION
[1]
This is an appeal from the decision of the Superior Court judge
[the judge] dismissing the appellants action pursuant to Rule 2.1.01
of the
Rules of Civil Procedure
,
R.R.O. 1990, Reg. 194.
[2]
The claim sought $1,050,000 in damages against
the respondent, a Vice‑Chair at the Human Rights Tribunal of Ontario. The
action arose out of a hearing into a human rights complaint against the
appellant, over which the respondent was presiding. The appellant alleged that
the respondent failed to conduct the hearing in accordance with the required
rules, norms, and standards, and that her actions concerning an adjournment in
the proceedings during which the appellant sought medical attention from
paramedics infringed his rights to health, dignity, and liberty.
[3]
The respondent wrote to the Registrar of the
Superior Court, copying the appellant, requesting an order under r. 2.1
dismissing the claim. The appellant wrote to the Registrar stating that he
contested the respondents submissions and would provide reasons should the
court consider the request to dismiss.
[4]
The judge dismissed the claim without receiving
submissions from the parties. He noted that the appellants concerns regarding
the human rights hearing should have been raised before the Tribunal and that
the only jurisdiction the court had was by way of an application for judicial
review in the Divisional Court. The appellant had no right to sue the
respondent concerning the manner in which she conducted the hearing. Moreover,
the statement of claim disclosed no cause of action and could not be saved. It
was, on its face, an improper pleading and a frivolous action.
[5]
The principles governing the operation of r. 2.1
are set out
in
Visic v. Elia Associates Professional Corporation
, 2020 ONCA 690, at para. 8. It is well established that the
decision of the judge is a discretionary decision that is entitled to
deference. We see no basis to interfere with the judges decision in this case.
[6]
We accept, as the appellant submits, that the
statement of claim in this case is not marred by the sorts of inflammatory
rhetoric or hyperbolic claims often seen in a frivolous and vexatious action.
Nevertheless, the claim cannot succeed given the respondents immunity from
suit, and this immunity precludes the pleadings from being saved. It was open
to the judge to conclude that this is the sort of litigation that r. 2.1 was
designed to weed out. We do not accept the appellants attempt to avoid the
immunity by distinguishing the respondents actions conducting the hearing from
those taken when she was not physically present in the hearing room.
[7]
Nor do we accept that the judges decision to
not to permit submissions violated the duty of fairness. Determinations under
r. 2.1.01(1) are to be made in a summary manner and pursuant to subsection (3)
may, in the courts discretion, be made without written submissions. The judge
considered the matter and stated that he would have dealt with the request
pursuant to a different procedure if it were decided on the basis of a failure
to comply with either the
Crown Liability and Proceedings Act
, 2019
,
S.O. 2019, c. 7, Sched. 17
or the
Limitations Act
, 2002
,
S.O. 2002, c. 24, Sched.
B.
However, given that the action could not possibly
succeed, it was open to the judge to conclude that no purpose would be served
in putting the plaintiff on notice and providing an opportunity to make written
submissions.
[8]
The appeal is dismissed.
[9]
The respondent does not seek costs and none are
awarded.
R.G. Juriansz
J.A.
Grant Huscroft
J.A.
M. Jamal J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Fontaine v. Canada (Attorney
General), 2021 ONCA 313
DATE: 20210510
DOCKET: M52372 (C69253)
Paciocco J.A. (Motion Judge)
BETWEEN
Larry Philip Fontaine in his
personal capacity and in his capacity as the Executor of the estate of Agnes
Mary Fontaine, deceased, Michelline Ammaq, Percy Archie, Charles Baxter Sr.,
Elijah Baxter, Evelyn Baxter, Donald Belcourt, Nora Bernard, John Bosum, Janet
Brewster, Rhonda Buffalo, Ernestine Caibaiosai-Gidmark, Michael Carpan, Brenda
Cyr, Deanna Cyr, Malcolm Dawson, Ann Dene, Benny Doctor, Lucy Doctor, James
Fontaine in his personal capacity and in his capacity as the Executor of the
estate of Agnes Mary Fontaine, deceased, Vincent Bradley Fontaine, Dana Eva
Marie Francey, Peggy Good, Fred Kelly, Rosemarie Kuptana, Elizabeth Kusiak,
Theresa Larocque, Jane McCullum, Cornelius McComber, Veronica Marten, Stanley
Thomas Nepetaypo, Flora Northwest, Norman Pauchey, Camble Quatell, Alvin Barney
Saulteaux, Christine Semple, Dennis Smokeyday, Kenneth Sparvier, Edward
Tapiatic, Helen Winderman and Adrian Yellowknee
Plaintiffs
and
The Attorney General of Canada
, The Presbyterian Church In
Canada, The General Synod of the Anglican Church of Canada, The United Church
of Canada, The Board of Home Missions of The United Church of Canada, The
Womens Missionary Society of The Presbyterian Church, The Baptist Church In
Canada, Board of Home Missions and Social Services of the Presbyterian Church
in Bay, The Canada Impact North Ministries of the Company for the Propagation
of the Gospel in New England (also known as The New England Company), The
Diocese of Saskatchewan, The Diocese of The Synod of Cariboo, The Foreign Mission
of The Presbyterian Church in Canada, The Incorporated Synod of the Diocese of
Huron, The Methodist Church of Canada, The Missionary Society of the Anglican
Church of Canada, The Missionary Society of the Methodist Church of Canada
(also known as The Methodist Missionary Society of Canada), The Incorporated
Synod of the Diocese of Algoma, The Synod of The Anglican Church of the Diocese
of Quebec, The Synod of The Diocese of Athabasca, The Synod of the Diocese of
Brandon, The Anglican Synod of the Diocese of British Columbia, The Synod of
The Diocese of Calgary, The Synod of the Diocese of Keewatin, The Synod of the
Diocese of Quappelle, The Synod of the Diocese of New Westminster, The Synod
of the Diocese of Yukon, The Trustee Board of the Presbyterian Church in
Canada, The Board of Home Missions and Social Service of the Presbyterian
Church of Canada, The Womens Missionary Society of the United Church of
Canada, Sisters of Charity, a Body Corporate also known as Sisters of Charity
of St. Vincent de Paul, Halifax, also known as Sisters of Charity Halifax,
Roman Catholic Episcopal Corporation of Halifax, Les Soeurs de Notre
Dame-Auxiliatrice, Les Soeurs de St. Francois dAssise, Institut des Soeurs du
Bon Conseil, Les Soeurs de Saint-Joseph de Saint-Hyancithe, Les Soeurs de
Jésus-Marie, Les Soeurs de lAssomption de la Sainte Vierge, Les Soeurs de
lAssomption de la Saint Vierge de lAlberta, Les Soeurs de la Charité de
St.-Hyacinthe, Les Oeuvres Oblates de lOntario, Les Résidences Oblates du
Québec, La Corporation Episcopale Catholique Romaine de la Baie James (The
Roman Catholic Episcopal Corporation of James Bay), The Catholic Diocese of
Moosonee, Les Soeurs Grises de Montréal/Grey Nuns of Montreal, Sisters of
Charity (Grey Nuns) of Alberta, Les Soeurs de la Charité des T.N.O., Hotel-Dieu
de Nicolet, The Grey Nuns of Manitoba Inc.-Les Soeurs Grises du Manitoba Inc.,
La Corporation Episcopale Catholique Romaine de la Baie dHudson-The Roman
Catholic Episcopal Corporation of Hudsons Bay, Missionary Oblates-Grandin
Province, Les Oblats de Marie Immaculée du Manitoba, The Archiepiscopal
Corporation of Regina, The Sisters of the Presentation, The Sisters of St.
Joseph of Sault St. Marie, Sisters of Charity of Ottawa, Oblates of Mary
Immaculate-St. Peters Province, The Sisters of Saint Ann, Sisters of
Instruction of the Child Jesus, The Benedictine Sisters of Mt. Angel Oregon,
Les Pères Montfortains, The Roman Catholic Bishop of Kamloops Corporation Sole,
The Bishop of Victoria, Corporation Sole, The Roman Catholic Bishop of Nelson,
Corporation Sole, Order of the Oblates of Mary Immaculate in the Province of
British Columbia, The Sisters of Charity of Providence of Western Canada, La
Corporation Episcopale Catholique Romaine de Grouard, Roman Catholic Episcopal
Corporation of Keewatin, La Corporation Archiepiscopale Catholique Romaine de
St. Boniface, Les Missionnaires Oblates Soeurs de St. Boniface-The Missionary
Oblates Sisters of St. Boniface, Roman Catholic Archiepiscopal Corporation of
Winnipeg, La Corporation Episcopale Catholique Romaine de Prince Albert, The
Roman Catholic Bishop of Thunder Bay, Immaculate Heart Community of Los Angeles
CA, Archdiocese of Vancouver-The Roman Catholic Archbishop of Vancouver, Roman
Catholic Diocese of Whitehorse, The Catholic Episcopale Corporation of
Mackenzie-Fort Smith, The Roman Catholic Episcopal Corporation of Prince
Rupert, Episcopal Corporation of Saskatoon, OMI Lacombe Canada Inc. and Mt.
Angel Abbey Inc.
Defendants
(Respondents/
Responding Party
)
In the Matter of the Request for Directions
by Dr. Edmund Metatawabin
and by IAP Claimants T-00185, S-20774 and
S-16753
Pertaining to St. Annes Indian Residential
School
Requestors
(Appellants/Moving
Parties)
Proceedings
under the
Class Proceedings Act
, 1992
, S.O. 1992, c. 6
Michael Swinwood and Fay K. Brunning,
for the moving parties
Catherine A.
Coughlan, Brent Thompson and Eve Coppinger, for the responding party
Heard: April 22, 2021 by video
conference
ENDORSEMENT
OVERVIEW
[1]
The motions before me relate to claims under the
Independent Assessment Process (the IAP) made against the Attorney General of
Canada (Canada), the responding party, by former residents of St. Annes Indian
Residential School (St. Annes IRS) pursuant to the Indian Residential School
Settlement Agreement (the IRSSA).
[2]
The moving parties include three former residents
of St. Annes IRS who made claims under the IAP. They contend that at the time
their matters were resolved, Canada had failed to fulfill its disclosure
obligations, and still has not done so. In a request for directions (RFD) initiated
on May 12, 2020 (Metatawabin RFD #2), the moving parties seek a declaration
that Canada breached previous disclosure orders made on January 14, 2014 and
June 23, 2015 (the Disclosure Orders). In Metatawabin RFD #2, the moving
parties also seek an order compelling Canada to revise documentation used in
their IAP claims within 30 days, so the claimants can determine whether they
should seek to re-open those claims. Finally, Metatawabin RFD #2 seeks a preservation
order preventing Canada from destroying documents that pertain to the St.
Annes IRS IAP claims.
[3]
Dr. Edmund Metatawabin is also a moving party.
Dr. Metatawabin is a former St. Annes IRS resident and a distinguished
Indigenous leader who is actively involved in IRSSA matters relating to St.
Annes IRS. In this matter he has offered to represent the interests of St.
Annes IRS abuse survivors whose claims may have been adversely affected by allegedly
unfair disclosure. Many of these survivors are unknown to the moving parties
because their identities are confidential under the IRSSA.
[4]
The moving parties are pursuing their claims in
Metatawabin RFD #2 before Glustein J. under the IRSSAs Court Administration
Protocol (the CAP). Ordinarily, Perell J., the Ontario Supervising Judge for
IRSSA matters, would be hearing Metatawabin RFD #2. However, Perell J. recused
himself from Metatawabin RFD #2 due to reasonable apprehension of bias concerns
arising out of a related proceeding.
[5]
On March 18, 2021, Canada filed an RFD
requesting that an Independent Special Advisor (ISA) be appointed to conduct
an independent review of certain St. Annes IRS IAP claims. On April 20, 2021,
Perell J. granted the request. The moving parties seek to stay that order (the
Order Under Appeal) pending appeal. The moving parties contend that the Order
Under Appeal improperly undercuts the Metatawabin RFD #2 proceedings and provides
for a process not contemplated in the IRSSA. Moreover, the moving parties say that
the Order Under Appeal was secured in an abusive manner by Canada in an unfair,
secret proceeding that did not comply with the CAP, and was issued by a judge who
should have recused himself in light of his earlier recusal from Metatawabin
RFD #2.
[6]
The moving parties also ask for an interim preservation
order covering all documents possessed by government officials relating to St.
Annes IRS IAP claimants.
[7]
Of course, it is not my role as a motion judge
to resolve the underlying dispute or to comment on the fairness or wisdom of
decisions that have been taken below. My sole function is to determine whether
a stay pending appeal is in the interests of justice based on established legal
standards, and to determine whether I should exercise my discretion to issue
the requested preservation order.
[8]
For reasons that follow, I am not persuaded it
is in the interests of justice to stay the Order Under Appeal. Nor, in my view,
do the interests of justice call for a preservation order. I would therefore
dismiss the motions before me.
BACKGROUND AND
MATERIAL FACTS
The IRSSA and
the IAP
[9]
The IRSSA is the settlement agreement for
several class actions and civil claims relating to sexual and physical abuse of
former students at Canadian residential schools. In exchange for forfeiting
their right to sue, potential claimants have the option of participating in the
IRSSAs IAP.
[10]
Of importance, Canada has responsibilities
relating to the creation of the evidentiary record to be used in assessing IAP
claims. Canada is required to disclose relevant documents in its possession and
control, and it is obliged to use this information to produce a narrative
report (Narrative) relating to each residential school, as well as person of
interest reports (POI Reports) for each claimant for use in the IAP. These
documents can play an instrumental role in determining the success of IAP
claims.
[11]
The CAP governs the process for RFDs brought
under the IRSSA. The CAP is administered by nine Supervising Judges; one from
each of the affected provincial and territorial jurisdictions. Pursuant to the
terms of the CAP, two Administrative Judges are selected from among the
Supervising Judges. Perell J., the Ontario Supervising Judge, is the current Eastern
Administrative Judge (EAJ), and his order is the Order Under Appeal. I shall
refer to him as the EAJ in this endorsement. The current Western Administrative
Judge (WAJ) is the British Columbia Supervising Judge.
[12]
Any party, counsel, or other entity with
standing may bring an RFD to the Administrative Judges relating to all matters
that require court orders, directions or consideration during the course of the
administration of the IRSSA. After receiving an RFD, the EAJ and WAJ must determine
whether a case conference or a hearing is required. Case conferences may be
conducted by one or both Administrative Judges. If a hearing is required, the Administrative
Judges assign the hearing of the RFD to the Supervising Judge from the court
with jurisdiction over the matter.
[13]
Although all IAP claims have been completed, and
the IAP ceased operations on March 31, 2021, supervisory courts may review and re-open
claims where exceptional circumstances are present:
J.W. v. Canada
(Attorney General)
, 2019 SCC 19, [2019] 2 S.C.R. 224, at para. 27. The
moving parties take the position that if Canada did breach the Disclosure
Orders, dispositions and settlement agreements involving St. Annes IRS IAP claimants
may need to be re-opened, and punitive and aggravated damages may be
appropriate.
The disclosure
issues in Metatawabin RFD #2
[14]
The first Disclosure Order at issue in
Metatawabin RFD #2 was made by the EAJ on January 14, 2014. In it he ordered
the production of documents relating to an extensive criminal investigation conducted
by the Ontario Provincial Police into claims of abuse at St. Annes IRS. Canada
was also ordered to comply with its disclosure obligations relating to other
relevant, non-privileged documents, and to revise the Narrative and POI Reports
for St. Annes IRS. This Order led to the disclosure of more than 12,000
additional documents and to substantial revisions to the Narrative and to some POI
Reports.
[15]
The second Disclosure Order at issue in
Metatawabin RFD #2, dated June 23, 2015, was also made by the EAJ. That Order was
obtained by approximately 50 St. Annes IRS IAP claimants who were dissatisfied
with Canadas compliance with the January 14, 2014 Disclosure Order. The June 23,
2015 Disclosure Order directed Canada to revise identified reports to include
specified categories of information, and to make further particularized
disclosure.
[16]
The parties disagree as to whether Canada has
fully complied with the Disclosure Orders; the moving parties contend that Canada
has not. One of their core complaints is that Canada failed to revise disclosure
relating to claims that had already been resolved before the Disclosure Orders
were issued, and that this resulted in unfair settlements affecting an
estimated 166+ claimants.
[17]
Between 2015 and 2018, numerous RFDs were
brought before the EAJ seeking further enforcement of the Disclosure Orders. The
moving parties contend these RFDs were not heard on their merits because the
EAJ always accepted Canadas preliminary objections. They emphasize that courts
have a duty to ensure all IAP claimants receive the benefits they bargained for
when they entered into the IRSSA and forfeited their right to sue, but argue
that the EAJ has breached this obligation by failing to enforce these orders
and to re-open claims for fair adjudication.
The EAJs recusal from Metatawabin RFD #2
[18]
Ms. Brunning, in her capacity as counsel
participating in related proceedings, made critical comments about the EAJs
response to attempts to enforce the Disclosure Orders. On January 15, 2018, the
EAJ issued an order in which he criticized Ms. Brunnings conduct and ordered
costs personally against her: 2018 ONSC 357. In February 2020, the Divisional
Court set these orders aside, finding that the EAJ should have recused himself
from making them: 2020 ONSC 1003 (Div. Ct.).
[19]
On May 12, 2020, the moving parties, with Ms.
Brunning as one of their counsel, filed Metatawabin
RFD #2, once again seeking
the enforcement of the Disclosure Orders, as well as additional incidental
relief for individual claimants.
[20]
On June 5, 2020, the EAJ recused himself as Supervising
Judge in Metatawabin RFD #2: 2020 ONSC 3497. By joint direction, the EAJ
appointed the WAJ as Supervising Judge to hear Metatawabin RFD #2.
Rouleau J.A.s order dated November 2, 2020
[21]
On November 2, 2020, this court set aside the
EAJs order appointing the WAJ as Supervising Judge for Metatawabin RFD #2.
Rouleau J.A. held that para. 5(a) of the CAP required that RFDs involving
strictly Ontario class members and Ontario institutions were to be directed to
the Ontario Superior Court of Justice for hearing: 2020 ONCA 688, at para. 42.
As a result, Rouleau J.A. set aside the EAJs order assigning Metatawabin RFD
#2 to the WAJ and remitted the matter to the Ontario Superior Court of Justice
for hearing. Further, Rouleau J.A. directed, at para. 66 of his reasons, that [a]s
the Ontario Supervising Judge has recused himself, it is up to the Chief
Justice of the Ontario Superior Court of Justice to assign a different
Supervising Judge.
Glustein J.s appointment and management of
Metatawabin RFD #2
[22]
On November 5, 2020, in a letter with the
reference line RE:
Fontaine v. Canada (Attorney-General)
, the Chief
Justice of the Ontario Superior Court of Justice appointed Glustein J. to act
as Supervising Judge in this matter. Metatawabin RFD #2 is now proceeding
before Glustein J. Canada has filed a motion to dismiss Metatawabin RFD #2,
alleging abuse of process. Glustein J. has held multiple case conferences attended
by Canada and the moving parties.
[23]
According to the moving parties, in one such
conference on March 12, 2021, Glustein J. indicated he could deal with whether
there was a breach of the Disclosure Orders without having to resolve certain
outstanding factual issues relating to claimant representation. The moving
parties say Glustein J. also advised Canada not to play a game of got you
with the documents. As I understand the moving parties, they interpret the
former comment as an indication that Glustein J. is poised to decide the
disclosure issue on its merits, and the latter as a caution to Canada not to take
a narrow view of its obligation to preserve documents, pending the decision on
the merits in Metatawabin RFD #2.
Canadas RFD to appoint an ISA
[24]
On March 18, 2021, Canada filed an RFD requesting
the appointment of an ISA to conduct an independent review of IAP claims
brought by former students at St. Annes IRS. In this RFD, Canada submitted
that, despite a success rate of 96.4% for St. Annes IRS IAP claimants,
extensive negative publicity arising from the heavily litigated disclosure
dispute is undermining public confidence in the integrity of the IRSSA and the IAP.
[25]
To address this, Canada requested an order that
would allow for an independent investigation of certain St. Annes IRS IAP claims
to determine in each case: (1) whether the 2014 disclosure was available in each
claims adjudication, (2) if not, whether there was a conscious decision by
counsel to proceed without disclosure, and (3) if not, whether the disclosure would
have been reasonably likely to have impacted the amount of compensation awarded.
The order Canada sought had provisions designed to maintain confidentiality and
respect privacy and solicitor-client privilege.
The March 22, 2021 Assignment Order
[26]
On March 22, 2021, the EAJ and WAJ issued a joint
direction assigning the EAJ as the Supervising Judge for Canadas RFD (the Assignment
Order). The Assignment Order provided for the RFD to be heard in writing. It
also directed court counsel to invite written submissions from,
inter
alia
,
the requestors in Metatawabin RFD #2 (the moving parties) by
April 7, 2021.
[27]
On April 1, 2021 the moving parties filed a notice
of appeal of the Assignment Order, seeking the dismissal of that Order and the
confirmation of Glustein J. as the Ontario Supervising Judge for all RFD matters
pertaining to St. Annes class members (Notice of Appeal #1).
[28]
The moving parties brought a concurrent motion
to stay the Assignment Order pending appeal (Motion #1). They also sought a Preservation
Order requiring Canada to preserve all documents pertaining to St. Annes IRS IAP
claims. In addition, Motion #1 requested an order expediting the appeal, perhaps
to be heard by the same panel that issued the November 2, 2020 Reasons and
Order. This is the motion for which notice was given, and it was scheduled before
me for an April 22, 2021 hearing.
The Order Under Appeal
[29]
On April 20, 2021, two days before Motion #1 was
scheduled to be heard, the EAJ issued the Order Under Appeal, after having
received written submissions from the Assembly of First Nations, as well as the
IRSSAs Independent Counsel and the Chair of the National Administration
Committee. The moving parties had also filed written submissions, under
protest.
[30]
In the Order Under Appeal, the EAJ identified Canadas
RFD request as urgent, given that the IRSSA was near completion and serious
allegations have been made about the integrity of [the IAP] and about whether the
claims of certain Claimants who attended [St. Annes IRS] were administered in
accordance with the provisions of the IRSSA. He noted that the festering
grievance [regarding the Disclosure Orders] risks undermining public confidence
in the integrity of the IAP with respect to St. Annes claims.
[31]
The Order Under Appeal modified the terms of
Canadas draft order to accommodate certain objections made before the EAJ. The
EAJ appointed the Hon. Ian Pitfield as ISA to conduct the St. Annes Review.
In doing so, the EAJ relied on his authority to appoint a referee pursuant to r.
54 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194,
mutatis
mutandis
. Upon completion of the St. Annes Review, the EAJ ordered
the ISA to deliver a sealed report of his findings to the court and Canada, but
directed that Canada would not participate in the process except to facilitate the
ISAs access to relevant records. At para. 10, the Order Under Appeal set the
terms of the St. Annes Review as follows:
In the report, the ISA shall make an
independent determination for each IAP Claimant whose IAP claim was resolved
(whether by adjudication, settlement, negotiation, or withdrawal)
before
additional disclosure was made available pursuant to the [Disclosure Orders]
and the ISA shall report to the court the answers to the following questions:
i.
Were the 2014/2015 disclosure documents
available
for the claims adjudication?
ii.
If not,
could the 2014/2015 disclosure
and use of the documents for the IAP have materially affected the amount of
compensation paid on the claim? and,
iii.
If
the disclosure
and use of the
documents could have materially affected the amount of the compensation, what
additional compensation should have been paid in accordance with the IRSSA?
[Emphasis added.]
[32]
On April 22, 2021, the day of the motion hearing
before me, the moving parties filed a notice of appeal of the Order Under
Appeal (Notice of Appeal #2). In their Notice of Appeal #2, the moving
parties seek to have the Order Under Appeal set aside, and reiterate their request
that Glustein J. be confirmed as the Ontario Supervising Judge to determine
all legal matters pertaining to the 166+ St. Annes IAP claimants whose rights
are being determined in Metatawabin RFD #2.
The moving parties grounds of appeal
[33]
The grounds of appeal are set out at para. 20 of
Notice of Appeal #2, but they are suffused with factual claims and argument in
a repetitive list of points and subpoints. My understanding of the grounds of
appeal being advanced by the moving parties can fairly be summarized as
follows:
i.
The EAJ erred by not recusing himself from this
matter because of reasonable apprehension of bias;
ii.
The EAJ erred by adjudicating Canadas RFD
because Glustein J. was the Ontario Supervising Judge with sole authority to
hear all St. Annes IRS IAP matters;
iii.
The EAJ breached rules of natural justice, as the
Order Under Appeal was made without a public hearing, without evidence, and
without the knowledge, input, and representation of the St. Annes IRS IAP claimants
whose rights are affected;
iv.
It was an abuse of process for Canada to bring
the RFD that led to the Order Under Appeal; and
v.
The Order Under Appeal is in breach of the CAP
under the IRSSA.
[34]
On April 21, 2021, the moving parties filed a
Supplementary Notice of Motion as a companion to Motion #1 (Motion #2).
In Motion #2, the moving parties seek an order staying the Order Under Appeal
pending their appeal.
THE ISSUES
[35]
Canada has been pragmatic in allowing the
matters before me to move forward. They took no objection to the late service
of Motion #2, nor to the fact that Motion #2 was being heard prior to Notice of
Appeal #2 having been officially filed.
[36]
I will therefore consider the relief requested
under Motion #1 and Motion #2, subject to two exceptions. First, I will not
consider the request made in Motion #1 to stay the Assignment Order. During the
oral hearing before me, the moving parties conceded that this request is now
moot. Second, in Motion #1 the moving parties asked for an order expediting the
appeal. No submissions were made in support of that request during the hearing,
so I will not consider it here.
[37]
There are therefore two issues before me:
(a) Should the Order Under Appeal, dated April 20, 2021, be stayed
pending appeal?
(b) Should a preservation order be issued?
ANALYSIS
A. THE ORDER
UNDER APPEAL SHOULD NOT BE STAYED
[38]
The overarching consideration on a motion for a stay
pending appeal is whether a stay is in the interests of justice
: BTR Global
Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust,
2011 ONCA
620, 283 O.A.C. 321, at para. 16;
2257573 Ontario Inc. v. Furney
, 2020
ONCA 742, at para. 20. This determination is informed by the three factors
described in
RJR-MacDonald Inc. v. Canada (Attorney General)
,
[1994]
1 S.C.R. 311, at p. 334:
(1) A preliminary assessment must be made of the merits of the
case to ensure there is a serious question to be determined on the appeal;
(2) It must be determined whether the moving party would suffer
irreparable harm if the stay were refused; and
(3) An assessment must be made as to which of the parties would
suffer greater harm from the granting or refusal of the stay pending a decision
on the merits.
[39]
As Laskin J.A. noted in
Circuit World Corp.
v. Lesperance
(1997), 33 O.R. (3d) 674, at p. 677, these three
criteria are not watertight compartments and the strength of one may
compensate for the weakness of another.
[40]
I have undertaken this assessment. As I will
explain, I am not satisfied that it is in the interests of justice to stay the Order
Under Appeal.
(1)
A Serious Issue to be Determined on Appeal
[41]
I recognize that the serious issue threshold is
low and will be satisfied if an appeal is neither frivolous nor vexatious:
Furney
,
at para. 22. However, my preliminary assessment is that the grounds of appeal
raised in respect of the Order Under Appeal are likely frivolous for
jurisdictional reasons. I say this based on my preliminary view that the appeal
probably should have been brought before the Divisional Court. This militates
against the seriousness of the issues to be determined, as the absence of
jurisdiction would mean the appeal is devoid of merit and therefore
frivolous:
Heidari v. Naghshbandi
, 2020 ONCA 757, 153 O.R. (3d) 756,
at para. 10;
Henderson v. Henderson
, 2014 ONCA 571, 324 O.A.C. 138, at
para. 8.
The potential jurisdictional problem
[42]
Pursuant to s. 6(1)(b) of the
Courts of
Justice Act
, R.S.O. 1990, c. C.43 (the
CJA
), an appeal lies to
this court from a final order of the Superior Court of Justice. Speaking
generally, if an order is interlocutory, rather than final, this court lacks jurisdiction
to hear an appeal from that order.
[43]
As Sharpe J.A. observed in
Fontaine v.
Canada (Attorney General)
, 2018 ONCA 749, at para. 5, a single judge of
this court has no final authority to determine the issue of jurisdiction.
However, Sharpe J.A. went on to explain that no stay should be granted in a
case over which this court lacks jurisdiction, so if a jurisdictional issue arises
on a stay motion it should be considered. Likewise, in
Fontaine v. Canada
(Attorney General)
, 2020 CanLII 64770 (Ont. C.A.) (
Fontaine Stay #2
),
Simmons J.A. held, at para. 14, that a single judge on a stay motion should
assess whether the order under appeal is interlocutory, or even probably
interlocutory since such a finding would militate against granting the
requested stay: see also,
Belton v. Spencer
, 2020 ONCA 623, 58 C.P.C.
(8th) 16, at paras. 41 and 50.
[44]
Based on my preliminary assessment below, the Order
Under Appeal is probably interlocutory. As such, I conclude that the serious
question factor militates against granting the requested stay.
Jurisdiction probably does not arise from
the recusal appeal
[45]
The moving parties rest their claim that the Order
Under Appeal is a final order primarily on their position that the EAJs
failure to recuse himself is a final determination of a substantive issue. In
support of this submission, they seek to draw an analogy to their successful appeal
of the EAJs order of June 5, 2020 in which the EAJ purported to assign
Metatawabin RFD #2 to the WAJ in British Columbia. After rejecting Canadas
submission that this order was interlocutory, Simmons J.A. issued a stay pending
appeal of that order and this court ultimately heard the appeal. Simmons J.A. acknowledged
that it was not her role as a single judge of this court to determine whether
the court had jurisdiction to entertain the appeal, but reasoned that the June
5, 2020 order was final because it finally determines a substantive matter
the [moving parties] entitlement to have [Metatawabin RFD #2] heard in the
forum they say is prescribed by the CAP:
Fontaine Stay #2
, at para.
16.
[46]
In my view, the moving parties analogy to
Fontaine
Stay #2
is inapt. A panel of this court has already determined, in related
proceedings, that a judges refusal to recuse themselves is an interlocutory
matter:
Brunning v. Fontaine
, 2019 ONCA 98, 144 O.R. (3d) 410, at
paras. 6-11; see also,
Beaver v. Hill
, 2019 ONCA 520, at paras. 14-15.
These cases support my preliminary view that the EAJs failure to recuse
himself from hearing Canadas RFD is probably an interlocutory decision
appealable only with leave to the Divisional Court. However, a preliminary
assessment of whether jurisdiction is likely to arise from other aspects of the
Order Under Appeal requires further analysis.
Jurisdiction probably does not arise under
the traditional
Hendrickson
test
[47]
This court recently affirmed in
Drywall Acoustic
Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc.
, 2020
ONCA 375, at para. 16, that the test in
Hendrickson v. Kallio
, [1932]
O.R. 675 (C.A.), at p. 678, continues to govern in deciding whether an order is
final or interlocutory. That test is as follows:
The interlocutory order from which there is no
appeal is an order which does not determine the real matter in dispute between
the parties the very subject matter of the litigation, but only some matter
collateral. It may be final in the sense that it determines the very question
raised by the application, but it is interlocutory if the merits of the case
remain to be determined.
[48]
As
Hendrickson
teaches, the mere
fact that the Order Under Appeal appears to have finally resolved the
appointment of an ISA and the terms of the St. Annes Review does not make the
order a final one. MacFarland J.A. confirmed this point in
Waldman v.
Thomson Reuters Canada Limited
, 2015 ONCA 53, 330 O.A.C. 142, at para. 22,
noting that if an order were deemed final simply because it disposed finally of
whatever issue was before the court, the distinction between interlocutory and
final orders would cease to exist.
[49]
The material question is whether the Order Under
Appeal finally resolved the real matter in dispute between the parties, meaning
the very subject matter of the litigation. The real matter in dispute between
the parties is whether Canada breached the disclosure obligations it owes to
St. Annes IRS claimants under the IAP. In my view, the Order Under Appeal does
not resolve that dispute. At most, it provides a procedure for making future
findings that may bear indirectly upon that dispute. I will explain.
[50]
The EAJ did not make any findings of fact
relating to disclosure in the Order Under Appeal. Instead, he appointed the ISA
as a referee in accordance with Rule 54 of the
Rules of Civil Procedure
mutatis
mutandis
who shall make a report that
contains his or her findings, conclusions and recommendations.
[51]
Of importance, any reported findings,
conclusions, or recommendations of a referee under r. 54 have no legal effect
unless the report is confirmed by the directing judge after a confirmation hearing
on notice to the parties: rr. 54.07-54.08. Therefore, if the ISAs ultimate findings
do resolve substantive issues between the parties, those findings would not
arise from the Order Under Appeal, but instead from the ISAs report, which is
not yet in existence and which may or may not be confirmed by the EAJ.
[52]
Moreover, pursuant to r. 54.05, the moving
parties are entitled to challenge the progress of the ISA before he produces
his report. Further, pursuant to rr. 54.07-54.08, they will be free to oppose any
findings the ISA eventually makes before those findings have legal effect.
[53]
Not surprisingly,
in Webb v. 3584747 Canada
Inc.
(2002), 161 O.A.C. 244, (Div. Ct.), a judges order appointing a
referee pursuant to r. 54 to determine the claims of certain class members in a
class action was characterized as interlocutory: at para. 1.
[54]
In light of the foregoing, I think that
jurisdiction probably does not arise in this case under the traditional
Hendrickson
test.
Jurisdiction probably
does not arise even under a modified approach
[55]
For the sake of completeness, I will consider this
courts decision in
Parsons v. Ontario
, 2015 ONCA 158, 125 O.R. (3d)
168, revd on other grounds, 2016 SCC 42, [2016] 2 S.C.R. 162. In
Parsons
,
at para. 44, LaForme J.A. (for the majority) took a somewhat modified
approach in distinguishing between final and interlocutory orders within a
national class action where the substantive merits and defences had already
been determined by a judicially-approved settlement agreement.
[56]
Applying this somewhat modified approach,
LaForme J.A. characterized as final an order determining that supervisory
judges from different provinces could sit together to hear concurrent motions
for a proposed protocol extending the first claims deadline in the settlement agreement.
LaForme J.A. found that the essential character of the RFD leading to the
order was akin to an application to interpret a statute or contract under r.
14.05(3)(d). By analogy, LaForme J.A. held that the order was therefore final
rather than interlocutory.
[57]
Juriansz J.A. issued a strong dissent. He
rejected the modified approach endorsed by LaForme J.A., saying it would be confusing.
In Juriansz J.A.s view, even where substantive rights have already been
settled in a class action and no claims or defences remain to be tried, the traditional
Hendrickson
test should still be applied:
Parsons
, at
para. 208. For Juriansz J.A., the real issue in dispute was whether the court
should extend the deadline for filing first claims. He concluded that this issue
was not finally resolved by determining the forum in which the court could hear
the underlying motion. Therefore, according to Juriansz J.A., the order under
appeal was interlocutory and this court did not have jurisdiction.
[58]
I need not resolve whether the approach taken by
LaForme J.A. is appropriate because applying that approach would not alter my preliminary
assessment of the Order Under Appeal. Of importance, in
Parsons
, at
para. 53, LaForme J.A. cautioned that not all appeals from orders of
supervisory judges under a national class action settlement agreement are
final. The proper characterization will turn on the specific order under appeal.
[59]
In my view, even applying LaForme J.A.s
somewhat modified approach, the Order Under Appeal is probably interlocutory. Assuming,
without deciding, that Canadas RFD may be characterized as analogous to an
application under r. 14.05, the Order Under Appeal is distinguishable from the
order in
Parsons
in at least two material ways
.
[60]
First, the Order Under Appeal did not determine
the forum in which any substantive issues between Canada and the moving parties
would be resolved. The substantive disclosure issues between the parties are
being litigated in Metatawabin RFD #2 before Glustein J. The Order Under Appeal
does nothing to prevent that litigation from continuing.
[61]
Second, the Order Under Appeal is based on r. 54,
providing a statutory basis on which the moving parties may challenge the St.
Annes Review as it progresses, and oppose the ISAs substantive findings,
conclusions, and recommendations at a future hearing before they take effect.
[62]
In my view, even using the somewhat modified
approach that LaForme J.A. applied in
Parsons
, there is nothing about
the Order Under Appeal that could support the conclusion that it is a final
order.
Conclusion on the seriousness of the issue to be
determined on appeal
[63]
In my preliminary view, the Order Under Appeal
is probably interlocutory. If I am correct, this would make the moving parties
appeal filed in this court meritless:
Henderson
,
at para. 8. Regardless
of the substantive merits of the grounds of appeal advanced by the moving
parties, this probable absence of jurisdiction undermines the seriousness of
the issues to be determined. As such, I find that the first
RJR-MacDonald
factor militates against granting the stay.
[64]
However, even if I am wrong and the Order Under
Appeal is final such that there are viable serious issues to be determined on
appeal, this alone would not entitle the moving parties to a stay pending
appeal. They must ultimately persuade me that a stay is in the interests of
justice by showing they will suffer irreparable harm if a stay is not granted
and that the balance of convenience weighs in their favour.
[65]
As I will explain, I am not persuaded that the
remaining
RJR-MacDonald
factors favour granting the requested
stay pending appeal.
(2)
Irreparable Harm
[66]
When framed properly, irreparable harm arguments
should focus on the adverse effects that are likely to arise if the order under
appeal is not stayed pending appeal:
Ducharme v. Hudson
, 2021 ONCA
151, at para. 20. Many of the moving parties irreparable harm arguments focused
instead on allegations about the harm caused by the Order Under Appeal itself,
including that it was obtained through an unfair process from a judge who did not
properly enforce the Disclosure Orders. I will not consider those submissions
further.
[67]
Only three of the submissions made before me relate
to harm that could be caused by failing to stay the Order Under Appeal pending
appeal:
(i) The St. Annes Review could produce results that are
inconsistent with the ultimate resolution of Metatawabin RFD #2;
(ii) Access to justice will be denied to the St. Annes IRS IAP
claimants potentially affected by Metatawabin RFD #2; and
(iii) The St. Annes Review will create duplicative costs.
[68]
I will address each submission in turn.
(i) Inconsistent findings will not result from the Order
Under Appeal
[69]
Without question, the risk of inconsistent
findings or results from parallel proceedings can cause irreparable harm to
parties and to the administration of justice:
Fontaine v. Canada (Attorney
General)
, 2018 ONCA 832, at para. 15.
[70]
However, in my view, there is no realistic risk
of inconsistent findings between Metatawabin RFD #2 and the Order Under Appeal.
As I have explained, no findings were made in the Order Under Appeal relating
to disclosure. The risk of inconsistent findings would arise, if at all, from
the ISAs report, which may or may not take legal effect if confirmed at some
later date. In other words, at this stage, an assessment of whether
inconsistent legal determinations might arise from the St. Annes Review would
be purely speculative.
[71]
Indeed, there is no evidence before me indicating
a realistic risk that the ISA himself could make findings that are inconsistent
with those that may be made in Metatawabin RFD #2. Metatawabin RFD #2 is
concerned with whether Canada breached the Disclosure Orders. Its focus is on
the disclosure that
has not been made
, and whether Canada failed to
revise POI Reports contrary to the Disclosure Orders
after
those Disclosure
Orders were issued in 2014-2015. As revealed in the terms of the St. Annes
Review set out at para. 10 of the Order Under Appeal, reproduced at para. 31 above,
the ISAs mandate is to consider whether the disclosure that
has been made
pursuant to the Disclosure Orders was available during IAP claim adjudications
that occurred
before
the Disclosure Orders were issued in 2014-2015.
(ii) Access to
justice will not be denied to the St. Annes IRS IAP claimants
[72]
In the Assignment Order, the EAJ was assigned to
decide Canadas RFD requesting the appointment of an ISA. In support of their
motion to stay the Assignment Order, the moving parties argued that unless that
Order was stayed pending appeal, thereby preventing the EAJ from deciding
Canadas RFD, access to justice for the 166+ St. Annes Claimants, in the [Metatawabin
RFD #2] proceedings before Glustein J., will be denied.
[73]
This irreparable harm argument is obviously
linked to the moving parties contention in their Notice of Appeal #1 that
Canadas RFD was brought to frustrate the Metatawabin RFD #2 hearing that is
currently underway before Glustein J. Assuming the moving parties rely on this
argument in support of Motion #2, I do not accept it.
[74]
The Order Under Appeal does not purport to stay
or adjourn the Metatawabin RFD #2 hearing, nor does it purport to direct anyone
to discontinue those proceedings. Nor, for the reasons I have given, does the
Order Under Appeal present a realistic risk of inconsistent findings that could
compromise the ultimate decision on the merits in Metatawabin RFD #2. Finally,
the Order Under Appeal does not appear to jeopardize any benefits that may be obtained
by the moving parties in Metatawabin RFD #2.
[75]
To the contrary, the ISAs mandate is to
determine whether additional compensation should have been paid to certain St.
Annes IRS IAP claimants. Although the Order Under Appeal does not provide a
specific mechanism for rectifying underpayment, it is evident that the Order could
lead to additional payments being made to certain St. Annes claimants. It is
difficult to characterize the possibility of additional compensation to
claimants as irreparable harm.
(iii) There is no
risk of duplicative costs
[76]
Since the Order Under Appeal does not address
the same issues as Metatawabin RFD #2, any costs that IAP claimants may incur
in relation to the St. Annes Review would not be duplicative.
Conclusion on
irreparable harm
[77]
Accordingly, the moving parties have not
satisfied me that irremediable harm will arise if the Order Under Appeal is not
stayed.
(3)
The Balance of Convenience
[78]
I have identified no irreparable harm to the
moving parties. Nor has any other harm been demonstrated that could support
their view that the balance of convenience favours granting a stay pending
appeal.
[79]
In contrast, in my view there is a risk of harm
to Canada if a stay is ordered. The St. Annes Review would be delayed,
postponing Canadas ambition to reinforce public confidence in the IRSSA by
obtaining a full and timely claims review. However, I am not persuaded that
this risk is pressing because the unfairness concerns underlying the St. Annes
Review are not apt to be answered until all related proceedings, including Metatawabin
RFD #2 and the appeal in this matter, are concluded.
[80]
Suffice it to say that, in my view, the balance
of convenience does not favour a stay pending appeal.
(4)
Conclusion on the Stay Motion
[81]
Given the probable jurisdictional issues I have
identified, in my view there is no serious issue to be determined on appeal to
this court. Even if there were, I have not found any irreparable harm if a stay
pending appeal is not ordered, and the balance of convenience does not favour a
stay.
[82]
Accordingly, I conclude it is not in the
interests of justice to stay the Order Under Appeal.
B. A
PRESERVATION ORDER IS NOT WARRANTED
[83]
The Order Under Appeal does not address the
preservation of documents, nor does the Assignment Order. There is therefore no
issue being appealed that relates directly to the preservation of documents. The
moving parties nonetheless request that I make a preservation order. The scope
of the relief sought is set out in a draft order filed with Motion #1. If granted,
in addition to incidental relief, that order would require Canada to preserve
the following:
Every document
that [is] or [has] been in
the possession of government officials, which document in any way pertains to
St. Annes IAP claims adjudicated under the IRSSA and/or to Requests for
Directions and/or civil actions related thereto, unless and until further Order
of the Ontario Superior Court of Justice.
[84]
The moving parties cite no authority to support
the preservation order they request. The Crown contends that I have no
jurisdiction to make that order. I do not entirely agree. Section 134(2) of the
CJA
authorizes a single judge of this court to make any interim
order considered just to prevent prejudice to a party pending appeal:
Sub-Prime
Mortgage Corporation v. Kaweesa
, 2021 ONCA 215, at paras. 44-46. The moving
parties are concerned with the prejudice that could arise if documents required
to pursue re-opened IAP claims are destroyed before those claims are re-opened.
The focus of their concern is a sunset order that was issued on May 29, 2020 permitting
Canada to destroy documents in anticipation of the March 31, 2021 deadline for the
IAP to cease operations (the Sunset Order). The documents were to be destroyed
to protect the privacy of IAP claimants.
[85]
In response to a separate motion brought by the
moving parties, on February 3, 2021 the WAJ varied the Sunset Order to require
Canada to preserve documentation relating to St. Annes IRS IAP claims (the
Sunset Variation Order). The moving parties contend that the Sunset Variation
Order does not cover all the documents that may be relevant to St. Annes IRS IAP
claims implicated in Metatawabin RFD #2. They argue that the preservation order
they seek is urgently required to prevent the litigation related to this appeal
from being undermined by the destruction of documents.
[86]
Although I do have jurisdiction to make the
requested interim preservation order pursuant to
CJA
s. 134(2),
in my view it is not in the interests of justice to do so.
[87]
First, I have concerns about judge shopping and
duplicative proceedings. The moving parties have not appealed the WAJs Sunset
Variation Order. On March 18, 2021, the moving parties amended Metatawabin RFD
#2 to include a request for an order directing Canada not to destroy any IAP
documents. Therefore, that issue is now before Glustein J. This reduces any
potential urgency or risk of irreparable harm that may have militated in favour
of granting the requested preservation order in the interests of justice.
[88]
Second, this requested relief engages complex
issues relating to the risks associated with preserving highly confidential
documents. I am not satisfied that all considerations that should bear on the
preservation order sought by the moving parties were fully argued before me.
[89]
Third, I am not satisfied that the preservation order
is necessary to prevent prejudice to the moving parties in the context of their
appeal. On March 23, 2021, Canada advised that it would seek an order
permitting it to preserve all St. Annes IRS documents pending the completion
of the St. Annes Review if court counsel, Mr. Gover, instructed Canada to do
so. Canada also undertook to preserve those documents from destruction until
the RFD is returned. The next day, Mr. Gover advised the parties that Canadas
undertaking was satisfactory to the Courts and no formal order was necessary.
Even though Canadas RFD has already been returned and the Order Under Appeal has
been rendered, counsel for Canada affirmed before me that Canadas undertaking
to the Ontario Superior Court of Justice was deemed sufficient for the purpose
of preserving the documents pending the outcome of these matters.
[90]
It is therefore not in the interests of justice
for me to make the interim preservation order requested by the moving parties.
DISPOSITION
[91]
The motions for a stay pending appeal of the
Order Under Appeal and for an interim preservation order are dismissed.
[92]
If Canada, the responding party, wishes to pursue
a costs order, it may provide submissions in writing, not to exceed 3 pages,
accompanied by a bill of costs within 10 court days of the receipt of this
decision. The moving parties may respond and make costs submissions in writing,
not to exceed 3 pages, accompanied by a bill of costs, within 5 court days of
being served with Canadas costs materials.
David
M. Paciocco J.A. |
COURT OF APPEAL FOR ONTARIO
CITATION: Fontaine v. Canada (Attorney General), 2021 ONCA 66
DATE: 20210129
DOCKET: C68407
Fairburn A.C.J.O., Rouleau and Miller JJ.A.
BETWEEN
Larry Philip Fontaine
in his personal capacity and in his capacity as the Executor of the estate of
Agnes Mary Fontaine, deceased, Michelline Ammaq, Percy Archie, Charles Baxter
Sr., Elijah Baxter, Evelyn Baxter, Donald Belcourt, Nora Bernard, John Bosum, Janet
Brewster, Rhonda Buffalo, Ernestine Caibaiosai-Gidmark, Michael Carpan, Brenda
Cyr, Deanna Cyr, Malcolm Dawson, Ann Dene, Benny Doctor, Lucy Doctor, James
Fontaine in his personal capacity and in his capacity as the Executor of the
estate of Agnes Mary Fontaine, deceased, Vincent Bradley Fontaine, Dana Eva
Marie Francey, Peggy Good, Fred Kelly, Rosemarie Kuptana, Elizabeth Kusiak,
Theresa Larocque, Jane McCullum, Cornelius McComber, Veronica Marten, Stanley
Thomas Nepetaypo, Flora Northwest, Norman Pauchey, Camble Quatell, Alvin Barney
Saulteaux, Christine Semple, Dennis Smokeyday, Kenneth Sparvier, Edward
Tapiatic, Helen Winderman and Adrian Yellowknee
Plaintiffs
(Appellants)
and
The Attorney General
of Canada
, The Presbyterian Church In Canada, The General Synod of the
Anglican Church of Canada, The United Church of Canada, The Board of Home
Missions of The United Church of Canada, The Womens Missionary Society of The
Presbyterian Church, The Baptist Church In Canada, Board of Home Missions and
Social Services of the Presbyterian Church in Bay, The Canada Impact North
Ministries of the Company for the Propagation of the Gospel in New England
(also known as The New England Company), The Diocese of Saskatchewan, The
Diocese of The Synod of Cariboo, The Foreign Mission of The Presbyterian Church
in Canada, The Incorporated Synod of the Diocese of Huron, The Methodist Church
of Canada, The Missionary Society of the Anglican Church of Canada, The
Missionary Society of the Methodist Church of Canada (also known as The
Methodist Missionary Society of Canada), The Incorporated Synod of the Diocese
of Algoma, The Synod of The Anglican Church of the Diocese of Quebec, The Synod
of The Diocese of Athabasca, The Synod of the Diocese of Brandon, The Anglican
Synod of the Diocese of British Columbia, The Synod of The Diocese of Calgary,
The Synod of the Diocese of Keewatin, The Synod of the Diocese of Quappelle,
The Synod of the Diocese of New Westminster, The Synod of the Diocese of Yukon,
The Trustee Board of the Presbyterian Church in Canada, The Board of Home
Missions and Social Service of the Presbyterian Church of Canada, The Womens
Missionary Society of the United Church of Canada, Sisters of Charity, a Body
Corporate also known as Sisters of Charity of St. Vincent de Paul, Halifax,
also known as Sisters of Charity Halifax, Roman Catholic Episcopal Corporation
of Halifax, Les Soeurs de Notre Dame-Auxiliatrice, Les Soeurs de St. Francois
dAssise, Institut des Soeurs du Bon Conseil, Les Soeurs de Saint-Joseph de
Saint-Hyancithe, Les Soeurs de Jésus-Marie, Les Soeurs de lAssomption de la
Sainte Vierge, Les Soeurs de lAssomption de la Saint Vierge de lAlberta, Les
Soeurs de la Charité de St.-Hyacinthe, Les Oeuvres Oblates de lOntario, Les
Résidences Oblates du Québec, La Corporation Episcopale Catholique Romaine de
la Baie James (The Roman Catholic Episcopal Corporation of James Bay), The
Catholic Diocese of Moosonee, Les Soeurs Grises de Montréal/Grey Nuns of
Montreal, Sisters of Charity (Grey Nuns) of Alberta, Les Soeurs de la Charité
des T.N.O., Hotel-Dieu de Nicolet, The Grey Nuns of Manitoba Inc.-Les Soeurs
Grises du Manitoba Inc., La Corporation Episcopale Catholique Romaine de la
Baie dHudson-The Roman Catholic Episcopal Corporation of Hudsons Bay, Missionary
Oblates-Grandin Province, Les Oblats de Marie Immaculée du Manitoba, The
Archiepiscopal Corporation of Regina, The Sisters of the Presentation, The
Sisters of St. Joseph of Sault St. Marie, Sisters of Charity of Ottawa, Oblates
of Mary Immaculate-St. Peters Province, The Sisters of Saint Ann, Sisters of
Instruction of the Child Jesus, The Benedictine Sisters of Mt. Angel Oregon,
Les Pères Montfortains, The Roman Catholic Bishop of Kamloops Corporation Sole,
The Bishop of Victoria, Corporation Sole, The Roman Catholic Bishop of Nelson,
Corporation Sole, Order of the Oblates of Mary Immaculate in the Province of
British Columbia, The Sisters of Charity of Providence of Western Canada, La
Corporation Episcopale Catholique Romaine de Grouard, Roman Catholic Episcopal
Corporation of Keewatin, La Corporation Archiepiscopale Catholique Romaine de
St. Boniface, Les Missionnaires Oblates Soeurs de St. Boniface-The Missionary
Oblates Sisters of St. Boniface, Roman Catholic Archiepiscopal Corporation of
Winnipeg, La Corporation Episcopale Catholique Romaine de Prince Albert, The
Roman Catholic Bishop of Thunder Bay, Immaculate Heart Community of Los Angeles
CA, Archdiocese of Vancouver-The Roman Catholic Archbishop of Vancouver, Roman
Catholic Diocese of Whitehorse, The Catholic Episcopale Corporation of
Mackenzie-Fort Smith, The Roman Catholic Episcopal Corporation of Prince
Rupert, Episcopal Corporation of Saskatoon, OMI Lacombe Canada Inc. and Mt.
Angel Abbey Inc.
Defendants
(
Respondent
)
Fay K. Brunning and Michael Swinwood, for the appellants
Edmund Metatawabin, St. Annes IAP Claimant T-00185, St. Annes IAP Claimant
S-20774, and St. Annes IAP Claimant S-16753
Catherine Coughlan and Brent Thompson, for the
respondent Attorney General of Canada
Stuart Wuttke, for the respondent Assembly First Nations
David Schulze, for the respondent Independent Counsel
Evatt Merchant, for the respondent Merchant Law Group
Estée Garfin, for the intervener Attorney General of
Ontario
Heard: September 21, 2020 by video conference
On appeal from the order of Justice Paul M. Perell of the
Ontario Superior Court of Justice, dated June 5, 2020, with reasons reported at
2020 ONSC 3497.
COSTS
ENDORSEMENT
[1]
Four participants in this appeal seek nearly $190,000 in costs. The
respondent, the Attorney General of Canada (Canada), has already agreed to
pay $53,543.53 in costs to the appellants but opposes the costs requested by the
three other participants, that is: the Assembly of First Nations request for
$10,550; the Merchant Law Groups request for $70,818.89; and the request of
Independent Counsel for $54,542.50. These three additional participants seek
costs on a full indemnity basis.
[2]
Canada maintains that, unlike the appellants, these three other
participants were not directly impacted by the order under appeal and neither
Independent Counsel nor the Merchant Law Group represents a discernible client
interest. Further, Canada argues that the issue on appeal was a straightforward
interpretative issue. The arguments of the three requesting parties
submissions on the appeal were unnecessarily duplicative and were largely
covered by the appellants. Therefore, Canada indicates that this is not an
appropriate case to award costs to the three other participants.
[3]
The three requesting parties argue that costs should follow the result.
They maintain that they raised arguments on which the court ultimately relied
in allowing the appeal. They submit that the issues were complex and of
national significance and the amounts they request are reasonable and
proportionate in the circumstances.
[4]
In our view, it is appropriate that the three requesting parties be
awarded costs. They were entitled to participate in support of the appellants
and, in that sense, were successful parties on appeal. However, we consider the
amount sought to be excessive in the circumstances. While the issues raised on
the appeal were not simple, they were nonetheless straightforward issues of
interpretation.
[5]
While we do not question the time each of the three additional participants
devoted to this matter, it is clear to us that much of the work carried out by
the requesting parties was duplicative of the work done by the appellants and
by each other. We see little purpose in carrying out a line by line analysis of
each of the bill of costs with a view to identifying and eliminating selected
entries.
[6]
In our view, it is unreasonable to require Canada to reimburse each of
the participants on a full indemnity basis for all of the time being claimed. We
consider the amount sought by the Assembly of First Nations to be generally
reasonable, and we award it $10,000 in costs. The amount sought by the Merchant
Law Group is, however, excessive in the circumstances, and we award it $20,000
in costs. The amount sought by Independent Counsel is considerably less than
the amount sought by the Merchant Law Group, but we nonetheless consider it
excessive in the circumstances. We note that Independent Counsel participated
and made submissions on the stay motion and, as a result, should be awarded an
amount somewhat higher than the amount awarded to the Merchant Law Group. We
therefore award Independent Counsel $27,000 in costs.
[7]
All amounts are inclusive of applicable taxes and disbursements.
Fairburn A.C.J.O.
Paul Rouleau J.A.
B.W. Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Fontaine v. Canada (Attorney General), 2021 ONCA
203
DATE: 20210401
DOCKET: C68080
Roberts, Jamal and Thorburn JJ.A.
BETWEEN
Larry Philip Fontaine in his personal
capacity and in his capacity as the Executor of the estate of Agnes Mary
Fontaine, deceased, Michelline Ammaq,
Percy Archie, Charles Baxter Sr.,
Elijah Baxter, Evelyn Baxter, Donald Belcourt, Nora Bernard, John Bosum, Janet
Brewster, Rhonda Buffalo, Ernestine Caibaiosai-Gidmark, Michael Carpan, Brenda
Cyr, Deanna Cyr, Malcolm Dawson, Ann Dene, Benny Doctor, Lucy Doctor, James
Fontaine in his personal capacity and in his capacity as the Executor of the estate
of
Agnes Mary Fontaine, deceased, Vincent
Bradley Fontaine,
Dana Eva Marie Francey, Peggy Good,
Fred Kelly, Rosemarie Kuptana, Elizabeth Kusiak, Theresa Larocque, Jane McCullum,
Cornelius McComber, Veronica Marten, Stanley Thomas Nepetaypo, Flora Northwest,
Norman Pauchey, Camble Quatell, Alvin
Barney Saulteaux, Christine Semple, Dennis Smokeyday, Kenneth Sparvier, Edward
Tapiatic, Helen Winderman and Adrian Yellowknee
Plaintiffs
and
The Attorney General of Canada
,
The Presbyterian Church In Canada,
The General Synod of the Anglican
Church of Canada, The United Church of Canada, The Board of Home Missions of
the United Church of Canada,
The Womens Missionary Society of the
Presbyterian Church, The Baptist Church in Canada, Board of Home Missions and
Social Services of the Presbyterian Church in Bay, The Canada Impact North
Ministries of the Company for the Propagation of the Gospel in New England
(also known as The New England Company), The Diocese of Saskatchewan, The
Diocese of the Synod of Cariboo, The Foreign Mission of the Presbyterian Church
in Canada, The Incorporated Synod of the Diocese of Huron, The Methodist Church
of Canada, The Missionary Society of the Anglican Church of Canada,
The Missionary Society of the Methodist
Church of Canada (also known as the Methodist Missionary Society of Canada),
The Incorporated Synod of the Diocese of Algoma, The Synod of the Anglican
Church of the Diocese of Quebec, The Synod of the Diocese of Athabasca, The
Synod of the Diocese of Brandon, The Anglican Synod of the Diocese of British
Columbia, The Synod of the Diocese of Calgary, The Synod of the Diocese of
Keewatin, The Synod of the Diocese of QuAppelle, The Synod of the Diocese of
New Westminster,
The Synod of the Diocese of Yukon, The
Trustee Board of the Presbyterian Church in Canada, The Board of Home Missions
and Social Service of the Presbyterian Church of Canada, The Womens Missionary
Society of the United Church of Canada, Sisters of Charity, a Body Corporate
also known as Sisters of Charity of St. Vincent de Paul, Halifax, also known as
Sisters of Charity Halifax, Roman Catholic Episcopal Corporation of Halifax,
Les Soeurs de Notre Dame-Auxiliatrice, Les Soeurs de St. François dAssise, Institut
des Soeurs du Bon Conseil, Les Soeurs de Saint-Joseph de Saint-Hyacinthe, Les
Soeurs de Jésus-Marie, Les Soeurs de lAssomption de la Sainte Vierge, Les
Soeurs de lAssomption de la Sainte Vierge de lAlberta, Les Soeurs de la
Charité de St.-Hyacinthe, Les Oeuvres Oblates de lOntario, Les Résidences
Oblates du Québec, La Corporation Épiscopale Catholique Romaine de la Baie
James (The Roman Catholic Episcopal Corporation of James Bay), The Catholic
Diocese of Moosonee, Les Soeurs Grises de Montréal/Grey Nuns of Montreal,
Sisters of Charity (Grey Nuns) of Alberta, Les Soeurs de la Charité des T.N.O.,
Hotel-Dieu de Nicolet, The Grey Nuns of Manitoba Inc. Les Soeurs Grises du
Manitoba Inc., La Corporation Épiscopale Catholique Romaine de la Baie dHudson
The Roman Catholic Episcopal Corporation of Hudsons Bay, Missionary Oblates
Grandin Province, Les Oblats de Marie Immaculée du Manitoba, The
Archiepiscopal Corporation of Regina, The Sisters of the Presentation, The
Sisters of St. Joseph of Sault St. Marie, Sisters of Charity of Ottawa, Oblates
of Mary Immaculate St. Peters Province, The Sisters of Saint Ann, Sisters of
Instruction of the Child Jesus, The Benedictine Sisters of Mt. Angel Oregon,
Les Pères Montfortains, The Roman Catholic Bishop of Kamloops Corporation Sole,
The Bishop of Victoria, Corporation Sole, The Roman Catholic Bishop of Nelson,
Corporation Sole, Order of the Oblates of Mary Immaculate in the Province of
British Columbia, The Sisters of Charity of Providence of Western Canada, La
Corporation Épiscopale Catholique Romaine de Grouard, Roman Catholic Episcopal
Corporation of Keewatin, La Corporation Archiépiscopale Catholique Romaine de
St. Boniface, Les Missionnaires Oblates Soeurs de St. Boniface The Missionary
Oblates Sisters of St. Boniface, Roman Catholic Archiepiscopal Corporation of
Winnipeg, La Corporation Épiscopale Catholique Romaine de Prince Albert, The
Roman Catholic Bishop of Thunder Bay, Immaculate Heart Community of Los Angeles
CA, Archdiocese of Vancouver The Roman Catholic Archbishop of Vancouver,
Roman Catholic Diocese of Whitehorse, The Catholic Episcopal Corporation of
Mackenzie-Fort Smith, The Roman Catholic Episcopal Corporation of Prince
Rupert, Episcopal Corporation of Saskatoon, OMI Lacombe Canada Inc. and Mt.
Angel Abbey Inc.
Defendants (
Respondent
)
Joanna Birenbaum, for the appellant National Centre for
Truth and Reconciliation
Catherine A. Coughlan and Brent Thompson, for
the respondent Attorney General of Canada
Stuart Wuttke and Jeremy Kolodziej, for the respondent Assembly
of First Nations
P. Jonathan Faulds, Q.C., for the respondent National
Administration Committee
Heard: October 29, 2020 by video conference
On appeal from the order of
Justice Paul M. Perell of the Superior Court of Justice, dated January 20,
2020, with reasons reported at 2020 ONSC 366.
By the Court:
A.
Overview
[1]
This is an appeal by the
National Centre for Truth and Reconciliation (NCTR) of the order regarding
the disposition of proposed statistical reports and records arising out of the
Indian Residential Schools Settlement Agreement (IRSSA) and the Independent
Assessment Process (IAP).
[2]
This appeal is about
competing privacy and archival interests involving the preservation and control
of historical documents and data that relate to the intensely personal and
confidential accounts of the survivors of the abuse that occurred at Canadas
Indian Residential Schools. It concerns the myriad administrative records and
other materials arising out of the settlement and adjudication of the Indian
Residential School survivor claims pursuant to the historic IRSSA. The national
tragedy of the Indian Residential Schools is well documented. The documentation
of these claims was essential to the successful operation of the IAP that was
established under the IRSSA. This documentation also served to advance the
integral purposes of truth and reconciliation through the creation of the NCTR,
a unique Indigenous historical archive.
[3]
The IAP records and
documents have been the subject of several court proceedings. This appeal
concerns the disposition of certain documents and the use of data (Records)
related to the administration of the IAP by the Indian Residential Schools
Adjudication Secretariat (the Secretariat) under the direction of the Chief
Adjudicator. These Records pertain to the operation, management, and oversight
of the IAP. Through the IAP, thousands of Indian Residential School survivor
claims were adjudicated and resolved pursuant to the IRSSA that was
court-approved in late 2006 and early 2007.
[4]
The Chief Adjudicator
brought a Request for Directions (RFD) before the Supervising Judge of the
Ontario Superior Court of Justice (Supervising Judge) with respect to two
classes of Records: (a) proposed statistical reports; and (b) Non-Claim
Records. The Supervising Judge is tasked with administering the IRSSA in Ontario.
In this RFD, the Chief Adjudicator proposed to generate new statistical
reports, titled Final Outcome Statistical Reports and referred to as Static
Reports (the proposed Static Reports), about the IAP using confidential
claims data. If these proposed Static Reports were approved, the Chief
Adjudicator intended to include them in his IAP Final Report. The Chief
Adjudicator also sought permission to transfer the proposed Static Reports and
some of the Non-Claim Records for archiving to the appellant, the NCTR, which
is an emanation of the IRSSA and not a party to the IRSSA.
[5]
At issue before the
Supervising Judge was the risk of disclosure of IAP confidential information,
as well as the reliability and archival importance of some of the statistical
data and administrative documents sought to be produced and archived. The
Supervising Judges predominant concern was to preserve the confidentiality of
all information and documentation related to the claims and identities of the
Indian Residential School survivors. With respect to the proposed Static
Reports, if they could be produced in a form that ensured confidentiality,
reliability, and archival validity, they would no doubt be of historical and
archival importance.
[6]
The Supervising Judge dismissed
the Chief Adjudicators RFD and declined to fully implement his proposal,
including the preparation of the proposed Static Reports. Instead, the
Supervising Judge directed the respondent, the Attorney General of Canada
(Canada), to submit a new proposal for the archiving of copies of the
Non-Claim Records with the NCTR, subject to certain inclusions and exclusions.
[7]
The NCTR submits that the
Supervising Judge erred in dismissing the Chief Adjudicators RFD. Canada
maintains that the Supervising Judge made no error and that the appeal should
be dismissed.
[8]
For the reasons that follow,
we agree that the Supervising Judge erred in his treatment of the proposed
Static Reports, and we therefore remit this issue for a rehearing before the Supervising
Judge. We dismiss the appeal as it pertains to the Non-Claim Records.
B.
Issues
[9]
The NCTR alone appeals from
the Supervising Judges order and raises the following issues:
i.
Can and should the proposed Static Reports be
generated and archived with the NCTR? In particular, did the Supervising Judge
err in concluding that the proposed Static Reports should not be generated or archived,
and that the model proposed Static Reports should remain sealed, as they:
(a)
directly
or indirectly contravene
Canada (Attorney General) v. Fontaine
,
2017 SCC 47, [2017] 2 S.C.R. 205 (
Fontaine (SCC)
),
by possibly allowing the identities of claimants and their confidential
information to be uncovered;
(b)
could be
manipulated or spun to draw unreliable and contentious conclusions; and
(c)
do
not appear to advance the goals of truth and reconciliation?
ii.
Did the Supervising Judge err in excluding from
archiving at the NCTR the following Non-Claim Records:
(a)
the adjudicator
performance records;
(b)
the
non-public IAP Oversight Committee records;
(c)
the
complaint and investigation records in respect of IAP claims; and
(d)
any
records that risk disclosing IAP personal information, confidential
information, or information subject to solicitor-client or litigation
privilege?
iii.
Did the Supervising Judge err by permitting
Canada to archive the excluded Non-Claim Records while prohibiting Canada from
ever transferring these records to the NCTR?
[10]
The NCTR also requests a
stay of the Supervising Judges order with respect to the proposed Static
Reports in order to forestall the destruction of the Single Access to Dispute
Resolution Enterprise (SADRE) database, which is used to case-manage IAP
claims.
[11]
The SADRE database houses
the IAP data from which the proposed Static Reports would be generated. Only
authorized staff in Aboriginal Affairs and Northern Development Canada (now
Crown-Indigenous Relations and Northern Affairs Canada) and Secretariat
offices, and those who have approved remote access software, can access the
SADRE database. Through the design of the SADRE database, some information is
only accessible by the Secretariat and some information is only accessible by
Crown-Indigenous Relations and Northern Affairs Canada.
[12]
On December 11, 2020, this
panel granted an interim stay of the order and of the destruction of the SADRE
database until the release of this decision. As indicated below, this stay is
continued until the Supervising Judge disposes of the issue of the proposed
Static Reports that we remit for a rehearing.
[13]
The Assembly of First
Nations (AFN) and the National Administration Committee (NAC) support the
position taken by the NCTR regarding the proposed Static Reports. However, they
take no position regarding the Non-Claim Records.
[14]
Canada submits the appeal
should be dismissed in its entirety. Its overarching submission is that the
NCTR has no contractual right or legal entitlement to demand production of
these documents.
[15]
The Chief Adjudicator did
not commence an appeal, nor did he appear on the hearing of the NCTRs appeal,
despite being granted 15 minutes for oral argument by Pepall J.A.:
Fontaine
v. Canada (Attorney General)
, 2020 ONCA 540, at para. 17. In a subsequent
letter addressed to this panel, dated September 15, 2020, the Chief Adjudicator
determined that his participation in this appeal was not necessary, as the
Supervising Judge exercised his jurisdiction over the Non-Claim Records
arising from the administration of the IRSSA by shaping the scope of a donation
to the NCTR through balancing the personal privacy concerns with the public
interest in preserving the records. Further, the Chief Adjudicator determined
that it was best he did not participate in the appeal,
[g]iven past concerns about the participation of
the Chief Adjudicator in appellate proceedings.
The proposed Static Reports were not mentioned in this
letter. While the Chief Adjudicators absence does not preclude our
determination of this appeal, on the rehearing, the Supervising Judge will need
to determine the Chief Adjudicators current position regarding the proposed
Static Reports.
C.
Admission of Fresh Evidence
[16]
Canada seeks to adduce fresh
evidence on this appeal: the October 20, 2020 affidavit of Patricia Long, a
paralegal with the Department of Justice Canada, that sets out the history of
the appeal; and Canadas responding compendium containing Canadas materials
filed in response to the NCTRs stay motion before Pepall J.A., including the
August 13, 2020 affidavit of Ms. Long, affidavits filed in relation to the RFD
that culminated in
Fontaine (SCC)
, and the IRSSA itself.
[17]
The NCTR primarily objects
to the admission of Ms. Longs August 13, 2020 affidavit, which includes
information that, as of that date, through the IAP notice plan that began in
2018, 33 IAP claimants have authorized the Chief Adjudicator to deliver their IAP
documents to the NCTR. The NCTR submits that this information is unhelpful and
leads to evidentiary questions that the NCTR could have addressed if this had
been raised before the Supervising Judge. In any event, the NCTR notes that IAP
claimants have until September 2027 to make a decision about archiving their
records.
[18]
We admit the materials
proffered by Canada. In our view, the statistical information meets the
criteria for admission: it was not available before the Supervising Judge; and
it is relevant and necessary to deal fairly with the issues on appeal, as this
information completes the contextual background for this appeal:
Sengmueller
v. Sengmueller
(1994), 111 D.L.R. (4th) 19 (Ont. C.A.), at pp. 22-23.
D.
Contextual Background
[19]
As an organizing framework
for our analysis, we briefly set out the context in which the documents and
data in issue were created and how the question of their disposition came
before the Supervising Judge for consideration.
(1)
Overview of the IRSSA and the IAP
[20]
All the documents and data were
created pursuant to the implementation and administration of the IRSSA. The
IRSSA settled the class actions and civil claims of the approximate 79,000
survivor claimants who suffered abuse while residents of the Indian Residential
Schools in Canada and who were living as of May 30, 2005:
Baxter v. Canada
(Attorney General)
(2006), 83 O.R. (3d) 481 (S.C.), at para. 4;
Fontaine
v. Canada (Attorney General)
, 2020 ONCA 688, at para. 6.
[21]
Between the 1860s and 1990s,
more than 150,000 Indigenous children were placed in the Indian Residential
Schools funded by Canada and operated by various religious organizations. Here,
the children suffered the appalling abuse that gave rise to the IRSSA. The
IRSSA represents the culmination of negotiations to address the historical and
ongoing damaging legacy of Canadas Indian Residential Schools system. Notably,
the Preamble to the IRSSA provides that its goals are to achieve a fair,
comprehensive and lasting resolution of the legacy of Indian Residential
Schools through the promotion of healing, education, truth and reconciliation
and commemoration.
[22]
Between December 2006 and
January 2007, nine courts across Canada (the supervising courts) approved the
IRSSA and issued substantially identical Approval Orders. In March 2007, the
supervising courts also issued identical Implementation Orders. As set out by
the Supervising Judge, at para. 13 of his reasons, the judgments and orders of
the supervising courts provide that the supervising courts shall supervise the
implementation of the IRSSA and that the
[supervising courts]
may issue such orders as are necessary to implement and
enforce the provisions of the agreement and the judgment.
[23]
The IRSSA effectively
combines all the outstanding litigation into one class action. Over 38,000
claims have been processed and resolved, and over $3 billion has been disbursed
to IAP claimants. The IRSSA provides for financial compensation to the
survivors of the Indian Residential Schools, and it addresses the need for the
archiving of documents to advance truth-telling and reconciliation and
recognize the states duty to remember, all the while safeguarding the privacy
interests of the individuals who participated in the process.
[24]
The IRSSA recognizes that
compensation for the survivors of abuse through the IAP process is insufficient
to fulfill its goals of truth and reconciliation. As the AFN indicated in its
November 2004 report entitled Report on Canadas Dispute Resolution Plan to
Compensate for Abuses in Indian Residential Schools, truth-telling, healing,
and public education are also required. The AFNs recommendation for the
creation of a truth commission to advance these purposes was incorporated into
the IRSSA.
[25]
Article 7.01 and Schedule N
of the IRSSA establish the Truth and Reconciliation Commission (TRC), which
was tasked with creating a historical record of the Indian Residential School
system and ensuring that its legacy is preserved and made accessible to the
public for future study:
Fontaine (SCC)
, at para. 11. Schedule N also provides
for the creation of a National Research Centre, later the NCTR, to archive and
store the records collected by the TRC:
Fontaine (SCC)
, at para. 11. Schedule
N also allows, but does not require, the transfer of IAP information to the TRC,
and therefore to the NCTR, for research and archiving purposes.
[26]
In keeping with the purposes
of truth and reconciliation, pursuant to Schedule D of the IRSSA, the IAP was
created as a means for claimants to seek financial compensation for the serious
physical and sexual abuse that they suffered at Indian Residential Schools.
In the fabric of this court
process, Canada has both an administrative role in allocating the settlement
funds and an adversarial role in challenging IAP claims:
Baxter
, at paras. 36-38.
[27]
Given the enormously
sensitive and private nature of the information that is disclosed during the
IAP, there was a high premium placed on confidentiality by the participants.
But for the promise of absolute confidentiality, claimants, alleged
perpetrators, and church representatives would not likely have participated:
Fontaine
(SCC)
, at paras. 42-47.
[28]
The Secretariat manages the
IAP under the direction of the Chief Adjudicator. The Chief Adjudicator, who
has been in the role of supervising the IAP since 2013, is certainly well
placed to make recommendations concerning records and reports pertaining to the
IAP. As directed by Schedule D of the IRSSA, one of the Chief Adjudicators
duties is to
[p]
repare annual reports to the Oversight Committee
on the functioning of the adjudicative process under this IAP. This IAP
Oversight Committee supervises the administrative aspects of the IAP. In
addition, the Implementation Orders for the IRSSA indicate a further reporting
obligation for the Chief Adjudicator, as he must report directly to the
supervising courts of the IRSSA not less than quarterly on all aspects of the
implementation and operation of the IAP.
[29]
The IRSSA does not expressly
address the issue of the production of the proposed Static Reports nor the disposition
of the Non-Claim Records. However, the establishment of the TRC, its goal to
create as complete a historical record as possible, and the creation of the
NCTR to fulfill the TRCs mandate, support the idea that the IRSSA allows for
the production of historically important and reliable materials and documents
where no risk of disclosure of confidential information exists.
(2)
The Chief Adjudicators RFD and
Fontaine (SCC)
[30]
In anticipation of the
projected completion of IAP adjudication work by December 2020 and the
projected administrative closeout of the Secretariat by March 31, 2021, the
Chief Adjudicator has sought the direction of the Supervising Judge concerning
the appropriate disposition of all the Records pertaining to the IAP.
[31]
The disposition of the IAP
documents related to the claims advanced by Indian Residential School survivors
(the Claim Records) was the subject of an earlier RFD that culminated in the
Supreme Court of Canadas decision in
Fontaine (SCC)
. Here, the
Supreme Court upheld the Supervising Judges decision that all Claim Records
must be destroyed following a 15-year retention period to protect the privacy
and confidentiality rights of the claimants. During this period, individual IAP
claimants may elect to have their own Claim Records preserved and archived
through a notice program administered by the Chief Adjudicator. According to
the fresh evidence filed by Canada, as of August 13, 2020, only 33 claimants
have so far elected to transfer their own Claim Records to the NCTR.
[32]
In
Fontaine (SCC)
,
the Supreme Court resolved [t]he tension between th
[
e] mandate of
commemoration and memorialization, and the privacy which IAP claimants were
promised: at para. 11. The Supreme Court confirmed the primacy of the IAP
claimants entitlement to privacy and the need to respect their choice to share
(or not share) their sensitive and personal stories. As the Supreme Court
observed at para. 59, It is not for this Court to conscript the stories of
survivors, where confidentiality and solely voluntary disclosure had been
agreed to.
[33]
The Chief Adjudicator sought
directions regarding his proposal to produce and archive the proposed Static
Reports. With respect to the Non-Claim Records, the Chief Adjudicator made a
proposal and sought directions regarding their disposition and archiving at the
NCTR.
[34]
With respect to the proposed
Static Reports, importantly, the Secretariat had already prepared statistical
reports using the SADRE database (existing statistical reports), which have
been disseminated to the IAP Oversight Committee and the supervising courts
through the Chief Adjudicators annual and quarterly reports. Some of these
existing statistical reports have been published on the Secretariats website
and therefore made available to the public. According to the October 25, 2019
affidavit of Nicole Hansen, the Acting Manager of the Business Process
Management and Reporting Unit of the Secretariat and Supervisor of Statistical
Operations, at para. 24, the rationale behind the production of the proposed
Static Reports is that statistical data from the IAP can contribute to
understanding the scale and scope of abuse at residential schools by future
historians, as well as contributing to understanding the IAP claims process
itself.
[35]
According to Ms. Hansen, the
proposed Static Reports were intended to be a final set of statistical reports
to provide an overview of the IAP claimant population and the claims process. The
Chief Adjudicator proposed that they be appended to his IAP Final Report and also
archived at the NCTR. Model proposed Static Reports were produced under seal
for the Supervising Judges review, attached as Exhibit K to Ms. Hansens
affidavit.
[36]
The initial generation of
the proposed Static Reports was undertaken in consultation with the lAP
Oversight Committee. As indicated at paras. 25-26
of Ms. Hansens affidavit, Sample Final Static Reports [were] provided to
the lAP Oversight Committee and modifications [were] made based on feedback
received from committee members. In fact, the variables to be cross-tabulated
and presented in the proposed Static Reports were selected based on
consideration of what might be of interest to residential school survivors,
historical researchers, and the public.
[37]
A very high-level summary of
the nature of these proposed Static Reports is contained at para. 39(g) of the
Supervising Judges reasons.
In describing
the major details of the Chief Adjudicators proposal, the Supervising Judge
explained that the proposed Static Reports
would cross-tabulate specific variables in the SADRE
database and be accompanied by a glossary of terms. For example, the proposed Static
Reports would aggregate information about lAP claimant profiles based on
variables such as age, sex, and acts of abuse by province.
[38]
At para. 30 of her
affidavit, Ms. Hansen provided a general list of the categories of information to
be contained in
the
proposed Static Reports:
(i) General
statistical information about the lAP;
(ii) Overview
of IAP claims;
(iii) lAP
process timelines;
(iv) Claim
compensation statistics;
(v) lAP
claimant profile;
(vi) Claim
compensation statistics by religious affiliation of [Indian Residential
Schools]; and
(vii) Claim
statistics for individual [Indian Residential Schools].
[39]
Ms. Hansen deposed that the
Secretariat uses various techniques to protect individual privacy and
confidentiality, including data generalization and data suppression, when
producing statistical reports. Using these techniques, the model proposed Static
Reports attached as Exhibit K to Ms. Hansens affidavit were generated at the
national, provincial, and territorial level. For the proposed Static Reports,
as stated at para. 28 of Ms. Hansens affidavit, the age of claimants will be
aggregated in 10-year bands, with outliers of very young or very old claimants
further aggregated. Lastly, Ms. Hansen indicated at para. 27 that where fewer
than 20 adjudicator decisions were made in respect of an individual Indian
Residential School, the data will be aggregated and summarized in an other schools
category.
[40]
Despite this study of the
techniques to be used, the parties proffered no expert or other evidence
concerning the level of data generalization or data suppression that would be
necessary to ensure confidentiality and the reliability and archival soundness
of the proposed Static Reports, nor was there any evidence before the Supervising
Judge that any particular table contained in the model proposed Static Reports
attached as Exhibit K to Ms. Hansens affidavit identified or risked
identifying lAP claimants or anyone else.
(3)
The Supervising Judges Decision
[41]
The Supervising Judge
determined that the proposed Static Reports should not be generated or included
in the Chief Adjudicators IAP Final Report or archived at the NCTR. He
concluded that the proposed Static Reports might reveal, through deductive
reasoning, the identity of IAP claimants, which would contravene the prior
order in
Fontaine (SCC)
. The Supervising Judge also held that there
was a danger the data could be manipulated or spun to draw unreliable and
contentious conclusions, and in his view, some of the data would not
necessarily advance truth and reconciliation.
[42]
The
Supervising Judge held that with respect to the Non-Claim
Records, the normal regime for the disposition
of government documents should not be disturbed. Therefore, Canada, not the Chief
Adjudicator, should submit a new RFD for the disposition and archiving of copies
of the Non-Claim Records with the NCTR, subject to the Supervising Judges directions
concerning the inclusion and exclusion of certain documents in the Non-Claim
Records collection. In particular, he excluded from the Non-Claim Records
collection the adjudicator performance records, the non-public IAP Oversight
Committee records, and the complaint and investigation records, on the basis
that they reveal confidential, sensitive, and privileged information. He also
generally excluded the archival of records where there was any risk that they
could reveal IAP personal information, confidential information, or information
subject to solicitor-client or litigation privilege.
E.
ANALYSIS
(1)
Standard of Review
[43]
At its core, this
appeal involves the Supervising Judges treatment of the proposed Static
Reports and the Non-Claim Records based on his review of the evidentiary record
before him. Notably, in dismissing the Chief Adjudicators RFD, the Supervising
Judge reviewed the model proposed Static Reports and other key pieces of
evidence pertaining to the Non-Claim Records to arrive at his conclusions.
Therefore, his conclusions involved the interpretation of the evidence as a
whole:
Housen v. Nikolaisen
, 2002 SCC 33,
[2002] 2 S.C.R. 235, at para. 36;
Amertek Inc. v. Canadian Commercial Corp.
(2005), 76 O.R. (3d) 241 (C.A.), at para. 68,
leave to appeal refused,
[2005]
S.C.C.A. No. 439.
[44]
Such an interpretation
of evidence involves factual or inferential determinations, which are entitled
to deference and should not be overturned by an appellate court, except where
there is a palpable and overriding error or one of its functional
equivalents, which includes a decision that is not reasonably supported by
the evidence: see
H.L. v. Canada (Attorney General)
, 2005 SCC 25,
[2005] 1 S.C.R. 401, at para. 110;
MacDougall v. MacDougall
(2005),
205 O.A.C. 216 (C.A.), at para. 31.
[45]
Moreover, by virtue of
his appointment
, the Supervising
Judge has wide supervisory jurisdiction and discretion under the IRSSA, class
action legislation, and his inherent jurisdiction as a superior court justice,
to implement and administer the IRSSA and make directions regarding the disposition
of the IAP documents:
Fontaine (SCC)
, at paras. 31-33. Having served
as Eastern Administrative Judge since 2013, the Supervising Judge is certainly
well-versed in the history of the IRSSA and the importance of the IAP
documents.
[46]
However, as we will
explain below, the Supervising Judges conclusion, at para. 225 of his reasons,
that producing and archiving the proposed Static Reports puts far too much at
risk, for too little gain was
not reasonably supported
by the evidence:
H.L.
, at para. 110
. Appellate intervention is
therefore warranted to remit this issue for a rehearing before the Supervising
Judge.
[47]
We reach a different
conclusion with respect to the Supervising Judges dismissal of the Chief
Adjudicators proposal for the Non-Claim Records. For the reasons set out
below, we see no error with his determination of this issue.
(2)
The
Proposed Static
Reports
(a)
Positions on
Appeal
[48]
The NCTR, the AFN, and the
NAC submit that the Supervising Judge erred in failing to order the generation
of the proposed Static Reports. They say there is no evidence to support the
Supervising Judges conclusions that the proposed Static Reports could reveal
confidential information, were subject to manipulation and could be spun to
drawn unreliable and contentious conclusions and would not advance truth and
reconciliation.
[49]
Canada opposes the
preparation of the proposed Static Reports on the grounds that the IRSSA makes
no reference to their generation and the NCTR does not possess a contractual or
legal right to require their production. Canada submits there is no basis to
intervene with the Supervising Judges determination that the proposed Static Reports
would contravene the order in
Fontaine (SCC)
, nor his conclusions
concerning the issues of reliability and utility.
(b)
Discussion
[50]
The issue is whether the Supervising
Judge should have ordered that the proposed Static Reports be produced by the
Chief Adjudicator and archived at the NCTR. In his reasons, the Supervising
Judge outlined three key concerns: whether the confidentiality of IAP claimants
could be maintained; whether the information could be manipulated or spun to
draw unreliable and contentious conclusions; and whether the production of the proposed
Static Reports would advance the goals of truth and reconciliation.
[51]
The parties adduced no
evidence that the Supervising Judge was prepared to accept in relation to these
questions, nor did the Supervising Judge request further evidence to address
his concerns.
[52]
Given the Supervising
judges concerns, he could and should have requested further information from
the parties to enable him to properly assess his concerns. He erred by
dismissing the request for the production of the proposed Static Reports and
the archiving of the proposed Static Reports at the NCTR in the absence of an
evidentiary foundation that permitted him to make any determination on these
issues.
[53]
In his reasons, the
Supervising Judge acknowledged the historical significance of both the Claim
Records and the Non-Claim Records. He also recognized the historical
significance of the existing statistical reports that were founded on data from
the SADRE database, as evidenced by the fact that he ordered that they be
included in the Non-Claim Records collection to be archived at the NCTR.
[54]
While the confidentiality,
reliability, and archival validity of the form and contents of the proposed
Static Reports were disputed, the historical and archival importance of the
information to be contained in the proposed Static Reports was not in issue.
The unchallenged June 9, 2018 expert affidavit of Dr. Trudy Huskamp Peterson, a
Certified Archivist of the Academy of Certified Archivists, confirmed, at para.
10, that a very broad approach to preserving records of transitional justice
and human rights mechanisms or institutions is prudent, appropriate, and in
keeping with internationally accepted archiving principles and standards.
[55]
Given the historical
significance of the information to be gleaned from the SADRE database that is
slated for destruction, it was incumbent on the Supervising Judge to adjudicate
this issue on an adequate record. He erred by rendering a decision that was
not reasonably supported by the evidence:
H.L.
, at para. 110
.
[56]
As a result, we remit the
issue of the proposed Static Reports to the Supervising Judge for determination
in accordance with these reasons and the directions that we shall outline at
the conclusion of our analysis.
[57]
As we are remitting the
issue of the proposed Static Reports to the Supervising Judge, it is important
that we delineate in our analysis the facets of the Supervising Judges
analytical approach that are not in dispute or in error, and those that require
correction and further direction for the purpose of the rehearing.
(i)
The Unchallenged Aspects of the Supervising Judges Approach
[58]
We start our analysis with
the issues that are not in dispute on appeal.
[59]
First, the proposed Static
Reports are meant to contain aggregated statistical data about IAP claimants
that would serve to provide a better understanding of the claims process and
the scale and scope of abuse at the Indian Residential Schools. As such, as long
as the confidentiality of the IAP data is preserved, the IRSSA does not explicitly
preclude the generation of the proposed Static Reports.
[60]
Second, there is nothing in
the IRSSA to circumscribe the Chief Adjudicators exercise of his discretion in
fulfilling his responsibility to report on the process and explain the findings
of the IAP, except for the overarching concerns of maintaining the privacy of
the individuals involved in the IAP and of advancing the goals of truth and
reconciliation.
[61]
Third, concerns about the
disclosure of the proposed Static Reports must be remitted to the Supervising
Judge. The Supervising Judge has the power to direct the handling of the IAP
documents:
Fontaine (SCC)
, at para. 31. This includes determining
whether the proposed Static Reports should be generated and archived. No party
or non-party may unilaterally direct the production of any IAP document,
including the proposed Static Reports. Approval of any such production must be
sought from the Supervising Judge.
[62]
Fourth, the Supervising Judge
is required to protect the confidentiality of the IAP claimants private
information. There is no dispute that if there were a risk that the proposed
Static Reports revealed confidential claimant data, they should not be produced,
as this would violate the order in
Fontaine (SCC)
. Given that the
information in the proposed Static Reports would be based on the confidential
information contained in the SADRE database, protection of the IAP claimants
rights to confidentiality must be maintained. Following
Fontaine (SCC)
,
the safeguarding of the IAP claimants privacy rights properly served as the
main lens through which the Supervising Judge assessed the Chief Adjudicators
proposal regarding the proposed Static Reports.
[63]
Fifth, no issue is taken
with the principles the Supervising Judge used to consider the reliability and
archival utility of the proposed Static Reports. His reasons demonstrate that
he was attuned to the four foundational principles for archives espoused by Dr.
Peterson: authenticity; reliability; integrity; and usability.
[64]
Sixth, there was no dispute
that, like the existing statistical reports, the production of the proposed
Static Reports could be of historical and archival significance, provided they are
generated in a form that protects the claimants rights to the
confidentiality of their IAP information, and that the data are produced in a
reliable manner that is consistent with the principles of archival validity and
utility.
[65]
Indeed, the Supervising
Judges approval of the existing statistical reports is unchallenged on appeal.
As the Supervising Judge recognized by his inclusion of the existing
statistical reports in the Non-Claim Records collection to be archived at the
NCTR, the production of statistical reports may be of historical and archival
significance, so long as these reports do not reveal IAP confidential data. In
fact, the Supervising Judge, at para. 214 of his reasons, determined that the
existing statistical reports do not violate the order in
Fontaine (SCC)
,
as they are aggregate or collective information that does not identify
individual claimants.
[66]
At para. 215 of his reasons,
the Supervising Judge rejected Canadas argument that the existing statistical
reports revealed IAP confidential data because they are more about the nature
of the IAP claims in general and the aspects of the IAP that were engaged than
they are about the characteristics or identities of the Claimants in
particular. He was further satisfied, at para. 222 of his reasons, that the
existing statistical reports ha
[
d] variables that in the aggregate do not reveal
information that would be offensive to individuals or to the collective
because they report on the Secretariats administration and processing of
claims, rather than on what the claims process reveals about the history of
particular residential schools.
(ii)
The Disputed Elements of the Supervising Judges
Approach
[67]
The NCTR argues that the
Supervising Judge erred in his approach because his concerns about the proposed
Static Reports are not supported by evidence. Canada disagrees with the NCTRs
position.
[68]
The core of the Supervising
Judges reasons regarding the proposed Static Reports is contained at paras.
220-25, excerpted here:
[H]
aving examined the model Static
Reports, I observe that depending on what specific variables are selected,
it
might be possible by deductive reasoning to disclose the identities of IAP
Claimants
and this would arguably contravene the Orders made in [
Fontaine
(SCC)
].
[D]epending on school size and temporal information, and
variables based on age, sex, and acts of abuse by province,
it might be
possible to deduce confidential personal information from some of the proposed
Static Reports
. I am especially concerned that this may be possible in the
case of some small and remote communities, leading to very unfortunate
consequences.
Information about how many claims were made and how many were
resolved is statistical information that cannot be manipulated or spun to draw
unreliable and contentious conclusions. However, the same cannot be said about
some of the proposed Static Reports, where, for instance,
unreliable and
contentious conclusions might be drawn about acts of student-on-student abuse
at particular schools
. I have reviewed some models of Static Reports and
the
reliability and soundness of the models is doubtful without more information
from historians, archivists, sociologists, and perhaps other social scientists
with some expertise in statistical analysis about the proper and appropriate
use of this statistical evidence[
.]
Lies as much as truths can be told by the manipulation of data.
There is some considerable truth in the progressive maxim lies, damned lies,
and statistics, and
care needs to be taken in making a statistical analysis
that support[s] observations and conclusions that are debatable and
contentious. A deeper understanding of the SADRE database might belie any
conclusions to be drawn from Static Reports
.
[I] do not see how truth and reconciliation will be advanced
by reports identifying which school was the worst of the worst or ranking
schools in the order of which school had more student-on-student sexual
assaults than staff sexual assaults, etc.
[Emphasis added.]
[69]
As the emphasized excerpts
demonstrate, the Supervising Judge expressed considerable concern about the
inadequacy of the evidentiary record and raised questions that he concluded
could not be answered. We agree with the NCTRs submission that the Supervising
Judge erred by dismissing the RFD without any adequate evidentiary foundation.
(iii)
The
Inadequacy
of the
Evidentiary Record
[70]
With respect to the
evidentiary record before him, it was open to the Supervising Judge to raise
the issues he did concerning the absence of expert and other evidence that he
believed precluded him from assessing the reliability and soundness of the
proposed Static Reports.
[71]
The Chief Adjudicator was
alive to these issues. As we earlier noted, the lay affidavits before the
Supervising Judge provided a summary of the possible methodologies that could
be employed to anonymize data, such as data generalization and data
suppression, and there was general, uncontroversial evidence about archival
science and internationally accepted archiving principles.
[72]
However, there was no expert
or other evidence concerning the level of data generalization or data suppression
that would be necessary to ensure confidentiality and the reliability and
soundness of the proposed Static Reports. Notably, Dr. Peterson was not asked
to provide an opinion on the generation of statistical information, which
includes the proposed Static Reports.
[73]
It is uncontroversial that
the risk of disclosure of confidential information increases commensurate with
the greater level of detail provided. As Professor David H. Flaherty noted at
para. 74 of his May 2, 2014 affidavit, filed as expert evidence in support of
the earlier RFD about the Claim Records, while in theory anonymization by
redaction is possible,
[i]
n practice, there is now a rich literature on
how enormously difficult it is to try to anonymize personal information and
that the risks of re-identification are very high.
[74]
Further, there was no
conclusive evidence as to what form the proposed Static Reports would definitively
and ultimately take. The Supervising Judge was provided with models of proposed
Static Reports, attached as sealed Exhibit K to Ms. Hansens affidavit.
However, it was by no means certain that these models would be the final form
of all the proposed Static Reports to be generated. As Ms. Hansen noted at
para. 15 of her affidavit, Statistical Reports can take many forms, depending
on the available data, the purpose for which the reports will be used, and the
audience. Notably, prior proposed Static Reports were modified based on
feedback from the IAP Oversight Committee members, which include an independent
chair and eight other members: two former Indian Residential School students;
two class counsel representatives; two church representatives; and two
representatives for Canada. Also, when explaining the form of the model
proposed Static Reports, Ms. Hansen used the words
[a]t present, at para. 30 of her affidavit. Such language
leads to the assumption that the model proposed Static Reports are not in final
form, as the form itself may be modified in the future.
(iv)
The Supervising Judges Errors
[75]
Having identified his
concerns that there was a lack of expert and other evidence, the Supervising
Judge erred by concluding, at paras. 220 and 225 of his reasons, that the proposed
Static Reports would arguably contravene the Orders made in
[
Fontaine
(SCC)
]
and that generating and archiving the Static Reports puts
far too much at risk, for too little gain, as these conclusions were
not reasonably supported by the evidence:
H.L.
, at para. 110
.
Other than the Supervising Judges personal examination of the model proposed
Static Reports, the Supervising Judge did not refer to any evidence to justify these
conclusions, and the defects in the evidentiary record that he identified did
not permit him to reach those determinations.
[76]
First, there was no evidence
before the Supervising Judge in support of his belief, advanced at para. 221 of
his reasons, that it might be possible to deduce confidential personal
information from some of the proposed Static Reports. Nor has Canada submitted
any concrete privacy or confidentiality concerns about specific identifiable
information.
[77]
While Professor Flaherty
outlined in his affidavit the difficulty in anonymizing data, he did not state
that it cannot be done. Indeed, the existing statistical reports demonstrate
that it can be done. As already noted, the existing statistical reports contain
aggregated data taken from the SADRE database. The Supervising Judge expressed
no concerns about the confidentiality, reliability, or utility of those
reports. Moreover, he ordered that they be included in the Non-Claim Records
collection to be archived at the NCTR. During oral submissions, Canada conceded
that the existing statistical reports are examples of reports where data were
harvested from the SADRE database and presented at a very high-level, in a
way that does not reveal confidential information.
[78]
According to the October 11,
2019 affidavit of Roger Tetreault, the Executive Director of the Secretariat,
at para. 51, the existing statistical reports, which are derived from the same
database to be used to produce the proposed Static Reports, are produced in
accordance with statistical principles which involve the aggregation of data in
ways that allow for meaningful analysis without identifying individuals. The
goal is to ensure that the proposed Static Reports do not contain
personal information that could identify a
claimant, alleged perpetrator, or any other affected individual.
[79]
In her affidavit, Ms. Hansen
explained the various methodologies that were used
throughout the IAP process to ensure the confidentiality of claimants and other
participants in the IAP when producing statistical reports: s
tatistical
aggregation of data; data generalization; and data suppression.
[80]
The same statistical
principles and methodologies employed to ensure the confidentiality,
reliability, and utility of the existing statistical reports would presumably be
used in the creation of the proposed Static Reports. The proposed Static
Reports are statistical reports and, as Mr. Tetreault and Ms. Hansen indicate
in their respective affidavits, statistical reports are produced in accordance
with these statistical principles and methodologies.
[81]
Second, there was no
evidence in support of the Supervising Judges conclusion that the data in the
proposed Static Reports could or would be manipulated. Specifically, the
Supervising Judges reasons reference no evidence in relation to his statements
at para. 223 that the reliability and soundness of some models that he
reviewed was doubtful and that unreliable and contentious conclusions might be
drawn regarding acts of student-on-student abuse at particular schools.
[82]
Third, there was no evidence
that the production of the proposed Static Reports would impair the goals of
truth and reconciliation. On the contrary, as the Supervising Judge
acknowledged by the inclusion of the existing statistical reports in the
Non-Claim Records collection, the data within statistical reports are of
historical importance. Notably, these data no doubt hold important information
on how widespread the physical and sexual abuse was in the Indian Residential Schools.
If confidentiality and reliability are ensured, the proposed Static Reports will
be available to advance truth and reconciliation by presenting and preserving data
about the history, impact, and legacy of Canadas Indian Residential Schools.
In this way, the proposed Static Reports would further the objectives of the
IRSSA.
(v)
Conclusion
[83]
The Supervising Judges
concerns about the need to ensure the confidentiality, reliability, and
archival utility of the proposed Static Reports, and his concern regarding the
lack of sufficient evidence, are valid concerns. However, there was no evidence
before the Supervising Judge to substantiate those concerns.
[84]
Having identified his
concerns pertaining to confidentiality, reliability, and archival utility, the
Supervising Judge should have required further evidence be adduced.
[85]
In our view, one of the
principal obstacles faced by the parties and the Supervising Judge is that no
proposed Static Reports were generated. Only model proposed Static Reports were
provided to the Supervising Judge. Without generating the proposed Static
Reports in their final form, it is difficult if not impossible to determine
whether the proposed Static Reports should be produced and archived. Generation
of the proposed Static Reports will allow the parties to respond to the
Supervising Judges concerns, articulate any specific objections, and
substantiate those objections with reference to specific areas of issue in the
proposed Static Reports.
[86]
Accordingly, we order that
any proposed Static Reports be produced in final form by the Chief Adjudicator,
placed under seal, and submitted to the Supervising Judge prior to the
rehearing. If the Chief Adjudicator is unable to produce the proposed Static
Reports prior to the closure of the Secretariat, the parties may seek direction
from this court.
[87]
For clarity, the proposed
Static Reports could include those already produced in Exhibit K to Ms.
Hansens affidavit if those reports are, in fact, in final form. The
Supervising Judge will then determine how the proposed Static Reports will be
produced under seal, prior to the rehearing, to the parties and their experts
for the purposes of the rehearing. Production of these proposed Static Reports
under seal will allow the parties the opportunity to review the proposed Static
Reports in their final form, and adduce further evidence to properly address, or
make submissions concerning, the risk of disclosure of confidential IAP
information, their reliability, and their archival validity.
[88]
Until the Supervising Judge
has determined the issue of the proposed Static Reports, we order a stay of the
order and of the destruction of the SADRE database from which the proposed Static
Reports are intended to be produced.
(3)
The Non-
Claim
Records
[89]
The NCTR submits that the
Supervising Judge ignored Canadas duty under the IRSSA to remember and to
preserve records of enduring historical value and prioritized the privacy of
state actors over the rights of Indigenous peoples, and the public interest in
general, to the preservation of these records.
[90]
In our view, these
submissions have no merit and can be dealt with summarily.
[91]
While the NCTR is an
appropriate archive, it has no legal or contractual right to demand the
transfer of any documents. As Canada argues, the IRSSA gives the NCTR no such
authority. In fact, the IRSSA is otherwise silent regarding the disposition of
the Non-Claim Records.
[92]
Further, the Supervising
Judge expressly referenced and acknowledged, at paras. 127-31 of his reasons,
the historical and archival importance of the Non-Claim Records, including
those pertaining to the administration and workings of the Chief Adjudicator,
the IAP Oversight Committee, and the Secretariat. As he stated at para. 193 of
his reasons:
The Claim Records and the Non-Claim Records
are both important parts of creating a comprehensive historical record and of
fulfilling Canadas duty to compile a comprehensive and accessible record based
on human rights principles that, in turn, respond to a right to justice, a
personal and collective right to know, and the states duty to remember.
[93]
The Supervising Judge was
required to balance non-claimant individual rights to privacy, confidentiality,
and legal privilege with the goals enshrined in the IRSSA. In doing so, he
determined that the following categories of Non-Claim Records contained
confidential, sensitive, and privileged information. This determination was
rooted firmly in the unchallenged evidence of Mr. Tetreault and the archival
assessment of Edward Tompkins, appended to Mr. Tetreaults affidavit, which the
Supervising Judge accepted.
(a)
The Adjudicator Performance Records
[94]
The adjudicator performance
records were excluded from the Chief Adjudicators proposal. The Supervising
Judge agreed with the Chief Adjudicator that disclosure of the adjudicator
performance records would undermine deliberative secrecy and the finality of
the IAP by providing a basis for collateral attacks on adjudicators decisions
and re-litigation of matters settled in IAP proceedings. He also agreed that
the idea of disclosing the records of adjudicators personal employment
information was particularly inappropriate given the confidential nature of the
IAP whereby decisions are not available for review.
(b)
The Non-Public IAP Oversight Committee Records
[95]
The non-public IAP Oversight
Committee Records relate to the committees
in camera
sessions that arose
in confidence. These also include records not normally made public: agendas;
document packages; emails that may include sensitive personal information about
adjudicators performance; complaints against claimant counsel and others; and
information subject to solicitor-client privilege, litigation privilege, or
common interest privilege. As a result, the Supervising Judge concluded that
only publicly available records of the IAP Oversight Committee should be
included in the Non-Claim Records collection.
(c)
The
Complaint
and
Investigation Records
[96]
Complaint records include
information about complaints and investigations into persons acting for claimants
in connection with the IAP. They contain sensitive personal information and
allegations against individuals. Some of the information has not been verified,
corroborated, or tested. In some cases, the allegations were unfounded. A joint
direction was made by judges in both Ontario and British Columbia that none of
these documents should be published without prior written approval from the Court
Monitor. The Supervising Judge therefore determined that the complaint and
investigation records that had not been disclosed to the public should not be
included in the Non-Claim Records collection.
[97]
We see no basis to intervene
with the Supervising Judges decision to exclude these three categories of
records from the Non-Claim Records collection.
(d)
The General Prohibition
[98]
Finally, we see no error in
the Supervising Judges general prohibition against the inclusion of records in
the Non-Claim Records collection where there is any risk that these records
could reveal confidential and privileged information. In any event, it is open
to the parties and non-parties to clarify the meaning of this provision when
they re-attend to deal with the proposed Static Reports and Canadas RFD.
[99]
We therefore dismiss this
ground of appeal.
(e)
Archiving of the Non-Claim Records
[100]
Lastly, the NCTR submits that the Supervising
Judge erred in holding that Canada can archive these original confidential
records, while prohibiting Canada from transferring these records to the NCTR.
[101]
We disagree that the Supervising Judge erred.
[102]
The Supervising Judges clear prohibition is
against the public disclosure of confidential IAP information, as confirmed by
Fontaine
(SCC)
. This is not controversial but a well-settled prohibition that
applies equally to Canada and that the Supervising Judge was not permitted to
revisit. As the Supervising Judge indicated at para. 203 of his reasons, the
NCTR is free to build as comprehensive an archive as it may outside of the
strictures of the IRSSA, which strictures it must observe just as much as Canada
must observe those strictures.
[103]
However, the Supervising Judge did not prohibit
Canada from transferring any other Non-Claim Records to the NCTR. As he stated
at paras. 204 and 211 of his reasons, Canada is not or should not be against
archiving copies of Non-Claim Documents with the NCTR, and there is,
practically speaking, no meaningful dispute between the parties about the
appropriateness of the NCTR as an archive for copies of the Non-Claim Records.
As such, copies of appropriate Non-Claim Records, not originals, can be
delivered to the NCTR, following the approach used by Goudge J.A. in
Fontaine
v. Canada (Attorney General)
, 2013 ONSC 684, 114 O.R. (3d) 263, as
emphasized by the Supervising Judge at para. 202 of his reasons.
[104]
It is also important to note that, as set out at
paras. 194-204 of his reasons, the Supervising Judge envisaged and recommended
a consultative process with respect to the Non-Claim Records. The NCTR will
also have the opportunity to participate in the hearing of Canadas RFD and
proposal regarding the Non-Claim Records to voice its concerns.
[105]
We therefore dismiss this ground of appeal.
F.
Disposition
[106]
For these reasons, we allow the appeal in part,
set aside paras. 3(f) and 7 of the Supervising Judges January 20, 2020 order,
and remit the issue of the proposed Static Reports to the Supervising Judge for
a rehearing in accordance with these reasons.
[107]
We order the production of any further proposed
Static Reports to be in final form and placed under seal to the Supervising
Judge prior to the rehearing, in accordance with his directions.
[108]
We grant the NCTRs request for a stay of the
order to prevent the destruction of the SADRE database from which the proposed
Static Reports are to be produced, until such time as the Supervising Judge
disposes of this issue.
[109]
We otherwise dismiss the appeal as it pertains
to the Non-Claim Records.
[110]
If any party is seeking costs and the parties
cannot agree on the disposition of costs, they may make brief written
submissions of no more than two pages, plus a costs outline, within seven days
of the release of these reasons.
Released: April 1, 2021 L.R.
L.B. Roberts J.A.
M. Jamal J.A.
J.A. Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Foster v. West, 2021 ONCA 263
DATE: 20210423
DOCKET: M52387 (C68225)
Fairburn A.C.J.O. (Motion Judge)
BETWEEN
Rebecca Mae (Swirsky) Foster
Applicant (Appellant)
and
James John West
Respondent (Respondent)
Ken Nathens and Denniel Duong, for the appellant
Mackenzie Dean and Kirsten Hughes, for
the respondent
Jane Stewart and Mary Birdsell, for the
proposed intervener Justice for Children and Youth
Heard: April 22, 2021 by video conference
REASONS FOR DECISION
[1]
This is a motion for leave to intervene as a
friend of the court, pursuant to r. 13.02 of the
Rules of Civil Procedure
,
R.R.O. 1990, Reg. 194, in an appeal from an order of McLaren J., dated February
26, 2020, resolving a long-running, high conflict custody and access matter
involving two children of a former marriage. The two children are now 11 and 15
years of age.
[2]
The children were not represented by the Office
of the Childrens Lawyer at trial. Even so, the appellant mother presented
evidence from various professionals purporting to express the views and
preferences of the children. In contrast, the respondent father presented
evidence of various professionals who focussed upon the impact of conflict and
alienation on the children.
[3]
The trial judge found that the childrens views
and preferences [were] not helpful in arriving at the decision. The trial
judge did not put any weight on the views and preferences because she
considered them to be not reliable. Ultimately, the trial judge ordered equal
time sharing between the parties and custody (decision-making responsibility
under the recent March 1, 2021 amendments to the
Divorce Act
, R.S.C.
1985, c. 3 (2nd Supp.), s. 2(1)) to the respondent.
[4]
Justice for Children and Youth (JFCY) seeks
leave to intervene as a friend of the court in the appeal that is currently
listed to be heard on May 7, 2021.
[5]
JFCY is a specialty legal aid clinic that has
been in existence for almost 40 years. Its mandate includes the promotion and
protection of the rights of children. JFCY has significant expertise providing
direct legal representation to vulnerable youth, including in the area of
family law. JFCY was also involved in assisting with submissions made in
relation to the recent amendments to the
Divorce Act
, including those
that involve the determination of the best interests of the child: see
Divorce
Act
, s. 16. This court and others have benefited from JFCYs expertise as
an intervener in the past.
[6]
If granted leave to intervene, JFCY commits to
refrain from taking a position on the outcome of the appeal, instead focussing
its arguments upon the rights and interests of children at large. In broad
strokes, JFCY proposes to address: (1) the recent amendments to the
Divorce
Act
and how those amendments affirm and clarify existing components of
the best interests of the child analysis; (2) the need to ensure that children
have an opportunity to have their views and preferences heard by the court, which
includes children having an independent voice in family law proceedings,
appropriate to their age, stage of development, and maturity; (3) the fact
that expressions of alignment and allegations of alienation are an insufficient
basis upon which to dispense with childrens rights to be heard and to have
their own preferences and views expressed and meaningfully considered; and (4)
the need to keep the best interests of the child at the centre of all
decision-making regarding children, not just decisions related to parenting
time and contact. As it relates to the first argument, JFCY highlights that
this is the first time that this court will be called upon to interpret the
amendments to the
Divorce Act
.
[7]
While the appellant consents to the intervention,
the respondent is opposed to JFCYs motion to intervene.
[8]
The appellant filed no materials on this motion
and made limited oral submissions in favour of intervention, noting that JFCY
has an expertise that it can bring to the appeal that the appellant is unable
to advance. While the appellant argues that the interpretation of the new
provisions within the
Divorce Act
will be generally important on
appeal, in the sense that they inform how the trial judge should have
approached the consideration of the childrens best interests, the appellant
acknowledges that the amendments were not operative at the time of the trial
judges decision and, therefore, the trial judge did not err in failing to apply
the amendments.
[9]
The respondent argues that JFCY should be denied
intervener status for a number of reasons, including that: (1) this is an
entirely private dispute that should require a more onerous and stringent
standard before permitting an intervention; (2) the arguments of the proposed intervener
are not unique and there would be no need for the input of the proposed intervener,
as JFCY will be unable to make a useful contribution in this fact-specific
appeal; and (3) the lateness of this motion to intervene, being brought so
close to the hearing date, will prejudice the respondent, in the sense that it
will not give the respondent sufficient time to respond.
[10]
The test for intervention is well-established
and needs no amplification. As Dubin C.J.O. held in
Peel (Regional
Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd.
(1990),
74 O.R. (2d) 164 (C.A.), at p. 167:
Although much
has been written as to the proper matters to be considered in determining
whether an application for intervention should be granted, in the end, in my
opinion, the matters to be considered are the nature of the case, the issues
which arise and the likelihood of the applicant being able to make a useful
contribution to the resolution of the appeal without causing injustice to the
immediate parties.
[11]
I start with the proposition that this is a
private dispute. Where intervention is sought in a private dispute of this
nature, as opposed to one involving the state, the standard to be met by the
proposed intervener is more onerous or more stringently applied:
Jones v.
Tsige
(2011), 106 O.R. (3d) 721 (C.A.), at para. 23.
[12]
Looking at the matter through that lens, I note the
appellant acknowledged in oral submissions that this court will not be asked to
apply the amendments to the
Divorce Act
in this case, as the
trial judge did not err in failing to apply the amendments. Rather, the appellant
argues that the interpretation of the
Divorce Act
as it existed at the
time that the trial judge gave her decision should be informed by the amendments
regarding the best interests of the child. Therefore, in my view, this appeal
does not bring the interpretation and application of the amendments of the
Divorce
Act
as squarely into focus as the proposed intervener suggests.
[13]
Further, I note that the appellant is
represented by senior counsel and, to the extent that the amendments to the
Divorce
Act
might
shed some light on the trial judges approach to the best
interests of the children in this case, I have no doubt that the appellant can
articulate that position without the assistance of an intervener.
[14]
As for the balance of the issues that JFCY
wishes to raise, none of them are novel, in the sense that this court will be
called upon to weigh in on something of first impression. While I have no doubt
that JFCY could make a useful contribution on these issues, this would be the
case on many similar appeals heard by this court, including those arising from
public disputes.
[15]
Regardless, what really tips the balance against
the intervention in this case is the timing of the application and the
prejudice that will arise to the respondent if intervener status to JFCY is
granted. The order appealed from is dated February 26, 2020:
Swirsky v.
West
, 2020 ONSC 1213. The appellants notice of appeal was filed in this
court on March 25, 2020. JFCY first put the respondent on notice of their
intention to seek leave to intervene on March 26, 2021. The earliest motion
date available to hear this matter was April 22, 2021. At the same time that
the matter was set down for the April 22, 2021 hearing, the court communicated
with the proposed intervener and parties about a filing schedule, including
that the proposed intervener file their materials no later than April 12,
2021.
[16]
At the hearing of the motion yesterday, April
22, 2021, inquiries were made as to whether the proposed intervener, if granted
intervener status, could file their factum by today, April 23, 2021, two weeks
before the hearing of the appeal. That was not possible. The earliest date
possible was said to be April 28, 2021. I note that the court has since
received a letter that the proposed intervener could file a factum one day
earlier, that is by April 27, 2021. Assuming this earlier filing date were to
be granted, that would still only leave seven court days before the hearing of
the appeal.
[17]
While the appellant takes no issue with the
proposed filing date, the respondent argues that they will be prejudiced by
this late filing. Counsel for the respondent have obligations over the week of
April 26, 2021, which I accept to be the case, that would prevent them from
considering the new factum until the week of May 3, 2021. This would be the
same week of the scheduled appeal. The respondent would need a proper
opportunity to reply to JFCYs factum. Even the appellant said that they may
wish to reply. In any event, for the respondent, working toward a reply could
not commence until the Monday of the week of the hearing of the Friday appeal. Furthermore,
in a letter sent to the court following oral submissions, counsel for the
respondent reiterated their inability to respond to JFCYs factum if it were to
be filed on April 27, 2021.
[18]
In my view, the respondent has a very strong
position when it comes to prejudice. This is not to mention that an
intervention of this nature is meant to assist the court, yet that assistance
can be significantly diminished when the materials are being filed at the last
minute.
[19]
Although the proposed intervener was under no
obligation to do so, it is often the case that when a motion to intervene is
brought, and especially when it is brought on such short notice, a draft
proposed factum is provided with that application. While the proposed
intervener provided a very high-level overview of their main arguments,
bringing a draft proposed factum would have permitted the parties to know the
proposed interveners precise position and would have allowed for an immediate
filing should the motion be granted. The date of the hearing of the appeal has
been known for some time, certainly prior to JFCYs first notice to counsel of
their wish to seek intervener status.
[20]
None of these comments should be taken as
criticisms of JFCY or as a failure to appreciate the very important work done
by the organization. I do not question JFCYs expertise, which has been of
assistance to this court in the past. Even so, when I balance the nature of
this appeal against the nature of the contribution that could be made to the
issues in dispute, and the nature of the prejudice that could arise from
allowing perfection of such a late intervention, I conclude that the motion
must be dismissed.
[21]
JFCY is a publicly funded, public interest
organization. This was a brief motion involving the application of well-known
principles of law regarding an intervention pursuant to r. 13.02 of the
Rules
of Civil Procedure
. The motion was well motivated. Therefore, costs will
not be awarded to the respondent.
Fairburn A.C.J.O.
|
COURT OF APPEAL FOR ONTARIO
CITATION:
Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2021 ONCA 201
DATE: 20210401
DOCKET: C67533 and
C67557
Gillese, Lauwers and
Benotto JJ.A.
DOCKET: C67533
BETWEEN
Fram Elgin Mills 90
Inc.
(formerly Frambordeaux
Developments Inc.)
Plaintiff
and
Romandale Farms
Limited
, Jeffrey Kerbel,
2001251 Ontario Inc.
and First Elgin Developments Inc.
Defendants
(
Respondent
/Appellants)
AND BETWEEN
Fram 405 Construction
Ltd. and Bordeaux Homes Inc.
Plaintiffs
and
Romandale Farms
Limited
, 2001251 Ontario Inc., First Elgin
Developments Inc. and
Jeffrey Kerbel
Defendants
(
Respondent
/Appellants)
AND BETWEEN
Romandale Farms Limited
Plaintiff (Respondent)
and
2001251 Ontario Inc.
Defendant (Appellant)
AND BETWEEN
2001251 Ontario Inc.
Plaintiff (Appellant)
and
Romandale Farms Limited
Defendant (Respondent)
DOCKET: C67557
BETWEEN
Fram Elgin Mills 90
Inc.
(formerly Frambordeaux
Developments Inc.)
Plaintiff (Appellant)
and
Romandale Farms Limited
,
Jeffrey Kerbel,
2001251 Ontario Inc.
and First Elgin Developments Inc.
Defendants (
Respondent
)
AND BETWEEN
Fram 405
Construction Ltd.
and
Bordeaux Homes Inc.
Plaintiffs (
Appellant
)
and
Romandale Farms
Limited
, 2001251 Ontario Inc.,
First Elgin
Developments Inc. and Jeffrey Kerbel
Defendants (
Respondent
)
AND BETWEEN
Romandale Farms Limited
Plaintiff
and
2001251 Ontario Inc.
Defendant
AND BETWEEN
2001251 Ontario Inc.
Plaintiff
and
Romandale Farms Limited
Defendant
Chris G. Paliare and Tina H. Lie, for the appellants
Jeffrey Kerbel, 2001251 Ontario Inc., and First Elgin Developments Inc.
(C67533)
Sheila R. Block, Jeremy Opolsky, Sara J. Erskine, and
Benjamin Lerer for the appellants Fram Elgin Mills 90 Inc. (formerly
Frambordeaux Developments Inc.) and Fram 405 Construction Inc. (C67557)
Sarit E. Batner, Kosta Kalogiros, and Avi Bourassa, for
the respondent Romandale Farms Limited (C67533 and C67557)
Heard: September 8 and 9, 2020, by video conference
On appeal from the judgment of
Justice Nancy J. Spies, of the Superior Court of Justice, dated September 13,
2019, with reasons reported at 2019 ONSC 5322, and from the costs order, dated
April 2, 2020.
Table of Contents
Majority
Reasons
:
1
I.
Overview
..
1
II.
THE PARTIES
.
6
III.
KEY DATES AND AGREEMENTS
.
7
IV.
The Trial REASONS
.
18
V.
The Issues ON THE
APPEALS
.
29
A.
Issues
Raised by Fram
..
29
B.
Issues
Raised by Kerbel
30
VI.
ROMANDALE ALLEGES
THRESHOLD FLAWS
.
30
A.
The First
Alleged Threshold Flaw
.
31
B.
The Second
Alleged Threshold Flaw
.
34
VII.
analysis of frams issues
.
35
Issue #1: Did the trial
judge err in failing to find that Romandale was estopped, based on estoppel by
representation or by convention, from claiming that the Settlement Agreement
breached the 2005 August Agreement?
A.
The Parties
Positions
.
35
B.
Estoppel by
Representation
.
44
(1) Governing Legal Principles
(2) Application of the Law
C.
Estoppel by
Convention
.
(1) Governing Legal Principles
(2) Application
of the Law
(a) Assumption Shared and Communicated
(i) The Settlement Agreement and Drafts
Leading to It
(ii) Letters between Counsel
(iii) Pleadings and Evidence at Trial
(b) Reliance
(c) Detriment
(
d) Romandales Overriding Submission on Estoppel by Convention
(e) Conclusion on Estoppel by Convention
Issue #2: Did
the trial judge err in determining that, by entering into the Settlement
Agreement, Kerbel breached the 2005 August Agreement?
VIII.
analysis of KERBELS issues
.
74
Issue #3: Did the trial
judge err in concluding that Kerbel repudiated the 2005 August Agreement?
Issue #4: Did the trial
judge err in concluding that the 2005 August Agreement was frustrated?
A.
The Parties
Positions
.
75
B.
Governing
Legal Principles
.
79
C.
Application
of the Law
.
80
Issue #5: Did
the trial judge err in concluding that the 2005 August Agreement was void for
mistake?
A.
The Parties
Positions
.
85
B.
Governing
Legal Principles
.
86
C.
Application
of the Law
.
87
Issue #6: Did
the trial judge err in finding Kerbels claim was limitation-barred?
A.
The Parties
Positions
.
89
B.
Governing
Legal Principles
.
92
C.
Application
of the Law
.
93
Issue #7: Did
the trial judge err in concluding that Kerbel was not entitled to specific
performance of the 2005 August Agreement?
A.
The Parties
Positions
.
99
B.
Governing
Legal Principles
.
102
C.
Application
of the Law
.
103
IX.
FRAMS CLAIM FOR DAMAGES
.
108
X.
The Costs Appeal
.
109
XI.
A COMMENT ON THE
CONCURRING REASONS
.
111
XII.
Disposition
.
111
SCHEDULE A: CHRONOLOGY OF EVENTS
.
113
Schedule B: KEY Contractual
Provisions
.
127
1. Key Provisions in
the COAs
.
127
2. The 2005 August
Agreement
131
3. The Settlement
Agreement
138
Concurring
Reasons by Lauwers J.A.:
149
A.
OVERVIEW
..
149
B.
THE CONTRACTUAL CONTEXT
.
149
C.
ANALYSIS
.
151
(1).. Any Estoppel Ceased to Have
Practical Effect When Fram Consented to the Sale of Romandales Remaining
Interest on August 22, 2018
.
151
(2).. Estoppel by Convention Is Not Made
Out
153
(3).. Kerbel Did Not Breach the 2005
August Agreement by Entering Into the Settlement
Agreement with Fram
..
167
(4).. By Entering Into the Settlement
Agreement, Kerbel Did Not Repudiate Its Obligations Under the 2005 August
Agreement.
181
(5).. Kerbel Is Entitled to Specific
Performance of the 2005 August Agreement
183
Gillese
J.A.:
[1]
These appeals involve competing claims to
undeveloped lands in Markham, Ontario. They illustrate the perils associated
with a landowner selling interests in the land to more than one party in more
than one transaction.
[2]
The appeals raise many legal issues, one of
which is the little-known equitable doctrine of estoppel by convention. In
Canada, this doctrine finds its roots in
Ryan v. Moore
,
2005 SCC 38, [2005] 2 S.C.R. 53. As you will see, estoppel by
convention plays a critical role in the resolution of these appeals.
I.
Overview
[3]
Romandale Farms Limited (
Romandale
) owned two neighbouring farms in Markham
[1]
known as the
McGrisken Farm and the Snider Farm (the
Lands
). The
Lands comprise approximately 275 acres of undeveloped land in the Elgin Mills
Road and Warden Avenue area of Markham.
[4]
Initially, Romandale was the sole owner of the
Lands. However, in 2003 and 2005, Romandale entered into agreements relating to
the Lands, as a result of which much litigation has ensued.
[5]
In 2003, Romandale sold an undivided 5% interest in the
Lands to
Fram
.
[2]
Romandale and Fram planned to obtain the necessary planning
approval for the Lands so that they could be developed for residential use. It
was their intention that Fram would build homes on the Lands, sell them, and
share the profits with Romandale. Romandale and Fram entered into a number of
agreements relating to the Lands, including co-owners agreements (the
COAs
). Under the COAs, subject to limited exceptions, neither party
could dispose of its interest in the Lands. The COAs also contained a buy-sell
mechanism that was generally available only after secondary planning approval
(
SPA
)
[3]
had been obtained
for the Lands. SPA is required before the Lands can be developed.
[6]
In August 2005, Romandale entered into an
agreement with
Kerbel
[4]
(the
2005 August Agreement
) consisting of several transactions respecting properties in
Markham. One of the transactions was the sale of Romandales 95% interest in
the Lands to Kerbel. This was to be achieved in two steps. In the first step,
Romandale sold Kerbel 5% of its interest in the Lands.
[5]
In the second step,
Romandale agreed to sell its remaining interest in the Lands to Kerbel, conditional
on either Frams consent to the sale or Romandales exercise of the buy-sell
provisions in the COAs. All of the transactions under the 2005 August Agreement
have been completed with the exception of the sale of Romandales remaining
interest in the Lands to Kerbel.
[6]
[7]
Whether Romandale is bound by the 2005 August
Agreement and its obligations respecting the sale of its remaining interest
in the Lands is the driving force behind these appeals.
[8]
In 2007, Fram sued Romandale and Kerbel,
claiming that the 2005 August Agreement was an impermissible disposition of
Romandales interest in the Lands under the COAs (the
2007
Action
).
[9]
In 2008, Fram and the development manager for
the Lands sued Romandale and Kerbel. They alleged that the 2005 August Agreement
amounted to a breach of the construction management agreements between Fram and
Romandale respecting the Lands (the
2008 Action
).
[10]
In 2009, government decisions significantly
changed the timelines and development prospects for the Lands. Development of
the Snider Farm was delayed until 2021-2031 and of the McGrisken Farm until
2031-2051. In addition, the Snider Farm was newly earmarked for employment use,
which would prevent residential development.
[11]
The 2007 and 2008 Actions were scheduled for trial
in the fall of 2010. In an attempt to settle them before trial, Fram, Kerbel
and Romandale attended a judicial mediation in September 2010. At the
mediation, the three parties reached an agreement in principle. That agreement
included a statement of the parties intention that the purchase and sale of
Romandales remaining interest in the Lands to Kerbel would take place after
the Lands obtained SPA (the
Statement
).
Romandale later withdrew from the settlement agreement. However, in December
2010, Fram and Kerbel settled the matters between them and entered into a
settlement agreement (the
Settlement Agreement
). It is important to note that para. 5 of the Settlement Agreement
contains the Statement.
[12]
In 2014, Romandale sued Kerbel claiming Kerbel
breached the 2005 August Agreement by taking steps to reduce the amount of
developable acreage on the Lands (the
2014 Action
).
[13]
In 2015, Romandale changed legal counsel. For
the first time, it took the position that, because of the Statement in the
Settlement Agreement, Kerbel had repudiated the 2005 August Agreement.
Romandale also announced that it considered itself no longer bound by the 2005
August Agreement. Accordingly, in 2016, Kerbel sued Romandale to compel it to
perform its remaining obligation under the 2005 August Agreement (the
2016
Action
).
[14]
The four actions involving the Lands were tried
together in the fall of 2018.
[15]
By judgment dated September 13, 2019 (the
Judgment
), all four actions were resolved in favour of Romandale. The trial
judges key determination was that Kerbel repudiated the 2005 August Agreement
when it entered into the Settlement Agreement because para. 5 of the Settlement
Agreement stated the parties intention that the purchase and sale of the
Remaining Interest would take place after SPA. The trial judge found that
Romandale had accepted the repudiation and concluded that the 2005 August
Agreement was at an end. Accordingly, Romandale was excused from performing its
remaining obligations under the 2005 August Agreement.
[16]
Both Fram and Kerbel (collectively, the
Appellants
) appeal to this court. Their appeals were consolidated. The
Appellants ask this court to, among other things, declare that the 2005 August
Agreement is valid and enforceable, and make an order for specific performance
requiring Romandale to perform its obligations under the 2005 August Agreement.
[17]
For the reasons that follow, I would allow the
appeals and make the requested order for specific performance.
II.
THE PARTIES
[18]
There are two sets of appellants in this appeal.
[19]
The Fram appellants consist of Fram Elgin Mills
90 Inc. and Fram 405 Construction Ltd. Fram Elgin Mills 90 Inc. is part of a
group of companies known as the Fram Building Group. It was incorporated for
the purpose of developing the Lands. Before 2010, it was named Frambordeaux
Developments Inc. Frank Giannone is the president of Fram Elgin Mills 90 Inc.
In deciding the issues in these appeals, it generally does not matter whether
the Fram appellants were involved collectively or individually. For ease of
reference, I use Fram when I refer to one or more of the Fram appellants.
However, when the distinction matters, I use the individual partys name.
[20]
The Kerbel appellants consist of 2001251 Ontario
Inc., First Elgin Developments Inc., and Jeffrey Kerbel. They are land
developers and builders. Mr. Kerbel is the principal of the Kerbel group of
companies. Again, for ease of reference, I use Kerbel when I refer to one or
more of the Kerbel appellants but, when the distinction matters, I use the
individual partys name.
[21]
Romandale is a corporation that has long owned
properties in the Markham area, including the Lands. Helen Roman-Barber has
been the principal of Romandale since 1988. The Roman family owns and operates
Romandale. It also owned the Triple R Lands, an adjoining property to the
Lands.
III.
KEY DATES AND AGREEMENTS
[22]
Below you will find a summary of the key dates
and most significant agreements. A more detailed chronology of events is
contained in Schedule A to these reasons. In the analysis of the various
issues, I rely on the detailed recitation of facts set out in that chronology.
This section and the chronology in Schedule A are based on the factual
findings in the trial judges reasons (the
Reasons
).
[23]
In Schedule B to these reasons, you will find
the text of: the key contractual provisions in the COAs between Romandale and
Fram; the 2005 August Agreement; and, the Settlement Agreement.
2003
[24]
Romandale sells Fram an undivided 5% interest in the Lands and the
parties enter into two identical sets of agreements, one set for each farm
property. Each set consisted of three documents: the
COA
, which sets out the terms and conditions on which Romandale and
Fram, as co-owners, hold title to the Lands; the Construction Management
Agreement (
CMA
), under which Fram
was to construct and sell residential units on the Lands, once the Lands
achieved
SPA
; and the Development Management Agreement
(
DMA
), which governed the
development process for the Lands. Bordeaux Developments (Ontario) Inc. (
Bordeaux
) was also a party to the DMAs and, under its terms, Bordeaux was
appointed the development manager responsible for the development requirements
of the Lands.
[25]
Of these agreements, the COAs are the most significant for these
appeals. The buy-sell provision in s. 5.07 of the COAs permits a co-owner,
under certain conditions, to tender on the other an offer to sell its entire
interest in the Lands and, at the same time, an offer to buy the others entire
interest in the Lands on the same terms as the offer to sell. The non-tendering
party must choose whether to buy out the tendering party or sell its interest.
The buy-sell is available once SPA is obtained for the Lands or the DMAs are
terminated.
[26]
Section 6.02 of the COAs provides that if an event of default occurs
and is continuing, the non-defaulting party has the right to, among other
things, bring proceedings for specific performance and/or buy the defaulting
partys interest in the Lands at 95% of fair market value.
[27]
Development of the Lands depended on obtaining planning approval,
including appropriate amendments to the official plan. These changes are made
to the secondary plan, which provides more detailed policies for the
development of a specific area. The process of obtaining development approval
for specific lands is known as SPA. This is reflected in s. 5.07(a) of the COAs
which defines SPA as an amendment of the official plan of the Town of Markham applicable
to the Lands, obtained in accordance with the Planning Act (Ontario).
[28]
When Romandale and Fram entered into these agreements in 2003,
Romandale had not yet started the SPA process.
2004
[29]
With Frams consent, Romandale borrows $6 million from the Bank of
Nova Scotia (
BNS
), secured by a
mortgage on the Lands.
2005
[30]
With Frams consent, Romandale terminates the DMAs with Bordeaux.
[7]
The ongoing work to
move the Lands through SPA continues through a new agreement between Fram and
Romandale to co-manage development of the Lands.
[31]
BNS calls its $6 million mortgage. Romandale needs financing to
repay the BNS loan by August 30, 2005. It also needs cash to make distributions
to the Roman family. The solution is the 2005 August Agreement, which Romandale
and Kerbel enter into on August 29, 2005.
[32]
In the 2005 August Agreement, Kerbel agrees to pay off the BNS
mortgage and extend the same amount as a new loan to Romandale under the same
security and Romandale agrees to: (1) sell Kerbel its 95% interest in the Lands
for a fixed price of $160,000 per acre; (2) on behalf of the Roman family, sell
Kerbel the adjoining Triple R Lands for $175,000 per acre, subject to a
purchase price adjustment for non-developable acreage; and (3) grant Kerbel a
right of second refusal over other lands, called the Elgin South Property. The
sale of Romandales interest in the Lands is to occur in two steps:
a. Step 1:
an initial sale of 5% of Romandales interest in the Lands; and
b. Step 2:
the sale of Romandales remaining interest in the Lands (
Remaining Interest
),
conditional on:
i. Romandale
buying out Frams interest in the Lands pursuant to the buy-sell provisions in
the COAs; or
ii. Fram
consenting to the transaction.
[33]
I refer to the second step of the sale of
Romandales interest in the Lands to Kerbel as the
Conditional
Provision
.
[34]
All the transactions in the 2005 August
Agreement have been completed, except the sale of Romandales Remaining
Interest to Kerbel under the Conditional Provision. Romandale received over $16
million in immediate value from Kerbel under the 2005 August Agreement: $6
million in new mortgage financing; $2,128,000 in cash for its 5% interest in
the Lands; and, $8,575,000 for the Triple R Lands.
[35]
Paragraph 5 of the 2005 August Agreement
empowers Kerbel to cause Romandale to trigger the buy-sell provision in the
COAs following SPA being obtained for the Lands. Paragraph 5 also gives Kerbel
exclusive control over the development of the Lands.
[36]
Ms. Roman-Barber tells Fram she reached an
agreement with Kerbel under which she sold the Triple R Lands, assigned the BNS
mortgage, and sold a 5% interest in the Lands. She does not disclose that
Romandale also committed to sell its entire interest in the Lands through the
Conditional Provision.
2007
[37]
Despite repeated requests that Romandale provide
it with a copy of the 2005 August Agreement, it is only in April 2007 that
Frams counsel is permitted to read a copy.
[38]
Fram starts the 2007 Action against Romandale
and Kerbel, alleging that the 2005 August Agreement was a prohibited
disposition under the COAs. It also seeks an injunction restraining Romandale
from any further sale of its interest in the Lands. Further, it gives notice it
will seek to exercise its remedy under the COAs to purchase Romandales
interest in the Lands at 95% of fair market value.
[39]
The injunction is ordered.
2008
[40]
Fram and Bordeaux start the 2008 Action against
Romandale and Kerbel based on alleged breaches of the CMAs. Under the CMAs,
Fram has the right to construct residences on the Lands once SPA is obtained.
[41]
Kerbel, as owner of the Triple R Lands, together
with
neighbouring
landowners, form the North Markham
Landowners Group (
NMLG
) with the
goal of engaging collectively with the relevant authorities about the
development of their respective properties.
[42]
From 2008 onward, the NMLG retains consultants
and commissions studies required for the development process and engages in
that process with Markham. NMLGs development costs have been in the hundred of
thousands of dollars. Until 2011, Kerbel reimbursed Romandale for all costs associated
with the Lands, including Romandales share of the NMLG cash calls that were
made to fund the NMLG ongoing development activities.
2009
[43]
Government decisions change the anticipated
development timeline for the Lands. As a result, development of the Snider Farm
is delayed until 2021-2031 and of the McGrisken Farm until 2031-2051. In
addition, the Snider Farm is proposed for employment use, which would prevent
residential development.
[44]
At Kerbels insistence, Romandale joins the
NMLG.
2010
[45]
In the hope of resolving the 2007 and 2008 Actions before trial,
Romandale, Fram, and Kerbel engage in settlement discussions at a judicial
mediation in September 2010. The three parties reach an agreement in principle
on the main settlement terms. One of the agreed settlement terms is that the
sale of Romandales Remaining Interest to Kerbel will occur after the Lands
achieve SPA. The following day, counsel for Romandale writes to counsel for
Fram and Kerbel and outlines the agreed points of settlement, including that
sale of its Remaining Interest will occur when SPA has been obtained for the
Lands.
[46]
Romandale withdraws from the settlement in October but Fram and
Kerbel move forward and enter into the Settlement Agreement in December 2010.
[47]
The Settlement Agreement provides that if
Romandale does not concur in it and the 2007 and 2008 Actions proceed to trial:
(1)
Fram would discontinue its claims against Kerbel, not seek a declaration
that the 2005 August Agreement is void, and restrict its claims against
Romandale to damages;
(2)
Kerbel would provide Fram with an option to purchase a 50% interest in
Romandales Remaining Interest, on the same terms and conditions as Kerbel
might purchase Romandales Remaining Interest;
(3)
If Fram exercises the option, it and Kerbel would enter into a joint
venture agreement to develop the Lands with (effectively) an equal sharing of
costs;
(4)
Fram does not consent to Romandales sale of its Remaining Interest in
the Lands to Kerbel; and
(5)
Para. 5 of the Settlement Agreement includes the statement of Fram and
Kerbels intention that the purchase and sale of Romandales Remaining
Interest in the Lands pursuant to these Minutes of Settlement will take place
after [SPA] for the Lands has been obtained.
2011
[48]
By letter dated January 28, 2011, counsel for
Romandale advises Fram and Kerbel that Romandale objects to Kerbels land
planner telling the NMLG that there was a change in the ownership of the Lands.
The letter reiterates that Romandale conditionally sold the Lands to Kerbel
under the 2005 August Agreement and [t]he condition could only be satisfied by
either a) secondary plan approval (which has not been achieved); b) or the
consent of [Fram] to the transaction.
[49]
Romandale represents the Lands at the NMLG and
instructs its planning consultant (and others working for it) to not share
information with Kerbels planner.
[50]
Kerbels counsel sends a letter, dated February
17, 2011, to Romandales counsel complaining that Ms. Roman-Barbers conduct is
a breach of para. 5 of the 2005 August Agreement in which Romandale ceded
control of the development process for the Lands to Kerbel. It demands that Romandale
confirm to the NMLG that Kerbels planning consultant has the sole authority to
represent the Lands and threatens to commence proceedings if Ms. Roman-Barber
does not comply with para. 5 of the 2005 August Agreement.
[51]
Romandales counsel responds by letter, dated
February 25, 2011, asserting that its client had at all times acted in
accordance with the 2005 August Agreement and that it is considering whether
the Settlement Agreement was a breach of the 2005 August Agreement.
2013
[52]
Meanwhile, Romandale and Kerbel are involved in
litigation over the purchase price of the Triple R Lands (the
Triple
R Lands Litigation
), one of the transactions in the
2005 August Agreement. In February 2013, Romandale and Kerbel enter into a
partial settlement in which they agree that if Kerbel is found to be entitled
to a price adjustment, the determination of the non-developable lands is to be
done pursuant to the terms of the [2005 August Agreement] and the Amendment.
[8]
[53]
Romandale leaves the NMLG.
2014
[54]
Romandale starts the 2014 Action against Kerbel,
alleging that Kerbel fundamentally breached the 2005 August Agreement by taking
steps to reduce the amount of developable acreage on the Lands. It seeks a
declaration that the 2005 August Agreement is terminated or, alternatively,
damages.
[55]
This court releases its decision in the Triple R
Lands Litigation, finding in favour of Kerbel. It declares that Kerbel is
entitled to a purchase price reduction in accordance with the 2005 August
Agreement.
2015
[56]
Romandale retains new counsel and takes a new
position: the buy-sell provisions in the COAs could be performed
before
SPA because the DMAs with
Bordeaux had been terminated in February 2005.
[57]
Romandale obtains leave to amend its pleadings
in the 2007 Action to allege, for the first time, that Kerbel repudiated the
2005 August Agreement by entering into the Settlement Agreement because it
contained para. 5 which provides that the purchase and sale of Romandales
Remaining Interest in the Lands would occur after SPA. Also for the first time,
in its amended pleading, Romandale asserts that it will not perform the 2005
August Agreement in any event.
2016
[58]
Kerbel starts the 2016 Action against Romandale,
seeking specific performance of the 2005 August Agreement.
2017
[59]
Kerbel files a crossclaim in the 2007 Action
seeking specific performance of the 2005 August Agreement and an order
directing Romandale to comply with its terms.
[60]
Romandale files a defence to Kerbels crossclaim
in the 2007 Action and newly alleges that the 2005 August Agreement offends the
rule against perpetuities.
2018
[61]
Shortly before the trial of the four actions
begins in October 2018, Fram and Kerbel amend the Settlement Agreement to allow
the sale of Romandales Remaining Interest to close immediately, rather than
after SPA, and Fram delivers its consent to that sale.
[62]
When the trial begins, SPA has not been obtained
for the Lands.
IV.
The Trial REASONS
[63]
As the trial reasons are over 100 single-spaced
pages in length, I will not attempt to summarize them here. Instead, I set out
below a summary of the disposition of each of the four actions. Thereafter, I
summarize the Reasons on the issues raised in these appeals.
Disposition of the Four Actions
[64]
The trial judge concluded that Romandale did not
breach the COAs when it entered into the 2005 August Agreement and dismissed
the 2007 Action accordingly. In reaching this conclusion, the trial judge held
that: (1) the Conditional Provision was not a Disposition in breach of s.
5.03 of the COAs; (2) Romandale was not obliged to give Fram notice and a copy
of the 2005 August Agreement so, if it did fail to disclose the same (which
Romandale disputed), the failure was not a breach of the COAs; and, (3)
Romandale did not breach the COAs by ceding control over the development of the
Lands to Kerbel under the 2005 August Agreement (Reasons, at paras. 187-91,
204-05).
[65]
The trial judge concluded that Romandales entry
into the 2005 August Agreement did not amount to a breach of the CMAs because
Romandale continued to own its Remaining Interest in the Lands and for all
practical purposes continued to control the development of the Lands in the
same way as before (Reasons, at para. 226). Accordingly, she dismissed the 2008
Action.
[66]
With respect to the 2014 Action, the trial judge
declared that the 2005 August Agreement was at an end and terminated and she
dismissed Kerbels crossclaim seeking damages against Romandale. These orders
flowed from the trial judges determination that Kerbel repudiated the 2005
August Agreement by entering into the Settlement Agreement (Reasons, at paras.
346, 442).
[67]
Having found that Kerbel had repudiated the 2005
August Agreement and that Romandale accepted the repudiation, the trial judge
dismissed Kerbels 2016 Action for specific performance of the 2005 August
Agreement (Reasons, at paras. 346, 442).
Estoppel (Reasons, at paras. 359-72)
[68]
At trial, both estoppel by representation and
estoppel by convention were argued. The trial judge addressed estoppel by
representation in the Reasons. However, she did not address estoppel by
convention.
[69]
Quoting from para. 29 of
Scotsburn
Co-operative Services Ltd. v. W.T. Goodwin Ltd.
, [1985] 1
S.C.R. 54, the trial judge set out the following legal principles for estoppel
by representation, at para. 359:
The essence of estoppel is
representation by words or conduct
which induces detrimental reliance
. A
more exhaustive definition is offered in Spencer Bower and Turner,
The Law
Relating to Estoppel by Representation
(3rd ed., 1977), at p. 4:
where one person (the
representor) has made a representation to another person (the representee)
in words or by acts or conduct, or (being under a duty to the representee to
speak or act) by silence or inaction,
with the intention (actual or
presumptive), and with the result, of inducing the representee on the faith of
such representation to alter his position to his detriment
, the
representor, in any litigation which may afterwards take place between him and
the representee, is estopped, as against the representee, from making, or
attempting to establish by evidence, any averment substantially at variance
with his former representation, if the representee at the proper time, and in
the proper manner, objects thereto. [Emphasis in the Reasons.]
[70]
The trial judge described Fram and Kerbels
position on estoppel as follows. They argued that, prior to the Settlement Agreement
and for a number of years following it, Romandale consistently took the
position that: (1) the 2005 August Agreement was valid and enforceable; and (2)
if Fram did not consent to Romandales sale of its Remaining Interest to
Kerbel, the buy-sell in the 2005 August Agreement would be performed after SPA.
They asserted that Fram relied on Romandales position in entering into the
Settlement Agreement, thereby compromising its claim to the Lands by 50%, and
that Kerbel also compromised its position in reliance on Romandales position.
[71]
Romandale contended that Fram and Kerbel
overstated its positions and stripped them of the context in which they were
taken. The trial judge agreed, for the following reasons. In the 2007 Action,
Romandales primary position was that the 2005 August Agreement did not breach
the COAs and, as a result, the 2005 August Agreement was valid. The trial judge
acknowledged that Romandale did take the position that the buy-sell in the 2005
August Agreement would be triggered after SPA because the buy-sell in the COAs
could only be triggered after SPA. However, she noted that Romandales position
on the buy-sell in the COAs was mistaken and the parties shared this mistaken
understanding until 2015 when Romandale rectified its mistake and amended its
pleadings. At that point, Romandale asserted that the 2005 August Agreement was
unenforceable because Kerbel repudiated it by entering into the Settlement
Agreement. However, the trial judge stated that this assertion did not change
Romandales primary position: Romandale continued to defend the 2007 Action on
the basis that the 2005 August Agreement did not breach the COAs. She said that
Romandale did not backtrack from its primary position: it was responding to new
factual events that carried legal consequences.
[72]
On the issue of reliance, the trial judge said
that Frams only evidence was a bald assertion by Mr. Giannone that he relied
on Romandales position that the 2005 August Agreement was enforceable. She
said this evidence was totally unreliable and could not be accepted.
[73]
In any event, the trial judge concluded, any
reliance would have been totally unreasonable as Romandale objected to the
Settlement Agreement before it was entered into. Therefore, Fram and Kerbel
proceeded at their own risk.
Repudiation of the 2005 August Agreement (Reasons, at paras.
30546)
[74]
The trial judge stated the legal principles
governing repudiation as follows, at para. 305:
The applicable law is not in dispute. A contract may be said to
be repudiated when one party acts in a way, by words or conduct, that evinces
an intent to no longer be bound by the contract. Only a very substantial breach
will amount to a repudiation. As the court stated in
Jedfro Investments
at para. 21, having little regard for an agreement does not establish that a
party is repudiating the agreement. Repudiation arises where the innocent
party is deprived of substantially the whole benefit of its agreement. When
faced with repudiation, the innocent party may elect to treat the contract as
at an end, relieving the parties from further performance. [Citations omitted.]
[75]
She concluded that the Settlement Agreement
materially and substantially changed the deal in the 2005 August Agreement for
the following reasons. Because Kerbel was no longer at liberty to cause
Romandale to trigger the buy-sell before SPA and Fram was no longer at liberty
to consent before SPA, the result of the Settlement Agreement was to tie up the
Lands until after SPA, then decades away or more, at a fixed price, without
paying Romandale for the Lands and while leaving Romandale with all the risks
and liabilities. She said this entirely devalued the Conditional Provision,
given the time value of money, and that Kerbel shifted all of the risk of the
Lands to Romandale by tying up the Lands indefinitely without any compensation
to Romandale.
[76]
The trial judge also concluded that, by entering
into the Settlement Agreement, Kerbel demonstrated an intent not to be bound by
the ongoing performance of the 2005 August Agreement. It wanted instead to
abide only by its new Settlement Agreement with Fram.
[77]
The trial judge determined that Kerbels repudiation of the 2005
August Agreement deprived Romandale of substantially the whole benefit of that
agreement. In making this determination, the trial judge considered each
transaction in the 2005 August Agreement on its own and stated that there was
no dispute that by the time of the Settlement Agreement, Romandale had not
received any of the benefit of the Conditional Provision. She said that all of
the transactions in the 2005 August Agreement were either of no benefit to
Romandale or of relatively modest benefit when compared to the Conditional
Provision. She concluded that performance of the other parts of the 2005 August
Agreement could not represent Romandale receiving substantially the whole of
the benefit of that agreement (at para. 336).
[78]
The trial judge found that Romandale had accepted Kerbels
repudiation. In making this finding, she said: (1) by February 2011, Kerbel
knew that Romandale was no longer acting in accordance with the 2005 August
Agreement; and (2) in a letter dated February 9, 2011, from counsel for
Romandale to counsel for Kerbel, Romandale took the position that Kerbel had
breached the 2005 August Agreement and it was considering its rights (at
para. 338).
[79]
Having found that Romandale accepted Kerbels repudiation, the trial
judge concluded that the parties were relieved of their obligations under the
Conditional Provision and it was at an end. Consequently, the Conditional
Provision was not enforceable against Romandale.
[80]
The trial judge also concluded that Kerbel
breached its duty of good faith and its fiduciary duty in acting as Romandales
agent, by fettering its discretion in the Settlement Agreement as to when to
cause Romandale to trigger the buy-sell. Further, she was of the view that by
entering into the Settlement Agreement, Kerbel breached the time is of
the essence clause in the 2005 August Agreement and the clause stipulating
that the conditions precedent were for the mutual benefit of the
parties.
Frustration (Reasons, at paras. 347-49)
[81]
In light of the trial judges determination on
repudiation, it was not necessary that she consider Romandales alternative
argument that the 2005 August Agreement was rendered unenforceable on account
of frustration. However, the trial judge stated, had it been necessary to
consider it, she was persuaded that the 2005 August Agreement was frustrated.
[82]
Relying on
Naylor Group Inc. v.
Ellis-Don Construction Ltd.
, 2001 SCC 58, [2001] 2 S.C.R.
943, at para. 53, the trial judge said that frustration occurs when a situation
has arisen for which the parties made no provision in the contract and
performance of the contract becomes a thing radically different from that
which was undertaken by the contract (at para. 348).
[83]
The trial judge said it was clear that when the
2005 August Agreement was entered into, both Ms. Roman-Barber and Mr. Kerbel
expected that SPA was only years away, not decades away. Unforeseen planning
changes resulted in SPA being delayed for decades and the farms being put on
different development tracks. In addition, the Snider Farm could be developed
only as employment lands, not for residential use. These changes were beyond
the control of the parties and rendered the performance of the Conditional
Provision radically different from that to which the parties agreed.
Mistake (Reasons, at paras. 350-53)
[84]
Romandale argued that if obtaining SPA was a
prerequisite to triggering the buy-sell, the Conditional Provision was
unenforceable because Kerbel and Romandale were mistaken, when entering into
the 2005 August Agreement, as to the time horizon within which SPA could be
achieved.
[85]
The trial judge accepted this argument and found
the Conditional Provision void for mistake. She said the following, at para.
351:
Both Romandale and Kerbel, in making a time is of the essence
clause, fixing a purchase price of $160,000 per acre, and providing for the
conditions precedent for their mutual benefit, without any sunset clause or
otherwise set[ting] the closing date, were operating on the mistaken
understanding that SPA would occur within a relatively short time period, and
certainly not decades after the [2005 August Agreement] was entered into.
[86]
Citing
Miller Paving Ltd. v. B.
Gottardo Construction Ltd.
,
2007 ONCA 422, 86 O.R. (3d)
161, at para. 23, the trial judge set aside the 2005 August Agreement contract
for common mistake as, in all the circumstances, it would be unconscientious
for a contracting party to avail itself of the legal advantage it had obtained.
She agreed with Romandale that it would be unconscionable and commercially
absurd to enforce the Conditional Provision or even consider it valid and
enforceable since the parties would never have agreed to its terms, especially
the fixed price per acre of the Lands, had they known that the timeline for SPA
would change so drastically and
be pushed out decades in the future.
Kerbels Claims were Time-Barred (Reasons, at paras. 400-07)
[87]
The trial judge found that even if Kerbel had a
claim for specific performance of the 2005 August Agreement, its claim was
barred by the expiration of the two-year limitation period under the
Limitations
Act, 2002
, S.O. 2002, c. 24, Sched. B, (the
Limitations
Act
) and the equitable doctrine of laches.
[88]
The trial judge found that Kerbel was aware, as
of 2011, that Romandale: viewed the Conditional Provision as being at an end;
was no longer co-operating with Kerbel to advance the Lands through development
as required by the 2005 August Agreement; and, was shutting Kerbel out for its
own purposes. She said this conduct clearly revealed that Romandale intended to
remain the owner of the Lands and, from its point of view, the Conditional
Provision was dead.
[89]
Despite being aware of this, Kerbel took no
material steps to enforce its rights and acquiesced to the state of affairs for
years before asserting a claim for specific performance for the first time in
the 2016 Action.
[90]
She rejected Kerbels claim that it did not know
until 2015 that Romandale intended to not perform the Conditional Provision,
saying that this was undermined by the clear implications of Romandales
conduct since 2011.
[91]
Kerbel did not seek specific performance of the
2005 August Agreement until it commenced the 2016 Action. That was more than
five years after it wrote to Romandale in 2011 asserting that Romandale was
breaching the 2005 August Agreement, and threatening to commence litigation to
affirm the breach. By 2016, Kerbel was outside the two-year statutory
limitation period, had acquiesced to Romandales conduct, and had permitted a
state of affairs to exist where Romandale spent years investing significant
time, effort, and money into the Lands.
Specific Performance (Reasons, at paras. 399, 408-23)
[92]
The trial judge held that Kerbel was not
entitled to specific performance of the 2005 August Agreement because the Lands
were not unique.
[93]
The trial judge found the Lands were not unique
because Kerbels only evidence of uniqueness was a bald assertion from Mr.
Kerbel and because the expert evidence, including from Kerbels expert,
contradicted Kerbels assertion. The experts called by all three parties used a
direct comparison approach to provide their opinions on land values. The
direct comparison approach determines value based on an analysis of sales of
similar properties within a close time period and location. The trial judge
concluded that because Fram and Kerbels experts were able to use the direct
comparison approach to value the Lands, the Lands are not unique.
[94]
Further, the trial judge said, the Lands are not unique because they
were just an investment for Kerbel, there were suitable substitute properties
that Kerbel could purchase, and it was possible to quantify the monetary
equivalent of Kerbels alleged future losses.
V.
The Issues ON THE APPEALS
A.
Issues Raised by Fram
[95]
Fram says that the trial judge made numerous
errors in her lengthy trial decision. To narrow its appeal, Fram focused on two
issues. It submits that the trial judge erred in:
1. failing to find that Romandale was estopped,
based on either estoppel by representation or estoppel by convention, from
claiming that the Settlement Agreement breached the 2005 August Agreement; and
2. concluding that, by entering into
the Settlement Agreement, Kerbel breached the 2005 August Agreement.
B.
Issues Raised by Kerbel
[96]
In
its appeal, Kerbel raises five issues. It submits that the trial judge erred in
concluding that:
3. it repudiated the 2005 August
Agreement by entering into the Settlement Agreement;
4. the 2005 August Agreement was
frustrated;
5. the 2005 August Agreement was void
for mistake;
6. its claim was limitation barred;
and,
7. it was not entitled to specific
performance of the 2005 August Agreement.
VI.
ROMANDALE ALLEGES THRESHOLD
FLAWS
[97]
Before turning to the issues raised on appeal, I
will address Romandales contention that the appeals suffer from two threshold
flaws warranting their dismissal.
[98]
First, Romandale submits that Frams appeal is
improper because it is not an appeal from the dismissal of its 2007 and 2008
Actions but, rather, an attempt to appeal from the 2014 and 2016 Actions, to
which Fram was not a party. It says that only a party to a proceeding below can
appeal and the fact that multiple actions are ordered to be heard together does
not alter the distinct identities of the parties.
[99]
Second, Romandale submits that the appeals are
improper because they are founded on a new, never pleaded or asserted
interpretation of the 2005 August Agreement: that it gave Kerbel an unfettered
discretion to cause Romandale to trigger the buy-sell before or after SPA.
Romandale contends that this interpretation contradicts the one that Kerbel
argued at trial: that the 2005 August Agreement required that it cause
Romandale to trigger the buy-sell only after SPA. Romandale concludes on this
alleged flaw by noting that, had the Appellants raised this new theory in their
pleadings or at trial, the evidence would have no doubt been different.
Allowing Fram and/or Kerbel to now advance this theory, Romandale says, would
be manifestly unfair.
[100]
For the following reasons, I do not accept that either alleged
threshold flaw justifies dismissing the appeals.
A.
The First Alleged Threshold Flaw
[101]
In my view, the direction that the four actions be tried together
coupled with the way in which the trial was conducted are a full answer to the
first alleged flaw.
[102]
In his capacity as the case management judge in these proceedings
and pursuant to r. 6 of the
Rules of Civil Procedure
, R.R.O. 1990, reg. 194, Dunphy J. exercised his discretion and
directed that the four actions be tried together in a single trial. He also
gave directions about matters relating to the conduct of the trial. There can
be no doubt about the wisdom of these directions.
[103]
Rule 6 provides that where two or more proceedings are pending in
the court, an order may be made that they be tried together if it appears to
the court that the proceedings have a common question of law or fact, the
relief claimed in them arises out of the same transaction or series of
transactions, or for any other reason. An order under r. 6 is discretionary.
[104]
The purpose behind r. 6 is to avoid a multiplicity of proceedings
and thereby prevent inconsistent dispositions, protect scarce judicial
resources, and save expense to the parties. It also safeguards against a
tactical decision to subject a party or parties to more than one action and,
therefore, promotes fairness: see
Wood v. Farr Ford Ltd.
, 2008
CanLII 53848 (Ont. S.C.), at para. 23;
Mohamed Imran Hanif v. Ontario
College of Pharmacists, Her Majesty the Queen in Right of Ontario and AGO
,
2013 ONSC 6991, 315 O.A.C. 368 (Div. Ct.), at para. 18.
[105]
It is readily apparent that the preconditions to the application of
r. 6 were met. The four actions had common questions of law and fact. And, the
relief claimed in the actions arose out of one or more of the transactions
relating to the Lands. As the trial judge noted, at para. 23 of the Reasons,
the direction that the four actions be tried together was made because the
actions involve all of the current disputes between these three protagonists
with respect to their interests in the Lands.
[106]
Further, the direction that the actions be tried together fulfilled
the purpose which underlies r. 6. A single trial avoided a multiplicity of
proceedings among the parties, prevented inconsistent dispositions relating to
the Lands, protected scarce judicial resources, and saved the parties expense.
In my view, it also does away with Romandales contention that Fram was a party
only to its actions and not to the proceeding below. The four actions were
tried together and a single judgment was rendered in respect of those actions.
The fact that the Judgment sets out the relief granted in respect of each
action separately does not alter the fact that Fram was a party to the
proceeding below and, thus, has the right to appeal from the Judgment.
[107]
Furthermore, Romandales position on the first alleged threshold
flaw flies in the face of the way in which these actions proceeded at trial.
Although the actions were not formally consolidated, the trial of the actions
was effectively consolidated, with the evidence being used on all issues and
argument permitted on all issues by all parties.
[108]
At trial, Fram was permitted to lead evidence and make argument on
the same issues it now raises on appeal. The Reasons show that both Fram and
Kerbel argued the issues raised in the appeals; the trial judge repeatedly
refers to Frams position on the issues and she often refers to Frams and
Kerbels positions interchangeably. Had Romandale wished to take issue with
Fram making argument and adducing evidence on the issues at trial, it was
incumbent on Romandale to object at trial, which would have given Fram the
opportunity to request to be added as a party. Having stayed silent at trial,
Romandale cannot now take the position that Fram does not have standing on this
appeal to raise and argue the issues it is pursuing.
[109]
Finally, I note that Romandale did not question the propriety of
Frams appeal before the case management judge of this court who issued the
order consolidating the appeals. It does not now lie in Romandales mouth to
suggest that Fram is not entitled to pursue its appeal.
[110]
For these reasons, Frams appeal is not improper.
B.
The Second Alleged Threshold Flaw
[111]
Romandales
second alleged threshold flaw is based on the new interpretation of the 2005
August Agreement it says that Fram and/or Kerbel advance on appeal. In my
analysis of Issue #1, below, I explain that because of estoppel by convention,
Romandale is barred from asserting that the buy-sell provisions in the COAs and
the 2005 August Agreement could be utilized pre-SPA. The trial judge
interpreted the 2005 August Agreement on the basis that the buy-sell provision
could be utilized pre-SPA (Reasons, para. 291). That is, she interpreted it in
a way that is impermissible because of the operation of estoppel by convention.
Consequently, her interpretation of the 2005 August Agreement cannot stand and
it is unnecessary to decide Issue #2. The allegedly new interpretation was made
in the context of Issue #2. As it is unnecessary to decide Issue #2, it is also
unnecessary to decide whether the Appellants committed the second threshold
flaw as Romandale alleges.
[112]
Thus,
the second alleged threshold flaw does not warrant the dismissal of these
appeals.
VII.
analysis of frams issues
Issue #1: Did the trial judge err in failing to
find that Romandale was estopped, based on estoppel by representation or by
convention, from claiming that the Settlement Agreement breached the 2005
August Agreement?
A.
The Parties Positions
Fram
[113]
Fram contends that, before 2015, Romandale repeatedly made two
representations: (1) under the COAs, the buy-sell could not be exercised until
after SPA; and (2) under the 2005 August Agreement, Kerbel could not cause
Romandale to trigger the buy-sell in the COAs until after SPA (the
Representations
). It says that Romandale made the Representations and statements
consistent with them in: its pleadings; Ms. Roman-Barbers affidavits; its
solicitors letters, both before and after the Settlement Agreement; and, Ms.
Roman-Barbers discovery evidence. Fram submits that the Representations formed
the basis of a shared common understanding among the parties, and para. 5 was
incorporated into the Settlement Agreement in reliance on the Representations
and with Romandales full knowledge. It will be recalled that para. 5 of the
Settlement Agreement states the parties intention that the purchase and sale of
the Remaining Interest would take place after SPA.
[114]
Fram argues that estoppel by representation and estoppel by
convention both operate to bar Romandale from reversing its position and
claiming that para. 5 of the Settlement Agreement is a breach of the 2005
August Agreement. It contends that the trial judge made a palpable and
overriding error in refusing to apply estoppel on the basis that Fram and
Kerbel had not relied on the Representations or, if they did, that their
reliance was unreasonable.
[115]
In terms of reliance, Fram says that the trial judge erred in
dismissing its and Kerbels evidence that they relied on the Representations on
the basis the evidence was simply bald assertions. Fram argues there is
nothing bald about the change in course of action it and Kerbel took in
entering into the Settlement Agreement. It contends that as a result of the
Settlement Agreement, it gave up seeking specific performance of its
contractual remedies and limited its damages claim against Romandale to 50% of the
Lands, while Kerbel gave up 50% of its rights under the 2005 August Agreement.
They did so based on the common understanding perpetuated by Romandale and
its lawyers that post-SPA closing was consistent with the COAs and the 2005
August Agreement.
[116]
Further, Fram contends, there was nothing unreasonable about it and
Kerbels reliance on Romandales Representations. Those Representations were
made in a litigation context through pleadings, affidavits, solicitors
letters, and examination testimony. The very purpose of the Representations was
to allow the courts and other parties to rely on them for notice and the truth
of their contents. For example, when Ms. Roman-Barber swore her affidavit in
2007, she intended the court to rely on it in the injunction proceeding. The
court did exactly that: Forestell J. accepted Ms. Roman-Barbers evidence that
the original intent of the [2005 August Agreement] was that the sale to
[Kerbel] of the remaining interest of Romandale in the Lands would not occur
until some time after SPA. If the court was entitled to rely on Romandales
representation of its position Fram argues it was surely reasonable for Fram
and Kerbel to do the same.
[117]
Fram says the trial judge erred in concluding that reliance was
totally unreasonable in light of Romandales objection to the Settlement
Agreement, because Romandales objection was not based on the timing of the
buy-sell.
[118]
In terms of detriment, Fram submits that it would be unjust and
unfair to permit Romandale to resile from the mutual assumptions or
Representations. In 2010, Kerbel and it entered into the Settlement Agreement
with the assistance of a judicial mediation and, at that time, all three
parties agreed that the 2005 August Agreement would close post-SPA. Five years
later in 2015, knowing the state of the Settlement Agreement, Romandale
upended the playing field and changed its position to make an uncontroversial
term in 2010 (i.e. para. 5) an allegedly repudiatory breach of the 2005 August
Agreement. This, Fram contends, is unfair because it threatens to take away
Fram and Kerbels entire economic interest in the 2005 August Agreement.
Kerbel
[119]
On these appeals, Kerbel repeats and relies on Frams submissions on
estoppel. However, because the trial judge did not deal with estoppel by
convention, it falls to this court to decide that matter
de novo
. Consequently, I will set out a summary of Kerbels trial position
on that issue.
[120]
At trial, Kerbel argued that estoppel by convention applied to bar
Romandale from contending that, because of para. 5 in the Settlement Agreement,
Kerbel breached the 2005 August Agreement by entering into the Settlement
Agreement. It referred to the principles governing estoppel by convention, as
set out in
Ryan v. Moore
, and argued that
those principles squarely applied.
[121]
Kerbel identified the following as its shared understanding with
Romandale when they entered into the 2005 August Agreement: because the sale of
Romandales Remaining Interest would close after SPA, the 2005 August Agreement
did not breach the COAs between Romandale and Fram (the
Shared
Understanding
). Romandale repeatedly expressed the
Shared Understanding after the 2005 August Agreement was entered into. This
includes in the fall of 2010, during which time all three parties Romandale,
Fram and Kerbel participated in the judicial mediation that took place in
respect of the 2007 and 2008 Actions. Kerbel argued that was evidence that all
three parties held and operated under the Shared Understanding.
[122]
Kerbel also pointed to the fact that even after Romandale resiled
from the Settlement Agreement, it knew that Fram and Kerbel were continuing to
discuss settlement on the basis of the Shared Understanding. It was only months
after the Settlement Agreement was executed that Romandale, for the first time,
took the position that by entering into the Settlement Agreement, Kerbel
breached the 2005 August Agreement. Kerbel argued that Romandale was obliged to
warn it, before the Settlement Agreement was executed, that it intended to
change its position on the Shared Understanding.
[123]
Kerbel also contended that it would suffer detriment if Romandale
were allowed to resile from the Shared Assumption. It had already given
Romandale over $16 million in value under the 2005 August Agreement and,
through the Settlement Agreement, it compromised its rights under that
agreement. If Romandale were allowed to resile from the Shared Assumptions,
Kerbel would lose the opportunity to close its purchase of the Remaining
Interest under the 2005 August Agreement and develop the Lands.
Romandale
[124]
Romandale says that Frams submissions on estoppel are premised on
an erroneous oversimplification of the equitable doctrine of convention. It
contends that, even if there was a shared assumption that the buy-sell could
not be triggered under the 2005 August Agreement until after SPA, there was no
transaction or dealing between Romandale and either Fram or Kerbel for which this
shared assumption formed the basis. In making this argument, Romandale relies
on para. 4 of
Ryan v. Moore
, in which the
Supreme Court of Canada states:
Estoppel by convention operates where
the
parties
have agreed that certain facts
are deemed
to be true and to form the basis of the transaction into which they are
about
to enter
. If they have acted upon the agreed assumption,
then
,
as regards
that
transaction
, each is estopped
against the other
from
questioning the truth of the statement of facts so assumed if it would be
unjust to allow one to go back on it. [Citations omitted; emphasis as added by
Romandale.]
[125]
Thus, Romandale argues, neither Fram nor Kerbel can use estoppel by
convention against Romandale to protect the Settlement Agreement. Because the Settlement
Agreement was entered into between Fram and Kerbel only, estoppel by convention
may apply as between them but not [to] Romandale.
[126]
As well, Romandale submits that Frams argument on estoppel starts
with a misstatement about the nature and character of its position prior to the
Settlement Agreement. It says that it made no representation upon which Fram or
Kerbel could rely, nor did the parties have a shared assumption for the
purposes of estoppel.
[127]
Its position in the 2007 Action was that the 2005 August Agreement
was not a breach of the COAs. It says that the timing of the triggering of the
buy-sell was irrelevant to whether Romandale had breached the COAs. To the
extent Romandale asserted that the buy-sell in the 2005 August Agreement would
be triggered after SPA, this was just another way of Romandale asserting that
the buy-sell under the [2005 August Agreement] could only be triggered when it
was triggerable under s. 5.07 of the COAs, coupled with the mistake the parties
and counsel had made about s. 5.07. Given that the mistake was of no
consequence to the matters in dispute in the 2007 Action, it went unnoticed,
was not something the parties deliberated on, joined issue on, or turned their
minds to. It did not form the basis of any of their dealings nor were they all
of the mind that it would govern their future affairs.
[128]
Romandale also argues that the trial judge did not err in concluding
that Fram and Kerbel had not established reliance. It says that the trial judge
correctly gave no weight to either Mr. Giannones self-serving assertion of
reliance in his affidavit evidence or to the recital in the Settlement
Agreement. It contends that the evidence made clear that Fram and Kerbel were
not relying on Romandale at all but, rather, crafted the Settlement Agreement
to carry out a scheme in which they would immediately assume control over the
development of the Lands for their benefit while putting off their purchase of
the Lands for at least decades.
[129]
Furthermore, Romandale says, the trial judge did not err in finding
that any reliance by Fram and Kebel was unreasonable. Just because a statement
is made in the course of litigation does not mean it can automatically be
relied on for the purposes of estoppel. It depends on the circumstances. Fram and
Kerbel cannot have reasonably relied on Romandales assertions regarding the
timing of the buy-sell in the 2005 August Agreement because that issue was not
in dispute in the litigation prior to the Settlement Agreement being entered
into.
[130]
Romandale also points to its objection to the Settlement Agreement,
arguing that it does not matter whether its objection was based on para. 5 of
that agreement. Its objection put Fram and Kerbel on notice that it would
object to any settlement between them. Thus, they proceeded at their own risk.
[131]
Romandale also says that, given their position on these appeals,
Fram and Kerbel could not have reasonably relied on a shared assumption that
the buy-sell could only be triggered after SPA when entering into the
Settlement Agreement. Their position on appeal is that Kerbel had an unfettered
discretion to trigger the buy-sell in the 2005 August Agreement either before
or after SPA. Thus, Romandale contends, they cannot be heard to say it was
reasonable for them to rely on a clearly wrong and now abandoned
interpretation.
[132]
Romandale also says Fram has not established that it would be unjust
to allow it to correct its mistake or that Fram and Kerbel suffered any
detriment. It cannot be unjust for a party to correct a mistake that is patently
obvious on the express words of the contracts, to which all parties had access.
Furthermore, Fram and Kerbels entry into the Settlement Agreement was a
deliberate and inequitable scheme to tie up and control the Lands to
Romandales exclusion while putting off their purchase for decades.
[133]
Moreover, Romandale submits that neither Fram nor Kerbel suffered
any relevant detriment in entering into the Settlement Agreement. To the extent
Fram suffered detriment by giving up 50% of its claim against Romandale, that
detriment is moot because Frams claims in the 2007 and 2008 Actions were
dismissed and are not being appealed. And, Kerbel presented no evidence of
detriment. Romandale says that granting Fram an option to buy 50% of the Lands
is not detriment: Kerbel granted the option in exchange for Fram giving up its
claims against Kerbel. It was Kerbels choice to assign some litigation risk to
being sued by Fram and to mitigate that risk by striking a deal with Fram. That
Fram ultimately lost and Kerbel paid for nothing is irrelevant.
B.
Estoppel by Representation
(1)
Governing Legal Principles
[134]
In
Canadian Superior Oil Ltd. v. Paddon-Hughes
Development Co.
, [1970] S.C.R. 932, at pp. 939-40, the
Supreme Court stated that the essential factors giving rise to estoppel by
representation are:
(1) a representation or
conduct amounting to a representation intended to induce a course of conduct on
the part of the person to whom the representation is made;
(2) an act or omission
resulting from the representation, whether actual or by conduct, by the person
to whom the representation is made; and
(3) detriment to such person
as a consequence of the act or omission.
[135]
More recently in
Ryan v. Moore
, at
para. 5, the Supreme Court referred to its much earlier decision in
Page
v. Austin
(1884), 10 S.C.R. 132, at para. 164, to
describe the doctrine of estoppel by representation as follows:
Estoppel by representation requires a positive
representation made by the party whom it is sought to bind, with the intention
that it shall be acted on by the party with whom he or she is dealing, the
latter having so acted upon it as to make it inequitable that the party making
the representation should be permitted to dispute its truth, or do anything
inconsistent with it.
(2)
Application of the Law
[136]
I agree with the trial judge that Fram and Kerbel fail in their
claim of estoppel by representation. However, I do so for different reasons
than those of the trial judge.
[137]
It will be recalled that, at trial, Fram and Kerbel argued that they
entered into the Settlement Agreement in reliance on Romandales representation
that the 2005 August Agreement was valid and that the buy-sell provision in it
was to be performed or completed after SPA. The trial judge concluded that
estoppel by representation was not made out because Fram and Kerbel had not
proven that they relied on the representation and, if they had, their reliance
was unreasonable. That is, the trial judge concluded that Fram and Kerbel
failed to prove the second essential factor giving rise to estoppel by
representation.
[138]
In my view, however, Fram and Kerbel fail on the first essential
factor giving rise to estoppel by representation.
[139]
Canadian
Superior Oil Ltd.
describes the first essential factor as
a representation intended to induce a course of conduct on the part of the
person to whom the representation was made. In
Ryan v. Moore
, this factor is expressed as the requirement that a positive
representation be made with the intention that it shall be acted on by the
party to whom the representation is made. On the facts, Romandale did not make
a representation with the intention that Fram and Kerbel should act on it.
[140]
In the fall of 2010, Fram, Kerbel, and Romandale were attempting to
settle the 2007 and 2008 Actions. After reaching a settlement agreement in
principle, the parties continued to negotiate the terms of the settlement.
During that process, Fram and Kerbel were made aware that Romandale continued to
maintain its position that the 2005 August Agreement was valid and the buy-sell
provisions in it and in the COAs could not be utilized until SPA had been
achieved for the Lands.
[141]
However, knowledge of Romandales position and the fact its position
remained unchanged from the time that it entered into the 2005 August Agreement
until December 2010, when Fram and Kerbel entered into the Settlement
Agreement, is not tantamount to Romandale representing that it would not change
its position going forward.
[142]
Further
and in any event, Fram and Kerbels knowledge of Romandales position does not
meet the requirement in the first essential element that Romandale made a
representation of its position
with the intention of inducing
Fram and Kerbel to enter into the Settlement Agreement or otherwise
act on it.
[143]
Consequently,
Fram and Kerbel failed to prove the first essential factor giving rise to
estoppel by representation. For these reasons, I agree with the trial judge
that estoppel by representation was not made out.
C.
Estoppel by Convention
(1)
Governing Legal Principles
[144]
At para. 59 of
Ryan v. Moore
, the
Supreme Court states that the following criteria form the basis of the doctrine
of estoppel by convention:
(1) The parties dealings
must have been based on a shared assumption of fact or law: estoppel requires
manifest representation by statement or conduct creating a mutual assumption.
Nevertheless, estoppel can arise out of
silence
(impliedly). [Emphasis
in original.]
(2) A party must have
conducted itself, i.e. acted, in reliance on such shared assumption, its
actions resulting in a change of its legal position.
(3) It must also be unjust or
unfair to allow one of the parties to resile or depart from the common
assumption. The party seeking to establish estoppel therefore has to prove that
detriment will be suffered if the other party is allowed to resile from the
assumption since there has been a change from the presumed position.
[145]
On the first criterion which the Court refers to as Assumption
Shared and Communicated the Court provides the following additional
guidance, at paras. 61-62:
The crucial requirement for estoppel by convention, which
distinguishes it from the other types of estoppel, is that at the material time
both parties must be of a like mind. The court must determine what state of
affairs the parties have accepted, and decide whether there is sufficient
certainty and clarity in the terms of the convention to give rise to any
enforceable equity.
While it may not be necessary that the assumption by the party
raising estoppel be created or encouraged by the estopped party, it must be
shared in the sense that each is aware of the assumption of the other. Mutual
assent is what distinguishes the estoppel by convention from other types of estoppel.
Thus, it is not enough that each of the two parties acts on an assumption not
communicated to the other. Further, the estopped party must have, at the very
least, communicated to the other that he or she is indeed sharing the other
partys (
ex hypothesi
) mistaken assumption. [Citations omitted.]
[146]
The court also offers further guidance on the second and third
criteria, namely, reliance and detriment. It notes that the requirement of
detrimental reliance lies at the heart of true estoppel and that detrimental
reliance encompasses two distinct, but interrelated concepts: reliance and
detriment: at paras. 68-69.
[147]
Reliance requires a finding that the party seeking to establish the
estoppel changed its course of conduct by acting, or abstaining from acting, in
reliance upon the assumption, thereby altering its legal position: at para. 69.
[148]
In terms of detriment, the Court offers this guidance, at para. 73
of
Ryan v. Moore
. Once the party seeking to
establish estoppel shows that it acted on a shared assumption, it must prove
detriment. For the plea to succeed, it must be unjust or unfair to allow a
party to resile from the common assumption. A change from the presumed legal
position will facilitate the establishment of detriment because there is an
element of injustice inherent within the concept of the shared assumption one
party has acted unjustly in allowing the belief or expectation to cross the
line and arise in the others mind: at para. 73, citing Sean Wilken,
Wilken
and Villiers: The Law of Waiver, Variation and Estoppel
,
2nd ed. (Oxford: Oxford University Press, 2002), at p. 228.
(2)
Application of the Law
[149]
Unlike estoppel by representation, I must approach the issue of
estoppel by convention on a
de novo
basis. I
do so because, while the parties expressly raised and argued the issue of
estoppel by convention at trial, the trial judge did not address it.
[150]
I will address each of the three criteria that form the basis of
estoppel by convention: (a) assumption shared and communicated; (b) reliance;
and (c) detriment.
(a)
Assumption Shared and Communicated
[151]
The first criterion for estoppel by convention requires that the
parties dealings were based on a shared assumption of fact or law:
Ryan
v. Moore
, at
para. 59. Thus, I must determine what state of affairs the parties
accepted and decide whether there was sufficient certainty and clarity in the
shared assumptions to give rise to an enforceable equity:
Ryan v.
Moore
, at para. 61.
[152]
I deal first with whether the alleged shared assumptions are
sufficiently certain and clear.
[153]
In the fall of 2010, when Fram, Kerbel, and Romandale were trying to
settle the 2007 and 2008 Actions, the parties based their dealings on two
assumptions: (1) the buy-sell provision in the COAs could not be triggered
until after SPA had been achieved for the Lands;
[9]
and (2) under the 2005 August Agreement, Kerbel could not cause
Romandale to trigger the buy-sell under the COAs until after SPA
[10]
(the
Shared Assumptions
).
There is no ambiguity or lack of clarity about the Shared Assumptions: they
have sufficient certainty and clarity to satisfy that requirement in the first
criterion of estoppel by convention.
[11]
[154]
It is worth recalling at this point that I did not find statements
to the same effect as the Shared Assumptions to amount to representations
within the meaning of estoppel by representation. That is because a common or
shared assumption, as that term is used in estoppel by convention, is not the
same thing as a representation. As the Supreme Court explained, at para. 62 of
Ryan
v. Moore
, an assumption need not be created or encouraged
by the estopped party: it must simply be shared, in the sense that each party
is aware that the assumption is held by the other(s). As the Supreme Court
stated, Mutual assent is what distinguishes the estoppel by convention from
other types of estoppel.
[155]
Having found the Shared Assumptions were sufficiently certain and
clear, I must now determine whether the parties were of a like mind. In
making this determination, I must consider whether the three parties: (1) held
the Shared Assumptions at the material times; (2) communicated to the others
that they held the Shared Assumptions; and (3) based their dealings on them:
Ryan
v. Moore
,
at paras. 61-62. In my view, the following
documents establish these three matters. Thus, the first criterion for estoppel
by convention is met.
(i)
The Settlement Agreement and Drafts Leading to It
[156]
The final Settlement Agreement is clear evidence that Fram and
Kerbel held the Shared Assumptions, communicated that to one another, and based
their dealings on them. This is evident from the first, second, and sixth
preambles, and para. 5 of the Settlement Agreement:
·
The first preamble recites that Fram and Romandale are co-owners
of the Lands and parties to the COAs and, under the COAs, each has a buy-sell
right in respect of the others interest but that right may only be exercised
after [SPA] has been obtained for the Lands.
·
The second preamble recites that Romandale and Kerbel are parties
to the 2005 August Agreement under which Romandale agreed to sell to Kerbel its
Remaining Interest at such time as Romandale could exercise its buy-sell
rights under the Buy-Sell Provisions of the [COAs].
·
The sixth preamble recites that Fram and Kerbel have agreed to
settlement so that the right of [Kerbel] to acquire Romandales Remaining
Interest in the Lands pursuant to the [2005 August Agreement] may be exercised
60 days after [SPA] for the Lands is obtained.
·
Paragraph 5 provides that [i]t is the intention of [Fram and
Kerbel] that the purchase and sale of Romandales Remaining Interest in the
Lands pursuant to these Minutes of Settlement will take place after [SPA] for
the Lands has been obtained.
[157]
Though Romandale was not a party to the final Settlement Agreement,
its conduct in the fall of 2010 up to and including when Fram and Kerbel
executed the Settlement Agreement demonstrates that it too held the Shared
Assumptions, communicated that to Fram and Kerbel, and based its dealings with
them on the Shared Assumptions.
[158]
It will be recalled that in September of 2010, the three parties
came to an agreement in principle at the judicial mediation. Based on the
agreement in principle, counsel for Fram prepared very preliminary draft
minutes of settlement and sent the draft to counsel for Romandale under cover
of a letter dated September 8, 2010. The preliminary draft was short; it
consisted of four preambles and seven paragraphs. The fourth preamble and para.
6 of that draft reflect the Shared Assumptions.
·
The fourth preamble reads as follows:
WHEREAS
the parties have agreed to settlement
so that the right of [Kerbel] to acquire Romandales Remaining Interest in the
Lands pursuant to the [2005 August Agreement] shall be exercised 60 days after
[SPA] for the Lands is obtained
·
Paragraph 6 provides:
[Fram] does not by this agreement consent to the transaction
referred to in paragraph 2 of the [2005 August Agreement]. Romandale hereby
acknowledges that this settlement agreement does not constitute [Frams
consent]
and that it is the intention of the parties that the purchase and
sale of Romandales entire Remaining Interest in the Lands pursuant to these
Minutes of Settlement will take place 60 days after [SPA] for the Lands has
been obtained.
[159]
After
the preliminary draft was circulated, counsel for the three parties continued
to exchange draft settlement agreements and discuss other possible provisions
that might be included.
[160]
In a letter dated September 24, 2010, counsel for Romandale wrote to
counsel for Kerbel and Fram and set out the areas on which the parties were in
agreement, including [t]hat the sale of each parcel will take place when that
particular parcel achieves Secondary Planning Approval.
[161]
Under cover of a letter dated September 29, 2010, counsel for Fram
sent Romandales counsel (with a copy to Kerbels counsel) a proposed final
draft. The letter stated that if the draft was acceptable, the draft stamp
would be removed and it would be circulated for signature. The proposed final
draft settlement agreement contained essentially the same fourth preamble as
that in the preliminary draft (set out above) and, of a total of seven
paragraphs, three reflect the Shared Assumptions.
·
Paragraph 1 provided that the injunction ordered by Forestell J.
July 26, 2007 shall continue in respect of each of the two parcels comprising
the Lands
until 60 days after [SPA] has been granted in respect of that
particular parcel of the Lands.
·
Paragraph 4 provided that Fram Kerbel and Romandale shall
complete the sale of the entire Remaining Interest of Romandale in the Lands on
the terms described in paragraph 2 of the [2005 August Agreement], 60 days
after [SPA] has been obtained for each of the two parcels comprising the
Lands.
·
Paragraph 7 provided that
[t]he parties
hereby acknowledge
that in making these minutes of settlement, it is
their
common intention that the purchase and sale of the Romandales Remaining
Interest in the Lands pursuant to these Minutes of Settlement shall take place
in respect of each of the two parcels of the Lands
after [SPA] for each
parcel has been obtained
,
and that the closing of the purchase and
sale for each parcel shall take place 60 days after [SPA] for that particular
parcel of the Lands has been obtained. [Emphasis added.]
[162]
In response, by letter dated September 30, 2010, counsel for
Romandale provided comments on the draft and asked that the final settlement
agreement include, among other things, a provision explicitly requiring the
parties to do nothing to hinder or delay the obtaining of SPA for the Lands. He
wrote, As we were specifically advised at the mediation that this would not be
a problem, the wording should be inserted in the Minutes. As well, counsel for
Romandale asked that a drop-dead date for the contemplated sale of the Lands
be inserted in case the Lands never achieved SPA:
At present, there exists the possibility that one or both
parcels may not receive [SPA]. Such a failure to address that point may call
into question the validity of the agreements or at least pose a practical
problem for the parties if [SPA] is not achieved (at least in our lifetimes)
for either of the parcels.
[163]
The parties continued to communicate about the draft settlement
agreement for some weeks. In October 2010, Romandale began taking issue with the
draft agreements, which I discuss in more detail below. Ultimately, in a letter
dated November 12, 2010, Frams counsel wrote to Romandales counsel (with a
copy to Kerbels counsel), stating that it appeared Romandale was resiling from
the settlement agreement so steps would be taken to reschedule the trial of the
2007 and 2008 Actions. Frams counsel enclosed a copy of the draft settlement
agreement that Fram and Kerbel intended to enter into. The enclosed agreement
was substantially the same as the final Settlement Agreement, including the
provisions that reflected the Shared Assumptions.
[164]
Never once during the judicial mediation or in the period that
followed leading up to the Settlement Agreement despite the many
communications among counsel which reflected the Shared Assumptions did
Romandale ever object to the Shared Assumptions or the terms in the drafts that
reflected them. On the contrary, during that period, Romandale expressly
affirmed the parties shared understanding that the sale and purchase of
Romandales Remaining Interest would occur after SPA as, for example, in its
counsels letters of September 24 and September 30, 2010, described above.
[165]
In my view, what transpired among the three parties during this
period alone satisfies the requirements of the first criterion for estoppel by
convention. The following documents reinforce this conclusion.
(ii)
Letters between Counsel
[166]
In a letter dated September 22, 2009, Romandales corporate counsel
wrote to Kerbels counsel to address the matter of participation in the NMLG.
He stated that, under the 2005 August Agreement, Kerbel was to act as
Romandales agent and attorney for the purposes of taking the steps necessary
to proceed to [SPA] and thereby trigger the buy-sell rights under the [COAs].
This is communication by Romandale to Kerbel of its belief in the Shared
Assumptions.
[167]
Romandale also communicated its belief in the Shared Assumptions to
Fram. By letter dated January 28, 2011, counsel for Romandale wrote to counsel
for Fram stating:
[Romandale] was and is the registered owner of 90% of the
[Lands]. It conditionally sold those lands to [Kerbel] by way of an agreement
dated August 2005. The condition could only be satisfied by either a) secondary
plan approval (which has not been achieved); b) or the consent of [Fram] to the
transaction.
[168]
This letter was sent more than a month after Fram and Kerbel entered
into the Settlement Agreement. It demonstrates that Romandale continued to
believe the Shared Assumptions even after the Settlement Agreement was
executed.
(iii)
Pleadings and Evidence at Trial
[169]
The pleadings and evidence at trial further demonstrate that all
three parties held the Shared Assumptions in the relevant time period. In
addition, they show that each party made manifest representations of its belief
in the Shared Assumptions and communicated that to the other parties.
[170]
At trial, Fram and Kerbels positions rested on the Shared
Assumptions. Their pleadings including Frams Fresh as Amended Reply and
Kerbels Statement of Defence and Crossclaim in the 2007 Action reflect their
shared belief that SPA was required before the buy-sell provision in the COAs
and the 2005 August Agreement could be triggered.
[171]
Romandales Statement of Defence in the 2007 Action (before it was
amended in 2015), its Statement of Defence in the 2008 Action, and its Notice
of Motion to stay the 2007 Action all explicitly stated that the buy-sell
provision in the 2005 August Agreement could not be triggered until after SPA
was obtained for the Lands.
[172]
Furthermore, Ms. Roman-Barbers affidavits sworn July 11, 2007, and
August 23, 2007, and her discovery evidence in February 2009 communicated to
Fram, Kerbel, and beyond her (and therefore, Romandales) belief that the
sale of the Remaining Interest under the 2005 August Agreement was conditional
on SPA being obtained for the Lands.
(b)
Reliance
[173]
Having established that the first criterion for estoppel by
convention is met, I must now determine whether Fram and Kerbel acted in
reliance on the Shared Assumptions. For the purpose of estoppel by convention,
reliance requires a finding that the party seeking to establish estoppel
changed its course of conduct by acting (or abstaining from acting) in reliance
on the shared assumption, thereby altering its legal position:
Ryan
v. Moore
, at para. 69.
[174]
In my view, Fram and Kerbel satisfy the reliance criterion. Paragraph
5 of the Settlement Agreement is based on the Shared Assumptions. Fram and
Kerbel entered into the Settlement Agreement in reliance on the Shared
Assumptions. As a result of having entered into the Settlement Agreement, their
respective legal positions under the COAs and the 2005 August Agreement were
altered. An overview of the alteration to their legal positions that resulted
from having entered into the Settlement Agreement is as follows.
[175]
Before entering into the Settlement Agreement, Frams legal position
in respect of the Lands was governed by the COAs between it and Romandale. In
the 2007 Action, it claimed that Romandale had breached the prohibition against
Disposition in the COAs by entering into the 2005 August Agreement. If Fram
succeeded in its claim, Fram was entitled to, among other things: a declaration
that the offending agreement (i.e., the 2005 August Agreement) was void under
s. 5.03 of the COAs; bring proceedings for specific performance under s.
6.02(b) of the COAs; and purchase Romandales interest in the Lands at 95% of
their fair market value under s. 6.02(d) of the COAs. As a result of entering
into the Settlement Agreement, Fram gave up those rights: pursuant to s. 1 of
the Settlement Agreement, Fram agreed that it would not seek a declaration that
the 2005 August Agreement was void and that it would limit its damages claims
against Romandale to 50% of the Lands.
[176]
Before entering into the Settlement Agreement, Kerbels legal
position in respect of the Lands was governed by the 2005 August Agreement
between it and Romandale. The Conditional Provision in that agreement gave
Kerbel the opportunity to acquire 100% ownership of the Lands. After entering
into the Settlement Agreement, that changed. Pursuant to para. 2 of the
Settlement Agreement, if Kerbel acquired ownership of the Lands, Kerbel was
obliged at Frams option to allow Fram to acquire a 50% undivided interest
in the Lands on the same terms and conditions as Kerbel had acquired the
Remaining Interest from Romandale.
[177]
Thus, it can be seen, Fram and Kerbels legal positions were altered
as a result of relying on the Shared Assumptions.
[178]
I do not view my determination that Fram and Kerbel meet the
reliance criterion for estoppel by convention as running afoul of the trial
judges determination of no reliance on the part of Fram and Kerbel or, if
there was reliance, it was unreasonable. That is because the trial judge made
her reliance determination based on the legal principles governing estoppel by
representation whereas I decided reliance in accordance with the legal
principles governing estoppel by convention. The two legal frameworks are
different, the test for reliance in each is different, and, therefore, the
determination of reliance under each may be different without being inconsistent.
[179]
However, if, as Romandale urges, the trial judges determination on
reliance is a finding of fact for which deference must be shown, I would set it
aside on the basis that it is the result of palpable and overriding error.
[180]
On the evidence set out above, it is clear that Fram and Kerbel
relied on the Shared Assumptions in entering into the Settlement Agreement. A
plain reading of the Settlement Agreement alone shows that. A contrary finding
namely, that Fram and Kerbel did not rely on the Shared Assumptions in
entering into the Settlement Agreement is simply not available on the
evidence. Thus, such a finding would be the result of palpable and overriding
error.
[181]
The trial judge also made a palpable and overriding error in
determining that, if there was reliance, it was unreasonable. In making this
determination, the trial judge accepted that Romandale put Fram and Kerbel on
notice that it objected to any settlement agreement between them in respect of
the Lands without its consent: Reasons, at para. 129. Romandale says that it
objected clearly and unequivocally to the Settlement Agreement including
Fram and Kerbel deferring the closing of the 2005 August Agreement by decades
rather than carrying it out immediately in 2010, as Romandale expressly asked
them to do. In support of this argument, it relies on its letter to Fram,
dated October 25, 2010.
[182]
I do not agree. The relevant portions of Romandales letter of
October 25, 2010, are as follows:
More importantly, your correspondence only confirms our
clients belief that the relationship contemplated by the proposed Minutes of
Settlement cannot work
. Simply put, the benefit of the
August 2005 Agreement cannot be assigned in whole or in part to your client
without our clients consent
. In order to give that consent, not only
would real estate counsel have to draft extensive documentation, but
there remain at present simply some points to which our client
cannot agree, in particular, the registration of the injunction against title
to the lands for which Romandale continues to hold legal title; and arbitration
over a process which Romandale has effectively controlled without objection
from any party for 5 years now
.
To avoid these problems, your client,
together with Mr. Kerbel, can formulate an offer to purchase our clients
interest in the lands immediately
. Failing that, we should appear before
Justice Moore and request a trial date to adjudicate all issues.
If you and [counsel for Kerbel] believe that a settlement of the
August 2005 Agreement can be effected without the consent of the 90% land
holder, then that issue will likely also form the subject matter of the trial
.
[Emphasis added.]
[183]
Nothing in this letter suggests that Romandale objected to the
Settlement Agreement because of para. 5. That is, there is nothing in the
letter to indicate that Romandale objected to the expressed intention in para.
5 that the purchase and sale of the Remaining Interest was to take place after
SPA. Instead, the letter shows that Romandale resiled from the Settlement
Agreement over matters such as registration of the injunction on title to the
Lands and arbitration.
[184]
Further, Romandales call to Fram and Kerbel to formulate an offer
to purchase [Romandales] interest in the lands immediately does not indicate
that Romandale believed the buy-sell provisions in the COAs and the 2005 August
Agreement could be triggered at any time, pre or post-SPA. The parties all knew
Fram could consent to the sale of Romandales Remaining Interest before SPA
and, with that consent, the purchase and sale of Romandales Remaining Interest
could proceed immediately. Romandales call to Fram and Kerbel to make an
immediate purchase is merely a request that the parties proceed with the sale
under Frams consent. It says nothing about Romandales assumptions regarding
the buy-sell provisions.
[185]
Until 2015, Romandale never retracted its communications on the
Shared Assumptions and never purported to. In fact, as I describe above,
Romandale confirmed in writing its belief in the Shared Assumptions in a letter
in January 2011
after
Fram and Kerbel executed the
Settlement Agreement when it again made manifest that the sale of its
Remaining Interest under the 2005 August Agreement could not take place until
after SPA or with Frams consent.
[186]
As Romandale did not communicate to Fram and Kerbel that it no
longer held the Shared Assumptions until 2015, in the circumstances of this
case, it was not unreasonable for Fram and Kerbel to rely on the Shared
Assumptions when they entered into the Settlement Agreement in 2010. As Fram
points out, the court relied on Romandales assertions to the same effect in
the injunction proceeding. In light of that, it can scarcely be said to be
unreasonable that Fram and Kerbel also relied on them.
(c)
Detriment
[187]
The third criterion for establishing estoppel by convention is
detriment. As the parties seeking to establish estoppel by convention, Fram and
Kerbel must prove that if Romandale were allowed to resile from the Shared
Assumptions, they would suffer detriment since there had been a change from
their presumed legal positions:
Ryan v. Moore
,
at paras. 59, 69. To succeed in proving detriment, Fram and Kerbel must show
that it would be unjust or unfair to allow Romandale to resile from the Shared
Assumptions:
Ryan v. Moore
, at paras. 59, 73
and 74. A change from their presumed legal positions will facilitate the
establishment of detriment:
Ryan v. Moore
,
at para. 73.
[188]
As I have explained, Fram and Kerbel entered into the Settlement
Agreement in reliance on the Shared Assumptions and thereby altered their legal
positions under the COAs and the 2005 August Agreement respectively. While the
change in their legal positions facilitates the establishment of detriment, it
remains their burden to show that it would be unjust or unfair to allow
Romandale to resile from the Shared Assumptions:
Ryan v. Moore
, at para. 74. One need only consider what transpired at the trial
below and the resulting Judgment to find they satisfy that burden.
[189]
Paragraph 5 of the Settlement Agreement reflects the parties Shared
Assumptions that the purchase and sale of Romandales Remaining Interest would
take place after SPA had been obtained. The trial judge accepted Romandales
submission that para. 5 was a breach of the 2005 August Agreement on Kerbels
part. In so doing, the trial judge permitted Romandale to resile from the
Shared Assumptions. Having determined that Kerbel was in breach, the trial judge
declared the 2005 August Agreement at an end and excused Romandale from
performance of its obligations under that agreement. Thus, it can be seen, if
Romandale had not been permitted to resile from the Shared Assumptions, Kerbel
would not have been found to have been in breach of the 2005 August Agreement
and it would not have lost the right to compel Romandale to fulfill its
obligations under that agreement. In the circumstances of this case, it was
unjust and unfair to Kerbel that Romandale was permitted to resile from the
Shared Assumptions.
[190]
It was also unfair and unjust to Fram. In accordance with the
Settlement Agreement, Fram discontinued its claims against Kerbel in the 2007
and 2008 Actions and gave up significant claims against Romandale under the
COAs. However, the
quid pro quo
under the
Settlement Agreement was that Fram would have the opportunity to acquire 50%
ownership of the Lands once Kerbel bought Romandales Remaining Interest.
Because Romandale was permitted to resile from the Shared Assumptions and was
consequently excused from performance under the 2005 August Agreement,
Romandale was no longer obliged to sell its Remaining Interest to Kerbel. Thus,
Fram gave up its claims for nothing.
[191]
Accordingly, in my view, it would be unjust and unfair to allow
Romandale to resile from the Shared Assumptions. In reaching this conclusion, I
reject Romandales submission to the contrary.
[192]
Romandale makes two arguments in support of its submission that it
would be neither unjust nor unfair to allow it to resile. First, it argues that
it cannot be unjust or unfair that it be allowed to correct the mistaken Shared
Assumptions because the mistake as to the timing of the buy-sell provisions was
patently obvious on the express words of the contracts to which all parties
had access. Second, it argues that Fram and Kerbels entry into the Settlement
Agreement was a deliberate and inequitable scheme to tie up and control the
Lands (to Romandales exclusion) while putting off their purchase for at least
decades.
[193]
Respectfully, Romandales first argument misunderstands the
detriment criterion in the doctrine of estoppel by convention. Detriment is not
about the correctness of the Shared Assumptions or how obviously incorrect they
might have been. Detriment is a question of whether it would be unjust or
unfair to allow Romandale to resile from the Shared Assumptions regardless of
whether the Shared Assumptions were correct or were patently incorrect.
[194]
Romandales second argument is that if it was not permitted to
resile, Fram and Kerbel would get away with their deliberate and inequitable
scheme to tie up the Lands for decades without having to pay for them. This
argument does not withstand scrutiny. Before trial, Fram gave its consent to
Kerbels purchase of Romandales Remaining Interest. Accordingly, had Romandale
wished, it could have completed the sale of its Remaining Interest to Kerbel
right then. In short, by the time of trial, there was no threat that, as a
result of the Settlement Agreement, the Lands would be tied up for decades
without Romandale being paid for its Remaining Interest in them.
[195]
At all material times during its dealings with Fram and Kerbel,
Romandale manifestly represented to Fram and Kerbel that it held the Shared
Assumptions. Fram and Kerbel then relied on the Shared Assumptions and entered
into the Settlement Agreement. As a result of that, Fram and Kerbels legal
positions were altered. In the circumstances, it would be unjust and unfair to
permit Romandale to resile from the Shared Assumptions. Consequently, Fram and
Kerbel have met their burden on the detriment criterion.
(d)
Romandales Overriding Submission on Estoppel by Convention
[196]
Before finally determining whether estoppel by convention applies, I
must address Romandales overriding submission that Fram and Kerbel cannot
avail themselves of the doctrine because there was no contract between it and
either Fram or Kerbel based on the Shared Assumptions only Fram and Kerbel
were parties to the Settlement Agreement.
[197]
It will be recalled that Romandale relies on para. 4 of
Ryan
v. Moore
for this submission. For ease of reference, I
set out para. 4 again, below.
Estoppel by convention operates where the parties have agreed
that certain facts
are deemed to be true and to form the
basis of the transaction into which they are
about
to enter
. If
they have acted upon the agreed assumption, then,
as
regards
that transaction
, each is estopped
against the other
from questioning the truth of the statement of facts so assumed if it would be
unjust to allow one to go back on it. [Citations omitted; emphasis as added by
Romandale.]
[198]
I accept that the language in para. 4 of
Ryan v. Moore
may be seen as suggestive of a contractual relationship among the
parties. However, the facts of
Ryan v. Moore
show that the doctrine of estoppel by convention is not limited to such
situations.
[199]
Ryan
v. Moore
concerned a three-vehicle accident that took
place in 1997. Peter Ryan (the Plaintiff) and Rex Gilbert Moore were two of
the drivers involved in the accident. Soon after the accident happened, the
Plaintiff began corresponding with the adjuster assigned by Mr. Moores
insurer.
[200]
Mr. Moore died in 1998 from causes unrelated to the accident.
Letters of Administration were granted to his administratrix in February 1999.
[201]
The Plaintiff started a personal injury action against Mr. Moore in
October 1999. That claim was within the two-year limitation period in the
Limitations
Act
, S.N.L. 1995, c. L-16.1.
[202]
The insurer learned of Mr. Moores death in May 2000; the Plaintiff
learned of it in September 2000. In November 2000, the insurer refused to
settle the Plaintiffs claim on the basis it was outside the limitation period
in the
Survival of Actions Act
, R.S.N.L
.
1990, s. S-32, which imposes a six-month limitation period
from the granting of Letters of Administration. The insurer then applied to
have the action struck as being out of time. The trial judge dismissed the
application.
[203]
An appeal and cross-appeal were taken to the Newfoundland Court of
Appeal. A majority of the Court of Appeal held that estoppel by convention
barred the insurer and Mr. Moores estate from pleading that Mr. Moore died in
1998 or that Letters of Administration were granted in February 1999. Thus,
they could not invoke the shorter limitation period in the
Survival
of Actions Act
.
[204]
The insurer and Mr. Moores estate appealed to the Supreme Court.
The Supreme Court allowed the appeal and struck the Plaintiffs statement of
claim because it had been brought outside the six-month period prescribed by
the
Survival of Actions Act
.
[205]
The Supreme Court held that the doctrine of estoppel by convention
had not been made out. It found that none of the letters exchanged by the
Plaintiff and the insurer with respect to the Plaintiffs personal injury claim
proved the existence of a common assumption. The mere fact that communications
occurred between the parties did not establish that they assumed that Mr. Moore
was alive. And, the fact the parties were conferring without regard to the
limitation period did not establish a shared assumption that the limitation
period defence would not be relied on. There was never any discussion by the
Plaintiff of the limitation period.
[206]
Thus, while the Supreme Court in
Ryan v. Moore
refers to the Plaintiff, the insurer, and Mr. Moores estate as
parties, they were not parties to a contract. Despite that, the Supreme Court
considered whether the doctrine of estoppel by convention operated. In fact,
estoppel by convention was the central legal point on which the appeal hinged.
Further, when the Supreme Court concluded that the doctrine was inapplicable,
it made no mention of the absence of a contract among the parties. Rather, the
Court found the doctrine to be inapplicable because the correspondence among
the parties did not prove the existence of a shared assumption among the
parties. It found that such things as the subject line in the correspondence,
which read Your Insured: Rex Moore, lacked sufficient clarity and certainty
to demonstrate a common belief that he was alive. It further found that even if
one could conclude that there was a common assumption, the Plaintiff had never
communicated that he shared it.
[207]
Accordingly, the applicability of the doctrine of estoppel by
convention does not depend on the parties having entered into a contract with
one another. Rather, as the Supreme Court states in para. 59 of
Ryan
v. Moore
,
the question is whether the parties dealings
were based on a shared assumption of fact or law. In this case, while Romandale
was not a party to the Settlement Agreement, it was actively involved in the
negotiations leading up to that agreement. As I explain above, during that
period, the parties correspondence (among other things) clearly demonstrate
that their dealings were based on the Shared Assumptions.
(e)
Conclusion on Estoppel by Convention
[208]
In the judicial mediation in September 2010, Fram, Kerbel, and
Romandale communicated to one another their common belief in the Shared
Assumptions. They reached a settlement agreement in principle which reflected
those assumptions. The Shared Assumptions were manifest in the preliminary
draft settlement agreement and all the drafts that followed through to the
final Settlement Agreement. Romandale participated in ongoing negotiations of
the Settlement Agreement and received copies of all the drafts, even after it
resiled from that agreement. Never once during that process did Romandale
dispute the validity of the Shared Assumptions. Rather, at several points it
expressly reiterated the Shared Assumptions in communications it sent to Fram
and Kerbel.
[209]
When Fram and Kerbel entered into the Settlement Agreement, they
relied on their unqualified understanding that all three parties and their
counsel held the Shared Assumptions. As a result of having entered into the
Settlement Agreement, their legal positions were altered. Allowing Romandale to
resile from the Shared Assumptions years after the Settlement Agreement was
concluded would cause detriment to both Fram and Kerbel.
[210]
As Fram and Kerbel satisfied the three criteria that form the basis
for doctrine of estoppel by convention, Romandale was estopped from resiling
from the Shared Assumptions and the trial below should have been conducted
accordingly.
Issue #2: Did the trial judge err in
determining that, by entering into the Settlement Agreement, Kerbel breached
the 2005 August Agreement?
[211]
After Romandale terminated the DMAs with Bordeaux in early 2005,
Bordeaux responded with an action against Romandale and Fram, alleging the
termination was invalid and of no force and effect. The litigation was ongoing
in August 2005 when Romandale and Kerbel entered into the 2005 August
Agreement. The trial judge interpreted the 2005 August Agreement as permitting
Kerbel to delay triggering the buy-sell provisions until after SPA
only
if the Bordeaux litigation dragged on
(emphasis added) (the
Interpretation
). Based on the Interpretation, the trial judge concluded that
Kerbel repudiated the 2005 August Agreement by entering into the Settlement
Agreement because, as a result of para. 5 of the Settlement Agreement, the
purchase and sale of the Remaining Interest could not take place until after
SPA.
[212]
Fram argues that the trial judges Interpretation is erroneous. It
contends that she made four extricable errors of law in reaching the
Interpretation: (1) failure to give the text of the 2005 August Agreement
primacy; (2) accepting impermissible subjective evidence as factual matrix
evidence; (3) misinterpreting the time is of the essence clause in the 2005
August Agreement; and (4) failing to look at commercial reasonableness at the
time of contract execution and from the viewpoint of both parties.
[213]
In light of my conclusion on the doctrine of estoppel by convention,
Romandale is barred from asserting that the buy-sell provisions in either the
COAs or the 2005 August Agreement could be exercised before SPA. Because the
trial judges Interpretation permits for the buy-sell provision in the 2005
August Agreement to be exercised before SPA, the Interpretation is contrary to
the Shared Assumptions and cannot stand. Consequently, I need not address the
errors in contractual interpretation that Fram contends the trial judge made.
[214]
While I need not address the alleged errors in contractual
interpretation, nothing in these reasons is to be taken as approving the trial
judges interpretation of the 2005 August Agreement or her application of the
principles of contractual interpretation.
VIII.
analysis
of KERBELS issues
Issue #3: Did the trial judge err in concluding
that Kerbel repudiated the 2005 August Agreement?
[215]
In addition to finding that Kerbel breached the 2005 August
Agreement by entering into the Settlement Agreement with Fram, the trial judge
also found that, by entering into the Settlement Agreement, Kerbel failed to
act in good faith, breached the fiduciary duty she found Kerbel owed Romandale,
breached the time is of the essence clause in the 2005 August Agreement, and
repudiated the 2005 August Agreement. As I have explained, estoppel by
convention operates to bar Romandale from attacking the validity of para. 5 of
the Settlement Agreement. As para. 5 of the Settlement Agreement was the basis
on which the trial judge concluded that Kerbel repudiated the 2005 August
Agreement, that conclusion must fall. Accordingly, it is not necessary to
address the issues (and related sub-issues) that Kerbel raises respecting the
trial judges conclusion that by entering into the Settlement Agreement, Kerbel
repudiated the 2005 August Agreement.
[216]
However,
nothing in these reasons is to be taken as approving the trial judges
determination that Kerbel repudiated the 2005 August Agreement by entering into
the Settlement Agreement, her application of the principles governing
repudiation, her finding that Kerbel owed a fiduciary duty to Romandale and
breached it, her finding that Kerbel breached its contractual duty of good
faith, or her analysis and conclusion that, as a result of the Settlement
Agreement, Romandale was deprived of substantially the whole benefit of the
2005 August Agreement.
Issue
#4: Did the trial judge err in concluding that the 2005 August Agreement
was frustrated?
A.
The Parties Positions
Kerbel
[217]
Kerbels overarching position on appeal rests on this foundational
legal proposition: the general rule is that it is not the function of the court
to rewrite a contract for the parties nor is it the courts role to relieve one
of the parties against the consequences of an improvident contract:
Pacific
National Investments Ltd. v. Victoria (City of)
, 2004 SCC
75, [2004] 3 S.C.R. 575, at para. 31. Kerbel says that the trial judge violated
this general rule and, after determining that enforcement of the 2005 August
Agreement was not in Romandales interests, allowed that conclusion to drive
her reasoning. However, Kerbel says, the question for the trial judge was not
whether the 2005 August Agreement turned out to be a good deal for Romandale
but, rather, whether the defences Romandale asserted to the enforcement of the
2005 August Agreement were tenable in law and fact.
[218]
In terms of frustration specifically, Kerbel submits that the trial
judge erred when she concluded, at para. 349 of the Reasons, that the 2005
August Agreement was frustrated because unforeseen planning changes resulted
in SPA not only being delayed for decades but also putting the two farms on
different development tracks. Kerbel says that the doctrine of frustration
does not apply for two reasons.
[219]
First, it notes that frustration applies when a supervening event
alters the nature of the parties obligations to such an extent that to compel
performance would require a party to do something radically different than
what they had agreed to under their contract. It says that the change in the
development timeline for the Lands did not fundamentally alter what the parties
contracted for under the 2005 August Agreement. The parties had agreed that
Romandale would sell and Kerbel would buy its Remaining Interest in the Lands.
The thing the parties bargained for has not changed only the timing of the
closing of the transaction has.
[220]
Second, Kerbel says that a contract is not frustrated if the
supervening event was contemplated by the parties at the time of contracting
and was provided for, or deliberately chosen not to be provided for, in the
contract. It argues that to the parties knowledge, the planning and
development process is fluid, unpredictable, and outside the parties control.
There was never any certainty as to the development timeline for the Lands and
the fact that governmental decisions altered the timetable was within the
parties contemplation. They point to this courts decision in the Triple R
Lands Litigation, in which that precise point is made:
First Elgin
Mills Developments Inc. v. Romandale Farms Limited
, 2014
ONCA 576, 324 O.A.C. 153, at para. 32.
[221]
Further, Kerbel argues, contrary to the trial judges finding, the
parties agreement to a fixed purchase price in this context does not lead to a
commercial absurdity. The parties deliberately chose to enter into an
agreement for a fixed purchase price of the Remaining Interest that was
significantly above market value. In doing so, Romandale assumed the risk of
what a delay in closing would entail.
Fram
[222]
Fram
adopts Kerbels position on all issues it raises on appeal. To avoid
repetition, on the balance of the issues, I will not reiterate Frams position.
Romandale
[223]
Romandale submits that Kerbel has not demonstrated any palpable and
overriding errors in the trial judges finding that the 2005 August Agreement
was frustrated when unforeseen planning changes delayed SPA for decades and put
the Lands on different development tracks. It makes two key arguments in
support of this submission.
[224]
First, it says that Kerbel is wrong that the change in the
development timeline did not fundamentally change the nature of the contract
because it simply delayed closing. The trial judge found that a short closing
horizon was part of the pith and substance of the contract and, in any event,
that SPA was at most years away, not decades. A delay of decades is radically
different than what the parties agreed to. Further, Romandale says Kerbel
failed to address the trial judges finding on frustration based on the farms
being placed on different development tracks.
[225]
As well, Romandale says Kerbel is wrong that legislative changes
cannot frustrate a contract.
Relying
on
Capital Quality Homes Ltd. v. Colwyn Construction Ltd.
(1975), 61 D.L.R. (3d) 385 (Ont. C.A.) and
Focal
Properties Ltd. v. George Wimpey (Canada) Ltd.
(1975), 73
D.L.R. (3d) 387 (Ont. C.A.), it says that changes in law or policy will
frustrate a contract and relieve the parties of performance where the common
venture is frustrated. The trial judge found that the parties common
venture of providing for the most expedient sale of the Lands, without
breaching the COAs, was no longer attainable.
[226]
Romandale says that proof of a delayed timeline for development and
separate development tracks for the farms resulted in radically different
circumstances than those contemplated in the 2005 August Agreement. It argues
this is apparent from the terms of the that agreement: it was silent on how to
close if the Lands achieved SPA at different times; the farms were treated as a
single property; there were no terms on how to treat the farms individually;
and, it made no commercial sense when closing was decades in the future. This,
Romandale argues, would result in an irreconcilable divergence of interests when
the express terms of the 2005 August Agreement provide it is conditional for
the benefit of both parties.
[227]
Second, Romandale says that Kerbel is wrong that the parties
contemplated the planning changes when entering into the 2005 August Agreement
or deliberately did not provide for such changes. It argues that Kerbels
reference to this courts 2014 decision regarding the Triple R Lands is
misleading. Even if the parties were aware that the process of developing the
Lands was fluid, unpredictable, and would take time, this does not mean they
contemplated SPA being deferred for decades and that the Lands would be put on
separate development tracks.
[228]
Romandale contends that the trial judges factual findings are
important that when the 2005 August Agreement was made, the parties expected
the Lands would achieve SPA by 2010 or soon thereafter and not decades later or
with the farms on separate development tracks. It says these are radical
changes in the planning law and process and Kerbel has not challenged them.
B.
Governing Legal Principles
[229]
A contract is frustrated when without the fault of either party
a supervening event alters the nature of a partys obligations under the
contract to such an extent that to compel performance despite the new and
changed circumstances would be to order [the party] to do something radically
different from what the parties agreed to under [their] contract:
Naylor
Group Inc. v. Ellis-Don Construction Ltd.
, 2001 SCC 58,
[2001] 2 S.C.R. 943, at para. 55;
Perkins v. Sheikhtavi
, 2019 ONCA 925, 16 R.P.R. (6th) 42, at para. 15.
[230]
However, a contract is not frustrated if the supervening event
results from a voluntary act of one of the parties or if the parties
contemplated the supervening event at the time of contracting and provided for,
or deliberately chose not to provide for, the event in the contract:
Perkins
, at para. 16;
Capital Quality
Homes
,
at
p. 626
.
[231]
The party claiming frustration bears the burden of proving the
constituent elements necessary to establish frustration:
Perkins
, at para. 17.
C.
Application of the Law
[232]
The trial judge concluded that the 2005 August Agreement was
frustrated because unforeseen planning changes resulted in SPA being delayed by
decades and put the Snider and McGrisken Farms on different development tracks.
She said these matters rendered performance of the Conditional Provision
radically different from that which the parties agreed to: at para. 349. In
my view, the trial judge erred in law in so concluding: the planning changes do
not amount to a supervening event, as that term is used in the doctrine of
frustration.
[233]
As previously noted, at para. 55 of
Naylor Group
, the Supreme Court stated that a contract is frustrated when
without the fault of either party a supervening event alters the nature of a
partys obligations under the contract to such an extent that to compel
performance would be to order the party to do something radically different
from that to which it had agreed under the contract. Neither the change to the
timing of the development of the Lands nor the fact that the development paths
of the two farms now diverge render Romandales obligations under the 2005
August Agreement radically different from that to which it agreed. Therefore,
the planning changes are not a supervening event and the agreement is not
frustrated.
[234]
This conclusion follows inescapably from a consideration of the 2005
August Agreement as a whole, including the Conditional Provision. When
Romandale and Kerbel entered into the 2005 August Agreement, all of their
obligations under it were to be performed in short order with one exception:
their obligations under the Conditional Provision. Those obligations were
clearly spelled out: Romandale was to sell its Remaining Interest in the Lands
to Kerbel at a price of $160,000 per acre: (1) with Frams consent to the
transaction or (2) through Romandales exercise of the buy-sell provision in
the COAs, after the Lands achieved SPA. The parties specified the two methods
by which the transaction could be completed rather than simply setting a date
for its completion because they wanted to ensure that the 2005 August
Agreement did not run afoul of Romandales pre-existing legal obligations to
Fram under the COAs.
[235]
While the planning changes altered the timing horizon for the
development of the Lands and the development paths of the Snider and McGrisken
Farms, those changes did not radically alter what the parties had agreed to
under the 2005 August Agreement. In fact, the planning changes did not alter
the parties obligations under the Conditional Provision in any way. What
changed were the parties expectations about when SPA would be obtained for the
Lands. Romandale remained obliged to sell its Remaining Interest to Kerbel,
either by obtaining Frams consent to the transaction or by using the buy-sell
provisions in the COAs, once SPA for the Lands was achieved. And Kerbel
remained obliged to pay Romandale $160,000 per acre for the Remaining Interest.
The fact that the expected timing for SPA changed did not alter those
obligations and nothing in the 2005 August Agreement suggests otherwise. For
example, there is no drop-dead date provision in the agreement. With due
respect to the trial judge, the boiler-plate statement at para. 7(c) of the
2005 August Agreement that time is of the essence cannot be construed to mean
that a short closing horizon was part of the pith and substance of the
contract. Further and in any event, if Romandale was troubled by the prospect
of a lengthy delay in closing based on SPA, it could have sought Frams consent
to the transaction. On the record, Romandale took no steps in that regard,
despite having expressly undertaken in the Conditional Provision to use
reasonable best efforts to obtain Frams consent.
[236]
Because the parties obligations under the Conditional Provision are
not altered by the planning changes, it cannot be said that compelling performance
of the 2005 August Agreement would be to order Romandale to do something
radically different from that to which it agreed. In short, in the
circumstances of this case, the planning changes do not amount to a supervening
event.
[237]
Further, even if the planning changes were to amount to a
supervening event, the 2005 August Agreement is not frustrated because the
supervening event was within Romandale and Kerbels contemplation when they
entered into the agreement and they did not provide for it:
Perkins
, at para. 16. Of this there can be no doubt, given this courts
findings in
First Elgin Mills
.
[238]
It will be recalled that
First Elgin Mills
dealt with the transaction in the 2005 August Agreement in which
Kerbel purchased the Triple R Lands from Romandale (acting on behalf of the
Roman family). The purchase price for the Triple R Lands was calculated on the
basis that the land was all developable. However, the land was not all
developable so Kerbel sought an adjustment to the purchase price in accordance with
the terms of the 2005 August Agreement. Romandale resisted, saying that the
purchase price adjustment clause had expired. The matter was litigated. This
court ultimately found in favour of Kerbel. At paras. 31-32 of
First
Elgin Mills
, Lauwers J.A. writing for the court, stated:
The process of moving raw land through the land development
process, is complex, time consuming, and expensive. The outcome is frequently
uncertain.
The parties to this litigation are sophisticated and
experienced land developers and were legally represented throughout the
proceedings. The principals affidavits show that, when they entered into the
[2005 August Agreement], they were aware that the process of developing the
[Lands] would be fluid and the outcome somewhat unpredictable, and that it
would take time perhaps years to finalize the [Lands] development
potential. There were provincial, regional, and local requirements to be met,
any of which could affect the [Lands] development potential ...
[239]
Thus, it can be seen, this court found that Romandale and Kerbel
were aware of the vagaries of the planning process when they entered into the
2005 August Agreement. That is, the possibility of planning changes was within
the parties contemplation when they entered into the 2005 August Agreement.
Despite that, they made no provision for such a possibility as, for example,
through the insertion of a drop-dead provision. Therefore, even if the
planning changes were a supervening event, the 2005 August Agreement is not
frustrated.
[240]
I conclude on this issue by noting that, while Romandale is correct
that legislative changes can frustrate a contract, this applies when the
legislation destroys the very foundation of the agreement:
Capital
Quality Homes
, at para. 29. As I have explained, that is
not this case.
Issue
#5: Did the trial judge err in concluding that the 2005 August Agreement
was void for mistake?
A.
The Parties Positions
Kerbel
[241]
Kerbel submits that the trial judge erred in law in finding that the
2005 August Agreement was void for mistake because the parties were operating
on the mistaken understanding that SPA would occur within a relatively short
time period, not decades after the agreement was entered into.
[242]
It argues that the doctrine of common mistake requires the plaintiff
to show that, as a result of the common mistake, the subject matter of the
contract became something essentially different from what it was believed to
be. Moreover, on the theory that the mistake destroys the consensual nature of
the bargain, the mistake must have existed at the time that the contract was
made. However, Kerbel says, there was no mistake in this case. Both parties
considered SPA to be years away when they executed the 2005 August Agreement.
The fact that an assumption turns out to be incorrect, as a result of
subsequent events, does not affect the consensus at the time the contract was
made.
[243]
In any event, Kerbel says, the change to the development timeline
did not fundamentally change the subject matter of the contract.
Romandale
[244]
Romandale submits that Kerbel has not articulated a basis for
disturbing the trial judges conclusions on mistake. It says that Kerbel is
referring to the common law doctrine of mistake in its submissions to this
court whereas the trial judge relied on the equitable doctrine of mistake.
[245]
Romandale contends that the trial judge found that the parties were
mistaken as to the time horizon for achieving SPA and that change in the
development timeline did fundamentally alter the subject matter of the
contract.
B.
Governing Legal Principles
[246]
At common law, a contract will be void for mistake when the parties
were under a common mistake that changes the subject matter of the contract
into something essentially different from what the parties believed it to be:
Miller
Paving Ltd. v. B. Gottardo Construction Ltd.
, 2007 ONCA
422, 86 O.R. (3d) 161, at paras. 22, 30. The mistake must have existed at the
time the contract was made:
Zeitel v. Ellscheid
(1991), 85 D.L.R. (4th) 654 (Ont. C.A.), at para. 44, affd [1994]
2 S.C.R. 142.
[247]
In equity, the court may relieve for common mistake when it would be
unconscientious, in all the circumstances, to allow a contracting party to
avail itself of the legal advantage it had obtained and granting relief can be
done without injustice to third parties. The contract is liable to be set aside
if the parties were under a common misapprehension as to the facts or their
respective rights, provided the mistake was fundamental and the party seeking
to set aside the contract was not at fault:
Miller Paving
, at para. 23.
C.
Application of the Law
[248]
In my view it matters not whether the trial judge decided this issue
based on the common law or equitable principles governing mistake. Mistake is
not made out under either.
[249]
At common law, the courts jurisdiction to set aside a contract for
mistake arises when the parties are under a common mistake that changes the
subject matter of the contract into something essentially different from what
the parties believed it to be:
Miller Paving
,
at para. 30. As I explain above on the issue of frustration, that is not this
case. The parties obligations were clearly spelled out in the 2005 August
Agreement: Romandale was to sell its Remaining Interest to Kerbel at a price of
$160,000 per acre, either with Frams consent or through Romandales exercise
of its buy-sell rights under the COAs. The planning changes made to the
development of the Lands did not alter those obligations. The parties were
aware of the vagaries of the planning process when they entered into the 2005
August Agreement. They knew that the process of developing the Lands was fluid
and the outcome unpredictable. The fact that events did not play out according
to the parties initial time estimates does not somehow elevate those estimates
into a common mistake such as to vitiate their consent to the deal in the 2005
August Agreement. As the subject matter of the 2005 August Agreement remained
essentially the same as what the parties believed it to be when they entered into
the agreement, mistake is not made out at common law.
[250]
In equity, the court may set aside a contract for common mistake
when it would be unconscientious, in all the circumstances, to allow a
contracting party to avail itself of the legal advantage it obtained, provided
it can be done without injustice to third parties. I address the issues of
unjustness and unfairness above, in my discussion of estoppel by convention. I
will not repeat myself. The considerations set out in that analysis show why,
even if Kerbel could be seen to have obtained a legal advantage because of the
changes in the planning process, it is not unconscientious to enforce the
2005 August Agreement. In any event, there was no fundamental mistake upon
which to base common mistake in equity.
[251]
I conclude on the equitable doctrine of common mistake by observing
that the court is to take into consideration all of the circumstances when
deciding whether it would be unconscientious to enforce the contract. The
circumstances at the time of trial included the fact that Fram had provided its
consent to the transaction in the Conditional Provision. Consequently, the
transaction could have closed immediately. The trial judge did not take that
into consideration. This is evident from her conclusion that enforcing the 2005
August Agreement would be unconscionable because the transaction had been put
off for decades. In the face of Frams consent, the transaction could have
closed immediately. Thus, it was a palpable and overriding error to find that
the transaction had been put off for decades. Moreover, in my view, the trial
judge erred in law in failing to take into account the relevant consideration
of Frams consent when determining whether it would be unconscionable to
enforce the 2005 August Agreement. For these reasons, Romandale failed to make
out the requirements for common mistake in equity and the trial judge erred in
finding otherwise.
Issue
#6: Did the trial judge err in finding Kerbels claim was
limitation-barred?
A.
The Parties Positions
Kerbel
[252]
Kerbel submits that the trial judge made palpable and overriding
errors of fact and law in finding that its claim was limitation-barred. It
makes three arguments in support of this submission.
[253]
First, until 2015, Romandale alleged that the 2005 August Agreement
was terminated by Kerbels breach in reducing the net developable acreage of
the Lands; it sought damages in the alternative. It was only in 2015 that
Romandale claimed it would not comply with the 2005 August Agreement in any
event, and Kerbel started the 2016 Action shortly thereafter.
[254]
Second, the trial judges finding that Kerbel discovered its claim
in 2011 ignores Master Grahams ruling on December 21, 2012.
[12]
In that ruling,
Master Graham dismissed Romandales motion for leave to amend its pleadings to
allege that Kerbel had breached the 2005 August Agreement by entering into the
Settlement Agreement. Kerbel says it was entitled to rely on the ruling and
that the trial judges reasoning leads to an anomalous and unreasonable result.
In order to bring its action in time, Kerbel would have had to commence an
action by 2013 for a declaration that the Settlement Agreement did not breach
the 2005 August Agreement but, in 2012, Master Graham had already reached that
conclusion.
[255]
Third, even if Kerbel was aware in 2011 that Romandale viewed the
2005 August Agreement to be at an end, the trial judge erred in law in finding
that the limitation period began to run as of that date. At its highest,
Romandales statement to Kerbel that it was not going to comply with the 2005
August Agreement amounted to an anticipatory breach of contract, not an actual
breach of contract. An anticipatory breach does not terminate or discharge the
contract. Where the innocent party does not accept the anticipated breach and
continues to treat the contract as subsisting, it does not discover its claim
for the purposes of the
Limitations Act
and the limitation period does not begin to run until the breach
has occurred and the innocent party has suffered some damage. In this case,
Kerbel made it clear that it did not accept Romandales anticipatory breach of
the 2005 August Agreement and considered the agreement to continue in effect.
Therefore, the limitation period did not begin to run as of 2011.
Romandale
[256]
Romandale says that Kerbels submission that it had no reason to
commence an action until 2015 is contradicted by the evidence, as is Kerbels
assertion that it did not accept Romandales anticipated repudiation and
continued to treat the agreement as subsisting. As the trial judge found, by
2011 Romandale was no longer acting in accordance with the 2005 August
Agreement. Under para. 5 of that agreement, Romandale was obliged to cede
control over development to Kerbel but it was not complying with that obligation.
Kerbels counsel sent a letter in February 2011 asserting that Romandale was
breaching the agreement and its conduct was actionable. Romandale did not
comply even after that letter. The manner in which Romandale was breaching the
2005 August Agreement demonstrated that it did not ever intend to sell the
Lands to Kerbel. The conduct was not ambiguous: Kerbel was on notice that if it
wanted specific performance it could not sit on its rights.
[257]
Furthermore, Romandale argues, Kerbel was not entitled to rely on
the decisions of Master Graham and Kiteley J. in the pleadings motion to
prevent the running of the limitation period. Those decisions did not reach a
conclusion on the merits of the impact of the Settlement Agreement on the 2005
August Agreement. All that was decided was that Romandales proposed amendment
was not tenable in law.
B.
Governing Legal Principles
[258]
An anticipatory breach of contract occurs when one party to a
contract, by express language or conduct, or as a matter of implication from
what it has said or done, repudiates its contractual obligations before they
fall due:
Ali v. O-Two Medical Technologies Inc.
, 2013 ONCA 733, 118 O.R. (3d) 321, at para. 22, citing G.H.L.
Fridman,
The Law of Contract in Canada
, 6th
ed. (Toronto: Carswell, 2011), at p. 585.
[259]
An anticipatory breach does not, in itself, terminate the contract.
Once the offending party shows its intention not to be bound by the contract,
the innocent party has a choice. The innocent party may accept the breach and
elect to sue immediately for damages, in which case the innocent party must
clearly and unequivocally accept the repudiation to terminate the contract.
Alternatively, the innocent party may choose to treat the contract as
subsisting, continue to press for performance, and bring the action only when
the promised performance fails to materialize. However, by choosing the latter
option, the innocent party is bound to accept performance if the repudiating
party decides to carry out its obligations:
Ali,
at para. 24.
[260]
Section 4 of the
Limitations Act
provides that a proceeding shall not be commenced in respect of a claim after
the second anniversary of the day on which the claim was discovered. Section
5(1)(a) sets out the factors for determining when a party discovers a claim.
However, where the innocent party does not accept the repudiation of the
contract, the limitation period does not begin to run until the breach actually
occurs:
Ali
, at paras. 26-27.
C.
Application of the Law
[261]
The trial judge found that the two-year limitation period governing
Kerbels claim for specific performance began running in February 2011 because,
by that time, Romandales conduct showed that it intended to remain the owner
of the Lands and from its point of view, the Conditional [Provision] was dead
(Reasons, at para. 403). That is, the trial judge concluded that Romandale had
repudiated the 2005 August Agreement by February 2011 and Kerbel knew that.
Consequently, the trial judge held that the 2016 Action was brought out of
time. In my view, the trial judge made a palpable and overriding error in
finding that the two-year limitation period began running in 2011. To explain
why, we must review the situation between Romandale and Kerbel in February 2011
and the trial judges findings on their conduct at that time.
[262]
Under para. 5 of the 2005 August Agreement, Romandale gave Kerbel
exclusive control over the development process for the Lands. Nonetheless, by
2011, Ms. Roman-Barber (and, at her direction, those working for her) was
actively attempting to shut Kerbel out of the development planning process. In
a letter dated February 17, 2011 (
Kerbels February 2011 Letter
), from Kerbels counsel to Romandales counsel, Kerbel complained
about Romandales conduct, stated it was a breach of the 2005 August Agreement,
demanded that Romandale confirm to the NMLG that Kerbels planning consultant
had the sole authority to represent the Lands, and threatened to commence
proceedings if Ms. Roman-Barber did not comply with the terms of para. 5 of the
2005 August Agreement.
[263]
By letter dated February 25, 2011, Romandales counsel responded to
Kerbels February 2011 Letter (the
Responding Letter
). In the Responding Letter, counsel for Romandale denied that Ms.
Roman-Barber had breached the 2005 August Agreement and asserted that his
client had, at all times, complied with the terms of that agreement. The
Responding Letter also stated that Romandale was considering whether Kerbels
purported settlement with [Fram] is in breach of the [2005 August] Agreement.
[264]
At para. 146 of the Reasons, the trial judge summarized what
transpired between Kerbel and Romandale in the relevant time period (i.e.
December 2010 to February 2011). Her summary includes references to Kerbels
February 2011 Letter and the Responding Letter. Paragraph 146 ends with the
trial judges conclusion that the evidence was clear that Romandale continued
to exclude Kerbel from participation in the development of the Lands and Kerbel
took no action as threatened in its letter of February 17, 2011 (the
First
Finding
).
[265]
Based on a consideration of precisely the same conduct as that which
she considered in making the First Finding, the trial judge found, at para. 403
of the Reasons, that Kerbel was aware that Romandale intended to remain the
owner of the Lands and that from its point of view the Conditional [Provision]
was dead (the
Second Finding
).
[266]
The two findings are very different. The First Finding is specific
and limited: in February 2011, Romandale was excluding Kerbel from
participation in the development of the Lands. The Second Finding is that
Romandales conduct put Kerbel on notice that Romandale had repudiated the
Conditional Provision by acting as if it was dead.
[267]
Thus, the question becomes: are the two findings reconcilable? They
are not, either on the facts or the law.
[268]
Factually, the Second Finding cannot stand in light of Romandales
Responding Letter. In that letter, Romandales counsel denied that his client
was in breach of the 2005 August Agreement and also stated that Romandale was
considering whether the Settlement Agreement was a breach of the 2005 August
Agreement. Clearly, the Responding Letter contains no express repudiation of
its obligations under the Conditional Provision. On the contrary, in the
Responding Letter, Romandale affirms that the 2005 August Agreement is
operating, that it is complying with it, and that it is considering its
position under the 2005 August Agreement as a result of Kerbel having entered
into the Settlement Agreement.
[269]
In terms of the law, the Second Finding was not open to the trial
judge either. In the Reasons on this issue, when the trial judge makes the
Second Finding, she does not explicitly refer to anticipatory breach or the
legal principles that govern it. However, based on the parties positions on
this issue, it appears that she made the Second Finding based on those
principles. On that assumption, the trial judge was considering Romandales
language and conduct in the relevant period to determine whether it could be
construed as a repudiation of its obligations under the Conditional Provision
before they became due for performance. In other words, the trial judge was
considering whether Romandale had committed an anticipatory breach of the 2005
August Agreement by indicating that it would not comply with its obligations
under the Conditional Provision. Romandale made no express assertion to that
effect. Therefore, the Second Finding must have been based on Romandales
conduct. However, as I have just explained, in light of the Responding Letter
in which Romandale affirmed the 2005 August Agreement, its conduct cannot be so
construed.
[270]
Thus, there was no anticipatory breach by Romandale of its
obligations under the Conditional Provision in 2011 and the limitation clock
did not begin ticking.
[271]
Romandales anticipatory repudiation of the 2005 August Agreement
occurred for the first time in 2015 through its express statement to that
effect by its new counsel. As the innocent party, Kerbel had the choice whether
to accept the repudiation or treat the 2005 August Agreement as subsisting. It
elected to accept the anticipatory breach and commenced the 2016 Action, which
was within the two-year limitation period.
[272]
I note that Romandale points to other findings the trial judge made
regarding Romandales conduct after Fram and Kerbel entered into the Settlement
Agreement, which Romandale says demonstrate that it treated the 2005 August Agreement
as dead. These findings relate to events that occurred after February 2011. As
the trial judge based her determination on Kerbel having discovered its claim
by February 2011, it is unnecessary to consider Romandales conduct falling
after that time.
[273]
I conclude on this issue with the following two points. First, it is
trite law that not every breach of a contract amounts to a repudiation. By
February 2011, Kerbel was aware that Romandale was in breach of para. 5 of the
2005 August Agreement because of its conduct respecting the development process
for the Lands. However, that breach was not a repudiation of the Conditional
Provision. Second, even if Romandales conduct could be construed as a
repudiation of the Conditional Provision, it was an anticipatory breach. As
such, the limitation period did not begin running unless Kerbel accepted the
repudiation (
Ali
,
at paras. 26-27) and
that Kerbel did not do. On the contrary, as discussed above, Kerbel protested
Romandales conduct in its February 2011 Letter and affirmed the validity of
the 2005 August Agreement. Kerbel then continued its work with the NMLG in the
development process and maintained its position in the various lawsuits that
the 2005 August Agreement was valid and enforceable. Thus, Romandales breach
of its obligations relating to the development process by February 2011 could
not have started the limitation clock running.
Issue #7: Did the trial judge err in concluding
that Kerbel was not entitled to specific performance of the 2005 August
Agreement?
A.
The
Parties Positions
Kerbel
[274]
Kerbel submits that the trial judge erred in law in rejecting its
claim for specific performance because she ignored the uniqueness of the Lands
to Kerbel. Instead, the trial judge focused entirely on whether the Lands were
capable of valuation and whether substitute properties were available.
[275]
Kerbel gives five reasons for its contention that the Lands have a
peculiar or special value to it.
[276]
First, Kerbel already owns a 4.75% undivided interest in the Lands.
It purchased that interest with the express intention that it would become the
owner of all of the Lands. For that reason, Romandale and it never contemplated
what a co-owner relationship would look like (unlike Romandale and Fram which
entered into COAs). If specific performance is not ordered, Romandale and
Kerbel will be forced to remain as co-owners of the Lands, a relationship that
neither expected nor wanted. Granting specific performance, however, would
allow the parties to put an end to their fraught and highly litigious
relationship.
[277]
Second, in light of this courts ruling in the Triple R Lands
Litigation, Kerbel is entitled to set off the purchase price adjustment for
those lands from the purchase price it is to pay Romandale for the Remaining
Interest. Such a price reduction is not available for any other property that
might come on the market and gives the Lands a quality that cannot be
duplicated.
[278]
Third, Kerbel has already made significant investments in time,
money, and expertise in the development of the Lands and surrounding
properties.
[279]
Fourth, Kerbel entered into all of the transactions in the 2005
August Agreement with a view to its long-term plan to secure large tracts of
undeveloped land for the purposes of development and construction. The
transactions in the 2005 August Agreement included its purchase of the Triple R
Lands, which adjoins the Lands, and a right of second refusal on the Elgin
South Property.
[280]
Fifth, Kerbel is not seeking specific performance of a purely executory
contract. It is seeking performance of a contract which it has already
substantially performed. The transactions in the 2005 August Agreement were
intertwined and formed part of a package. Kerbel has upheld its end of the
bargain by assuming the BNS mortgage, purchasing the initial 4.75% interest in
the Lands, and purchasing the Triple R Lands.
[281]
Kerbel also submits that the trial judge erred in finding its claim
for specific performance was barred by laches. It says that, in determining
whether there has been delay amounting to laches, the main considerations are
acquiescence on its part and any change of position by Romandale arising from
reasonable reliance on Kerbels acceptance of the status quo. Kerbel says
neither of those considerations applied. It never acquiesced and, as the trial
judge found, there was no change to the status quo after the Settlement
Agreement.
[282]
Finally, Kerbel takes issue with the trial judges statement at
para. 406 of the Reasons that, because Romandale had spent years investing
significant time, effort, and money into the Lands, it would be unjust to
disrupt that by granting specific performance. It notes that the 2005 August
Agreement required Romandale to cooperate in the development of the Lands and
there is no injustice or prejudice that follows from compliance with its legal
obligations. To the extent that Romandale incurred development costs, it can
seek reimbursement from Kerbel under the terms of the 2005 August Agreement,
just as it did in the past.
Romandale
[283]
Romandale submits that this court owes a high degree of deference to
the trial judges exercise of discretion in refusing to grant specific
performance. It argues that the trial judge did not ignore the uniqueness of
the Lands to Kerbel she rejected Kerbels claim of uniqueness because she
found Mr. Kerbels own expert evidence contradicted his bald assertion that the
Lands were unique and because the Lands were just an investment for Kerbel.
[284]
Further, Romandale says, the trial judge considered whether substitute
properties were available and concluded that the undeveloped Lands were not
unique to Kerbel, a developer engaged in a profit-seeking venture, and there
were plenty of substitute properties available. Romandale says that Kerbel has
not articulated any palpable and overriding errors in the trial judges
conclusion.
[285]
As for the five arguments that Kerbel advances for why the Lands are
special and unique to it, Romandale says they are simply re-argument, which the
trial judge was entitled to reject, as she did. Romandale says that Kerbel has
not pointed to a palpable and overriding error in the trial judges
determination, therefore it must stand.
[286]
On laches, Romandale says that the trial judge found both
acquiescence and reliance and Kerbel has not cited any evidence to show the
findings were the result of palpable and overriding error.
B.
Governing Legal Principles
[287]
Specific performance is not to be ordered for breach of contract
unless damages are inadequate. When damages are found to be inadequate, it is generally
because of the unique nature of the property bargained for. It is for this
reason that specific performance has historically been granted in cases
involving the purchase and sale of real property:
Erie Sand &
Gravel Ltd. v. Series Farms Ltd.
, 2009 ONCA 709, 97 O.R.
(3d) 241, at paras. 110-11.
[288]
However, it cannot be assumed that damages for breach of contract
for the purchase and sale of real estate will be an inadequate remedy in all
cases. Specific performance should not be granted absent evidence the property
is unique to the extent its substitute would not be readily available:
Semelhago
v. Paramadevan
, [1996] 2 S.C.R. 415, at para. 22. Whether
a substitute is readily available depends on the facts of the particular case.
Therefore, uniqueness is a fact-specific inquiry:
Di Millo v.
2099232 Ontario Inc.
, 2018 ONCA 1051, 430 D.L.R. (4th)
296, at para. 67, leave to appeal refused, [2019] S.C.C.A. No. 55.
[289]
Laches is an equitable doctrine that offers a defence to delayed
equitable claims. Mere delay is insufficient to trigger laches. The party
asserting laches must establish one of two things: (1) acquiescence on the
claimants part; or (2) a change of its position arising from reasonable
reliance on the claimants acceptance of the
status quo
:
Manitoba Metis Federation Inc. v. Canada (Attorney
General)
, 2013 SCC 14, [2013] 1 S.C.R. 623, at paras.
145-47;
Intact Insurance Company of Canada v. Lombard General
Insurance Company of Canada
,
2015 ONCA 764, 128
O.R. (3d) 658, at paras. 8-11.
C.
Application of the Law
[290]
The trial judge declined to order specific performance largely
because she concluded that the Lands were not unique to Kerbel. In my view, she
erred in three ways in reaching that conclusion.
[291]
First, the trial judge erred in law in relying on the evidence of
the experts called to provide a value for the Lands to find that the Lands were
not unique to Kerbel. The experts had used the direct comparison approach to
value the Lands. That approach required the experts to find comparable
properties with similar characteristics to the Lands. While the direct
comparison approach is an accepted method for valuing land, it does not speak
to whether a property is unique in the legal sense. Put another way, because
the direct comparison approach does not address the legal requirements for
determining whether land is unique, it cannot be used as a proxy for that
purpose. It was an error in law to do so.
[292]
Second, it was a palpable and overriding error for the trial judge
to find that the only evidence on uniqueness was Mr. Kerbels bald assertion
to that effect. In so doing, the trial judge neglected to consider the
following points:
(1)
Kerbel already owns a 4.75% undivided interest in the Lands and fully
owns the adjoining property, the Triple R Lands. No other property has both
these characteristics;
(2)
In light of this courts ruling in the Triple R Lands Litigation, Kerbel
is entitled to set off the purchase price adjustment for the Triple R Lands
from the purchase price it is to pay Romandale for the Remaining Interest. Such
a price reduction is not available for any other property that might come on
the market and gives the Lands a quality that cannot be duplicated;
(3)
Kerbel has already made significant investments in time, money, and
expertise in the development of the Lands;
(4)
With Romandales full knowledge and consent, Kerbel entered into the
package of intertwined transactions in the 2005 August Agreement in order to
secure a large tract of undeveloped land for the purposes of development and
construction. The transactions in the 2005 August Agreement include Kerbels
purchase of the Triple R Lands, which adjoins the Lands, and a right of second
refusal on the Elgin South Property; and,
(5)
Kerbel is not seeking specific performance of a purely executory
contract. It is seeking performance of a contract which it has already
substantially performed. On the trial judges findings, Romandale received over
$16.7 million of immediate value under the 2005 August Agreement. The upfront
money Kerbel paid Romandale was to satisfy Romandales need for liquidity.
Kerbel has upheld its end of the bargain by assuming the BNS mortgage,
purchasing the initial 4.75% interest in the Lands, and purchasing the Triple R
Lands.
[293]
Third, a property is unique if there is no readily available substitute
property:
Semelhago
, at para. 22. One method
of proving that there is no readily available substitute is to show that the
property has a quality that cannot be readily duplicated elsewhere:
Erie
Sand
, at paras. 115-16. The above considerations establish
that the Lands have qualities that cannot be readily if at all duplicated
elsewhere. They also show that, contrary to the trial judges finding, the
Lands are not merely an investment for Kerbel with any number of suitable
substitutes available. The Lands are unique to Kerbel.
[294]
While the trial judges analysis focused on the uniqueness of the
Lands, I also view her to have fallen into error in failing to consider the
effects of refusing to grant specific performance. In this case, if specific performance
is not ordered, Romandale and Kerbel will remain co-owners of the Lands. As
Kerbel points out, that situation was not expected, wanted, or provided for in
the 2005 August Agreement. And, as the events of the past 12 years have shown,
the situation is unworkable. This consideration militates in favour of finding
that damages are an inadequate remedy.
[295]
The trial judge gave laches as a further reason for refusing to
grant specific performance. In my view, she erred in law in this regard because
Romandale made out neither of the two requirements enunciated in
Manitoba
Metis Federation
.
[296]
First, Kerbel did not acquiesce in Romandales attempts to shut it
out of the development process. As discussed above, counsel for Kerbel wrote to
counsel for Romandale in February 2011, complaining about this conduct, stating
it was a breach of Romandales obligations under the 2005 August Agreement, and
demanding that Romandale confirm to the NMLG that Kerbels planning consultant
had the sole authority to represent the Lands. Moreover, despite Romandales
attempts to shut Kerbel out of the development process, Kerbel continued to be
actively involved in the development process through the NMLG. Kerbel also
continued to maintain that the 2005 August Agreement was in force until in
response to Romandales declaration in 2015 that it would not perform its
obligations under the 2005 August Agreement it started the 2016 Action.
[297]
Second, Romandale did not change its position in reliance on
Kerbels alleged acceptance of the status quo. The trial judge found, at paras.
118-19 and 339 of the Reasons, that there was no change in Romandales behavior
and the status quo did not change after Kerbel and Fram entered into the
Settlement Agreement.
[298]
Further, to the extent that the trial judge found reliance based on
Romandales investment of time, money and effort into the Lands development,
in my view she erred. Under the terms of the 2005 August Agreement, Romandale
was obliged to cooperate with Kerbel in development of the Lands. Reliance
cannot be claimed when it is a matter of compliance with ones legal
obligations. And, in any event, Romandale can seek reimbursement for
development costs from Kerbel under the terms of the 2005 August Agreement,
just as it did in the past.
IX.
FRAMS CLAIM FOR DAMAGES
[299]
Fram asks that it be awarded damages of $11,997,500 for its loss
respecting 50% of the Lands that go to Kerbel under the Settlement Agreement.
Its very brief submissions are as follows. The 2005 August Agreement was a
breach of the prohibition against Dispositions in s. 5.03 of the COAs. Upon
breach, pursuant to s. 6.02(d) of the COAs, Romandale was obliged to sell the
Lands to Fram for 95% of fair market value. As Romandale refused to do that,
Fram is entitled to the difference in the market value of the Lands between
then and trial. Fram says it mitigated its losses by entering into the
Settlement Agreement and withdrawing its challenge to the validity of the 2005
August Agreement. Because Romandales actions were responsible for Fram giving
up its 50% interest in the Lands, Fram should be compensated in damages.
[300]
The foundation for Frams claim to damages is that Romandale
breached the prohibition against Dispositions in s. 5.03 of the COAs when it entered
into the 2005 August Agreement. However, the trial judge found against Fram on
that matter. In paras. 168-90 of the Reasons, the trial judge gives a thorough
explanation for her determination that Romandale did not breach the prohibition
against Dispositions in s. 5.03 of the COAs by entering into the 2005 August
Agreement (the
Determination
). In
its appeal, Fram did not challenge the Determination. Therefore, the
Determination stands and Frams claim to damages must necessarily fail.
X.
The Costs Appeal
[301]
By order dated April 2, 2020 (the
Costs Order
), the trial judge ordered costs in favour of Romandale in the
amount of $2,708,651.57. Costs were awarded on a substantial indemnity basis
and made payable on a joint and several basis by Fram and Kerbel.
[302]
Both Fram and Kerbel seek leave to appeal the Costs Order.
[303]
The general principle is that when an appeal is allowed, the order
for costs below is set aside and the appellant is awarded costs below and on
appeal:
St. Jean v. Cheung
, 2009 ONCA 9, 45
E.T.R. 3(d) 171, at para. 4;
Climans v. Latner
,
2020 ONCA 554, 449 D.L.R. (4th) 651, at para. 85. As I would allow the appeals,
the general principle applies and the Costs Order is set aside. Thus, it is
unnecessary to determine whether leave to appeal the Costs Order should be
granted and, if so, whether the appeals against that order should be allowed.
[304]
Based on the parties brief submissions on this matter at the oral
hearing of the appeals, I understand that all three agree that if the appeals
are allowed, costs below should be awarded on a partial indemnity basis.
However, they disagree on the basis by which those costs should be determined.
Fram and Kerbel argue that this court should fix those costs at 60% of the full
indemnity request contained in the bills of costs they submitted at trial.
Romandale contends that, if the parties are unable to agree on the quantum of
partial indemnity costs, costs should be assessed.
[305]
Romandale also challenges Frams entitlement to costs below. It
submits that Fram has no appeal but, rather, only an economic interest in the
outcome of Kerbels appeal. Consequently, if the appeals are allowed, Romandale
says that Fram is not entitled to costs below.
[306]
For the reasons given in my determination of Romandales first alleged
threshold flaw, I reject Romandales submission that Fram is disentitled to
costs below.
[307]
The oral submissions do not provide the court with an adequate basis
on which to quantify the costs below for Fram and Kerbel. I trust that the
foregoing provides the parties with sufficient guidance that they can resolve
the quantum of costs below among themselves. If they are unable to do that, as
indicated in the disposition below, the parties may have recourse to this court
to resolve the matter.
XI.
A COMMENT ON THE CONCURRING
REASONS
[308]
My reasons do not address the first proposition set out in my
colleagues concurring reasons because no party raised or argued the legal
effect of Frams consent.
[309]
In terms of the second proposition estoppel by convention no party
raised or argued the legal issues addressed by my colleague in his concurring
reasons. Consequently, my reasons do not address those legal issues.
[310]
Accordingly, nothing in my reasons should be taken as approving of
those parts of the concurring reasons relating to the first and second
propositions.
XII.
Disposition
[311]
Accordingly, I would allow the appeals and declare that the 2005
August Agreement is valid and enforceable, and I would order specific
performance of Romandales obligations under the 2005 August Agreement.
[312]
Counsel for the parties advised that they had resolved the matter of
costs of the appeals and that no order was required in that regard. Thus, I
would make no order as to costs of the appeals.
[313]
In terms of costs below, if the parties are unable to resolve that
matter, I would permit them to make written submissions to a maximum of 5
double-spaced pages. I would give the Appellants 14 days from the date of
release of this judgment to file their written submissions and Romandale 21
days.
[314]
Neither Fram nor Kerbel specified what changes should be made to the
Judgment if the appeals were successful. In light of that and the complexity of
the pleadings, I will leave it to the parties to resolve that matter. I offer
the following comments as guidance:
i.
because I would dismiss
Frams request for damages and no appeals were taken in respect of the 2007
Action and the 2008 Action, I would make no change to paras. 1 and 2 of the
Judgment to the extent it dismisses those actions. However, that part of para.
1 of the Judgment dismissing Kerbels crossclaim may need to be altered to
reflect the result of these appeals;
ii.
I would set aside para.
3 of the Judgment and substitute an order dismissing the 2016 Action;
iii.
I would set aside para.
5 of the Judgment and substitute an order declaring that the 2005 August
Agreement is valid and enforceable and an order for specific performance of
Romandales obligations under it; and,
iv.
I would set aside para.
6 of the Judgment.
Gillese J.A.
I agree. M.L.
Benotto J.A.
SCHEDULE
A: CHRONOLOGY OF EVENTS
2003
[1]
Romandale sells Fram an
undivided 5% interest in two neighbouring farms in Markham known as the
McGrisken Farm and the Snider Farm (the
Lands
) and the parties enter into two identical sets of
agreements, one set for each farm property: the Co-Owners Agreement (
COA
), which sets out the terms and conditions
on which Romandale and Fram, as co-owners, hold title to the Lands; the
Construction Management Agreement (
CMA
), under which Fram is to construct and sell
residential units on the Lands, once they achieve Secondary Plan Approval (
SPA
); and the Development Management
Agreement (
DMA
),
which governs the development process for the Lands. Bordeaux Developments
(Ontario) Inc. (Bordeaux) is also a party to the DMAs and, under its terms,
is appointed the development manager. When the parties enter into these
agreements, they expect to obtain SPA for the Lands around 2010.
[2]
Of these agreements,
the COAs are the most significant for these appeals. The buy-sell provision in
s. 5.07 of the COAs permits either co-owner, under certain conditions, to
tender on the other an offer to sell its entire interest in the Lands and, at
the same time, an offer to buy the others entire interest in the Lands on the
same terms as the offer to sell. The non-tendering party must choose whether to
buy out the tendering party or sell its interest. The buy-sell is available
once SPA is obtained for the Lands or the DMA is terminated.
[3]
Section 6.02 of the
COAs provides that if an Event of Default occurs and is continuing, the
non-defaulting party can, among other things, bring proceedings for specific
performance and/or buy the defaulting partys interest in the Lands at 95% of
fair market value.
[4]
Development of the
Lands depends on obtaining planning approval, including appropriate amendments
to the official plan. These changes are made to the secondary plan, which
provides more detailed policies for the development of a specific area. The
process of obtaining development approval for specific lands is known as SPA.
This is reflected in s. 5.07(a) of the COAs, which defines SPA as an amendment
of the official plan of the Town of Markham applicable to the Lands, obtained
in accordance with the Planning Act (Ontario).
[5]
When Romandale and Fram
enter into these agreements in 2003, Romandale has not yet started the SPA
process.
2004
[6]
With Frams consent,
Romandale borrows $6 million from the Bank of Nova Scotia (
BNS
) secured by a mortgage on the Lands.
2005
[7]
With Frams consent,
Romandale terminates the DMAs with Bordeaux.
[8]
In response, Bordeaux
brings an action against Romandale and Fram, alleging the termination was
invalid and of no force and effect.
[9]
The ongoing work to
move the Lands through SPA continues through a new agreement between Fram and
Romandale to co-manage development of the Lands.
[10]
BNS calls the $6 million mortgage.
Romandale needs financing to repay the BNS loan by August 30, 2005. It also
needs cash to make distributions to the Roman family. The solution is an
agreement which Romandale and Kerbel enter into on August 29, 2005 (the
2005 August Agreement
).
[11]
In the 2005 August Agreement, Kerbel agrees
to pay off the BNS mortgage and extend the same amount as a new loan to
Romandale under the same security and Romandale agrees to: (1) sell to Kerbel
its 95% interest in the Lands, at a fixed price of $160,000 per acre; (2) sell
to Kerbel (on behalf of the Roman family) the Triple R Lands for $175,000 per
acre, subject to a price adjustment for non-developable acreage; and (3) grant
Kerbel a right of second refusal over other lands called the Elgin South
Property. The sale of Romandales interest in the Lands is to occur in two
steps:
a.
an initial sale of 5%
of Romandales interest in the Lands; and
b.
the sale of Romandales
remaining interest in the Lands (
Remaining Interest
), conditional on:
i.
Romandale buying out
Frams interest in the Lands pursuant to the buy-sell provisions in the COAs;
or
ii.
Fram consenting to the
transaction.
[12]
The second step of the sale of Romandales
interest in the Lands to Kerbel is referred to as the
Conditional Provision
.
[13]
All the transactions in the 2005 August
Agreement have been completed, except the sale of Romandales Remaining
Interest to Kerbel under the Conditional Provision.
[14]
Paragraph 5 of the 2005 August Agreement
empowers Kerbel to cause Romandale to trigger the buy-sell provision in the
COAs following SPA being obtained for the Lands. It also gives Kerbel full
control over the development of the Lands.
[15]
When the parties entered into the 2005
August Agreement, Romandale expected the Lands would advance through the
planning process by approximately 2010 and Kerbel hoped that SPA might take
only seven to ten years to unfold.
[16]
Ms. Roman-Barber tells Fram she reached an
agreement with Kerbel under which Keel bought the Triple R Lands, assumed the
BNS mortgage, and bought 5% of Romandales interest in the Lands. She does not
disclose that Romandale has committed to sell its entire interest in the Lands
through the Conditional Provision.
2007
[17]
In January, Romandale discloses to Fram
that it sold its entire interest in the Lands to Kerbel. Frams repeated
requests for a copy of the 2005 August Agreement are refused. Frams counsel is
shown a copy of the agreement in April, on conditions.
[18]
In June, Romandale attempts to sell a
further 7% interest in the Lands to Kerbel on the same terms as the 2005 August
Agreement. This time it notifies Fram, which issues a notice of default for a
prohibited disposition.
[19]
In July, Fram starts an action against
Romandale and Kerbel, alleging that the 2005 August Agreement was a prohibited
disposition under the COAs, and seeking an injunction restraining Romandale
from any further sale of its interest in the Lands (the
2007 Action
).
[20]
Fram also gives notice it will seek to
exercise its remedy under the COAs to purchase Romandales interest in the
Lands at 95% of fair market value.
[21]
In July, Ms. Roman-Barber produces a copy
of the 2005 August Agreement as an exhibit to her affidavit on the injunction
motion. This is the first time that Fram is provided with a copy of the
agreement.
[22]
In her affidavit, Ms. Roman-Barber swears
that The Agreement of August 29, 2005 is conditional upon [SPA] and The
Buy/Sell Provisions are only exercisable after what is commonly known as
[SPA].
[23]
Justice Forestell grants the injunction
restraining Romandale from making any disposition of the Lands or any part of
its interests in them, stating [t]he original intent of the [2005 August
Agreement] was that the sale to [Kerbel] of the [Remaining Interest] would not
occur until some time after SPA.
2008
[24]
Fram and Bordeaux start an action against
Romandale and Kerbel based on alleged breaches of the CMAs (the
2008 Action
). Under the CMAs, Fram had the right to construct
residences on the Lands once SPA is obtained.
[25]
Kerbel, as owner of the Triple R Lands,
together with neighbouring landowners, form the North Markham Landowners Group
(NMLG) with the goal of engaging collectively with the relevant authorities
about the development of their respective properties.
[26]
From 2008 onward, the NMLG retains
consultants and commissions studies required for the development process and
engages in that process with Markham. NMLGs development costs have been in the
hundreds of thousands of dollars. Until 2011, Kerbel reimbursed Romandale for
all costs associated with the Lands, including Romandales share of the NMLG
cash calls that were made to fund the NMLG ongoing development activities.
2009
[27]
The anticipated development timeline for
the Lands changes because of government decisions. As a result, development of
the Snider Farm is delayed until 2021-2031 and of the McGrisken Farm until
2031-2051. In addition, the Snider Farm is proposed for employment use, which
would prevent residential development.
[28]
Ms. Roman-Barber makes further statements
during examinations that the buy-sell would be triggered after SPA.
[29]
The 2007 and 2008 Actions are set down for
trial in July. In November, they are consolidated.
2010
[30]
The parties attend pre-trial conferences,
following which the trial is adjourned and the parties engage in settlement
discussions.
[31]
At a judicial mediation in September 2010,
the parties reach an agreement in principle on the main settlement terms. One
of the agreed settlement terms is that the sale of Romandales Remaining
Interest to Kerbel will occur after the Lands achieve SPA.
[32]
In a letter dated September 24, 2010, from
Romandales counsel to counsel for Kerbel and Fram, he set out areas on which
the parties had agreed, including That the sale of each of parcel will take
place when that particular parcel achieves [SPA].
[33]
Various drafts are exchanged among counsel
for the three parties, all of which include a provision to the effect that
purchase and sale of Romandales Remaining Interest will take place after SPA.
[34]
Romandale withdrew from the settlement in
October for reasons that include disagreement over registration of the
injunction against the Lands. Its reasons do not include an objection to the
provision that purchase and sale will take place after SPA.
[35]
Fram and Kerbel move forward with
settlement and enter into final minutes of settlement, (the
Settlement Agreement
) in December 2010. It provides that if Romandale
does not concur in it and the 2007 and 2008 Actions proceed to trial:
1)
Fram would discontinue its claims against Kerbel and
restrict its claims against Romandale to damages;
2)
Kerbel would grant Fram an option
to purchase a 50% interest in Romandales Remaining Interest in the Lands, on
the same terms and conditions as Kerbel might purchase Romandales Remaining
Interest;
3)
If Fram exercises the option, it
and Kerbel would enter into a joint venture agreement to develop the Lands with
(effectively) an equal sharing of costs;
4)
Fram did not consent to
Romandales sale of its Remaining Interest in the Lands to Kerbel; and
5)
It is Fram and Kerbels intention
that the purchase and sale of Romandales Remaining Interest in the Lands
pursuant to these Minutes of Settlement will take place after [SPA] for the
Lands has been obtained.
2011
[36]
By letter dated January 28, 2011, counsel
for Romandale advises Fram and Kerbel that Romandale objects to Kerbels land
planner telling the North Markham Landowners Group (
NMLG
) that there was a change in the ownership of the Lands. The letter
reiterates that Romandale conditionally sold the Lands to Kerbel under the 2005
August Agreement and [t]he condition could only be satisfied by either a)
secondary plan approval (which has not been achieved); b) or the consent of
[Fram] to the transaction.
[37]
Romandale represents the Lands at the NMLG
and instructs its planning consultant (and others working for it) to not share
information with Kerbels planner.
[38]
Kerbels counsel sends a letter, dated
February 17, 2011, to Romandales counsel complaining that Ms. Roman-Barbers
conduct was a breach of para. 5 of the 2005 August Agreement in which Romandale
ceded control of the development process for the Lands to Kerbel. It demands
that Romandale confirm to the NMLG that Kerbels planning consultant has the
sole authority to represent the Lands and threatens to commence proceedings if
Ms. Roman-Barber did not comply with para. 5 of the 2005 August Agreement.
[39]
Romandales counsel responds by letter,
dated February 25, 2011, asserting that its client had at all times acted in
accordance with the 2005 August Agreement and was considering whether the
Settlement Agreement was a breach of the 2005 August Agreement.
2012
[40]
In February, Romandale seeks payment from
Kerbel of invoices and expenses incurred pursuant to the 2005 August Agreement.
[41]
In June, Romandale moves to amend its
pleadings in the 2007 and 2008 Actions and for leave to commence claims against
Kerbel, alleging the Settlement Agreement fundamentally breached the 2005
August Agreement.
2013
[42]
Master Graham dismisses Romandales
amendment motion, finding that the Settlement Agreement did not amount to a
breach of the 2005 August Agreement because whatever the Kerbel defendants do
with the [L]ands once Romandales interest in them is conveyed
is none of
Romandales concern. Accordingly, he said, Romandales argument that the 2005
August Agreement was breached is not tenable at law.
[43]
Romandale appeals Master Grahams order.
[44]
Meanwhile, Romandale and Kerbel were
involved in litigation over the Triple R Lands (the
Triple R Lands Litigation
), one of the transactions in the 2005 August
Agreement. Under the 2005 August Agreement, Kerbel purchased the Triple R Lands
for $175,000 per developable acre, subject to a purchase-price rebate
calculated in reference to developable acreage. The parties disagreed about
whether and how much rebate was owed. In February 2013, Romandale and Kerbel
enter into a partial settlement in which they agree that if Kerbel is found to
be entitled to a price adjustment, the determination of the non-developable
lands is to be done pursuant to the terms of the [2005 August Agreement] and
the Amendment.
[45]
Romandale leaves the NMLG.
2014
[46]
Romandale brings an action against Kerbel,
alleging Kerbel breached the 2005 August Agreement by taking steps to reduce
the amount of potential developable acreage on the Lands. It seeks a
declaration that the 2005 August Agreement was terminated or, alternatively,
damages (the
2014 Action
).
[47]
Justice Kiteley dismisses Romandales
appeal of Master Grahams order.
[48]
This court releases its decision in the
Triple R Lands Litigation. It finds in favour of Kerbel, declaring that Kerbel
was entitled to a purchase price reduction in accordance with the [2005 August
Agreement].
[49]
NMLG enters into a funding agreement with Markham
for the purpose of funding the municipalitys studies and reports related to
future development of lands in north Markham. Kerbel pays all of the costs
associated with the Lands under the funding agreement.
2015
[50]
Romandale retains new counsel and takes a
new position. For the first time it claims that the buy-sell provisions in the
COAs could be performed
before
SPA because the DMAs with Bordeaux had
been terminated in February 2005.
[51]
Romandale obtains leave to amend its
pleadings in the 2007 Action to allege, for the first time, that Kerbel
repudiated the 2005 August Agreement by entering into the Settlement Agreement
because the latter included a provision that the purchase and sale of its
Remaining Interest would occur after SPA. Also for the first time, in its
amended pleadings, Romandale asserts that it will not perform the 2005 August
Agreement in any event. Until then, Romandales position in the 2007 Action
mirrored its position in the 2014 Action: that it was entitled to damages from
Kerbel if the court did not find that the 2005 August Agreement was terminated.
[52]
Justice Dunphy orders that Kerbel be added
as a party to the 2007 Action, that the injunction be dissolved, and that
Romandale be permitted to amend its pleadings to argue repudiation.
2016
[53]
Kerbel starts an action against Romandale
seeking specific performance of the 2005 August Agreement (the
2016 Action
).
2017
[54]
Kerbel files a crossclaim in the 2007
Action seeking specific performance of the 2005 August Agreement and an order
directing Romandale to comply with its terms.
[55]
Romandale files a defence to Kerbels
crossclaim in the 2007 Action alleging that the 2005 August Agreement offends
the rule against perpetuities.
2018
[56]
Shortly before the trial of the four
actions begins in October 2018, Fram and Kerbel amend the Settlement Agreement
to allow the sale of Romandales Remaining Interest to close immediately,
rather than after SPA. The stated basis for this is to militate against the
risk that the 2005 August Agreement could offend the rule against perpetuities.
[57]
Fram delivers its consent to Romandale to
close the sale of its Remaining Interest under the 2005 August Agreement.
[58]
The trial of the four actions begins in
October. SPA had not been obtained for the Lands.
Schedule B
:
KEY Contractual Provisions
1.
Key Provisions in the COAs
Section
1.01
Definitions:
Unless
the subject matter or context otherwise requires:
[
]
(s) Disposition
means the sale (including judicial sale), assignment, exchange, transfer,
lease, mortgage, hypothecation, pledge, encumbrance, devise, bequeath or other
disposition or agreement for such by a Co-Owner of the whole or part of its
Co-Owner's Interest, and a Disposition shall include an amalgamation, a
transfer by arrangement, conversion, exchange, sale, assignment or trust of the
Equity Shares or the issue of any treasury shares which in any case would
result in a change of Control of a Co-Owner;
Section
5.03
Dispositions:
Save
for those Dispositions expressly permitted in this Agreement neither Co-Owner
shall make or permit a Disposition without the consent of the other Co-Owner
(which consent may be unreasonably or arbitrarily withheld) and any attempt to
do so shall be void and the other Co-Owner shall, in addition to all other
rights and remedies in law and in equity, be entitled to a decree or order
restraining and enjoining such Disposition and the offending Co-Owner shall not
plead in defence thereto that there would be an adequate remedy at law it being
recognized and agreed that the injury and damage resulting from such default
would be impossible to measure monetarily. Notwithstanding anything in this
Agreement contained no Disposition may be made if:
(t) as
a
result
thereof,
the
other
Co-Owner
or
its
Co-Owner's
Interest
shall be
subject to any taxation to which it was not theretofore subject or to
any governmental controls or regulations to which it was not subject prior
thereto by reason solely of the nationality or residence of the transferee;
or
(u) the
Disposition is not permitted by law or any term of any Permitted Encumbrance or
any agreement or document affecting the Co-Owners or the Lands unless any
approval required by such Permitted Encumbrance, agreement or document has been
obtained and is in effect; or
(v) the
Disposition is for less than all of the Co-Owner's Interest; or
(w) such
Co-Owner or any Affiliate of such Co-Owner is a Defaulting Party hereunder,
and any
Disposition which would procure such result shall be void. The Co-Owners shall
use their reasonable best efforts to obtain the consents of any third parties
to any Disposition which would otherwise be permitted hereunder (provided,
however, that a Co-Owner shall not be obligated to expend any funds, incur any
liabilities or amend any agreements in order to obtain any such consent).
Notwithstanding
anything
herein contained, no Disposition may be made unless the transferee enters into
an agreement with any continuing Co-Owner (and satisfactory to its counsel
acting reasonably) whereby the transferee shall be bound by and entitled to the
benefit of this Agreement to the extent of the Co-Owners Interest which is the
subject of the Disposition
.
Section
5.07
Buy-Sell Provisions:
(a)
Provided
that what is commonly called secondary plan approval (that is an amendment of
the official plan of the Town of Markham applicable to the Lands, obtained in
accordance with the Planning Act (Ontario)) (the
Secondary Plan Approval
)
has been obtained for the Lands, or if the Management Agreement has been
terminated, then a Co-Owner who is not then a Defaulting Party (the
Initiating
Party
) may, at any time thereafter tender on the other party (the
Recipient
Party
), not less than two (2) copies of an agreement combining a separate
offer to sell the Initiating Party's full title to all (but not less than all)
of its Co-Owner's Interest in the Lands to the Recipient Party (the Sale
Offer) and an offer to purchase all (but not less than all) of the Recipient
Party's Co-Owner's Interest in the Lands (the Purchase Offer) at a price and
upon such terms and conditions as may be set by the Initiating Party except
that the purchase price must be paid by cash and the assumption of the
assumable Permitted Encumbrances affecting the applicable co-Owner's Interest
and save and except that the price and terms as to payment with respect to the
Sale Offer for each one percent (1%) interest must be equal to and identical to
the price and terms as to payment with respect to the Purchase Offer for each
one percent (1%) interest and that the closing of the transaction resulting
from the acceptance of the Sale Offer or the Purchase Offer Shall take place no
earlier than 30 days and no later than 90 days after the expiration of the 100
day period referred to in Subsection 5.07(b). On the completion date of the
transaction contemplated in the Sale Offer the purchasing Co-Owner shall pay to
the selling Co-Owner the balance of the purchase price by cash or certified
cheque.
(b) One
business day after receipt of the Purchase Offer by the Recipient Party, the
Initiating Party shall deliver to the Recipient, as a deposit, a certified
cheque or bank draft in an amount equal to five percent (5%) of the purchase
price stipulated in the Purchase Offer and such cheque or bank draft shall be
payable to the Recipient Party's counsel, in trust. The Recipient Party shall
have 100 days following the receipt of the Sale Offer and the Purchase Offer in
which to elect either to accept the Purchase Offer or the Sale Offer.
(c) If
the Recipient Party shall elect to accept the Sale Offer it shall return to the
Initiating Party its deposit (by way of certified cheque or bank draft)
together with one (1) fully executed copy of the Sale Offer accompanied by the
Recipient Partys certified cheque or bank draft as a deposit equal to 5% of
the purchase price stipulated in the Sale Offer payable to the Initiating
Party's counsel, in trust. If the Recipient Party shall not accept the Sale
Offer it shall accept the Purchase Offer within the time limited. Failure of
the Recipient Party to accept the Sale Offer or the Purchase Offer shall be
deemed to mean that the Recipient Party has accepted the Purchase Offer.
(d) To
the extent not stated or contradicted in any Purchase Offer or Sale Offer, the
closing thereof shall be completed in accordance with the terms and conditions
referred to in Section 8.01 hereof.
Section
5.10
Romandales Right to Sell:
Subject
only to the provisions of Section 5.03(a), (b) and (d) but notwithstanding any
other provision in this Agreement to the contrary, Romandale may upon 20 days
notice to Frambordeaux, accompanied with a copy of a bona fide arm's length
offer to purchase (the Offer), elect to sell in one or more transactions up
to but not in excess of an undivided 39% interest in the Lands payable only in
cash and by assumption of existing assumable Permitted Encumbrances, provided
that any purchaser of such interest shall agree in writing that following such
purchase and sale the Co-Owners Committee shall remain the same and that the
representative of Romandale shall also be the representative of the purchaser
that all decisions and actions of Romandale and the purchaser under or pursuant
to this Agreement (including the exercise of all rights hereunder) shall be
made by Romandale alone. Frambordeaux may, at any time within 10 days from
receipt of the aforesaid notice, by written notice to Romandale, elect to sell
all or part of its Co- Owner's Interest on the same terms and conditions as
contained in the Offer (except that the consideration shall be adjusted in
accordance with the ratio of Frambordeaux's Co-Ownership Proportion to
Romandale's Co-Ownership Proportion) provided that if Frambordeaux elects to
sell only a part of its Co-Owner's Interest, it shall retain at least an
undivided 2% Co-Owner's Interest and if Frambordeaux elects to sell all or part
of its Co Owner's Interest, Romandale or the purchaser shall be obligated to
complete the purchase of Frambordeaux's Co-Owner's Interest pursuant to this
Section 5.10.
Section
6.02
Remedies Available to a Non-Defaulting Party:
If
an Event of Default has occurred and is continuing, a Non-defaulting Party
shall have the right to:
(a) remedy
such Event of Default and any event of default of the Defaulting Party under
any other agreements Approved by the Co-Owners, and shall be entitled upon
demand to be reimbursed by the Defaulting Party for any monies expended to
remedy any such Event of Default and any other expenses incurred by such
Non-defaulting Party, together with interest (calculated and payable monthly)
at the lesser of the rate of 4% per annum in excess of the Prime Rate or the
maximum rate then permitted at law from the date such monies were expended or
such expenses were incurred to the date of repayment thereof; and/or
(b) bring
any proceedings in the nature of specific performance, injunction or other
equitable remedy, it being acknowledged by the parties hereto that damages at
law may be an inadequate remedy for a default or breach of this Agreement;
and/or
(c) bring
any action at law as may be necessary or advisable in order to recover damages;
and/or
(d) arrange,
upon written notice to the Defaulting Party, for a determination of the Fair
Market Value (as determined pursuant to Section 6.03) of the Defaulting Party's
Co-Owner's Interest as at the date of such notice and shall deliver written
notice to the other Co-Owner of such Fair Market Value, and either
contemporaneously with such first written notice or such second written notice,
a Non-defaulting Party shall have the right to give written notice (Notice of
Exercise) to the Defaulting Party that such Non-defaulting Party elects to
purchase the Defaulting Party's Co-Owner's Interest at a price equal to
ninety-five (95%) per cent of the Fair Market Value thereof payable only in
cash and by the assumption of assumable Permitted Encumbrances affecting the
Defaulting Party's Co-Owner's Interest and to purchase such interest at such
price in which event the Defaulting Party shall sell and the Non-defaulting
Party shall purchase such interest on the terms set forth in Subsections 6.03
and 6.04 hereof.
2.
The 2005
August Agreement
WHEREAS:
A. Romandale,
as to an undivided 95% interest, and Frambordeaux Developments Inc. (FDI), as
to an undivided 5% interest, are the owners of the lands and premises
consisting of 278 acres, more or less, described as part of Lot 25 in
Concessions 4 and 5, Town of Markham (having P.I.N. 03055-0008 (LT) (the
Snider Property) and 03056-0052 (LT) (the McGrisken Property))
(collectively, the Snider/McGrisken Property) which are subject to a mortgage
in favour of The Bank of Nova Scotia (the Bank) in the original principal amount
of $6,000,000 registered as Instrument No. YR479080 (the BNS Mortgage);
B. The
amount outstanding under the BNS Mortgage is scheduled to become due and
payable on August 30, 2005 and Romandale has requested 2001251 to acquire the
mortgagee's interest under the BNS Mortgage and such of the Bank's additional
security provided by Romandale in connection therewith as may be required in
order to ensure that the BNS Mortgage is a good and valid first charge against
title to the Snider/McGrisken Property (collectively, the Security) and
thereafter extend its terms for repayment;
C. Romandale
has agreed to sell its interest in the Snider/McGrisken Property to 2001251 on
the terms herein set out;
D. Romandale
and parties affiliated with Romandale are the owners of the lands and premises
described as part of Lot 26, Concession 4, Town of Markham (having PIN
03055-0009 (LT)) (the Triple R Property) and Romandale has agreed to cause
the sale of such property to 2001251 on the terms herein set out;
E. Romandale
is the owner of the lands and premises described as part of Lot 24, Concession
5, Town of Markham (being PIN 03056-0199 (LT)) (the Elgin South Property) and
has agreed to grant to 2001251 a right of refusal to purchase such property on
the terms herein set out;
NOW
THEREFORE THIS AGREEMENT WITNESSES that, in consideration of 2001251 agreeing
to acquire the BNS Mortgage and extend the term for repayment thereunder and in
consideration of the other covenants contained herein, the parties agree as
follows:
1. BNS
Mortgage
(a) 2001251
or its affiliate shall acquire the mortgagees interest under the Security,
including without limitation, the BNS Mortgage on or before the amount
outstanding thereunder becomes due and payable. 2001251 and/or its designate
shall be at liberty to contact the Bank at any time hereafter for the purposes
of settling the terms and conditions in respect of the purchase of the BNS
Mortgage. 2001251 shall receive a mortgage statement from the Bank setting out
the current outstanding balance under the BNS Mortgage. Thereafter, the parties
to the BNS Mortgage shall enter into an amending agreement whereby: (i) the
term is extended such that all amounts secured thereby shall become due and
payable upon the earlier of (A) the date that is three (3) years from the date
of closing of 2001251s purchase of the BNS Mortgage and (B) the date upon
which Romandale conveys the Remaining Portion (as hereinafter defined) of the
Snider/McGrisken Property to 2001251 and (ii) the interest rate chargeable
thereunder shall be 8% per annum payable interest only monthly in arrears.
(b) Romandale
shall pay the sum of $20,000 to 2001251 on the execution of this agreement to
reimburse it for its costs and expenses incurred to date, and it shall pay to
2001251 all further costs and expenses of 2001251 incurred in connection with
the BNS Mortgage acquisition on the date that the mortgage assignment and
amending agreement is executed by the parties an registered on title.
Notwithstanding the foregoing, the parties agree that Romandale shall only be
responsible up to the sum of $10,000 in respect of legal fees incurred in
connection with 2001251's acquisition of the BNS Mortgage.
(c) In
connection with the acquisition of the BNS Mortgage by 2001251, Romandale shall
cause its counsel Berkow Cohen LLP (Jack Berkow) and Gowling Lafleur Henderson
LLP (John Whyte) (collectively, Romandale Counsel), to provide opinions in
favour of 2001251(collectively, the Opinions), which shall be in forms
acceptable to 2001251 and its counsel, Aird & Berlis LLP (Hayden Solomons),
acting reasonably, and which shall include, without limitation, opinions that
the BNS Mortgage is a good and valid first fixed mortgage registered against
title in the Snider/McGrisken Property and that the BNS Mortgage and this
Security has been validly assigned to 2001251, that there are no other
financial encumbrances affecting title to the Snider/McGrisken Property and
that acquisition and amendment by 2001251 of the BNS Mortgage on the terms and
conditions as herein set out shall not constitute a transaction (including,
without limitation, a Disposition as defined under the Co-Owner Agreement
dated May 29, 2003 in respect of the Snider Property (the Snider Co-Owner
Agreement) and as defined under the Co-Owner Agreement dated May 29, 2003 in
respect of the McGrisken Property (the McGrisken Co-Owner Agreement)
(collectively, the Snider Co-Owner Agreement and the McGrisken Co-Owner
Agreement are referred to herein as the Co-Owners Agreements, and any
amendments thereto) that requires the consent of FDI pursuant to the said
Co-Owners Agreements.
2. Sale
of the Snider/McGrisken Property
Romandale
shall sell 5% of its interest (the Initial Interest) in the Snider/McGrisken
Property (being 4.75% of the total 100% ownership in the Snider/McGrisken
Property (e.g. 95% Romandale and 5% FDI as of the date of this agreement) and,
of FDI if it so desires, to 2001251 or its affiliate on the terms herein set
out. Romandale shall sell its remaining interest in the Snider/McGrisken
Property, being 95% of its interest in the Snider/McGrisken Property (the
Remaining Interest) also on the terms herein set out save that the sale of
the Remaining Interest is conditional for the benefit of the vendor and the
purchaser on the valid exercise of the buy-sell rights under the Buy-Sell
Provisions (as defined in paragraph 5 of this Agreement) and the completion of
the buy-out of the interest of FDI, or, in the alternative, the consent of FDI
to the transaction and save that financial figure shall be adjusted pro-rata to
represent the said Remaining Interest. In respect of the foregoing, Romandale
covenants to use reasonable best efforts to obtain the consent of FDI in
respect of the sale of the Remaining Interest to 2001251 or its affiliate as
aforesaid. For clarification, the following terms are applicable in respect of
the Initial Interest but would be adjusted to reflect the aforesaid Remaining
Interest at the time that Romandale is able to sell the Remaining Interest to
2001251 or its affiliate as aforesaid:
(a) The
purchase price shall be based on the sum of $160,000 per acre which price will
be calculated using the existing most recent survey of the subject property
which Romandale represents and warrants accurately describes the subject
property. With respect to the purchase of the Initial Interest, an initial
deposit of $100,000 shall be paid immediately, and the balance of the purchase
price shall be paid by certified cheque or bank draft on the closing of such
transaction. With respect to the purchase of the Remaining Interest, the
purchase price shall be reduced at the end of the 5
th
year of the
term of the VTB #1 Mortgage (as hereinafter described) by the amount that the
acreage of the non-developable land (being land prohibited from development by
law) subject to environmental protection requirements, wood lots, land below
top-of-bank and the set-backs from top-of-bank, streams and floodplain,
existing easements, but not including up to half of the existing lake on the
subject property to a maximum of two acres (the ND Land) exceeds 15% of the
total acreage. The parties shall each retain their own consultant to determine
the acreage of the ND Land and both parties shall agree upon a third
independent qualified consultant to determine the acreage of the ND Land in the
event that their own consultants cannot agree upon such acreage. In the event
of such disagreement, the amount of the ND Land shall be deemed to be the
average of the amounts determined by the 3 consultants. Such determination of
the amount of acreage of the ND Land shall be final and binding upon the
parties, with no rights of appeal therefrom. The parties shall each bear the
cost of their own consultant and 50% of the cost of the third consultant.
(b) The
purchase price in respect of the purchase of the Remaining Interest shall be
paid to the extent of 35% thereof by certified cheque on closing and the
balance by way of a vendor take-back mortgage (the VTB #1 Mortgage) with a
term of 7 years, bearing no interest, with two balloon principal payments of
$9,500,000 each to be paid at the end of the 3
rd
year of the term
and at the end of the 5
th
year of the term, respectively, with the
price adjustment described in section 2(a) hereof to be applied at the time of
such [later] payment. Notwithstanding the above, however, the parties further
agree that the aggregate of the amount paid on closing and the two balloon
principal payments shall not exceed 75% of the overall purchase price as
adjusted pursuant to section 2(a) hereof.
(c) The
closing of the sale of the Initial Interest shall take place on the 31
st
day of January, 2006. The closing of the sale of the Remaining Interest shall
take place sixty (60) days (or the next business day following such sixtieth
(60
th
) day after the earlier of: (1) Romandale obtaining the consent
of FDI pursuant to the Co-Owners Agreements to the sale of the Remaining
Interest to 2001251 pursuant to the terms and conditions hereof, or (2)
Romandale closing the purchase of FDI's co-ownership interest in the
Snider/McGrisken Property pursuant to its rights under the Buy-Sell Provisions
(as defined in paragraph 5 of this Agreement).
(d) The
occupants approved by Romandale (the Superintendents) shall be entitled to
occupy the residence on the Snider/McGrisken Property as Superintendents and
caretakers to maintain and supervise the property, and they are to pay all
maintenance, utilities and fire and liability insurance costs (which insurance
shall be obtained by them and with the owner noted on all insurance policies
for the above coverages as loss payee). The Superintendents' right to occupy
the property shall automatically terminate on the earlier of the 5
th
anniversary of the closing of the purchase and sale of the Initial Interest or
Secondary Plan Approval being obtained for the Snider/McGrisken Property.
(e) In the
event of any final judgment or order or any execution in favour of Bordeaux,
FDI or any third party which attaches to or creates an interest in or affects
title to the Snider/McGrisken Property, then in such case, the purchase price
hereunder for Romandale's interest in the Snider/McGrisken Property shall be
reduced by the value of such judgment, order or execution as follows: (1) in
the event that the purchase transaction in respect of the Initial Interest has
not yet closed, a reduction in the cash component of the said purchase price,
(2) in the event that the purchase transaction in respect of the Remaining
Interest has not closed then the purchase price in respect thereof shall be
reduced by a reduction first in the cash component of the said purchase price
and the balance, if any, resulting in a reduction of the principal amount owing
under the VTB #1 Mortgage, or (3) in the event that such purchase transaction
in respect of the Remaining Interest has closed, a reduction in the principal
balance, owing under the VTB #1 Mortgage. The parties covenant and agree to
notify the other of the details of any such judgment, order or execution
forthwith following first becoming aware of such judgment, order or execution.
3. Sale
of the Triple R Property
Romandale
shall sell, or shall cause the owners to sell, the Triple R Property to 2001251
or its affiliates on the terms herein set out:
(a) The
purchase price shall be based on the sum of $175,000 per acre which price will
be calculated using the existing most recent survey of the subject property
which Romandale represents and warrants accurately describes the subject
property. The purchase price shall be reduced at the end of the 5
th
year of the term of the VTB #2 Mortgage (as hereinafter described) by the
amount that the acreage of the ND Land within the Triple R Property exceeds 20%
of the total acreage. The determination of the amount of acreage of such ND
Land shall be made in the same manner as that described in section 2 (a)
hereof;
(b) The
purchase price shall be paid to the extent of 70% thereof by certified cheque
on closing and the balance by way of a vendor take-back mortgage (the VTB #2
Mortgage) with a term of 7 years, bearing no interest, with a balloon principal
payment of $1 million at the end of the 3
rd
year of the term. The
price adjustment described in section 3(a) hereof shall be applied at the end
of the 5
th
year of the term, and 50% of the balance owing under the
VTB #2 Mortgage shall be paid at the end of the 6
th
year of the term
and the balance at the end of the 7
th
year of the term;
(c) The
Superintendents shall be entitled to occupy the residence on the Triple R
Property as Superintendents and caretakers to maintain and supervise the
property, and they are to pay all maintenance, utilities and fire and liability
insurance costs (which insurance shall be obtained by them and with the owner
noted on all insurance policies for the above coverages as loss payee). The
Superintendents' right to occupy the property shall automatically terminate on
the earlier of the 5
th
anniversary of closing or Secondary Plan
Approval being obtained for the Triple R Property.
(d) 2001251
shall immediately provide a deposit to Romandale in the amount of $100,000 in
respect of its obligations to purchase the Triple R Property pursuant to the
terms hereof, together with an interest-free loan of $1,000,000 evidenced by a
promissory note signed by Romandale which shall be repayable on the closing of
the sale of the Triple R Property to 2001251 or its affiliates.
(e) The
closing of such sale shall take place on the date that is 70 days following the
closing date of the transactions described in section 1 hereof (or the next
business day thereafter in the event that such 70
th
day is not a
business day).
4. Elgin
South Property
The
Elgin South property is subject to an existing right of first refusal in favour
of Angus Glen Farm (1996) Limited. On the closing of the acquisition of the BNS
Mortgage, Romandale shall grant to 2001251 or its affiliate a right of second
refusal to purchase such property on the same terms as contained in any offer
to purchase that Romandale is prepared to accept. The form of such grant shall
be in the same form as the existing agreement with Angus Glen Farm (1996)
Limited. 2001251 shall be permitted to register notice of the aforesaid right
of second refusal against title to the Elgin South Property. Romandale
covenants and agrees to execute such further documents and to do all such
further acts and things from time to time as requested by 2001251, to more
effectively confirm and evidence the right of second refusal.
5. Irrevocable
Appointment
Romandale
hereby agrees that, on consideration of entering of this agreement by 2001251,
other good and valuable consideration and the sum of Ten Dollars ($10.00) paid
by 2001251 to Romandale, the receipt and sufficiency of all of which is hereby
acknowledged, Romandale hereby irrevocably appoints 2001251 as its exclusive
true and lawful attorney and agent having full power of substitution, and
2001251 is hereby fully authorized as such to act on behalf of and/or give
binding instructions to Romandale solely in connection with the exercise of the
buy-sell rights pursuant to the Buy-Sell Provisions (as hereinafter defined).
Romandale agrees that any and all decisions, operations, conduct and actions
relating to the development of the Snider/McGrisken Property shall be within
the exclusive control of 2001251 and Romandale shall assist in facilitating
such control to comply with Section 5.10 of the Co-Owners Agreements over all
decisions, operations, conduct and actions exercisable by Romandale relating to
the development and obtaining of development approvals for the Snider/McGrisken
Property. Prior to the closing of the sale of the Remaining Interest, Romandale
acknowledges and agrees that it may not transfer, sell, encumber or otherwise
deal with or dispose of all or any part of the Snider/McGrisken Property
without the prior written consent of 2001251. Romandale covenants and agrees to
execute such further documents and to do all such further acts and things from
time to time as requested by 2001251, to more effectively confirm and evidence
the said attorney as it relates to the buy-sell rights. Romandale and 2001251
shall cooperate in getting the Snider/McGrisken Property included under the
Town of Markham urban envelope for development purposes, and Romandale shall
make all reasonable steps to reduce land wastage to as small an amount as
possible, using Joanne Burnett, Jeff Kerbel and/or his designate to act on behalf of Romandale in taking such steps. Romandale further acknowledges that
the foregoing rights of 2001251 are intended, without limitation, to permit
2001251 to cause Romandale to trigger Romandale's buy-sell rights under section
5.07 of each of the Co-Owners Agreements in respect of the Snider/McGrisken
Property (collectively, the Buy-Sell Provisions) following Secondary Plan
Approval being obtained for the Snider/McGrisken Property such that Romandale
acquires the co-ownership interest of FDI in the Snider/McGrisken Property and
then conveys such interest to 2001251 in accordance with this Agreement and to
restrict Romandale from dealing with the Remaining Interest or any part thereof
in the Snider/McGrisken Property in any way whatsoever, subject to the terms
and conditions of the Co-Owners Agreement.
6. Development
Costs
Romandale
shall not be responsible for development costs incurred by 2001251 Ontario Inc.
7. General
(a) This
agreement shall be a binding agreement between the parties hereto save that it
shall be conditional upon compliance with the
Planning Act
.
(b) Any
notice given hereunder shall be in writing and given by personal delivery or by
fax to the addresses set out on the signing page hereof. Such notice shall be
deemed to have been given on the day of delivery or transmission if such was
completed by 5:00 p.m. failing which it shall be deemed to have been given on
the next day.
(c) Time
shall be of the essence hereof.
(d) Romandale
shall take all actions so as to ensure that all property interests conveyed
pursuant to this agreement shall be good and marketable, free of all mortgages,
liens and encumbrances.
(e) This
agreement may be executed and delivered by counterparts and by facsimile
transmission, and if so executed and delivered, each document shall be deemed
to be in original, shall have the same effect as if each party so executing and
delivering this agreement had executed the same copy of this agreement and all
of which copies when taken together shall constitute one and the same document.
3.
The Settlement Agreement
WHEREAS
Frambordeaux
Developments Inc. (Frambordeaux) and Romandale Farms Limited (Romandale)
are co-owners of two parcels of land which are the subject of these actions
(the Lands) and are parties to Co-Owners Agreements governing their rights
and obligations respecting their ownership of the Lands (the Co-Owners
Agreements) which provide,
inter alia
, that each Co-Owner has a right
of first refusal respecting an offer to purchase the other Co-Owners interest
(the Right of First Refusal) and each Co-Owner has a buy-sell right in
respect of the other Co-Owners interest (the Buy-Sell Provision), but that
in both cases the rights may only be exercised after secondary plan approval
has been obtained for the Lands, and that save for those dispositions expressly
permitted by the Co-owners Agreements (whereby Romandale was permitted under
certain conditions to sell up to 39% interest in the Lands), neither Co-Owner
is permitted to dispose of its interest in the Lands without the consent of the
other Co-Owner;
AND WHEREAS
Romandale and
2001251 Ontario Inc. ("2001251") made an agreement dated August 29,
2005 (the "August 29, 2005 Agreement") whereby Romandale agreed,
inter alia, in respect of the Lands: to sell 5% of its interest (the
"Initial Interest") in the Lands (being 4.75% of the total 100%
ownership in the Lands) on the terms set out therein and originally scheduled
to close January 31, 2006; and to sell its Remaining Interest in the lands
(being 95% of its interest representing 90.25% of the total 100% ownership in
the
Lands) on the
terms set out therein and at such time as Romandale could exercise its buy-sell
rights under the Buy-Sell Provisions of the Co-Owners Agreements or
Frambordeaux consented to the transaction;
AND WHEREAS
pursuant to the
August 29, 2005 Agreement, Romandale transferred 5% of its interest in the
Lands (being 4. 75% of the total Lands) to First Elgin Mills Developments Inc.
("First Elgin"), an affiliate of 2001251, on or about June 6, 2006;
AND WHEREAS
Romandale and
First Elgin made a further agreement dated June 25, 2007, (the "June 25,
2007 Agreement"), whereby Romandale agreed to sell a further 7% of its
original 95% interest in the Lands (being 6.65% of the total 100% ownership in
the Lands) to First Elgin for the same purchase price of $160,000 per acre
subject to adjustment for net developable acreage as provided in the August 29,
2005 Agreement;
AND WHEREAS
Frambordeaux
sought and obtained an interlocutory injunction July 26, 2007 enjoining the
defendants until further order of the Court from making any disposition of the
Lands or any part of the interest of Romandale in the Lands;
AND WHEREAS
the Plaintiffs and
the Defendants 2001251, First Elgin and Jeffrey Kerbel have agreed to
settlement so that the right of 2001251 or its affiliate to acquire Romandale's
Remaining Interest in the Lands pursuant to the August 29, 2005 Agreement may
be exercised 60 days after Secondary Plan Approval for the Lands is obtained,
and upon such acquisition the entire Lands shall at Frambordeaux' option be
beneficially owned equally between 2001251 and Frambordeaux thereafter, so that
a 50% undivided interest therein shall be beneficially owned by 2001251 or its
nominee, and a 50% undivided interest therein shall be owned beneficially by
Frambordeaux or its nominee.
THE
PARTIES HERETO
agree as follows:
In
the event Romandale will not concur in this settlement and these actions
proceed to trial, Frambordeaux, Fram 405 Construction Ltd. and Bordeaux
Homes Inc. shall not seek any relief against 2001251, First Elgin or
Jeffrey Kerbel and shall not seek a declaration that the August 29, 2005
Agreement is void nor that the June 6, 2006 transfer is invalid, but may
pursue its claims against Romandale otherwise, including its claims for
damages for breach of contract, misrepresentation and damages in lieu of
specific performance, and all claims in these actions against 2001251,
First Elgin and Jeffrey Kerbel shall be discontinued, with such
discontinuance being an absolute defence for those defendants to any
subsequent actions arising out of the circumstances pleaded.
2001251
hereby grants an option to Frambordeaux to purchase a 50% interest in
Romandale's Remaining Interest in the Lands to be acquired by 2001251 as
described in paragraph 2 of the August 29, 2005 Agreement, on the same
terms and conditions as 2001251 may purchase Romandale's Remaining
Interest in the Lands, at such time or times as 2001251 may exercise its
right to purchase all or part of Romandale's Remaining Interest, provided
that in the event Frambordeaux exercises its option hereby granted, the
respective interests of Frambordeaux and 2001251 shall be adjusted so that
each of Frambordeaux and 2001251 (including their affiliates and related
parties) beneficially hold an exactly equal percentage ownership interest
(being an undivided 50% interest each) in the Lands.
In
the event Frambordeaux exercises its option described in paragraph 2
hereof, and all or part of Romandale's
Remaining
Interest
shall have been purchased, 2001251, First Elgin and Frambordeaux shall
assign all of their right, title and interest in the Lands to Fram First
Elgin Developments Inc. which shall hold in trust for 2001251 or its
nominee and for Frambordeaux or its nominee, each as to a 50% beneficial
interest therein.
2001251
and Frambordeaux, or their nominees, together with First Elgin Mills
Developments Inc. and Fram First Elgin Developments Inc. shall enter into
the form of joint venture agreement attached as Schedule "A"
hereto and agree to share equally all costs relating to the acquisition of
the Remaining Interest from Romandale, and all development costs incurred
by either of them relating to the Lands since August 29, 2005 and going
forward, and to make all decisions concerning the development and/or the
exercise of all rights and obligations respecting the Lands, on a joint
basis. Any disputes or disagreements shall be resolved by arbitration
before a single arbitrator as the parties may agree, or failing such
agreement, as may be appointed by a judge of the Ontario Superior Court.
Frambordeaux
does not by this settlement agreement or otherwise consent to the
transaction referred to in paragraph 2 of the August 29, 2005 Agreement.
It is the intention of the parties hereto that the purchase and sale of
Romandale's Remaining Interest in the Lands pursuant to these Minutes of
Settlement will take place after Secondary Plan Approval for the Lands has
been obtained.
The
parties acknowledge that the legal description of the Lands is as set out
in Schedule "B" appended hereto and that Notice of this
Agreement pursuant to the Land Titles Act, R.S.O. 1990, c.L.5 may be
registered against their respective undivided
interest
in the Lands
and that Notice of Security Interest in respect of the option granted by
this Agreement may be registered pursuant to the Personal Property
Security Act, R.S.O. 1990, c. P. 10.
Dated:
December 3
rd
, 2010
Lauwers
J.A. (
concurring
):
[315]
I would reach the same
destination as my colleague, dismissal of the appeal, but by a different route.
We part company on the role of estoppel by convention. I adopt my colleagues short
forms in these reasons.
A.
OVERVIEW
[316]
I summarize my view of
this appeal in the following propositions:
1)
When Fram consented to the sale of Romandales Remaining Interest in the
Lands to Kerbel under the 2005 August Agreement on August 22, 2018, any
estoppel against Romandale ceased to have practical effect and was therefore spent.
It plays no further legal role in the contractual relations among the parties.
Those relations are entirely structured and governed by their respective
agreements.
2)
In any event, on the facts of this case, estoppel by convention does not
arise.
3)
By entering into the Settlement Agreement, Kerbel did not breach the
2005 August Agreement.
4)
Kerbel did not repudiate the 2005 August Agreement.
5)
Kerbel is entitled to specific performance of the 2005 August Agreement.
[317]
I will explain each of
these propositions in turn, after restating the contractual context.
B.
THE
CONTRACTUAL CONTEXT
[318]
The COAs between Fram
and Romandale respecting the McGrisken and Snider Farms were signed in 2003.
The COAs structure the relationship between Fram and Romandale.
[319]
The 2005 August Agreement
between Kerbel and Romandale was signed in 2005. It included not only the
McGrisken Farm and the Snider Farm, but also the Triple R Lands and the Elgin
South Property, both of which were owned by or subject to the direction of
Romandale. The 2005 August Agreement structures the relationship between Kerbel
and Romandale. It has been fully performed except for the sale of Romandales
Remaining Interest in the McGrisken and Snider Farms to Kerbel.
[320]
Fram and Kerbel signed
the Settlement Agreement on December 3, 2010. The Settlement Agreement
structures the relationship between Fram and Kerbel. Romandale was not a party
to the Settlement Agreement. Romandale had participated in the September 2010 judicial
mediation but withdrew in October 2010. (I observe that calling the
exercise a judicial mediation gives it unwarranted gravity.) In the end, the
Settlement Agreement was a business deal between Kerbel and Fram to which
Romandale was not a party.
[321]
Romandale first raised
the possibility that the Settlement Agreement breached the 2005 August
Agreement in February 2011 but did not allege that by entering it Kerbel
repudiated the 2005 August Agreement until 2015.
[322]
As I will explain, these
three agreements remain in full force and effect and govern the parties to them.
C.
ANALYSIS
(1)
Any
Estoppel Ceased to Have Practical Effect When Fram Consented to the Sale of
Romandales Remaining Interest on August 22, 2018
[323]
The estoppel by
convention raised by Kerbel and Fram against Romandale arises from the
Settlement Agreement. Romandale argues that Kerbel repudiated the 2005 August
Agreement by entering into the Settlement Agreement, which provided that the
sale of Romandales Remaining Interest would take place only after the Lands
obtained SPA. Kerbel, in turn, seeks an order for specific performance of the
2005 August Agreement. Kerbel and Fram, together, argue that Romandale is
estopped from resiling from Romandales earlier position that the buy-sell in
the COAs could only be triggered upon SPA. That position was reflected in earlier
representations to that effect made by all three parties, as my colleague has
detailed at paras. 156-172. But for Frams 2018 consent, giving effect to this
position would have the effect of extending the likely date for closing the
COAs, and perforce the 2005 August Agreement, for many years, until after SPA.
[324]
My colleague defines
the Shared Assumptions that underpin the estoppel by convention, at para. 153:
(1) the buy-sell provision in the COAs could not be triggered
until after SPA had been achieved for the Lands; and (2) under the 2005 August
Agreement, Kerbel could not cause Romandale to trigger the buy-sell under the
COAs until after SPA.
She finds that Romandale is estopped from resiling
from these Shared Assumptions. In her analysis, the estoppel continues to
operate and prevents Romandale from resisting on order for specific performance
of the 2005 August Agreement on the basis that it was fundamentally breached
and repudiated by Kerbels entry into the Settlement Agreement.
[325]
However, as my
colleague notes, the assumption that the buy-sell provision in the COAs could
not be triggered until after SPA was a mistaken reading of s. 5.07 of the COAs.
Romandale could have triggered the buy-sell under the COAs at any time after the
DMAs were terminated in February 2005. Because the 2005 August Agreement was
tied to the COAs, Kerbel could have caused Romandale to pull the trigger at any
time after it signed that agreement. This understanding of the true trigger
date is now common ground.
[326]
In August 2018, a few
months before the trial started, Fram consented to the sale of Romandales
Remaining Interest in the McGrisken and Snider Farms to Kerbel, pursuant to the
2005 August Agreement. Under para. 2(c) of that agreement, The closing of the
sale of the Remaining Interest shall take place sixty (60) days
after
Romandale
obtaining the consent of [Fram]... to the sale of the Remaining Interest. Frams
consent removed any obstacle to the closing of that transaction.
[327]
The alleged estoppel
prevented Romandale from insisting on an earlier closing date than after SPA, which
by 2010 was projected to be years if not decades into the future. But this
purpose of the estoppel was rendered redundant by Frams 2018 consent. In my
view, assuming the estoppel was founded and was enforceable against Romandale, it
ceased to have practical effect and plays no further legal role in the
contractual relations among the parties. Frams consent could not have revived
the 2005 August Agreement if it had been repudiated by Kerbel but, as I explain
below, Kerbel did not repudiate that agreement.
[328]
The relations among
the contracting parties are entirely structured and governed by their
respective agreements, which also govern the disposition of this appeal.
[329]
If I am mistaken in
concluding that the estoppel was effectively spent in 2018, I next set out my
reasons for holding that there was no estoppel by convention on the facts of
this case.
(2)
Estoppel
by Convention Is Not Made Out
[330]
I begin with the
governing principles of estoppel by convention, review the evidence, and then apply
the principles to the facts.
(a)
The Principles Governing Estoppel by Convention
[331]
The law on estoppel by
convention, at least in Canada, is under-theorized. There has been little
jurisprudence. The most authoritative statement is that of the Supreme Court in
Ryan v. Moore,
2005 SCC 38, [2005] 2 S.C.R. 53. Bastarache J. set out
the criteria that form the basis of the doctrine, at para. 59, which I repeat here
for convenience:
(1) The parties dealings must have been based on a shared
assumption of fact or law: estoppel requires manifest representation by
statement or conduct creating a mutual assumption. Nevertheless, estoppel can
arise out of
silence
(impliedly). [Emphasis in original.]
(2) A party must have conducted itself, i.e. acted, in
reliance on such shared assumption, its actions resulting in a change of its
legal position.
(3) It must also be unjust or unfair to allow one of the
parties to resile or depart from the common assumption. The party seeking to
establish estoppel therefore has to prove that detriment will be suffered if
the other party is allowed to resile from the assumption since there has been a
change from the presumed position.
[332]
Note the reference by
Bastarache J. to the requirement for a manifest representation. This
expression must be read in context. The key difference between estoppel by
representation and estoppel by convention is that in estoppel by
representation, one party must make a representation to the other party on
which the other party relies, whereas, in estoppel by convention, neither party
need have made a representation to the other party so long as they both proceeded
on a shared assumption and were each aware of the others assumption: see
Ryan
v. Moore
, at paras. 54, 62.
[333]
In
Grasshopper
Solar Corporation v. Independent Electricity System Operator
, 2020 ONCA
499, leave to appeal refused, [2020] S.C.C.A. No. 360 and No. 361, Huscroft
J.A. made explicit another element of the test that I believe was implicit: the
partys reliance on the shared assumption must have been reasonable. Huscroft
J.A. noted, at para 54:
Although the doctrine of estoppel cannot vary the terms of a
contract, it may operate to prevent a party from relying on the terms of the
contract
to the extent necessary to protect the
reasonable reliance of the other party
. Thus, the doctrine has the potential
to undermine the certainty of contract and must be applied with care,
especially in the context of commercial relationships between sophisticated
parties represented by counsel. Estoppel is a fact specific doctrine and the
concern noted by Bastarache J. in
Moore
, at para. 50 remains apposite:
"estoppels are to be received with caution and applied with care". [Emphasis
added, citation omitted.]
[334]
Huscroft J.A. added,
at para. 55, that estoppel by convention is a relatively rare form of estoppel,
and, at para. 56, Estoppel exists to protect
reasonable
reliance: it
must be reasonable to adopt a particular assumption and reasonable to act in
reliance on it (emphasis in original, citations omitted).
[335]
This orientation anchors
estoppel by convention in the root principle of the common law of contract,
which is to give effect to the reasonable expectations of contracting parties
as set out in the text of their contract: see
Martin v. American
International Assurance Life Co.
, 2003 SCC 16, [2003] 1 S.C.R. 158, at
paras. 12, 16;
Ledcor Construction Ltd. v. Northbridge Indemnity Insurance
Co.
, 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 5;
Onex Corp. v.
American Home Assurance Co.
,
2013 ONCA 117, 114 O.R. (3d) 161, at
paras. 106, 108, leave to appeal refused, [2013] S.C.C.A. No. 178; and
Dumbrell
v. The Regional Group of Companies Inc.
, 2007 ONCA 59, 85 O.R. (3d) 616, at
paras. 51-53.
[13]
[336]
Parol evidence figures
in this case. Evidence of what a party said or did is often admissible as part
of the narrative of a contractual dispute. It is undoubtedly admissible to
found an estoppel, as stated in
Chartbrook Limited v. Persimmon Homes
Limited
, [2009] UKHL 38, at para. 42:
The rule excludes evidence of what was said or done during the
course of negotiating the agreement for the purpose of drawing inferences about
what the contract meant. It does not exclude the use of such evidence for other
purposes: for example, to establish that a fact which may be relevant as
background was known to the parties,
or to support a
claim for rectification or estoppel. These are not exceptions to the rule. They
operate outside it
. [Emphasis added.]
[337]
Such evidence is also
available, by necessary implication, to challenge the veracity of an estoppel.
(b)
The Evidence
[338]
As the trial judge
explained, the mistaken view of the trigger date appears to have originated in
some correspondence from counsel for Fram in February 2007. It was then perpetuated
in many statements, as my colleague outlines at paras. 156-172. Often, these
statements were made by Romandales own representatives. This mistake was
apparently not discovered until 2015 when Romandales new counsel pointed it
out and it became the factual backbone to Romandales litigation strategy.
[339]
The trial judge described
the situation, at paras. 103-105:
It is Romandale's position that "amidst the to-ing and
fro-ing" of Fram and Romandale's counsel in respect of Romandale's alleged
breach of the COAs, Fram's counsel set in motion a mischaracterization of the
availability of the Buy-Sell in s. 5.07 of the COAs that pervaded subsequent
pleadings and affidavits relied on by the parties and that was ultimately
identified and rectified by Romandale in 2015 when it changed counsel. It is
alleged that this began in a letter dated February 26, 2007, when counsel for
Fram wrote to counsel for Romandale alleging a breach of the COAs and
asserting:
The Elgin Mills Lands have not received Secondary Plan
Approval, as defined in Section 5.07(a) in each of the Co-ownership Agreements.
Therefore, the provisions dealing with Dispositions set out in Section 5.04,
5.05 and 5.07 are inapplicable.
Whether or not this was the first time this incorrect position
was stated or not, this position was clearly wrong in that as I have already
stated, the Buy-Sell could also be triggered after termination of the DMAs,
even
before SPA
, which I have found occurred in
February 2005. This error in summarizing the Buy-Sell provisions of the COAs as
only being available after SPA was also taken up by Kerbel and Romandale. For
example, in the first recital to the Settlement Agreement the COAs are referred
to, and with respect to the Buy-Sell provisions it is stated that "the
rights may only be exercised
after secondary plan
approval
has been obtained for the Lands ..." [emphasis added].
When Ms. Batner was retained by Romandale in 2015, Romandale
was granted leave to amend its Statement of Defence to correct the
mischaracterization that had pervaded the pleadings and tainted the parties'
evidence until that time. As already stated, this error explains the evidence
of Mrs. Roman-Barber and the positions of Romandale's former counsel in the
period from 2007 to the time Ms. Batner was retained.
[340]
My colleague
identifies the assumption that the buy-sell provision in the COAs could not be
triggered until after SPA as the shared assumption on which estoppel by
convention arises. This assumption, in her view, was held by all of the parties
in 2010 when the Settlement Agreement was negotiated. Candidly, I doubt the
veracity of this assertion, at least as it relates to Kerbel and Fram, and
particularly to Mr. Kerbel.
[341]
The trial judge found that
Mr. Kerbel knew he could have caused Romandale to trigger the buy-sell under
the COAs at any time, because the DMAs had been terminated in February 2005:
In his affidavit Mr. Kerbel swore that he and Mrs. Roman-Barber
deliberately agreed to defer triggering the Buy-Sell in the August 2005
Agreement until
after SPA
because of Mr. Kerbel's
reluctance to being dragged into the existing Bordeaux litigation regarding the
DMAs and that their lawyers drafted the August 2005 Agreement to provide for
this. He testified that he and Mrs. Roman-Barber and their lawyers agreed
"and we specifically took [the DMAs] out of our deal because no judge had
said [Bordeaux] was terminated".
Romandale argues that this was false evidence and I agree.
First of all, Mr. Kerbel abandoned that position during his cross-examination,
when he admitted he could have caused Romandale to trigger the Buy-Sell
before SPA
under the August 2005 Agreement, and indeed
that he would have when the Bordeaux litigation resolved:
Q: [...
I]f the Bordeaux litigation
settled, you would have caused Romandale to trigger the buy/sell
. You
recall I asked you that question?
A:
Yes, Im going to say I would have.
Q: Pardon?
A:
I am going to say I would have.
Q:
You would have?
A:
Yes.
[...]
Q: And you wanted to be the decider on the timing and the
amount of the buy/sell that Romandale would trigger with Fram.
A: Well,
the timing was as soon as I
could
, but the amount, yeah.
Q: So when you say the timing was "as soon as I
could", that just goes back to our last discussion.
As
soon as possible, as soon as you were satisfied that the Bordeaux litigation
wasn't a problem, you would have caused Romandale to trigger the buy/sell.
[14]
A:
Yes, I would have.
[Emphasis
added by the trial judge.]
[342]
The trial judge stated,
at para. 314, that the pith and substance of the 2005 August Agreement was an
expedient land sale (Kerbel gets the Lands and Romandale gets the equity it required)
without breaching the existing Land agreements [with Fram]. She noted
accurately: There was zero benefit to Romandale in putting off closing.
[343]
What changed for all
the participants was the development horizon. The trigger date acquired new saliency
in 2009, when government decisions introduced a long delay in the development
horizon. From development approvals that were, in 2005, anticipated in a few
years, the development horizon went out many years, perhaps decades. The likely
land use designations also changed, with the Snider Farm proposed for
employment use, not residential development, reducing both the value of the
Lands and Frams incentive as a home builder.
[344]
I noted in this
courts decision in
First Elgin Mills Developments Inc. v. Romandale Farms
Limited
, 2014 ONCA 573, 324 O.A.C. 153, at paras. 31-32: The process of
moving raw land through the land development process is complex, time
consuming, and expensive. I added: The outcome is frequently uncertain. This
is known to experienced land developers like Kerbel and Fram and experienced
owners of development lands like Romandale. The agreements between the parties were
built around these uncertainties, which came to pass in this case.
[345]
Because of the changes
in the development horizon and the likely development permissions, both Kerbel
and Fram had a substantially reduced appetite to complete the transactions
contemplated by the COAs and the 2005 August Agreement. The trial judge
explained:
Both Mr. Giannone and Mr. Kerbel acknowledged at trial that
these developments concerned them. They both admitted that they would have
preferred shorter development timelines and a residential designation for the
Snider Farm, as residential use would have made for a significantly better
investment. Fram would have preferred residential land use rather than
employment land use as the real way that Fram was to make money was largely
tied to its homebuilding rights under the CMAs, which would be dead if the
Lands remained employment lands.
Mr. Kerbel admitted that by 2009 as a result of these
developments, he was no longer in the mindset of closing with Romandale as soon
as possible. Mr. Giannone admitted that by 2010 the Lands were a materially
"different product". Mr. Giannone also admitted that because of his
concerns about the real estate market, when he entered into the Settlement
Agreement with Kerbel, he was not committed to buying half of Romandale's
remaining interest in the Lands. He wanted to have that option in the future. He
was careful to ensure that by entering into the Settlement Agreement it could
not be construed a consent under the Conditional Agreement because if Fram had
consented, the deal between Romandale and Kerbel could have closed.
[346]
I make several observations
about where things stood upon execution of the Settlement Agreement by Kerbel
and Fram. It was drafted by Kerbel and Fram to reflect their interests. It was
an advantageous deal for two canny land developers, entirely at the risk and
cost of the majority landowner, Romandale. The Settlement Agreement states
that, under the COAs, the buy-sell could only be exercised after SPA had been
obtained and that Romandale would sell its Remaining Interest to Kerbel under
the 2005 August Agreement when the buy-sell could be exercised or when Fram
consented. The Settlement Agreement goes on to provide that the sale of
Romandales Remaining Interest to Kerbel will take place after SPA is
obtained. Effectively, under the terms of the Settlement Agreement, Kerbel
agreed not to cause Romandale to trigger the buy-sell provision under the COAs
as it was empowered to do under the 2005 August Agreement. This elongation of
time spared both Kerbel and Fram the obligation to come up with the money to
finance the acquisition of land whose value had become uncertain, until SPA,
when its value could be ascertained.
[347]
This allowed Kerbel to
put off paying Romandale the fixed price of $160,000 per acre, negotiated
in 2005, for many years, perhaps decades. With inflation over the ensuing years,
the constant dollar value of the land would decline over that time at the sole
expense of Romandale.
[348]
This also saved Fram,
for the same period of time, from having to respond to the buy-sell provision
in the COAs. Fram instead acquired a solid development partner, in Kerbel, with
whom to share acquisition and development costs, and risks. And both Fram and
Kerbel, being formidable adversaries, eliminated litigation risk and cost
between them by settling their actions against each other.
(c)
The Principles Applied
[349]
In my view, the
invocation by Kerbel and Fram of estoppel by convention fails. Any application
of estoppel by convention in this case requires this court to account for the
role that the supposedly shared but mistaken assumption regarding the interpretation
of the COAs actually played in the formation of the Settlement Agreement.
[350]
Given Mr. Kerbels
evidence that he knew the buy-sell could be triggered after the termination of
the DMAs, and before SPA, as quoted by the trial judge and repeated at para. 341,
above, it is very unlikely that Kerbel in particular, and Fram by implication,
shared in Romandales mistaken interpretation of the trigger date in the COAs. I
infer that it is much more likely that they knowingly took advantage of Romandales
mistaken view, which had been repeated on many occasions. Ignorance of the true
trigger date on the part of Kerbel and Fram, two savvy land developers, is
highly implausible. Kerbel and Fram used the trigger date as a vehicle to put
off payment to Romandale indefinitely.
[351]
My colleague alludes
to the fact that none of the parties to this appeal resisted the claim that
they had all shared in the mistaken assumption that the buy-sell could only be
triggered after SPA.
[352]
It is true that
estoppel by convention was not resisted on this basis. However, the trial judge
found, at para. 87, that Mr. Kerbel knew that [the buy-sell] could be
triggered before SPA after termination of the DMAs. At para. 89, she found Mr. Kerbels
evidence that he had forgotten this fact disingenuous. A finding that Kerbel
shared in the mistaken shared assumption that my colleague identifies is
inconsistent with the trial judges findings, to which I would defer as factual
determinations of credibility. The inferences I have drawn from these
determinations are inescapable.
[353]
Further, estoppels
are to be received with caution and applied with care:
Ryan v. Moore
,
at para. 50. Because the doctrine has the potential to undermine the certainty
of contract [it] must be applied with care, especially in the context of
commercial relationships between sophisticated parties represented by counsel:
Grasshopper Solar
, at para. 54,
per
Huscroft J.A. Applying due
caution and care, I cannot find an estoppel by convention where, given the
evidence, one does not arise on the facts and the law, however argued by
parties whose concern is less for the law than for their individual advantage. Here,
the claimed estoppel by convention cannot survive Mr. Kerbels knowledge, when
the Settlement Agreement was negotiated, that the shared assumption was
mistaken. This can be seen in two ways.
[354]
First, given the fact
of Mr. Kerbels knowledge, I have difficulty accepting that the assumption that
the buy-sell could not be triggered until after SPA was shared in the manner
required for estoppel by convention. Bastarache J. notes that the crucial
requirement for estoppel by convention, which distinguishes it from the other
types of estoppel, is that at the material time both parties must be of a like
mind:
Ryan v. Moore
, at para. 61 (citations omitted). Further,
estoppel by convention requires mutual assent:
Ryan v. Moore
, at
para. 62. Where one party knows that the other party is mistaken and chooses to
acquiesce in their mistake rather than correct it, they were plainly not of
like minds nor did they mutually assent.
[355]
Second, Mr. Kerbels
knowledge that the assumption was incorrect renders unreasonable any reliance by
Kerbel and Fram on the mistaken trigger date. Mr. Kerbel was under no
illusion that this reading was not correct, as the trial judge found. Nor had
he forgotten what the correct reading was, as she also found. As noted above, I
would defer to those findings as factual determinations of credibility. They
also comport with the commercial realities. It was not reasonable of Kerbel and
Fram to rely on Romandales interpretation of the trigger date, knowing that it
was mistaken.
[356]
These two reasons are
sufficient to dismiss the estoppel by convention arguments put forward by
Kerbel and Fram. I conclude that the legal basis for estoppel by convention is
not made out on the facts of this case. This conclusion obliges me to consider
whether Kerbel repudiated or breached the 2005 August Agreement, a task that my
colleague was spared by her view of estoppel, and to which I now turn.
(3)
Kerbel
Did Not Breach the 2005 August Agreement by Entering Into the Settlement
Agreement with Fram
[357]
It is necessary to put
the 2005 August Agreement in its proper context or factual matrix before
assessing whether the trial judge properly assessed Kerbels alleged breaches.
(a)
The Context
[358]
The court must survey
the contractual landscape in this case with a clear eye. In my view, the trial
judges manifest sympathy for Romandale was misplaced. Romandale did not occupy
the moral high ground in this bruising corporate battle, as I will explain.
[359]
It is a truism that
contracting parties seek their own ends. An important aspect of contractual
design, as Swan and Adamski observe, at p. 148, is allocating risk between the contracting
parties:
[M]uch contract drafting is focused on the allocation of risk,
on the need to make clear just how the risks associated with an activity or the
actual operation of the contractual relation, are not only allocated but
understood to be allocated. It is bizarre for a court to be or to appear to
be unaware of this role, one performed by the majority of members of the
legal profession. Solicitors would be aghast if a court, in interpreting a
contract, were to focus on the parties intentions and ignore the efforts of
one party to shape the others expectations, in the light of what the first
party was prepared to do. Such intentions are nothing but a judicial
construct, a chimera, and wholly fanciful.
[360]
The root contractual
documents in this case are the 2003 COAs between Romandale and Fram. Romandale
was looking for a land developer to assist it in bringing the Lands to the
point at which they could be used for residential purposes. Fram became
Romandales business partner for this purpose. As the trial judge found:
The plan was that Romandale and Fram would own the Lands and
Bordeaux would manage the requirements for the development of the Lands, so
they could be designated for residential use following [SPA], a stage of the
municipal planning approvals process, Fram would then buy lots at market value
and build homes and share the profits with Romandale.
[361]
The COAs, and the buy-sell
provision in particular, were carefully designed to allow each party to extract
the maximum value for its interest in the Lands at the point that either party chose
to force the other to buy its interest.
[362]
By entering the COAs, Romandale
got money (by selling the five percent interest in the Lands to Fram) and Fram
got an exclusive option to purchase Romandales remaining interest. The key
problem with the COAs was that Romandale was effectively stuck with Fram as a
partner in developing the Lands. The COAs permitted Romandale to sell its
remaining interest in the Lands to another developer, but only with Frams
consent. Crucially, Frams consent, per s. 5.03 of the COAs, may be
unreasonably or arbitrarily withheld, giving it control over any large
disposition of the Lands by Romandale. (This provision was not unbalanced
because it permitted Romandale to refuse consent to a disposition by Fram of
its interest on the same basis.)
[363]
When Romandales need
and appetite for money grew, it asked Fram to increase its interest in the Lands
but Fram declined. Romandales need for more money, coupled with Frams
reluctance to invest more, drove Romandale into a deal with Kerbel.
(b)
The 2005 August Agreement Favoured Kerbel
[364]
The 2005 August
Agreement was cleverly designed to accomplish Romandales end of getting cash
without breaching the COAs with Fram. Romandale did get more money. But Kerbel
drove a careful bargain, recognizing both Romandales need for cash and the
difficult and complex situation that the COAs posed for Kerbel with respect to
Frams interest.
[365]
The 2005 August
Agreement was drafted in Kerbels favour. This is not a surprise. Romandale had
a strong need for funds and Kerbel was the able funder. As the trial judge
stated, at para. 69, Romandale needed to refinance a $6,000,000 Bank of Nova
Scotia (BNS) mortgage on the Lands and wanted cash to make distributions to
Romandale and Roman family members. She noted, at para. 329, Romandale
actually received $16,703,000 of immediate value from Kerbel: $6,000,000 in new
mortgage financing to retire the BNS Mortgage, $2,128,000 cash on the sale of
5% of the Elgin Mills Lands owned by Romandale, and $8,575,000 cash was paid on
the sale of the Triple R Lands.
[366]
The text of the 2005
August Agreement ceded a large measure of control to Kerbel, although it was
constrained by Romandales need and obligation to continue to comply with the
COAs. The agreement appointed Kerbel as attorney and agent for Romandale in
material and specific respects. Section 5 was entitled "Irrevocable
Appointment" and provides in part:
... Romandale hereby irrevocably appoints [Kerbel] as its
exclusive
true and lawful attorney and agent having full
power of substitution, and [Kerbel] is hereby fully authorized as such to act
on behalf of and/or give binding instructions to Romandale solely in connection
with the exercise of the buy-sell rights pursuant to the Buy-Sell Provisions
(as hereinafter defined).
Romandale agrees that any and
all decisions, operations, conduct and actions relating to the development of
the Snider/McGrisken Property shall be within the exclusive control of [Kerbel]
and Romandale shall assist in facilitating such control to comply with Section
5.10 of the Co-Owners Agreements over all decisions; operations, conduct and
action exercisable by Romandale relating to the development and obtaining of
development approvals
for the Snider/McGrisken Property.... Romandale
and [Kerbel] shall cooperate in getting the Snider/McGrisken Property included
under the Town of Markham urban envelope for development purposes, and Romandale
shall take all reasonable steps to reduce land wastage to as small an amount as
possible, using Joanne Burnett, Jeff Kerbel and/or his designate to act on
behalf of Romandale in taking such steps. [Emphasis added.]
[367]
The control that Romandale
granted to Kerbel was related to compliance with the COAs, as the trial judge found
at para. 202. She noted, at para. 203, that Romandale continued to exercise
control of the development process throughout.
[368]
The trial judge
correctly observed, at para. 202: The opening sentence provides that Romandale
appoints [Kerbel] as its agent solely in connection with the Buy-Sell
provisions in the COAs. The trial judge added: This makes sense as it was
Kerbel's intention to buy Romandale's remaining interest in the Lands and so it
would want control over
when
Romandale triggered
the Buy-Sell (emphasis added). I agree.
[369]
It is noteworthy that the
2005 August Agreement did not bind Kerbel to a date by which it was required to
pull the buy-sell trigger in the COAs. Although Mr. Kerbel testified to
his reluctance to trigger the provision while Romandale was litigating with
Bordeaux, nothing in the 2005 August Agreement required him to pull the trigger
when that litigation ended, even though, as the trial judge observed, the
Bordeaux litigation was expressly referred to in s. 2(e). (Recall that the
Bordeaux litigation was settled in October 2014.)
[370]
Only Frams consent to
the sale of Romandales Remaining Interest to Kerbel under the 2005 August
Agreement could force Kerbel to close.
[371]
Despite finding that
Kerbel would have wanted control over the timing of the triggering of the
buy-sell, the trial judge later found, somewhat inconsistently, at paras.
299-300, that the intention of the parties was to close as soon as possible and
Kerbels discretion on when the buy-sell would be triggered was not so broad
as to allow it to transform a deal that was intended to close as soon as
possible into a deal that was not to close until decades away. She relied on
the time is of the essence clause in para. 7 (c) of the 2005 August Agreement
for this finding.
[372]
I agree with my
colleagues statement, at para. 233, that the time is of the essence clause
cannot be construed to mean that a short closing horizon was part of the pith
and substance of the contract. With respect, the trial judge misapprehended
the purpose and role of a time is of the essence clause in commercial
contracts. Such a clause is engaged where a time limit is stipulated; it does
not serve to impose a time limit but rather dictates the consequences that flow
from failing to comply with a time limit stipulated in an agreement: see
Di
Millo v. 2099232 Ontario Inc.
, 2018 ONCA 1051, 430 D.L.R. (4th) 296, at
paras. 31-37, leave to appeal refused, [2019] S.C.C.A. No. 55. Benotto J.A. noted,
in
Di Millo
, at para. 37:
Notably, while the option clause includes two time limits, it
is silent as to the time limit for exercising the option. However, the
application judge found, that providing notice to the Respondent that complies
with the Agreement, 6 months after the option first arose, does not comply with
the time is of the essence clause. In my view, he erred in finding
that the time is of the essence clause was engaged where no time was
stipulated in the contract for exercising the option and in finding that there
was non-compliance with the time is of the essence clause. Those errors
tainted his finding that the option had expired by the time the appellant gave
notice.
Those words apply here with necessary modifications.
The trial judges reliance on the time is of the essence clause was an error
of law.
[373]
Mr. Kerbel testified
that, in the early days when the development process looked like it would move
quickly to a happy outcome, he wanted to close quickly. But the trial judge
misapprehended this evidence to impose a contractual obligation on Kerbel to
close as soon as possible, regardless. There is no express obligation in the
2005 August Agreement to close as soon as possible and there is no legal basis
for implying one. Implying such an obligation is neither necessary to give
business efficacy to the contract, nor would it pass the officious bystander
test: see
Energy Fundamentals Group Inc. v. Veresen Inc.
, 2015 ONCA
514, 388 D.L.R. (4th) 672, at paras. 30-31;
M.J.B. Enterprises Ltd. v.
Defence Construction (1951) Ltd.
, [1999] 1 S.C.R. 619, at para. 27;
Canadian
Pacific Hotels Ltd. v. Bank of Montreal
, [1987] 1 S.C.R. 711, at p. 775.
[374]
The 2005 August
Agreement provided Kerbel with other advantages. The fixed-price of $160,000
per acre to be paid to Romandale on closing was above the 2005 current market
value for the McGrisken and Snider Farms but the fact that it was a fixed-price
contract minimized the risk to Kerbel and capped Romandales return. In other
words, Romandale gave up its right to share in any increases in the value of
the Lands, to Kerbels benefit. Had the development horizon contemplated by the
parties in 2005 been met, then Romandales return would have been limited to
the fixed-price; any increase in the value of the Lands thereafter would have
been enjoyed by either Kerbel or Fram. One of them would have ended up with the
Lands at a higher price through the buy-sell mechanism in the COAs, if they did
not come to some other agreement.
[375]
The 2005 August
Agreement gave Romandale the opportunity to carry out an end run on Fram and
its exclusive option to buy the rest of the Lands. The agreement was cleverly
designed but it put Fram and Kerbel on a collision course.
(c)
The Settlement Agreement
[376]
As noted earlier, the
development horizon changed substantially. By 2010, Kerbel and Fram were in
lawsuits with each other. Neither was anxious to acquire all of the Lands
immediately through the operation of the buy-sell provision, nor did they wish
to give up their interests in the land. Their way out of the impasse was the
Settlement Agreement, by which they ended up sharing costs. This was a
practical outcome for experienced land developers.
(d)
Kerbels Alleged Breaches of the 2005 August Agreement
[377]
Romandales revised
litigation strategy targeted s. 5 of the Settlement Agreement:
[Fram] does not by this settlement agreement or otherwise
consent to the transaction referred to in paragraph 2 of the August 29, 2005
Agreement. It is the intention of the parties hereto that the purchase and sale
of Romandales Remaining Interest in the Lands pursuant to these Minutes of
Settlement will take place after Secondary Plan Approval for the Lands has been
obtained.
[378]
The trial judge found
that Kerbel breached the 2005 August Agreement, at para. 310: By entering into
the Settlement Agreement, Kerbel totally fettered its discretion as to when to
cause Romandale to trigger the Buy-Sell just because it no longer wanted to
close the purchase of Romandale's Remaining Interest quickly.
[379]
First, the trial judge
found, at para. 319, that Kerbel had a fiduciary duty to Romandale that it
breached by entering into the Settlement Agreement.
[380]
There is no scope for
the imposition of fiduciary duties on Kerbel. That would oblige Kerbel to act
solely in the best interests of Romandale, which is the antithesis of the
self-interest that contracting parties in commercial contracts are generally entitled
to pursue. In
Hodgkinson v. Simms
, [1994] 3 S.C.R. 377, [1994] S.C.J.
No. 84, the court said, at p. 414, para. 38:
Commercial interactions between parties at arm's length
normally derive their social utility from the pursuit of self‑interest,
and the courts are rightly circumspect when asked to enforce a duty (i.e., the
fiduciary duty) that vindicates the very antithesis of self‑interest
. [T]he
law does not object to one party taking advantage of another
per se
,
so long as the particular form of advantage taking is not otherwise objectionable.
[Citations omitted.]
[381]
As noted, the wording
of the 2005 August Agreement was in Kerbels favour in order to avoid any such
subordination either to Romandale entirely or to some notional conception of
their mutual best interests, as Romandale argues.
[382]
It is possible for a
contracting party to accept a fiduciary duty. Romandale submits that because
the 2005 August Agreement explicitly made Kerbel Romandales lawful attorney
and agent for some purposes, that principle is applicable here. But this
misconstrues the purpose of Kerbels appointment as Romandales attorney and
agent, which was to leave the timing of the triggering of the buy-sell under
the COAs in Kerbels sole control without any further dependence on Romandale. Kerbel,
as the funder, wanted to control all aspects of the exercise of the buy-sell provisions
in the COAs. As the trial judge herself stated, this made sense.
[383]
I would set aside the
trial judges holding that Kerbel owed Romandale a fiduciary duty as an error
in law.
[384]
Second, the trial
judge found, at para. 310, that Kerbel breached its duty of good faith to
Romandale under the 2005 August Agreement:
By entering into the Settlement Agreement with Fram, Kerbel
acted in its own self-interest, to the detriment of Romandale's interests.
Kerbel undermined the entire value of the August 2005 Agreement for Romandale.
Without a doubt Kerbel did not act in good faith.
[385]
The trial judge
invoked the the duty to act in good faith citing
Bhasin v. Hrynew
, 2014
SCC 71, [2014] 3 S.C.R. 494, at para. 65, and the expectation that a party
exercising discretion is required to do so in good faith, citing
Greenberg
v. Meffert
(1985), 50 O.R. (2d) 755 (C.A.), at paras. 18 and 26, leave to
appeal refused, [1985] 2 S.C.R. ix. Had the authorities been available, the
trial judge would likely have invoked
C.M. Callow Inc. v. Zollinger
, 2020
SCC 45, and
Wastech Services Ltd. v. Greater Vancouver Sewerage and
Drainage District
, 2021 SCC 7, for the same propositions.
[386]
I do not agree. It is
not obvious to me what role the doctrine of good faith in contractual
performance should play in this complex commercial setting. Courts should be
very reluctant to interfere in the dealings of hard-headed business people
pursuing their competitive goals. This pursuit is not forbidden in a market
economy: it is expected, as the Supreme Court observed in
Hodgkinson
, at
p. 414, para. 38, quoted earlier.
[387]
The parties were
sophisticated, resourced and professionally advised throughout. No doubt both
Fram and Kerbel have deeper pockets but there is no scope for invoking the
concept of unequal bargaining power in this context without, by necessary
implication, imperilling any larger corporations ability to engage in commerce
with smaller entities. The language in all of the agreements was carefully
negotiated and chosen to allocate the parties respective risks and
responsibilities, benefits and burdens.
[388]
This case illustrates
operations in the real world. To achieve its ends, in negotiating the
Settlement Agreement with Fram, Kerbel essentially pulled the same move on
Romandale that Romandale had pulled on Fram in entering into the 2005 August
Agreement with Kerbel.
[389]
Seen through the good
faith lens, Romandale could be criticized for defeating Frams exclusive option
to the Lands via the 2005 August Agreement with Kerbel. But all Romandale was
doing was pursuing its own ends within the limits of the contractual language
in the COAs in order to raise cash by extracting value from all of its lands,
including the McGrisken and Snider Farms. (I note that by entering into the
2005 August Agreement, Romandale did not breach the COAs, contrary to Frams
assertions in the 2007 and 2008 actions. The trial judge dismissed those
actions and Fram did not appeal the dismissals.)
[390]
Similarly, by entering
into the Settlement Agreement, all Kerbel was doing was pursuing its own ends
within the limits of the contractual language in the 2005 August Agreement in
order to reduce its exposure to the land and to the risks posed by the
litigation with Fram.
[391]
The text of a contract
matters in discerning the parties reasonable expectations. Kerbel never
undertook to perform its obligations under the 2005 August Agreement for
Romandales benefit, or even for their mutual benefit, as Romandale argues.
The parties reasonably expected that the commercial realities would pressure
all sides to move with alacrity. But Kerbel did not bind itself to do so,
wisely in retrospect, given how the commercial realities have changed. This is
not unusual in the fraught sphere of land development in Ontario, and particularly
in the area surrounding Toronto. What gutted the transactions was not the
Settlement Agreement but the changed development horizon that affected all the
parties adversely.
[392]
Nor is it clear to me
what the invocation of good faith performance would contribute in this setting.
I note the submission, recorded by the trial judge, at para. 326:
Romandale submits that it need not point to a specific date on
which Kerbel must have caused it to trigger the Buy-Sell, nor does this Court
need to pinpoint a date, in order to find that a fiduciary duty existed or to
find that there has been a repudiatory breach arising from Kerbel's breach of
same (among other contractual obligations).
In this case, it is clear the line
was crossed when Kerbel settled with Fram in 2010 and deliberately ensured the
Buy-Sell would never be triggered before SPA (if at all), in furtherance of its
own self-interests and in complete contravention of Romandale's interests.
[393]
Romandales refusal to
specify a date is noteworthy because if the date does not comport with Kerbels
best business interests, as permitted by the 2005 August Agreement, it would be
purely arbitrary. I note in passing that the earliest date would be after the
Bordeaux litigation settled, which was in October 2014.
[394]
Nor is it clear to me
that, had Kerbel and Fram never entered into the Settlement Agreement and had
Fram not consented to the sale, there would be any obligation on Kerbel even
today
to cause Romandale to trigger the buy-sell
provision in the COAs.
[395]
Finally, I note that
if there is a right date for the transfer of Romandales Remaining Interest
to Kerbel, it would be sixty days after Fram consented to that transaction in
2018, as that is precisely what is stipulated in the 2005 August Agreement.
[396]
To conclude, the trial
judge erred in finding that Kerbel breached the 2005 August Agreement and its
duty of good faith performance by entering into the Settlement Agreement with
Fram. I do not find any basis here for judicial tweaking via the doctrine of
good faith performance, or for any judicial interference in the ordinary
operation of these carefully negotiated contracts, which embody the reasonable
expectations of the parties and which are fully capable of execution on their
precise terms.
[397]
If Kerbel breached the
2005 August Agreement by entering into the Settlement Agreement with Fram, then
that breach would have to be taken into account in the exercise of discretion
as to whether to order specific performance. The behaviour of the parties is a
relevant consideration in deciding whether to order specific performance:
Matthew
Brady Self Storage Corporation v. InStorage Limited Partnership
, 2014 ONCA
858, 125 O.R. (3d) 121, at para. 32, leave to appeal refused, [2015] S.C.C.A.
No. 50;
Paterson Veterinary Professional Corporation v. Stilton Corp. Ltd.
,
2019 ONCA 746, 438 D.L.R. (4th) 374, at para. 31, leave to appeal refused,
[2019] S.C.C.A. No. 420. But here there is no such breach.
(4)
By
Entering Into the Settlement Agreement, Kerbel Did Not Repudiate Its Obligations
Under the 2005 August Agreement.
[398]
Because I have found
that Kerbel did not breach the 2005 August Agreement, on that ground alone,
there is no basis for finding that Kerbel repudiated that agreement.
[399]
However, in my view
the trial judges approach to the repudiation issue was wrong in principle and
requires comment. Recall that Romandale argued that it is not required to close
the 2005 August Agreement because Kerbel had repudiated that agreement by
entering into the Settlement Agreement. The trial judge agreed and refused
Kerbels request for an order compelling Romandale to specifically perform the
2005 August Agreement.
[400]
The trial judge
deconstructed the 2005 August Agreement into constituent parts. This approach
was wrong in principle. She extracted the conveyance of the McGrisken and
Snider Farms from the 2005 August Agreement in order to deem that part of the
agreement repudiated. This approach is not consistent with the holistic
approach courts must take to carefully negotiated commercial agreements. Just
as a court interpreting a contract must read the contract as a whole, a court analyzing
whether a fundamental breach amounting to repudiation has occurred should
consider both the alleged breach, and the obligations the breaching party has
performed, in relation to the breaching partys obligations under the whole contract:
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2
S.C.R. 633, at para. 47;
1193430 Ontario Inc. v.
Boa-Franc Inc.
(2005), 260 D.L.R. (4th) 659 (Ont. C.A.), at para. 50
,
leave to appeal refused, [2006] S.C.C.A. No. 2.
[401]
I conclude that the
trial judge erred in recruiting the doctrine of repudiation, because of the
substantial prior performance on Kerbels part, which was valued by the trial
judge at about $16 million. There is no basis upon which it could be said that
Romandale was deprived of substantially all of the benefit it contracted for
under the 2005 August Agreement:
Boa-Franc
Inc.
, at para. 50;
Majdpour v. M&B Acquisition Corp.
(2001), 206 D.L.R. (4th) 627
(Ont. C.A.), at para. 31;
Hunter Engineering Co. v. Syncrude Canada Ltd.
,
[1989] 1 S.C.R. 426, at p. 499,
per
Wilson J.
[402]
Contrary to the submissions
of Romandale and the trial judges determination, Kerbel did not repudiate the
2005 August Agreement by entering into the Settlement Agreement, largely
because much of the 2005 August Agreement had been performed to the benefit of
both parties. It is simply too late for the proverbial egg to be unscrambled.
It is too late for repudiation to play a useful role in analyzing the
contractual relationships between Romandale and Kerbel.
(5)
Kerbel
Is Entitled to Specific Performance of the 2005 August Agreement
[403]
I agree with my
colleagues analysis, at paras. 290-298, and with her conclusion that Kerbel is
entitled to specific performance of the 2005 August Agreement.
Released: April 1, 2021 E.E.G.
P. Lauwers J.A.
[1]
When the parties entered into the various agreements, Markham was still a town
in Ontario. It did not become a city until 2012. For ease of reference, I will
refer to the municipality simply as Markham.
[2]
This term is explained in para. 19 below.
[3]
SPA is defined in s. 5.07 of the COAs as an amendment of the official plan of
the Town of Markham applicable to the Lands, obtained in accordance with the Planning
Act (Ontario).
[4]
This term is explained in para. 20 below.
[5]
Romandales sale of 5% of its 95% interest in the Lands
resulted in Kerbel acquiring a 4.75% undivided interest in the Lands.
[6]
Romandale received over $16 million in immediate value from
Kerbel under the 2005 August Agreement.
[7]
In response, Bordeaux sues Romandale and Fram, alleging the
termination was invalid and of no force or effect. Romandale settled the
Bordeaux litigation in 2014.
[8]
The 2005 August Agreement was amended by an agreement dated
March 14, 2006, to provide that any amount owing to Kerbel from a purchase
price adjustment for non-developable acreage of the Triple R Lands, which was
to be made at the end of the fifth year of the vendor takeback mortgage, would
be set off against the eventual purchase price for the Remaining Interest in
the Lands.
[9]
The parties were mistaken on this matter. Under s. 5.07 of the
COAs, the buy-sell could have been exercised when the DMAs were terminated.
Romandale terminated the DMAs in February 2005. Therefore, the buy-sell in the
COAs could have been exercised as early as February 2005.
[10]
This may or may not have been a mistaken assumption. Whether,
under the 2005 August Agreement, Kerbel could have required Romandale to
trigger the buy-sell in the COAs before SPA is a point of contractual
interpretation. As I have concluded that estoppel by convention applies to bar
Romandale from contending that it could have been triggered pre-SPA, this point
of contractual interpretation need not be decided.
[11]
As discussed below, the communications in
Ryan
v. Moore
are an
example of alleged shared
assumptions that do not have sufficient clarity and certainty to satisfy the
first criterion.
[12]
It will be recalled that Kiteley J. upheld this ruling on June
20, 2014.
[13]
Angela Swan and Jakub Adamski point out that courts have not
always adopted an approach consistent with this principle: Contractual
Interpretation in the Supreme Court: Confusion Reigns Supreme in Matthew
Harrington, ed.,
Private Law in
Canada: A 150-Year Retrospective
(Toronto: LexisNexis,
2017) p. 115.
See also Edward J. Waitzer and Douglas Sarro, Protecting
Reasonable Expectations: Mapping the Trajectory of the Law (2016) 57:3 Can.
Bus. L.J. 285.
[14]
The Bordeaux action was settled in October 2014.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Fram Elgin Mills 90 Inc. v. Romandale
Farms Limited, 2021 ONCA 381
DATE: 20210602
DOCKET: C67533 and
C67557
Gillese, Lauwers and
Benotto JJ.A.
DOCKET: C67533
BETWEEN
Fram Elgin Mills 90
Inc. (formerly Frambordeaux
Developments Inc.)
Plaintiff
and
Romandale Farms
Limited
, Jeffrey Kerbel, 2001251 Ontario Inc.
and First Elgin Developments Inc.
Defendants
(
Respondent
/Appellants)
AND BETWEEN
Fram 405 Construction
Ltd. and Bordeaux Homes Inc.
Plaintiffs
and
Romandale Farms
Limited
, 2001251 Ontario Inc., First Elgin Developments Inc. and
Jeffrey Kerbel
Defendants
(
Respondent
/Appellants)
AND BETWEEN
Romandale Farms Limited
Plaintiff (Respondent)
and
2001251 Ontario Inc.
Defendant
(Appellant)
AND BETWEEN
2001251 Ontario Inc.
Plaintiff (Appellant)
and
Romandale Farms Limited
Defendant
(Respondent)
DOCKET: C67557
BETWEEN
Fram Elgin Mills 90
Inc. (formerly Frambordeaux
Developments Inc.)
Plaintiff (Appellant)
and
Romandale Farms
Limited
, Jeffrey Kerbel,2001251 Ontario Inc.
and First Elgin Developments Inc.
Defendants (
Respondent
)
AND BETWEEN
Fram 405
Construction Ltd.
and Bordeaux Homes Inc.
Plaintiffs (
Appellant
)
and
First Elgin
Developments Inc. and Jeffrey Kerbel
Defendants (
Respondent
)
AND BETWEEN
Romandale Farms Limited
Plaintiff
and
2001251 Ontario Inc.
Defendant
AND BETWEEN
2001251 Ontario Inc.
Plaintiff
and
Romandale Farms Limited
Defendant
Chris G. Paliare and Tina H. Lie, for the appellants
Jeffrey Kerbel, 2001251 Ontario Inc., and First Elgin Developments Inc.
(C67533)
Sheila R. Block, Jeremy Opolsky, Sara J. Erskine, and
Benjamin Lerer for the appellants Fram Elgin Mills 90 Inc. (formerly
Frambordeaux Developments Inc.) and Fram 405 Construction Inc. (C67557)
Sarit E. Batner, Kosta Kalogiros, and Avi Bourassa, for
the respondent Romandale Farms Limited (C67533 and C67557)
Heard: September 8 and 9, 2020 by video conference
On appeal from the judgment of
Justice Nancy J. Spies, of the Superior Court of Justice, dated September 13,
2019, with reasons reported at 2019 ONSC 5322, and from the costs order, dated
April 2, 2020.
COSTS ENDORSEMENT
[1]
Four actions involving the Lands in this proceeding were tried together
in the fall of 2018 (the Actions). Romandale was awarded costs of the Actions,
on a substantial indemnity basis, in the amount of $2,708,651.57. Those costs were
made payable on a joint and several basis by Fram and Kerbel.
[2]
Fram and Kerbel each appealed to this court. Their appeals were consolidated
(the Appeals). The Appeals were successful. The parties agreed on costs of
the Appeals but were unable to resolve the matter of costs below. This costs
endorsement decides that matter.
[3]
For the reasons that follow, Fram and Kerbel are entitled to partial
indemnity costs for the Actions, in the amounts that each sought.
The Parties Positions
Fram
[4]
Fram seeks partial indemnity costs of $1,147,595.63 for the Actions. It
did not succeed on its 2007 and 2008 Actions and did not appeal the trial decisions
on them. Nonetheless, Fram argues, as a result of the Appeals, it has achieved overall
success and is entitled to its costs of the Actions.
[5]
Fram also relies on having beat the offer to settle the litigation which
it and Kerbel jointly made in September 2018 (the Settlement Offer), just
before the trial of the Actions. Romandale rejected their Settlement Offer. At
the oral hearing of the Appeals, the parties each stated that entitlement to
costs of the Actions was on a partial indemnity basis. Accordingly, Fram did
not advance a claim for enhanced costs under r. 49.10 of the
Rules of Civil
Procedure
,
R.R.O. 1990, Reg. 194.
[6]
Finally, Fram contends that its costs are fair and reasonable.
Kerbel
[7]
Kerbel seeks partial indemnity costs of $956,002.50 for the Actions. It
says those costs are fair and reasonable and reflect its overall success. Kerbel
contends that the Actions, although not formally consolidated, were effectively
consolidated with the evidence being used, and argument permitted, on all
issues by all parties. Moreover, it points out that Romandale sought and was
awarded costs of the Actions against Kerbel and Fram on a joint and several
basis.
[8]
Like Fram, Kerbel also relies on the fact that it beat the Settlement Offer.
Romandale
[9]
Romandale accepts that Fram and Kerbel are entitled to their partial
indemnity costs of the 2014 and 2016 Actions in which Kerbel claimed specific
performance of the 2005 August Agreement. However, it submits that neither Fram
nor Kerbel are entitled to costs of the 2007 and 2008 Actions which Fram
unsuccessfully prosecuted against Romandale. As Fram did not appeal the results
of those actions, Romandales success on those actions stands. Thus, Romandale
submits, Fram should pay Romandale its partial indemnity costs of the 2007 and 2008
Actions and Kerbel is not entitled to its partial indemnity costs relating to
those Actions.
Analysis
[10]
Costs
are not to be determined by considering success on an issue by issue basis.
Rather, they are to be based on the overall success achieved by a party:
Wesbell
Networks Inc. v. Bell Canada
, 2015 ONCA 33, at para. 21. In the
circumstances of these Appeals, the same principle applies: costs of the Actions
are to be determined by considering the overall success achieved by the parties
as a result of the Appeals.
[11]
The
Actions were tried together to ensure that the rights and interests of the
parties, in the Lands, were properly determined. The Appeals determined those
respective rights and interests with the result that Fram and Kerbel achieved
overall success. The fact that Fram was unsuccessful on the 2007 and 2008
Actions does not detract from its overall success. Moreover, the Actions were
intertwined. As the reasons of this court demonstrate, the evidence relating to
the 2007 and 2008 Actions was directly relevant to the disposition of the
Appeals. The fact that costs below were awarded jointly and severally as
against Fram and Kerbel, in accordance with Romandales request, is telling in
this regard. Had the Actions been severable, as Romandale now maintains, costs
of the 2007 and 2008 Actions would have been payable by Fram alone. Instead,
Fram and Kerbel were held jointly and severally responsible for costs of all of
the Actions.
[12]
Further
and importantly, Fram and Kerbel achieved greater success on the Appeals than
their Settlement Offer, which Romandale rejected.
[13]
We
are satisfied that Fram and Kerbels partial indemnity costs are reasonable.
This can be seen by comparing them to Romandales partial indemnity costs of $2,283,089.26
for the Actions. As well, the amounts claimed and recovered were significant.
The market value of the Lands in 2018 was $50,000,000. Finally, the matters in
issue were complex, numerous, and very important to all the parties.
Disposition
[14]
Accordingly,
Fram and Kerbel are entitled to partial indemnity costs of the Actions in the
amounts that each claimed.
E.E. Gillese J.A.
P. Lauwers J.A.
M.L. Benotto J.A. |
COURT OF APPEAL FOR ONTARIO
CITATION: Fresco v. Canadian Imperial Bank
of Commerce, 2021 ONCA 46
DATE: 20210126
DOCKET: M51965 (C68801) & M51968 (C68649)
Doherty, Zarnett and Coroza
JJ.A.
BETWEEN
Dara Fresco
Plaintiff
(Respondent/Moving Party)
and
Canadian Imperial Bank of
Commerce
Defendant
(Appellant/Responding Party)
Louis Sokolov, Jody Brown and David
OConnor, for the moving party
Linda M. Plumpton, Sarah Whitmore and
John C. Field, for the responding party
Heard: January 4, 2021 by video conference
Zarnett J.A.
A.
Introduction
[1]
The respondent, Dara Fresco (Ms. Fresco), is the
representative plaintiff in a class action against the appellant, Canadian
Imperial Bank of Commerce (the Bank). She moves to quash two aspects of the
appeals brought by the Bank from the judgment of Belobaba J. (the motions judge),
made in the context of his disposition of common issues in the action.
[2]
Specifically, Ms. Fresco argues that although
other aspects of the motions judges judgment are properly appealable to this
court, those dealing with the effect of limitation periods and aggregate damages
may only be appealed to the Divisional Court, with leave.
[3]
For the reasons that follow, I would dismiss the
motions to quash. In my view, the limitations and aggregate damages aspects of
the motions judges judgment were all part of his judgment on the common issues.
This court has jurisdiction under s. 30(3) of the
Class Proceedings Act, 1992
,
S.O. 1992, c. 6 (the
CPA
), over appeals from a judgment on the
common issues, and thus over these aspects of the appeals.
B.
The context
(1)
The Action, Its Certification, and the Common
Issues
[4]
The class represented by Ms. Fresco is comprised
of approximately 31,000 current and former Bank employees. The action concerns class
members rights to compensation for overtime worked in the period from 1993 to
2009.
[5]
Although certification was originally refused by
the Superior Court and the Divisional Court, upon further appeal to this court,
the action was ultimately certified as a class proceeding in 2012:
Fresco
v. Canadian Imperial Bank of Commerce
, 2012 ONCA 444, 293 O.A.C. 248.
[6]
When this court made the certification order, it
articulated (i.e. certified) eight common issues for determination. Broadly
speaking, common issues 1 to 5 asked whether the Bank breached a contractual or
other duty by allowing or encouraging class members to work overtime, not
properly recording their time, and not ensuring they were properly compensated
for overtime worked. Common issue 6 asked whether the elements of unjust
enrichment were established in favour of class members. If the answers to any
of common issues 1 to 6 were yes, common issue 7 asked what remedies class
members were entitled to, and common issue 8 asked whether the class was
entitled to an award of aggravated, exemplary or punitive damages.
[7]
This court did not certify a separate common
issue about the effect of limitation periods, stating: [t]he issue of
limitation periods is not an ingredient of the class members claims, but
instead may be relied on by [the Bank] in its defence: at para. 108.
[8]
As well, this court refused to certify a common
issue concerning an aggregate assessment of damages, stating that for the
reasons in
Fulawka v. Bank of Nova Scotia,
2012 ONCA 443
, 111 O.R. (3d) 346, leave to appeal refused
[2012] S.C.C.A. No. 326, the preconditions in s. 24(1) of the
CPA
for
ordering an aggregate assessment of monetary relief cannot be satisfied in this
case: at para. 109.
(2)
The Motions Judges Judgment
[9]
The parties each moved for summary judgment on
the common issues and for related relief. The motions judge held three hearings
and issued three sets of reasons.
[10]
In his first set of reasons, the motions judge
addressed the disposition of common issues 1 through 5, which he denominated
the liability issues. He found in favour of the plaintiff class on all five
issues
: Fresco v. Canadian Imperial Bank of Commerce
, 2020 ONSC 75.
[11]
In his second set of reasons, the motions judge
found in favour of the plaintiff class on issue 6 (unjust enrichment) and on
issue 7 (remedies), finding that class members are entitled to certain
declarations as well as to damages. He found against the plaintiff class on
common issue 8, finding no entitlement to aggravated, exemplary or punitive
damages. He also certified an additional common issueCan the defendants monetary
liability be determined on an aggregate basis? If so, in what amount?and
deferred an answer to that additional issue until a further hearing following
an exchange of expert reports. He rejected the Banks argument that this
courts refusal to certify aggregate damages as a common issue, and the
doctrine of
res judicata
, precluded him from proceeding as he did. He held
that the decision in
Pro-Sys Consultants Ltd. v. Microsoft Corporation
,
2013 SCC 57, [2013] 3 S.C.R. 477, gave him that power:
Fresco v. Canadian
Imperial Bank of Commerce
, 2020 ONSC 4288.
[12]
In his third set of reasons, the motions judge
rejected the Banks request for a class-wide limitations order barring all
class members claims before certain dates (2007 in some cases and 2003 in
others). He held that although the request rested on a plausible procedural
foundation, as it was advanced as part of the summary judgment motion, the
banks limitations defence cannot fairly be determined on a class-wide basis
but, as per the usual practice, should be deferred to the individual hearings
stage. He also refused to rule on the Banks argument that s. 28 of the
CPA
did not have the effect of suspending the running of limitation periods for
class members outside of Ontario, as the issue was premature until individual
hearings were conducted:
Fresco v. Canadian Imperial Bank of Commerce
,
2020 ONSC 6098, at paras. 9, 22-23, 53 and 57.
[13]
Subsequent to oral argument of these motions to
quash, counsel provided this court with the formal judgment of the motions
judge. His answers to the common issues are set out in paragraph 1 and Schedule
A to the formal judgment, his addition of a common issue regarding aggregate
damages is set out in paragraph 2, and his rejection of the Banks request for
a class-wide limitations order is set out in paragraph 3.
(3)
The Appeals
[14]
The Bank has appealed from all of the motions
judges determinations. Although three notices of appeal were filed (one after
each set of the motions judges reasons) the appeals have been consolidated and
will proceed together on all issues subject to the result of this motion.
(4)
The Moving Partys Position
[15]
Ms. Fresco does not dispute that the Bank may
appeal to this court from the aspects of the judgment that determined common
issues 1 through 5 (liability), 6 (unjust enrichment), and 7 (remedies), under
s. 30(3) of the
CPA
. But she takes the position that the motions
judges decision to certify an additional common issue concerning aggregate
damages, and his decision to refuse a class-wide limitations order and to defer
limitations issues to individual hearings, can only be appealed to the
Divisional Court with leave.
[16]
With respect to the motions judges
determination certifying aggregate damages as an additional common issue, Ms.
Fresco argues that the appeal route is governed by s. 30(2) of the
CPA
[1]
,
in effect at the relevant time, which provided that an
order certifying a proceeding as a class proceeding may only be appealed to
the Divisional Court with leave. If s. 30(2) does not govern, she argues that
the appeal route is governed by the
Courts of Justice Act
, R.S.O. 1990, c. C.43
(the
CJA
)
.
Under s. 6(1)(b) of the
CJA
, this court only
has jurisdiction where the order of Superior Court judge sought to be appealed is
final. Ms. Fresco submits that as no decision to grant or award aggregate
damages has yet been made, the motions judges determination was interlocutory.
[17]
With respect to the limitations issue, Ms. Fresco
argues that s. 6(1)(b) of the
CJA
governs the appeal route. Since the
motions judge simply deferred limitations questions to the individual hearings
stage, no final order was made, and this court lacks jurisdiction over the
appeal on that issue.
C.
Analysis
[18]
I do not accept Ms. Frescos arguments.
[19]
Whether
this court has jurisdiction over an appeal from a judgment or order in a
class proceeding is a two-step analysis. The first question is whether the
appeal is from a judgment or order covered by s. 30 of the
CPA
, and if so, whether s. 30 directs the
appeal to this court. If the order is not one covered by s. 30 of the
CPA
, then whether the appeal lies to this court
is determined by the provisions of the
CJA
. In the latter circumstance, the primary
determinant is whether the order is final, as opposed to interlocutory:
Bancroft-Snell
v. Visa Canada Corporation
,
2019 ONCA 822, 148 O.R. (3d) 139, at para. 16.
[20]
The version of the
CPA
that governs
this appeal provided, in s. 30(2) and (3), as follows:
(2) A party may appeal to the
Divisional Court from an order certifying a proceeding as a class proceeding,
with leave of the Superior Court of Justice as provided in the rules of court.
(3) A party may appeal to the Court
of Appeal from a judgment on common issues and from an order under section 24,
other than an order that determines individual claims made by class.
[21]
For efficiency, the motions judge held three
hearings and issued three sets of reasons addressing a number of issues. But
this should not obscure the appropriate focus on the question of the proper
appeal route. The matters that the motions judge dealt with all arose on
motions for judgment on the common issues. The determinations he made about limitations
and aggregate damages were part of his judgment on the common issues. This
court therefore has jurisdiction over all aspects of the appeals under s. 30(3)
of the
CPA
. It is not necessary to consider whether, viewed
discreetly, the determinations of these issues were final or interlocutory, a
distinction that is not imported into s. 30(3) of the
CPA
.
(1)
Limitations
[22]
Two factors combine to entail the conclusion
that the limitations aspect of the judgment is appealable as part of the
judgment on the common issues. First, the limitations issue was raised as a
defence on a class-wide basis, and second, the motions judge rejected the
defence as being applicable on a class-wide basis, in the context of his
disposition of the common issues.
[23]
As was permitted by this court when it certified
the action as a class proceeding, the limitations issue was raised by the Bank
as a defence to the claim of the plaintiff class on the common issues. As a
defence, it was raised to alter or restrict the judgment that would otherwise
be given on the common issues. The limitations defence, in the form of a
request for a class-wide limitations restriction, was part of the Banks position
on the summary judgment motions.
[24]
If the motions judge had accepted the Banks
defence that, on a class-wide basis, claims before certain dates were statute
barred, the judgment on the common issues on liability or remedy would have
reflected that restriction.
[2]
As the defence on a class-wide basis was not accepted, the common issues
judgment on liability and remedy reflects no class-wide restriction of claims. As
in any appeal from a judgment, whether a defence should have been accepted and
altered or restricted the judgment given is fair game for argument on the appeal.
It is part of the appeal from the judgment itself.
[25]
As much as it may be germane to whether there
is any merit to the Banks complaint about how the limitations defence was dealt
with by the motions judge, it is not germane to the appeal route that the
motions judge said that limitations issues could be raised at the individual
hearings stage. Answering common issues without giving effect to a defence that
is asserted to be applicable on a class-wide basis, even while holding that the
defence may be raised in individual hearings, is still a judgment on the common
issues for appeal purposes.
[3]
(2)
Aggregate Damages
[26]
Similarly, it is the nature of the power exercised
by the motions judge to add aggregate damages as an issue, and the context in
which he exercised it, that entail the conclusion that that aspect of the
judgment is appealable as part of the judgment on the common issues.
[27]
In certifying aggregate damages as an
additional common issue, the motions judge did not make an order certifying the
proceedings as a class proceeding within the meaning of s. 30(2) of the
CPA
.
Such an order had already been made by this court in 2012. Accordingly, the
appeal route in s. 30(2) of the
CPA
is inapplicable.
[28]
Nor did the motions judge make an order adding a
common issue prior to, or in circumstances divorced from, his disposition of
the common issues. Rather, the motions judge was exercising the power referred
to by the Supreme Court of Canada in
Pro-Sys Consultants
, where
Rothstein J. stated, at para. 134:
The ultimate decision as to whether the
aggregate damages provisions of the
CPA
should be available is
one that should be left to the common issues trial judge. Further, the failure
to propose or certify aggregate damages, or another remedy, as a common issue
does not preclude a trial judge from invoking the provisions if considered
appropriate once liability is found.
[29]
In other words, the motions judge relied on a
power that permits the judge deciding the common issues of liability and
remedy, to add aggregate damages as an additional common issue. His directions
toward an award of aggregate damages are therefore part of his judgment on the
common issues, as is his rejection of the Banks defence to the exercise of
that power, namely that this courts prior refusal to certify aggregate damages
as a common issue in this case in the 2012 certification order gave rise to
res
judicata
.
[30]
That the motions judge left, to a further
hearing, the question of whether aggregate damages would actually be ordered
payable, goes to the correctness of his exercise of the power and, perhaps, to
whether the issue is ripe for appeal, but is not relevant to where the appeal
lies.
D.
Conclusion
[31]
For these reasons, I would dismiss the motions
to quash. In accordance with the agreement of the parties, the Bank is entitled
to its costs of the motions fixed in the sum of $10,000, inclusive of disbursements
and applicable taxes.
Released: January
26, 2021 DD
B. Zarnett J.A.
I agree. Doherty J.A.
I agree. S. Coroza J.A.
[1]
Recent amendments to the
CPA
came into effect October 1, 2020 but they do not apply to this proceeding. As
amended, the
CPA
now directs that
appeals from orders certifying or refusing to certify a class proceeding be
brought to this court.
[2]
It would not matter if the answers to the questions of whether the
Bank had liability and whether there was a remedy in damages appeared in one
paragraph of the formal judgment and the restrictionthat there was no
liability or damages before a certain dateappeared in a different paragraph.
They would have to be considered together as the judgment on the common issues.
[3]
Just as the judgment on the common issue of remedies, which
specified a remedy of damages, is properly appealable to this court even though
no amount is thereby awarded to any person, and even though, absent
consideration of aggregate damages, individual hearings would be required to deal
with whether any individual had proven an amount that the Bank would have to
pay.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Goldentuler v. Simmons Dasilva
LLP, 2021 ONCA 219
DATE: 20210407
DOCKET: C68561
Juriansz, Nordheimer and Jamal
JJ.A.
BETWEEN
Edward Goldentuler
Plaintiff (Respondent)
and
Simmons Dasilva LLP and Ray
Thapar
Defendants (Appellants)
Sean Dewart and Adrienne Lei, for the
appellants
Edward Goldentuler, in person
Heard: April 6, 2021 by
videoconference
On appeal from the order of Justice Jill
Cameron of the Superior Court of Justice, dated July 14, 2020 with reasons
reported at 2020 ONSC 4315.
REASONS FOR DECISION
[1]
The defendants appeal from the order of the
motion judge that dismissed their motion, pursuant to r. 21.01(3)(b) of the
Rules
of Civil Procedure
, R.R.O. 1990, Reg. 194, to dismiss this action on the
basis that the plaintiff is without legal capacity to commence or continue the
action. At the conclusion of the hearing, we allowed the appeal with reasons to
follow. We now provide our reasons.
[2]
The essential background facts are that the respondent's
late brother was a lawyer in private practice. Before his death, he commenced
an action against a group of former employees who had removed 120 client files
from his office in the dead of night and deleted his electronic records
concerning the stolen files.
[3]
The respondent, who is also a lawyer, obtained
an order to continue the action in the name of his late brother's Estate. The
claim proceeded to an uncontested damages assessment and the Estate obtained
judgment for $318,174.55.
[4]
Thereafter, purportedly in his capacity as Estate
trustee, the respondent retained the appellants to pursue an appeal in this
Court. The appeal was successful and the damages award in favour of the Estate
was increased to $901,791.71.
[1]
[5]
The appellants were successful in having the
judgment satisfied, but a dispute arose concerning their fees for the appeal,
following which the respondent commenced this solicitor's negligence action in
his own name and in his personal capacity. He seeks $2 million in damages,
alleging that the appellants fell below the standard of care in conducting the
appeal.
[6]
The appellants brought a motion to dismiss the
action on the grounds that the respondent does not have legal capacity to sue
them, as the appellants had acted for the Estate, not the respondent personally.
Further, the appellants submitted that it was only the Estate that could have
suffered any damages from the alleged negligence, not the respondent
personally.
[7]
In response to the motion, the respondent alleged
for the first time that the Estate's chose-in-action against the ex-employees
had been assigned to him, before the Estate retained the appellants, as part of
his purchase of his late brothers law firm from the Estate.
[8]
The motion judge dismissed the motion to dismiss
the action. In doing so, the motion judge found as a fact that the appellants
were aware that the respondent had purchased the law firm from his late
brothers wife, who was the executor of the Estate. A copy of the agreement had
been sent to the appellants lawyers by the respondent on February 7, 2020 in
response to their motion to dismiss. The motion judge then stated the core
issue she was to determine. She said, at para. 29:
However, the issue is not whether the
defendants knew about the purchase of the law firm. The issue is who retained
the defendants on the appeal, therefore who was owed a duty of care by them and
who would be affected by the outcome of the appeal.
[9]
The motion judge concluded that the respondent
had capacity to bring the action. She based this conclusion on two facts: (i)
the account for legal fees was directed to the respondent and (ii) the
respondent was the only party who could have been affected by the outcome of
the appeal since he had purchased the law firm.
[10]
In our view, the motion judge made a palpable
and overriding error in her determination of the motion. She did so by not
addressing the crucial question that she herself had stated, that is, who
retained the appellants? The answer to that question is clear, it was the
Estate. It was the Estate in whose name the original litigation was continued,
it was the Estate that was the party on the appeal, and it was the Estate for
whose benefit the damage award was increased. On that latter point, we note
that it was the Estate to whom payment was made on the ultimate judgment and it
was the Estate on whose behalf the retainer agreement with the appellants was
signed.
[11]
We would add that nothing of consequence turns
on the fact that the account for legal fees was directed to the respondent. He was
the individual who provided instructions to the appellants on behalf of the
Estate. The addressee of the account does not change on whose behalf the
appellants were retained. We also note that the account was expressly stated to
be for fees relating to the matter of Estate of Henry Goldentuler v. Robert
Crosbie et al.
[12]
In light of our conclusion, it is unnecessary to
address the arguments regarding the possible application of the
Conveyancing
and Law of Property Act
, R.S.O. 1990, c. C.34 to this case. However, the
fact that we do not need to address those arguments should not be taken as meaning
that we agree with the position taken by the motion judge on the issue, or on
her interpretation of the Act.
[13]
The respondent does not have a personal claim
arising from the retainer of the appellants given the party on whose behalf the
appeal was brought and on whose behalf the appellants were retained. He does
not, therefore, have capacity to bring the solicitors negligence claim.
[14]
In the event of this result, in his factum, the
respondent asked that this court amend the title of proceeding to add the
proper plaintiff. It is simply too late for the respondent to seek such relief.
Among other reasons, we do not have any indication whether the Estate would be
prepared to be added as a plaintiff in this action. The consent of the Estate
would be necessary for that purpose. It also does not address what appears to
be some potential difficulties with the original action.
[15]
It is for these reasons that the appeal was
allowed and the order below set aside. In its place, the motion is granted, and
the action is dismissed. The appellants are entitled to their costs of the
appeal in the agreed amount of $9,000 inclusive of disbursements and HST. As
also agreed, the costs award below is reversed so that it is now in favour of
the appellants.
R.G. Juriansz J.A.
I.V.B. Nordheimer J.A.
M. Jamal J.A.
[1]
Goldentuler Estate v. Crosbie
, 2017 ONCA 591
|
COURT OF APPEAL FOR ONTARIO
CITATION: Great Northern Insulation Services Ltd. v. King
Road Paving and Landscaping Inc., 2021 ONCA 367
DATE: 20210601
DOCKET: C67541
Doherty, Nordheimer and Harvison Young JJ.A.
BETWEEN
Great Northern Insulation
Services Ltd.
Plaintiff/Appellant
(Respondent)
and
King Road Paving and
Landscaping Inc. also known as King Road Paving & Landscaping Inc., Louis
Alaimo, Agostino Plati, Giuseppina Plati, and Scotia Mortgage Corporation
Defendants/Respondents
Jonathan Frustaglio, for the appellant Sutherland Law
Michael Odumodu, for the respondent Great
Northern Insulation Services Ltd.
Heard: April 30, 2021 by video conference
On appeal from the order of the Divisional Court (Justices David
L. Corbett, Frederick L. Myers and Elizabeth C. Sheard), dated June 14, 2019,
with reasons reported at 2019 ONSC 3671, 71 C.B.R. (6th) 187, varying the judgment
of Justice Robert Charney of the Superior Court of Justice, dated December 14,
2017, with reasons reported at 2017 ONSC 7675, 86 C.L.R. (4th) 331.
Nordheimer
J.A.:
[1]
Sutherland Law appeals, with leave, from the order of the Divisional
Court that allowed the appeal of Great Northern Insulation Services Ltd. from
the trial judges decision regarding its claim for priority arising out of a
charging order that the appellant law firm had obtained in this construction
lien proceeding. As I am in substantial agreement with the analysis undertaken
by the Divisional Court, I would dismiss the appeal.
BACKGROUND
[2]
King Road Paving and Landscaping Inc. (King Road) was hired in June
2012 by the defendant Agostino Plati and Giuseppe (Pino) Nesci, as a contractor
to complete extensive work on the renovation of an old barn located in
Schomberg, Ontario. A dispute arose over payment for the work.
[3]
The dispute captured two suppliers (subcontractors) that supplied goods
and services to the project and remained unpaid. They registered construction
liens against the property. These lien claims were tried together with King
Roads claim against the owners. The first supplier is Great Northern
Insulation Services Ltd. (Great Northern), which contracted with King Road to
supply spray foam insulation to the barn for $51,415. The second supplier is
Webdensco, a building supply centre. Subsequently, Webdensco assigned its
interest in its lien to King Road, pursuant to s. 73 of the
Construction
Lien Act
, R.S.O. 1990, c. C.30.
[1]
King Road then sought payment in the amount of $54,387.99 on behalf of
Webdensco.
[4]
A trial of the issues was eventually heard and determined.
[2]
The trial judge granted judgment in favour of King Road against the owners. He
also granted judgment in favour of Great Northern against King Road in the
amount of $105,803. Further, the trial judge declared that both Great Northern and
Webdensco were entitled to liens under the
Construction Lien Act
.
[5]
Some months after the trial decision was released, the appellant law
firm, which had represented King Road in the proceedings, brought a motion on
an urgent basis for a charging order under s. 34(1) of the
Solicitors Act
,
R.S.O. 1990, c. S.15. The trial judge granted the charging order.
[3]
In doing so, the trial judge provided that the charging order would have
priority over any amount owed to Great Northern by King Road pursuant to the
trial judgment and costs order.
[6]
Great Northern did not appeal the granting of the charging order, but it
did appeal the priority provided by the charging order over the amounts owed to
it. By reasons dated June 14, 2019, the Divisional Court allowed the appeal and
varied the charging order to provide that Great Northern had priority over the
solicitors' charging order in the amount of $54,737.61, plus any interest that
accrued on this amount to the time it is paid to Great Northern. That amount represents
the funds that remained from what had been paid by the owners to King Road. As
will be seen, those funds are trust funds under the
Construction Lien Act
.
THE DECISION BELOW
[7]
In making the order that it did, the Divisional Court found that
interest owing to Great Northern was to be included in the amount that Great
Northern could claim against the trust funds created by operation of the
Construction
Lien Act
. In this case, interest amounted to $51,065.39 as found by the
trial judge. The other amount of $3,744.37 was the amount that was left unpaid to
Great Northern on the base contract price.
[8]
In reaching this conclusion, the Divisional Court held that the proper
interpretation of s. 8 of the
Construction Lien Act
, included interest
due on the contract price. At the core of this appeal is the appellants
contention that the Divisional Courts interpretation is in error.
ANALYSIS
[9]
In my view, the issues raised by the appellant boil down to the
following:
1.
The Divisional Court erred in finding that it had jurisdiction to hear
an appeal from the charging order.
2.
The Divisional Court erred in finding that interest payable on the
contract price was to be included within the trust funds.
3.
The Divisional Court erred in finding that Great Northerns priority
over the trust funds was not affected by the assignment of Webdenscos lien to
King Road.
I will deal with each of the issues in turn.
(1)
Jurisdiction
[10]
I
do not agree with the appellant that any appeal from the charging order lay
directly to this court, and that the Divisional Court erred in concluding that
it had jurisdiction to hear the appeal. The charging order was obtained
pursuant to s. 34(1) of the
Solicitors Act
, which reads:
Where a solicitor has been employed to prosecute or
defend a proceeding in the Superior Court of Justice, the court may, on motion,
declare the solicitor to be entitled to a charge on the property recovered or
preserved through the instrumentality of the solicitor for the solicitors
fees, costs, charges and disbursements in the proceeding.
[11]
It
is implicit in the wording of s. 34(1) that a lawyer who wishes to obtain a
charging order must do so by bringing a motion in the proceeding where the property
recovered or preserved through the instrumentality of the solicitor
originated. In this case, that proceeding was the construction lien proceeding.
The necessary appeal route from any order obtained in a proceeding is dictated
by the statute that governs the proceeding, in this case, the
Construction
Lien Act
.
The
Construction Lien Act
provides, in s. 71,
that an appeal from a judgment lies to the Divisional Court. This court does
not have original appellate jurisdiction when a statute provides a right of
first appeal to the Divisional Court:
Courts of Justice Act
, R.S.O.
1990, c. C.43, s. 6(1)(b).
[12]
The
Divisional Court was correct in concluding that it had jurisdiction to hear the
appeal from the charging order.
(2)
Trust funds and Interest
[13]
This
is the issue that lies at the heart of this appeal. Indeed, the appellant
essentially conceded, during the hearing, that if it did not prevail on this
issue, the appeal would likely fail. This issue turns on the proper
interpretation of s. 8 and, in particular, s. 8(2) of the
Construction Lien
Act
, which reads:
The contractor or subcontractor is the trustee of the
trust fund created by subsection (1) and the contractor or subcontractor shall
not appropriate or convert any part of the fund to the contractors or
subcontractors own use or to any use inconsistent with the trust until all
subcontractors and other persons who supply services or materials to the
improvement are paid all amounts related to the improvement owed to them by the
contractor or subcontractor.
[14]
The
Construction Lien Act
is remedial legislation. Consequently, it should
be given a fair, large and liberal interpretation in order to achieve its
objectives:
Legislation Act, 2006
, S.O. 2006, c. 21, Sched. F, s.
64(1). Principal among those objectives is the protection of those lower down
on the pyramid of claimants. As Weiler J.A. said in
Sunview Doors Ltd. v.
Academy Doors & Windows Ltd.
,
2010 ONCA 198, 101 O.R. (3d) 285,
at para. 99:
The object of the Act is to prevent unjust enrichment of those
higher up in the construction pyramid by ensuring that money paid for an
improvement flows down to those at the bottom. In seeking to protect persons on
the lower rungs from financial hardship and unfair treatment by those above,
the Act is clearly remedial in nature. The remedial nature of the Act also
supports a liberal construction so as to enable it to serve its purpose.
[15]
In
my view, the words all amounts related to the improvement owed to them by the
contractor found in s. 8(2) ought to be given that large and liberal interpretation.
The words all amounts related to are, themselves, broad, much like the words
in respect of have been found to be. In that regard, I refer to the language
of Major J. in
Markevich v. Canada
, 2003 SCC 9, [2003] 1 S.C.R. 94, at
para. 26, where he said: The words in respect of have been held by this
Court to be words of the broadest scope that convey some link between two
subject matters.
[16]
In
the normal commercial context, interest that accrues on payments due under a
contract would be considered amounts owing on the contract. Interest on overdue
amounts may be expressly included in the terms of the contract or it may be
implied such as, for example, where the interest provision is included in the
invoices that are rendered under the contract. This interpretation is
consistent with the definition of price contained in s. 1(1) of the
Construction
Lien Act
which reads, in part:
price means the contract or subcontract price,
(a) agreed upon between the parties
[17]
The
actual contractual agreements between the parties are not in the record before
us. However, the trial judge referred in his reasons, at para. 183, to the fact
that Great Northern and King Road had entered into a credit agreement that provided
credit terms of 30 days for payment, with interest on outstanding amounts at
the rate of 2% per month. Therefore, the interest amount in this case was
expressly provided for by the contractual arrangements between the parties.
[18]
Thus,
interest reasonably falls within the scope of s. 8(2) as an amount owing to a
subcontractor relating to the improvement. Interest owing is therefore part of
the trust fund created by s. 8(1) and falls directly within the restrictions on
the permissible use of those trust funds stipulated by s. 8(2).
[19]
Given
the priority established by s. 8(2) that subcontractors enjoy over the trust funds,
there was no basis for the trial judge to give the charging order a greater priority
over the trust funds. Such a conclusion would be fundamentally inconsistent
with the purpose behind the creation of the trust and would violate the above
restriction on the use of the trust funds.
[20]
I
would add, on this point, that we are not speaking here about lien rights. We
are speaking about trust funds. The two are separate concepts under the
Construction
Lien Act
. Liens give subcontractors and suppliers the right to assert a
claim directly against the property, whereas trusts serve to protect the
interests of subcontractors and suppliers by protecting funds that are owed to,
or have been received by, the contractor. Actually, the
Construction Lien
Act
provides expressly that interest is not part of the lien claim in s. 14(2),
which reads:
No person is entitled to a lien for any interest on
the amount owed to the person in respect of the services or materials that have
been supplied by the person,
but nothing in this subsection affects any
right that the person may otherwise have to recover that interest
.
[Emphasis added.]
[21]
No
such exclusion is contained in s. 8. While Great Northern would not have been
entitled to include the interest amount within its lien claim, there is no
principled reason to exclude interest from the trust fund provisions, absent
the legislation so providing. Excluding interest would also be inconsistent
with the object of the legislation as expressed in
Sunview Doors Ltd.
above.
[22]
This
conclusion is also consistent with the purpose of the trust provisions as
enunciated by Sharpe J.A. in
The Guarantee Company of North America v. Royal
Bank of Canada
, 2019 ONCA 9, 144 O.R. (3d) 225, where he said, at para. 31:
[T]he legislature enacted the trust provisions because it
recognized that the lien provisions only provided a partial form of security to
suppliers. The lien provisions failed to protect suppliers at the bottom of the
pyramid in situations where the owner of the land had already paid the
contractor. The trust provisions complement the lien provisions by providing
security to suppliers at the bottom of the pyramid in these situations.
[23]
I
would also note that this conclusion mirrors the conclusion reached by the New
Brunswick Court of Appeal in
Fundy Ventilation Limited v. Brunswick
Construction Ltd., Fraser Companies Limited and Minister of National Revenue
(1982), 40 N.B.R. (2d) 484 (C.A.), 136 D.L.R. (3d) 455, leave to appeal
refused, 45 N.R. 528, where, in considering a similar issue, La Forest J.A.
said, succinctly, at p. 502: Interest would equally attach to Fundy's claim
under the trust.
[24]
Finally,
on this point, I agree with the Divisional Court that there is only one trust
fund for the subcontractors. This is clear from the wording of s. 8(1) constitute
a
trust fund (emphasis added). It is also clear from the observations
made by Sharpe J.A. in
Royal Bank of Canada
, at paras. 27-32, as to
the purpose of the trust fund provisions.
(3)
The Webdensco assignment
[25]
A
final issue must be addressed. There is an issue raised as to whether the above
analysis is altered by the fact that the other subcontractor, Webdensco,
assigned its lien to King Road during the course of the proceeding. The
Divisional Court held that if King Road used monies that it had received from
the owners to pay Webdensco, which would be trust funds, then Webdenscos trust
claim was extinguished, leaving only Great Northern with rights to the trust
funds. Put another way, if King Road used monies impressed with a trust in
favour of the subcontractors, then Webdenscos claim to the trust funds was
gone, leaving only Great Northern with the right to claim against the trust
funds. King Road did not acquire any right to claim against those trust funds.
[26]
On
this point, at the hearing before the Divisional Court, the panel raised with
counsel whether s. 11 of the
Construction Lien Act
played a role in
the proper analysis of the issues raised. Given that the question was raised by
the panel, the parties were given leave to file written submissions on the
point.
[27]
As
I have already said, the contractor had, at some point, settled the claim of
Webdensco and taken an assignment of its lien. This then raised the issue
whether that arrangement permitted the contractor to stand in the shoes of
Webdensco when it came to the distribution of the trust funds. The appellants
position was that the contractor was afforded all of its rights as a lien
claimant including the right to receive payment of Webdensco's pro-rata share
from the trust funds. The appellant coupled this submission with its contention
that there are separate trust funds one for each subcontractor. Like the Divisional
Court, I have rejected that latter argument above.
[28]
The
Divisional Court disagreed with the appellant. It found that the result
submitted by the appellant would only be the case if the contractor had used
non-trust funds to pay Webdensco and receive an assignment of its lien. That
conclusion follows from the express language of s. 11(1), which reads:
Subject to Part IV, a trustee who pays in whole or in part for
the supply of services or materials to an improvement out of money that is not
subject to a trust under this Part may retain from trust funds an amount equal
to that paid by the trustee without being in breach of the trust.
[29]
In
this court, the appellant changes tack. It now argues that the application of
s. 11 was a new issue that ought not to have been permitted on appeal, citing
Kaiman
v. Graham
, 2009 ONCA 77, 245 O.A.C. 130, at para. 18. The appellant also
complains that it was not permitted to file evidence about the source of the
funds used by King Road to pay Webdensco.
[30]
I
do not accept either of the challenges raised by the appellant. While the
application of s. 11 may have arisen first on the appeal, that does not make it
a new [issue] as contemplated by the decision in
Kaiman
.
[4]
The Divisional Court was being asked to answer a specific question that
involved the interpretation of the
Construction Lien Act
. Any section
of the statute that might be relevant to the question to be answered had to be
considered. If the Divisional Court thought that s. 11 might play some role in
their analysis of the question that was before them, then the Divisional Court
was obliged to raise the issue with the parties and permit them to make
submissions. That is what happened.
[31]
In
terms of the evidentiary issue, the appellant did not, at any point, ask for
leave to file evidence as to the source of the funds. It did not do so at the
time that the issue was raised by the panel at the hearing in the Divisional
Court; and it did not do so in its written submissions responding to the s. 11 issue.
Similarly, the appellant did not make any such request in this court, nor did it
bring a motion to adduce fresh evidence. The appellant cannot complain about a
denial of the right to file evidence that it never made any request for.
Further, given that it was the appellant that was suggesting that the
contractor might fall within the exception provided for in s. 11, it was the
appellant who bore the evidentiary burden. Given that it did not seek to place
evidence before the court on the issue, the Divisional Court was entitled to
assume that King Road had used trust funds, i.e. funds received from the
owners, to pay Webdensco.
CONCLUSION
[32]
The
appeal is dismissed. The respondent is entitled to its costs of the appeal in
the amount of $14,000 inclusive of disbursements and HST.
Released: June 1, 2021 D.D.
I.V.B. Nordheimer
J.A.
I agree. Doherty J.A.
I agree. Harvison Young J.A.
[1]
The contracts in this case were entered into around 2012 and
all events in issue were completed prior to July 1, 2018, the date on which numerous
provisions of the
Construction Lien
Amendment Act, 2017
, S.O. 2017, c. 24 came into effect.
That Act made a number of changes to the
Construction Lien Act
,
including changing the name of the statute to the
Construction Act
.
[2]
King Road Paving and Landscaping Inc. v.
Plati
, 2017 ONSC 557, 64 C.L.R. (4th) 102;
King Road Paving and Landscaping Inc. v. Plati
,
2017 ONSC 6319, 77 C.L.R. (4th) 165.
[3]
King Road Paving and Landscaping Inc. v.
Plati
, 2017 ONSC 7675, 86 C.L.R. (4th) 331.
[4]
See the recent discussion of this distinction in
R. v. G.F.
,
2021 SCC 20, at para. 93.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Grist v. TruGrp Inc., 2021 ONCA
309
DATE: 20210511
DOCKET: C68144
Lauwers, Miller and Nordheimer
JJ.A.
BETWEEN
Geoff Grist, Pauline Grist and
Brook Restoration Ltd.
Plaintiffs (Appellants)
and
TruGrp Inc., Alexander McMullen
and Christian Brannan
Defendants (Respondents)
Derek J. Bell and Katelyn Ellins, for
the appellants
Damien Buntsma and Richard K.
MacGregor, for the respondents
Heard: December 1, 2020 by video conference
On appeal from the judgment of Justice Grant
R. Dow of the Superior Court of Justice, dated February 5, 2020, with reasons
at 2020 ONSC 347.
REASONS
FOR DECISION
OVERVIEW
[1]
The respondents Alexander McMullen and Christian Brannan were employees
of the appellant Brook Restoration Ltd. (Brook), a building restoration company.
McMullen and Brannan left Brook to start a competing business, the respondent TruGrp
Inc. (TruGrp).
[2]
Litigation followed. In March 2018, Brook sued McMullen and Brannan for
various causes of action, including breach of fiduciary duty, misappropriation
of confidential information, and interference with economic relations, later
amending their claim to include TruGrp as a defendant (the Brook action). In March
2019, the respondents sued Brook, Brooks officers Geoff Grist and Pauline Grist,
and Brooks counsel for defamation, among other causes of action (the TruGrp action).
The TruGrp action was discontinued.
[3]
In July 2019, the appellants brought the present action alleging, among
other claims, defamation. The respondents responded with a motion under 137.1
of the
Courts of Justice Act
, R.S.O. 1990, c. C.43, to dismiss it as a
Strategic Lawsuit Against Public Participation (SLAPP).
[4]
The motion judge allowed the motion and dismissed the appellants
action. For the reason given below, we do not agree that the July 2019 action
is properly characterized as a SLAPP. Accordingly, for the reasons given below,
the appeal is allowed and the order dismissing the action is set aside.
BACKGROUND
A.
The TruGrp Action
[5]
Under the Brook action, the appellants counsel sent preservation
letters to TruGrps contractors directing them to preserve any relevant evidence.
In March 2019, in response to the preservation letters, the respondents sued
the appellants and their counsel for defamation, civil conspiracy, and unlawful
interference with economic relations. The next month, the respondents
discontinued the TruGrp action.
B.
The OLRB Application
[6]
In May 2019, The Operative Plasterers and Cement Masons International
Association of the United States and Canada, Local 598 (the Union) initiated an
Ontario
Labour
Relations Board (the OLRB) application
against Brook and TruGrp. The OLRB application was unrelated to the Brook and
TruGrp
actions. It was
centred
on whether TruGrp was Brooks successor employer under
the
Labour Relations Act, 1995
, S.O. 1995, c. 1, Sched. A, and therefore
bound to the same collective agreements as Brook. Geoff Grist, Pauline Grist,
and the appellants counsel in the Brook Action were not parties in the OLRB proceeding.
[7]
When TruGrp filed its response to the Unions Application, it attached the
statement of claim from the discontinued TruGrp Action. Brook alleged that the response
and attached statement of claim contained false and defamatory statements about
Brook, Geoff Grist, Pauline Grist, and the appellants counsel. TruGrp argued
the statement of claim was relevant to establishing that TruGrp was not a
successor employer. The statements to which the appellants objected include the
following allegations:
·
the appellants and their counsel sent the
preservation letters to intimidate potential customers and others from doing
business with the respondents. These letters were also intended to deceive their
recipients;
·
the appellants illegally put pressure on the
Union to bring the related employer application before the OLRB; and
·
the appellants initiated frivolous and vexatious
legal proceedings against former employees who set up competing firms, or firms
operating in a related stream of the restoration industry, in order to cause
irreparable economic and reputational harm to those competing firms.
[8]
Brook demanded that TruGrp withdraw from its OLRB response the
discontinued statement of claim and the allegedly false statements. TruGrp refused.
The Union, with Brooks support, moved to strike the impugned portions of TruGrps
Response. The OLRB dismissed the motion to strike.
CURRENT PROCEEDINGS
[9]
In July 2019, the appellants commenced this action against the
respondents, based on the respondents use of the impugned expressions in their
OLRB pleadings. The appellants sought damages for defamation, unlawful
interference with economic and contractual relations, and abuse of process.
[10]
In
response, the respondents brought a motion under s. 137.1 of the
Courts of
Justice Act
to have the appellants action dismissed as a SLAPP. The respondents
argued this action was an attempt to limit the respondents freedom of
expression on matters of public interest. Primarily, the respondents argued the
impugned expressions contained in the discontinued statement of claim related
to a matter of public interest because they spoke to the appellants pattern of
using litigation to gain an economic advantage over competitors, affect the
union certification process, and interfere with employees freedom of
association.
[11]
The
motion judge allowed the anti-SLAPP motion and dismissed the appellants action
on the basis that TruGrps response in the OLRB application constituted an expression
made in relation to a matter of public interest:
there is a public interest in how the
operation of restoration work in the province in conducted. It is also in the
public interest with regard to the involvement in retaining other businesses to
do that type of work. This includes businesses that are subject to collective
bargaining or workers represented by unions and activities within the
jurisdiction of the OLRB. The parties to the action before me raise allegations
of prohibited practices such as price covering.
[12]
Having
found that the respondents met their threshold burden, the motion judge considered
whether the appellants could
show
, pursuant to s.
137.1(4)(a), that the action had substantial merit and that the respondents had
no valid
defence
. Although the motion judge concluded
that the appellants action had substantial merit, he held that the appellants failed
to show the respondents had no valid
defence
.
[13]
In
concluding that the appellants failed to show the respondents lacked a valid
defence
, the motion judge held that the impugned expression
fell within the doctrine of absolute privilege. He recognized that absolute
privilege would not apply if the expression was not made for the purpose of the
OLRB proceeding. However, he concluded that the discontinued statement of claim
added value to TruGrps position before the OLRB. He found that TruGrp
referenced the preservation letters and Brooks allegations against TruGrp in
order to support TruGrps position that it was not Brooks successor employer. Consequently,
the motion judge found that TruGrps response in the OLRB proceeding, which
included references to the discontinued statement of claim, fell under the
protection of absolute privilege.
[14]
Finally,
the motion judge concluded that the harm Brook suffered from TruGrp including
the discontinued statement of claim in the response was not sufficiently
serious to warrant permitting the action to proceed.
ISSUES ON APPEAL
[15]
The
appellants effectively argue that the motion judge made three errors:
1.
the motion judge characterized the respondents
expression too broadly for the purposes of analysis under s. 137.1(2) and further
erred in concluding that the expression was a matter of public interest;
2.
the motion judge erred in interpreting the merits test; and
3.
the motion judge erred in finding the appellants did not tender sufficient
evidence of harm to permit the action to proceed.
ANALYSIS
Is the
expression a matter of public interest?
(1)
Principles
[16]
To
satisfy the threshold requirements under s. 137.1(3), the moving party must show
(i) the proceeding arises from an expression made by the moving party, and (ii)
the expression relates to a matter of public interest:
1704604 Ontario
Ltd. v. Pointes Protection Association
, 2020 SCC 22, 449 D.L.R. (4th) 1, at
para. 21. Here, there is no dispute that the pleadings constitute expression.
This appeal turns on whether the respondents expression relates to a matter of
public interest.
[17]
The
purpose of s. 137.1, as explained in
Pointes
, is to circumscribe
proceedings that adversely affect expression made in relation to matters of
public interest, in order to protect that expression and safeguard the fundamental
value that is public participation in democracy: at para. 30. It is not a new
form of summary trial on the merits of a defamation action but is instead meant
to provide an early and cost-effective means of ending litigation brought by a plaintiff
to silence a party who has spoken on a matter of public interest:
Sokoloff
v. Tru-Path Occupational Therapy Services Ltd.
, 2020 ONCA 730, 153 O.R.
(3d) 20, at para. 47. Its paradigmatic application is to prevent others from silencing
persons who are speaking on matters that have significance beyond themselves.
[18]
The
scope of s. 137.1s protection is set using the concept of the public interest.
This is a concept that many have found difficult to apply. The most detailed exploration
of the concept is provided in
Grant v. Torstar
, 2009 SCC 61, [2009] 3
S.C.R. 640, in the analogous context of the law of defamation. That case emphasizes
that the public interest is not a descriptive concept: it is not a matter of
ascertaining what the public, or any subgroup, believes to be interesting, entertaining,
or worth their attention: at para. 102. Instead, there is necessarily a
normative aspect to what is genuinely a matter of public interest:
Sokoloff
,
at para. 18. That is, the statement must address an issue about which the
public has some substantial concern because it affects the welfare of citizens,
or one to which considerable public notoriety or controversy has attached:
Grant
,
at para. 105, citing Raymond E. Brown,
The Law of Defamation in Canada
,
loose-leaf, (2008-Rel. 3) 2nd ed. (Scarborough: Carswell, 1999), vol. 2, at pp.
15-137 and 15-138. Again, the fact of notoriety or controversy is not
sufficient in itself one must assess the reason for the notoriety.
[19]
The
public interest includes such matters as the establishment, use, allocation,
and maintenance of shared public goods, and therefore protects discussion and
advocacy about the distribution of benefits and burdens of social life. But the
public interest is not necessarily limited to matters of shared public life:
Grant
,
at para. 106. There is, after all, a public interest in maintaining peaceful
relations between persons in society and in drawing attention to acts of injustice.
But the resolution of purely private disputes between more or less equalsdisputes
that have no immediate bearing on the rights or obligations of otherscan seldom
be a matter of public interest:
Sokoloff
, at para. 19.
(2)
Application
[20]
The
appellants argue that the motion judge erred by characterizing the relevant expression
as the response as a whole. Thus, he held that there is a public interest in
how the operation of restoration work in the province is conducted, as well as
in retaining other businessesincluding businesses that are subject to
collective bargaining and workers represented by unions and activities within
the jurisdiction of the OLRBto perform restoration work.
[21]
The
motion judge erred by failing to analyze the specific statements that were the
subject of the appellants action. This includes the allegedly defamatory
statements in the statement of claim appended to the response, as well as the
11 paragraphs in the response repeating the points made in that attachment. It
is only these statements that constitute the relevant expression for the
purposes of the s. 137.1 motion. The remaining statements contained in the response
and the appended statement of claim were not the subject of the appellants
action, and the appellants had not attempted to use legal process to prevent or
discourage the respondents from making those statements. The whole of the response
provides relevant context for understanding the 11 paragraphs itemized in the
defamation action and can be considered for that purpose. However, the
expression that is the relevant subject matter for the motion is the 11
paragraphs in the response and the portions of the statement of claim from
which those paragraphs originate.
[22]
The
subject of those paragraphs, summarized above, is best characterized as an allegation
that a building restoration business engaged in conduct that was tortious and
contrary to
labour
law, in order to harm its competitors
and gain an unfair advantage.
[23]
We
agree with the appellants that the motion judge erred in finding the expression
relates to a matter of public interest. Activity that unfairly reduces
competition is a matter of public interest, in the sense that justice requires that
such actions be proscribed for the common good. But that does not mean that every
occurrence of this type of misconduct is a matter of public interest, having
significance to anyone other than the parties involved and the institutions established
to resolve their disputes. The nature of the respondents expression is fundamentally
a private dispute, to which s. 137.1 does not apply.
[24]
In
light of our finding, the respondents s. 137.1 motion fails at the s. 137.1(3)
threshold stage. Accordingly, it is not necessary that we address the other
issues raised by the appellants.
[25]
There
is no reason why the appellants action should not proceed to adjudication. In
so holding, however, we should not be taken as having expressed any opinion on
the merits of that action.
DISPOSITION
[26]
The
appeal is allowed, the order below is set aside, and the action is restored. If
the parties are unable to agree on the costs of the appeal, they may each file
written submissions, not to exceed three pages, and a bill of costs, within 14 days.
P. Lauwers J.A.
B.W. Miller J.A.
I.V.B. Nordheimer J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Halton (Regional Municipality) v.
F. Greco & Sons Limited (Greco Construction), 2021 ONCA 322
DATE: 20210512
DOCKET: M52153 and M52369 (M51847)
Nordheimer J.A. (Motions Judge)
BETWEEN
The Regional Municipality of
Halton
Plaintiff
Moving and Responding Party
and
F.
Greco & Sons Limited o/a Greco Construction, Michael Greco, John Frank Greco,
John Paul Greco, Sirron Systems Incorporated, Sirron Systems Inc., Sirron Group
International, Sirron Electrical Contracting Corporation, David Allan Norris,
Meehans Industrial Maintenance Ltd., Patrick Vincent Meehan, Jason Matthew
Mote, Giulio (Julio) Cerelli, Canian Precision Machine Shop Limited, Wahan
Aghaian, Eli Ishkanian and
Lisa Snowball
Defendants
Moving and Responding Party
Talia Gordner, for the moving and
responding party, Regional Municipality of Halton
Paul H. Starkman, for the moving and
responding party, Lisa Snowball
Heard: May 12, 2021
by video conference
ENDORSEMENT
[1]
I have two motions before me. One motion is
brought by the Regional Municipality of Halton to strike out the motion for
leave to appeal brought by the responding party, Lisa Snowball. The other
motion is brought by Lisa Snowball for leave to file fresh evidence on the
motion for leave to appeal. Ms. Snowballs motion for leave to appeal seeks to
appeal the denial of leave to appeal by the Divisional Court from an order of a
Superior Court judge.
[2]
Prior to hearing the merits of the motions, I
raised with counsel whether a single judge of this court has jurisdiction to
determine either of them. I have concluded that I do not.
[3]
Only a panel can determine the issue of
jurisdiction with respect to an appeal:
Courts of Justice Act
, R.S.O.
1990, c. C.43, s. 134(3),
Rules of Civil Procedure,
R.R.O. 1990, Reg.
194, r. 61.16(2.2). Also, only a panel can determine a motion for leave to
appeal:
Courts of Justice Act
, ss. 7(1), 7(3).
[4]
In my view, it follows from these provisions
that since a panel must determine the motion for leave to appeal, it is a panel
that must determine any jurisdictional issue relating to the motion for leave
since, if successful, it would finally determine whether there is an appeal or
not. Therefore, it must be a panel of this court that hears and determines the
Regions motion to strike the motion for leave to appeal.
[5]
I reach the same conclusion respecting Ms.
Snowballs motion to adduce fresh evidence. Rule 61.16(2) provides that a
motion to receive fresh evidence must be made to the panel hearing the appeal.
Following the same analysis above relating to the jurisdiction issue, it is my
view that, if a panel hearing an appeal must determine the admissibility of
fresh evidence on the appeal, a panel hearing a motion for leave to appeal must
determine the admissibility of fresh evidence on that motion.
[6]
As a result, I order that these two motions be
transferred to be heard and determined by a panel of this court. If the panel
determines the jurisdictional issue in favour of the Region, then the motion
for fresh evidence becomes moot. If the jurisdictional issue is determined in
favour of Ms. Snowball, then the panel can direct how the motion for fresh
evidence ought to be dealt with.
[7]
I reserve the costs of today to the panel
hearing the motions.
I.V.B.
Nordheimer J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION:
Hannivan v. Wasi, 2021 ONCA 187
DATE: 20210325
DOCKET:
C68206
Feldman,
Paciocco and Coroza JJ.A.
BETWEEN
Paul
J. Hannivan and Pamela J. Hannivan
Plaintiffs/Moving
Parties
(Respondents)
and
Muhammad Wasi
and RE/MAX Aboutowne Realty Corp.
Defendants/Responding
Parties
(
Appellant
)
AND BETWEEN
Muhammad
Wasi
Plaintiff
by Counterclaim/Responding Party
(Appellant)
and
Paul
J. Hannivan and Pamela J. Hannivan
Defendants
by Counterclaim/Moving Parties
(Respondents)
Dheeraj Bhatia, for the appellant
Mark A. De Sanctis, for the respondents
Heard: March 8, 2021 by video
conference
On appeal
from the judgment of Justice Clayton Conlan of the Superior Court of Justice,
dated February 20, 2020, with reasons reported at 2020 ONSC 1060.
REASONS FOR DECISION
BACKGROUND
[1]
On March 20, 2017, the appellant
purchaser and the respondent vendors executed an agreement of purchase and sale
(APS) for a residential property located in Oakville, Ontario. The purchase
price was $1,155,000. The purchaser paid a $50,000 deposit. Both parties were
represented by real estate agents throughout the process.
[2]
The APS had a closing
date of August 18, 2017. All requisitions affecting title to the property were
to be submitted by August 1, 2017 at 6:00 p.m. The purchaser did not submit any
requisitions before the deadline expired.
[3]
After regular business
hours on August 17, 2017, the day before the closing, counsel for the purchaser
sent correspondence to the vendors real estate lawyer. The lengthy
correspondence set out various concerns with the transaction. Of note to this
appeal is the purchasers allegation that the vendors failed to comply with a
term of the APS concerning a property survey. That term, found in Schedule A to
the APS, is as follows:
The Seller agrees to provide, at the Sellers
own expense, not later than two weeks, an existing survey of said property
showing the current location of all structures, buildings, fences,
improvements, easements, rights-of-way, and encroachments affecting said
property. The Seller will further deliver, on completion, a declaration
confirming that there have been no additions to the structures, building,
fences, and improvements on the property since the date of this survey.
[4]
In the correspondence,
counsel for the purchaser claimed that the APS was null and void due to the vendors
failure to comply with the survey term. They demanded that the purchasers
deposit be returned to him in full. On August 18, 2017, the vendors
solicitor replied, stating that the purchaser had breached the APS and thereby
forfeited his deposit.
[5]
The transaction never
closed. The vendors relisted the property for sale, ultimately selling it to
another buyer for less than the original purchase price in the APS. The vendors
sued the purchaser for the difference in the purchase price, plus other
damages. The purchaser counterclaimed for, primarily, the return of his
deposit.
[6]
The vendors moved for
summary judgment on their claim and the counterclaim. On February 20, 2020, a
motion judge granted the motion in favour of the vendors on both the primary
claim and counterclaim.
[7]
The motion judge held
that the purchaser repudiated the transaction and was not justified in doing
so. The motion judge observed that the vendors provided to the purchasers real
estate agent a document purporting to be a survey, nearly five months before
the correspondence on behalf of the purchaser was sent declaring the APS null
and void. He noted that the purported survey was signed by an Ontario land surveyor
and dated. The motion judge recognized that this survey was bare-bones and
did not show the current location of the items listed in the survey term of the
APS. In his view, however, the purchaser was not entitled to repudiate the deal
on this basis because a more detailed, original survey was in no way essential
to the transaction.
[8]
The purchaser asks this
court to set aside the motion judges decision. He raises several grounds of
appeal.
ANALYSIS
[9]
First, the purchaser
argues that the motion judge did not consider the vendors failure on the
motion to plead or argue compliance with the survey term of the APS. We
disagree. A fair reading of the vendors reply and defence to counterclaim, as
well as their factum in the court below, does not disclose any deficiency in
the vendors pleadings.
[10]
Second, the purchaser
asserts that the motion judge failed to consider the vendors admission, namely
that they were aware that the purchaser intended to renovate the property, as
evidence that a survey complying with Schedule A of the APS was essential to
the transaction.
[11]
We do not accept this
assertion. In our view, the motion judges failure to mention the admission in
his reasons does not mean he failed to consider it. The motion judge was
clearly alive to the purchasers submission that it was his intention to
renovate the property. Indeed, he noted the purchasers submission that summary
judgment was not appropriate in this case because he needed an opportunity at
trial to adduce further evidence on his intention to do major renovations to
the property. That submission was quite properly rejected by the motion judge.
Whether the vendors knew that the purchaser was going to renovate the property
had nothing to do, generally, with the purchasers ability to close the
transaction or his alleged entitlement to repudiate the APS.
[12]
Third, the purchaser
submits that the motion judges reasons were inadequate and failed to deal with
the survey term. This submission has no merit. The motion judge focused on the
survey term and provided concise reasons as to why the purchaser was not
entitled to repudiate the APS.
[13]
Fourth, the purchaser
contends that the motion judge failed to consider various authorities put
forward by the purchaser, including
Domowicz v. Orsa Investments Ltd.
(1993), 36 R.P.R. (2d) 174 (Ont. Gen. Div.). In
Domowicz
, a vendor was
late in its delivery of a survey, precluding the purchaser from arranging
financing for the transaction. The court held that the purchaser should have
been accommodated by a reasonable extension of the closing date, and resolved
the issue of liability in the purchasers favour: at pp. 1, 4, 21-22, and 25.
[14]
In this case, the
motion judge noted that the purchaser was relying heavily on
Domowicz
.
However, the motion judge concluded that taking the purchasers position as
high as it could be, even if the vendors did not strictly comply with the
survey term contained in Schedule A of the APS, this would not have entitled the
purchaser to refuse to close the transaction. This conclusion flowed from the
fact that the survey had nothing to do with financing, zoning, or the purchasers
ability to close the transaction. We see no basis to interfere with these findings.
[15]
Finally, the purchaser
argues that the motion judge misconstrued evidence, including expert evidence,
and failed to properly consider submissions by the purchaser.
[16]
We see no merit to this
argument. The motion judge carefully reviewed the evidence and focused on
whether the vendors alleged non-compliance with the survey term entitled the
purchaser to repudiate the APS because it was essential to the bargain. He
concluded that it was not. In reaching that conclusion, he considered the parties
submissions and observed how counsel for the purchaser narrowed the analysis
considerably when he stated that the purchasers entire case rested on the
survey term.
DISPOSITION
[17]
For these reasons, the
appeal is dismissed. The vendors are entitled to their costs of the appeal in
the agreed upon amount of $7,500, inclusive of disbursements and HST
.
K.
Feldman J.A.
David
M. Paciocco J.A.
S.
Coroza J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Hayward v. Hayward, 2021 ONCA 175
DATE: 20210322
DOCKET: C67890
Lauwers,
Trotter and Zarnett JJ.A.
BETWEEN
Leslie
Ann Hayward, as Estate Trustee and The Estate of
Jeanne
Hayward also known as Jean Hayward
Applicants
(Respondents)
and
Alexander William Keith Hayward
,
Shawn Hayward
,
David
Hayward
,
Kelly Hayward and
Lori Hayward
Respondents
(
Appellants
)
Robert J. De Toni, for the appellants
Robert A. Lewis, for the respondents
Heard: March 16, 2021 by video conference
On appeal from the judgment of Justice Stanley
J. Kershman of the Superior Court of Justice, dated December 12, 2019, with
reasons reported at 2019 ONSC 7083, and from the costs order, dated March 6,
2020, with reasons reported at 2020 ONSC 1458.
REASONS
FOR DECISION
[1]
This appeal concerns the estate of Jeanne
Hayward. She is survived by her former husband, Alexander [Alex] Hayward, and
their five adult children, Leslie, Shawn, David, Kelly, and Lori. (In these
reasons we use first names to distinguish among them, not out of disrespect.)
All five siblings were named as beneficiaries in Jeannes will, but Alex was
not. Leslie is the estate trustee. Shawn, David, and Lori, but not Kelly, supported
their fathers claims to various estate assets and estate funds.
[2]
Alex appeals the disposition of his claims to re
payment of a loan he made to Jeanne with
which she bought a Chevrolet Malibu
and to ownership of
a Montana tractor, and seeks leave to appeal the costs award. Shawn, David and
Lori join him only in the appeal of the costs award.
The Chevrolet Malibu
[3]
Alex had claimed that although the Malibu was in
Jeannes name, he had provided, as a loan, the cash with which it was
purchased. The estate argued that Alex did not pay for the Malibu. The trial
judge found that Alex had paid for Jeannes Malibu, but when he did so he was
making a gift, not a loan. However, the estate had not argued that the money
paid by Alex for the Malibu was a gift.
[4]
We agree with the appellant that it was not open
to the trial judge to find that the funds Alex paid for the Malibu were a gift
and not a loan. As Doherty J.A. noted in
Rodaro v. Royal Bank of
Canada
(2002), 59 O.R. (3d) 74, at paras. 61-63, a trial judges reliance
on a ground that was not argued is fundamentally unfair and potentially
unreliable because it was not tested through the adversarial process. The law
prescribes tests for determining when the payment of funds is a gift, but the
trial judge did not apply or allow the parties to address those tests before
determining that Alexs payment for the Malibu was a gift, not a loan. The
appeal on this ground is allowed, and we remit the issue to the Superior Court
for trial.
The Montana Tractor
[5]
Alex purchased the Montana tractor and the bill
of sale was in his name. He paid the $1,000 down payment in cash. The balance
of $12,560 was paid with a cheque in Leslies name. Leslie argued that the
cheque came from her, and, since Alex never paid her back, the tractor was
hers. Alex argued that the money actually came from Jeanne, and, because the tractor
was in his name, he owned it. He said Jeanne probably borrowed the money from
Leslie, but he was not sure.
[6]
The trial judge found that Alex had paid the
initial deposit and owned the tractor. However, he found that Leslie had paid the
balance of $12,560, which was most of the purchase price. Because there was no
evidence Alex ever repaid her, the trial judge found that Alex owed Leslie
$12,560.
[7]
The appellant argues that the trial judge erred
in failing to find that repayment of the loan was time-barred under the
Limitations
Act, 2002
, S.O. 2002, c. 24. This proceeding was started as an application
and did not have full pleadings, but it was open to counsel to raise the
application of the
Limitations Act
as a defence to Leslies claim. The
trial judge cannot be criticized for failing to respond to a defence that was
not raised by counsel. This ground of appeal is dismissed.
The Costs Award
[8]
The major issue in this appeal is the trial
judges award of substantial indemnity costs against the appellants.
[9]
The appellants make three arguments. They argue,
first, that the trial judges discretionary award of substantial indemnity
costs against Alex, Shawn, David and Lori was wrong in principle. We agree with
the trial judge that the behaviour of the appellants warranted substantial
indemnity costs in light of Alexs misconduct. That misconduct was worthy of
sanction under the principles in
Davies v. Clarington
(Municipality)
, 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 28-31 and 40.
This misconduct was supported by the sibling appellants.
[10]
The trial judge noted that Alex disputed the
authenticity of a document, signed by Jeanne and Alex as a supplement to their separation
agreement, disposing of some assets. Its authenticity was a significant issue
at trial and consumed time and resources. Each appellant contributed to the
allegation that the agreement was not authentic. The trial judge noted, in his
costs award:
[Alex] was fully supported in this position by
Shawn, David and Lori Hayward. In addition to giving evidence in support of it
being not authentic they also provided their own evidence claiming that it was
fraudulent. At one point in the trial, Shawn Hayward testified that Leslie
Hayward could have tampered with her mother's computer. Leslie Hayward claimed
that she could not have manipulated some of the emails.
[11]
Alex and the siblings supporting him brought a motion
on short notice to introduce an expert report regarding the authenticity of
this document. This forced the estate to hire an expert to prove that the agreement
was authentic. The trial judge relied on the estates expert evidence and Kellys
testimony to find that the agreement was authentic. The implication is that
Alex had advanced an argument that he knew to be false, which is surely good
evidence of egregious misconduct.
[12]
The trial judge also found that Alex was
tenacious and intransigent; that he signed the agreement, even though he
claimed otherwise; and that he denied that Leslie paid for the Montana tractor,
even though the cheque proved she did.
[13]
The appellants second costs argument is that
the siblings should have been considered by the trial judge to be non-parties
without any responsibility for costs. We reject this argument.
[14]
There is no error in the trial judges
disposition of this issue. He found:
The Court finds that Shawn, David and Lori
Hayward were in this together with Alex Hayward.
The Court rejects [their]
argument that the costs should be only as against Alex Hayward. The Court finds
that Shawn, David and Lori Hayward actively participated with their father in
these proceedings and costs consequences should apply to all of them.
On this basis, the Court finds that the
interests of Alex Hayward are not separate from Shawn, David and Lori Hayward.
[15]
The appellants third costs argument is that the
trial judge erred in finding
that Leslie, as trustee,
was entitled to recover her full indemnity costs out of the estate, including
those costs related to disputes over items solely between her and Alex. Counsel
for the estate agrees. The parties concurred in suggesting that the range of
costs attributable to Leslies personal disputes warrant a reduction of between
$5,000 and $10,000 from the total award to her. We fix the amount of the
deduction at $7,500.
[16]
Accordingly, we vary the trial judges costs
award by reducing the remainder of costs he ordered to be paid by the estate to
the estate trustee of $16,030.23 by $7,500. We leave the disposition of costs
on the Malibu loan/gift issue remitted to trial including the original trial to
the trial judge hearing the re-trial; we recognize that doing so benefits
Leslie and the estate somewhat since the trial judges costs disposition
includes an amount on account of this issue but it appears most efficient to
proceed in this manner. The costs appeal is otherwise dismissed and the
respective obligations to pay forthwith come into force.
[17]
The costs of this appeal are payable forthwith
by the appellants to the respondents in the reduced amount of $15,000 inclusive
of costs and disbursements, to reflect the appellants partial success.
P.
Lauwers J.A.
Gary
Trotter J.A.
B.
Zarnett J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Heliotrope Investment Corporation
v. 1324789 Ontario Inc., 2021 ONCA 39
DATE: 20210119
DOCKET:
M51698
(C68123), M51699 (C68122) & M51700 (C68121)
Lauwers,
Hourigan and Brown JJ.A.
BETWEEN
DOCKET:
M51700 (C68121)
Heliotrope
Investment Corporation
Plaintiff
(Respondent)
(Moving
Party)
and
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary
Beach
and 1073650 Ontario Inc.
Defendants
(Appellants)
(Responding Parties)
and
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary
Beach
and 1073650 Ontario Inc.
Plaintiffs by Counterclaim
(Appellants)
(Responding Parties)
and
Canadian Western Trust Company (In Trust for RRSP Plan
Number #10084752 and Plan #10084190), Heliotrope Investment
Corporation, Magenta Capital Corporation and Magenta
Mortgage
Investment Corporation
Defendants by Counterclaim
(Respondents)
(Moving
Parties)
AND
BETWEEN
DOCKET: M51699 (C68122)
Canadian Western Trust Company
(In
Trust for RRSP Plan Number #10084752 and Plan #10084190)
Plaintiff
(Respondent)
(Moving
Party)
and
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary
Beach and 1073650 Ontario Inc.
Defendants
(Appellants)
(Responding Parties)
and
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary
Beach
and 1073650 Ontario Inc.
Plaintiffs by Counterclaim
(Appellants)
(Responding Parties)
and
Canadian Western Trust Company (In Trust for RRSP Plan
#10084752 and Plan #10084190), Heliotrope Investment
Corporation, Magenta Capital Corporation and Magenta
Mortgage
Investment Corporation
Defendants by Counterclaim
(Respondents)
(Moving Parties)
AND
BETWEEN
DOCKET: M51698 (C68123)
Canadian Western Trust Company (Incorporation No. A46845),
In
Trust for RRSP Plan Number #10084752 and Plan #10084190
Plaintiff/Defendant by Counterclaim
(Respondent)
(Moving Party)
and
1324789 Ontario Inc., 1073650 Ontario Inc., Johnathan Gary
Beach
and Martha Lorraine Beach
Defendants/Plaintiffs by
Counterclaim
(Appellants)
(Responding Parties)
Eric Lay,
for the moving parties
No one appearing for the responding
parties
Heard: January 18, 2021 by video
conference
REASONS
FOR DECISION
[1]
On consent, the motion is dismissed with costs reserved to the
panel hearing the appeal.
P. Lauwers J.A.
C.W. Hourigan J.A.
David Brown J.A.
.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Hillmount Capital Inc. v. Pizale,
2021 ONCA 364
DATE: 20210528
DOCKET: M52200 (C68999)
Strathy C.J.O., Brown and Miller
JJ.A.
BETWEEN
Hillmount Capital Inc.
Respondent
(Applicant)
and
Celine Brittany Pizale and
Richard Stanley Pizale
Moving
Parties/Appellants
(Respondents)
Jamie Spotswood and Rachel Migicovsky,
for the moving parties/appellants, Celine and Richard Pizale
Robert Macdonald and Teodora Prpa, for
the receiver, Zeifman Partners Inc.
Behn Conroy, for the purchasers,
Patricia and David Armstrong
Shana Nodel, for second mortgagees,
1713691 Ontario Inc. and Boris Nodel
Terry M. Walman, for first mortgagee,
Elle Mortgage Corporation
Heard: February 8, 2021 by video conference
BROWN J.A.:
I. OVERVIEW
[1]
The appellants, Celine and Richard Pizale, owned
a partially-renovated residential property on Lyndhurst Avenue in Toronto (the
Property). In June 2020 the first mortgagee, Hillmount Capital Inc.
(Hillmount), applied for an order appointing the respondent, Zeifman Partners
Inc., as receiver of the Property (the Receiver). Koehnen J. granted such an
order on June 19, 2020 (the Appointment Order).
[2]
The Receiver marketed the Property on an as is
basis and entered into an agreement of purchase and sale with Patricia and
David Armstrong (the Purchasers). By orders dated January 8, 2021, Conway J.
granted a sale approval and vesting order (the Approval Order), together with
an administration order approving the Receivers activities, as well as
increasing its borrowing authority to $250,000.00 (the Administration Order).
[3]
On January 15, 2021, the Pizales filed a notice
of appeal of the Motion Judges January 8 orders. Two motions then ensued
before the Chambers Judge.
[4]
First, the Receiver moved for orders (i)
declaring that the Pizales do not have an automatic right of appeal under ss.
193(a)-(d)
of the
Bankruptcy and Insolvency Act
,
R.S.C., 1985, c. B-3 (the
BIA
),
and (ii) denying them leave to
appeal the Approval and Administration Orders under
BIA
s. 193(e).
[5]
The Pizales then brought a motion for (i) a
declaration that they have a right to appeal to this court from the Approval and
Administration Orders under s. 193(c), which states that an appeal lies to
the Court of Appeal if the property involved in the appeal exceeds in value
ten thousand dollars, or (ii) alternatively, leave to appeal the orders
pursuant to s. 193(e) and a stay of the Approval and Administration Orders
pending their appeal.
[6]
By order dated February 4, 2021 the Chambers
Judge declared that the Pizales did not have an automatic right of appeal and
denied them leave to appeal (the Chambers Order). He ordered that the sale of
the Property should proceed.
[7]
The Pizales thereupon brought an urgent panel
review motion pursuant to s. 7(5) of the
Courts of Justice Act
, R.S.O.
1990, c. C.43 (
CJA
), to set aside the Chambers Order and, if
necessary, stay the Approval and Administration Orders.
[8]
The panel heard the motion on February 8, 2021,
the day scheduled for the closing of the sale of the Property. At the
conclusion of the hearing the panel dismissed the Pizales motion, with reasons
to follow. These are those reasons.
II. BACKGROUND
The Property and the receivership
[9]
The Pizales were in the process of renovating
the Property when Hillmount, the first mortgagee, applied for the appointment
of a receiver. At the time, there were four mortgages registered against the
Property: (i) the first mortgage to Hillmount for approximately $3.35 million,
later assigned to Elle Mortgage Corporation (Elle); (ii) an $800,000 second
mortgage to 1713691 Ontario Inc. and Boris Nodel; (iii) a third mortgage for
$569,359 to Harold Wine, Gad Caro, and Marshall Morris; and (iv) a $325,000
fourth mortgage to Weihao Zhang. The Pizales had been in default under the
first mortgage for a number of months prior to the Receivers appointment.
[10]
The Appointment Order authorized the Receiver to
take possession of the Property, preserve, market, and sell it. The Receiver
was authorized to borrow up to $150,000 from Hillmount. Given the significant
costs required to complete the renovation of the Property, the limited
borrowing authority given to the Receiver clearly indicated that its mandate
under the Appointment Order was to sell the Property on an as is basis.
[11]
As described by the Motion Judge in her
endorsement, the Receiver initially listed the Property for sale at $4.8
million, which was higher than the appraisals it had obtained for a sale on an
as is basis. Notwithstanding numerous showings of the Property, that listing
price did not attract any offers. In mid-September 2020, the Receiver reduced
the listing price to $4.15 million. Several offers were received, which the
Receiver pursued. The Receiver entered into a Sale Agreement with the
Purchasers for a purchase price that was higher than its two as is appraisals
and any other offers received by the Receiver.
The decision of the Motion Judge
[12]
The Receiver moved for court approval of the
Sale Agreement. In its Second Report, the Receiver stated that if the Sale
Agreement was not approved, it did not believe it would be able to sell the
Property for an equal or higher price.
[13]
The Pizales opposed the Receivers motion. They
wanted to regain possession of the Property, complete the renovations, and sell
it for an as complete or as renovated price. The second mortgagees also
opposed the sale. Elle, the assignee of the first mortgage, and the third and
fourth mortgagees opposed any sale of the Property but supported a discharge of
the Receiver. Notwithstanding those positions, no motion to discharge the
Receiver was brought before the Motion Judge.
[14]
The Motion Judge approved the Sale Agreement,
concluding that the evidence showed the proposed sale satisfied the principles
set out in
Royal Bank v. Soundair Corp.
(1991), 4 O.R. (3d) 1(C.A.).
She rejected the submissions made in opposition to the sale stating, at para.
26 of her endorsement:
It was only after the Sale Agreement was
entered into that the mortgagees (after making certain arrangements with the
Respondents) joined forces to mount a coordinated opposition to the [Approval
and Vesting Order]. Their reasons for doing so are not apparent on the face of
the record and consist only of a stated opposition. The mortgagees and
Respondents failed to engage in the court-authorized receivership and sales
process at any time prior to the signing of the Sale Agreement. The Receiver,
after conducting a legitimate and proper sales process, entered into an
agreement with the Purchasers, which the mortgagees and Respondents are now seeking
to have this court reject. They are seeking to prevent the sale altogether. I
have considered and weighed the interests of all parties and find that there is
no basis for this court to allow the objections of the mortgagees and
Respondents to prevent the Receiver from concluding its agreement with the
Purchasers.
[15]
The Motion Judge also granted the Administration
Order, which was unopposed save for the Receivers fees and disbursements, for
which the Receiver intended to seek approval at a later date.
The decision of the Chambers Judge
[16]
The Pizales submitted to the Chambers Judge that
their appeal fell within
BIA
s. 193(c). The Chambers Judge noted that
the Pizales accepted the jurisprudence summarized in the chambers decision in
2403177
Ontario Inc. v. Bending Lake Iron Group Limited
, 2016 ONCA 225, 347 O.A.C.
226 (
Bending Lake
),
[1]
that
BIA
s. 193(c) does not apply to orders that: are procedural in nature; do not bring
into play the value of the debtors property; or do not result in a loss. The
Chambers Judge concluded that the Pizales appeal did not fall within
BIA
s. 193(c) for three reasons: (i) the Pizales critiques of the Approval
Order all related to the manner in which the Property was sold and therefore
concerned matters of procedure that did not give rise to an automatic right of
appeal; (ii) the Pizales appeal did not bring into play the value of the
Property; and (iii) the Approval Order would not result in a loss. The Chambers
Judge rejected the Pizales argument that an automatic right of appeal lay in
respect of the Administration Order for the same reasons he rejected the
argument for the Approval Order.
[17]
The Chambers Judge then concluded that the
Pizales should not be granted leave to appeal under
BIA
s. 193(e). He
did not regard their appeal as raising an issue of general importance to the
practice in bankruptcy/insolvency matters or the administration of justice as a
whole. Instead, it was an attempt to relitigate a dispute between the Pizales
and the receiver that will have little importance to bankruptcy/insolvency
matters beyond the parties. Nor did the Chambers Judge view the Pizales
appeal as
prima facie
meritorious. He found the Motion Judges
Soundair
analysis to be complete and the grounds do not raise a serious issue to be
appealed. Finally, the Chambers Judge held that granting leave would risk
losing the sale to the Purchasers, thereby placing into question the whole
integrity of the sales process.
III. THE STANDARD OF REVIEW
[18]
On a panel review of the order of a single judge
pursuant to
CJA
s. 7(5), the panel may interfere with the order if the
chambers judge failed to identify the applicable principles, erred in principle
or reached an unreasonable result:
DeMarco v. Nicoletti
, 2017 ONCA
417, at para. 3;
Yaiguaje v. Chevron Corporation
, 2017 ONCA 827, 138
O.R. (3d) 1, at para. 21;
Struik v. Dixie Lee Food Systems Ltd.
, 2018
ONCA 22, at paras. 5-6.
IV. THE ISSUES RAISED BY THE REVIEW
MOTION
[19]
On this motion to review, the Pizales advance
three main arguments to set aside the Chambers Decision.
[20]
First, they contend the Chambers Judge erred by
applying the legal principles concerning
BIA
s. 193(c) in a too
restrictive or narrow way.
[21]
Second, the Pizales submit that the Chambers
Judge misconstrued their arguments about why they had an automatic right of
appeal under
BIA
s. 193(c). They were not alleging improvident sale or
an improper sale process. Instead, they were alleging that the receivership was
spent so there was no need to liquidate the Property. In their submission,
the purpose of the receivership was achieved when Hillmount, the applicant
creditor, was made whole and assigned its first mortgage to Elle. According to
the Pizales, given that assignment the Motion Judge should have given more
weight to the objections to the sale by the Pizales and remaining creditors.
Instead, the Approval Order wrongfully preferred preserving the integrity of
the sales process over the substantive interests of the Pizales and their
creditor mortgagees.
[22]
More specifically, the Pizales submit that the
Chambers Judge erred in concluding that:
(i)
the Approval and Administration Orders were
procedural in nature when the Pizales were arguing that the orders prejudiced
their substantive rights;
(ii)
the Approval Order did not put the value of the
Property in question. The Pizales submit that the appraisals they filed put
that value in question;
(iii)
the Pizales did not retain an interest in the
Property and therefore its value was not in question. The Pizales argue that
while the receivership changed the nature of their interest in the Property, it
did not extinguish it; and
(iv)
the Approval Order did not result in a loss of
at least $10,000. According to the Pizales, the Chambers Judge ignored the
increase in their exposure to their creditors resulting from the sale of the
Property on an as is rather than as complete basis.
[23]
Finally, the Pizales submit the Chambers Judge
erred in failing to grant leave to appeal as he misconstrued the bases of the
Pizales opposition to the Approval Order and their grounds of appeal.
V. FIRST ISSUE: DID THE CHAMBERS JUDGE APPLY THE CASE LAW
CONCERNING
BIA
s. 193(c) TOO NARROWLY?
[24]
Section 193(c) of the
BIA
states that
an appeal lies to the Court of Appeal from any order or decision of a judge of
the court in the following cases:
(c) if the property involved in the appeal
exceeds in value ten thousand dollars.
[25]
Before the Chambers Judge, the Pizales
acknowledged that
BIA
s. 193(c) does not apply to certain types of
orders, specifically those identified in
Bending Lake
. That decision
observed, at para. 53, that the case law holds that
BIA
s. 193(c)
does not apply to orders (i) that are procedural in nature,
[2]
(ii) that do not bring into play the value of the debtors property
[3]
or (iii) do not result in a loss.
[4]
The last principle derives from two Supreme Court of Canada cases,
Orpen
v. Roberts
, [1925] S.C.R. 364, at p. 367, and
Fallis and Deacon v.
United Fuel Investments Ltd.
, [1962] S.C.R. 771.
[26]
Notwithstanding this acknowledgement, the
Pizales contend that the Chambers Judge failed to apply those principles in
what they style as the less restrictive approach set out in the decision of the
Saskatchewan Court of Appeal in
MNP Ltd. v. Wilkes
, 2020 SKCA 66, 449
D.L.R. (4th) 439 (
Wilkes
).
[27]
To deal with that submission, I shall address
two issues: (i) the significance, if any, of the narrow and broad
interpretation labels regarding s. 193(c) found in some of the case law; and
(ii) the practical difference, if any, of the approach in
Wilkes
in
contrast to that found in the cases summarized in
Bending Lake
.
The narrow and broad interpretation
dichotomy
[28]
Although the Pizales rely on some appellate
decisions from other provinces to advocate for a broad interpretation of the
automatic rights of appeal in
BIA
ss. 193(a)-(d), they ignore
panel decisions of this court that have expressly taken a narrow approach to
the interpretation of those appeal rights due to the broad automatic stay on
appeal contained in
BIA
s. 195.
[5]
[29]
For example, several weeks after the
Bending
Lake
decision, a panel of this court released reasons in
Enroute
Imports Inc. (Re)
,
2016
ONCA 247, 35 C.B.R. (6th) 1. At issue on that appeal was an order concerning
the ability to examine a representative of the bankrupt. The panel stated, at
para. 5:
The case law considering
s. 193(c) from this court makes clear that, given the broad nature of the stay
imposed by s. 195 of the
BIA
, the right
of appeal without leave under s. 193(c) must be narrowly construed. In
addition, the appeal must directly involve property exceeding $10,000 in value
:
Crate Marine Sales Limited (Re)
, 2016 ONCA 140,
Robson Estate v. Robson
(2002)
,
33 C.B.R. (4th) 86 (Ont. C.A.),
Business Development Bank of Canada v. Pine Tree Resorts Inc.
, 2013 ONCA 282, 115 O.R. (3d) 617, and
Ontario
Wealth Management Corporation v. Sica Masonry and General Contracting Ltd.
, 2014 ONCA 500, 17 C.B.R. (6th) 91. (emphasis added)
[30]
The panel found that the order at issue did not
fall within s. 193(c) for two reasons: the entitlement to conduct an examination
was procedural in nature and did not directly involve property, and the
appellants argument that the motion judge erred in finding that the proposal
was reasonable and made in good faith did not put the property directly in
issue. The panel also denied leave to appeal.
[31]
The next year, a panel in
Romspen Investment
Corporation v. Courtice Auto Wreckers Limited
, 2017 ONCA 301, 47 C.B.R.
(6th) 1, leave to appeal refused, [2017] S.C.C.A. No. 238, followed
Enroute
Imports
in holding that the right of appeal under s. 193(c) must be
narrowly construed and limited to cases where the appeal directly involves
property exceeding $10,000 in value: at para. 22.
[32]
These statements by two panels of this court
strike a different analytical stance than the comments by the chambers judge in
Wong v. Luu
, 2013 BCCA 547, 348 B.C.A.C. 155, at para. 23, that the
right of appeal under
BIA
s. 193 is broad, generous and
wide-reaching. I would further note that the decisions in
Wong
and
Wilkes
did not address the effect of the automatic stay in s. 195 on the
interpretation of ss. 193(a)-(d), a factor this court has considered
significant for its interpretative approach.
[33]
That said, the recent panel decision of this
court in
Davidson (Re)
, 2021 ONCA 135, 86 C.B.R. (6th) 1, determined
that it was not necessary in that case to engage in a debate over whether
BIA
s. 193(c) should be given a narrow or broad interpretation: at paras. 9-10. In
that case, the panel assumed that s. 193(c) applied but dismissed the appeal on
the merits.
The state of the case law
[34]
When one looks past the labels of narrow and
broad, one discovers that a consensus appears to exist in the case law about how
to answer s. 193(c)s question of whether the property involved in the appeal
exceeds $10,000. As I will explain, the Pizales submission greatly overstates
the differences between the operative principles described in
Wilkes
and
the case law summarized and categorized in
Bending Lake
.
[35]
Wilkes
held
that a courts primary task when examining whether an automatic right of appeal
exists is to answer the question raised by s. 193(c) and determine whether the
property involved in the appeal exceeds $10,000. Writing for the court,
Jackson J.A. continued, at para. 61:
Courts have used different ways of giving
meaning to s. 193(c), but it is still the words of the statute that govern.
Thus, in
Fallis
, by its adoption of what the Court had said in
Orpen
,
the test is stated as,
What is the loss which the
granting or refusing of the right claimed will entail?
In
Fogel
,
the Court asked what is the value in jeopardy (at para 6). In
McNeil
,
the Chambers judge observed that [t]he property involved in the appeal
may
be determined by comparing the order appealed against the remedy sought in the
notice of appeal (at para 13). In
Trimor
, the Chambers judge added to
the
OrpenFallis
test by stating [t]he focus of the inquiry under s.
193(c) is the amount of money at stake
(at para 10). All of these
expressions are consistent with the statutory language present in s. 193(c).
[36]
As mentioned above at para. 25,
Bending Lake
summarized the case law as identifying three types of orders that do not fall
within the ambit of
BIA
s. 193(c). The first type the case law
identifies is an order that does not result in a loss, as described in the
Orpen
and
Fallis
cases, which were the focus of the courts analysis in
Wilkes
.
The need for an order to result in a loss to fall within s. 193(c) was framed
slightly differently by the Alberta Court of Appeal in
Re Bearcat
Exploration Ltd. (Bankrupt)
, 2003 ABCA 365, 339 A.R. 376, where the court
stated, at para. 10, that an appeal under
BIA
s. 193(c) must in
substance be about the value of the property, not just any claim related to
bankruptcy. Or, as put by panels of this court in
Enroute Imports
and
Courtice Auto Wreckers
, the appeal must directly involve property
exceeding $10,000 in value.
[37]
Bending Lake
also pointed out that the jurisprudence treated two other types of orders as
falling outside of s. 193(c): those that do not bring into play the value of
the debtors property; and those that are procedural in nature. Excluding those
types of orders from the ambit of s. 193(c) is consistent with and indeed
flows logically from the loss principle articulated in the
Orpen/Fallis
cases.
[38]
By its nature the second type of order - one that
does not bring into play the value of the debtors property - would not result
in a loss or put property value in jeopardy. For example, it is well-established
in the
BIA
s. 193(c) jurisprudence that an order appointing a receiver
or interim receiver usually does not bring into play the value of the debtors
property as it simply appoints an officer of the court to preserve and monetize
those assets subject to court approval.
[6]
[39]
The third type of order that the case law places
outside of s. 193(c) is a procedural order, which really is a sub-set of orders
that do not bring into play the value of the debtors property. The case law
identifies various procedural orders of this kind: the dismissal of the
bankrupts motion to strike out the petition against him;
[7]
the conduct of an examination of the bankrupt;
[8]
an order declining leave to examine the bankrupt;
[9]
approval of the trustees proposed auction process;
[10]
directions regarding the conduct of a trial;
[11]
an appeal process order;
[12]
an order denying a union leave to apply for certification during
receivership;
[13]
and
an order granting an adjournment.
[14]
In some circumstances, a sale approval order, on analysis, may be
merely procedural in nature.
[15]
[40]
Wilkes
acknowledges that it is solidly established in the jurisprudence that there is
no right of appeal under s. 193(c) from a question involving procedure
alone
:
at para. 61 (emphasis in original). Indeed, a few months after the release of
Wilkes
,
Jackson J.A., sitting as a chambers judge, concluded in
Re Harmon
International Industries Inc.
, 2020 SKCA 95, 81 C.B.R. (6th) 1, that leave
was required to appeal a receivers sale process order stating, at paras.
34-35:
Thus, what the Court has before it is an Order
that authorizes a
list price
of $3.8 million for the Millar Avenue
Building. It does not propose a sale price of $3.8 million.
All that the Order does is establish a process for the sale of
the property.
Any proposed sale must still be confirmed.
At this point, the claim
of loss is without any foundation at all. It is, as such, entirely speculative
. It assumes that the listing agent will not market the property to
its fullest potential or that the receiver will place an improvident sale
before the Court of Queens Bench to be confirmed and the Court will confirm
it. It is possible that Harmon will apply to Elson J. under s. 185(7) of the
BIA
or wait until it is determined that the property is proposed to be sold for
less than what Harmon believes it is worth and place the Brunsdon Appraisal
before Elson J. at that time. It is also possible that Harmon will obtain other
financing so as to permit it to buy the property at the list price or the
property will sell for an amount acceptable to Harmon. In my view,
the Order does not directly have an impact on the proprietary
or monetary interests of Harmon or crystallize any loss at this time. It
concerns a matter of procedure only. It is merely an order as to manner of
sale, as was the case in
Dominion
Foundry Co. (Re)
(1965), 52 DLR (2d) 79 (Man CA).
No
value is in jeopardy, and no party can claim a loss as a result.
In my
view, the property involved in the proposed appeal does not exceed in value
$10,000 as those words are used in s. 193(c) of the
BIA
. Thus, I
conclude it was necessary for Harmon to apply for leave to appeal. (Emphasis
added.)
[41]
However,
Wilkes
makes an additional
point. Merely because the question in issue is procedural does not necessarily
mean there is not property value involved in the appeal that exceeds $10,000.
Section 193(c) requires a court to analyze the economic effect of the order
sought to be appealed: at paras. 62-63.
[42]
I agree. What is required in any consideration
of whether the appeal of an order falls within
BIA
s. 193(c) is a
critical examination of the effect of the order sought to be appealed. Such an
examination requires scrutinizing the grounds of appeal that are advanced in
respect of the order made below, the reasons the lower court gave for the
order, and the record that was before it. The inquiry into the effect of the
order under appeal therefore is a fact-specific one; it is also an
evidence-based inquiry, which involves more than merely accepting any bald
allegations asserted in a notice of appeal:
Bending Lake
, at para. 64.
Wilkes
concurs on this point, holding, at para. 64, that the loss
claimed must be sufficiently grounded in the evidence to the satisfaction of
the Court determining whether there is a right of appeal, a point repeated in
the subsequent chambers decision in
Re Harmon International Industries
,
at para. 32.
[43]
While the amendment of the
BIA
in 1992
to include Part XI dealing with Secured Creditors and Receivers increased the
practical need for the timely adjudication of appeals launched from orders made
under the Act, an approach to the application of s. 193(c) that requires a
fact-specific, evidence-based critical scrutiny of the effect of the order
sought to be appealed should foster the remedial objectives of Canadas
insolvency statutes to provide for
timely
,
efficient
and
impartial resolution of a debtors insolvency:
9354-9186 Quebec Inc. v.
Callidus Capital Corp.
, 2020 SCC 10, 444 D.L.R. (4th) 373, at para. 40
(emphasis added.)
[44]
There will be cases where the effect of an order
sought to be appealed is such that an appeal lies as of right under
BIA
s. 193(c) but the respondent takes the view that the appeal is without merit or
the automatic stay under
BIA
s. 195 would cause undue delay or prejudice
in the bankruptcy proceeding. In such cases, it is open to the respondent to
move to cancel the automatic stay. A motion to cancel the stay prompts a
judicial assessment of the merits of the appeal, the appellants litigation
conduct, and the relative prejudice that cancelling or maintaining the stay
would have on interested persons and the interests of justice generally:
Royal
Bank of Canada v. Bodanis
, 2020 ONCA 185, 78 C.B.R. (6th) 165 (Chambers),
at paras. 11-14;
After Eight Interiors Inc. v. Glenwood Homes Inc.
,
2006 ABCA 121, 391 A.R. 202 (Chambers), at para. 6;
Pelletier (Re)
,
2020 ABCA 450, 86 C.B.R. (6th) 108 (Chambers), at para. 45.
Conclusion
[45]
The Pizales contention that the Chambers Judge
erred by applying too restrictive an approach to s. 193(c) is based on a
dichotomy in the case law that is more illusory than real, more semantic than
substantive. While the cases under s. 193(c) have explained the interpretative
task using differing language (as is to be expected in a body of jurisprudence
under a national statute), at their core the cases share common ground in
attempting to discern the operative effect of the order sought to be appealed:
does the order result in a loss or gain, or put in jeopardy value of property,
in excess of $10,000?
[46]
The Chambers Judge identified the applicable
legal principles. I see no basis to interfere with his decision on that ground.
VI. SECOND ISSUE: DID THE CHAMBERS JUDGE MISAPPREHEND THE
PIZALES KEY ARGUMENTS?
[47]
I shall now consider the Pizales submission
that the Chambers Judge misapprehended the key elements of their arguments. The
Pizales advance two main arguments:
(i)
The Chambers Judge erred in holding that as a result of the Approval
Order they had not suffered a loss of greater than $10,000; and
(ii)
The Chambers Judge misapprehended their
principal ground of appeal, which is not based on allegations of an improvident
sale or improper sale process but rather based on a failure of the Motion Judge
to properly weigh the interests of the creditors and debtor, favouring process
in so doing. As part of this submission the Pizales contend that the
receivership was spent upon Hillmounts assignment of its first mortgage to
Elle, which meant that there was no need for a sale of the Property.
The loss argument
[48]
The Pizales are not arguing that since the
Property is worth more than $10,000, a loss of greater than that amount is
established for purposes of
BIA
s. 193(c). Instead, they submit
that appraisals showed they had equity in the Property greater than $10,000 when
the Property was valued on an as complete basis. The Receivers sale
jeopardized that equity and approval of the sale would increase their liability
exposure to their mortgagees as compared to a sale on an as complete basis. As
they submitted in their factums: the Approval Order entails a loss of their
rights to retain the Property as its value increases and sell it when the
renovations are complete if they so choose (Jan. 19 factum, para. 53); what
they want to do is retain ownership of the Property (Jan. 25 factum, para. 7).
[49]
The Chambers Judge understood the Pizales
argument. At para. 26 of his reasons he wrote: As I understand this argument,
if the renovations were completed, they could achieve a higher price for the
home and the gap between what the receiver is selling the house for and what
could be obtained if the Pizales were permitted to finish the renovation would
represent the loss. He rejected the submission that the Approval Order would
result in a loss to the Pizales, concluding that the motion judge made strong
findings that the receiver did not act improvidently.
[50]
I do not regard the Chambers Judges conclusion
as one based on an error in principle or an unreasonable result.
[51]
Central to the Pizales submission is their
assertion that selling the Property in a renovated state would fetch a higher
sales price. The evidence before the Motion Judge and Chambers Judge strongly
indicated that such would be the case. But, for the purposes of a s. 193(c)
analysis, that is neither here nor there. That is because the parameters of the
Receivers sale were set, for all practical commercial purposes, by the terms
of the Appointment Order made earlier on June 19, 2020.
[52]
The Appointment Order was made when the Property
was in an unfinished state and a significant expenditure of funds would be
required to complete the renovations. The Appointment Order authorized the Receiver
to take possession of the Property and market it for sale. It did not authorize
the Receiver to complete the renovations the Pizales had started to make.
Indeed, para. 19 of the Appointment Order limited the Receivers authority to
borrow from Hillmount to $150,000, an amount that would not come close to
completing the needed renovations.
[53]
The Appointment Order had the effect of
authorizing a process to market the Property on an as is basis or, as put by
the Receiver in one of its factums, the Appointment Order contemplated a
liquidation process, not a renovation process. That order, not the Approval
Order, put in jeopardy any difference in value between the sale of the Property
on an as complete and as is basis. Accordingly, the Approval Order did not
result in any loss beyond that already worked by the Appointment Orders
authorization of the Receiver to market the Property on an as is basis. Put
another way, the Pizales appeal of the Approval Order seeks to unwind the
economic effect of the Appointment Order, which the Pizales did not appeal.
[54]
The Pizales advance a supplementary argument,
contending that even on an as is sale basis the Approval Order resulted in a
loss to them because the price fetched by the Receiver was less than one of
their as is appraisals. They argue that the Chambers Judge exacerbated the Motion
Judges error in finding that none of the Pizales appraisals considered the
Property on an as is basis.
[55]
I am not persuaded by this submission. After the
Receiver had entered into the Sale Agreement and moved for approval, the
Pizales filed two appraisals of the Property:
(i)
a December 30, 2020 appraisal by Heather Markoff, which valued the
Property on an as complete basis at $6.9 million. The report recorded the
land value as if vacant at $5 million and estimated the Propertys as is
market value at $5.955 million, although the author stated that she was unable
to locate current sales activity in a partially complete state of construction
at time of sale; and
(ii)
a January 4, 2021 Colliers appraisal, which estimated the as
complete value of the Property at $6.075 million.
[56]
The Pizales also had obtained a June 2020
appraisal from TM Appraisers Inc., which opined that the fair market value of
the Property on an as if complete basis was $7.5 million. It listed the land
value as if vacant at $5 million by extraction and contained an As Is
Addendum that estimated the as is value at $6.525 million. According to the
Receiver, this appraisal was before Koehnen J. in redacted form but not
produced in response to the Sale Agreement.
[57]
Although the Motion Judge referred in her
reasons to the December 2020 and January 2021 appraisals, she did not make
express reference to the as is value found in the December 2020 appraisal. I
do not view her failure to do so as amounting to an error that somehow brings
the as is value of the Property into question. As the Motion Judge noted in
her reasons: the Receiver listed the Property at $4.8 million, a price higher
than the appraisals it had received; 23 showings elicited no offers; the
Receiver lowered the listing price, which resulted in its receipt and
negotiation of a number of offers but no deal; and, finally the Receiver
accepted the early November 2020 offer from the Purchasers, which was higher
than its two appraisals and any other offer received. Against those efforts by
the Receiver, and the absence of any alternative transaction presented by the
Pizales or their creditors, the fact that the Purchasers offer was lower than
the as is appraisals received by the Pizales spoke loudly to the reality of
the existing market for the partially completed Property:
Pricewaterhousecoopers
Inc. v. 1905393 Alberta Ltd
, 2019 ABCA 433, 98 Alta. L.R. (6th) 1, at
para. 15. In those circumstances, it is no surprise that the Motion Judge did
not treat the as is estimate as a relevant indicator of market conditions.
[58]
Accordingly, I am not persuaded that the
Chambers Judge erred in concluding that the Approval Order did not result in a
loss greater than $10,000 and, as a result, the Pizales appeal did not fall within
BIA
s. 193(c).
The spent receivership argument
[59]
Although that is sufficient to dispose of the
Pizales panel review motion, I wish briefly to address the Pizales submission
that when Hillmount assigned its first mortgage to Elle, it was made whole.
They argue that with the original applicant creditor no longer part of the
receivership and the remaining mortgagees opposed to the sale, the receivership
was spent, with the result that there was no need for the Propertys sale.
[60]
The Motion Judges reasons provide a complete
answer to that submission. The Motion Judge spent considerable time in her
reasons considering and weighing the interests of the various parties: at
paras. 18-26. She wrote that:
(i)
The reasons for the mortgagees opposing the sale
were not apparent on the face of the record;
(ii)
The mortgagees and Pizales failed to engage in
the court-authorized receivership and sales process at any time prior to the
signing of the Sale Agreement;
(iii)
The Receiver conducted a legitimate and proper
sales process; and, significantly,
(iv)
The mortgagees and Pizales did not put on the table any alternative
transaction or bring a motion to discharge the Receiver.
[61]
On the last point, in its December 1, 2020
Acknowledgement in favour of the Receiver and Hillmount, Elle specifically
acknowledged that it understood (i) the Receivership is not at an end by
virtue of the undersigned accepting the Assignment; and (ii) until terminated
by Court order, the Receivership remains in full force and effect.
[62]
In light of those circumstances, the Motion Judges
conclusion that, having weighed the interests of all parties there was no basis
to allow their objections to prevent the Receiver from concluding the
agreement, was a reasonable one.
VII. THIRD ISSUE: DID THE CHAMBERS JUDGE ERR IN FAILING TO GRANT
LEAVE TO APPEAL PURSUANT TO
BIA
s. 193(e)?
[63]
In seeking to set aside the Chambers Judges
refusal to grant leave to appeal the Approval Order pursuant to
BIA
s.
193(e), the Pizales largely repeat the arguments they make in respect of s. 193(c).
I have already dealt with those arguments. I would only add that the Chambers
Judge, applying the well-known test for granting leave to appeal set out in
Business
Development Bank of Canada v. Pine Tree Resorts
[16]
and the deference appropriate to the discretionary decision of the Motion
Judge,
[17]
concluded that the Pizales appeal would have little importance to
bankruptcy/insolvency matters beyond the parties, did not raise a serious issue
for appeal, and would hinder the receivership and risk losing the sale to the
Purchasers. Those conclusions were reasonable ones, anchored as they were in
the record. I see no basis to interfere with the Chambers Judges refusal to
grant the Pizales leave to appeal.
VIII. FOURTH ISSUE: THE ADMINISTRATION
ORDER
[64]
The Administration Order approved the Receivers
activities described in its Second Report and First Supplement to the Second
Report and increased the Receivers borrowing authority from $150,000 to
$250,000. Before the Motion Judge, the Pizales did not oppose the issuance of
the Administration Order.
[65]
The Pizales sought to appeal, or seek leave to
appeal, the Administration Order. Before the Chambers Judge they made two
arguments: (i) the Administration Order is inextricably linked to the issues
regarding the Approval Order, so that if they had a right to appeal the
Approval Order or were granted leave to do so, they were entitled to appeal the
Administration Order; and (ii) the Administration Order creates a loss as it
authorizes the Receiver to borrow a further $100,000.
[66]
In its Second Report dated December 4, 2020, the
Receiver stated that any additional amounts borrowed would be applied to the
Receivers existing fees and any future fees or expenses leading up to the
closing of the sale. Accordingly, the purpose of the further borrowing approved
by the Administration Order is to enable the Receiver to complete its efforts
to sell the Property on an as is basis. The increased borrowing power is
ancillary to the exercise of the Receivers powers under the Appointment Order
and does not result in any further jeopardy of value than that worked by the
Appointment Order. Accordingly, for purposes of the s. 193(c) analysis, the
operative effect of the Administration Order is, as the Pizales describe,
inextricably linked with the effect of the Approval Order, which the Chambers
Judge correctly found did not fall within s. 193(c).
[67]
The Chambers Judge dismissed the Pizales motion
in respect of the Administration Order for the reasons supporting his dismissal
of their motion regarding the Approval Order. That was a reasonable conclusion
for him to reach on the record. I see no basis to interfere with it.
IX. DISPOSITION
[68]
For the reasons set out above, I would dismiss
the Pizales panel review motion.
[69]
If the parties are unable to agree on the costs
of the motion, any party seeking costs of the motion may deliver brief written
cost submissions of up to five pages in length within 10 days of the release of
the reasons. Any party against whom costs are sought may deliver brief
responding cost submissions within 5 days thereafter.
Released: May 28, 2021 G.R.S.
David Brown
J.A.
I agree.
G.R. Strathy C.J.O.
I agree.
B.W. Miller J.A.
[1]
Application for leave to appeal under
BIA
s. 193(e) dismissed: 2016 ONCA 485, 37 C.B.R. (6th) 173.
[2]
Re Dominion Foundry Co
.
, (1965) 52
D.L.R. (2d) 79 (Man. C.A.);
Alternative
Fuel Systems Inc. v. EDO (Canada) Ltd. (Trustee of)
, 1997 ABCA 273, 48
C.B.R. (3d) 171 (Chambers).
[3]
Business Development Bank of Canada v. Pine Tree
Resorts Inc
.
, 2013 ONCA 282, 115 O.R. (3d) 617 (Chambers), at
para. 17.
[4]
Trimor Mortgage Investment Corporation v. Fox
,
2015 ABCA 44, 26 Alta. L.R. (6th) 291 (Chambers).
[5]
Section 195 states, in part, that all proceedings under an order or judgment
appealed from shall be stayed until the appeal is disposed of, but the Court of
Appeal or a judge thereof may vary or cancel the stay
if it appears that the
appeal is not being prosecuted diligently, or for such other reason as the
Court of appeal or a judge thereof may deem proper.
[6]
Simonelli v. Mackin
, 2003 ABCA 47, 320
A.R. 330 (Chambers), at paras. 18-20;
Re
Bearcat Exploration Ltd
.
, at para. 10;
Business Development Bank of Canada v. Pine Tree
Resorts
,
at para. 17;
7451190
Manitoba Ltd. v. CWB Maxium Financial Inc. et al
.
, 2019 MBCA 95
(Chambers), at para. 18;
Buduchnist Credit
Union Limited v. 2321197 Ontario Inc
.
, 2019 ONCA 588, 72 C.B.R.
(6th) 245, at para. 12;
CWB Maxium Financial
Inc. v. 2026998 Alberta Ltd
.
, 2020 ABCA 118 (Chambers), at paras.
1-2.
[7]
Simonelli
, at paras. 26-27.
[8]
Enroute Imports Inc. (Re)
, at para. 6.
[9]
Davidson
(Re)
, at para. 6.
[10]
IceGen
Inc. (Re)
, 2016 ONCA 902, 42 C.B.R. (6th) 183 (Chambers), at para. 3, leave
to appeal under s. 193(e) dismissed, 2016 ONCA 907, 42 C.B.R. (6th) 175.
[11]
2003945
Alberta Ltd. v. 1951584 Ontario Inc.
, 2018 ABCA 48, 57 C.B.R. (6th) 272
(Chambers), at para. 21.
[12]
Sangha
v. Bhamrah
, 2017 BCCA 434, 6 B.C.L.R. (6th) 1, at paras. 9-12.
[13]
Courtice Auto Wreckers
, at para. 22.
[14]
ATB
Financial v. Coredent Partnership
, 2020 ABCA 83, 77 C.B.R. (6th) 190
(Chambers), at para. 6.
[15]
Athabasca
Workforce Solutions Inc. v. Greenfire Oil & Gas Ltd.
, 2021 ABCA 66, 87 C.B.R.
(6th) 26 (Chambers), at para. 14.
[16]
The
test set out in
Pine Tree Resorts
was adopted by a panel of this court
in
Impact Tool & Mould Inc. v. Impact
Tool & Mould Inc. Estate
, 2013 ONCA 697, at para. 3.
[17]
Reciprocal
Opportunities Incorporated v. Sikh Lehar International Organization
, 2018
ONCA 713, 426 D.L.R. (4th) 273, where this court stated, at para. 54, that an
appeal court will interfere only where the judge considering the receivers
motion for approval of a sale has erred in law, seriously misapprehended the
evidence, exercised his or her discretion based upon irrelevant or erroneous
considerations, or failed to give any or sufficient weight to relevant
considerations.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Hilson v. Evans, 2021 ONCA 262
DATE: 20210423
DOCKET: C68133
Benotto, Miller and Trotter JJ.A.
BETWEEN
Janet
Louise Hilson
ppellant
(Plaintiff, Defendant by Counterclaim)
and
Carole Evans
Respondent
(Defendant, Plaintiff by Counterclaim)
Howard W. Reininger, for the appellant
Orie Niedzviecki, for the respondent
Heard and released orally: April 19, 2021 by
video conference
On
appeal from the judgment of Justice L. Sheard of the Superior Court of Justice,
dated February 19, 2020.
REASONS FOR DECISION
[1]
This is an appeal from a judgment of an amount
less than $50,000. The appeal is properly brought to the Divisional Court.
[2]
The appeal is quashed. Under the circumstances,
there will be no costs of the appeal.
M.L.
Benotto J.A.
B.W.
Miller J.A.
Gary
Trotter J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Hilton v. Hilton, 2021 ONCA 29
DATE: 20210119
DOCKET: C68243
Tulloch, Miller and Paciocco
JJ.A.
BETWEEN
Marlene
Dale Hilton
Applicant (Respondent)
and
Charles Mark Hilton
Respondent (Appellant)
Michael J. Stangarone and Stephen P. Kirby,
for the appellant
Dale A. Turner, for the respondent
Heard: November 18, 2020 by video conference
On
appeal from the order of Justice Paul Nicholson of the Superior Court of
Justice, dated February 24, 2020.
REASONS FOR DECISION
Background
[1]
The respondent initiated divorce proceedings in
September 2018. The appellant had not filed an Answer by the time of the first
case conference on March 21, 2019. The respondent brought a motion for an order
for an uncontested trial. At the case conference, Fryer J. noted the appellant
in default and ordered him to deliver his Answer, disclosure, and financial statements
including Notices of Assessment within 30 days. She held the respondents
motion for an uncontested trial in abeyance until the 30-day period expired. If
the appellant delivered the materials as required, the noting in default would
be set aside and the motion for an uncontested trial would be dismissed. If not,
the uncontested trial would proceed.
[2]
The appellant did not comply with the order. By the
second case conference on June 19, 2019, he had still not filed an Answer or any
materials. Accordingly, Fryer J. confirmed the appellants noting in default
and scheduled the uncontested trial for September 23, 2019. She also ordered the
partition and sale of the matrimonial home.
[3]
The uncontested trial was ultimately held on
November 22, 2019 before Fryer J. She made orders providing the respondent with
exclusive possession of the matrimonial home, facilitating the sale of the
matrimonial home and the division of the sale proceeds, and granting the
respondent temporary spousal support. The determination of final spousal support
and child support were left to a continuation of the uncontested trial. The
continuation has not yet taken place.
[4]
Thereafter, in February 2020, the appellant
brought a 14B motion seeking the following relief: setting aside all orders
made to date; granting leave to serve and file an Answer and financial statements;
and granting leave to dispense with the requirement to serve and file his
Notices of Assessment, which he stated were unavailable due to the actions of
the respondent. The motion was heard in writing by Nicholson J., who dismissed
the motion. Although Nicholson J.s handwritten endorsement is brief, his reason
for the dismissal appears to be that the appellant had not appealed any of Fryer
J.s orders.
[5]
The appellant now appeals Nicholson J.s dismissal
of the 14B motion and requests this court set aside Nicholson J.s order. The
appellant also requests that this court set aside all of Fryer J.s previous
orders, grant the appellant 30 days to file his Answer and financial statements
without the Notices of Assessment, and order the parties to proceed to another
case conference on the substantive issues. In the alternative, the appellant
requests this court order the 14B motion be determined by another judge of the
Superior Court of Justice via an oral hearing. Finally, he requests costs of
this appeal. For the reasons set out below, we allow the appeal in part.
Analysis
[6]
The appellant argues that the 14B motion before
Nicholson J. was brought under r. 25(19) of the
Family Law Rules
, O.
Reg. 114/99, although he did not specify that rule in the Notice of Motion. He
makes his argument on the basis that the respondent had committed a fraud on
the court through misrepresentations and material omissions in her evidence at
the hearing of the uncontested trial. That is, the appellant argues there were
things the respondent knew that she did not disclose, and things she said that
she knew were not true. This resulted, the appellant argues, in an interim
support order that was too high and an unfair division of the proceeds from the
sale of the matrimonial home.
[7]
Nicholson J. did not address the substance of
the motion to dismiss prior orders on the basis of fraud. He dismissed the
motion on the basis that Fryer J.s November 22, 2019 and previous orders could
not be set aside because the appellant had not appealed any of those orders.
[8]
The appellant argues that the only route for him
to challenge the November 22, 2019 order was to bring a motion to change under r.
25(19). An appeal would have been premature:
Ketelaars v. Ketelaars
, 2011
ONCA 349, 2 R.F.L. (7th) 296;
Gray v. Gray
, 2017 ONCA 100, 137 O.R.
(3d) 65. This court held in
Gray
that r. 25(19) provides a more
effective way to correct orders in its ambit and de-listed an appeal pending a
decision at the court of first instance.
[9]
We agree with this submission to some extent. However,
some of the orders the appellant seeks to set aside were made on the basis of
his own failure to provide required disclosure. Nicholson J. was correct that
an appeal would be required to set aside those orders. However, to the extent
that the relief sought by the appellant was on the basis of the respondents
misrepresentations at trial, those assertions ought to have been decided on the
merits.
[10]
By failing to comply with the
Family Law Rules
and the orders of Fryer J., the appellant is the author of much of his
misfortune. When a party does not participate in the process, things tend to not
go well. Nevertheless, the appellants allegations of the respondents misrepresentations
and material omissions must still be determined on the merits.
[11]
We allow the appeal in part and direct that the
allegations of the respondents misrepresentations and material omissions be
returned to the Superior Court for a determination of the merits under r. 25(19)(a).
We offer no opinion on the merits of that motion.
[12]
It remains for the trial judge to determine the
extent of the appellants participatory rights at the continuation of the trial,
including whether the appellant will be permitted to advance any reliable and
credible evidence that the respondent is misleading the court.
DISPOSITION
[13]
The appeal is allowed and the matter is returned
to the Superior Court of Justice for a new hearing of the r. 25(19)(a) motion,
based on the written record that was before Nicholson J. Costs of the appeal
are fixed at $15,000 inclusive of HST and disbursements. These costs are to be awarded
to the party that is successful on the r. 25(19) motion. However, if the
appellant abandons the r. 25(19) motion, the costs of this appeal will be
payable to the respondent, subject to any contrary order by the Superior Court
of Justice.
M.
Tulloch J.A.
B.W.
Miller J.A.
David
M. Paciocco J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Hoang v. Mann Engineering Ltd.,
2021 ONCA 2
DATE: 20210105
DOCKET: C68186
Doherty, Lauwers and Miller
JJ.A.
BETWEEN
K. Matthew Hoang
Plaintiff (Appellant)
and
Mann Engineering Ltd., Aris
Building Technologies, Cartwright Management, Mann Enterprises, Wu Ventures,
Hay Solar Ltd., and Gigajoule Research and Development Ltd. (carrying on
business as the Mann Group)
Defendants (Respondents)
K. Matthew Hoang, appearing in person
Ted Flett and Daniel Hassell, for the
respondents
Heard: December 3, 2020 by
video conference
On appeal from the order of Justice B.
Glustein of the Superior Court of Justice, dated November 4, 2019, reported at
Hoang
v. Mann Engineering Ltd.
, 2019 ONSC 6383.
COSTS ENDORSEMENT
[1]
Costs of the
appeal are awarded to the respondents in the amount of $15,000, inclusive of
disbursements and all applicable taxes.
Doherty
J.A.
P.
Lauwers J.A.
B.W.
Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Hornstein v. Kats, 2021 ONCA 293
DATE: 20210506
DOCKET: C68450
Huscroft, Nordheimer and
Harvison Young JJ.A.
BETWEEN
Adriana Hornstein
Plaintiff (Appellant)
and
Anatoly Kats and Rachel Higgins
Defendant (Respondents)
Stephen R. Dyment, for the appellant
Mark A. Ross and Sharon A. Sam, for the
respondent, Anatoly Kats
Rachel Higgins, acting in person
Heard: April 29, 2021 by video
conference
On appeal from the judgment of Justice Carole
J. Brown of the Superior Court of Justice, dated May 5, 2020.
REASONS FOR DECISION
[1]
This case arises out of an alleged partnership for
the purchase of a residential property. The appellants argument that she was
in a partnership with the respondent Kats was rejected by the trial judge
following an 18-day trial. The trial judge found that, on an objective view,
the appellants actions were not consistent with a partnership and that no
partnership was created. The trial judge also found that the appellant had not
contributed any monies to the purchase or maintenance of the property and had
no beneficial interest in the property she alleged was owned by the
partnership.
[2]
The trial judge found, further, that the
appellant was not a credible witness, whereas she found that the respondent Kats
was credible and preferred his evidence. She found that the appellant took
advantage of Kats, his relative lack of sophistication in dealing with
properties, and his difficulties with the English language. Among other things,
the trial judge found that the appellant took out a second mortgage in Kats
name, secured against his family home, without his knowledge.
[3]
The trial judges findings are entitled to
deference. The appellant has not succeeded in establishing that the judge made
any error, let alone a palpable and overriding error, requiring this courts
intervention.
[4]
The appeal is dismissed as against the
respondent Kats.
[5]
The trial judge found that the respondent
Higgins had neither a claim for slander of title nor a claim for damages for
breach of s. 132 of the
Land Titles Act
, R.S.O. 1990, c. L.5
. Nevertheless, she ordered the
appellant to pay Higgins punitive damages in the amount of $35,000, citing the
egregious, unreasonable, and malicious nature of the appellants actions.
[6]
It is well established that there is no basis
for an award of punitive damages in the absence of an independent actionable
wrong:
Whiten v Pilot Insurance Co.
,
2002 SCC 18, [2002] 1
S.C.R. 595
. Punitive damages cannot be awarded simply on the basis
of a partys misconduct. Given that the trial judge did not identify an
independent actionable wrong, the award of punitive damages cannot stand.
[7]
Accordingly, the award of punitive damages must
be set aside. The appeal is allowed only to this extent.
[8]
The respondent Kats is entitled to his costs on
the appeal, fixed in the agreed amount of $15,000, all-inclusive.
[9]
It is not appropriate to award costs to the
appellant against the respondent Higgins in this court, and no such costs are
ordered. The costs order below remains unchanged.
Grant Huscroft
J.A.
I.V.B. Nordheimer
J.A.
Harvison
Young J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Iafolla v. Lasota, 2021 ONCA 245
DATE: 20210420
DOCKET: C68673
Rouleau, Benotto and Miller
JJ.A.
BETWEEN
Enrico Iafolla
Applicant (Appellant)
and
Jolanta Lasota
Respondent (Respondent)
Payam Ezzatian, for the appellant
Brian P. Pilley, for the respondent
Heard: April 1, 2020
On appeal from the judgment of Justice Paul B. Schabas of the Superior
Court of Justice, dated September 1, 2020.
Benotto
J.A.:
[1]
This is an appeal brought by the insurer of the
named appellant Enrico Iafolla. He appeals the dismissal of an application for a
declaration that, as a judgment creditor of the ex-husband of the respondent,
he is entitled to receive the balance of the proceeds of the sale of a
matrimonial home. Pursuant to the divorce judgment between the respondent and
her ex-husband, those funds are to be held as security for his support
obligations.
[2]
As I will explain, the issue here engages the
courts fundamental duty to satisfy itself that reasonable arrangements have
been made for the support of children. I would allow the appeal in part and
direct the matter back to the trial judge to consider whether a variation of
the Divorce Judgment is appropriate as a result of the material change in
circumstances.
BACKGROUND
[3]
The respondent Jolanta Lasota and Zlatko Antonov
were married and have one child. They separated in 2017. It is common ground
that Antonov has paid no child support, has shown little interest in the child,
now 11, and did not participate in the divorce proceedings. He made no
financial disclosure.
[4]
On July 25, 2018, Backhouse J. presided over the
divorce. Antonov did not appear. She attributed an income to him based on his
bank deposits and established monthly child and spousal support in the amounts
of $1,429 and $3,191 respectively. In the Divorce Order, she gave Ms. Lasota
control over the sale of the jointly held matrimonial home. The net proceeds of
the sale after paying real estate commissions, legal expenses, tax arrears, and
the outstanding mortgage were to be divided into two equal shares. From
Antonovs share, she ordered that the arrears of child and spousal support then
owing, plus the equalization payment be deducted. The trial judge further
ordered at paragraph 19:
The remaining balance
of [Antonovs] share of the net proceeds of the sale of the Matrimonial Home,
if any, shall be held in trust as security for [Antonovs] future child and
spousal support obligations.
[5]
The home was sold in November 2018. It appeared on
closing that there was a writ of execution registered on title to the home on
November 28, 2017. The writ relates to a judgment against Antonov for $380,071
plus costs and interest.
[6]
The net proceeds of the sale were $594,273.30. It
was agreed between the appellant and the respondent that, from these proceeds, various
fees, tax, and mortgage payments would be paid. In addition, the 8 months of
spousal and child support arrears were paid to the respondent. The balance of
Antonovs share of the proceeds would be placed in trust without prejudice the appellants
right to bring an application to determine who has priority to those funds. The
amount in issue now is $180,670.15.
[7]
As mentioned, Antonov has made no support payments,
including pursuant to the Divorce Order. His arrears would now be over $140,000
and soon will amount to the entire amount being held back from the sale.
POSITIONS OF THE
PARTIES
The appellant
[8]
The appellants position is that he is entitled to
the full amount of $180,670.15 pursuant to his rights under s. 2 of the
Creditors' Relief Act, 2010
, S.O. 2010, c.
16, Schedule 4 (
CRA
).
He submits that the Divorce Order should be set aside to the extent that it
interferes with his rights under the
CRA
.
[9]
Section 2 of the
CRA
states:
2. (1) Except as otherwise provided in
this Act, there is no priority among creditors by execution or garnishment
issued by the Superior Court of Justice, the Family Court of the Superior Court
of Justice and the Ontario Court of Justice.
Exception, support or maintenance
orders
(3) A support or maintenance order has
the following priority over other judgment debts, other than debts owing to the
Crown in right of Canada, regardless of when an enforcement process is issued
or served:
1. If the maintenance or support
order requires periodic payments, the order has priority to the extent of all
arrears owing under the order at the time of seizure or attachment.
2. If
the support or maintenance order requires the payment of a lump sum, the order
has priority to the extent of any portion of the lump sum that has not been
paid.
[10]
The appellant argues that the effect of this section is to give
priority to lump sum support orders and periodic payments in arrears only. Following
the payment which cleared up arrears to that date, he submits that he is
entitled to collect on his judgment.
[11]
The appellant relies on
Maroukis v.
Maroukis
(1981), 33 O.R. (2d) 661 (C.A.), affd
[1984] 2 S.C.R. 137. In that case,
the trial judge ordered
that the jointly owned matrimonial home vested with the wife retroactive to the
date of separation. The trial judge declared that any subsequent executions on
the property did not affect the wifes title. On appeal, this court held that
the trial judge had no jurisdiction to make a retroactive order since the house
was held in joint tenancy when the executions were filed and attached to [the
husbands] interest in it. The Supreme Court of Canada agreed with the Court
of Appeals conclusion.
[12]
Maroukis
was followed in
Ferguson v. Ferguson
, 116 D.L.R. (4th) 707
(Ont. Unif. Fam. Ct.), at p. 713, which found that a writ of execution for a
debt of the husband, filed before the order that the house be sold and proceeds
divided, has priority over any claim that the wife has to the husband's net
proceeds of the sale of the matrimonial home.
[13]
Consequently, the appellant seeks a declaration that he has an
entitlement to the proceeds.
The respondent
[14]
The respondent submits that the Court has no jurisdiction to vary the
Divorce Order outside the divorce proceedings. The effect of the order sought
would be to vary the Divorce Order. Further she submits that the writ and the
CRA
create no substantive right to the
funds for the applicant.
[15]
The respondent relies on
Stevens v. Stevens
(2005)
, 20 R.F.L. (6th) 453 (Ont. S.C.J.),
affd 214 O.A.C. 201, where the trial judge distinguished
Maroukis
and
Ferguson
as cases determined under provincial family law statutes which did not
permit retroactive orders, whereas the creation of a trust is based on the
courts equitable jurisdiction. In
Stevens
a retroactive vesting order was found to prevail over a writ filed by
a bank. This court agreed that
Maroukis
and
Ferguson
were
therefore distinguished:
Stevens v. Stevens
(2006),
214 O.A.C.
201, at paras. 12,15.
DECISION OF THE APPLICATION JUDGE
[16]
The application judge concluded that the trial judge crafted the
Divorce Order to create a trust to secure the respondents support payments.
This takes priority over the applicants interest which, in any event, is
simply that of an execution creditor whose interest is subject to all the
equities:
Ontario Development Corp. v. Trustee of
the Estate of I.C. Suatac Construction Ltd.
(1976), 69
D.L.R. (3d) 353, at p. 359 (Ont. C.A.); see also
1842752
Ontario Inc. v. Fortress Wismer 3-2011 Ltd
., 2020
ONCA 250, at para. 37.
[17]
The application judge relied on
Stevens
, where Cronk J.A. expressed concern that the bank was pursuing a
collateral attack on the original vesting order, stating, at para., 21 that
the determination of this issue required an evaluation and weighing of the
equities as between the Bank and Ms. Stevens. The application judge concluded
that attempts to vary such orders should be addressed in the original
proceeding, where the Court may consider the equities between the parties,
including the scope and purposes of support orders made under the
Divorce Act
, R.S.C. 1985, c. 3 (2nd Supp.).
[18]
The application was dismissed.
ANALYSIS
[19]
I have concluded that the application judge erred: (i) in his
interpretation of the jurisprudence; and (ii) by not addressing the courts
duty regarding child support. Consequently, the matter should be returned to
the trial judge to consider the material change in circumstances.
Jurisprudence
[20]
The application judge relied on
Stevens
to establish the priority of the respondents claim to the proceeds of
sale. There, the trial judge had determined that a constructive trust operated
as of the date of separation to vest the matrimonial home in the wifes name.
Therefore, the wife had title to the home before the execution was filed. Here,
the respondent did not have title in the husbands portion of the sale at the
time the writ was filed.
[21]
However, I do not agree that
Maroukis,
relied on by the appellant, assists him. There, a writ of execution
was filed with the sheriff before the trial judge vested property in the name
of the wife. On an application to the trial judge to clarify the judgment the
trial judge vested the home in the wifes name as of the date of separation
which pre-dated the writ of execution. This court confirmed the vesting order
but not the retrospective effect. The Supreme Court dismissed the appeal
confirming that, when property is divided on marriage breakdown, it does not
vest until the order is made and there is no provision to retroactively vest
property. The wifes title was subject to a pre-existing execution filed with
the sheriff.
[22]
The situation is different here. The underlying order in
Maroukis
was not, as it is here, for child
and spousal support. And, as I will explain below, the limits on retroactivity
do not apply to a variation of child support.
The courts obligation with respect to child
support
[23]
Child support is the right of the child. The
Divorce Act
establishes a child centered
approach to divorce orders by giving priority to childrens needs. Children are
not parties to their parents divorce. Consequently, the presence of a child in
divorce proceedings engages special duties for the court to ensure that
arrangements are made for support. Section 11(1)(b) of the
Divorce Act
provides that:
[I]t is the duty of the court...
(b) to
satisfy itself that reasonable arrangements have been made for the support of
any children of the marriage, having regard to the applicable guidelines, and,
if such arrangements have not been made, to stay the granting of the divorce
until such arrangements are made
[24]
The trial judge, in accordance with her duty under s. 11 of the
Divorce Act
, secured the sale proceeds of
the home for future support including support for the child. There is no
similar duty on the court for property claims between the spouses or for
spousal support. The trial judge clearly intended to secure the ex-husbands
share of the matrimonial home proceeds for the benefit of the child. That is
why she included paragraph 19 in the Divorce Order.
[25]
The appellant submits that the provisions of paragraph 19 mean that
only the portion of the proceeds left over after his debt is paid are available
to secure the support. He relies on the words net proceeds
if any
will be secured. I do not agree
for two reasons.
[26]
First, paragraph 19 of the Divorce Order must be read with paragraph 16
which refers to net proceeds as: remaining after paying real estate
commissions, legal expenses on the sale, tax arrears, if any, [and the] outstanding
mortgage. There is no mention of outstanding debts or writs.
[27]
Second, the trial judge was clearly not aware of
the appellants writ. Because the declaration sought by the appellant
effectively eliminates the security the trial judge put in place, the security
the trial judge would have ordered had she known of the writ would likely have
been different. For example, she could have considered s. 2(3)(2) of the
CRA
to comply with her duty under s.11(1)
of the
Divorce Act.
[28]
The discovery of the writ of execution constitutes
a material change in circumstances giving rise to a variation application.
The test for a material change, is a change that is substantial,
continuing and that if known at the time, would likely have resulted in different
terms:
Willick v. Willick
, [1994] 3 S.C.R. 670, at p. 688;
L.M.P.
v. L.S
., 2011 SCC 64, at para. 32. Had the appellants writ of execution
been known at the time of the Divorce Order, it would likely have resulted in a
different order.
[29]
On a variation application, the
terms of the original order are presumed to comply with the
objectives of the Divorce Act:
L.M.P.
, at para 33. Once the material
change is established any variation should reflect that change in accordance
with the objectives set out in s. 17(4).
[30]
The
Divorce Act
provides:
17 (1) A court of competent
jurisdiction may make an order varying, rescinding or suspending,
retroactively
or prospectively,
(a) a support order or any
provision of one, on application by either or both former spouses;
(3)
The court may include in a
variation order any provision that under this Act could have been included in
the order in respect of which the variation order is sought, and the court has
the same powers and obligations that it would have when making that order.
(4)
Before
the court makes a variation order in respect of a child support order, the
court shall satisfy itself that a change of circumstances as provided for in
the applicable guidelines has occurred since the making of the child support
order or the last variation order made in respect of that order. [Emphasis
added.]
[31]
I note as well that
the
security ordered by the trial judge applies to both the spousal and child
support. It was not apportioned as between the two types of support. It will
remain up to the trial judge address this if she considers it appropriate. At
approximately $17,000/year in child support alone, and given that the child is
only 11, the child support obligation alone could well exhaust the disputed
amount.
Power to return matter to trial judge
[32]
The application judge viewed the effect of the
order sought to be a variance of the Divorce Order. He explained that the
variation should be done in the divorce proceedings. However, given his
disposition he did not consider referring the matter to the trial judge to assess
whether a variation was appropriate to ensure that child support was in compliance
with the provisions of the
Divorce Act
.
[33]
In the circumstances the application judge ought
to have referred the matter to the trial judge. That the respondent did not
move for a variation is not material for several reasons.
[34]
First, s. 11 imposes a duty on
the court
to ensure adequate arrangements for the support of the child.
[35]
Second, the primary objective in the
Family
Law Rules
is to enable
the court
to deal with cases justly. In
this regard, r.1(6) provides that the court may impose conditions and give
directions as appropriate. Further, the court, pursuant to r. 7(2) and (5) may
add a party to a variation if the person not a spouse - is affected.
[36]
Third, a return to the trial judge on a
variation would eliminate the potential of two conflicting court orders.
[37]
Section 134 of the
Courts of Justice Act
,
R.S.O. 1990, c. C.43, provides that this court may, make any order that ought
to or could have been made by the court appealed from. Because the court below
should have referred the matter back to the trial judge to revisit her orders
in light of the writ it is appropriate that this court make that order.
DISPOSITION
[38]
I would allow the appeal in part and order that
the matter be returned to the trial judge to consider the material change in
circumstances.
[39]
I would make no order as to costs.
Released: April 20, 2021 P.L.
M.L.
Benotto J.A.
I
agree Paul Rouleau J.A.
I
agree B.W. Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Inzola Group Limited v. Brampton
(City), 2021 ONCA 143
DATE: 20210308
DOCKET: C66545
Strathy C.J.O., Brown and Miller
JJ.A.
BETWEEN
Inzola Group Limited
Plaintiff (Appellant)
and
The Corporation of the City of
Brampton
Defendant (Respondent)
David Chernos, Stuart Svonkin and
Alexandra Allison, for the appellant
Adam Stephens, Daniel Rabinowitz and
Kate Genest, for the respondent
Heard: February 9, 2021 by video conference
On appeal from the judgment of Justice John
R. Sproat of the Superior Court of Justice, dated January 11, 2019, with
reasons reported at 2019 ONSC 7632 and from the costs order dated August 26,
2019, with reasons reported at 2019 ONSC 3480.
Strathy C.J.O.:
A.
introduction
[1]
This appeal concerns issues of contract
interpretation and fair dealing in the context of a multi-million-dollar
construction project for an extension to the City Hall in Brampton, Ontario.
The appellant, Inzola Group Limited (Inzola), which was disqualified as a
result of alleged breaches of the Request for Proposals (RFP), denied the
breaches, claimed it had been disqualified as a result of bias, and sought
damages for breach of contract.
[2]
The trial judge dismissed Inzolas claims, but
assessed the damages to which Inzola would have been entitled, had its claim
succeeded.
[3]
Inzola submits that the trial judge erred in the
interpretation of the contract, failed to recognize that the City breached a
duty of fair and equal treatment, and erred in the quantification of damages.
[4]
For the reasons that follow, I would dismiss the
appeal on liability. As a result, I find it unnecessary to address damages.
B.
BACKGROUND
[5]
On October 30, 2009 the respondent, the City of
Brampton (the City), issued an RFP for an addition to its City Hall. The RFP process,
which the trial judge described as well-defined and detailed, was designed to
keep elected municipal officials out of the competitive bidding process by
limiting the City Councils role to approving or rejecting a proposal that had
been recommended by an independent Evaluation Committee. The process
contemplated that qualified "Respondents who had submitted proposals
would engage with City staff in a Competitive Dialogue. Their proposals would
then be assessed by the Evaluation Committee, which would select a Preferred
Respondent, whose proposal would be recommended to City Council for approval.
The City engaged an outside expert as a Process and Fairness Advisor, to
monitor the process, to ensure its fairness and to report directly to City
Council.
[6]
Inzola was one of three qualified Respondents to
the RFP. Inzola was based in Brampton and had extensive experience in land
development and construction. An Inzola-related company had built the Brampton
City Hall in the late 1980s. The principals of Inzola, John Cutruzzola and Bill
Kanellopoulos, had deep roots in Brampton, having been residents since 1972.
They owned a number of properties in downtown Brampton and leased space to the
City. They had a familiar relationship with City Staff and with members of City
Council, many of whom had served for more than 15 years. Between 2003 and 2010,
the Mayor and all but one member of Council received donations from companies
related to Inzola or its principals. The Mayor, in her first speech to the
Brampton Board of Trade, had referred to Mr. Cutruzzola as Mr. Brampton. The
Mayor and her husband had attended the weddings of Mr. Cutruzzolas two sons.
[7]
As the trial judge observed, there was nothing
untoward about these relationships. But, he found that Inzola perceived itself
as having something of a home field advantage in relation to decisions made by
City Council. He found that Inzola perceived that the greater the involvement
of Council [in the RFP process], the greater the advantage to Inzola.
[8]
From an early stage in the RFP process, Inzola,
either directly or through its lawyers, sought to have the process changed so
that qualified Respondents would have the opportunity to present their proposals
and prices at a meeting of City Council. Ultimately, Inzola wanted Council to have
input into the selection of the successful Respondent. As the trial judge
observed, this proved to be a recurring theme in the events leading up to
Inzolas disqualification.
[9]
The RFP provided that the process would be
managed by the City. During the process, Respondents were to contact the City
only through the Citys Purchasing Supervisor, who was designated as the sole
point of contact: RFP, ss. A1 and I1.
[1]
All Respondents were required to sign a confidentiality agreement in form and
substance prescribed by the City: RFP, s. J7.
[2]
Respondents were prohibited from issuing any media release, public announcement
or public disclosure relating to the RFP process without the prior written
consent of the City: RFP, s. K4.
[3]
[10]
Respondents agreed to conduct themselves in good
faith and in accordance with the RFP: RFP, s. K8.
[4]
An addendum to the RFP
provided that the Evaluation Committee could, in its sole discretion,
disqualify a Respondent for a failure to comply with any of the terms and
conditions of the RFP.
[11]
Inzola and two other contractors were selected
to participate in the Competitive Dialogue. On April 7, 2010, the City sent
them a confidentiality agreement (the Confidentiality Agreement) to be signed
prior to the Competitive Dialogue.
[12]
The other two Respondents signed the
Confidentiality Agreement and began the Competitive Dialogue process. Inzola
objected to signing on the basis that the Confidentiality Agreement was overly
broad. Inzola maintained that the Respondents should be able to present their final
offers directly to Council.
[13]
Over the next two months, Inzola and its lawyers
attempted to persuade the City that they should not have to sign the Confidentiality
Agreement and that City Council should have an opportunity to see and hear
presentations from all three Respondents concerning their proposals and
pricing. Acting on the advice of the Process and Fairness Advisor, the City
explained that the Confidentiality Agreement was mandatory, and that the RFP
process did not contemplate Respondents making direct presentations to Council.
Both the Process and Fairness Advisor and the Evaluation Committee concluded
that allowing Inzola to make submissions to Council would be a fatal breach
of the RFP and would contravene principles of fairness and equity.
[14]
Notwithstanding the Citys response, Inzolas
lawyer asked the City Clerk to permit a deputation on behalf of Inzola to
address Council concerning the scope and duration of the Confidentiality
Agreement
and the opportunity for each [Respondent] to present Final
Submissions with pricing to Council.
[15]
On May 28, 2010, less than a week before a
scheduled Council meeting on June 2, Mr. Cutruzzola left a telephone message
for the City Clerk indicating that Inzola wanted to appear before Council,
stating, [e]ither we do it in Council or do it through the press.
[16]
On June 1, 2010, Inzolas lawyer sent a letter
to the Mayor and members of the Council, attaching Inzolas correspondence with
the City, maintaining the position that the Confidentiality Agreement was too
broad and that each Respondent should be entitled to present their final
submission with pricing to Council, so that Council could hear an unfiltered
presentation.
[17]
Mr. Cutruzzola was not permitted to address the
Council at its meeting on June 2, 2010. He immediately gave an interview to the
Brampton Guardian newspaper, outlining the concerns he had raised through his
lawyer and stated that Inzola would never be part of a secret process. That
interview was published the same day under the headline, Developer accuses
city of secrecy. Mr. Cutruzzola was quoted as saying, [w]hat is behind the
secrecy? Why the secrecy? and [w]e do not participate in a secret process.
[18]
The Process and Fairness Advisor advised the
Evaluation Committee that Inzola was in breach of several provisions of the RFP
and that it was necessary for the City to determine Inzolas status
immediately. By letter dated June 11, 2010, the City advised Inzola that it was
disqualified from further participation in the RFP process.
[19]
Ultimately, one of the other two Respondents,
Dominus Construction, was awarded the contract for Phase 1 of the project, the
construction of the addition to City Hall. Phase 2, the construction of a
library, has never proceeded.
[20]
Inzola commenced this action on July 4, 2011.
C.
TRIAL JUDGES REASONS
[21]
The trial lasted 38 days. Closing submissions of
the parties ran to some 450 pages. The trial judgment was lengthy and thorough.
[22]
In view of the focused nature of Inzolas
appeal, I set out the trial judges findings only in relation to those matters
that are the subject of this appeal.
(1)
Breach of contract
[23]
The trial judge found that Inzola breached the
RFP in several respects.
Confidentiality agreement
[24]
First, he found that Inzola failed to sign a
confidentiality agreement. He rejected Inzolas submission that the Confidentiality
Agreement was overly broad because it was not restricted to protecting
commercial confidentiality. In this regard, he referred to the evidence of
Paul Emanuelli, an expert witness on public procurement, who testified that the
definition of confidential information in the agreement was a standard one. The
trial judge observed that the agreement had been drafted by external counsel
and the other two Respondents had signed the agreement.
[25]
The trial judge found that, in any event,
Inzolas real concern about the Confidentiality Agreement was that it would
preclude Inzola from presenting its proposal directly to Council. He observed,
[i]n my opinion, this was not a legitimate concern. I agree with [the Process
and Fairness Advisor] and interpret the RFP as not allowing Respondents to
present their Final Offers directly to Council.
Sole point of contact
[26]
The trial judge also found that Inzola had breached
the sole point of contact provision of the RFP. He rejected as highly
technical Inzolas argument that the provision was concerned only with
questions about the RFP and did not prohibit a Respondent from raising concerns
or complaints about the Citys conduct of the RFP process. Pointing to section
I1 of the RFP, the Communication Protocol, he noted that the RFP provided that
any Respondent that communicated with the City other than through the
Purchasing Supervisor could be disqualified. He found that Inzola clearly
breached the RFP by having its lawyer write to the Mayor and Council on June 1,
2010, effectively asking them to intervene in the process.
[27]
As a preamble to these conclusions, the trial
judge observed that all City witnesses had agreed that the 2005 Bellamy Report
[5]
was highly persuasive, if not
authoritative, as to procurement best practices in public contracting. He made
reference to observations in that report that elected municipal officials
should remain outside the competitive process and should not be involved in
reviewing bid documents, meeting with bidders and making their own evaluation.
He noted that a direct appeal to Council would have been contrary to the
recommendations of the Bellamy Report.
[28]
The trial judge thus accepted the Citys
submission that Inzolas interpretation of the sole point of contact
provision would be unworkable, would wreak havoc on the procurement process,
would undermine the integrity and proper functioning of the procurement process,
and would defeat the policy objective outlined in the Bellamy Report of
keeping the politicians separated from specific procurements.
Media releases and public disclosure
[29]
The trial judge also found that Inzola had
breached the RFPs prohibition of public announcements or disclosure to the
media. He found, again, that Inzolas arguments concerning this issue were
highly technical. There was no relevant distinction between making an
announcement or press release and a response to a media inquiry. Mr. Cutruzzola
had threatened to do it through the press if he were not allowed to speak to Council
and that is exactly what he did.
(2)
Uneven Treatment
[30]
A significant part of Inzolas case at trial was
that the Mayor and City staff were biased against Inzola and that City staff had
acted unethically to tilt the RFP process against Inzola and in favour of
Dominus, the successful Respondent. The trial judge found that the City did not
breach its obligations to Inzola and the disqualification of Inzola was not the
result of bias. At para. 172, he found that Dominus was selected as the
Preferred Respondent based on the merits of its Final Offer and not by reason
of any political inference or partiality.
[31]
Inzola does not challenge this conclusion,
except in one respect.
[32]
Dominus submitted a final offer dated December
9, 2010. This was some six months after Inzola had been disqualified. Dominuss
offer included Phase 1, the expansion of City Hall, and Phase 2, which
included a library to be constructed at 20 George Street in Brampton. The offer
stated that Dominus had an option to purchase 20 George Street. That statement
was untrue, at least at the time that Council met on March 28, 2011 to consider
whether to approve Dominus as the Preferred Respondent to construct the Phase 1
City Hall expansion.
[33]
On that date, Dominus advised City staff that as
the City had deferred consideration of Phase 2, Dominus had not extended its
option on 20 George Street. It said that it had a business relationship with
the owner of the property and was confident that it could acquire the property.
There was evidence to support the conclusion that at the Council meeting on
March 28, 2011, and in a subsequent report to Council in July, City staff
misled Council about the existence of an option. In fact, Dominus had told City
staff that it was not prepared to pay for an option on 20 George Street, given
that Phase 2 might not proceed.
[34]
However, on August 10, 2011, the day Council
approved the contract with Dominus, Dominus acquired an option to purchase 20
George Street for $480,000. Ultimately, the City acquired the option from
Dominus and purchased the property, in spite of the fact that Phase 2 was not
proceeding.
[35]
At trial, Inzola cited the Citys dealings with
Dominus and 20 George Street as evidence of a continuing bias against Inzola.
Inzola submitted that the City provided assistance to Dominus, which it never
would have provided to Inzola, to ensure that Dominus would succeed.
[36]
The trial judge rejected this argument:
I do not agree. By August, 2011, City staff
had been working hard for approximately 14 months to gain approval for a much
needed City Hall expansion. Testimony and emails show City staff working at all
hours of the day and night and on weekends. [The Process and Fairness Advisor]
testified that a failed RFP can stigmatize a City and deter future respondents.
So too could a second failed RFP stigmatize the senior staff members who were
driving the process. I am satisfied that the assistance offered to Dominus had
nothing to do with Inzola and everything to do with staff wanting to complete
the project successfully to meet the needs of the City and to be recognized for
that accomplishment. The dealings with 20 George St. do not, therefore, support
Inzola's contention that bias against Inzola was a factor in its
disqualification.
[37]
In contrast to Dominuss alleged breach, the
trial judge found that the breaches by Inzola could not have been more
fundamental. Inzola wanted Council to intervene and effectively sanction a new
process whereby Inzola would get to make an unfiltered presentation of its
proposal to Council.
(3)
Damages
[38]
For the sake of completeness, the trial judge
considered the damages that would have been awarded to Inzola, had he found the
City liable to Inzola. Inzola argued that expectation damages should be awarded
because it would have been awarded the contract had it not been disqualified.
The trial judge rejected this argument. He found that the RFP was essentially
an unenforceable agreement to negotiate, which would not create a contract
until the successful Respondent had negotiated a contract with the City. The
minimal performance principle found in
Hamilton v. Open Window Bakery Ltd.
,
2004 SCC 9, [2004] 1 S.C.R. 303 was applicable. If Inzola had established
liability, it could only recover its reliance damages in the amount of
$200,000, its estimated cost in responding to the RFP.
[39]
In the further alternative, the trial judge
quantified Inzolas damages in the event it was entitled to expectation
damages. He held that Inzola was fighting an uphill battle to become the
successful Respondent and that it had a 20% chance of doing so. Based on his
calculation, Inzola would have made a profit of $13,818,260 had it been
successful in securing the contract. As a result, he estimated Inzolas damages
at 20% of that amount, namely $2,763,652.
D.
DISCUSSION
[40]
Inzola raises five issues on appeal, which I
shall discuss in order.
(1)
Was Inzola permitted to raise process concerns outside the sole
point of contact?
(a)
The Parties Submissions
[41]
Inzola claims that the trial judge made two errors
in the interpretation of the RFP. This section considers the first of the
alleged errors. Inzola submits that the trial judge conflated the substance of its
concerns about the RFP with the manner in which they were communicated.
Specifically, Inzola submits that the trial judge erred by focusing on the
merits of Inzolas complaints rather than whether it was entitled to raise them
directly with City Council and outside the sole point of contact provision of
the RFP.
[42]
Inzola submits that the sole point of contact
provision pertained only to operational communications in the course of the RFP
process. It was not intended to apply to concerns about the process itself. Inzola
says that the issue was not whether its objection to the Confidentiality Agreement
was legitimate, it was whether it was entitled to raise the issue outside the
sole point of contact. Inzola submits that the purpose of the relevant
provisions of the RFP were to prevent Respondents from lobbying with City
Council in favour of their proposals, not to prevent them from raising concerns
about the process.
[43]
The City points out that by submitting its
proposal, Inzola accepted the terms of the RFP.
[6]
The trial judge found that Inzola had committed three independent breaches of
the RFP: it had failed to sign the Confidentiality Agreement; it had breached
the duty to communicate only through the sole point of contact; and it had
made a statement to the media. The City submits that any one of those breaches
would have justified its disqualification.
[44]
The City submits that City officials wanted to
keep Inzola in the process, because they believed it was desirable to have
three Respondents competing for the contract. However, Inzola attempted to
change the process to its own advantage, and persisted in that conduct in spite
of the Citys warning that it would be disqualified. Ultimately, the Evaluation
Committee disqualified Inzola, based on the advice of the Process and Fairness
Advisor.
(b)
Analysis
[45]
Inzolas submission about the trial judges
reasoning must be considered in the context of its breaches of the requirements
of the RFP. Absent a credible basis for refusing to sign the Confidentiality Agreement,
Inzola was obligated to sign it. In this case, Inzola had no credible basis for
not signing the agreement. Its real reason for not wanting to sign was, as the
trial judge found, that Inzola wanted to advocate for its proposal before City
Council.
[46]
Nor can there be any dispute that Inzola
breached the prohibition against media release, public announcement or public
disclosure. I agree with the trial judge that Inzolas interpretation of the
media provision was highly technical and contrary to its plain meaning. More
fundamentally, by mischaracterizing the RFP to the press as a secret process,
Inzola was attempting to undermine the process to its advantage.
[47]
Last, I agree with the trial judge that Inzolas
interpretation of the Communication Protocol was also highly technical and ignored
the broad meaning of clause A1. The sole point of contact feature of the RFP was
designed to ensure consistency and fairness in RFP communications. If Inzola
had a complaint about the process, it was required, pursuant to the RFP, to
communicate that complaint through the sole point of contact. Again, on a more
fundamental level, Inzolas communication with the Mayor and City Council was
contrary to a principal objective of the RFP process preserving the integrity
of the process by keeping politics out of it.
[48]
Inzola was not disqualified because it
misinterpreted the RFP. It was disqualified because its conduct not only
breached the terms of the RFP, but because it threatened the credibility and
integrity of the RFP process. It was disqualified by the Evaluation Committee,
on the advice of the Process and Fairness Advisor, who were understandably
concerned that politicizing the process at the insistence of one Respondent
would cause a loss of confidence in the fairness and integrity of the process on
the part of the other two Respondents and could cause the RFP process to fail.
[49]
In my view, the trial judges interpretation of
the contract in this respect was reasonable and is entitled to deference:
Sattva
Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at
para. 52.
(2)
Did the trial judge err by treating the Bellamy Report as part of
the factual matrix?
(a)
The Parties
Submissions
[50]
The second alleged interpretation error advanced
by Inzola is that the trial judge erred in concluding that the Bellamy Report
was part of the factual matrix of the contract, effectively treating Inzolas
conduct as a breach of the Bellamy Reports recommendations as opposed to a
breach of the RFP.
[51]
Inzola observes that the RFP was a contract and
that the relevant contractual interpretation principles should apply. Contractual
interpretation involves analyzing the words of the written contract, in light
of its factual matrix. The factual matrix of a contract includes facts that are
objectively within the knowledge of both parties at the time the contract was
executed:
Sattva
, at paras. 47, 58. Inzola submits there was no
evidence that it regarded the Bellamy Report as part of the contracts matrix
or underpinnings.
[52]
Inzola submits the trial judge erred by focusing
his findings on the Citys subjective and uncommunicated intentions with regard
to the Bellamy Report:
Eli Lilly & Co. v. Novopharm Ltd.
, [1998] 2
S.C.R. 129. Inzola says it had no reason to know that its actions would be
measured against the Bellamy Report. Nor would Inzola have considered the Bellamy
Report part of the factual matrix of the contract because the Report had no
statutory effect and the Report concerns events that took place in a different
city. Further, Inzola says it did not address in its closing submissions at
trial whether the Bellamy Report could be used as an interpretive aid, because
no one, including the City, suggested it could be.
[53]
Ultimately, says Inzola, the trial judge found a
breach of the Bellamy Report, not the RFP. Specifically, the trial judge erred
when he accepted the Citys submission, at para. 210, that bringing City
Council into disputes about the procurement process would undermine the
integrity and proper functioning of that process and would defeat the policy
objectives outlined in the Bellamy Report of keeping the politicians separated
from specific procurements.
[54]
The City counters that the trial judges
interpretation of the RFP was based on the plain meaning of its provisions,
which supported his conclusion that Inzola had clearly breached the RFP. The City
submits that it was appropriate for the trial judge to consider the Bellamy
Report in response to Inzolas assertion that it was entitled to complain about
the process, whether it was ultimately right or wrong. The Bellamy Report was
relevant to how City staff developed and ran the RFP process and it was also
relevant to the standard of commercial reasonableness. In addition to relying
on the Bellamy Report as evidence of best practices, the City submits that the
trial judge also relied on the expert evidence of Mr. Emanuelli, who testified
on the subject of best practices in RFP processes, including the single point
of contact approach.
(b)
Analysis
[55]
I do not accept Inzolas submission. The trial
judge was entitled to consider the underlying principles of the RFP and its structure
in order to properly interpret the contract.
[56]
The trial judge considered a variety of evidence
in his interpretation of the underlying principles of the RFP. The Bellamy
Report was entered as an exhibit at trial and the trial judge qualified Mr.
Emanuelli as an expert witness on industry norms in Canadian public
procurement. The trial judge also relied on the evidence of City staff, who
explained that the Bellamy Report had influenced their design of the RFP
process.
[57]
For example, Mr. Lewis, Commissioner of
Financial Services and Chair of the Evaluation Committee, gave evidence, in the
trial judges wording, that the standard in Brampton, and in other places he
had worked, was that Council was not involved in evaluating tenders or
proposals. That was a key Bellamy Report recommendation. It was also standard
that the actual proposals or bids that were received did not go to Council.
It
was also standard that Respondents were not allowed to delegate to Council.
[58]
The trial judge did not find that the Bellamy
Report was part of the factual matrix or that the parties had a meeting of
the minds with respect to the report. It was not necessary for him to do so. In
assessing the Citys response to Inzolas conduct, he was entitled to consider,
as he did, the underlying principles that informed the Citys choice of the
structure for the RFP. These underlying principles made it clear that the RFP was
designed to keep City Council separate from the evaluation process. The trial
judge did not need to, as Inzola suggests, fill in the RFP terms with the
Bellamy Report recommendations to come to this conclusion. As discussed above, Mr.
Emanuelli and City witnesses stated that best practices in contracts of this
nature called for the process to take place outside the political realm.
(3)
Did the City breach its duty of fair and equal treatment?
(a)
The Parties
Submissions
[59]
Inzola claims that the City owed it a duty of
fair and equal treatment in the RFP process, regardless of whether it breached
the RFP. It claims the City breached that duty by treating Dominuss breach
differently from Inzolas and applied an uneven standard to Dominuss
non-compliant bid. Inzola submits that, had Dominuss bid been disqualified,
there would have been a new RFP process and Inzola would have been entitled to
bid. It claims damages for the loss of opportunity.
[60]
Inzola says that while the trial judge
recognized a duty of fair and equal treatment, he failed to properly consider
whether Dominuss misrepresentation of the status of its option on 20 George
Street should have resulted in its disqualification. Had he done so, he would
have recognized that the City applied an uneven standard to Inzolas conduct on
the one hand and to Dominuss on the other. Inzola submits that by failing to
sanction Dominuss misrepresentation by disqualifying it, the City breached the
duty of fair and equal treatment owed to Inzola.
[61]
Inzola further submits that the timing of its disqualification
is insignificant in the analysis of whether the City breached the duty of fair
and equal treatment:
CG Acquisition Inc. v. P1 Consulting Inc.
, 2019
ONCA 745, at paras. 11, 16 and 19. While Inzola accepts that the City had
discretion in the process, it submits that there was no exercise of discretion
with regard to Dominuss breach. In considering Inzolas disqualification, the
City raised the issue with the Evaluation Committee and consulted with the
Process and Fairness Advisor. Inzola submits that same process was not followed
when Dominus submitted a non-compliant bid. City staff knew about the breach
and did not convene a meeting, nor did they consult the Process and Fairness
Advisor. Instead, Inzola submits that City staff misled City Council about the
misrepresentation. Inzola submits that had the City engaged in the same process
for Inzolas and Dominuss breaches, they likely would not have breached their
duty of fair and equal treatment instead they engaged in two different
processes, resulting in unfair and unequal treatment of Inzola.
[62]
The City makes three responses: (i) the duty of
fair and equal treatment as articulated by Inzola was no longer in existence
once Inzola had been disqualified; (ii) the trial judge compared Inzolas and
Dominuss breaches and concluded they were not similar and therefore did not
need to be addressed with similar processes; and (iii) the City had the
discretion to deal with the breaches differently because the situations were
different. Ultimately, the City submits that these arguments were before the trial
judge and he rejected Inzolas argument. The trial judge concluded that the
breaches were not similar Inzolas breach was fundamental to the process. The
City submits that Dominuss breach was not only less serious, but also of a
different nature. It related to an option in the distant Phase 2. There was no
concern that Dominuss promised option could not be delivered. In fact, the City
now owns the property in question.
(b)
Analysis
[63]
I agree with the Citys submissions. Dominuss
breaches were not of the same order of magnitude as Inzolas breaches. As the
trial judge found, Inzolas breach was fundamental. It threatened the integrity
of the RFP process itself. In contrast, Dominuss breach was inconsequential.
It related to a second phase of the project, which never happened. The breach
was also technical, in the sense that City officials never had any doubt that
Dominus was able to secure an option on the property.
[64]
Even assuming, therefore, that Inzola had a right
to insist on equal treatment after its disqualification, there was no
reasonable comparison between the two breaches. Moreover, s. K9 of the RFP
gave the City broad discretionary powers over the RFP process. Specifically, s.
K9(f) empowered the City to waive deficiencies and excuse non-compliance. The City
was therefore entitled to waive Dominuss breach.
(4)
Did the trial judge err in the calculation of damages?
[65]
Inzola submits that the trial judge erred in
finding that, in the event of success at trial, Inzola was entitled only to
reliance damages, rather than expectation damages. In view of the fact that I
would dismiss the appeal on liability, I do not find it necessary to address
this issue.
(5)
Leave to appeal costs
[66]
Inzola seeks to appeal the costs order against
it. I would not grant leave to appeal costs.
[67]
The trial judge awarded the City its costs on a
partial indemnity basis of $3.08 million. Inzola has not demonstrated that the
trial judge made an error in principle or that the costs award was plainly wrong:
Open Window Bakery Ltd.
, at para. 27.
E.
DISPOSITION
[68]
For these reasons, I would dismiss the appeal.
If the parties are unable to resolve costs, they shall make written
submissions. The City shall file its submissions within fifteen days of the
release of these reasons and Inzola shall have seven days within which to
respond. The submissions shall not exceed five pages in length, excluding costs
outlines.
Released: March 8, 2021 G.R.S.
George R. Strathy C.J.O.
I agree. David Brown J.A.
I agree. B.W. Miller J.A.
[1]
A1. Background. The City will manage the RFP Process and there
will be a single point of contact for Respondents. During the RFP Process,
Respondents should contact the City only through the Purchasing Supervisor as
set out in RFP, section I. Communication.
I1. Communication Protocol. Any Respondent who has
questions with regard to the RFP Process, requirements, or other aspects of the
RFP shall communicate solely through Purchasing Division
Any Respondent found
to be in communication with other than the Purchasing Supervisor may result in
the City disqualifying the Respondents Submission.
[2]
J7. Confidentiality Agreement. Respondents are required to sign
and submit a confidentiality agreement in a form and substance prescribed by
the City
prior to the Competitive Dialogue Process.
[3]
K4. Media releases, public disclosures and public announcement. A
Respondent, including any Joint Venture participant, and their Advisors,
employees, representatives and Respondent Team members, and their respective Advisors,
employees and representatives shall not issue or disseminate any media release,
public announcement or public disclosure (whether for publication in the press,
on the radio, television, internet or any other medium) that relates to the RFP
Process, the RFP documents or the Project or any matters related thereto,
without the prior written consent of the City.
[4]
K8. Good Faith Process. By responding to this request, the
Respondent commits to respond to this RFP, and otherwise to conduct itself, in
good faith with the City of Brampton and in accordance with the terms of this
RFP.
[5]
City of Toronto, Toronto Computer Leasing Inquiry and Toronto
External Contracts Inquiry, The Honourable Denise E. Bellamy, 2005.
[6]
K. Legal Matters. The respondent agrees and confirms that its
submission to [the City] pursuant to this RFP indicates and expresses
Respondents unqualified acceptance, agreement, promise and obligation to the
following terms, conditions, provisions, disclaimers and requirements in this
RFP. The delivery of a submission by the respondent shall constitute the
respondents unqualified agreement and acceptance of the foregoing.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Jay-Pee Drycleaners Inc. v.
2321324 Ontario Inc. , 2021 ONCA 250
DATE: 20210422
DOCKET: M52322 (C68270)
Tulloch, Nordheimer and Jamal
JJ.A.
BETWEEN
Jay-Pee
Drycleaners Inc. (Lee, Byeongheon)
Appellant/Respondent by cross-appeal
(Responding Party)
and
2321324
Ontario Inc. a.k.a. Jasaab Holdings Inc
Respondent/Appellant by cross-appeal
(Moving Party)
Byeongheon Lee, in person/responding
party
Marwa Younes, for the respondent/moving
party
Heard: April 9, 2021 by video
conference
REASONS FOR DECISION
[1]
Prior to the hearing of this appeal, the courts
Senior Legal Officer wrote to the parties and advised them that there may be an
issue regarding the jurisdiction of this court to hear the appeal. In response
to that letter, the moving party brought a motion to transfer this appeal and
the cross-appeal to the Divisional Court. At the hearing of the appeal, we
granted an order transferring the appeal and the cross-appeal to the Divisional
Court for reasons to follow. We now provide our reasons.
[2]
Mr. Lee, the appellant, leased commercial
premises from the respondent. The respondent terminated that lease, wrongfully
as found by this court in an earlier decision.
[1]
In that decision, this court granted summary judgment to Mr. Lee and ordered an
assessment of damages.
[3]
That assessment of damages was conducted before
Hackland J. in the Superior Court of Justice. By reasons dated March 6, 2020,
he awarded Mr. Lee a total of $16,000 in damages.
[2]
Mr. Lee has appealed that
damages award and the respondent has cross-appealed.
[4]
This court has jurisdiction to hear appeals from
final orders of the Superior Court of Justice, with certain exceptions. One of
those exceptions, set out in s. 19(1)(a) of the
Courts of Justice Act
,
R.S.O. 1990, c. C.43, is where the amount ordered to be paid is not more than
$50,000. The amount awarded in this case falls into that exception.
[5]
Consequently, this court does not have
jurisdiction to hear the appeal. Exercising our authority under s. 110 of the
Courts
of Justice Act
, we transferred the appeal and the cross-appeal to the
Divisional Court, which has the jurisdiction to hear both matters. We did not
make any order as to costs.
M.
Tulloch J.A.
I.V.B.
Nordheimer J.A.
M.
Jamal J.A.
[1]
Jay-Pee Drycleaners Inc v.
2321324 Ontario Inc.
, 2017 ONCA 798
[2]
Lee v. 2321324 Ontario Inc.
,
2020 ONSC 1473
|
COURT OF APPEAL FOR ONTARIO
CITATION: Jonas v. Elliott, 2021 ONCA 124
DATE: 20210225
DOCKET: C68049
Doherty, Pepall and Thorburn JJ.A.
BETWEEN
Richard Edmond Jonas and Anne
Catherine Jonas
Plaintiffs (Appellants)
and
Matthew Elliott,
The City of
Stratford
and
Carrie Goudy
Defendants (
Respondents
)
James J. Mays and John G. Langlois, for
the appellants
Robert Smith, for the respondents
Heard: February 19, 2021 by videoconference
On appeal from the order of Justice Michael
D. McArthur of the Superior Court of Justice, dated January 17, 2020, with
reasons at 2020 ONSC 354.
REASONS FOR DECISION
[1]
This is an appeal of an order granting partial summary judgment,
dismissing the action against Carrie Goudy, the host of a party, and the City of
Stratford which rented the facility used to host the party and granted
permission to serve alcohol. While attending the party, Matthew Elliott
assaulted Richard Jonas, who suffered injuries.
[2]
The appellants, Richard and Anne Jonas, claim the motion judge erred in (a)
finding no duty of care on the part of the host and/or the City, and (b)
bifurcating the proceeding which, they assert, will result in a risk of
duplication with their surviving claim against Mr. Elliott.
[3]
Following the hearing, the appeal was dismissed with reasons to follow.
These are those reasons.
[4]
The
Occupiers Liability Act
R.S.O. 1990, c. O.2 provides that
a person or organization with physical
possession and/or responsibility for and control over a property is supposed to
take steps to ensure that all persons on the property are reasonably safe while
on the premises. This
duty was correctly articulated by the motion
judge.
[5]
He also correctly noted that in order to establish a duty of care, there
must be a relationship of proximity and foreseeable harm.
[6]
The motion judge held that, in this case, there was a relationship of
proximity. However, he held the altercation was not reasonably foreseeable
because:
a)
Experienced and trained staff were hired to
serve alcohol and a friend provided security at the door;
b)
Both Messrs. Jonas and Elliott had consumed
alcohol before attending the party but neither exhibited prior signs of
aggressive behaviour or conduct that would suggest they had consumed alcohol
before they arrived;
c)
Ms. Goudy was unaware of their prior alcohol
consumption;
d)
The incident was both sudden and brief;
e)
There was only one other minor incident that
evening involving an intoxicated patron who was appropriately removed from the
party, placed in a taxi and taken home; and,
f)
The fact that Mr. Jonas was let into the party
by Ms. Goudy, was not the cause of the incident.
[7]
These findings of facts about the activity at the party are sufficient
to demonstrate that the harm was not reasonably foreseeable, and these findings
are owed deference. In any event there is no evidence that the altercation was
caused or contributed to by intoxication.
[8]
The appellants suggest there was evidence that conflicts with the motion
judges finding that the entrance was properly supervised and the event was a modest
gathering. The appellants claim that although those providing alcohol were
properly certified, the person at the entrance to the party was a friend. They say
that some witnesses thought there were over two-hundred people at the gathering,
inconsistent with this being a modest gathering.
[9]
We see no merit to these submissions as, even if this evidence had been
accepted by the motion judge, it is not material to whether the altercation was
reasonably foreseeable.
[10]
The
motion judge accepted that the appellants did not demonstrate that there was an
act or failure to act on the part of the occupier that caused Mr. Jonas' injury.
The assault by Mr. Elliott on Mr. Jonas was entirely unexpected and could not
have been reasonably foreseen by the respondents. As such, he concluded that
there is no genuine issue requiring a trial.
[11]
We
see no error in his finding that the harm was not reasonably foreseeable or his
conclusion that Mr. Jonas claim and Mr. Elliotts crossclaim against Ms. Goudy
and the City should be dismissed.
[12]
Moreover,
he correctly granted partial summary judgment. The claims against the
respondents could readily be bifurcated from the remaining claim against Mr. Elliott
in an expeditious and cost-effective manner. Given the nature of the remaining
claim for damages for assault and battery against Mr. Elliott, any risk of
inconsistent findings was immaterial.
[13]
For
these reasons, the appeal is dismissed.
[14]
Costs
to the respondents in the amount of $10,000, inclusive of disbursements and
HST.
Doherty
J.A.
S.E.
Pepall J.A.
J.A.
Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Joo v. Tran, 2021 ONCA 107
DATE: 20210218
DOCKET: C68078
Strathy C.J.O., Brown and Miller
JJ.A.
BETWEEN
Il-Jung
Joo and Hae-Sun Joo
Plaintiffs (Respondents)
and
Hong Phat Tran and Thu Thuy Thi Dinh
Defendants (Appellants)
AND BETWEEN
Hong
Phat Tran and Thu Thuy Thi Dinh
Plaintiffs by Counterclaim
and
Il-Jung Joo, Hae-Sun Joo, Rocky Chow, Living Realty Inc., Brokerage,
Bonnie Wan and Daniel Wan
Defendants by Counterclaim
Domenic Saverino, for the appellants
Jonathan M. Friedman, for the
respondents
Heard: February 11, 2021 by video conference
On appeal from the judgment of Justice Gregory
M. Mulligan of the Superior Court of Justice, dated January 23, 2020, with
reasons reported at 2020 ONSC 806.
REASONS FOR DECISION
[1]
The appellant purchasers entered into an
agreement of purchase and sale (APS) with the respondent vendors to purchase
the respondents home for $2.1 million. The respondents accepted the offer on
April 30, 2017.
[2]
Through para. 10 of the standard form agreement,
the vendors warranted that the property was free from all encumbrances, save
and except for minor utility easements and other enumerated exceptions. Schedule
A to the APS added a term stating that the vendors would discharge any encumbrances
on or before closing, either through sale proceeds or by way of solicitors
undertaking. Schedule A did not include the express qualification contained in
para. 10, which excluded minor utility easements.
[3]
On May 4, 2017, the APS was amended by the
addition of Schedule C, which contained a building survey showing four
easements registered against the property. Three of these were utility
easements concerning electricity and telecommunications. A fourth notation was granted
to a municipality and concerned water mains, sanitary sewers, and stormwater
drains.
[4]
On August 14, 2017, the appellants took the
position that the respondents had failed to disclose easements of material
significance. On August 31, 2017, the appellants requisitioned their removal.
The respondents refused, on the basis that the easements were expressly
contemplated by para. 10 of the APS. The appellants refused to close.
[5]
The respondents subsequently resold the property
at a substantial loss. They brought an action for breach of contract and were
granted summary judgment in the amount of $430,000.
[6]
On appeal, the appellants argue that the motion
judge erred by: (1) not finding that Schedule A imposed an unqualified duty on
the vendor to provide clear title; (2) finding the appellants were not entitled
to terminate the APS despite the respondents failure to remove the easements;
(3) finding the easements were minor rather than material; and (4) resolving
the main dispute on a motion for summary judgment.
[7]
We do not agree that the motion judge erred in
any respect.
[8]
There was no evidence that the easements would
actually interfere with the use or enjoyment of the property.
[9]
The appellants argument on appeal is that the respondents
were obligated to discharge all easements, come what may, regardless of whether
such an obligation was possible to fulfill or would make any commercial sense
if it were. The appellants do not explain how the respondents could have
discharged the easements, what the practical consequences would be for the
appellants or the residents of any neighbouring properties, or how it would make
commercial sense for a vendor of a residential property to remove electricity,
water, and sewer services prior to conveying title. In response to the apparent
absurdity of this position, the appellants fall back on the argument that, absurd
or not, this was the agreement that the respondents made.
[10]
The motion judge did not accept the appellants characterization
of the APS as requiring the vendors to discharge standard easements. Although
para. 26 of the APS required that in the event of conflict between an added
provision and a standard provision, the added provision would supersede, the
motion judge did not read para. 10 and Schedule A as being in conflict. The purpose
of Schedule A, on the reading of the motion judge, was not to modify the
obligations contained in para. 10, but to allow the obligations in para. 10 to
be fulfilled by way of solicitors undertaking. Not only was this
interpretation available to the motion judge, the alternative reading proposed
by the appellants would have resulted in absurdity.
[11]
We do not see any reviewable error in the motion
judges interpretation of the APS.
DISPOSITION
[12]
The appeal is dismissed. Costs are awarded to
the respondents in the amount of $10,870, inclusive of HST and disbursements.
G.R.
Strathy C.J.O.
David
Brown J.A.
B.W.
Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION:
Kaminski (Re), 2021 ONCA 220
DATE: 20210409
DOCKET:
C68713
Hourigan,
Zarnett and Coroza JJ.A.
IN
THE MATTER OF: Michael Kaminski
AN
APPEAL UNDER PART XX.1 OF THE
CODE
Daniel Medd, for the appellant
Madeline Lisus, for the respondent, Attorney
General of Ontario
Leisha Senko, for the respondent,
Person in Charge of the Centre for Addiction and Mental Health
Heard: April 1, 2021 by video conference
On appeal from
the disposition of the Ontario Review Board dated July 7, 2020, with reasons
dated September 14, 2020.
REASONS FOR DECISION
OVERVIEW
[1]
The appellant appeals from the disposition of
the Ontario Review Board (the Board) continuing his conditional discharge. He
submits that the Board misapplied the significant threat test and that its
decision was otherwise unreasonable. He contends that the Board should have
granted him an absolute discharge. For the following reasons, we dismiss the
appeal.
BACKGROUND
[2]
On January 26, 2016, the appellant was found not
criminally responsible on account of mental disorder (NCRMD) on charges of
criminal harassment and failure to comply with a condition of judicial release.
The index offences arose out of the appellants fixation on his art schoolteacher,
fueled by auditory hallucinations and delusional thoughts symptomatic of his
diagnosis of schizophrenia.
[3]
The disposition under appeal continues a
positive trend of increased liberty for the appellant. Following the appellants
initial Board hearing, he was ordered detained within a secure unit at the
Centre for Addiction and Mental Health. At the appellants first annual review hearing,
the Board agreed with the parties joint position that the appellant posed a
significant risk and crafted a detention order with privileges including community
living. After the appellants second annual hearing, the Board continued his
detention order with community living privileges. At the appellants third
annual hearing, the Board imposed a conditional discharge with a condition that
the appellant live with his parents and report every two weeks. This
disposition was based on a joint request by the parties.
[4]
At the appellants latest hearing, the evidence
before the Board included: the hospitals report; the testimony of Dr. Darby, a
forensic consultant; and the appellants testimony. Aspects of this evidence
were positive, including how the appellant had successfully obtained full-time
employment.
[5]
However, the evidence also demonstrated that the
appellant continued to have limited insight into his mental illness, his need
for medication, and the index offences. Dr. Darby explained that the clinical
teams unanimous opinion was that the appellant continued to pose a significant
threat to public safety. These concerns were reflected in the appellants testimony
that he wanted to find a psychiatrist who might discontinue his medication to
determine whether he could live without it. He also believed that his mental
illness was not permanent.
[6]
The Board found that the appellant continued to
pose a significant threat to the safety of the public. The Board continued his
conditional discharge, while decreasing the reporting period and removing the residence
requirement. In reaching their conclusion, the Board emphasized their concerns about
the appellants lack of insight into his illness and need for medication; the
appellants plan to find a psychiatrist he could experiment with were he no
longer under the Boards jurisdiction; and the opinions of Dr. Darby and the
appellants clinical team.
ANALYSIS
[7]
Considerable deference is owed to the Boards
determination on whether an NCRMD accused is a significant threat to the safety
of the public:
Wall (Re)
, 2017 ONCA 713, 417 D.L.R. (4th) 124, at
para. 21;
Abdulle
(Re)
, 2020 ONCA 698, at para. 15. The
appellant argues that the Board did not clearly explain what evidence in the
record led it to conclude that the appellant posed a significant threat. A
significant threat to the safety of the public means that there exists a foreseeable
and substantial risk of serious physical or psychological harm to individuals
in the community:
Marmolejo
(Re)
, 2021 ONCA 130, at para. 37;
Marchese
(Re)
, 2018 ONCA 307, 359 C.C.C. (3d) 408, at para. 9.
[8]
In our view, the Boards decision is based on an
internally coherent, rational chain of analysis and is justified in relation to
the facts and the law:
Canada (Minister of Citizenship and Immigration) v.
Vavilov
, 2019 SCC 65, 441 D.L.R. (4th) 1, at para. 85. The Board explained
why it believed the appellant posed a significant threat at paras. 44 and 45 of
its reasons. This determination was based upon, among other things, the
evidence of Dr. Darby, the opinion of the clinical team, the gravity of harm
arising from the index offences, and the likelihood of similarly serious harm
occurring in the future. The Board explained that these concerns stemmed primarily
from the appellants lack of insight into his own condition and need for
medication, as well as his desire to engage a community psychiatrist who would
eventually permit him to discontinue medication. We see no basis to interfere
with the Boards conclusion that the appellants plans were not realistic and
would result in significant decompensation, creating a significant risk to
members of the public. The Boards decision to continue the appellants conditional
discharge, while removing the residence requirement and decreasing the
reporting obligation, was reasonable.
DISPOSITION
[9]
The appeal is dismissed.
C.W.
Hourigan J.A.
B.
Zarnett J.A.
S.
Coroza J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Kaynes v. BP p.l.c., 2021 ONCA 36
DATE: 20210120
DOCKET: C67782
Feldman, van Rensburg and
Thorburn JJ.A.
BETWEEN
Peter Kaynes
Appellant (Plaintiff)
and
BP p.l.c.
Respondent (Defendant)
Eli Karp and Hadi Davarinia, for the
appellant
Laura K. Fric, Kevin OBrien and Karin
Sachar, for the respondent
Heard: July 16, 2020, by video conference
On appeal from the order of Justice Paul
M. Perell of the Superior Court of Justice, dated November 8, 2019, with
reasons reported at 2019 ONSC 6464.
Feldman J.A.:
[1]
The appellant has been attempting to bring a
Canadian class action against the respondent BP p.l.c. (BP) on behalf of Canadian
shareholders, based on securities misrepresentations BP made about the safety
of its drilling operations in the Gulf of Mexico prior to the Deepwater Horizon
explosion in 2010. The appellant has faced numerous procedural and
jurisdictional roadblocks. This appeal is from an order that strikes out the
latest amendment to his statement of claim and essentially ends the litigation.
[2]
The appellants 2019 amendment, which claims
fraudulent misrepresentation for the first time, was struck out as statute-barred
pursuant to the
Limitations Act, 2002
, S.O. 2002, c. 24, Sched. B, on
a motion by BP under r. 21.01(1)(a) of the
Rules of Civil Procedure
,
R.R.O. 1990, Reg. 194. As a consequence, the appellant became disqualified as a
representative plaintiff for the class, because the claims that remained extant
and that were allowed to proceed covered a time period that did not include his
claim.
[3]
This appeal raises two key issues: 1) what are
the elements of a claim for fraudulent misrepresentation, within the meaning
of the
Limitations Act,
that must be discoverable in order to commence
the two-year limitation period? and 2) are there circumstances where an
amendment to a statement of claim can be dismissed as statute-barred on a
motion brought under r. 21.01(1)(a)?
[4]
For the reasons discussed below, I agree that it
is plain and obvious that the appellants new claim for fraudulent
misrepresentation is statute-barred and that it was appropriate to determine that
issue on a r. 21.01(1)(a) motion, given the particular pleadings in this case.
Accordingly, I would dismiss the appeal.
Factual Background and Judicial History
A.
The
Parties
[5]
BP is a U.K. petroleum company whose securities trade on international
stock exchanges.
[6]
The appellant is a resident of Ontario. On or before August 12, 2008,
while he was a resident of Alberta, he purchased BP shares over the New York
Stock Exchange.
B.
The Proposed Class
Action
[7]
This action emerged from BPs Deepwater Horizon explosion on April 20,
2010. In broad terms, the appellant alleges that in its securities filings, BP
made 14 misrepresentations about its operational safety and ability to respond
to an oil disaster, which had the effect of artificially inflating its share
price. Following the Deepwater Horizon explosion on April 20, 2010, BP publicly
corrected these misrepresentations between April 21, 2010 and May 29, 2010,
leading to a significant drop in BPs share price. In his current statement of
claim, the appellant seeks to certify a class action on behalf of Canadian
residents who acquired equity securities in BP on the secondary market from
February 22, 2008 to April 23, 2010.
[8]
The appellant has filed five different statements of claim in Canada during
the life of this action: a 2012 Alberta Claim, a 2012 Ontario Claim, a 2013
Ontario Claim, a 2017 Ontario Claim and, most recently, a 2019 Ontario Claim.
The important features of each Claim are discussed below.
C.
2012 Alberta Claim
[9]
On April 20, 2012, the first iteration of this proposed class action was
filed in Alberta. The appellant was a member of the proposed class and was
added as a plaintiff on May 25, 2012. That claim advanced two causes of action:
(1) statutory secondary market misrepresentation under Albertas
Securities Act
and (2) common law negligent
misrepresentation.
[10]
The 2012 Alberta Claim never got off the ground. Under Albertas
Rules
of Court
, leave is required to serve a defendant outside of Canada. Leave
was denied on two separate occasions,
September 18, 2012 and November
14, 2012,
on the basis that the plaintiffs had failed to establish
that the claim had a real and substantial connection to Alberta.
D.
2012 Ontario Claim
[11]
The
appellant did not appeal the November 14, 2012 Alberta court decision denying leave
for service
ex juris
. Instead, on November 15,
2012, he commenced a similar action in Ontario that advanced two causes of
action: (1) the statutory cause of action for secondary market
misrepresentation provided for in Part XXIII.1, s. 138.3 of Ontarios
Securities Act
, R.S.O. 1990, c. S.5, and other equivalent
provincial securities legislation and (2) common law negligent
misrepresentation.
[12]
BP
challenged Ontarios jurisdiction over this matter.
E.
2013 Ontario Claim
[13]
On
August 9, 2013, while BPs jurisdiction challenge was pending, the appellant
filed a fresh as amended statement of claim that effectively withdrew the
common law negligent misrepresentation cause of action.
[14]
On
October 9, 2013, BPs jurisdictional challenge was initially dismissed.
However, on appeal, on August 14, 2014, this court in
Kaynes
v. BP, PLC,
2014 ONCA 580, 122 O.R. (3d), leave to appeal refused,
[2014] S.C.C.A. No. 452, allowed BPs appeal on the basis of
forum non conveniens
and stayed
the claim of Canadians who had purchased BP shares on foreign exchanges. Only a
truncated proposed class action on behalf of shareholders who had purchased
their shares on the Toronto Stock Exchange was allowed to proceed.
F.
Related U.S.
Litigation
[15]
While
the Ontario jurisdiction battle was ongoing, other litigation against BP was
progressing in the U.S. Most significantly for the purposes of this appeal, on
September 4, 2014, the District Court for the Eastern District of Louisiana
held that BP had acted with conscious disregard of known risks and was
primarily responsible for the oil spill and guilty of gross negligence and
willful misconduct.
[16]
BP
appealed this decision. However, on July 2, 2015, BP reached an agreement with
the U.S. Department of Justice and five U.S. states to resolve nearly all
claims outstanding against BP from the oil spill. Significantly, this
settlement resulted in BP abandoning its appeal of the September 4, 2014
Louisiana District Court decision, which had found that BP engaged in willful
misconduct.
G.
The Appellant Unsuccessfully Pursues Claims in the U.S.
[17]
In March 2015, after the Supreme Court of Canada
denied the appellants application for leave to appeal this courts
jurisdiction decision, he commenced a proposed class action against BP in the
United States District Court for the Southern District of Texas. He asserted a
claim for pre-explosion misrepresentations based on Ontarios
Securities
Act
.
[18]
In response, BP moved to dismiss the appellants
U.S. action. On September 25, 2015, the Texas Court granted BPs motion and
dismissed the appellants action, in part because the claim was time-barred by
the three-year limitation period under Ontarios
Securities Act.
[19]
The
appellant did not appeal that decision. Instead, on February 26, 2016, he
brought a motion to lift the stay of his Canadian proceedings in Ontario.
H.
Ontario Stay Lifted
[20]
On
July 29, 2016, this court in
Kaynes v. BP, P.L.C.
,
2016 ONCA 601, 133 O.R. (3d) 29, leave to appeal to S.C.C. refused, 36127
(January 19, 2017), granted the motion to lift the stay, expressing no view on
the limitations issues.
I.
2017
Ontario Claim
[21]
On
June 7, 2017, with the stay lifted, the appellant delivered his second fresh as
amended statement of claim. The 2017 Claim advanced statutory misrepresentation
claims solely on the basis of Ontarios
Securities Act
.
While it added new misrepresentation allegations not referred to in the 2012 or
2013 Claims, it did not revive the abandoned common law negligent misrepresentation
cause of action. It also added for the first time, allegations that BP knew that
its misrepresentations were false when it made them. For example, the 2017
Claim reads in part (emphasis added throughout):
On May 8, 2007, BP
released its 2006 Sustainability Report, in which it represented that the OMS
was a comprehensive Process Safety system that covered all aspects of its
operations, and that it would apply to all of its operations because the OMS
was the foundation for a safe, effective, and high-performing operation.
BP and its executive
officers, including its then-CEO,
knew
that these representations
(i.e., the OMS Misrepresentation)
were false when made
because BP
had no intention of applying the OMS to all of its North American
operations, and therefore the OMS did not cover all aspects of BP's operations.
This representation supported BP's investment quality and share price.
On February 22, 2008, BP
released its 2007 Annual Review, which is a core document. In the 2007 Annual
Review, BP represented that with its new CEO, it was focused on three
priorities: safety, people, and performance. BP further represented that it
would implement the Process Safety recommendations from the Baker Report.
This core document
contained the OMS Misrepresentation. At the time this statement was made, BP
and its new CEO
knew
or ought to have known that BP did not
intend to implement all of the Baker Reports recommendations, including that
its integrated and comprehensive process safety management system (i.e. the
OMS) would not be implemented at all of BPs U.S. operations.
On April 16, 2009, BP
released its 2008 Sustainability Review and represented that the OMS was
introduced and completed in the North America Gas, Gulf of Mexico, Columbia and
the Endicott Field in Alaska.
This core document
contained the OMS Misrepresentation. At the time it was made, BP
knew
that the OMS would not apply to every BP project site and that BP had migrated
only one of seven sites in the Gulf of Mexico to the OMS.
This core document also
contained the Omission. At the time the 2008 Sustainability Review, which
touted BP's commitment to Process Safety, was released, BP and its management
were
well aware
that a December 2008 internal strategy document had
specifically identified numerous Process Safety priority gaps which increased
the potential for and severity of Process Safety related incidents, but omitted
to disclose this material fact.
On February 26, 2010, BP released its 2009
Annual Review, in which it represented that its OMS provided a common framework
for all of its operations and set out formatted procedures on how to manage
risks at each BP site.
This core document contained the OMS
Misrepresentation. At the time this representation was made, BP
knew
that the OMS did not apply to each of BPs sites, that the OMS did not provide
a group-wide framework to identify and manage operational risks, that the OMS
was not yet implemented in the Gulf of Mexico
At different times during the Class Period,
material facts about BP's Process Safety at the Deepwater Horizon and Macondo
Well, OMS, and OSRP emerged within BP and were made known to its senior
executives. BP, however, negligently
or intentionally
omitted
these material facts from its disclosure documents.
[22]
In
response, BP challenged the timeliness of the statutory misrepresentation
claims. On September 1, 2017, Perell J. in
Kaynes v. BP, P.L.C.
,
2017 ONSC 5172, 74 B.L.R. (5th) 49, declared most of the misrepresentation
claims statute-barred pursuant to s. 138.14 of Ontarios
Securities
Act
. That section creates an events-based limitation period and
provides that no action for a misrepresentation shall be commenced later than
three years after the date on which the misrepresentation was made.
[23]
On
April 5, 2018, this court in
Kaynes v. BP, P.L.C.
,
2018 ONCA 337, 81 B.L.R. (5th) 6, dismissed the appeal from Perell J.s
decision.
[24]
These
decisions significantly reduced the scope of the proposed class action.
Originally, the appellant had sought to advance statutory claims based on
misrepresentations occurring from May 9, 2007 to April 23, 2010 (1,080 days).
As a result of the s. 138.14 limitation decisions, however, the appellants proposed
class period was reduced to February 27, 2010 to April 23, 2010 (55 days). Since
the appellant acquired his BP shares on or before August 12, 2008, his personal
statutory claims were all statute-barred.
J.
2019 Ontario
Claim
[25]
The
appellant delivered another amended statement of claim on September 4, 2019.
This 2019 Claim is the first Claim to expressly advance a cause of action for
fraudulent misrepresentation. The 2019 Claim repeats the 14 alleged
misrepresentations made by BP between May 2007 and April 2010, but further
pleads that some of the misrepresentations were made by BP with
knowledge of the falsities contained therein or with a reckless
disregard to learning the accuracy of the representation
. It also added
an Appendix A with particulars of the fraudulent misrepresentation allegations.
K.
BP
Challenges the Timeliness of the Fraudulent Misrepresentation Claim
[26]
The
order under appeal was made on BPs motion under r. 21.01(1)(a) for an order
declaring the fraudulent misrepresentation claims statute-barred pursuant to
the
Limitations Act
. In the alternative, BP
requested that the pleadings be struck as an abuse of process. BP also sought
to dismiss the balance of the appellants action because his claims fell
outside the class period and no suitable representative plaintiff had been proposed.
[27]
The
appellant resisted the motion on two bases. Procedurally, he argued that a
limitations issue cannot be determined on a r. 21.01(1)(a) motion when
discoverability is in issue. Substantively, he submitted that it was not plain
and obvious that his claim was statute-barred.
L.
Motion Judges
Decision
[28]
The
motion judge granted BPs motion and dismissed the action. He held that all
common law misrepresentation claims, whether negligent or fraudulent, were
discovered when BP made corrective disclosures between March and June 2010. By
that time, the appellant had discovered that he had suffered a loss due to an
act of misrepresentation by BP and that a proceeding was an appropriate way to
seek a remedy. Therefore, the Ontario action that was brought in November 2012
was commenced too late to advance those claims.
[29]
Alternatively,
the motion judge found that the appellant would have discovered BPs fraudulent
intent in 2010 when Canadians and Americans in the U.S. were advancing claims
based on
scienter
that is, that BP had fraudulently
misrepresented its securities to secondary market purchasers.
Scienter
was a necessary component of such claims and
had to be asserted in order to bring them.
[1]
The motion judge concluded from the existence of such actions in the U.S.
courts that [b]y 2010,
a reasonable person with the abilities
and in the circumstances of Mr. Kaynes would have discovered that his cause of
action in fraudulent misrepresentation had accrued and that having regard to
the nature of the injury, loss or damage, a proceeding would be [] appropriate.
[30]
The
motion judge rejected the appellants position that the fraudulent
misrepresentation claim in the 2019 amended statement of claim was an alternative
theory of liability arising from facts he had asserted in his prior pleadings,
including the 2017 amended statement of claim, rather than a new cause of
action. The motion judge found that
the essential material
facts of the fraudulent misrepresentation claim were not pleaded in the earlier
pleadings.
[31]
Finally,
the motion judge was satisfied that in the circumstances of this case, it was
appropriate to determine the limitation issue on a r. 21.01(1)(a) motion. He
agreed with the appellant that only in the rarest of cases should a court rule
on a limitation issue before a statement of defence is filed, since it is
possible that the plaintiff could assert additional facts in the statement of
claim or reply that would alter the conclusion that a limitation period had
expired. Nevertheless, he held that he could determine the limitation issue in
this case under the exception articulated by this court in
Beardsley v. Ontario
(2001), 57 O.R. (3d) 1 (C.A.) which
held, at para. 21, that a limitation issue can be decided under r. 21.01(1)(a)
before a statement of defence is filed where it is plain and obvious from a
review of a statement of claim that no additional facts could be asserted that
would alter the conclusion that a limitation period had expired.
Issues
[32]
This
appeal raises four issues:
1.
Did the motion judge err by finding that the common law claims for
negligent and fraudulent misrepresentation were discoverable by June 2010, once
BP effectively acknowledged through its corrective disclosure that its statements
contained misrepresentations? Or, is one of the factual elements of a claim for
fraudulent misrepresentation that a plaintiff must have discovered under s.
5(1)(a) of the
Limitations Act
, the fact that
the defendant knew that the misrepresentation was false?
2.
Did the motion judge err by finding that because of allegations of
scienter
in the U.S.
actions, it was plain and obvious that the appellant knew or ought reasonably
to have known that he had a claim in fraudulent misrepresentation more than two
years before the 2019 amendment?
3.
Did the motion judge err by failing to find that the effect of pleading
in 2017 that BP knew its representations were false when it made them, was to make
the appellants pleading of fraudulent misrepresentation in the 2019 amendment
merely a request for a new remedy but not a new claim that was statute-barred?
4.
Did the motion judge err by proceeding on a motion under r. 21.01(1)(a)
to decide a limitation issue?
[33]
As
I will expand on below, I would answer these questions as follows:
1.
The motion
judge erred in his discovery analysis. A claim for fraudulent
misrepresentation is only discovered under s. 5 of the
Limitations Act
if the plaintiff knows, or ought to have known, that the defendant knew that
the misrepresentation was false.
2.
In the context of this motion, the motion judge improperly relied on
U.S.
scienter
pleadings
to make a factual finding about discoverability.
3.
The fraudulent misrepresentation claim in the 2019 amended statement of
claim is a new, statute-barred claim.
4.
The motion judge did not err in deciding the limitations issue in this
case under a r. 21.01(1)(a) motion because, due to the particular pleadings of
this case, there were no disputed material facts at issue.
Analysis
A.
Standard of Review
[34]
As
this is an appeal from an order on a r. 21.01(1)(a) motion, I agree with both
parties positions that the standard of review requires this court to determine
whether the motion judge was correct to find that the appellants claim for
fraudulent misrepresentation in its 2019 amended statement of claim is statute-barred.
Issue 1:
Is one of the elements of a claim for fraudulent misrepresentation that a
plaintiff must have discovered under s. 5(1)(a) of the
Limitations
Act
, the fact that the defendant knew that the misrepresentation
was false?
I.
The Limitation Period Runs From the Date a Claim is Discovered
[35]
Under s. 4 of the
Limitations Act
, a
proceeding may not be commenced more than two years after the claim is
discovered. A claim is defined in s. 1 as:
a claim to remedy an injury, loss or damage
that occurred as a result of an act or omission.
[36]
Under s. 5(1)(a) of the
Limitations Act,
a claim is discovered when the person first knew (or reasonably ought to have
known) the following four elements: (i) the occurrence of the injury, loss or
damage, (ii) that it was caused by or contributed to by an act or omission,
(iii) that the act or omission was by the defendant, and (iv) based on the
nature of the injury, loss or damage, a proceeding would be an appropriate
means to seek a remedy. Under s. 2(1), the
Limitations Act
applies to
claims pursued in court proceedings.
[37]
As a number of commentators and judges have
discussed, unlike the former
Limitations Act
, R.S.O. 1990, c. L.15, the
current
Limitations Act
does not refer to a cause of action as the
starting point for the commencement of the limitation period. Rather, the commencement
of the limitation period is based on the discoverability of a claim, and a
claim is discovered when the plaintiff discovers the generic elements of a
claim that are set out in s. 5(1)(a), or reasonably ought to have discovered
them (s. 5(1)(b)): see, for example:
Hare v. Hare
(2006)
,
83
O.R. (3d) 766 (C.A.), at para. 29,
per
Gillese J.A., and paras. 61,
75,
per
Juriansz J.A., dissenting;
Placzek v. Green,
2009
ONCA 83, 307 D.L.R. (4th) 441, at para. 25;
Apotex Inc. v. Nordion
(Canada) Inc.
, 2019 ONCA 23, 431 D.L.R. (4th) 262, at paras. 84-86;
Daniel
Zacks, Claims, Not Causes of Action: The Misapprehension of Limitations
Principles (2018) 48 Adv. Q. 168; Stephen Cavanagh, Appropriate means in s.
5(1)(a)(iv) of the
Limitations Act, 2002
(2019) 39th Annual Civil
Litigation Conference.
[38]
Nevertheless, numerous Ontario judgments that have
considered when a claim is discovered under the
Limitations Act
have done
so with reference to when the cause of action arose. See, for example:
Hamilton
(City) v. Metcalfe & Mansfield Capital Corp.
, 2012 ONCA 156, 290
O.A.C. 42, at paras. 14, 35;
Liu v. Wong
, 2016 ONCA 366, at paras. 7-8,
leave to appeal refused, [2016] S.C.C.A. No. 264;
Colin v. Tan
, 2016
ONSC 1187, 81 C.P.C. (7th) 130, at para. 63;
Unicorr Limited v. Minuk
Construction & Engineering Limited
, 2016 ONSC 7350, 82 R.P.R. (5th)
47, at para. 69, affd 2017 ONCA 757;
T.W. Marsh Well Drilling &
Service Inc. v. Ashburn
, 2017 ONSC 2531 (Div. Ct.), at para. 14. Academic
treatises have done the same. For example, in the authoritative text,
The
Law of Limitations
, the authors treat claim as encompassing a cause of
action: Justice Graeme Mew, Debra Rolph & Daniel Zacks,
The Law of
Limitations
, 3rd ed. (Toronto: LexisNexis, 2016). At
§
3.2-3.3 they state:
Traditionally, a cause of action accrued and
hence, a limitation period started to run, when all of the elements of a wrong
existed, such that an action could be brought.
The commencement was expressed in terms of the
accrual of the cause of action, but has recently been modified in many cases to
instead reflect the time when a claim was first discovered by the person with
the claim,
i.e.
, when a plaintiff became aware of the cause of action
and
remedy available.
[39]
Additionally, in the discussion of
discoverability principles under s. 5 of the
Limitations Act
, at
§
3.107, the authors state: Another
issue that arises is whether section 5 applies to all causes of action, or just
to those governed by the basic limitation period.
[40]
I agree that the
Limitation Act
s
introduction of discovery of a claim as the triggering mechanism for the
commencement of the limitation period has not done away with any role for causes
of action. As I will explain, under s. 5(1)(a)(ii) of the
Limitations Act
,
one of the matters that is required for the discovery of a claim is: that
the injury, loss or damage was caused by or contributed to by
an act or
omission
(emphasis added). Because a claim necessarily involves seeking a
legal remedy in a court proceeding, the act or omission that must be discovered
is one that will give rise to a legal remedy,
i.e.
, a cause of action.
In the case of a fraudulent misrepresentation, the act or omission is a knowing
misrepresentation.
II.
The Significance of the Removal of Cause of Action
[41]
The Supreme Court of Canada introduced the general
applicability of discoverability for limitation purposes into the
interpretation and application of limitation statutes in its decisions in
Kamloops
(City) v. Nielsen,
[1984] 2 S.C.R. 2 and
Central & Eastern Trust
Co. v. Rafuse
, [1986] 2 S.C.R. 147. The common law discoverability rule
provided that a plaintiffs
cause of
action would be discovered for the purposes of a limitation period when
the material facts on which it is based
have been discovered or ought to have been discovered by the plaintiff by the
exercise of reasonable diligence:
Rafuse
, at p. 224.
The
rule was developed to avoid the injustice of precluding an action before a
person is able to raise it:
Peixeiro v. Haberman
, [1997] 3 S.C.R. 549,
at para. 36.
[2]
[42]
Ontarios new
Limitations Act
makes discoverability
a statutory requirement. It incorporates discoverability into the date for
commencement of the limitation period, but refers to the discoverability of a
claim rather than a cause of action, based on the recommendation of the
Limitations Act Consultation Group to the Attorney General contained in
Recommendations
for a New Limitations Act
(Toronto: Ministry of the Attorney General of
Ontario, 1991). The report explains the proposed change as follows, at p. 17:
The term claim is used throughout the
recommendations in place of cause of action primarily to mark the departure
from a limitations system where different causes of action are subject to
different starting points and periods of different duration. Otherwise, claim
is not substantially different from cause of action.
[43]
Accordingly, there is nothing in the
Consultation Groups report that demands treating claim for limitations
purposes as unconnected to a plaintiffs particular cause of action. Indeed, attempting
to do so would fit uncomfortably with basic civil procedure, as causes of
action have not become extinct for pleading purposes. A pleading may be struck
out if it discloses no reasonable cause of action: r. 21.01(1)(b).
[44]
It seems to me therefore, that the first issue
is what is the relationship between discovering a claim for the purposes of the
Limitations Act
, and having the factual information necessary to
assert a cause of action in an originating pleading? Does a person who seeks to
commence a timely proceeding for a claim to obtain a remedy based on a legal
right to seek that remedy,
i.e.
a cause of action, need to have
discovered facts to substantiate each element of the particular cause of action
in order to have discovered their claim to a remedy, within the meaning of the
Limitations
Act
? In my view, the answer is yes.
[45]
An examination of the language used in r. 25.06,
the rule that governs the contents of a pleading, is instructive. Instead of
using cause of action as in r. 21.01(1)(b), r. 25.06 uses claim, a term
not defined in the
Rules of Civil Procedure
, and defence. Rule
25.06(1) requires a pleading to contain the material facts on which the party
relies for the claim or defence. And, where conditions of mind such as fraud
and misrepresentation are alleged, r. 25.06(8) requires that full particulars
must be pleaded except that knowledge may be alleged as a fact.
[46]
Therefore, while the rule uses the term claim,
the contents of a proper initiating pleading asserting a claim for a remedy contemplated
by the rule will include the legal elements to support a claim,
i.e.
,
a cause of action.
[47]
Similarly, while the
Limitations Act
no
longer uses the term cause of action, for the reason explained by the Attorney
Generals Consultation Group, both the definition of claim and the components listed
in s. 5(1)(a) that have to be discovered before the limitation period commences
to run in respect of a claim, still require the discovery of the elements of a
cause of action that will give rise to a legal remedy.
[48]
I refer, in particular, to the definition of
claim, which is defined to mean a claim to remedy an injury, loss or damage resulting
from
an act or omission
, and the requirement in s. 5(1)(a)(ii) to
discover
the act or omission
as one of the discoverability elements. Because
only a wrongful act or omission gives the affected person the right to a remedy
in a court proceeding, discovery of the act or omission must include discovery
of the wrongful aspect of it that gives rise to the legal right to the particular
remedy being claimed. And under s. 5(1)(a)(iv), for the limitation period to
commence, a proceeding must be an appropriate means to seek a remedy. That will
only be the case when the claimant is able to plead a cause of action that
gives rise to a remedy.
[49]
The fact that the act or omission must be
wrongful is confirmed by the language of s. 18(1) that deals with contribution
and indemnity, where the defendant of a claim is referred to as an alleged
wrongdoer. That section provides:
For the purposes of subsection 5 (2) and
section 15, in the case of a claim by one alleged wrongdoer against another for
contribution and indemnity, the day on which the first alleged wrongdoer was
served with the claim in respect of which contribution and indemnity is sought
shall be deemed to be the day the act or omission on which that alleged
wrongdoers claim is based took place.
[50]
All of the above indicates that, although the
Limitations
Act
no longer uses the term cause of action, the purpose of removing
that language was to signal a departure from establishing different limitation
periods for different causes of action, but not to undermine the basic
structure of the civil procedure process, where a proceeding to obtain a remedy
at law must include all of the components of the cause of action that would
entitle the claimant to that remedy. The
Limitations Act
and the
Rules
of Civil Procedure
must work harmoniously together. It would have taken
clear and explicit language to indicate that the Legislature intended otherwise.
There is no such language in the
Limitations Act
, nor would there be
any purpose in doing so.
[51]
In my view, the focus of the analysis should not
be on the removal of the specific reference to a cause of action, but instead,
on the purpose of introducing the claim concept. That concept includes the
definition of claim as well as the four discoverability components. The
Legislature introduced the concept of a claim in the
Limitations Act
to
provide a universal framework for discoverability that transcends the
requirements for particular causes of action. The introduction of this concept,
however, did not make the particular causes of action pursued in a legal
proceeding irrelevant for the s. 5 discovery analysis.
[52]
To that end, in addition to an act or omission
that will give rise to a remedy, for limitations purposes, the
Limitations
Act
also requires that certain common factors must be discovered before
the limitation period will begin to run, even though all of those factors may
not be required to establish any particular cause of action and the right to a
remedy for that cause of action.
[53]
For example, the most significant common factor for
a claim is loss or damage. Consequently, for causes of action such as breach of
contract where loss or damage is not required, no claim arises for limitation purposes
and the limitation period does not commence until loss or damage is suffered
and the person discovers that they suffered loss or damage: see, for example,
Apotex
Inc.
, at paras. 84-86. That does not mean, however, that a plaintiff is
precluded from issuing a statement of claim for breach of contract before
suffering damage, because for pleading purposes, the cause of action does not
require damage.
[54]
The other new significant common factor for
discovery of a claim is in s. 5(1)(a)(iv), which states:
that, having regard to the nature of the
injury, loss or damage, a proceeding would be an appropriate means to seek to
remedy it.
[55]
This is another extra component for the
discovery of a claim that is not part of any cause of action.
[56]
Of course, it is always a question of fact at
what point a claimant had or ought to have had sufficient knowledge of each of
the factors to trigger the commencement of the limitation period. The claimant
need not know to a certainty that the defendant will be found liable that is
the issue to be determined by the trier of fact. As this court stated in
Lawless
v. Anderson,
2011 ONCA 102, 276 O.A.C. 75, at para. 23:
Determining whether a person
has discovered a claim is a fact-based analysis. The question to be posed is
whether the prospective plaintiff knows enough facts on which to base an
allegation of negligence against the defendant. If the plaintiff does, then the
claim has been discovered, and the limitation begins to run
: see
Soper v. Southcott
(1998), 39 O.R. (3d) 737 (C.A.)
and
McSween v. Louis
(2000), 132 O.A.C. 304 (C.A.).
[3]
[57]
In summary, the
Limitations
Act
uses the discovery of a claim as the triggering mechanism for the commencement
of the limitation period. Discovery of a claim includes components that may not
be requirements of any particular cause of action, such as injury, loss or
damage (s. 5(1)(a)(i)), and that having regard to the nature of the injury loss
or damage, a proceeding would be an appropriate means to remedy it (s.
5(1)(a)(iv)).
[58]
However, the second component, that the injury
loss or damage was caused by an act or omission (s. 5(1)(a)(ii)), read together
with the definition of claim, which is a claim to remedy the injury, loss or
damage that occurred as a result of the act or omission (s. 1), and with the
requirement that the claim must be pursued in a court proceeding (s. 2(1)),
incorporates the requirement for a legally recognized basis to make the claim,
known as a cause of action.
III.
Application of Principles
[59]
For fraudulent misrepresentation, the act or
omission that the claimant must discover is that the misstatement that caused
the damage was made with knowledge that the representation was false, an
absence of belief in its truth or recklessness as to its truth:
Midland
Resources Holding Limited
v. Shtaif,
2017 ONCA 320, 135 O.R. (3d)
481, at para. 162, leave to appeal refused, [2017] S.C.C.A. No. 246.
[4]
[60]
In this case, the amended pleading in 2019 added
a claim for fraudulent misrepresentation. Relying on the same 14 misstatements by
BP that formed the basis of the original negligent misrepresentation claim and
the statutory misrepresentation claim, the 2019 amendment claimed that documents
were released by BP with knowledge of the falsities contained therein or with
a reckless disregard to learning the accuracy of the representation. For the
first time the appellant claimed damages based on fraud.
[61]
The motion judge found that the claim for
fraudulent misrepresentation was statute-barred. He based his conclusion on the
following analysis:
[A]round June 1, 2010, presumptively and also
subjectively and objectively factually, Mr. Kaynes discovered he had a claim
against BP. He subjectively knew that [BPs] misconduct had caused him harm and
he knew that court proceedings would be appropriate. For the purpose of the
commencement of limitation periods, it was not necessary for Mr. Kaynes to put
a cause of action name to his claim. Whatever way the statement of claim was
later framed to name a cause of action, the claim to which the cause of action
was connected had been discovered in 2010 and the limitation period clock was
running.
In other words, having discovered a claim in
2010, Mr. Kaynes had two years to plead the misconduct connected to the claim
by pleading the material facts of negligence, negligent misrepresentation,
fraudulent, misrepresentation, an oppression remedy, nuisance, or whatever. For
the purpose of commencing a proceeding, however he might label his claim as a
cause of action in a statement of claim, the limitation period for the claim
was running by June 1, 2010. As it happened, albeit late, in November 2012, Mr.
Kaynes pleaded a cause of action for negligent misrepresentation in Ontario,
and he gave his claim a cause of action name, but regardless of its name in
accordance with the principles of the
Limitations Act, 2002
, the
negligent misrepresentation claim was already statute barred. A fraudulent
misrepresentation claim had it been pleaded in November 2012 in Ontario would
also have been statute barred.
[62]
From this passage, it appears that the motion
judges analysis is that by 2010 the appellant had discovered all of his
misrepresentation claims for the purposes of the
Limitations Act
, because
he knew then that BP had made false statements. He characterized fraudulent and
negligent misrepresentation claims as merely different labels that would apply
to the appellants claim based on the same material facts.
[63]
I would reject this analysis of the operation of
the
Limitations Act
in respect of a claim for fraudulent
misrepresentation as an error of law. In my view, the defendants knowledge
that the misrepresentation was false, or at a minimum, its recklessness as to
whether the misrepresentation was false, is a relevant material fact underlying
any claim for fraudulent misrepresentation. If the motion judges approach were
correct, it would mean in the case of a misrepresentation, that the claimant
would be required to commence an action alleging fraud within two years of the
misrepresentation, whether or not he knew or ought reasonably to have known of
the defendants fraudulent intent, in order to preserve the limitation period
for fraudulent misrepresentation. Of course, as well as being non-compliant
with the pleadings rule, such a requirement would fly in the face of the well-established
common law principle that a party must only plead fraud when they can
substantiate the claim, or risk an award of substantial indemnity costs:
Unisys
Canada Inc.
v. York Three Associates Inc.
(2001), 150 O.A.C. 49
(C.A.), at para. 15;
Catford v. Catford
, 2013 ONCA 58, at para. 4.
IV.
Conclusion: Issue 1
[64]
In summary, under s. 5(1)(a)(ii) of the
Limitations
Act
, one of the matters that is required for the discovery of a claim
is: that the injury, loss or damage was caused by or contributed to by
an
act or omission
(emphasis added). Because a claim necessarily involves a
legal remedy, the act or omission that must be discovered is one that will give
rise to a legal remedy,
i.e.
, a cause of action.
[65]
Therefore, in the case of a fraudulent
misrepresentation, the act or omission is a knowing misrepresentation. It would
make no sense to require a person to commence an action for fraudulent
misrepresentation without the legal basis for doing so, in order to preserve
the limitation period. That is neither the intent nor the effect of the
Limitations
Act
. The motion judge erred by concluding otherwise.
Issue 2: Did the motion judge err by finding that because of
allegations of
scienter
in the U.S. actions it was plain and obvious that the appellant
knew or ought reasonably to have known that he had a claim in fraudulent
misrepresentation more than two years before the 2019 amendment?
[66]
The motion judge found, effectively in the
alternative, that in any event, the appellant had discovered that BP knew its misstatements
were false by 2010. The motion judge reasoned that because of related
litigation in the U.S., where an action for misstatements in the securities
disclosure context requires a pleading of
scienter
,
i.e.,
knowing falsehood, that based on the pleading of
scienter
, the
appellant ought to have known that BP knew its misrepresentations were false.
[67]
I agree with the appellant that this factual finding
was not available to the motion judge on this r. 21.01(1)(a) motion. In the
face of the
scienter
pleading, which was a requirement of the action
in the U.S. actions, BP continued to deny knowledge until July 2015. The
scienter
pleading on its face was not determinative of the knowledge issue. A
factual inquiry was required. It was not open to the motion judge to make that
factual finding in the context of this motion, because there would be an issue whether
a reasonable person in the appellants position ought to have known about BPs
fraud more than two years before he pleaded fraud, based on the U.S. pleading
or other available information that the US plaintiffs may have had when they
pleaded
scienter
.
Issue 3: Was the fraudulent misrepresentation claim in the 2019
amended statement of claim merely a claim for a new remedy based on facts already
pleaded in the 2017 amended statement of claim and therefore not out of time?
[68]
The appellant only expressly sought a remedy for
fraudulent misrepresentation in his 2019 amended statement of claim.
Nevertheless, he submits that the fraud claim is timely because his 2019
pleading of fraud is not a new claim but an alternative theory of liability
based on facts pleaded in prior statements of claim, particularly in the 2017
amendment, filed June 7, 2017.
[69]
In the 2017 amendment (which asserted only a
claim for statutory misrepresentation), the appellant added some factual
allegations, including that BP made the misrepresentations knowing they were
false. He says that these additional allegations were timely in 2017 because they
were pleaded within two years of his discovery of BPs fraud on July 2, 2015,
the date BP settled a number of actions in the U.S. and abandoned an appeal
from a decision which found that BP had acted with conscious disregard of
known risks and was guilty of gross negligence and willful misconduct.
[70]
Even though the appellant did not add a claim of
fraud or seek a remedy for fraudulent misrepresentation in the 2017 amended
pleading, he submits that because he had already pleaded the element of
knowledge of the fraud in the 2017 amendment in a timely fashion, the claim
based on fraud in the 2019 amendment is not a new claim within the meaning of
the
Limitations Act
, and it is not out of time.
[71]
I would not give effect to this argument. The
2017 amended pleading states at para. 3 that the action seeks damages pursuant
to ss. 138.3(1)(a) and 138.3(2)(a) of Ontarios
Securities Act.
While
the 2017 amended statement of claim pleaded in various paragraphs that BP
knew or was aware of certain facts, the pleading of knowledge was entirely
in the context of the statutory claims that were asserted in that pleading. Moreover,
the 2017 amended claim does not plead all of the necessary material facts for a
common law fraudulent misrepresentation claim, including reliance.
[72]
The 2019 pleading claiming fraudulent
misrepresentation is not simply an alternative theory of liability based on the
same facts, or a claim for different relief based on the same factual matrix as
what is pleaded in the 2017 amended claim. It is not a different or new legal
characterization of the same wrong as the claim for statutory
misrepresentation. This is underscored by his amendment to para. 3 which, after
referring to the statutory claims asserted in the action states that the appellant
also advances a claim for common law fraud. Rather, it asserts a fundamentally
different claim: see
1100997 Ontario Ltd. v. North Elgin Centre Inc.
,
2016 ONCA 848, 409 D.L.R. (4th) 382, at paras. 20-21, 36.
[73]
I would therefore reject this ground of appeal.
Issue 4: Did the motion judge err by proceeding on a motion under r.
21.01(1)(a) of the
Rules of Civil Procedure
to determine whether a claim was statute-barred?
[74]
There are a number of decisions of this court, decided
since the enactment of the
Limitations Act
, that suggest that discoverability
issues should rarely, if ever, be decided on a motion under r. 21.01(1)(a)
unless pleadings are closed and the facts are undisputed: see:
Beardsley
,
at para. 21;
Tran v. University of Western Ontario,
2016 ONCA 978, 410
D.L.R. (4th) 527, at paras. 18-21;
Salewski v. Lalonde
, 2017 ONCA 515,
137 O.R. (3d) 762, at paras. 42-45;
Clark v. Ontario (Attorney General)
,
2019 ONCA 311, 56 C.C.L.T. (4th) 1, at paras. 42, 46-48, leave to appeal to
S.C.C. granted and appeal heard (on other issues) and reserved October 15, 2020,
38687.
[75]
In this proposed class action proceeding, BP has
not yet delivered a statement of defence because it is not required to do so
until the appellant has obtained leave to assert his statutory claim under Part
XXIII.1 of Ontarios
Securities Act
: see:
Vaeth v. North American
Palladium Ltd.
, 2016 ONSC 5015, at paras. 13-15. Therefore, pleadings are
not closed.
[76]
While r. 21.01(1)(a) refers to the determination
of a question of law, where the facts regarding discovery of the claim are
undisputed so that the determination of the issue is plain and obvious, then whether
the action is statute-barred is considered a question of law that can be
determined on a r. 21.01(1)(a) motion.
[77]
A recent example of this is an earlier appeal decision
in this action,
Kaynes v. BP,
P.L.C.,
2018 ONCA 337, 81
B.L.R. (5th) 6, where the court found that it was plain and obvious that some
of the statutory claims, where the limitation period runs from the date the misrepresentation
was made, were
statute-barred. One
of the arguments on that appeal was the same one made here, that the issue
should not be decided on a r. 21 motion before a defence is filed and the facts
are ascertained. In rejecting that submission, the court stated at para. 13:
The appellant submits that
this case was not appropriate for determination as a Rule 21 motion. We
disagree. In a case such as this where the parties agree that there are no
material facts in dispute, it is an efficient use of court resources to
determine limitations defences on a Rule 21 motion.
[78]
Two other recent cases have discussed and
applied the no facts in issue exception to the rule.
In
Davidoff v. Sobeys Ontario
,
2019 ONCA 684,
leave to appeal to S.C.C. refused, 38953 (April 9, 2020), the plaintiff issued
a statement of claim on November 1, 2017, seeking to sue Sobeys Ontario for
wrongful dismissal. Both parties agreed that the claim was discoverable by the
date of the plaintiffs termination of employment October 6, 2015 which
made the claim presumptively statute-barred. The plaintiff argued, however,
that a letter he had mailed to Sobeys and its legal counsel on September 29,
2017 was a notice of action, and therefore the action was timely.
[79]
After concluding that the letter did not constitute a notice of action,
the court found that the limitation issue could be determined under r. 21.01(1)(a),
since both parties agreed on the date that the claim became discoverable. Because
the date of discovery was not in issue, the court applied the above-quoted
reasoning from
Kaynes v. BP, P.L.C.
(2018).
[80]
The other recent decision is
Brozmanova v.
Tarshis
, 2018 ONCA 523, 81 C.C.L.I. (5th) 1, where the plaintiffs
claim pleaded the date when she learned about the fraudulent conduct of the
defendant that was the subject of the claim. In that case, a statement of
defence had been filed that challenged factual assertions in the statement of
claim. The court suggested that a motion for summary judgment under r. 20 might
have been the preferable procedure to use because the parties had joined issue
on disputed facts. However, because the date of discovery of the claim was not one
of the disputed facts, it was not improper for the defendant to have moved
under r. 21.01(1)(a) to strike the claim as statute-barred.
[81]
In establishing the main rule that a claim should not normally be
struck out as statute-barred using r. 21.01(1)(a), the courts have noted that
discoverability issues are factual and that the rule is intended for legal
issues only where the facts are undisputed. It would therefore be unfair to a
plaintiff where the facts are not admitted, to use this rule, which does not
allow evidence to be filed except with leave or on consent. But where a
plaintiffs pleadings establish when the plaintiff discovered the claim, so
that that issue is undisputed, then the courts have allowed r. 21.01(1)(a) to
be used as an efficient method of striking out claims that have no chance of
success, in accordance with the principle approved in
Knight
v. Imperial Tobacco Canada Ltd.
, 2011 SCC 42, [2011] 3 S.C.R. 45,
at para. 19.
[82]
Applying these principles to this case, the appellant pleaded in
the 2019 draft reply document that it filed on the motion, a number of
alternative dates which it says revealed that BPs misconduct was fraudulent.
The latest event date that the draft reply identifies is July 2, 2015, when BP
settled a number of actions in the U.S. and abandoned an appeal of a decision that
found that it had acted with conscious disregard of known risks. The
appellant pleaded that up until that date, BP had fraudulently concealed that
its misstatements were made knowingly between 2008 and 2010. By pleading this
fact, the appellant has conceded the latest date when it discovered or
reasonably could have discovered BPs fraudulent conduct was July 2, 2015, more
than two years before the 2019 amended statement of claim.
[83]
Finally, the appellants alternative pleading in
his 2019 draft reply, that BP fraudulently concealed the fraudulent nature of
the misrepresentation alleged until less than two years prior to the new
amendments in September of 2019 does not alter this result. Nothing further is
pleaded to support this conclusory statement. In
Das v. George Weston
Limited
, 2018 ONCA 1053, 43 E.T.R. (4th), leave to appeal refused, [2019]
S.C.C.A. No. 69, this court explained, at para. 74, that
while the material facts that are pleaded
in the statement of claim are assumed to be true for purposes of a motion to
strike, bald conclusory statements of fact and allegations of legal conclusions
unsupported by material facts are not. The motion judge was not bound to
accept the appellants position that this fraud claim was only discovered in
the preceding two years, since that position was pleaded without the support of
any material facts.
[84]
Accordingly, as the July 2015 date is not in dispute, it is plain
and obvious that the appellants claim for fraudulent misrepresentation in the 2019
amended statement of claim is out of time and statute-barred. On that basis, I
agree with the conclusion of the motion judge that the issue can be determined
on a r. 21.01(1)(a) motion, and that the 2019 amended claim must be struck on
that basis.
Result
[85]
For these reasons, I would dismiss the appeal
with costs to BP fixed at $20,000, as agreed to by the parties.
Released: January 20, 2021 (K.F.)
K.
Feldman J.A.
I
agree. K. van Rensburg J.A.
I agree. Thorburn J.A.
[1]
In the
U.S., investors rely on SEC Rule 10b-5, 17 C.F.R. s.240.10b-5, under s.10(b) of
the
Securities Exchange Act of 1934
,
to bring actions for misrepresentation in continuous disclosure. A plaintiff in
a U.S. court must plead and prove
scienter
,
namely an intent to deceive, manipulate or defraud:
Ernst & Ernst v. Hochfelder
, 425 U.S.
185 (U.S. Sup. Ct. 1976). See:
Yip v. HSBC
Holdings plc
, 2017 ONSC 5332, at para. 69.
[2]
Most
recently, the Supreme Court of Canada discussed how the discoverability rule
applies to extend the limitation period for causes of action granted by s.
36(1)(a) of the
Competition Act
, R.S.C., 1985, c. C-34, in
Pioneer
Corp. v. Godfrey
, 2019 SCC 42, 437 D.L.R. (4th) 383.
[3]
The
Supreme Court of Canada has granted leave to appeal from the decision of the
Court of Appeal of New Brunswick in
Province of New Brunswick v. Grant Thornton
,
2020
NBCA 18, 54 C.P.C. (8th) 271, leave to appeal granted, 39182 (August 13, 2020)
on the issue of the extent of a plaintiffs knowledge or discovery of the facts
of negligent misstatement that will be sufficient to trigger the commencement
of the limitation period.
[4]
Section 5(2) incorporates a presumption that the claimant knew all the
discoverability components of a claim in s. 5(1)(a) on the day the act or
omission took place, unless the contrary is proved, while s. 5(1)(b)
incorporates into the discoverability analysis, when a reasonable person with
the abilities and in the circumstances of the claimant ought to have known all
of the s. 5(1)(a) discoverability components of a claim. For fraudulent
misrepresentation, that would include the knowledge of falsity component.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Kenaidan Contracting Ltd. v.
Lancaster Group Inc., 2021 ONCA 125
DATE: 20210224
DOCKET: C67371
MacPherson, Gillese and
Nordheimer JJ.A.
BETWEEN
Kenaidan Contracting Ltd.
Plaintiff (Appellant)
and
Lancaster Group Inc., Greg
Crawford, and Blair Hubber
Defendants (Respondents)
Robert B. Cohen, for the appellant
No one appearing for the respondents
Heard: February 24, 2021 by video conference
On appeal from the order of Justice Leiper
of the Superior Court of Justice, dated July 25, 2019.
APPEAL BOOK ENDORSEMENT
[1]
On consent, the appeal is dismissed without
costs.
|
WARNING
This is a case under the
Child, Youth and
Family Services Act, 2017
and subject to subsections 87(8) and 87(9) of this legislation.
These subsections and
subsection 142(3) of
the
Child, Youth and Services Act, 2017
, which
deals with the consequences of failure to comply,
read as follows:
87
(8)
Prohibition re identifying child
No person shall publish or make public information that has the
effect of identifying a child who is a witness at or a participant in a hearing
or the subject of a proceeding, or the childs parent or foster parent or a
member of the childs family.
(9)
Prohibition
re identifying person charged
The court may make an order prohibiting the publication of
information that has the effect of identifying a person charged with an offence
under this Part.
142
(3)
Offences re publication
A person who contravenes subsection 87(8) or
134(11) (publication of identifying information) or an order prohibiting
publication made under clause 87(7)(c) or subsection 87(9), and a director,
officer or employee of a corporation who authorizes, permits or concurs in such
a contravention by the corporation, is guilty of an offence and on conviction
is liable to a fine of not more than $10,000 or to imprisonment for a term of
not more than three years, or to both
.
COURT OF APPEAL FOR ONTARIO
CITATION: Kenora-Rainy River Districts Child
and Family Services v. K.R., 2021 ONCA 123
DATE: 20210224
DOCKET: C68485
Fairburn A.C.J.O., MacPherson
and Gillese JJ.A.
BETWEEN
Kenora-Rainy
River Districts Child and Family Services
Applicant (Respondent)
and
K.R. and P.N.R.
Respondents (Appellants)
K.R., acting in person
P.N.R., acting in person
David J. Elliott, for the respondent
Heard and released orally: February 23, 2021 by
video conference
On
appeal from the order of Justice John S. Fregeau of the Superior Court of
Justice, dated June 15, 2020.
REASONS FOR DECISION
[1]
The appellants are the parents of two children.
In 2018, a justice of the Ontario Court of Justice (Family Court) found that
the children were in need of protection pursuant to the
Child and Family
Services Act
, R.S.O. 1990, c. C.11.
[2]
The appellants appealed from this decision to
the Superior Court of Justice. During the course of the appeal process, the
appellants brought several motions, one of which was a motion for further
disclosure. In a decision dated 15 June 2020, Fregeau J. granted the relief
sought in part and denied other disclosure requests as being irrelevant.
[3]
As a preliminary issue, the respondent contends
that the appellants have brought their appeal in the wrong court; they should
be in the Divisional Court.
[4]
Section 6(1)(b) of the
Courts of Justice Act
,
R.S.O. 1990, c. C.43, requires that a final order of a judge of the Superior
Court of Justice be appealed to the Court of Appeal. Section 19(1)(b) requires
that an interlocutory order of a judge of the Superior Court of Justice be
appealed to the Divisional Court with leave. If the order is interlocutory, s.
38(3) of the
Family Law Rules
, O. Reg. 114/99, requires the appeal and
the leave motion to be heard at the same time.
[5]
We agree with the respondent. Justice Fregeaus
decision relating to disclosure is interlocutory: see
Higgins v. Higgins
,
2007 ONCA 663, at para. 19.
[6]
The appeal is quashed for lack of jurisdiction.
Fairburn
A.C.J.O.
J.C.
MacPherson J.A.
E.E.
Gillese J.A.
|
COUR DAPPEL DE LONTARIO
RÉFÉRENCE : Khader c. Mamache, 2021 ONCA 51
DATE : 20210125
DOSSIER : M52105 (C68765)
La juge Roberts (la juge saisie
de la motion)
ENTRE
Mohamed Khader
Requérant
(Appelant/Auteur de la motion)
et
Hassna Mamache
Intimée
(Intimée/Partie intimée)
Mohamed Khader, en personne
Kibondo M. Kilongozi, pour lintimée
Date de laudience : le 22 janvier 2021 par visioconférence
INSCRIPTION
[1]
Lappelant cherche à proroger le délai pour mettre
son appel en état. Lappelant interjette appel de lordonnance du juge Shelston
du 29 septembre 2020, rejetant sa motion de varier lordonnance finale du 23 octobre
2017, et de lordonnance du juge Shelston du 3 novembre 2020 concernant les
dépens de la motion rejetée.
[2]
Les parties ont consenti à lordonnance finale
du 23 octobre 2017 qui prévoit la garde partagée de leurs jeunes enfants. Lappelant
a introduit une motion devant le juge Shelston pour varier cette ordonnance
afin quil soit accordé provisoirement la garde exclusive de leurs enfants. En outre,
les parties ont demandé au juge de déterminer si leurs enfants devraient assister
virtuellement ou physiquement à lécole pendant la pandémie de la COVID-19. Sans
un procès, le juge Shelston na pas pu déterminer les questions de crédibilité
soulevées par les parties. Il a conclu quun procès était nécessaire pour les
résoudre. Toutefois, il a décidé que les enfants peuvent assister physiquement
à lécole. En tout, il a rejeté la motion de lappelant avec des dépens de 7,000
$ accordés à lintimée.
[3]
Dans une motion pour proroger le délai, les critères
à examiner sont bien établis, à savoir : lintention de lappelant de poursuivre
lappel ; la durée du délai et lexplication pour ce délai ; le préjudice causé
par le délai, y compris le préjudice aux enfants ; et le fondement de lappel. Bien
quil soit nécessaire détudier tous ces critères, limpossibilité que lappelant
ait gain de cause peut être déterminative. La question prédominante est de
considérer sil est juste que le délai soit prorogé. Voir notamment
Codina v. Canadian Broadcasting Corporation
, 2020 ONCA 116, aux paras. 2, 7 ;
Issasi
v. Rosenzweig
, 2011 ONCA 112, 277 O.A.C. 391, au
para. 4 ;
Enbridge Gas Distribution Inc. v. Froese
, 2013 ONCA 131, 114 O.R. (3e) 636, aux paras. 15-16.
[4]
Jaccepte que lappelant veuille poursuivre son
appel et quil prenne quelques efforts pour le faire. Néanmoins, je ne suis pas
persuadée quil est juste que le délai soit prorogé parce que le délai cause préjudice
aux enfants et lappel est sans fondement.
[5]
Bien que le délai en question ne soit pas démesuré,
tout délai a un impact sur lintérêt des jeunes enfants des parties puisque ces
enfants ont besoin dune vie stable en matière de garde et daccès, ce qui leur
permet de fonder une bonne relation avec les deux parents : voir
D.G. v.
A.F.
, 2014 ONCA 436, aux paras. 33-34. Le processus prévu par le juge Shelston
pour régler ou déterminer par un procès la question de la garde présentée par lappelant
est retardé. La résolution définitive des litiges est extrêmement importante en
matière de garde des enfants et renforce lobligation de retenue envers la décision
intrinsèquement discrétionnaire de première instance :
Van de Perre c. Edwards
, 2001 CSC 60,
[2001] 2 R.C.S. 1014,
au para. 13.
[6]
Deuxièmement, les ordonnances du juge Shelston sont
interlocutoires et, par conséquent, sont du ressort de la Cour divisionnaire
avec lautorisation prévue dans les règles de pratique : voir lart.
19(1)(b) de la
Loi sur les tribunaux judiciaires
,
L.R.O. 1990, c. C.43. Par conséquent, lappelant ne peut pas avoir gain de
cause parce que la Cour dappel ne peut pas entendre son appel. La règle
applicable pour lautorisation dinterjeter appel devant la Cour divisionnaire dune
ordonnance interlocutoire en vertu dune motion est la r. 62.02 des
Règles de procédure civile
, R.R.O.
1990, Règl. 194. Cette motion est entendue sur pièces et lautorisation est obtenue
auprès dune formation de juges de la Cour divisionnaire. Selon la r. 62.02(3)
des
Règles de procédure civile
, lavis de motion en autorisation doit être signifié dans les 15
jours qui suivent la date à laquelle a été rendue lordonnance. Toutefois, la
r. 3.02 des
Règles de procédure civile
prévoit quun juge du tribunal dappel
peut proroger ce délai en vertu dune motion.
[7]
Lintimée ne consent pas au transfert de lappel
et objecte que lappelant sera autorisé à poursuivre son appel devant la Cour
divisionnaire. Puisque lappel exige lautorisation de la Cour divisionnaire, je
ne suis pas en mesure de transférer ou autoriser lappel, selon lart. 110 de
Loi sur les tribunaux judiciaires
. De
plus, puisque seule la Cour divisionnaire a compétence dentendre lappel avec
lautorisation prévue par les règles de pratique, je ne suis pas en mesure de proroger
le délai pour signifier lavis de motion en autorisation. Ces questions sont à déterminer
par la Cour divisionnaire, si lappelant décide de poursuivre un appel en entreprenant
les étapes nécessaires selon les règles de pratique.
[8]
Pour ces motifs, la motion est rejetée.
[9]
Il ny aura pas dordonnance concernant les dépens
de cette motion.
L.B.
Roberts j.a.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Knapp v. Knapp, 2021 ONCA 305
DATE: 20210510
DOCKET: C67153
Benotto, Miller and Trotter
JJ.A.
BETWEEN
David Jonathan Knapp
Applicant (Respondent)
and
Keturah Lael Knapp
Respondent (Appellant)
Michael Stangarone, for the appellant
Todd Hein and John C. Noonan, for the
respondent
Heard: April 19, 2021 by video conference
On appeal from the order of Justice Erika
Chozik of the Superior Court of Justice, dated June 18, 2019, with reasons at
2019 ONSC 7353, and from the costs order dated February 19, 2020, with reasons at
2020 ONSC 1094.
Benotto J.A.:
[1]
The parties are former spouses. They were
involved in a high-conflict parenting dispute. After two years and multiple
court attendances, the matter culminated in an 18-day trial. The trial judge
concluded that joint custody was in the best interests of the children and
apportioned the decision-making authority in an attempt to avoid ongoing
conflict between the parents.
[2]
The mother appeals alleging errors by the trial
judge.
[3]
For the reasons that follow, I would dismiss the
appeal.
FACTS
[4]
The appellant Keturah Knapp and the respondent
David Knapp were married for over 13 years before separating in 2017. They have
two children, now aged 11 and 8. While living together, they had roughly equal
parenting time with the children.
[5]
The parties are deeply religious. In 2016, the
appellants sister was going through a divorce and the respondent sent her a
letter saying he believed she would suffer grave consequences from Jesus if she
moved forward with her divorce. It was around this time that the appellant and
respondents own marital problems escalated.
[6]
In early 2017, the parties decided to discuss
their marital issues before two witnesses from their church. They had two
meetings. The appellant asked the respondent to email her the biblical passages
he was reading so she could better understand his position. After the meetings,
he sent her the passages in an email with the subject line Warning keturah.
The email included bible passages and comments suggesting wives should always
submit to their husbands and that it was a sin for a wife to refuse to have
intercourse with her husband.
[7]
Around two weeks later, without warning, the
appellant took the children to a womens shelter. She refused to allow the
respondent to see the children unsupervised. The appellant testified that she
was afraid the respondent would hurt her or her children to do Gods bidding.
[8]
The Office of the Childrens Lawyer (OCL), Childrens
Aid Society (CAS), and the Crisis, Outreach and Support Team (COAST) were
called in. They all investigated the respondent.
[9]
CAS and COAST found the respondent was no risk
to himself or his children. The OCL recommended the respondent undergo a
psychological evaluation. He complied and the evaluation found no indications
of abuse and supported a finding that the respondent was a well-functioning,
adaptive individual with no major personality disturbances. Nevertheless, the
OCL recommended the appellant have sole custody of the children.
DECISION BELOW
[10]
The main issue at trial was the parenting plan
for the children. The trial judge was required to determine where the children
would live, how much time they would spend with each parent and who would have
decision-making authority. The trial judge concluded that the best interests of
the children required a joint custody arrangement with parallel decision-making
authority, and equal parenting time.
[11]
The trial judge rejected most of the appellants
evidence, particularly her evidence respecting the allegations against the
respondent. She found no evidence the respondent was, or was at risk of
becoming, neglectful or abusive. His letter to the appellants sister and his
email titled Warning keturah, when read in context, were not meant to be
threatening.
[12]
The trial judge also rejected the bulk of the
assumptions and conclusions underpinning the OCLs report. The OCL investigator
himself had observed no issues with the respondents parenting and failed to
consider the best interests of the children in making his recommendation.
[13]
The trial judge noted that neither the CAS nor
COAST had any concerns with the respondents parenting abilities.
[14]
At the conclusion of trial, the trial judge
allocated decision-making between the parents: the appellant would have
authority over education decisions and the respondent would have authority over
medical decisions. This was in part because the appellant is fearful of traditional
medicine and had a history of misrepresenting medical recommendations to the
respondent.
[15]
Finally, the trial judge ordered the appellant
to pay the respondent $250,000 in costs.
ISSUES
[16]
The appellant alleges that the trial judge
erred: (i) by relying on hearsay when she analyzed the OCL recommendations;
(ii) by failing to consider the childrens wishes; (iii) by presuming that the
maximum contact principle amounted to equal parenting time; (iv) by making an
order that conflicts with final orders that were previously made on consent;
and (v) by awarding costs to the respondent.
ANALYSIS
[17]
It is always preferable and in the best
interests of the children that the parenting plans be developed by the
parents. That is why there is an emphasis on resolution in family law
legislation and practice. When the parents cannot agree, the court must
formulate a plan for them. This frequently results in at least one parent being
dissatisfied. So too here.
[18]
I begin with two themes that permeate the
appellants submissions and then turn to the specific allegations set out
above.
[19]
The two themes are that the trial judge rejected
the recommendation in the OCL report and also changed the status quo.
[20]
A trial judge is not required to accept the OCL
recommendations. They are just that: recommendations. Here, the trial judge
made extensive factual findings rejecting the foundation of the OCL recommendations.
She then proceeded to make her own assessment as to the best interests of the
children.
[21]
A trial judge is not bound by the perceived
status quo. Here, the trial judge rejected the appellants evidence that she
was the primary caregiver. Instead, she found that prior to the separation the
parents shared parenting equally. The only change to the status quo occurred
when the appellant unilaterally and wrongly removed the children from their
home and kept them in a womens shelter, denying the respondent parenting time.
[22]
Against this background, I turn to the specific
errors of law alleged.
(1)
Hearsay
[23]
The appellant submits that the multiple reports
including from COAST and the medical records filed were presumptively
inadmissible hearsay and the trial judge erred in relying upon then absent
authentication.
[24]
The trial judge did not err by referring to
them.
[25]
Many of the medical reports were filed into
evidence by the appellant. The COAST report was discussed in the OCL report.
Many were put to both parties in cross-examination. Neither party denied the
accuracy nor sought to call the declarants as witnesses. The appellant cannot
now allege that the trial judge erred by relying on documents she submitted.
(2)
Views of the children
[26]
There is no question that the views and
preferences of children must be considered in all matters affecting them.
However, they must be viewed in context.
[27]
The children had been taken from their home,
kept away from their father while their mother professed fear of their father.
He was then only able to see them in a supervised setting with gradual
increases. It would be naïve to think that these circumstances would not
negatively influence the childrens views.
[28]
The trial judge rejected the appellants
testimony that she feared for her safety or the safety of her children and
found that her flight to the shelter and subsequent conduct was aimed at
gaining a tactical advantage in this litigation. In doing so she correctly
gave the childrens preferences little weight.
[29]
In any event the parties had agreed that the
views of the children would be put in evidence through the OCL. The then 9-year
old was somewhat ambivalent about where to live. The then 6-year old wanted
more time with the appellant. The OCL report was not based on the wishes of the
children, but on the clinicians own views. The trial judge rejected the
foundation of the clinicians views and made her own determination as to best
interest.
(3)
Maximum contact
[30]
The appellant submits that the trial judge erred
by placing an onus on her to establish that equal parenting was not in the
childrens best interests. She relies on the trial judges reference to
Folahan
v.
Folahan
,
2013 ONSC
2966, [2013] W.D.F.L. 4357, where the trial judge said that the onus is on a
parent to rebut the presumption of equal time. As this court said in
Rigillo
v.
Rigillo
, 2019 ONCA 647, 31 R.F.L. (8th) 361, at para.
13, the maximum contact principle does not necessarily require equal parenting
time.
[31]
The
Divorce Act,
R.S.C. 1985, c. 3 (2nd
Supp.) in force at the time of the trial addressed the maximum
contact principle:
16(10)
In making an order under this section, the court shall give effect
to the principle that a child of the marriage should have as much contact with
each spouse as is consistent with the best interests of the child and, for that
purpose, shall take into consideration the willingness of the person for whom
custody is sought to facilitate such contact.
[32]
The current provision of
Divorce Act
, is
more direct:
16(6)
In allocating parenting time, the court shall give effect to the
principle that a child should have as much time with each spouse as is consistent
with the best interests of the child.
[33]
The
Childrens Law Reform Act
, R.S.O. 1990, c. C.12,
provided:
20 (1
) Except as otherwise provided in this Part, a childs parents are
equally entitled to custody of the child.
[34]
The trial judge applied these principles and did
not mistake maximum parenting time with equal time. Nor did she place an onus
on the appellant to rebut equal parenting time. Her reasons, read as a whole,
demonstrate that she was alive to the principle that a child-focused approach
to achieving as much parenting time as possible with each parent is the
objective of the maximum contact principle. It may end up being equal time. It
may not. Each family is different, and the principle is a guide set out to
benefit children.
(4)
Jurisdiction challenge
[35]
The appellant argues that the trial judge lacked
jurisdiction to make her order because it amounted to a change of the order of
Coats J. made on March 20, 2019 which provided that: (i) the appellant is to
take the children to counselling to assist them in processing and coping with
their feelings relating to the difficult transitions; and (ii) neither parent
would have care of the children for three weekends in a row.
[36]
The appellant says that in light of this order
the trial judge did not have jurisdiction to order that the respondent make
all major decisions with respect to all medical, dental, optometrist and
vaccination issues. Nor, she says did the trial judge have the jurisdiction to
order a summer schedule of three weeks uninterrupted for each parent. She
submits that the order is marked final and could only be changed pursuant to
a motion to change under r. 15 of the
Family Law Rules
, O. Reg. 114/99.
[37]
With respect, this submission borders on the
frivolous.
[38]
Rule 15 of the
Family Law Rules
does
not confer jurisdiction. It provides a process by which a party who wishes to
change a final order can make that request to the court. It is simply wrong to
suggest that it in any way limits a trial judge in the exercise of her
discretion.
[39]
The trial judge had jurisdiction to determine
the best interests of the children in all parenting matters. After an 18-day
trial dealing almost exclusively with parenting, the trial judge made findings
of fact and determined the best interests of the children would be served by a
joint custody arrangement with specified decision-making authority and
specified time-sharing. She was in no way bound by an earlier order and a
motion to change was not necessary.
[40]
In any event, the order of Coats J. is no longer
relevant. The counselling it referred to was in connection with the transition
and conflict that the children had experienced. The children are no longer in
transition. They have been in the regime set out by the trial judge for two
years.
[41]
I am also not convinced that the order is final.
Despite the word final on the order, all matters of parenting remained
outstanding and subject to trial this is the hallmark of an interlocutory
order.
(5)
Costs
[42]
Costs were awarded to the respondent by the
trial judge. She found that there were many examples of the appellant acting
unreasonably and with excessive caution, both before and during the trial. The
respondent also made two offers to receive somewhat less than 50/50 access,
both of which the appellant refused. Considering the appellants conduct and
that the respondent was more successful at trial than in either of his offers
to settle, the respondent was entitled to substantial indemnity costs.
[43]
The appellant seeks leave to appeal the trial
judges costs order. She submits that it is inappropriate to order costs in
parenting cases when the parties have acted in good faith.
[44]
While the trial judge did not find bad faith,
she did articulate multiple examples of the appellants unreasonable conduct
which unnecessarily drew out and complicated the proceedings and increased the
litigious nature of the proceedings. In arriving at her conclusion, she applied
the guidance of r. 24.
[45]
Except to comment that the words substantial
indemnity and full indemnity do not apply to r. 24, I see no basis to
interfere with her discretion in awarding costs to the respondent or with
respect to her overall assessment of the quantum.
(6)
Fresh Evidence
[46]
The mother appealed the trial decision which was
dated June 19, 2019. After multiple delays, she perfected the appeal which was
heard nearly two years later on April 19, 2021.
[47]
One week before the appeal was heard, the
appellant filed a motion to submit fresh evidence on the appeal.
[48]
Where children are involved, there is generally
more flexibility with respect to the admission of fresh evidence. However, the
evidence submitted here does not assist a determination of the issues. It is in
the form of an affidavit sworn by the appellant which argues why the trial
judgment is wrong. In effect, it reflects a continuation of the conduct that
led the trial judge to make a finding of unreasonableness.
[49]
I would not admit the fresh evidence.
CONCLUSION
[50]
I would dismiss the appeal with costs to the
respondent in the agreed upon amount of $18,000, all inclusive.
Released: May 10, 2021 M.L.B.
M.L. Benotto J.A.
I agree B.W. Miller J.A.
I agree Gary Trotter J.A.
|
WARNING
This is a case under the
Child, Youth and Family
Services Act, 2017
and subject to subsections 87(8) and 87(9) of this
legislation.
These subsections and subsection 142(3) of
the
Child, Youth and Services Act, 2017
, which
deals with the
consequences of failure to comply, read as follows:
87
(8)
Prohibition
re identifying child
No person shall publish or make public
information that has the effect of identifying a child who is a witness at or a
participant in a hearing or the subject of a proceeding, or the childs parent
or foster parent or a member of the childs family.
(9)
Prohibition re identifying person charged
The court may make an order prohibiting the publication of information
that has the effect of identifying a person charged with an offence under this
Part.
142
(3)
Offences
re publication
A person who contravenes subsection 87(8) or 134(11)
(publication of identifying information) or an order prohibiting publication
made under clause 87(7)(
c
) or subsection 87(9), and a director, officer
or employee of a corporation who authorizes, permits or concurs in such a
contravention by the corporation, is guilty of an offence and on conviction is
liable to a fine of not more than $10,000 or to imprisonment for a term of not
more than three years, or to both.
COURT OF APPEAL FOR ONTARIO
CITATION: L.R. v. Childrens Aid Society of
Toronto, 2021 ONCA 84
DATE: 20210208
DOCKET:
M52038
(C68584)
Rouleau,
Benotto and Thorburn JJ.A.
BETWEEN
L.R.
Respondent Mother
(Appellant/Responding Party)
and
Childrens
Aid Society of Toronto
Applicant
(Respondent /Moving Party)
and
T.H.
Respondent Father
(Respondent/Responding Party)
and
Office of The Childrens Lawyer
Respondent
(Respondent/Responding party)
Chithika Withanage and Marcia Duncan,
for the moving party the Childrens Aid Society of Toronto
Jane Long and Gary Gottlieb, for the
responding party the Office of the Childrens lawyer
L.R., acting in person
T.H., acting in person
Heard and released
orally: February 4, 2021 by video conference
REASONS
FOR DECISION
[1]
The Childrens Aid Society (the Society) brings
this motion to quash the second appeal in a child protection matter. The child
is 12 years old and has been the subject of the proceedings for several years.
The Office of the Childrens Lawyer represents the child and supports the
motion.
[2]
In 2019 the child was found in need of
protection. There was no appeal from the protection order. The following year,
the parties participated in an 11-day trial before Zisman J. The evidence was
extensive. In a detailed 47-page decision, the trial judge assessed the
evidence and made clear findings of fact. She concluded that the child should be
placed in the temporary care of the Society for four months and then placed in
the care of the father for six months under supervision. She also ordered that
the mother not audio or video record the child, the father, any Society worker
or third-party professional working with the family without prior consent.
[3]
The mother appealed the order of Zisman J. to
the Superior Court. For extensive and detailed reasons, Horkins J. dismissed
the appeal. The mother now appeals the dismissal of the appeal to this court.
The father takes no position on this appeal or on the motion to quash the
appeal.
[4]
The mothers appeal is from the temporary order.
Two events have taken place since the dismissal of the appeal: the temporary
supervision order has expired; and a status review application was commenced on
October 15, 2020 before the Ontario Court of Justice. The first appearance took
place on November 12, 2020. In the result, the order of Zisman J. is now a
nullity. The appeal is therefore moot.
[5]
We see no reason to exercise our discretion to
hear the appeal. An appeal will not advance the interests of the child and the
ongoing factual issues belong in the Ontario Court of Justice. The childs
future must be determined without delay and the status review should proceed
expeditiously.
[6]
The appeal is therefore quashed.
Paul
Rouleau J.A.
M.L.
Benotto J.A.
J.A.
Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION:
Lad v. Marcos, 2021 ONCA 183
DATE: 20210325
DOCKET:
M52058 (C68821)
Lauwers,
Trotter and Zarnett JJ.A.
BETWEEN
Ishver
Lad and Sumitra Lad
Plaintiffs
(Respondents/Moving
Parties)
and
Manny
Marcos, also known as Manuel Marcos also known as
Manuel
Martins Marcos also known as Manny Martins Marcos
also
known as Manuel M. Marcos, Joe Marcos, also known as Joe Luis
Marcos
also known as Jose Luis Marcos also known as Jose Marcos,
Arlete
Susana Marcos, Catarina Arruda Marcos and
Marcos
Limited Building Design Consultants
Defendants
(Appellants/Responding
Parties)
Dora Konomi and Timothy M. Morgan, for the
moving parties
Ted Evangelidis, for the responding
parties Joe Marcos, Arlete Susana Marcos, and Catarina Arruda Marcos
Gregory Hemsworth, for the responding
parties Manny Marcos and Marcos Limited Building Design Consultants
Heard: March 18, 2021 by video conference
REASONS
FOR DECISION
[1]
This is yet another motion to quash an appeal on
the basis that the order under appeal is interlocutory, not final, and not
properly before this court. The principles governing this issue were recently
laid out in
Paulpillai Estate v. Yusuf
, 2020 ONCA 655, at
para. 16.
[2]
The motion judge described the motion before him
in these terms:
Joe Marcos, Arlete Marcos and Catarina Marcos,
and separately, Manny Marcos, seek an order striking out the Plaintiffs' claims
for declaratory relief set out in paragraphs 1(a) and (b) of the Fresh as
Amended Statement of Claim issued June 10, 2019, together with the
consequential and ancillary relief set out in paragraphs 1(c) - (f), without
leave to amend. The effect of this relief, if granted, would end the
Plaintiffs claim.
In the alternative, the defendants seek a
determination under r. 21.01(1)(a) that the plaintiffs cannot seek and are not
entitled to the declaratory relief sought in paragraphs 1(a) and (b) of the
Fresh as Amended Statement of Claim, and therefore are not entitled to the
ancillary and consequential relief arising therefrom sought in paragraphs 1 (c)
- (f).
[3]
The nub of the motion judges decision is this:
For the reasons that follow, the motion is
dismissed. In reaching this result, I make no comment of the viability of the
causes of action either as pleaded, or as determined on a full record, or with
respect to the eloquence with which they are pleaded. I merely hold a) that it
is not plain and obvious that the causes of action have no merit, and b) they are
properly pleaded.
[4]
The responding parties argue that because the
motion was brought under r. 21.01(1)(a) of the
Rules of Civil
Procedure
, R.R.O. 1990, Reg. 194, the motion judges decision perforce was
a final determination of a legal question. They cite
Atlas Holdings v.
Vratsidas
, 2012 ONSC 1375, at para. 12. But that case turned on a
determination that finally disposed of a question of law, being whether the
limitations defence was available to the defendants. The Superior Court had found
that it was not available, and this court had agreed. Brown J., as he then was,
then said, at para. 18, having lost on the question of law as to whether
the plaintiffs' claims were statute-barred, the defendants cannot now rely on a
limitation period defence.
[5]
The law is clear that not every unsuccessful
motion under r. 21.01(1)(a) automatically gives rise to a right of appeal, only
those that finally dispose of the issue raised by that defence, and thereby [deprive]
the defendant of a substantive right which could be determinative of the entire
action":
Ball v. Donais
(1993), 13 O.R. (3d) 322 (C.A.).
[6]
The order the moving parties seek to appeal did
not finally determine any issues between the parties; the issues were all left
to the trial judge. It is quintessentially an interlocutory order over which
only the Divisional Court has jurisdiction under s. 19(1)(b) of the
Courts
of Justice Act
, R.S.O. 1990, c. C.43.
[7]
This conclusion is so obvious that this attempted
appeal can be described as no more than an effort to buy time, part of what the
motion judge, in his costs endorsement, termed the defendants Carthaginian
litigation strategy. We agree with the moving parties that they are entitled
to substantial indemnity costs and fix them in the amount of $10,000 inclusive
of disbursements and taxes, payable by the responding parties forthwith.
P.
Lauwers J.A.
Gary
Trotter J.A.
B.
Zarnett J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Landrus (Re), 2021 ONCA 292
DATE: 20210504
DOCKET: C68823
van Rensburg, Huscroft and Thorburn JJ.A.
IN THE MATTER OF: Benjamin Landrus
AN APPEAL UNDER PART XX.1 OF THE
CODE
Ken J. Berger, for the appellant
Karen Papadopoulos, for the respondent, Attorney General
of Ontario
Jessica Szabo, for the respondent, the Person in Charge
of Ontario Shores Centre for Mental Health Sciences
Heard: April 30, 2021 by videoconference
On appeal from the disposition of the Ontario Review
Board, dated October 13, 2020, with reasons dated November 3, 2020.
REASONS FOR DECISION
[1]
This is an appeal from a disposition of the
Ontario Review Board (the Board) on a restriction of liberty hearing. The
appellant, who has schizophrenia, was found not criminally responsible on
account of mental disorder (NCR) on a charge of aggravated assault in June
2013. Pursuant to the disposition of May 6, 2020 he has been detained at the
Ontario Shores Centre for Mental Health Sciences (the Hospital) with privileges
up to and including the ability to live in the community in accommodations
approved by the person in charge.
[2]
On August 28, 2020, the Board was informed,
pursuant to s. 672.56(2)(b) of the
Criminal Code
, that the appellants liberty had been restricted. On August 17th,
the appellant had been transferred from a general forensic unit at the Hospital
to a more restrictive secure forensic unit. The appellant, who was deemed
incapable of consenting to treatment, but was appealing that finding, had
stopped taking his anti-psychotic medication. In the months leading up to the
restriction of liberty, the appellants mental health had deteriorated and
there were instances of verbal aggression and hostility to co-patients and
staff.
[3]
Following a restriction of liberty hearing, the
Board found that the restriction of the appellants liberty was and remained
necessary and appropriate and constituted the least onerous and restrictive
measure. The Board accepted that the appellants mental health had
deteriorated, and that he showed increased irritability and hypersensitivity to
sound. His behaviour had deteriorated to the point where it was obvious that he
required the higher level of structure, support and observation he could only
receive on a secure forensic unit.
[4]
The appellant asserts that the Board failed to
take into consideration his liberty interests and other needs, as mandated by
s. 672.54 of the
Code
. In particular, the
Board did not properly assess his request for a lateral transfer to another
unit. He asserts that the Boards findings that his mental status had
deteriorated as a result of not taking his medication, and that the transfer to
a more secure forensic unit was necessary were not supported by evidence and
were unreasonable. The appellant submits that it was unreasonable for the Board
to find that the Hospital was justified in not transferring him to another
minimum security unit to alleviate his sensitivity to noise and other
environmental stressors, that were the cause of his conflict with other
co-patients and staff. He contends that the Hospital transferred him to a more
secure unit simply to teach him a lesson and to punish him for not taking his
medication.
[5]
We disagree.
[6]
The Board considered all of the required
factors, including the appellants request for an accommodation in his living
conditions. There was evidence to support the need to transfer the appellant to
a more secure unit. This included the testimony of his treating psychiatrist,
Dr. Pytyck, that, among other things, the appellant was not manageable in the
lower security unit; that his acting out posed a risk of harm to co-patients
and staff; that the months leading up to the restriction of liberty were marked
with increasingly rapid decompensation; that the appellant directly threatened
three patients; and that he had little to no insight into his need for
treatment.
[7]
Contrary to the appellants submissions, there
is no evidence that the Hospital was simply trying to teach the appellant a
lesson about taking his medication, by refusing his request for a transfer to a
different unit with less noise and environmental stimuli.
[8]
The evidence that was accepted by the Board was
that, in the months before the transfer to a more secure unit, the Hospital on
several occasions had offered and the appellant had refused, a room change on
the same unit in an attempt to accommodate his request for a quieter and darker
environment. The Board reasonably accepted Dr. Pytycks evidence, supported by
the Hospitals report, that the appellants behaviour had deteriorated to the
point where it was obvious that he required the higher level of structure,
support and observation that he could only receive on a secure forensic unit
and that the appellants behaviour resulted from the deterioration of his
mental status after he had discontinued his medication. Since his transfer to a
secure forensic unit, his presentation had remained much the same, with a
further incident of threatening behaviour to a co‑patient. There is
nothing to support the appellants contention that a lateral move to different
minimum-security unit would have improved his mental state or behaviour.
[9]
The Boards conclusion that the restriction of
liberty was and remained necessary is reasonable. For these reasons the appeal
is dismissed.
K. van Rensburg J.A.
Grant
Huscroft J.A.
J.A. Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Latner v. Ontario Securities
Commission, 2021 ONCA 316
DATE: 20210511
DOCKET: C67944
Juriansz, van Rensburg and
Sossin JJ.A.
BETWEEN
Gabriel Latner
Applicant (Appellant)
and
Ontario Securities Commission
Respondent (Respondent)
Gabriel Latner, acting in person
Andrew Lokan and Elizabeth Rathbone,
for the respondent
Heard: May 5, 2021, by video conference
On appeal from the order of Justice Bernadette
Dietrich of the Superior Court of Justice, dated November 28, 2019.
REASONS FOR DECISION
[1]
The appellant appeals from an order striking out
his application challenging a regulation adopted and enforced by the Ontario
Securities Commission that allows individuals to purchase stocks in the exempt
market if they meet minimum income and net worth thresholds. His application
rested on the premise that economic class should be recognized as an
analogous ground under s. 15 (1) of the
Canadian Charter of Rights and
Freedoms
. The motion judge struck the application without leave to amend
under r. 21.01(1)(b) because she reasoned that his position that economic
class should be recognized as an analogous ground under s. 15 was doomed to
fail.
[2]
We agree with the cogent reasons of the motion
judge. We do not accept the appellants argument that the motion judge erred by
making a finding of fact by holding economic class is not an immutable
personal characteristic. She used that phrase, not in making a finding of
fact, but in quoting from para. 13 of the Supreme Courts judgment in
Corbiere
v. Canada (Minister of Indian and Northern Affairs)
, [1999] 2 S.C.R. 203.
She went on to observe that the Supreme Court added that an analogous ground
flows from the central concept of immutable or constructively immutable
personal characteristics and impacts on a discrete and insular minority, or a
group that has been historically discriminated against:
Corbiere
, at
para. 13. It is clear in the context of the decision as a whole that the
appellants application did not disclose sufficient facts to meet the
requirements to establish an analogous ground, as set out in
Corbiere
.
[3]
Nor do we accept the appellants argument that
the motion judge improperly reversed the onus on the respondents motion to
strike.
The motion judge correctly identified that
[t]he
facts pleaded are the firm basis upon which the possibility of success of the
claim must be evaluated:
R. v. Imperial Tobacco Canada Ltd.
, 2011 SCC
42, [2011] 3 S.C.R. 45, at para. 22. She then identified the legal test that
the facts pleaded had to satisfy in order for the application to not be struck.
The motion judge held that the applicant ha[d] not pleaded any material facts
to show that all Canadians who cannot meet the impugned threshold
shared any
personal characteristic beyond an inability to meet the threshold. The motion
judge also noted that the appellant failed to plead that this group
has
suffered historic disadvantage or is at risk of having such disadvantages
perpetuated by stereotyping or prejudice. When her reasons are read as a
whole, it is clear the motion judge struck the application because she was
satisfied there was no reasonable prospect it would succeed because the law was
sufficiently settled as applicable to the facts as pled by the appellant.
[4]
We agree that there was no chance that the
economic class of the vast majority of Canadians who would be precluded from
investing in the capital markets for their inability to meet the impugned
threshold, could acquire the status of a protected group under s. 15 of the
Charter
.
The application cannot be amended to avoid that result. The motion judge did
not err in principle or act unreasonably in refusing the appellant leave to
amend his application.
[5]
The appeal is dismissed. Costs are fixed in the
amount of $10,000 all-inclusive.
R.G. Juriansz J.A.
K. van Rensburg J.A.
Sossin J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Laurentian University of Sudbury (Re), 2021 ONCA
199
DATE: 20210331
DOCKET: M52287
Hoy, Pepall and Zarnett JJ.A.
In the Matter of
the
Companies Creditors Arrangement Act
,
R.S.C. 1985, c.
C-36, as amended;
And in the
Matter of a Plan of Compromise or Arrangement
of Laurentian
University of Sudbury
Murray Gold and James Harnum, for the moving party the Ontario
Confederation of University Faculty Associations
Susan Philpott and Charles Sinclair, for the moving
party the Laurentian University Faculty Association
Miriam Martin, for the moving party the Canadian Union
of Public Employees
D.J. Miller, Scott McGrath and Derek Harland, for the
responding party Laurentian University of Sudbury
Ashley Taylor, Elizabeth Pillon and Zev Smith,
for the responding party Ernst & Young Inc., acting as the Monitor
Heard: in writing
Motion for leave to appeal from the order of Chief Justice
Geoffrey B. Morawetz of the Superior Court of Justice, dated February 26, 2021.
REASONS FOR DECISION
[1]
Laurentian University of Sudbury (Laurentian)
is a publicly funded, bilingual and tricultural post-secondary institution,
serving domestic and international undergraduate and graduate students. Due to
recurring operational deficits, it has encountered a liquidity crisis and is
insolvent.
[2]
Laurentian sought and obtained protection under
the
Companies Creditors Arrangement Act
,
R.S.C. 1985, c. C.36 (CCAA), to permit it to restructure, financially and
operationally, in order to emerge as a sustainable university for the benefit
of all stakeholders.
Among the stated reasons for Laurentians CCAA application
was what it described as unsustainable academic costs, which Laurentian attributes
in part to the terms of its collective agreement with its faculty members.
[3]
Two unions representing Laurentian employees - the Laurentian
University Faculty Association (LUFA) and the Canadian Union of Public
Employees (CUPE) - and the Ontario Confederation of University Faculty
Associations (OCUFA), an umbrella organization representing faculty
associations, seek leave to appeal the decision of the CCAA judge, dated
February 26, 2021, which continues a sealing order over two documents that Laurentian
filed on its application for CCAA protection.
[4]
Having reviewed the written submissions of the parties and the
sealed documents, we refuse leave for the reasons that follow.
Background
[5]
On February 1, 2021, the CCAA judge made an order (the Initial
Order), granting Laurentian initial relief under the CCAA.
[6]
Four days later, on February 5, 2021, the CCAA judge made an
order appointing Dunphy J. as mediator to conduct a confidential mediation
among Laurentians key stakeholders. The mediation is intended to address
various issues concerning Laurentians restructuring, including a new
collective agreement with LUFA, which represents 612 Laurentian faculty,
accounting for 60% of the universitys payroll. LUFA supported the appointment
of the mediator.
[7]
The Initial Order contained a sealing provision.
At the comeback hearing, there was opposition to it. The CCAA judge continued the
sealing provision in the Amended and Restated Order, dated February 11, 2021,
on an interim basis, pending a supplementary endorsement.
[8]
The sealing provision, which was identical in both orders, covers
two exhibits (Exhibits EEE and FFF) to the
affidavit by
Dr. Robert
Haché,
which was filed in support of Laurentians request for the Initial Order. Dr.
Hach
é is the President, Vice-Chancellor
and CEO of Laurentian.
[9]
The sealing provision states that
the Exhibits
are herby sealed pending further order of the Court, and shall not form part
of the public record. Both the Initial Order and the Amended and Restated
Order provide that any interested party may apply on seven days notice to vary
or amend the order.
[10]
The sealed Exhibits consist of two letters. Exhibit
EEE is a letter from the Ministry of Colleges and Universities (Ministry) to
Laurentian, dated January 21, 2021. Exhibit FFF is a letter from Laurentian
to the Ministry, dated January 25, 2021. Laurentian has described the letters
as containing information with respect to [Laurentian] and certain of its
stakeholders, including various rights or positions that stakeholders or
[Laurentian] may take either inside or outside of these CCAA proceedings, the
disclosure of which could jeopardize [Laurentians] efforts to restructure.
[11]
None of the moving parties sought to
cross-examine Dr. Hach
é
on his affidavit or the communications between Laurentian and the
Ministry.
[12]
The CCAA judge released his supplementary endorsement on February
26, 2021, continuing the sealing provision. The effect of the sealing provision
is that both the broader public and the parties to the CCAA proceeding are
prevented from accessing the Exhibits.
[13]
The CCAA judge held that the sealing provision was authorized
under s. 137(2) of the
Courts of Justice Act
, R.S.O. 1990, c. C.43,
and by the application of the principles in
Sierra Club of Canada v. Canada
(Minister of Finance)
, 2002 SCC 41, [2002] 2 S.C.R. 522. According to
Sierra
Club
, at para. 53, a confidentiality or sealing order should only be
granted when:
(a) such an order is necessary in order
to prevent a serious risk to an important interest, including a commercial
interest, in the context of litigation because reasonably alternative measures
will not prevent the risk; and
(b)
the
salutary effects of the confidentiality order, including the effects on the
right of civil litigants to a fair trial, outweigh its deleterious effects,
including the effects on the right to free expression, which in this context
includes the public interest in open and accessible court proceedings.
[14]
The CCAA judge summarized the evidence in Dr.
Hach
é
s affidavit
and noted that he had reviewed the Exhibits in detail. He indicated that the
evidence, as contained in Dr. Hach
é
s affidavit, outlines that there has been continuous communication
between Laurentian and the Ministry with respect to Laurentians financial
crisis, and that the government is well aware that a real-time solution must be
found if Laurentian is to survive. He noted that the role, if any, that the
Ministry will play is at this moment uncertain.
[15]
Considering the first branch of the
Sierra
Club
test, he concluded that disclosure of the Exhibits,
at this time
, could be
detrimental to any potential restructuring of [Laurentian] (emphasis added).
Accordingly, the risk in disclosing the Exhibits is real and substantial and
poses a serious risk to the future viability of [Laurentian]. He also noted
that it is speculative to conclude that the Exhibits contain information that
is not helpful to [Laurentians] position.
[16]
He found that the commercial interest was that
of the entire Laurentian community, including the faculty, students, employees,
third-party suppliers and the City of Greater Sudbury and the surrounding area;
that it is of paramount importance to these groups that all efforts to
restructure Laurentian be explored; and that it is necessary to maintain the
confidentiality of the Exhibits in order to do so. He reiterated that [t]he
disclosure of the Exhibits,
at this time,
could undermine the restructuring efforts being undertaken by
[Laurentian] (emphasis added).
[17]
He was not satisfied that there were any
reasonable alternatives to a sealing order over the Exhibits. Stakeholders were
involved in the mediation and the negotiations could or could shortly be at a
sensitive stage. It would not be appropriate to implement any alternative to a
confidentiality order. To do so could negatively impact the mediation efforts.
[18]
Turning to the second branch of the
Sierra
Club
test, the CCAA judge was also satisfied, based on
the evidence, that the salutary effects of the sealing provision outweighed its
deleterious effects, including the public interest in accessing the Exhibits.
Leave Test
[19]
Section 13 of the CCAA provides that any person
dissatisfied with an order or a decision made under the CCAA may appeal from
the order or decision with leave.
Leave to appeal in CCAA proceedings is
to be granted sparingly
and only where there are serious and
arguable grounds that are of real and significant interest to the parties.
This cautious approach is a function of several factors.
[20]
First, a high degree of deference is owed to discretionary
decisions made by judges supervising CCAA proceedings, who are steeped in the
intricacies of the
CCAA
proceedings they oversee. Appellate
intervention is justified only where the supervising judge erred in principle
or exercised their discretion unreasonably:
9354-9186 Qu
é
bec inc. v. Callidus Capital Corp.
, 2020
SCC 10, 78 C.B.R. (6th) 1, at paras. 53 to 54.
[21]
Second, CCAA proceedings are dynamic. It is often inappropriate
to consider an exercise of discretion by the supervising judge in isolation of
other exercises of discretion by the judge in endeavouring to balance the
various interests:
Edgewater Casino Inc. (Re)
, 2009 BCCA 40, 51
C.B.R. (5th) 1, at para 20.
[22]
Third, CCAA restructurings can be time sensitive. The existence
of, and delay involved in, an appeal can be counterproductive to a successful restructuring.
[23]
In addressing whether leave should be granted,
the court will consider four factors, specifically whether:
(a)
the
proposed appeal is
prima facie
meritorious or frivolous;
(b)
the
points on the proposed appeal are of significance to the practice;
(c)
the
points on the proposed appeal are of significance to the action; and
(d)
whether the proposed appeal will unduly hinder the progress of
the action.
See:
Nortel Networks Corp.
(Re)
, 2016 ONCA 332, 130 O.R. (3d) 481, at para. 34.
Leave is Not Warranted
[24]
As we will explain, we refuse to grant leave
because the proposed appeal is not
prima facie
meritorious, granting leave would unduly hinder the progress of the action, and
the proposed appeal is not of significance to the action. This is not an
appropriate case for this court to explore issues of significance to the
practice relating to the granting of sealing orders in the CCAA context.
Leave Not
Prima Facie
Meritorious
[25]
The moving parties raise three questions for determination on
their proposed appeal, which we paraphrase as follows:
1. Did the CCAA judge err in focussing
solely on Laurentians assertion of an important commercial interest without
balancing the various competing interests applicable to a sealing order?
2. Did the CCAA judge err in granting
the sealing provision without a sufficient evidentiary foundation?
3. Did the CCAA judge err in concluding
that the sealing provision was justified as a result of speculative concerns
about the impact that disclosure of the Exhibits that were sealed would have on
the CCAA restructuring process?
[26]
A significant plank of the moving parties argument is that the
sealing provision denies access to the sealed documents to parties to the CCAA
process on the ostensible ground that the documents might have an impact on the
positions those parties choose to take vis-
à
-vis the
restructuring. They argue that the importance of the documents to the
formulation of their positions is the exact reason why they should have access
to the documents, not a justification for denying access to them.
[27]
We note that one of the moving parties, OCUFA, is not a creditor
of Laurentian and is apparently not participating in the court-ordered mediation,
the aim of which is a consensual restructuring. It is not clear in what sense
OCUFA is a party to the CCAA proceeding or is in any different position than
any other member of the public who may be interested in the court-filed
materials. Yet the moving parties do not differentiate, in their proposed
appeal questions or in the relief they propose to seek, between the
entitlements of OCUFA to obtain the documents and those of the other moving
parties. In other words, although reference is made to the denial of access to
litigants, the underlying theory of the moving parties actually starts and
stops with the proposition that there should be no sealing order at all.
[28]
We are not persuaded that the proposed appeal, challenging what
is a discretionary order, is
prima facie
meritorious.
[29]
The CCAA judge set out the
Sierra
Club
test in his reasons. Contrary to the submissions of
the moving parties, he was well aware that
Sierra Club
required him to balance the deleterious effects of the sealing order.
[30]
In earlier reasons, the CCAA judge noted that if
the restructuring is to be successful, it will have to be largely completed by
the end of April 2021. The timeline is exceptionally short. In exercising his
discretion, the CCAA judge concluded that the risk to the potential
restructuring of Laurentian within this extremely tight timeframe if the
Exhibits were disclosed outweighed other relevant interests.
[31]
The moving parties were (and are) concerned that
they understand the Ontario governments position in relation to the
restructuring, yet they did not seek to cross-examine Dr. Hach
é
. The CCAA judge, who
reviewed the Exhibits, strove to address that concern, carefully signaling that
the role, if any, that the Ministry will play is at this moment uncertain. Alive
to concerns about fairness, he also signaled to the parties that it would be
speculative to conclude that the Exhibits contain information that is not
helpful to [Laurentians] position.
[32]
The moving parties have expressed particular concern that the
sealing order creates an informational imbalance that may hurt them in the
mediation process.
Nothing before us suggests that the moving
parties who are participating in the court-ordered mediation (which appears to
be only LUFA) have been hampered by any informational imbalance. The judicial
mediator, who was appointed by the CCAA judge, is a bulwark against unfair
treatment in the mediation. Should the judicial mediator have concerns that the
moving parties have been hampered in the mediation by an informational
imbalance or a perceived informational imbalance, it is open to him to raise them
with the CCAA judge within the parameters of the February 5, 2021 order
appointing the mediator.
[33]
Nor do we see anything in the sealing provision that would
prevent a party from making a request to the CCAA judge, at the appropriate
time, for relief on appropriate terms. As noted, the sealing provision is
expressly subject to further order of the Court. The CCAA judge in his
reasons of February 26 said only that an alternative to the sealing provision
was not appropriate at this time.
[34]
In seeking leave, the moving parties have raised
questions about how s. 2(d) of the
Charter of Rights and Freedoms
comes into play, as one of the purposes of the mediation is to
conclude a new collective agreement with LUFA. But they do not dispute
Laurentians submission that this issue was not argued below. It is difficult
to fault the CCAA judge for not weighing a competing interest that was not asserted
before him.
[35]
The moving parties also say that the CCAA judge
failed to advert to the impact his ruling would have on freedom of expression. We
are satisfied he did take that factor into account, as he mentions it in
setting out the test and later says that the deleterious effects include the
public interest in accessing the Exhibits.
[36]
The second and third questions raised by the
moving parties ask the court to revisit an issue raised before the CCAA judge. He
described the essence of the submissions made to him by those opposing the
sealing order as there being no evidence that the sealing order was necessary
to protect a valid commercial interest.
[37]
The CCAA judge was satisfied that there was a
sufficient evidentiary basis. He based his conclusion that disclosing the
Exhibits posed a serious risk to the restructuring on his review of the Exhibits
and Dr.
Haché
s
evidence. The moving parties are correct that Dr.
Haché
did not opine in his
affidavit that disclosure of the Exhibits posed a serious risk to the viability
of the restructuring. But Dr.
Haché
s evidence describes something of the dynamics at play and is clear
as to Laurentians dire position and the timeframe within which the
restructuring must be completed, if it is to be successful. It provided the
foundation on which the Monitor, an officer of the court, supported Laurentians
position that disclosure posed a serious risk, and the CCAA judge, who has
extensive experience in CCAA restructurings, concluded that disclosure posed a
serious risk. The CCAA judge exercised his judgment, based on an evidentiary
record.
[38]
The fact the proposed appeal is not
prima
facie
meritorious weighs significantly against granting
leave.
Appeal Would Hinder Progress of the Action
[39]
As we have said, this restructuring is on an exceptionally short
timeline. We are told that the mediation is ongoing, with sessions occurring
daily. There is urgency to being able to reach a successful restructuring by
the end of April, in light of Laurentians financial position and the need for
certainty regarding the next academic year. There is too great a risk that an
appeal would be a distraction from restructuring efforts and thus would unduly
hinder the progress of the action, which also weighs significantly against
granting leave.
No Significance to the Action
[40]
Given the involvement of a court-appointed mediator and that it
is open to the CCAA judge to revisit the sealing provision and possibly revoke
it or limit its impact by allowing the parties to the CCAA proceeding to access
the sealed documents, the significance of the proposed appeal to the action is
insufficient to justify leave.
Significance to the Practice
[41]
The
facts of this case highlight some
novel and interesting questions about the application of the
Sierra Club
test in the CCAA context.
These include questions about
granting sealing orders over information filed in support of the application
for protection under the CCAA, the granting of sealing orders where interests
under s. 2(d) of the
Charter
are arguably at
play, and about the application of sealing orders to parties and stakeholders
involved in the restructuring efforts. However, given our view of the merits of
the proposed appeal and the other factors, this is not the appropriate case in
which to explore these issues.
Disposition
[42]
Leave to appeal is refused. In the circumstances, there shall be
no order as to costs.
Alexandra Hoy J.A.
S.E. Pepall J.A.
B. Zarnett J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Lengyel v. TD Home and Auto
Insurance, 2021 ONCA 237
DATE: 20210415
DOCKET: M51658 (C67778)
Tulloch, Nordheimer and Jamal
JJ.A.
BETWEEN
Gabriella Lengyel
Appellant (Plaintiff)
and
TD Home and Auto Insurance
Respondent (Defendant)
Gabriella Lengyel, in person/responding
party
Heather Hogan, for the Public
Guardian and Trustee/moving party
No one appearing for the
defendant
Heard: April 9, 2021 by video
conference
REASONS FOR DECISION
[1]
The Public Guardian and Trustee brings a motion
to quash this appeal on the grounds that this court lacks jurisdiction to hear
it. We are advised that the defendant supports the motion
[2]
The Public Guardian and Trustee is the litigation
guardian for Gabriella Lengyel with respect to two civil proceedings arising
out of automobile accidents where Ms. Lengyel is the plaintiff. The Public
Guardian and Trustee settled those proceedings and obtained court approval of
the settlement, over the objections of Ms. Lengyel.
[3]
Ms. Lengyel has appealed the approval order to
this court. The Public Guardian and Trustee says that this court does not have
jurisdiction to hear this appeal because (a) Ms. Lengyel has no right to bring
the appeal as that authority lies entirely with her litigation guardian and (b)
if Ms. Lengyel is seeking to challenge the appointment of the Public Guardian
and Trustee as her litigation guardian, then that appeal lies only to the
Divisional Court, with leave.
[4]
Both points made by the Public Guardian and
Trustee are well-taken. Once a litigation guardian is appointed, the litigation
guardian has sole control over the proceeding:
Kavuru (Litigation guardian
of) v. Heselden
, 2014 ONSC 6718, 328 O.A.C. 399, 70 C.P.C. (7th) 60 (Div.
Ct.). As was pointed out in
Kavuru
, if Ms. Lengyel is unhappy with the
settlement, she could have sought to replace the Public Guardian and Trustee as
her litigation guardian, but she has not done so.
[5]
Further, if Ms. Lengyel were to take the route
of seeking to replace her litigation guardian, that would be a matter to be
dealt with before the Superior Court of Justice or, if taken by way of appeal
from the original appointment order, to the Divisional Court, with leave.
[6]
In either event, Ms. Lengyel does not currently
have the authority to appeal the order approving the settlement.
[7]
The appeal is quashed for lack of jurisdiction. Our
order is without prejudice to Ms. Lengyel bringing a motion before the
Divisional Court for an extension of time to seek leave to appeal from the order
appointing the Public Guardian and Trustee as litigation guardian, if she is so
advised. We would not make any order as to costs.
M.
Tulloch J.A.
I.V.B.
Nordheimer J.A.
M.
Jamal J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Lenihan v. Shankar, 2021 ONCA 142
DATE: 20210303
DOCKET: M52203 & M52231 (C68956)
Benotto J.A. (In
Chambers)
BETWEEN
Kevin William Lenihan
Applicant
(Moving Party on M52203/
Responding Party on M52231)
and
Indira Shankar
Respondent
(Responding Party on M52203/
Moving Party on M52231)
Andrew Chris and Joanna Hunt-Jones, for
the moving party/responding party
Indira Shankar, acting in person
Heard: February 17
and 25, 2021
REASONS FOR DECISION
INTRODUCTION
[1]
The applicant, Kevin
Lenihan, is the father of two-year old M. The respondent, Indira Shankar is the
mother. They have been involved in high conflict custody litigation for M.s entire
short life. Ultimately, the trial judge awarded sole custody to Mr. Lenihan and
the right for him to move to Oregon with M. Ms. Shankar appeals. Mr. Lenihan
brought a motion for security for costs.
[2]
At the original return
of the motion, Ms. Shankar indicated that she wanted to file a response, but
the court office would not accept her material because it was not in the
correct format. I adjourned the motion to be returned before me and advised the
motions office to accept her material notwithstanding its deficiencies.
[3]
I have now heard and
read submissions from both parties.
BACKGROUND
[4]
Mr. Lenihan, an
American citizen, lives in Oregon where he owns a home near to his parents and
two brothers. He and Ms. Shankar met in Oregon. Very quickly after their
meeting, Ms. Shankar moved into his home and they married in June 2017. Ms. Shankar
is a citizen of India with permanent residence status in Canada. A month after
their marriage she returned to Canada ostensibly to maintain her permanent
residence status. The following month, the parties learned that Ms. Shankar was
pregnant. Mr. Lenihan moved temporarily to Ontario to be with her. Problems in
the marriage arose and they separated in December 2017.
[5]
In early February 2018 Ms.
Shankar sent Mr. Lenihan a series of text messages indicating that the baby had
been born prematurely and was in the neo-natal intensive care unit, breathing
on a ventilator. These statements were false. M. was born on March 30, 2018.
[6]
M. was born with a
condition called craniosynostosis. She underwent three corrective surgeries in
2018 and 2019. The surgeries were successful, and she has no continuing
disability, although updates will be required from time to time.
[7]
From the day of her
birth, M. has been at the center of conflict and litigation. Due to allegations
made by Ms. Shankar, the Childrens Aid Society (CAS) became involved. So too
did the Office of the Childrens Lawyer (OCL). The CAS and OCL determined
that the allegations were false. Several family court judges conducted case
conferences. Finally, the custody trial began on November 17, 2020.
[8]
Mr. Lenihan and
his mother travelled from their home in Oregon
to Ontario two weeks in advance of the trial to sit out their required
quarantine period in a local hotel where they maintained their residence
throughout the proceeding.
THE TRIAL
[9]
The trial lasted for
four weeks. The trial judges reasons describe its many challenges.
On the fifth day of trial, Ms. Shankar,
alleging that Mr. Lenihan was not the biological father, filed the results of a
paternity test. She then said he was just a sperm donor and filed a Sperm
Donor Agreement which showed he did not want to be involved with the child.
She also filed an email exchange between the father and his counsel which
alleged the planning of a criminal act to remove the mother from the
litigation. It became evident rather quickly that these documents were in the
words of the trial judge transparent and shocking forgeries created by the
mother. This was not the only forgery presented by Ms. Shankar. She also
presented an 18-page affidavit from someone who upon being called as a
witness by Mr. Lenihan said she did not know Ms. Shankar and had never signed
the affidavit.
[10]
The mothers two counsel
her tenth and eleventh withdrew from the record upon realizing their
unwitting participation in placing fraudulent evidence before the court. The
trial judge granted Ms. Shankars request to continue the trial in-person. The
day was a Friday. It concluded with witness planning, generous directions on
self-representation and the sorting of details for that evenings weekend
transfer of M. to her father.
[11]
Thirty hours later, Ms. Shankar
boarded a plane for Delhi, India, first class, with a transfer from Delhi to
Bengaluru. She did not inform the court, the father or the child. She did not
return. Her agent counsel attended on the following Monday, seeking leave for
the mother to continue with the trial on Zoom from her family home in India.
The trial judge granted the request and ordered her to provide travel and other
particulars, including a copy of her return ticket. A return ticket was never
provided.
[12]
The trial continued until
December 11, 2020. Ms. Shankar never returned.
[13]
Due to the urgency of the
situation, the trial judge gave oral reasons at the end of the trial, to be
followed by more extensive written reasons. She said:
Time is of the essence in this decision. There
is a young child who has been living in a hotel for the past 20 days with a
father who is a resident of Oregon, and a mother who has left the jurisdiction
without a return ticket.
I find that it is
in [M.s] best interest to transfer her residence from Ontario, Canada to
Oregon, USA where she will have a stable residence, extended family supports,
medical care and a good education. In doing so, I acknowledge that this change
in residence will remove this case from Ontario jurisdiction.
[14]
The trial judge
dispensed with the requirement of the mothers consent for M. to travel. She also
dispensed with the need for the mothers consent to issue a birth certificate,
passport (both Canadian and American) and any other travel or identifying
documents necessary for Mr. Lenihans return to Oregon with M.
[15]
As she said she would,
the trial judge then provided more detailed written reasons reported at 2021
ONSC 330.
FURTHER REASONS OF
THE TRIAL JUDGE
[16]
The trial judges
further reasons examined the extensive evidence and her findings in more
detail, all with a view to the childs best interests. She
concluded that Ms. Shankars actions were entirely
inconsistent with the childs best interests. She had taken extreme steps to
keep the father, the professionals, CAS and the OCL from knowing basic facts.
She did not name the father on their daughters Statement of Live Birth or
obtain a birth certificate. She asserted non-existent court Orders to
professionals and the hospital and ignored Orders that did exist, particularly
Orders for disclosure. She had a second child but did not disclose the father of
her second child or his legal name to Mr. Lenihan, the Society, the OCL or the
Court. She repeatedly threatened the father, his family and CAS workers.
[17]
The trial judge found that
the mother had virtually no credibility because of her repeated lies and
attempts at forgery. She was also, according to the trial judge, incapable of
putting the childs needs before her own. She went to extreme lengths to attack
the father.
[18]
The trial judge found the
father caring and competent, attuned to the childs needs and genuinely willing
to foster the mother-daughter relationship while being appropriately
protective. Because of the allegations against him by the mother, he was
extensively investigated by the Toronto and Peel CAS. He has been further
vetted by a Childrens Lawyer. The OCLs final Report detailed 18 substantive
allegations that had been made by the mother against the father, all of which were
determined to be false. The OCL found him to be a fully available and capable
caregiver. His plan of care is sound and supported by his extended family. He
offers the child a stable, healthy, and emotionally rich childhood. The trial
judge said that he built a strong attachment with M. in the face of
unimaginable adversity. She found that the father will meet the childs
medical, educational, and emotional needs. She had evidence from a pediatrician
in Oregon who has agreed to continue the required follow-up for her care. The
trial judge found that the father was more than a capable parent.
[19]
Against this background
Mr. Lenihan moves for security for costs of Ms. Shankars appeal.
SECURITY FOR COSTS
[20]
It is rarely
appropriate to award security for costs in a child-related matter. This is a
rare case. As the trial judge said:
I say this
gravely: but for cases of infanticide or abduction, Ms. Shankars actions in
and outside of this litigation exceed any known to me in the caselaw.
[21]
I turn to the legal principles
engaged by the motion in the context of these facts.
(1)
Applicable test
[22]
Security for costs may
be ordered pursuant to r. 61.06(1) of the
Rules of Civil Procedure
, R.R.R.
1990, Reg. 194, when 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;
(b)
An order for security
for costs could be made against the appellant under r. 56.01; or
(c)
For other good reason,
security for costs should be ordered.
[23]
The overarching
principle is the justness of the order sought.
(2)
Frivolous and vexatious
[24]
There is good reason to
believe that the appeal is frivolous and vexatious.
[25]
The appeal is readily
recognizable as lacking merit and therefore frivolous. The trial judge made
credibility and factual findings that were strongly supported by the evidence
and the mothers conduct throughout the proceedings, which I have summarized
above. In particular, the trial judge carefully considered the childs best
interests and found that they were best served by being with the father in
Oregon. Because of the mothers conduct towards the father and his family,
there was no basis to award joint custody.
[26]
Ms. Shankars appeal raises
no errors of law. She challenges the trial judges findings of fact and her
assessments of credibility. As I have set out, the trial judge gave detailed
reasons for her findings. Under these circumstances there is little chance of
overturning the result: see
Henderson v. Wright
,
2016 ONCA 89, 345 O.A.C. 231, at para. 19.
[27]
The mothers conduct
toward the father throughout has also demonstrated that there is good reason to
believe that the appeal is vexatious.
[28]
Ms. Shankars motion
material runs to approximately 160 pages single spaced. In her written and oral
submissions, she makes outrageous claims against Mr. Lenihan including that he
has trafficked, abducted, illegally brought the child to the United
States, and is torturing M. and keeping her in a cage. She says he is a drug
addict and homeless. She has already reported him to Child Protective Services
in Oregon. She says that he may sell the child or give her up for adoption.
She claims that she does not know if the child is alive or dead, then describes
their regular Skype calls.
[29]
There is clearly good
reason to believe that the appeal is frivolous and vexatious.
(3)
Insufficient assets in
Ontario
[30]
Although the mother says
she has returned to Ontario, her materials contradict this. Her costs
submissions filed on February 5, 2021 repeatedly assert that she lives in India
with her family. She states in those submissions that she had no choice but to
leave Canada. She also claims to have no money.
[31]
During her oral
submissions, she said she was in Ontario and working for the government. She
has claimed an income of $95,000 per year. Her last filed financial statement,
together with her representations throughout the proceedings, indicate that she
has no assets available to pay the costs of this appeal.
(4)
Other good reason
[32]
There are other good
reasons to require security for costs.
[33]
First, the mother engaged
in deceitful and fraudulent conduct as found by the trial judge.
[34]
Second, the child is now
in Oregon. As the trial judge recognized, future parenting disputes would be addressed
there.
[35]
Finally, and most
importantly: this appeal involves the wellbeing of a child who has been the
subject of litigation her entire life. Her best interests must be considered in
every step of the proceeding. Her best interests would not be served by a
continuation of this proceeding. The impact of this litigation on the child
cannot be ignored. As Poupore J., sitting as an appeal judge of the Divisional
Court said: security for costs [is] warranted because of the applicants
motivation for the appeal, the cost to the parties and judicial resources used
to date and the impact of the litigation on the children:
Morwald-
Benvenides v. Benvenides
, 2017 ONSC 3786, [2017] W.D.F.L. 3729, at para. 13.
MOTHERS MOTION FOR A
STAY
[36]
Ms. Shankar included in
her responding material a request that the child be returned to Ontario,
thereby requesting a stay of proceedings.
[37]
The test for a stay of
judgment pending appeal is the three-part test set out in
RJR-McDonald Inc.
v. Canada (Attorney General),
[1994] 1 S.C.R. 311, at p. 334. The
appellant has the burden to demonstrate that (1) there is a serious question to
be determined on the appeal; (2) she will suffer irreparable harm if the stay
is denied; and (3) the balance of convenience favours granting a stay. These
three criteria are not watertight compartments. The court must decide whether
the interests of justice call for a stay:
Circuit
World Corp. v. Lesperance
(1997), 33 O.R. (3d) 674 (C.A.), at p. 677.
[38]
I have already
described why there is no serious issue to be determined on appeal.
[39]
The child is the one
who will suffer serious harm. She is in Oregon with her father, grandparents
and extended family. She has a pediatrician. On the other hand, there is no
basis to conclude that the mother will suffer serious harm if the stay is not
granted.
[40]
The balance of
convenience favours the child remaining in Oregon with his father and his
family.
[41]
For these reasons, I do
not require responding material from the father for the mother has not met the
test for a stay.
CONCLUSION
[42]
The motion by Mr.
Lenihan for security for costs is granted. Ms. Shankar is required to deposit
$30,000 to the credit of the appeal by March 30, 2021.
[43]
Ms. Shankars motion
for a stay pending appeal is dismissed.
[44]
Costs of these motions
are payable by Ms. Shankar to Mr. Lenihan fixed at $6,500 inclusive of HST and
disbursements.
M.L.
Benotto J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Lesko v. Lesko, 2021 ONCA 369
DATE: 20210602
DOCKET: C68396
Strathy C.J.O., Brown and Miller JJ.A.
BETWEEN
Kelly Sue Lesko
Applicant (Respondent)
and
David Joseph Lesko
Respondent (Appellant)
Gary S. Joseph and Stephen P. Kirby, for the appellant
Peter M. Callahan, for the respondent
Heard: February 12, 2021 by video conference
On appeal from the
orders of Justice Michael R. Gibson of the Superior Court of Justice, dated May
19, 2020, June 25, 2020, and August 7, 2020.
BROWN J.A.:
I.
overview
[1]
The appellant, David Joseph Lesko (David), and the respondent, Kelly
Sue Lesko (Kelly), started to live together in September 1998 and married on
August 23, 2003. They have two children. They legally separated on
December 31, 2014 but continued to live together thereafter as a family
until the matrimonial home at Valleyview Court in Oakville was sold in November
2015.
[2]
By the time of the trial, the parties had settled many issues. The remaining
issues were adjudicated by the trial judge, which resulted in his Divorce Order
dated May 19, 2020 (the Order).
[3]
David appeals three parts of that Order:
[1]
(i) awarding an equalization payment to Kelly. That award resulted from the
trial judges finding that based on her unjust enrichment claim Kelly had a 50%
interest in a property on Taplow Crescent, Oakville that David had acquired
prior to the date of marriage. That finding permitted Kelly to deduct 50% of
the marriage date value of that property in her net family property calculation;
(ii) fixing Davids income at $208,000.00 for purposes of support calculations;
and (iii) disallowing Davids claim of a credit against retroactive support
obligations of approximately $48,000 in expenses that David contends he
incurred between the date of legal separation and the sale of the matrimonial
home.
[4]
For the reasons set out below, I am not persuaded that the trial judge erred
in his conclusions and I would dismiss Davids appeal. For ease of reference, I
propose to deal with the relevant facts under each of the issues on appeal.
II.
STANDARD OF REVIEW
[5]
Orders resolving financial disputes in family
law cases are entitled to significant deference. An appeal court should only
intervene where there is a material error, a serious misapprehension of the
evidence, or an error in law. It is not entitled to overturn a support order
simply because it would have made a different decision or balanced the factors
differently:
Hickey v. Hickey
, [1999] 2 S.C.R.
518, at para. 12.
III.
FIRST ISSUE: the TREATMENT OF THE TAPLOW PROPERTY
Background facts
[6]
In June 1998, David purchased Taplow a fixer upper property through
power of sale proceedings for $164,000. David financed the purchase through a
$41,000 down payment and a $123,000 mortgage. By the time of purchase, Kelly
and David had been dating for over a year. They decided to move in together
once Taplow had been made habitable, which was accomplished by September 1998.
[7]
Kelly did not contribute financially to the purchase of Taplow nor was
her name put on title. However, starting in August 1998 she contributed $500 a
month to cover the couples expenses, which included a monthly mortgage payment
of $831.35. Those contributions continued until a few months before their first
child was born in 2004.
[8]
Taplow was gutted from top to bottom, and extensive renovations were
made to the property between 1998 and the propertys sale in 2007, about four
years after Kelly and David married. Since David and Kelly both worked full
time, the renovations were done during evenings and on weekends. David
completed most of the physical renovations, while Kelly took charge of
housekeeping and home maintenance.
[9]
When Taplow was sold in 2007, David and Kelly put the full sale proceeds
into their new Valleyview Court house, another fixer upper in need of
renovation. As with Taplow, they renovated their new house with a view to reselling
it for a profit and investing the sale proceeds into yet another new property.
Their separation occurred before they could fulfill this plan.
[10]
In her Application, Kelly requested a declaration that she had a 50%
beneficial interest in Taplow at the date of marriage on the basis of
constructive trust as she had contributed to the acquisition, preservation,
maintenance, and improvement of the property in both money and moneys worth.
The
trial judge awarded Kelly a half-interest in Taplow on the date of marriage.
Davids position on appeal
[11]
David
submits the trial judge erred in awarding Kelly an interest in Taplow as there
was no unjust enrichment in this case. The trial judge never considered or applied
the elements of unjust enrichment in his reasons and, without this clear
finding, it was inappropriate to consider whether there was a joint family venture.
Moreover, if the trial judge had properly considered the test for unjust
enrichment, he should have concluded that Kellys claim failed because she was simply
in a tenant-landlord type of relationship with David prior to their marriage.
During that time, she provided her labour without any expectation of
compensation
.
[12]
Further, there was no joint family venture in respect of Taplow. The
factors outlined in
Kerr v. Baranow
, 2011 SCC
10, [2011] 1 S.C.R. 269, do not support the trial judges finding. Even if
there was a joint family venture, Kellys contributions did not entitle her to
a half interest in Taplow.
[13]
Finally,
the trial judge erred when he failed to consider whether the
Family
Law Act
,
R.S.O. 1990, c. F.3 (
FLA
)
equalization
scheme remedied any unjust enrichment arising from the relationship.
Governing
legal principles
[14]
If a party establishes the three elements of a claim
for unjust enrichment enrichment, corresponding deprivation, and lack of
juristic reason the remedy can take one of two forms: a personal (or monetary)
award or a proprietary award:
Kerr
, at paras.
46, 55;
Moore v. Sweet
, 2018 SCC 52, [2018] 3
S.C.R. 303, at para. 89. The framework in which a court should assess the
appropriate remedy was summarized by this court in
Martin v. Sansome
, 2014 ONCA 14, 118 O.R. (3d) 522, at para. 52:
In this way, the framework established in
Kerr
requires
the court to ask the following questions:
1) Have the elements of unjust enrichment enrichment and a
corresponding deprivation in the absence of a juristic reason been made out?;
2) If so, will monetary damages suffice to address the unjust
enrichment, keeping in mind bars to recovery and special ties to the property
that cannot be remedied by money?;
3) If the answer to question 2 is yes, should the monetary
damages be quantified on a fee-for service basis or a joint family venture
basis?; and,
4) If, and only if monetary damages are insufficient, is there
a sufficient nexus to a property that warrants impressing it with a
constructive trust interest?
[15]
A monetary award is the default remedy and
should suffice in most cases to remedy the unjust enrichment:
Kerr
, at para. 47;
Moore
, at para. 89.
In
Kerr
, the Supreme Court of Canada clarified
that monetary awards for unjust enrichment could be quantified in two ways.
First, a monetary award may be calculated on a
quantum meruit
or fee-for-service basis
the value of the claimants uncompensated services. Second, a
monetary award may be calculated on a value survived basis, by reference to
the overall increase in the couples wealth during the relationship:
Kerr
,
at paras. 49 and 55.
[16]
The concept of joint family venture helps courts
to quantify the monetary remedy where a claim of unjust enrichment has been
made out. Where the evidence shows that the domestic arrangements under which
the unmarried parties have lived amounted to a joint family venture, monetary
damages should be calculated on the value survived basis, namely on the basis
of a share of the wealth generated in the joint family venture proportionate to
the claimants contributions:
Kerr
, at para.
102. If there was no joint family venture, monetary damages calculated on a
quantum
meruit
basis are likely appropriate.
[17]
The proprietary remedy of constructive trust in
a property requires a claimant to show two things: that monetary damages are
inappropriate or insufficient to remedy the unjust enrichment; and the
claimants contribution was linked to the acquisition, preservation,
maintenance, or improvement of the disputed property. The required link has
been variously described as demonstrating a sufficiently substantial and
direct link, a causal connection, a nexus or a clear proprietary
relationship:
Kerr
, at paras. 50-51, 78;
Moore
, at para. 91. The extent of the constructive trust interest should
be proportionate to the claimants contributions:
Kerr
, at para. 53;
Moore
, at para. 91.
Analysis
[18]
I
find no reversible error in the trial judges conclusion that Kelly established
a claim for unjust enrichment which entitled her to deduct 50% of the
marriage-date value of Taplow for purposes of the net family property
calculation under the
FLA
.
[19]
Although
the trial judges reasons on this issue are terse and would have benefited from
further elaboration and explanation, they disclose that he made the following
findings:
(i) The evidence clearly demonstrated that the parties
jointly planned to purchase the Taplow property, renovate it, and sell it for
profit: at para. 53;
(ii) Kelly contributed extensively to the acquisition,
preservation, maintenance and improvement of the property in both money and
other contributions: at para. 55;
(iii) David would be unjustly enriched if he were to
receive the benefit of Kellys efforts without recognition of them: at para. 56;
(iv) A clear connection existed between Kellys
contributions and the property sufficient to impose a constructive trust in her
favour: at para. 56; and
(v) The parties owned the property equally on the date of
their marriage, with the result that each could deduct 50% of the net value of
the property on that date for the purposes of calculating their net family
property: at para. 57.
[20]
Ample
evidence supported findings (i) and (ii): in the months leading up to their
co-habitation, Kelly helped David select a property that was a fixer-upper; following
its purchase, Taplow was gutted; they moved in several months after the initial
renovations made it habitable; the full renovation of the property consumed the
next five years; while David completed the physical renovations, Kelly managed
their household so that he could devote his free time to the renovations; she
cooked, cleaned, did the laundry, gardened, landscaped, and generally
maintained the house; she also assisted with the selection of fixtures, tiles,
flooring, and backsplashes, among other furnishings; and Kelly contributed $500
a month to their household expenses, an amount that covered more than half the
monthly mortgage payment of $831.35.
[21]
That
evidence also supported the trial judges finding (iv) that a clear connection
existed between Kellys contributions and the property.
[22]
However,
the trial judge did not expressly address arguments David made about why Kelly
had not made out a claim for unjust enrichment, including the presence of a
juristic reason for retaining the benefit. The trial judge should have.
However, on the simple factual record before us I see no prejudice from the
trial judges failure to do so. The answers to the question why the trial
judge was satisfied that Kelly had established her claim to unjust enrichment are
clear in the record:
R. v. G.F.
, 2021 SCC 20, at para. 70.
[23]
David
first argued that a contractual reason existed which entitled him to retain the
benefits conferred by Kelly. He contended that from the time they moved into
Taplow in September 1998 until their marriage five years later in August 2003,
their relationship was that of landlord and tenant. David contended that the
$500 Kelly contributed each month from the time they started to co-habit was
rent or, as he put it in cross-examination: Um, she paid $500 a month I guess
rent. At trial, a receipt dated August 10, 1998 for $500 that David had given
to Kelly was filed as an exhibit. On the receipt David had noted: August 98 Rent.
David also made much of the fact that Kelly agreed on cross-examination that it
was reasonable to suggest that she had given David post-dated cheques for her rent.
[24]
When
the evidence is viewed as a whole, there was good reason why the trial judge
did not accept this argument by David. Admissions made by David during his
cross-examination belied his characterization of their relationship as one that
was landlord and tenant-like. David acknowledged that he and Kelly moved into a
property that was barely livable and required extensive renovations, hardly a
scenario in which one party would pay rent:
Q. So she was all in, and you were all in too. Buying this
crappy house, fixing it up, fixing it up over, and living in it while you were
fixing it up she was in on all of that. And so were you.
A. Yeah. I suppose.
Q. Yeah, young people do crazy things like that. And you did
it together. Right?
A. I guess, yeah
.
Q. Yeah. And she lived in that Taplow house with you while it
was basically under construction?
A. Yeah. I mean the main floor was done, but the except other
than the kitchen but that was you know another issue, but the basement was....
(Emphasis added.)
[25]
David
also acknowledged that Kelly contributed to their ability to proceed with and
complete the renovations at Taplow:
Q. You said to this court sir, that you did the next phase of
the renovation when you could afford it?
A. Yes.
Q. And Kelly contributed to the savings that led to you being
able to afford it?
A. She contributed to the monthly you know maintenance and
operational household expenses. Absolutely.
Q. And she reduced your monthly expenses because she had an
income and she was contributing to the household?
A. Yeah.
Q. Yeah. She was keeping things together to allow you to do the
physical work?
A. Um, yeah, I don't know because she also worked at nights
too, so.
Q. Yeah, thats right
A. Yeah.
Q. ...because thats what it took to keep this whole project
afloat?
A. Sure.
Q. To keep money coming in so that you would have food on the
table while you were still building this home? She had to do that. You needed
extra money.
A. Yeah, sure. Absolutely. All money helps.
[26]
Davids
second argument was that even if there was unjust enrichment, the trial judge
should have considered whether the
FLA
s equalization scheme remedied
the unjust enrichment. David emphasizes that the sale proceeds from Taplow were
placed into the couples next home, in which they held title as joint tenants,
thereby enabling Kelly to participate in any future appreciation of value.
[27]
I
see no merit to this argument. The
FLA
s equalization scheme governs asset accumulation during
marriage:
McNamee v. McNamee
, 2011 ONCA 533, 106 O.R. (3d) 401, at
para. 66;
Martin
, at para. 66. While the equalization scheme will
likely resolve most unjust enrichment claims resulting from a marriage, a claim
that one party was entitled to an interest in a property existing at the date
of marriage based on unjust enrichment arising prior to marriage requires
analysis under the common law framework outlined in
Kerr
. Consequently,
the trial judge was not required to consider Kellys entitlements that would
arise post-marriage date under the
FLA
when considering her unjust
enrichment claim based on events occurring before and in respect of an asset
existing at the date of marriage.
[28]
On
appeal, David also argues that the mutual conferral of benefits that occurred
during the pre-marriage stage of the relationship amounted to a juristic reason
for his enrichment and Kellys deprivation. While mutual benefit conferral can
be taken into account at the juristic reason stage of the analysis, its use at
that stage is limited to providing relevant evidence of the parties reasonable
expectations that could support the existence of a juristic reason outside the
settled categories, such as a contractual relationship:
Kerr
, at
paras. 109 and 115. As the trial judge pointed out at para. 53, the evidence in
the present case pointed in a different direction. After their marriage in
2003, David and Kelly sold the Taplow property and used the proceeds to buy
another fixer-upper, this time with the title registered in both their names.
Accordingly, the evidence as a whole showed that David and Kelly arranged their
affairs to acquire fixer-uppers, renovate them, and then sell them at a
profit, with both parties expecting to benefit from their mutual efforts.
[29]
To
summarize the analysis to this point, I see no reversible error in the trial
judges findings (i) to (iv) described in para. 19 above that supported his
conclusion Kelly was entitled to a remedy in respect of her contributions to
the renovation of the Taplow property on the basis of unjust enrichment.
[30]
That
leaves for consideration the trial judges finding (v) that David and Kelly
owned the Taplow property equally on the date of their marriage, with the
result that each could deduct 50% of the net value of the property on that date
for the purposes of calculating their net family property. Having found that
Kelly had made out her claim for unjust enrichment, the
trial
judge did not then consider whether monetary damages would suffice to address
the unjust enrichment, which
Martin
indicates
is the next step in the analysis. Given the way the parties framed the issues
for the trial judges determination, it is understandable that he did not
consider the sufficiency of a monetary award.
[31]
The remedy Kelly sought for the unjust
enrichment was not a monetary award in the trial judgment or a proprietary
interest in an existing asset. Instead, Kelly sought a remedy that would enable
her to include part of the value of Taplow at the date of marriage in her net
family property statement thereby recognizing the unjust enrichment David had
received.
[32]
On his part, David did not argue that monetary
damages would provide Kelly with an adequate remedy; he sought to prevent Kelly
from obtaining any remedy that would permit her to claim part of the marriage
date value of Taplow in her net family property statement. On appeal, David has
not argued that the trial judge erred by failing to consider a monetary award;
instead, he argues that the trial judge erred by allowing Kelly to include 50%
of the marriage date value in her NFP statement.
[33]
Unfortunately,
the trial judge gave no reasons for his conclusion that fairness required Kelly
to receive a 50% interest in Taplow for her contributions. As stated in
Kerr
at para. 53:
The extent of the constructive trust interest should be proportionate
to the claimants contributions. Where the contributions are unequal, the
shares will be unequal
As Dickson J. put it in
Rathwell
, The court
will assess the contributions made by each spouse and make a fair, equitable
distribution having regard to the respective contributions. (Citations
omitted.)
[34]
Unlike the
FLA
,
which presumes that couples are entitled to an equal share of net family
property accumulated during marriage, there is no presumption that a finding of
unjust enrichment entitles a claimant to a half interest in the property. The
extent of the claimants interest must be proportionate to their contributions:
Kerr
,
at para. 102. When the
contributions are unequal, the shares should be unequal:
Kerr
, at paras. 84-85.
[35]
I
have concluded that on the record before us, the trial judges finding that
Kelly was entitled to deduct 50% of the net value of the Taplow property on the
date of marriage for purposes of calculating her net family property is a
reasonably fair and equitable remedy.
It is clear from the
evidence that prior to their marriage Kelly and David were engaged in the joint
project of renovating the Taplow fixer-upper for their mutual benefit. As
well, the trial judges finding is supported by the evidence that David
applied
the full proceeds from the sale of Taplow to acquire the Valleyview Court
fixer upper and put Kelly on title as co-owner, without any separate
financial contribution by Kelly. Although that purchase took place four years
after the date of marriage, it stands as a powerful recognition by David of
Kellys equal contribution to the success of the Taplow renovation, which
enabled them to move up the economic ladder to a higher-end house. Accordingly,
I would not interfere with the trial judges finding on this issue.
IV.
SECOND ISSUE: DAVIDS INCOME FOR SUPPORT
PURPOSES
Factual background
[36]
Davids
income for support purposes was contested at trial. David earned his living
through his successful painting business, Mr. Paint. David and Kelly each hired
experts to review Davids personal and corporate financial information and opine
on Davids annual income. Their opinions were relatively similar, with Kellys
expert finding a slightly higher income than Davids expert:
Year
2013
2014
2015
2016
2017
Kellys Expert
$
147,605
$
178,637
$
105,550
$
111,464
$
207,904
Davids Expert
$92,626
$140,103
$
87,379
$
115,706
$
193,816
[37]
David
argued that his income for support purposes should be set at $132,300, based on
the average of his income in 2015, 2016, and 2017. He contended that his income
in 2017 was an outlier and that the loss of a client in 2018 had resulted in a
significant reduction in his earnings.
Analysis
[38]
I
would not interfere with the trial judges decision to use Davids 2017 income
for support purposes, rather than a three-year average.
[39]
The
starting point for determining income for both child and spousal support is ss.
16 to 20 of the
Federal Child Support Guidelines
, S.O.R./97-175.
[2]
Section 16 sets a presumption that a spouses most recent
[3]
annual income shall be determined from the sources of income set out in Revenue
Canadas general tax return Line 150 income:
Punzo v. Punzo
, 2016 ONCA
957, 90 R.F.L. (7th) 304, at para. 19. Section 17(1) permits a court to look
over the last three years in the following circumstances:
17(1) If the court is of the opinion that the
determination of a spouses annual income under section 16 would not be the
fairest determination of that income, the court may have regard to the spouses
income over the last three years and determine an amount that is fair and reasonable
in light of any pattern of income, fluctuation in income or receipt of a
non-recurring amount during those years.
[40]
Accordingly,
the Guidelines rely on the more recent past to predict the near future and do
not adopt averaging as a default methodology:
Mason v. Mason
, 2016
ONCA 725, 132 O.R. (3d) 641, at para. 138. The language in s. 17 is permissive,
not mandatory. The trial judge was under no obligation to average Davids
income:
Decaen v. Decaen
, 2013 ONCA 218, 303 O.A.C. 261, at para. 50.
[41]
Furthermore,
the evidence at trial indicated that Davids suggested three-year averaging of
his annual income at $132,300 would significantly understate his actual income.
On cross-examination, David conceded that based on his current mortgage, tax,
and insurance costs alone, he would have to be earning at least $160,000 a
year to support those expenses. As well, as the trial judge noted David did not
call at trial a representative of the client which Mr. Paint lost in 2018.
[42]
Finally,
I see no basis for interfering with the trial judges decision to exclude
Davids 2018 T4 Statement of Remuneration Paid and Mr. Paints unaudited 2018
Financial Statements. In his reasons on the
voir dire
, the trial judge
noted that Davids counsel conceded that the two documents were not essential
to the case and their only value was that the corporate revenue report indicated
that 2017 was an exceptional year and revenues fell in 2018. The trial judge stated
that he was not satisfied that David took all reasonable steps to expedite the
production of the T4 and company financial statements knowing that the matter
was scheduled for trial at the April 2019 sittings. He further held that the documents
late disclosure prejudiced Kelly as her expert did not have sufficient time to
consider them. The trial judge concluded that the prejudice accruing from the
admission of these documents would outweigh their probative value and, as a
result, he would not admit them into evidence:
Family Law Rules
, O.
Reg. 114/99, ss. 1(8)(d) and (8.1). It was within the trial judges discretion
to exclude that evidence on the ground that its prejudicial effect outweighed
its probative value:
Gray v. ICBC
, 2010 BCCA 459, 326 D.L.R. (4th)
564, at para. 1.
[43]
For
these reasons I would not interfere with the trial judges decision to use
Davids 2017 income for support purposes. Of course, if Davids income materially
declines in the future, he may bring the appropriate motion to change.
V.
THIRD ISSUE: DAVIDS CLAIM FOR POST-SEPARATION
EXPENSES
Factual background
[44]
At
trial, Kelly and David both sought reimbursement for family-related expenses,
most of which were incurred between the date of their legal separation on
December 31, 2014 and the sale of the matrimonial home in November 2015. As
mentioned, the family continued to reside in the house until its sale.
[45]
Kelly sought reimbursement from David for his
share of expenses charged to the family Visa card after separation relating to
home maintenance, Mr. Paint expenses, medical, family vacation, childrens
activities, and interest charges. The trial judge granted this claim writing
simply: The amount owing by [David] in this regard would be $12,285.59.
[46]
David sought reimbursement for half of the
$48,160.68
in expenses he testified he had incurred in respect of the family home from
January 1, 2015 until the house was sold in November 2015. In disposing of this
claim, the trial judge wrote, in full:
This was not advanced
in his Answer. [David] should not be entitled to an adjustment of the household
expenses that he claimed.
[47]
David submits that two errors infect that conclusion by the trial
judge:
(i) The trial judge applied a double standard in
considering the parties reimbursement requests, disallowing Davids because he
did not plead it in his Answer but allowing Kellys although she had not
included them in her Application;
(ii) The trial judge erred in law by failing to give David
credit against his retroactive support obligations for payments he made to
third parties on a support recipients behalf, namely Kelly and their children.
Analysis
[48]
I do not accept Davids first submission that
Kelly failed to advance a reimbursement claim in her Application. In para. 16
of her Application, Kelly pleaded: The Applicant is in need of funds to
support herself and the children and to pay the credit card debt that the
parties accumulated after separation. The Applicant has requested that [David]
consent to the release of a portion of the sale proceeds, however, [David] has
refused this request with no reasonable explanation. Kelly squarely put the
issue on the table from the start of the litigation.
[49]
As to Davids second submission, given the thinness
of the trial judges reasons on this issue a consideration of the record is
required to ascertain whether it provides a clear answer:
G.F.
, at para. 70.
[50]
David and Kelly agreed on a legal separation
date of December 31, 2014. However, they and their children continued to live
together in the family home until it was sold in November 2015. Kelly testified
that during 2015 she and David carried on with the status quo, playing like [they]
were together as they did not want their children to know about the separation
until the house was sold. As to their understanding about the responsibility
for family expenses following the legal date of separation but before the sale
of the house, Kelly testified on cross-examination as follows:
Q. Okay. And so the same principle, just so I
understand Im not belabouring the point, so the same principle would apply to
the family vacation in Florida, the Sabres game; in other words, you were
living in the same house, you hadnt told the kids yet, and there was no
expectation that there was going to be some formal accounting of how money was
spent.
A. All we were doing as we always had done I
was still buying the groceries, I was still my role was still - hadn't
changed...
Q. Right.
A.
since we separated, so.
[51]
Prior to the date of separation, David had made
all the payments on the family Visa card. After the date of separation, David
only made occasional payments on the card even though family expenses,
including expenses related to the family home, continued to be charged to the
card. David explained that notwithstanding his pre-separation payment of all
charges to the card, he stopped paying because technically the Visa card was in
Kellys name and he just had a secondary users card.
[52]
As to his own claim against Kelly for 2015
expenses in respect of the family home, David only advised Kelly a few weeks
before the April 2019 trial that he would be seeking reimbursement for them.
[4]
He explained that he only
decided to claim reimbursement when he realized that Kelly was seeking
retroactive child and spousal support. However, cross-examination revealed that
position to be completely unfounded. David admitted that Kellys September 2016
Application clearly stated she was seeking retroactive support.
[53]
At trial, Kelly did not dispute that David had
paid most of the $48,160.68 in expenses he was claiming but pointed out that
his claim for reimbursement was a departure from the
status quo
regarding the management of the familys affairs that had prevailed
during 2015 until the house was sold.
[54]
By the time of the trial, over three years had
elapsed between the time David had incurred the expenses and his 11th hour reimbursement
claim just prior to trial. He clearly knew from Kellys September 2016 Application
that she was asserting claims for retroactive child and spousal support, yet he
included no claim for any reimbursement of expenses in his November 2016
Answer. Prior to trial, David only paid monthly child support of $250,
notwithstanding his position at trial that his income during that period of
time averaged at least $132,300. Further, his claim for reimbursement of
post-separation expenses marked a departure from the parties
status
quo
approach between the date of legal separation and the
sale of the house, an approach adopted in the interests of their two young
children. The expenses for which David was seeking reimbursement benefitted all
members of the family, including himself, as he continued to live in the family
home until it was sold. Given those circumstances, I see no error in principle,
or unreasonableness in the result, of the trial judge exercising his discretion
to deny David his 11th hour, three-year old claim for expenses incurred during
2015. Accordingly, I do not give effect to this ground of appeal.
VI.
disposition
[55]
For
the reasons outlined above, I would dismiss the appeal. Based on the agreement
of the parties at the hearing, I would award Kelly her costs of the appeal
fixed at $15,000, inclusive of disbursements and applicable taxes.
[56]
At
the end of oral submissions, Kellys counsel requested an order that the
parties real estate solicitor release the remaining sale proceeds held in
trust in accordance with these reasons. Davids counsel did not object to that
request. Accordingly, an order shall go that the remaining funds held in trust
be distributed to the parties in satisfaction of the amounts awarded in the trial
judges Order and the costs of this appeal.
Released: June 2, 2021 G. R. S.
David Brown J.A.
I agree. G.R. Strathy
C.J.O.
I agree. B.W. Miller
J.A.
[1]
Davids factum also argued that the trial judge erred by
making the August 7, 2020 order. However, during oral argument, Davids counsel
advised the court that this issue is now moot and effectively settled. Kellys
counsel agreed. Accordingly, there is no need to comment on the merits of this
argument. As well, David requested that this court re-visit the costs awarded
below only in the event he succeeded on the appeal, which he has not.
[2]
Section 6.1 of the
Spousal Support Advisory Guidelines
(Ottawa: Department of Justice, 2008) states that the starting
point for the determination of income under the
Spousal Support Advisory Guidelines
is the definition of income under the
Federal Child Support Guidelines
.
[3]
Section 2(3) of the
Federal Child Support Guidelines
states that: Where, for the purposes of these Guidelines, any
amount is determined on the basis of specified information, the most current
information must be used.
[4]
March 18, 2019 Trial Scheduling Endorsement Form.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Lima v. Kwinter, 2021 ONCA 47
DATE: 20210126
DOCKET: C67269
Doherty, Hoy and Jamal JJ.A.
BETWEEN
David Lima
Applicant
(Respondent/Appellant in Cross-Appeal)
and
Alfred M. Kwinter, Alfred
Kwinter Professional Corporation and 1736314 Ontario Inc. carrying on business
as Singer Kwinter
Respondents
(Appellants/Respondents in Cross-Appeal)
Chris G. Paliare and Lauren Pearce, for
the appellants/respondents in cross-appeal
Peter I. Waldmann, for the respondent/appellant
in cross-appeal
Heard: In writing (submitted to a panel on
September 17, 2020)
On appeal from the judgment of Justice Cynthia
Petersen of the Superior Court of Justice, dated July 3, 2019 with reasons
reported at 2019 ONSC 4064.
Doherty J.A.:
I
[1]
This is an appeal brought by the law firm,
Singer Kwinter (SK), and a cross-appeal brought by their former client, Mr.
David Lima. SK represented Mr. Lima in an action brought against his insurer
and his insurance broker. The appeal and cross-appeal are from an assessment of
SKs fees. That assessment proceeded by way of an application before a Superior
Court judge. In addition to appealing the assessment, both SK and Mr. Lima also
seek leave to appeal the costs order made by the application judge.
[2]
I would allow SKs appeal, but only to the
extent of eliminating the application judges recalculation of the
disbursements to account for what she believed to be a double-counting of
certain disbursements. I would dismiss Mr. Limas appeal from the assessment.
[3]
I would dismiss SKs application for leave to
appeal the costs ordered on the application. I would grant Mr. Lima leave to
appeal, allow the appeal and vary the costs order in his favour to $20,000.
II
background facts
[4]
Mr. Limas home and other buildings on his
property burned down in February 2011. Investigation revealed the fire was
deliberately set. Mr. Limas insurer suspected him.
[5]
In the summer of 2011, frustrated with the
progress of his insurance claim, Mr. Lima decided to retain SK.
[1]
SK, a well-known plaintiffs
litigation firm, has enjoyed considerable success taking lawsuits to trial
against insurers who have denied coverage on fire insurance policies and alleged
arson.
[6]
Mr. Lima could not fund what was potentially
long, complicated and expensive litigation on an ongoing basis. He and SK
negotiated a contingency fee agreement (CFA). SK initially proposed a fee
equal to one-third of all monies ultimately paid by any defendants. Mr. Lima
verbally agreed with this proposal, but shortly afterwards, suggested to Mr.
Singer the fee was too high. Mr. Singer agreed to renegotiate.
[7]
In September 2011, Mr. Lima signed a retainer agreement
with SK. The retainer provided for payment to SK, calculated in two ways. SK
was to receive a fee based on a percentage of any amount recovered. Mr. Lima
agreed to pay a fee equal to 20 percent of all claims paid by the defendants up
to $500,000, and 10 percent of all claims paid in excess of $500,000. In
addition to the percentage fee, the CFA also entitled SK to costs paid by the defendants.
The relevant provision read:
In addition to the above-noted sums, the
balance of our fees will be paid by the defendant known as partial indemnity
costs. This amount is in addition to the amounts paid by you noted above.
[8]
In October 2011, SK commenced an action against
the insurer and the insurance broker. In addition to claiming damages against
the insurer of over $5 million for negligence and breach of contract, Mr. Lima sought
punitive damages based on the insurers bad faith denial of coverage. As
against the broker, Mr. Lima claimed damages of $2 million, alleging the broker
failed to give him proper advice and arrange adequate or appropriate insurance
coverage.
[9]
The insurer denied coverage in its statement of
defence, alleging Mr. Lima had either started the fire or caused someone else
to start the fire. The insurer and the broker both maintained the losses claimed
by Mr. Lima were grossly exaggerated. The insurer also counterclaimed against
Mr. Lima, seeking $1.7 million in damages for monies the insurer said it was
obliged to pay to mortgagees under the terms of the policy.
[10]
The action proceeded through discoveries, three pre-trials,
and a mediation. In May 2015, the broker agreed to settle the claims made
against it with a payment to Mr. Lima of $150,000 all in. The insurer settled
about a month later in June 2015 with an all in payment of $1,250,000.
Neither settlement attributed any part of the settlement amounts to any specific
head of damages, or to costs.
[11]
Mr. Lima directed that certain payments be made directly
to third party creditors. The remainder of the settlement funds was paid into
SKs trust account. SK billed Mr. Lima $50,000 in respect of the settlement
with the broker. SK unilaterally attributed $20,000 of that amount to costs.
The remaining $30,000 represented SKs fees calculated in accordance with the
percentages set out in the CFA. SKs bill to Mr. Lima showed $33,900 ($30,000
in fees, plus $3,900 HST) paid to SK from the settlement funds deposited into
SKs trust account by the broker. Mr. Singer testified SK forgave the remaining
amount owing on fees as part of its final accounting with Mr. Lima after the
settlement with the insurer.
[12]
In respect of the funds paid by the insurer into
SKs trust account, SK took fees of $338,390.04, of which it unilaterally attributed
$150,000 to costs, with the remainder representing the fees owed to SK under the
percentages set down in the CFA.
[2]
[13]
In total, SK took fees of $372,290.04 ($33,900
plus $338,390.04). In addition, disbursements of $101,994.34 were paid out of
the settlement funds.
III
the application
[14]
About a year after receiving SKs final account,
Mr. Lima served a Notice of Assessment under the
Solicitors Act
, R.S.O. 1990, c. S.15
. After a false
start before an assessment officer, Mr. Lima commenced an application in the
Superior Court in July 2017, challenging the legality of the CFA. The
application was eventually heard in late January and early February 2019.
[15]
On the application, SK conceded that it knew
when it entered into the CFA with Mr. Lima the agreement contravened s. 28.1(8)
of the
Solicitors Act
, and was unenforceable by virtue of s. 28.1(9).
[3]
According to SK, it was
commonplace in 2011 to negotiate contingency fee agreements, like the one
negotiated with Mr. Lima, and to fail to apply for, or obtain, the judicial
approval required under s. 28.1(8).
[4]
[16]
SK argued, that because the CFA was unenforceable,
its fees should be calculated on a
quantum meruit
basis. SK further
submitted, that in performing that
quantum merit
assessment, the court
must look at Mr. Limas reasonable expectations as one of the relevant factors.
SK contended Mr. Limas reasonable expectations were reflected in the terms of
the CFA he had agreed to with SK. SK contended the amount it had billed Mr.
Lima pursuant to the CFA was reasonable and justifiable on a
quantum meruit
analysis.
[17]
On the application, Mr. Lima did not argue that
SK should be required to return all of the funds it had taken as fees as a
consequence of deliberately entering into an unenforceable contingency fee
agreement. Instead, Mr. Lima submitted SKs bills should be reduced by subtracting
the amounts SK had arbitrarily allocated to costs in the settlement with the
insurer and the broker ($170,000). Mr. Lima argued those arbitrary figures were
made up numbers and amounted to double-counting, having regard to the fees SK
had taken as a percentage of the settlement funds. Mr. Lima insisted he had
never been told that SK would be entitled to costs paid by the defendant on top
of the percentage fee he had agreed to pay. Finally, Mr. Lima submitted there
should be other specific deductions from the fees charged to reflect duplications
and excessive charges.
[18]
Prior to the application, counsel for Mr. Lima
and SK agreed disbursements were not in issue and did not have to be proved. The
application proceeded on the basis that the amount claimed for disbursements
was not in issue.
[19]
The application judge agreed that SKs fees should
be assessed on a
quantum meruit
basis. After referencing the many
factors identified in
Cohen v. Kealey and Blaney
, [1985] O.J. No. 160
(C.A.), the application judge proceeded to consider each factor at length.
Ultimately, she concluded SK was entitled to fees in the amount of $328,546.41
rather than the $372,290.04 SK had claimed. The application judge ordered the
difference, $43,743.63, returned to Mr. Lima.
[20]
Despite the parties agreement that
disbursements were not in issue, and the absence of any submissions from
counsel, the application judge, based on her own review of the billing documents,
concluded SK had inadvertently double-billed disbursements in the amount of
$16,100. She ordered repayment of that amount by SK to Mr. Lima. In total, the
application judge awarded judgment to Mr. Lima in the amount of $59,843.63,
plus pre-judgment interest.
IV
the issues
[21]
Both parties advanced a number of grounds of
appeal. Their arguments raised three questions:
·
Did the application judge err in failing to eliminate
or at least substantially reduce SKs fees on account of SK entering into a CFA
it knew to be unenforceable under the
Solicitors Act
?
·
Assuming the application judge was correct in assessing
SKs fees on a
quantum meruit
basis, did she make legal errors or
material factual errors in her analysis?
·
Should the application judge have reviewed the
amounts attributed to disbursements, given the position of the parties on the
application, and if so, did she correctly hold $16,100 in disbursements had
been inadvertently double counted?
A.
should sks deliberate non-compliance with the
solicitors
act
have disentitled sk to any fees or, alternatively resulted in a
substantial reduction in sks fees?
[22]
The CFA crafted by SK required Mr. Lima to pay a
percentage fee based on the amount he recovered and, in addition, authorized
payment of costs to SK. Sections 28.1(8) and (9) of the
Solicitors Act
,
when read together, provide that a contingency fee agreement, which includes
both a fee payable under the agreement and an amount arising as a result of an
award of costs or costs obtained as part of a settlement, is unenforceable
unless that agreement is approved by a justice of the Superior Court. Approval is
granted only if the lawyer and client make a joint application for approval of
the contingency fee agreement, and satisfy the justice there are exceptional
circumstances warranting including payment of costs to the lawyer as part of
the fees owed under a contingency fee agreement. SK knew an application to the
court for approval was necessary, but did not make any application. SK did not
tell Mr. Lima court approval was required.
[5]
[23]
Sections
28.1(8) and (9) are consumer protection legislation. The
requirements of a joint application for approval and judicial
approval predicated on exceptional circumstances protect clients from excessive
fees and fees determined, according to contractual terms, lacking in
transparency and predictability:
Almalki v. Canada (Attorney General)
,
2019 ONCA 26, at paras. 47-50. The lack of transparency is apparent from a
review of the CFA entered into by SK and Mr. Lima. Under the terms of that
agreement, it was left to SK to unilaterally attribute an amount from the
settlement amounts to costs. Mr. Lima could not know, from the terms of the
CFA, what amount from any settlement SK would attribute to costs paid by the
defendant, and therefore ultimately payable to SK as part of its total fee.
[24]
With the CFA rendered unenforceable by the
Solicitors
Act
, the question becomes how should SKs fees be assessed? Counsel for
Mr. Lima on appeal submits SKs reliance on a CFA it knew to be contrary to the
Solicitors Act
and unenforceable should disentitle SK to any payment
for the services it provided, or alternatively should result in a substantial reduction
of any amount otherwise payable to SK for those services. Counsel argued that
SKs blatant disregard of the constraints of the
Solicitors Act
resulted in a breach of its fiduciary duty to Mr. Lima and an improper removal
of Mr. Limas funds from SKs trust account. Counsel stresses SK knew all along
the CFA contravened the
Solicitors Act
and could not be enforced. He
submits that SKs deliberate and knowing breach of the
Solicitors Act
distinguishes this case from cases like
Tri Level Claims Consultants Ltd.
v. Koliniotis
(2005), 257 D.L.R. (4
th
) 297 (Ont. C.A.), at
para. 40, in which this court allowed recovery of fees on a
quantum meruit
basis, after a paralegal unknowingly entered into an unenforceable contingency
fee agreement.
[25]
I cannot accept Mr. Limas submission for
several reasons. The assessment process is intended to provide a relatively
expeditious manner in which to determine a reasonable fee for legal services
provided. Allegations of misconduct against a lawyer, which have no impact on
the value of the legal service provided, are not properly resolved in the
context of an assessment application. Mr. Limas argument would introduce a
punitive element into the assessment process. He invites the court to punish
SK for non-compliance with the
Solicitors Act
by eliminating or reducing his fee. Punishment is
not normally a goal of civil litigation. If SK should be punished, that task must
be left to the state or the Law Society.
[26]
Mr. Lima also seeks a windfall. He would have
the court make an order allowing him to avoid reasonable payment for legal
services that resulted in significant financial benefit to Mr. Lima. The approach
urged by Mr. Lima, which would allow him to reap the benefits of the settlements
achieved by SKs efforts without paying a fair and reasonable fee, goes well
beyond any legitimate consumer protection goal, and strikes me as the very
definition of unjust enrichment.
[27]
Mr. Limas contention that SKs breach of
the
Solicitors Act
should disentitle SK to reasonable fees for
services finds no support in the language of the relevant provisions in the
Solicitors
Act
. Section 28.1(9) renders a
contingency fee agreement that does not comply with s. 28.1(8) unenforceable.
Courts have long drawn a distinction between services provided pursuant to an
agreement which is illegal as offensive to fundamental public policy notions
and agreements that are unenforceable. Services provided under agreements which
are unenforceable but not illegal as contrary to public policy are compensable
on a
quantum meruit
basis:
Tri Level Claims Consultants Ltd.
, at para. 34 (Ont. C.A.).
[28]
Section 28.1(9)
speaks only to the enforceability of a non-compliant contingency fee agreement.
SK cannot enforce the CFA. That is, SK cannot rely on the terms of that
agreement to fix the value of the legal services provided to Mr. Lima. The unenforceability
of the CFA does not, however, alter the reality that the services provided by
SK had real value to Mr. Lima. Nor, in my view, does the unenforceability of
the CFA negate SKs entitlement to reasonable compensation for the services it
provided. Had the legislature intended to deny legal fees for services provided
pursuant to an unenforceable CFA, or had the legislature intended that
non-compliance with s. 28.1(8) should compel a deduction in fees otherwise
owed, the legislature would have done much more than simply declare the contingency
fee agreement unenforceable.
[29]
Apart from
the specific language of s. 28.1(9), the common law provides no basis for
depriving SK of any payment for its services by virtue of its non-compliance
with s. 28.1(8). Courts will not recognize or enforce claims predicated on illegal
agreements that are offensive to public policy. For example, the court process will
not lend itself to recovery for services provided pursuant to an agreement to
commit a tort or a crime:
Tri Level Claims
Consultants Ltd.
, at
para. 35.
[30]
The CFA
entered into by SK and Mr. Lima does not contemplate the commission of a crime.
Nor do the terms necessarily constitute champerty, maintenance or any other
tort: see
McIntyre Estate v. Ontario (Attorney
General)
(2002), 61
O.R. (3d) 257 (C.A.), at paras. 26, 47, 70-76. The common law offers no
justification for going beyond the statutory consequences described in s. 28.1(9).
That section speaks only to the enforceability of the contingency fee agreement,
and not to any entitlement to compensation for the value of services provided
pursuant to the agreement.
[31]
Sections 23 and 24 of the
Solicitors Act
offer strong support for the interpretation of s. 28.1(9) that does not deny a
lawyer a
quantum meruit
assessment of fees if the contingency fee
agreement is rendered unenforceable by s. 28.1(9). Under s. 23, a client may
challenge fees owing under any agreement, including a contingency fee agreement,
on the basis the terms of the agreement are not fair and reasonable between the
parties. If the court accepts that the terms are not fair and reasonable, s.
24 directs:
the agreement may be declared void, and the
court may order it to be cancelled and may direct the costs, fees, charges and
disbursements incurred or chargeable in respect of the matters included therein
to be assessed in the ordinary manner.
[32]
As s. 24 makes plain, a contingency fee
agreement that is not fair and reasonable is void and cancelled. The
section, however, goes on to provide that fees are to be assessed in the
ordinary manner, that is by a determination of what is reasonable in all the
circumstances: see
Raphael Partners v. Lam
(2002), 61 O.R. (3d) 417
(C.A.), at paras. 30-33, 49-50;
Henricks-Hunter v. 814888 Ontario Inc.
(Phoenix Concert Theatre)
, 2012 ONCA 496.
[33]
Although s. 28.1(9) does not specifically
indicate a contingency fee agreement found unenforceable under that section
should be assessed in the ordinary manner, I see no principled reason to draw a
distinction between a contingency fee agreement found unenforceable under s.
28.1(9) and a contingency fee agreement found void or cancelled under s.
24. The same consequence should follow in respect of agreements found wanting
under either s. 24 or s. 28.1(9). The lawyer can no longer rely on the terms of
the contingency fee agreement as the basis for determining their fee, but is entitled
to reasonable compensation reflective of the value of the legal services
provided.
[34]
The case law,
while sparse, is also against Mr. Limas position. In
Cookish v. Paul Lee Associates Professional Corporation
, 2013 ONCA 278, the client claimed the
contingency fee agreement with his lawyer was invalid for non-compliance with
the
Solicitors Act
. This court framed the issue in this way,
at para. 2:
As it turns out, however, there is a dispute
about the nature of the retainer agreement entered into between the parties. Is
it, or is it not, a valid contingency fee agreement, as contemplated by the
Solicitors
Act
[citation omitted]? If the answer is no as Ms. Cookish contends
then the account may be assessed as to the amount on a
quantum meruit
basis. If the answer is yes as the solicitors contend then effect must be
given to the formula set out in the agreement in determining the amount.
[35]
Ultimately, at para. 60, the court remitted the
matter to the application judge to consider the nature, validity and effect of
the agreement entered into between the client and the solicitor.
[36]
In
Du Vernet v. 1017682 Ontario Limited
and Victor Wong
, 2009 ONSC 29191, the client sought an assessment of his
lawyers fees payable under a contingency fee agreement. The motion judge held
the contingency fee agreement did not comply with the relevant regulations
under the
Solicitors Act
:
Du
Vernet
, at paras. 18-20. He further
held the agreement was void under s. 24 of the
Solicitors Act
as unfair and unreasonable:
Du Vernet
, at para. 23. The motion judge went on, however, to
determine that the lawyers were entitled to fees assessed in the ordinary
manner:
Du Vernet
, at
paras. 26-29.
[37]
In
Sé
guin v. Van Dyke
, 2013
ONSC 6576, the motion judge considered a contingency fee agreement that did not
comply with s. 28.1(8). He declared the agreement void and unenforceable. The
motion judge said, at para. 20:
I grant the application and declare the
contingency fee agreement void and unenforceable. The reasonableness of the
fees charged by the defendant will be determined by the trial judge in the tort
action, who will receive
viva voce
evidence and who will be in a
better position to determine the credibility of the parties.
[38]
The order in
Sé
guin
recognizes the lawyers entitlement to reasonable fees,
despite non-compliance with s. 28.1(8) of the
Solicitors Act
, and the unenforceability of the contingency fee
agreement. For reasons peculiar to that case, the motion judge directed that
the assessment of the fees should be determined in the context of the pending tort
action.
[39]
Mr. Lima
relies on
Chudy v. Merchant Law Group
, 2008 BCCA 484. In
Chudy
,
the client sued his former solicitors alleging fraud, breach of trust and
breach of fiduciary duty. Among other things, the client demanded the return of
the funds paid pursuant to a contingency fee agreement. The client alleged the
agreement was invalid for a variety of reasons, all of which involved
misconduct by his former lawyers. The client maintained any fees paid were paid
as a result of the lawyers deceit and breach of their fiduciary duty.
[40]
The majority
of the British Columbia Court of Appeal concluded the contingency fee agreements
were unenforceable primarily because the solicitor who entered into the
agreements was not licensed to practice law. The majority also rejected the
lawyers claim to a
quantum meruit
assessment of those fees. The court said,
at para. 76:
The appellants arguments do not address the
misconduct found by the trial judge or how that misconduct affects the
quantum
meruit
claim. In this respect, the finding that the respondents would have
taken the file elsewhere had they known the truth about Mr. Shaws professional
status in the winter of 2002 takes on particular significance. The application
seeks to recover fees it would not have earned but for Mr. Shaws deceit. His
deceit clearly makes the
quantum meruit
claim untenable in equity.
[41]
I agree with the conclusion reached by the
majority of the British Columbia Court of Appeal. On the findings of the trial
judge, the fees paid by the client were paid directly as a consequence of the
deceit perpetrated upon the clients by the lawyers. The client was entitled to
recover any fees paid as damages flowing from the lawyers fraud. A
quantum
meruit
claim could not mitigate those damages.
[42]
There is no suggestion in this record Mr. Lima
would not have agreed to the terms of the CFA if he knew the agreement contravened
s. 28.1(8) of the
Solicitors Act
. Further, on the application judges
findings, Mr. Lima was not deceived or misled as to the terms of the CFA.
Chudy
does not assist Mr. Lima.
[43]
Both parties made some reference to
Hodge v.
Neinstein
,
supra
. In that case, the Divisional Court and this
court were concerned with whether s. 28.1(8) of the
Solicitors Act
could support a cause of action for the purposes of certification as a class
action. Neither court opined on the consequences of non-compliance with s.
28.1(8). The
Divisional Court did, however,
indicate the court trying the action might order the return to the client of
all funds paid under the unenforceable contingency fee agreement. The court
went on to observe, if the funds were ordered returned, it would be incumbent
on the lawyer to establish a valid
quantum meruit
claim for fees:
Hodge v. Neinstein
, at para. 8.
[44]
In summary, for the reasons set out above, the
application judge correctly held the CFA was unenforceable. She properly concluded
SKs fees should be assessed on a
quantum meruit
basis and correctly
did not treat SKs deliberate breach of s. 28.1(8) of the
Solicitors Act
as a reason for eliminating or substantially discounting fees otherwise earned by
SK.
[45]
On the application judges findings, the CFA
reflected Mr. Limas agreement as to how SKs fees would be calculated. Specifically,
the application judge was satisfied Mr. Lima understood the CFA included both a
percentage fee component and a costs component. In coming to that conclusion, the
application judge rejected Mr. Limas evidence to the contrary, stating at,
para. 176:
I find that Mr. Lima was aware, from the time
that he retained Singer Kwinter, that partial indemnity costs would be added to
the solicitors percentage fees in the event of a settlement. There is,
however, no evidence that Mr. Lima knew how partial indemnity costs would be
calculated.
[46]
By all accounts, Mr. Lima is a successful and
experienced business person. He negotiated the fee agreement with SK. The terms
of the agreement negotiated by Mr. Lima provided valuable insight into his
reasonable expectations as to the fees he would eventually have to pay. His
reasonable expectations are a significant factor in determining reasonable
value for the service provided. It must, however, be stressed that the terms of
the agreement go only so far in shedding light on Mr. Limas reasonable expectations.
Based on the CFA, Mr. Lima could not know how the costs component would be determined,
or what the amount would be.
B.
did the application judge make errors in her
quantum
meruit
analysis?
[47]
The application judges
quantum meruit
assessment tracked the individual factors identified in the case law. She
clearly understood it was not her function to value the services according to
the terms of the unenforceable CFA. Instead, she had to arrive at a
quantum
meruit
assessment after weighing all of the relevant factors, including
Mr. Limas reasonable expectations as to the fees he would be required to pay:
Lima
v. Singer
, at para. 62.
[48]
In her detailed consideration of the factors
relevant to a
quantum meruit
assessment, the application judge made a
number of significant factual findings:
·
SK took appropriate and reasonable steps to
advance Mr. Limas litigation (para. 85);
·
It would have been reasonable for SK to have
spent roughly 300 billable hours on the file (paras. 86-88);
·
The file had significant legal complexity (para.
100);
·
SK handled the litigation with demonstrable
expertise and competence. They showed a high degree of skill, which favours a
generous assessment of their fees (paras. 100, 124);
·
Mr. Limas claim that SK failed to follow his
instructions on a specific matter was, like significant other parts of his
evidence, false (paras. 121, 175);
·
SK assumed a substantial financial risk by
committing to take Mr. Limas case all the way through trial without payment.
There was a genuine risk the claim would be dismissed at trial. Had the claim
failed at trial, SK would have been required to absorb losses in excess of
$500,000 (paras. 133, 134, 141-43, 159);
·
The results achieved by SK were very good and
excellent (para. 160);
·
Without SK extending the contingency fee
agreement, Mr. Lima would not have been able to finance the litigation. On a
normal fee-for-service basis, he would have been required to advance at least
$100,000 before the case got to trial (para. 164); and
·
The amounts to be paid to Mr. Lima under the
terms of the settlements were commensurate with the amounts he had been told he
could expect to receive under those settlements before Mr. Lima signed the
Minutes of Settlement and the Directions to Counsel (para. 186);
[49]
It is fair to say that neither SK nor Mr. Lima
are happy with the application judges
quantum meruit
analysis. Both
argue she was wrong about the level of success Mr. Lima realized through the
settlements. SK argues the application judge understated the success by
calculating SKs fees at the low end of the range suggested by one witness. Mr.
Lima, however, submits the application judge mischaracterized what were, in
reality, average results as very good or excellent.
[50]
I will not go through the arithmetic and other
exercises performed by the parties in support of their very different
interpretations of the results achieved by SK. The assessment of the level of
success achieved, like other assessments (e.g. the level of risk assumed by the
lawyers, the skill of the lawyers), requires a holistic assessment which places
the results in the context of the entirety of the relevant circumstances. There
is no doubt an element of subjectivity to some of the necessary assessments. It
is sufficient, in my view, to hold that the application judges assessments
were reasonable and available to her on the record before her. I would not
interfere with any of her factual findings.
[51]
SK and Mr. Lima allege errors in respect of the
treatment of the evidence of the witness, David Leblanc. Mr. Leblanc, an
appraiser who had been retained by Mr. Lima during the litigation, was called
as a witness on the assessment by Mr. Lima. In cross-examination, Mr. Leblanc
was asked about his experience working with law firms in cases like this one
and the kinds of fees charged by those law firms. Mr. Leblanc testified to his considerable
experience in cases like this one. He indicated that, as a rough average,
fees ranged from 25 to 35 percent of the recovery. Counsel for Mr. Lima
objected to the answer, but the trial judge admitted it, indicating the witness
was speaking only to his personal experience and not offering a broader
opinion.
[52]
The application judge ultimately determined SK
should receive a fee of 25 percent of the settlement funds, less disbursements
(paras. 189-92). SK submits the 25 percent falls at the bottom of Mr. Leblancs
range and, given the findings of the application judge, the assessment should
have been closer to the 35 percent, at the top of the range. Mr. Lima maintains
Mr. Leblancs evidence was inadmissible and should have been rejected outright.
He claims Mr. Leblanc was not qualified to give expert evidence and the
procedural requirements in respect of expert evidence were not followed.
[53]
The trial judge was entitled to consider Mr.
Leblancs evidence, based on his personal experience, for what it was worth.
His evidence constituted some evidence of fees charged in cases that were, at
least, generically similar to this one.
[54]
I would also reject SKs submission in respect
of Mr. Leblancs evidence. That submission proceeds on the faulty assumption
that, because the application judge permitted Mr. Leblanc to testify about his
personal experience, she was required to translate that evidence into a range
of fees within which she must operate, for the purposes of determining SKs
fees. Mr. Leblancs evidence did not set a general range, and the application
judge did not use it for that purpose. His testimony simply provided some
evidence of the level of contingency fees charged in similar cases in which he had
been involved.
[55]
The application judge made no error in her
treatment of Mr. Leblancs evidence. She did not arrive at 25 percent as an
appropriate fee by relying on Mr. Leblancs evidence. She explained how she
arrived at 25 percent as an appropriate fee, at para. 190:
This percentage takes into consideration the
significant monetary value of the matters in issue and their importance to Mr.
Lima, the very substantial amount of time reasonably expended by the solicitors
on the file, the high degree of skill and competence demonstrated by the
solicitors, the risk of non-payment assumed by the solicitors, the excellent
results achieved by the solicitors, Mr. Limas ability to pay any amount that
Mr. Lima could reasonably have expected to pay in the circumstances. It also takes
into consideration the fact that the claims were settled prior to trial and
prior to completing full trial preparation. Had the matter gone to trial with
the same result, I would have found that a higher percentage than 25 percent
was appropriate.
[56]
SK next submits the application judge wrongly
took into account Mr. Limas ability to pay his legal fees as at the time of
the assessment, some four years after the settlement. SK submits Mr. Limas
ability to pay at the time of the retainer, or at the time of settlement, may
have relevance in assessing his fees on a
quantum meruit
basis, but
Mr. Limas financial circumstances years after the settlement cannot have any
relevance.
[57]
There is merit to SKs submission. However,
although the application judge made a brief reference to Mr. Limas difficult
financial circumstances as of 2019 under the heading Ability of the Client to
Pay (para. 163), I do not read Mr. Limas financial difficulties as having any
impact on the application judges ultimate assessment. The application judge
went no further than to indicate some reduction in SKs fees could provide
financial help for Mr. Lima. The application judge did not endorse that
approach or identify any reduction on account of Mr. Limas difficult financial
circumstances.
[58]
SKs last submission challenging the
quantum
meruit
assessment by the application judge arises out of the treatment of
legal services provided by SK in respect of ancillary claims made by Mr. Limas
creditors. These claims had some collateral connection to Mr. Limas claims
against the insurer and the broker. Mr. Singer testified SK undertook to help Mr.
Lima on these matters without charging him anything beyond the amounts payable
under the CFA.
[59]
SK submits that its decision not to charge for
services relating to ancillary matters was predicated on the existence of the
CFA. SK contends, that because the CFA was unenforceable, it is entitled to a
quantum
meruit
assessment of all of the services it provided.
[60]
SKs submission is bold, if nothing else. In
effect, SK submits that it should not be bound by its agreement not to charge
for certain legal services because the CFA, which it knew all along was
unenforceable, is indeed unenforceable. In any event, Mr. Lima clearly had
every reason to reasonably expect he would not be required to pay for services
rendered in respect of the ancillary matters.
[61]
Even if the service in respect of these ancillary
matters should have been taken into account in the
quantum meruit
assessment, the application record indicates that minimal work was done on
these ancillary files. Assuming the work should have been taken into account, I
see no reason to think the minimal additional work involved would have led to
any different ultimate determination as to the appropriate fee.
[62]
Like SK, Mr. Lima raises several alleged errors
in the application judges
quantum meruit
assessment. He argues, that
without a valid contingency fee agreement, a
quantum meruit
assessment
cannot be based on a percentage of the settlement amounts. He submits, if a
quantum
meruit
assessment is based on the percentage of the settlement amounts, it
is simply a contingency fee under another name. Contingency fees that do not
comply with the
Solicitors Act
are not enforceable. Counsel contends
the application judge could not avoid the prohibition against enforcing the CFA
by, in effect, implementing a contingency fee agreement under the guise of a
quantum
meruit
assessment.
[63]
The application judge did not base her
quantum
meruit
assessment on a percentage of
the settlement amounts. She based that assessment on her thorough review of the
relevant factors and a careful blending of those factors. Her reasons clearly
set out the path to her decision.
[64]
The application judge did ultimately determine
that the assessment should be quantified as a percentage of the settlement
amounts. I see no error in that mode of quantification, particularly where a
significant part of the value of the legal services provided flowed from the
lawyers assumption of a very real, significant financial risk, absent which
the client could not have pursued the claim. Furthermore, an assessment based
on a percentage of the settlement amounts was clearly the mode of
quantification contemplated by both SK and Mr. Lima.
[65]
Mr. Lima next argues, that even if the
application judge properly determined that
quantum meruit
fees could be awarded as a percentage of the
settlement amounts, the motion judge erred in failing to deduct the amounts SK
had attributed to costs ($170,000) from the settlement amounts before
determining the fee based on 25 percent of the settlement amounts.
[66]
I would reject this argument. The amount SK
had attributed to costs from the settlement for the purposes of their fee
calculations under the CFA had no relevance to the application judges
quantum
meruit
assessment. The application
judge concluded the value of SKs legal services should be quantified as a
percentage of the settlement amounts recovered for Mr. Lima. Whatever part of
those amounts SK unilaterally attributed to costs, for the purposes of the CFA,
had no relevance to the trial judges assessment of SKs fees on a
quantum
meruit
basis.
[67]
Mr. Lima further submits that time spent on
the file is the major factor in any
quantum meruit
assessment. He contends, that while the application
judge referred to the hours spent, she largely ignored them in her assessment:
Lima
v. Singer Kwinter
, at paras. 73-88.
[68]
Time spent on the file is obviously a relevant
consideration. Under traditional retainers, it will, in all likelihood, be
among the most important considerations. Its significance in any given case,
however, depends on the interplay of all of the relevant factors.
[69]
The application judge decided that the nature of
the retainer and the totality of the circumstances warranted giving prominence
to factors other than the time spent on the file. She said, at para. 143:
Given the substantial risk assumed by Singer
Kwinter, it would be inequitable to compensate the solicitors in this case on
an hourly basis for the services they provided on a percentage contingency fee
basis. The clients assume no financial hardship. Mr. Lima paid an initial retainer
of only $5,000, but that amount was ultimately refunded to him. The clients
benefitted from skilled legal representation at no costs to them with all the
financial risk assumed by their solicitors.
[70]
I agree with the trial judges
observations. They explain why the hours put in on the file were not as
important in arriving at a
quantum meruit
assessment in this situation, as they would be in many others.
[71]
None of the arguments advanced by SK or Mr. Lima
give cause to set aside or vary the application judges
quantum meruit
assessment.
C.
should the application judge have reviewed the
disbursements and, if so, did she err in finding an inadvertent double-counting?
[72]
The parties had agreed well before the
application commenced that SK was entitled to the disbursements listed in its
accounts and need not prove those disbursements. The application proceeded on
that basis. The disbursements went unchallenged and the documents relevant to
the disbursements were left unexplored.
[73]
In her reasons, the application judge concluded
SK had inadvertently included in its final bill disbursements in the amount of
$16,100, that had already been claimed and paid in connection with the
settlement with the broker:
Lima v. Singer Kwinter
, at paras. 57-60,
191-95. The application judge had discovered the apparent double-counting on
her own review of the records during the preparation of her reasons. Neither
party had any opportunity to address the issue. They first became aware that
disbursements were in issue when they read the application judges reasons.
[74]
The rules governing raising issues not properly
pleaded are not necessarily applied as strictly in a proceeding involving an assessment
of a lawyers fees, as they would be in regular civil litigation. I think it would
have been appropriate for the application judge to raise the question of the possible
double-counting of disbursements, even though the parties had agreed
disbursements were not in issue. The application judge erred, however, in
deciding that issue without giving the parties any opportunity to address the
apparent double-counting she had discovered during her review of the evidence.
[75]
SK had no reason to think the amount of
disbursements it claimed were challenged, or that the application judge would
take issue with the amount claimed for disbursements. Fairness dictated that
when the application judge had concerns about the amounts claimed for
disbursements during her review of the record, she bring those concerns to the
attention of the parties and give them an opportunity to call evidence and make
submissions before she decided the issue.
[76]
The wisdom of allowing counsel an opportunity to
address the issue before deciding it, is made clear on this record. The billing
documents referred to by the application judge do not demonstrate any
double-counting, although they do raise that distinct possibility. The
submissions made in the facta filed in this court are not convincing either
way. There may or may not have been an inadvertent double-counting. It may also
be that the fees owing to SK as a result of the settlement with the insurance
broker were understated in the same billing documents. Evidence and submissions
based on that evidence would, in all likelihood, have resolved the issue one
way or the other.
[77]
Normally, the onus would be on SK to prove the
disbursements. However, when, as here, the parties had specifically agreed SK
was entitled to the disbursements claimed and need not prove them, it would be
unfair to deny SK disbursements for want of proof. Absent a clear and
demonstrated double-counting, I would hold Mr. Lima to his agreement that SK
was entitled to the disbursements claimed. The application judge erred in
requiring SK to repay $16,100 to correct a double-counting of disbursements.
V
conclusion on the appeal and cross-appeal
[78]
I would allow SKs appeal to the extent that the
judgment in favour of Mr. Lima is reduced by $16,100 from $59,843.63 to
$43,743.63, plus pre-judgment interest.
[79]
Mr. Limas cross-appeal is dismissed.
VI
the costs appeals
[80]
The application judge awarded Mr. Lima costs on
a partial indemnity basis up to November 13, 2018, the date on which SK served
Mr. Lima with an Offer to Settle in the amount of $50,000. The application
judge fixed those costs at $20,000.
[81]
The application judge treated the $50,000 offer
as more favourable than the judgment obtained by Mr. Lima, as in her view the
$16,100 attributable to the inadvertent double-counting of disbursements should
be deducted from the judgment for the purposes of assessing costs, leaving a net
judgment of $43,743.63. Based on this calculation, the November 13, 2018
$50,000 offer exceeded the judgment. The application judge awarded SK partial
indemnity costs after November 13, 2018. She fixed those costs at $17,000.
[6]
[82]
In the end, SK was required to pay Mr. Lima
$3,000 in costs ($20,000 minus $17,000).
[83]
Both parties have alleged a myriad of errors by
the application judge in her costs assessment. I do not propose to address each
argument. Nor do I think the appropriate costs order in these circumstances
should turn on the rules applicable to offers to settle. There are two fundamental
facts which are largely determinative of the proper costs order on this
application.
[84]
First, SK bears the responsibility for the need
for an assessment. By entering into a fee agreement it knew to be contrary to
the
Solicitors Act
and unenforceable without prior court approval, and
by failing to inform the client of these facts, SK made the ultimate assessment
of its fee virtually inevitable if and when the client learned the CFA was
unenforceable. Not only was the assessment made inevitable by SKs conduct, I
think its very combative tone was also very much a predictable consequence of
SKs troubling lack of candor with Mr. Lima. Mr. Lima had little reason to
accept at face value anything SK said about their fees by the time he commenced
his application.
[85]
SKs misconduct in respect of the CFA made the
assessment of its fees virtually inevitable and goes a long way to making SK
responsible for the costs of that assessment, regardless of the outcome.
[86]
The second important fact, however, points in
the opposite direction. Beginning about two months before the application
hearing, SK made several
bona fides
attempts to settle the assessment.
Mr. Lima made none. His only offer to settle proposed terms more suggestive of
capitulation than settlement.
[87]
Mr. Lima bears significant responsibility for
the four-day hearing that eventually ensued. Two of the offers he rejected were
better, one was much better, than the amount Mr. Lima is due under the
judgment, as varied by this court. While SKs actions are largely responsible
for the bringing of the assessment application, Mr. Limas actions are
primarily responsible for the four-day hearing.
[88]
In my view, a proper balance is achieved by
awarding Mr. Lima his costs up to the point of the offer in November 2018 and
denying either party any costs after that point.
[89]
The application judge fixed Mr. Limas costs at
$20,000 up to November 2018. This amount may be somewhat high on a partial
indemnity basis. However, Mr. Lima was entitled to something more than partial
indemnity costs, given SKs misconduct.
[90]
I would grant Mr. Lima leave to appeal costs and
vary the costs to $20,000, all inclusive. I would dismiss SKs motion for leave
to appeal costs.
VII
costs of the appeal
[91]
SK was successful on the main appeal to the
extent of reducing the judgment by $16,100. Mr. Lima was successful on the
costs appeal to the extent of increasing the costs award to him by $17,000. In
light of the similar and limited success of both parties, I would make no order
as to costs on the appeal.
Released: DD JAN 26 2021
Doherty J.A.
I agree Alexandra Hoy J.A.
I agree M. Jamal J.A.
[1]
SK was retained by Mr. Lima and his common-law wife, Ms.
Martha
Hildebrandt. I will refer to Mr. Lima as the client.
[2]
As the application judge points out, at para. 61, by treating the
settlement amounts paid by the broker and insurer separately, contrary to the
terms of the CFA, the total amount claimed for fees by SK exceeded the amount
actually owed under the percentages set out in the CFA. The application judge
did not quantify that amount, but it would appear to be about $15,000.
[3]
The CFA also did not comply with the applicable regulations:
O. Reg. 195/04 Contingency Fee Agreements, ss. 2, 3.
[4]
The practice apparently changed after December 2015, when the
Divisional Court certified a class action against a law firm. The class action
raised common issues with respect to the enforceability of the contingency fee
agreements and the clients entitlement to a return of any and all fees
collected under contingency fee agreements that contravened the
Solicitors Act
:
Hodge
v. Neinstein
, 2015 ONSC 7345 (Div. Ct.), affd in part, 2017 ONCA 294, leave to
appeal to SCC dismissed, [2017] S.C.C.A. No. 341
.
[5]
In May 2018, legislation was enacted repealing ss. 28.1(8)
and (9) of the
Solicitors Act
. That amendment
has not yet been proclaimed in force.
[6]
The application judge erred in deducting the $16,100 from
the judgment, for the purposes of determining whether SKs offer exceeded the
judgment. However, that error was overtaken when this court varied the judgment
to $43,743.63, the amount used by the trial judge in determining whether the
offers exceeded the judgment.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Lockhart v. Lockhart, 2021 ONCA
329
DATE: 20210519
DOCKET: C68651
Huscroft, Paciocco and Jamal
JJ.A.
BETWEEN
Barbara
Lockhart personally and in her capacity as attorney for property
of June Lockhart
Applicant/Moving Party (Respondent)
and
Robert Lockhart personally and
in his capacity as attorney for property
of June Lockhart, and June Lockhart
Respondent/Responding Party (Appellant)
Robert Lockhart, acting in person
Matthew Rendely and Bryan Gilmartin,
for the respondent
Heard: May 13, 2021 by videoconference
On
appeal from the order of Justice Bernadette Dietrich, of the Superior Court of
Justice, dated August 12, 2020.
REASONS FOR DECISION
[1]
In 2018, the appellant, Robert Lockhart, arranged for his mother, June
Lockhart, to execute a Power of Attorney for Property (POAP) and a Power of
Attorney for Personal Care (POAPC) appointing him as her attorney. His
sister, the respondent, Barbara Lockhart, brought a successful motion
challenging the validity of those appointments. By order dated August 12, 2020,
the POAP and POAPC were declared to be void
ab
initio
and of no force or effect. Pursuant to the
Health Care Consent Act
, 1996
, S.O. 1996, c. 2,
Sched. A, the appellant and the respondent were also ordered to jointly make
personal care, health care and treatment decisions on Junes behalf. Costs were
awarded to the respondent in the amount of $55,000 inclusive of HST and
disbursements.
[2]
The appellant appeals the declaration relating to the POAPC and the
Health Care Consent Act
order,
as well as the costs order.
[3]
The appellant submits that the motion judge erred in law by misapplying
the capacity test for a POAPC and by placing the onus on him to establish
Junes capacity to grant the POAPC. We disagree. The motion judge clearly
understood the test of capacity under the POAPC and applied it correctly.
Moreover, we see no error in the motion judges ruling, pursuant to s. 2(3) of
the
Substitute Decisions Act
, 1992
,
S.O. 1992, c. 30, that the appellant had reasonable grounds to believe that
June was incapable of entering into the POAPC, and therefore could not rely upon
the presumption of capacity. That holding was supported by factual findings the
motion judge was entitled to make relating to the manner in which the POAPC was
executed, efforts by the appellant to avoid an assessment of Junes competence
to execute a POAPC, and the significant delay by the appellant in disclosing
that the POAPC was executed.
[4]
Nor do we accept the appellants submissions that the motion judge
misapprehended or failed to consider evidence, committed palpable and
overriding errors in making findings, or failed to give adequate reasons for
her decision. We find no errors in her analysis, and her reasons for decision
adequately address the evidence and issues before her.
[5]
Finally, we see no basis for interfering with the costs decision. Leave to
appeal costs is denied.
[6]
We need not address the reasonable apprehension of bias claim initially
advanced by the appellant, as he abandoned that ground of appeal for tactical
reasons at the outset of the oral hearing.
[7]
The appeal is therefore dismissed. Costs in this appeal are awarded to
the respondent in the amount of $30,000 inclusive of HST and disbursements.
Grant Huscroft J.A.
David M. Paciocco
J.A.
M. Jamal J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Longueépée v. University of
Waterloo, 2021 ONCA 53
DATE: 20210126
DOCKET: C67862
Strathy C.J.O., Lauwers and van
Rensburg JJ.A.
BETWEEN
Roch Longueépée
Applicant (Respondent)
and
University of Waterloo
and
Human Rights Tribunal of Ontario
Respondents (
Appellant
/
Respondent
)
Frank Cesario and Amanda P. Cohen, for
the appellant
David Baker and Laura Lepine, for the
respondent Roch Longueépée
Brian A. Blumenthal and Jason Tam, for
the respondent Human Rights Tribunal of Ontario
Heard: June 1 and 5, 2020 by video conference
On appeal from the order of the
Divisional Court (David L. Corbett, Graeme Mew, and Frederick L. Myers JJ.),
dated September 20, 2019, with reasons reported at 2019 ONSC 5465, 439 D.L.R.
(4th) 326, allowing an application for judicial review of a decision of the
Human Rights Tribunal of Ontario dated May 25, 2017, with reasons reported at
2017 HRTO 575 and a reconsideration decision dated December 22, 2017, with
reasons reported at 2017 HRTO 1698.
COSTS ENDORSEMENT
[1]
We have received and considered the written submissions on costs of the
appeal.
[2]
The respondent Roch Longueépée seeks his partial indemnity costs of the
appeal severally from the appellant University of Waterloo and from the Human
Rights Tribunal of Ontario (the HRTO). He seeks approximately 25% of his
costs from the HRTO. Both the University and the HRTO resist the claim for
costs.
[3]
We disagree with the University that this is a case where no costs
should be awarded as between itself and Mr. Longueépée because success was
divided on the appeal. Mr. Longueépée was largely successful, and is entitled
to his costs. The central issue on appeal whether the HRTOs decision
dismissing Mr. Longueépées human rights complaint was unreasonable was
determined against the University. The appeal was allowed only to the extent
that the matter was sent back to the HRTO for a remedy.
[4]
The University does not take issue with the number of hours spent or work
done by Mr. Longueépées counsel but argues that the partial indemnity rates
claimed, when compared with his counsels actual rates, is too high; we agree
and fix Mr. Longueépées costs against the University at $25,000 inclusive of
disbursements and HST.
[5]
In seeking costs against the HRTO, Mr. Longueépée asserts that the appeal
was made more complex by the positions taken by the HRTO: first, in
unsuccessfully seeking a five-judge panel for the appeal, and second, in
arguing that the correct standard of review of a decision of the HRTO post-
Vavilov
(
Canada (Minister of Citizenship and Immigration) v. Vavilov
,
2019 SCC 65), was patent unreasonableness an argument that was not made by
the University. Although the HRTO did not take a position on the outcome of the
appeal, it provided detailed written and oral submissions on the standard of
review issue, to which Mr. Longueépée responded. Ultimately, this court
concluded that it was unwise and unnecessary in this appeal to determine the
issue because it should be decided in a case where the standard of review makes
a difference to the outcome and where the parties with a stake in the dispute
have joined issue on the point (at para. 56).
[6]
While we agree with the HRTOs submission that it did not raise the
standard of review issue in bad faith or improperly, it is nevertheless
appropriate in the context of this case for the HRTO to be responsible for a
portion of Mr. Longueépées partial indemnity costs. The HRTOs decision
to advance the standard of review argument necessarily expanded the scope of
the appeal, and Mr. Longueépée had no choice but to respond.
[7]
We fix Mr. Longueépées costs against the HRTO in the sum of $7,500,
inclusive of disbursements and HST, which amount reflects the proportion of
time required to address the standard of review issue raised by the HRTO and to
respond to the request for a five-judge panel.
[8]
Mr. Longueépée is therefore entitled to partial indemnity costs of $25,000
from the University and $7,500 from the HRTO, both amounts inclusive of
disbursements and HST.
G.R.
Strathy C.J.O.
P.
Lauwers J.A.
K.
van Rensburg J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Louis v. Poitras, 2021 ONCA 49
DATE: 20210125
DOCKET: C68953
Watt,
Lauwers and Hourigan JJ.A.
BETWEEN
Firma Louis and Marcdere Louis
Plaintiffs
(Moving
Parties/Appellants)
and
Jacques
Poitras and
Security National Insurance Company
Defendants
(
Responding Party/Respondent
)
AND BETWEEN
Firma Louis
Plaintiff
(Moving
Party/Appellant)
and
TD Insurance
Meloche Monnex and Security National Insurance Company
Defendants
(Responding
Parties/Respondents)
Joseph Y. Obagi and
Elizabeth A. Quigley, for the moving parties/appellants
Barry Marta, for
the responding party/respondent Security National Insurance Company
Joseph Griffiths,
for the responding parties/respondents TD Insurance Meloche Monnex and Security
National Insurance Company
Heard: January 20, 2021, by video conference
On appeal from the order of the
Divisional Court (Justices Thomas R. Lederer, Darla A. Wilson, and Jamie K.
Trimble), dated November 16, 2020, with reasons reported at 2020 ONSC 6907, granting
the appeal of the order of Justice Robert N. Beaudoin of the Superior Court of
Justice, dated September 9, 2020, with reasons reported at 2020 ONSC 5301, 152
O.R. (3d) 760.
Hourigan J.A.:
I. Introduction
[1]
The civil justice system in Ontario faces an
unprecedented crisis. Among other challenges, the COVID-19 pandemic has
significantly reduced the availability of courtrooms. Trial courts have
necessarily had to prioritize criminal and family law cases to the detriment of
civil cases' timely resolution. Consequently, civil justice reform has shot to
the forefront as a public policy imperative. Procedural reforms have been implemented
to respond to the challenge, including increasing the use of electronic filing
and electronic hearings. In addition, more fundamental changes in the operation
of the civil justice system are being contemplated, such as the potential
elimination of civil jury trials. Whether these reforms will come to pass
remains to be seen. In the meantime, our courts are charged with the management
of a civil justice system that is being overwhelmed.
[2]
Judges of the Superior Court work tirelessly to
keep the civil justice system afloat. This sometimes means that they must find
creative ways to ensure that parties get their day in court in a timely manner.
In so doing, they respond to the Supreme Court's injunction in
Hryniak v. Mauldin
,
2014 SCC 7, [2014] 1 S.C.R. 87, that no less than a cultural shift is required
to preserve our civil justice system. In the cases at bar, the motion judge
made such a creative order. He struck the jury notices and ordered that the
cases proceed in three-week tranches. On appeal, the Divisional Court held that
while the motion judge had the discretion to make that order, it was made on an
insufficient evidentiary basis and was therefore arbitrary. It set aside the
motion judges order and restored the jury notices.
[3]
There is no single province wide answer to the
problems we face in delivering timely civil justice; local conditions will
necessarily impact the choice of effective solutions. However, what must remain
consistent across the province is that motion and trial judges have the
discretion to respond to local conditions to ensure the timely delivery of
justice. It is a necessary corollary to that proposition that intermediate
courts of appeal should not lightly second guess those discretionary decisions.
In the cases at bar, the Divisional Court did just that under the guise of a
finding regarding the evidentiary record. That finding is unsupportable. The
motion judge had an abundance of evidence to justify his order.
[4]
More fundamentally, the Divisional Courts
approach is at odds with the current reality faced by our courts. Superior
Court judges are acutely aware of local conditions, and it is counterproductive
for intermediate appeal courts to interfere unnecessarily. It is only in rare
situations that an appellate court should overrule discretionary case
management decisions. This was not such a rare case. On the contrary, this was
a situation where the motion judges creativity should have been the subject of
approbation, not condemnation. Therefore, for the reasons I will more fully
detail below, I would grant leave to appeal, set aside the Divisional Courts
order, allow the appeal and restore the motion judges order.
II. Facts
[5]
The appellants were involved in a motor vehicle
collision in Ottawa on May 9, 2013. Two actions resulted: a tort action and an
accident benefits action. Jury notices were filed by the defendants in each proceeding,
which were ordered tried together in a 10-week jury trial commencing April 20,
2020.
[6]
COVID-19 then intervened, and the trial date was
lost. All parties were ready for trial. But for the pandemic, the trial of
both actions would have proceeded in April 2020.
[7]
In July 2020, the plaintiff moved for an order
striking the jury notices in both actions, which the motion judge granted.
Civil jury trials were not being scheduled at that time in Ottawa, but
judge-alone trials of three weeks or less were available within the following
six months. Consequently, the motion judge ordered the trials to proceed in
three-week tranches, beginning in February 2021.
[8]
The defendant insurers appealed the motion
judges order to the Divisional Court. That court allowed the appeal, reinstating
the jury notices in both actions. The Divisional Court concluded that the
motion judges decision to strike the jury notices was arbitrary because it was
attributed solely to the presence of delay but lacked sufficient evidence of actual
prejudice to the parties.
[9]
The Divisional Court summarized its reasoning in
overturning the motion judge at para. 2 of its reasons:
The decision of the motion judge to strike the
jury notice was attributed, by him, solely to the presence of delay without any
reliance on evidence that explained the anticipated length of the delay, the
circumstances that might cause it to be extended or ameliorated or its impact
on the administration of justice. There was nothing to which he referred that
considered the particular circumstances. In the absence of such information,
the decision was arbitrary. The recognition of the presence of delay, without
more, is not enough.
[10]
The plaintiffs moved to stay the Divisional
Courts order pending appeal to this court. Brown J.A. granted the stay, finding
strong grounds to suggest the Divisional Court misapprehended relevant facts,
particularly regarding uncertainty in Ottawa as to when or how a jury trial
might proceed in light of the pandemic. Further, Brown J.A. noted that pandemic-related
delay affecting civil jury trial scheduling has been raised in several cases
and may require consideration by this court. Upon granting the stay, Brown J.A.
ordered that this motion for leave to appeal be expedited and heard together
with the appeal if the panel entertains submissions on the appeal, as we did.
III. Analysis
(a)
Leave to Appeal
[11]
The test on a motion for leave to appeal in
these circumstances is found in
Re Sault Dock Co. Ltd. and City of Sault
Ste. Marie,
[1973] 2 O.R. 479 (C.A.) at pp. 480-81. These appeals fall
into the category of special circumstances:
The Court will of course consider also cases
where special circumstances would make the matter sought to be brought before
the Court
a matter of public importance or would appear
to require that in the interest of justice leave should be granted
such
as the introduction of new evidence,
obvious
misapprehension of the Divisional Court of the relevant facts
or a clear
departure from the established principles of law resulting in a miscarriage of
justice.
[12]
The plaintiffs submit that there are two grounds
upon which leave to appeal ought to be granted: (i) the Divisional Court decision
discloses an obvious misapprehension of the relevant facts considered by the motion
judge in granting the order to strike the jury notices; and (ii) there is a
serious question raised by this appeal that engages a matter of public
importance that this court should consider in the interests of justice.
[13]
I am satisfied that the Divisional Courts analysis
shows an obvious misapprehension of the relevant facts. The details of these
patent errors will be considered in the analysis of the merits of the proposed
appeal. For the purposes of the motion for leave to appeal, I note that the
Divisional Court made an obvious error in concluding that the motion judge made
his decision without regard to evidence of the local conditions as they
impacted these actions. As I will explain, the motion judge was explicit
regarding the evidence he was relying on in making that order, evidence that went
to the specifics of the situation then extant regarding jury trials in Ottawa
and its impact on these proceedings.
[14]
I also have no hesitation in finding that this appeal
raises a matter of public importance regarding the administration of civil
justice. Guidance is necessary regarding civil case management during the
current pandemic crisis. When I say guidance, I do not mean that this court
should provide advice to trial courts on how to manage their civil lists. I
have every confidence that they know how to do so in the context of local
conditions. What I mean is that guidance is necessary for intermediate courts
of appeal to remind them of the minimal role they play in reviewing discretionary
case management decisions.
[15]
Given the foregoing, I would grant leave to
appeal. Simply put, the decision below is flawed on its face, and the approach
taken by the Divisional Court must be discouraged if courts are going to properly
manage their civil lists during the pandemic and beyond.
(b)
Merits of the Appeal
[16]
The Divisional Court's reasons and the reasons
of the motion judge are like ships passing in the night. The Divisional Court
makes a series of findings in reaching its conclusion that the decision of the
motion judge is arbitrary. In so doing, it purports to undertake a detailed
analysis of the motion judge's reasons to demonstrate that there was an
insufficient evidentiary foundation for the decision to strike the jury notices.
That analysis does not withstand scrutiny.
[17]
It is well settled in the jurisprudence that the
substantive right to a civil jury trial is qualified because a partys
entitlement to a jury trial is subject to the power of the court to order that
the action proceed without a jury. While a court should not interfere with the
right to a jury trial in a civil case without just cause or compelling reasons,
a judge considering a motion to strike a jury notice has a broad discretion to determine
the mode of trial. This court described the role of the court this way in
Cowles
v. Balac
, (2006) 83 O.R. (3d) 660 (C.A.), at paras. 38-39, leave to appeal
refused, [2006] S.C.C.A. No. 496:
While that test confers a rather broad
discretion on a court confronted with such a motion, it is nonetheless a
sensible test. After all, the object of a civil trial is to provide justice
between the parties, nothing more. It makes sense that neither party should
have an unfettered right to determine the mode of trial. Rather, the court,
which plays the role of impartial arbiter, should, when a disagreement arises,
have the power to determine whether justice to the parties will be better
served by trying a case with or without a jury.
The application of this test should not
diminish the important role that juries play in the administration of civil
justice. Experience shows that juries are able to deal with a wide variety of
cases and to render fair and just results. The test, however, recognizes that
the paramount objective of the civil justice system is to provide the means by
which a dispute between parties can be resolved in the most just manner
possible.
[18]
It is equally well settled that an appellate
court reviewing a decision to strike a jury notice has a very limited scope of
review. It may only interfere where the decision to strike was exercised arbitrarily
or capriciously or was based upon a wrong or inapplicable principle of law:
Kostopoulos
v. Jesshope
(1985), 50 O.R. (2d) 54 (C.A.), at pp. 69-70, leave to appeal
refused, [1985] S.C.C.A. No. 93.
[19]
Given the Divisional Courts reasoning in this
case, the admonition from this court in
Cowles
regarding deference
bears repeating. The court warned that an appeal court should not merely pay
lip service to the concept of deference and then proceed to substitute its own
view as to what the proper result should be for that of the lower court.
Interference is only justified when the lower court is shown to have committed
the type of error referred to in
Kostopoulos
:
Cowles
, at
para. 42.
[20]
With that comment in mind, I turn to a review of
the Divisional Courts reasons. There is considerable overlap in the Divisional
Courts analysis, but certain key findings emerge from the courts reasons. In
my view, all of these findings are erroneous and reflect a fundamental
misunderstanding of the role of appellate courts in considering appeals from orders
to strike jury notices.
[21]
First, the court found that delay alone is not
enough to strike a jury notice. According to the Divisional Court, there must
also be proof of some additional prejudice before a court is justified in
striking a jury notice. Thus, the court concluded, at para. 24, that in these
cases, there was no just cause or cogent reason to interfere with the statutory
right of the defendants to seek trial by jury. I disagree.
[22]
The accident in this case occurred over seven
years ago. There was no indication when a civil jury trial might be held in
Ottawa at the time of the motion. Accordingly, the motion judge found that the
real and substantial prejudice arises simply by reason of delay: at para. 46.
I agree with the statement of Brown J.A. in his decision on the stay motion
that this was a legally permissible finding and that delay in obtaining a date
for a civil jury trial can, by itself, constitute prejudice and justify striking
out a jury notice. As Brown J.A. notes, the whole
raison dêtre
of
the civil justice system, as captured in r. 1.04(1), is that courts will work
to provide the most expeditious
determination of every civil proceeding on its
merits:
Louis v. Poitras
, 2020 ONCA 815, at para. 33.
[23]
This case neatly captures the competing
approaches to the crisis faced by the civil justice system. The motion judge
approached this case practically, cognizant of his responsibility to the
parties and the system to move cases forward and offer timely service. By
contrast, the Divisional Court took the wrong approach to the new reality of
the civil justice system. Implicit in its reasoning is that delay is to be
expected and tolerated; it is the ordinary course. That is precisely the type
of complacency that has led to the civil justice systems systemic delay and was
subject to criticism by the Supreme Court of Canada in
Hryniak
.
[24]
Second, the Divisional Court expanded the scope
of its analysis beyond the interests of the parties and considered the broader
context of the civil justice system during the pandemic. The court correctly recognized,
at paras. 26-30, that the right to a jury trial is subject to the overriding
interests of the administration of justice and issues of practicality: see
Girao
v. Cunningham
, 2020 ONCA 260, 2 C.C.L.I. (6th) 15, at para. 171;
MacLeod
v. Canadian Road Management Company,
2018 ONSC 2186, 79 C.C.L.I. (5th)
314, at para. 29;
Belton v. Spencer
, 2020 ONSC 5327 at paras. 13-20, stay
denied, 2020 ONCA 623.
[25]
There is no debate that in considering a request
to strike a jury notice, the court may look beyond the parties interests and
consider the broader interests of the administration of justice. While the
Divisional Court purported to consider the administration of justice, it ignored
the realities of the current situation. In its analysis, the importance of the
administration of justice was almost totally discounted.
[26]
A proper consideration of the administration of
justice would recognize that local judges are best positioned to understand the
availability of resources and the appropriate approach in the circumstances of
a given case. Judicial responses to the pandemic and court resources
availability vary across the province:
Passero v. Doornkempt
, 2020
ONSC 6384, at para. 49. That does not mean that different approaches reflect a
conflict in the case law. Rather, they reflect the due exercise of judicial
discretion in differing local circumstances:
Belton
v. Spencer
,
2020 ONCA 623, at para. 75. An appeal court must respect the reasonable
exercise of this discretion. It impedes the proper administration of justice by
second-guessing the local courts discretionary case management decisions under
the pretext of an arbitrariness analysis.
[27]
Third, the Divisional Court undertook a
comparison of the circumstances of the cases at bar to other cases where the
pandemic was considered in the context of a motion to strike a jury notice. It concluded
that while the courts in those cases were justified in striking a jury notice, there
was an insufficient evidentiary basis here. The Divisional Court concluded, at
para. 55, that the [motion] judge relied only on the fact of delay without any
evidence applicable to the specific situation. It also found at para. 66:
The mere statement of delay or the implication
of its presence is not enough. There must be some evidence or other indication
that contributes to prejudice to the parties or concerns for the administration
of justice. In this case the judge relied on delay removed from the specific
concerns of the parties.
[28]
The Divisional Court went on to distinguish
other decisions regarding striking jury notices like
Belton, MacDougall v.
Sisley,
2020 ONSC 6632
and
Higashi v. Chiarot
, 2020 ONSC
5523
on the basis that in those cases, the motion judges had evidence
regarding the particular circumstances of the local civil list such as
directives issued by the court and information provided to the court by the
Regional Senior Judge.
[29]
The Divisional Courts analysis of
Higashi
,
another Ottawa case, is particularly illuminating. There the motion judge,
Roger J., made inquiries of the Regional Senior Judge, court staff, and the
judge in charge of civil litigation in Ottawa regarding the status of the civil
list. He took judicial notice that he did not know when a civil jury trial
could proceed and that it was doubtful that criminal courtrooms would be
available for civil jury trials.
[30]
The Divisional Court accepted that the court in
Higashi
had a sufficient evidentiary foundation to make an order striking the jury
notice. It contrasted the evidence available in
Higashi
with these
cases and concluded that the motion judges decision was so lacking an
evidentiary basis that it was arbitrary. With respect, this analysis is deeply
flawed and sets the bar regarding what constitutes an arbitrary decision at a
dangerously low level, a level that can be easily utilized to strip a motion
judge of his or her discretion.
[31]
I start by noting that in his reasons, the
motion judge referenced the decision in
Higashi
,
which
had been released
eight
days earlier. This reference
is ignored by the Divisional Court. Left unanswered by its reasons is why the
motion judge could not rely on the information from Roger J. regarding the
status of the availability of civil jury trials in Ottawa. Is it suggested that
this information was reliable in
Higashi
but unreliable in these cases?
Was the motion judge obliged to undertake his own investigation? How exactly
can reliance on very recent information in a judicial colleagues decision
qualify as an arbitrary exercise of discretion?
[32]
The flaws in the Divisional Courts analysis
become even more apparent when the motion judges reasons are properly
analyzed. It is plain from his reasons that he undertook a detailed analysis of
Ottawa's situation and reached his own conclusion regarding the status of civil
jury trials in the city. The motion judge noted that in June 2020, formal
notice was given to the Ottawa bar that civil jury trials would not proceed
until January 2021 at the earliest. He observed that only a limited number of
courtrooms in Ottawa had been retrofitted with plexiglass dividers at the time
of the motion, and no plan had been finalized to accommodate jury trials.
Further, the conversion of a jury assembly room into a jury deliberation room
in the Ottawa courthouse would permit only a single jury trial to proceed at
any given time.
[33]
Thus, contrary to the Divisional Courts
finding, the motion judge turned his mind to the local conditions and made an
unassailable finding that it was unknown when or how a jury trial might be
heard in these matters. I concur with the comment of Brown J.A. that this
finding was correct at the time of the motion; correct at the time of the
Divisional Court hearing; and correct today.
Louis
, at para. 29. In
the circumstances of these cases, including that the accident took place over
seven years ago, the motion judge was entirely justified in striking the jury
notices.
[34]
Finally, I note the respondent Security National
Insurance submission that since the release of the Divisional Court's decision,
the tortfeasor defendant settled with the plaintiffs. I am not satisfied that
this settlement changes the analysis in any meaningful way.
[35]
In summary, the Divisional Court erred in its
analysis. Its conclusion that the motion judges decision was arbitrary finds
no support in the motion judges reasons or the record before him. The appeal
must be allowed on this basis.
IV. Disposition
[36]
I would grant leave to appeal, allow the appeal,
set aside the judgment of the Divisional Court, and restore the order of the
motion judge.
[37]
Regarding the costs of the appeal, the parties
requested that they be given until January 29, 2021, to attempt to reach an
agreement on costs. I would grant that request and order that, in the absence
of an agreement, the appellants have until February 5, 2021, to serve and file
their costs submissions, the respondents have until February 12, 2021, to serve
and file their responding submissions, and any reply submissions be served and
filed by February 17, 2021.
Released: D.W. January 25, 2021
C.W. Hourigan J.A.
I Agree. David Watt J.A.
I Agree. P. Lauwers J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Lucas v. 1858793 Ontario Inc.
(Howard Park), 2021 ONCA 52
DATE: 20210128
DOCKET: C67896 & C67904
Hoy, Brown and Thorburn JJ.A.
BETWEEN
Alexandre Alberto Da Silva Lucas
and Kelly Ramos Avelar Lucas
Applicants
(Respondents)
and
1858793
Ontario Inc. o/a Howard Park,
Sofia
Ribeiro and Andre Ribeiro
Respondents (Appellants)
William Ribeiro, for the appellant, 1858793
Ontario Inc. o/a Howard Park
Andreas G. Seibert, for the appellants,
Sofia Ribeiro and Andre Ribeiro
Leon J. Melconian, for the respondents,
Alexandre Lucas and Kelly Lucas
Heard: November 12, 2020 by video conference
On appeal from the order of Justice Paul
Schabas of the Superior Court of Justice, dated January 2, 2020 with reasons
reported at 2020 ONSC 964, 17 R.P.R. (6th) 138.
BROWN J.A.:
I. OVERVIEW
[1]
This appeal concerns an agreement of purchase
and sale for a small, one-bedroom residential condominium unit in the west end
of Toronto. The two main issues are: (1) whether the application judge erred in
concluding that the vendor wrongfully terminated the agreement; and (2) whether
the application judge erred in granting the purchasers the remedy of specific
performance.
[2]
By way of overview, in January 2015, the appellant
vendor, 1858793 Ontario Inc. o/a Howard Park (185), and the respondent
buyers, Alexandre and Kelly Lucas (Alex and Kelly or, together, the
Lucases), entered into an agreement, pre-construction, for the purchase and
sale of a condominium unit in Toronto (the Agreement) for a price of $369,900.
[3]
185, a condominium development company, is owned
and operated by Mario and Francisco Ribeiro (Mario and Francisco or,
together, the Ribeiro Brothers). Alex worked for a roofing company owned by
the Ribeiro Brothers from 2009 until 2017, when he left to join a competitor.
[4]
In February 2019, just prior to the sales
scheduled closing, 185 purported to terminate the Agreement and forfeit the
Lucases deposit of $73,980. 185 claimed that the Lucases had breached the
Agreement by leasing the unit to a tenant, Renato Duarte, during the interim
occupancy period without 185s permission.
[5]
On March 12, 2019, 185 entered into an agreement
to re-sell the unit to the appellants Sofia and Andre Ribeiro (Sofia and
Andre), who are Franciscos children and Marios niece and nephew. In May
2019, during the interim occupancy period under that agreement, Sofia and Andre
leased the unit to two tenants with 185s consent. The Lucases registered a
caution on title which prevented the sale to Sofia and Andre from closing.
[6]
The Lucases commenced this application seeking relief
from forfeiture and, in effect, specific performance of the Agreement. The
application judge granted both. He concluded that 185 had wrongfully terminated
the Agreement, declared the sale to Sofia and Andre null and void, and ordered
185 to close the sale of the property to the Lucases.
[7]
The appellants appealed. 185 sought a stay of
the judgment pending appeal. MacPherson J.A. dismissed the motion by order
dated February 14, 2020, following which title to the unit was transferred to
the Lucases. They took possession of the unit on April 1, 2020 and, with the
consent of the appellants, placed a $200,000 mortgage on title in June 2020.
[8]
The appellants advance three main grounds of
appeal.
[1]
First, they argue the application judge erred by finding that 185 wrongfully
terminated the Agreement. Second, they submit the application judge misapplied remedial
principles in awarding specific performance. Finally, they say the application
judge had no basis to interfere with 185s subsequent sale of the unit to Sofia
and Andre and disrupt the rights of their tenants, who were not parties to the
application and had no opportunity to respond.
[9]
I would dismiss the appeal. The record supports
the application judges finding that 185 lost its right to terminate by
declining to treat the Agreement at an end within a reasonable time following
the Lucases alleged breach. Further, the application judge correctly
identified the principles governing the remedy of specific performance. I see
no reversible error in his application of those principles to the facts of this
case or his order that 185 perform the Agreement and transfer the unit to the
Lucases rather than to Sofia and Andre.
II. ISSUE 1: 185s TERMINATION OF THE AGREEMENT
A. The evidence
[10]
Alex and Kelly are married. At the time they
entered into the Agreement, they had one child; at the time of judgment, they
had two.
[11]
In 2009, Alex began working for Triumph Roofing
and Sheet Metal Inc. (Triumph), a company owned and operated by the Ribeiro
Brothers. Over the next few years, Alex and Kelly became friends with Mario and
Francisco. By 2015, Alex had been promoted to manager of Triumphs roofing
division.
The Agreement for Unit 421
[12]
On January 11, 2015, the Lucases and 185 entered
into the Agreement for Unit 421 at 38 Howard Park Avenue in Toronto, which was
to be a 595 square-foot, one-bedroom unit located on the fourth floor of an
eight-storey building (the Unit). The Agreement set the purchase price at
$369,900 and would have required the Lucases to make five deposit payments totalling
$73,980 by the occupancy date, which was yet to be determined.
[13]
However, Mario deposed that 185 offered the Unit
to the Lucases on advantageous terms based on their friendship, Alexs
long-standing employment with Triumph, and the expectation that Alex would
remain a key Triumph employee for years to come. These terms, added by
separate amendments to the Agreement, included the following:
(i) a $15,000 credit toward the purchase price, $5,652.26 of
which the Lucases used to pay for upgrades to the Unit; and
(ii) the ability to stretch out payment of part of the deposit in
twenty interest-free monthly increments of $1,000 payable from March 2015 to
October 2016, with the balance due on occupancy.
[14]
Section 18 of the Agreement prohibits the buyers
from leasing the Unit prior to the closing date without the vendors written
consent, stating, in part:
18. The Purchaser covenants and agrees with
the Vendor not to
offer for lease
the Unit, at any time prior to the unit
Transfer Date without first
obtaining the written consent of the Vendor
The
Purchaser acknowledges and
agrees that once a breach of
the preceding covenant occurs such breach is or shall be incapable of
rectification
, and accordingly the Purchaser acknowledges and agrees
that
in the event of such breach the Vendor shall have
the unilateral right and option of terminating this Agreement and Occupancy
License
, effective upon delivery of notice of termination to the
Purchaser or Purchaser's solicitor, whereupon the provisions of this Agreement
dealing with the consequence of termination by reason of the Purchaser's default,
shall apply
. [Emphasis added.]
[15]
Section C.12 of the Terms of Occupancy License,
attached as Schedule C to the Agreement, contains a similar prohibition,
stating in part that the Purchaser shall not have the right to assign, sublet
or in any other manner dispose of the Occupancy License during Interim
Occupancy without the prior written consent of the Vendor.
[16]
Section 17 of the Agreement provides that the
buyers agree not to register a caution or certificate of pending litigation
against title to the Unit.
Alex leaves Triumph
[17]
In January 2017, Alex resigned from Triumph to become
part owner of a competitor company called Maxim Roofing Limited (Maxim). As a
result, Alexs relationship with the Ribeiro Brothers soured. Mario believed Alex
was trying to poach Triumph employees to work for Maxim.
The Lucases take possession of Unit 421
[18]
185 advised the Lucases that the Unit would be
ready for occupancy on April 20, 2018. The Lucases signed an interim occupancy agreement
requiring them to provide 185 with 12 post-dated monthly occupancy cheques for
$1,548.03 each.
[19]
During the interim occupancy period and before
the Agreement could close, 185 needed to address outstanding building deficiencies
and register the condominium declaration on title. Registration would not occur
until February 21, 2019.
[20]
On April 20, 2018, the Lucases took possession
of the Unit. By that time, they had paid all required deposits, totalling $73,980.
Renato Duarte moves into Unit 421
[21]
The Lucases did not move into Unit 421 upon
taking possession; they allowed Mr. Duarte to move in.
[22]
Mr. Duarte and Alex met in 2016, when Mr. Duarte
worked for Triumph as a roofing foreman. In 2017, after Triumph let Mr. Duarte
go, Alex hired him to work for Maxim.
[23]
In April 2018, Mr. Duarte told Alex he was
having financial problems and needed a place to stay. The Lucases agreed to let
Mr. Duarte live in the Unit rent-free until he got back on his feet. Mr.
Duarte moved into the Unit on May 1, 2018.
185 alleges a breach of the Agreement
[24]
In late July 2018, Mario became aware that Mr.
Duarte was living in the Unit, when he was advised of such by 185 employees who
worked in the building.
[25]
On September 21, 2018, Ms. Vanessa Spagnuolo, on
behalf of 185, emailed Kelly to advise that 185 had been unable to address
certain deficiencies in the Unit because Mr. Duarte, whom Ms. Spagnuolo referred
to as a tenant, had denied access to 185 contractors. Ms. Spagnuolo told Kelly
that Mr. Duartes occupancy was a breach of s. 18 of the Agreement:
I would like to take this opportunity to bring
to your attention the terms of [the Agreement] with respect to leasing. As per
item 18
you are currently in breach of [the Agreement]. As per [the
Agreement], written consent of [185] is required to offer for lease or lease
the unit
All requests for leases are at the sole discretion of our management
and are only reviewed once all deficiencies are signed off
please expedite
permission to allow deficiencies to be completed, once they are completed /
signed by You with site staff you may request permission to lease / rent the
unit
until then we will consider you to be in breach of [s. 18 of the
Agreement].
[26]
Kelly replied by email on the same day and
denied that Mr. Duarte had refused access to the Unit. She also asserted that
Mr. Duarte was not leasing the Unit, writing:
Im familiar with the terms of [the Agreement]
but in regards to Mr. Duarte, he does not lease the unit. We do not have any
type of rental agreement with him nor have we ever received any type of
compensation from him.
[27]
On October 1, 2018, Mr. Duarte was arrested
following a police search of the Unit. He vacated the Unit and did not return.
[28]
After Mr. Duartes departure, the Unit remained
unoccupied. 185 continued to cash the Lucases monthly occupancy cheques. In
November 2018, the Lucases permitted 185 to enter the Unit on several occasions
to rectify various deficiencies.
[29]
185 did not raise the Lucases alleged breach of
s. 18 again until December 2018, in the context of a dispute over a bathtub
repair (the Bathtub Dispute).
The Bathtub Dispute
[30]
A gouge in the Units bathtub was identified in
the late spring or summer of 2018. In an email to Kelly dated August 9, 2018, a
185 employee acknowledged it was the companys responsibility to fix the deficiency
with the bathtub.
[31]
On November 23, 2018, the Lucases attended the
Unit for a Tarion inspection, which revealed that the bathtub gouge had not
been rectified.
[32]
On December 6, Mr. Ross Eskandari, another 185
employee, informed the Lucases that 185 had opted to repair not replace the
bathtub. Mr. Eskandari also suggested that Mr. Duarte had caused the damage to
the bathtub and again alleged that the Lucases had breached the Agreement. He
gave the Lucases two options:
Option 1 We have completed a second tub
repair as a courtesy to you
We ask that you review the work in person and
trust that you will find it acceptable. If accepted, we ask that you remove it
from your deficiency list to close this item.
Option 2 If on the other hand you do not
accept the repair & we are directed to replace the tub by Tarion, we will
proceed with a full tub replacement in protest.
All costs
involved with your unit and breach of the occupancy agreement with regards to
leasing will be tabulated at closing. We reserve the right to have all costs be
included as part of your settlement fees owed to the developer prior to closing
.
[Emphasis added.]
[33]
In an email dated December 19, 2018, Ms.
Spagnuolo suggested that 185 would pursue the Lucases for the alleged breach stemming
from Mr. Duartes occupancy if they did not release 185 from its obligation to
replace the bathtub:
Without prejudice, we are willing to come to
an agreement for a limited time. If the bathtub repair that we completed in
good faith, which was caused by your tenant, along with all other Tarion issues
are cleared, [185] will not pursue your breach of the occupancy agreement any
further. If you are not in agreement please advise and we will consult with
Tarion for next steps.
[34]
The Lucases were not satisfied with the repair
and refused to sign off.
[35]
On January 2, 2019, Tarion determined that the
damage to the bathtub was not consistent with homeowner use, confirming it
was 185s responsibility to replace the tub. Nevertheless, 185 continued to
urge the Lucases to sign off on the repair in exchange for relief from their breach
of the occupancy agreement. The Lucases once again refused.
[36]
By email dated January 22, 2019, 185 advised the
Lucases it would replace the bathtub in protest and that all costs related
to [the Unit] associated with damage caused by your tenant will be tracked and
kept in claim of your breach of occupancy agreement.
[37]
185 replaced the bathtub on January 28, 2019.
185 purports to terminate the Agreement
[38]
A week later, on February 5, 2019 which was
about two weeks prior to the scheduled closing date for the Unit 185 sent a
letter to the Lucases purporting to terminate the Agreement on the basis of Mr.
Duartes occupancy. (Mr. Duarte had vacated the Unit a little over four months
earlier.) The letter stated, in part:
We refer you to Section 18 in the Agreement in
which the section sets out that the unit cannot be leased to a tenant without
the prior written consent of the vendor. We have learned that you leased the
unit to a third party tenant which is a fundamental breach
entitling us to
terminate your Agreement. Section 18 goes on further to state that once a breach
of this covenant occurs, the breach is incapable of rectification and that we
have the unilateral right to terminate your [Agreement] effective upon delivery
of this letter
We hereby terminate your [Agreement] and have had your
deposits and occupancy fees forfeited to us as liquidated damages.
[39]
By the time they received the termination letter,
the Lucases had paid 185 a total of $93,534.70, covering the deposits, $15,482 in
monthly interim occupancy fees for the period May 2018 through February 2019,
and other expenses. 185 claimed it was entitled to retain the entire sum based
on the Lucases alleged breach of s. 18.
185 agrees to sell the Unit to Sofia and
Andre
[40]
Just over a month later, on March 12, 2019, 185
agreed to sell the Unit to Franciscos children, Sofia and Andre, for a
purchase price of $418,000. Edgar Shamilyan, a realtor retained by 185 to
provide an expert report, placed a significantly higher value on the Unit. In
his report dated May 1, 2019, Mr. Shamilyan opined that the base price for the
Unit at the time of his report was approximately $489,000. Another realtor
retained by 185, Alexandre Alves, in his April 26, 2019 expert report, valued
the Unit at $500,000 to $520,000.
[41]
The agreement required Sofia and Andre to put down
$5,000 at signing and another $13,000 on the closing date, which had not been
set. Mario also advised Sofia that, because she was family, 185 would agree to
act as the lender to finance the balance of the purchase price. The loan was
secured by a promissory note and a vendor take-back mortgage, with a yearly
interest rate of 3%.
[42]
In May 2019, Sofia and Andre obtained 185s
permission to lease the Unit during the interim occupancy period. A one-year lease
of the Unit to two non-party tenants was signed on May 23, 2019.
[43]
On March 19, 2019, a week after 185 agreed to
sell the Unit to Sofia and Andre, the Lucases commenced this application
against 185 seeking relief from forfeiture and specific performance of the Agreement.
The application did not seek damages as an alternative to, or in lieu of,
specific performance. On April 1, they also registered a caution on title,
which prevented the sale to Sofia and Andre from closing pending the outcome of
this litigation. On May 15, 2019, the Lucases amended their application to add
Sofia and Andre as parties.
B. Reasons of the application judge
[44]
On the application, the Lucases argued they had
not breached s. 18 of the Agreement because they never had a lease agreement
with Mr. Duarte and he never paid rent. In the alternative, if they had
breached s. 18, the Lucases submitted that 185 had not treated Mr. Duartes
occupancy as a fundamental breach within a reasonable time and had thereby waived
its termination and forfeiture rights.
[45]
The application judge agreed with the Lucases in
both respects. First, he found that the Lucases had simply loaned the Unit to
Mr. Duarte for a short time, without a lease agreement, and had received no
rent or other benefits from him. As such, he held there was no lease and
therefore no breach of s. 18: at para. 31.
[46]
Even if there had been a breach, the application
judge concluded that 185 affirmed the Agreement by its conduct after learning of
Mr. Duartes occupancy: at para. 45. He found 185 became aware of the alleged
breach by September 21, 2018 at latest, the day Ms. Spagnuolo told Kelly that
Mr. Duarte had denied access to the Unit. Nevertheless, 185 did not exercise
its right to treat the contract at an end within a reasonable time. Instead, it
continued to accept occupancy payments until February 2019, only vaguely purporting
to rely on s. 18 as a bargaining chip in the Bathtub Dispute. 185 thus lost
the right to terminate and, as of February 2019, nothing stood in the way of
closing the sale: at paras. 39-42.
C. The issue stated
[47]
For the purposes of my analysis, I shall assume,
without deciding, that the Lucases breached s. 18 by allowing Mr. Duarte to live
in the Unit during the occupancy period without 185s written consent. My
analysis will focus on 185s submission that the application judge erred in
finding that 185 lost its right to terminate by failing to treat the Agreement
at an end within a reasonable time after the alleged breach.
[48]
185 submits that it did not lose or waive its
contractual termination rights as the Agreement was clear that any breach of s.
18 was incapable of rectification. The emails exchanged with Kelly on
September 21, 2018 show that, contrary to the application judges findings at
paras. 42-45, 185 insisted on strict compliance with s. 18 of the Agreement as
soon as it learned Mr. Duarte was living in the Unit. From this point on, 185
says it was entitled to terminate unilaterally. As such, and since the
Agreement did not expressly require timely termination, 185 argues the
application judge erred by concluding 185 waived its right to terminate by
failing to do so within a reasonable time.
[49]
In any event, 185 contends that it did terminate
within a reasonable time. From December 6, 2018 to January 11, 2019, the
parties exchanged emails regarding the Bathtub Dispute which 185 says were
privileged settlement communications relating to the Lucases alleged breach
of s. 18. 185 argues that, when the period during which these emails were
exchanged is removed from the calculation, its decision to terminate in
February 2019 was made only three months after it gave the Lucases notice of
the breach on September 21, 2018. According to 185, three months was a
reasonable period between the notification of breach and the notice of
termination.
D. Analysis
[50]
Section 18 of the Agreement provides that if a
purchaser leases a unit during the occupancy period without first securing the
vendors written consent, a breach occurs and such breach is or shall be
incapable of rectification. However, while the breach may be incapable of
rectification, such a breach does not cause an immediate termination of the
Agreement. As s. 18 goes on to state, in the event of such breach the Vendor
shall have the unilateral right and option of terminating this Agreement and
Occupancy License.
[51]
Upon learning of Mr. Duartes occupancy of the
Unit, 185 did not exercise its termination rights under s. 18 of the Agreement.
It waited many months before so doing. During that period, 185 accepted the
Lucases monthly interim occupancy payments and worked to remedy the bathtub
deficiency. This conduct by 185 led the application judge to state, at paras.
37 to 39, that:
The problem
is that 185 did not treat [the
Agreement] at an end; to the contrary, it did not treat the breach as
fundamental or incapable of rectification at all
[185] took no steps to
investigate or require compliance with section 18 of the Agreement until it
raised the issue in September 2018, in the context of an emerging dispute
between the Lucases and 185 about deficiencies. Spagnuolos September 21 email
did not terminate the Agreement, but suggested the breach could be cured by
signing off on deficiencies.
185 did not respond to Kellys denial of a
breach on September 21, 2018, and did not raise the issue again until December,
long after the breach, if any, had been cured. Throughout this time, 185
continued to cash the applicants cheques paying the monthly occupancy fee.
Only on December 19, 2018, was the alleged
breach raised again, as a bargaining chip over the bathtub repair a repair
185 was obliged to make. The applicants objected to 185s demands, and 185
continued to treat the contract as extant and continued to take the applicants
monthly occupancy fees. 185s demand was repeated on January 11, 2019, though
it never said the contract would be terminated if the Lucases did not agree to
185 not repairing the bathtub. 185s email of January 22 was even more
tactical, saying that the tub would be repaired in protest
.
[52]
That course of events led the application judge
to conclude, at para. 42, that:
In my view, by not treating the Agreement at
an end and incapable of rectification when it knew of the breach, at latest,
by September 21, 2018, 185 lost the right to terminate and claim the deposits
and fees as liquidated damages. It sat on its rights, to the detriment of the
applicants, who continued to pay occupancy fees and expected to close the sale
in early 2019. Assuming there had been a breach between May 1 and October 1,
2018, that breach was rectified and both parties acted on that basis from
October 1 forward. There was no breach in February 2019 and nothing stood in
the way of closing the sale. 185 acted wrongly in terminating the Agreement.
[53]
In reaching that conclusion, the application judge
did not commit any error of law. He correctly identified the applicable legal
principle. Even if the Lucases breach could be characterized as repudiatory, on
the basis that s. 18 of the Agreement describes that particular kind of breach
as one incapable of rectification, an innocent party must elect to treat the
contract at an end and communicate that election to the repudiating party
within a reasonable time:
Place Concorde East Ltd. Partnership v. Shelter
Corp. of Canada Ltd.
(2006), 270 D.L.R. (4th) 181, at para. 50.
[54]
Nor do I see any palpable and overriding error
of fact in the application judges finding that 185 failed to elect to treat
the Agreement as at an end within a reasonable time. The record amply supports
that finding of fact by the application judge.
[55]
I am also not persuaded by 185s submission that
the application judge should have treated the Bathtub Dispute emails as
privileged settlement communications. The application judge held, at para. 46
of his reasons, that the emails are not properly characterized as settlement
communications:
This submission has no merit. First, only one
email, dated December 19, states it is without prejudice. Second, these are
not settlement discussions between lawyers; they are communications between the
parties regarding their positions on the performance of a continuing contract,
including the fulfillment of 185s obligation to repair and resolve
deficiencies in the Unit. There is no basis to treat them as being inadmissible
on the basis of settlement privilege.
[56]
I see no error in that characterization. The
emails focused on how the vendor would remedy a construction deficiency with
the bathtub: the vendor wanted to patch the bathtub; the Lucases wanted the
bathtub replaced. The emails did not purport to compromise the dispute that is
the subject-matter of this litigation namely, whether 185 was entitled to
terminate the Agreement because the Lucases had permitted Mr. Duarte to occupy
the Unit for a period of time. That litigious dispute was not yet in existence
or within contemplation:
Losenno v. Ontario Human Rights Commission
(2005), 78 O.R. (3d) 161 (C.A.), at para. 21; Sidney N. Lederman, Alan W.
Bryant & Michelle K. Fuerst,
Sopinka, Lederman & Bryant: The Law of
Evidence in Canada,
5th ed. (Toronto: LexisNexis Canada, 2018), at §14.348;
Bercovitch v. Resnick
, 2011 ONSC 5082, at para. 26, leave to appeal
refused, 2011 ONSC 6410 (Div. Crt.). To the contrary, the two options set out
in the vendors email of December 6, 2018 reproduced at para. 32 above specifically
contemplated that the Agreement would close even if the Lucases insisted on the
replacement of the bathtub.
[57]
As well, from the language of the Bathtub
Dispute emails, the Lucases could not have contemplated that a disagreement
over how to repair the bathtub would lead 185 to terminate the Agreement and
trigger this litigation. The application judge was therefore entitled to rely
on the Bathtub Dispute emails to support his finding that 185 did not treat the
Lucases alleged breach of s. 18 as fundamental or incapable of
rectification.
E. Conclusion on Issue 1
[58]
Accordingly, I am not persuaded by this ground
of appeal. I see no reversible error in the application judges finding that
185, by its conduct, lost the right to rely on the alleged breach by the
Lucases as a basis to terminate the Agreement.
III. ISSUE 2: THE AVAILABILITY OF
SPECIFIC PERFORMANCE
A. The application judges reasons and
order
[59]
As remedies for 185s wrongful termination, in
their application the Lucases sought relief from forfeiture of the deposit and
specific performance. The Lucases did not seek damages in lieu of specific
performance.
[60]
The application judge first exercised his
discretion under s. 98 of the
Courts of Justice Act
, R.S.O. 1990, c.
C.43 to grant the Lucases relief from forfeiture, concluding the applicable
test was clearly met:
Saskatchewan River Bungalows Ltd. v. Maritime Life
Assurance Co.
, [1994] 2 S.C.R. 490. 185 does not contest that part of his
judgment.
[61]
He then considered whether the Lucases were
entitled to specific performance based on three factors: (1) the nature of the
property, particularly its uniqueness within the meaning of
Semelhago v. Paramadevan
,
[1996] 2 S.C.R. 415, at para. 22; (2) the related question of the inadequacy of
damages as a remedy; and (3) the behaviour of the parties:
Matthew Brady
Self Storage Corp. v. InStorage Limited Partnership
, 2014 ONCA 858, 125
O.R. (3d) 121, at para. 32, leave to appeal refused, [2015] S.C.C.A. No. 50.
[62]
With respect to the nature of the property, the
application judge held, at paras. 59 and 64, that uniqueness arose not from the
Lucases subjective needs or the Units physical characteristics, but because the
Agreement contained advantageous terms and could not have been readily
duplicated in Torontos competitive, volatile real estate market:
1954294
Ontario Ltd. v. Gracegreen Real Estate Development Ltd.
, 2017 ONSC 6369, 80
C.L.R. (4th) 297, at para. 151.
[63]
Relatedly, the application judge concluded that
the circumstances surrounding the Agreement rendered damages inadequate. The
Lucases paid over $90,000 toward the Unit from January 2015 to February 2019. During
this time, as the Unit increased in value significantly along with much of
Torontos housing market, this money was not available to the Lucases for
acquiring another property. The application judge commented that the litigation
would likely drag for years if the Lucases were limited to suing for damages,
during which time the Lucases would be denied the advantage of the rise in
value of the Unit that exists today as well as the use of their deposit. In
other words, the Lucases losses were difficult to mitigate, making specific
performance a more complete and just remedy than damages in the circumstances:
at paras. 63-65.
[64]
Finally, the application judge held that 185s
conduct favoured granting specific performance. 185 had continued to accept
payments from the Lucases while improperly trying to use the allegation of a
breach to avoid its responsibility to replace the bathtub. It then terminated
the Agreement and took the Lucases deposit without justification, long after Mr.
Duarte had vacated the Unit: at para. 75. Moreover, 185s subsequent sale to
Sofia and Andre, which was not at arms length and did not contain commercially
reasonable terms, was a sham designed to put the Unit out of the Lucases reach:
at paras. 66 and 77. As he amplified in his cost reasons, the application judge
concluded the transaction was a sham in part because it involved a sale below
market price, with little by way of an up-front payment: 2020 ONSC 1329, at
para. 4.
[65]
Based on the foregoing, the application judge
concluded that specific performance was the best remedy to serve justice
between the parties. He ordered 185 to complete the sale of the Unit to the
Lucases in accordance with the Agreement no later than February 14, 2020, with
all payments to date credited toward the purchase price. In addition, the
application judge declared the sale to Sofia and Andre null and void and
ordered the lease with their tenants assigned to the Lucases.
B. The issue stated
[66]
The appellants contend that the application
judge made three main errors in granting the Lucases specific performance of
the Unit rather than directing an assessment of damages:
(1) awarding specific relief for a generic condominium unit that
the Lucases now intend to sell, contrary to the principles governing specific
performance of real estate contracts;
(2) finding that damages were inadequate as a remedy without
evidence that (a) the Lucases would have had trouble finding a replacement property,
or (b) damages would be difficult to assess; and
(3) holding that 185s behaviour favoured granting specific
performance but failing to properly consider the Lucases misconduct.
[67]
Before explaining why I am not persuaded by these
submissions, I first set out the principles applicable to a purchasers claim
for specific performance of a contract for the sale of residential property.
C. The governing principles
[68]
The most appropriate place to start the analysis
is by recalling first principles. In general, contractual remedies are intended
to provide the non-breaching party with what the contract was to provide: Angela
Swan, Jakub Adamski & Annie Na,
Canadian Contract Law,
4th ed.
(Toronto: LexisNexis Canada, 2018), at
§
6.14. That usually is done by requiring the party in breach to pay,
as damages, an amount of money that will provide the victim of the breach with
the financial equivalent of performance: John D. McCamus,
The Law of
Contracts,
3rd ed. (Toronto: Irwin Law, 2020), at p. 971. However, as
observed by The Honourable Robert J. Sharpe in
Injunctions and Specific
Performance
, loose-leaf (2020-Rel. 29), 4th ed. (Toronto: Thomson Reuters,
2012), at
§
7.50:
The existing regime of remedial law strongly
favours the first option of damages and awards specific performance only in
exceptional cases.
Yet in many cases, specific relief may
seem to be the only sure way to put the plaintiff in the position he or she
would have been in had the contract been performed
The assessment of
damages the innocent party has suffered can be a difficult, expensive and
time-consuming task. Specific performance has the advantage of avoiding the
problems and costs the parties and the judicial system must incur if damages
are to be assessed.
Perhaps more significant is the very
real element of risk that the translation into money terms of the effect of the
breach on the plaintiff may be inaccurate. Some cases will present more risk
than others but it cannot be denied that the element of risk of error is
virtually swept away if the court is able to make an order of specific
performance. The innocent party receives the very thing bargained for rather
than a monetary estimate of its worth
. [Emphasis added.]
The overarching test for granting specific
performance
[69]
The basic rationale for an order of specific
performance of contracts is that damages may not, in the particular case,
afford a complete remedy:
Adderley v. Dixon
(1824), 57 E.R. 239 (Ch.),
at p. 240;
Semelhago
, at para. 21;
Matthew Brady
, at para.
29. In
Semelhago
, the Supreme Court noted that at one time the common
law regarded every piece of real property as unique. However, in the
contemporary real estate market, which is characterized by the mass production
of urban residential housing, it cannot be assumed that damages for breach of
contract for the purchase and sale of real estate would be an inadequate remedy
in all cases: at para. 21. Accordingly, specific performance should not be
granted as a matter of course absent evidence that the property is unique to
the extent that its substitute would not be readily available: at para. 22.
Therefore, a party seeking specific performance must establish a fair, real,
and substantial justification by showing that damages would be inadequate to compensate
for its loss of the subject property:
Asamera Oil Corp. v. Seal Oil &
General Corp.,
[1979] 1 S.C.R. 633, at p. 668.
[70]
In his article Death to
Semelhago
! (2016)
39:1 Dalhousie L.J. 1, Professor Bruce Ziff commented, at p. 9, that the
change ushered in by
Semelhago
can be seen as one of degree, not
principle. The point was made, in a slightly different way, by Lax J., in
John
E. Dodge Holdings Ltd. v. 805062 Ontario Ltd.
(2001), 56 O.R. (3d) 341
(S.C.), affd (2003) 63 O.R. (3d) 304 (C.A.), leave to appeal refused, [2003]
S.C.C.A. No. 145. She ventured the view, at para. 55, that
Semelhago
did not replace the presumption of uniqueness with a presumption of
replaceability.
[2]
Certainly the plaintiff bears the onus of demonstrating entitlement to the
remedy of specific performance. But what does that require the plaintiff to
demonstrate? Lax J. stated, at para. 55:
Semelhago
asks us to examine in each case, the plaintiff and the property. The danger in
framing the issue as one of uniqueness (a term that carries with it a pre-
Semelhago
antediluvian aroma) is that the real point of
Semelhago
will be lost.
It is obviously important to identify the factors or characteristics that make
a particular property unique to a particular plaintiff.
The
more fundamental question is whether the plaintiff has shown that the land
rather than its monetary equivalent better serves justice between the parties.
This will depend on whether money is an adequate substitute for the plaintiff's
loss and this in turn will depend on whether the subject matter of the contract
is generic or unique. [Emphasis added.]
[71]
Whether specific performance is to be awarded or
not is therefore a question that is rooted firmly in the facts of an individual
case:
Matthew Brady
, at para. 32. In determining whether a plaintiff
has shown that the land rather than its monetary equivalent better serves
justice between the parties, courts typically examine and weigh together three
factors: (i) the nature of the property involved; (ii) the related question of
the inadequacy of damages as a remedy; and (iii) the behaviour of the parties,
having regard to the equitable nature of the remedy:
Landmark of Thornhill
Ltd. v. Jacobson
(1995), 25 O.R. (3d) 628 (C.A.), at p. 636. Whether a property
is unique, either by virtue of its nature or the features of the contract for
its purchase and sale
[3]
,
operates as only one of several factors a court must consider when determining
entitlement to specific performance.
[72]
Against that backdrop of general principles, I
shall examine the case law regarding each factor.
(i)
The nature of the property
[73]
In assessing whether a property is unique, courts
may have regard to: (a) a propertys physical attributes; (b) the purchasers
subjective interests, or (c) the circumstances of the underlying transaction.
While physical and subjective uniqueness of property will usually be
significant in cases where a purchaser as opposed to a vendor seeks
specific performance, the types of uniqueness are not exclusive and no
difference in evidential weight should be given to one form over another: Jeffrey
Berryman,
The Law of Equitable Remedies
, 2nd ed. (Toronto: Irwin Law,
2013), at pp. 355-57.
[74]
Uniqueness does not mean singularity or
incomparability. Instead, it means that the property has a quality (or
qualities) making it especially suitable for the proposed use that cannot be
readily duplicated elsewhere:
Dodge
(S.C.), at para. 60. For example,
a rising real estate market, particularly where the purchasers deposit remains
tied up by the vendor, may indicate that the transaction could not have been
readily duplicated or that other properties were not readily available at the
time of breach within the plaintiffs price range:
Walker v. Jones
(2008), 298 D.L.R. (4th) 344
,
at para. 165;
Sivasubramaniam v.
Mohammad
, 2018 ONSC 3073, 98 R.P.R. (5th) 130,
at paras. 84 and
92, affd 2019 ONCA 242, 100 R.P.R. (5th) 1.
[75]
The court should examine the subjective
uniqueness of the property from the point of view of the plaintiff at the time
of contracting:
Dodge
(S.C.), at para. 59. The court must also determine
objectively whether the plaintiff has demonstrated that the property or the
transaction has characteristics that make an award of damages inadequate for
that particular plaintiff:
Dodge
(S.C.), at para. 59;
Di Millo v.
2099232 Ontario Inc.
, 2018 ONCA 1051, 430 D.L.R. (4th) 296,
at paras. 70-73, leave to appeal refused, [2019] S.C.C.A. No. 55.
[76]
While units in cookie-cutter townhouses or condominium
units may be considered less unique than other forms of property, some condominiums
are truly unique:
Gillespie v. 1766998 Ontario Inc.
, 2014 ONSC 6952,
49 R.P.R. (5th) 65, at para. 26;
Landmark of Thornhill
, at p. 636. Even
in the case of mass-produced condominiums, the issue remains whether the
plaintiff has shown, upon the consideration of all the factors, that the land
rather than its monetary equivalent better serves justice between the parties.
[77]
Put another way, the specific performance
analysis is not merely a search for uniqueness. As the case law discloses, other
factors such as the inadequacy of damages as a remedy and the behaviour of the
parties also play a role:
Landmark of Thornhill
, at p. 636;
Dodge
(S.C.), at para 55;
UBS Securities Inc. v. Sands Brothers Canada Ltd.
,
2009 ONCA 328, 95 O.R. (3d) 93, at para. 100.
(ii)
Adequacy of damages
[78]
As indicated above, one other factor is whether
damages would be adequate to remedy the purchasers loss. For instance, courts
should be reluctant to award specific performance of contracts for property
purchased solely as an investment, since money damages are well-suited to satisfy
purely financial interests:
Southcott Estates Inc. v. Toronto Catholic
District School Board
, 2012 SCC 51, [2012] 2 S.C.R. 675, at paras. 40-41.
[79]
By contrast, if damages would be particularly
time-consuming, difficult, or complex to compute, this may point in favour of
specific performance: Sharpe J.,
Injunctions and Specific Performance
,
at
§
7.220;
Neighbourhoods
of Cornell Inc. v. 1440106 Ontario Inc.
(2003), 11 R.P.R. (4th) 294, at
paras. 112-14, affd (2004), 22 R.P.R. (4th) 176 (C.A.), leave to appeal
refused, [2004] S.C.C.A. No. 390.
(iii)
The behaviour of the parties
[80]
A final factor involves considering the
behaviour of the parties and weighing the equities at play in the transaction:
Paterson
Veterinary Professional Corporation v. Stilton Corp. Ltd.
, 2019 ONCA 746,
438 D.L.R. (4th) 374, at para. 31, leave to appeal to S.C.C. refused, 38927
(April 2, 2020);
Matthew Brady
, at para. 32. A vendors bad faith attempt
to terminate a valid agreement of purchase and sale may support an order of
specific performance against that party:
Gracegreen
, at para. 170.
D. Analysis
[81]
In assessing the appellants submission that the
application judge misapplied the foregoing principles in granting specific
performance, I shall address the three main errors alleged by the appellants.
First error: The Unit was not unique to the
Lucases
[82]
The appellants contend that Unit 421 was not
unique to the Lucases in any way; it was merely a generic investment opportunity.
They submit the application judge misapplied the applicable principles by
awarding specific performance after finding, at paras. 59 and 61, that the Unit
cannot be described as physically unique and that uniqueness of the property
in the sense that it has some special characteristic sought by the party, does
not apply. According to the appellants, the fact the Lucases now intend to
sell the Unit and buy a larger home due to their expanding family proves
that Unit 421 is only valuable to them financially and therefore is not unique:
Southcott
, at paras. 38-40.
[83]
I see no reversible error in the application
judges analysis. Although he acknowledged that the Unit is one of many similar
properties available in Toronto at any given time, there is no rigid rule
requiring a court to decline specific performance to a prospective purchaser in
the absence of physical or subjective uniqueness. In determining whether a
substitute for the Unit was readily available within the meaning of
Semelhago
,
a court may look beyond the physical attributes or location of a property to
examine the features of the purchase transaction.
[84]
That is what the application judge did. At para.
64, he found that the Unit was unique based on advantageous terms in the
Agreement. These terms included: (a) a $15,000 credit, part of which the
Lucases used to customize the Unit with upgrades, and (b) the ability to
stretch out payment of the deposit into small monthly increments. The
appellants now argue that these terms were available to the public at large.
However, 185s evidence on the application was that (a) the overall deal outlined
in the Agreement was unique to Alex Lucas and (b) the deposit payment
structure was only available to the Lucases, not to others, because of Alexs
long-standing employment with Triumph. The Agreement
locked in a home for
the Lucases at a favourable price, along with the ability to slowly build their
deposit. As long as they made their payments, they were insulated from market fluctuation
while their home was being constructed and fitted with custom upgrades. On this
basis, the application judge found that the Agreement could not have been
readily duplicated at the time of 185s wrongful termination in February 2019.
I see no palpable and overriding error in that finding.
[85]
This case is distinguishable from
Southcott
,
where a developer sought specific relief with respect to property it had agreed
to purchase solely as an investment. At the hearing, 185 acknowledged there was
no evidence that the Lucases purchased Unit 421 as an investment property.
Rather, the Lucases evidence was that they intended to live in the Unit when
they entered into the Agreement in 2015. Later, when their second child was
born, they decided they needed more space. While the arrival of a second child
before the Units closing date changed their plans to live in the Unit, Kelly
deposed that their interest in completing the purchase of the Unit remained one
tied to residential use, not investment they could use the sale proceeds as
the means to buy a 2-bedroom unit in the condominium in which to live. Accordingly,
the evidence does not support the appellants efforts to paint the Lucases interest
in the Unit as solely an investment opportunity.
Second error: The Lucases failed to establish
the inadequacy of damages
[86]
The
second alleged error concerns the application judges finding, at para. 65, that
pursuing damages would deny the Lucases the advantage of the rise in value of
the Unit, hindering their ability to buy a home of the size and quality they
could otherwise afford now. The appellants say the application judge failed to
acknowledge that damages would be assessed at the date of judgment based on a
straightforward analysis of the Units fair market value. As such, damages
would not be complex to assess and the Lucases would not lose out on any
increase in value.
[87]
The
appellants further argue that the Lucases did not specifically plead that
damages were inadequate or adduce evidence that it would have been difficult
for them to obtain a similar property in Toronto. Therefore, the appellants
submit that there was no basis on which to find damages inadequate and the application
judge should have recognized the Lucases duty to mitigate.
[88]
I
am not persuaded by the appellants submissions for four reasons.
[89]
First,
the application judge found damages inadequate because of delay, not quantum.
He did not ignore the practice that damages generally are assessed as of the
date of judgment (or trial); he held that it would be unfair to make the
Lucases wait any longer to be compensated for 185s misconduct.
[90]
As
I read his reasons, especially at para. 65, the application judge made three
points:
(i) To
accept 185s position that specific performance should not be available for a
breach of a contract to sell a standard condominium unit where a vendor retains
control of the purchasers deposit would make it difficult for purchasers to
mitigate their damages. They would not be able to use their deposit to acquire a
replacement property;
(ii) Even
with a damages award in their pockets, purchasers such as the Lucases would
still have to spend time and money pursuing their vendor, such as 185, if it
did not immediately honour the judgment; and
(iii) Finally,
a suit for damages could drag on for years. I take the application judge to
be pointing to the Lucases choice to bring an application, rather than an
action, to obtain their remedy for 185s breach. Bringing an application for
specific performance would better achieve justice than requiring the [Lucases]
to sue for damages, as the application judge put the matter.
[4]
I see no error in any of these points made by the
application judge. Indeed, I agree with them.
[91]
In
regard to the application judges comment that a suit for damages could drag on
for years, I would note that an application is designed as a more stream-lined
device than an action to obtain a remedy, avoiding the delays and costs too
often associated with productions, discoveries, and the scheduling of trials.
And the potential advantage of an application over an action was demonstrated
in this case: the Lucases issued their notice of application in March 2019 and
obtained their judgment less than 10 months later, in January 2020. An example
of the courts process satisfying the service guarantee promised by r.
1.04(1) of the
Rules of Civil Procedure
to secure the just, most expeditious and least expensive
determination of every civil proceedings on its merits:
Louis
v. Poitras
, 2020 ONCA 815, at para. 33; 2021 ONCA 49, at para. 22.
[92]
Second,
the Lucases were not required to specifically plead the inadequacy of damages,
as the appellants contend. A claim for specific performance, by its nature,
requires a court to inquire into whether damages would be an adequate remedy in
the circumstances. While choosing not to plead damages as an alternative to
specific performance may, in some circumstances, be a risky litigation strategy,
it does not preclude a court from assessing the circumstances surrounding the
transaction and subsequent litigation in exercising its remedial discretion. Accordingly,
185s contention that it was taken by surprise when the application judge
considered inadequacy of damages is not tenable given the Lucases claim for
specific performance.
[93]
Third,
there was sufficient evidence to support the application judges finding that damages
were inadequate to compensate the Lucases. It is common ground that prices in
the Toronto real estate market rose significantly over the past several years. The
evidence before the application judge was that the Unit had increased in value
by about 40% between the signing of the Agreement in 2015 and 185s purported
termination in 2019. Given that four years had elapsed between the execution of
the Agreement and 185s wrongful termination, it was reasonable for the
application judge to infer that it would have been difficult for the Lucases to
find a property at a comparable price, particularly when 185 had seized their
deposit.
[94]
Finally,
I do not accept the appellants suggestion that in order to obtain specific
performance the Lucases were required to prove they lacked the financial means
to mitigate their loss. In their application, the Lucases claimed specific
performance, not damages. In
Southcott
, the
Supreme Court explained the interplay between a claim for specific performance
and the obligation of the innocent party to mitigate when faced with a breach
of contract. At para. 37, the court stated:
Asamera
set out the general
principles governing mitigation: was the plaintiffs inaction reasonable in the
circumstances, and could the plaintiff have mitigated if it chose to do so.
Those principles apply to a plaintiff seeking specific performance. If the
plaintiff has a substantial justification or a substantial and legitimate
interest in specific performance, its refusal to purchase other property may
be reasonable, depending upon the circumstances of the case.
[95]
In
assessing whether the plaintiffs refusal to purchase another property was
reasonable, the defendant vendor bears the burden of proof. As the court went
on to state in
Southcott
, at para. 45: [W]here
it is alleged that a plaintiff has failed to mitigate damages, the onus of
proof on a balance of probabilities lies with the defendant, who must establish
not only that the plaintiff failed to take reasonable efforts to find a
substitute, but also that a reasonable profitable substitute could be found.
[96]
The
application judge obviously found that 185 had not discharged that onus. 185s
retention of the deposit evidently played a large role in the application
judges analysis for he noted, at para. 64, that the [Lucases] deposits have
been provided to 185, and that money has been, and remains, tied up in the
property, unavailable for acquiring another property, as the market continues
to rise. The evidence also disclosed two other impediments to reasonable
mitigation: (i) the expert evidence indicated that any potential substitute
property in February 2019 would have been significantly more expensive than the
contract price for the Unit; and (ii) the Agreement had provided the Lucases
with special advantageous terms because of their relationship with the vendors
principals.
[97]
Given
those circumstances, I see no error in the application judges determination
that the
Lucases had shown that specific performance of
conveying the Unit, rather than awarding its monetary equivalent, better served
justice between the parties
.
Third error: the Lucases behaved
inappropriately, not 185
[98]
The
appellants also contend the application judge failed to consider that the
Lucases did not bring their claim for equitable relief with clean hands.
Conversely, they argue that the subsequent sale to Sofia and Andre, while a favourable
deal, was legitimate. As such, the appellants say the application judge erred
in finding that the behaviour of the parties weighed in favour of awarding specific
performance against 185.
[99]
I
see no merit in this submission. The application judge considered and rejected essentially
the same argument: at paras. 72-75. On appeal, 185 seeks to re-litigate the
issue. Although 185 may disagree with the application judges reasoning, I see
nothing to suggest he made any palpable and overriding error in his application
of the doctrine of clean hands.
[100]
Further, as the
application judge noted, at para. 75, the equities in this case strongly favour
the Lucases. The Lucases upheld their end of the Agreement and expected 185 to
do the same. Over the course of four years they made all required payments to
secure ownership of the Unit. In September 2018, 185 took issue with Mr.
Duartes occupancy. However, 185 did not promptly invoke any right to terminate
under the Agreement. Instead, it did nothing for months, only raising the
matter again in December as leverage in the Bathtub Dispute, long after Mr.
Duarte had already vacated the Unit. When that tactic failed, 185 terminated
the Agreement on the eve of closing, seized the Lucases deposit, and re-sold
the Unit to close relatives of the companys principals on favourable terms.
[101]
The appellants submit
that the application judge erred in finding, at para. 77, that the re-sale of
the Unit to Sofia and Andre was a sham, intended by the [appellants] to
prevent the [Lucases] from acquiring title to Unit 421. While the word sham
might overstate the commercially favourable aspects of the re-sale transaction,
the evidence certainly supported the application judges inference that 185
entered into that transaction to prevent the Lucases from acquiring title to
the Unit. Specifically, the evidence revealed that:
(i) Sofia
and Andre were the children of one of 185s principals;
(ii) The
re-sale price of $418,000 was far below the then market price for the Unit,
which 185s own experts valued at between $489,000 and $520,000;
(iii) The
required deposit of $5,000 was only 1% of the purchase price, far lower in
proportion than the deposit required of the Lucases on their purchase.
[5]
Another $13,000, or 3%, was to be paid on closing, with the balance financed by
a vendor take-back mortgage from 185, the company owned by the purchasers
father and uncle;
[6]
(iv) Mario
deposed that 185 offered the mortgage because he was aware that Sofia and Andre
did not have the money to close the transaction;
(v) The
re-sale was not the result of listing the Unit on the open market. Instead,
Sofia deposed that her uncle approached her to advise that the sale of the Unit
to a former Triumph employee was not proceeding; and
(vi) Sofia
deposed that her uncles overture occurred in early March 2019, just three
weeks after 185 purported to terminate the Agreement.
[102]
Given the evidence set
out above in paras. 100 and 101, it certainly was open to the application judge
to find that 185 acted in bad faith in terminating the Agreement and to take
that conduct into account in granting equitable relief to the Lucases.
E. Conclusion on Issue 2
[103]
Accordingly, I would dismiss the appeal with respect to remedy. I
see no reversible error in the application judges decision to grant specific
performance in favour of the Lucases. He properly applied the controlling
principles to the evidence before him. Rather than focus solely on the uniqueness
of the Unit itself, he conducted a broad critical inquiry as to the adequacy of
damages having regard to the circumstances of the transaction as a whole. Based
on this inquiry, the application judge was entitled to conclude, as he did, that
specific performance would best serve justice between the parties.
IV. ISSUE 3: THE SUBSEQUENT SALE TO SOFIA
AND ANDRE
[104]
The final issue on appeal concerns 185s subsequent sale of the Unit
to Sofia and Andre. The appellants submit the application judge erred by
ordering the lease with Sofia and Andres tenants assigned to the Lucases. As non-parties
to the litigation, the appellants submit that the tenants had no recourse to
challenge the application judges interference with their contractual rights. They
say the lease should be re-assigned and all rent payments returned to Sofia and
Andre.
[105]
As a practical matter, this is no longer a live issue. At the
hearing, respondents counsel confirmed that Sofia and Andres tenants
voluntarily vacated the Unit on March 31, 2020, after paying only one month of
rent to the Lucases. The Lucases re-took vacant possession of the Unit in April
2020.
[106]
As well, given my conclusion that the application judge did not err
in granting the Lucases specific performance of the Agreement, I see no error
in that part of his judgment which, in effect, directed the Lucases to honour
the lease with the then existing tenants of the Unit.
V. DISPOSITION
[107]
For the reasons set out above, I would dismiss the appeal.
[108]
I would order the appellants to pay the respondents their partial
indemnity costs of the appeal fixed in the amount of $18,500, inclusive of
disbursements and applicable taxes.
Released: AH JAN 28 2021
David
Brown J.A.
I
agree. Alexandra Hoy J.A.
I
agree. Thorburn J.A.
[1]
185
abandoned its appeal of the application judges order with respect to relief
from forfeiture and released $73,980 in deposit monies to the Lucases.
[2]
Low J. first made this point
in
904060
Ontario Ltd. v. 529566 Ontario Ltd.
, [1999] O.J. No. 355 (S.C.), at para.
14.
[3]
Domowicz v. Orsa Investments Ltd.
(1993), 15 O.R.
(3d) 661, at pp. 687-88, affd (1998), 40 O.R. (3d) 256 (C.A.);
Matthew
Brady
, at para. 39;
Di Millo v. 2099232 Ontario Inc.
, 2018 ONCA
1051, 430 D.L.R. (4th) 296, at paras. 70-74,
leave to appeal
refused, [2019] S.C.C.A. No. 55.
[4]
In
Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd.
, 2014
BCCA 388, 377 D.L.R. (4th) 701, the British Columbia Court of Appeal noted the
advantages of the remedy of specific performance in providing greater access to
justice in the courts, stating, at para. 49:
In terms of the modern
concept of access to justice, the remedy has much to be said for it, at least
in the context of contracts for the sale and purchase of land. Certainly it is
likely to be less expensive and time-consuming than the assessment of damages,
which requires the parties to marshal expert evidence concerning the value of
the land as at a particular date (which may be in issue) in what may be an
unstable market
.
[5]
Sofia
and Andre recovered their deposit through the rent paid by their tenants prior
to the judgment and transfer of the Unit to the Lucases.
[6]
Although
the application judge, at paras. 22 and 77, stated that the agreement to secure
payment of the balance of the purchase price was by way of a promissory note, not
a mortgage, in my view this mischaracterization is of no consequence. At the
end of the day, the purchasers were offered financing for 96% of the purchase
price by the company owned by their father and uncle.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Magnotta v. Yu, 2021 ONCA 185
DATE: 20210325
DOCKET: C68187
MacPherson, Gillese and
Nordheimer JJ.A.
BETWEEN
Melissa Magnotta as the
Representative of the Estate of Joseph Magnotta and Melissa Magnotta
Plaintiffs (Respondents)
and
Xiaozeng Yu
,
Xiahong Mao
and Sutton Group-Admiral Realty Inc.
Defendants (
Appellants
)
Sean Dewart and Mathieu Bélanger, for
the appellants
Alfred J. Esterbauer, Arleen Huggins,
and Sydney Hodge, for the respondents
Heard by videoconference:
February 26, 2021
On appeal from the judgment of Justice Paul
B. Schabas of the Superior Court of Justice, dated February 18, 2020 with
reasons reported at 2020 ONSC 1049.
Gillese J.A.:
Overview
[1]
This proceeding stems from a failed real estate
deal. Offers to settle flowed between the parties. The respondents purported to
accept an outstanding offer but the appellants claimed there was no offer
capable of being accepted. The respondents moved to enforce settlement.
[2]
The motion judge found the respondents had
accepted a valid offer made pursuant to rule 49 of the
Rules of Civil
Procedure
, R.R.O. 1990, Reg. 194. While he had the discretion to not enforce
the settlement, he chose not to exercise it.
[3]
The issue on appeal is whether the motion judge
erred in refusing to exercise that discretion. For the reasons that follow, in
my view, he did not. Consequently, I would dismiss the appeal.
Background
[4]
On March 8, 2017, Xiaozeng Yu entered into an
agreement of purchase and sale for a residential property in Richmond Hill,
Ontario (the Property) owned by Melissa Magnotta and the late Joseph Magnotta
(the Respondents).
[1]
The purchase price was $2,662,000 and July 7, 2017, was the scheduled closing
date. Ms. Yu made a deposit of $65,000.
[5]
Ms. Yu waived conditions on March 13. She had
until June 23 to inspect title and make requisitions. On June 29, Ms. Yus real
estate agent sought a two-week delay in closing so Ms. Yu could obtain
financing because she had been unable to sell her own home. The following day,
the Respondents received a letter from Ms. Yus lawyer with many requisitions, the
most significant of which concerned the conversion of the houses garage into a
master bedroom, apparently without building permits and in contravention of zoning
by-laws.
[6]
The Respondents answered the requisitions even
though they were out of time. Ms. Yus lawyer was not satisfied with the
Respondents answer on the garage conversion. He asserted that good title could
not be conveyed in the absence of the Respondents delivering a valid building
permit, Ms. Yu would not close the transaction, and the agreement was at an
end. The sale did not close on July 7, 2017.
[7]
In September 2017, the Respondents sued Ms. Yu
and her mother, Xiahong Mao (the Appellants). Ms. Mao was named because she had
placed a mortgage on Ms. Yus property in the amount of $900,000 on July 4,
2017 (three days before the closing date). The statement of claim alleged that
the mortgage was registered as a fraudulent preference or conveyance.
[8]
The Respondents subsequently sold the Property for
$900,000 less than what Ms. Yu had agreed to pay for it. They filed a summary
judgment motion that was to be heard on June 24, 2019.
[9]
In March 2019, the Appellants changed legal
counsel.
[10]
In late May 2019, counsel for the parties
exchanged several offers to settle. For the purposes of this appeal, the relevant
offer is one made by counsel for the Appellants in writing on May 29, 2019 (the
Offer). The Offer set out two options for acceptance. Option A offered the
immediate release of the $65,000 deposit, a payment of $200,000 within 15 days,
and a further payment of $235,000 within 30 days. Option B offered the
immediate release of the $65,000 deposit, a payment of $200,000 within 15 days,
and a further payment of $285,000 in 90 days.
[11]
Counsel for the Respondents responded that same
day. She said the Offer was insufficient and confirmed that she would cross-examine
Ms. Yu the following morning. Later that day, counsel for the Appellants
advised counsel for the Respondents that the Appellants had retained new
counsel.
[12]
The Appellants retained new counsel not
counsel on this appeal on May 30, 2019, at which point her former lawyers
ceased to be involved in this matter.
[13]
In June 2019, the Appellants new counsel
obtained expert opinion evidence from a land use planning consultant and a real
estate lawyer. The former opined that the garage conversion was non-complaint
with the zoning by-laws and the building code. The latter opined that the
conversion was not discoverable by a title search and either went to the root
of title or was a requisition that could be made up to five days prior to
closing and, therefore, was timely. The expert reports were served on counsel
for the Respondents on June 25, just as counsel was leaving on vacation.
[2]
[14]
Beginning on June 26, counsel for the
Respondents was out of the country on a prescheduled vacation.
[15]
On July 3, counsel for the Respondents wrote to
the Appellants new counsel advising that her clients accepted Option B of the
Offer. Two days later, the Appellants counsel responded that there was no
offer to settle capable of being accepted and, in any event, the Offer was no
longer open for acceptance.
[16]
The Respondents moved to enforce settlement
based on their acceptance of the Offer.
THE MOTION JUDGES REASONS
[17]
The motion judge found that the Offer complied
with r. 49: it was made in writing; by a person with authority to make it; effectively
served on the opposing party; capable of acceptance; not time limited; and not
withdrawn. Citing
York North Condominium Corp. No. 5 v. Van Horne Clipper Properties
Ltd.
(1989), 70 O.R. (2d) 317 (C.A.) at para. 10, the motion judge
observed that even if the Offer had been rejected, it remained open for
acceptance because it had not been withdrawn.
[18]
As the Offer complied with r. 49, the motion
judge stated that it should be presumptively enforced. He gave comprehensive
reasons for why the Appellants had failed to rebut the presumption.
[19]
The motion judge next considered whether he
should exercise his discretion to not require compliance with the settlement. He
set out the Appellants position at para. 47 of his reasons:
Essentially, the [Appellants] submit that the
expert evidence obtained in June 2019 completely changed the case such that it
would be unjust to hold them to an offer that pre-dated that change and of
which their counsel was unaware. To this, they also argue that it was
unreasonable for [Respondents] counsel to think that the Offer was still open
for acceptance given the new evidence, and it is suggested that she took
advantage of an Offer mistakenly left open by the [Appellants].
[20]
He concluded that this was not one of those
rare cases where an injustice would result if the settlement was enforced. He
gave three reasons for this conclusion.
[21]
First, the motion judge felt it was not
appropriate for him to assess the strength of the case for either side. He said
that, apart from being unable to do so adequately, allowing a party to avoid an
outstanding offer on the basis that its case had improved would create
uncertainty and defeat the purpose of r. 49. He acknowledged that the Respondents
sold the Property for approximately $900,000 less than what Ms. Yu had agreed
to pay and that might have been the result of the alleged title issues, but he
had no evidence of that. Further, he did not have any expert evidence that the
Respondents might have led in response to the Appellants new evidence. He said
that, if he were to rely on that new evidence, it would open the door to
permitting parties to avoid what, in retrospect, may have been an improvident
offer.
[22]
Second, the motion judge found that this was not
a case in which the Respondents lawyers knowingly took advantage of a mistake
by counsel for the Appellants.
[23]
Third, the motion judge did not accept that it
was unreasonable for the Respondents counsel to have thought the Offer was
still open despite the expert evidence served on her at the end of June. He
acknowledged that the case looked different and that counsel for the Respondents
had indicated that a summary judgment motion was no longer viable. However, counsel
for the Respondents did not concede that their case was hopeless, and he could
not so conclude. The motion judge also stated that he would not speculate as to
why the Respondents chose to accept the Offer which, he noted, compromised the
case at about 50% of the amount of the loss claimed. He said that this compromise
made it difficult to conclude that one party would be unduly prejudiced.
The Issue
[24]
The Appellants do not take issue with the motion
judges conclusion that the Offer complied with r. 49 and the Respondents
validly accepted it. The sole issue they raise on appeal is whether the motion
judge erred in refusing to exercise his discretion to not enforce the
settlement.
THE GOVERNING LEGAL PRINCIPLES
[25]
There is no dispute about the legal principles
that govern this appeal.
[26]
Rule 49.09(a) is permissive. If a party to an
accepted offer does not comply with the terms of the offer, the other party can
move for judgment in the terms of the accepted offer and the judge may grant
judgment accordingly. Thus, the judge has discretion whether to enforce the
settlement.
[27]
The standard of review of the judges exercise
of discretion to enforce a settlement was articulated by this court in
Milios
v. Zagas
(1998), 38 O.R. (3d) 218 (C.A.), at para.19:
In determining whether to enforce a settlement
under R. 49.09, all of the relevant factors disclosed by the evidence must be
taken into account. When that is done, an appellate court will not generally
interfere with the motion judges decision to grant, or not grant, judgment in
accordance with an accepted offer.
[28]
At para. 21 of
Milios
,
Osborne
J.A., writing for the court, stated that the motions judge erred by not taking
into account manifestly important factors, including:
- since no order giving effect to the
settlement had been taken out, the parties pre-settlement positions remained
intact;
- apart from losing the benefit of the
impugned settlement, the defendant would not be prejudiced if the settlement was
not enforced;
- the degree to which the plaintiff would be
prejudiced if judgment was granted in relation to the prejudice that the defendant
would suffer if the settlement was not enforced;
- the fact that no third parties were, or
would be, affected if the settlement was not enforced.
[29]
In
Srebot v. Srebot Farms Ltd.
, 2013
ONCA 84, this court reiterated the deferential approach it is to take when reviewing
such decisions. At para. 5, this court stated that the motion judges
appreciation of the evidence and her related factual findings attract great
deference. And, at para. 6, it stated that the discretionary decision to not
enforce a concluded settlement should be reserved for rare cases where compelling
circumstances establish that the enforcement of the settlement is not in the
interests of justice.
THE PARTIES POSITIONS
[30]
The Appellants submit that the motion judge referred
to the factors set out at para. 21 of
Milios
but failed to consider
them. They say that failure is a legal error and, consequently, this court owes
no deference to the motion judges discretionary decision to not enforce the
settlement. The Appellants make four arguments in support of this position.
[31]
First, there is clear evidence of an error. Ms.
Yus uncontradicted evidence was that she believed there were no offers that
could be accepted by the Respondents and her new counsel were unaware of the
outstanding Offer. While the Offer ought to have been withdrawn before it was
accepted, this mistake by counsel ought not to be visited on the Appellants.
[32]
Second, no order giving effect to the settlement
had been taken out.
[33]
Third, the motion judge did not carry out a meaningful
analysis of the relative prejudice to the parties because he failed to consider
the possibility that Ms. Yu was correct that the Respondents could not convey good
title. If correct, she did not breach the agreement of purchase and sale and yet,
because of the enforcement of the settlement, as the blameless party she would
have to pay $485,000 to the at-fault Respondents because of a lawyers slip. Further,
while there was compelling evidence of potential prejudice to Ms. Yu, including
being deprived of having the issues decided on the merits at a trial, there was
no evidence of prejudice to the Respondents apart from the loss of the
settlement.
[34]
Fourth, no third parties would be affected by
the non-enforcement of the settlement.
[35]
The Respondents submit that there is no basis on
which to interfere with the motion judges discretionary decision and that the
Appellants are seeking to relitigate the motion by asking this court to engage
in its own assessment of the evidence. They contend that the motion judge considered
all the relevant legal principles, made factual findings that withstand scrutiny
on the palpable and overriding standard, and reasonably concluded that this was
not one of those rare cases in which it would not be in the interests of
justice to enforce the settlement.
Analysis
[36]
I accept the Respondents submissions. The motion
judges factual findings are wholly justified on the record and the Appellants
do not suggest otherwise. The motion judge also clearly and correctly
articulated the governing legal principles. Again, the Appellants concede this.
The Appellants sole quarrel is with the motion judges exercise of discretion. However,
I am satisfied that the motion judge took into consideration all relevant
factors when exercising his discretion and, consequently, there is no basis for
this court to interfere with his decision.
[37]
The Appellants foundational proposition is that
the motion judge erred in law by failing to take into account the factors set
out at para. 21 of
Milios
. I reject this proposition for four reasons.
[38]
First, in determining whether to enforce the
settlement, the motion judges task was to consider all relevant factors:
Milios
,
at para. 19. The factors identified at para. 21 of
Milios
were
important in the circumstances of that case. That does not mean that they are
relevant in all cases and that a failure to advert to them on the part of the
motion judge is an error in law.
[39]
Second, at para. 49 of his reasons, the motion
judge quoted para. 21 of
Milios
, showing that he was alive to a
consideration of those factors. There was no need to mention that no order
giving effect to the settlement had been taken out and no third-party rights were
affected because the parties did not contend otherwise.
[40]
Third, the motion judge fully addressed the relevant
factors as identified by the Appellants. One of those factors was the
Appellants submission that a mistake had been made which warranted the motion
judges exercise of discretion. The motion judge disagreed. He found that this
case was not like
Fox Estate v. Stelmaszyk
(2003), 65 O.R. (3d) 846 (C.A.),
in which the plaintiffs lawyer knowingly took advantage of a mistake by
counsel for the defendants. On the contrary, the motion judge found that
counsel for the Respondents did not take advantage of a mistake on the part of
new counsel for the Appellants because she was unaware that new counsel did not
know that the Offer was outstanding. What she did know was that new counsel had
the Appellants full file for a month before she accepted the Offer. The fact
that Ms. Yu believed there were no outstanding offers does not undermine the
motion judges finding that there was no mistake of the sort found in
Fox
Estate
which justified judicial refusal to enforce the settlement.
[41]
Fourth, the motion judge meaningfully considered
the Appellants arguments based on the relative prejudice to the parties if the
settlement were enforced. He acknowledged that the Appellants case appeared to
have been strengthened as a result of the expert evidence. However, on the
record before him, the motion judge said that he could not adequately assess
the parties relative positions on the underlying merits of the case and that
it would not be appropriate in any case. To the extent that the quoted words
suggest that it would never be appropriate to assess the underlying merits of
the case, I disagree because there may be situations in which it would be
appropriate to make that assessment. However, I agree with the motion judge that,
in the circumstances of this case, it would not have been appropriate to engage
in such an assessment.
[42]
The motion judge gave further reasons on the
question of the relative prejudice the parties would suffer if the settlement
were enforced. He said that allowing a party to avoid an outstanding offer on
the basis its position had improved would create uncertainty and defeat the
purpose of r. 49. He also noted that he did not have evidence before him that
it was the title issues that led to the Respondents selling the Property for
$900,000 less than what Ms. Yu had agreed to pay for it. Further, he did not
have any expert evidence that the Respondents might have introduced in response
to that of the Appellants and stated that relying on the latter as the basis
for exercising his discretion would open the door to permitting parties to
avoid what, in retrospect, may have been an improvident offer.
[43]
Finally, as the motion judge noted at para. 54
of his reasons, the fact that the Offer reflected a compromise approaching 50%
of the amount of the loss claimed made it difficult to conclude that one party
or the other would be unduly prejudiced in the circumstances.
[44]
In short, contrary to the Appellants assertion,
the motion judge fully considered their arguments relating to the interests of
justice and the degree of prejudice that would be suffered by the respective
parties.
[45]
The motion judge considered all relevant factors
before concluding that this was not one those rare cases in which the
interests of justice favoured the exercise of his discretion to refuse to
enforce the settlement. I see no basis on which to interfere with the motion
judges decision.
DISPOSITION
[46]
Accordingly, I would dismiss the appeal with
costs to the respondent fixed at $7,500, all inclusive.
Released: March 25, 2021 J.C.M.
E.E.
Gillese J.A.
I agree.
J.C. MacPherson J.A.
I agree.
I.V.B. Nordheimer J.A.
[1]
Unfortunately, Mr. Magnotta passed away during the
litigation. Ms. Magnotta continued with the litigation both on her own behalf
and as representative of Mr. Magnottas estate.
[2]
There is some confusion in the record on when the expert
reports were served on counsel for the Respondents. I have followed the motion
judges statement on this matter at para. 18 of his reasons.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Makeeva v. Makeev, 2021 ONCA 232
DATE: 20210414
DOCKET: C67320 & C68478
Rouleau, Brown and Miller JJ.A.
BETWEEN
Natalia
Makeeva
Applicant
(Appellant/Respondent by way of cross-appeal)
and
Andrey Makeev
Respondent
(Respondent/Appellant by way of cross-appeal)
Ruslana Korytko, for the appellant/respondent
by way of cross-appeal
John W. Bruggeman, for the respondent/appellant
by way of cross-appeal
Heard: March 29 by video conference
On
appeal from the judgments of Justice E. Ria Tzimas of the Superior Court of
Justice, dated July 18, 2019 and June 19, 2020 with reasons reported at 2019
ONSC 4334 and 2020 ONSC 3750.
REASONS FOR DECISION
[1]
After a trial of the family law issues, the
appellant was ordered to pay $905 per month in spousal support indefinitely on
the grounds that, after the dissolution of their 15-year marriage, the
respondent was suffering financially. The trial judge also ordered that the
appellant pay $17,419.60 as an equalization payment.
[2]
After the judge issued her decision, the
appellant attempted to reopen the trial and file fresh evidence about the
respondents potential income and his counsels alleged misconduct in registering
a mortgage on the parties matrimonial home. The trial judge dismissed this
motion largely on the basis that this evidence would not change her original
judgment.
[3]
The appellant raises five grounds of appeal. She
argues that the trial judge erred in:
1.
allowing the interpreter to continue
interpreting despite the appellants stated concerns about her competency;
2.
failing to order a lump sum child support
payment;
3.
imputing the respondents income at $28,000 per
year;
4.
awarding spousal support; and
5.
failing to admit the fresh evidence.
[4]
The respondent cross-appeals and argues that the
trial judge erred by failing to deduct the value of a date of marriage asset
from the respondents net family property.
[5]
For the reasons that follow, we dismiss the
appeal and allow the cross-appeal.
The competency of the interpreter
[6]
The appellant argues that due to the alleged
incompetency of the Russian language interpreter there were inaccuracies and
omissions in the translation over the course of the trial, and that this
affected the appellants ability to properly cross-examine the respondent. The
appellant maintains that the errors were substantial and resulted in an unfair
trial.
[7]
We disagree.
[8]
It was only on the seventh day of trial that the
appellants lawyer, who is fluent in Russian, raised a concern respecting the
quality of the translation. When the issue was raised, the trial judge provided
three options to the appellant on how to proceed. The appellant chose to
continue the trial using the same interpreter.
[9]
Having chosen to proceed with the interpreter,
she cannot now raise this as a ground of appeal. Further, it is significant in
our view that we have been provided with no expert evidence as to any inaccuracies
that could potentially have changed the outcome on an issue of importance.
Was a lump sum child support payment
appropriate?
[10]
The appellant argues that the trial judge ought
to have made a lump sum child support payment order. In her submission, it was evident
that, since separation, the respondent had regularly failed to pay periodic
child support and contribute towards the childrens s. 7 expenses. In her view,
therefore, a lump sum child support payment was clearly in the best interests
of the children. Despite the appellants request for such an order, the trial
judge did not, in her reasons, explain why the request was denied.
[11]
We see no error in the trial judges refusal to
award a lump sum child support payment. This is an issue of mixed fact and law.
Lump sum support is considered appropriate where there is real risk that
periodic payments will not be made. The appellant was unable to direct the
court to evidence showing that the respondents behaviour was indicative of
future non-payment of child support. No basis has been provided for interfering
with the trial judges decision not to award a lump sum child support payment.
The imputation of income to the respondent
[12]
The appellant submits that the trial judges
decision to impute the respondents income at $28,000 is unreasonable. She
maintains that the appellant is intentionally underemployed and that the figure
the trial judge chose as imputed income is not based on the evidence.
[13]
Given factors such as the age, education,
experience, skills and health of the respondent, as well as the job
opportunities he could pursue, the appellant argues that the court should have
imputed income to the respondent of $60,000 per year as a licensed journeyman
electrician. Alternatively, given that several years earlier the respondent had
been a truck driver, the trial judge could have imputed a salary of $50,000,
representing the salary he had been earning in that role.
[14]
We disagree. Imputation of income is an issue of
mixed fact at law. The trial judges determination is anchored in factual
findings which are to be afforded deference and are not to be disturbed without
showing that the judge committed palpable and overriding errors. On appeal, the
appellant can point to no error, let alone a palpable and overriding error.
[15]
The trial judge found that the respondents English
language skills were limited and that he had been working as a handyman for the
Russian-speaking community in the Greater Toronto Area. There was no admissible
evidence presented at trial to support the suggestion that, although he was qualified
as a journeyman electrician, he could have earned anything approaching $60,000
per year.
[16]
Further, there was no basis to impute to the
respondent the income of a truck driver. The respondent gave evidence that he
had quit his truck driving job in 2008 due to back problems. The trial judge
accepted that evidence. There was no basis in the evidence to find that he
could return to that employment.
[17]
The respondent lives a modest lifestyle. Nothing
that he earned suggested an income greater than what he reported in his sworn
financial statements. The imputation of income in the amount of $28,000 was reasonable
in all of the circumstances.
The award of spousal support to the
respondent
[18]
The appellant submits that in determining that
she should pay spousal support to the respondent, the court failed to give
sufficient consideration, or any consideration, to s. 15.3(1) of the
Divorce
Act
, R.S.C. 1985, c. 3 (2nd Supp.)
and s. 38.1(1) of the
Family Law Act
, R.S.O. 1990, c. F.3,
which direct the court to give
priority to the support of children over an order for spousal support. She argues
that the court failed to evaluate the respondents claim for spousal support in
conjunction with the appellants ability to meet both her own and the
respondents reasonable needs.
[19]
The appellant also submits that the trial judge
ignored relevant case law and made a spousal support order shifting the entire
burden of the economic disadvantage of the marriage and its breakdown onto the
appellant. As the evidence discloses, she was the primary caregiver for the
parties children. Had the trial judge properly considered the parties
financial circumstances as a result of the separation and division of assets,
as well as their respective earning capacities, the trial judge ought to have
concluded that no spousal support should be paid by the appellant.
[20]
We dismiss this ground of appeal. The trial
judge correctly found that the respondent was entitled to compensatory support
resulting from his having forgone paid work and career opportunities in order
to care for the children while the appellant was pursuing her nursing degrees.
The record also shows a substantial disparity in the income of both parties.
The respondent is 62 years old and earning close to minimum wage. The appellant
is 38 years old with a prosperous career ahead of her.
[21]
Based on the respondents imputed income of
$28,000 and the appellants income of $92,000, there is a substantial
inequality in the parties income. This was a 15-year marriage with two
children. In our view, the trial judges decision to award spousal support
based on the mid-range of the spousal support advisory guidelines for an
indefinite duration was reasonable and entitled to deference.
The dismissal of the fresh evidence motion
[22]
After the trial judge gave her decision but
before the final order was issued and entered, the appellant brought a motion
to present evidence related to two issues: (a) an apparent impropriety by
respondents trial counsel, who allegedly registered a private mortgage against
the matrimonial home and failed to disclose it to the court; and (b) the trial
judges mistaken belief that the appellant had attempted to establish that the
respondent is a master electrician and had misled a judge who had earlier
involvement in the matter.
[23]
The appellant maintains that the court erred in refusing
to admit the fresh evidence or in failing to declare a mistrial to avoid a
potential miscarriage of justice. The appellant also contests the trial judges
award of the costs of the motion to the respondent.
[24]
We see no error in the trial judges dismissal
of the motion. The trial judge found that even if she had known at trial of the
alleged improper mortgage transaction entered into by the respondents trial
lawyer, it would have had no impact on her assessment of the respondents
evidence or his lawyers representations to the court. The trial judge had
already found the respondents evidence to be highly suspect, incongruent, and
unreliable. It is apparent, therefore, that there was no basis to reopen the
trial to admit the evidence.
[25]
As for the documents said to be relevant to the
allegation of having misled an earlier judge, the trial judge found that the
documents had been available prior to trial and that some had even been put
forward, and excluded, as potential evidence. In any event, the judge found
that they were of no assistance as they were confirmatory of the income she had
imputed to the respondent. The trial judges refusal to reopen the trial ought
not to be interfered with. There is also no basis upon which to interfere with
the trial judges decision to award the costs of the motion to the respondent.
The respondents cross-appeal
[26]
The respondent submits that the trial judge
erred in failing to deduct the agreed value of a solely owned date of marriage
asset from the respondents net family property. This resulted in an error in
the amount of equalization payment owed by the appellant to the respondent. In
her reasons, the trial judge found that a condominium owned by the respondent at
the date of marriage valued at $64,785 was not a matrimonial home and, as a
result, should not be excluded from equalization. Because the condominium was a
date of marriage asset of the respondent, she ought, however, to have deducted
the value of the condominium from the respondents assets in the equalization
calculations.
[27]
The appellant argues that the respondent has
taken the trial judges finding that the condominium was not a matrimonial home
out of context. In her submission, when the judges reasons are read as a
whole, it is clear that the intention of the court was that the condominium
should not be included in the respondents pre-married assets because the
condominium had been sold and the funds reinvested. It should be excluded from
the net family property calculations.
[28]
In our view, the cross-appeal ought to be
allowed. Having found that the condominium was not a matrimonial home, the
trial judge ought to have deducted the value of the date of marriage asset in
the equalization calculations. Although the trial judge discusses the reinvestment
in her reasons, she does not explain why the deduction was not done.
[29]
Adjusting for the $64,785 condominium that was
owned by the respondent at the time of their marriage, and accounting for a $2,000
arithmetic error, the equalization payment ought to have been in the amount of $50,812.10.
Conclusion
[30]
We dismiss the appeal and allow the
cross-appeal. The equalization payment ordered by the trial judge is amended to
the amount of $50,812.10. Costs payable by the appellant are fixed in the
amount of $25,000 inclusive of taxes and disbursements.
Paul
Rouleau J.A.
David
Brown J.A.
B.W.
Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Malik v. Nikbakht, 2021 ONCA 176
DATE: 20210323
DOCKET: C67101
Feldman, Paciocco and Coroza
JJ.A.
BETWEEN
Sarfraz Malik
Plaintiff/Respondent (Appellant)
and
Amir Nikbakht
, Derek Da Silva,
and Conbora Formings
Inc.
Defendants/
Appellant
(
Respondent
)
Joel Cormier and Hudson Chalmers, for
the appellant
Theodore P.
Charney, Caleb Edwards and James Omran, for the respondent Amir Nikbakht
Heard: March 12, 2021 by video
conference
On appeal from the order of Justice Peter
J. Cavanagh of the Superior Court of Justice, dated May 22, 2019, with reasons
reported at 2019 ONSC 3118, allowing an appeal from the order of Master Charles
G.T. Wiebe of the Superior Court of Justice, dated April 30, 2018, with reasons
reported at 2018 ONSC 2816.
Paciocco J.A.:
MATERIAL FACTS
[1]
On October 10, 2013, a vehicle operated by the
appellant, Sarfraz Malik, was involved in a three-car collision. Mr. Malik and
the passengers in his vehicle, Mr. Maliks wife and their three children, were
injured.
[2]
On November 12, 2014, Mr. Malik sued the owners
and operators of the other vehicles for damages relating to the injuries he
suffered. Notably, Mr. Malik did not include a claim pursuant to s. 61 of the
Family
Law Act
,
R.S.O. 1990, c. F.3 (
FLA
) for his losses
arising from the injuries to his children.
[3]
Mr. Maliks wife, Khadija Malik, and his three
children brought lawsuits of their own, including against Mr. Malik. Unlike Mr.
Malik, they included s. 61
FLA
claims for their damages arising
from the injuries to each other.
[4]
In February 2018, more than four years after the
accident, Mr. Malik brought a motion for leave to amend his statement of claim
to add his own s. 61
FLA
claims relating to his losses arising from
the injuries to his children. One of the defendants, Amir Nikbakht, the
respondent in this appeal, resisted Mr. Maliks motion, arguing that the s. 61
FLA
claims Mr. Malik wanted to advance constituted a new statutory cause of
action that was statute barred under the
Limitations Act
, 2002
,
S.O. 2002, c. 24, Sched. B.
THE DECISIONS
BELOW
[5]
On April 30, 2018, Master Wiebe of the Superior
Court of Justice granted Mr. Maliks motion for leave to amend his pleadings. Master
Wiebe concluded that he was bound by
Bazkur v. Coore
, 2012 ONSC 3468,
292 O.A.C. 391 (Div. Ct.), a decision by a single judge of the Divisional Court.
In
Bazkur
, the court
held that subsequent s. 61
FLA
claims added to a timely negligence action are merely claims for additional
damages arising from the existing negligence claim and therefore not subject to
the two-year limitation period in the
Limitations Act
, 2002
.
[6]
Mr. Nikbakht successfully appealed Master
Wiebes decision to a judge of the Superior Court of Justice. On May 22, 2019, the
appeal judge ruled that Master Wiebe was bound by
Bazkur
, but that he
was not. He declined to follow
Bazkur
after concluding that it was plainly
wrong. The appeal judge gave extensive reasons supporting his conclusion that
a claim under s. 61
FLA
is a cause of action distinct from the
timely negligence claim brought by Mr. Malik. The s. 61
FLA
claims
Mr. Malik sought to add were therefore statute barred. Accordingly, the appeal
judge set aside Master Wiebes order and dismissed Mr. Maliks motion for leave
to amend.
THE ISSUE ON APPEAL
[7]
Mr. Malik now appeals the appeal judges
decision and seeks an order allowing the amendment to his statement of claim. Mr.
Malik argues that the appeal judge erred in law in finding that his s. 61
FLA
claims constituted a cause of action distinct from his negligence claim. He
submits that he has already pleaded, in a timely manner, the same acts of
negligence on the part of the defendants that support the s. 61
FLA
claims and is simply seeking recovery under another head of damages.
[8]
As I will explain, I would not give effect to
this appeal.
ANALYSIS
[9]
In my view, the appeal judge was correct in
holding that a s. 61
FLA
claim is a cause of action that, in Mr.
Maliks case, is statute barred.
[10]
As the appeal judge correctly acknowledged, the
common law does not permit family members to sue for compensation for injuries
to their relatives. He explained, at para. 26, that s. 61(1)
FLA
therefore
created a statutory cause of action that did not previously exist at common
law:
Camarata v. Morgan
, 2009 ONCA 38, 246 O.A.C. 235, at para. 10.
[11]
Section 61(1)
FLA
provides:
If a person is injured or killed by
the fault or neglect of another under circumstances where the person is
entitled to recover damages, or would have been entitled if not killed, the
spouse,
children, grandchildren, parents, grandparents, brothers and sisters
of the person are entitled to recover their pecuniary loss resulting from the
injury or death from the person from whom the person injured or killed is
entitled to recover or would have been entitled if not killed, and to maintain
an action for the purpose in a court of competent jurisdiction.
[12]
As put by Laskin J.A. (concurring), this
provision dramatically expanded recovery:
Macartney v. Warner
(2000), 46 O.R. (3d) 641 (Ont. C.A.), at para. 51.
[13]
Significantly, the new cause of action created
by s. 61 of the
FLA
is derivative:
Camarata
, at para. 9. In
other words, Mr. Maliks s. 61
FLA
claim would be for his damages
arising out of injuries caused
to his children
as the result of
allegedly negligent breaches by the defendants of duties of care they owed
to
his children
. As the appeal judge pointed out, at paras. 28-29, this is a
fundamentally different claim than Mr. Maliks negligence action, which claimed
damages arising out of
his own injuries
caused as the result of
allegedly negligent breaches by the defendants of duties of care they owed
to
him
. Indeed, as the appeal judge recognized, at para. 17, had Mr. Malik
brought his s. 61
FLA
claims in a timely way, he could have
done so even without instituting a negligence action of his own.
[14]
I do not read this courts decision in
Ridel
v. Cassin
, 2014 ONCA 763, which cites
Bazkur
, at para. 10, as
holding that
Bazkur
was correctly decided. In
Ridel
,
this court cited
Bazkur
, along with other authorities, only for
the uncontroversial proposition that claims for additional damages arising from
an existing cause of action in a timely claim are not barred by the
Limitations
Act
, 2002
. The error in
Bazkur
occurred in the
application of that principle.
[15]
It follows that the appeal judge was correct in
finding that Mr. Malik was not entitled to amend his statement of claim to
bring a new statutory cause of action outside of the applicable limitation
period.
DISPOSITION
[16]
For these reasons, I would affirm the appeal
judges decision and dismiss Mr. Maliks appeal.
[17]
At the end of the hearing, the parties expressed
confidence that they could agree to an appropriate amount for costs. If they
fail to do so and a costs order is required, either party may notify the
Registrar within 15 business days of the release of these Reasons for Decision,
and a timeline for the exchange of costs submissions will be provided.
Released: Tuesday, March 23, 2021
K.F.
David
M. Paciocco J.A.
I agree. K. Feldman J.A.
I
agree. S. Coroza J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Manchanda v. Thethi, 2021 ONCA 127
DATE: 20210301
DOCKET: C66823
Strathy C.J.O., Brown and Miller
JJ.A.
BETWEEN
Jastinder
Manchanda
Applicant (Appellant)
and
Sukhvir
Thethi
Respondent (Respondent)
Stephen P. Kirby and Gary S. Joseph,
for the appellant
Richard H. Parker, Q.C., for the
respondent
Heard: February 8, 2021 by video conference
On appeal from the order of Justice
Patrick J. Monahan of the Superior Court of Justice, dated March 21, 2019, with
reasons reported at 2019 ONSC 1749, and the costs order dated July 12, 2019,
with reasons reported at 2019 ONSC 4239.
REASONS FOR DECISION
[1]
This matter comes before the court a second
time. On the first occasion, this court dismissed the respondents appeal from
an order striking his pleadings as a result of his willful non-compliance with
court orders, including orders to make financial disclosure:
Manchanda v.
Thethi
, 2016 ONCA 909, 84 R.F.L. (7th) 374. The court observed that the
parties had been engaged in high conflict matrimonial litigation, which gave
rise to countless court attendances resulting in court orders from at least
ten different judges.
[2]
The matter eventually proceeded to an
uncontested trial, which the respondent was permitted to attend as an observer.
[3]
The appellant appeals various aspects of the
trial judges disposition of her claims. We deal with each of her complaints
below. In overview, we see no error in the trial judges thorough reasons.
Before turning to the grounds of appeal, we address whether the respondent is
entitled to make submissions on the appeal.
No right of audience
[4]
The appellant submits that the respondent should
not be permitted to participate in the appeal. She describes the appellant as a
serial violator of court orders. The respondent also remains in default of
approximately $45,000 of court ordered costs. This courts decision in
Abu-Saud
v. Abu-Saud
, 2020 ONCA 824, reaffirmed that an audience will not be
granted to a party who is in default of court orders: see also
Dickie v.
Dickie
, 2007 SCC 8, [2007] 1 S.C.R. 346, at para. 6. In
Murphy v.
Murphy
, 2015 ONCA 69, 56 R.F.L. (7th) 257, the party in default was the
respondent to the appeal, as is the case here.
[5]
After hearing the appellants submissions, and
submissions from the respondents counsel on the issue of his clients standing
on the appeal, we concluded that the respondents default was both deliberate
and willful. We advised the respondents counsel that we would not hear
submissions from him. Nor would we consider a document he had filed with the
court on the day of the appeal, purportedly containing a calculation of the
equalization payment.
First ground: trial judge allowed respondent
to participate indirectly
[6]
The
Family Law Rules
, O Reg 114/99,
provide that the court may deal with a partys failure to follow the rules,
including a failure to make proper disclosure, by striking out any or all
documents filed by that party. This consequence stems from the need to sanction
and deter non-disclosure of assets, which has been described as the cancer of
family law:
Leskun v. Leskun
, 2006 SCC 25, [2006] 1 S.C.R. 920, at
para. 4, citing
Cunha v. Cunha
(1994), 99 B.C.L.R. 93 (S.C.).
[7]
The appellant submits that the trial judge
imposed an unfair evidentiary burden on her and erred in failing to draw
adverse inferences against the respondent where his documents had been struck.
As a result, the appellant claims that the trial judge ultimately allowed the
respondent to benefit from his own misconduct.
[8]
In
Meade v. Meade
(2002), 31 R.F.L.
(5th) 88 (Ont. S.C.), Kiteley J. held that where disclosure is inadequate and
inferences must be drawn, they should be in favour of the compliant party: at
para. 81. The appellant submits that the trial judge failed to abide by this
principle. The appellant also submits that the trial judge failed to recognize
that once the respondents documents were struck, the documents of the compliant
party should be accepted.
[9]
The appellant cited three instances in which the
trial judge failed to accept the information in her documents: her claim to a
constructive or resulting trust in the rental property, the respondents
percentage of ownership of his company, A4U Limited, and the appellants
valuation of the matrimonial home. In doing so, the appellant submits the trial
judge permitted the respondent to re-enter the proceeding.
[10]
We disagree. Rule 1(8.4) of the
Family Law
Rules
, which establishes the consequences of striking out documents, does
not automatically exclude the defaulting party from the proceeding. Instead, it
intentionally removes the partys
entitlement
to
notice and participation. The court may nevertheless permit participation by
the defaulting party, to the extent it will assist the court.
[11]
Referring to para. 81 of
Meade
, the
trial judge acknowledged that in view of the respondents failure to make
adequate financial disclosure, there is broad discretion for a court to draw
reasonable inferences for the purpose of resolving property issues or imputing
income. Contrary to the appellants assertion, the striking of the
respondents documents did not mean that the trial judge was compelled to
accept her evidence at face value. In an uncontested trial, the trial judge was
entitled, indeed required, to probe the appellants evidence to ensure a just
result.
[12]
As this court stated at para. 49 of
Purcaru
v. Purcaru
, 2010 ONCA 92, 75 R.F.L. (6th) 33 and confirmed in
Mullin
v. Sherlock
, 2018 ONCA 1063, 19 R.F.L. (8th) 1: the objective of a
sanction ought not to be the elimination of the adversary, but rather one that
will persuade the adversary to comply with the orders of the court
This is
because denying a party the right to participate at trial may lead to factual
errors giving rise to an injustice.
[13]
The principle from
Purcaru
is
applicable here. It is apparent from the record that the appellants own
documentation was deficient in many respects, that she was over-reaching in
some respects, and that her evidence shifted in the face of the trial judges
inquiries. From our observations of the record, the trial judge did not impose
an unfair burden on the appellant. On the contrary, he wanted to be satisfied
that his findings of fact were based on credible and reliable evidence.
[14]
Pursuant to Rule 2 of the
Family Law Rules
,
trial judges in family law proceedings have great latitude to use their
discretion to adjudicate cases fairly:
Titova v. Titov
, 2012 ONCA 864,
29 R.F.L. (7th) 267, at para. 48. The trial judges approach appropriately
reflected the courts obligation to guard against the risk of factual errors in
the face of only one partys evidence and documents.
Second ground:
constructive trust
[15]
The appellant submits that the trial judge erred
in failing to recognize a constructive trust in her favour. She submits that
the issue of net family property and constructive trust are linked. In the net
family property calculation, the trial judge reduced the value of the
matrimonial home from the current value to the value on valuation day. The
appellant submits that the value she put forward reflected her contribution to
the property and that the trial judges reduction of the property value failed
to acknowledge her contributions contributions that, the appellant submits,
are tied to the constructive trust.
[16]
The appellant concedes that in the vast majority
of cases, a married couples division of property will be governed by the net
family property statutory scheme. However, in some circumstances, a party may
seek the equitable remedy of a constructive trust. In this case, the appellant
submits that the trial judge should have recognized that a trust was created
through unjust enrichment. She submits that this is an appropriate case to
recognize a constructive trust because her contribution to the business of the
rental property, including financial contribution, was substantial.
[17]
The trial judge noted that in family law cases
there is an expectation that the net family property calculations will address
unjust enrichment. However, the appellant submits that unjust enrichment is not
always addressed in the statutory scheme:
Martin v. Sansome
, 2014 ONCA
14, 118 O.R. (3d) 522. For example, the net family property equalization does
not account for unjust enrichment when there is a significant increase in value
due to one partys contribution. The appellant submits that her contributions
were ignored and that this constitutes a reviewable error. The appellant
submits that she met the test for unjust enrichment, and that the trial judge
failed to properly engage with the test, simply saying that the appellant
failed the test.
[18]
We disagree. The trial judge considered the
appellants submissions and held that this was not an exceptional case as
described in
Martin
. In this case, any unfairness that might otherwise
arise out of unequal contribution could adequately be addressed by the equalization
of net family property. The trial judges conclusion is consistent with s. 5(6)
of the
Family Law Act
, R.S.O. 1990, c. F. 3.
Third ground: spousal support
[19]
The appellant submits that the trial judge
failed to acknowledge that loss of opportunity factors are not the only
factors to be considered in a compensatory spousal support claim. The appellant
submits that compensatory support should also address sacrifices and
contribution. The appellant contributed to the rental business by collecting
rent and dealing with defaulting renters, among other things. The appellant
submits that the trial judge failed to recognize these contributions and
articulated a narrow definition for compensatory support. In the appellants
submission, this was an error and ignores the second half of s. 15.2(6) [of
the
Divorce Act
, R.S.C. 1985 c. 3. (2nd Supp)].
[20]
In our view, the trial judge did not err. The
trial judge specifically acknowledged, at para. 58 of his reasons, the
expansive approach to considering a compensatory basis for spousal support.
He simply found that, based on the facts before him, the appellant failed to
establish an entitlement to spousal support on compensatory or other grounds.
His conclusion is entitled to deference.
Fourth ground:
vesting order
[21]
The trial judge dismissed the appellants
request for an order pursuant to s. 9(1)(d) of the
Family Law Act
. The
appellant sought an order that a property owned by the respondent, valued at
$870,000, be transferred to her in satisfaction of the judgment if the
respondent had not paid the judgment within 120 days. In rejecting this relief,
the trial judge reasoned that such an order would constitute a windfall to the
appellant because the value of the property exceeded the amount of the
judgment. He also noted that there could be third parties with an interest in
the property.
[22]
The appellant submits that this was an
appropriate case for a vesting order due to the respondents persistent
breaches of court orders. She acknowledges that granting a vesting order is
discretionary, but submits that the trial judge should have imposed a partial
charge on the property. The appellant concedes that this option was not
proposed to the trial judge.
[23]
The trial judge cannot be faulted for failing to
grant a remedy that was not requested at trial. We would not interfere with the
exercise of his discretion.
Fifth ground: costs
[24]
In the event the appeal is dismissed, the
appellant seeks leave to appeal the costs award. She submits that the costs
award was unreasonably low and had the effect of punishing her for the respondents
misconduct.
[25]
We do not agree. The trial judge awarded costs
of $80,000, all-inclusive, about half the amount claimed by the appellant on a
full indemnity basis. He found that while the rates charged by counsel were
reasonable, and much of the time spent was necessary, the costs award should
reflect the fact that many of the appellants claims were rejected in whole and
in part. He also found that the appellant conducted the litigation in a way that
needlessly added to its length and complexity.
[26]
In arriving at the costs award, the trial judge
considered the relevant principles in Rule 24(12)(a) of the
Family Law
Rules
. The appellant has identified no error in principle and no error in
the exercise of the trial judges discretion. We dismiss the application for
leave to appeal costs.
Disposition
[27]
For these reasons, the appeal is dismissed. In all
the circumstances, we make no order as to costs.
G.R.
Strathy C.J.O.
David
Brown J.A.
B.W.
Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Manicom v. Manicom, 2021 ONCA 399
DATE: 20210607
DOCKET: C69099
Rouleau, Hoy and van Rensburg JJ.A.
BETWEEN
Donald Conrad Manicom, Conrad Refrigerated Trucking Inc.
and Manicom Holdings Inc.
Applicants
(Appellants/
Respondents by way of cross-appeal)
and
Michele Ann Manicom
Respondent
(Respondent/
Appellant by way of cross-appeal)
Michael A. Polvere and James R. Leslie, for the
appellants/respondents by way of cross-appeal
J. Douglas Skinner and Justin Newman, for the
respondent/appellant by way of cross-appeal
Heard and released orally: June 4, 2021 by video conference
On appeal from the order
of Justice Jonathon C. George of the Superior Court of Justice, dated February
3, 2021, with reasons reported at 2021 ONSC 855, and from the costs order,
dated March 29, 2021.
REASONS FOR DECISION
[1]
The individual appellant, Donald Conrad Manicom, and the respondent are
separated spouses engaged in a matrimonial dispute. Each owns 50% of the shares
of two corporations (the Corporations). The respondent refused to complete
the sale of her shares in the Corporations to the appellant on the scheduled
closing date, asserting that she had not agreed to the Non-Solicitation and
Non-Competition Agreement (NCA) which formed part of the closing documents.
Mr. Manicom was unwilling to purchase the respondents shares without the NCA.
[2]
Mr. Manicom and the Corporations sought an order for specific
performance, compelling the respondent to execute the documents, including the
NCA, necessary to complete the sale of her shares in the Corporations to Mr.
Manicom. The application judge held that, on the evidence before him, he could
not find that the respondent had agreed to the NCA. Accordingly, he dismissed the
application.
[3]
The application judge awarded costs to the respondent in the
all-inclusive amount of $9000.
[4]
Mr. Manicom and the Corporations appeal the order dismissing their
application. The respondent seeks leave to cross-appeal the order as to costs.
[5]
The appellants repeat arguments that they made to the application judge,
principally that, objectively, the respondent would have expected that she
would be required to enter into a non-solicitation and non-competition
agreement in connection with the sale of her shares and that the terms of the
agreement drafted by them were reasonable. They also say that the fact that the
parties counsel engaged in negotiations of the terms of the NCA after the
scheduled closing date shows that the parties had agreed in principle that
there would be a non-solicitation and non-competition agreement with a
five-year term. We note that the appellants concede that the parties did not
agree as to the end date of the NCA in those negotiations.
[6]
The application judge accepted that a non-solicitation and non-competition
agreement is a standard term in a transaction such as this and that it is hard
to imagine that the Respondent did not and does not know this. However, the
fact was that it was not a topic of discussion during the negotiation period
and the best evidence was that the respondent had not discussed such an
agreement with her counsel before the closing date. The application judge noted
that there was no written agreement and no evidence of a verbal agreement. He
found that neither the respondents lawyers receipt and presentation of the
closing documents to the respondent nor the lawyers exchanges about the NCA
after the scheduled closing date gave rise to a valid and enforceable contract.
[7]
There is no basis for this court to interfere with the application
judges finding that the respondent had not agreed to the NCA.
[8]
As to the cross-appeal as to costs, we agree with the respondent that to
the extent that the application judge may have taken into account the
respondents decision not to enter into the NCA on the appellants terms, the
application judge misdirected himself. However, in all the circumstances, we
consider that the amount of the costs awarded was reasonable.
[9]
Accordingly, we dismiss the appeal and deny leave to appeal the order as
to costs. The respondent shall be entitled to costs in the agreed amount of
$10,000.
Paul Rouleau J.A.
Alexandra Hoy J.A.
K. van Rensburg J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Marchant Realty Partners Inc. v. 2407553 Ontario
Inc., 2021 ONCA 375
DATE: 20210531
DOCKET: M52417, M52418 & M52419
Jamal J.A. (Motions
Judge)
DOCKET: M52417
BETWEEN
Marchant Realty Partners
Inc., as agent
Responding Party
and
2407553
Ontario Inc., 2384648 Ontario Inc., 2384646 Ontario Inc., 24000196
Ontario Inc. and 2396139
Ontario Inc.
Moving
Parties
DOCKET: M52418
AND BETWEEN
Marchant Realty
Partners Inc., as agent
Responding Party
and
4544 Zimmerman
Avenue LP and 4544 Zimmerman Avenue GP Inc.
Moving Parties
DOCKET: M52419
AND BETWEEN
Marchant Realty
Partners Inc., as agent
Responding Party
and
4267 River Road
LP and 4267 River Road GP Inc.
Moving
Parties
Steven L. Graff, Miranda Spence
and Stephen Nadler, for the moving parties
Sara-Ann Wilson and Kenneth
Kraft, for the responding party Zeifman Partners Inc.
Heard: May 20, 2021 by video conference
REASONS FOR DECISION
[1]
The moving parties are debtors (Debtors) over whose assets,
undertakings, and real property the responding party Zeifman Partners Inc., (Receiver)
is the court-appointed receiver and manager. The Debtors seek leave to appeal to
this court under s. 193(e) of the
Bankruptcy and Insolvency Act
,
R.S.C. 1985, c. B-3 (
BIA
), from orders of Cavanagh J. (motion
judge) of the Superior Court of Justice (Commercial List) dated March 25, 2021,
approving the Receivers proposed sale process and list prices for five commercial
properties in downtown Niagara Falls, Ontario (Properties).
[2]
For the reasons that follow, the motions for leave to appeal are
dismissed.
Background
[3]
Marchant Realty Partners Inc. (Agent), as agent for a group of lenders
(Lenders), commenced three related receivership proceedings before the
Commercial List concerning loans the Lenders made to the Debtors. The loans
matured over three years ago, some loans more than four years ago. As of
October 2020, the Debtors owed more than $16 million under the loans.
[4]
The three receivership applications were originally scheduled for September
2018 but were adjourned five times to give the Debtors more time to refinance
the Properties. The refinancing never happened.
[5]
With no refinancing or repayment plan on the horizon, the Agent moved
forward with the receivership applications. In August 2020, Gilmore J. of the
Commercial List appointed the Receiver as receiver and manager over the
Debtors Properties, although the appointment was stayed for just over two
months to give the Debtors one last chance to repay the loans. They could not do
so, and the Receivers appointment became effective in mid-October 2020.
[6]
The Properties are about 4 km from the tourist area of Niagara Falls.
The Properties are mixed-use commercial properties (most needing repairs), a
seasonal operating motel (closed because of the pandemic), and vacant land.
[7]
The Receiver is authorized to market the Properties, including
advertising them for sale, soliciting offers to buy them, and negotiating such
terms as the Receiver deems appropriate.
The Motion Judges Decision
[8]
The Receiver recommended list prices for the sale of Properties based
on: (1) independent appraisals from two local appraisers, Humphrey Appraisal
Services Inc. and Jacob Ellens & Associates Inc.; (2) recommended list
prices for the Properties from three real estate brokerages; and (3)
discussions with Jones Lang LaSalle Real Estate Services, the proposed listing
brokerage, which has expertise selling properties around Niagara Falls. Even
with these list prices, the Lenders will lose money on their loans to the
Debtors.
[9]
The Debtors opposed the proposed list prices and relied on competing
appraisals of Colliers, a commercial real estate firm. Colliers appraisals which
focussed on the development potential of the Properties were almost 300%
higher than the Receivers list prices. The Debtors asked the motion judge to
direct the Receiver to list the Properties at Colliers proposed prices for 60
days to see what the market will bear.
[10]
By
order dated March 25, 2021, the motion judge approved the Receivers proposed
sale process and list prices for the Properties. The motion judge found:
The Receiver is an officer of the court with duties to all
stakeholders. In
my view, the
Receiver has
shown that it is acting in good faith and diligently to discharge its duties to
deal with the [Properties] in a commercially reasonable manner. The Receiver
has reviewed the Colliers appraisals and the information upon which Colliers
relies for its appraisals of the [Properties]. The Receiver has explained why
it does not agree with the Colliers appraisals, and why it has recommended that
the sale process be approved. I have considered the process which the Receiver
has followed and the information upon which it relies to support its
recommendations. The [Debtors] have not shown that the Receiver followed a
flawed procedure. I am not satisfied
that
this
is an exceptional case where it is proper for me to reject the business
judgment made by the Receiver.
The Test for Leave to Appeal Under s. 193(e) of the
BIA
[11]
The
moving parties seek leave to appeal from the motion judges orders under s.
193(e) of the
BIA
. This provision provides that, unless an appeal lies
as of right or as otherwise expressly provided, an appeal lies to the Court of
Appeal from any order or decision of a judge of the court
by leave of a
judge of the Court of Appeal.
[12]
In
deciding whether to grant leave under s. 193(e) of the
BIA
, this court
considers the following principles:
·
Granting leave is discretionary and must be exercised in a
flexible and contextual way:
Business Development Bank of Canada v. Pine
Tree Resorts Inc.
, 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29.
·
In exercising its discretion, the court should examine whether
the proposed appeal: (1) raises an issue of general importance to
bankruptcy/insolvency practice or the administration of justice, and is one
this court should address; (2) is
prima facie
meritorious; and (3)
would not unduly hinder the progress of the bankruptcy/insolvency proceedings:
Pine
Tree Resorts
, at para. 29;
McEwen (Re)
, 2020 ONCA 511, 452 D.L.R.
(4th) 248, at para. 76.
Should this Court Grant Leave to Appeal?
(1)
Does the proposed appeal raise an issue of general importance to
bankruptcy/insolvency practice or the administration of justice?
[13]
The Debtors
assert that the proposed appeal raises an issue of general important to
bankruptcy/insolvency practice. They frame the issue on the proposed appeal as the
extent of the deference that the Court owes to a receivers business judgment
when approving a sale process. They claim the appeal will provide guidance to
receivers as they consider the level of scrutiny they may expect from the Court,
and to other stakeholders as they consider whether to challenge the actions
taken by any given receiver.
[14]
The
Receiver frames the issue on appeal much more narrowly. It claims the appeal is
highly fact-specific and concerns, in essence, the appropriate list prices of the
Properties. It says no legal principles are in dispute and the appeal will have
no bearing or importance for the practice of insolvency and the administration
of receivership proceedings.
[15]
I
agree with the Receiver. Although on any appeal the court would consider and
apply the principles of deference applicable to a receivers business judgment,
those principles are not in dispute. They were correctly stated by the motion
judge, who cited this courts decision in
Regal Constellation Hotel Ltd. (Re)
(2004), 71 O.R. (3d) 355 (C.A.), at para. 23:
Underlying these considerations are the principles the courts
apply when reviewing a sale by a court-appointed receiver. They exercise
considerable caution when doing so, and will interfere only in special
circumstances particularly when the receiver has been dealing with an unusual
or difficult asset. Although the courts will carefully scrutinize the procedure
followed by a receiver, they rely upon the expertise of their appointed
receivers, and are reluctant to second-guess the considered business decisions
made by the receiver in arriving at its recommendations. The court will assume
that the receiver is acting properly unless the contrary is
clearly
shown. See
Royal Bank of Canada v.
Soundair Corp.
(1991), 4 O.R. (3d) 1, 83 D.L.R. (4th) 76 (C.A.).
[16]
On the
Debtors argument, the appeal would involve the application of these settled principles.
However, applying settled principles of deference to the Receivers business decisions
here would not raise an issue of general importance to bankruptcy/insolvency
practice or the administration of justice.
[17]
The
Debtors also say the motion judge failed to apply the correct legal test
for evaluating whether a receiver has acted properly in
selling a
property, as stated in
Royal Bank of Canada v. Soundair Corp.
(1991), 4 O.R. (3d) 1 (C.A.). This issue relates to the deference issue because
the Debtors claim the motion judge failed to cite or apply the
Soundair
test and instead was unduly deferential to the Receiver. I will consider this
argument below in evaluating whether the proposed appeal is
prima facie
meritorious.
(2)
Is the proposed appeal
prima facie
meritorious?
[18]
In
evaluating whether the proposed appeal has
prima facie
merit, I begin
by noting that this court gives substantial deference to the discretion of commercial
court judges supervising insolvency and restructuring proceedings and does not
intervene absent demonstrable error:
Ravelston Corp. Ltd. (Re)
, 2007
ONCA 135, 85 O.R. (3d) 175, at para. 3.
[19]
As already
noted, commercial court judges also give substantial deference to the decisions
and recommendations of a receiver as an officer of the court. If the receivers
decisions are within the broad bounds of reasonableness and the receiver proceeded
fairly, after considering the interests of all stakeholders, the court will not
intervene:
Ravelston
, at para. 3;
Regal Constellation Hotel
,
at para. 23. A court will assume that the receiver is acting properly unless
the contrary is clearly shown:
Regal Constellation Hotel
, at para.
23.
[20]
The
Debtors assert, however, that this court would overcome the deference shielding
the receivers business judgments and the motion judges review of those
judgments because the motion judge made an extricable error of law. The Debtors
say the motion judge erred in law by failing to state or apply the
Soundair
test for evaluating whether a receiver has acted properly in recommending list
prices for the Properties.
[21]
The
Soundair
test in the context of a sale involves consideration of:
·
Whether the receiver made sufficient effort to obtain the best
price and did not act improvidently;
·
The interests of the parties;
·
The efficacy and integrity of the process by which offers were
obtained; and
·
Whether there has been unfairness in the working out of the
process:
Soundair
, at p. 6;
Regal Constellation Hotel
, at
para. 24.
[22]
The
Debtors claim that the motion judge did not cite or apply the
Soundair
test but instead applied a new, two-part test: (1) the respondent on a motion
to approve a sale process must show the receiver followed a flawed process in
developing its sale process; and (2) only if that hurdle is cleared may the respondent
challenge the sale process itself.
[23]
I do
not accept the Debtors submission. Although I agree the motion judge did not expressly
set out the
Soundair
test, he cited
Soundair
elsewhere in his
reasons. As an experienced commercial judge, he was familiar with the
Soundair
test and applied it in his reasons:
·
Whether the receiver made sufficient effort to obtain the
best price and did not act improvidently
The motion judge found that the
Receiver made sufficient effort to obtain the best and most realistic list
price and did not act improvidently. He noted that the Receiver reviewed the
Colliers appraisals and the information upon which Colliers relies for its
appraisals of the [Properties]. The Receiver has explained why it does not
agree with the Colliers appraisals, and why it has recommended that the sale
process be approved. The motion judge also noted that the Receiver explained
why listing the Properties for 60 days at Colliers proposed list prices could
result in little to no interest in the sale process, with the result that
properties languish on the market and ultimately require drastic price
reductions to generate interest. This could lead to lower recoveries than
what would have been possible had the property [been] listed for sale at an
appropriate price at the outset.
·
The interests of the parties
The motion judge found
that the Receiver considered the interests of all parties in proposing the
suggested list prices. He noted that [t]he Receiver is an officer of the court
with duties to all stakeholders, which included the interests of the Debtors. He
found that the Receiver has shown that it is acting in good faith and
diligently to discharge its duty to deal with the [Properties] in a
commercially reasonable manner.
·
The efficacy and integrity of the process by which offers
were obtained
The motion judge considered the integrity of the process
by which the list prices were recommended. He considered the process which the
Receiver has followed and the information upon which it relies to support its
recommendations. He found that [t]he [Debtors] have not shown that the
Receiver followed a flawed procedure.
·
Whether there has been unfairness in the working out of the
process
The motion judge found no unfairness in the process that the Receiver
followed. He found the Receiver properly considered and responded to Colliers
appraisals. The proposed list prices did not result from any unfairness.
[24]
I thus
conclude the motion judge applied the
Soundair
test. I see no
extricable error of law or any basis to interfere with his decision.
[25]
The proposed
appeal therefore lacks
prima facie
merit.
(3)
Would the proposed appeal unduly hinder the progress of the receivership
proceedings?
[26]
Lastly,
the Debtors assert that the proposed appeal would not unduly hinder the progress
of the receivership proceedings. They say the Debtors have no other assets, so all
the Receiver has left to do is list and sell the Properties. The Debtors agree
to expedite the appeal and claim that any minor delay in the sale process is
not enough to deny leave to appeal.
[27]
I
disagree. All the loans in issue matured at least three years ago, some four
years ago. Over two years have passed since the original return date of the
receivership applications. There have been further delays to allow the Debtors
to refinance the Properties, which they could not do. Substantial property
taxes are accruing on the Properties and the Receiver is responsible for their ongoing
carrying costs, which rank ahead of the Lenders mortgages and are thus eroding
their potential recovery. Further delay in the Receivers ability to sell the
Properties will only further degrade the Lenders security position and should
not be permitted.
[28]
I thus
conclude the proposed appeal would unduly hinder the progress of the
receivership proceedings.
Disposition
[29]
The motions
for leave to appeal are dismissed. As agreed by the parties, there shall be no order
as to costs.
[30]
As
jointly requested by the parties, pending further order the unredacted versions
of the Debtors factums shall remain under seal and will not be publicly
available because they contain commercially sensitive and confidential information
about the Receivers and Debtors proposed list prices for the Properties.
M. Jamal J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION:
Marmolejo (Re), 2021 ONCA 130
DATE: 20210302
DOCKET:
C67649
Tulloch,
Paciocco and Harvison Young JJ.A.
IN
THE MATTER OF:
Alfredo G. Marmolejo
AN
APPEAL UNDER PART XX.1 OF THE
CODE
Alfredo G. Marmolejo, acting in person
Anita Szigeti and Maya Kotob, for the
appellant
Lisa Fineberg
, for the respondent, Attorney
General of Ontario
Leisha Senko and Michele Warner, for
the respondent, Person in Charge of Centre for Addiction and Mental Health
Heard: August 21, 2020 by
video conference
On appeal from the disposition of the
Ontario Review Board dated September 25, 2019, with reasons reported at
Marmolejo
(Re)
, [2019] O.R.B.D. No. 2378.
Tulloch J.A.:
A.
OVERVIEW
[1]
The appellant appeals from the September 25, 2019 disposition of the
Ontario Review Board (the Board), which continued the appellants conditional
discharge. That conditional discharge was one of several annual conditional
discharges that followed an August 2010 determination that the appellant was
not criminally responsible on account of mental disorder (NCR) in relation to
two index offences.
[2]
The Board released its reasons for disposition on October 16, 2019. It
determined that the appellant remained a significant threat to the safety of
the public. It further concluded that the only way to manage that threat was a
continuation of a conditional discharge with a new term requiring the appellant
to submit urine samples for alcohol and drug screening.
[3]
The appellant argues that the Board erred in law and arrived at an unreasonable
disposition. First, the appellant contends that the Board erred in its
application of the significant risk test by simply accepting the evidence and
not offering any analysis. Second, and along a similar vein, the appellant
submits that the Boards reasons for disposition are insufficient. The
appellant submits that the proper application of the significant risk test does
not support the Boards determination on this issue. The appellant seeks an
order for an absolute discharge. Alternatively, he asks this court to remit the
matter to the Board for a re-hearing before a differently constituted panel.
[4]
For reasons that follow, I agree with the appellants position. The
Board did not conduct a proper assessment of whether the appellant met the
significant risk threshold, as evident by the complete lack of analysis on this
point. The evidence before the Board could not support a finding that the
appellant constituted a significant risk to the public. He was therefore
constitutionally entitled to an absolute discharge.
[5]
In ordinary circumstances, an absolute discharge would be the
appropriate disposition. However, a month after this appeal was heard, the
Board convened for the appellants 2020 annual disposition review hearing. On
November 2, 2020, it held that the appellant no longer represented a
significant risk to the public and granted an absolute discharge:
Marmolejo
(Re),
[2020] O.R.B.D. No. 2277. In other words, the appellants request
for relief is now moot. I would nonetheless address the merits of this appeal
in order to provide guidance to the Board.
B.
FACTUAL BACKGROUND
(1)
The Appellants Psychiatric History
[6]
The appellants psychiatric history dates back to 1987 when he was a
teenager. He was first hospitalized at age 15 when police found him wandering
in the streets and crossing in traffic. His mother reported that he experienced
symptoms of paranoia and suspiciousness in the years following his
hospitalization.
[7]
In September 2005, the appellant was found NCR for a charge of arson. A
doctor diagnosed him with schizophrenia and depression. He was transferred to a
minimum secure unit in November 2005. By September 2006, he was spending
weekends with his parents. After a hearing in November 2006, the Board issued a
minimum-security detention order with community living privileges. In December 2006,
he was discharged to live in an apartment in the community. Just under a year
later, in November 2007, the Board issued a conditional discharge. The
appellants mental status remained stable and he was compliant with his
medications.
[8]
At his 2008 annual disposition review hearing, the Board granted the appellant
an absolute discharge. The appellant reported that he stopped taking his
medication approximately one year after his discharge. Between 2009 and 2010,
he was hospitalized pursuant to the
Mental Health Act
, R.S.O. 1990, c.
M. 7 on three occasions.
(2)
The Index Offences
[9]
In April 2010, the appellant was convicted of one count of criminal
harassment and one count of failing to comply with a probation order. On August 24,
2010, the appellant was found NCR for these offences. At the time, the
appellant was delusional, paranoid, and verbally aggressive. He was treated
with medication and sentenced to a period of incarceration, followed by a
period of probation for two years. These two index offences form the subject
matter for the disposition of the Board that is now at issue.
(3)
The Boards Dispositions Between 2010 and 2019
[10]
On
November 8, 2011, the appellant was discharged to live in an apartment at a
temporary transitional housing facility. Eleven months later, he moved in with
his family. By 2012, his medication was reduced.
[11]
In
2013 the appellant was briefly hospitalized when his parents reported he was
experiencing auditory hallucinations. His medications were increased. He
returned to live with his parents, and then moved into an apartment shortly
thereafter.
[12]
The
Board issued a conditional discharge on May 20, 2014. His medications were
decreased. His mental status remained stable and he continued to adhere to his
medication regime. He continued to live independently and began working for his
brother on a part-time basis.
[13]
At
annual disposition reviews conducted from 2015 to 2018, the appellant
unsuccessfully sought to receive an absolute discharge: each time the Board found
that he continued to pose a significant threat, and either added or removed conditions
of his discharge.
[14]
From
2018 to 2019 the appellant continued to reside independently in his subsidized
apartment in Toronto without incident. He received financial support through the
Ontario Disability Support Program (ODSP) and from his parents. He maintained
his relationship with his girlfriend. There were no changes to his medication.
(4)
The 2019 Hearing Before the Board
[15]
In
2019, the Board released its sixth consecutive disposition continuing the conditional
discharge, this time reinserting a term requiring the appellant to submit urine
samples for alcohol and drug testing. That disposition is the subject of this
appeal.
[16]
At
the 2019 hearing, the Board received written and oral evidence by way of the
Hospitals report to the Board and the testimony of Dr. Choptiany, who is the
appellants outpatient psychiatrist.
[17]
Dr.
Choptiany testified that the appellant had been compliant with his reporting
requirements and accepts that he has schizophrenia. Dr. Choptiany also
testified that the appellant has stated that he would continue to take his
medication in the event that he was granted an absolute discharge.
[18]
Dr.
Choptiany expressed concern regarding the appellants attitude toward his index
offences. In particular, Dr. Choptiany opined that the appellant had downplayed
the significance or severity of the behaviours that occurred at the time of the
index offences. The Hospitals report also noted that the appellant was unable
to link his illness to his behaviours at the time of the index offence.
[19]
Both
the Hospitals report and Dr. Choptiany also noted that the appellants
therapeutic relationship with his psychiatric team deteriorated significantly
over the course of the reporting year. It appeared that at least part of the
reason was that the appellant was frustrated with his continued supervision by
the Board, and the fact that he still had not received an absolute discharge.
In his testimony, Dr. Choptiany suggested that it might be helpful if the
Boards disposition required the appellant to submit to urine sampling. He was
of the view that such testing could assist the psychiatric team in determining
why the appellants demeanor changed.
[20]
Dr.
Choptiany opined that the appellant still posed a significant threat based on
the diagnosis of schizophrenia, along with the appellants history of
non-compliance with medication, substance abuse, aggressive behavior, and
limited insight into his situation.
[21]
Dr.
Choptiany further observed that if the appellant were no longer under the
jurisdiction of the Board, he would discontinue his medications, likely use
alcohol or illegal substances, and again become psychotic, which would put the
public at risk of harm.
C.
THE DECISION OF THE
BOARD
[22]
In
the reasons for disposition of the Board dated October 16, 2019, the Board set
out a brief summary of the two index offences, the appellants personal
history, and the legal and psychiatric history. The Board then summarized the
appellants progress over the past year in four paragraphs, which consisted
mainly of a lengthy quote from the Hospitals report.
[23]
In
dealing with the issue of whether the appellant posed a significant threat, the
Board stated only the following:
18. The Hospitals report contains information
concerning the issue of significant threat to the safety of the public
including:
''If Mr. Marmolejo were to reoffend, it
would flow from noncompliance with antipsychotic medication potentially
exacerbated by the use of substances. Mr. Marmolejo has demonstrated limited
insight into the specific benefit of a reduced risk for violent or harassing
behaviour
as emanating from ongoing compliance with
antipsychotic medication. While he has reported that he would continue taking
his medications if no longer under the ORB, it is considered likely that he
would stop or reduce the dose of his medication if no longer under the ORB.
Risk of violent behaviour would gradually arise as a result of noncompliance.
The risk would be exacerbated in the event of his reverting to use of cannabis,
which has historically contributed to a paranoid state of mind and the
emergence of other psychotic symptoms in Mr. Marmolejo."
19. In his oral testimony Dr. Choptiany
confirmed that Mr. Marmolejo remains a significant threat to the safety of
the public because he has limited insight into the nature of his illness. He
has a past history of substance use. When he is unwell, he is aggressive and is
capable of physical and psychological harm. If he did go off his medication, he
would fall away from care and decompensate particularly since his therapeutic
relationship with his clinical team has deteriorated so badly in the last year.
[24]
The
Board then concluded as follows:
21.
The evidence in this
case establishes that Mr. Marmolejo continues to represent a significant
threat to the safety of the public. This panel accepts that evidence
.
This panel is also satisfied that the only way to manage the threat is by the
maintenance of the conditional discharge with the addition of a urine screen
for alcohol and the nonmedical use of drugs. In our view, this is the necessary
and appropriate order. It is also the least onerous and least restrictive order
in the circumstances of this case. [Emphasis added.]
D.
POSITION OF THE PARTIES
[25]
The
appellant submits that the Boards disposition was unreasonable and rested on
an error of law. He argues that the Board failed to conduct a proper assessment
as to whether the appellant was a significant threat to the safety of the
public. The appellant submits that he does not meet the threshold of
significant risk. He takes issue with the imposition of a conditional discharge,
as well as the addition of a new condition requiring him to submit urine
samples.
[26]
The
appellant also argues that the Board provided insufficient reasons. In
particular, he notes that there is no analysis section: the Board simply
states its conclusion that the appellant posed a significant risk. The Board
failed to explain how it applied the statutory test, how it dealt with the
material evidence before them, or how it reached its conclusion that the
appellant remains a significant threat to the safety of the public.
[27]
The
respondents submit that the Board made no error in its application of the
significant threat test; there was sufficient evidence before the Board to
reach its conclusion; and the reasons provided by the Board were legally
sufficient.
E.
ANALYSIS
(1)
Standard of Review
[28]
This
court may set aside an order of the Board only where it is of the opinion that:
(a) the decision is unreasonable or cannot be supported by the evidence; (b) the
decision is based on a wrong decision on a question of law (unless no
substantial wrong or miscarriage of justice has occurred); or (c) there was a
miscarriage of justice:
Criminal Code
, R.S.C., 1985, c. C-46, s.
672.78(1);
R. v. Owen
, 2003 SCC 33, 174 C.C.C. (3d) 1, at
para. 31.
[29]
The
standard of review under s. 672.78(1)(a) is one of reasonableness. The court
should ask itself whether the Boards risk assessment and disposition order was
unreasonable in the sense of not being supported by reasons that can bear even
a somewhat probing examination:
Owen
, at para. 33, citing
Canada
(Director of Investigation and Research) v. Southam Inc
., [1997] 1 S.C.R.
748, at para. 56.
[30]
If
the Boards decision could reasonably be the subject of disagreement among
Board members properly informed of the facts and instructed on the applicable
law, the court should in general decline to intervene:
Owen
, at para.
33. As this court explained in
Sokal (Re),
2018 ONCA 113, at paras.
12-13:
An appellate court must always recall the
difficulty of assessing whether a given individual poses a significant threat
to public safety:
Winko v. British Columbia
(Forensic Psychiatric Institute)
, [1999] 2 S.C.R.
625, at para. 61.
The appeal court does not make its own
judgment on the question of significant threat and use that judgment as the
benchmark for assessing the reasonableness of the Board's decision. Nor does
the court re-weigh the considerations that were before the Board
:
Wall (Re)
, 2017 ONCA 713, at para. 21.
The reasonableness of
the Board's decision must be evaluated by considering the reasons it proffers
in the context in which the decision is made
. At
issue is whether the Board reached an acceptable and defensible outcome,
keeping in mind the need to protect the liberty of the NCR accused as much as
possible, while also protecting society:
Wall
, at para. 22. [Emphasis added.]
[31]
However,
the standard is not as high as the unreasonable verdict in criminal cases. As
stated by this court, the standard of reasonableness enacted by s.
672.78(1)(a) involves respectful attention, though not submission to the
Board's reasons:
Mental Health Centre Penetanguishene v. Ontario
,
2010 ONCA 197, 260 O.A.C. 125, at para. 65.
[32]
The
standard of review under s. 672.78(1)(b), with respect to errors of law, is one
of correctness:
Mazzei v. British Columbia (Director of Adult Forensic
Psychiatric Services
), [2006] SCC 7, [2006] 1 S.C.R. 326, at para. 16. An
erroneous application of the significant threat test is an error of law:
Hammoud (Re),
2018 ONCA 317, at para. 9.
(2)
The Significant Risk Requirement Under Section 672.54
[33]
Review
Boards derive their jurisdiction from Part XX.1 of the
Criminal Code
. Pursuant
to s. 672.54, the Board must make a disposition that takes into account the
safety of the public, the mental condition of the accused, the reintegration of
the accused into society and the other needs of the accused. That section
empowers the Board to order the following dispositions:
When a court or Review Board makes a
disposition under subsection 672.45(2), section 672.47, subsection 672.64(3) or
section 672.83 or 672.84, it shall, taking into account the safety of the
public, which is the paramount consideration, the mental condition of the
accused, the reintegration of the accused into society and the other needs of
the accused, make one of the following dispositions that is necessary and
appropriate in the circumstances:
(a) where a verdict of not criminally
responsible on account of mental disorder has been rendered in respect of the
accused and, in the opinion of the court or Review Board, the accused is not a
significant threat to the safety of the public, by order, direct that the
accused be discharged absolutely;
(b) by order, direct that the accused be
discharged subject to such conditions as the court or Review Board considers
appropriate; or
(c) by order, direct that the accused be
detained in custody in a hospital, subject to such conditions as the court or
Review Board considers appropriate.
[34]
Accordingly,
the role of the Board is first to determine whether an NCR accused represents a
significant threat to public safety. If the answer to that question is no or
uncertain then the NCR accused must be discharged absolutely:
Winko v.
British Columbia (Forensic Psychiatric Institute),
[1999] 2 S.C.R. 625, at
pp. 659-661, 669. If the NCR accused does present a significant threat, the
Board must either conditionally discharge or detain the individual:
Winko,
pp.
662, 669.
[35]
It
is important to bear in mind that the Boards responsibility to grant an
absolute discharge is non-discretionary in the event that it harbours any doubt
about whether the NCR accused represents a significant threat:
Carrick (Re),
2018 ONCA 752, at para. 16. As the majority of the Supreme Court
emphasized in
Winko,
at pp. 652-653: Once an NCR accused is no longer
a significant threat to public safety, the criminal justice system has no
further application.
[36]
Individuals
with mental disorders are not inherently dangerous:
Winko,
at p. 653.
There is no presumption of dangerousness and no burden on the NCR accused to
prove a lack of dangerousness:
Winko,
at pp. 660-661, 662. Rather, the
legal and evidentiary burden of establishing significant threat rests on the
Board or the court:
Winko,
at p. 663.
[37]
The
threshold for significant risk is onerous:
Carrick (Re)
, 2015 ONCA
866, 128 O.R. (3d) 209, at para. 17. A significant threat to the safety of the
public means a foreseeable and substantial risk of physical or psychological
harm to members of the public:
R. v. Ferguson,
2010 ONCA 810, at para.
8. The conduct must be of a serious criminal nature:
Ferguson,
at para.
8. A very small risk of grave harm will not suffice, nor will a high risk of
trivial harm:
Ferguson,
at para. 8. The threat must be more than
speculative in nature; it must be supported by evidence:
Winko
, at p.
665;
Pellett (Re),
2017 ONCA 753, 139 O.R. (3d) 651, at para. 21.
(3)
The Disposition of the Board Significant Threat
[38]
As
explained above, the Boards conclusion on the significant threat issue was
devoid of any analysis, a point I will return to below. It rested solely on a
flat acceptance of the evidence before the Board. In examining whether the
Board erred in finding that the appellant posed a significant threat to the
safety of the public, I will assume that the Board based that finding on
conclusions found in the Hospitals report and the evidence of Dr. Choptiany
that was before the Board.
[39]
The
evidence pertaining to significant threat, as summarized by the Boards reasons
at paras. 18-19, included the following general conclusions: (1) the appellant
has limited insight into the nature of his illness; (2) when he is unwell, he
is capable of physical and psychological harm; (3) he would decompensate if he
went off his medication; and (4) the risk of decompensation is heightened due
to the deterioration of his therapeutic relationship with his clinical team and
his history of substance use:
Marmolejo (Re),
[2019] O.R.B.D. No.
2378, at paras. 18-19.
[40]
None
of these factors, taken alone or together, support the Boards finding that the
appellant presented a significant threat to the safety of the public. More
specifically, the general conclusions relied upon by the Board address neither
the degree of the risk nor the gravity of the apprehended harm. An appropriate significant
threat finding cannot be made without considering these questions. A finding of
significant threat based on the aforementioned factors without such evidence would
have been an error in law because it would amount to a failure to apply the
proper test to the evidence adduced at the hearing:
Hammoud,
at para. 9.
It would also have been an unreasonable disposition. I will examine each of the
factors identified in evidence before the Board, in turn.
[41]
The
fact that an accused lacks insight into their condition is but one factor for
consideration, and it must be used with care. In
Kalra (Re)
, 2018 ONCA
833, at para. 52, this court examined the role of insight in relation to
significant risk and found that a lack of insight must be evaluated in its
proper context:
Whether an NCR accused has insight into his or
her mental illness, and the extent of that insight, is only part of the
analysis in determining if there is a significant threat to the safety of the
public.
While insight is a treatment goal, it is one some
persons living with mental illness may be unable to fully achieve. In some
instances, particularly where the contemplated harm falls at the lower end of
the spectrum, it may be unreasonable to require, as the Board did here, that an
NCR accused's insight into his or her illness be "entrenched on his
consciousness" in order to obtain an absolute discharge
. [Emphasis
added.]
[42]
This analysis is equally applicable to the circumstances at hand. A lack
of insight alone cannot form the basis of a significant threat finding without
analysis of how that lack of insight factors into the risk the NCR accused will
pose. Due to the brevity of the Boards reasons, the extent to which this
factor contributed to the finding of significant risk is unclear. Yet the
appellants lack of insight has been a running and dominant theme throughout
the appellants dispositions over the years. It also figured prominently in the
Hospitals report and Dr. Choptianys testimony. Needless to say, the Board
must be cautious in inferring that an NCR accused comprises a significant risk without
consideration of how that lack of insight poses a risk in the circumstances of
the case at hand.
[43]
Furthermore,
the fact that the appellant may be capable of physical
and psychological harm when he is unwell is likewise insufficient to ground a
finding of significant risk. That is not the threshold. There needs to be a
foreseeable and substantial risk of significant physical or psychological harm;
that is, the NCR accused must pose a risk of
serious
criminal conduct.
Anything less is an insufficient basis to deny entitlement to an absolute
discharge.
[44]
Additionally,
a finding that a person might discontinue their medication must be supported by
evidence and be linked in a reasoned way to the finding that the NCR accused
poses a significant threat to the public. In
Pellett,
at para. 32,
this court noted that the onerous substantial threat standard was not met by
the risk that an NCR accused could cease taking her medication, which would
result in a worsening of her condition. This is so even where there is considerable
likelihood that the NCR accused would discontinue their medication:
Hammoud,
at para. 9;
Ferguson,
at paras. 1-3. As this court noted in
Hammoud
:
There was no doubt that for three decades the
appellant has suffered, as she continues to suffer, from a serious mental
disorder.
Equally, there was no doubt that, presented with
the opportunity to do so, the appellant would discontinue her medication. But
these are not the risks at which the "significant threat" threshold
in s. 672.5401 is directed
. In our view, read as a whole, the reasons of
the Board reveal legal error the failure to apply the proper test for
"significant threat to the safety of the public" to the evidence
adduced at the hearing. [Emphasis added.]
[45]
In the present case, the appellant has complied with his medication
regimen for years and has repeatedly indicated that he would continue taking
his medication upon his absolute discharge. Although he stopped taking his
medication after he received his 2008 absolute discharge, there is no evidence
that this would happen again. His liberty cannot be beholden to a mistake made
over a decade ago.
[46]
Nor
can one equate the deterioration in the appellants relationship with his
psychiatric team with significant threat. The team did not observe any overt
psychiatric symptoms. Admittedly, the change in temperament remains unexplained.
However, uncertainty does not ground a finding of significant threat, even when
considered along with the other conclusions that emerge from the evidence that
was before the Board.
[47]
Finally,
it is well recognized that a risk of substance abuse does not justify the
denial of an absolute discharge unless that substance abuse would pose a
significant threat to the public:
Carrick (Re),
(2015), at para. 39;
Wall
(Re),
2017 ONCA 713, 417 D.L.R. (4th) 124,
at paras. 25, 29-30;
Sokal
,
at para. 25. An NCR accused cannot be under the Boards jurisdiction
indefinitely because of substance use. The evidence before the Board failed to
offer insight into the degree of the risk that substance abuse posed to the
appellants behavior and was therefore of marginal utility.
[48]
In
sum, the Board erred in law by not engaging the appropriate legal standards required
for a significant risk finding. If the Boards finding was, in fact, based on
the conclusions put before it in evidence, viewing these factors in light of the
concerns raised above the finding was also unreasonable. The evidence before
the board leads me to a different outcome than the Board: I am satisfied that
the totality of this record does not permit a finding that the appellant posed
a significant threat to the public. The appellant was entitled to an absolute
discharge.
(4)
The Need for Robust Reasons on the Significant Threat Issue
[49]
In
every case, the Board is required to explain why the disposition is necessary
and appropriate in the circumstances:
Marchese (Re)
, 2018 ONCA 307,
359 C.C.C. (3d) 408, at para. 16. A cursory consideration of the question of significant
risk will not suffice where an individuals liberty is on the line:
Carrick
(Re),
(2018), at para. 20. As noted above, the Boards disposition must be
able to withstand a somewhat probing examination in order for the conclusion
on significant threat to be upheld as reasonable. As this court observed in
Marchese
,
at para. 8: To conduct a somewhat probing examination this court must have
something to probe.
[50]
In
Marchese
, this court contemplated the difficulty posed when the Board
fails to provide sufficient reasons. In that case, the Boards analysis on the
key issue of significant threat was confined to one paragraph at the end of
five pages of reasons. Brown J.A., writing for the court, commented that: This
brevity led the Board to treat material evidence without the rigour one would
expect from a specialized tribunal such as the Board.
[51]
Nevertheless
,
the court ultimately upheld the Boards disposition. After remarking on
the insufficiency of reasons, the court reviewed the record before the Board.
It concluded that there was evidence that supported the Boards finding on the
significant threat issue, notwithstanding the clear deficiency in reasons. For
example, Ms. Marchese was re-admitted to the hospital for seven months due to a
deterioration in her mental status during the period under review:
Marchese
,
at para. 13. While in seclusion at the hospital, she also exhibited escalated
behaviour that risked harm to herself and others:
Marchese
,
at
paras. 13-14. At the hearing, there was also some indication that Ms. Marchese
had further contact with the hospital in the interim. Thus, the court declined
to interfere with the Boards finding that Ms. Marchese remained a significant
threat.
[52]
However,
in so doing, the court identified a trend besetting Ontario Review Board cases:
Yet, too often this court sees reasons from the Board that go on at
considerable length to recite submissions, only to conclude with a cursory
analysis of the key issue: is the appellant a significant threat to the safety
of the public? Brown J.A. provided the following helpful commentary for Board
going forward:
Cursory analysis is difficult to probe. It
also risks failing to provide justification, transparency, and intelligibility
for the resulting decision.
To avoid that risk, in every
case the Board's reasons should clearly explain what evidence in the record
leads it to conclude that the condition and conduct of the NCRMD accused
creates a significant threat to the safety of the public, both in the sense
that there exists a real, foreseeable risk of physical or psychological harm
occurring to individuals in the community and in the sense that this potential
harm must itself be serious:
R. v. Ferguson
, 2010 ONCA 810, 264 C.C.C. (3d) 451 (Ont. C.A.), at para. 8. The
Board's reasons must clearly deal with the likelihood of a risk materializing
and the seriousness of the harm that might occur:
Carrick
(Re)
, 2015 ONCA 866, 128 O.R. (3d) 209 (Ont.
C.A.), at para. 16. [Emphasis added.]
[53]
He
further noted that the Boards reasons must identify the material evidence
which it relies on and explain how the evidence is linked to the issue of
significant threat:
Marchese
, at para. 11. A conclusion is not an
explanation; and
whether that conclusion falls within a
range of possible, acceptable outcomes cannot be assessed in light of the
absence of any analysis
:
Marchese
, at para. 17.
[54]
Another
case that grapples with a similar issue is
Magee (Re)
,
2020
ONCA 418. Although the case is factually distinguishable, the Boards
reasons for dismissing Mr. Magees request suffered from the same defects that
are present here: namely, an absence of meaningful reasons. On appeal, this
court ordered a new hearing on the basis that the Boards disposition was unreasonable.
Harvison Young J.A., writing for the court, held that the reasons failed to
reflect an adequate engagement with the requirement that it make the least
onerous disposition:
Magee
,
at paras. 24, 30-32; 40-42. She
noted that the Board failed to explain its disposition in light of the
supporting evidence:
Magee
,
at para. 25. In doing so, she reminds
us of the following helpful comment in
Vavilov
,
at para. 127:
T
he
principles of justification and transparency
require that an administrative decision maker's reasons
meaningfully account
for the central issues and
concerns raised by the parties" (emphasis added).
[55]
More
broadly, to succeed on an appeal based on inadequate reasons, an appellant must
show that the reasons are so deficient that they foreclose meaningful appellate
review, and the deficiency has occasioned prejudice to the exercise of the
appellants legal right to an appeal:
R. v. Dinardo
, 2008 SCC 24,
[2008] 1 S.C.R. 788, at para. 25,
R. v. Sheppard,
2002 SCC 26, [2002]
1 S.C.R. 869, at para. 33, and
R. v. Braich
, 2002 SCC 27, [2002] 1
S.C.R. 903, at para. 31.
(5)
The Disposition of the Board Insufficient Reasons
[56]
In
some ways, the facts of this case align with those in
Marchese
. The
decision of the Board sets out the history of the matter, and quotes at length
from the Hospitals report. The Board discussed that report, and the evidence
of Dr. Choptiany, in a cursory manner. The decision of the Board does not
clearly set out why the condition and conduct of the appellant creates a
significant threat to the public.
[57]
In
fact, the Board does not even mention the appellants position when making its
determination that the appellant posed a significant risk to the public. There
is no analysis at all. There is no indication as to why the appellant might
stop taking medication when he states that he would continue to take it, and he
had taken in for years. There is no analysis as to why the potential risk posed
by the appellant was serious as opposed to relatively trivial harm.
[58]
I
am satisfied that the Boards reasons are so deficient that they foreclose
meaningful appellate review. Likewise, the deficiency would have occasioned
prejudice to the exercise of the appellants legal right to appeal.
[59]
Notably,
this case departs from
Marchese
in a crucial way: here, the evidence
before the Board does not appear to support a finding of significant threat. Accordingly,
I do not have the same hesitations about interfering with the Boards disposition.
As explained above, the appellant was entitled to an absolute discharge.
F.
CONCLUSION AND
DISPOSITION
[60]
Accordingly,
the appeal is allowed. As noted above, in light of the Boards 2020
disposition, there is no need for further relief at this point in time.
Released: March 2, 2021 M.T.
M.
Tulloch J.A.
I
agree. David M. Paciocco J.A.
I
agree. Harvison Young J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Marshallzehr Group Inc. v. Ideal
(BC) Developments Inc., 2021 ONCA 229
DATE: 20210413
DOCKET:
C68419
Rouleau, Brown and Miller JJ.A.
BETWEEN
Marshallzehr Group Inc.
Plaintiff/Defendant
by Counterclaim
(Respondent)
and
Ideal (BC) Developments Inc., Ideal (BC2) Developments Inc.,
2490568 Ontario Inc., 2490564 Ontario Inc. IDEAL Developments Inc.,
and Shajiraj Nadarajalingam
Defendants/Plaintiffs
by Counterclaim
(Appellants)
Mark A. Russell, for the appellants
Stephen Schwartz, for the respondents
Heard: March 29, 2021 by video conference
On appeal from the judgment of Justice Paul
M. Perell of the Superior Court of Justice, dated March 11, 2020,
with reasons reported at 2020 ONSC 1547, 100 B.L.R. (5th) 66
.
BROWN J.A.:
I. OVERVIEW
[1]
The appellants, Ideal (BC) Developments Inc.,
Ideal (BC2) Developments Inc., 2490568 Ontario Inc., 2490564 Ontario Inc.,
Ideal Developments Inc., and Shajiraj Nadarajalingam (hereafter collectively Ideal),
appeal the judgment of the motion judge that ordered them to pay the
respondent, MarshallZehr Group Inc. (MZ), the sum of $508,071.09 and
dismissed Ideals counterclaim against MZ.
[2]
By Commitment Letter dated October 31, 2018 (the
CL), and executed by Ideal on November 8, 2018, MZ was prepared to provide Ideal
with financing for a residential real estate project. Two of the appellants,
Ideal Developments Inc. and Shajiraj Nadarajalingam, were to act as guarantors
of the indebtedness.
[3]
According to the CL: (i) MZ intended to
syndicate the loan and lend Ideal $15.2 million (the Loan); (ii) the Loan was
to act as a first mortgage land loan for Ideals development of the project; (iii)
the CL stipulated that the funds for the project were to consist of the Loan plus
$5.9 million in equity; (iv) the loan would be for a term of 13 months; (v) the
Loan would consist of three facilities, with the facilities bearing interest
rates ranging from Prime + 5.3% per annum (floor rate of 9.25%) on the largest
facility to Prime + 10.05% (floor rate 14.0%) on the smallest; (vi)
subordinate financing was subject to MZs consent; (vii) the closing date for
the Loan was scheduled for December 5, 2018; and (viii) MZ was not required to
advance any funds prior to the Borrower having fulfilled to the Lenders
satisfaction the Initial Funding Conditions specified in s. 2.1 of the CL.
[4]
By December 17, 2018 MZ had given Ideal notice that
the syndicated lenders had started to advance funds. MZ informed Ideal on
December 21, 2018 that interest was beginning to accrue on the Loan. Thereafter,
in accordance with the terms of the CL, MZ advanced the syndicated funds to its
counsel, to be held in trust pending Ideals satisfaction of the Initial
Funding Conditions.
[5]
In the result, the Loan never closed, and no funds
were ever advanced to Ideal. By letter dated January 23, 2019, MZ notified Ideal
that it was ending the CL, stating, in part:
Please accept this letter as notice that the
Lender is hereby terminating the Commitment Letter effective immediately in
accordance with the terms thereof.
Notwithstanding the Lenders unilateral right
to cancel the Commitment Letter at any time and as it may determine, in its
sole and unfettered discretion, we have been advised by our client that the
Obligors have not met the Initial Funding Conditions set out in Part II,
Section 2.1 therein.
[6]
MZ sought payment from Ideal of $553,899.48 for
various fees and expenses in connection with the CL.
[7]
By letter dated February 28, 2019, Ideal took
the position that MZ did not have the right to terminate the CL without providing
notice and giving Ideal an opportunity to cure any default.
[8]
MZ brought this action seeking payment of
various fees and expenses described in the CL. Ideal defended and, as well,
counter-claimed for damages caused by MZs wrongful termination of the CL. MZ
then moved for summary judgment, which the motion judge granted.
[9]
Ideal raises two main grounds of appeal. First,
it submits that the motion judge erred in determining that MZ was entitled to
end the loan facility under the CLs Cancellation provision and dismissing Ideals
counterclaim. Second, Ideal argues that the motion judge erred in calculating
the fees and expenses to which MZ was entitled upon cancellation of the CL.
II. FIRST GROUND OF APPEAL: MZS RIGHT TO END THECOMMITMENT
LETTER
A. The issue stated
[10]
Ideals first ground of appeal concerns the
motion judges interpretation of the CL, specifically the contractual basis of
MZs right to end the CL in the circumstances, as well as the application of
that interpretation to the facts of the case. The applicable standard of review
is that articulated in
Sattva Capital Corp. v.
Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R.
633,
and its progeny.
[11]
Ideal submits that when interpreting the CL the
motion judge committed an error on an extricable question of law. It argues the
motion judge failed to interpret the provisions of the contract as a whole,
with the result that he failed to assign meaning to all the contested terms of
the CL:
Ventas, Inc. v. Sunrise Senior Living Real
Estate Investment Trust
(2007), 85 O.R. (3d) 254
(C.A.), at para. 24;
Deslaurier Custom Cabinets
Inc. v. 1728106 Ontario Inc.
, 2017 ONCA 293, 135
O.R. (3d), at para. 58, leave to appeal refused, [2016] S.C.C.A. No. 249.
[12]
The contested terms of the CL are those that
entitle MZ to bring its relationship with Ideal to an end. The first is found
in Part I of the CL. Headed Cancellation, the provision states:
The Lender may on demand require immediate
payment of all amounts outstanding or accrued in connection with this
Commitment.
The Lender may at any
time, for any reason and without notice, cancel the undrawn portion of the Loan
. [Emphasis added.] (Hereafter the Cancellation Provision.)
[13]
The other is contained in Part V of the CL,
Default Provisions.
Section
5.1 identifies events of default, which include the neglect by any Obligor (the
named borrowers and guarantors) to observe or perform any covenant or
obligation contained in any Document on its part to be observed or performed
and, such Obligor shall fail (in the case of those defaults which can be
rectified by such Obligor) to remedy such default within a period of thirty
(30) days after the giving of notice
[14]
Section 5.2 provides that [u]pon the occurrence
of any Event of Default that has not been cured within the timelines set out
herein, the Lender by written notice to the Borrower (an Acceleration Notice)
shall be entitled to: a) declare the Loan and the right of the Borrower to
apply for further Advances to be terminated; and b) declare all Obligations
of the Borrower to the Lender (including, without limitation, the all unpaid
fees whether or not deemed earned) to be immediately due and payable
without
further demand
[15]
I will refer to ss. 5.1 and 5.2 collectively as
the Default and Demand Provisions.
[16]
Before the motion judge, Ideal argued that the
Default and Demand Provisions governed MZs ability to terminate the CL prior
to the closing of the loan transaction. It contended that MZ had wrongfully
terminated the CL because it had failed to give Ideal notice that it had
committed an event of default and afford Ideal an opportunity to cure the
default.
[17]
The motion judge did not accept that submission.
He held that MZs January 23, 2019 letter constituted the exercise by MZ of its
right to end the relationship with Ideal under the Cancellation Provision. He
stated:
Read literally, the Cancellation Provision
required MZ to have a reason for the cancellation and its expressed reason was
that Ideal had not satisfied the Initial Funding Conditions. Section 2.1 of the
Commitment Letter provided that MZ shall not be required to advance any funds
prior to Ideal having fulfilled to the Lender's satisfaction the funding
preconditions.
Although MZ speaks of Ideal defaulting with
respect to the Initial Funding Conditions, more felicitous and legally accurate
language is that Ideal had not satisfied the pre-conditions for the loan. More
importantly, by January 22, 2010 [
sic
] it was apparent that Ideal
would not or could not satisfy the pre-conditions.
[18]
Ideal advances two arguments in support of its
position that the motion judge erred in holding that MZ was entitled, in the
circumstances, to utilize the Cancellation Provision. First, a proper
interpretation of the CL as a whole requires giving meaning and priority to the
Default and Demand Provisions. Second, MZ did not have a legitimate reason to
terminate the CL and, as a result, MZ failed to exercise its discretionary
powers under the CL in good faith.
B. Analysis
The interpretation of the CL
[19]
I am not persuaded that the motion judge erred
on an extricable question of law. In my view, his interpretation gave effect to
all the CLs terms.
[20]
The terms of the CL cover two periods of time in
the relationship between MZ and Ideal: (i) the period from the date of
execution of the CL to the closing of the transaction by the Initial Advance of
funds to Ideal; and (ii) the period following the Initial Advance of funds
through to the end of the 13-month term of the Loan. When the CL is examined in
its entirety, the provisions relating to the pre-closing period are, roughly
speaking, found in the following portions of the CL: (a) s. 2.1, which specifies
the Initial Funding Conditions; and (b) Part III, which describes the security and
documentation to be delivered by Ideal. Those that concern the
post-closing/post-Initial Advance period are: (c) s. 2.2, dealing with Funding
Conditions for Borrower Draws (although the CL contemplated a single, Initial
Advance); (d) Part IV, dealing with Borrowers Covenants; and (e) Part V, the
Default Provisions. Parts I and VI, the General Provisions, contain terms that concern
both periods of time.
[21]
Provisions of the CL clearly stated that MZ, as lender,
was not required to advance any funds prior to Ideal, as borrower, fulfilling
stipulated pre-conditions to MZs satisfaction. For example, Part VI states, in
part: The execution of this letter does not obligate the Lender to advance any
of the agreed funds unless all of the conditions to such advances have been
satisfied to the satisfaction of the Lender and its solicitors.
[22]
When the motion judges reasons are read against
that background, I am satisfied that his interpretation gave effect to the
basic bargain agreed to by the parties and gave meaning to all the CLs terms.
[23]
Ideal contends that MZ could not use the
Cancellation Provision because it merely permitted the Lender to cancel the
undrawn portion of the Loan. Ideal points to the definition of Loan in the
opening paragraph of the CL, which states:
This commitment letter confirms that
MarshallZehr Group Inc. (the Lender) is prepared to provide financing (the
Loan) for the Project conditional on the terms and conditions contained in
this letter agreement (the Commitment).
[24]
In Ideals submission, the cancellation of the
undrawn portion of the Loan would not amount to a termination of the CL or the
Loan, which is what MZ purported to do in its January 23, 2019 letter. Instead,
according to Ideal, any termination of the Loan required MZ to resort to the
Default and Demand Provisions. Only if MZ gave notice of a default and an
opportunity for Ideal to cure the default could it then proceed, under s. 5.2,
to issue to Ideal an acceleration notice that would declare the Loan and the
right of the Borrower to apply for further Advances to be terminated.
[25]
I do not regard the interpretation advanced by
Ideal as a commercially reasonable one. While I agree with the motion judges
observation, at para. 45, that the Commitment Letter is far from plainly
written, in my view his interpretation gave practical meaning to all the CLs
terms and was commercially reasonable.
[26]
When MZ sent its January 23, 2019 letter, the
parties had not closed the financing of the Loan. As a result, MZ had not
advanced any funds to Ideal. The CL contemplated one advance of funds, the
Initial Advance, which would comprise the entirety of the Loan. Accordingly, at
the time of the January 23, 2019 letter the entirety of Loan remained undrawn
because the loan transaction had not yet closed and no funds had been advanced.
In those circumstances, the Cancellation Provision would be available to
cancel the undrawn portion of the Loan. The effect of the cancellation would
be to put an end to, or terminate, the CL.
[27]
By contrast, the following language of s. 5.2
envisages a situation where the loan transaction has closed and some advance of
funds has occurred: declare the Loan and the right of the Borrower
to apply for further Advances
to be terminated.
[Emphasis added.] Section 5.2 of the CL contemplates circumstances where some
portion of the Loan has been advanced, an uncured event of default has
occurred, as a result of which the Lender can declare the Loan to be terminated
and accelerate all obligations, with the Loan becoming immediately due and
payable.
[28]
Is the language of the Cancellation Provision a
perfect fit with only pre-closing circumstances? No. One could argue that its
reference to the undrawn portion of the Loan covers a situation where the
borrower already had made a draw and, therefore, the transaction had closed. But,
in my view the motion judges interpretation was a more commercially reasonable
one in the actual circumstances of this case: the Loan transaction had not
closed; no advance had been made to Ideal; the CL contemplated a single,
Initial Advance, not multiple draws; and MZ was under no obligation to
advance funds before Ideal fulfilled the stipulated pre-closing conditions to
MZs satisfaction.
[29]
I therefore conclude that the motion judge did
not commit an error on an extricable question of law. His interpretation of the
CL was a reasonable one, which gave practical recognition to the structure of the
CL and meaning to all its terms. Accordingly, I see no reversible error in his interpretation
of the Cancellation Provision and his conclusion that MZ could use the
provision in the circumstances. Nor do I see any palpable and overriding error
in his finding that by sending its January 23, 2019 letter MZ was purporting to
exercise its right under the Cancellation Provision. That finding was available
to the motion judge on the record.
The availability of the Cancellation
Provision in the circumstances
[30]
Ideal also submits that its dispute with MZ
about the terms of subordinate financing did not entitle MZ to exercise its
rights under the Cancellation Provision.
[31]
Feature Corp. held an existing third mortgage on
the project properties. Since the Subordinate Financing clause in Part I of
the CL required MZs prior written consent to any junior mortgage, Ideal discussed
with MZ terms for subordinating and postponing the third mortgage. The parties
could not agree on the length of a standstill period during which the third
mortgagee could not enforce its rights in the event of a default by Ideal: MZ
wanted a standstill period for the entire term of its Loan; Ideal wanted only a
90-day standstill period.
[32]
By email dated January 14, 2019, MZ repeated
that it required a full standstill, observed that the issue had been addressed
multiple times, and advised that the parties should move on from it. By further
email dated January 16, 2019, MZ advised Ideal that [w]e will not limit the
timeframe around our standstill clause. On January 18, 2019, Ideals counsel formally
wrote to MZ that its insistence on an indefinite standstill period was
unreasonable as such a provision was not expressly required by the CL. Counsel
advised that unless MZ altered its position and, as well, agreed to a $2
million increase in the third mortgage, we will seek our clients instructions
regarding termination of the Commitment Letter, without prejudice to their
rights and remedies in law and equity. MZ remained firm in its position.
[33]
Ideal submits, in effect, that the language of
the Subordinate Financing clause treats the parties inability to resolve the
dispute over the standstill agreement as a default which, in turn, required
MZ to resort to the Default and Demand Provisions, not the Cancellation
Provision, to end the relationship.
[34]
I am not persuaded by that submission.
[35]
The Subordinate Financing clause uses the word
default in two places, each involving a different circumstance. The first
refers to a situation where Ideal obtains additional financing without MZs
consent; the second is where an approved secondary lender issues a discharge
certificate greater than zero without MZs consent.
[36]
Neither circumstance applied to the dispute
between MZ and Ideal, which involved Ideals obligation to satisfy the Initial
Funding Conditions for the Loan. Section 2.1(a) of the Initial Funding
Conditions required the execution of all the security and ancillary loan
agreements and documents before MZ was obligated to advance any funds. Ideals
obligation under Part III of the CL required Ideal to deliver security in the
form and on the terms acceptable to the Lenders solicitors, including (a) in
s. III.j, postponements from such other creditors as the Lender may require
upon completion of its due diligence and (b) in s. III.o, [s]uch further
security
and ancillary documents and agreements as the Lender or its
solicitors may, acting reasonably, deem necessary to adequately secure the Loan
obligations and complete and perfect the Security.
[37]
The record discloses that Ideal was not prepared
to agree to the form of subordination agreement acceptable to MZ. At para. 54
of his reasons, the motion judge found that the negotiations over whether MZ
would consent to the additional financing and about what would be the terms of
the postponement, subordination and standstill agreement had reached a
dead-end, which was a very serious impediment to going forward with the loan
for both parties. I see no palpable and overriding error in that finding;
ample evidence supported it.
[38]
The motion judge stated, at para. 52, that the
Cancellation Provision required MZ to have a reason for the cancellation and
its expressed reason was that Ideal had not satisfied the Initial Funding
Conditions. Given the requirements of s. 2.1 regarding the Initial Funding
Conditions and Part III regarding Security, I see no palpable and overriding
error in the motion judges conclusion that the parties impasse over the terms
of the Feature Corp. subordinate financing provided MZ with a legitimate reason
to exercise its rights under the Cancellation Provision.
[39]
Ideal makes one further argument. In its
statement of defence and counterclaim, Ideal pleaded that MZ breached its duty
of good faith by unreasonably demanding a permanent standstill agreement from
subordinate financiers in excess of its rights under the [CL] and by
terminating the [CL] without proper notice of alleged default or providing a
required cure period to remedy the same. Ideal did not advance that argument
before the motion judge. However, during oral submissions on appeal, Ideal,
relying on the recent decision of the Supreme Court of Canada in
Wastech
Services Ltd. v. Greater Vancouver Sewerage and Drainage District
, 2021
SCC 7, 454 D.L.R. (4th) 1, argued that MZ did not exercise its rights under the
Cancellation Provision in a good faith manner.
[40]
I am not prepared to give effect to this
submission. I put to one side the issue of whether it is open to Ideal to argue
on appeal a pleaded defence that it elected not to pursue below in response to
MZs motion for summary judgment. As well, the lateness of the hour at which
Ideal has raised this issue has deprived the panel of the benefit of the
parties considered submissions on how the principles articulated in
Wastech
would apply to a partys conduct in the pre-closing phase of a contractual
relationship, such as in the present case. Nevertheless, I would observe that
while
Wastech
states that contractual discretion must be exercised
reasonably, in light of the purpose for which it was conferred, the decision
notes that such a duty of good faith does not displace the detailed,
negotiated bargain as the primary source of justice between the parties: at
paras. 4 and 5.
[41]
In the present case, MZ was faced with a
situation where: (a) Ideal had been unable to renew its existing first
mortgage; (b) Ideal had agreed, in the CL, to use equity to source the balance
of funds for the project but ultimately wanted to maintain and increase the
amount of its third mortgage; (c) Ideal had agreed, in the CL, that MZs
consent was required for any subordinate financing and relevant security and
ancillary documentation had to be satisfactory to MZ and its solicitors; and
(d) Ideals counsel had put MZ on formal notice that its insistence on a total
standstill was unreasonable and might lead Ideal to terminate the CL. Ideals
position that its subordinate lender need only agree to a 90-day standstill on
its enforcement rights understandably would cause MZ concern about the degree
of additional risk it would be assuming if it were to advance funds to Ideal on
that basis.
[42]
The agreed Initial Funding Conditions reflected
many of the limits to the risk that MZ was prepared to assume in lending to
Ideal. When viewed in the context of the entire agreement, the Cancellation
Provision appeared to be designed, in part, to bring the relationship to an end
if the borrower was unable or unwilling to satisfy the pre-conditions to
lending. Faced with a potential borrower who was not prepared to conclude an
agreement within the CLs agreed-upon risk limits, the Cancellation Provision was
available for MZ to use to avoid such unbargained for risk. Again, recall that s.
2.1 of the CL provided that MZ was not required to advance any funds until
Ideal fulfilled the Initial Funding Conditions to MZs satisfaction. In those
circumstances, I see nothing unreasonable about its use of the Cancellation
Provision.
Conclusion
[43]
For those reasons, I am not persuaded by Ideals
first ground of appeal. I see no basis to interfere with the motion judges
conclusion that MZ was entitled to exercise the Cancellation Provision in the
circumstances.
III. SECOND
GROUND OF APPEAL: THE RECOVERABLE FEES AND EXPENSES
[44]
The $508,071.09 judgment in MZs favour consists
of awards for: (i) Standby Interest: $101,958.82; (ii) expenses consisting of
payments by MZ for legal fees, document review, and planning advice: $60,112.27;
and (iii) a Lender Fee of $396,000, less the $50,000 Good Faith Deposit (net
$346,000).
[45]
Ideal submits that the motion judge erred in
granting judgment for those amounts because none were recoverable under the
terms of the CL in the event MZ exercised the Cancellation Provision. MZ
submits the motion judge made no error. I will consider each item in turn.
Standby Interest
[46]
The CL stated that MZ intended to syndicate the
Loan, which it did. Part I of the CL stipulated that if the Loan was not fully
advanced by December 5, 2018, interest will commence on the advance date
established herein for such advance, in the form of standby interest (Standby
Interest) on any unadvanced portion of the Loan and will become due and
payable on the date the Loan is advanced
or upon the
termination of this Commitment Letter without any advances having been made
.
[Emphasis added.]
[47]
By December 17, 2018 MZ had advised Ideal that
it had syndicated the Loan. Over the next few weeks MZ transferred the
syndicated funds to its counsel to be held in trust, pending closing of the
loan transaction.
[48]
Ideal submits that the motion judge erred in
finding that MZ was entitled to Standby Interest pursuant to the Cancellation
Provision. Since such interest was payable only upon the termination of this
Commitment Letter without any advances having been made, according to Ideal MZ
was only entitled to Standby Interest if it had proceeded under the Default and
Demand Provisions termination language.
[49]
I am not persuaded by Ideals submission. The
practical effect of MZ proceeding under the Cancellation Provision was to
terminate the CL without any advances having been made, the very circumstance
contemplated by the CLs Standby Interest provision. Pursuant to that
provision, MZ was entitled to recover from Ideal interest on the syndicated
funds that had been put in place pending closing of the Loan. I see no error in
the motion judge granting judgment for that amount.
Expenses and Good Faith deposit
[50]
The Expenses section in Part I of the CL stated
that: All reasonable expenses of the Lender and the Borrower shall be paid by
the Borrower including (but not limited to), the cost of any third-party
reports and all legal costs
regardless of whether the
Borrower proceeds with the transaction
[Emphasis added.] The Good
Faith Deposit section stated:
$50,000 non-refundable
if
Borrower fails to proceed based on the terms of this Commitment Letter
and is full compensation to the Lender for its work and efforts in preparation
of this Commitment Letter. The Borrower shall also be responsible for the
Lenders legal and other, professional fees and out of pocket expenses
if the Borrower fails to proceed with the Loan
.
[Emphasis added.]
[51]
The motion judge held that MZ was entitled to
recover its legal fees, consultants expenses, and the Good Faith Deposit
pursuant to the Cancellation Provision. Ideal submits that the motion judge
erred in so holding because MZs exercise of the Cancellation Provision did not
amount to Ideal, as borrower, failing to proceed with the transaction or Loan.
[52]
The motion judge found, at para. 53, that by
January 22, 2019 it was apparent that Ideal would not or could not satisfy the
pre-conditions. Ample evidence supported that finding, at least in respect of
certain informational requirements and the terms of the subordinated financing.
Given that conduct by Ideal, I see no error in the motion judges implicit
conclusion that Ideal did not proceed with, or failed to proceed with, the
transaction.
Lenders Fee
[53]
The Fees section of Part I of the CL provides
that: $396,000, the Lender Fee, less the Good Faith Deposit
shall be deducted from the Initial Advance
. [Emphasis
added.] Part I defines the Initial Advance, in part, as follows:
The Loan shall be advanced in one draw:
The first draw (Draw 1 or the Initial
Advance) is anticipated to be in the principal amount of $15,200,000 and
advanced upon satisfaction of the conditions contained herein and by the
applicable Notices (see Appendix A, B, C and D). The Initial Advance is
expected to be as follows:
Land Debt
Refinancing $13,000,000
Lender Fee $
396,000
[54]
The motion judge held that the claim for the
Lender Fee was recoverable pursuant to the Cancellation Provision. In reaching
that conclusion, he did not address Ideals submission that the Lender Fee was
not payable without an advance of the Loan. On its part, MZ argues that the
Lender Fee was earned upon its completion of due diligence and advance of the
Loan to the Trust Account.
[55]
I am persuaded by Ideals submission. The
language of the CL specifies that the Lender Fee shall be deducted from the
Initial Advance and MZ did not make an Initial Advance to Ideal. The CL does
not contain any other language of entitlement to the Lender Fee.
[56]
I do not accept MZs argument that the fee was
earned upon the advance of the Loan to the Trust Account; the CL clearly
distinguishes between the Lender Advance the transfer of the syndicated funds
to MZs trust account and the Initial Advance, which is an advance to the
Borrower.
[57]
Nor do I accept MZs submission that the
decision in
Chijindu v. Prudential Property Management
, 2014 ONSC
4759, applies to the facts of the present case. That case is distinguishable in
two respects. First, the mortgage commitment letter did not contain the
language found in the CL that the fee was to be deducted from an advance.
Second, in
Chijindu
the mortgagee in fact had advanced the first draw
under the mortgage commitment letter, and the issue was whether the mortgagee
was entitled to the entire lenders administrative fee or only an amount
pro
rated
to the amount of the actual advance. The application judge held that
the language of the mortgage commitment letter entitled the mortgagee to the
entire amount: at paras. 10 and 13.
[58]
Consequently, I conclude that the motion judge
erred in granting judgment for the Lender Fee.
Conclusion
[59]
By way of summary, the fees and expenses to
which MZ is entitled under the CL total $212,071.09 ($101,958.82 Standby
Interest + $60,112.27 expenses + $50,000 Good Faith Deposit). MZ has already
received the Good Faith Deposit. Therefore, the amount remaining payable by
Ideal is $162,071.09.
IV. DISPOSITION
[60]
For the reasons set out above, I would allow the
appeal in part and vary para. 1 of the Judgment from $508,071.09 to
$162,071.09.
[61]
If the parties are unable to agree upon the
costs of this appeal, they may file brief (no more than 5 pages) cost
submissions within 10 days of the release of these reasons.
Released: April 13, 2021 P.R.
David
Brown J.A.
I
agree. Paul Rouleau J.A.
I
agree. B.W. Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Marshallzehr Group Inc. v. Ideal (BC) Developments
Inc., 2021 ONCA 299
DATE: 20210505
DOCKET: C68419
Rouleau, Brown and Miller JJ.A.
BETWEEN
Marshallzehr Group Inc.
Plaintiff/Defendant by
Counterclaim
(Respondent)
and
Ideal
(BC) Developments Inc., Ideal (BC2) Developments Inc., 2490568 Ontario
Inc., 2490564 Ontario Inc. IDEAL Developments Inc., and Shajiraj Nadarajalingam
Defendants/Plaintiffs by Counterclaim
(Appellants)
Mark A. Russell, for the appellants
Stephen Schwartz, for the respondents
Heard: March 29, 2021 by video conference
On appeal from the judgment of Justice Paul M. Perell of
the Superior Court of Justice, dated March 11, 2020, with reasons reported at
2020 ONSC 1547, 100 B.L.R. (5th) 66.
COSTS ENDORSEMENT
[1]
The appellants, Ideal (BC) Developments Inc., Ideal (BC2) Developments
Inc., 2490568 Ontario Inc., 2490564 Ontario Inc., Ideal Developments Inc., and
Shajiraj Nadarajalingam (hereafter collectively Ideal), seek partial
indemnity costs of their appeal in the amount of $12,072.87. On its part, the
respondent, MarshallZehr Group Inc., seeks partial indemnity costs of the
appeal of $7,735.98.
[2]
Although Ideal was not fully successful on its appeal, it did succeed in
significantly reducing the amount of the judgment against it. In those
circumstances, Ideal is entitled to costs of the appeal fixed in the amount of
$10,000, inclusive of disbursements and applicable taxes. We do not interfere
with the cost award made by the motion judge.
Paul Rouleau J.A.
David Brown J.A.
B.W. Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Martin v. 11037315 Canada Inc.,
2021 ONCA 246
DATE: 20210416
DOCKET: M52365 (C69053)
Pepall J.A. (Motion Judge)
BETWEEN
Kelly
Martin
Applicant
(Respondent/Responding
Party)
and
11037315 Canada Inc.
,
2670082
Ontario Corp.
, and Autodome Ltd.
Respondents
(Appellants/
Moving
Parties
)
Samir S. Chhina, for the moving parties
Dennis Van Sickle, for the responding party
Heard: April 13, 2021 by video conference
ENDORSEMENT
[1]
The moving parties, 11037315 Canada Inc. (110) and 2670082 Ontario
Corp. (267), seek an order setting aside the Registrars March 29, 2021 order
dismissing their appeal and an order extending the time to perfect the appeal.
[2]
The responding party, Ms. Martin, was served last Wednesday evening. Ms. Martins
counsel seeks an adjournment to file materials in response. Initially, counsel
advised that his client also wanted to bring a cross-motion for security for
costs but ultimately indicated that he does not intend to proceed with such a
motion at this time. Such a motion would be moot if he is successful in
resisting the moving parties motion. Accordingly, he will limit his position
to responding to the motion. He submits that egregious facts are missing from
the materials before the court and the merits and overall justice of the case
favour a dismissal of this motion.
[3]
I raised with counsel the issue of the jurisdiction of this court over
the appeal. The parties seemed content to proceed in this court, but
jurisdiction cannot be conferred by consent or on the basis of being unopposed.
That said, I am satisfied that there is an arguable case to be made that this
court has jurisdiction.
[4]
I will briefly outline the background facts related to the question of whether
this court has jurisdiction over the proposed appeal.
[5]
The application judges endorsement dated December 23, 2020 discloses
that Ms. Martin bought her house in 2010 for $289,000 with mortgage financing
from TD Bank. By 2019, the property was worth $575,000 and the mortgage had
been reduced to $160,000. She then obtained a second mortgage for $65,000 from
2148468 Ontario Ltd. (214). 214 assigned the mortgage to 110 but Ms. Martin
was unaware of this. 110 served her with a claim for foreclosure. She thought
the claim was from 214 and confused the meaning of foreclosure with power of
sale, thinking she would ultimately receive the net proceeds following the
sale. The application judge estimated these to amount to about $350,000.
Unbeknownst to her, 110 obtained default judgment against her and then sold the
property to 267 for $425,000 when it was worth $575,000. 267 obtained a
mortgage of $465,000 on the property.
[6]
Ms. Martin brought an application to set aside the default judgment
obtained in the foreclosure action and also sought other monetary relief. The
application judge granted Ms. Martins application. On December 23, 2020, he ordered
that: the default judgment be set aside, the property forthwith be listed for
sale, net proceeds over $425,000 be paid to Ms. Martin, and 110 pay her the
proceeds it received from the sale that were in excess of the amount set forth
in its statement of claim. He also dispensed with a formal typed order, saying
that his endorsement was deemed to be an order in the circumstances of COVID-19.
[7]
In essence, the effect of the application judges order is that Ms.
Martin recovers her equity in the property net of the mortgage and other obligations.
In exercising his discretion, he relied on equity, absence of prejudice to 267,
whom he found was not a
bona fide
purchaser for value without notice,
and the absence of notice of assignment, which meant that the default judgment
was irregularly obtained.
[8]
267 then moved under r. 59.06(2) of the
Rules of Civil Procedure
,
R.R.O. 1990, Reg. 194, arguing that a new fact had been discovered: 110 had
sent Ms. Martin notice of the assignment by registered mail. On January 29,
2021, the motion judge dismissed the motion on the basis of lack of due
diligence and in any event, his earlier decision was based primarily on equity
and not on the absence of any notice of assignment. He again determined that given
the pandemic, his endorsement was deemed to be the order without any need to
obtain a formal, typed order.
[9]
267 is now appealing from these two orders and a costs endorsement dated
February 23, 2012.
[10]
The
Court of Appeals website states that:
An issued and entered order is required for
the purpose of an appeal to the Court of Appeal for Ontario in civil
proceedings. For information on obtaining an order from the Ontario Superior
Court of Justice during the COVID-19 pandemic, please see section D.5 of the
Superior Court's Consolidated Notice to the Profession, Litigants, Accused
Person, Public and the Media.
Thus, an issued and entered order is required for the
purpose of an appeal to the Court of Appeal for Ontario in civil proceedings. I
would recommend that our Registry Office staff advise the moving parties that
they should obtain and file an issued and entered order prior to the hearing of
this motion.
[11]
The
December 23, 2020 order has both interlocutory and final elements. An order setting
aside a default judgment is an interlocutory order:
Laurentian Plaza Corp. v.
Martin
(1992), 89 D.L.R. (4th) 50 (Ont. C.A.) at p. 53. As such, leave to
appeal to the Divisional Court pursuant to s. 19(1)(b) of the
Courts of Justice
Act
,
R.S.O. 1990, c. C.43 and
r. 62.02(1) of the
Rules of Civil Procedure
would be required, leave
that may not be granted by this court.
[12]
However,
the remaining portions of the December 23, 2020 order are final in nature and
the order finally disposed of the application.
[13]
In
Lax v. Lax
(2004), 239 D.L.R.
(4th) 683 (Ont. C.A.), at para. 9, this court held that leave to appeal from an
order of a judge of the Superior Court is not required where the issues in an
appeal from an order having final and interlocutory aspects are so interrelated
that leave would inevitably have been granted. In that case, the defendants
moved for summary judgment seeking to dismiss the plaintiffs action as being
statute-barred by the applicable limitation period. The motion judge determined
that the action was not statute-barred. This determination gave rise to a final
order on the authority of
Abbott v. Collins
, (2002), 62 O.R. (3d) 99
(C.A.). The motion judge went on to hold that even if the limitation period
applied, there was a discoverability issue that required a trial. As Feldman
J.A. noted on behalf of the court, the second determination was interlocutory:
Although the second issue would, if brought as a stand-alone
appeal to the Divisional Court, require leave of that court, because the two
issues are so interrelated, we were able to proceed to hear the two appeals
together in accordance with s. 6(2) of the [
CJA
], on the basis that once the first
issue was before this court, leave would inevitably have been granted on the
second.
[14]
This
court proceeded to hear and determine both issues.
[15]
Lax
has since been followed in
Azzeh v. Legendre
, 2017 ONCA 385, 135
O.R. (3d) 721, leave to appeal refused, [2017] S.C.C.A. No. 289. This court
acknowledged that para. 1 of the formal order, which granted leave to add the
City of Sudbury and others as defendants, was interlocutory. Paragraph 2, which
made other amendments consistent with the addition of the defendants, was also
interlocutory. However, para. 3, which granted a declaration that the action
was not statute-barred, was final. While normally leave must be obtained from
the Divisional Court before an appeal from an interlocutory order can be
combined with an appeal from a final order, leave was not required as this case
was similar to
Lax
. The court explained: [w]hether the City was
properly added as a defendant depends on whether the action against it is
statute-barred. Therefore, both aspects of the appeal were heard by this court:
at para. 26. See also
Abbasbayli v. Fiera Foods Company
, 2021 ONCA 95,
at para. 17;
2099082 Ontario Limited v. Varcon Construction Corporation
,
2020 ONCA 202, 97 C.L.R. (4th) 26, at para. 17; and
Cooper v. The Laundry
Lounge, Inc.
, 2020 ONCA 166, at para. 2.
[16]
As
for the January 29, 2021 order, an order dismissing a motion under r. 59 to set
aside or vary an order is interlocutory:
Antique Treasures of the World
Inc. v. Bauer
, 2003 CanLII 35349 (Ont. C.A.). However, again, the issues
raised by that order are closely related to those in the December 23, 2020
order.
[17]
In
the circumstances, given the interrelationship of the issues engaged by the two
orders the moving parties seek to appeal, and based on the aforementioned
authorities, I conclude that it is at the very least arguable that this court
has jurisdiction over the appeal.
[18]
As
such, it is appropriate for me to adjourn the motion to a new date as requested
by the responding party. I am adjourning the motion to April 28, 2021, a date
agreed upon by the parties, to permit the responding party to respond to the
motion. I am satisfied that the request is legitimate given the abbreviated service
and the absence of any materials from the responding party. The costs of today
are reserved to the judge hearing the motion.
S.E.
Pepall J.A.
|
WARNING
The President
of the panel hearing this appeal directs that the following should be attached
to the file:
An order
restricting publication in this proceeding under ss. 486.4(1), (2), (2.1),
(2.2), (3) or (4) or 486.6(1) or (2) of the
Criminal Code
shall
continue. These sections of
the Criminal Code
provide:
486.4(1) Subject to
subsection (2), the presiding judge or justice may make an order directing that
any information that could identify the victim or a witness shall not be
published in any document or broadcast or transmitted in any way, in
proceedings in respect of
(a) any
of the following offences;
(i) an offence
under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1,
172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02,
279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or
(ii) any offence
under this Act, as it read at any time before the day on which this
subparagraph comes into force, if the conduct alleged involves a violation of
the complainants sexual integrity and that conduct would be an offence
referred to in subparagraph (i) if it occurred on or after that day; or
(iii) REPEALED:
S.C. 2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49).
(b) two or more
offences being dealt with in the same proceeding, at least one of which is an
offence referred to in paragraph (a).
(2) In proceedings in respect of the
offences referred to in paragraph (1)(a) or (b), the presiding judge or justice
shall
(a) at
the first reasonable opportunity, inform any witness under the age of eighteen
years and the victim of the right to make an application for the order; and
(b) on
application made by the victim, the prosecutor or any such witness, make the
order.
(2.1) Subject to subsection (2.2),
in proceedings in respect of an offence other than an offence referred to in
subsection (1), if the victim is under the age of 18 years, the presiding judge
or justice may make an order directing that any information that could identify
the victim shall not be published in any document or broadcast or transmitted
in any way.
(2.2) In proceedings in respect of
an offence other than an offence referred to in subsection (1), if the victim
is under the age of 18 years, the presiding judge or justice shall
(a)
as soon as feasible, inform the victim of their right to make an application
for the order; and
(b)
on application of the victim or the prosecutor, make the order.
(3) In proceedings in respect of
an offence under section 163.1, a judge or justice shall make an order
directing that any information that could identify a witness who is under the
age of eighteen years, or any person who is the subject of a representation,
written material or a recording that constitutes child pornography within the
meaning of that section, shall not be published in any document or broadcast or
transmitted in any way.
(4) An order made under this
section does not apply in respect of the disclosure of information in the
course of the administration of justice when it is not the purpose of the
disclosure to make the information known in the community.
2005, c. 32, s. 15; 2005, c. 43, s.
8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22,48; 2015,
c. 13, s. 18.
486.6(1) Every person who
fails to comply with an order made under subsection 486.4(1), (2) or (3) or
486.5(1) or (2) is guilty of an offence punishable on summary conviction.
(2) For greater certainty, an
order referred to in subsection (1) applies to prohibit, in relation to
proceedings taken against any person who fails to comply with the order, the
publication in any document or the broadcasting or transmission in any way of
information that could identify a victim, witness or justice system participant
whose identity is protected by the order. 2005, c. 32, s. 15.
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Tootiak, 2021 ONCA 356
DATE: 20210527
DOCKET: C65194
Watt, Benotto and Harvison Young
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Jayson Tootiak
Appellant
Ian B. Kasper, for the appellant
Alexander Hrybinsky, for the respondent
Heard: May 19, 2021 by video
conference
On appeal from the from the conviction
entered on February 26, 2013 and the sentence imposed on December 1, 2015 by
Justice Jack Nadelle of the Ontario Court of Justice.
REASONS FOR DECISION
[1]
The appellant was convicted of a sexual assault
and assault causing bodily harm. He was sentenced to 13 years less two years
pre-sentence custody on the sexual assault and 10 years concurrent on the
assault causing bodily harm. He appeals his conviction and sentence.
[2]
The appellant formally agreed at trial that the
sex act with the complainant took place. He did not testify.
[3]
He appeals the trial judges finding on
credibility of the complainant. He submits that the judge erred by: (i)
bolstering her credibility because she acknowledged her criminal record; (ii)
relying on evidence to support her credibility that was neither independent nor
material; and (iii) finding that she had an excellent recollection of events.
[4]
We accept none of these grounds.
[5]
A trial judge
s finding of credibility is owed a
high degree of deference on appeal. Read as a whole, the trial judges reasons
show he found the complainant to be credible and reliable. He made none of the
three errors alleged. In particular:
1.
The trial judge cautioned himself on the complainants criminal record.
In this context he commented that she readily admitted it. His comment was
responsive to the defence focus on her record during cross-examination. It did
not amount to impermissible bolstering.
2.
There was independent evidence confirming the complainants evidence:
the bus driver and the police officer testified about injuries to her face and
head. The nurse testified about injuries to her buttocks. This evidence was
independent and material.
3.
The trial judge was not required to address every inconsistency in the
complainants evidence. He found her recollection of events to be excellent.
Clearly, he was not referring to individual details such as how many drinks she
had consumed or how certain abrasions happened but rather her recollection of
being violently assaulted and raped.
[6]
We see no error in the trial judges conclusions.
[7]
The appellant was sentenced to 13 years less two years for pre-sentence
custody for the sexual assault. It is acknowledged by the Crown that this
exceeds the maximum sentence of 10 years and is thus an error.
[8]
The conviction appeal is dismissed. The sentence appeal is allowed. The
net sentence is therefore varied to six years, 10 months and two days.
David Watt J.A.
M.L. Benotto J.A.
A. Harvison Young
J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: McMurter v. McMurter, 2021 ONCA 5
DATE: 20210105
DOCKET: C66465
Feldman,
Simmons and Harvison Young JJ.A.
BETWEEN
Kelly
Ann McMurter
Applicant
(Respondent)
and
James
Robert Gordon McMurter
Respondent
(Appellant)
Kelly Ann McMurter, acting in person
Andrew Rogerson, for the appellant
Heard: in writing
On
appeal from the order of Justice Helen MacLeod-Beliveau of the Superior Court
of Justice, dated December 28, 2018, with reasons reported at 2018 ONSC 7604.
COSTS
ENDORSEMENT
[1]
Costs of the appeal are to the respondent on a
partial indemnity scale in the amount of $2,500, inclusive of disbursements and
HST.
K.
Feldman J.A.
Janet
Simmons J.A.
A.
Harvison Young J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Medcof (Re), 2021 ONCA 168
DATE: 20210319
DOCKET: C68714
Watt, Benotto and Jamal JJ.A.
IN THE MATTER OF: William Medcof
AN APPEAL UNDER PART XX.1 OF THE
CODE
Ken J. Berger
,
for the appellant
Erica Whitford
, for the respondent,
Attorney General of Ontario
Leisha Senko, for the respondent,
Person in Charge of the Centre for Addiction and Mental Health
Heard: March 4, 2021 by video
conference
On appeal from the disposition of the
Ontario Review Board dated, July 8, 2020, with reasons dated September 16, 2020.
REASONS FOR DECISION
Background
[1]
The appellant has been under the jurisdiction of the ORB since
2002. In 2001, he attacked his roommate, kidnapped his mother, and threatened
and assaulted his father. On November 29, 2002 he was found not criminally
responsible on account of mental disorder. Thereafter, the appellant generally
resided in minimum and medium secure units of mental health
facilities.
[2]
The appellant has been diagnosed with schizophrenia, substance use
disorder, personality disorder, and exhibitionistic paraphilic disorder. He was
found treatment incapable in 2006 and the Public Guardian and Trustee is his
substitute decision-maker. In 2012 he was discharged to reside in the community
in supportive housing. Since that time, he has been living in housing run by
Ecuhome. He has his own room and shares a kitchen, bathroom and common areas.
He has not been involved in violent or criminal behaviour. He was granted a
conditional discharge in 2017, which was continued in 2018 and 2019.
The Current Disposition
[3]
The appellant had a positive year following the 2019 disposition.
However, he also began testing positive for cocaine in 2019. This, together
with his regular use of marijuana, became a concern of his treatment team
headed by Dr. Pearce. While there were no incidents of violence, on March 4,
2020 he threatened Dr. Pearce and his staff. His family expressed concern with
respect to potential violence.
[4]
The appellant contends that the medical treatment does nothing for him
and he wants to go on a medication holiday to prove that he does not need to
be medicated. He said he will stop his medication if he receives an absolute
discharge. In Dr. Pearces opinion, the medication holiday would need to be
carefully monitored and he would need to abstain from drug use for at least a
month before conducting the medication holiday. If the appellant does not agree
to abstain, then there is a significant risk of decompensation and relapse to
violent behaviour.
[5]
The Board determined that, based on these facts, he remained a
significant threat to the safety of the public and his conditional discharge
should be continued.
Issues on Appeal
[6]
The appellant seeks an absolute discharge. He raises two arguments:
1.
He submits that
Dr. Pearces conclusion that he would stop treatment and decompensate if given
an absolute discharge was not supported by the evidence.
2.
The Boards
reasons were insufficient to support the conclusion that the appellant is a
significant risk to public safety.
Discussion
[7]
The appellant says that the Boards findings that he remains a
significant threat to the safety of the public defies logic and amounts to a
life sentence for something that happened decades ago. In particular, he
points to the fact that there have been no incidents of violence and he has not
been hospitalized for five years. There was no evidence, he submits, that he
would decompensate and become a risk.
[8]
Dr. Pearces conclusions were based on the fact that the appellant
suffers from a major mental illness for which he continues to exhibit symptoms.
He has a lack of insight to the illness and the corresponding risks. As set out
in the hospital report, the appellant intends to stop all medication, and this
creates a serious risk that he will decompensate. The appellant is not willing
to abstain from drug use, which he claims is irrelevant. In fact, a combination
of non-compliance with medication and substance abuse would lead to a return to
psychotic symptoms, which led to the index offences.
[9]
In our view, the Boards conclusion that the appellant poses a
significant threat is reasonable based on the evidence at the hearing.
[10]
We
do not agree that the reasons of the Board were insufficient. They clearly
indicate the reasons for the disposition. The Board referred to the appellants
progress, lack of violent acts and need to abstain from drugs, particularly
cocaine, for at least one month. However, the appellant did not demonstrate
that he is prepared to remain abstinent.
[11]
The
Board concluded:
It is clear from the evidence in the Hospital Report and the
viva voce
evidence of Dr. Pearce that there is a
substantial risk of his continuing to use marijuana and cocaine which will
produce a psychotic reaction and trigger his tendency to do violence.
[12]
We
conclude that the disposition of the Board is reasonable.
[13]
For
these reasons, the appeal is dismissed.
David Watt J.A.
M.L. Benotto J.A.
M. Jamal J.A.
|
COURT OF APPEAL
FOR ONTARIO
CITATION: Mikelsteins v. Morrison Hershfield Limited, 2021
ONCA 155
DATE: 20210312
DOCKET: C66315
Fairburn A.C.J.O., Lauwers and Nordheimer JJ.A.
BETWEEN
Ivars Mikelsteins
Plaintiff (Respondent)
and
M
orrison Hershfield Limited
Defendant (Appellant)
David E. Greenwood and Christopher McClelland, for the
appellant
James D. Heeney and Julia Burke, for the respondent
Heard: in writing
On remand from the order of the Supreme Court of Canada, dated
November 19, 2020.
REASONS FOR DECISION
[1]
On June 20, 2019, we released our decision allowing the appeal from the
judgment of the Superior Court of Justice dated November 22, 2018 in this
matter.
[1]
On November 19, 2020, the Supreme Court of Canada, in response to a motion for
leave to appeal by the respondent, rendered judgment remanding this matter to
this court pursuant to s. 43(1.1) of the
Supreme Court Act
, R.S.C.
1985, c. S-26 for disposition in accordance with its decision in
Matthews
v. Ocean Nutrition Canada Ltd.
,
2020 SCC 26, 449 D.L.R. (4th) 583.
[2]
After the remand was made, this court requested and received written submissions
from the parties.
The principal issue
[3]
The background to this matter is set out in detail in our reasons on the
appeal. It is unnecessary to repeat all of that detail. In brief, the
respondent commenced an action for wrongful dismissal. He then brought a motion
for summary judgment. The motion judge awarded the respondent damages for
wrongful dismissal. That award was not appealed. The motion judge also determined
that the respondent was entitled to an additional payment for the shares that
he held in the appellants parent corporation, Morrison Hershfield Group Inc., and
a further entitlement to a share bonus. Those awards were the subject of the
appeal.
[4]
The respondent was one of a select group of the appellants employees who
were eligible to purchase shares of Morrison Hershfield Group Inc. Those shares
were governed by the terms and conditions of the Amended and Restated Morrison
Hershfield Group Inc. Shareholders Agreement, dated January 18, 2013 (the
Shareholders Agreement). At the time that his employment was terminated, the
respondent owned a total of 5,108 shares.
[5]
Under the terms of the Shareholders Agreement, the respondent, and
other shareholders, were eligible to receive annual Share Bonuses. The share
bonus payable in respect of each share is determined by an objective calculation
based on the companys financial results. The total share bonus payable to each
shareholder depends on the total number of shares that the shareholder had
previously decided to purchase. As we said in our earlier reasons, the share
bonus is not related to the shareholders contributions as an employee of the
appellant. It is, in effect, a dividend.
[6]
With respect to the respondents shareholdings, the motion judge
determined that the respondent was entitled to: (i) hold the shares until the
end of the reasonable notice period (i.e. 26 months after he was notified of
his termination and his association with the appellant had ceased); and (ii)
receive damages for the loss of the share bonus that would have been payable
during such 26-month period.
[7]
Article 3 of the Shareholders Agreement deals with Automatic Transfer
Notices, and applies in situations where, among other things, a shareholder
resigns, is terminated, becomes bankrupt, or dies. Article 3.2 applies in cases
of termination, and states:
A Shareholder whose association with the Corporation and its
Affiliates ceases by reason of termination by the Corporation of his/her
employment with the Corporation and its Affiliates shall, immediately after
such termination, be deemed to have given a Transfer Notice covering all of the
Shares held by him/her on a date which is 30 days from the date he/she is
notified of such termination by the Corporation.
The Shareholders Agreement proceeds to specify that a
shareholder that is deemed to have given a Transfer Notice under Article 3 is
entitled to the Fair Value of his or her shares (as that term is defined in
the Shareholders Agreement).
[8]
Contrary to the motion judges conclusions, we determined that the
respondent was not entitled to have his shares valued as at the end of the
notice period nor was he entitled to the share bonuses during that time.
[9]
The question that is now before us is whether the decision of the
Supreme Court of Canada in
Ocean Nutrition
would direct that different
conclusions ought to have been reached on those two issues. We conclude that it
would not.
[10]
In
Ocean Nutrition
, at para. 55, Kasirer J. concluded that, in assessing
an employees damages arising from a wrongful dismissal, a court should ask
itself two questions:
(i) Would the employee have been entitled to the bonus or
benefit as part of their compensation during the reasonable notice period?
(ii) If so, do the terms of the employment contract or bonus
plan unambiguously take away or limit that common law right?
[11]
One
very important factual point underpins these two questions. They are both
directed at determining the rights of the employee
qua
employee. That
is, they are both directed at determining the damages that an employee is
entitled to arising from a breach of the contract of employment.
[12]
In
this case, the respondents claim to the dividend does not arise from the
breach of his contract of employment. Rather, we were determining the
respondents rights as a shareholder of Morrison Hershfield Group Inc. pursuant
to the Shareholders Agreement. In that regard, it is of importance to remember
that the respondent did not receive his shares in Morrison Hershfield Group
Inc. as some form of compensation as an employee of the appellant. To the
contrary, the respondent was given the opportunity to use his own funds to
purchase shares in Morrison Hershfield Group Inc. When he elected to do so, the
respondents rights regarding his shares were dictated by the terms of the
Shareholders Agreement.
[13]
The
decision in
Ocean Nutrition
does not change the proper analysis to be
applied to the issues raised on the appeal in this case. The respondents
entitlement respecting his shares falls to be determined by his rights as a
shareholder of Morrison Hershfield Group Inc., not by his status as a
terminated employee of the appellant. To conclude otherwise would run the risk
of interfering with the established law on the rights and obligations of
shareholders, much of which is codified in corporate statutes such as the
Business
Corporations Act
, R.S.O. 1990, c. B.16 and the
Canada Business
Corporations Act
, R.S.C. 1985, c. C-44.
[14]
Just
by way of example, s. 32 of the
Business Corporations Act
provides
that a corporation may purchase or redeem any redeemable shares issued by it,
which, in one sense, is what happened in this case. As we observed in our decision,
there are very good reasons why an employee-owned corporation would not wish an
employee to be able to exercise all of the rights of a shareholder once their
employment is terminated.
[15]
We
would add that the treatment of the payment of the amounts under the
Income
Tax Act
, R.S.C. 1985, c. 1 (5th Supp.), does not change the law applicable
to the rights being determined under the Shareholders Agreement.
Other issues raised
[16]
The
respondent raises certain other issues, including the possible application of
the
Employment Standards Act
, 2000
, S.O. 2000, c. 41. With
respect, the remand of this matter does not invite a wholesale reopening of the
appeal and all matters relating to it:
Deslaurier Custom Cabinets Inc. v.
1728106 Ontario Inc.
,
2017 ONCA 293, 135 O.R. (3d) 241, at para. 14,
leave to appeal refused, [2016] S.C.C.A. No. 249. Rather, the remand is
restricted to its terms, which was for disposition in accordance with
David
Matthews v. Ocean Nutrition Canada Ltd.
,
2020 SCC 26.
[17]
None
of the other issues raised by the respondent arise from the decision of
Ocean
Nutrition
. Indeed, the Supreme Court of Canada expressly declined to deal
with the application of minimum employment standards in its decision.
Consequently, those issues are not open for re-argument.
[18]
Finally,
the respondent sought a further oral hearing in this matter. The appellant said
that no further oral argument was required. We agree with the appellant. The
issue to be determined can be properly resolved through the written submissions
of the parties.
C
onclusion
[19]
For
these reasons, having reconsidered our decision in light of
Ocean
Nutrition
,
we affirm our earlier appeal decision. The appellant is entitled to its costs
of the remand proceeding fixed in the amount of $10,000, inclusive of
disbursements and HST.
Fairburn A.C.J.O.
P. Lauwers J.A.
I.V.B. Nordheimer
J.A.
[1]
Mikelsteins v. Morrison Hershfield Limited
,
2019 ONCA 515, 56 C.C.E.L. (4th) 1.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Moar v. McLaughlin, 2021 ONCA 264
DATE: 20210423
DOCKET: C68833
Benotto, Miller and Trotter JJ.A.
BETWEEN
Brianne
Harrison Moar
Appellant
and
Daniel John McLaughlin
Respondent
Maybelline R. Massey, for the appellant
Danica Maslov, for the respondent
Heard and released orally: April 22, 2021 by
video conference
On
appeal from the order of Justice J.R. Henderson of the Superior Court of
Justice, dated October 9, 2020.
REASONS FOR DECISION
[1]
The appellant submits that the motion judge
erred in concluding that a material change in circumstances existed for the
purposes of a motion to change under Rule 15 of the
Family Law Rules
.
[2]
The parties agreed that, pursuant to r. 16, the
issue of whether a material change existed would be determined on a summary
judgment motion. The motion judge concluded that there was a material change of
circumstances.
[3]
The appellant submits that the motion judge
should not have made the order because there was a genuine issue for trial.
[4]
We do not agree. The parties agreed at a case
conference before Broad J. that the issue of whether there was a material
change of circumstances be determined in advance of the motion change by way of
summary judgment.
[5]
The appellant further submits that the motion
judge erred in his application of the test for material change set out in
Gordon
and Goertz
[1996] 2 S.C.R. 27.
[6]
Again, we disagree.
[7]
The respondent has moved, has a new partner and a
change in his work schedule. These factors clearly fall within the
Gordon
and Goertz
analysis. They are relevant to the best interest of the
children, a matter within the discretion of the motion judge.
[8]
The appeal is dismissed with costs in the agreed
upon amount of $3,500 all inclusive.
M.L.
Benotto J.A.
B.W.
Miller J.A.
Gary
Trotter J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Mohamoud v.
Carleton Condominium Corporation No. 25, 2021 ONCA 191
DATE: 20210329
DOCKET: C67919
Tulloch, Miller and
Thorburn JJ.A.
BETWEEN
Sadiya Ali Mohamoud
Applicant (Appellant)
and
Carleton Condominium
Corporation No. 25
Respondent (Respondent)
Gary G. Boyd and Hilary Chung, for the appellant
Melinda Andrews, for the respondent
Heard: November 17, 2020 by video conference
On appeal from the judgment of
Justice Heather J. Williams of the Superior Court of Justice dated December 9,
2019, with reasons reported at 2019 ONSC 7127.
REASONS FOR DECISION
[1]
T
he appellant appeals the order of the application
judge dated December 9, 2019, which dismissed her application under
the
Condominium Act
, 1998, S.O.
1998, c. 19 (the Act).
[2]
The appellant has owned
a unit in the respondents condominium since 2009. The appellant brought an
application against the respondent alleging that: (1) the corporation failed to
properly maintain and repair the common elements of the condominium building
under ss. 89 and 90 of the Act, and (2) it acted in a manner that was
oppressive or unfairly prejudicial, or that unfairly disregarded her interests,
under s. 135 of the Act.
[3]
The application
involved a noise complaint relating to fans located on the roof directly above
the appellants condominium unit. The appellant informed the respondent that
the noise was causing her discomfort in 2014. In 2019, the respondent removed
two fans above the appellants unit. According to the appellant, the removal of
these two fans reduced the noise to a tolerable level. The appellant alleged
that the respondent did not take her complaints seriously, and did not rectify
the problem in a timely manner.
[4]
The appellant asks this
court to set aside the order of the application judge, raising two grounds of appeal:
1.
the application judge erred in using the legal
test of reasonableness when determining whether the respondent corporation
acted oppressively within the meaning of s. 135 of the
Act
; and
2.
the application judge erred by only considering
the applicants reasonable expectation that the respondent would comply with
its maintenance and repair obligations, without also considering her other
reasonable expectations, including that: the respondent would address her
concerns in a timely manner; she could have quiet enjoyment of her unit; the
respondent would act in accordance with the professional advice it received;
and the respondent would take her concerns seriously.
[5]
For the following
reasons, we dismiss the appeal.
A.
The test under s.
135(2) of the act
[6]
The judge dismissed the
application, finding that the respondent met its obligations under the Act. In
particular, she found that the respondent acted reasonably and appropriately when
responding to the appellants noise complaint.
[7]
The appellant agrees
that the application judge properly applied the test of reasonableness when she
assessed whether the respondent breached its obligation to maintain and repair
the common elements of the condominium under ss. 89 and 90 of the Act.
However, she submits that the application judge erred in applying the
same test of reasonableness when determining whether the respondents conduct
was oppressive within the meaning of s. 135 of the
Act
. Put
another way, the appellant contends that the application judge conflated the test
of oppression under s. 135 of the
Act
with the test of reasonableness under ss.
89 and 90
.
[8]
Under s. 135(2) of the Act,
the court must determine whether the impugned conduct is, or threatens to be,
oppressive or unfairly prejudicial to the applicant or unfairly disregards their
interests. The test under s. 135(2) has two prongs. First, the court must
assess whether there has been a breach to the claimants reasonable
expectations. If the answer is yes, the court must then go on to consider
whether the conduct complained of amounts to oppression, unfair prejudice, or unfair
disregard of the relevant interest:
Metropolitan
Toronto Condominium Corporation No. 1272 v. Beach Development (Phase II)
Corporation
, 2011 ONCA 667, 285
O.A.C. 372, at paras. 5-6;
3716724 Canada Inc. v. Carleton Condominium
Corporation No. 375
, 2016 ONCA 650, 61 B.L.R. (5th) 173, at
para. 29
.
[9]
Reading the application
judges reasons in their totality, it is clear that she understood and applied
the correct test under s. 135(2) of the Act. The application judge correctly
sets out the test at para. 36 of her reasons:
A unit owner seeking an oppression remedy under the
Condominium
Act
must show both that there was a breach of their reasonable
expectations and that those reasonable expectations were breached by conduct
legitimately characterized as oppressive. (
Weir
, supra, at paras.
10-11.)
[10]
The application judge also grasped
the nature of the appellants claim in relation to s. 135(2): namely, that the
respondent allegedly ignored her, disbelieved her complaints about the noise
and deliberately dragged its heals when responding to her complaints.
[11]
After thoroughly engaging with
these concerns, the application judge made the following finding:
I find that Ms. Mohamoud had a reasonable expectation that
CCC25 would comply with its statutory obligations to repair and maintain its
common elements. I also find that CCC25 acted reasonably and in compliance with
these obligations.
Stated otherwise, the application
judge found that the appellant failed to satisfy the first prong of the test: the
respondent did not act in a manner that breached the appellants reasonable
expectations because it acted reasonably and complied with its statutory
obligations.
[12]
Moreover, based on the factual
matrix before her, the
application judge was entitled to find that the respondents conduct did not
amount to oppression, unfair prejudice, or unfair disregard of the appellants
interests on the basis that the respondent acted reasonably. In our view, the
evidence, as set out by the application judge, was consistent with the finding
that the respondent did not act in a manner that was oppressive or unfairly
prejudicial to the appellant, or that it unfairly disregarded her interests. In
coming to that determination, the application judge noted that:
1. There was evidence that the fans were
inspected and maintained on a regular basis by a company retained by the
respondent;
2. After the appellant brought her concerns to
the respondents attention, the fans were inspected specifically with a view to
identifying the source of the noise;
3. In August 2014, the respondent retained a
company that inspected the roof of the building and found nothing that was
rattling;
4. In January 2015, the same company inspected
and serviced the fans, and was unable to identify any problems;
5. In the spring of 2015, the appellant
retained a consultant who concluded that none of the noise levels in the
appellants unit exceeded industry guidelines. Highway traffic and a
refrigerator were the sources of the loudest noises in the appellants unit;
6. In June 2016, the company retained by the
respondent inspected the fans and exchanged some of the blower assemblies. The
company placed quieter blowers in the fans above the appellant's unit;
7. In February 2017, the company conducted an
"on/off' test to ascertain which fans caused the noise. The appellant
reported that turning off fans other than those over her own unit eliminated
the noise problem entirely. The company removed those fans;
8. In September 2018, mechanical engineers inspected
the two fans over the appellants unit and concluded that neither fan was
particularly noisy. One of the fans was quiet according to industry standards,
while the other had only a slight bearing noise;
9. The fans over the appellants unit were
serviced on October 5, 2018;
10. When the respondent sought to change the
fans over the appellants unit, the appellants consultant objected to the
installation instructions of the fans' manufacturer, resulting in further
delay;
11. The new fans were installed on July 16,
2019, in accordance with the manufacturer's original instructions, even though
the respondents expert was of the opinion that these fans were not the cause
of the noise in the appellant's unit; and
12. After the fans over the appellants unit
were replaced, the appellant initially said that the noise and vibration
persisted, however her own expert did some testing and reported that the noise
in her unit was at acceptable levels.
[13]
As a result, the application
judge was satisfied that the respondent had addressed the appellant's complaint
in a reasonable manner by meeting with her, communicating with her orally and
in writing, visiting her unit on multiple occasions, retaining contractors and
experts to investigate, and in following the recommendations of the experts.
The application judges finding that the respondents conduct did not amount to
oppression, unfair prejudice, or unfair disregard is entitled to deference on
appeal.
[14]
We find no error in the
decision of the application judge.
[15]
This ground of appeal
is dismissed.
B.
The applicants other
reasonable expectations
[16]
Again, the appellant
submits that the application judge erred by failing to consider her reasonable
expectations that: the respondent would address her concerns in a timely
manner; she could have quiet enjoyment of her unit; the respondent would act in
accordance with the professional advice it received; and the respondent would
take her concerns seriously.
[17]
The appellants
argument is not borne out in the facts, as found by the application judge, and
as reiterated above, in para. 12. The respondent tried to address the
appellants concerns in a timely manner. It also tried to ensure that she had
quiet enjoyment of her unit. The respondent took action even when it was
contrary to the professional advice that it had received. The application judge
specifically found that the respondent took the appellants concerns seriously,
and that the respondent spent considerable amounts of money trying to address
them.
[18]
We find no error in the
decision of the application judge. It appears the appellant is simply
attempting to re-litigate the factual determinations made by the application
judge.
[19]
We give no effect to
this ground of appeal.
C.
Conclusion and
Disposition
[20]
The appeal is
dismissed. As noted in the hearing, costs are awarded to the respondent in the
amount of $12,000, inclusive of
disbursements and HST
.
M.
Tulloch J.A.
B.W.
Miller J.A.
J.A.
Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Motuz (Re), 2021 ONCA 247
DATE: 20210420
DOCKET: C68632
Fairburn A.C.J.O., Doherty and
Sossin JJ.A.
IN THE MATTER OF: Gary Robert Motuz
AN APPEAL UNDER PART XX.1 OF THE
CODE
Dean Embry, for the appellant, Gary
Robert Motuz
Gerald Brienza, for the respondent,
Attorney General of Ontario
Julia Lefebvre, for the respondent, Person
in Charge of Waypoint Centre for Mental Health Care
Heard and released orally:
April 16, 2021 by video conference
On appeal from the disposition of the
Ontario Review Board, dated July 13, 2020, with reasons dated August 12, 2020.
REASONS FOR DECISION
[1]
This is an appeal from the July 13, 2020
disposition of the Ontario Review Board (Board), imposing a detention
order.
[2]
On February 24, 2021, the Board convened the
appellants annual hearing pursuant to s. 672.81(1) of the
Criminal Code
,
R.S.C. 1985, c. C-46,
resulting in another detention order. The
reasons for the most recent detention order were released on March 18, 2021.
Those reasons are largely the same as the reasons released on August 12, 2020.
[3]
As the July 13, 2020 disposition is no longer in
effect, the parties were asked to provide written submissions on the question
of mootness ahead of todays hearing. They were also permitted to make oral
submissions on the question of mootness this morning.
[4]
All parties agree that the matter is moot.
[5]
The appellant argues, though, that because the
reasons for the current disposition are largely the same as the reasons for the
now moot disposition, the March 18, 2021 reasons should simply be incorporated
into the present appeal without the need for new or additional arguments.
[6]
In oral submissions today, the Crown has taken
the position that the matter is moot and should not be heard by this court
without the benefit of a full record.
[7]
The Person in Charge of Waypoint Centre for
Mental Health Care agrees with the Crown that this court should not exercise
its discretion to hear the appeal today.
[8]
We agree that this appeal is moot, and we find
that it should not be heard today.
[9]
The appellants request is to attempt to turn an
appeal from the old disposition into an appeal from the new disposition. To be
clear, the new disposition has not been appealed from and there is no record
before this court as it relates to the new disposition. On their face alone,
the reasons for the new disposition demonstrate that things have changed to
some extent between the two dispositions. Counsel are in agreement that, among
other things, there has been a fairly recent decompensation over the winter.
Not only are we without a transcript of the evidence upon which the
February 24, 2021 disposition rests, but we are also without the most recent
hospital report setting out the appellants progress and status between the July
13, 2020 disposition and the February 24, 2021 disposition.
[10]
We decline to determine the merits of an appeal
without an appropriate record, particularly an appeal that rests on the
question of the reasonableness of the Boards disposition.
[11]
The appeal from the 2020 order is therefore dismissed
as moot.
[12]
If the appellant commences an appeal from the
February 24, 2021 disposition, this court will endeavour to find as early a date
as possible in the circumstances for the hearing of the appeal.
Fairburn
A.C.J.O.
Doherty
J.A.
L.
Sossin J.A.
|
COURT
OF APPEAL FOR ONTARIO
CITATION: Nagpal v. IBM Canada Ltd., 2021
ONCA 274
DATE: 20210430
DOCKET: C67398
Doherty, Pepall and Thorburn
JJ.A.
BETWEEN
Vinay Nagpal
Plaintiff
(Respondent)
and
IBM
Canada Ltd.
Defendant
(Appellant)
Jennifer Dolman and Aislinn Reid, for
the appellant
IBM Canada Ltd.
Michael N. Freeman, for the respondent Vinay
Nagpal
Heard: February 16, 2021 by videoconference
On appeal from
the judgment of Justice Paul B. Schabas of the Superior Court of Justice, dated
July 30, 2019, with reasons reported at 2019 ONSC 4547, 2019 C.L.L.C. 210-065.
Thorburn J.A.:
A.
OVERVIEW
[1]
This is an appeal of an order dismissing IBM
Canada Ltd.s (IBM) motion for summary judgment and granting summary judgment
in favour of IBMs former employee, Vinay Nagpal.
[2]
In so doing, the motion judge held that IBM had
not established that Mr. Nagpal had resigned, abandoned his position at IBM,
or that his contract of employment was frustrated. These were the issues placed
before the motion judge by IBM.
[3]
First, the motion judge held that, there was no
clear and unequivocal resignation by Mr. Nagpal. Nor can it be said that Mr.
Nagpals actions, viewed objectively by a reasonable person, clearly and unequivocally
indicated an intention to no longer be bound by his employment contract with
IBM. As such, the motion judge held that Mr. Nagpal did not resign or abandon
his employment with IBM.
[4]
Second, the motion judge found that IBM could
not rely on the doctrine of frustration as IBM had no basis to find that his
illness was permanent, or even long-term at the time his employment ended.
[5]
Third, although he held it was not necessary for
his decision, the motion judge was not satisfied that the Short-Term Disability
(STD) Policy formed part of the employment contract which could be relied on
by IBM to support its contention that Mr. Nagpal resigned.
[6]
On the motion, the parties had agreed that,
should IBM be unsuccessful in establishing that Mr. Nagpal either resigned,
abandoned his position, or that the contract was frustrated, it would follow
that Mr. Nagpal had been wrongfully dismissed. Noting this concession, the
motion judge granted Mr. Nagpal summary judgment for wrongful dismissal, with
damages to be assessed.
[7]
On this appeal, IBM claims the motion judge:
1.
Made palpable and overriding errors by
misapprehending evidence that Mr. Nagpal had resigned, abandoned his
employment or that his contract of employment was frustrated;
2.
Erred in holding that the STD Policy was not
part of Mr. Nagpals employment contract and that Mr. Nagpal was not estopped
from denying that the STD Policy was enforceable; and,
3.
Erred in finding that IBM had a duty to further
discuss Mr. Nagpals medical condition with him.
[8]
For the reasons that follow, I would dismiss the
appeal.
B.
BACKGROUND
Mr. Nagpals employment history
[9]
Mr. Nagpal was employed by IBM for over two
decades and spent fifteen years in leadership or management positions.
[10]
In 2011, he applied for and was granted a new
leadership position. Shortly thereafter, he began experiencing stress and
mental health problems. Mr. Nagpal attributed these difficulties to a
challenging employee and he sought support from his supervisor, Rick Simpson. The
motion judge found that, by March 2012, Mr. Simpson was aware of Mr.
Nagpals stress and mental health challenges but took few steps to address them.
By November 2012, Mr. Simpson was tracking Mr. Nagpals absences from work and,
in January 2013, Mr. Simpson gave Mr. Nagpal a poor performance evaluation,
the first he had received.
[11]
In March 2013, Mr. Nagpal called in sick. Mr.
Nagpal advised IBM that his doctor recommended he take six weeks off and he
commenced a leave of absence. He was referred to Manulife Financial Corp.
(Manulife), which administers IBMs STD Policy.
The STD Policy
[12]
Under the STD Policy, qualified IBM employees with
at least five years of service are provided 100% of their salary for the first
26 weeks of disability leave. To qualify, an employee must have an illness or
injury that prevents the employee from performing the essential duties of the
occupation. Documentation must be provided to Manulife in support of the claim.
[13]
If short-term disability benefits are denied by
Manulife, the employee may either return to work, appeal Manulifes decision
and remain on an administrative unpaid leave of absence until the appeal is
adjudicated by Manulife, or apply for long-term disability. The STD Policy also
provides that:
If you have not taken any action in support of
your appeal within one month of the commencement of the unpaid leave, IBM will
consider that you have abandoned your appeal. In this instance
you will be
expected to return to work immediately or will be presumed to have voluntarily
resigned your employment with IBM
. [Emphasis added.]
[14]
While Manulife administers the STD Policy on
behalf of IBM, the policy provides that IBM in its sole discretion shall
decide who is properly entitled to STD benefits. It also provides that IBM reserves
the right to modify, discontinue, suspend, or improve its disability policies
and, further, that [n]othing contained in [the policy] shall be construed as
creating an express or implied obligation on the part of IBM to maintain its
disability policies.
Mr. Nagpals application for STD benefits
[15]
In May 2013, Mr. Nagpal was told he had to
provide documentation to support his claim for short-term disability benefits
to Manulife.
[16]
In June, Mr. Nagpals psychiatrist completed
Manulifes short questionnaire confirming that he was being treated for
depression and anxiety, among other things.
[17]
In early July, his psychologist completed
Manulifes questionnaire, advising that Mr. Nagpal had poor stress coping,
cognitive impairment, limited energy and tolerance and that the duration of
this was unknown. She stated that return to work is premature and would
likely exacerbate symptoms and stall recovery and was not recommended. Manulife
acknowledged receipt of these materials, thanked Mr. Nagpal for his quick
response, and told him that, [a]s the information is reviewed, we will
follow-up with you.
[18]
Neither Mr. Nagpals psychiatrist nor
psychologist provided their notes and reports to Manulife, as requested by the
questionnaire. Manulife never followed up to request these additional
materials, nor did Mr. Nagpal receive copies of the information his treating professionals
sent to Manulife.
Manulifes response
[19]
On July 16, Manulifes medical consultant, Dr.
Hines, reviewed Mr. Nagpals file. On the basis of the responses to
questionnaires, he observed that there was some improvement in Mr. Nagpals
condition. He acknowledged that Mr. Nagpal was on medication for
depression and that there were workplace issues but stated that Mr. Nagpal should
be able to receive treatment while working. He did not contact Mr. Nagpals
doctors. The motion judge noted that it was difficult to reconcile Dr. Hines
conclusion with the views of those treating Mr. Nagpal.
[20]
On July 19, Manulife told Mr. Nagpal that his benefits
would be terminated based on the information received from his two physicians
and Dr. Hines assessment. Mr. Nagpal was advised that he could appeal but that
there would be no point in appealing unless he submitted information that has
not already been reviewed.
[21]
On July 22, IBM, through Mr. Simpson, informed
Mr. Nagpal that he could return to work or appeal Manulifes decision, and that
he had until August 22, 2013 to provide the appropriate documentation required
to support the appeal to Manulife, otherwise IBM would consider the appeal
abandoned and you will be required to return to work or will be considered to
have voluntarily resigned your employment.
The termination of Mr. Nagpals benefits and
IBMs response
[22]
Mr. Nagpal did not commence an appeal and provided
no new information to Manulife, although his benefits were to expire on July
30. He contacted his doctors, who confirmed that Manulife had not requested any
additional information and that they were unable to offer anything new to
Manulife. Mr. Nagpal deposed that, at this point, he thought IBM was putting
him between a rock and a hard place and that he saw no point in appealing, as
Manulifes representative had told him there was nothing to be gained.
[23]
Instead, he engaged legal counsel, Mr. Freeman,
who advised IBM by letter dated July 29 that:
1.
Mr. Nagpal
cannot return to work
(emphasis added);
2.
[T]here is no new information that would be brought
forward in support of an appeal other than what was provided by Mr. Nagpals
doctors on June 2 and July 2, 2013;
3.
The doctors would be pleased to provide updated
information if required; and,
4.
Mr. Nagpal has no intention of resigning, nor
will he be cajoled into doing so. He is, however, prepared to enter into
negotiations that might lead to the development of an exit package whereby he
would agree to leave IBM provided that he is reasonably compensated for doing
so
.
5.
He looked forward to the courtesy of your
prompt reply.
[24]
Mr. Nagpals short-term disability benefits
expired the following day.
[25]
No one at IBM responded to Mr. Nagpal counsels July
29, 2013 letter until September 10, when IBM offered Mr. Nagpal three options:
(1) a return-to-work meeting to discuss your barriers to returning to work;
(2) communicate directly with IBM to address any workplace concerns; and/or
(3) contact the confidential employee assistance provider for information about
services such as Professional Counselling, Family Support, Nutrition and
Health Coaching. He was told that if he did not engage any of these processes
by September 27, 2013 we will consider you to have voluntarily resigned on
September 27, 2013.
[26]
On September 19, his counsel responded, stating that
Mr. Nagpals healthcare providers advise that he is not capable of returning
to work even with some form of accommodation
. [T]he only satisfactory
resolution is that if Mr. Nagpals disability cannot be reinstated, his
salary should continue to be paid to him. It appears the intent is to either
starve Mr. Nagpal into settlement or force him to resign from his employment.
Please rest assured that neither of these will happen.
[27]
Mr. Nagpals counsel received no response from
IBM. On October 9, the company wrote to Mr. Nagpal stating that it considered him
to have abandoned [his] employment with IBM Canada Limited. While there were
further discussions with Mr. Nagpals counsel, IBM did not reinstate Mr. Nagpal
as requested or provide him with an exit package.
[28]
In December 2013, Mr. Nagpal commenced an action
against IBM alleging, among other things, wrongful or constructive dismissal. In
May 2014, he also commenced an action against Manulife, alleging breach of
contract, which was settled by payment of a lump sum of an undisclosed amount
prior to the motion on appeal.
Mr. Nagpals ongoing health challenges
[29]
There is no dispute that Mr. Nagpal was unwell
in 2013 and continued to have mental health challenges for several years
following these events. The motion judge noted that, [i]n the litigation,
additional medical information, in the form of notes and reports have been
produced that may well have supported continuing STD, and providing [long-term
disability], benefits.
[30]
The motion judge found that these documents were
in the doctors possession but not Mr. Nagpals and, as noted above, that Mr.
Nagpal was unaware of the contents of the documents submitted to Manulife.
C.
ANALYSIS OF THE Issues
1.
Did the motion judge make palpable and
overriding errors of fact in holding that Mr. Nagpal neither resigned nor
abandoned his employment, nor was the contract frustrated?
The law
[31]
As the motion judge observed, resignation must
be clear and unequivocal. The evidence must objectively reflect an intention to
resign, through words or conduct. Context is important. The totality of the
circumstances must be considered:
Kieran v. Ingram Micro Inc.
(2004)
,
189 O.A.C. 58 (C.A.), at para. 27.
[32]
The test for abandonment by contrast, is whether
the statements or actions of an employee, viewed objectively by a reasonable
person, clearly and unequivocally indicate an intention to no longer be bound by
the employment contract and, in particular, the implied term of every
employment contract that the employee must attend work unless excused or unable:
Betts v. IBM Canada Ltd.
, 2015 ONSC 5298, 2016 C.L.L.C. 210-003 (
Betts
(ONSC)
), at para. 57, affd 2016 ONSC 2496, 31 C.C.E.L. (4th) 60 (Div.
Ct.) (
Betts (Div. Ct.)
);
Pereira v. The Business Depot Ltd.
,
2009 BCSC 1178
, at para. 29,
revd on
other grounds, 2011 BCCA 361
,
20 B.C.L.R.
(5th) 295
.
[33]
A contract is frustrated where, without default
of either party, a contractual obligation has become incapable of being
performed because the circumstances in which performance is called for would
render it a thing radically different from that which was undertaken by the
contract:
Duong v. Linmar Corp
, 2010 ONSC 3159, 82 C.C.E.L. (3d) 84,
at paras. 33-36, affd
2011 ONCA 38 and
Naylor Group Inc. v. Ellis-Don Construction
Ltd.
, 2001 SCC 58, [2001] 2 S.C.R. 943 at 967-968.
[34]
The determination of whether a temporary
incapacity to work constitutes frustration is also contextual. Illness alone is
not a frustrating event and one must look at the length of the illness in
relation to the duration of the employment contract:
Duong
, at para.
35;
Antonacci v. Great Atlantic & Pacific Company of Canada Ltd.
(1998),
35 C.C.E.L. (2d) 1 (Ont. C.J.), at para. 37, affd 128 O.A.C. 236 (C.A.), at
paras. 9-11.
[35]
Evidence that relates to the post-termination
nature and extent of an employees disability is permitted only if that
evidence sheds light on the nature and extent of the employees disability at
the time of the employees dismissal:
Ciszkowski v. Canac Kitchens
,
2015 ONSC 73, 20 C.C.E.L. (4th) 171, at para 156.
The motion judges decision
[36]
The motion judge found that Mr. Nagpal said clearly,
through his lawyer, that he had no intention of resigning or abandoning his
employment.
[37]
He rejected IBMs argument that, notwithstanding
these statements, Mr. Nagpals conduct in failing to appeal Manulifes
decision or return to work amounted to abandonment or resignation. In his view,
Mr. Nagpals conduct could not be looked at in isolation. IBM ignored the letters
from Mr. Nagpals lawyer and simply relied on the process set out in the STD Policy,
the application of which, it had delegated to Manulife. When that ran its
course, IBM presented Mr. Nagpal with options that all contemplated a return to
work, even though IBM knew Mr. Nagpal had been on STD leave for four
months due to mental health issues, and had been told by Mr. Nagpals lawyer
that Mr. Nagpals treating professionals had advised him against returning to
work.
[38]
The motion judge observed that IBM made no
attempt to engage with Mr. Freeman or obtain any further information about
Mr. Nagpals condition, despite the fact that IBM knew he was under medical
care
. While the motion judge noted that Mr. Freeman failed to identify the
gap in information [provided by Mr. Nagpal] or pursue an appeal [with Manulife]
which might have disclosed more about Mr. Nagpals condition to IBM, this alone
did not mean Mr. Nagpal resigned or abandoned his employment.
[39]
Finally, he considered IBMs argument that the
STD Policy was part of Mr. Nagpals contract of employment such that Mr.
Nagpal was deemed to have voluntarily resigned. The motion judge found that the
STD Policy was not part of the employment contract that could be relied upon by
IBM to conclude that he had resigned but held that this finding was not
necessary for his decision. [H]aving regard to the entire factual context, he
held that Mr. Nagpal did not resign, nor did his actions, viewed objectively,
indicate that he no longer intended to be bound by the terms of his employment
contract.
[40]
Moreover, at para. 52, he held that the contract
of employment was not frustrated because when his employment was terminated:
IBM had very limited evidence of Mr. Nagpals
condition, and no basis to find that his illness was permanent, or even
long-term. It made no inquiries either. To the extent that evidence
subsequently disclosed demonstrated that he had a longer-term illness, this was
something that could easily be tolerated by a large company like IBM. An
ability to tolerate long-term absences is indicated by the availability of
long-term disability benefits and by the fact that had Mr. Nagpal appealed
Manulifes decision his employment status would have continued, albeit without
pay.
[41]
Since IBM conceded on the motion for summary
judgment that Mr. Nagpal was wrongfully dismissed if IBMs arguments regarding
resignation, abandonment, and frustration were unsuccessful, the motion judge
granted summary judgment in favour of Mr. Nagpal.
Analysis and conclusion
[42]
There is no dispute that deference is owed to
the motion judge on appeal. Whether or not there is a genuine issue requiring
trial is a question of mixed fact and law. Absent an error in principle or an
error with regard to a purely legal question, the motion judges findings should
be overturned only where there is palpable and overriding error:
Hryniak v.
Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 80-84.
[43]
I see no error in the motion judges finding
that IBM did not satisfy its onus to establish that Mr. Nagpal resigned or
abandoned his employment on or before October 9, 2013, because (i) he and his
counsel made clear and unequivocal assertions that he was not resigning or
abandoning his employment; (ii) he advised IBM that he was suffering from ongoing
mental health issues and, (iii) Mr. Nagpals lawyer told IBM that Mr. Nagpals healthcare
providers said he was incapable of returning to work and they would be
pleased to provide updated information if required.
[44]
Based on this undisputed evidence, I find there
was no palpable and overriding error in the motion judges findings of fact or
his conclusion that, viewed objectively, Mr. Nagpals actions do not reflect a
clear intention to resign nor do they indicate an intention to no longer be
bound by the employment contract. As discussed in greater detail below, nor do I
accept IBMs argument that, notwithstanding this evidence, Mr. Nagpal resigned
by operation of the STD Policy. As such, IBMs argument that the motion judge erred
in finding that Mr. Nagpal neither resigned nor abandoned his employment must fail.
[45]
I further find that the motion judge made no legal
error in concluding that the contract of employment was not frustrated.
[46]
IBM claims the motion judge made a palpable and
overriding error of fact by failing to consider evidence that, at the time of Mr.
Nagpals termination of employment, there was no reasonable likelihood of him
returning to work at IBM within a reasonable period and that the contract of
employment was therefore frustrated. This evidence was in the form of letters
from legal counsel referenced above, and medical evidence.
[47]
I disagree. IBMs argument on the motion and
before this court was that it was not provided with sufficient information to
know the extent of Mr. Nagpals illness or when he could return to work. Since
IBM did not know and did not ask Mr. Nagpals counsel to provide the
information from Mr. Nagpals treating medical professionals, whom he said
would be pleased to provide updated information if required, IBM could not
satisfy its onus to establish that the contract of employment was frustrated at
the time his employment terminated.
[48]
IBM cited
Ciszkowski
to support its
position on appeal that post-termination evidence is permitted so long as it
relates to the nature and extent of an employee's disability at the time of
termination of employment.
[49]
The
Ciszkowski
decision was noted by
the motion judge. He held, however, that the case also provides that an
employer is not permitted to rely on post‑termination evidence if it is
not relevant to the dismissal date. The medical notes IBM introduced on the
motion were written prior to Mr. Nagpals dismissal but were not in IBMs possession
at the time of dismissal. They are evidence that demonstrates only that, sometime
later, IBM discovered he had a longer-term illness.
[50]
Moreover, the letters from Mr. Nagpals lawyer, which
were available to IBM at the time his employment was terminated, were before
the motion judge and his interpretation of those letters attracts deference. The
letters do not establish that Mr. Nagpals illness was so severe that he was
likely unable to continue his employment after the expiration of the term of IBMs
long-term disability policy.
[51]
For these reasons, IBMs claim that the contract
of employment was frustrated must fail.
2.
Did the motion judge err in holding that the STD
Policy was not part of Mr. Nagpals employment contract?
[52]
IBM raises several arguments concerning the motion
judges treatment of the STD Policy. IBM claims (i) the motion judge erred by
granting summary judgment on a basis not pleaded, namely that the STD Plan did
not form part of Mr. Nagpals contract of employment; (ii) the motion judge
applied incorrect legal principles in determining that the STD Policy did not
form part of the contract of employment; and in any event, (iii) Mr. Nagpal was
estopped from denying the enforceability of the STD Policy.
[53]
In short, IBM claims that the STD Policy confers
benefits on employees that they are not otherwise entitled to under statute or
common law. The condition of receiving those benefits is that employees comply
with the terms set out in the policy. As such, IBM claims the motion judge was
wrong to decide that the STD Policy did not form part of the contract of
employment and erred in failing to give effect to the STD Policys presumption
of resignation.
[54]
As noted by IBM, this STD Policy has been found
by other courts to be enforceable, insofar as noncompliance with procedures set
out in the policy (i) may justify dismissal or (ii) may support a finding of resignation
or abandonment:
Betts (ONSC)
, at para. 62;
Betts
(Div.
Ct.)
, at para. 19.
[55]
The motion judge nonetheless held that the STD Policy
could not be relied on by IBM to conclude that Mr. Nagpals failure to appeal
Manulifes decision and his subsequent failure to return to work amounted to a
resignation. He observed that termination provisions rebutting an employees
common-law entitlement to termination only on reasonable notice require clear,
express, and unambiguous language in the contract of employment. In his view, the
STD Policy did not form part of the contract of employment because there was no
evidence of a common intention to be bound by its terms, as IBM could change
those terms unilaterally at any time. His analysis of this issue is consistent with
the authorities in
Leeming v. IBM Canada Ltd.
, 2015 ONSC 1447, at
paras. 48-51;
Rahemtulla v. Vanfed Credit Union
(1984), 51 B.C.L.R.
200 (S.C.), at paras. 10-28, per McLachlin J. (as she then was);
Cheong v.
Grand Pacific Travel & Trade (Canada) Corp.
, 2016 BCSC 1321, 35
C.C.E.L. (4th) 316, at para. 48.
[56]
He held however, at para. 45, that it was not
necessary for him to decide whether the STD Policy formed part of Mr. Nagpals
contract of employment.
[57]
I agree with the motion judge that it is not
necessary to decide whether this STD Policy forms part of the contract of
employment because, even if it were part of the employment contract, the
provision of the STD Policy at issue provides only that Mr. Nagpal will be
presumed
to have voluntarily resigned (emphasis added).
[58]
I accept that, regardless of whether it forms
part of the contract of employment, the presumption contained in the STD Policy
could be relevant to a determination of whether Mr. Nagpal in fact clearly and
unequivocally resigned his employment, as suggested by the Divisional Court in
Betts
,
at para. 19. But this presumption must be looked at in the context of the other
evidence that (i) Mr. Nagpal and his counsel clearly and consistently said
that he
did not
intend to resign, and (ii) the above medical opinions substantiate
Mr. Nagpals claim that he was suffering from mental health issues and there
were concerns about his ability to return to work. Even if the presumption of
resignation were part of the contract of employment, it was open to the motion judge
to find that the evidence, taken as a whole and viewed objectively, does not clearly
and unequivocally indicate Mr. Nagpals intention to resign or abandon his
employment contract, particularly given the evidence that he was unable to work
when he was seen by his psychologist.
[59]
In my view, Mr. Nagpals conduct, and that of
his lawyer, was not without fault. But the motion judge was alive to these
issues. As he noted, [e]ach case turns on its own facts. He considered and
distinguished
Betts
and found on the evidence before him that,
notwithstanding the language of the STD Policy, Mr. Nagpal did not resign.
This finding is entitled to deference.
[60]
I cannot accept IBMs argument that the motion
judge erred by deciding the motion on a basis not pleaded by Mr. Nagpal. IBM
raised the effect of the STD Policy on its motion; Mr. Nagpal was entitled to
dispute IBMs assertions. The motion judge was invited to consider the effect
of the STD Policy and, in any event, did not decide the motion on the basis of its
unenforceability. Moreover, there was no unfairness in granting Mr. Nagpal
summary judgment given IBMs concession that liability would follow from the
failure of its motion.
[61]
Finally, because the motion judge did not decide
the motion for summary judgment on the basis of the enforceability of the STD
Policy, I need not address IBMs estoppel argument.
3.
Whether the motion judge erred in finding that
IBM had a duty to discuss Mr. Nagpals medical condition further with him
[62]
IBM also claims that the motion judge erred by
asserting that IBM had a duty to discuss Mr. Nagpals medical condition with
him.
[63]
The motion judge remarked, at para. 38, that:
IBM should have done more when Mr. Nagpal
clearly expressed an intention to return to work when he was able to do so and
said he could not do so because of his continuing illness, on the advice of his
doctors. Instead, on September 10, rather than reaching out to Mr. Freeman [Mr.
Nagpals lawyer] and inquiring into why Mr. Nagpal, a senior, a [sic] long-time
employee was not able to return to work, Ms. Runnalls [from IBM] gave him an
ultimatum and Mr. Simpson [from IBM] initiated steps to permanently replace Mr.
Nagpal.
[64]
This statement was made in the context of the
motion judges analysis of whether IBM had established that Mr. Nagpal resigned
or abandoned his employment, not in the context of a free-standing duty on
IBMs part.
[65]
Furthermore, as noted at para. 30 of the motion
judges reasons, the parties agreed that unless IBM was able to establish that
Mr. Nagpal resigned or abandoned his employment, or that his contract of
employment was frustrated, IBM would concede that Mr. Nagpal was wrongfully
dismissed.
[66]
Consistent with that agreement, the motion judge
held, at para. 54 of his reasons, that:
In light of my findings that Mr. Nagpal did
not resign or abandon his employment, and that the employment contract was not
frustrated, IBMs motion for summary judgment is dismissed. It follows, then,
that Mr. Nagpal was wrongfully dismissed, and I grant summary judgment in
favour of the plaintiff accordingly. Although Mr. Nagpal brought no motion
for summary judgment, the Court can grant judgment in such circumstances when
all of the relevant evidence is before the Court, as here, and where, as here,
the parties agreed that the only
remaining issue if IBM failed on its motion, is to determine damages
.
[Emphasis added]
[67]
Given the above concession
that the wrongful dismissal claim succeeds if the claims of
resignation, abandonment, and frustration are unsuccessful, the only remaining
issue is the determination of damages.
D.
CONCLUSION
[68]
For the above reasons, I would dismiss the
appeal and remit the issue of damages to the motion judge.
[69]
The parties did not reach an agreement on costs
of the appeal and the motion below. I would order that, if the parties are
unable to reach an agreement, the respondent shall make written submissions,
not exceeding five pages, within 14 days of the release of these reasons. The
appellant shall make written submissions, not exceeding five pages, within 10
days after the respondent makes his submissions.
Released:
April
30, 2021 D.D.
J.A.
Thorburn J.A.
I
agree. Doherty J.A.
I
agree. S.E. Pepall J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Nemchin v. Green, 2021 ONCA 342
DATE: 20210519
DOCKET: C67869
Roberts, Trotter and Thorburn
JJ.A.
BETWEEN
Tatiana Nemchin
Plaintiff (Appellant)
and
Yvonne Green
Defendant
(Respondent)
Joseph Y. Obagi and Elizabeth A.
Quigley, for the appellant
Stephen G. Ross, Thomas Macmillan and
Meryl Rodrigues, for the respondent
Heard: October 27, 2020 by
video conference
On appeal
from the order of Justice Sylvia Corthorn of the Superior Court of Justice,
dated October 28, 2019, with reasons reported at 2019 ONSC 6243.
COSTS ENDORSEMENT
[1]
On April 16, 2021 we allowed
the appeal and amended various paragraphs of the trial judges October 28, 2019
order. The trial judge had ordered the appellant to pay to the respondent an
additional amount to top up the appellants assigned benefits under the Sun
Life income continuation plan to account for Sun Lifes deduction of income
taxes at source. We set aside that portion of the order and required the
respondent to reimburse the appellant for any top up amounts paid by the
appellant pursuant to the order. We granted the appellant her partial indemnity
costs in the agreed upon amount of $30,000.
[2]
We invited the parties to
make further written submissions about the costs of the motion before the trial
judge if they could not agree on their disposition in the light of our
decision. They could not and we have reviewed their costs submissions.
[3]
In her March 3, 2020
endorsement, reported as
Nemchin v. Green
, 2020 ONSC 1375, the trial
judge disposed of the costs related to two motions: she awarded the respondent
costs for its successful assignment and prejudgment interest motion but concluded
that there should be no order with respect to costs for the second motion
dealing with various aspects of the treatment of the Sun Life benefits which
culminated in her October 28, 2019 top up order (the top up motion). The
trial judge was of the view that both parties were responsible for the lack of
agreement reached with respect to the terms of the assignment of the
appellants rights under the Sun Life plan.
[4]
The appellant seeks costs
related to the top up motion. The respondent says there should be no costs. In
the event that we award costs to the appellant, the parties have agreed that
costs should be in the amount of $10,000.
[5]
We agree that the appellant
is entitled to costs.
[6]
While, as the respondent
points out, the parties respective submissions were developed somewhat
differently on appeal, this was understandable in the circumstances as the
parties had to respond to the trial judges unanticipated top up order. As the
trial judge noted, the terms of her order differ from the specific terms
proposed by counsel for the parties during submissions.
[7]
The tax treatment of the
assigned benefits proved a stumbling block for the parties agreement on the
terms of the assignment. Had the parties sought an advance ruling from the CRA
on the tax treatment of the benefits, as suggested by the appellant, the tax treatment
issue could have been ascertained and an agreement more likely achieved. The
top up motion could have been avoided or, at the very least, could have
proceeded on a more certain factual footing. Instead, both the top up motion
and the resulting appeal were argued without a concrete understanding of the
tax consequences of the assignment from the CRAs perspective.
[8]
Moreover, as we noted in
paragraph 41 of our reasons disposing of the appeal, the appellant should be
relieved of the financial burden related to the implementation of the assignment
of her rights under the Sun Life plan for the period of the assignment. As a
result, she is entitled to her costs of the motion to deal with the mechanical
aspects of the assignment.
[9]
Accordingly, the respondent
shall pay to the appellant the agreed upon amount of $10,000 for her costs in
relation to the top up motion.
L.B.
Roberts J.A.
Gary
Trotter J.A.
J.A.
Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Nemchin v. Green, 2021 ONCA 238
DATE: 20210416
DOCKET: C67869
Roberts, Trotter and Thorburn
JJ.A.
BETWEEN
Tatiana Nemchin
Plaintiff (Appellant)
and
Yvonne Green
Defendant
(Respondent)
Joseph Y. Obagi and Elizabeth A.
Quigley, for the appellant
Stephen G. Ross, Thomas Macmillan and
Meryl Rodrigues, for the respondent
Heard: October 27, 2020 by
video conference
On appeal
from the order of Justice Sylvia Corthorn of the Superior Court of Justice,
dated October 28, 2019, with reasons reported at 2019 ONSC 6243.
Roberts
J.A.:
Overview
[1]
The appellant appeals from
the trial judges order requiring her to top up the amount of the long-term
disability benefits that she assigned to the respondents insurer pursuant to
s. 267.8(12) of the
Insurance Act
, R.S.O. 1990, c. I.8.
[2]
Following the successful
trial of her action, the appellant was awarded substantial damages against the
respondent. The respondent then moved under s. 267.8(12) of the
Insurance
Act
for an order requiring the appellant to assign her rights to the
benefits she receives under an income continuation plan to the respondents
insurer. The trial judge granted the respondents request and included an additional
order that the appellant
top up any amount
paid from her insurer, Sun Life Assurance Company of Canada, to the
respondents insurer, Aviva Insurance Company of Canada, to account for the
fact that Sun Life deducted applicable income taxes from its payments to the
appellant.
[3]
While no longer contesting
the assignment of her benefits to the respondents insurer, the appellant
submits that the trial judges order was contrary to the principles of natural
justice and exceeded her jurisdiction because neither party sought the top up
that she ordered. Moreover, the appellant argues, the trial judge erred in her
interpretation of s. 267.8 of the
Insurance Act
.
[4]
The appellant asks that the trial
judges top up order be set aside, that the respondents insurer repay all top
up amounts to the appellant, plus interest, and that the respondents insurer
be required to bear all costs necessary to address the tax and other implications
of the assignment of the appellants benefits.
[5]
For the reasons that follow,
I would allow the appeal and grant the requested relief.
Background
[6]
The appellant sustained
serious injuries and became totally disabled as a result of a motor vehicle
accident involving the respondent. The jury determined the respondent was 90%
liable for the accident. The appellant was found 10% contributorily negligent. On
April 5, 2017 the jury awarded the appellant significant damages because of her
injuries. With respect to her future loss of income claim, the head of damages
relevant to this appeal, the appellant received an award of $540,000, net of a
10% reduction for the appellants contributory negligence.
[7]
The appellants injuries
triggered coverage for long-term disability income continuation benefits from
Sun Life, her employers group benefits insurer. Both the appellant and her
employer had contributed to the plan. As a result, Sun Life deducted and remitted
income taxes from its payments to the appellant under the plan and provided to the
appellant an annual T4A slip for the gross benefit. In the period between the
April 5, 2017 judgment and the payment of the judgment damages by the
respondents insurer on November 14, 2019
[1]
, the appellant received from Sun
Life net after-tax payments totalling $104,162.34.
[8]
Following the jurys
verdict, the respondent brought a motion under s. 267.8(12) of the
Insurance
Act
to require the appellant to assign to the respondents insurer from
the date of the judgment the appellants rights to the Sun Life benefits. The relevant
provisions of s. 267.8(12) of the
Insurance Act
are as follows:
Assignment of future collateral benefits
(12) The court that heard and determined the
action for loss or damage from bodily injury or death arising directly or
indirectly from the use or operation of the automobile, on motion, may order
that, subject to any conditions the court considers just,
(a) the plaintiff who recovered damages in the
action
assign to the defendants or the defendants insurers all rights in
respect of all payments to which the plaintiff who recovered damages is
entitled in respect of the incident after the trial of the action
, [emphasis
added]
(ii) for income loss or loss of earning
capacity under the laws of any jurisdiction or under an income continuation
benefit plan,
(b) the plaintiff who recovered damages in the
action co-operate with the defendants or the defendants insurers in any claim
or proceeding brought by the defendants or the defendants insurers in respect
of a payment assigned pursuant to clause (a).
[9]
The trial judge considered
how the assignment of all rights in respect of all payments to which the
plaintiff
is entitled under s. 267.8(12)(a) should apply to the
appellants income continuation plan. She found that s. 267.8(12)(a) called
for the assignment of the
gross
amount of the Sun Life benefits, and not
the
net after-tax
payments. She rejected the appellants submission that
a ruling from the Canada Revenue Agency (CRA) should be obtained to determine
if the appellants tax liability and Sun Lifes tax withholding obligation
would change once the rights to the payments under the plan were assigned to
the respondents insurer. She found that Sun Lifes obligation to withhold
income tax was irrelevant to the appellants right to receive the gross amount
of the payments.
[10]
Having concluded that the
respondents insurer was entitled to receive the gross benefit under the
appellants income continuation plan, the trial judge considered two methods of
structuring the assignment. Under the first approach, Sun Life would make
payments directly to the respondents insurer while deducting taxes at source. The
appellant would then top up the payments to compensate for the source
deductions. The assignment would remain in place until the earlier of the
appellant reaching the age of 65 and the respondents insurer recovering the
amount it had paid in tort damages for future loss of income. From the trial
judges perspective, this arrangement served to insulate the respondents
insurer from the appellants personal tax situation: the appellant would be
responsible for any shortfall arising from the deductions at source and she
would receive the benefit of any tax refunds resulting from overpayment without
depriving the respondent of its right to receive the full benefit.
[11]
Under the second approach,
the appellant would not top up the payments, and the respondents insurer would
receive the net payments from Sun Life. In both cases, the appellant would
receive the benefit of any tax refund and bear responsibility for any
shortfall. However, under the second approach, the respondents insurer would
recoup the amount owing under the assignment more slowly.
[12]
The trial judge concluded
that the appellant was required to top up the net payments from the date of the
judgment that were assigned to the respondents insurer so that they would
equal the gross payments to which the appellant was entitled under the Sun Life
plan.
[13]
With respect to the amounts
already paid by Sun Life under the income continuation plan, the trial judge ordered
the appellant to disclose to Aviva the gross amount of her entitlement since
the jurys verdict. This amount, later determined to be $124,951.05, was deducted
from the $540,000 income loss award in accordance with the trial judges top up
order, despite the fact that the appellant had only received net payments of
$104,162.34 from Sun Life. At the hearing of the appeal, counsel for the
appellant indicated that the appellant has not made any further top up payments
on the assigned payments.
Issues
[14]
I would summarize the issues
as follows:
i.
Was the trial judges top up order procedurally
unfair and contrary to natural justice?
ii.
Did the trial judge err in her interpretation
and application of s. 267.8 of the
Insurance Act
?
(1)
Procedural Fairness
[15]
It is common ground that
neither party requested that the trial judge make the top up order. Rather, the
appellant submitted that the gross amount of the payments received from Sun
Life should be credited against the amount assigned to Aviva, even though Aviva
would receive only payment of the net benefit, and that, regardless, there
should be a mechanism to address the potential income tax shortfall or
overpayment by the appellant arising from the deduction of income tax at source.
The respondent sought an assignment to its insurer of the appellants rights to
the net after-tax benefits received from Sun Life from the date of judgment, with
a provision for an accounting of any taxes refunded in the case of overpayment
on source deductions. The trial judge did not request submissions from the
parties on the issue of top up.
[16]
In my view, the trial judge resolved
the rights of the parties, imposed a burden on the appellant, and provided a
remedy to the respondent, on a theory never pleaded and with respect to which
battle was never joined:
Rodaro v. Royal Bank of Canada
(2002)
, 59 O.R. (3d) 74 (C.A.), at para.
63. Accordingly, the order must be set aside.
[17]
Anticipating this outcome,
the parties requested that this court look afresh at the top up question and
the underlying issue of the parties respective rights and obligations under
the statutory assignment, rather than remitting it to the trial judge for a
rehearing. I am of the view that the record and the parties submissions are
sufficient to permit such a determination. I turn now to that analysis.
(2)
Section 267.8 of the
Insurance Act
(a)
The parties positions
[18]
The appellant submits that
the trial judges top up order represents an erroneous interpretation of the trust
and assignment provisions of s. 267.8 of the
Insurance Act
. Under the
trust provisions, the appellant can only hold in trust and pay over to the
respondents insurer the payments she actually received. Under the statutory
assignment, the respondents insurer, as assignee of the rights to the taxable
collateral benefits, must assume the tax consequences of the benefits along
with the benefits themselves. Otherwise, the appellant, as tort victim, is left
in a worse net position than a tort victim with no collateral benefits, and the
respondents insurer receives a windfall.
[19]
The respondent says that
even if the trial judge erred, her top up order is reasonable and causes no
prejudice to the appellant. It also best serves the principle of finality that
benefits both parties because there will be no need for an ongoing accounting
or other administrative reconciliation. Relying on
Kant v. The Queen
,
[2001] 2 C.T.C. 2703
(T.C.C.), the respondent submits that the appellant may
not be required to pay taxes on the benefits after the assignment since they
are not taxable in [her] hands when assigned because she derives no benefit
from them. According to the respondent, the appellant can seek a refund of the
taxes remitted by Sun Life.
(b)
Analysis
[20]
It is my view that the trial
judge misinterpreted ss. 267.8(9), (10), and (12)(a)(ii) of the
Insurance
Act
and applied the trust and assignment provisions in a manner contrary
to the plain meaning of the legislative text and its purposes. She also erred
in failing to take into account Sun Lifes withholding and remittance of income
tax as a statutory trust and its effect on the appellants rights under the
plan.
[21]
As this court indicated in
Bapoo
v. Co-Operators General Insurance Co.
(1997), 154 D.L.R. (4th) 385 (Ont.
C.A.), leave to appeal refused, [1998] S.C.C.A. No. 62, at p. 389, the
interpretative framework to be applied is as follows:
The modern approach to statutory
interpretation calls on courts to interpret a legislative provision in its
total context.
The court's interpretation should comply with the legislative
text, promote the legislative purpose and produce a reasonable and just meaning
.
Professor Sullivan described the modern approach in the following passage in
Driedger
on the Construction of Statutes
:
There is only one rule in modern
interpretation, namely, courts are obliged to determine the meaning of
legislation in its total context, having regard to the purpose of the
legislation, the consequences of proposed interpretations, the presumptions and
special rules of interpretation, as well as admissible external aids
. In other words, the courts must consider and take into account all
relevant and admissible indicators of legislative meaning. After taking these
into account, the court must then adopt an interpretation that is appropriate.
An
appropriate interpretation is one that can be justified in terms of (a) its
plausibility, that is, its compliance with legislative text; (b) its efficacy,
that is, its promotion of the legislative purpose; and (c) its acceptability,
that is, the outcome is reasonable and just
. [Emphasis added; Citations
omitted.]
[22]
It is well established that
the legislative purpose of s. 267.8 is to promote fair compensation to injured plaintiffs
and prevent double recovery. As this court observed in
Cadieux v. Cloutier,
2018 ONCA 903, 429 D.L.R. (4th) 468,
leave to appeal refused
[2019]
S.C.C.A. No. 63
, at para. 17:
Section 267.8 of the
Insurance Act
contains
provisions designed to address [the overlap between tort damages and collateral
benefits] and to prevent double recovery. It reflects the principle that
victims should be fairly compensated, but not over-compensated.
See also:
Carroll
v. McEwen
, 2018 ONCA 902, 429 D.L.R. (4th) 443, at para.
38;
Cobb v.
Long Estate,
2017 ONCA 717, at
para. 52;
El-Khodr v. Lackie
, 2017 ONCA 716, 416 D.L.R. (4th) 189, at para.
33, leave to appeal refused, [2017] S.C.C.A. No.
461. As I shall explain, I conclude that the effect of the trial judges order
is to leave the appellant undercompensated and in a worse position than if she
had not had collateral benefits from Sun Life.
(i)
The trust provisions under ss. 267.8(9) and (10)
[23]
While the trial judge did
not expressly address the application of the trust provisions under ss.
267.8(9) and (10) to the amounts received by the appellant pre-assignment, the
effect of her order requiring the deduction of the gross amount of the payments
to the appellant under the Sun Life plan since the date of judgment on April 5,
2017 resulted in the deduction of more than the amount of the payments actually
received and held in trust by the appellant post trial and pre-assignment. This
effect runs contrary to the provisions of ss. 267.8(9) and (10).
[24]
Under s. 267.8(9)(ii), prior
to any assignment under ss. 267.8(12)(a)(ii), a successful plaintiff must hold
payments
in respect of the incident
that the plaintiff receives
after the trial of the action for income loss or loss of earning capacity
under an income continuation benefit plan
in trust
(emphasis added).
Subsection 267.8(10) requires the plaintiff who holds money in trust under
subsection (9) to pay the money to the persons from whom damages were
recovered in the action, in the proportions that those persons paid the
damages.
[25]
Subsections 267.8(9) and (10)
impose a statutory trust on the payments that the plaintiff actually receives
for the benefit of the defendant or the defendants insurer. These provisions
reflect basic trust principles: a trustee is only chargeable for the trust
property that he or she actually holds or controls; and the trust property does
not form part of the trustees property but is held for the beneficiary of the
statutory trust:
Lewin on Trusts
, 19th ed. (London: Sweet &
Maxwell, 2015) at pp. 2-4 and 285. See also
In Re Scott
, [1948]
SASR 193, at p. 196. Under ss. 267.8(9) and (10), the plaintiff as
trustee holds the monies received in trust for the defendant or the defendants
insurer who pays the judgment damages.
[26]
The trust property in the
present case consisted of the net after-tax payments that the appellant
received pre-assignment from Sun Life from the date of the judgment in the
amount of $104,162.34. The appellant, as trustee, was only required to hold in
trust and then pay to the respondents insurer these actual payments from Sun
Life, which were net of tax. Contrary to the provisions of ss. 267.8(9)
and (10), the trial judges order erroneously inflated that amount to
$124,951.05, representing the gross pre-tax amount, which had the effect of
reducing the appellants compensation by $20,788.71 once the trust funds were
set off against the judgment damages. The appellant was never required to hold
this amount in trust and it should be repaid.
(ii)
The assignment provisions under s.
267.8(12)(a)(ii)
[27]
Similar reasoning led the
trial judge into error with respect to the assignment provisions under s.
267.8(12)(a)(ii) of the
Insurance Act
. As noted, this section permits a
defendant to seek the assignment to its insurer of all rights in respect of
all payments to which the plaintiff who recovered damages is entitled in
respect of the incident
under an income continuation benefit plan. In my
view, the trial judge conflated the respondents insurers entitlement to the
rights to the plan benefits with the mechanism of a specific mode of payment, namely
an assignment, and therefore failed to apply the assignment provisions under s. 267.8(12)(a)(ii)
in a manner consistent with the trust provisions under s. 267.8(9) and
(10).
[28]
The trial judge correctly
recognized at para. 16 of her reasons that the assignment is of all rights in
respect of all payments and that [t]he assignment is of more than the
payments themselves. However, she failed to recognize that the respondents
insurer, as assignee, steps into the shoes of the appellant and acquires the
entitlement to the rights to the appellants benefits subject to all the
equities and obligations existing between the appellant and Sun Life under the
plan:
Frederick v. Aviation & Gen. Ins. Co.
, [1966] O.J. No. 1064
(C.A.). Instead, the trial judge effectively concluded that the respondents
insurer was entitled to collect the appellants gross benefits as if they were
not taxable or as if the appellant had elected to take the entire taxable sum in
hand.
[29]
In my view, the language of
s. 267.8(12) does no more than clarify the mechanism of the
assignment
of the appellants rights to the payments within the scheme of s. 267.8. This
means that by virtue and for the term of the assignment, the respondents
insurer has all the appellants rights and is subject to all the provisions
under the plan, including, subject to the plan
[2]
, the ability to deal directly
with Sun Life and to contest the deduction of income taxes from the payments.
But, while s. 267.8(12)(a) refers to all
rights
in respect of all
payments to which the plaintiff who recovered damages is
entitled
rather than payments
received
by the plaintiff, as was the case in
Bapoo
,
it does not entitle the respondents insurer to receive payments greater than
those the appellant receives. Subsection 267.8(12) does not refer to payments
received, because the focus of this provision is not on the entitlement to
payments
,
but rather on the broader entitlement to the plaintiffs underlying
rights
,
which includes a right to payment, among others.
(iii)
The trust and assignment provisions are
complementary mechanisms
[30]
The trial judges approach
fails to take into account the complementary nature of the trust and assignment
provisions in the context of s. 267.8 as a whole which, as earlier noted, is
designed to ensure fair compensation to the injured plaintiff:
Cadieux
,
at para. 111.
[31]
First, the trial judges
approach would introduce a discrepancy between the provisions of ss. 267.8(9)
and (10), and (12) of the
Insurance Act
,
which are
intended to be complementary. As
earlier noted, the modern rules of statutory interpretation require the words
of the statute to be read in their entire context and in their grammatical and
ordinary sense harmoniously with the scheme of the Act, the object of the Act,
and the intention of the enacting legislative body:
Cadieux
, at para.
109, citing
Rizzo & Rizzo Shoes Ltd. (Re)
, [1998] 1 S.C.R. 27, at
para. 21.
[32]
Subsections 267.8(9), (10),
and (12) provide for two different mechanisms that work together to achieve the
same underlying aim of providing compensation without over-compensation:
Cadieux
,
at para. 24;
Carroll
, at para. 38;
El-Khodr
, at para. 33. As
discussed above, the plain meaning of s. 267.8(9) is that a plaintiff is
required to hold monies
actually received
in trust. Here, prior to any
assignment to the respondents insurer under s. 267.8(12)(a)(ii), the
appellant was required to hold in trust the actual net after-tax payments from
Sun Life as she received them. It would not make common sense for the
assignment to apply to gross pre-tax amounts if the trust does not. This would
place the appellant in a different and worse position simply because the
mechanism of assignment was engaged as opposed to the mechanism of a trust.
[33]
Second, and similarly, it
would not make common sense for there to be a different meaning of the word
payments in each of ss. 267.8(9), (10) and (12). Reading the provisions
harmoniously, the grammatical and ordinary sense of the word payments is
the same in the trust and assignment provisions under s. 267.8(9), (10),
and (12). As noted, the payments referred to in ss. 267.8(9) and (10) are the
payments actually received and held in trust by the appellant. In this case, from
the date of the judgment, this amounted to $104,162.34 in payments that the
appellant actually received. The word payments in s. 267.8(12) must refer to
the same payments but to be received under the mechanism of an assignment.
(iv)
Effect of Sun Lifes statutory obligations
[34]
The trial judges errors in
her interpretation and application of the trust and assignment provisions led
her to ignore the effect of Sun Lifes withholding and remittance of income
taxes to the CRA from the plan payments pursuant to its statutory obligations. Again,
as the appellants assignee, the respondents insurer has all the same rights
as against Sun Life as the appellant, and Sun Life has all the same defences. These
defences may include any statutory obligation on the part of Sun Life to
withhold and remit taxes to the CRA from the plan payments.
[35]
The respondent argues that, post-assignment,
Sun Life is no longer required to withhold and remit taxes because the
appellant no longer receives the benefit of the plan payments; however, as I
explain in para. 38 below, this is by no means certain absent a court order or
CRA ruling. Moreover, it is common ground that pre-assignment, Sun Life was
obliged under the provisions of the
Income Tax Act
, R.S.C. 1985, c. 1
(5th Supp.), to deduct and remit taxes from payments made directly to the
appellant for her benefit under Sun Lifes income continuation plan. Further,
post-assignment, Sun Life intends to continue withholding and remitting income
taxes regardless of whether the payments are issued directly to the appellant
or to the respondents insurer, until otherwise exempted by court order or CRA
ruling.
[36]
The parties did not
reference the provisions of the
Income Tax Act
that give rise to Sun
Lifes statutory obligations to withhold and remit taxes. Presumably, the income
from the plan is taxable in the hands of the appellant under s. 6(1)(f) of the
Income
Tax Act
because both the appellant and her employer contributed to the
plan: See also
Pugh v. Canada
, [2000] T.C.J. No. 585, at para. 9;
Bouchard
v. Canada
, 2008 TCC 408, at para. 14. If that is the case, then the income
from Sun Life under the income continuation plan would fall under the
definition of salary or wages at in s. 248. Under s. 153 of the
Income
Tax Act
, Every person paying at any time in a taxation year (a) salary,
wages or other remuneration
shall deduct or withhold from the payment the
payees tax. This is no mere mechanical exercise as the trial judge stated. Amounts
deducted but unremitted by any person are deemed to be held separate and apart
from the property of the person and in trust for Her Majesty and for payment
to Her Majesty pursuant to s. 227(4) of the Act.
[37]
Regardless if its position
is correct, the fact that Sun Life purports to withhold and remit income taxes
pursuant to a statutory obligation to the CRA means that those monies are
imposed with a statutory trust and therefore do not form part of the payments
made under the plan. Even if the respondent prevails and Sun Life is no longer
required to withhold and remit taxes, this does not alter the nature and effect
of its present withholdings and remittances as statutory trust funds. In
consequence, so long as Sun Life withholds and remits taxes pursuant to the
statutory trust provisions of the
Income Tax Act
, Avivas assigned
rights are to the net after-tax payments.
[38]
I do not accept the
respondents submission that the trial judges order causes no prejudice to the
appellant because she can simply apply for a tax refund and be in no worse
position. First, it is by no means certain that the CRA would agree that the
appellant is entitled to a refund of the taxes remitted by Sun Life. It is
dependent on a whole host of variables, including the appellants personal tax
circumstances about which there is no evidence. Second, the appellant would likely
be required to incur considerable expense to ascertain whether the CRA accepts
this position. This additional financial burden is contrary to s. 267.8 of the
Insurance
Act
since it undermines the purpose of full compensation for the
appellant.
[39]
The respondent obtained an
assignment to its insurer of the appellants rights to future collateral
benefits under the Sun Life plan from the date of judgment. If it disputes the
deduction of income tax at source, then the respondents insurer, having
stepped into the appellants shoes through the assignment, must take the
necessary steps and incur the necessary expense to deal with that issue. For
the term of the assignment, the appellant has assigned her rights with respect
to those payments. While s. 267.8(12)(b) of the
Insurance Act
requires
her to cooperate with the respondents insurer, it is the respondents insurer,
as assignee, that must direct what is to be done in relation to the plan
benefits.
[40]
The respondent and its
insurer cannot complain of its situation. If they had acceded to the
appellants request to seek a ruling from the CRA on the tax issue, the issues
of quantum and liability for taxes following the assignment could have been
ascertained. As it presently stands, the respondents insurer is only entitled
to receive what Sun Life pays. It would be patently unfair to require the
appellant to pay for the very step that she submitted was necessary before the trial
judge made her assignment order. Having taken the benefits of the assignment,
the respondents insurer must undertake the concomitant burdens.
Conclusion
[41]
The trial judges
interpretation leads to an unfair result. It imposes a financial burden on the
appellant that she would not have incurred if she did not have collateral
benefits. This runs counter to the principle of full compensation. The
statutory assignment of her rights under the Sun Life plan means that for the term
of the assignment the appellant no longer receives any benefit under the plan
and should be relieved of any financial burden in respect of it.
[42]
Accordingly, the correct
interpretation of s. 267(12)(a)(ii) of the
Insurance Act
is that the
assignment of the appellants rights under the plan means that the respondents
insurer is entitled to a credit for the actual payments that the appellant
receives under the plan. As matters now stand, this means net of the taxes
withheld by Sun Life. The respondents insurer is entitled to take whatever
steps are necessary, at its own expense and with the appellants co-operation,
as required under s. 267(12)(b), to deal with the issue of the tax withholdings
with Sun Life and the CRA.
Disposition
[43]
In my view, the fairest
order that is also in keeping with the purposes of s. 267.8 of the
Insurance
Act
is to amend the trial judges order to provide for the assignment from
the date of judgment of the appellants rights in respect of all payments under
the Sun Life plan to the respondents insurer, net of all income tax withholdings
so long as Sun Life continues to withhold and remit income taxes to the CRA from
the payments made under its plan, until the appellant reaches the age of 65 or the
respondents insurer has been fully reimbursed for its payment of the loss of
income damages award, whichever event occurs earlier. We were advised that the
appellant has not received any tax refunds or credits with respect to the
withholdings since the date of judgment. As a result,
so
long as Sun Life continues to withhold taxes from the payments made under its
plan
, this order obviates the need for an annual accounting.
[44]
In the event the respondents
insurer wishes to contest with Sun Life and/or the CRA the issue of tax
withholdings during the period of the assignment, the respondents insurer
shall pay all expenses associated with such request, including for the
preparation of any necessary forms or returns by the appellant or her financial,
legal or other advisors, and the payment of any disbursements or fees. This
arrangement is consistent with the requirement in para. 4 of the order that the
respondents insurer shall pay the appellant the reasonable costs that she
incurred to preserve her rights to payment of the long-term disability benefits
under the Sun Life plan.
[45]
Accordingly, I would allow the
appeal. I would amend para. 2 of the October 28, 2019 order to reflect the
disclosure of the gross and net payments for the benefits under the Sun Life
plan, set aside paras. 3, 5 and 6 and insert in their place a new paragraph (or
paragraphs as the case may be) in accordance with these reasons. I would order
that the respondents insurer pay to the appellant the amount of $20,788.71
that was deducted from its payment of the appellants loss of income damages
award. As earlier noted, according to the parties submissions, the appellant
has not paid any top up amounts under paras. 5 and 6 of the October 28, 2019
order. If that is incorrect, the appellant is at liberty to provide evidence of
such payments and this courts order can provide for their repayment. I would
amend para. 9 to provide that the appellant shall co-operate with the
respondents insurer, at the latters expense, and that this co-operation shall
also include participation in any process regarding Sun Life and/or the CRA
concerning the income tax remitted by Sun Life.
[46]
The parties did not make
submissions as to what should occur with respect to any set off against the
judgment in the event that the taxes previously remitted by Sun Life were
refunded by the CRA and/or in the event that Sun Life no longer withholds the
taxes. Accordingly, if the parties cannot agree on the formulation of the additional
terms to be inserted into the order in accordance with these reasons, or they
require additional direction to address the set off issue or any other issue
necessary for the implementation of this courts decision, I would permit them
to make brief written submissions of no more than two pages, plus a draft form
of order, within seven days of the release of these reasons.
[47]
In accordance with the
parties agreement, I would grant the appellant her partial indemnity costs of
the appeal in the amount of $30,000, inclusive of disbursements and applicable
taxes.
[48]
If the parties cannot agree
on the disposition of the costs on the motion before the trial judge, I would
allow them the opportunity to forward to the panel brief written submissions of
no more than two pages, with a costs outline, within seven days of the release
of these reasons.
Released: April
16, 2021 L.R.
L.B.
Roberts J.A.
I
agree. Gary Trotter J.A.
I
agree. Thorburn J.A.
[1]
This delay
appears to have resulted in part from the appeal of the decision on the merits,
which this court dismissed on July 31, 2019 with reasons reported at 2019 ONCA
634, and from the fact that the payment of damages was put off until the
quantum of the assignment could be ascertained in the post-trial ruling
currently under appeal. That motion was only argued in October 2019.
[2]
We
were not provided with a copy of the Sun Life plan. While a June 26, 2018 email
from Sun Life to appellants counsel, noted by the motion judge at para. 21 of
her reasons, refers vaguely to some mechanical difficulty with payment
protocols, it does not indicate, in my view, any restriction against the respondents
insurer dealing directly with Sun Life. As a result, I presume there is none.
|
COURT OF APPEAL FOR ONTARIO
CITATION: North Elgin Centre Inc. v.
McDonalds Restaurants of Canada Limited, 2021 ONCA 173
DATE: 20210317
DOCKET: M51329 & M51679
(C63933)
Brown J.A.
(Motions Judge)
BETWEEN
North
Elgin Centre Inc.
Applicant
(Respondent)
(Responding
Party/Moving Party on cross-motion)
and
McDonalds
Restaurants of Canada Limited
Respondent
(Appellant)
(Moving
Party/Responding Party on cross-motion)
Andrew Parley,
Margaret Robbins and Sean Blakeley, for the moving party/appellant, McDonalds
Restaurants of Canada Limited
Jeffrey E. Streisfield, for the moving
party on the cross-motion/respondent, North Elgin Centre Inc.
Heard: December 7 and 8, 2020 by video
conference
REASONS
FOR DECISION
I. OVERVIEW
[1]
McDonalds Restaurants of Canada Limited (McDonalds)
moves for an order declaring North Elgin Centre Inc. (NEC) in contempt of the
order of a panel of this court dated January 29, 2018 (the Order). That Order
was made in respect of the renewal of a lease between NEC, as landlord, and
McDonalds, as tenant, for commercial property located in Richmond Hill,
Ontario (the Lease).
[2]
The Order declared that the Lease had been
renewed for a first renewal term running from March 11, 2017 to March 10, 2027.
Since the renewal term requires consent approval under s. 50(3)(f) of the
Planning
Act
, R.S.O. 1990, c. P.13,
[1]
para. 3(b) of the Order states:
McDonalds shall, within 30 days of the date
of the issuance of the reasons by the Court, bring an application for the
consent required under s. 50(3)(f) of the
Planning Act
and the
Respondent, [NEC], shall provide all reasonable cooperation to obtain that
consent.
[3]
McDonalds alleges that NEC has acted in ways
that breached the Orders requirement that it provide all reasonable
cooperation to obtain the
Planning Act
consent.
[4]
NEC has brought a cross-motion that seeks
declaratory relief in the nature of defences to the contempt motion, as well as
directions regarding its obligations under para. 3(b) of the Order.
[5]
Contempt proceedings proceed in two stages: a
liability phase, followed by a penalty phase:
Carey v. Laiken
, 2015
SCC 17, [2015] 2 S.C.R. 79, at para. 18. These are my reasons for the liability
phase of McDonalds contempt motion.
[6]
As I will explain below, I dismiss McDonalds
motion. Given the basis for my conclusion that NEC is not in contempt of the
Order, it is not necessary to decide the issues raised by NECs cross-motion,
so I dismiss that motion.
II. JURISDICTION
[7]
McDonalds initially sought to bring its contempt
motion before the panel that made the Order. The panel invited submissions from
the parties on the appropriate procedure to hear the contempt motion. NECs
submissions disclosed that it intended to bring a cross-motion seeking
directions as to whether the Lease was void because
Planning Act
consent was not obtained before the expiry of 21 years or, alternatively,
directions about what NEC could do or not do having regard to paragraph 3(b)
of the Courts Order.
[8]
The panel advised that a settlement conference
would take place before Pardu J.A., which occurred on June 10, 2020. No
settlement was reached. By order dated June 19, 2020, Pardu J.A. gave
directions regarding the hearing of the motions (the Directions Order).
[9]
The Directions Order provided that the motion
for contempt and a motion for directions and for declaratory relief, if brought
by North Elgin, be heard together by a single judge of the Court of Appeal.
However, [t]his is without prejudice to the right of the judge hearing both
motions to determine whether the court has jurisdiction to give the declaratory
relief sought.
[10]
Neither party objects to a single judge of this
court hearing the motions.
[11]
Although the parties were not able to locate any
jurisprudence of this court on the issue of the jurisdiction of a single judge
to hear a contempt motion to enforce a panel order,
[2]
I am satisfied that the combined operation of the
Courts of
Justice Act
, R.S.O. 1990, c. C.43 (
CJA
), and the
Rules of
Civil Procedure
provides such jurisdiction.
[12]
The
Rules of Civil Procedure
apply to
all civil proceedings in the Court of Appeal, subject to a few exceptions which
do not apply to these motions: r. 1.02(1). Rule 60.11(1) requires that a
contempt order to enforce an order requiring a person to do an act must be
obtained on motion to a judge in the proceeding in which the order to be
enforced was made. Where the order to be enforced is one made by the Court of
Appeal, a contempt motion therefore must be brought in the Court of Appeal.
[13]
Section 7(2) of the
CJA
provides that a
motion in the Court of Appeal shall be heard and determined by one judge,
subject to the exceptions enumerated in s. 7(3), none of which include a
contempt motion. I therefore conclude that a single judge of this court has the
jurisdiction to hear a contempt motion to enforce an order made by a panel of
the court.
III. BACKGROUND FACTS
A.
The lease renewal dispute
[14]
NEC owns a parcel of land at the north-east
corner of Yonge Street and Bernard Avenue on which it operates a shopping plaza
(the Property). Under the Lease that commenced March 11, 1997, NEC leases
part of the Property to McDonalds, which operates a restaurant on the demised
premises.
[15]
The initial term of the Lease was for 20 years,
expiring on March 10, 2017, with McDonalds having options to extend the term
for two additional consecutive terms of ten years each.
[3]
[16]
The Property is located within a planning
intensification area, known as a Key Development Area (KDA), in the 2010 Richmond
Hill Official Plan. In 2016, the Town of Richmond Hill (the Town) initiated a
process to prepare a secondary plan and zoning by-law for the KDA. As part of
that process, NEC provided Town staff with a concept plan and parking strategy
for the future development of the Property. The concept plan contemplates a
high-density, mixed use, transit supportive development on the Property and
shows that eventually a residential tower may be located on the site presently
occupied by the McDonalds restaurant. In late 2017, NEC and other area
landowners appealed the secondary plan and zoning by-law to the Local Planning
Appeal Tribunal.
[17]
Section 19.10 of the Lease provides that it is
subject to the
Planning Act
. As noted, s. 50(3)(f) of that Act provides,
in part, that no person shall enter into any agreement that has the effect of
granting the use of or right in land directly or by entitlement to renewal for
a period of twenty-one years or more unless
(f) a consent is given to convey,
mortgage or charge the land, or grant, assign or exercise a power of
appointment in respect of the land or enter into an agreement in respect of the
land. Section 19.10 of the Lease places the obligation on the landlord, NEC,
to seek any
Planning Act
consent.
[18]
In 2016, a dispute arose over McDonalds
exercise of its first right to renew the term of the Lease for an additional 10
years. The dispute went to court, where the application judge found that the
Lease had come to an end in March 2017 as McDonalds had failed to comply with
the renewal provision: 2017 ONSC 3306, 87 R.P.R. (5th) 303.
[19]
In January 2018, this court allowed McDonalds
appeal, declaring the Lease had been renewed for the first 10-year renewal term
and referring the rent dispute for the renewal term to arbitration: 2018 ONCA
71, 87 R.P.R. (5th) 315, at para. 13. This court then dealt, at para. 14, with
the need to obtain consent under the
Planning Act
for the first
renewal term:
With regard to McDonalds claim for an order
requiring North Elgin to specifically perform its obligation to obtain a
Planning
Act
consent, we note that the end of the 21
st
year under the
Lease is fast approaching. We proposed to the parties in oral argument that the
most sensible order would be one in which McDonalds was permitted to
immediately bring an application for the consent, and North Elgin would provide
all reasonable cooperation to obtain the consent. The parties were agreeable to
that order, and it shall issue.
[20]
Para. 3(b) of the Order set out the parties
obligations in respect of the
Planning Act
consent application,
including requiring NEC to provide all reasonable cooperation to obtain that
consent.
B.
The Consent Application
Events from February until October 2018
[21]
McDonalds retained Dentons Canada LLP to
prepare and file the
Planning Act
consent application (the Consent Application).
Dentons had the Consent Application signed by Mr. Renzo Belluz, a NEC
representative, and filed it with the Town on February 1, 2018.
[22]
The Consent Application stated it sought [c]onsent
to a long term lease for a McDonalds restaurant. The covering letter for the
application stated:
The subject McDonalds Restaurant has been
operating on the property for some time. The implementing (subject) lease
permits McDonalds Restaurant to use part (approximately 1,200 sq. m.) of our
clients property (as depicted on the enclosed Site Plan), along with
non-exclusive rights for access and parking over the remainder of the property
(therefore, easement approvals are not required).
The subject lease was for an initial term of
twenty (20) years with a lease commencement date of March 1997.
The lease has two (2) options to
extend for ten (10) years each. It is these extensions that require Planning
Act approval.
As you are aware, the
Planning Act
requires leases of this length of time and nature (i.e. not part of a building
and not the entire site) to be approved by the Committee of Adjustment when the
term extends beyond twenty-one (21) years less a day.
It is respectfully submitted that this
application for consent to a lease supports the orderly development of the
neighbourhood, is consistent with the Zoning By-law and complies with all of
those matters that one must have regard to pursuant to Section 51(24) of the
Planning
Act
, and that a plan of subdivision is not appropriate in this
circumstance. [Emphasis added.]
[23]
Town staff responded on March 21, 2018 advising
that:
In order to understand the implications of the
proposed consent, a Concept Plan (Section 5.2 of the OP) with a Planning
Justification are required to demonstrate how the application conforms with the
long term vision of the Towns new Official Plan and recently adopted Yonge and
Bernard Key Development Area Secondary Plan.
[24]
In March and April 2018 emails sent to Dentons,
Town staff raised a concern about how a long-term lease might freeze development
on the Property to single storey buildings, which would not be in keeping with
the Official Plan.
[25]
In the summer of 2018 McDonalds obtained from
NEC copies of concept plans NEC had prepared in 2017 for the development of the
entire Property. McDonalds took the position that the 2017 concept plans did
not make provision for a site for its restaurant and asked NEC to submit
revised concept plans to the Town.
[26]
By letter dated August 9, 2018, NECs counsel
confirmed that NEC is not only consenting to your client's application for
Planning
Act
approval but has even allowed the application to be made by your
client in its name. As far as the Town of Richmond Hill (the Municipality) is
concerned, NEC is 100% behind the application for the
Planning Act
approval. The letter noted that:
3. The reason the Municipality requested a
Planning Justification Report in support of your clients application is
because your clients application conflicts with and creates issues arising
from (i) the Zoning By-Law, (ii) the Official Plan and (iii) an Interim Control
By-Law
4. Toward the bottom of page 4 of your letter,
you are asking NEC to provide a planning justification report outlining what
is needed in order for the restaurant to comply. However, it is strictly your
clients obligation to prepare and submit the Planning Justification Report
supporting its application that has been requested by the Municipality
5. You also seem to believe that any NEC
concept plans have affected your clients application. That is manifestly
incorrect. What is relevant are the Municipalitys Zoning By-Law, Official Plan
and Interim Control By-Law. While there is a non-conforming use for the leased
lands, your client must nevertheless satisfy the Municipality with respect to
its application for the
Planning Act
approval sought. It is simply up
to your client to once and for all proceed with and submit a Planning
Justification Report which will hopefully persuade the Municipality to approve
the application for
Planning Act
approval.
[27]
By October 2018 McDonalds had retained Mr. Mike
Crough, of the IBI Group, to assist with the Consent Application. In October
2018 the IBI Group discussed with the Town the requirements for a Planning
Justification Report. The IBI Group prepared an initial draft report but,
according to an affidavit sworn by Mr. Crough, there followed a period of
inactivity on the file and the IBI Group did not communicate with McDonalds
for several months.
November 2018 until June 2019: the rent arbitration
[28]
It appears that McDonalds did not revive the
work of the IBI Group until after the completion of the rental rate arbitration
in June 2019.
[29]
The rental rate arbitration was held in February
and May 2019, with an Award issued on June 26, 2019. In that proceeding,
McDonalds obtained the production of the lease with one other tenant at the
shopping plaza. NEC initially sought to appeal the Award but abandoned its
application to do so.
June through August 2019: McDonalds Planning
Justification Report
[30]
In June 2019, McDonalds asked NEC to provide
copies of current leases for other tenants in the shopping plaza so they could
be used in the Consent Application. Extensive correspondence ensued between
counsel for the parties, in which McDonalds sought certain information from
NEC that it needed to prepare a Planning Justification Report and in which NEC,
in turn, sought access to the entire draft report. I need not delve into the
details of the back-and-forth for present purposes. Suffice it to say that on
September 10, 2019 McDonalds filed with the Town a Planning Justification
Report prepared by the IBI Group (the IBI Report).
September through November 2019: Town staffs response to the IBI
Report
[31]
By email dated September 20, 2019, Town staff
informed counsel for the parties that:
This is to advise that staff has reviewed the [IBI
Report] and is prepared to concur with the conclusions and recommendations
contained therein, provided the owner confirms in writing that he is aware of
both the proposed lease and the pending development proposal to permit high
density residential development on the subject lands.
[32]
McDonalds immediately sought from NEC the
written confirmation asked for by the Town. Confirmation from NEC was not
forthcoming, for reasons set out in NEC counsels October 2, 2019 email to
McDonalds:
The IBI report filed by McDonald's in support
of the consent application (the September 2019 report) contains inaccurate statements
(opinions) regarding the future development potential and timing of the NEC
lands which are acknowledged to be within a KDA and MTSA.
There appear to be at least two issues (1)
the temporal impact of a consent and (2) the spatial extent of any consent on the
NEC lands.
1. The lease was renewed for a 10 year
term (not up to 18 years and 4 months). This was not disclosed in the IBI
report, and if disclosed may well support a consent limited to a 10 year term -
which would expire in 2027.
2. In any event, the lease contains a no build
zone clause (lease par 22.03 and schedule E4) - which consists of the entire
NEC site. This clause (and its impact) was not disclosed or discussed in the
IBI report, nor made known to the city planner or planning department who now
request an acknowledgement letter from NEC. (Of course, the City knows that there
is a Secondary Plan and Zoning Bylaw before LPAT for approval).
NEC does not wish to be a party to an
application that potentially misrepresents information to the decision making tribunal
(the committee of adjustment).
The question therefore is how we address these
matters going forward which is why a meeting has been requested in advance of
a consideration to returning to the court for directions. I am available on
Friday but prefer Monday Oct 7 in the AM. Please confirm. [Emphasis added.]
[33]
Further correspondence ensued, including NECs
advice that it intended to meet with Town staff. The IBI Group wrote to the
Town and provided a copy of the Lease. That resulted in Town staffs November
1, 2019 email to the parties that stated, in part:
In the interim, staff has carefully reviewed
your e-mail below and are therefore satisfied the Owner is aware of both the
proposed lease and the pending development proposal to permit high density
residential development on the its land holdings. Given the above, we no longer
believe a meeting is necessary and are prepared to move forward with the
application for consent. Please advise if you concur.
[34]
Then, on November 8, 2019, Town staff further
advised:
Consent application B012/18 has been placed
into our priority queue for the January 2020 circulation. Our internal meeting
takes place on December 10, 2019 and applicants will be notified by email by
the end of the week if they have been scheduled. Please open the
acknowledgement letter contained in that email to advise you when signs are
available for pick-up and the date staff reports will be ready.
December 2019: the MPlan Report
[35]
On December 6, 2019, a few days prior to Town
staffs scheduled internal meeting, NEC filed a report prepared by MPlan Inc.
as NECs input on the Consent Application.
[36]
The MPlan Report commented on the Consent Application
and the IBI Group Report. The MPlan Report made the following recommendations
concerning the consent application:
In order for the proposed Consent Application
to be supportable, the following CONDITIONS OF APPROVAL are necessary and
reasonable:
1. The Consent shall be limited to 8
years, being the remaining portion of the renewal term. The owner or McDonalds
may apply for a further Consent should McDonalds seek to renew the lease for
the 2
nd
renewal term.
Reason: The Lease was only renewed for the 1
st
renewal term.
2. The Consent shall apply to the area
of land shown on Appendix B.
Reason: Appendix B ensures that the subject
lands can be redeveloped in phases, if necessary, in accordance with the
Provincial, Regional and Municipal mandated intensification policies including
provision of more affordable housing options including purpose built rental
units, while providing for McDonalds continued use of the severed lands for
the remainder of the renewal term.
3. The consent approval does not apply
to, and no sanction is given to, Section 22.03 and Schedule E-4 to the Lease
and to Sections 22.01, 22.02 and 22.04 of the Lease.
Reason: The No Build Zone provision and
related sections sterilize the NEC property and therefore do not meet the
Planning Act requirements referred to above.
The
condition is intended to ensure that consent to the 1
st
renewal term
does not freeze development on the retained lands and removes any restriction
that would otherwise prevent development from occurring in a phases, with the
south west corner of the property potentially be redeveloped last.
[Emphasis
added.]
[37]
In general terms, ss. 22.01 to 22.04 of the
Lease allow McDonalds, and its customers, the right to use the parking areas
and other outdoor common areas of the shopping plaza and prohibit NEC from
building on any part of the common areas shown with hatch marks on Schedule
E-4 to the Lease. The hatched area constitutes a significant portion of NECs
Property.
[38]
In response to the MPlan Report, on December 12,
2019 Town staff advised that the Consent Application has been deferred until
such a time that it has been determined what the actual request is and the
owner is satisfied.
[39]
On December 17, 2019, the IBI Group wrote to the
Town stating, in part:
I do not agree with the conditions or
modifications proposed in the North Elgin Report. Specifically, I do not agree
with the proposal to reduce the time period nor the expanded spatial area
proposed.
[40]
In January 2020, Town staff advised NECs
counsel that: (i) the Committee of Adjustment considered the Consent
Application to be incomplete, hence the deferral; and (ii) the Committee of
Adjustment would require the Propertys owner to be satisfied with the Consent
Application and would ensure that the Consent Application and submitted
drawings were complete.
C.
THE MOTIONS
[41]
McDonalds alleges that by filing the December 2019
MPlan Report NEC breached para. 3(b) of the Order, which requires NEC to
provide all reasonable cooperation for the Consent Application. McDonalds
seeks a declaration that NEC is in contempt of the Order, the imposition of a
fine on NEC, and an order requiring NEC to withdraw the MPlan Report from the
Consent Application.
[42]
NECs cross-motion has two aspects. First, NEC
seeks certain declarations that would operate, in effect, as defences to the
contempt motion. Specifically, NEC seeks orders that the Lease came to an end in
March 2018, 21 years after its commencement, with the result that the contempt
motion is moot. Second, NEC seeks an order explaining what para. 3(b) of the
Order requires it to do.
IV. CONTEMPT: THE GOVERNING PRINCIPLES
[43]
Civil contempt consists of the intentional doing
of an act which is prohibited by a court order:
Carey
, at para. 26. As
summarized in
Carey
, at paras. 32 to 35, civil contempt has three
elements that must be established beyond a reasonable doubt:
(i)
the order alleged to have been breached must
state clearly and unequivocally what should and should not be done. An order
may be found to be unclear if: it is missing an essential detail about where,
when or to whom it applies; it incorporates overly broad language; or external
circumstances have obscured its meaning;
(ii)
the party alleged to have breached the order
must have had actual knowledge of it. Actual knowledge may be inferred from the
circumstances or an alleged contemnor may attract liability on the basis of the
wilful blindness doctrine; and
(iii)
the party allegedly in breach must have
intentionally done the act that the order prohibits or intentionally failed to
do the act that the order compels.
All that is required
to establish civil contempt is proof beyond a reasonable doubt of an
intentional act or omission that is in fact in breach of a clear order of which
the alleged contemnor has notice
:
Carey
, at para. 38. Contumacy
the intent to interfere with the administration of justice is not an element
of civil contempt and lack of contumacy is therefore not a defence:
Carey
,
at para. 29.
[44]
With civil contempt, where there is no element
of public defiance, the purpose of a contempt order is seen primarily as
coercive rather than punitive, with the court attempting to obtain compliance
with its order:
United Nurses of Alberta v. Alberta (Attorney General)
,
[1992] 1 S.C.R. 901, at p. 943, per Sopinka J., in dissent;
Chiang (Re)
,
2009 ONCA 3, 93 O.R. (3d) 483, at para. 11. To that end, r. 60.11 of the
Rules
of Civil Procedure
contemplates that a judge may set aside a finding of
contempt if the contemnor subsequently complies with the order or otherwise
purges his or her contempt or, in exceptional circumstances, where new facts or
evidence have come to light after the contempt finding was made:
Carey
,
at paras. 62, 64 and 66.
[45]
As the contempt power is discretionary, courts
have consistently discouraged its routine use to obtain compliance with court
orders. It should be used cautiously and with great restraint; it is regarded
as an enforcement power of last, not first, resort. So, where an alleged
contemnor acted in good faith in taking reasonable steps to comply with the
order, the judge entertaining a contempt motion generally retains some
discretion to decline to make a finding of contempt. As well, a judge may
properly exercise his or her discretion to decline to impose a contempt finding
where it would work an injustice in the circumstances of the case:
Carey
,
at paras. 36-37.
[46]
As a procedural matter, the party seeking a
finding of contempt must clearly specify the act or omission that constitutes
the contempt. The usual requirement is that the notice of motion set out the
particulars of the alleged contempt:
Bell ExpressVu Limited Partnership v.
Corkery
, 2009 ONCA 85, 94 O.R. (3d) 614, at paras. 17, 20 and 42-45;
Rocca
Dickson Andreis Inc. v. Umberto Andreis
, 2013 ONSC 5508, 111 W.C.B. (2d)
587 (Div. Ct.), at para. 20; and
Dare Foods (Biscuit Division) Ltd. v. Gill
,
[1973] 1 O.R. 637 (H.C.), at p. 639.
V.
APPLICATION OF THE GENERAL PRINCIPLES
A.
Framing the key issue in dispute
[47]
There is no dispute that NEC knew about and
understood the Order. On his examination, Mr. Renzo Belluz, a principal of NEC
and a practising planning lawyer, acknowledged that he had read the Order and
understood what it required NEC to do. Further, the evidence clearly shows that
NEC retained MPlan to prepare and file the report on its behalf. As a result,
the filing of the MPlan Report with the Town certainly was an intentional act
by NEC. As acknowledged in MPlans filing letter of December 6, 2019, the MPlan
Report served as NECs input to the Consent Application, as well as a review
of the IBI Report.
[48]
The key issue then boils down to whether the
filing of the MPlan Report was a breach of para. 3(b) of the Order that
required NEC to provide all reasonable cooperation to obtain [the] consent
sought by McDonalds from the Town pursuant to the
Planning Act
.
[49]
That is the issue I intend to address in the
balance of these reasons. Before doing so, I wish to address two issues raised
by the parties.
[50]
First, in its factum McDonalds points to
conduct by NEC other than the filing of the MPlan Report that it alleges
disrupted the Consent Application process, such as delays by NEC in responding
to communications by McDonalds and NECs refusal to comply with simple
requests from McDonalds and the Town. Apart from the fact that McDonalds did
not plead in its notice of motion that such conduct amounted to acts of
contempt, in my view the conduct did not materially affect the prosecution of
the Consent Application. Notwithstanding McDonalds own delay of close to 10
months in prosecuting the Consent Application, the reality was that by early
November 2019 Town staff had advised McDonalds that they were prepared to move
forward with the Consent Application, which had been placed in the priority
queue for circulation.
[51]
Second, on its part NEC asserts, by way of a
defence to the contempt motion, that no Lease existed after March 2018, following
the expiry of 21 years from the commencement of the Lease, with the result that
the contempt motion is moot. However, as of December 6, 2019, when NEC filed
the MPlan Report, the Consent Application was very much alive and before the
Towns Committee of Adjustment for consideration. The MPlan Report, which
purported to provide the Committee of Adjustment with NECs input on the
Consent Application, did not take the position that the Lease was at an end and
therefore the Committee of Adjustment should or could not consider the Consent
Application. Instead, NEC took the position that the Consent Application could
be supported, subject to conditions set out in the MPlan Report. Given that
position, I do not consider it necessary to determine what appears to be a defence
constructed after-the-fact in response to the contempt motion and which is
inconsistent with the position NEC took in the MPlan Report.
[52]
Accordingly, the balance of these reasons will
focus on what I regard as the determinative issue, namely: whether NECs filing
of the MPlan Report was a breach of para. 3(b) of the Order.
[53]
I will proceed with some caution. Although
consideration of the Consent Application by the Committee of Adjustment has
been deferred, the application remains alive. Consequently, I will decide the
contempt motion but in a manner that recognizes the future conduct of the
Consent Application lies within the jurisdiction of the Committee of Adjustment.
B.
The positions of the parties
[54]
McDonalds takes the position that by filing the
MPlan Report, NEC directly opposed the Consent Application. While the MPlan
Report nominally supported the Consent Application, by including conditions for
granting consent approval the report effectively opposed the relief sought by
McDonalds.
[55]
McDonalds contends that by retaining MPlan to
prepare and file the Report, NEC directly and deliberately hindered the Consent
Application in breach of the Order or, alternatively, acted in a manner
indifferent, reckless or willfully blind to conduct carried out in violation of
the Order.
[56]
In response, NEC submits that the Order did not
prohibit it from filing the MPlan Report. The IBI Report contained errors and
material omissions that the MPlan Report sought to correct. As well, the MPlan
Report contains planning reasons and explanations to the Committee of
Adjustment as to how the Consent Application could be approved.
C.
Analysis
The context in which to assess the
allegations of contempt
[57]
Section 19.10 of the Lease stipulates that it is
subject to the
Planning Act
. In considering the Consent Application,
the Committee of Adjustment will consider the renewal of the Lease in the
context of the various public planning instruments and policies in effect. Town
staff pointed this out to McDonalds in its March 21, 2018 communication that
requested McDonalds to file a concept plan, together with a Planning Justification
Report.
[58]
Some 17 months after the Town had made its
request, McDonalds sought to satisfy it by filing the IBI Report. McDonalds
did not provide NEC with the report for review before submitting it; NEC
received a copy of the report the day before its filing. The IBI Report went
into great detail about the implications of the renewal of the Lease for
planning policies contained in instruments issued by various levels of
government.
[59]
Three aspects of the IBI Report are of
particular relevance to the contempt motion:
(i) The Consent Application signed by NECs representative
referred simply to a consent for a long term lease for a McDonalds
Restaurant. The February 1, 2018 covering letter from Dentons indicated that
Planning
Act
approval was sought for the two ten-year options to extend under the
Lease. The IBI Report indicated that consent was being sought for the two
renewal periods. The IBI Report did not disclose that the Order only renewed
the Lease for the first 10-year renewal term;
(ii) The IBI Report included a sketch, Figure 4-1, that outlined
in red the demised premises that are subject to the proposed extension of the
Lease. The report states that the proposed extension of the existing lease
area would occupy approximately 7% of the total site area, and does not include
vehicular or pedestrian access points to external roads. The area covers the
existing McDonalds restaurant building, immediately adjacent walkway and
landscape areas, the existing drive through lane, a small portion of the
westerly internal drive aisle, and two accessible parking spaces. This point
is repeated in the reports conclusion, which states that [t]he spatial extent
of the lease is based on existing and approved development on the subject
lands, which permits the stand-alone McDonalds restaurant; and
(iii) The IBI Report emphasized in several places that
the Consent Application and the Lease would not prevent
growth and development from occurring on the NEC Property
. For example, s.
5.1.1. of the IBI Report stated that [t]he area of the lands not subject to
the proposed extension of the existing lease provides sufficient space and
frontage for phased or complete development/re-development in the future, should
that occur.
[60]
On its face, the filing of the MPlan Report was
NECs attempt to draw to the Committee of Adjustments attention certain
aspects of the Consent Application that it thought affected its interest as
owner of the Property, of which the demised premises formed only a small part.
The MPlan Report stated that it intended to provide NECs input to the
Consent Application, comment on the IBI Report, and respond to requests by Town
staff that it confirm it was aware of and supported the Consent Application.
[61]
The Committee of Adjustment has not denied the
Consent Application; it has deferred considering the application until the
parties provide it with requested clarification.
[62]
That is the context in which McDonalds allegation
that NEC has breached the Orders requirement that NEC provide all reasonable
cooperation must be assessed.
[63]
I shall now consider McDonalds allegation that by
filing the MPlan Report NEC breached para. 3(b) of the Order.
First allegation: The MPlan Report opposed
the Consent Application
[64]
McDonalds alleges that the MPlan Report is
explicitly contrary to the Consent Application because it does not support the
application. I am not persuaded by that submission. A plain reading of the
MPlan Report reveals that it supports a consent application, a point
acknowledged on cross-examination by Mr. Crough from IBI. However, the MPlan Report
proposed three conditions of approval. As I will explain in the next few
paragraphs, I conclude that NEC had a legitimate interest in proposing the
conditions of approval and by doing so did not breach its obligation to provide
all reasonable cooperation.
Second allegation: The MPlan Report improperly proposed a temporal
limit on the consent
[65]
McDonalds next alleges that the MPlan Report is
explicitly contrary to the Consent Application because it proposed that consent
approval be limited to the initial 10-year renewal period, not to the two
10-year lease renewal options contained in the Lease. While it is true that
NECs proposal to limit consent approval is inconsistent with McDonalds
application to obtain approval for the two renewal periods, NECs proposal does
not amount to a breach of para. 3(b) of the Order. Since the Order only
declared that the Lease had been renewed for the first 10-year renewal term,
NECs obligation to provide reasonable co-operation under para. 3(b) of the
Order only extended to an application that sought approval for the first renewal
period sanctioned by this court.
Third allegation: The MPlan Report improperly proposed a
geographical limit on the consent
[66]
McDonalds alleges that the MPlan Report is
explicitly contrary to the Consent Application by proposing that any consent
provided be geographically limited in a manner that conflicts with McDonalds
rights under the Lease. This allegation has two parts.
[67]
The first part of the allegation asserts that one
condition of approval proposed by the MPlan Report would modify the area to
which any consent would apply to ensure that NEC could redevelop the rest of
the Property in accordance with applicable planning intensification policies
and plans. It is true that the MPlan Report proposed such a modification, but the
modification was more spatially favourable to McDonalds than that contained in
the IBI Report and was consistent with the extent of the demised premises under
the Lease.
[68]
Over the years, the Lease had undergone several
amendments that expanded the size of the demised premises, in large part to
enable McDonalds to expand the restaurants drive-through. Under the Lease,
the demised premises were L-shaped. The IBI Report proposed, in Figure 4-1, that
the lands for which consent be given track the L-shape of the demised premises.
[69]
The MPlan Report proposed that consent approval
be given to a larger, rectangular area of the Property that would include the
L-shaped demised premises, together with additional parts of the Property. The
MPlan Report contended that the larger, more regular shape of the area, to
which consent approval should apply, would facilitate the orderly development
of the balance of the NEC Property. To be clear, NEC was not proposing that
consent approval be given to an area smaller than the demised premises under
the Lease. Quite the opposite. NEC proposed that consent approval be given to
an area larger than the demised premises. In those circumstances, I am not
persuaded that such a proposal amounted to a failure to provide all reasonable
cooperation required by para. 3(b) of the Order.
[70]
The second part of the allegation asserts that NECs
proposal that consent approval should not apply to the No Build Zone provisions
of the Lease was contrary to the Consent Application and a breach of the Order.
Article XXII of the Lease deals with common areas. Sections 22.01 to 22.04 of
the Lease allow McDonalds, and its customers, the right to use the parking
areas and other outdoor common areas of the shopping plaza and prohibit NEC
from building on any part of the common areas shown with hatch marks on
Schedule E-4 to the Lease. The hatched area constitutes a significant portion
of NECs Property.
[71]
The MPlan Report proposed that consent approval
not apply to the No Build Zone Lease provisions as those provisions sterilize
the NEC property and therefore do not meet the Planning Act requirements
referred to above. The condition is intended to ensure that consent to the 1
st
renewal term does not freeze development on the retained lands and removes any
restriction that would otherwise prevent development from occurring in a phases,
with the south west corner of the property potentially be redeveloped last [
sic
].
[72]
McDonalds alleges that this proposal in the
MPlan Report is contrary to the Consent Application. I am not persuaded that it
is. First, the Consent Application, the Dentons covering letter, and the IBI
Report did not make any mention of the Leases No Build Zone provisions. It is
difficult to see how the MPlan Reports proposal could be inconsistent with a
matter that was not disclosed by McDonalds in its Consent Application. Indeed,
it is not clear from the record why the IBI Report failed to address the
implications of the Consent Application for the Leases No Build Zone provisions.
[73]
Further, the MPlan Reports proposal is
consistent with the numerous representations made by the IBI Report that approval
of the Consent Application would not prevent growth and development from
occurring on the rest of the Property.
[74]
Finally, the Leases renewal terms are subject
to the
Planning Act
. McDonalds is not entitled as of right to consent
approval under s. 50(3)(f) of the
Planning Act
. McDonalds must
demonstrate to the Committee of Adjustment that the consent it seeks is
consistent with the planning principles relevant to the granting of such
consent. Within two months of the filing of the Consent Application, Town staff
clearly signalled the need for McDonalds to provide a concept plan and
planning justification, which in part would address the impact of any consent
approval on the future development of the remainder of the Property. NEC had a
legitimate interest in ensuring that the Committee of Adjustment was aware of
provisions of the Lease, such as the No Build Zone provisions, that could
impact such future development.
[75]
Accordingly, I conclude that the three
conditions of approval proposed in the MPlan Report reflected legitimate
concerns of NEC, as owner of the remainder of the Property, about relevant
issues that McDonalds had not identified in its Consent Application. On their
face the proposed conditions were not designed to defeat the Consent
Application, but to support the granting of consent approval that took into
account NECs legitimate concerns. As a result, I do not see the content of the
MPlan Report, including its proposed conditions of approval, as constituting a
breach by NEC of its obligation to provide all reasonable cooperation under
the Order.
Fourth allegation: The mere filing of the
MPlan Report breached the Order
[76]
McDonalds advances one final argument. It
contends that the mere filing of the MPlan Report constituted an act of
contempt because it resulted in the Committee of Adjustment deferring
consideration of the Consent Application. I am not persuaded by this
submission. Para. 3(b) of the Order did not sanction a process in which
McDonalds was permitted to proceed with its Consent Application on a kind of
ex
parte
basis, with no ability for the landowner, NEC, to raise legitimate planning
issues or point out inaccuracies in McDonalds application. The evidence
discloses that at various points NEC sought to provide some input into the
application but was rebuffed by McDonalds. In those circumstances, it is
understandable that NEC would want to place before the Committee of Adjustment
information it thought relevant to a complete consideration of the Consent Application
and its approval on a basis that was fair to the legitimate interests of both
tenant and landlord. In the circumstances, I do not regard NECs filing of the
MPlan Report as a breach of para. 3(b) of the Order.
D.
Conclusion
[77]
By way of summary, I am not satisfied that
McDonalds has established, beyond a reasonable doubt, that NECs filing of the
MPlan Report constituted a failure by NEC to provide all reasonable
cooperation to obtain
Planning Act
consent.
[78]
Consequently, I dismiss McDonalds contempt
motion.
VI.
NECS CROSS-MOTION
[79]
I have treated the relief sought by NEC in
paras. (a) through (d)(ii) of its notice of motion as forms of defence to McDonalds
contempt motion. As I have been able to decide the contempt motion on other
grounds, it is not necessary to consider those requests for relief by NEC.
[80]
In para. (d)(iii) of its notice of motion NEC
seeks further explanation of the meaning of para. 3(b) of the Order. As a
single judge, I cannot vary the order made by a panel which, in effect, is the
nature of NECs request. In any event, the Order is clear and speaks for
itself; no further explanation is required.
[81]
Accordingly, I dismiss NECs motion.
VII.
DISPOSITION
[82]
For the reasons set out above, I dismiss the
motions brought by McDonalds and NEC.
[83]
Should any party decide to seek costs of the
motions, it may file brief (no more than 7 pages) cost submissions within 10
days of the release of these reasons. The party against whom costs are sought
may file brief (no more than 7 pages) responding submissions within 10 days
thereafter.
David
Brown J.A.
[1]
Planning
Act
, s. 50(3): No person shall convey land by way of a deed or transfer, or
grant, assign or exercise a power of appointment with respect to land, or
mortgage or charge land, or enter into an agreement of sale and purchase of
land or enter into any agreement that has the effect of granting the use of or
right in land directly or by entitlement to renewal for a period of twenty-one
years or more unless,
(f)
a consent is given to convey, mortgage or charge the land, or grant, assign or
exercise a power of appointment in respect of the land or enter into an
agreement in respect of the land
[2]
The
case law on this issue is sparse. In
Peel Financial Holdings Ltd. v. Western
Delta Lands Partnership
, 2003 BCCA 551, [2003] B.C.W.L.D. 890, at paras.
11-17, a single judge of the British Columbia Court of Appeal relied on the
provisions of the
Court of Appeal Act
, R.S.B.C. 1996, c. 77, to conclude
that he had the jurisdiction to hear a contempt motion to enforce an order made
by a single judge of the Court of Appeal.
[3]
Pursuant to the terms of the Lease and a 2015 Second Amending
Agreement.
|
COURT OF APPEAL FOR ONTARIO
CITATION: O'Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385
DATE: 20210607
DOCKET: C68215
Roberts, Zarnett and Sossin JJ.A.
BETWEEN
William OReilly
Plaintiff (Respondent)
and
ClearMRI Solutions Ltd., ClearMRI Solutions Inc.,
Jeff Hassman,
Jae Kim
,
Stefan Larson, David Stopak,
Tornado Medical Systems
, Inc., Arsen
Hajian,
Jeff Courtney and Gordon Cheung
Defendants (
Appellants
)
Ted Brook and Paul Macchione, for the appellants Tornado
Medical Systems, Inc. and Jae Kim
Jacqueline Horvat and Alexandra Chun, for the respondent
Heard: January 29, 2021 by videoconference
On appeal from the judgment of Honourable Justice Jane
Ferguson of the Superior Court of Justice, dated February 11, 2020, with
reasons reported at 2020 ONSC 938.
Zarnett J.A.:
i.
INTRODUCTION
[1]
This appeal concerns the scope and application of two avenues of
recourse that are potentially available when employment entitlements have not
been honoured.
[2]
One avenue exists under the doctrine of common employer liability. This
common law doctrine
[1]
recognizes that an employee may simultaneously have more than one employer. If
an employer is a member of an interrelated corporate group, one or more other corporations
in the group may also have liability for the employment obligations. However,
and importantly, they will only have liability if, on the evidence assessed
objectively, there was an intention to create an employer/employee relationship
between the employee and those related corporations.
[3]
A second avenue exists under the provisions of s. 131 of Ontarios
Business
Corporations Act
, R.S.O. 1990, c. B.16 (
OBCA
). This section
imposes liability on corporate directors, in favour of a corporate employee, for
up to six months unpaid wages and up to twelve months vacation pay. That
liability is subject to specific conditions.
[4]
The appellant, Tornado Medical Systems, Inc. (Tornado) stood at the
top of a corporate group. It was the majority shareholder of ClearMRI Solutions
Ltd. (ClearMRI Canada) which itself had a wholly owned subsidiary, ClearMRI
Solutions, Inc. (ClearMRI US).
[5]
The respondent, William OReilly, served as the Chief Executive Officer
(CEO) of ClearMRI Canada and ClearMRI US (together, ClearMRI companies).
His written employment agreement was with ClearMRI US, but he reported to, and his
performance goals were set by, the board of directors of ClearMRI Canada.
[6]
When his employment ended, Mr. OReilly was owed substantial sums for
salary and other entitlements. He brought an action seeking recovery of all
outstanding amounts from the ClearMRI companies and Tornado. While Mr. OReilly
did not have a formal position or written agreement with Tornado, he alleged
that it, along with the ClearMRI companies, were his common employers. The
action also sought recovery from the directors of Tornado and ClearMRI Canada,
including the appellant, Jae Kim (Dr. Kim), for six months unpaid wages and
twelve months vacation pay under s. 131 of the
OBCA
.
[7]
Mr. OReilly obtained default judgment against the ClearMRI companies. He
subsequently moved for summary judgment against the other defendants. His
motion was successful.
[8]
Tornado appeals the judgment against it, arguing that the finding of the
motion judge that it was liable to Mr. OReilly as a common employer is flawed.
Tornado argues that the motion judge misconstrued the common employer doctrine,
effectively finding it liable only because of its corporate affiliation to Mr.
OReillys contractual employer.
[9]
Dr. Kim appeals the judgment finding him liable as a director of
ClearMRI Canada. Dr. Kim contends that the motion judge improperly applied s.
131 of the
OBCA
to hold him liable without evidence that a condition
to that liability execution against ClearMRI Canada having been returned
unsatisfied had been met.
[10]
Tornado
and Dr. Kim both argue that the motion judge further erred in determining the
quantum of their respective liability.
[11]
I
would allow the appeal by Tornado. The motion judge erred in her articulation
and application of the common employer doctrine and thus made an extricable
error of law in concluding that Tornado was a common employer.
[12]
I
would dismiss Dr. Kims appeal, subject to one variation necessary to respect
the
OBCAs
conditions for s. 131 director liability.
[13]
Below,
I set out my reasons for these conclusions.
ii.
BACKGROUND
A.
Tornado and the ClearMRI Companies
[14]
Tornado
is an Ontario corporation. In 2010, it acquired licence rights to intellectual
property that can be used to facilitate the refurbishment and upgrading of Magnetic
Resonance Imaging (MRI) machines.
[15]
Tornado
is the majority shareholder of ClearMRI Canada, which is also an Ontario
corporation. ClearMRI Canada was formed in 2012 to develop a business of
upgrading and refurbishing MRI machines. For this purpose, Tornado assigned, to
ClearMRI Canada, its licence rights to the intellectual property.
[16]
In
addition to the incidents of corporate control over ClearMRI Canada that flowed
from its majority shareholding, Tornado had certain specified rights under a
Unanimous Shareholder Agreement that related to ClearMRI Canada: Tornados
consent was required for certain dividends, large capital expenditures, the
sale of ClearMRI Canadas business, any amalgamation with another corporation,
or any winding-up, reorganization, or dissolution. Tornados consent rights did
not, however, extend to changes in management of ClearMRI Canada or its
subsidiaries, employment agreements, or dealing with loans from non-arms-length
persons the Unanimous Shareholder Agreement required only the approval of the
board of ClearMRI Canada, or a committee of the board, for these matters.
[2]
[17]
To
some extent, the boards of directors of Tornado and ClearMRI Canada overlapped;
ClearMRI Canadas board consisted of five directors, two of whom were also directors
of Tornado. Dr. Kim was a director of both Tornado and ClearMRI Canada.
[18]
ClearMRI
US is a Delaware company, wholly owned by ClearMRI Canada. It was formed in May
2012 to obtain American regulatory approval of the ClearMRI technology and to develop
the MRI upgrading and refurbishing business in the United States.
B.
Mr. OReillys Roles and Written Employment Agreement
[19]
Mr.
OReilly served as CEO of ClearMRI Canada from approximately the time of its
formation. He was also one of its directors. When ClearMRI US was formed, he also
became its CEO and sole director. Mr. OReilly did not hold any formal position
with Tornado.
[20]
On
May 22, 2012, Mr. OReilly and ClearMRI US signed an agreement confirming the
terms of his employment. The agreement named ClearMRI US as Mr. OReillys
employer. The agreement specified that Mr. OReilly was to serve as its CEO and
was to be paid an annual base salary of $153,000 USD in 2012, increasing to
$210,000 USD in 2013. He was also entitled to benefits including paid vacation
and to specific payments if he was terminated without notice or cause. He was also
eligible to earn a performance bonus of $80,000 USD and to receive other
compensation.
[21]
Although
ClearMRI US was named in the written agreement as the employer, the motion
judge found that Mr. OReilly was also employed by ClearMRI Canada and Tornado.
Her reasons for doing so are discussed below.
C.
Deferral of Salary, Non-Payment of Employment Obligations, and the
Termination of Mr. OReillys Employment
[22]
Cash
flow problems inhibited the successful launch of the MRI upgrading and
refurbishment business. Mr. OReilly took certain steps to overcome that
problem. To assist with the required funding, he agreed to defer his full
salary commencing in 2013 until ClearMRI Canada started to earn revenue; the
deferral continued in 2014. The motion judge found that Mr. OReilly had not agreed
to defer his salary indefinitely, only temporarily, and that he received assurances
from ClearMRI Canada and Tornado that ClearMRI Canada was committed to bringing
its product to market. I return to the arrangements for the deferral and the
assurance in more detail below.
[23]
In
December 2013, Mr. OReilly also made a $50,000 USD loan to ClearMRI Canada. To
avoid the appearance of a conflict of interest, he resigned as a director and
CEO of both ClearMRI Canada and ClearMRI US. However, the motion judge noted
that in reality he continued in the CEO role. This loan was not repaid.
[24]
In
April 2014, Mr. OReilly secured a regulatory clearance from the U.S. Food and
Drug Administration. The motion judge found that this step entitled him to a performance
bonus of $80,000 USD. However, the performance bonus was never paid.
[25]
By
the spring of 2014, it was apparent that ClearMRI Canada was no longer
committed to bringing their product to market. On August 6, 2014, Mr. OReilly
took the position that he had been constructively dismissed. His lawyer
demanded payment from ClearMRI Canada and ClearMRI US of $281,315 USD in unpaid
salary, and of the $50,000 USD loan.
D.
The Action
[26]
In
October 2014, Mr. OReilly commenced this action against ClearMRI Canada,
ClearMRI US, Tornado, and individual directors of ClearMRI Canada and Tornado,
including Dr. Kim.
[27]
The
claims against the individuals were for six months wages and twelve months
vacation pay under s. 131 of the
OBCA
. The corporations were each sued
(as common employers) for all unpaid wages and employment entitlements.
ClearMRI Canada and ClearMRI US were sued for the unpaid loan.
[28]
On
September 2, 2015, Mr. OReilly obtained default judgment against ClearMRI
Canada and ClearMRI US for deferred salary, vacation pay, the performance bonus,
and the unpaid loan, totalling $381,103.84 USD, plus costs.
[29]
The
default judgment was not satisfied, and Mr. OReilly moved for summary judgment
against the remaining defendants.
E.
The Motion Judges Decision
[30]
The
motion judge was satisfied that this was an appropriate case for summary
judgment.
[31]
The
motion judge described the common law doctrine of common employer liability as
one that requires the court to look past the immediate bilateral contractual
relationship
and recognize that an employee may be employed by a number of
different companies at the same time. A group of companies identified as concurrent
employers will have joint and several liability with respect to the rights
and entitlements of the employee. The motion judge identified three factors
that should be considered: the employment agreement itself; where the effective
control over the employee resides; and whether there was common control between
the different legal entities.
[32]
The
motion judge then addressed whether ClearMRI Canada was a common employer of
Mr. OReilly. She concluded that it was, noting that the issue was not really
in dispute and there was already a judgment against it. She found that Mr.
OReilly reported to the ClearMRI Canada board, which set his performance
goals, and that, [i]n practice, effective control over [Mr.] OReilly did
reside with ClearMRI Canada; she further remarked that ClearMRI Canada wholly
owned ClearMRI US, and had incorporated it for a specific purpose. She was
satisfied they both had a single relationship with [Mr.] OReilly.
[33]
The
motion judge next considered the liability of the individuals who were
directors of ClearMRI Canada, including Dr. Kim. She referred to the source of
directors liability for wages, s. 131 of the
OBCA
, which provides, in
relevant part, as follows:
Directors
Liability to employees for wages
(1)
The directors of a corporation are jointly and
severally liable to the employees of the corporation for all debts not
exceeding six months wages that become payable while they are directors for
services performed for the corporation and for the vacation pay accrued while
they are directors for not more than twelve months under the
Employment
Standards Act
, and the regulations thereunder, or under any collective
agreement made by the corporation.
Limitation
of liability
(2) A director is liable under subsection (1) only if,
(a) the corporation is sued in
the action against the director and execution against the corporation is
returned unsatisfied in whole or in part; or
(b) before or after the action
is commenced, the corporation goes into liquidation, is ordered to be wound up
or makes an authorized assignment under the
Bankruptcy and Insolvency
Act
(Canada), or a receiving order under that Act is made against it,
and, in any such case, the claim for the debt has been proved. 2002, c.
24, Sched. B, s. 27 (1).
Idem
(3) Where execution referred to in clause (2) (b) has issued,
the amount recoverable from a director is the amount remaining unsatisfied
after execution. R.S.O. 1990, c. B.16, s. 131 (3).
[34]
She
found that the ClearMRI Canada directors were jointly and severally liable
under s. 131 of the
OBCA
to Mr.
OReilly
for six months of
unpaid wages and twelve months
of
vacation pay, specifically $153,400 USD. As Mr. OReilly was also a
director, she found that he shared in that liability.
[35]
Next,
the motion judge considered whether Tornado was a common employer using the
three factors she identified. She stated that it was not determinative that
there was no employment agreement with Tornado. She found that Tornado exercised
a sufficient amount of control over Mr. OReilly, as both Tornado and ClearMRI
Canada had accepted his offers to defer his salary and to loan funds to ClearMRI
Canada, both had assured Mr. OReilly that ClearMRI Canada was committed to
bringing its product to market, and both shared the business objectives that
Mr. OReilly was employed to achieve. She found common control between the
different legal entities because Tornado had incorporated ClearMRI Canada to
develop a specific business; Tornado had a majority controlling shareholder
interest; Tornado had consent rights under the Unanimous Shareholder Agreement;
there was an overlap in directors; and when it came time to replace a director
of ClearMRI Canada, Dr. Kim wished to discuss the replacement with Tornado.
Accordingly, she found that Tornado was a common employer, jointly and
severally liable for the employment related amounts of the default judgment everything
except the unpaid loan and interest on it.
[36]
Finally,
she held that if Tornado did not satisfy the judgment against it, the Tornado
directors individually named in the action would share in the liability of the
ClearMRI companies directors for the six months wages and twelve months
vacation pay.
[3]
She said that the judgment against the Tornado directors is to remain in
abeyance until and unless Tornado does not satisfy the judgment against it.
There was no similar statement regarding the judgment against the ClearMRI companies
directors.
[37]
The
formal judgment indicated that the parties could return to the Court for
directions concerning the liability of the two Tornado directors if execution
against Tornado was returned unsatisfied. No similar provision appeared in the
judgment concerning the liability of the ClearMRI Canada directors, including
Dr. Kim.
iii.
ANALYSIS
A.
Was Tornado Properly Found to be a Common Employer?
The Arguments
[38]
Tornado argues that although the motion
judge mentioned effective control over the employee as part of the common
employer test, nothing that she referred to showed any effective control by
Tornado over Mr. OReilly as an employee. Tornado submits that the motion judge
effectively treated Tornados corporate relationship with the ClearMRI companies
as rendering it liable, which is insufficient in law for a corporation to be liable
for anothers obligations.
[39]
Tornado also argues that the motion judge
gave no real consideration to the presence of a written employment agreement
which specified Mr. OReillys employer, and to the absence of an employment
agreement with Tornado. It submits that it was necessary to consider whether
Mr. OReilly had a reasonable expectation that Tornado was his employer the
written employment agreement and Mr. OReillys senior role in the ClearMRI
companies shows he could not have reasonably held such an expectation.
[40]
Tornado also argues that the common
employer doctrine only applies to wrongful dismissal claims, and that claims
for unpaid salary against a corporation related to the employer must be made
under s. 4 of the
Employment Standards Act
, which was not invoked by Mr. OReilly.
Further, it challenges how the motion judge arrived at the quantum of its
liability.
[41]
Mr. OReilly argues that the motion judge
made no reversible error in reaching the conclusion that Tornado was a common
employer, in holding it liable for unfulfilled employment obligations, and in
determining the quantum of that liability.
[42]
I begin by discussing the relationship
between the concept of corporate separateness, under which corporations are not
liable for debts and obligations of affiliated or subsidiary corporations, and
the common employer doctrine, which may impose liability on related
corporations. I also discuss the role of an employment agreement in that
analysis. I then address why the common employer doctrine applies to claims beyond
those for wrongful dismissal. Against that backdrop, I explain why I conclude
that the motion judge erred in granting summary judgment based on her finding
that Tornado was a common employer. In light of that conclusion, it is
unnecessary to examine Tornados arguments about quantum.
Corporate Separateness
[43]
A corporation is a distinct legal entity
with the powers and privileges of a natural person:
OBCA
, s. 15. These powers and privileges
include owning assets in its own right, carrying on its own business, and being
responsible only for obligations it has itself incurred.
[44]
The fact that one
corporation owns the shares of or is affiliated with another does not mean they
have common responsibility for their debts, nor common ownership of their businesses
or assets. A corporations business and assets are not, in law, the business or
assets of its parent corporation:
Yaiguaje v. Chevron Corporation
, 2018 ONCA 472, 141 O.R. (3d) 1 at paras.
57-58, leave to appeal refused, [2018] S.C.C.A. No. 255;
BCE Inc. v.
1976 Debentureholders
, 2008 SCC
69, [2008] 3 S.C.R. 560 at para. 34. Similarly, a parent (shareholder) corporation
is not liable, as such, for the debts and obligations of a subsidiary:
OBCA
, s. 9
[45]
The fact that corporations are related and
coordinate their activities does not, in and of itself, change this paradigm. Ontario
law rejects a group enterprise theory under which related corporations that
operate closely would, by that very fact, be considered to jointly own their
businesses or be liable for each others obligations. Although the group might,
from the standpoint of economics, appear as a unit or single enterprise, the
legal reality of distinct corporations governs:
Meditrust Healthcare
Inc. v. Shoppers Drug Mart
(2002), 61 O.R. (3d) 786 (C.A.) at paras. 29-31;
Yaiguaje
, at paras.
76-77.
[46]
Corporate separateness has exceptions
the court may pierce the corporate veil
and hold a parent corporation liable for obligations
nominally incurred by a subsidiary corporation that is a mere façade:
in order to ignore the corporate separateness principle, the
court must be satisfied that: (i) there is complete control of the subsidiary,
such that the subsidiary is the mere puppet of the parent corporation; and
(ii) the subsidiary was incorporated for a fraudulent or improper purpose or
used by the parent as a shell for improper activity:
Yaiguaje
, at para.
66. [Citations omitted].
[47]
As the test for
piercing the corporate veil makes clear, control by one corporation over
another, on its own, does not make the controlling corporation liable for the
obligations of the controlled corporation; a fraudulent or improper purpose
must also be present.
[48]
It is not suggested in
this case that there are grounds to pierce the corporate veil of any of the
relevant corporations. Accordingly, the basis on which the common employer
doctrine operates to hold related corporations liable, while remaining consistent
with the concept of corporate separateness, is important.
The Common Employer Doctrine
[49]
The
common employer doctrine does not involve piercing the corporate veil or
ignoring the separate legal personality of each corporation. It imposes
liability on companies within a corporate group only if, and to the extent that,
each can be said to have entered into a contract of employment with the
employee:
Sinclair v. Dover Engineering Services Ltd.
, 49 D.L.R. (4th)
297 (B.C.C.A.)
(Sinclair (BCCA))
, at para. 9.
[50]
Thus,
consistent with the doctrine of corporate separateness, a corporation is not
held to be a common employer simply because it owned, controlled, or was
affiliated with another corporation that had a direct employment relationship
with the employee. Rather, a corporation related to the nominal employer will
be found to be a common employer only where it is shown, on the evidence, that
there was an intention to create an employer/employee relationship between the
individual and the related corporation:
Gray v. Standard Trustco Ltd.
(1994), 8 C.C.E.L. (2d) 46 (Ont. Gen. Div.), at para. 3;
Downtown Eatery
(1993) Ltd. v. Her Majesty the Queen in Right of Ontario
(2001), 54
O.R. (3d) 161 (C.A.), at paras. 31, 40, leave to appeal refused, [2002] 3
S.C.R. vi (note);
Rowland v. VDC Manufacturing Inc.
, 2017 ONSC 3351,
at paras. 12-13.
[51]
As
illustrated by the issue in this case, where Mr. OReilly alleges that Tornado
is liable for specific employment obligations, the common employer question is one
of contractual formation did the employee and the corporation alleged to be a
common employer intend to contract about employment with each other on the
terms alleged? When such an intention is found to exist, no violence is done to
the concept of corporate separateness because the corporation is held liable
for obligations it has undertaken.
[52]
To
determine whether the required intention to contract was present, the parties
subjective thoughts are irrelevant. Nor need the intention necessarily have
been reflected in a written agreement. The common laws approach to contractual
formation is objective; intention to contract can be derived
from conduct. As the Supreme Court has
stated in a similar common law contractual formation context, what is relevant
is how each partys conduct would appear to a reasonable person in the
position of the other party:
Owners, Strata Plan LMS 3905 v.
Crystal Square Parking Corp.
, 2020
SCC 29, 450 D.L.R. (4th) 105, at para. 33.
[53]
A
variety of conduct may be relevant to whether there was an intention to
contract between the employee and the alleged common employer(s).
As they bear upon this case, two types of conduct are
important.
One is conduct that reveals where effective control over the
employee resided. The second is the existence of an agreement specifying an
employer other than the alleged common employer(s).
[54]
The
conduct most germane to showing an intention that there was an employment
relationship with two or more members of an interrelated corporate group is
conduct which reveals that effective control over the employee resided with
those members
[4]
:
Downtown Eatery
, at paras. 32-33. This is consistent with how the
law distinguishes employment from other types of relationships. Control over
such matters as the selection of employees, payment of wages or other
remuneration, method of work, and ability to dismiss, can be important
indicators of an employer/employee relationship:
Baldwin v. Erin District
High School Board
,
1961 O.R. 687, at para 11, affd 36 D.L.R. (2d)
244 (SCC); see also
Bagby v. Gustavson International Drilling Co. Ltd.
,
1980 ABCA 227, 24 A.R. 181, at paras. 48-50.
[55]
A
written agreement that specifies an employer other than the corporation(s)
alleged to be the common employers may also be relevant. The extent of its
relevance depends on how the existence and terms of the written agreement, in
light of the facts, informs the question of whether there was an intention that
others were also employers.
[56]
These
points are illustrated in this courts leading decision on common employer
liability,
Downtown Eatery
, and the case law which has followed.
[57]
In
Downtown Eatery
, the employee was the manager of a nightclub called For
Your Eyes Only. The nightclub was operated together by a highly integrated or
seamless group of companies. One corporation owned the premises; a second
owned the trademark and held the liquor and entertainment licences; a third owned
the chattels and equipment; and a fourth was the paymaster: at para. 34. The
employees contract was with the business name For Your Eyes Only, which itself
was not a legal entity: at paras. 38-40.
[58]
The
court held that an individual may be found to be an employee of more than one
corporation in a related group of corporations, as long as the evidence shows
an intention to create an employer/employee relationship between the individual
and the respective corporations within the group: at para. 31. To determine
that issue, the operative question raised by the facts was where effective
control over the employee resides: at paras. 32-33.
[59]
In
Downtown Eatery
, the answer to that question was that each of the commonly
controlled corporations that was integrally and directly involved in owning and
operating the nightclub, was exercising control over, and was therefore a
common employer of, the manager.
[60]
The
court stated at para. 40:
In conclusion, Alouche's true employer in 1993 was the
consortium of Grad and Grosman companies which operated
For Your Eyes Only
.
The contract of employment was between Alouche and
For Your Eyes Only
which was not a legal entity.
Yet the contract specified that Alouche
would be "entitled to the entire package of medical extended health care
and insurance benefits as available in our sister organization". The
sister organization was not identified. In these circumstances,
and
bearing in mind
the important roles played by several companies in the operation of the
nightclub
, we conclude that Alouche's employer in June 1993 when he was
wrongfully dismissed was all of Twin Peaks, The Landing Strip, Downtown Eatery
and Best Beaver. This group of companies functioned as a single, integrated
unit in relation to the operation of
For Your Eyes Only
. [Emphasis
added.]
[61]
The
two emphasized passages deserve amplification.
[62]
First,
the written contract of employment in
Downtown Eatery
, by not naming a
legal entity, did not indicate a choice of one entity over another in terms of identifying
the employer. Rather, it indicated the employer was the nightclub, a business
operated by the four corporations. Although there was a written agreement, it
begged, rather than answered, the question of who the parties intended the employer
to be.
[63]
Second,
each of the corporations found to be a common employer was directly involved in
the operation of the nightclub that employed the manager. The nightclub was
each of their business. Each was thus in a direct relationship of control with
the employee who had been hired to manage their business. None were held to be
employers simply because they had a relationship with another corporation that
was directly involved with the employee. As Hourigan J.A. noted in
Yaiguaje
,
the conclusion in
Downtown Eatery
rested more on the plaintiffs relationship to
the group of companies rather than the relationships among the companies in the
group: at para. 69.
[64]
In
other cases, a common employer allegation has failed due to the presence of a
written employment agreement that specified that only one company within the corporate
group was the employer:
Dumbrell v. The Regional Group of Companies Inc.
, 2007
ONCA 59, 85 OR (3d) 616, at para.
83
;
Mazza v. Ornge
Corporate Services,
2015 ONSC 7785, 52 B.L.R. (5th) 51 (
Mazza
(ONSC)
), at paras. 93-99, affd
2016 ONCA 753
, 62
B.L.R. (5th) 211 (
Mazza (ONCA)
). In each of these cases, the facts
were such that the court could conclude that the employee knew the only entity to
whom he could look for fulfillment of employment obligations:
Dumbrell
,
at para. 83;
Mazza (ONSC)
at paras. 90, 93-94. As this court explained
in
Mazza (ONCA)
, the common employer claim was precluded because [t]he
Employment Agreement identified only one employer and contained an express
release of claims against affiliated corporations: at para. 8. In other words,
the written agreements in those cases, in light of all the facts, did not
permit the conclusion that there was an intention to create an employer/employee
relationship with anyone beyond the employer specified in the written
agreement.
[65]
Nonetheless,
as
Downtown Eatery
shows, a written agreement will not always preclude
a finding of common employers. It depends on the terms of the written agreement,
and the other facts of the case. The circumstances must reasonably permit the
inference that there was an intention that the alleged common employers were
also parties to the employment agreement. The inference is not available simply
because the corporations are related: As Morgan J. explained in
Rowland
,
at paras. 12-13:
In order to establish that two or more legal entities are his
common employer, the Plaintiff must demonstrate that he had a reasonable
expectation that the Defendants were each a party to his employment contract
Where the employee is aware that he was employed by a single
employer, the fact of interlocking shareholders with his formal employer does
not itself establish a common employer. The onus is on the Plaintiff to
demonstrate that there was effective control over the employee by all of the
alleged common employer companies. There must be evidence of an actual
intention to create an employer/employee relationship between the individual
and the respective corporations within the group. [Citations omitted.]
To summarize, the doctrine of common employer liability
exists consistently with the principle of corporate separateness because it
holds related corporations liable for obligations they actually undertook to
perform in favour of the employee. It does not hold them liable simply because
they have a corporate relationship with the nominal employer. Whether the
related corporations actually undertook to perform those obligations is a
question of contractual formation did the parties objectively act in a way
that shows they intended to be parties to an employment contract with each
other, on the terms alleged? Of central relevance to that question is where
effective control over the employee resided. The existence of a written
agreement specifying an employer other than the alleged common employer(s) will
also be relevant; the extent of the relevance will depend on the terms and the
factual context.
To Which Claims Does the Common Employer Doctrine
Apply?
[66]
Tornado
argues that the common employer doctrine applies only to wrongful dismissal
claims. In my view, this argument must be rejected.
[67]
Although
the common employer doctrine has traditionally been applied to wrongful
dismissal claims, there is no reason in principle to so limit it. Whether a
corporation is a common employer is a function of whether it is properly
considered a party to the employment agreement with the employee. Therefore,
any claims that could be brought by reason of that agreement can be made
against the common employer. This includes claims for a breach that consists of
not paying salary, bonus, or other entitlements as much as it includes claims
for a breach that consists of dismissing the employee without notice or cause.
[68]
Against
that backdrop, I turn to a consideration of the approach taken by the motion
judge.
The Standard of Review
[69]
Whether
a common employer relationship exists is a question of mixed fact and law, as
it involves the application of a legal standard to a set of facts. Appellate
deference is generally warranted, but intervention is justified when the judge
commits an extricable error of law, such as the formulation and application of
the wrong test, or makes a palpable and overriding error of fact:
Housen v.
Nikolaisen
, 2002 SCC 33, [2002] 2. S.C.R. 235, at para. 36.
The Motion Judge Did Not Articulate or Apply the
Correct Test
[70]
The
test to determine whether corporations are common employers may be stated in several
ways that are in substance the same. For example, as articulated by Wallace
J.A. in
Sinclair (BCCA)
: The issue
reduces itself to determining
which company or companies entered into a contract of employment with [the
employee] pursuant to which he would provide services in return for his salary
and benefits: at para 8. Or, as adopted in
Downtown Eatery
,
One
must find evidence of an intention to create an employer/employee relationship
between the individual and the respective corporations within the group: at para.
31.
[71]
Mr.
OReilly contended that Tornado owed him the same obligations as ClearMRI US
under the written employment agreement the same salary, benefits, and other
employment entitlements. For that contention to succeed, it was necessary to
find that Tornado and Mr. OReilly intended to contract with each other on
those terms.
[72]
As
discussed below, the motion judge did not address that question. Although she
referred to three factors that are relevant to determining whether a common employer
relationship exists, she did not articulate the actual test, namely, whether
there was an intention that Tornado was a party to the employment agreement
with Mr. OReilly on the terms alleged. Nor did she apply that test to the
factors she considered. In other words, she did not ask, or answer, the right
question.
[73]
I
deal, in turn, with the three factors the motion judge considered through the
lens of the test.
The Effect of an Employment Agreement
[74]
The
first factor the motion judge discussed was Tornados absence from Mr.
OReillys employment agreement. She held that this was not determinative. She
said: It is true that O 'Reilly's employment contract does not mention
Tornado, and that Tornado did not pay him, but the factor of a contractual
relationship is not determinative, or else it would be too simple for employers
to evade their obligations towards their employees.
[75]
To
the extent that the motion judge suggested that there did not need to be any
contractual relationship between Tornado and Mr. OReilly in order to consider
Tornado a common employer, she erred. The whole point of the common employer
inquiry was to determine whether Tornado was a party to an employment agreement
imposing the obligations that Mr. OReilly sought to enforce. That did not
require a written agreement with Tornado, but it did require a determination
that a contractual relationship with Tornado on the terms alleged had been
formed. The motion judge never adverted to that question.
[76]
The
motion judge cited
Downtown Eatery
for the proposition that a contractual
relationship is not a decisive factor. However, the passage the motion judge
cited spoke to the relevance of a written agreement that did not specifically name
the common employers; the court was not suggesting that a corporation can be a common
employer without a finding that it and the employee intended to be parties to
an employment agreement with each other.
[77]
To
the extent that the motion judge was addressing the effect of the written
agreement specifying only ClearMRI US as the employer, her consideration was
incomplete. She did not address the agreements fundamental difference from that
in
Downtown Eatery
which, unlike the agreement in this case, neither
selected an entity as the employer, nor implicitly excluded any others from
consideration. Here, the written agreement specifically named a corporation for
which the appellant actually worked.
[78]
It
was accordingly necessary to assess how the written agreement bore on the
question of whether there was an intention that Tornado was a party to the
employment agreement with the same obligations as ClearMRI US. This analysis would
have to be made in light of all of the evidence.
[79]
The
motion judge did not, however, undertake this required analysis.
Tornados Control Over Mr. OReilly As an
Employee
[80]
The
second factor the motion judge considered was whether Tornado exercised a sufficient
amount of control over Mr. OReilly. She held that it did, but her conclusion
is tainted by her failure to relate the facts to the proper test.
[81]
The
motion judge relied on several facts which she said she took from Mr.
OReillys uncontested evidence: that Tornado and ClearMRI Canada both agreed
to accept [Mr.] OReillys offer to defer his salary; that Tornado and
ClearMRI Canada both agreed to accept his offer to loan funds to ClearMRI
Canada; that Tornado and ClearMRI Canada had assured Mr. OReilly that both
were committed to bringing the ClearMRI products to market; and that Tornado
shared business objectives that Mr. OReilly was employed to achieve. There are
several problems with these findings.
[82]
Beginning
with the offer to defer salary, the motion judge misapprehended Mr. OReillys
evidence. Mr. OReilly did not say his offer to defer his salary was accepted
by Tornado. Rather, he said that [t]he Board of Directors [of ClearMRI Canada]
discussed and approved of the arrangement to defer my salary until we are
receiving revenue at its meeting of February 27, 2013
This evidence does not
indicate that Tornado was exercising control over Mr. OReilly as an employee.
[83]
Second,
with respect to the loan, the motion judge did not relate her reliance on this
to her later conclusion that the loan was a private commercial debt and not a
debt related to employment duties. The motion judge did not explain, nor is it
apparent, why Tornados involvement in agreeing to the loan, which she found to
be unrelated to employment duties, was relevant to whether it was exercising
control over Mr. OReilly as an employee. For similar reasons, Tornados offer that
Mr. OReilly take shares in ClearMRI Canada in satisfaction of the loan an
offer Mr. OReilly did not accept does not assist in showing that effective
control over Mr. OReilly, as an employee, resided with Tornado.
[84]
Third,
Mr. OReillys evidence about an assurance was that at the time he offered to
defer his salary, he was reassured by ClearMRI, Clear MRIs directors, Tornado
and Tornados directors, and had no reason to doubt that ClearMRI [Canada] was
committed to bringing the product to market and subsequently earning
significant revenue. The motion judge did not explain, and it is not apparent,
why the provision of this assurance about what his employer, ClearMRI Canada,
was committed to do, constituted Tornado exercising control over Mr. OReilly
as an employee.
[85]
The
fourth fact the motion judge relied on, shared business objectives between Tornado
and the ClearMRI companies, impermissibly strayed across the boundaries of
corporate separateness. A shareholders objectives may be aligned with that of
the corporation, in that the corporations success may accrue to the benefit of
the shareholder. However, the business remains that of the corporation. An
employee of a corporation is not controlled by a shareholder of that
corporation simply because the employee is working for the success of the
corporation, and the shareholder hopes that such success will occur.
[86]
Stepping
back from the specific findings, the key question was whether there was
evidence of an intention to create an employment agreement between Tornado and
Mr. OReilly containing the obligations Mr. OReilly sought to enforce. The
motion judge did not relate the evidence about control over Mr. OReilly to this
critical question. She did not consider whether the evidence about control showed
an intention that Tornado was one of Mr. OReillys employers at the time Mr.
OReilly commenced employment in 2012, or that Tornado was somehow added as one
of his employers at a point after that.
Corporate Relationships
[87]
The
third factor the motion judge considered was whether there was a sufficient
relationship between Tornado and the ClearMRI companies to apply the common employer
doctrine. She found that there was, relying on Tornados majority ownership and
incidents of corporate control, Tornados consent rights under the Unanimous
Shareholder Agreement, and a desire of Dr. Kim to consult Tornado about a proposed
replacement to ClearMRI Canadas board of directors.
[5]
[88]
That
corporations to which the common employer doctrine is applied are related to
each other, members of a corporate group, or commonly controlled, is a feature
of the case law. It might usefully be described as a necessary, but not a
sufficient, factor for the application of the common employer doctrine. The
corporate interrelationships in this case were such that the common employer
doctrine qualified for consideration. But the corporate interrelationships do
not, on their own, justify applying the doctrine. If they did, the common
employer doctrine would lose its consistency with the concept of corporate
separateness.
[89]
In
some cases, the corporate set-up may shed light on with whom the employee has
contracted, because it brings into sharper focus where effective control over
the employee resided. For example, in
Downtown Eatery
, all of the
commonly controlled corporations were directly operating the business that
employed the manager. In
Sinclair
, the employee was required to work for
two companies even though on the payroll of only one. Or the employee may have
been transferred from company to company within a group in a manner that may indicate
the employment agreement was with the parent corporation:
Bagby
, at
para. 46.
[90]
These
features were not present here. The motion judge did not consider or explain
why the aspects of the corporate relationship between Tornado and the ClearMRI
companies indicated an intention that Tornado was a party to the employment
agreement with Mr. OReilly. In the absence of something that shows such an
intention, share ownership and its incidents, including the power to elect
directors and the alignment of financial objectives between parent and subsidiary
corporations, are insufficient to establish common employer status on the
parent. The motion judge referred to an overlap in directors, but there was no
suggestion of confusion about the capacity in which directors were acting when
they interacted with Mr. OReilly concerning employment. And while the motion
judge relied on Tornados consent rights under the Unanimous Shareholder
Agreement, those rights did not extend to employment agreements or changes in
senior management matters reserved to the ClearMRI Canada board.
[91]
Thus,
on the key question of whether there was an intention that Tornado was a party
to the employment arrangement with Mr. OReilly even accepting the finding
that the written agreement was not dispositive the motion judges conclusions
about control over Mr. OReilly as an employee did not address the correct test
and were thus legally insufficient to support summary judgment. The corporate
interrelationships could not fill that gap.
Conclusion on Common Employer Liability
[92]
Accordingly,
I would set aside the summary judgment against Tornado, and substitute an order
dismissing the motion for summary judgment against it.
B.
Dr. Kims Appeal
[93]
In
her reasons, the motion judge found Dr. Kim liable for six months wages and
twelve months vacation pay on the basis that he was a director of ClearMRI
Canada. Although he was also a director of Tornado, the formal judgment only
addresses his liability as a director of ClearMRI Canada.
[94]
Dr.
Kims primary argument on appeal is that even though ClearMRI Canada had not
paid the judgment against it, the conditions to his liability in s. 131(2) of
the
OBCA
are quite specific, and there was no evidence they were
fulfilled. There was no evidence that ClearMRI Canada was in liquidation,
ordered to be wound-up, or was formally bankrupt as contemplated by s.
131(2)(b). Nor was there evidence that an execution against ClearMRI Canada was
returned unsatisfied as contemplated by s. 131(2)(a).
[95]
The
issue is how s. 131 is to be interpreted in this case, given that it
contemplates the director and the corporation being sued in the same action,
yet provides that a directors liability is conditional on, for example, an
execution against the corporation being returned unsatisfied, a step that would
occur after judgment.
[96]
In
a case where the issue of liability of both the corporation and the directors
comes up for consideration at the same time, and judgment is given against the
corporation, any judgment against the director may have to be conditional on
the occurrence of a subsequent event. That was how the motion judge, having
found Tornado to be liable, approached the matter in respect of the Tornado
directors. She directed the parties to return to address the responsibility of
two Tornado directors (but not Dr. Kim) if execution against Tornado was
returned unsatisfied.
[97]
Mr.
OReilly obtained judgment against ClearMRI Canada sometime before he brought a
motion for summary judgment against Dr. Kim. Dr. Kim argues that Mr. OReilly could
have included evidence in the summary judgment motion that execution had been
returned unsatisfied against ClearMRI Canada if that were the case. Since he did
not, Dr. Kim argues that no judgment at all should have been given against him.
In any event, the judgment does not reflect that Dr. Kims liability is
conditional on s. 131(2) events occurring.
[98]
I
reject the argument that no judgment at all should have been granted against
Dr. Kim. Nothing in s. 131 of the
OBCA
puts a time limit on when the
conditions in s. 131(2) can be fulfilled. But the formal judgment should be
amended to provide that the liability of Dr. Kim in para. 3 is conditional on
an execution against ClearMRI Canada being returned unsatisfied, or one of the
events referred to in s. 131(2)(b) occurring in relation to ClearMRI Canada. The
parties should have leave to return to the motion judge for directions if any
issue arises on this point.
C.
Quantum Issues
[99]
The
appellants made various arguments regarding the quantum of the judgments
against them. Given the disposition of Tornados appeal, I address two that could
apply to Dr. Kim.
[100]
First, they argue that
the motion judge did not consider the fact that Mr. OReilly resigned in December
2013, and that this should affect the quantum of his entitlement. I would
reject that argument. The motion judge found that, notwithstanding the formal resignation,
Mr. OReilly continued to work as CEO in reality. This reality governs his
compensation entitlement.
[101]
Second, it is argued
that the agreement to defer specified the circumstance under which payment
would resume, namely, the business earning revenue, and this never occurred. Mr.
OReilly gave evidence, however, that revenue was earned. In my view, there was
evidence on which the motion judge could properly view the deferral as
non-permanent, such that the entitlement to claim salary and other entitlements
was not waived and was in place when the revenue was earned.
[102]
Finally, it is argued
that the motion judge simply accepted the amounts in the default judgment.
There was evidence before the motion judge on the quantum of Mr. OReillys
entitlements as they pertained to Dr. Kims liability. As well, his liability
is derivative of that of ClearMRI Canada, which had been determined by
judgment. I would not interfere with the quantum of the judgment against Dr.
Kim.
iv.
CONCLUSION
[103]
Subject to the
variation noted in para. 98 above, I would dismiss the appeal of Dr. Kim. I
would allow Tornados appeal and set aside the summary judgment against it.
[104]
The parties made
submissions on costs but did not specifically address the mixed result I have
arrived at. If the parties cannot agree on costs, they should make written
submissions limited to three pages each, within ten days of the release of
these reasons.
Released: June 7, 2021 L.R.
B. Zarnett J.A.
I agree. L.B.
Roberts J.A.
I agree. Sossin
J.A.
[1]
Only the common law doctrine of common employer liability was
invoked by the respondent in this case. Section 4 of the
Employment Standards Act
,
2000, S.O. 2000, c. 41 provides for circumstances in which separate persons are
treated as one employer. It is not necessary to comment on how the section
might have applied in this case, a point on which the parties did not agree.
[2]
The motion judge described this latter category of decision as falling within
Tornados consent rights at para. 13 of her reasons, but this appears to
misread sections 2.12 and 2.13 of the Unanimous Shareholder Agreement.
[3]
The motion judge subsequently varied her judgment to delete one of the
individuals (Stefan Larson) as he had not been a director of either Tornado or
ClearMRI Canada at the relevant time.
[4]
This is a different question from the question of corporate
control, which, at its most basic, refers to the ability of a shareholder to
elect the majority of a corporations board of directors:
OBCA
, s. 1(5). The fact
that one corporation controls a second corporation does not equate to control
by the first corporation over the second corporations employees.
[5]
Neither the director being replaced, or the replacement, was
Mr. OReilly.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Oakville (Town) v. Sullivan, 2021
ONCA 1
DATE: 20210106
DOCKET: C68261
Trotter, Zarnett and Jamal JJ.A.
BETWEEN
The Corporation of the Town
of Oakville and
Oakville Hydro Electricity
Distribution Inc.
Applicants (Respondents)
and
Michael Arthur Sullivan and
Margaret Di Pede
Respondents (Appellants)
Albert G. Formosa and Marie-Pier
Nadeau, for the appellants
Charles M.K. Loopstra and Scott E.
Hamilton, for the respondents
Heard: November 24, 2020 by video conference
On appeal from the
order of Justice Clayton Conlan of the Superior Court of Justice, dated March
6, 2020, with reasons reported at 2020 ONSC 1419.
Jamal J.A.:
Introduction
[1]
This appeal involves a claim for actionable
encroachment on an easement. The appellants, Michael Sullivan and Margaret Di
Pede, built a swimming pool and surrounding deck, platform, and other elements
(Pool Amenities) behind their house in Oakville. The Pool Amenities extend over
a ten-foot strip of land which, although owned by the appellants, is subject to
an easement held by the respondents, The Corporation of the Town of Oakville
(Town) and Oakville Hydro Electricity Distribution Inc. (Hydro). The easement
prohibits the erection of any building or structure within that strip of land.
The appellants knew about the easement when they bought the property and proceeded
to build the Pool Amenities without a municipal building permit.
[2]
The application judge declared the Pool
Amenities to be a building or structure erected on the land that was subject
to the easement, and thus an actionable encroachment upon it. He ordered the appellants
to remove the Pool Amenities and remediate any damage to the easement by June
1, 2020. The appellants now appeal.
[3]
For the reasons that follow, I would dismiss the
appeal.
Background
[4]
In June 1972, the appellants predecessors in
title granted an easement to the Town over the most westerly ten feet (10) of
their property. The easement indenture, which is registered on title, provides in
relevant part:
WHEREAS the Owners are the owners of the lands
described in Schedule A
hereto
and have
agreed to grant the herein mentioned easements;
NOW THEREFORE the Owners in consideration of
other good and valuable consideration and the sum of Two Dollars ($2.00) now
paid to it by the Town,
hereby
grants to the
Town the right, liberty and privilege appurtenant to its undertaking as a
Municipal Corporation to construct, operate, maintain, replace and repair
underground sewers, drains, pipes, conduits, wires and services generally with
such above ground accesses, manholes, catch basins, hydrants, service boxes and
other appurtenances as it desires, at its expense and for so long as it
desires, upon, across, along and under the land described in Schedule A
hereto
and for every such purpose the Town and those
claiming under it shall have access to the said land
at
all times
but
reserving to the Owners the right to use the surface of
the said land for any purpose which does not conflict with the Towns rights
hereunder
and specifically excluding the planting of
any tree and the erection of any building or structure
. [Emphasis added.]
[5]
In February 2000, the Town sold the easement to
Hydro but retained an interest in it under the municipal by-law authorizing the
sale.
[6]
In October 2012, the appellants bought the
property. They knew about the easement before closing, but believed it was abandoned
or never used. In fact, located within the easement is an underground conduit
that houses a hydro cable providing electricity to a neighbouring property.
[7]
In early 2014, the appellants built the Pool
Amenities in their back yard within the easement.
[8]
It is not disputed that the Pool Amenities are a
building under the Ontario
Building Code Act, 1992
, S.O. 1992, c.
23, and thus legally required a municipal building permit. No such permit was
obtained. In January 2018, the appellant Michael Sullivan pleaded guilty to
building the Pool Amenities without a building permit and breaching an order to
comply. Mr. Sullivan offered to pay to relocate the hydro service of the
neighbouring property, but his affected neighbour was unwilling to agree to
this proposal.
[9]
It is also not disputed that, over the years, several
other structures have been erected within the easement with the Towns approval,
including a carport and part of the house. Two large trees are also within the
easement.
[10]
In May 2018, the respondents applied to the
Ontario Superior Court for a declaration that the Pool Amenities encroach upon
the easement and for an order requiring their removal.
The application judges decision
[11]
By order dated March 6, 2020, the application
judge granted the application. In his reasons, he ruled that the Pool Amenities
actionably encroach upon the easement because they contravene the express
prohibition against erecting a building or structure within it. He also ruled
that the equitable doctrine of proprietary estoppel does not prevent the Town
and Hydro from enforcing their rights under the easement. He therefore ordered
the appellants to remove the Pool Amenities and to remediate any damage to the
easement at their own expense by June 1, 2020.
[12]
In
obiter dicta
, however, the application
judge added that had he not concluded that the Pool Amenities contravened the
express terms of the easement, he would have ruled that the Town and Hydro had
not established an actionable encroachment. He was prepared to accept that the
Pool Amenities could cause some unspecified or unknown, but probably quite
minor, degree of inconvenience to the Town and/or Hydro in exercising their
Easement rights, however, that is not the test for substantial interference.
Issues
[13]
This appeal raises three issues:
1.
Is there an actionable encroachment on the easement?
2.
Was the easement abandoned or partially
extinguished?
3.
Does the equitable doctrine of proprietary
estoppel preclude enforcement of the easement?
Discussion
Issue #1: Is there an actionable encroachment
on the easement?
(a)
Applicable principles
[14]
In evaluating whether there is an actionable
encroachment on an easement created by express grant, the court first determines
the nature and extent of the easement by interpreting the wording of the
instrument creating the easement, considered in the context of the
circumstances that existed when the easement was created:
Fallowfield v.
Bourgault
(2003), 68 O.R. (3d) 417 (C.A.), at para. 10; see also
Raimondi
v. Ontario Heritage Trust
, 2018 ONCA 750, 96 R.P.R. (5th) 175, at para.
11.
[15]
Once the nature and extent of the easement have been
determined, the court then considers whether there is an actionable
encroachment upon it. The test for an actionable encroachment is whether there is
a substantial interference with the use and enjoyment of the easement for the
purpose identified in the grant:
Weidelich v. de Koning
, 2014 ONCA
736, 122 O.R. (3d) 545, at paras. 9-11;
Fallowfield
, at paras. 40-41;
Hunsinger
v. Carter
, 2018 ONCA 656, 91 R.P.R. (5th) 175, at para. 11; Anne Warner La
Forest,
Anger & Honsberger, Law of Real Property
, loose-leaf, 3rd
ed. (Toronto: Thomson Reuters, 2019),
at para.
17:20.50; and
Halsburys Laws of Canada
Real Property
(Toronto:
LexisNexis Canada, 2016 Reissue), at HRP-325.
(b)
Application to this case
[16]
The appellants assert that the application judge
erred in ruling that the Pool Amenities are an actionable encroachment, for two
reasons:
1.
The easement does not limit the appellants right to build the Pool
Amenities on their property, because the easement was only ever intended to be
used, and has only ever been used, for a hydro line, which can be serviced even
with the Pool Amenities located within the easement; and
2.
The application judge applied the wrong test for actionable
encroachment by ruling that the appellants are prohibited outright from
erecting any building or structure within the Easement, regardless of whether
that building or structure conflicted or substantially interfered with the
rights of the Easement holder(s). Had the application judge applied the
correct substantial interference test, he would have concluded that no actionable
encroachment was established.
[17]
I do not accept these submissions.
[18]
First, the application judges ruling as to the nature
and extent of the easement involves a question of mixed fact and law that attracts
appellate deference, and is reviewable (absent an extricable error of law)
only for palpable and overriding error: see
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at para.
50;
Owners, Strata Plan LMS 3905 v. Crystal Square Parking
Corp.
, 2020 SCC 29, 450
D.L.R. (4th) 105, at para. 101,
per
Rowe J. (dissenting, but not on this
point);
Tessaro v. Langlois
, 2019 BCCA 95, 100 R.P.R. (5th) 51, at
paras. 18-20; and
Twogee Developments Ltd v. Felger
Farming Co Ltd
,
2017 ABCA 138, 52 Alta. L.R. (6th) 270,
at
para. 27.
[19]
In my view, the application judge properly
focused on the wording of the easement indenture. The indenture states that the
appellants rights to use the surface of the lands within the easement
specifically exclud[es] the planting of any tree and the erection of any
building or structure. He was entitled to conclude that the easement delivered
a two-part message to the homeowner: (i) do not use the surface of the
Easement land for any purpose that conflicts with the Towns rights (described
above),
and
(ii) so that there is no confusion, do not under any
circumstances plant a tree or erect a building or structure within the Easement
(emphasis in original). The bottom line, the application judge stated, is that
the planting of a tree or the erection of a building or structure on the
Easement land is not permitted, period.
[20]
The application judge was also entitled to
conclude that interpreting the easement as an outright prohibition reflects its
broad purpose of allowing the Town unfettered access within the easement to
provide municipal services:
One must remember that
the purpose of this
particular
Easement
is very broad. The Town, from the outset of the Indentures creation, has the
right to (i) go underground within the Easement for, effectively, any reason
connected to municipal services and to (ii) access, above ground and within the
Easement, any item related to such a service. An outright prohibition against
the planting/erection of any tree, building or structure within the Easement
is neatly consistent with
such a broad purpose.
[21]
The appellants say that the application judges interpretation
focuses principally on the wording of the indenture and ignores contemporaneous
extrinsic evidence that suggests that the easement was primarily if not
exclusively intended to permit a hydro line under the appellants property.
They say that modern technology now allows the hydro line to be repaired or
replaced even if a building or structure is erected within the easement.
[22]
I do not accept this submission. It is, in
effect, an invitation for the court to read down the clear words of the
easement indenture based on the surrounding circumstances and the use made of
the easement to date. But, as Rothstein J. for the Supreme Court of Canada cautioned
in
Sattva
, [w]hile the surrounding circumstances will be considered
in interpreting the terms of a contract, they must never be allowed to
overwhelm the words of that agreement: at para. 57. The easement indenture here
is not limited to placing a hydro line under the appellants property. It also
allows the Town to install and maintain underground sewers, drains, pipes,
conduits, wires and services generally. That these facilities have not been
installed within the easement to date is of no moment. The easement is not time
limited and is therefore perpetual:
Remicorp Industries Inc. v. Metrolinx
,
2017 ONCA 443, 138 O.R. (3d) 109, at para. 47, citing
Gale on Easements
,
20th ed. (London: Thomson Reuters (Professional) UK Limited, 2017), at para.
12-26. Indeed, the easement indenture expressly permits the Town access to
provide the other listed municipal services, as it desires and for so long
as it desires.
[23]
Thus, in my view, the application judges determination
of the nature and extent of the easement is not tainted by palpable or overriding
error. I would therefore reject the appellants first argument that the
easement does not prohibit the erection of a building or structure such as the
Pool Amenities.
[24]
Second, I disagree with the appellants claim that
the application judge applied the wrong test for an actionable encroachment. Although
I accept that the application judges reasons could have been clearer, I read those
reasons as implicitly applying the substantial interference test. By contravening
the outright prohibition against erecting a building or structure, the Pool
Amenities necessarily encroach upon the easement. The easement indenture does
not say that the appellants are prohibited from erecting a building or
structure unless it creates a barrier or obstacle to the respondents exercise of
their rights under the easement. Rather, as the application judge held, the
appellants are prohibited outright from erecting any business or structure
within the Easement. By agreeing to an outright prohibition, without
qualification, the parties have effectively defined for themselves what will
constitute a substantial interference with the easement.
[25]
The application judges observation in the
alternative and in
obiter
that the respondents did not discharge their
onus of establishing substantial interference does not detract from this
conclusion. His
obiter
observation considered only one aspect of the
easement the appellants obligation not to use the surface of the easement
for any purpose that conflicts with the Towns rights. Because it was in the
alternative, it did not consider the outright prohibition against erecting any
building or structure. But when the outright prohibition is considered, as it
was under the first part of the application judges analysis, a substantial
interference is established.
[26]
I therefore see no basis to intervene with the
application judges conclusion that the Pool Amenities are an actionable
encroachment on the easement.
Issue #2: Was the easement abandoned or partially
extinguished?
(a)
Applicable principles
[27]
In
Remicorp
, this court reviewed the
general principles relating to abandonment of an easement by release (at paras.
47-51) and partial extinguishment of an easement (at paras. 63-73). In broad
outline:
·
Unless an easement is granted for a term of
years, the rights conferred by an easement are perpetual and, accordingly, are actually
or potentially valuable rights. Therefore it is not lightly to be inferred that
the owner of such a right should give it up for no consideration: at para. 47,
citing
Gale on Easements
, at para. 12-26.
·
Other than by an express release, an easement
can be abandoned by release impliedly by non-use coupled with evidence of an
intention to abandon the easement: at para. 49.
·
An easement can be extinguished either by
statute or at common law: at paras. 70-71.
(b)
Application to this case
[28]
Here, in the alternative, the appellants assert that
the easement has been abandoned for any purpose other than the hydro cable.
They say this is the only purpose for which the easement has been used, and that
modern technology allows the cable to be serviced effectively even with the Pool
Amenities within the easement. They also suggest the easement has been partially
extinguished at common law because the easement serves no purpose other than
servicing the hydro cable.
[29]
However, the application judge made no express findings
on abandonment or partial extinguishment, and it is not clear whether these
issues were even argued before him. This court will generally not entertain entirely
new issues on appeal where doing so might unfairly deprive the other party of
the opportunity to lead relevant evidence:
Kaiman v. Graham
, 2009 ONCA
77, 245 O.A.C. 130, at para. 18;
Whitby (Town) v. G & G 878996 LM Ltd.
,
2020 ONCA 654, 5 M.P.L.R. (6th) 174, at para. 9.
[30]
In any event, based on the evidence before the
court and the findings that were made, I see no basis to conclude that the easement
was abandoned or partially extinguished:
·
No
express
abandonment
is alleged, nor have the appellants
established implied abandonment. In my view, the creation of the easement by express
grant registered on title and its use continuously for a hydro cable is
sufficient to find that the respondents did not intend to abandon it: see
Remicorp
, at paras. 50-51.
·
Nor is there any basis to find that the easement
was extinguished at common law. There is no evidence that the municipal purposes
for creating the easement have
come to an end
:
Remicorp
, at para. 65, citing
Anger & Honsberger
,
Law
of Real Property
, at para. 17:20.60(a). Nor does lack of use and lack
of need suffice to extinguish an easement by
operation
of
law:
Remicorp
, at para. 76.
[31]
I therefore conclude that the appellants have
not established that the easement was abandoned or partially extinguished.
Issue #3: Does the equitable doctrine of proprietary estoppel preclude
enforcement of the easement?
(a)
Applicable principles
[32]
Proprietary estoppel is an equitable doctrine that
can create or affect property rights when there is a want of consideration or
of writing:
Clarke v. Johnson
, 2014 ONCA 237, 371 D.L.R. (4th) 618, at
para. 41, citing
Anger & Honsberger, Law of Real Property
, at
para.
28:10.20. As noted in
Clarke
,
at para. 52, three elements must be established:
(i) the owner of the land induces, encourages
or allows the claimant to believe that he has or will enjoy some right or
benefit over the property;
(ii) in reliance upon his belief, the claimant
acts to his detriment to the knowledge of the owner; and
(iii) the owner then seeks to take unconscionable
advantage of the claimant by denying him the right or benefit which he expected
to receive[.]
(b)
Application to this case
[33]
In the further alternative, before this court the
appellants largely repeat the argument they made before the application judge to
invoke proprietary estoppel: (i) the Town expressly permitted the construction
of a portion of the appellants house and carport within the easement, and thus
induced, encouraged, or allowed them to believe that the easement was abandoned
or no longer in use; (ii) the appellants relied on this belief when building
the Pool Amenities within the easement; and (iii) it would be unconscionable to
allow the respondents to now assert that the Pool Amenities encroach on the
easement.
[34]
The application judge rejected this argument and
concluded that the appellants had established none of the conditions for proprietary
estoppel:
[T]here is no evidence to suggest that Hydro
had any knowledge of
the other structures
located
within the easement that existed before the
Pool Amenities were installed, and thus, it cannot be said that Hydro induced,
encouraged or allowed [the appellants] to do what they did in early 2014.
Second, we know for certain that the
[appellants] did not enquire with the Town and/or Hydro about
the scope of
the Easement or a building permit
before installing the Pool Amenities, and thus, there is no evidence to suggest
that the [appellants] acted to their detriment to the knowledge of either the
Town or Hydro.
Third, though perhaps unforgiving
to some degree,
there is nothing unconscionable
about the Town and Hydro enforcing the clear wording of the said Indenture.
[35]
The application judge correctly cited the elements
for proprietary estoppel enunciated in
Clarke
, and asked whether those
elements were met based on the facts. His conclusion that the appellants had
not established the conditions for proprietary estoppel is a finding of mixed
fact and law that attracts appellate deference, absent palpable and overriding
error. In my view, the appellants have shown no such error.
[36]
I therefore conclude that the equitable doctrine
of proprietary estoppel does not preclude the enforcement of the respondents easement.
Disposition
[37]
I would dismiss the appeal, order the appellants
to comply with the order of the application judge by June 30, 2021 (the date agreed
to by the parties), and award the respondents costs of the appeal in the agreed
amount of $40,000, all inclusive, payable within 30 days.
Released: January 6, 2021 (G.T.T.)
M.
Jamal J.A.
I agree.
G.T. Trotter J.A.
I agree. B. Zarnett J.A.
|
COURT
OF APPEAL FOR ONTARIO
CITATION: Ontario
(Labour) v. Sudbury (City), 2021 ONCA 252
DATE: 20210423
DOCKET: C67701
Fairburn A.C.J.O., Watt and
Huscroft JJ.A.
BETWEEN
Her Majesty the Queen in Right of
Ontario (Ministry of Labour)
Appellant
and
Corporation
of the City of Greater Sudbury
Respondent
David McCaskill, for the appellant
Ryan J. Conlin and Amanda D. Boyce, for
the respondent
Chetan Muram and Kevin Simms, for the
intervener Workers Health and Safety Legal Clinic
Heard: January 26, 2021 by video conference
On appeal from the judgment of Justice
John S. Poupore of the Superior Court of Justice, dated June 6, 2019, with
reasons reported at 2019 ONSC 3285, 88 M.P.L.R. (5th) 158, dismissing an appeal
from the acquittals entered on August 31, 2018, by Justice Karen L. Lische of
the Ontario Court of Justice.
REASONS FOR DECISION
OVERVIEW
[1]
A woman died after she was struck by a road
grader performing repairs at an intersection in downtown Sudbury. The grader
driver was employed by Interpaving Limited, a company the respondent, the City
of Sudbury, had contracted to complete the road repairs. The City employed
inspectors at the project site, among other things overseeing Interpavings
contract compliance.
[2]
Interpaving and the City were charged with violations
of
Construction Projects
, O. Reg. 213/91 (the Regulation), contrary
to s. 25(1)(c) of the
Occupational Health and Safety Act
, R.S.O. 1990,
c. O.1
(
OHSA
or the Act). The City was charged on the basis that it was both
a constructor and an employer within the meaning of the Act.
[1]
[3]
Interpaving was found guilty but the City was
acquitted in separate proceedings. The trial judge in the Citys case found
that there was no signaller in assisting the grader operator, nor was a fence
erected between the public way and the worksite, as required by the Regulation.
However, the trial judge concluded that the City was neither an employer nor a
constructor and so owed no duties under the Act. The trial judge went on to
find that, in any event, the City had a due diligence defence to the charges.
[4]
The Crowns appeal was dismissed. The appeal
judge upheld the trial judges finding that the City was neither an employer nor
a constructor and did not consider whether the City would have had a due
diligence defence.
[5]
The Crown was granted leave to appeal to this
court to determine whether the appeal judge erred in concluding that the City
was not an employer under the Act. The Citys possible status as a constructor
was an issue of mixed fact and law and so not subject to appeal under s. 131 of
the
Provincial Offences
Act
, R.S.O. 1990, c. P.33 (
POA
).
[6]
We conclude that the City was an employer within
the meaning of the Act and, as a result, was liable for violations of the Regulation
found by the trial judge unless it could establish a due diligence defence. The
appeal is allowed and the decision is remitted as set out below to hear the
Crowns appeal of the trial judges due diligence finding.
DISCUSSION
Is the City an employer?
[7]
This is an appeal from the judgment of the
appeal judge. The question for this court is whether the appeal judge erred in
concluding that the City was not an employer for purposes of the Act.
[8]
At the outset, the Crown reminds the court that
the
OHSA
is public welfare legislation, and as such should be read
liberally and broadly in a manner consistent with its purpose. There is no
doubt that this is so; this court has consistently instructed that the Act must
be interpreted generously, rather than narrowly or technically, in order to
allow it to achieve the purpose of protecting employees health and safety.
See, most recently,
Ontario
(Labour) v. Quinton Steel (Wellington) Limited
,
2017 ONCA 1006 at paras. 19-20, and the authorities
cited.
[9]
Whether the City is an employer turns on the
application of the definition of employer in s. 1(1) of the
OHSA
,
which provides as follows:
employer
means a person who employs one or more workers or contracts for the services of
one or more workers and includes a contractor or subcontractor who performs
work or supplies services and a contractor or subcontractor who undertakes with
an owner, constructor, contractor or subcontractor to perform work or supply
services
; (employeur)
[10]
The definition embraces both employing and
contracting for the services of workers, but this appeal can be resolved at the
first branch of the definition. As this court explained in
R. v. Wyssen
,
1992 CanLII 7598 (Ont. C.A.), at p. 7, [t]he definition of employer in the
Act covers two relationships: firstly, that of a person who employs workers and
secondly, that of one who contracts for the services of workers. A person who
employs one or more workers is therefore an employer for the purposes of the
Act and is responsible for ensuring compliance with the Act in the workplace.
[11]
The Act establishes overlapping responsibility
for health and safety and contemplates the possibility of multiple employers in
a workplace. In
Wyssen
, at p. 9, the court noted that the relevant enforcement provisions
in the Act put employers virtually in the position of an insurer who must make
certain that the prescribed regulations for safety in the work place have been
complied with before work is undertaken by either employees or independent
contractors.
[12]
Not only do the duties of the workplace parties
overlap; one person or entity may also meet the definitions for several
different workplace parties and therefore be required to assume the duties of
each of those parties at the same time. For example, a person or entity might
be subject to duties as an owner as well as an employer and a constructor.
[13]
In this case, there is no doubt that City
inspectors employees employed directly by the City were present on the project
site and performed a variety of tasks. Among other things, they monitored the job
site for quality control purposes and monitored the progress of the work to
confirm that the City was receiving the work it was paying for.
[14]
Plainly, the City employed one or more workers
at the project site within the meaning of s. 1(1). It is therefore an employer
for the purposes of the Act and, as
Wyssen
makes clear, that is
sufficient to dispose of this appeal. The exemption in s. 1(3), which precludes
an owner from becoming a constructor by engaging a person to oversee quality
control, does not preclude owners from becoming employers.
[15]
Although Brown J.A. raised a broader question in
granting leave to appeal to this court whether control is a requirement in
cases where a municipality has contracted work to a third party it is not
necessary to resolve this question in order to decide this appeal. The City
employed one or more workers at the project site and so assumed
responsibilities as an employer under the Act on this basis under the first
branch of the employer definition. Whether a municipality that contracts work
to a third party must exercise control over that third party or its workers to
be an employer under the second branch of the definition raises a number of
issues that were not sufficiently canvassed in the parties submissions. In our
view, it would be improvident to decide these issues on the record before us.
[16]
Consequently
, nothing in
this decision is to be taken as either an endorsement of the appeal judges
analysis or a determination of whether or not control is an element of the
definition of employer where a municipality contracts work to a third party.
Did the City exercise due diligence?
[17]
As noted above, the trial judges findings that
the Regulation was breached by the failure to have a signaller in place to
assist the grader operator and the failure to erect a fence between the public
way and the worksite render the City liable as employer for breach of s.
25(1)(c) of the Act, unless the City succeeds in establishing a due diligence
defence.
[18]
The Crown argues that the trial courts test for
due diligence a matter not addressed by the appeal judge was wrong in law.
According to the Crown, the City was required to show that it took all
reasonable steps to ensure that the
specific
safety violations were
remedied; general acts directed at safety cannot satisfy the due diligence
obligation. The Crown submits that, if this court concludes that the City was
an employer, the necessary findings of fact were made by the trial judge to
substitute convictions on counts 8 and 9 of the Information (failure to have a
signaller and failure to erect a fence). In the alternative, the Crown requests
that a new trial be ordered.
[19]
The City responds that it satisfied its due
diligence obligations by exercising diligence and prudence in the tendering
process that resulted in the contract with Interpaving. In the alternative, the
City argues that it took other steps that were sufficiently specific to meet
its due diligence obligations as an employer.
[20]
It must be emphasized that this court sits in
appeal from the decision of the appeal judge, not the trial judge:
Ontario
(Labour) v. Nugent
, 2019 ONCA 999, 384 C.C.C. (3d) 189, at para. 22. The
appeal judge made no decision on the due diligence question, but a new trial is
neither necessary nor appropriate for that reason. The appropriate remedy is to
remit the matter to the appeal court to hear the Citys appeal of the due
diligence issue.
[21]
The courts ability to remit the matter flows
from s.
134 of the
POA
, which incorporates
ss. 121 and 125 with necessary modifications. In short, s. 121 sets out the
powers of the first-level appeal court in allowing an appeal from an acquittal.
Although s. 121 does not explicitly provide that the Court of Appeal may remit
the matter to the appeal judge to consider an alternative argument, s. 134
provides that the provision applies in the Court of Appeal with necessary
modifications. Section 125 provides that, when exercising its power under s.
121, the court may make any order that justice requires. These provisions
authorize the court to remit the matter to the appeal court: see e.g.,
R. v. Francis
(1996), 92 O.A.C. 308 (C.A.);
R. v. Thorne
, [1997] O.J. No. 1036 (C.A.);
Ottawa (City) v. Spirak
, 2008 ONCA 299;
Ontario (Ministry of Labour) v. Modern
Niagara Toronto Inc.
, 2008 ONCA 590, 297 D.L.R.
(4th) 156;
R. v. Courtice
Auto Wreckers Limited
, 2014 ONCA 189, 308
C.C.C. (3d) 571; and
R.
v. Maxwell
, 2007 ONCA 834.
CONCLUSION
[22]
The appeal is allowed. The decision of the
appeal court judge is set aside.
[23]
The Crown fairly concedes that the trial judge
does not appear to have made the necessary factual findings to determine guilt
on count 10 of the Information and that this charge was somewhat peripheral to
the event in question. Accordingly, the matter is remitted to the appeal court
for a hearing before a different judge to consider the Crowns appeal of the
Citys due diligence defence with respect to counts 8 and 9 of the Information.
Fairburn
A.C.J.O.
David Watt J.A.
Grant Huscroft
J.A.
[1]
The City and Interpaving were both charged as employers
pursuant to s. 25(1)(c) of the Act. The City was also charged as a
constructor pursuant to s. 23(1)(a) and (b), but Interpaving was not.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Ontario College of Teachers v.
Bouragba, 2021 ONCA 8
DATE: 20210108
DOCKET: M51998 (C68742) & M52018 (C68742)
Doherty, Zarnett and Coroza
JJ.A.
BETWEEN
The Ontario College of Teachers
Plaintiff (Respondent)
and
Ahmed Bouragba
Defendant (Appellant)
Ahmed Bouragba, appearing in person
Christine L. Lonsdale and
Charlotte-Anne Malischewski, for the respondent
Heard: January 4, 2021 by
video conference
REASONS FOR DECISION
[1]
There are two motions before the court. The
respondent, The Ontario College of Teachers (the College), seeks to quash the
appeal brought by Mr. Bouragba on the basis that the order of OBrien J., dated
September 4, 2020, is interlocutory and appealable only to the Divisional Court
with leave. The appellant seeks an order staying the order of OBrien J. until
his appeal from that order has been heard and decided by this court. Mr. Bouragbas
motion to stay need only be addressed on the merits if the appeal is properly
brought in this court.
[2]
The appellant appeals the order which fixes
January 12, 2021 for the hearing of the Colleges motion to discontinue its
action against the appellant. The order also directs that Mr. Bouragba,
assuming the Colleges action has not been finally disposed of on the Colleges
motion to discontinue, may schedule his motion under s. 137.1 of the
Courts
of Justice Act
after the Supreme Court has determined whether to grant him
leave to appeal on a related appeal.
[3]
The order under appeal is a scheduling order. It
sets a date for the hearing of the Colleges motion, and fixes the timing for
the scheduling of Mr. Bouragbas s. 137.1 motion. The order does not determine
the merits of either the Colleges motion to discontinue, or Mr. Bouragbas s.
137.1 motion.
[4]
In her endorsement, OBrien J. does express a
view concerning the effect of s. 137.1(5) of the
Courts of Justice Act
on the Colleges right to bring a motion to discontinue its action. The appeal,
however, lies from the order not from the reasons. As indicated above, the
order speaks only to scheduling matters.
[5]
In oral argument, counsel for the College conceded
the views of OBrien J. with respect to s. 137.1(5) are not binding on the
court that will hear the Colleges motion to discontinue its action on January
12, 2021. We agree with that concession. On the Colleges motion to discontinue
its action, Mr. Bouragba is free to argue s. 137.1(5) precludes the College
from bringing a motion to discontinue its action after Mr. Bouragba had
commenced his motion under s. 137.1 and before the s. 137.1 motion was finally
disposed of. If Mr. Bouragba chooses to advance that argument, it will be for
the master hearing the motion to discontinue to decide the merits of that and
any other argument advanced by him.
[6]
The scheduling order made by OBrien J. is
interlocutory. This court has no jurisdiction to entertain an appeal. The
appeal is quashed. As there is no appeal properly before this court, the motion
to stay the order of OBrien J. is also quashed.
[7]
The College is entitled to costs fixed at
$1,000, inclusive of disbursements and relevant taxes.
Doherty
J.A.
B.
Zarnett J.A.
S.
Coroza J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Ontario (Natural Resources and
Forestry) v. South Bruce Peninsula (Town), 2021 ONCA 332
DATE: 20210514
DOCKET: M52429
Miller J.A. (Motion Judge)
BETWEEN
Her Majesty the Queen in Right of Ontario
(Ministry
of Natural Resources and Forestry)
Respondent (Responding Party)
and
The Town of the South Bruce
Peninsula
Appellant (Moving Party)
Jonathan C. Lisus and James Renihan,
for the moving party
Nicholas Adamson and Madeline Ritchie,
for the responding party
Heard: May 4, 2021 by video conference
ENDORSEMENT
[1]
The Town of South Bruce Peninsula, the moving
party, is responsible for maintaining Sauble Beach, a popular tourist
destination. The beach is also the seasonal nesting home of the piping plover,
a migratory shorebird designated as endangered by the
Endangered Species
Act, 2007
, S.O. 2007, c. 6 (the
ESA
). Section 10(1) of the
ESA
makes it an offence for any person to damage or destroy the habitat of over
175 species of plants and animals, including the piping plover. The section
applies to habitats located on private or public land.
[2]
In addition to its obligations under the
ESA
,
the Town is required to maintain the beach for the safety of its users. Since 2007,
when the piping plover returned to Sauble Beach after a 30-year absence, the
Town has worked closely with the Ministry of Natural Resources and Forestry (MNRF)
to assist in recovery efforts. The Town has sought to minimize the impact of its
maintenance on the plovers, to take active steps to protect the few plovers
nests (typically fewer than five) from predators and accidental interference
from beach users, and to ensure that the natural features of the beach area
remain suitable to piping plovers looking for a place to nest. All seemed
satisfactory until 2017.
[3]
In early April 2017, before the annual arrival of
the piping plovers, the Town mechanically raked the beach. In late August 2017,
after the piping plovers had left for the season, the Town advised MNRF of its plan
for upcoming maintenance. MNRF raised no objections to what was proposed and the
Town carried out its maintenance.
[4]
Subsequently, the MNRF alleged that the nature and
extent of the Towns maintenance in April and August exceeded what had been
proposed and had damaged plover habitat.
[5]
The Town was charged and convicted of two counts
of damaging piping plover habitat, contrary to s. 10(1)(a) of the
ESA
.
The convictions were upheld on appeal by Morneau J. of the Ontario Court of
Justice (the Appeal Judge).
[6]
The Town seeks leave to appeal to this court
pursuant to s. 139(1) of the
Provincial Offences Act
, R.S.O. 1990, c.
P.33 (the
POA
). It raises two issues: (i) the Appeal Judge (and the
Justice of the Peace below) erred in their interpretation of s. 10(1) of the
ESA
,
particularly with respect to what constitutes damage to a species habitat
and the evidence required to prove it, and (ii) the Appeal Judge (and the Justice
of the Peace) erred in applying the test in
White Burgess Langille Inman v.
Abbott and Haliburton Co.
, 2015 SCC 23, [2015] 2 S.C.R. 182 governing the
admissibility of expert evidence in the context of a regulatory offence.
[7]
The threshold for granting leave to appeal pursuant
to s. 139 of the
POA
is high. Section 139(1) provides that leave is
only available on special grounds upon a question of law alone. Section 139(2)
further specifies that no leave shall be granted unless, in the particular
circumstances of the case, it is essential in the public interest or for the
due administration of justice that leave be granted.
[8]
The Town argues that the Appeal Judge erred by
interpreting damage too broadly, to include any change, no matter how
temporary, that would make an area less attractive, useful or valuable to a
species. This would capture any change that made a habitat less attractive to a
species to any degree regardless of whether it was a trifling inconvenience or
capable of having any practical impact on the life processes of the species in
question. The Town argues that damage must be interpreted with reference to
the definition of habitat in the
ESA
, which is defined, in part, as an
area on which the species depends, directly or indirectly, to carry on its life
processes: at s. 2(1).
[9]
The Town argues that s. 10(1), properly
interpreted, would require some assessment and some evidence that a change to
a habitat had some negative impact on the viability of the species. It further
argues that the interpretation of damage should include a balance between the
protection of listed species and the economics of industries operating under
the
ESA
. Furthermore, the public interest requirement from s. 139(2) is
satisfied, it argues, by the number of land owners and users who are at risk of
violating the
ESA
or are constrained in their use of land, due to an
overly expansive and rigid interpretation of s. 10(1).
[10]
The Crown concedes that the interpretation of
damage in the context of the
ESA
is a legal question, but argues
that the Appeal Judge made no error in her interpretation of s. 10(1). It argues,
further, that the interpretation advanced by the Town is untenable, as s. 10(1)
is a strict liability offence that is established on proof that a habitat has
been damaged to any degree, independently of any harm to a species. Finally, the
Crown argues that an appeal on this question is not essential either to the public
interest or the due administration of justice.
[11]
I am satisfied that leave ought to be granted on
this question. The interpretation of the
ESA
provided by the Appeal
Judge may be found to be right. However, the questions raised by the Town are serious
and their resolution will make the legislation more determinate and thus capable
of providing greater guidance to those subject to it. Further, there are a
great many persons who are required to conform their behaviour to the demands
of statute. The
ESA
is of such broad application impacting private
and public landowners as well as any member of the public using such lands that
as with
R. v. Castonguay Blasting
, 2011 ONCA 292, 58 C.E.L.R. (3d) 30,
Ontario (Labour) v. Sudbury (City)
, 2019 ONCA 854, 93 M.P.L.R. (5th)
179,
and
R. v. Hicks
, 2014 ONCA 756, its interpretation is a
matter of public interest. Furthermore, as with
Hicks
, this seems to
be this courts first opportunity to apply this section.
[12]
I would also grant leave on the second issue. It
is true that
White Burgess
has received considerable attention from
this court and others since it was decided. There may prove to be no questions
of nuance about its application in a regulatory setting that have not already been
canvassed in the criminal and civil context. However, guidance from this court on
such a fundamental question of law related to the administration justice is
appropriate, and I am satisfied that leave should be granted on this basis.
DISPOSITION
[13]
The motion for leave to appeal is granted.
B.W. Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Ontario Nurses Association v.
Participating
Nursing Homes, 2021 ONCA 148
DATE: 20210309
DOCKET:
C67495 &
C67497
Strathy C.J.O., Benotto, Brown,
Huscroft and Zarnett JJ.A.
BETWEEN
Ontario Nurses Association
Applicant
(Respondent/Appellant
by way of cross-appeal)
and
Participating Nursing Homes
Respondents
(Appellants/Respondents
by way of cross-appeal)
and
Service Employees International
Union, Local 1
Respondent
(Respondent/Appellant
by way of cross-appeal)
AND BETWEEN
Service Employees International
Union, Local 1
Applicant
(Respondent/Appellant
by way of cross-appeal)
and
Participating Nursing Homes
Respondents
(Appellants/Respondents
by way of cross-appeal)
and
Ontario Nurses
Association
Respondent
(Respondent/Appellant by way of cross-appeal)
David M. Golden and Marco P. Falco, for
the appellants/respondents by way of cross-appeal, the Participating Nursing
Homes
S. Zachary Green, Emily Bala and
Carolyn L. Kay, for the appellant/respondent by way of cross-appeal, the
Attorney General of Ontario
Paul J.J. Cavalluzzo, Adrienne Telford
and Lara Koerner Yeo, for the respondent/appellant by way of cross-appeal, the
Service Employees International Union, Local 1
Janet Borowy, Danielle Bisnar, and Andrea
Sobko, for the respondent/appellant by way of cross-appeal, the Ontario Nurses
Association
Lindsay Lawrence and Aaron Hart, for
the respondent, the Pay Equity Hearings Tribunal
Fay Faraday, for the intervener, the
Equal Pay Coalition
Heard: October 6 and 7, 2020 by video
conference
On appeal from the judgment of the
Divisional Court (Regional Senior Judge Geoffrey B. Morawetz and Justices Robbie
Gordon and Nancy L. Backhouse), dated April 30, 2019, with reasons reported at
2019 ONSC 2168, reversing in part a decision of the Pay Equity Hearings
Tribunal, dated January 21, 2016, with reasons reported at [2016] O.P.E.D. No.
5.
Benotto J.A.:
OVERVIEW
[1]
The purpose of the
Pay Equity Act
,
R.S.O. 1990, c. P.7 (the Act), is to redress systemic gender discrimination
in compensation experienced by those in female job classes. To that end, the
Act requires employers who are subject to the Act to
establish
and
maintain
compensation practices that provide for pay equity in every establishment of
the employer (emphasis added): Act, s. 7(1).
[2]
In establishing pay equity, three different
methods of comparison are used. Each involves a comparison between male and
female job classes.
[3]
In predominantly female workplaces, like the
nursing homes in question, there are no male job classes with which female job
classes can be directly compared. For women in these workplaces, the Act
provides a proxy method whereby a female job class, from an establishment where
pay equity has already been achieved using a male comparator, is deemed to be
the male job class.
[4]
The parties in this case dispute whether the
proxy method is to be used in ensuring that pay equity is maintained. The
appellants, the Participating Nursing Homes (PNH) and the Attorney General of
Ontario (AGO), submit that the proxy method is only to be used to establish pay
equity, not to maintain it. The respondents, the Ontario Nurses Association
(ONA) and the Service Employees International Union, Local 1 (SEIU), disagree.
They submit that the proxy method must also be used to maintain pay equity,
because otherwise there would be no ongoing male comparator, which is essential
to identify and redress systemic discrimination in compensation. In their
cross-appeal, they submit that if the Act is not interpreted as requiring the
proxy method to be used in maintaining pay equity, then the Act contravenes s.
15 of the
Charter of Rights and Freedoms
.
[5]
The matter came before the Pay Equity Hearings
Tribunal (the Tribunal) following applications by the ONA and the SEIU. The
Tribunal did not agree that the proxy method was to be used to maintain pay
equity and set out a formula for maintaining pay equity that did not include
the proxy method.
[6]
The Divisional Court concluded that the Tribunals
decision was unreasonable. It held that a proper interpretation of the Act
requires ongoing access to male comparators as set out in the proxy method to
maintain pay equity. The Divisional Court remitted the matter to the Tribunal
to specify what procedures should be used to ensure continued access to male
comparators.
[7]
For the reasons that follow, I conclude that
the Tribunals decision is unreasonable, as the text, context, scheme and
purpose of the Act make it clear that ongoing access to male comparators through
the proxy method is required to maintain pay equity. I would dismiss the appeals
and the cross-appeal.
BACKGROUND
The parties
[8]
The PN
H
are a group
of employers that operate up to 143 for-profit nursing homes in Ontario.
[9]
The ONA is the bargaining agent for
approximately 2,100 registered nurses and allied health professionals working
at nursing homes across the province. The SEIU is the bargaining agent for
registered practical nurses, personal support workers, health care aides, and
dietary, housekeeping, and recreational aides working at the PNH. The SEIU and the
ONA are referred to collectively as the Unions.
[10]
The AGO was added as an intervener by the Tribunal and also
appeals.
[11]
The Tribunal and the Equal Pay Coalition were added as
interveners by the Divisional Court and have made submissions before this court
as well.
Ontarios pay equity legislation
[12]
The purpose of the
Pay Equity Act
is clear. The
preamble provides that it is desirable that affirmative action be taken to
redress gender discrimination in the compensation of employees employed in
female job classes in Ontario. The body of the Act further confirms:
4 (1)
The purpose of this Act is to redress systemic gender discrimination in
compensation for work performed by employees in female job classes.
[13]
Section 1(1) of the Act specifies when a job class is a
female job class and when it is a male job class. Generally speaking, a
female job class is a job class in which 60 per cent or more of the members are
female. Section 1(1) of the Act defines the term job class to mean those
positions in an establishment that have similar duties and responsibilities and
require similar qualifications, are filled by similar recruiting procedures and
have the same compensation schedule, salary grade or range of salary rates.
[14]
The
Act
imposes an obligation to both establish and maintain pay-equity-compliant
compensation practices:
7 (1)
Every employer shall establish and maintain compensation practices that provide
for pay equity in every establishment of the employer.
[15]
As explained
in more detail below, systemic discrimination is identified by undertaking a
comparison between female job classes and male, or deemed male, job classes in
terms of compensation and the value of work performed: Act, ss. 4(2), 21.13. The
criterion applied in determining the value of work is a composite of the
skill, effort and responsibility normally required in the performance of the
work and the conditions under which it is normally performed: Act, s. 5(1).
[16]
The
Act
prescribes three methods for achieving pay equity: the job-to-job,
proportional value and proxy methods.
[17]
The job-to-job and proportional value methods involve
comparing the value/compensation relationship of female job classes to the
value/compensation relationship of male job classes within the employers
establishment. An establishment means all of the employees of an employer
employed in a geographic division or divisions.
[18]
The Act provides the proxy method for achieving pay equity
in establishments without any male job classes. The proxy method is complex,
but at its core, it involves comparing a female job class in the seeking
employers establishment (in this case, the PNH) to a female job class at a
proxy employers establishment (in this case, Municipal Homes for the Aged
(Municipal Homes)).
[19]
A proxy female job class is used because it has already
achieved pay equity by way of comparison to a male job class within the proxy
employers establishment. The value/compensation relationship of the proxy
female job class is compared to the value/compensation relationship of the
female job class at the seeking employers establishment with a view to
determining the adjustments necessary to achieve pay equity for the seeking
employers employees. In short, the proxy female class functions as the deemed
male comparator.
[20]
To achieve pay equity for
all
female job classes
within the seeking establishment, the female job class that was compared to the
proxy female job class becomes the key female job class. All other female job
classes in the seeking establishment are then evaluated to ensure that the
value/compensation relationship for their jobs is equal to that of the key
female job class.
The parties disagree on how to maintain pay equity
[21]
Employment in the nursing home sector is
almost exclusively female. As a result, there are no male job classes available
for purposes of comparison at the PNH, and they were required to use the proxy
method in establishing pay-equity-compliant compensation practices for their
employees. Municipal Homes were identified as a suitable proxy employer. They
are similarly female dominated, but because they are operated by municipalities,
there are male job classes available for comparison.
[22]
In 1994, the PNH took steps to establish pay-equity-compliant
compensation practices for female employees using the proxy method. Following
extensive negotiations, the Unions and the PNH reached an agreement. In
accordance with the agreement, pay equity was established for all female job
classes at the PNH by 2005, following adjustments to increase compensation for
all the female job classes.
[23]
The Unions take the position that the PNH have failed to
maintain pay-equity-compliant compensation practices since 2005. Over time, the
Unions have observed several changes in PNH workplaces that suggest the value
of the work performed by employees is increasing: a new legislative framework;
new education requirements for employees; increasing acuity of nursing home
residents; and more medical services required to meet the rising needs of
residents. Employees at the Municipal Homes would have experienced the same
workplace changes, increasing the value of their work. The Unions have also
observed that wage gaps have re-emerged between PNH employees and employees at the
Municipal Homes doing comparable work. Accordingly, it appeared to the Unions that
the compensation of employees at the Municipal Homes had increased because of
the ongoing access to male comparators. This prompted the ONA and the SEIU to
bring applications to the Tribunal.
[24]
The Unions submit that since the PNH established pay equity
using the proxy method, the
Act
requires that it be maintained using that same method because a lack of an
ongoing connection to a male comparator will allow pay disparity to re-emerge.
[25]
The position of the PNH and the AGO is that the Tribunals maintenance
method, which requires only a one-time comparison with a female job class in a
proxy establishment (i.e., a deemed male comparator), is reasonable. The
Tribunals decision is detailed below.
Charter
values
and s. 15
Charter
rights
[26]
The Unions have asserted
throughout that the Tribunal and the courts must consider
Charter
values as an aid to interpret the Act an argument that was accepted by the
Divisional Court. They rely, in part, on this courts decision in
Taylor-Baptiste v. Ontario Public Service Employees Union
, 2015 ONCA 495,
126 O.R. (3d) 481, leave to appeal refused, [2015] S.C.C.A. No. 412. In
Taylor-Baptiste
,
the court had the following to say about
Charter
values in the
administrative law context, at paras. 54-57:
Their first submission is that an
administrative tribunal can only consider
Charter
values in its decision-making if an ambiguity exists in the
provision of its home or enabling statute at issue in a case
.
Binding authority prevents the acceptance of
the appellants submission. Slightly more than a decade after
deciding
Bell ExpressVu
, the Supreme Court rejected an argument similar to the appellants
when, in
R. v. Clarke
, it stated, at para. 16:
Only in the administrative law
context is ambiguity not the divining rod that attracts
Charter
values. Instead,
administrative law decision-makers must act consistently with the values
underlying the grant of discretion, including
Charter
values (
Doré
, at para.
24
). The issue in the
administrative context therefore, is not whether the statutory language is so
ambiguous as to engage
Charter
values,
it is whether the exercise of discretion by the administrative decision-maker unreasonably
limits the
Charter
protections
in light of the legislative objective of the statutory scheme.
The appellants second submission is that
the
Charter
values interpretive principle articulated in
Doré
only applies to instances
where an administrative decision-maker exercises a discretionary power, such as
crafting a remedy. They say it does not apply to the kind of adjudicative
decision made by the Tribunal in this case i.e. whether the respondents
conduct violated s. 5(1) of the
Code
.
While I take the
appellants point that in both
Doré
and
Loyola High School
the Supreme Court frequently referred to the exercise of a
discretionary power under a home statute, in my view the decision in
Doré
, when read as a whole, prevents
the acceptance of the appellants submission. First, in
Doré
the Court stated that
administrative decisions are
always
required to consider fundamental values (emphasis in
original). Second, the context which framed the courts discussion in
Doré
was analogous to the present
case i.e. the determination by an administrative tribunal about whether a
persons conduct had violated the strictures of a statutory or regulatory rule.
[Footnotes omitted.]
[27]
The Unions further submit on their
cross-appeal that, if the
Act
does not require maintenance using the proxy method, the
Act
contravenes s. 15 of the
Charter.
[28]
The PNH and the AGO submit that
the Tribunal was not required to consider
Charter
values because,
unlike in
Taylor-Baptiste
, there was no ambiguity in the statute. They
further submit that if
Taylor-Baptiste
stands for the proposition that
administrative actors must always consider
Charter
values when
interpreting statutes, even in the absence of ambiguity, then
Taylor-Baptiste
was wrongly decided because it is inconsistent with Supreme Court authorities.
Tribunal decision
[29]
The Tribunal dismissed the ONAs and the SEIU's
applications.
[30]
The Tribunal agreed that the Act imposed an obligation on
the PNH to maintain pay-equity-compliant compensation practices, but rejected
the submission that the proxy method should be used to fulfill that obligation.
[31]
The Tribunal found that the proxy method was
extraordinary, and it viewed an ongoing requirement to obtain information
from the proxy employer as a substantial practical impediment. The Tribunal concluded
that the Act did not require the use of the proxy method for maintenance and
added: [t]he Acts focus is on the specific compensation practices that
determine what an employer pays its own female job classes in a given
establishment. The Tribunal stated:
In summary, the Acts obligation to
maintain pay equity applies regardless of the methodology of comparison used.
Pay equity that is achieved under a proxy plan must be maintained. Generally
speaking, maintenance requires the on-going monitoring of any changes in either
the compensation or the value (the amalgam of skill, effort, responsibilities
and working conditions) of female job classes and the male job classes
(including deemed male job classes) used for comparison purposes. In the case
of proxy plans, however, maintenance does not require the monitoring of changes
to the value or compensation of the female job classes in the proxy
establishment. To so require would be inconsistent with the over-riding principle
that the Act mandates each individual employer to whom it applies to ensure
that its own compensation practices are free from gender discrimination.
Instead, what is required is monitoring of the compensation and value
relationship of the non-key female job classes and the key female job class as
compared to the compensation/value relationship (PV line) that has already been
determined to provide for pay equity.
[32]
The Tribunal addressed and rejected the Unions s. 15
Charter
arguments.
Divisional Court decision
[33]
The Divisional Court concluded that the Tribunals decision
was unreasonable. The court determined that while the Act does not contravene
s. 15 of the
Charter
, the Tribunal erred in failing to consider
Charter
values when interpreting the
Act
.
[34]
The Divisional Court relied on
Taylor-Baptiste
to
reject the Tribunals position that statutory ambiguity was required before
Charter
values could be employed to interpret the
Act
.
The Divisional Court considered it settled law that administrative decision
makers must balance the
Charter
values at play with the statutory
objectives of the legislation in question.
[35]
The Divisional Court proceeded to
conduct its own
Charter
values analysis. Applying the framework from
Doré
v. Barreau du Québec
, 2012 SCC 12, [2012] S.C.R. 395, the Divisional Court
held that the Tribunals decision limited s. 15 of the
Charter
,
because it denied women in predominantly female workplaces (compared to women
who have male comparators within their establishments) the right to maintain
pay equity with reference to male work. It noted that [t]he fundamental
precept of pay equity is that there should be equal pay for work of equal value
between women and men and that [t]he touchstone of a pay equity analysis is
the comparison to male work, as men enjoy the benefit of compensation tied to
the value of their work as opposed to their gender.
[36]
Further, it held that the Tribunal
failed to balance the severity of the interference with s. 15 with the
statutory objectives of the
Act
.
The objectives of the
Act
include to ensure such discrimination [in compensation] does not re-emerge.
The Tribunal failed to consider the discriminatory effects of its
interpretation on women in female-dominated workplaces. The Tribunals
interpretation denied these women the right to correct any pay gap that has
re-emerged since 1994. Maintaining pay equity by internal comparison of female
job classes does nothing to ensure that the key female job class wage to which the
other female classes are compared reflects any re-emergence of a pay equity gap
since 1994.
[37]
The court declined to send the matter back to the Tribunal
for reconsideration given its conclusion that the only proportionate balancing
of the
Charter
right of equality with the statutory mandate of the
Act
, properly construed, requires the
maintenance of pay equity in predominantly female workplaces through the proxy
method of comparison. The matter was remitted to the Tribunal to specify the
procedures for maintaining pay equity using the proxy method.
[38]
The Divisional Courts conclusion that the
Act
did not contravene s. 15 of
the
Charter
was tied to its conclusion about the proper interpretation
of the
Act
:
We have considered whether the
Act
is discriminatory on its face because there is no mechanism spelled out in the
Act
for maintaining pay equity by reference to male work
for women in predominantly female workplaces reliant on the proxy method.
However, we have concluded that
there is
an interpretation of the
Act
that would render it non-discriminatory-namely
,
that the employer must maintain a compensation practice that involves ongoing
comparison of the key female job class to a proxy female job class.
Accordingly, we find that the
Act
does not
contravene the
Charter
. [Emphasis added.]
ANALYSIS
[39]
The question for this court is whether the Divisional Court
was correct in concluding that the Tribunals decision was unreasonable. As I
will explain, I agree with the conclusion that the Tribunals decision was
unreasonable, although I reach that conclusion without relying on
Charter
values. As my answer to the question is yes, I need not deal with the s. 15
issue raised on the cross-appeal.
Guiding principles
[40]
The focus of this courts inquiry is the reasonableness of
the Tribunals decision. This involves stepping into the shoes of the lower
court and focusing on the Tribunals decision:
Agraira v. Canada (Public
Safety and Emergency Preparedness)
, 2013 SCC 36, [2013] 2 S.C.R. 559, at
paras. 45-46.
[41]
An inquiry into the reasonableness
of an administrative tribunals decision begins with
Canada (Minister of
Citizenship and Immigration) v. Vavilov
,
2019 SCC 65, 441 D.L.R.
(4th) 1
.
[42]
Post-
Vavilov,
there is a single standard of
reasonableness. At para. 89:
[R]easonableness remains a single
standard, and elements of a decisions context do not modulate the standard or
the degree of scrutiny by the reviewing court. Instead, the particular context of
a decision constrains what will be reasonable for an administrative decision
maker to decide in a given case. This is what it means to say that
[r]easonableness is a single standard that takes its colour from the context.
[Citations omitted.]
[43]
A tribunals governing statute is an
important part of
considering whether the
tribunals decision was reasonable in light of the relevant factual and legal
constraints that bear on it.
Vavilov
, at para. 108:
Because
administrative decision makers receive their powers by statute, the governing
statutory scheme is likely to be the most salient aspect of the legal context
relevant to a particular decision. That administrative decision makers play a
role, along with courts, in elaborating the precise content of the
administrative schemes they administer should not be taken to mean that
administrative decision makers are permitted to disregard or rewrite the law as
enacted by Parliament and the provincial legislatures.
[44]
Vavilov
reaffirms the
modern principle of statutory interpretation, which requires that the words
of a statute must be read in their entire context and in their grammatical and
ordinary sense harmoniously with the scheme of the
Act
,
the object of the
Act
, and the intention of Parliament:
Vavilov
, at para.
117.
[45]
The administrative decision must be consistent with
principles of statutory interpretation and be compliant with the rationale and
purview of the statutory scheme under which it is adopted:
Vavilov
, at paras.
108, 118. As set out in
Vavilov
at para. 121:
The administrative
decision makers task is to interpret the contested provision in a manner
consistent with the
text, context
and purpose
, applying its particular insight
into the statutory scheme at issue. [Emphasis added.]
[46]
Vavilov
cautions that
a reviewing court is not interpreting the statute
de novo
. Rather, the
focus should be on the reasonableness of the administrative decision. In other
words, the focus of the analysis is on why the Tribunals decision is
unreasonable, not what this court would have decided in the Tribunals place. This
is explained at paras. 115-116:
Matters of statutory interpretation are not
treated uniquely and, as with other questions of law, may be evaluated on a
reasonableness standard. Although the general approach to reasonableness review
described above applies in such cases, we recognize that it is necessary to
provide additional guidance to reviewing courts on this point. This is because
reviewing courts are accustomed to resolving questions of statutory
interpretation in a context in which the issue is before them at first instance
or on appeal, and where they are expected to perform their own independent
analysis and come to their own conclusions
.
Reasonableness review functions differently
. Where reasonableness is the applicable standard on a question of
statutory interpretation, the reviewing court does not undertake a
de
novo
analysis of the question or ask itself what the correct
decision would have been:
Ryan
, at
para.
50
. Instead, just as it does when applying the
reasonableness standard in reviewing questions of fact, discretion or
policy, the court must examine the administrative decision as a whole,
including the reasons provided by the decision maker and the outcome that was
reached. [Emphasis added.]
[47]
With these principles in mind, I turn now to explain why
the Tribunals interpretation of the Act is unreasonable.
The Tribunals maintenance method
[48]
The Tribunal held that [i]t is possible to maintain pay
equity without continuing resort to the compensation practices in the proxy
establishment. It explained in some detail how it thought that could be
achieved:
The initial comparison and adjustment of the
value/compensation ratio of the key female job classes to match the
value/compensation ratio of the proxy female job classes is capable of being
expressed as a mathematical formula or equation. The equation may describe a
gender neutral wage line capable of being plotted on a matrix where the
increasing value of a job results in movement along the X axis, and where the
increasing compensation rate of a job results in movement along the Y axis. The
complexity of the equation will depend on the extent to which the slope of the
wage line is other than constant. If it is constant, the relationship and the
equation may be very simply expressed as one of $/point of value.
Regardless of how the compensation/value
equation is expressed, either of its variables may change over time, with the
consequence that the other must also change if the same result is to be
maintained
.
Subsequent to
January 1, 1994, the two potential triggers engaging the obligation to maintain
are: a change in the compensation of the key female job class; or a change in
the value of any of the job classes in the seeking employer's establishment.
Whenever the hourly rate for the key female job class increases without any
increase in its value occurring, the $/point ratio will increase. Pay equity
for the other female job classes will be maintained only if that new ratio also
obtains for them, and their value has not changed. If the job duties and
responsibilities of the key female job class change such that its point value
increases, then its rate of compensation must also increase to maintain
whatever $/point ratio is applicable at the time. The same is true for the
other female job classes.
[49]
Thus, the Tribunals approach to
maintenance is limited to an internal comparison between the key female job
class and the non-key female job classes. In the Tribunals view,
maintenance does not require the monitoring of changes to
the value or compensation of the female job classes in the proxy establishment.
In other words, no ongoing comparison is made with the deemed male job classes in
the proxy workplace.
[50]
In my view, the
Tribunals interpretation
which deprives women in establishments without male job classes access
to an ongoing deemed male comparator
is unreasonable
as it ignores the purpose, scheme and plain wording of the Act.
The Act
requires female to male
comparison
[51]
The scheme of the Act is built on the fundamental premise that
in order to redress systemic gender discrimination in compensation, there must
be a comparison between male and female job classes.
[52]
As set out above, the preamble to the Act and s. 4(1)
confirm that the purpose of the Act is to redress systemic
gender
discrimination in
compensation for employees in female job classes.
[53]
The Act itself indicates that comparison to male job
classes is the way to identify systemic discrimination. Section 21.13 provides
that, in establishments that use the proxy method, systemic discrimination is
identified by comparing a female job class in the seeking establishment with a
proxy female class (i.e., deemed male comparator):
Systemic gender discrimination
21.13
For the purposes of this Part and despite subsection 4(2), systemic
gender discrimination in compensation shall be identified by undertaking
comparisons, in terms of compensation and in terms of the value of the work
performed, using the proxy method of comparison,
(a) between each key female job class in the
seeking employer's establishment and female job classes in a proxy establishment;
and
(b) between the
female job classes in the seeking employer's establishment that are not key
female job classes and the key female job classes in that establishment.
[54]
Identifying gender discrimination is a key element of the
establishment and maintenance of pay equity. Yet, the Tribunal did not consider
this section of the Act which applies to establishments that use the proxy
method.
[55]
The Tribunals failure to address s. 21.13 leads me to a
loss of confidence in the outcome reached.
Vavilov
addresses this at
para. 122:
If, however, it is
clear that the administrative decision maker may well, had it considered a key
element of a statutory provisions text, context or purpose, have arrived at a
different result, its failure to consider that element would be indefensible,
and unreasonable in the circumstances. Like other aspects of reasonableness
review, omissions are not stand-alone grounds for judicial intervention: the
key question is whether the omitted aspect of the analysis causes the reviewing
court to lose confidence in the outcome reached by the decision maker.
[56]
The job-to-job and proportional value methods presume that
there will be male job classes in the establishment that can be compared to
female job classes. These methods are thus not suitable for female-dominated
workplaces where there are no male job classes. Had the Tribunal relied on s.
21.13 - which provides that comparison with the proxy job classes is the way to
identify systemic discrimination in establishments using the proxy method - it
may well have arrived at a different result.
[57]
Beyond the requirement for comparison at the
identification stage
, pay equity is achieved when
the required comparison is done, and any necessary adjustments are made:
Achievement of pay equity
5.1 (1)
For the purposes of this Act, pay equity is achieved in an establishment when
every female job class in the establishment has been
compared
to a job
class or job classes under the job-to-job method of
comparison
, the
proportional value method of
comparison
or, in the case of an
employer to whom Part III.2 applies, the proxy method of
comparison
, and
any adjustment to the job rate of each female class that is indicated by the
comparison has been made. [Emphasis added.]
[58]
The proxy method was added to the Act specifically to
provide for deemed male comparators for establishments where no male job
classes exist. Part III.2 of the Act sets out how the comparison between the
seeking employer and the proxy employer works and how the value/compensation
relationship for the key female job class in the seeking employers
establishment permits pay equity to be achieved for the rest of the female job
classes in that establishment:
Proxy method required
21.14(1)
A seeking employer shall use the proxy method of comparison for all
female job classes in an establishment.
Proxy method described
21.15(1) Pay equity is achieved
for a female job class in an establishment of a seeking employer under the
proxy method of comparison,
(a) in the case of a key female
job class,
(i) when the class is compared
with those female job classes in a proxy establishment whose duties and
responsibilities are similar to those of the key female job class, and
(ii) when the job rate for the
class bears the same relationship to the value of the work performed in the
class as the pay equity job rates for the female job classes in the proxy
establishment bear to the value of the work performed in those classes; and
(b) in the case of any other
female job class,
(i) when the class has been
compared with the key female job classes in the establishment of the seeking
employer, and
(ii) when the job rate for the
class bears the same relationship to the value of the work performed in the
class as the pay equity job rates for the key female job classes bear to the
value of the work performed in those classes.
Comparison methods
(2) The comparisons referred to
in subsection (1) shall be carried out using the proportional value method of
comparison,
(a)
in the case of a
comparison under clause (1)(a), as if the female job classes in the proxy
establishment were male job classes of the seeking employer
; and
(b)
in the case of a
comparison under clause (1)(b), as if the key female job classes of the seeking
employer were male job classes of the seeking employer
.
Comparison system
(3) The
comparisons shall be carried out using a gender-neutral comparison system.
[Emphasis added.]
[59]
As s. 21.15(2)(a) states, the female job classes in the
proxy establishment are treated as if [they] were male job classes of the
seeking employer for the purpose of comparison to a key female job class in
the seeking establishment. The reason the
proxy
female job class serves as a deemed male job class is because it has already
achieved pay equity by way of comparison to a male job class within the proxy
employers establishment. Similarly, once the key female job classes have
achieved pay equity, s. 21.15(2)(b) states that they are treated
as if [they] were male job classes of the seeking
employer for the purpose of comparison to any other female job classes within
the seeking employers establishment.
[60]
The AGO submits that the Divisional Court disregarded the
fact that the comparison under the proxy method happens between female job
classes, and so there is no comparison between male and female work. I do not
agree. While the direct comparison is between the key female job class in the
seeking employers establishment and a deemed male comparator in the proxy establishment,
women in the seeking employers establishment benefit from the fact that the
deemed male comparator has direct access to a male comparator. This permits
comparison between male and female work even if there is not a direct
comparison, as under the proportional value or job-to-job methods.
[61]
To sum up, all three comparison methods involve a direct or
indirect comparison between female and male job classes. As I will explain, it
is unreasonable to interpret the Act as doing away with an ongoing deemed male
comparator when it comes to the employers duty to maintain pay equity in
female-dominated establishments that used the proxy method to establish pay
equity.
T
he ongoing requirement for male
comparators in maintenance
[62]
The Tribunals distinction between the application of Part
III.2 to the obligation to establish pay equity and the obligation to maintain
pay equity is not grounded in the plain language or scheme of the
Act
, which makes no such distinction between the methods to be
used for establishing and maintaining pay equity. Nor is the distinction
consistent with the purpose of the Act.
[63]
The Act is divided into various parts. Part I of the Act,
entitled General, includes ss. 1-9 of the Act. Among other things, Part I
sets out the purpose of the Act (s. 4(1)), and the employers duty to establish
and maintain compensation practices that provide for pay equity (s. 7(1)). Both
establishing and maintaining pay equity are directed at achieving the purposes
of the Act, namely, to redress systemic discrimination in compensation.
[64]
Part I also explains how "pay equity is achieved in s.
5.1(1):
5.1 (1)
For the purposes of this Act
, pay equity is
achieved
in an
establishment when every female job class in the establishment has been compared
to a job class or job classes under the job-to-job method of comparison, the
proportional value method of
comparison or, in the case of an employer
to whom Part III.2 applies, the proxy method of comparison, and any adjustment
to the job rate of each female class that is indicated by the comparison has
been made. [Emphasis added.]
[65]
I would make two observations about s. 5.1(1).
[66]
First, achieve in s. 5.1(1) is not synonymous with establish
in s. 7(1). As a matter of statutory interpretation, [i]t is presumed that the
legislature uses language carefully and consistently so that within a statute
or other legislative instrument the same words have the same meaning and different
words have different meanings: Ruth Sullivan,
Sullivan on the Construction
of Statutes
, 6th ed. (Markham: LexisNexis, 2014), at 8.32.
[67]
Second, s. 5.1(1) opens with the words [f]or the purposes
of the Act. The purposes of the Act include both establishing
and
maintaining
pay equity. As such, the methods in s. 5.1(1) are not limited to establishing
pay-equity-compliant compensation practices. Rather, they also apply in
maintaining them.
[68]
Moreover, not using the proxy method to maintain
pay-equity-compliant compensation practices would undermine the purpose of the
Act.
[69]
The Supreme Courts decision in
Alliance
demonstrates
the inequity that arises when compensation for female employees is not tied to
that for males on an ongoing basis:
Quebec
(Attorney General) v. Alliance du personnel professionnel et technique de la
santé et des services sociaux
, 2018 SCC
17, [2018] 1 S.C.R. 464
. In
Alliance
, the court
considered the maintenance provisions of the Quebec legislation, which required
that women wait five years before applying for pay equity maintenance. At para.
38, the court identified the systemic nature of pay discrimination and how the
impugned legislation created barriers to addressing the problem:
Although the
scheme purports to address systemic discrimination, it in fact codifies the
denial to women of benefits routinely enjoyed by men namely, compensation
tied to the value of their work. Men receive this compensation as a matter of
course; women, under this scheme, are expected to endure five-year periods of
pay inequity, and to receive equal compensation only where their employer
voluntarily acts in a non-discriminatory manner, or where they can meet the
heavy burden of proving the employer engaged in deliberate or improper conduct.
The scheme thus places barriers along the path to equal pay for women.
[70]
So too here. The Tribunals elimination of male comparators
for women in predominantly female job classes places barriers along the path
to equal pay for women. I will explain.
[71]
Alliance,
and the
Supreme Courts companion decision,
Centrale des syndicats du Québec v.
Quebec (Attorney General)
,
2018
SCC 18, [2018] 1 S.C.R. 522 (
CSQ
), explain that womens work is
valued less than mens. Since the devaluation is systemic, it follows
that it will continue to exist within the seeking employer's establishment after
pay equity is established. Any internal adjustment to the value/compensation
ratio in an establishment without male comparators will include systemic
assumptions about the value of women's work and result in a smaller adjustment
than if the work were valued in the same way that men's work is valued.
[72]
The importance of the male comparator is demonstrated by
the fact that in non-proxy cases the Tribunal routinely uses the same
method for maintaining pay equity as was used to establish pay equity in the
first place:
BICC Phillips
(7 October, 1997) 0590-96 (P.E.H.T.);
Canadian
Union of Public Employees v. City of Peterborough,
2015 CanLII 55324
(P.E.H.T.);
Ottawa Board of Education
(28 May 1996) 0473-93; 0474-93;
0485-94; 0487-94 (P.E.H.T.);
Ontario Secondary School Teachers Federation
on behalf of the Educational Assistants Bargaining Unit v. Simcoe Muskoka
Catholic District School Board
, 2018
CanLII 123879 (P.E.H.T.)
.
[73]
In recognition of the potential for systemic discrimination
to re-emerge, in job-to-job and proportional value establishments there is
continual reference back to the male comparators rather than setting a
value/compensation ratio for the female job classes and maintaining pay equity
only by reference to that initial ratio. The regular reference back to
male comparators is undertaken because women's work continues to be systemically
undervalued. A 1994 ratio cannot account for any devaluation that has taken
place since that date.
[74]
Women in establishments without male comparators are most
at risk of being affected by discrimination, as noted in
CSQ
, at para. 29:
Moreover, since women
in workplaces without male comparators may suffer more acutely from the effects
of pay inequity precisely because of the absence of men in their workplaces,
these categories single out for inferior treatment the group of women whose pay
has, arguably, been most markedly impacted by their gender
.
[75]
The Tribunals maintenance method fails to provide a means
to redress systemic discrimination on an ongoing basis for these most
vulnerable women. The Tribunals maintenance method assumes there is no
discrimination unless the ratio used to establish pay equity is no longer being
maintained. Under its method, which relies on an outdated comparison, re-emerging
systemic discrimination would not be identified and addressed.
[76]
In explaining its reasons for rejecting the proxy method for
maintenance, the Tribunal describes a number of features of the Act, noting
that in the context of the Act as a whole the proxy method is extraordinary. Among
other things, the Tribunal states that [t]he Acts focus is on the specific
compensation practices that determine what an employer pays its own female job
classes in a given establishment. It emphasizes what it describes as the
over-riding principle that the Act mandates each
individual
employer
to whom it applies to ensure that
its own
compensation practices are
free from gender discrimination (emphasis in original).
[77]
With respect, the Tribunal lost sight of the fact that pay
equity can be maintained internally when using the job-to-job and proportional
value methods as a consequence of the fact that there are internal male
comparators. The over-riding principle or purpose of the Act is not internal
comparison but rather redressing systemic discrimination in compensation for
work performed by employees in female job classes.
[78]
The Tribunal also made the point that the Act
does not require wage parity, and it emphasized that not all differences in
compensation are necessarily attributable to gender discrimination:
The Act does not require wage parity as
between different employers. Two different employers operating the same kind of
business in the same geographic area may have pay-equity-compliant compensation
practices even though the female job classes performing the same or
substantially similar duties for each of those employers do not receive similar
compensation. In other words, the Act contemplates that the rates of pay for
the same or similar women's work may vary depending on
the
identity and characteristics of their employer
.
The Act recognizes
that not all differences in compensation between comparably-valued mens and
womens work (where the womens work is paid less) in the same establishment
are necessarily attributable to gender discrimination. Section 8(1) of the Act
outlines a number of situations where such difference(s) in compensation need
not be redressed. [Emphasis in original.]
[79]
I accept that wage parity is not the measure of whether
there is inequity in compensation that must be redressed. Rather, the Act
provides that pay equity is achieved by using one of the three comparison
methods and making the required adjustments, whether or not that results in
parity between different employers.
[80]
I also accept that s. 8 expressly permits some differences
in compensation:
8
(1) This Act
does not apply so as to prevent differences in compensation between a female
job class and a male job class if the employer is able to show that the
difference is the result of,
(a) a formal seniority system
that does not discriminate on the basis of gender;
(b) a temporary employee training
or development assignment that is equally available to male and female
employees and that leads to career advancement for those involved in the
program;
(c) a merit compensation plan
that is based on formal performance ratings and that has been brought to the
attention of the employees and that does not discriminate on the basis of
gender;
(d) the personnel practice known
as red-circling, where, based on a gender-neutral re-evaluation process, the
value of a position has been down-graded and the compensation of the incumbent
employee has been frozen or his or her increases in compensation have been
curtailed until the compensation for the down-graded position is equivalent to
or greater than the compensation payable to the incumbent; or
(e) a skills shortage that is
causing a temporary inflation in compensation because the employer is
encountering difficulties in recruiting employees with the requisite skills for
positions in the job class.
(2) After
pay equity has been achieved in an establishment, this Act does not apply so as
to prevent differences in compensation between a female job class and a male
job class if the employer is able to show that the difference is the result of
differences in bargaining strength.
[81]
This section acknowledges that systemic discrimination
continues to exist even though there are circumstances in which it does not
follow necessarily that differences in compensation are the result of
discrimination.
[82]
The Tribunal admitted that there is no provision in Part
III.2 that expressly constrains a seeking employer from requesting [the pay-equity-compliant
rate for the proxy employers job classes] on an ongoing basis. However, it
was concerned that it would be an onerous task for the proxy employer. In its
view, obtaining the necessary information from the proxy employer would be a
substantial practical impediment. In any event, the Tribunal concluded that
the Act did not require such information sharing.
[83]
As the Tribunal recognized, the Act does not constrain a
seeking employer from requesting information from a proxy employer on an
ongoing basis. Indeed, s. 21.17(1) provides a means for seeking employers to
access necessary information about the compensation practices and working
conditions within the proxy establishment. It is not limited to the establishment"
phase. Section 21.17(1) states that the purpose of getting such information is
to make a comparison to a key female job class using the proxy method.
Unreasonable Decision
[84]
As
Vavilov
instructs at para. 100, before a
reviewing court can set aside a decision on the basis that it is unreasonable,
the court must be satisfied that there are sufficiently serious shortcomings
in the decision such that it cannot be said to exhibit the requisite degree of
justification, intelligibility and transparency. While the Tribunals reasons
are transparent and intelligible, there is nothing in the Act that would
justify eliminating a male comparator for maintaining pay equity in establishments
where the proxy method was used to establish pay equity. In my view, the only
reasonable interpretation of the Act is that it requires the use of the proxy
method in maintaining pay-equity-compliant compensation practices in such establishments.
Charter
Values
[85]
My conclusion that the Tribunals decision is unreasonable rests
on the application of the modern principle of statutory interpretation.
It is unnecessary to determine whether the Tribunal also
erred in failing to take into account
Charter
values in interpreting
the Act. While I leave the
Charter
values issue for another day, I
would question the need to resort to a
Charter
values analysis in a
situation like this one where the
Charter
value in question equality
is consistent with the purpose of the legislation, which is to redress
discrimination in compensation.
Accordingly, there
is no need to determine whether
Taylor-Baptiste
was wrongly decided on the question of
Charter
values.
DISPOSITION
[86]
I would dismiss the appeals.
[87]
I agree with the Divisional Court that the matter should be
remitted to the Tribunal to specify what procedures should be used to ensure
that those employees, represented by the Unions, who have established pay
equity through the proxy method, will continue to have access to male
comparators to maintain pay equity.
[88]
I would also dismiss the cross-appeal. It is not necessary
to address the cross-appeal, which was initiated if this court allowed the
appeals.
[89]
I would invite submissions as to costs (limited to 5 p
ages) within 15 days of the release of this decision.
M.L.
Benotto J.A.
I
agree David Brown J.A.
I
agree B. Zarnett J.A.
Huscroft
J.A. (Dissenting):
OVERVIEW
[90]
The legislative
obligation in this case is clear. Section 7(1) of the
Pay Equity Act
,
R.S.O. 1990, c. P.7, requires the parties to establish and maintain
compensation practices that provide for pay equity in every establishment of
the employer. But while the Act sets out several methods for establishing pay
equity, it says nothing about how pay equity is to be maintained once it has
been achieved. The question for the Pay Equity Tribunal was how compensation practices
that provide for pay equity are to be maintained in workplaces where pay equity
has been achieved by means of proxy comparison.
[91]
In order to answer this
question, the Pay Equity Tribunal held hearings over a period of several days
and heard not only from the parties but also the Attorney General for Ontario,
who was granted permission to intervene in the proceedings. The Tribunal heard
evidence from lay and expert witnesses concerning the operation of the homes
party to this dispute; the relationship of the homes to the government;
employment in the homes; the bargaining relationship of the workplace parties;
and the negotiation of the parties pay equity plan in 1994, which culminated
in the achievement of pay equity when the final pay adjustment was made in
2005.
[92]
The Tribunal wrote a
lengthy and detailed decision that runs to 76 single-spaced pages. The decision
reviews the history of the legislation, the study that gave rise to the
amendments establishing the proxy comparison system, and the governments
various discussion papers and legislative statements. It also discusses the
repeal of the proxy method and the decision in
Service Employees
International Union, Local 204 v. Ontario (Attorney General)
(1997), 151
D.L.R. (4th) 273 (Ont. Sup. Ct.), which declared the repeal to be
unconstitutional and of no force or effect.
[93]
The Tribunal analyzed
the positions of the parties and reviewed its caselaw. Ultimately, the Tribunal
decided not to adopt either of the parties positions. Instead, the Tribunal
outlined a formula for compensation practices in the parties workplaces that
maintains pay equity by maintaining the ratio between the hourly wage and the
point value of the relevant job. The Tribunal explained the operation of this
formula in a series of detailed examples. Finally, the Tribunal made an order
requiring the parties to negotiate and endeavour to agree on an amendment to
their pay equity plans to stipulate a Gender Neutral Comparison System (GNCS)
and to apply it to determine whether any maintenance adjustments are required.
[94]
The majority of the
court concludes that the Tribunals decision is unreasonable. Although they
assert that the decision cannot identify and address re-emerging systemic
discrimination, they do not say that it fails to maintain pay equity. Instead,
they conclude that there is only one way in which pay equity is to be
maintained only one reasonable interpretation of the Act: if pay equity was
established using the proxy comparison method set out in the Act, it must be
maintained using the proxy comparison method. The Tribunals decision is
unreasonable, the majority concludes, because it does not adopt this
interpretation.
[95]
I disagree.
[96]
The Tribunals decision
is thorough and cogent and makes sense of an extremely complicated legislative
scheme. The decision reflects the Tribunals considerable expertise, not only
in pay equity but also in the diverse labour relations contexts in which pay
equity disputes arise unionized and non-unionized workplaces, and workplaces
where binding interest arbitration replaces the right to strike. It is entitled
to deference from this court. I see no basis to conclude that it is
unreasonable.
[97]
I would allow the
appeal for the reasons that follow. I would not decide the cross-appeal without
additional submissions from the parties.
DISCUSSION
The
nature and purpose of reasonableness review
[98]
At the outset, it is
important to review the nature and purpose of reasonableness review and to
consider the changes wrought by the majority decision of the Supreme Court in
Canada
(Minister of Citizenship and Immigration) v. Vavilov
, 2019 SCC 65, 441 D.L.R.
(4th) 1.
[99]
Reasonableness review
differs fundamentally from correctness review. Correctness review assumes a
binary: decisions are either right or wrong, and it is the courts task to
ensure that wrong decisions are corrected, whether or not they appear to be
reasonable or were made reasonably. In contrast, reasonableness review usually
assumes a range of reasonable decisions, and the courts task is to ensure that
a particular decision is transparent, intelligible, and justified. Correctness
review premises
de novo
review by the court, whereas reasonableness
review involves scrutinizing the reasons for an administrative decision to see
whether they justify that decision.
[100]
The key point is this:
reasonableness is an inherently deferential standard of review. Where the
reasonableness standard of review applies, courts are required to defer to and
uphold decisions with which they may not agree, provided only that those
decisions are reasonable. Correctness review involves no such compromise.
[101]
Vavilov
does not alter the distinction between
correctness and reasonableness review. The key change effected by
Vavilov
is the elimination of the contextual approach to selecting which standard of
review applies. Henceforth, it is presumed that reasonableness review applies
to the decisions of administrative decision makers. This presumption may be
rebutted if the legislature has prescribed the relevant standard of review, as
it may, for example, by establishing a right of appeal, in which case
correctness review must be applied.
[102]
The presumption that
reasonableness review applies may also be rebutted if the rule of law requires
that correctness review be applied. Specifically, the presumption is rebutted
for constitutional questions, questions of law that are of central importance
to the legal system as a whole, and questions concerning the jurisdictional
boundaries between two or more administrative bodies questions for which the
rule of law requires consistency and a final, determinate answer. These
categories are not to be understood as closed, but nor are they to be expanded
beyond their purpose: preventing the rule of law from being undermined and
supporting the proper functioning of the justice system.
[103]
Much could be said
about this, but for the purposes of this appeal there is no need to consider
the requirements of either the rule of law or the proper functioning of the
justice system. It is plain that the decisions of the Pay Equity Tribunal are
subject to reasonableness review. The question is: how does reasonableness
review operate?
[104]
Vavilov
provides considerable guidance in this
regard, but the essential nature of reasonableness review has not changed.
Reasonableness review was, and remains, a deferential form of review. It is a
form of review that respects the distinct role of administrative decision
makers; involves a minimum of judicial interference; and requires a posture
of restraint by the reviewing court:
Vavilov
, at paras. 75 and 24. As
the Court reiterates, [r]easonableness review is an approach meant to ensure
that courts intervene in administrative matters
only where it is truly
necessary to do so in order to safeguard the legality, rationality and fairness
of the administrative process
,
Vavilov
at para. 13 (emphasis
added).
[105]
Vavilov
confirms that the reasonableness of a
particular decision is to be assessed having regard to the reasons proffered
for that decision. The court is not to ask what decision it would have made and
then compare the decision under review against the benchmark it has
established. Nor is the court to identify the range of possible decisions that
could have been made in order to see whether the decision under review falls
within it. The question for the court is whether the decision under review is
transparent, intelligible, and justified.
[106]
The underlying tension
in
Vavilov
concerns the intensity of the reasonableness review the Court
endorses. The Court reiterates that [r]easonableness is a single standard that
takes its colour from the context, at para. 89, suggesting differing intensity
of review, if not different standards, in different contexts: see David
Mullan, Reasonableness Review Post-
Vavilov
: An Encomium for
Correctness, or Deference as Usual? (Paper delivered at the What Difference
will
Vavilov
Make? Views from Workplace Law and Beyond Webinar, October
16, 2020) at pp. 16-17. Be that as it may, reasonableness remains a deferential
form of review, substantially different from correctness, as the Courts
emphasis on concepts such as respect and restraint demonstrates. At the
same time, however, the Court describes reasonableness as a robust form of
review:
Vavilov
, at para. 13.
[107]
To the extent that the
adjective robust simply emphasizes that reasonableness review is not to
function as a rubber stamp, no problem arises. But it must be acknowledged that
there are statements in the majority decision that appear to be in tension with
the concept of deference. For example, the Court speaks of constraints on
administrative decision makers and, significantly, states that there will
sometimes be only one reasonable interpretation of a statutory provision:
Vavilov
,
at paras. 90 and 110. This seems unobjectionable in theory; the legislature is
usually able to make its intention clear. But how is a court to conclude there
is but one reasonable interpretation if it is not to perform
de novo
analysis or determine the correct interpretation of the legislation itself,
which the Court specifically precludes? The Court acknowledges the problem but
states simply: it may sometimes become clear in the course of reviewing a
decision that the interplay of text, context and purpose leaves room for a
single reasonable interpretation:
Vavilov
, at para. 124.
[108]
This statement must be
read in the context of the Courts endorsement not only of deference, but also
of the continued importance of an administrative decision makers expertise.
Although expertise is no longer a relevant consideration in determining which
standard of review applies, it remains important to the manner in which
reasonableness review is conducted. Specialized knowledge matters. As the Court
emphasized at para. 93:
In conducting
reasonableness review, judges should be attentive to the application by
decision makers of specialized knowledge, as demonstrated by their reasons.
Respectful attention to a decision makers demonstrated expertise may reveal to
a reviewing court that an outcome that might be puzzling or counterintuitive on
its face nevertheless accords with the purposes and practical realities of the
relevant administrative regime and represents a reasonable approach given the
consequences and the operational impact of the decision.
This is an important admonition that in my view should be heeded in this
case.
[109]
Courts lack the
expertise that specialist administrative decision makers have; they simply do
not know what they do not know about the way in which a complex regulatory
scheme such as pay equity operates. Of course, this is not a reason for a
reviewing court to conclude that any and all decisions from specialized
tribunals are reasonable; it is, however, a reason for the court to exercise
considerable caution before concluding that a particular decision is
unreasonable, especially if in making that decision the tribunal is acting
within the sphere of its specialized knowledge, carrying out its mandate to
create solutions to problems.
The
Pay Equity Tribunals decision
[110]
As
Vavilov
instructs, the courts focus on judicial review must be on the Tribunals
reasons. The court needs to understand how the Tribunal reached its decision
before it can determine whether that decision is reasonable.
[111]
After noting the
absence of a definition of maintenance in the Act, the Tribunal reviewed all
of the provisions and regulations in which the term appears and found that none
of them provided any indication of how pay equity was to be maintained. Thus,
the Tribunal stated that the scope of [the obligation to maintain pay equity]
must be ascertained from a consideration of the Act as a whole, and that the
plain meaning of the word maintain suggests that the obligation is to
continue the compensation/value relationship that is established when a female
job becomes pay equity compliant. There is nothing unreasonable in any of
this.
[112]
The Tribunal reviewed
its caselaw and adopted the approach taken in previous cases: maintenance is
the means by which an employer ensures that compensation practices are kept
up-to-date and remain consistent with pay equity principles. The Tribunal
distinguished maintenance of pay equity from the sorts of change in
circumstances that require a formal review or reposting of a pay equity plan
for example, changes in the operational structure of an establishment, the
unionization of an employer, or the merger of employers. The Tribunal found
that the changes alleged in this case changes to job responsibilities or
educational requirement of the job classes and changes in the acuity and
demands of the patients in the homes were the sorts of changes that had to be
addressed in the pay equity maintenance process.
[113]
The problem was that
the way in which the parties developed their pay equity plan in this case
rendered it difficult to measure the value of work performed on an ongoing
basis. As outlined below, the parties did not agree to a GNCS, nor did they
evaluate any job classes. Thus, even assuming that their pay equity plan was
accurate when the agreement was made, the Tribunal could not be certain that it
remained so.
[114]
The Tribunal considered
and rejected the parties focus on compensation changes as the only variable
with which the maintenance obligation is concerned because it failed to address
changes in what the Tribunal identified as the key variable: the
value
of the job classes. The Tribunal rejected the employers argument that
across-the-board wage increases could maintain pay equity; this was true only
if the value of the job classes in the seeking establishment remained
unchanged. Similarly, the Tribunal rejected the unions argument that wage
differences between employees in Municipal Homes versus the homes in this case
meant that pay equity was not being maintained; the
Act
requires an
assessment not simply of whether compensation has changed, but whether the
relative value of job classes compared to their compensation has changed.
[115]
The Tribunal found that
wage rates for the same job class varied from one home to another and that
implementation of pay equity adjustments did not lead to uniform pay rates
across the homes. Further, although a number of changes occurred since the pay
equity plan was executed, those changes have not been addressed in the interest
arbitration process. A pay gap between wages and benefits in the homes and in
the Municipal Homes developed and increased. That being said, the Tribunal
emphasized that the obligation to maintain pay equity was more than simply
accounting for changes in compensation and had to be capable of application to all
public sector workplaces both union and non-union, and regardless of the
operation of interest arbitration.
[116]
The Tribunal reiterated
the importance of monitoring job duties and responsibilities to ensure that
comparator job classes remain appropriate, while noting the difficulty in doing
so: although compensation rates are in the public domain, information about
changes in job duties and responsibilities is not. The proxy employers
obligation to maintain pay equity in its own establishment makes it difficult
to determine the pay equity compliant rate for its job classes at any given
time. The Tribunal considered that there was a substantial practical
impediment to obtaining information to enable a proxy plan to be updated or
maintained to reflect changes in the value or compensation rates for the proxy
female job classes. But this was not what the Act requires in any event: the
focus of the Act is on the compensation practices specific to individual
establishments.
[117]
The Tribunal found that
pay equity can be maintained for both non-key female job classes and the key
female job class without continuing resort to the compensation practices in the
proxy establishment. Pay equity is to be maintained by on-going monitoring of
changes to either the compensation or the value of female and male job classes
(including deemed male job classes). The Tribunal sets out a detailed and
specific methodology and illustrates its operation with several specific
examples.
[118]
Finally, the Tribunal
concluded that changes in the clientele and the duties performed in the homes
may impact the value of the job classes, but the pay equity consequences could
be determined only by evaluating the job information using a GNCS, which the
parties plans lacked. Accordingly, the Tribunal ordered the parties to
negotiate and endeavour to agree on an amendment to their pay equity plans to
stipulate a GNCS and to apply it to determine whether any maintenance
adjustments are required.
The
Tribunals decision is reasonable
[119]
I repeat what I said at
the outset: the Tribunals decision is thorough and cogent. It makes sense of
an extremely complicated legislative scheme, a scheme with which the courts
have virtually no familiarity. The Tribunals decision reflects its
considerable expertise, not only in pay equity but also in the diverse labour
relations contexts in which pay equity disputes arise unionized and
non-unionized workplaces, and workplaces where binding interest arbitration
replaces the right to strike. I see no basis to conclude that the decision is
unreasonable.
[120]
There is no doubt that
the unions prefer proxy methodology because they suppose that it will yield
greater monetary benefits. But as the Tribunal was at pains to point out, the
pay equity obligation established by the Act is establishment-specific. The Act
is not designed to deliver wage parity; it is designed to require pay equity
compliant compensation practices in each establishment covered by the Act. This
may well mean different pay rates for female job classes across employers
differences that may be the result of unionization and the nature of bargaining
unit configurations in different workplaces.
[121]
The importance of
changes in the
value
of work performed is key to the Tribunals
decision. And this case was difficult, among other reasons, because the parties
did not follow the prescribed procedure in making their pay equity agreement.
They did not agree to a GNCS. They did not evaluate any job classes on the
basis of the skill, effort, responsibility and working conditions in the
seeking or proxy establishments. Instead, they simply negotiated a pay equity
settlement based on the assumptions that the employees possessed similar skills
whether they worked in a Municipal or private home; they performed the same
duties under the same conditions; and that their work was of the same value to
Municipal and private homes. Their negotiated settlement was deemed approved
despite technical non-compliance with the Act and its validity was not
challenged in these proceedings. But in the absence of a GNCS the Tribunal
could not be sure that the assumptions on which the Proxy Plans were based were
accurate when the plans were developed or that they remained accurate in any
event.
[122]
The majority concludes
not only that the Tribunals decision is unreasonable, but also that there is
only one reasonable interpretation of the statutory requirement to maintain pay
equity: in an establishment in which pay equity was achieved using the proxy
method, it must be maintained by using the proxy method. According to the
majority reasons, the Tribunals decision ignores the purpose, scheme and
plain wording of the Act.
[123]
With respect, I
disagree.
[124]
The Tribunal cannot be
said to have ignored anything, let alone the purpose, scheme and plain wording
of the Act. It fully understood the problem before it. As the Tribunal stated,
the purpose of the Act is to redress systemic gender discrimination in
compensation. The proxy method was established precisely because the
job-to-job comparison method could not achieve this purpose. As for the plain
wording of the Act, the difficulty presented by this case is the
absence
of plain wording: although the Act mandates the maintenance of pay equity, it
says nothing about
how
it is to be maintained.
[125]
It may well seem
counterintuitive that pay equity achieved in one manner should not be
maintained in the same manner. But the Tribunal considered that approach and
explained why it was neither practical nor necessary to use the proxy method to
maintain pay equity. Differences arising in the compensation/value relationship
in a proxy employer may be attributable to bargaining strength rather than
systemic discrimination. They may also be attributable to other
non-discriminatory reasons, even if the employees are performing work of the
same value. This is a problem because the
Pay Equity Act
is not intended
to redress differences in pay across employers
per se
; it is intended to
address only those differences that are the result of systemic discrimination.
Nor is the Act intended to establish industry or sectoral wage standards.
[126]
The majority
acknowledges this point but does not follow through on the implications.
Regardless of how pay equity is established, the obligation to establish and
maintain pay equity falls on individual employers. This is the sense in which
the Tribunal refers to the proxy methodology as extraordinary: although the
obligations to establish and maintain pay equity apply to individual employers
and their establishments, where the proxy methodology applies pay equity is
established having regard to the practices of a different, unrelated employer.
[127]
The Tribunal
specifically considers and rejects the interpretation the majority concludes is
the only reasonable one available. Although the majority sets out the relevant
passages from the decision in which the Tribunal outlines and explains its
formula for maintaining pay equity, they do not engage with the Tribunals
reasons. Significantly, the majority does not say that the Tribunals
methodology would not maintain pay equity at the Homes.
[128]
The majority criticizes
the Tribunal for failing to address s. 21.13, which it says leads to a loss of
confidence in the Tribunals decision. But the Tribunal devotes numerous pages
to explaining the operation of the proxy system and its purpose in redressing
systemic discrimination. There is no basis to suggest that the Tribunal
misunderstood its mandate and no basis to lose confidence in its decision. The
Tribunals decision is sensitive to the purpose and scheme of the Act throughout.
[129]
The majoritys argument
is not advanced by the general wording of s. 5.1(1), and in particular
introductory words [f]or purposes of this Act, nor by purported distinctions
between the terms achieve, establish, and maintain. It is simply asserted
that the Tribunals method would not identify and address re-emerging systemic
discrimination.
[130]
The premise underlying
the majority reasons is that the Tribunal has eliminated male comparators for
women in predominately female job classes. The problem with this premise is
that the proxy method operates without comparison to male job classes in the
proxy establishment. The comparison is with the key female job class in the
proxy employer, in which pay equity has been achieved. That class is treated as
though it is a male job class in the seeking employers establishment, and then
used to establish pay equity in the various female job classes. There is no
obvious reason why maintenance of the compensation/value ratio established by
the proxy comparison would not maintain pay equity in the relevant
establishment, regardless of the absence of male comparators.
[131]
At the end of the day,
the Tribunals decision identifies the relevant issues and engages with the
legislation and the arguments of the parties in a manner that is sensitive to
the purpose of the Act and the proxy system in particular. The Tribunal was
faced with a particular problem in this case: the parties negotiated a
settlement of their pay equity issues in 1995 rather than following the proxy
methodology prescribed in the Act. In the absence of a GNCS, the consequences
of changes since the pay equity agreement was negotiated could not be
ascertained. Accordingly, the Tribunal ordered the parties to negotiate and
endeavour to agree on an amendment to their pay equity agreement to stipulate a
GNCS and apply it to determine whether any maintenance adjustments were
necessary. There is nothing unreasonable in this.
[132]
The Tribunals reasons
are comprehensive. The Tribunal reviews the positions of the parties and
explains why it rejects them. It explains and demonstrates the operation of its
formula for maintaining pay equity, which uses a value/compensation ratio for
the key female job classes to maintain pay equity in all of the female job
classes in the seeking employer. There is no failure of internal rationality
nor are the Tribunals reasons marred by any logical fallacies. In short, the
decision is reasonable and should be upheld. With respect, the majority reasons
lose sight of the purpose of reasonableness review and ultimately collapse into
correctness review. It is significant that the word deference is nowhere to
be found in the majority reasons.
[133]
Care must be taken in
deciding that there is but one reasonable interpretation of a complicated
regulatory regime such as pay equity. There may well be only one reasonable
interpretation of rule-like language in a statute precise and narrow
language, as the court put it in
Vavilov
at para. 110 but there is no
such language at issue in this case. I do not accept that the Tribunal has
profoundly misunderstood and undermined its mandate, as the majority reasons
suggest. The Tribunals decision accords with the longstanding understanding at
the Pay Equity Commission, which was set out in
A Guide to Interpreting
Ontarios Pay Equity Act
, as well as the Ministry of Labours 1992
Discussion Paper on Pay Equity: Implementing Proxy Comparisons, both of which
contemplated onetime-only comparisons with the proxy employer in order to
establish pay equity. These are not binding sources of law, of course, but they
lend further support to the conclusion that the Tribunals decision is
reasonable.
[134]
I conclude that the
Tribunals decision is reasonable.
The
Charter
arguments
[135]
This court granted
leave to appeal from the decision of the Divisional Court and constituted a
five-member panel to hear this appeal because this courts decision in
Taylor-Baptiste
v. Ontario Public Service Employees Union
, 2015 ONCA 495, 126 O.R. (3d)
481, was challenged. The respondents cross-appealed, arguing that if the
Tribunals decision was not unreasonable, then the Act violated the
Charter
.
[136]
The majority concludes
that it is unnecessary to address the
Charter
values or the
Charter
violation arguments in light of its decision that the Tribunals decision is
unreasonable. My conclusion that the Tribunals decision was not unreasonable
renders it necessary for me to address the
Charter
arguments, and I do
so below.
[137]
I conclude that
Charter
values are relevant to statutory interpretation only where genuine ambiguity
exists. To the extent that
Taylor-Baptiste
says otherwise, it should not
be followed.
[138]
I would not decide
whether the legislation violates the
Charter
without further submissions
from the parties.
The
Divisional Court erred in applying
Charter
values
[139]
The Tribunal considered
and rejected the argument that
Charter
values applied so as to alter its
interpretation of the Act. The Tribunal found that resort to
Charter
values as an interpretive aid is warranted only in the case of ambiguity and
that the
Pay Equity Act
was not ambiguous.
[140]
With respect, the
Divisional Court erred in concluding that the Tribunal was required to consider
Charter
values in interpreting the relevant provisions of the
Pay
Equity Act
. There was no basis to invoke
Charter
values, still less
to conclude that the Tribunals decision was at odds with the
Charter
value of equality in any event.
[141]
The Divisional Court followed
this courts decision in
Taylor-Baptiste
. In that case, the court
acknowledged that the interpretive principle established in
Doré v. Barreau
du Québec,
2012 SCC 12, [2012] 1 S.C.R. 395, applies in the context of the
exercise of discretionary authority by administrative decision makers but
asserted that, read as a whole,
Doré
requires
Charter
values to
be considered in determining whether a persons conduct violated a statutory or
regulatory rule. I set out the relevant passages from the courts decision for
convenience, at paras. 54-58:
Their first
submission is that an administrative tribunal can only consider
Charter
values in its decision-making if an
ambiguity exists in the provision of its home or enabling statute at issue in a
case
.
Binding authority
prevents the acceptance of the appellants submission. Slightly more than a
decade after deciding
Bell ExpressVu
, the Supreme Court rejected an argument similar to the appellants
when, in
R. v. Clarke
,
it stated, at para. 16:
Only in the administrative
law context is ambiguity not the divining rod that attracts
Charter
values. Instead,
administrative law decision-makers must act consistently with the values
underlying the grant of discretion, including
Charter
values (
Doré
, at para. 24). The issue in the administrative
context therefore, is not whether the statutory language is so ambiguous as to
engage
Charter
values,
it is whether the exercise of discretion by the administrative decision-maker
unreasonably limits the
Charter
protections in light of the legislative objective of the statutory
scheme.
The appellants
second submission is that the
Charter
values interpretive principle articulated in
Doré
only
applies to instances where an administrative decision-maker exercises a
discretionary power, such as crafting a remedy. They say it does not apply to
the kind of adjudicative decision made by the Tribunal in this case i.e.
whether the respondents conduct violated s. 5(1) of the
Code
.
While I take the
appellants point that in both
Doré
and
Loyola High School
the
Supreme Court frequently referred to the exercise of a discretionary power
under a home statute, in my view the decision in
Doré
, when read as a
whole, prevents the acceptance of the appellants submission. First, in
Doré
the Court stated that administrative decisions are
always
required to
consider fundamental values (emphasis in original). Second, the context
which framed the courts discussion in
Doré
was analogous to the present
case i.e. the determination by an administrative tribunal about whether a
persons conduct had violated the strictures of a statutory or regulatory rule.
[Footnotes omitted.]
[142]
With respect, these
passages misstate the law. The limited role of
Charter
values in
interpreting legislation was outlined by the Supreme Court in
Bell ExpressVu
Limited Partnership v. Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559. In that case,
Iacobucci J., writing for the Court, stated at para. 62:
Statutory
enactments embody legislative will. They supplement, modify or supersede the
common law. More pointedly, when a statute comes into play during judicial
proceedings, the courts (absent any challenge on constitutional grounds) are charged
with interpreting and applying it in accordance with the sovereign intent of
the legislator. In this regard, although it is sometimes suggested that
it is appropriate for courts to prefer interpretations that tend to promote
those [
Charter
] principles and values over interpretations that
do not (Sullivan,
supra
, at p. 325), it must be stressed that, to the
extent this Court has recognized a
Charter
values interpretive principle, such principle can
only
receive
application in circumstances of genuine ambiguity, i.e., where a statutory
provision is subject to differing, but equally plausible, interpretations.
[Emphasis in original]
[143]
In short,
Charter
values are relevant only to the interpretation of legislation that is genuinely
ambiguous. The same rule applies for administrative decision makers as for
courts:
Wilson v. British Columbia (Superintendent of Motor Vehicles)
,
2015 SCC 47, [2015] 3 S.C.R. 300.
[144]
This approach is hardly
surprising. Statutory interpretation is concerned with identifying and giving
effect to the intention of the legislature. The
Charter
does not change
this. If legislation is in some way inconsistent with the
Charter
it is
of no force or effect to the extent of the inconsistency, but before that
conclusion is reached the legislation may be defended on the basis that it
establishes a reasonable limit on the
Charter
right at stake. It is no
part of the interpreters task to preclude a finding of inconsistency with the
Charter
,
or the attendant consequences, by interpreting legislation so as to avoid that
inconsistency. The exception is for legislation that is ambiguous, and the
ambiguity must be
genuine
. Iacobucci J. describes genuine ambiguity as
arising when a statutory provision is subject to differing, but equally
plausible
,
interpretations (emphasis added):
Bell ExpressVu
at para. 62.
Charter
values are not to be used to create ambiguity where none exists:
R. v.
Clarke
, 2014 SCC 28, [2014] 1 S.C.R. 612, at para. 1.
[145]
The narrowness of the
concept of ambiguity must be emphasized, for ambiguity is a concept that is
often misunderstood. Genuine ambiguity in a statute is rare; it arises only
where the legislature has failed to specify between two rarely more
meanings that are semantically possible. Ordinarily, ambiguity can be resolved
using the tools of statutory interpretation; read in context, the legislatures
intended meaning will usually be the only plausible meaning, and hence the
meaning that must be adopted. In those rare circumstances in which the
intention of the legislature cannot be inferred it is sensible to adopt the
interpretation that conforms to
Charter
values rather than the one that
does not: the legislature could be presumed to have intended to adopt the
plausible interpretation that is consistent with
Charter
values.
[146]
Ambiguity is often
confused with vagueness, but the terms are not interchangeable. The various
forms of indeterminacy and helpful academic authorities are discussed by Miller
J.A. in
Pong Marketing and Promotions Inc. v. Ontario Media Development
Corporation
, 2018 ONCA 555, 142 O.R. (3d) 542, at paras. 44-48. Unlike
ambiguity, vagueness is anything but rare; indeed, vagueness is ubiquitous in
many fields of regulation governed by standards rather than rules. Vaguely
worded legislation has a core of determinate or clear meaning, but a penumbra
that may be quite large; its application is
to this extent
underdetermined
.
Legislative standards are often underdetermined, but this is usually resolved
by caselaw that develops meaning of the vague standard. The duty to bargain in
good faith is a well-known concept in labour relations law that is vague, not
ambiguous; its meaning is fleshed out in the caselaw of the Labour Relations
Board, the expert body charged with responsibility for interpreting and
applying, and so developing, the duty.
[147]
The essential purpose
of statutory interpretation was not altered by passage of the
Charter
.
Administrative decision makers and courts must determine and give effect to the
intention of the legislature. They are neither mandated nor permitted to
disregard the intention of the legislature in order to give effect to
Charter
values. Indeed, the
Charter
does not require the court to interpret
legislation in a manner consistent with the
rights
it specifically
protects.
[148]
In this regard, the
Charter
differs from the
New Zealand Bill of Rights
and the
UK Human Rights
Act
, both of which require courts to interpret legislation in a manner
consistent with the rights they protect. But the difference between the
Charter
and these rights instruments is significant: only the
Charter
authorizes
courts to refuse to give effect to legislation that is inconsistent with the
protected rights. The requirement of rights-consistent interpretation is not
part of the Canadian approach to statutory interpretation because it is
necessary to give effect to both the intention of the legislature and the
supremacy of the Constitution. Put another way: the consequences of
inconsistency with the
Charter
are not to be avoided by a strategy of
adopting rights-consistent interpretations regardless of the legislatures
intentions.
[149]
Bell ExpressVu
is well-established authority that has
been upheld consistently: see
R. v. Rodgers
, 2006 SCC 15, [2006] 1
S.C.R. 554,
Clarke
, and
Wilson
.
It was relied on by this
court in
Ontario Medical Association v. Ontario (Information and Privacy
Commissioner)
, 2018 ONCA 673, 427 D.L.R. (4th) 67, at para. 20, and recent
decisions of this court including
Gehl v. Canada (Attorney General)
,
2017 ONCA 319, 138 O.R. (3d) 52;
E.T. v. Hamilton-Wentworth District School
Board
, 2017 ONCA 893, 140 O.R. (3d) 11; and
McKitty v. Hayani
, 2019
ONCA 805, 439 D.L.R. (4th) 504 all contemplate a limited role for
Charter
values and a limited conception of them.
[150]
To the extent that
Taylor-Baptiste
suggests that
Charter
values have a role to play in statutory
interpretation in the absence of ambiguity, it is inconsistent with this authority
and should not be followed.
[151]
The interpretation of
legislation even vaguely-worded legislation does not constitute an exercise
of discretionary decision-making authority to which
Charter
values
apply. Although vagueness connotes a range of decisions that may be made, that
range is always understood in the context of the intention of the legislature.
The interpretive exercise is different in kind from the exercise of authority
to make a discretionary decision or to exercise discretionary remedial authority.
[152]
I would add this: the
application of
Charter
values is often problematic because of the
failure to appreciate the difference between concepts such as rights and
values. The terms are often used interchangeably but they are not
interchangeable. The
Charter
is an exhaustive statement of the rights
and freedoms it protects. In contrast, there is neither a list of
Charter
values nor a canonical formulation of them:
McKitty
at para. 95, per
Miller J.A. Such values as have been recognized things such as dignity;
privacy; autonomy; and fairness are general and abstract concepts. Although
they trade on the
Charter
adjective, they are not
Charter
rights
.
They are, in general,
reasons for Charter
rights reasons that help
explain why certain rights were accorded constitutional protection.
[153]
The underlying reasons
for protecting rights are invariably broader than the rights themselves.
Consider the concept of dignity. People have rights, we might say, because they
are possessed of inherent human dignity. But the claims of morality are not
coextensive with the requirements of legality; not all moral claims find
expression in constitutionally protected legal rights. Thus, although the
decision to extend constitutional protection to particular rights arises out of
respect for human dignity, human dignity is not a freestanding right or freedom
under the
Charter
. It is not justiciable
per se
. Care must be
taken in identifying and applying
Charter
values, lest they supplant the
rights from which they are inferred.
[154]
Equality seems to be an
uncontroversial
Charter
value; it appears to be identical to the
Charter
right. But what work is the concept of equality doing when it is invoked as a
value as opposed to a right? The
Charter
value of equality is
necessarily broader than the
Charter
right to equality a right that is
limited not only by the text of s. 15 but also by decisions of the court
emphasizing the negative purpose of the provision in preventing discrimination
on enumerated and analogous grounds. And of course, s. 15 is, like all
Charter
rights, subject to such reasonable limits as may be imposed in a free and
democratic society, pursuant to s. 1.
[155]
The Divisional Court
demonstrates the problem of invoking
Charter
values as interpretive
imperatives by invoking equality to overturn the interpretation of human
rights legislation by a specialized human rights tribunal whose decision was
entitled to deference. If the Act is considered problematic on equality grounds
because of the way in which it requires the maintenance of pay equity, the
constitutionality of the Act may be challenged. That challenge should not be
preempted by invoking the
Charter
value of equality to alter the proper
operation of the Act.
[156]
In summary, there is no
ambiguity in the relevant
Pay Equity Act
provisions and hence it was
wrong for the Divisional Court to invoke
Charter
values in interpreting
the Act so as to override the Tribunals decision.
Taylor-Baptiste
should not be followed. The Tribunals decision is reasonable and should be
upheld.
The
cross-appeal
[157]
Since the hearing of
this case, the Supreme Court released its decision in
Fraser v. Canada
(Attorney General),
2020 SCC 28, 450 D.L.R. (4th) 1. I would not decide the
cross-appeal without inviting submissions from the parties concerning the
effect of this case.
Released: March 09, 2021 GRS
Grant
Huscroft J.A.
I
agree G.R. Strathy C.J.O.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Orillia (City) v. Metro Ontario Real Estate
Limited, 2021 ONCA 291
DATE: 20210506
DOCKET: C67924
Feldman, Simmons and Harvison Young JJ.A.
BETWEEN
The Corporation of the
City of Orillia
Applicant (Appellant/
Respondent by way of cross-appeal)
and
Metro Ontario Real Estate Limited
Respondent
(Respondent/
Appellant by way of cross-appeal)
AND BETWEEN
Metro
Ontario Real Estate Limited
Applicant (Respondent/
Appellant by way of cross-appeal)
and
The
Corporation of the City of Orillia
Respondent (Appellant/
Respondent by way of
cross-appeal)
Robert Wood, for the appellant/respondent by way of
cross-appeal
Krista Chaytor and Caitlin Steven, for the
respondent/appellant by way of cross-appeal
Heard: November 3, 2020 by video conference
On appeal from the judgment of Justice Clayton Conlan of
the Superior Court of Justice, dated December 20, 2019, with reasons reported
at 2019 ONSC 7467, 15 R.P.R. (6th) 78.
Harvison Young J.A.:
A.
Overview
[1]
This appeal and cross-appeal arise out of a commercial lease of a
grocery store in a shopping centre. The appellant landlord, the City of
Orillia, appeals the judgment of the application judge who found in favour of
the respondent Metros position that an amendment of the period of the lease
was ambiguous and considered extrinsic evidence that supported Metros submission
as to the ultimate term of the lease. Metro cross-appeals from the judgment
dismissing its claims against Orillia in relation to certain other issues.
B.
Background
[2]
The issue on the main appeal is the expiry date of the lease. The
original lease commenced on March 1, 1979 with an initial term of 25 years. The
expiry date was February 28, 2004. Metro also had a right to five successive
renewal periods of five years each. Thus, the ultimate expiry date was to be
February 2029, or a maximum of 50 years from the date the lease commenced.
[3]
In 1999, when Metro was planning the construction of an approximately
10,000 square foot addition, the parties negotiated an amendment to the lease
which, among other things, extended the term of the lease by ten years,
commencing on March 1, 2004 and expiring on February 28, 2014. The amendment
gave Metro the option to extend the term of the lease for three additional
periods of five years each for a total of five options or 25 years. Orillia brought
an application for a declaration that the maximum term of the lease is 50
years, expiring in 2029. At the application hearing and in the main appeal, Orillia
argued that the lease expires, at the latest, in February 2029, while Metro
argued that the lease extends until February 2039, at the latest.
[4]
The central issue on the cross-appeal is which party has the obligation
to replace the roof of the grocery store. Starting in 2016, the roof of the
grocery store began leaking, and Metro had to replace many of the ceiling tiles
in the store. Months later, Metro determined that the roof needed to be
replaced. Orillia took steps to implement a roof overlay solution but later asserted
that it had no obligation to repair the roof. Metro brought an application
requesting, among other things, an order requiring Orillia to replace the roof.
At the application hearing and in the cross-appeal, Metro alleged that under
the lease, Orillia had an obligation to replace the roof, while Metro only had an
obligation to repair the roof. Orillia disagreed and argued that the roof,
whether it requires repair or replacement, is Metros responsibility.
[5]
For the reasons that follow, I would allow the main appeal and dismiss
the cross-appeal, both in favour of Orillia.
(1)
The decision below
[6]
The applications of Orillia and Metro were heard together. On the lease expiry
date issue, the application judge dismissed Orillias application and declared,
in favour of Metro, that the lease would expire in 2039 at the latest. He found
that the lease was ambiguous because there were two reasonable interpretations
of the lease term clauses.
[7]
The first interpretation, advanced by Orillia, was that the maximum
50-year term of the lease was not altered by the amendment. Section 2 of the
amendment, which extended the term of the original lease by ten years from 2004
to 2014, reflected the exercising of two of the five five-year renewal options
under s. 3(2) of the original lease. Section 3 of the amendment, which stated
that Metro had the option to further extend the term for three additional
periods of five years each for a total of five options or 25 years, reflected
the fact that three renewal options remained, so that the lease would expire in
2029 at the latest.
[8]
The second interpretation, advanced by Metro, was that the parties
wanted to extend the length of the lease. Section 2 of the amending agreement
added an additional ten years to the maximum potential length of the lease, and
s. 3 of the amending agreement reflected that five five-year renewal periods
remained after 2014, so that the lease would expire in 2039 at the latest.
Section 3(3) of the original lease providing for a 50-year maximum term was
altered by s. 6 of the amending agreement, which provided that the original
lease is amended where necessary to give effect to the amendments.
[9]
The application judge found that the factual matrix did not help resolve
the ambiguity in the lease. As a result, the application judge examined the
extrinsic evidence. He found that the extrinsic evidence, including the notice
of lease registered on title and an estoppel certificate (both of which stated
that the lease could be extended to 2039), supported Metros position that the
amendment extended the maximum length of the lease by ten years.
[10]
On
the roof issue, in brief reasons, the application judge dismissed Metros
application and determined that Orillia did not have any duty to replace the
roof. He concluded that Metros obligation to maintain and repair the Leased
Premises under s. 14(1)(a) of the lease included the roof. The application
judge did not think that there was any legitimate basis to distinguish that
clause because it says repair rather than replace.
(2)
Issues on appeal
[11]
Orillia
makes four arguments on appeal:
·
The application judge erred in determining the lease was ambiguous;
·
The application judge erred in his consideration of the factual
matrix;
·
The application judge erred in his treatment of the extrinsic
evidence; and
·
The application judge erred in his consideration of commercial
reasonableness.
[12]
Metro
makes two arguments on their cross-appeal, although the parties reached an
agreement on the second issue during oral argument:
·
The application judge erred in finding that Orillia does not have
a duty to replace the roof; and
·
The application judge erred in finding that Metro does not have a
property interest in the Triangle Land.
(3)
The parties positions
[13]
On
the main appeal, Orillia argues that the application judge committed an
extricable error of law when he found an ambiguity, as he failed to interpret
the contract as a whole. He failed to read ss. 2 and 3 of the amending
agreement harmoniously with the original lease and the rest of the amending
agreement. The application judges reading of the amendment reads the words
for three (3) additional periods of five (5) years each and if all remaining
options are exercised out of s. 3 of the amending agreement.
[14]
Metro
argues that this is a question of mixed fact and law and that the standard of
review is one of palpable and overriding error. It submits that the application
judge did not make such an error. If the parties had intended for s. 2 of the
amending agreement to be an early exercise by Metro of two of its options to
renew, then the section could have stated that. The application judge
considered the lease and amending agreement as a whole, and he specifically
considered the effect of s. 3(3) of the original lease and s. 6 of the amending
agreement.
[15]
On
the roof repairs issue, the cross-appellant, Metro, argues that the application
judge erred in stating that nothing turned on the fact that Metros only
obligation under the lease was to repair, rather than replace. It argues that
the roof work is a replacement rather than a repair.
[16]
The
respondent on the cross-appeal, Orillia, argues that Metro bears the sole
responsibility of repairing the Store (as defined in the lease) and that
Orillia has the responsibility of repairing the remainder of the Shopping
Centre. The roof is part of the Store and Metro must repair or replace it when
it affects their use and enjoyment of the premises.
C.
Discussion
[17]
A
contract must be interpreted as a whole:
Sattva Capital Corp. v. Creston
Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 64. Courts should
not strain to create an ambiguity where none exists: see
Chilton v.
Co-operators General Insurance Co.
(1997), 143 D.L.R. (4th) 647 (Ont.
C.A.), at p. 654;
Amberber v. IBM Canada Ltd.
, 2018 ONCA 571, 424
D.L.R. (4th) 169, at para. 63; and G.H.L. Fridman,
The Law of Contract in
Canada
, 6th ed. (Toronto: Carswell, 2011), at pp. 442-43.
(1)
Standard of review
[18]
Contractual
interpretation is a question of mixed fact and law requiring the application of
principles of contractual interpretation to the words of a contract and its
factual matrix:
Sattva Capital
, at para. 50. However, an extricable
question of law is subject to a correctness standard of review. Potential
extricable questions include the application of an incorrect principle, the
failure to consider a required element of a legal test, or the failure to
consider a relevant factor:
Sattva Capital
, at para. 53. Courts
should be cautious in identifying extricable questions of law.
(2)
The main appeal
[19]
In
my view, the main appeal should be allowed. The application judge committed an
error of law by failing to consider the wording of the provisions in the
context of the agreement as a whole. If he had not committed this error, he
would have come to the conclusion that there was no ambiguity.
[20]
The
original lease commenced in 1979 with an initial term of 25 years. Metro also
had the option to renew for five successive periods of five years each. The maximum
term was to be 50 years with an ultimate expiry date in 2029. The relevant
provisions of the original lease are as follows:
INITIAL TERM
3. (1) TO HAVE AND TO HOLD the Leased Premises for and during a
period of 25 years and nil months commencing on the first day of March, 1979
.
RENEWALS
3. (2) The Tenant shall have the options to renew this lease
for 5 successive renewal periods of 5 years each
.
MAXIMUM TERM
3. (3) If the exercise of an
option to renew shall result in the Term exceeding a period of 50 years, then
notwithstanding the provisions of section 3(2), the Term shall expire on that
date which is 50 years after the date which is the earlier of the Occupation
Date or the commencement date of the Term.
[21]
The
parties entered into a lease amending agreement in 1999. The amendment extended
the term of the lease by ten years and gave Metro the option to extend the term
of the lease for three additional periods of five years each for a total of
five options or 25 years. The relevant provisions of the amending agreement are
as follows:
2. TERM
The term of the Lease is
extended from
the date that it would otherwise expire for a further term of ten (10) years
commencing March 1, 2004 and expiring on February 28, 2014
.
3. RENEWAL
The Tenant has the option to further extend the term of the
Lease for
three (3) additional periods of five (5) years
each, for a total of five (5) options or twenty-five (25) years, if all
remaining options are exercised
. The Tenant may exercise its options in
the same manner as provided in the Lease.
6. EXISTING LEASE
The Lease is amended wherever
necessary to give effect to the foregoing and the Landlord and Tenant confirm
that the Lease as so amended remains in full force and effect. [Emphasis
added.]
[22]
When
the 1999 amendment is read within the context of the original lease, there is
no ambiguity. Three reasons support this conclusion.
[23]
First,
a reading of the 1999 lease amendment alongside the original lease, considered
from the perspective of the parties in 1999, leads to this conclusion. It is
the only coherent way to make sense of the
three
additional
periods specified in s. 3 of the amendment, and Metro was unable to explain what
else the three additional periods could refer to, apart from the interpretation
advanced by Orillia. While the drafting was not perfect, this reading is the
only harmonious way to read the amendment with the original lease. At the time
of the amendment, five years remained in the first 25-year term. None of the
lease extension options under the original lease had been exercised, as the
first opportunity would only have arisen in 2004. In extending the original
term by ten years to 2014, the parties provided that there would have been a further
three options to renew. The provision of for a total of five in s. 3 of the
amending agreement can only mean that the extension from 2004-2014 comprised an
early exercise of two of Metros options to extend.
[24]
Second,
the application judges interpretation would have rendered the overall term of
the lease to be 60 years rather than 50, which was specifically precluded by
s. 3(3) of the original lease. The application judges view that the
basket clause in s. 6 of the amending agreement applies does not survive
scrutiny. Section 6 provided that the original lease would be amended where
necessary to give effect to the amendments. But the parties did not amend the
50-year limit provision, despite the fact that it was in the same section of
the original lease addressing the initial term and renewal options. It was not
buried elsewhere in the lease. Had the parties intended to vary the maximum
term set out in s. 3(3), it would have been easy for them to do so. They did
not.
[25]
Third,
this interpretation is supported by the factual matrix at the time of the 1999
amendment. Metro was expanding its store significantly, by 10,676 square feet.
The parties agree that as part of Metros financing, the landlord contributed
about $672,000 to the project ($63 per square foot). In return, Metro agreed to
pay about $4.50 more per square foot in rent in the extension area, compared to
the rent it was paying for the original area of the store. There is no dispute
that it was therefore in the landlords interest to secure an early extension
of the lease by ten years to 2014. While Metro undoubtedly expended large
amounts on the renovations, one can infer that this was a business decision and
it already had the right to remain for a further 30 years at the same rent if
it chose to exercise the options.
[26]
In
short, the application judge fell into error in failing to consider the actual
wording within the context of the lease as a whole, which led him to find that
the provision was ambiguous. This was an extricable legal error: see
Thunder
Bay (City) v. Canadian National Railway Company
, 2018 ONCA 517, 424 D.L.R.
(4th) 588, at para. 46, leave to appeal refused, [2018] S.C.C.A. No. 358. The
expiry date of the lease is 2029 and not 2039 as Metro argued. Orillias appeal
must be allowed.
(3)
The cross-appeal
(a)
The roof repairs
[27]
Starting
in 2016, Metro experienced leaks in the roof at the grocery store, and its roof
consultant determined that the roof needed to be replaced. The consultant
suggested either a roof overlay that would salvage the existing insulation, or
a full roof replacement strategy. Orillia approved, budgeted for, and entered
into a contract for the roof overlay solution, but Orillia later took the
position that these steps were taken in a mistaken belief that it had an obligation
to repair the roof and that it now understands it has no such obligation. It
was in this context that Metro sought an order requiring Orillia to replace the
roof.
[28]
The
application judge correctly concluded that Orillia did not have any duty to
replace the roof and that Metro had the obligation to maintain and repair the
roof. Section 14(1)(a) of the lease states that the tenant, Metro, must
maintain and repair the Leased Premises. The landlords obligation to make
repairs and replacements in s. 15 is subject to the tenants obligations under
s. 14.
[29]
The
relevant sections of the lease are as follows:
ARTICLE XIV REPAIR, ALTERATIONS AND MAINTENANCE OF STORE
TENANTS OBLIGATION
14. (1)
The Tenant covenants
that from and after the earlier of the Occupation Date or
the date on which the Tenant accepts possession of the Store
and opens the
Store for business to the public
(a) The Tenant shall maintain and repair the Leased Premises
.
EXCEPTIONS
14. (2) The obligations of the Tenant under section 14(1) shall
be subject to the following exceptions:
(a) reasonable wear and tear which does not affect the use
and enjoyment of the Leased Premises by the Tenant
.
ARTICLE XV REPAIR, ALTERATIONS AND MAINTENANCE OF SHOPPING
CENTRE
LANDLORDS OBLIGATIONS
15. (1) Subject to Article XIV, the Landlord shall
(a) keep or cause all buildings and improvements in the
Shopping Centre and the Common Facilities to be kept in good repair and in a
clean, orderly and safe condition (both inside and outside), and
(b) in a good and workmanlike
manner promptly do all such work and make or cause to be made all necessary
repairs, make all necessary rebuildings and replacements (structural or
otherwise), ordinary as well as extraordinary, and foreseen as well as unforeseen,
including all such repairs, rebuildings and replacements which as a prudent
owner thereof it should do or make to properly maintain and operate all
buildings and improvements in the Shopping Centre and the Common Facilities.
[30]
Given
the structure of the repair obligations under this lease, the proper analytical
approach is to determine 1) whether the roof work is included in the tenants
obligation to repair, 2) determine whether the roof work falls under an
exception listed in s. 14(2), and 3) if the roof work is not the tenants
obligation, determine if the work falls under the landlords repair obligation
in s. 15 of the lease.
(i)
Tenants obligation to repair
[31]
The
construction of a covenant of repair in a lease is a contextual, fact-specific
exercise: see
G.M. Pace Enterprises Inc. v. Tsai
, 2003 BCSC 1336, 37
B.L.R. (3d) 60, at para. 66;
Lurcott v. Wakely
, [1911] 1 K.B. 905 (C.A.
(Eng.)), at pp. 915-16. Like all contracts, the contract as a whole forms part
of this context. Several principles on interpreting lease repair covenants
emerge from a review of English and Canadian case law. First, the primary
inquiry is to ask whether the repair gives the landlord back something entirely
different than was demised. Second, the obligation to repair must be
interpreted having regard to the specific wording of the repair covenant, the
terms of the lease as a whole, and the premises rented, including its condition
at the start of the lease. Third, a repair will generally involve some kind of
replacement or renewal. One question is whether the replacement or renewal is
of subsidiary parts of the whole or of the entire thing.
[32]
A
tenant that covenants to repair the premises is not obligated to fix defects in
the premises that go beyond a repair. The analytical question is whether the
work that the tenant is being asked to do can properly be described as repair,
or whether on the contrary it would involve giving back to the landlord a
wholly different thing from that which he demised:
Ravenseft Properties
Ltd. v. Davstone (Holdings) Ltd.
, [1980] Q.B. 12 (Q.B.D. (Eng.)), at p. 21;
Nicholas Dowding
et al.
, eds.,
Woodfall: Landlord and Tenant
,
loose-leaf (London: Sweet & Maxwell, 2020) (loose-leaf updated 2021,
release 122), vol. 1 at 13.032.
[33]
In
Morcom v. Campbell-Johnson
, [1955] 3 W.L.R. 497 (C.A. (Eng.)), at p.
501, leave to appeal to H.L. (Eng.) refused, Denning L.J. observed that the
distinction between a repair and an improvement is whether it is a replacement
of something already there or if it is the provision of something new:
It seems to me that the test, so
far as one can give any test in these matters, is this: if the work which is
done is the provision of something new for the benefit of the occupier, that
is, properly speaking, an improvement; but if it is only the replacement of
something already there, which has become dilapidated or worn out, then, albeit
that it is a replacement by its modern equivalent, it comes within the category
of repairs and not improvements.
[34]
The
test to determine whether the work goes beyond a repair has been stated in
many different ways. One approach is to look at the particular building, to
look at the state which it is in
at the date of the lease
,
to look at the precise terms of the lease, and then come to a conclusion as to
whether, on a fair interpretation of those terms in relation to that state, the
requisite work can fairly be termed repair. However large the covenant it must
not be looked at
in vacuo
(emphasis in original):
Brew Brothers Ltd. v. Snax (Ross) Ltd.
, [1970]
1 Q.B. 612 (C.A. (Eng.)), at p. 640, leave to appeal to H.L. (Eng.) refused
(October 13, 1969);
Dowding
, at
13.032.
[35]
In
Lurcott
, at p. 924, Buckley L.J. described repair as restoration by
renewal or replacement of subsidiary parts of a whole. Renewal, as
distinguished from repair, is reconstruction of the entirety, meaning by the
entirety not necessarily the whole but substantially the whole subject-matter
under discussion. Buckley L.J. continued, at p. 924, the question of repair
is in every case one of degree, and the test is whether the act to be done is
one which in substance is the renewal or replacement of defective parts, or the
renewal or replacement of substantially the whole.
[36]
The
English law on the definition of repair has, with some exceptions not relevant
here, been adopted by Canadian courts: see e.g.
Norbury Sudbury Ltd. v.
Noront Steel (1981) Ltd.
(1984), 11 D.L.R. (4th) 686 (Ont. H.C.), at p. 698;
Hall v. Campbellford Cloth Co. Ltd.
, [1944] 2 D.L.R. 247 (Ont. H.C.).
[37]
There
are only a few Canadian cases that deal specifically with the obligation to
repair a roof under a lease. In
Hall
, the roof of a curling rink
collapsed after an unusual amount of snow accumulated on top of it. The roof
and premises were available to be repaired, and the premises were not wholly destroyed.
After a thorough review of Canadian, English, and American case law, the court
determined, in conclusory reasons, that the repair fell under the tenants
obligation to repair, reasonable wear and tear and damage by fire, lightning
and tempest only excepted.
[38]
In
G.M. Pace,
the court concluded that the tenant was not obligated to
replace the roof of a service station that was at the end of its useful life. The
service station was described as an older building that had suffered the
ravages of neglect, and the roof was the original roof, when the lease began.
As a result, the court determined that replacing the roof would provide to the
landlord a building in a condition better than the tenant had received it. The
tenant was only obliged to maintain, through repairs, the building as it
existed when the lease began. In addition, the roof did not require immediate replacement
and could continue to be bandaided for quite some time.
[39]
Finally,
in
708-1111 West Hastings Ltd. v. Coopers & Lybrand Vancouver Ltd.
,
1990 CanLII 1084 (B.C. Co. Ct.), revd on other grounds, 1991 CanLII 1374 (B.C.C.A.),
the issue was whether the roof membrane repair was a structural repair. In
deciding the issue, the court commented in
obiter
that [s]ome of the
English cases appear very harsh on the tenant. But it must be kept in mind the
tenancies are frequently of long duration. That a tenant for 40 years would be
held responsible for replacing a 20 year bonded roof during the term is not
remarkable. Some have cautioned that the length of the lease, although
relevant, cannot be weighed too heavily: see
Post Office v. Aquarius
Properties Ltd.
, [1987] 1 All E.R. 1055 (C.A.), at pp. 1064-65.
[40]
In
summary, when interpreting a covenant of repair in a lease, a court should
consider:
(i) whether the
repair gives the landlord back something entirely different than was demised (see
Ravenseft
;
Morcom
);
(ii) the circumstances
surrounding the obligation to repair including the specific wording of the
covenant, the terms of the lease, the premises rented, and the condition of the
premises at the start of the lease (see
Brew Brothers
;
G.M. Pace
;
708-1111 West Hastings
; and
Post Office
); and
(iii) whether the
replacement or renewal is of subsidiary parts of the whole or of the entire
thing (see
Lurcott
).
[41]
The
parties, quite properly, did not submit that s. 25 of the lease, which addresses
end of term obligations, applied to this case. The lease was renewed in 2019
and the final end of the lease will be 2029 as determined above.
Application to the facts
[42]
This
case involves the commercial lease of an anchor tenant. The lease length is a
maximum of 50 years, which is longer than the typical service life of built-up
roofs of 20-25 years, according to Metros roof consultants report. The
building was new when the lease started. When it became clear that the roof
needed significant repairs, the parties were presented with two options: (i) a
roof overlay, which would preserve part of the roof and defer a roof
replacement for another 15-20 years, and (ii) a full roof replacement. Orillia
elected for the less expensive roof overlay option.
[43]
The
starting point for the determination of the parties rights and obligations
under a commercial lease must be the lease itself, read as a whole. The
covenant to repair as set out in s. 14(1) imposes a general obligation upon the
tenant, while s. 14(2) creates several narrow exceptions. Metro did not argue
that the roof repairs fall within one of the exceptions in s. 14(2) but argued
that it was a replacement and not a repair and thus did not fall within the
scope of s. 14(1).
[44]
Given
the case law referred to above, I reject Metros submissions that the roof
repair was a replacement rather than a repair. Here, the roof overlay
solution will not itself even bring the property back to its original condition
as it will last less time than a new roof would. This case is distinguishable from
the concern in
G.M. Pace
, where a roof replacement by the tenant would
have returned the premises to the landlord in a better condition than it was in
when the lease began. It cannot be said that the roof overlay will give Orillia
something entirely different or better than what was originally demised or
that it replaces substantially the entire premises. At the beginning of the
lease in 1979, the roof was brand new. Further, given the evidence that the
roof overlay would last 15-20 years, and the fact that the lease was renewed in
2019, and has one more renewal in 2024 before the end of the lease in 2029, it
seems likely that Metro will receive the bulk of the benefit of the roof
overlay.
[45]
It
should also be noted that the covenant to repair issues in this appeal arise in
the course of the lease, and thus are not governed by s. 25(2) of the lease,
which provides that the tenant must surrender the leased premises upon
termination of the term in good and substantial repair and condition in
accordance with its covenants to maintain and repair the Leased Premises. This
covenant may raise distinct considerations that are not necessary to canvas on
this appeal.
(ii)
Reasonable wear and tear exception
[46]
A
reasonable wear and tear exception excludes damage due to the reasonable use
of the house by the tenant and the ordinary operation of natural forces from a
tenants obligation to repair: see
Haskell v. Marlow
, [1928] 2 K.B. 45
(K.B.D. (Eng.)), at p. 59;
Stellarbridge Management Inc. v. Magna
International (Canada) Inc.
, 2004 CanLII 9852 (Ont. C.A.), at para. 41, leave
to appeal refused, [2004] S.C.C.A. No. 371. The burden is on the party claiming
reasonable wear and tear to show that they are entitled to rely on the
exception: see
Stellarbridge
, at paras. 60-64.
[47]
In
this case, s. 14(2)(a) excludes from the tenants repair obligation only
reasonable wear and tear which does not affect the use and enjoyment of the
Leased Premises by the Tenant. This exclusion could not apply as the record
indicates that the roof was, at points, leaking, which would affect the tenants
use and enjoyment of the property.
(iii)
Landlords obligation of repair
[48]
Given
my conclusion that the roof repair is Metros obligation, it is clear from the
terms of s. 15 of the lease that Orillia is not obligated to repair the roof.
[49]
A
review of the lease indicates that there are no additional provisions that are
relevant to the interpretation of ss. 14 and 15 in this case. The application
judge did not err in concluding that Orillia did not have any duty to replace
the roof.
(b)
The Triangle Land
[50]
In
the course of argument before this court, the parties were able to agree that
it was not necessary to determine any issues of rights with respect to the
Triangle Land on this appeal at this time.
D.
Disposition
[51]
I
would allow the appeal and dismiss the cross-appeal. All inclusive costs of the
appeal of $25,000 and all inclusive costs of the application below of $35,000
are payable by the respondent and appellant by way of cross-appeal, Metro, to the
appellant and respondent by way of cross-appeal, Orillia, for a total of
$60,000.
Released: May 6, 2021 K.F.
A. Harvison Young J.A.
I agree K. Feldman J.A.
I agree Janet Simmons J.A.
|
WARNING
Prohibitions under the
Child, Youth and Family Services Act
, 2017, S.O. 2017, c.14, Sched. 1 apply to this
decision:
Prohibition re identifying child
87(8)
No
person shall publish or make public information that has the effect of
identifying a child who is a witness at or a participant in a hearing or the
subject of a proceeding, or the childs parent or foster parent or a member of
the childs family.
Prohibition re identifying person charged
87(9)
The court may make an order prohibiting the publication of information that has
the effect of identifying a person charged with an offence under this Part.
Transcript
87(10)
No
person except a party or a partys lawyer shall be given a copy of a transcript
of the hearing, unless the court orders otherwise.
Offences re publication
142(3)
A person who contravenes subsection 87 (8) or 134 (11) (publication
of identifying information) or an order prohibiting publication made under
clause 87 (7) (c) or subsection 87 (9), and a director, officer or employee of
a corporation who authorizes, permits or concurs in such a contravention by the
corporation, is guilty of an offence and on conviction is liable to a fine of
not more than $10,000 or to imprisonment for a term of not more than three
years, or to both.
COURT OF APPEAL FOR ONTARIO
CITATION: P.Y. v. Catholic Children's Aid
Society of Toronto, 2021 ONCA 248
DATE: 20210419
DOCKET: C68909
Fairburn A.C.J.O., Tulloch and
Miller JJ.A.
BETWEEN
P.Y. and A.Y.
Plaintiffs (Appellants)
and
The Catholic Childrens Aid
Society of Toronto et al.
Defendants (Respondents)
P.Y., acting in person
A.Y., acting in person
Carole Jenkins, for the respondents The
Catholic Childrens Aid Society of Toronto, Mary McConville, Janice Robinson
and Rena Knox
Domenico Polla, for the respondents Her
Majesty the Queen in Right of Ontario, The Office of the Childrens Lawyer of
Toronto and Katherine Kavassalis
Sean Dewart and Ruben Lindy, for the
respondent Frances Ann Gregory
Susan M. Sack, for the respondent Fatma
A. Khalid
Charles Sinclair, for the respondent
Haeley Gaber-Katz
Logan Crowell, for the respondent The
Hospital for Sick Children
Daniel Bassili, for the respondent
Conseil Scolaire Catholique Mon Avenir
Heard: in writing
On
appeal from the judgment of Justice Frederick L. Myers of the Superior Court of
Justice, dated October 30, 2020, with reasons reported at 2020 ONSC 6660.
COSTS ENDORSEMENT
[1]
This court issued reasons on March 16, 2021, dismissing the appeal from
the dismissal of the action against the remaining defendants as being frivolous
and vexatious, pursuant to r. 2.1.01 of the
Rules of Civil
Procedure
, R.R.O. 1990, Reg. 194.
[2]
The appellants did not respond to
the communication request sent by the counsel for the following respondents:
The Catholic Childrens Aid Society of Toronto, Mary McConville, Janice
Robinson, and Rena Knox. As such, they were unable to arrive at an agreement.
[3]
We have reviewed the written submissions provided by the parties. The
respondents, The Catholic Childrens Aid Society of Toronto, Mary McConville,
Janice Robinson, and Rena Knox, seek partial indemnity costs in the amount of $2,344.75.
The respondent, The Hospital for Sick Children, seeks partial indemnity costs
in the amount of $1,062.88. Lastly, the appellants request that there be no
order for costs.
[4]
The requested partial indemnity costs are reasonable. We order that the
appellants shall pay to the respondents, The Catholic Childrens Aid Society of
Toronto, Mary McConville, Janice Robinson, and Rena Knox, costs in the amount
of $2,344.75. We also order that the appellants shall pay to the respondent, The
Hospital for Sick Children, costs in the amount of $1,062.88. All costs are
inclusive of disbursements and applicable taxes.
Fairburn A.C.J.O.
M. Tulloch J.A.
B.W. Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Parliament v. Conley, 2021 ONCA
261
DATE: 20210426
DOCKET: C67348
Huscroft, Nordheimer and
Harvison Young JJ.A.
BETWEEN
Cole Parliament, an incapable by his Litigation Guardian,
Kimberley York, John Parliament, and the said
Kimberley York personally
Plaintiffs
(Appellants)
and
D.W. Conley and V. Park
Defendants (Respondents)
Gavin
MacKenzie, Brooke MacKenzie, Hilik Y. Elmaleh and Michael A. Hershkop, for the
appellants
Darryl
Cruz, Dorothy Charach and Joseph Ur, for the respondents
Heard: October 20,
2020 by video conference
On appeal
from the order of Justice Susan Woodley of the Superior Court of Justice, dated
August 30, 2019.
Harvison
Young J.A.:
A.
Overview
[1]
Cole Parliament was diagnosed with severe
hydrocephalus when he was around four months old. He is now 21 years old and
has cognitive and physical disabilities. He and his parents, Kimberley York and
John Parliament, sued the defendants and respondents on appeal, Dr. Conley and
Dr. Park, for negligence, alleging that they delayed in diagnosing and treating
Coles hydrocephalus and that this delay caused his brain damage. For the
purposes of this appeal, the essence of their claim was that Drs. Conley and
Park had breached the respective and applicable standards of care in failing to
take appropriate steps to see that Cole was followed up when they had first noted
the infants large head circumference.
[2]
After a lengthy jury trial during which some 27
experts testified, the jury found that the standard of care had been met by
both respondents, and the trial judge accordingly dismissed the action. The
appellants seek a new trial on the basis that the only expert on standard of
care for the respondents, Dr. Bruce, gave evidence that went far beyond the
scope of his expertise, failed to demonstrate impartiality, and usurped the
jurys proper role in opining on core credibility and factual questions which
included what the doctors had actually told Coles mother, Ms. York, and
whether she had followed the advice she was given. The respondents take the
position that Dr. Bruce was not biased and that his evidence fell within the
appropriate bounds. Moreover, they argue, the failure of the appellants trial
counsel to object to this evidence or to the charge on these grounds precludes them
from raising this on appeal.
[3]
For the reasons that follow, I would allow the
appeal.
B.
Background
(1)
Medical history and events
[4]
The sequence of events between the time of
Coles birth in August 1999 until the diagnosis of hydrocephalus and his
surgery in mid-December 1999 to treat his hydrocephalus is important context to
the issues on this appeal, and for that reason, I will set them out
chronologically.
[5]
Cole Parliament was born on August 16, 1999, the
first child born to his parents Kimberley York and John Parliament. Ms. York
had been induced due to concerns about Coles small size, and among other
things it was recorded on the physicians record of newborn infant that Cole
had needed resuscitation at birth and weighed six pounds, two ounces.
[6]
Dr. Conley was the long-time family doctor of
Ms. York, and Ms. York took Cole to his regular check ups with Dr. Conley. Between
his first visit to Dr. Conley at the age of three weeks on September 3, 1999
and his last visit to Dr. Conley on October 15, 1999, Coles head circumference
went from the 25th percentile to over the 90th percentile. During the same
period, his weight went from 3.11 kg, the 3rd percentile, to 4.98 kg, under the
50th percentile. The following chart summarizes Dr. Conleys notes on these measurements:
Date of Visit
Head Circumference
Height/Length
Weight
September 3,
1999
37 cm; over
25th percentile
52 cm; 10th
percentile
3.11 kg (6.8
lbs); 3rd percentile
September 21,
1999
39 cm; 50th
percentile
54 cm; 3rd
percentile
3.78 kg (8.3
lbs); 3rd percentile
October 15,
1999
42 cm, 41.5
cm; 97th percentile
57 cm; under
25th percentile
4.98 kg (11
lbs); under 50th percentile
[7]
Ms. York insisted that she raised the concerns
about Coles head size at each visit and that each time she was told it was
normal. Dr. Conley denied that Ms. York ever raised this concern as he would
have written it down if she had. Rather, his evidence was that he was the one
who raised the concern about Coles head size. When Cole visited Dr. Conley for
the last time on October 15 before the family moved to Barrie, Dr. Conley gave Ms.
York Coles immunization form and, according to Ms. York, told her that the
next expected visit would be in two months time. Ms. York said they would find
another doctor in Barrie.
[8]
According to Dr. Conley, his nurse had taken
Coles head circumference measurement that day (42 cm), and he remeasured and obtained
a measurement of 41.5 cm. Dr. Conley testified he would have been discussing his
concern with Coles head size with Ms. York and would have recommended that she
take Cole for a follow up in two to three weeks. There was no evidence that he
provided her with a referral to a physician in Barrie. Nor did he provide Ms.
York with Coles chart or follow up. Dr. Conley acknowledged that he had some
limited recollection of the September 3 and October 15 visits, but not the
September 21 visit, and would otherwise require his notes.
[9]
In addition, Ms. York took Cole to a walk-in
clinic on November 13. She was concerned because Cole had developed a cough and
did not seem to be eating enough. He was seen by Dr. Park. Dr. Park
acknowledged at trial that he had no recollection of this visit apart from his
notes. Although the visit was very short, Dr. Park measured Coles head. His
notes indicate that it was 45 cm in circumference, which Dr. Park plotted and
found that it was in the 95th percentile. He testified that this was definitely
abnormal. His notes also say large head, [t]o ER for assessment, and URI
for upper respiratory tract infection. Considering the ER note, Dr. Park
testified that he would have explained his concern to Ms. York, and he would
have told her to go to the emergency room as soon as possible. Ms. York denied
that Dr. Park had expressed any concern to her about Coles head size or that
he had told her to take Cole to the emergency room that day, stating Im a new
mom. I mean, he has a freckle on his right arm, you know, I would bring that up.
According to Ms. York, Dr. Park told her that everything was fine and Cole was
in good health.
[10]
The young family moved to Barrie as planned at
the end of November. On December 6, Ms. York took Cole to the emergency
department at the Royal Victoria Hospital in Barrie because he was drooling
more than usual and there were white patches on his gums. The hospital records
indicate it was thrush. From what Ms. York could remember, the doctor did not
measure Coles head and his head was not an issue that day. According to Ms.
York, they left with no problems, no issues.
[11]
On December 11, 1999, Ms. York attended a social
gathering where a family friend named Susan Williams, a pediatric nurse who
worked for pediatrician Dr. Schelberg, was also present. Ms. Williams expressed
concern about the size of Coles head, and she testified that Ms. York
was surprised that I thought there was a problem with the size of
the head because she had been told it was normal. Ms. Williams
offered to arrange for Dr. Schelberg to see Cole. Ms. York readily
agreed and took the next available appointment which took place on December 16,
1999. Dr. Schelberg
examined Cole and measured his
head, and his notes indicate large head. Specifically, Dr. Schelberg documented
a head circumference of 50 cm, greater than the 95th percentile.
[12]
Dr. Schelberg advised Ms. York that Cole had
hydrocephalus.
Dr. Schelbergs clinical notes had
included the phrases dilated veins, (+) sunset and (+) crackpot sign. During
his examination in chief, Dr. Macnab, an expert witness for the appellants, reviewed
Dr. Schelbergs findings. Dilated veins on the surface meant that the pressure
from the hydrocephalus was compromising normal circulation of blood through the
blood vessels. Sunsetting eyes, where you can see the whites of the eyes more
than the pupil, were a sign that pressure damage had occurred to the nerve
pathways that control eye movement. A cracked pot sign referred to Coles skull
bones being so pushed apart that the skull was effectively broken because of
the rising pressure in his head.
[13]
Dr. Schelberg referred Cole to Dr. Drake, a neurosurgeon
at the Hospital for Sick Children, who saw him the next day, on December 17. According
to Ms. York, Dr. Drake advised her that Cole had severe hydrocephalus. Cole
needed surgery to insert a shunt, which would drain the excess fluid from his
brain. Cole underwent this surgery on December 19, 1999.
[14]
Dr. Conleys wife worked at Dr. Conleys office,
and she testified that she had received a call from Mr. Harold York, Ms. Yorks
father, on December 17, 1999, based on a note she had taken. The note said Mr.
York called to say Cole has been diagnosed with hydrocephalus and [a]lso
stated Dr. C had told Kim to have head size checked. Mr. York did not recall
making that call and was sure that call never took place. He also denied
having made that last statement, saying [t]hats absolutely not possible
because Dr. Conley had always said that Coles head size was normal.
(2)
The trial
[15]
The main issues at trial were standard of care,
causation, and damages. On the first issue, which is also the relevant issue on
this appeal, the central dispute was whether Dr. Conley and Dr. Park had met
the applicable standard of care. The appellants position was that they had not.
They argued that neither doctor had told the parents that Coles head size was
a matter of concern. Even if some concern was expressed at the time, the
standard of care required the doctors who saw Cole in October and November to
take additional steps and actually make referrals, among other things. Further,
the notion that Ms. York would not have brought Cole for assessment right away,
had she been instructed to, defied common sense, particularly in light of the
fact that this was a mother who was good at following up on instructions and took
Cole to many medical appointments, including for small things.
[16]
The respondents position was that both doctors
had expressed their concerns to Ms. York; that the doctors had taken sufficient
steps because a referral was not required when Dr. Conley saw Cole on October
15 and Dr. Park had told Ms. York to take Cole to the emergency room; and that
Ms. York had chosen not to take Cole for follow up with a doctor or to the
emergency department despite receiving advice to do so.
[17]
In short, the issues of credibility and
reliability at trial as they related to standard of care were central issues
revolving around what the two doctors had said to Ms. York on the various
occasions that they saw Cole, whether she followed any instructions she was
given, and whether the doctors actions or omissions met the applicable
standard of care.
(3)
The expert evidence at trial
[18]
Although there were 27 experts who testified at
the trial, only four testified as to the standard of care. For the appellants, three
doctors were qualified as experts as to the standard of care:
1.
Dr. James Rourke, an expert in family medicine,
creator of the Rourke Baby Record guideline for looking after babies and
infants up to the age of five used by most family doctors in Canada;
2.
Dr. Andrew Macnab, an expert in pediatrics and
neonatology, a subspecialty of pediatrics concerned with looking after newborn infants,
and a professor at the University of British Columbia; and
3.
Dr. Jan Ahuja, an expert in walk-in centre care,
a walk-in and emergency medicine physician, a professor at the University of
Ottawa, and a peer assessor and medical inspector for the College of Physicians
and Surgeons of Ontario.
[19]
For the respondents, the following doctor was
qualified as an expert as to the standard of care:
1.
Dr. Barry Bruce, an expert in family medicine and episodic care, a
physician practicing in Carp, Ontario who has mainly worked in general family
practice and episodic walk-in patient care, and former Chief of Staff at the
Queensway Carleton Hospital in Ottawa.
[20]
Dr. Rourke opined that the abnormal and serious
clinical finding of rapidly increasing head circumference was evident by
October 15, 1999, at which point it had increased from over the 25th percentile
to the 50th percentile and then to the 97th percentile over a six-week period. He
noted that by September 21, Coles weight had remained on the same percentile
from September 3, while the head moved up significantly, and that at this
point in time, ones got to be concerned about which is the problem. He
testified that Dr. Conley fell below the standard of care on October 15, 1999 because
based on Dr. Conleys notes, Dr. Conley had failed to recognize the serious
implications of Coles very abnormal head circumference growth, failed to carry
out and record an assessment with respect to the serious clinical finding, and
failed to make an urgent referral to a specialist.
[21]
Dr. Macnab opined that the standard of care
required that a baby with Coles pattern of head growth, as documented by Dr.
Conley on October 15, 1999, must be referred to a specialist immediately. Dr.
Macnab explained that growth typically occurs along the centile we are born on,
so when patterns of growth fall off percentiles, it is worrying because it
means the growth is not following the normal curve. He plotted Dr. Conleys
measurements of Coles head circumferences and pointed out that while there was
cause for concern even at the visit of September 21 because there was crossing
of centiles, Coles head measurement by October 15 was essentially off the
centile chart and showed a highly abnormal pattern of growth requiring
immediate action, namely referral to a specialist. When asked to assume that
Dr. Conley did tell Ms. York to take Cole to have his head checked and whether a
patient can be expected to follow that advice, Dr. Macnab opined that its not
appropriate to delegate or abdicate this kind of decision, responsibility,
care, next step, to a young mother and that with something this important,
the follow-up has to be guaranteed.
[22]
Dr. Ahuja opined that Dr. Park fell below the
standard of care because he failed to carry out and record a complete history
and physical examination related to the abnormal and significant finding of
Coles head size, he failed to discuss this abnormal finding with Ms. York, and
he failed to properly and effectively refer Cole for further urgent assessment.
Dr. Park did not act appropriately upon his finding of an abnormal head size.
He should have provided a copy of his record of treatment clearly indicating
his concerns, sent a consult note to the emergency department indicating his
concerns, and made direct contact with at least a triage nurse at the emergency
department of the hospital. Dr. Ahuja assumed that these things were not done
because they were not documented but agreed that if something is not written
down it does not necessarily mean that the act did not happen. His opinion was
that Dr. Parks chart was clinically substandard.
[23]
Dr. Bruce opined that both Dr. Conley and Dr.
Park met the standard of care. Rather than using the Boston Graph that Dr.
Conley had used in 1999, Dr. Bruce re-plotted Coles head circumference
measurements on the graph used by Dr. Park with different percentile curves. Dr.
Bruces plots showed that Coles head circumference was at approximately the 75th
percentile on September 3, about the 80th percentile on September 21, and about
the 95th percentile on October 15. His opinion was that Coles changing head
size over the three visits in itself did not require a referral, and Dr. Conley
was not obliged to make a referral for Cole on October 15, as Cole was
otherwise well. Even using Dr. Conleys percentiles and plotting, the standard
of care on October 15 did not require a referral, only that head circumference
be remeasured again within two to four weeks. Dr. Conley had appropriately remeasured
Coles head when he identified a concern about head size, and it was
appropriate to advise Ms. York to have Coles head size followed by a new
physician, if one could be found, at an appropriate time.
[24]
With respect to Dr. Park, Dr. Bruce said he had
met the standard of care because he recognized that Cole had a large head, he
had measured it, he had assessed the measurement and found a clear abnormality,
and he had decided to send Cole to the emergency room for assessment. Assuming
that Dr. Park had told Ms. York that his reason for wanting her to go to the
emergency room was for an assessment of Coles head size and that he had given
her a note with his findings for the emergency room doctor, that would meet the
standard of care. No additional steps were required. Dr. Park was entitled and
obligated to rely on Ms. York to take Cole to the emergency room.
[25]
In cross-examination, Dr. Bruce agreed that he ignored
Ms. Yorks evidence when he wrote his report, because he did not think it was
relevant. He also expressed his opinion that he did not think Ms. Yorks memory
was accurate, that he had put more weight on Dr. Conleys evidence because he
had some notes, and that it was inconceivable that Dr. Park had not told Ms.
York to take Cole to the emergency room.
[26]
As I will discuss further below, the evidence of
Dr. Conley and Dr. Park was irreconcilable with the evidence of Ms. York. Dr.
Conley maintained that he expressed concern about Coles head size in October
and that Ms. York did not raise a concern about his head size during any of the
visits as he would have written that down. Ms. York testified that she was the
one who raised the concern and was repeatedly reassured that Coles head size was
within normal range and that she should not worry. She specifically denied that
Dr. Conley told her on October 15 that she needed to have Coles head size
watched or checked, stating that she was given the immunization record and told
that Cole did not need to be seen for another two months. With respect to Dr.
Park, Ms. York denied that he had told her to take Cole to the emergency room,
saying that she would have done so had he said that. Credibility and
reliability of the lay witnesses was thus a critical issue for the jury to
resolve in this trial.
(4)
Issues at trial with respect to expert evidence
[27]
There were no objections to the admissibility of
Dr. Bruces evidence either at the outset or in the course of his testimony and
cross-examination. Following Dr. Bruces testimony, however, the respondents attempted
to qualify another doctor, Dr. Karen Fleming, as an additional expert in the
standard of care. The appellants objected to Dr. Fleming being qualified as an
expert because she lacked independence and impartiality and her evidence was
unnecessary.
[28]
The trial judge reviewed Dr. Flemings reports and
found that they included credibility assessments, inaccuracies, and methodological
flaws, and thus lacked objectivity. Dr. Fleming accepted the evidence of the respondent
doctors and rejected the evidence of the appellants without explanation, and
she was unwilling or unable to recognize or acknowledge this preference. She made
improper fact-finding and credibility assessments and acted as both judge and
jury. The trial judge found that there was a serious concern that the jury
would accept the premise underlying Dr. Flemings opinion as conclusive or be affected
by her acceptance of certain facts. The trial judge concluded that Dr. Fleming
lacked independence, rendering her incapable of providing an impartial opinion
and refused to admit her evidence.
(5)
Pre-charge conference and closing submissions
[29]
At the pre-charge conference, counsel for the
respondents made submissions clarifying the trial judges summary of Dr.
Bruces evidence. Counsel for the appellants did not make submissions on Dr.
Bruces evidence except to clarify that Dr. Bruce had not opined on whether he
accepted Harold Yorks evidence.
[30]
During closing submissions, counsel for the
respondents told the jury that they would need to make decisions on the
credibility and reliability of the fact witnesses and expert witnesses. Counsel
submitted that the standard of care issue in the case was driven by two main
questions, namely, what actually happened between Dr. Conley and Ms. York on
October 15 and between Dr. Park and Ms. York on November 13: (1) whether Dr.
Conley told Ms. York on October 15 that Coles head size needed to be followed;
and (2) whether Dr. Park told Ms. York on November 13 that she should take Cole
to the emergency room. The answers to these two questions should be yes. It
made no sense that both doctors would have been concerned about Coles head
size, recorded that concern, and not told Ms. York. With regard to the expert
evidence on the standard of care issue for both Dr. Conley and Dr. Park,
counsel encouraged the jury to accept the evidence of Dr. Bruce.
[31]
Counsel for the appellants submitted that the
question was not what Dr. Conley may or may not have told Ms. York, as defence
counsel had framed it, but rather what he ought to have done in those
circumstances. There were instances where Dr. Conley and Dr. Park appeared to
change their evidence, and counsels position was if the doctors did nothing
wrong during the October and November visits, they would not need to come to
court and attempt to change their evidence. Counsel for the appellants also
emphasized the importance of the credibility of the witnesses and highlighted
the evidence of Dr. Bruce on standard of care. Counsel submitted that Dr. Bruce
did not fulfill his obligation to the court to provide objective evidence, read
from a transcript of Dr. Bruces cross-examination, and submitted that the jury
could not trust Dr. Bruce.
(6)
The jury charge and verdict
[32]
The jury charge consisted of general principles
that apply to civil jury cases, legal principles on the issues that governed
the case including liability, causation, and damages, the specific questions
the jury would need to answer, and instructions to assist the jury with its
deliberations. The trial judge told the jury that in deciding the facts in this
case, they would need to weigh and judge the testimony of witnesses for
credibility and reliability. She provided guidance for dealing with expert
testimony, instructing the jury to take into account the experts skill,
experience, knowledge, familiarity with the facts, credibility, and whether the
expert seemed impartial and fair or unwilling to consider opinions other than
their own. Further, the jury was entitled to reject an experts opinion or find
it less helpful if they found the facts to be different from those underlying the
opinion.
[33]
In reviewing the legal principles in the case,
the trial judge began with negligence and the question of whether the defendants
breached the required standard of care. The jury was told that if this was not
proven, the plaintiffs could not succeed. The trial judge began her review of the
evidence on standard of care by telling the jury that while judges have a right
to comment on a witnesss credibility and inferences to be drawn from the
evidence, she did not intend to do so, and that it was the jurys duty to
interpret the evidence. In reviewing Dr. Bruces evidence, the trial judge
mentioned the cross-examination where Dr. Bruce testified that he had accepted
Dr. Conleys evidence, did not accept anything Ms. York said because she was
probably mistaken, and did not reference any of Mr. Parliaments evidence. The
trial judge did not give a specific instruction in the charge regarding Dr.
Bruces evidence, but she did end the standard of care portion of her charge by
reminding the jury that it was up to them to determine the weight to give an
expert opinion by considering various factors and questions, including whether the
witness seemed impartial and fair.
[34]
The jurys verdict was that Dr. Conley and Dr.
Park did not breach the standard of care. The jury made no findings on
causation. The trial judge dismissed the action against Dr. Conley and Dr. Park
in accordance with the jurys verdict.
C.
Issues on appeal
[35]
The appellants found their appeal on the trial
judges failure to exclude Dr. Bruces evidence, or alternatively, to provide a
clear and specific instruction to the jury with respect to his lack of
impartiality and the impropriety of his assessments of the parties credibility.
They argue that a new trial is required.
[36]
The respondents argue that, first, the jury
charge was sufficient to instruct the jury as to the concerns surrounding Dr.
Bruces evidence, and that this concern about bias simply went to the weight to
be given to the opinion. Moreover, they argue that the appellants ought not to
succeed on appeal on a new concern not raised at trial. Finally, they argue that
the verdict was reasonable. There was no miscarriage of justice; the appellants
simply failed to meet their onus of proof.
D.
Analysis
(1)
Did the trial judge err by failing to exclude
Dr. Bruces evidence or by failing to provide a specific instruction to the jury?
(a)
Positions of the parties
[37]
The appellants submit that Dr. Bruces evidence
was inadmissible in whole or in part, and that the trial judge erred in failing
to so instruct the jury. Dr. Bruces evidence was inadmissible because he
failed to fulfill his duty to be independent or impartial. He accepted the
version of events presented by the respondents and ignored the evidence of the
appellants. Dr. Bruce not only provided his opinion on what he thought
happened
on central questions in dispute, but he even went so far as to purport to make
findings of fact. The trial judge should have exercised her residual discretion
as part of her gatekeeping role to exclude Dr. Bruces evidence or at the very
least, she should have provided a specific instruction to the jury concerning
the impropriety of Dr. Bruces evidence and his failure to fulfill his duty.
[38]
The respondents argue that the appellants
closing submissions warned the jury about Dr. Bruces alleged bias in his
testimony with respect to both Dr. Conley and Dr. Park, and about Dr. Bruce ignoring
Ms. Yorks evidence and accepting the evidence of the physicians, despite the
fact that they acknowledged having no recollections of the visits while Ms.
York testified that she did. The respondents also submit that the charge
contained all the necessary warnings on credibility and reliability of all
witnesses and reiterated the appellants concerns with Dr. Bruces evidence.
Even if the appellants had asked the trial judge to exclude Dr. Bruces
evidence, it would have been inappropriate for her to do so. Dr. Bruces
evidence did not reveal a level of bias that would go to threshold
admissibility, and any concerns about bias would appropriately go to the weight
to be given to his evidence. He did not make findings of fact and he did not
advocate for the position of the respondents. He was merely making assumptions
and being cross-examined on those assumptions. Dr. Bruce reviewed the records
and transcripts and provided an expert opinion based on that review.
(b)
Impugned evidence of Dr. Bruce
[39]
The credibility and reliability of the lay
witnesses were critical issues for the jury to resolve in this trial. It is
against this backdrop that the appellants argue that Dr. Bruce was neither
independent nor impartial that he opined on matters going to the heart of the
credibility and veracity of Ms. York, Mr. Parliament, and the two doctors, at
times stating that he did not think Ms. Yorks evidence was relevant, that it
was untruthful, or that she could not have remembered it correctly. It is
necessary to review some of the impugned portions of Dr. Bruces testimony in
order to assess the submissions of the appellant.
[40]
Dr. Bruce agreed on cross-examination that he
chose to accept Dr. Conleys evidence over Ms. Yorks evidence, explaining that
he could find discrepancies in their evidence, that Ms. Yorks evidence in
discovery was not relevant, that he assumed Ms. York could not remember
correctly despite Ms. York saying that she had a clear recollection and Dr.
Conley saying he did not remember those visits well, and that he was not sure
her memory of the events was accurate:
Q.
And
you proceeded on the assumption throughout your report that Ms. York is
untruthful; yes?
A.
I
did find discrepancies between what I could read in the charts and what Ms.
York was saying, yes.
Q. Why
didnt you put down the information that Ms. York said in her discovery?
A.
Well, because I didnt think it was
relevant.
Q. Not
relevant? The fact that she says that he never mentioned -- she brought to ...
Dr. Conley a concern about Coles head size and he told her it was normal, thats
not relevant? The fact that he told her that everything was normal on October
15th, thats not relevant?
A. I
think with so many years, that
nobody could remember exactly what was said.
I think thats why I was looking at -- Dr. Conley had his notes to refer to,
and he had some memory of what he would have done, but there were no notes that
were kept by Coles mother.
Q. [W]ere
you fair and objective and nonpartisan here?
A. I think so.
Q. By not referring to Ms. Yorks evidence?
Yes?
A.
Well,
by assuming she couldnt remember correctly.
Q. Why
would you assume that if she says she remembers?
A. It was so many years.
Q. So
you assume that shes just making it up? Thats it; right? Under oath, shes making
those statements up? Thats your assumption?
A. I
dont think shes --
she believes that she remembers it, but Im not sure
that it was accurate.
Q. So
didnt you --
you perceived your role in this case to actually assess the
credibility of the two parties and make a decision who you believe or who you dont
believe?
A. I cant answer that.
Q. Well,
of course you can because thats what you did.
You chose to take Dr. Conleys
evidence, including those things that he [had] not documented in his records
just because he said it on discovery and used that to defend him. Yes or no?
A.
Its true.
[Emphasis added.]
[41]
Dr. Bruce later went on to opine in
cross-examination that Dr. Conley had conducted a sufficient neurological
examination despite the limited notes on Coles neurological status on October
15 because he could read between the lines. Dr. Bruce also assumed that Dr.
Conley had told Ms. York to have Coles head size followed, based on the note
will watch head size:
Q. I
see. So how about this reading between the lines: So for everything else, you dont
accept Ms. Yorks evidence, but for this neurological examination, whatever she
told Dr. Conley is gospel for you; right?
A. No.
Dr. Conley made notes of it at the time and made excellent notes at the
time, and, yes, its gospel. What the mother said was relying on memory for
events that had occurred many years before, so I have to be a little askance
that those were remembered correctly, yes.
Q. Theres
no note in Dr. Conleys chart that says that he told the mother to go and have
the head checked; correct?
A. Theres
no note that says specifically those words, no.
Q. Where
do you get the fact that Dr. Conley told the mother -- as you say in your
report, Dr. Conley told the mother to go and see another doctor to have the
head checked. Where did you get that information from?
A. Ill have to see exactly what I said.
Q.
You
wrote: It was appropriate for Dr. Conley in the circumstances to advise Ms.
Parliament, as he did, to have Coles head size followed by his new physician.
A. Yes.
Q. Where did you get that from?
A.
Well, thats what
I assume from that one line, will watch head size.
[Emphasis added.]
[42]
The appellants also point to Dr. Bruce preferring
the evidence of Dr. Park over Ms. York and straying well beyond the confines of
his role during his cross-examination when providing his opinion about whether
Dr. Park met the standard of care:
A.
Hes required to prepare a note. Actually, a
large head, as serious as it is, is a rather simple concept to portray.
Q. All right. You reviewed his notes. Did
you find any?
A. No. No, I did not.
Q.
But
for that purpose, you -- to render your opinion, you relied on Dr. Parks evidence
even though its nowhere in the records; correct?
A.
Yes.
Q.
And,
again, you ignored Ms. Yorks evidence on that point; right?
A.
Yes.
Q. Well,
Im suggesting to you that its not enough, given what we discussed, just to
tell the mother. He needs to write a detailed note, call the emergency
department or another physician who hes referring the patient to and have that
talk so that he makes sure that the baby is seen and that his advice is
understood; do you not agree?
A.
I think its clear that -- no, not entirely.
I think its clear that he
did
. Its inconceivable that he didnt convey this, given the gravity of
it, to the mother.
Its inconceivable that he didnt directly tell her to go
to emergency.
Q. Well,
is it conceivable that a mother who brings the child to a doctor on a Saturday
because of a cold or cough --
A. Yes.
Q. --
is not going to go to the emergency, which is five to seven minutes away, when shes
told your baby may have hydrocephalus, that this is a significant brain issue;
do you think that is more conceivable?
A. It does not sound
usual to me, but its conceivable because
thats what happened.
[Emphasis added.]
(c)
The principles
[43]
Expert evidence carries with it the risk that a
jury will inappropriately defer to the experts opinion rather than carefully
evaluate it:
White Burgess Langille Inman v. Abbott and Haliburton Co
.,
2015 SCC 23, [2015] 2 S.C.R. 182, at para. 17;
R. v. Mohan
, [1994] 2 S.C.R.
9, at pp. 21-22. The test for admissibility of expert evidence consists of two
steps. First, the proponent of expert evidence must establish that four
conditions are met in order to establish its admissibility: relevance;
necessity in assisting the trier of fact; absence of an exclusionary rule; and
a properly qualified expert. The second stage of the inquiry requires the trial
judge to conduct a cost-benefit analysis to determine whether otherwise
admissible expert evidence should nevertheless be excluded because its
probative value is outweighed by its prejudicial effect.
[44]
The ultimate conclusion as to the credibility or
truthfulness of a particular witness is for the trier of fact, and it is not
the proper subject of expert opinion. The rationale for this policy is that credibility
is a notoriously difficult problem, and a frustrated jury may readily accept an
experts opinion as a convenient basis upon which to resolve its difficulties:
see
R. v. Marquard
, [1993] 4 S.C.R. 223, at p. 248. In addition, one
of the central dangers of expert evidence is that finders of fact, and juries
in particular, may be too ready to rely on experts who appear to be
knowledgeable, credible and reliable. Doherty J.A. explained this danger in
R.
v. Abbey
, 2009 ONCA 624, 97 O.R. (3d) 330, at para. 90, leave to appeal
refused, [2010] S.C.C.A. No. 125:
Clearly, the most
important risk is the danger that a jury will be unable to make an effective
and critical assessment of the evidence. The complexity of the material
underlying the opinion, the expert's impressive credentials, the impenetrable
jargon in which the opinion is wrapped and the cross-examiner's inability to
expose the opinion's shortcomings may prevent an effective evaluation of the
evidence by the jury. There is a risk that a jury faced with a well-presented
firm opinion may abdicate its fact-finding role on the understandable
assumption that a person labelled as an expert by the trial judge knows more
about his or her area of expertise than do the individual members of the jury.
[45]
It is well established that a trial judges role
as gatekeeper is not exhausted once a particular expert has been permitted to
testify on the basis of their qualifications and the content of their report:
see
Bruff-Murphy v. Gunawardena
, 2017 ONCA 502, 138 O.R. (3d) 584, at
paras. 62-66, leave to appeal refused, [2017] S.C.C.A. No. 343;
R. v.
Sekhon
, 2014 SCC 15, [2014] 1 S.C.R. 272, at paras. 46-47. Rather, the
trial judge must protect the integrity of the process by ensuring that the
expert does not overstep the acceptable boundaries in giving evidence. As
Doherty J.A. stated in
Abbey
, at para. 62, it is essential that trial
judges ensure both [a] cautious delineation of the scope of the proposed
expert evidence and strict adherence to those boundaries, if the evidence is
admitted.
[46]
However, even when the content and scope of an
experts evidence is delineated in advance, the expert may stray in the course
of their oral testimony. As Hourigan J.A. noted in
Bruff-Murphy
,
at
paras. 62-63:
A trial judge in a civil jury case qualifying
an expert has a difficult task. She must make a decision based on an expert
report that will, in most cases, never be seen by the jury. While the report
provides a roadmap of the anticipated testimony and specific limits may be
placed on certain areas of testimony,
the trial judge obviously cannot predict with certainty the nature
or content of the experts testimony.
Where, as here,
the experts eventual testimony removes any doubt about her independence, the
trial judge must not act as if she were
functus
. The trial judge
must continue to exercise her gatekeeper function. After all, the concerns
about the impact of a non-independent expert witness on the jury have not been
eliminated. To the contrary, they have come to fruition.
At that stage, when the trial judge recognizes
the acute risk to trial fairness, she must take action.
[Emphasis added.]
[47]
The continuing gatekeeping role means that trial
judges must not only continue to ensure that the experts actual testimony does
not overstep the appropriate scope of the expert evidence; they must also
include ensuring that the experts testimony continues to be independent in the
sense that the expert does not become an advocate for the party by whom they
are called.
[48]
As Hourigan J.A. made clear in
Bruff-Murphy
,
the continuing gatekeeper role of a trial judge includes the continuation of
the residual discretion to exclude evidence when they are not satisfied that
the testimonys probative value exceeds its prejudicial effect: at paras. 65-66;
R. v. White
, 2011 SCC 13, [2011] 1 S.C.R. 433, at para. 50; and
R.
v. Bingley
, 2017 SCC 12, [2017] 1 S.C.R. 170, at para. 30.
(d)
Application
[49]
There does not appear to have been anything
inherently improper about Dr. Bruces opinion as to the applicable standard of
care. I would note, however, that it is not clear that the issue was canvassed
at the
voir dire
in the same manner as was the proposed evidence of
Dr. Fleming, which was excluded in its entirety because the trial judge
concluded that it was not independent. Rather, it seems that the appellants consented
both with respect to Dr. Bruces qualifications and the content of his report.
The appellants do not argue that Dr. Bruce should not have been permitted to
give expert evidence from the outset. However, they argue, and I accept, that as
the extracts above demonstrate, Dr. Bruce opined on the credibility of the
parties in his oral testimony, indicating that he believed the respondents and
not Ms. York. The credibility and reliability of Ms. York and the two doctors
were central issues for the jury to decide.
[50]
There were a number of problems with Dr. Bruces
evidence as given.
[51]
First, it illustrates one of the dangers of
expert evidence that oversteps its boundaries: the risk that a jury, faced with
difficult issues of credibility and reliability and a well-presented expert
opinion, will abdicate its fact-finding role on the understandable assumption
that a person labelled as an expert by the trial judge knows more about his or
her area of expertise than do the individual members of the jury: see
Abbey
,
at para. 90; see also
Marquard
, at p. 248. Dr. Bruce exceeded his role
as an expert when he opined on the credibility and reliability of the doctors
and Ms. York, for example observing that Ms. York was untruthful and could not
remember accurately. There was a risk that the members of the jury would accept
Dr. Bruces credibility and reliability assessments, rather than assess the
evidence of the witnesses and reach their own conclusions.
[52]
Second, the expression of an opinion as to the
credibility of witnesses is also a breach of the experts duty to be
independent. Dr. Bruce acknowledged in his evidence that in rendering his
opinion on standard of care, he disregarded Ms. Yorks evidence and assumed
that the doctors evidence was credible and reliable. I do not accept the
respondents argument that all Dr. Bruce was doing was making assumptions as
the questions put to him asked him to do. As the extracts above indicate
particularly its conceivable because thats what happened it is clear that
in some critical instances he was giving evidence about what actually happened,
based on his view of the credibility of the witnesses. His testimony extended
well beyond expressing opinions based on hypothetical facts he was asked to
assume. For these reasons, this evidence was not admissible and to the extent
his testimony opined on the credibility of the witnesses, it should have been
excluded. These circumstances called for the trial judge to exercise her
gatekeeping role and her residual discretion to exclude this evidence.
[53]
I do not agree with the respondents that the
appellants closing submissions were adequate to address any prejudice caused
to the appellants by the impugned aspects of Dr. Bruces evidence. Nothing that
the appellants could have said in their closing would have had the force of a
clear instruction from the trial judge to the effect that the impugned aspects
of Dr. Bruces evidence were inadmissible. Juries are told that the trial judge
is the judge of the law, and that they are to take their instructions from the
trial judge. What the appellants said was simply argument.
[54]
I also do not accept the respondents submission
that the final charge contained the necessary warnings. The vast majority of
the cautions to which the respondents refer are contained in the general
section of the charge and applied to all of the expert witnesses. The trial
judge had explained to the jury how to assess the credibility and reliability
of a witnesss evidence, with additional instructions on weighing expert
opinions. The jury was told to consider whether the expert struck them as being
honest, impartial, and fair, and told that they could reject an experts
opinion if they found the facts to be different from those which formed the
basis for the experts opinion. These general instructions came fairly early on
in the charge, in what is often referred to as the boilerplate portion, with
no reference to any of the individual experts who testified. The trial judge went
on to give instructions on the burden of proof, an overview of the facts, and instructions
on the legal principles for the standard of care before reviewing the lay
witness and expert evidence on standard of care and recapping the instructions
on weighing expert opinion.
[55]
There was no specific caution about Dr. Bruces
testimony on the issue of his view of the credibility and reliability of Ms.
York. The trial judge did, in her summary of the parties evidence, include the
following:
On cross-examination, Dr. Bruce testified that
he had read the transcripts of the examinations for discovery and in coming to
his opinions had accepted Dr. Conleys evidence. He did not accept anything
that Kim said as she was probably mistaken, nor did he reference any of John
Parliaments evidence.
On cross-examination, Dr. Bruce testified that
he accepted Dr. Parks evidence over Kim Yorks evidence. Dr. Bruce stated that
its inconceivable that he didnt convey this given the gravity of it to the
mother.
When asked whether it was conceivable that a
mother would not take her child to the emergency department when faced with a
potential hydrocephalus or brain injury, Dr. Bruce stated:
It does not
sound usual to me. Its conceivable because thats what happened.
[56]
However, there was, in short, nothing in the
charge instructing the jury to disregard Dr. Bruces evidence in relation to
the credibility and reliability of the two doctors and Ms. York.
(e)
What should the trial judge have done?
[57]
There are two steps that the trial judge could have
taken at the time that Dr. Bruce was testifying. First, she could have, in the
absence of the jury, invited submissions from the parties as to the content of
a mid-trial instruction that the jury ignore any and all of his expressions as
to the credibility or reliability of the witnesses. Second, she could have
included a very clear and specific instruction in the final charge on the
point. The general comment that it was entirely up to the jury to decide [h]ow
much or how little [they] believe of or rely upon an experts opinion was wholly
inadequate given the risk that the jury would place undue weight on Dr. Bruces
opinion. Given the large number of expert and lay witnesses who testified at
trial, nothing less than a clear and specific instruction that Dr. Bruces credibility
opinions were inadmissible and should be ignored would suffice.
[58]
The failure to so instruct the jury was a
serious error on the part of the trial judge, despite the fact that the appellants
counsel did not ask for either a mid-trial or a closing instruction. In this
case, the trial judge should have delivered a prompt and clear mid-trial
instruction during Dr. Bruces testimony and reiterated this instruction in the
final charge. I recognize that both steps might not be necessary in all cases,
but it was necessary in this case, given the highly prejudicial nature of the
impugned aspects of Dr. Bruces evidence to the appellants case and the fact
that the jury heard a great deal of additional evidence on subjects other than
the standard of care after he testified.
[59]
The defence called approximately five witnesses
on causation and six on damages over the next few weeks. This was not a short,
one issue trial in which it might have been reasonable to think that the
evidence would be fresh and that a caution in the final charge would suffice,
or that a mid-trial caution would have sufficed in the absence of a final
instruction that reiterated the caution. The circumstances of this trial,
including the number of experts, its length, and the complexity of the evidence
on a range of issues required that this instruction be given both when Dr.
Bruce overstepped his role as an expert when giving his evidence and in the
course of the final instructions.
(2)
Is the failure to raise the issue of Dr. Bruces
impartiality before the trial judge fatal on this appeal?
[60]
Dr. Bruces expert evidence was admitted at the
outset on consent. There were no objections by the appellants trial counsel to
Dr. Bruces evidence in chief, apart from a brief objection to require Dr.
Bruce to stay within the parameters of his report when opining on the
significance of a childs weight, nor to the absence of any specific reference
in the charge to Dr. Bruces lack of impartiality or bias.
(a)
Positions of the Parties
[61]
The respondents argue that the appellants should
be precluded from raising the issue of the admissibility of Dr. Bruces
evidence on appeal because they failed to object at trial to both the evidence
and the jury charge. Their failure to object should be given considerable
weight and should be fatal to their appeal. The appellants claim that Dr.
Bruces bias was evident in his reports. The respondents also claim that the fact
that the appellants challenged Dr. Flemings independence after Dr. Bruce had
testified demonstrated that they were alive to the issue of Dr. Bruces bias in
the course of the trial. Put another way, the respondents argue, the appellants
made a conscious choice not to object to Dr. Bruces qualification, and there was
no miscarriage of justice in this case to warrant ordering a new trial. As long
as there is some evidence to support the jurys verdict, it should not be set
aside. It was open to the jury to disbelieve the evidence of the appellants and
to conclude that negligence was not proven on a balance of probabilities.
[62]
The appellants submit that a substantial wrong
or miscarriage of justice occurred in this case and that a new trial is
warranted, despite their failure to object at trial. The integrity of the
administration of justice requires that expert witnesses honour their
obligations. There was a real danger that Dr. Bruces inappropriate credibility
and veracity assessments improperly influenced the jury. The jurys verdict was
tainted by improper evidence and must be set aside.
(b)
The principles
[63]
The general principle is that a party in a civil
case should not bring an appeal on the basis of some aspect of the lower court
proceeding to which it did not object: see
Marshall v. Watson Wyatt &
Co.
(2002), 209 D.L.R. (4th) 411 (Ont. C.A.), at para. 15;
Harris v.
Leikin Group Inc.
, 2014 ONCA 479, 120 O.R. (3d) 508, at para. 53; and
Maurice
v. Alles
, 2016 ONCA 287, 130 O.R. (3d) 452, at para. 25. A partys failure
to object at trial weighs heavily against that party now bringing an appeal
because it indicates that trial counsel did not consider that point to be
important or of sufficient consequence to require an objection: see
Arland
and Arland v. Taylor
, [1955] 3 D.L.R. 358 (Ont. C.A.), at p. 361;
Marshall
,
at para. 15.
[64]
An appellant cannot ask for a new trial as of
right due to an error during the trial when no objection was made on the point
at trial. The failure to have objected at trial is not treated lightly by an
appellate court and is usually fatal to an appeal on that point: see
Arland
,
at p. 361;
G.K. v. D.K.
, 1999 CanLII 935 (Ont. C.A.), at para. 15,
leave to appeal refused, [2000] S.C.C.A. No. 415;
Marshall
, at para.
15.
[65]
This principle has been invoked in connection
with an appellants failure at trial to object to a jury instruction or charge:
see e.g.
Bruff-Murphy
, at para. 69;
Pietkiewicz v. Sault Ste.
Marie District Roman Catholic Separate School Board
, 2004 CanLII 874 (Ont.
C.A.), at para. 22. It is also applicable on the issue of the admissibility of
evidence, as an objection to the admissibility of evidence on appeal will not
usually succeed unless the objection is made at trial: see
Hoang v.
Vicentini
, 2016 ONCA 723, 352 O.A.C. 358, at para. 63;
Marshall
at paras. 15, 30; and Sidney N. Lederman, Alan W. Bryant and Michelle K.
Fuerst, Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 5th ed.
(Toronto: LexisNexis Canada, 2018), at para. 2.109.
[66]
A new trial may be ordered in such cases,
however, when the court is satisfied that a new trial is necessary in the
interests of justice: see
Arland
, at p. 361;
Marshall
at
para. 15. When an objection is made on appeal that was not made at trial, the
focus should be on the question of whether a substantial wrong or miscarriage
of justice has occurred: see
Marshall
at paras. 14-15;
Arland
at pp. 364-65;
Pietkiewicz
at paras. 22-28.
[67]
In sum, this court can exercise its discretion
to grant a new trial or other remedy despite the failure of the appellants to
object to the jury charge or the admissibility of Dr. Bruces evidence if it
finds that the errors alleged by the appellants were errors that constituted a
substantial wrong or miscarriage of justice and that the interests of justice
require granting relief.
(c)
Did the errors constitute a substantial wrong or
miscarriage of justice?
[68]
As I have indicated above, the trial judge
erred in failing to advise the jury that it could not consider Dr. Bruces
evidence on the respective credibility and reliability of the parties.
[69]
It is not possible to assess with any certainty
the impact of Dr. Bruces evidence. That, however, misses the point, which is
whether there has been a miscarriage of justice in this case. Given the
centrality of credibility in this case, and the absence of any caution about
Dr. Bruces evidence (apart from summarizing the appellants cross-examination
of Dr. Bruce), there is a very real possibility that Dr. Bruces evidence on
credibility and reliability played a significant role in the jurys decision to
find that the standard of care was met by both doctors during the October and
November visits.
[70]
As Hourigan J.A. wrote in
Bruff-Murphy
at para. 72, [t]his court has a responsibility to protect the integrity of the
justice system. This is not a no harm, no foul situation. The sole witness
for the respondents on the issue of standard of care exceeded the admissible
scope of his evidence and opined on the credibility of the witnesses, which was
highly prejudicial to the appellants. The impugned evidence tainted the jurys
verdict and the verdict must be set aside.
[71]
For these reasons, I conclude that there has
been a miscarriage of justice and a new trial is required.
E.
Disposition
[72]
I would allow the appeal, set aside the judgment
below, and order a new trial. Costs of the appeal in the agreed amount of $25,000
are payable by the respondents to the appellants. The parties advised us that
they had an agreement on the costs below so it is unnecessary for us to address
those.
Released: April 26, 2021 G.H.
A. Harvison Young J.A.
I agree Grant Huscroft J.A.
I agree I.V.B. Nordheimer J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Participating Nursing Homes v.
Ontario
Nurses Association, 2021 ONCA 149
DATE: 20210309
DOCKET:
C67496
Strathy C.J.O., Benotto, Brown,
Huscroft and Zarnett JJ.A.
BETWEEN
Participating Nursing Homes
Applicants (Appellants)
and
Ontario Nurses Association
Respondent (Respondent)
and
Service Employees International
Union, Local 1
Respondent (Respondent)
David M. Golden and Marco P. Falco, for
the appellants Participating Nursing Homes
Paul J.J. Cavalluzzo, Adrienne Telford
and Lara Koerner Yeo, for the respondent Service Employees International Union,
Local 1
Janet Borowy, Danielle Bisnar, and Andrea
Sobko, for the respondent Ontario Nurses Association
Lindsay Lawrence and Aaron Hart, for
the respondent, the Pay Equity Hearings Tribunal
Fay Faraday, for the intervener, the
Equal Pay Coalition
Heard: October 6 and 7, 2020 by video
conference
On appeal from the judgment of the
Divisional Court (Regional Senior Judge Geoffrey B. Morawetz and Justices Robbie
Gordon and Nancy L. Backhouse), dated April 30, 2019, with reasons reported at
2019 ONSC 2772, affirming in part a decision of the Pay Equity Hearings
Tribunal, dated January 21, 2016, with reasons reported at [2016] O.P.E.D. No.
5.
Benotto J.A.
:
[1]
The Participating Nursing Homes (PNH) appeal
the decision of the Divisional Court upholding, in part, a decision of the Pay
Equity Hearings Tribunal. The Tribunal directed the parties to negotiate a gender-neutral
comparison system (GNCS) for maintaining pay equity. The PNH seek a
declaration that the
Pay Equity Act
, R.S.O. 1990, c. P.7 (the
Act
) does not require them to further
negotiate their maintenance obligation with the respondents by tying the
maintenance obligation to how the proxy employer historically valued male
jobs in its establishment in 1994. For the following reasons to be read with
the companion appeal released concurrently I would dismiss the appeal.
BACKGROUND
[2]
The PNH are employers who operate up to 143
nursing homes in Ontario. The
Ontario
Nurses Association (ONA) is the bargaining agent representing about 2,100
registered nurses and allied health professionals working at nursing homes
across the province. The Service Employees International Union, Local 1
(SEIU) is the bargaining agent representing a range of health care workers at
the PNH, including registered practical nurses, personal support workers,
health care aides, and dietary, housekeeping, and recreational aides.
(Collectively, the ONA and the SEIU are referred to as the Unions.)
[3]
Employment in the nursing home sector is
predominantly female. Consequently, the proxy methodology for establishing pay
equity in applies. The proxy method involves a comparison between a key female
job class in one employers establishment and an analogous female job class in
a different (proxy) employers establishment where pay equity has already
been established by way of comparison with a male job class.
[4]
The female job class from the proxy employer is
valued pursuant to a GNCS and the relationship between value and compensation
is thus determined. Pay equity is achieved for the key female job class by
adjusting its compensation so that the same value/compensation relationship
exists for both the key female job class and the proxy female job class. Pay
equity is then achieved for the rest of the seeking employers job classes by
comparison to the key female job classes.
[5]
The
Act
requires every seeking employer to prepare a pay equity plan including a
description of the GNCS used for the purposes of making the comparisons.
[6]
In 1995, the PNH and the Unions
negotiated and executed a pay equity plan for the entire nursing home sector
using as the proxy employer Unionized Municipal Homes for the Aged Across
Ontario (Municipal Homes) and designating health care aides as the seeking
employers key female job class and the proxy female job class. They agreed
that a total weighted average adjustment of $1.50 per hour would achieve pay
equity for the health care aides in the employ of the PNH and agreed upon a
schedule for implementing the required increase for all job classes. The
parties did not agree on a GNCS and did not use a GNCS to evaluate job classes
in the PNH and proxy female job classes. The various adjustments contemplated
by the pay equity plan were implemented, and by 2005 pay equity had been established.
[7]
The issue then became how to maintain pay equity
as required by the Act.
[8]
The Tribunal directed that the parties negotiate
a GNCS for these reasons:
Although the $1.50 Plan may have achieved pay
equity, it did so without applying a GNCS. So long as the skill, effort,
responsibility and working conditions of the female job classes in the Homes
remained unchanged, and they received the same percentage compensation
increases, the absence of a GNCS had no impact on pay equity
maintenance. We have already referred to the uncontradicted evidence
before us that there have been significant changes in the clientele and the
duties performed in the Homes that may well impact on the value of the job
classes. Those changes make the $1.50 Plan inappropriate because the pay
equity consequence of them can only be ascertained by evaluating the job
information using a GNCS, which the Proxy Plans lack. In the unionized
environment the selection of a GNCS and its application are matters that the
Act
contemplates will be negotiated between the employer and the
union.
Pursuant to our
authority under
section
25(2)
(g) of the
Act
, the parties are directed to negotiate and endeavor to agree on an
amendment to the $1.50 Plan to stipulate a GNCS, and to apply that GNCS to
determine whether any maintenance adjustments are required.
[9]
The Tribunals decision was upheld by the
Divisional Court.
[10]
The PNH submit that the Tribunals decision was
unreasonable because it will
forever
require the PNHs to base their
pay equity compensation on another employer.
[11]
I disagree.
[12]
First, the Tribunal clearly has the authority to
require compliance with the Act. A GNCS was neither negotiated nor applied as
part of the 1995 proxy comparison process. The parties accordingly did not
determine the gender-neutral value of the work performed by the female job
classes at either the PNH or Municipal Homes. It was the obligation of the
employer to prepare a pay equity plan in compliance with the
Act
. It did not do so, and it was within the Tribunals power to
direct it to comply. Section 25(2)(g) provides that the Tribunal
may order a party to a proceeding to take such action or refrain from
such action as in the opinion of the Hearings Tribunal is required in the
circumstances.
[13]
Second, for the reasons set out in the companion appeal, the object of
the Act requires ongoing comparison to men. When there are insufficient men in
the establishment, there is reference to another employer. That is how the
proxy method works
. The matter was remitted to the
Tribunal to specify what procedures should be used to ensure that the
respondents who have established pay equity through the proxy method will
continue to have access to male comparators to maintain pay equity. I would
direct that
the parties comply with the Tribunals
direction, to negotiate a GNCS and determine whether any maintenance
adjustments are required, in conjunction with the procedures specified by the
Tribunal as a result of the decision in the companion appeal.
[14]
I would dismiss the appeal and invite submissions as to costs (limited
to 5 pages) within 15 days of the release of this decision.
M.L.
Benotto J.A.
I
agree David Brown J.A.
I
agree B. Zarnett J.A.
Huscroft J.A.
(Concurring):
[15]
I conclude that the Tribunal's decision is
reasonable as a whole, including the order that the parties negotiate a GNCS. I
would dismiss the appeal for the reasons set out in the companion appeal.
Released: March 09, 2021 GRS
Grant Huscroft J.A.
I agree G.R. Strathy C.J.O.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Patterson v. Patterson, 2021 ONCA
70
DATE: 20210201
DOCKET: M51853 (C68604)
Roberts, Zarnett and Sossin
JJ.A.
BETWEEN
William Harold Patterson
Applicant/Moving Party
(Respondent)
and
Sarah Anne Elizabeth Patterson, in her
personal capacity and in her
capacity as the personal representative
of the Estate of Sheila Patsy Patterson,
and Donald David Oral Patterson Jr.
Respondent/Responding Parties
(Appellants)
Carol Craig, for the
appellants
Taayo Simmonds, for the
respondent
Heard: January 27, 2021 by video
conference
REASONS FOR
DECISION
[1]
The parties bring the following motions: 1) the
respondent seeks to quash the appellants appeal, as their notice of appeal was
served approximately 37 minutes late, and to extend the time for the service
and filing of his notice of cross-appeal to vary the order under appeal to
provide for leave to bring his passing of accounts application; and 2) the
appellants, in their responding factum, move to extend the time for the service
of their notice of appeal.
[2]
These motions arise out of the appellants
appeal from the order of Justice Brian W. Abrams, dated July 23, 2020, requiring
them, among other things, to pass their accounts for the period of time they
served as the attorneys for property for the late Sheila Patterson. The
appellants are respectively the son and granddaughter of Mrs. Patterson. The
granddaughter served as estate trustee for the estate of Mrs. Patterson. They
both exercised powers of attorney for Mrs. Patterson during her lifetime. The
respondent is also her son. Over the past several years, the parties have been
embroiled in high conflict litigation over Mrs. Pattersons modest estate.
[3]
As context for the motions, one of the appellants
principal grounds of appeal is their argument that the motion judge erred by
failing to address the leave requirement for the respondents passing of
accounts application under s. 42(4)(6) of the
Substitute Decisions Act,
1992
, S.O. 1992, c. 30.
[4]
We turn first to the respondents motion to extend
the time for the service and filing of his cross-appeal. In our view, the justice
of the case warrants the requested extension:
Rizzi v. Mavros
, 2007
ONCA 350, 85 O.R. (3d) 401, at para. 16. The issue of leave is the appellants
principal focus of their appeal. The respondent requests that this court
dismiss the appeal and grant an order varying the motion judges order to
explicitly state leave was granted. The appellants do not consent to the
variance sought nor agree that the respondent can seek that relief without a
cross-appeal. He is therefore required to bring a cross-appeal to seek this relief
in accordance with r. 61.07(1)(a) of the
Rules of Civil Procedure
,
R.R.O. 1990, Reg. 194, which indicates that a respondent who seeks to vary the
order appealed from must serve a notice of cross-appeal.
[5]
We do not accept the appellants submissions
that the cross-appeal will require any duplication or cause prejudice because
the respondent can incorporate his submissions on the leave issue in his responding
factum and any necessary materials into his responding compendium on the appellants
appeal. Under r. 61.12(6)(b) of the
Rules of Civil Procedure
, the
appellants are entitled to file a factum as respondents to the cross-appeal.
[6]
The respondent did not press his motion to quash
in oral submissions, given the responding materials filed by the appellant. It
is not in the interests of justice to quash the appeal. The cited breach was
technical and caused no prejudice. The notice of appeal was served only about
37 minutes late, the appellants appeal materials were accepted for filing by
this court, and the respondent made no complaint about the timeliness of
service until over a month later, when the appellants refused their consent to
the filing of his cross-appeal.
Disposition
[7]
We therefore allow the respondents motion to
extend the time for the filing of his cross-appeal to February 3, 2021, the
date requested by the respondent.
[8]
Given our disposition of the respondents
motions, it is not necessary for us to consider the appellants request for an
extension of time, which we therefore dismiss.
[9]
In accordance with the parties agreement, the
costs of these motions are reserved to the panel hearing the appeal and the cross-appeal.
L.B.
Roberts J.A.
B. Zarnett
J.A.
Sossin
J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Paulpillai Estate v. Yusuf, 2021 ONCA 196
DATE: 20210329
DOCKET: M51881 (C68024)
Doherty, Hoy and Jamal JJ.A.
BETWEEN
Theresa Yogaranie Paulpillai in her
capacity as the Estate Trustee for the Estate of Richmond Gabriel Paulpillai,
Theresa Yogaranie Paulpillai
and Maneharran Paulpillai
Applicants/Respondents
(Responding Parties)
and
Joshua Akanni Yusuf, Meerc Inc.
,
All Saints University Limited,
All Saints University School of
Medicine Limited, Avonelle Pinard, David Bruney,
Frankie Bellot and Medical Education
Examination Resource Center
Respondents/Appellants
(
Moving Parties
)
Osborne G. Barnwell, for the moving parties
Edwin G. Upenieks and Angela H. Kwok, for the responding
parties
Heard: in writing
COSTS ENDORSEMENT
[1]
The parties have agreed that costs of this motion in the amount of
$5,000.00 shall be payable by the Respondents/Appellants (Moving Parties on
M51881), Joshua Akanni Yusuf, Meerc Inc., All Saints University School of
Medicine Limited, Avonelle Pinard, David Bruney, Frankie Bellot, and Medical
Education Examination Resource Center, to the Applicants/Respondents
(Responding Parties on M51881) by April 26, 2021. We so order.
Doherty J.A.
Alexandra Hoy J.A.
M. Jamal J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Pearce v. Canada (Staff of the
Non-Public Funds, Canadian Forces), 2021 ONCA 65
DATE: 20210203
DOCKET: C68070
Strathy C.J.O., Rouleau and
Coroza JJ.A.
BETWEEN
Bryan Pearce
Plaintiff
(Respondent)
and
Her Majesty the Queen in Right
of Canada as represented by the Staff of the Non-Public Funds, Canadian Forces
Defendant
(Appellant)
Alexander M. Gay and Alexandra Pullano,
for the appellant
Andrew Montague-Reinholdt, for the respondent
Heard: November 24, 2020 by video conference
On appeal from the order and judgment of
Justice Heather J. Williams of the Superior Court of Justice, dated January 24,
2020.
Strathy C.J.O.:
[1]
This appeal raises a single issue concerning the
interpretation of s. 236 of the
Federal Public Sector Labour Relations Act
,
S.C. 2003, c. 22, s. 2 (
FPSLRA
): does the expression, termination
of employment for any reason that does not relate to a breach of discipline or
misconduct in ss. 236(3), include the common law concept of constructive
dismissal?
[2]
The motion judge held that it does, and allowed
the respondent, who was employed by a federal separate agency, to pursue his
claim for constructive dismissal in the Superior Court.
[3]
Section 236 of the
FPSLRA
provides:
236(1) The right of an employee to
seek redress by way of grievance for any dispute relating to his or her terms
or conditions of employment is in lieu of any right of action that the employee
may have in relation to any act or omission giving rise to the dispute.
(2) Subsection (1) applies whether
or not the employee avails himself or herself of the right to present a
grievance in any particular case and whether or not the grievance could be
referred to adjudication.
(3) Subsection (1) does not apply in
respect of an
employee of a separate agency
that
has not been designated under subsection 209(3)
if the
dispute relates to his or her termination of employment for any reason that
does not relate to a breach of discipline or misconduct
. [Emphasis added.]
[4]
The motion judge found that the exception in ss.
236(3) means that ss. 236(1) and (2) do not preclude the respondents action
against the appellant, his former employer. She dismissed the appellants
motion to dismiss the respondents action for want of jurisdiction.
[5]
For the reasons that follow, I agree, and would
dismiss the appeal.
I.
Factual background
[6]
The respondent was a non-unionized, 18-year
employee of a federal public service entity, the appellant, the Staff of the Non-Public
Funds (SNPF), Canadian Forces. SNPF is a separate agency within the meaning
of ss. 236(3) in the
FPSLRA
. Its operating name is the Canadian Forces
Morale and Welfare Services. The respondents last position was arena and
outdoor facility manager at the Canadian Forces Base Trenton.
[7]
The respondent quit his job in 2017. In 2018, he
commenced a civil action against the appellant, claiming he had been constructively
dismissed. He pleaded that, for many years, he was the object of bullying and
intimidation by his supervisor, and as a result, he suffered from work-related
stress, depression, and insomnia.
[8]
In 2009, the respondent brought a grievance, alleging
that he had been harassed by his supervisor over persistent and largely
unfounded allegations of wrongdoing against him. He alleged that although his grievance
was resolved, his position was downgraded, and some of his responsibilities were
taken away from him. In 2014, his department was reorganized, and he was
required to report to a more junior individual. He claimed that his former
supervisor continued to harass him. In March 2017, he initiated another
grievance for harassment.
[9]
The respondent pleads that he went on medical
leave from March to May 2017, due to mental health issues arising from the
toxic work environment created by [his former supervisor] and permitted by his
employer. Although he returned from this leave in June 2017, he resigned that
same month due to the allegedly toxic work environment. He pleads that his
resignation was involuntary, and that he was constructively dismissed. He claims
damages for constructive dismissal, equivalent to 24 months salary and
benefits in lieu of notice, as well as moral damages for breach of the duty of
good faith and fair dealing, and punitive damages.
[10]
The appellant, his employer, brought a motion pursuant to r.
21.01(3)(a) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, to
dismiss the action. The appellant alleged that the respondents terms and
conditions of employment were governed by the human resources policies of the SNPF,
the
Financial Administration Act
, R.S.C. 1985, c. F-11 (
FAA
)
and the
FPSLRA
. The appellant asserted that the respondent had
voluntarily resigned from his position, and that the court had no jurisdiction
to hear the constructive dismissal claim of a federal government employee. It
said that the appropriate recourse for the respondent was the grievance process
set out under the
FPSLRA
.
[11]
The motion judge dismissed the motion, permitting the respondents
action to proceed. The respondents employer, SNPF, appeals.
II.
the statutory context
[12]
In order to give context for the motion judges reasons and the
parties submissions, I will provide an overview of the federal public sector
labour relations regime, both in general, and as it relates to employees like
the respondent who are employed by a separate agency.
(1)
The
FAA
:
Core public administration and separate agencies
[13]
Employees in the federal public service are governed by a
comprehensive scheme that includes statutes, regulations, collective agreements
(in the case of unionized employees), and other governmental directives:
Bron
v. Canada (Attorney General)
, 2010 ONCA 71, 99 O.R. (3d) 749, at para. 13,
citing
Vaughan v. Canada
, 2005 SCC 11, [2005] 1 S.C.R. 146, at para. 1.
[14]
The
FAA
is part of that comprehensive scheme. It is
described as [a]n Act to provide for the financial administration of the
Government of Canada, the establishment and maintenance of the accounts of
Canada and the control of Crown corporations. Subsection 11(1) of the
FAA
defines public service by distinguishing between the core public
administration of Canada and other parts of the federal administration, on the
one hand, and separate agencies identified in Schedule V and other designated
parts of the federal public administration, on the other hand.
[15]
The core public administration includes departments of the federal
public service and various agencies, boards, and commissions listed in Schedule
I and Schedule IV of the
FAA
. Separate agencies, like the SNPF, are the
agencies, boards, and commissions listed under Schedule V to the
FAA
.
The Governor in Council has the ability to move a particular agency, board, or
commission from Schedule IV to Schedule V and vice versa: see Christopher
Rootham,
Labour and Employment Law in the Federal Public Service
,
(Ottawa: Irwin Law, 2007), at pp. 55-56. Schedule III of the
FAA
governs Crown corporations, which are not subject to the
FPSLRA
.
[16]
The distinction between the core public administration and separate
agencies is important in this case because the SNPF is a separate agency. Each
separate agency has independent status as an employer: Rootham, at p. 58. Other
separate agencies include the National Capital Commission, the National Film
Board, the National Research Council, and the Parks Canada Agency. Employees in
the core public administration, by contrast, are employed by the Treasury
Board as the delegate of her Majesty in Right of Canada: Rootham, at p. 57.
[17]
There is a sub-class of separate agencies, referred to as
designated separate agencies, because they have been designated by the
Governor in Council under ss. 209(3) of the
FPSLRA
. There are, at
present, only two such agencies, the Canada Revenue Agency and the Canada Food
Inspection Agency:
Federal Public Sector Labour Relations Act Separate
Agency Designation Order
, SOR/2005-59.
[18]
Counsel agreed that in establishing separate agencies, Parliament
intended them to be more nimble than the core public administration,
operating like the private sector with respect to their labour relations, and
giving them greater flexibility in hiring and firing.
[19]
As an employee of a separate agency that had not been designated
by the Governor in Council under ss. 209(3) of the
FPSLRA
, the
respondent was a member of a unique class of federal public servants entitled
to sue their employer in court pursuant to ss. 236(3) if the dispute relates
to his or her termination of employment for any reason that does not relate to
a breach of discipline or misconduct.
[20]
Subsection 12(2) of the
FAA
states that, subject to any
terms and conditions directed by the Governor in Council, the deputy head of
a separate agency (usually the chief executive officer), may, among other
things: establish standards of discipline and set penalties, including
termination of employment, suspension, demotion to a lower position, or
financial penalties; and effectuate the termination of employment or demotion to
a lower position for reasons other than breaches of discipline or misconduct. Subsection
12(3), which applies to both separate agencies and the core public
administration, provides that any such disciplinary action, termination of
employment, or demotion may only be for cause.
(2)
The
FPSLRA
[21]
The
FPSLRA
deals comprehensively with labour relations in
the federal public service. The preamble to the statute expresses the
commitment of the Government of Canada to the fair, credible, and efficient
resolution of matters arising in respect of terms and conditions of employment.
Section 12 provides for the administration of the statute by the Federal Public
Sector Labour Relations and Employment Board (the Board). Section 13 provides
that the Board is to adjudicate certain applications, disputes, and grievances.
[22]
Under ss. 208(1) and 236(1) of the
FPSLRA
, employees of the
federal public service, including employees of separate agencies, are required
to follow a grievance process if they are aggrieved by the interpretation or
application of any statute, regulation, direction, or other instrument made or
issued by the employer, that deals with terms and conditions of employment (ss.
208(1)(a)(i)), or as a result of any occurrence or matter affecting the terms
and conditions of their employment (ss. 208(1)(b)). The grievance process is internal,
and management personnel determine the merits of the grievance:
Bron
, at
para. 14.
[23]
Employees in the public service who have pursued a grievance up to
the final level of the grievance process and are not satisfied with the
outcome, are entitled, in certain circumstances, to refer the dispute to
adjudication by the Board. However, the path an employee may follow if the
grievance is not successful, depends on the nature of the grievance and whether
the employee is part of the core public administration, a designated separate
agency, or an undesignated separate agency.
[24]
Those paths are set out in ss. 209(1), which provides:
209 (1) An employee who is not a
member
as defined in subsection 2(1) of the
Royal Canadian Mounted Police Act
may refer to adjudication an individual grievance that has been presented up to
and including the final level in the grievance process and that has not been
dealt with to the employees satisfaction if the grievance is related to
(a) the interpretation or
application in respect of the employee of a provision of a collective agreement
or an arbitral award;
(b) a disciplinary action resulting
in termination, demotion, suspension or financial penalty;
(c) in the case of an employee in
the core public administration,
(i) demotion or termination under
paragraph 12(1)(d) of the
Financial Administration Act
for
unsatisfactory performance or under paragraph 12(1)(e) of that Act for any
other reason that does not relate to a breach of discipline or misconduct, or
(ii) deployment under the
Public
Service Employment Act
without the employees consent where consent is
required; or
(d) in the case of an employee of a
separate agency designated under subsection (3), demotion or termination for
any reason that does not relate to a breach of discipline or misconduct.
(2) Before referring an individual
grievance related to matters referred to in paragraph (1)(a), the employee must
obtain the approval of his or her bargaining agent to represent him or her in
the adjudication proceedings.
(3) The Governor in Council may, by
order, designate any separate agency for the purposes of paragraph (1)(d).
[25]
In summary, all public sector employees are entitled to adjudication
by the Board where their grievance is related to: (a) the interpretation or
application of a collective agreement or arbitration award (ss. 209(1)(a)); or
(b) disciplinary action resulting in termination, demotion, suspension or
financial penalty (ss. 209(1)(b)). Employees in the core public administration
are also entitled to refer the dispute to adjudication if their demotion or
termination was for unsatisfactory performance or any other reason that does
not relate to a breach of discipline or misconduct: ss. 209(1)(c). Thus,
employees in the core public administration are entitled to refer to
adjudication a grievance, relating to the termination of their employment,
regardless of whether the reason for their termination was disciplinary or
non-disciplinary.
[26]
Employees of separate agencies, however, can only have their
grievances referred to adjudication in limited circumstances. Employees of separate
agencies that have been designated by the Governor in Council, under ss. 209(3)
of the
FPSLRA
, may
refer their dispute to adjudication if their demotion or termination was for
any reason that does not relate to a breach of discipline or misconduct: ss.
209(1)(d). Employees of undesignated separate agencies, like SNPF, can only
refer their grievance to adjudication by the Board if it relates to the
interpretation or application of a collective agreement or arbitration award;
or if it relates to a disciplinary action resulting in termination, demotion,
suspension or financial penalty: ss. 209(1)(a) and (b).
The statutory adjudication process is not available for
non-disciplinary terminations of employees of separate agencies that have not
been designated under ss. 209(3). Those employees are not precluded from access
to the courts if they have been terminated for a reason that does
not
relate to a breach of discipline or misconduct: ss.
236(3). Whereas employees in the core public administration are able to pursue
both disciplinary and non-disciplinary terminations by adjudication, employees
of undesignated separate agencies have access to the courts for the latter.
[27]
The result is that undesignated separate agencies have greater
flexibility to terminate employees for non-disciplinary reasons because they
are not subject to a statutory adjudication process that may result in the
re-instatement of the employee.
[28]
Section 214 of the
FPSLRA
provides that, except in those
cases that may be referred to adjudication under s. 209, the decision on the
grievance taken at the final level in the grievance process is final and
binding for all purposes of this Act and no further action under this Act may
be taken on it.
[29]
Thus, the process available to employees of separate agencies, like
the respondent, differs from that available to employees in the core public administration.
Employees in the core public administration and employees of designated
separate agencies, covered by ss. 236(1) and (2), have no right of action in
the courts in relation to disciplinary and non-disciplinary terminations. Their
right is to proceed to grievance and, in some cases, to have the matter
referred to adjudication by the Board.
[30]
Subsection 236(3), on the other hand, gives employees of separate
agencies, other than those designated under ss. 209(3), the right to sue if
the dispute relates to his or her termination of employment for any reason that
does not relate to a breach of discipline or misconduct.
[31]
There is no dispute that the appellant, the SNPF, was
not
a separate agency that had been designated under ss.
209(3).
(3)
SNPF grievance policies
[32]
In addition to being subject to the foregoing statutory scheme, the
respondent was also subject to the human resources policies of the SNPF. The Termination
of Employment Policy provided full-time, non-unionized employees with severance
pay in lieu of notice, equivalent to two weeks pay for the first year of
service and one week for each additional year of service, up to a maximum of 28
weeks. It also provided that employees whose employment was terminated for
certain reasons were not entitled to notice, payment in lieu of notice, or
severance pay. These reasons included: disciplinary discharge; incompetence
and/or unsatisfactory performance; failure to meet a bona fide occupational
requirement or occupational qualification; failure to raise attendance to a
satisfactory level; and ineligibility for continued employment.
[33]
The SNPF also had a Grievance Policy, which provided that any
employee who feels aggrieved has the right to present a grievance. The policy
gave broad rights of grievance, allowing an employee to file a grievance as a
result of
any
occurrence or matter affecting the terms and conditions of
employment
(emphasis added). The policy also explained how grievances are to
be pursued. It contained both an informal grievance process and a formal
grievance process. If an employee did not receive a satisfactory internal
resolution of their grievance, they could, in certain circumstances, refer the
grievance to adjudication by the Board in accordance with the [
Federal Public Service Labour Relations
]
Act
and the Public
Service Labour Relations Board Regulations. The policy did not identify the
circumstances in which adjudication is available.
III.
The Motion Judges Reasons
[34]
The motion judge rejected the appellants submission that the
respondents lawsuit was simply a series of complaints related to his
employment, which could have been grieved, but that he had allowed his
complaints to accumulate and then claimed constructive dismissal.
[35]
She explained that although employees in the core public administration
had access to third-party adjudication for non-disciplinary terminations
through the Board, this was not available to employees of undesignated separate
agencies. The latter had a different route by virtue of ss. 236(3) of the
FPSLRA
.
She stated, at paras. 13 and 14:
Section 209 of the
FPSLRA
appears to
leave employees such as Mr. Pearce without recourse to an independent
decision-maker if their employment was terminated for a reason that was not
disciplinary; these employees may grieve a non-disciplinary termination but,
with no right of referral to adjudication, under s. 214, the decision at the
final level of their agencys internal grievance procedure is final.
This seemingly anomalous distinction between
core public administration and non-designated (under s. 209(3)) separate
agency employees is addressed by the section of the
FPSLRA
which is at
the heart of this motion, s. 236. Section 236 gives the latter group a right of
action against the employer. Section 236(1) states that the right to grieve
disputes is in lieu of the right to sue but s. 236(3) allows employees of
agencies such as the SNPF to sue their employer for a non-disciplinary
termination.
[36]
She found that even if the essential character of the dispute is a
series of grievable events, if one or a combination of those events is or
amounts to a non-disciplinary termination, [then] the employee has the right to
sue under s. 263(3) [
sic
]. According to the motion judge, termination
in ss. 236(3) includes constructive dismissal. She determined that Parliament
could not have intended an employee of an undesignated separate agency to have the
right to sue for wrongful termination, while that employee did not have a right
to sue for constructive dismissal and had to pursue an internal grievance
process.
IV.
The parties submissions
(1)
The Appellant
[37]
The appellant submits that the word, termination, in ss. 236(3) of
the
FPSLRA
does not include common law constructive dismissal. The
appellant asserts that, when the statutory scheme is considered as a whole, it
is evident that Parliament did not intend to include constructive dismissal in
the
FPSLRA
. Parliament introduced ss. 236(1) and (2) as a complete
bar to civil actions, like constructive dismissal, and codified ss. 236(3) as
a narrow exception, applicable to employees of undesignated separate agencies
who have been terminated for non-disciplinary reasons.
[38]
The appellant argues that any reason that does not relate to a
breach of discipline or misconduct in ss. 236(3) cannot include constructive
dismissal because the
FPSLRA
provides employees, like the respondent,
with a comprehensive grievance process to resolve such disputes. Sections 208
and 209 of the
FPSLRA
allow an employee to grieve all disputes related
to their employment, and to appeal up to third-party adjudication by the Board.
Subsection 236(3) offers an employee of an undesignated separate agency the ability
to sue in court if the employee meets the conditions contained therein. It is
the position of the appellant that these two options are put before the
employee as an election, and that the employee can only pursue one for the
resolution of their dispute. The appellant suggests that s. 209 of the
FPSLRA
,
which gives a right to adjudicate a grievance in relation to disciplinary action
resulting in termination, demotion, suspension or financial penalty, is
robust enough to address any events or occurrences associated with a claim of
constructive dismissal and, thus, ss. 236(3) cannot be used for this purpose. The
appellant submits that if ss. 236(3) is read to incorporate constructive
dismissal, employees would be able to launch collateral attacks against the
FPSLRA
regime by stringing together otherwise grievable events and occurrences just
so they can commence an action in the courts.
(2)
The Respondent
[39]
The respondent submits that he had no recourse to the adjudication
process because he was not a unionized employee, was not part of the core
public administration, his termination was not the result of disciplinary
action, and SNPF had not been designated under ss. 209(3) as being subject to
adjudication for non-disciplinary terminations. He contends, therefore, that he
has recourse to the court under ss. 236(3).
[40]
The respondent rejects the appellants proposition that an employee
of a separate agency must make an election whether to pursue the grievance
process under s. 208, or a court action under ss. 236(3). In the respondents
view, s. 208 and ss. 236(3) of the
FPSLRA
serve different purposes. An
employees failure to grieve can potentially be invoked by the employer as a
defence to the constructive dismissal claim, but not as a bar to the
commencement of the civil action.
V.
Analysis
[41]
This appeal turns on the interpretation of a statute. I turn first
to the relevant principles, and then to their application.
(1)
Principles of statutory interpretation
[42]
In
Re Rizzo & Rizzo Shoes Ltd.
, [1998] 1 S.C.R. 27, the
Supreme Court adopted the modern principle of statutory interpretation as expressed
by Elmer Driedger. That principle stipulates that the words of an Act are to
be read in their entire context and in their grammatical and ordinary sense
harmoniously with the scheme of the Act, the object of the Act, and the
intention of Parliament:
Rizzo
, at para. 21;
Bell ExpressVu
Limited Partnership v. Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.
See also Ruth Sullivan,
Statutory Interpretation
, 3rd ed. (Toronto:
Irwin Law, 2016), at pp. 44-45. In the federal legislative context, Driedgers
modern approach is supported by s. 12 of the
Interpretation Act
,
R.S.C. 1985, c. I-21, which provides that every enactment is deemed remedial,
and shall be given such fair, large and liberal construction and interpretation
as best ensures the attainment of its objects: see
Bell ExpressVu
, at
para. 26.
(2)
The context
[43]
The Supreme Courts reference to the entire context reminds us
that words have not only an intrinsic meaning, but that they sometimes take
their meaning from their context i.e. the words that surround them. In ss.
236(3), the words termination of employment are followed by the words for
any reason that does not relate to a breach of discipline or misconduct. We
understand from the context that termination of employment is to be given a
broad meaning (
any
reason), but that meaning
will not include terminations for some reasons, namely, those that relate to a
breach of discipline or misconduct.
[44]
We also know, from the broader context of ss. 236(1), that the right
in ss. 236(3) is an exception that applies
only
to
employees of undesignated separate agencies. All other employees, whether part
of the core public administration or employed by designated separate agencies,
must pursue their non-disciplinary terminations via grievance or third-party
adjudication.
[45]
The logic of these provisions has been explained above and will be
revisited when I examine the scheme and object of the legislation.
(3)
The grammatical and ordinary meaning
[46]
It is not difficult to determine the plain meaning of the words of ss.
236(3): if the dispute relates to his or her termination of employment
for any reason
that does not relate to a breach of
discipline or misconduct (emphasis added). The language is broad and, on its
face, excludes only terminations that are based on breach of discipline or
misconduct.
[47]
The appellant submits that the motion judge erred by improperly
reading in the word constructive into the phrase, termination of
employment, in ss. 236(3), thereby injecting the common law concept of constructive
dismissal into the federal employment regime where it has no place.
[48]
Constructive dismissal occurs where the employers conduct evinces
an intention to no longer be bound by the employment contract. When that
occurs, the employee has a choice of accepting the conduct, or treating it as a
repudiation of the contract and suing for wrongful dismissal:
Farber v.
Royal Trust Co.
, [1997] 1 S.C.R. 846, at para. 33;
Potter v. New
Brunswick Legal Aid Services Commission
, 2015 SCC 10, [2015] 1 S.C.R. 500,
at para. 30. The word, constructive, indicates that the dismissal is a legal
construct: the employers act is treated as a dismissal because of the way it
is characterized by law:
Potter
, at para. 30.
[49]
In
Evans v. Teamsters Local Union No. 31
, 2008 SCC 20,
[2008] 1 S.C.R. 661, at para. 26, the Supreme Court of Canada confirmed that
constructive dismissal is a termination:
[T]he very purpose behind recognizing
constructive dismissal is to acknowledge that where an employer unilaterally
imposes substantive changes to an employment contract,
the
employee has the right to treat the imposition of those changes as termination
.
This termination is every bit as real as if the employee were actually told
of the dismissal
. [Emphasis added.]
[50]
As Wagner J., as he then was, observed in
Potter
,
constructive dismissal can occur in one of two ways. In the first way, the
court determines whether the employer has breached an express or implied term
of the contract, and then determines whether the breach was sufficiently
serious to amount to constructive dismissal:
Potter
, at para. 32. In
the second way, the court determines whether the employers conduct more
generally demonstrates an intention to no longer be bound by the contract. For
example, if the employers treatment of the employee made continued employment
intolerable:
Potter
, at para. 33.
[51]
The second approach is retrospective. As Wagner J. observed in
Potter
,
at para. 33, it requires consideration of the cumulative effect of past acts
by the employer and the determination of whether those acts evinced an
intention no longer to be bound by the contract.
[52]
The approach is also objective. Under the second branch of the test
for constructive dismissal, the question is whether the employers conduct,
when viewed in the light of all the circumstances, would lead a reasonable
person to conclude that the employer no longer intended to be bound by the
contract:
Potter
, at para. 42.
[53]
It is precisely this form of constructive dismissal that the
respondent relies upon. He pleads that although he resigned, his resignation
was involuntary, and occurred due to the toll on his health from the toxic work
environment created by his supervisor and his supervisors subordinates. This
included harassment, groundless complaints against him, the downgrading of his
position, and the removal of job responsibilities. This is patently a pleading
of constructive dismissal.
[54]
In my view termination of employment for any reason in s. 236
includes the termination of employment by way of constructive dismissal. The
interpretation of the words surrounding termination in ss. 236(3) supports
the conclusion that ss. 236(3) was meant to capture constructive dismissal. As
noted earlier, in ss. 236(3), the word termination, is followed by the
phrase, for any reason. As described by Juriansz J.A. in
Aviva Insurance
Company of Canada v. McKeown
, 2017 ONCA 563, 136 O.R. (3d) 385, at para.
21, [r]eason is a simple but flexible word used in common parlance. It can
mean
a justification for some act or decision. The choice of Parliament to
use the word any before reason indicates that the
FPSLRA
contemplates an unidentifiable number of justifications for an employees
termination. Parliament did not attempt to restrict the definition of
termination beyond the qualification that it could not relate to a breach of
discipline or misconduct. The only plausible interpretation, when ss. 236(3)
is read as a whole, is that Parliament conceptualized termination in the broadest
possible terms: see
Brown v. Canada (Attorney General)
, 2013 ONCA 18,
114 O.R. 3(d) 355, at para. 55.
[55]
I do not accept the appellants submission that ss. 236(3) should be
given a narrow reading. As the motion judge noted, the words
relates to
his or her employment
for
any reason
are very broad: see
1704604 Ontario Ltd. v. Pointes
Protection Association
, 2018 ONCA 685, 142 O.R. 3(d) 161, at para. 65,
affd 2020 SCC 22. While I accept the proposition that the courts must respect
Parliaments preference for a particular dispute resolution process, such as a
grievance procedure and third-party adjudication (
Pleau v. Canada (Attorney
General)
, 1999 NSCA 159, 181 N.S.R. (2d) 356, at paras. 19-20, leave to
appeal refused, [2000] S.C.C.A. No. 83), that does not compel a narrow reading
of otherwise broad and unambiguous language permitting a particular class of employees
to pursue third-party adjudication in a judicial forum.
[56]
The appellants assertion that some of the respondents complaints
were grieved and others could have been, misses the mark. Constructive
dismissal can be established not only by single events, but it can also occur where
the cumulative effect of the employers conduct entitles the employee to quit
the labour relations equivalent of the final straw breaking the camels back.
[57]
I do not accept the appellants submission that constructive
dismissal is a common law concept that has no place in the federal labour and
employment regime. The appellant cites no judicial authority for this
proposition, although he does cite to two decisions of the PSLRB and the
PSLREB:
Gaskin v. Canada Revenue Agency
, 2008 PSLRB 96, at para. 69;
Wercberger
v. Canada Revenue Agency
, 2016 PSLREB 41, at para. 57. In the former, the Board
observed that it was clearly debatable whether the common-law doctrine of
constructive dismissal can be applied in this jurisdiction, where the
employers authority to terminate the employment relationship is precisely
defined and circumscribed by statute:
Gaskin
, at para. 69. In the
latter case, at para. 35, it was suggested that [t]he doctrine of constructive
dismissal has no application to the federal public service as employees in the
public sector must be terminated for cause.
[58]
Whatever the validity of that proposition in relation to public
sector employees in the core administration or in designated separate agencies,
the inclusion of ss. 236(3) makes it clear that an employee of an undesignated separate
agency may well be terminated for reasons other than breach of discipline or
misconduct that is, for reasons other than cause and preserves a right of
action for such dismissals.
[59]
An employee who has been constructively dismissed cannot be said to
have engaged in a breach of discipline or misconduct so as to fall within the
exception contained in ss. 236(3).
(4)
The scheme of the Act, the object of the Act, and the intention of
Parliament
[60]
The modern principle of statutory interpretation requires that the
words of a statute be interpreted harmoniously with the scheme of the Act, the
object of the Act, and the intention of Parliament. The legislative scheme
includes the individual provisions, parts, and sections that work together to
provide a plausible and coherent plan for the achievement of the statutes
intended purpose: Ruth Sullivan,
Sullivan on the Construction of Statutes
,
6th ed. (Toronto: LexisNexis Canada Inc., 2014), at §13.12. As described by
Greshuk J. in
Melnychuk v. Heard
, 1963 CanLII 815 (Alta. S.C.), at p. 263:
The court must not only consider one section
but all of the sections of an Act including the relation of one section to the
other sections, the relation of a section to the general object intended to be
secured by the Act, the importance of the section, the whole scope of the Act
and the real intention of the enacting body.
[61]
In some cases, the legislature may have enacted more than one
statute on the same subject-matter or enacted a provision meant to be read
alongside another statute. In
Re Therrien
, 2001 SCC 35, [2001] 2
S.C.R. 3, Gonthier J. explained, at para. 121, that [i]nterpretations
favouring harmony between the various statutes enacted by the same government should
indeed prevail. This presumption is even stronger when the statutes relate to
the same subject-matter. The practice of considering multiple statutes in the
interpretative exercise has also been codified in ss. 15(2)(b) of the federal
Interpretation
Act
.
[62]
An interpretation of the provision at issue that promotes the
purpose is preferred over one that is not: Sullivan,
Statutory
Interpretation
, at p. 53. As explained by Dickson J. in
Covert v. Nova
Scotia (Minister of Finance)
, [1980] 2 S.C.R. 774, at p. 807: The correct
approach, applicable to statutory construction generally, is to construe the
legislation with reasonable regard to its object and purpose and to give it
such interpretation as best ensures the attainment of such object and purpose.
The purposive analysis is a staple of modern statutory interpretation. It is
not only used when the text under dispute is ambiguous, but in every case and
at every stage of the interpretive exercise: Sullivan,
Statutory
Interpretation
, at p. 185.
[63]
The interpretation of termination in ss. 236(3) as including
constructive dismissal is supported by considering the broader context of the
FPSLRA
.
[64]
It will be recalled that ss. 209(1)(b) gives all federal public
servants, (other than members of the RCMP), including employees of separate
agencies, the right to refer a grievance to adjudication by the Board if it
relates to disciplinary action resulting in termination, demotion, suspension
or financial penalty (i.e. a disciplinary termination). However, ss.
209(1)(c) also provides that employees in the
core public
administration
are entitled to adjudication if their grievance relates
to (i) demotion or termination under para. 12(1)(d) of the
FAA
for unsatisfactory
performance, or under para. 12(1)(e) of the
FAA
for any other reason
that does not relate to a breach of discipline or misconduct (i.e. a
non-disciplinary termination).
[65]
Subsection 209(1)(d) makes a further special provision for an employee
of a designated separate agency, who may pursue a non-disciplinary termination
to adjudication.
[66]
Thus, to summarize, ss. 209(1)(b) and (c) of the
FPSLRA
provide employees of the core public administration with an opportunity to have
their grievances referred to adjudication regardless of whether the termination
is disciplinary or non-disciplinary. Subsections 209(1)(b) and (d) does the
same for employees of separate agencies that have been designated under ss.
209(3) of the
FPSLRA
.
[67]
There is no provision in s. 209 that gives employees of undesignated
separate agencies access to third-party adjudication of their disputes over
non-disciplinary terminations. Subsection 236(3) fills this gap, giving those
employees access to third-party adjudication through the courts. The language
of ss. 236(3), any reason that does not relate to a breach of discipline or
misconduct, is an exact parallel to ss. 209(1)(d), with the difference being
that employees of undesignated separate agencies have access to the courts for
such grievances, while employees of designated separate agencies must seek
adjudication by the Board.
[68]
Reading subsection 236(3) together with s. 209 demonstrates a Parliamentary
intention to enable all public sector employees to have access to third-party
adjudication for their non-disciplinary terminations. The difference is that
employees who are part of the core administration and employees of designated
separate agencies have access to the Board, while employees of undesignated
separate agencies have access to the courts. This distinction is entirely in
keeping with the intention of enabling separate agencies to behave more like
private enterprises in their labour relations.
[69]
The purpose of the
FPSLRA
is to ensure that the Government
of Canada is committed to the fair, credible and efficient resolution of
matters arising in respect of terms and conditions of employment. There is no
such fairness if ss. 236(3) of the
FPSLRA
is read to exclude
adjudicative processes for employees of undesignated separate agencies who have
been subject to non-disciplinary termination. Neither the
FPSLRA
nor
the
FAA
draw a distinction between employees of the core public
administration and employees of separate agencies so as to justify this
differential treatment. In fact, the parties concede that Parliaments choice
to distinguish between the core public administration and undesignated separate
agencies appears to have been motivated by the desire to see the latter conduct
its labour relations in a manner akin to the private sector. If that is the
case, then one would expect that employees of separate agencies will have an avenue
by which to seek a resolution of their non-disciplinary terminations. Subsection
236(3) provides that, when read as the respondent proposes.
[70]
Subsection 236(3) was also enacted after the Supreme Court of Canada
released its decision in
Vaughan
. In
Vaughan
, the Supreme
Court cautioned that, where Parliament has created a comprehensive legislative
scheme to deal with labour disputes, the process should not be compromised by
permitting parallel access to the courts. The Supreme Court recognized,
however, that there may be a residual discretion to access the courts if the
grievance procedure did not allow for third-party adjudication. To reach its
conclusion, the Supreme Court of Canada interpreted the
Public Service
Staff Relations Act
, R.S.C. 1985, c. P-35 (
PSSRA
), the
predecessor to the
FPSLRA
. The
PSSRA
had a grievance
procedure that did not include third-party adjudication with respect to the
denial of early retirement benefits. Grievance decisions were also insulated
from judicial review by a final and binding clause found in the legislation.
Parliament responded to
Vaughan
by repealing the
PSSRA
and
enacting the
FPSLRA
. Subsection 236(3) was a completely novel
provision, one without an equivalent in the
PSSRA
.
[71]
The context in which the
FPSLRA
and, specifically, ss.
236(3) were enacted indicates that Parliament recognized and accounted for the
Supreme Court of Canadas comments on the lack of access to third-party
adjudication for federal public service employees. Unlike the
PSSRA
,
the
FPSLRA
not only offers a comprehensive grievance regime through
which employees can contest their terminations, but it also includes the right
to third-party adjudication by the Board. At the same time, ss. 236(3) carves
out a specific exception for the employees of separate agencies, not designated
under ss. 209(3) of the
FPSLRA
, to access the courts in the limited
circumstances of a non-disciplinary termination.
(5)
Response to the appellants other submissions
[72]
Despite the appellants contention, interpreting ss. 236(3) to
include non-disciplinary terminations, such as constructive dismissal, does not
lead to an absurd result. Subsection 236(3) is part of, and essential to, a
fair grievance process for all employees of the federal public service.
[73]
The decision of the New Brunswick Court of Appeal in
Robichaud
v. Canada (Attorney General)
, 2013 NBCA 3, 398 N.B.R. (2d) 259, referred
to by the appellant, has no application. There, the court dismissed an action
for constructive dismissal against the Correctional Service of Canada, because
the employer was not a separate agency, and the court expressly observed that ss.
236(3) was not applicable.
[74]
The appellant relies, however, on the decision of the Federal Court
in a case involving Parks Canada which, like SNPF, is a separate agency:
Robinson
v. Canada (Parks Agency)
, 2017 FC 613. There, the court struck an
employees claim for constructive dismissal and other relief, on the basis that
the claim disclosed no reasonable cause of action.
[75]
The motion judge in
Robinson
found that the determinative
issue was whether ss. 236(3) of the
FPSLRA
applied with respect to the
allegations contained in the statement of claim. He held, at para. 25, that it
was necessary to determine the essential character of the dispute in view of
the factual context in which it arises and the breadth of the legislative
scheme for resolving labour disputes. He held, at paras. 26-27, that the claim
involved matters that were or could have been grieved:
In this case, the Plaintiff's claim - that
various events during his employment with Parks Canada cumulatively resulted in
a constructive or direct dismissal of his employment without cause - is a
collateral attempt to attack various decisions and events which are or were
otherwise grievable under the [
F
]
PSLRA
or Parks Canada's
Staffing
Policies
. In my view, each and all of the Plaintiff's claims pertain to
occurrences or matters affecting his employment with the Defendant, and the
legislative and administrative avenues for redress available to the Plaintiff
in this case would be undermined if the Statement of Claim is not struck and
the Plaintiff's complaints be allowed to proceed in this Court. Indeed, the
second stage of the Plaintiff's grievance has been suspended pending the
determination of this motion; that grievance process should be permitted to
continue to its ultimate outcome. There is no suggestion in this case that the
grievance process could not provide an appropriate remedy to redress the
Plaintiff's complaints.
[I]n this case, the Plaintiff resigned and
retired and did not meaningfully engage the schemes for resolution of workplace
disputes available to him when the alleged events occurred; had he done so, the
Defendant would have had an opportunity to respond to the disputes and take any
necessary corrective steps as intended by these schemes.
[76]
It appears that in
Robinson
, the motion judge of the
Federal Court accepted Canadas argument, at para. 23, that even when the
right of action is based on subsection 236(3), the Court has discretion to
decline to exercise jurisdiction to entertain a termination claim, and that
the principles in
Vaughan
should guide the Court in determining
whether it should defer to the comprehensive schemes established by Parliament
and decline to exercise jurisdiction. That argument was not made before us.
[77]
In my view, respectfully, it is incorrect. As the Federal Court
judge in
Robinson
observed, at para. 20, this court stated in
Bron
,
at para. 28, that the legislation under consideration in
Vaughan
(the
PSSRA
),
did not contain a provision similar to s. 236 of the
FPSLRA
, and [t]he
holding in
Vaughan
that the Superior Court retained a residual
discretion to entertain a claim based on a grievable complaint turned on the
language of the
PSSRA
the legislation in force at the relevant time.
It held that the enactment of the
FPSLRA
had changed the basic holding
in
Vaughan
.
[78]
It seems to me that, as regards an employee of an undesignated separate
agency, s. 236 does not leave the court with a discretion to accept or decline
jurisdiction. The right of an employee to grieve any dispute relating to the
terms or conditions of the employees employment is in lieu of any right of
action
unless
the dispute relates to his or her
termination of employment for any reason that does not relate to a breach of
discipline or misconduct. If the dispute falls within the latter category, the
court has no residual discretion to refuse to hear it.
[79]
That being said, I take no issue with the approach in
Robinson
,
which suggests that the court must determine the essential character of the
dispute to see whether it falls within ss. 236(3). Given the broad language of
that subsection, this will usually call for a determination of whether the
termination was for something other than a breach of discipline or misconduct.
I would not foreclose the possibility that a court hearing an action for
constructive dismissal might conclude that a series of individually grieved or
grievable complaints in a particular case do not cumulatively give rise to a
claim for constructive dismissal.
[80]
With respect, it does not appear that the Federal Court in
Robinson
considered the purpose of ss. 236(3) or its interpretation. Nor did it consider
the unique nature of a claim for constructive dismissal.
[81]
I contrast
Robinson
with
Haroun v. National Research
Council of Canada
, 2015 FC 1168. The plaintiff was hired by the National
Research Council of Canada (NRC) for a two-year term. The NRC is an
undesignated separate agency. Mr. Haroun was dismissed before the end of his
term for performance-related issues. He subsequently brought a grievance
under the
FPSLRA
, in which he alleged that the NRCs decision was
disguised discipline and without cause. The grievance was denied.
[82]
Mr. Haroun then commenced an action against the NRC. The parties moved
under Rule 220 of the
Federal Court Rules
, SOR/98-106, for a
determination on a preliminary issue of law could the plaintiff launch a
civil action, or was he required to seek judicial review of the grievance
decision? The Federal Court observed, at para. 4, that at the heart of the
impasse was the interpretation of s. 236 in the
FPSLRA
. It held, at
para. 7 of its decision, that:
The scope of section 236 of the PSLRA must be
assessed in light of sections 209 and 230, both of which distinguish between
performance-based and disciplinary dismissals. Paragraphs 209(1)(c) and (d)
restrict the right of adjudication for unsatisfactory performance to core
employees of the Public Service or to the employees of designated separate
agencies. Section 230 requires that, in such cases, the adjudicator apply the
deferential standard of reasonableness.
Nowhere do these
provisions purport to address or limit a cause of action at common law for the
wrongful, non-disciplinary dismissal of employees of separate, undesignated
agencies
. Instead, the PSLRA consistently recognizes a distinction
between core Public Service employees (including the employees of designated
separate agencies) and the employees of non-designated separate agencies. [Emphasis
added.]
[83]
The Federal Court went on to state, at para. 9, that
[T]he purpose of subsection 236(3) is to
preserve a common law right of action for employees of undesignated separate
agencies in relation to performance-based terminations. In the face of the
clear language used and the gravity of the consequences of termination, it
cannot be that Parliament intended that employees like Mr. Haroun be limited to
the option of pursuing a restrictive internal grievance with no right to
independent adjudication. Indeed, there is no reason to think that Parliament
intended to deprive separate agency employees of the right to the independent
assessment of the merits of their performance-based terminations.
[84]
The Federal Court ultimately concluded that Mr. Haroun could move
forward with his civil action. Although its reasons referred to
performance-based terminations, those observations must be taken in the context
of Mr. Harouns employment having been terminated for performance-based
reasons. It would not be compatible with the broad language of ss. 236(3) (for
any reason that does not relate to a breach of discipline or misconduct) to confine
its operation to only performance-based terminations.
[85]
Nor would I give effect to the appellants argument that allowing
the respondents claim to proceed will allow every employee of a separate
agency to circumvent the grievance process. The respondents claim may or may
not succeed. In order to succeed, he may be required to establish more than a
series of complaints that could individually have been or were pursued through
the grievance process. He will have to establish that, viewed individually or
cumulatively, the employers acts and omissions reached the point that he was
entitled in law to say, I quit, and to sue for damages.
VI.
disposition
[86]
For these reasons, I would dismiss the appeal. I would also order
that if the parties are unable to agree on costs, they may make written
submissions, to be filed with the registrar. The submissions shall not exceed
three pages in length, exclusive of the costs outline. The respondents
submissions shall be filed within 20 days of the release of these reasons and
the appellant shall have 10 days thereafter to file a response.
Released: G.R.S. FEB 03 2021
George R. Strathy C.J.O.
I
agree. Paul Rouleau J.A.
I
agree. S. Coroza J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Pipitone v. D'Amelio, 2021 ONCA
115
DATE: 20210224
DOCKET: C66536
Fairburn
A.C.J.O., Doherty and Thorburn JJ.A.
BETWEEN
Annette Pipitone
Applicant (Appellant)
and
Franco
DAmelio
Respondent (Respondent)
Annette
Pipitone, acting in person
Brigitta
Tseitlin, for the respondent
Heard: February 18,
2021 by video conference
On appeal from the order of Justice George A.
MacPherson of the Superior Court of Justice, dated May 11, 2018, with reasons
reported at 2018 ONSC 2970, and from the costs order, dated September 13, 2018,
with reasons at 2018 ONSC 5185.
REASONS
FOR DECISION
[1]
The
appellant and respondent were married on October 11, 1969. They executed a
separation agreement on October 3, 1984 and subsequently divorced in 1985. The
appellant later remarried and then divorced a second time.
[2]
On
July 2, 2015, the appellant brought a motion to vary the divorce order from her
marriage to the respondent and to set aside the separation agreement as it
relates to the waiver of spousal support, thereby seeking retroactive spousal
support. She also brought an application for damages arising from alleged
physical and sexual assault, mental abuse, and cruelty she is said to have endured
prior to the marriage and during the course of the marriage.
[3]
This
is an appeal from the dismissal of both claims.
[4]
The
appellants objections can be grouped under three broad headings.
The Appellants
Self-Represented Status
[5]
First,
the appellant argues that, in light of her self-represented status at the
motion, the motion judge failed in his obligation to provide her with the
assistance she was owed.
[6]
While
the appellant initially had a lawyer assisting her at the motion, counsel
withdrew from the record on the tenth day of the motion, after which the
appellant did not retain another lawyer. The appellant indicated her agreement
to the withdrawal. The motion judge asked the appellant if she intended to
retain new counsel. She did not intend to do so. He asked if she was prepared
to proceed with the motion, and she confirmed that she was.
[7]
The
appellant points to a number of factors that are said to support her claim of
inadequate assistance from the motion judge. For instance, she argues that the motion
judge should have informed her of the right to refuse her counsels withdrawal
from the record, and he should have warned her about the consequences of that
withdrawal.
[8]
We see
no basis upon which the appellant could have opposed counsels withdrawal from
the record. Nor do we see any basis for the claim that the motion judge failed
to provide the appellant with assistance throughout the proceeding. To the
contrary, the record reveals the motion judge took repeated steps to assist the
appellant in navigating her way through the matter. By way of example, he
helped her with basic evidentiary issues, explained how to enter exhibits,
allowed her to record the proceedings, and explained the stages of examination-in-chief
and cross-examination. In addition, the motion judge provided the appellant with
an informational guide for self-represented litigants, and he encouraged her to
read it. In our view, the appellant was provided with more than adequate
assistance from the motion judge.
The Allegations of
Abuse
[9]
Second,
the appellant argues that the motion judge erred by rejecting her evidence
about the allegations of abuse. She raises numerous complaints in this regard,
most of which reflect an attempt to relitigate the credibility assessments that
lay within the domain of the motion judge. Deference is owed to those
assessments.
[10]
In our
view, the motion judge made clear and detailed credibility findings, all of
which were rooted in the full evidentiary record before him. In assessing the
appellants credibility, the motion judge considered the evidence of other
witnesses who were familiar with the parties at the time the alleged conduct took
place, including the appellants mother. As the motion judge noted, some of
that evidence contradicted the appellants version of events. In making his
credibility assessments, the motion judge also considered certain statements
that the appellant made in the proceedings relating to the divorce from her
second husband, including where she had described the respondent as the boy
next door.
[11]
In our
view, the motion judge came to credibility conclusions that were rooted in the
evidence. We defer to those conclusions.
The Historical
Records
[12]
Third,
the appellant argues that the motion judge erred by excluding certain
historical records from the proceedings, ones that she claims would have
corroborated her version of events. We see no error in the motion judges
decision to exclude the records as inadmissible hearsay. While there is a Catholic
Childrens Aid Society record, that may have been admissible to rebut the respondents
implicit allegation of recent fabrication, considered in context, even if that
record had been admitted for that purpose, it would not have had any impact on
the manifold reasons given by the motion judge for rejecting the appellants credibility
in this case.
Fresh Evidence and
Costs Below
[13]
The appellant
brings a fresh evidence application on appeal, asking this court to admit the excluded
records. For the reasons already given, the fresh evidence application is
dismissed because the records were not admissible. Even if the one record was
admissible, it would not have affected the result.
[14]
The
appellant also challenges the costs award from trial. It is indeed a heavy
award, being $192,631. However, the motion judge gave detailed reasons for that
award, allowing only for partial indemnity costs. In light of the length of the
trial and the document-laden record, this was not an unreasonable amount. We
see no error in the motion judges decision on costs. The principle of
deference applies.
Disposition
[15]
The
appeal is dismissed. The fresh evidence application is also dismissed.
[16]
Written
costs submissions were received prior to the hearing of the appeal. Having
regard to those submissions and the respondents success on appeal, we order that
the appellant pay to the respondent his legal costs in the amount of $10,000,
inclusive of disbursements and HST.
Fairburn
A.C.J.O.
Doherty
J.A.
J.A.
Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Qin v. Ontario Securities
Commission, 2021 ONCA 165
DATE: 20210318
DOCKET: C68534
Doherty, Pepall and Thorburn
JJ.A.
BETWEEN
Xundong
Qin, also known as Sam Qin and Cenith Air Inc.
Plaintiffs (Appellants)
and
Ontario Securities Commission,
Christie Johnson, Steve Carpenter and Naomi Chak
Defendants (Respondents)
Andrew Ostrom, for the appellants
Paul Le Vay and Fredrick R. Schumann,
for the respondents
Heard: February 17, 2021 by video conference
On
appeal from the order of Justice G. Dow of the Superior Court of Justice, dated
April 24, 2020, striking the appellants statement of claim: reported at 2020
ONSC 1145.
Doherty J.A.:
I
overview
[1]
In February 2015, the Ontario Securities
Commission (OSC), acting under s. 126 of the
Securities Act
, R.S.O.,
1990, c. S.5 (the Act), froze the assets of the appellants and related companies.
In March 2015, the OSC commenced a proceeding against the appellants and
related companies under s. 127 of the Act. In May 2015, Pattillo J., directed
that the freeze order should continue:
OSC v. Future Solar
,
2015 ONSC 2334. In May 2016, a panel of
the OSC dismissed the allegations against the appellants and directed the freeze
order lifted forthwith:
Future Solar Developments Inc. et al.
, 2016
ONSEC 17. In May 2018, the appellants sued the OSC and three employees (the
respondents) for malicious prosecution.
[1]
[2]
The respondents moved to strike the statement of
claim on the basis the decision of Pattillo J. estopped the appellants from proving
the respondents acted without reasonable and probable cause when they commenced
proceedings against the appellants. As proof of the absence of reasonable and
probable cause is an essential element of the tort of malicious prosecution, the
appellants claim could not possibly succeed if they were estopped from proving
the absence of reasonable and probable cause.
[3]
The motion judge accepted the respondents
submissions and struck the claim. He allowed the appellants 30 days to amend
their claim to plead facts not available before Pattillo J. The appellants
chose not to amend the claim, but did appeal from the order. For the reasons
that follow, I would allow the appeal, set aside the order and return the
proceedings to the Superior Court.
II
the OSC proceedings
[4]
The appellant, Mr. Qin, and various entities he
controlled were involved in the development and management of solar energy
projects in Ontario and elsewhere.
[2]
Mr. Qin attempted to raise capital for his projects, especially in China, using
a program sponsored by the Ontario government, which allowed persons who made
substantial investments in Ontario-based business to apply for permanent
residence status in Canada. Mr. Qin raised several million dollars. Neither Mr.
Qin, nor any of his companies were registered to sell securities. No prospectus
was filed in connection with Mr. Qins efforts to raise funding.
[5]
The OSC commenced an investigation. In February
2015, it issued an order under s. 126 of the Act, freezing the assets of the appellants
and related companies. Section 126 allows the Commission to make that order:
If the Commission considers it expedient for
the due administration of Ontarios securities law or the regulation of capital
markets in Ontario
[6]
The OSC, as required by s. 126(5) of the Act,
applied to the Superior Court, on notice to the appellants, for an order
continuing the freeze order. The application came on before Pattillo J. Section
126(5.1) directs that the freeze order may be continued:
If the court is satisfied that the order
would be reasonable and expedient in the circumstances, having due regard to
the public interest and,
(a) the due administration of Ontarios
securities law or the securities law of another jurisdiction; or
(b) the regulation of capital markets in
Ontario or another jurisdiction.
[7]
In March 2015, before Pattillo J. heard the
motion to continue the freeze order, the OSC commenced a proceeding under s.
127 of the Act against the appellants. The OSC alleged the appellants had
breached s. 25 of the Act by trading in securities without proper registration,
and s. 53(1) of the Act, by distributing securities without first filing a
prospectus. Under s. 127, the OSC can make any of a variety of orders, provided
the order is justified in the public interest.
[8]
By order dated May 5, 2015, Pattillo J.
continued the freeze order imposed by the OSC. His reasons for doing so are at
the centre of the
issue estoppel
argument on which this appeal turns.
I will return to those reasons.
[9]
Subsequent to the order of Pattillo J., the
appellants unsuccessfully moved before Commissioner Condon to vary the freeze
order:
Future Solar Developments Inc. et al.
, 2015 ONSEC 25.
[10]
In May 2016, the Commission heard the merits of
the allegations against the appellants. The panel dismissed both allegations:
Future
Solar Developments Inc. et al.
, 2016 ONSEC 17. Commissioner Lenczner,
writing for the panel, found the appellants were not mainly engaged in the sale
of securities and were not required to register under the Act. He further held
the appellants were exempt under the private issuer exemption from the
requirement of filing a prospectus.
III
the malicious prosecution lawsuit
[11]
In their statement of claim, the appellants pleaded
the allegations made by the OSC in support of the freeze order in February 2015
and in the statement of allegations in March 2015 were false, made without
reasonable and probable cause, and made for a collateral and improper purpose.
The appellants further pleaded the respondents had proceeded with the
allegations against the appellants after March 2015, despite having been
provided with all relevant documents and a full explanation of the nature of
the appellants business operations, both of which demonstrated those
operations were in compliance with the Act. Lastly, the appellants pleaded the
proceedings before the OSC had been resolved entirely in their favour. The
appellants claimed damages of $100,000,000.
IV
The motion judges decision
[12]
The respondents moved under r. 21.01(d) to
strike the statement of claim. The respondents argued, the decision of Pattillo
J. effectively decided there was reasonable and probable cause to initiate the
proceedings under the Act against the appellants, and that the appellants were
estopped from arguing, in the context of a malicious prosecution claim, the
respondents did not have reasonable and probable cause.
[13]
The motion judge accepted the respondents
argument. He held the finding of Pattillo J. that there was a serious issue to
be tried in respect of the alleged breaches of the Act, raised the same
question as did the pleading in the malicious prosecution action alleging the
respondents had acted without reasonable and probable cause. The motion judge
reasoned that, as essentially the same question had been determined in the
proceedings before Pattillo J., the appellants were estopped from re-litigating
that issue in the malicious prosecution lawsuit. That
estoppel
doomed
the appellants action and warranted an order striking the claim:
Qin v.
Ontario Securities Commission
, 2020 ONSC 1145, at paras. 11-12, 16.
V
analysis
[14]
The appellants advanced several arguments. In my
view, the appeal can be resolved by addressing one of those arguments. Was the
question answered by Pattillo J. on the motion to continue the freeze order the
same question that will have to be answered in the civil suit when deciding
whether the respondents had reasonable and probable cause to initiate
proceedings against the appellants?
[15]
Although the motion judge referred to both
issue
estoppel
and abuse of process in holding the respondents claim could not
go forward, he correctly analyzed the arguments by reference to the essential
elements of
issue estoppel
:
Qin v. Ontario Securities Commission
,
2020, ONSC 1145, at paras. 11, 17. The doctrine of abuse of process may
preclude re-litigation that does not meet the exact criteria for
issue
estoppel
: see
Winter v. Sherman Estate
, 2018 ONCA 703, at para. 7.
However, on the facts of this case, there is no basis apart from
issue
estoppel
to argue the malicious prosecution claim constitutes an impermissible
re-litigation of decided facts. I will examine the merits of the appellants
argument solely by reference to the elements of
issue estoppel
.
[16]
Issue estoppel
protects against the
abuse of the courts process by preventing an unsuccessful party from re-litigating
a material fact or issue previously and finally decided in proceedings
involving the same parties or their privies. The doctrine is not absolute and
will not be applied if the interests of justice dictate otherwise:
Danyluk
v. Ainsworth Technologies Inc.
, 2001 SCC 44, at paras. 20, 24-25, 33.
[17]
Issue estoppel
operates to preclude re-litigation when
an issue or material fact that must be decided in the second proceeding raises
the same question that was decided in the previous proceeding. Binnie J. explained
this requirement in
Danyluk
, at para. 54:
In this case, for example, the existence of
an employment contract is a material fact common to both the ESA proceeding and
to the appellants wrongful dismissal claim in court.
Issue estoppel
simply means that once a material fact such as a valid employment contract is
found to exist (or not to exist) by a court or tribunal of competent
jurisdiction, whether on the basis of evidence or admissions, the same issue
cannot be relitigated in subsequent proceedings between the same parties.
The
estoppel, in other words, extends to the issues of fact, law and mixed fact and
law that are necessarily bound up with determination of that issue in the
prior proceedings
. [Emphasis added.]
[18]
Issue estoppel
extends to findings that are necessarily bound up in the findings made in the
prior proceeding. The outcome of this appeal turns on whether a determination
the OSC had reasonable and probable cause to commence proceedings against the
appellants was necessarily bound up in Pattillo J.s finding that the OSC
allegations raised a serious issue to be tried.
[19]
What exactly did Pattillo J. decide? He was
required to interpret, as a matter of first impression, s. 126(5.1), a
relatively new provision in the Act.
[3]
Pattillo J. concluded, at para. 31, that the OSC had to establish three things to
obtain an order continuing the freeze order. Only the first of those three
requirements is relevant here. He framed that requirement in these terms:
There is a serious issue to be tried in
respect of the respondents breaches of the Act or other security laws in
another jurisdiction.
[20]
This requirement speaks to some assessment of
the merits of the allegations, but only in a very limited way. Just how limited
is made clear by Pattillo J., at para. 28, where he describes the serious
issue to be tried standard as:
A lesser standard than the requirement to
establish a strong
prima facie
case or even a
prima facie
case.
[21]
A
prima facie
case is one which, if
unanswered, would justify, although not compel, a finding in favour of the
party advancing that case. In the context of a s. 126(5) hearing, a finding of
a
prima facie
case may be the equivalent of a finding of reasonable
and probable cause to believe the appellants had breached the Act. Pattillo J.,
however, expressly indicated he was assessing the merits of the OSCs
allegations on the lesser standard captured by the phrase serious issue to
be tried. That standard comes from the interlocutory/stay jurisprudence and is
used to describe a claim which, upon a preliminary assessment, is said to rise
above the level of a frivolous or vexatious claim. The merits threshold described
by the phrase serious issue to be tried is clearly a low one: see
RJR-MacDonald
Inc. v. Canada (Attorney General)
, [1994] 1 S.C.R. 311, at 337;
American
Cyanamid v. Ethicon Ltd.
, 1975 A.C. 396, at pp. 404-405 (H.L.). In my
view, a finding a claim is not frivolous or vexatious does not answer the
question whether the same claim is based on reasonable and probable cause.
[22]
The serious issue to be tried standard and the
reasonable and probable cause standard are qualitatively different. The
reasonable and probable cause standard invites scrutiny of the record to
determine the likelihood or probability, at the time the proceedings were
commenced, that the OSC could ultimately establish the allegations. The serious
question to be tried standard addresses the preliminary question of whether
the OSC had provided a sufficient basis upon which it could be said the
allegations had some merit warranting the continuation of the freeze orders and
related investigative steps. Viewed in their proper context, it is clear the
presence of reasonable and probable cause does not flow from a finding of a serious
issue to be tried and cannot be described as necessarily bound up in that
finding.
[23]
Although the different standards engaged by the
serious issue to be tried question and the reasonable and probable cause
question are enough to conclude
issue estoppel
cannot apply, the appellants
point to a second related and equally compelling reason for reaching that
result.
[24]
In considering whether there was a serious issue
to be tried concerning the merits of the allegations made against the
appellants, Pattillo J. indicated he would not assess the merits of the
exculpatory material placed before the court on the motion:
OSC v. Future
Solar
, 2015 ONSC 2334, at paras. 36-37. The approach taken by Pattillo J.
reflects the preliminary nature of his assessment of the merits of the allegations.
The matter was still in the investigative stage. Pattillo J. was asked to
freeze assets so that those assets might eventually be available, depending on
any disposition the OSC might make under s. 127 of the Act. At this stage, Pattillo
J. was not engaged in an assessment of the ultimate merits, which would include
any explanations offered by the defence.
[25]
While the relatively narrow evidentiary focus
taken by Pattillo J. makes sense in the context of a s. 126(5) motion, a
broader inquiry is required when assessing whether the respondents had reasonable
and probable cause. As explained in
Miazga v. Kvello Estate
, [2009] 3 S.C.R. 339, at 375-76,
reasonable and probable cause, in the context of prosecutions initiated by
public prosecutors, requires a determination of whether, objectively viewed,
the facts known to the prosecution when it was undertaken, provided reasonable
and probable cause to initiate the proceeding. This exercise engages an
examination of all of the facts known to the prosecution when it initiated proceedings.
Those facts include facts known to the prosecution which could exculpate the
would-be targets of the prosecution. Further, as set out above, the totality of
the facts known to the prosecution must be measured, not against the serious
issue to be tried standard, but against the more demanding reasonable and
probable cause standard.
[26]
Had Pattillo J. been called upon to decide
whether the OSC had reasonable and probable grounds to commence proceedings
against the appellants, he would have been required to consider the merits of
the exculpatory information the appellants had provided to the OSC. Pattillo J.
expressly, and
properly in my
view, declined to engage in that exercise in the context of a motion to
continue the freeze order.
[27]
I come back to the question what did Pattillo
J. decide? He determined the freeze order made by the OSC should be continued under
the criteria he described in his reasons. Those criteria did not require the
OSC to demonstrate reasonable and probable grounds to take proceedings against
the appellants. Nothing decided by Pattillo J. would preclude the appellants
from arguing the OSC did not have reasonable and probable grounds to believe
the appellants had breached the Act, either when they initiated the freeze
order, or when they commenced proceedings.
[28]
In holding that
issue estoppel
does not apply, I do not suggest the decision of Pattillo J., to the extent it
addresses the merits of the allegations, does not have evidentiary value when
it comes to deciding whether the appellants have proved the respondents did not
have reasonable and probable cause to commence proceedings:
Miazga v.
Kvello Estate
, at para. 97.
VI
conclusion
[29]
I would allow the appeal, set aside the order
striking the appellants statement of claim, and remit the matter to the
Superior Court.
[30]
I would award the appellants costs of the
motion, fixed at $7,000 all in, and costs on the appeal, fixed at $6,000 all
in.
Released: March 18, 2021 DD
Doherty
J.A.
I
agree S.E. Pepall J.A.
I
agree Thorburn J.A.
[1]
The appellants also alleged negligent investigation, but
have abandoned that claim.
[2]
The appellants maintain that, unlike the other corporate
entities, Cenith Air Inc. was involved in the manufacture of air purifiers and
had no involvement in any solar energy project. I need not address that claim
as, on my analysis, it has no relevance to the outcome of the appeal.
[3]
The correctness of Pattillo J.s interpretation of s.
126(5.1) is not in issue on this appeal.
|
COURT OF APPEAL FOR ONTARIO
CITATION: Quickie Convenience Stores Corp.
v. Parkland Fuel Corporation, 2021 ONCA 287
DATE: 20210503
DOCKET: C67832
Fairburn A.C.J.O., Feldman and
Nordheimer JJ.A.
BETWEEN
Quickie
Convenience Stores Corp.
Applicant (Appellant)
and
Parkland
Fuel Corporation
Respondent (Respondent)
William C. McDowell, Brian Kolenda
and
Vinayak Mishra, for the appellant
Linda M. Plumpton and Jonathan Silver,
for the respondent
Heard: in writing
On appeal from the judgment of Justice Paul
B. Kane of the Superior Court of Justice dated November 14, 2019, with reasons
reported at 2019 ONSC 6520.
COSTS ENDORSEMENT
[1]
On July 10, 2020, we released our decision in
which we allowed the appeal, set aside the order below and, in its place,
granted an order providing the appellant with the declaratory relief that it
sought in its Notice of Application. We awarded the appellant the costs of the
appeal fixed in the agreed amount of $3
5,000
inclusive of disbursements and HST. We then invited the parties to
make written submissions on the costs of the original application. While the
parties filed their costs submissions in accordance with the schedule set by
the court, due to an administrative error, those submissions were only very
recently provided to the panel. We have now reviewed those submissions.
[2]
The appellant asks for its costs of the appeal
on a substantial indemnity basis in the amount of $230,313.09 on the basis of
the conduct of the respondent that led up to this proceeding. In the
alternative, the appellant seeks costs in the amount of $174,978.68, representing
60% of its actual costs.
[3]
The respondent does not dispute that the
appellant is entitled to its costs of the application but submits that there is
no basis for an award of substantial indemnity costs. The respondent also
submits that the amount of costs sought is excessive. It says that a reasonable
amount would be no more than $85,000.
[4]
Contrary to the appellants submissions, we do
not consider the conduct of the respondent to be such as to warrant an award of
costs on the elevated substantial indemnity scale. As has been observed in many
cases, costs on the elevated scale are exceptional and are reserved for those
situations when a party has displayed reprehensible, scandalous or outrageous
conduct: see, most recently,
Montréal (Ville) v. Octane Stratégie inc.
,
2019 SCC 57, 440 D.L.R. (4th) 1, at para. 95. The conduct of the respondent in
this case does not rise to that level, even with the finding of bad faith
dealing. An award of partial indemnity costs is appropriate.
[5]
In our view, an award of costs in the amount of
$100,000 inclusive of disbursements and HST is a fair and reasonable amount to
fix for the costs of the original application. In fixing that amount, we have
taken into account a number of factors including the fact that the application
judge awarded the respondent costs of $52,900 on the original application, that
the appellant would have had a heavier burden as the applicant, and that
neither party was successful on all of the issues raised.
[6]
The respondent is ordered to pay that amount to
the appellant.
Fairburn
A.C.J.O.
K.
Feldman J.A.
I.V.B.
Nordheimer J.A.
|
MISE EN GARDE
Le président du comité qui
entend cet appel ordonne que lordonnance suivante soit jointe au dossier :
Lordonnance limitant la
publication dans cette instance, en vertu des paragraphes 486.4 (1), (2),
(2.1), (2.2), (3) ou (4) ou en vertu des paragraphes 486.6 (1) ou (2) du
Code criminel
, est maintenue. Ces
dispositions du
Code criminel
prévoient ce qui suit :
486.4(1) Sous réserve du
paragraphe (2), le juge ou le juge de paix qui préside peut rendre une
ordonnance interdisant de publier ou de diffuser de quelque façon que ce soit
tout renseignement qui permettrait détablir lidentité de la victime ou dun témoin
dans les procédures relatives à :
a) lune des infractions
suivantes;
(i) une infraction
prévue aux articles 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171,
171.1, 172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011,
279.02, 279.03, 280, 281, 286.1, 286.2, 286.3, 346 ou 347,
(ii)
une infraction prévue par la présente loi, dans toute version
antérieure à la date dentrée en vigueur du présent sous-alinéa, dans le cas où
lacte reproché constituerait une infraction visée au sous-alinéa (i) sil
était commis à cette date ou par la suite
,
(iii) [Abrogé, 2014, ch.
25, art. 22(2).]
b)
deux
infractions ou plus dans le cadre de la même procédure, dont lune est une
infraction visée à lalinéa
a
).
(2)
Dans les procédures relatives à des infractions visées aux alinéas (1)
a
) ou
b
), le juge ou le juge de paix qui préside est tenu :
a
) daviser dès que possible les témoins âgés de moins de dix-huit
ans et la victime de leur droit de demander lordonnance ;
b
) de rendre lordonnance, si le poursuivant, la victime ou lun de
ces témoins lui en fait la demande.
(2.1) Sous réserve du
paragraphe (2.2), le juge ou le juge de paix qui préside peut rendre une
ordonnance interdisant de publier ou de diffuser de quelque façon que ce soit
tout renseignement qui permettrait détablir lidentité de la victime âgée de
moins de dix-huit ans dans les procédures relatives à toute infraction autre
que celles visées au paragraphe (1).
(2.2) Dans les
procédures relatives à toute infraction autre que celles visées au paragraphe
(1), le juge ou le juge de paix qui préside est tenu, si la victime est âgée de
moins de dix-huit ans :
a
) daviser dans les meilleurs délais la victime de son droit de
demander lordonnance ;
b
) de rendre lordonnance, si le poursuivant ou la victime lui en
fait la demande.
(3) Dans les
procédures relatives à une infraction visée à larticle 163.1, le juge ou le
juge de paix rend une ordonnance interdisant de publier ou de diffuser de
quelque façon que ce soit tout renseignement qui permettrait détablir
lidentité dun témoin âgé de moins de dix-huit ans ou dune personne faisant
lobjet dune représentation, dun écrit ou dun enregistrement qui constitue
de la pornographie juvénile au sens de cet article.
(4) Les ordonnances
rendues en vertu du présent article ne sappliquent pas à la communication de
renseignements dans le cours de ladministration de la justice si la
communication ne vise pas à renseigner la collectivité.
486.6(1)
Quiconque transgresse une ordonnance rendue conformément aux
paragraphes 486.4(1), (2) ou (3) ou 486.5(1) ou (2) est coupable dune
infraction punissable sur déclaration de culpabilité par procédure sommaire.
(2) Il est entendu que
les ordonnances mentionnées au paragraphe (1) visent également linterdiction,
dans les procédures pour transgression de ces ordonnances, de diffuser ou de
publier de quelque façon que ce soit tout renseignement qui permettrait détablir
lidentité de la victime, du témoin ou de la personne associée au système
judiciaire que lordonnance vise à protéger.
2005, ch.
32, art. 15.
COUR DAPPEL DE LONTARIO
RÉFÉRENCE : R. c. F.J., 2021 ONCA 268
DATE : 20210430
DOSSIER : C66173
Les juges van Rensburg, Benotto
et Thorburn
ENTRE
Sa Majesté la Reine
Intimée
et
F.J.
Appelant
David Parry, pour lappelant
Vallery Bayly, pour lintimée
Date de laudience : le 3
décembre 2020 par visioconférence
En appel de la condamnation prononcée le
27 juillet 2018 et de la peine imposée le 19 décembre 2018 par la juge Michelle
OBonsawin de la Cour supérieure de justice, dont les motifs figurent à 2018
ONSC 4587.
La juge Thorburn :
A.
SURVOL
[1]
Lappelant a été reconnu coupable des infractions
de contacts sexuels, incitation à des contacts sexuels et agression sexuelle
par rapport à la plaignante, N.J., contrairement aux arts. 151, 152 et 271 du
Code
criminel
, L.R.C. 1985, c. C‑46. Le 19 décembre 2018, la juge de
procès a prononcé un arrêt des procédures pour les chefs daccusation en vertu
des arts. 152 et 271 du
Code criminel
. Lappelant a reçu une peine
demprisonnement de deux ans moins un jour pour les contacts sexuels.
[2]
Il interjette appel de sa condamnation et il fait
demande dautorisation dappel de sa peine.
[3]
La plaignante a décrit plusieurs incidents qui
ont eu lieu quand elle avait lâge de 12 ans.
[4]
La plaignante a dit que le premier incident
sest déroulé chez ses grands-parents maternels. Elle est allée acheter des
bonbons à un magasin. Au retour, elle regardait des bandes dessinées avec ses cousines.
Lappelant (son oncle) était assis à côté delle sur le divan. Il a chuchoté de
prendre un bonbon « Strap », daller dans la salle de toilette et de mettre
le bonbon sur son vagin. La plaignante a obéi et a par la suite donné le bonbon
à lappelant.
[5]
La plaignante a décrit un deuxième incident qui
a eu lieu quand lappelant la conduisait chez elle pour chercher ses vêtements
afin quelle puisse coucher chez ses cousines. Rendu chez elle, lappelant lui
a demandé de baisser ses pantalons et de se mettre à quatre pattes. Ensuite,
lappelant a frappé ses fesses nues. Il lui a demandé de lever son chandail et
de lui montrer ses seins. Il na pas touché les seins de la plaignante. Par la
suite, il lui a ordonné de remettre ses vêtements. Avant de sortir de chez
elle, lappelant la embrassée.
[6]
La plaignante a aussi témoigné que lappelant la
embrassée : près de la salle de lavage dans limmeuble des grands-parents ;
dans lascenseur de limmeuble des grands-parents ; dans le salon de lappelant
; et à lentrée à larrière de limmeuble des grands-parents. De plus, la
plaignante a témoigné que lappelant lui a demandé de sucer son pouce dans le
sous-sol de lappelant.
[7]
La question principale en litige que la juge de
procès devait résoudre concernait la crédibilité et la fiabilité des témoins,
notamment la plaignante et lappelant.
[8]
Lappelant interjette appel de sa condamnation
et fait demande dautorisation dappel de sa peine demprisonnement pour les
raisons suivantes :
1.
En trouvant quil y avait preuve dune absence de
motif pour fabriquer, la juge de procès a renversé le fardeau de la preuve ;
2.
La juge de procès a utilisé les déclarations
antérieures compatibles de la plaignante pour renforcer sa crédibilité ;
3.
La juge de procès a accepté le témoignage de la
plaignante sur des questions fondamentales, malgré les incohérences, parce que
la plaignante était enfant ;
4.
La juge de procès a accordé trop dimportance au
comportement de la plaignante quand elle témoignait ; et
5.
La juge de procès na pas accordé assez
dimportance aux circonstances atténuantes de lappelant lors de la
détermination de la peine et elle a erré en imposant une peine manifestement non
indiquée.
[9]
Lintimée demande que lappel soit rejeté pour
les raisons suivantes :
1.
La juge de procès a répondu aux représentations
de la défense que la plaignante avait un motif pour fabriquer en lien avec les
allégations de sa cousine. Elle na pas renversé le fardeau de la preuve en
concluant que la plaignante navait pas fabriqué les allégations ;
2.
La juge de procès na pas utilisé les
déclarations antérieures compatibles de la plaignante pour renforcer sa
crédibilité. Elle sest servie de ces déclarations pour répondre aux
représentations de la défense quil y avait des incohérences importantes au
sein de sa preuve ;
3.
La juge de procès a évalué la preuve de la
plaignante à la lumière de son jeune âge selon les principes de droit
applicables ;
4.
La juge de procès na pas accordé trop
dimportance au comportement de la plaignante. Le comportement nétait quun
facteur parmi plusieurs qui ont mené la juge de procès à retenir la preuve de
la plaignante ; et
5.
La juge de procès na pas exercé son pouvoir
discrétionnaire de façon déraisonnable en soupesant les circonstances
aggravantes et atténuantes.
De plus, la peine est
raisonnable.
[10]
Pour les motifs qui suivent, lappel est rejeté.
B.
ANALYSE
(1)
La norme de contrôle
[11]
Lévaluation de la crédibilité des témoins par la
juge de procès commande la retenue judiciaire en appel. Cependant, lévaluation
des erreurs de droit permet une intervention en appel :
R. v. Luceno
,
2015 ONCA 759, 331 C.C.C. (3
e
) 51, au para. 34 ;
R. v. Lacombe
,
2019 ONCA 938, 383 C.C.C. (3
e
) 114, au para. 32.
(2)
Le traitement du motif pour fabriquer
[12]
Lappelant maintient que la juge de procès a
erré en traitant une absence de preuve de motif pour fabriquer comme preuve dune
absence de motif pour fabriquer et, par conséquent, la juge de procès a
renversé le fardeau de la preuve. Lappelant prétend que la preuve entendue
lors du procès nétait pas capable de prouver une absence définitive de motif
pour fabriquer. Selon lappelant, la juge de procès a conclu quil y avait
preuve dune absence de motif pour fabriquer quand elle a dit que la plaignante
« na pas de raison pour mentir » et quand la juge de procès a
souligné, « je ne crois pas que D.J. et [la plaignante] ont créé un
complot tel quallégué par la [d]éfense » et « je ne crois pas que
[la plaignante] a inventé ses allégations contre [lappelant] ».
(a)
Le droit concernant le motif pour fabriquer
[13]
Labsence dun motif pour fabriquer est un
facteur pertinent dans lanalyse de la crédibilité des témoins, mais « [w]hat
must be avoided
is any suggestion that
the absence of a demonstrated motive
to fabricate necessarily means that there was no motive [to fabricate] » :
R. v. Batte
(2000), 145 C.C.C. (3
e
) 449, au para. 121.
[14]
Dans larrêt
R. v. Bartholomew
, 2019 ONCA
377, 375 C.C.C. (3
e
) 534, aux paras. 21-23, 25 et 28, le juge
Trotter a fait une analyse détaillée de lutilisation du motif pour
fabriquer :
An ulterior motive, or a motive to fabricate,
on the part of a complainant may be
important.
However, problems occur when
there is no
apparent motive to fabricate, but the evidence falls short of actually proving
absence of motive. In these circumstances,
it is dangerous and impermissible
to move from an apparent lack of motive to the conclusion that the complainant
must be telling the truth
. People may accuse others of committing a crime
for reasons that may never be known, or for no reason at all[.]
Therefore,
there is a significant
difference between absence of proved motive and proved absence of motive
[.]
The reasons are clear. In
R. v. B.
(R.W.)
(1993), 24 B.C.A.C. 1 (C.A.), Rowles
J.A. explained, at para. 28: it does not logically follow that because there
is no apparent reason for a motive to lie, the witness must be telling the
truth. This point was made in
[
R. v. L.L.
, 2009 ONCA 413, 244 C.C.C. (3d) 149]
, in which Simmons J.A. said, at para. 44: the fact that a
complainant has no
apparent
motive to fabricate does not mean that the
complainant has no motive to fabricate[.]
More
importantly, evidence of a good relationship between the
complainant
and the
appellant was not capable of proving that the complainant had no motive to
fabricate; it could do no more than support the conclusion of an absence of
evidence of a proved motive[.] This state of affairs was not capable of
enhancing the complainants credibility, as the trial judge did. At best, it
was a neutral factor.
[T]he trial judges findings on the issue of
motive formed an important part of her credibility assessment of the
complainant. She used her finding of a proved absence of motive to enhance the
credibility of the complainant, which was a central issue at trial. This
amounted to a miscarriage of justice warranting a new trial.
[Citations omises ; soulignements ajoutés.]
[15]
Dans larrêt
R. v. L.L.
, 2009 ONCA 413,
244 C.C.C. (3
e
) 149, au para. 45, la juge Simmons a prononcé le
suivant :
[E]vidence of a good relationship does no
more than reinforce the absence of evidence of proved motive.
The same reasoning applies to evidence of
negative consequences that may ensue from making serious allegations. Although
they highlight the significance of absence of evidence of motive, they do not
prove the absence of a hidden motive. [Notes omises.]
[16]
Dans larrêt
R. v. Ignacio
, 2021 ONCA
69, au para. 22, autorisation de pourvoi à la C.S.C. demandée, 39552, la juge
Pepall cite la prononciation suivante du juge de procès : « I note as well
that [the complainant] had no motive to falsely accuse Mr. Ignacio of a serious
crime ». Dans
Ignacio
,
aux paras. 25-26, lappelant a soumis quen
trouvant quil y avait preuve dune absence de motif pour fabriquer, le juge de
procès a renversé le fardeau de la preuve.
[17]
Dans son analyse, aux paras. 34-36 de
Ignacio
,
la juge Pepall a prononcé le suivant :
[I] am not persuaded that the trial judge
found that the Crown had proven no motive to fabricate. If that had been the
case
the Crown would have had a powerful platform to assert that the
complainant was telling the truth. One would expect such a finding to play a
much more prominent role in the trial judges analysis of credibility than it
did. Instead, it simply amounted to an observation and a factor to
consider, to use the trial judges words.
Moreover, the trial judge was required to
consider motive to fabricate due to the defence allegation that the complainant
had a motive to fabricate. In the context of the defence submissions, he was
entitled to look to the evidence for any suggestion of motive and conclude that
there was no such evidence. The trial judges reference to the state of the
relationship between the complainant and the appellant does not reflect a
finding that the complainant had
no
motive to fabricate. It is equally
consistent with a finding that there was
no evidence
of any motive to fabricate.
In my view, the language the trial judge used
and the context are much more reflective of a finding that there was an absence
of
evidence
of any motive to fabricate. The trial judge did not find that the
Crown had proven that the complainant had
no
motive to
fabricate. He effectively found that there was an
absence of evidence
of any motive to fabricate, and he treated this finding as one
factor in the credibility analysis. [Soulignements dans loriginal.]
(b)
Lapplication du droit aux faits
[18]
Lappelant a soutenu que la plaignante aurait pu
être motivée par sa cousine D.J. pour fabriquer ses allégations.
[19]
D.J., une des filles de lappelant, a accusé
lappelant davoir commis des infractions sexuelles contre elle. Entre le 21
novembre 2013 et le 3 novembre 2015, lappelant était assujetti à un engagement
de mise en liberté. À la suite dun procès, lappelant a été acquitté de toutes
les infractions le 3 novembre 2015.
[20]
Pendant son interrogatoire principal, la
plaignante a soutenu quelle avait connaissance de ce qui sest passé avec D.J.,
mais pas en grand détail. La famille en parlait, mais personne ne croyait les
allégations de D.J. La plaignante avait peur que sa famille ne la croie pas non
plus. D.J. était à lécole secondaire et la plaignante était à lécole intermédiaire.
Ces écoles étaient dans le même édifice. Daprès la plaignante, elles se
voyaient rarement, elles se parlaient seulement quand elles se croisaient dans
les couloirs de lécole et elles nont jamais discuté de leurs allégations
contre lappelant.
[21]
En contre-interrogatoire, la plaignante a
témoigné quelle ne savait pas où D.J. est allée habiter après avoir quitté la
maison de lappelant. Par la suite, elle a dit que D.J. est venue habiter chez elle
et sa mère pour une période, mais elle a maintenu quelle navait pas discuté
des allégations avec D.J. Elle a dit quelle avait oublié et a expliqué que sa
mémoire nest « pas très bonne ». La mère de la plaignante a confirmé la preuve
de la plaignante que D.J. avait passé moins dun mois chez eux en 2013 et que
la plaignante et D.J. ne passaient pas beaucoup de temps ensemble pendant cette
période.
[22]
D.J. a aussi témoigné pendant le procès de
lappelant. Notamment, elle a témoigné quelle a fréquenté la même école que la
plaignante pendant deux ans et quelles ont vécu ensemble durant la période en
question, mais pas pour longtemps. Elle a témoigné quen 2016, elle avait
envoyé un message à ses surs, indiquant que « tout va changer, on va pouvoir
se revoir ». Lexplication donnée est quelle voulait faire une application à
la cour pour obtenir la garde de ses surs. De plus, elle a nié avoir discuté ses
allégations contre lappelant avec la plaignante.
[23]
A.J., la sur de D.J., a confirmé quelle a reçu
le message de D.J. avant quelle ait appris les allégations de la plaignante. Aussi,
la plaignante lui a parfois donné des nouvelles à propos de D.J. après lavoir
vue à lécole.
[24]
La juge de procès a trouvé que largument de la défense
que la plaignante aurait pu être motivée par les allégations de D.J. contre
lappelant « nest pas supporté par la preuve » et « [i]l [ny a] pas de preuve
qui démontre que [la plaignante] voulait se venger contre [lappelant] ».
[25]
Selon la juge de procès, en « évaluant la
totalité de la preuve, je suis daccord [que la plaignante] na pas créé de la preuve
ou menti ». Mis en contexte, cette citation démontre que la juge de procès na
tout simplement pas accepté largument de la défense que la plaignante aurait
pu être motivée par les allégations de D.J. De plus, pour soutenir sa
conclusion que « [la plaignante] est un témoin crédible », la juge de procès a
cité les facteurs suivants :
a)
La plaignante aimait ses cousines, et daprès la
juge de procès, elle naurait pas inventé de telles accusations pour détruire
sa relation avec ses cousines quelle considérait comme ses meilleures amies ;
b)
La réaction familiale aux allégations de D.J.
était très négative ;
c)
La divulgation de la plaignante à son amie en
octobre 2015 soutient largument de lintimée quil ny a pas eu de fabrication
récente de la plaignante ;
d)
Cette divulgation à lamie de la plaignante a eu
lieu avant lacquittement de lappelant des accusations de D.J. ;
e)
La plaignante et D.J. ont témoigné quelles navaient
jamais discuté des allégations ;
f)
La mère de la plaignante a témoigné que la
plaignante et D.J. ne passaient pas beaucoup de temps ensemble et quelle ne
les a jamais entendues discuter des allégations ;
g)
Il y avait une absence de motif pour fabriquer,
selon la juge de procès ; et
h)
Le comportement de la plaignante lors de son
entrevue avec la police et lors de son témoignage au procès et la corroboration
de la preuve de la plaignante par dautres témoins pointent à la crédibilité de
la plaignante.
[26]
Cette considération de plusieurs facteurs pour
évaluer la crédibilité de la plaignante est semblable à la conclusion de la
cour dans larrêt
Ignacio
, au para.
3,
que « [p]laced in context, the trial judge rejected the motive to fabricate
argument advanced by the appellant. He was entitled to consider the absence of
evidence of a motive to fabricate as one of many factors in his credibility
analysis ».
En gardant ce contexte à lesprit, il
est possible de conclure que la juge de procès a déterminé quil y avait une
absence de preuve de motif pour fabriquer et non une preuve dabsence de motif
pour fabriquer. Si la juge de procès a conclu quil y avait une preuve dabsence
de motif pour fabriquer, « [o]ne would expect such a finding to play a
much more prominent role in the trial judges analysis of credibility than it
did » :
Ignacio
, au para.
34. Comme dans
Ignacio
,
au para. 59, la juge de procès en lespèce « considered the complainants
credibility independent from [the] conclusion that there was an absence of
evidence of a motive to fabricate. [T]he issue of motive to fabricate had been
raised by the defence and the trial judge felt obliged to address it ».
Pour la juge de procès en lespèce, labsence de preuve de motif
pour fabriquer était tout simplement un facteur parmi plusieurs à considérer
dans lévaluation de la crédibilité de la plaignante : voir
Ignacio
,
au para. 59.
[27]
De plus, la juge de procès navait aucun doute
raisonnable de la culpabilité de lappelant pour ces raisons et les raisons additionnelles
suivantes :
a)
La description de la plaignante de lincident où
lappelant a demandé à la plaignante de frotter un bonbon contre son vagin était
un « fait bizarre qui ne vient pas à lesprit facilement » et qui semblait réel ;
b)
Il était logique que lappelant ait dirigé la
plaignante à des endroits où les caméras dans limmeuble des grands-parents
ne lenregistreraient pas en train dembrasser la plaignante
, contrairement aux représentations de la défense que lappelant
naurait pas pris le risque de lembrasser dans les lieux publics de limmeuble
;
c)
A.J. avait corroboré la preuve de la plaignante que
les cousines mangeaient les bonbons « Strap » et regardaient des bandes
dessinées chez les grands-parents à lépoque des incidents, contrairement à
lappelant qui avait nié que les filles regardaient des bandes dessinées à
cette époque ;
d)
A.J. avait corroboré la preuve de la plaignante que
lappelant sasseyait parfois sur le divan chez les grands-parents ; et
e)
Le noyau des allégations restait cohérent.
[28]
En somme, la juge de procès a rejeté la théorie
de la défense que la plaignante avait un motif pour fabriquer les allégations
et, après avoir rejeté cet argument, elle sest fondée sur lensemble des facteurs
cité au para. 25 de cette décision pour accepter la preuve de la plaignante.
[29]
De plus, bien quelle ait cité labsence de
motif pour fabriquer parmi les facteurs quelle avait considérés en acceptant
la preuve de la plaignante, la juge de procès sest fondée sur un ensemble de
facteurs cité au para. 27 de cette décision pour trouver lappelant coupable
hors de tout doute raisonnable. Alors, le fardeau de la preuve na pas été
renversé.
[30]
La retenue judiciaire simpose à la conclusion
factuelle de la juge de procès :
Luceno
, au para. 34 ;
Housen
c. Nikolaisen
, 2002 CSC 33, [2002] 2 R.C.S. 235, aux paras. 10, 25.
[31]
Ce moyen dappel est donc rejeté.
(3)
Lutilisation des déclarations antérieures
compatibles de la plaignante
[32]
Lappelant maintient que la juge de procès a
utilisé les déclarations antérieures compatibles de la plaignante pour
renforcer sa crédibilité.
(a)
Le droit concernant lutilisation des
déclarations antérieures compatibles
[33]
Lorsque la défense soulève des incohérences
entre le témoignage au procès et les déclarations antérieures, la juge de procès
peut considérer les cohérences afin de déterminer limpact des incohérences
soulevées sur la crédibilité et la fiabilité de la preuve du témoin : voir
R. v. L.O.
, 2015 ONCA 394, 324 C.C.C. (3
e
) 562, aux paras.
34-36 ;
R. v. Perkins
, 2015 ONCA 521, au para. 9 ;
R. v.
Murray
, 2017 ONCA 393, 347 C.C.C. (3
e
) 529, au para. 152.
[34]
Dans larrêt
L.O.
, aux paras. 35-36, le
juge Doherty a décrit la façon daborder les allégations dincohérences :
An isolated, minor inconsistency in a sea of
otherwise consistent descriptions of the relevant events would have far less
impact on [the complainants] credibility and reliability than would several material
inconsistencies going to the heart of her allegations.
The jury had to consider the entirety of the
evidence relating to [the complainants] various statements, including the
consistencies in those statements, in deciding the impact of any inconsistencies
in those statements on her credibility and reliability. To the extent that [the
complainants] statements were consistent, especially on the central features
of the allegations, that consistency could counter, or at least mitigate, the
defence claim that [the complainant] was not credible or reliable because of
her many prior inconsistent statements[.] [Citations omises.]
(b)
Lapplication du droit aux faits
[35]
Comme dans larrêt
L.O.
, au para. 39,
lintimée au procès ne sest pas fiée aux déclarations antérieures compatibles
de la plaignante pour la véracité de leur contenu, autre que la déclaration de
la plaignante à la police admise en tant que preuve en vertu de lart. 715.1 du
Code criminel
.
[36]
Lavocat de la défense a présenté lors du contre-interrogatoire
de la plaignante le témoignage de la plaignante de lenquête préliminaire afin
dessayer de démontrer que sa preuve était incohérente.
[37]
La juge de procès pouvait alors évaluer les
incohérences soulevées compte tenu de lensemble de la preuve, y compris les
cohérences sur les points essentiels. Elle a rejeté largument de la défense
quil existait des incohérences importantes au sein de la preuve de la
plaignante pour les raisons suivantes :
Je ne suis pas daccord avec la [d]éfense que
la question des détails nuise à la crédibilité de [la plaignante]. Je ne peux
conclure que cette incohérence est importante pour ma décision. La divulgation
de [la plaignante] était cohérente avec ce quelle a dit lors de son entrevue
avec la police, à lenquête préliminaire et à ce procès. Le noyau de ses
allégations na jamais changé. Il est vrai que la mémoire de [la plaignante] était
parfois moins éclairée lors de son contre-interrogatoire. Cependant, je conclu[s]
que cétait plus une fonction de son âge et de sa routine. Il est très
important pour moi que son témoignage, relativement aux questions importantes, soit
cohérent. En ligne avec les décisions de la Cour suprême au sujet du témoignage
des enfants, il est important de prendre en considération lâge de la plaignante
au moment des incidents allégués.
[38]
La juge de procès na pas utilisé les déclarations
antérieures compatibles pour renforcer la crédibilité de la plaignante, mais pour
adresser le point soulevé par la défense. Elle a conclu quil nexistait pas
des incohérences matérielles et que le noyau des allégations restait cohérent.
[39]
De plus, comme affirme lappelant, lorsquune
déclaration est admise en vertu de lart. 715.1 du
Code criminel
, cette
déclaration devient partie du témoignage de la plaignante. Cependant, la juge de
procès peut toujours tenir en compte les cohérences et les incohérences
internes de la preuve du témoin, ce qui inclut la déclaration admise en vertu
de lart. 715.1 du
Code criminel
, pour évaluer la fiabilité de la
preuve et limpact des incohérences soulevées :
L.O.
, aux paras.
43-44.
[40]
Les conclusions de la juge de procès concernant la
crédibilité des témoins doivent être respectées, « sauf erreur manifeste et
dominante » :
R. c. Gagnon
, 2006 CSC 17, [2006] 1 R.C.S. 621, au para. 20. Ce moyen dappel
est donc rejeté.
(4)
Lévaluation des
incohérences
dans le témoignage de la plaignante
[41]
Lappelant maintient quil y a trois aspects du
témoignage de la plaignante que la juge de procès na pas résolus dune mesure
suffisante : (i) le fait que la plaignante ne pouvait pas se souvenir des
dates des incidents lors de son témoignage, alors quelle se souvenait des
dates dans sa déclaration à la police à peu près deux ans avant le procès ;
(ii) lajout dans le témoignage de la plaignante dun endroit additionnel où
lappelant lavait embrassée à limmeuble des grands-parents ; et (iii) le
témoignage de A.J. que la plaignante partageait parfois des nouvelles de sa
cousine D.J. après lavoir vue à lécole. Lappelant prétend que la juge de
procès a accordé trop dimportance au jeune âge de la plaignante comme facteur
déterminant pour résoudre les incohérences.
(a)
Le droit concernant le témoignage des jeunes
enfants
[42]
En traitant le témoignage des jeunes enfants, les
juges doivent « éviter de leur imposer les mêmes normes exigeantes qui sont
applicables aux adultes » :
R. c. B. (G.)
, [1990] 2 R.C.S. 30,
aux pp. 54-55. Alors, une « faille, comme une contradiction, dans le
témoignage dun enfant ne devrait pas avoir le même effet quune faille
semblable dans le témoignage dun adulte » :
B. (G.)
, à la
p. 55. Sil y a des incohérences dans le témoignage, « surtout en ce qui concerne
des questions connexes comme le moment ou le lieu », les juges doivent considérer
« lâge du témoin au moment des événements en question » :
R.
c. W. (R.)
, [1992] 2 R.C.S. 122, à la p. 134. Cependant, « cela ne
veut pas dire que les tribunaux ne devraient pas apprécier soigneusement la crédibilité
des témoins enfants et
que la norme de preuve doive être réduite à légard des
enfants » :
B. (G.)
, à la p. 55
.
(b)
Lapplication du droit aux faits
[43]
La plaignante avait 12 ans lors des incidents et
15 ans lors de son témoignage au procès.
[44]
La juge de procès a reconnu et a énoncé les
principes applicables à lévaluation de la preuve des enfants. Elle a conclu
que les failles dans la mémoire de la plaignante au sujet des dates lors de son
témoignage étaient explicables par son âge et sa routine. La plaignante
témoignait au sujet des événements qui ont eu lieu de manière routinière
quelques années avant le procès, lorsquelle avait 12 ans. Le fait que sa
mémoire était « parfois moins éclairée lors de son contre-interrogatoire »
nétait pas une incohérence matérielle.
[45]
Quant à lendroit additionnel où lappelant
avait embrassé la plaignante, la juge de procès a conclu raisonnablement quil « nest
pas surprenant » quun enfant nait pas mentionné auparavant un incident
davoir été embrassée parmi plusieurs autres incidents semblables. Ce nétait
pas une incohérence matérielle. Encore une fois, le « noyau de ses allégations
na jamais changé ».
[46]
Quant au témoignage dA.J. que la plaignante
partageait des nouvelles de D.J., la juge de procès nétait pas obligée de
répondre à chaque argument soulevé par la défense :
R. c. Dinardo
,
2008 CSC 24, [2008] 1 R.C.S. 788, au para. 30. Elle a mentionné cet aspect de
la preuve dA.J. De plus, bien que la plaignante ait nié quelle partageait des
nouvelles de D.J. avec ses surs, elle avait confirmé quelle a eu des
conversations avec ses cousines au sujet de leur sur. Limportant cest que la
juge de procès a accepté que D.J. na
jamais discuté de ses allégations avec la plaignante.
[47]
Ces conclusions de fait doivent être respectées
sauf erreur manifeste et dominante, dont lappelant na pas démontré :
Housen
,
au para. 10. La retenue judiciaire simpose. Ce moyen dappel est donc rejeté.
(5)
Limportance accordée au comportement de la
plaignante
[48]
Selon lappelant, la juge de procès a accordé
trop dimportance au comportement de la plaignante quand elle témoignait.
[49]
Toutefois, la juge de procès a reconnu quelle
ne devrait pas accorder trop dimportance au comportement des témoins et que «
bien que le comportement soit un facteur pertinent dans une évaluation de la
crédibilité, le comportement seul est un prédicteur notoirement non fiable de
lexactitude de la preuve fournie par un témoin ». La juge de procès a aussi
cité de la jurisprudence pour confirmer ce principe : voir notamment
Law
Society of Upper Canada v. Neinstein
, 2010 ONCA 193, 99 O.R. (3
e
)
1, au para. 66 ;
R. v. O.M.
,
2014 ONCA 503, 313 C.C.C. (3
e
) 5, au para. 34.
[50]
La juge de procès a considéré que la plaignante
avait « démontré une réaction émotive forte » lorsquelle décrivait les
attouchements sexuels : elle crachait, pleurait et tremblait lorsquelle
parlait des incidents ; et elle a « commencé à crier » après que la défense
avait suggéré que la plaignante mentait.
[51]
Pourtant, comme souligné au para. 25 de cette
décision, le comportement de la plaignante nétait quun des facteurs que la
juge de procès a considérés en évaluant la crédibilité de la plaignante. Ce
moyen dappel est donc rejeté.
(6)
Lappel de la peine devrait être rejeté
[52]
Lappelant fait demande dautorisation dappel
de sa peine. Il indique que la juge de procès na pas accordé assez dimportance
aux circonstances atténuantes de lappelant lors de la détermination de la
peine et elle a erré en imposant une peine manifestement non indiquée.
[53]
La juge de procès na commis aucune erreur de
principe ayant une incidence sur la détermination de la peine et la peine nest
pas manifestement non indiquée :
R. c. Lacasse
, 2015 CSC 64,
[2015] 3 R.C.S. 1089, au para. 11 ;
R. c. Friesen
, 2020 CSC 9, 391
C.C.C. (3
e
) 309, au para. 26.
[54]
Dans ses motifs pour la peine, la juge de procès
était « daccord avec lénumération des facteurs atténuants offerte par la
défense », incluant le fait que lappelant est responsable du
« soutien de son épouse et de deux de ses filles »
et le fait quil était en libération provisoire sous
caution selon des conditions strictes pendant plus de deux ans.
[55]
De plus, la peine demprisonnement de deux ans
moins un jour nest pas manifestement non indiquée. Lappelant a été déclaré
coupable davoir commis des actes sexuels à lendroit de sa nièce de 12 ans pendant
une période prolongée. Il se situait en position de confiance envers la
plaignante. Les incidents ont eu un grand impact sur la plaignante. Dans des
circonstances semblables, des peines similaires ont été approuvées :
R. v.
Manjra
, 2009 ONCA 485, 250
O.A.C. 257, aux paras. 2-3, 28-32, autorisation de pourvoi refusée, [2009]
C.S.C.R. no 393 ;
R. v. D.J.B.
, 2018 ONCA 566, aux paras. 1-3, 21 et 30. Ce
moyen dappel est donc rejeté.
C.
CONCLUSION
[56]
Pour les motifs énoncés plus haut, lappel de la
condamnation de lappelant est rejeté. La demande dautorisation dappel de la peine
est accordée, mais lappel de la peine de lappelant est rejeté.
Rendu le : 30 avril 2021 « K.M.v.R. »
« J.A.
Thorburn j.c.a. »
« Je
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WARNING
An order restricting publication in this proceeding
was made under s. 517 of the
Criminal Code
and continues to be in
effect. This section of the
Criminal Code
provides:
517(1) If the prosecutor or the accused
intends to show cause under section 515, he or she shall so state to the
justice and the justice may, and shall on application by the accused, before or
at any time during the course of the proceedings under that section, make an
order directing that the evidence taken, the information given or the
representations made and the reasons, if any, given or to be given by the
justice shall not be published in any document, or broadcast or transmitted in
any way before such time as
(a) if a preliminary inquiry is held, the
accused in respect of whom the proceedings are held is discharged; or
(b) if the accused in respect
of whom the proceedings are held is tried or ordered to stand trial, the trial
is ended.
Failure to comply
(2) Everyone who fails without lawful excuse, the
proof of which lies on him, to comply with an order made under subsection (1)
is guilty of an offence punishable on summary conviction.
(3) [Repealed, 2005, c. 32, s. 17]
R.S., 1985, c. C-46, s. 517; R.S., 1985, c. 27 (1st
Supp.), s. 101(E); 2005, c. 32, s. 17.
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Al Zarzour, 2021 ONCA 347
DATE: 20210520
DOCKET: M52451
Fairburn A.C.J.O.
(Motion Judge)
BETWEEN
Her Majesty the Queen
Respondent
and
Mohamad
Al Zarzour
Applicant
Megan Stuckey, for the applicant
Grace Choi, for the respondent
Heard: May 19, 2021
by video
conference
[1]
A non-publication order under ss. 517 and 522(5) of the
Criminal
Code
, R.S.C. 1985, c. C-46,
was imposed in this matter at the bail hearing in the court below. That order
precludes the publication, broadcast, or transmission of any evidence taken,
information given, representations made, and reasons given.
[2]
The decision in
R. v. Al Zarzour
, 2021 ONCA 347, contains
information covered by that order.
[3]
Accordingly, the decision will be available on the Court of Appeal for
Ontarios website once the non-publication order ceases to be in effect.
[4]
In the interim, a copy of the full decision is available at the Registry
of the Court of Appeal for Ontario at 130 Queen Street West, Toronto.
|
COURT OF APPEAL FOR ONTARIO
CITATION:
R. v. Alas, 2021 ONCA 224
DATE: 20210409
DOCKET:
C66058
MacPherson,
Tulloch, and Lauwers JJ.A.
BETWEEN
Her
Majesty the Queen
Respondent
and
Anthony
Raul Alas
Appellant
John M. Rosen, for the appellant
Karen Papadopoulos, for the respondent
Heard: December 14, 2020 by video conference
On appeal from the conviction entered on
May 26, 2016 and the sentence imposed on August 3, 2016 by Justice Gary T.
Trotter of the Superior Court of Justice, sitting with a jury.
Tulloch J.A.:
A.
INTRODUCTION
[1]
In the early morning hours of March 15, 2014,
the appellant, Anthony Alas, fatally stabbed Masud Khalif outside a bar in
Scarborough. After a three-week trial, a jury convicted the appellant of second
degree murder. He was sentenced to life with no parole ineligibility for eleven
years.
[2]
The appellant appeals his conviction alone,
raising three grounds. First, he argues that the trial judge erred by failing
to leave the defence of provocation with the jury. Second, he contends that the
trial judge erred in admitting the appellants statement to police. Third, he
submits that the trial judge erred by failing to adequately relate the evidence
of the case to the questions at issue in his charge to the jury.
[3]
For the reasons that follow, I would allow the
appeal on the first ground. Contrary to the submissions of both counsel at
trial, there was an air of reality to the defence of provocation in this case. With
respect, the defence should have been left with the jury for their consideration.
On this basis, I would order a new trial.
[4]
In light of my conclusion on the first ground, I
need not address the second or third grounds in detail. Suffice to say, I am
not persuaded that there is any merit to the appellants submissions on either
ground.
B.
FACTUAL OVERVIEW
[5]
Just before midnight on March 14, 2014, the
appellant and his fiancée, Catherine Déscoteaux, went to a bar to socialize and
play billiards. Ms. Déscoteaux was drinking alcohol, but the appellant was
not.
[6]
They met Patricia Isaacs and her mother at the
bar. Ms. Isaacs was a close friend of the appellant. She was a regular patron
at the bar and was familiar with the staff, including the bartender, Samantha
Blackmore. By the time the appellant and his fiancée joined Ms. Isaacs at the
bar, Ms. Isaacs indicated that she had consumed about three shots of tequila
and smoked some marijuana.
[7]
The deceased arrived at the same bar sometime between
11:00 p.m. and 11:30 p.m., accompanied by his friend, Kelly Bonnell. In his
testimony, Mr. Bonnell estimated that the deceased was about a seven on a
ten-point scale in terms of intoxication that evening. He had a blood alcohol level
over twice the legal limit for driving.
[8]
The appellant did not know the deceased or Mr.
Bonnell. Ms. Isaacs, on the other hand, had encountered the deceased before, on
two or three brief occasions at the bar. Ms. Blackwell, the bartender, had also
encountered the deceased before.
[9]
The events that form the subject of this appeal arose
from a series of interactions between the deceased and Ms. Isaacs.
[10]
Ms. Isaacs testified that she first interacted
with the deceased when he arrived at the bar that night. As the deceased passed
Ms. Isaacs, he tapped her on the head with his hand. Ms. Isaacs testified that
the deceased said she should be wearing a Toronto hat, not a Chicago Bulls hat.
According to Ms. Isaacs, the deceased then took the hat off Ms. Isaacs head
and held it high, out of her reach, for about five to ten minutes. She
eventually got her hat back and walked away.
[11]
When describing this incident during her
examination-in-chief, Ms. Isaacs said that the deceased was a bully, like mean
a bit but like, not, like too aggressive. Observers described this interaction
as playful; they were just joking around.
[12]
Afterwards, Ms. Isaacs went outside for a
cigarette. The deceased was also outside. According to Ms. Isaacs, as she tried
to re-enter the bar, the deceased grabbed the hood of her sweatshirt and pulled
her backwards, towards him. At the same time, he used his foot to push the door
shut. According to Ms. Isaacs, when she tried to enter the bar for a second
time, the deceased closed the door again, this time catching her head between
the door and the frame.
[13]
When Ms. Isaacs finally got back into the bar,
she was upset and crying. She complained to her mother and the bartender about
the deceaseds actions. She also informed the manager of the bar.
[14]
Ms. Isaacs also told Ms. Déscoteaux what happened.
The appellant overheard. Both Ms. Isaacs and Ms. Déscoteaux testified that the
appellant became angry when he heard about the deceaseds behaviour towards Ms. Isaacs.
In his police statement, the appellant said that he was shaking and really
wanted to do something to him badly. He further explained to police:
Yeah. Because like me,
like I have grown up with my dad beating up my mom my whole life
So I'm not the
person that's like that and I don't like girls getting mistreated in front of
me either, right
So I, I always got to stick up for them. I always got to say
something, because like I said, I don't - I don't like girls getting mistreated
in front of me, because of my dad like my whole life, right.
[15]
Ms. Isaacs and Ms. Déscoteaux recalled the
appellant saying that he wanted to hit the deceased in the head with a pool
cue. The appellant explained to police that he wanted to use a pool cue because
he felt like [he] couldnt take on a guy like that, noting:
Like the guy was big.
That's why I told the mom, like just let me whack him with the pool stick
because that was - because honestly I have been sick for ten years. I'm not
like at my full strength. I couldn't take on a guy like that
[16]
At the time, the appellant was about 56. He
suffered from longstanding health issues relating to his diagnoses of Type 1
diabetes and gastroparesis. The deceased was a large man, standing at
approximately 62 and weighing 230 pounds. He was described as stocky and
muscular.
[17]
Ms. Isaacs testified that she told the appellant
not to do anything, and to leave it alone. The appellant appeared to calm down
and went back to playing pool.
[18]
Shortly after this interaction, Ms. Isaacs again
went outside for a cigarette, this time with Ms. Déscoteaux in tow. Ms.
Déscoteaux testified that she hoped that the deceased would not come outside
because she had a bad feeling about him. The appellant told police that he
assured the women that he would come outside if he saw the deceased follow
them. In the meantime, the appellant returned to his pool game.
[19]
While the women were outside, the appellant saw
the deceased and Mr. Bonnell preparing to leave. The appellant quickly
retrieved his jacket and went outside. On his way out of the bar, the deceased
stopped to talk to someone; his friend, Mr. Bonnell, left and headed towards
his parked car.
[20]
The deceased exited the bar shortly after the
appellant. The appellant told police that the deceased stopped right beside the
appellant and started staring at Ms. Isaacs all hard core.
[21]
A verbal confrontation ensued between the
deceased and the women. Ms. Déscoteaux testified that the deceased started
yelling at them. According to Ms. Isaacs, Ms. Déscoteaux was angry and told him
to leave us alone and to shut the hell up. She recalled him refusing to leave
and swearing at them, calling Ms. Isaacs and Ms. Déscoteaux fucking bitches. Ms.
Déscoteaux called the deceased a rude, ignorant prick. By all accounts, the
appellant stood there silently at this point.
[22]
Ms. Blackwell, the bartender, tried to join the
group outside, but the deceased held the door closed and prevented her from
coming out. The appellant and Ms. Isaacs forced the door open so Ms. Blackwell
could join them outside. The appellant told police that he then confronted the
deceased for the first time, saying: What the fuck is wrong with you? Do you
have a problem?
[23]
Ms. Déscoteaux and the deceased continued to
argue and swear at one another. Ms. Déscoteaux testified that she confronted
the deceased about his behaviour towards Ms. Isaacs. She recalled saying: Did
your mom not teach you manners, youre not supposed to hit a woman. According
to Ms. Déscoteaux, the deceased responded by saying: I didnt hit her, I
tripped her.
[24]
Ms. Déscoteaux also testified that the deceased
kept putting his middle finger about half an inch from her face. She responded
by threatening to break his finger and unsuccessfully attempting to grab his
hand. She also said that she pushed the deceased back with a closed fist when
he was in her face.
[25]
As the verbal confrontation between the deceased
and the women continued, the appellant transferred a knife from his pants
pocket to his jacket pocket. It was the appellants common practice to carry a
knife for his protection. He told police that he did so because he had been
sick for ten years. He explained that he made the knife more accessible in this
moment because the deceased was much bigger and stronger than him.
[26]
There are conflicting accounts regarding what
precipitated the physical confrontation that happened next. From his vantage
point across the parking lot, Mr. Bonnell saw the appellant, Ms. Déscoteaux,
and Ms. Isaacs approach the deceased and surround him. The appellant told the
police that he saw the deceased form a fist, as if he was about to strike one
of the women who stood in front of him. Ms. Déscoteaux said that the deceased
lunged at her. Ms. Isaacs said that the deceased was swinging his right arm in
a punching motion.
[27]
The appellant told police that he reacted by
jumping in and quickly stabbing the deceased. He said that he did not intend to
stab the deceaseds throat; he was aiming for his chest.
[28]
Ms. Déscoteaux jumped on the deceaseds back and
began choking him. She testified that she was concerned about the appellant,
given his small stature and health conditions. She agreed with defence counsel that
she and the appellant were working together to defend [themselves] and that
it was one of the scariest moments in her life.
[29]
Ms. Déscoteaux testified that she pulled her arm
back when she saw blood. She initially thought the deceased had broken his nose
until she saw him clutching his neck.
[30]
When the appellant realized what he had done, he
fled the scene. Ms. Déscoteaux and Ms. Isaacs followed suit.
[31]
The deceased died from a stab wound to the neck.
He also had wounds on his right thigh, head, left forearm, right hand, and
chest. The Crown alleged that the appellant stabbed him six times.
[32]
Police arrested the appellant less than 48 hours
later, on March 16, 2014. Both the appellant and Ms. Déscoteaux gave video
statements to the police on the night of the arrest.
C.
TRIAL PROCEEDINGS
[33]
On May 16, 2016, defence counsel confirmed that
he would seek a jury charge that addressed self-defence, defence of a third
person, and possibly provocation. However, the next day, on May 17, 2016,
defence counsel reversed course. He indicated that provocation was
problematic and expressed doubt that the transactional nexus between what
happened in the bar and outside was enough to require a charge on provocation:
THE COURT: Well we're
going to have to discuss air of reality for provocation at least.
DEFENCE COUNSEL: I think
that's problematic for me. Obviously just on the outside I look at it as
particularly the evidence inside where he has a raised concern and then there's
the allowance of going outside so the question would be whether or not it's on
the (indiscernible) provocation. I think that's the problem for our side on
that element of it. There might still be a transactional nexus through it that
allows it to carry outside the bar given that it's such a short period of time
but I think that's the problem.
THE COURT: That's what
we'll be discussing on...
DEFENCE COUNSEL: Exactly.
THE COURT: ...whenever we
have the pre-charge conference...
DEFENCE COUNSEL: Exactly.
[34]
Later in his discussions with counsel that day,
the trial judge asked defence counsel again whether he would be arguing that
there is an air of reality to the defence of provocation. Defence counsel
wanted more time to research the issue, but indicated that it hinged on
whether or not I think you can separate when he first becomes aware of the
possibility of a dispute versus an actual attack against his partner.
[35]
At the pre-charge conference, defence counsel
took the position that provocation wasnt available, highlighting the cooling
off period between when the appellant learned of the first attack on Ms.
Isaacs and the time when the stabbing occurred:
Its my position that
provocation isnt available
Is not, is not because theres no air of reality
and just
there appears to be a cooling down period [after the incident in the
bar]. On that alone, I think it's insufficient to proceed because he's aware of
a potential assault or a violent altercation and has a cooling off period such
that it doesn't reach the on the (indiscernible) component which is necessary
to establish provocation such that it shocks the mind allowing the
mens rea
to be vitiated.
[36]
I would pause here to note that this is an
incorrect articulation of the law of provocation. The provocation defence does
not vitiate the
mens rea
for murder:
R. v. Humaid,
(2006) 208
C.C.C. (3d) 43 (Ont. C.A.), at para. 63, leave to appeal refused [2006]
S.C.C.A. No. 232. Instead, the defence partially excuses an offenders conduct
out of a compassion to human frailty:
R. v. Tran,
2010 SCC 58,
[2010] 3 SCR 350 at paras. 21-22.
[37]
Defence counsel then went on to concede that
there was no air of reality to the defence of provocation. Counsel argued that the
appellant was not acting on the sudden in the sense that he armed himself in
anticipation that something might happen when he stood outside with the women:
Additionally and even more
in support of removing provocation would be Mr. Alas' own statement in it he
declares Im standing outside and something to the effect of, I move the knife
from my pocket of my pyjamas up to the pocket in my hood in preparation or as a
prepared measure in case something were to happen. To me, again, that
demonstrates a mind consciously aware of something that may occur such that
it's not such a shock. Again, it doesn't really put him on the sudden under
the necessary legal test.
[38]
Crown counsel agreed with this submission,
noting that: [I]ts the position of the Crown that provocation is not
available for reasons similar to [defence counsel]. The Crown also focussed on
the cooling off period inside. It was the Crowns position that the sequence of
events could be separated into distinct actions on the part of the appellant
and therefore, he did not have an unprepared mind when he was outside with
the woman and the deceased:
CROWN COUNSEL: What takes
provocation away on those distinct actions, because I think Mr. McGregor is
quite correct, the very actions of Mr. Alas show a cooling off period such that
it's not one continuous transaction.
If you're looking at the
three distinct actions, obviously all different, that may have ultimately led
to the stabbing, a sudden provocation and a sudden response, looking at the
case law we're talking about firing at an unprepared mind. And when that
happens, Mr. Alas does not have an unprepared mind because he already has his
hand on that knife...
THE COURT: Well, you're
talking about suddenness, when he gave his statement it sounds like he's still
angry with, with the whole situation...
CROWN COUNSEL: He's
certainly saying he's still...
THE COURT: ...a few days
later.
CROWN COUNSEL: ...he's
still angry at the whole situation but there is that cooling off period in his
actions of playing pool.
THE COURT: I say that in
not in opposition to what you're saying but I'm agreeing with you. I'm talking
about suddenness.
CROWN COUNSEL: Thank you,
Your Honour. The main point being when Mr. Alas uses a weapon to stab Mr.
Khalif, it's not what happens is not to an unprepared mind as it's dictated
by the case law. What it ultimately means is there's no air of reality to the,
the defence.
[39]
Based on the submissions of counsel, the trial
judge ruled that he would not leave the defence of provocation with the jury.
D.
ANALYSIS
[40]
As noted above, I am of the view that this court
need only address the first issue raised in this appeal. The appellant argues
that the defence of provocation had an air of reality and therefore it should
have been left with the jury. For the reasons that follow, I agree.
(1)
The Air of Reality Test
[41]
At the outset, I will briefly summarize the test
that applies at this stage of the trial proceedings. All defences that arise on
the facts must be left to the jury, regardless of whether they have been raised
by an accused:
R. v. Cinous
, [2002] 2 S.C.R. 3, at para.
51;
R. v. Parnell,
(1983) 9 C.C.C. (3d) 353 (Ont. C.A.), at
para.
33, leave to appeal refused [1984] S.C.C.A. No.
333. Likewise, trial judges have a duty to keep defences that do not meet the
air of reality threshold from the jury, even if the defence in question is the
only path to the accuseds acquittal:
R. v. Pappas,
2013 SCC 56, [2013]
3 S.C.R. 452, at paras. 21-27.
[42]
The air of reality test asks whether there is
evidence on the record upon which a properly instructed jury acting reasonably
could acquit:
Cinous,
at para. 49. Stated otherwise, the trial
judge may engage in a limited weighing of the evidence to determine if a jury
acting reasonably could draw the inferences necessary to have a reasonable
doubt as to whether the accused is guilty of murder, on the basis of the
defence of provocation:
R. v. Cairney,
2013 SCC 55, [2013] 3
S.C.R. 420,
at para. 21.
[43]
The burden on the accused is evidential, not
persuasive:
Cinous,
at para. 52. The question before the trial
judge is not whether the defence is likely, unlikely, somewhat likely, or very
likely to succeed at the end of the day:
Cinous
, at para. 54. That
question is reserved for the jury. The air of reality test is only concerned
with whether a given defence is put in play by the totality of the evidence, accepting
the case of the accused at its highest and assuming the evidence relied upon is
true:
Cinous
, at para. 53.
[44]
Whether there is an air of reality to a defence
is a question of law, assessed on a standard of correctness:
Cinous,
at
para. 55;
Tran
,
at para. 40.
(2)
The Defence of Provocation
[45]
The defence of provocation recognizes that, as
a result of human frailties, the accused reacted inappropriately and
disproportionately, but understandably to a sufficiently serious wrongful act
or insult:
Tran,
at para. 22. At the time of the offence, ss. 232(1)
and (2) of the
Criminal Code,
R.S.C., 1985, c. C-46 governed the
defence of provocation and read as follows:
[1]
Murder reduced to Manslaughter
232 (1) Culpable homicide that
otherwise would be murder may be reduced to manslaughter if the person who
committed it did so in the heat of passion caused by sudden provocation.
What is provocation
(2) A wrongful act or an insult that
is of such a nature as to be sufficient to deprive an ordinary person of the
power of self-control is provocation for the purposes of this section if the
accused acted on it on the sudden and before there was time for his passion to
cool.
[46]
The defence will not always be available to
excuse a loss of self control; the law has evolved to recognize that people ought
not to yield to certain types of provocation, and that if they did the law
should offer no concession to them: A.J. Ashworth, The Doctrine of
Provocation (1976), 35
Cambridge L.J.
292, at p. 295 (emphasis in
original), as cited in
Cairney,
at para. 28
[47]
The Supreme Court outlined the four components
of the provocation defence in
Tran,
at paras. 25 and 36: (1) there
must be a wrongful act or insult; (2) the wrongful act or insult must be
sufficient to deprive an ordinary person of the power of self-control; (3) the
accused must have acted in response to the provocation; and (4) the accused
must have acted on the sudden before there was time for their passion to cool.
The first two components constitute the two-fold objective element of the
defence:
Tran
, at para. 25. The latter two components comprise the
two-fold subjective element of the defence:
Tran
, at para. 36.
(a)
The Objective Components
[48]
The ordinary person standard with respect to the
first two elements serves a restraining function, ensuring that only losses of
self-control that comport with contemporary societys norms and values will
attract the laws compassion:
Tran
, at para. 30.
[49]
The court takes a flexible and contextual
approach to the ordinary person in the context of provocation. As the Supreme
Court held in
R. v. Thibert
, [1996] 1 S.C.R. 37, at para. 14:
the ordinary person must
be taken to be of the same age, and sex, and must share with the accused such
other factors as would give the act or insult in question a special
significance. In other words, all the relevant background circumstances should
be considered.
All contextual factors that would
give the act or insult special significance to an ordinary person must be taken
into account:
Thibert
, at para. 18.
[50]
For example, in
R. v. Land,
2019 ONCA
39, 145 O.R. (3d) 29, at paras. 95-97, Paciocco J.A. held that the accuseds
experiences as a sexual abuse survivor had a bearing on the ordinary person
test. The confrontation in that case arose out of the deceaseds alleged
sexually abusive conduct towards a young girl. Paciocco J.A. wrote at para. 96:
In this case, the ordinary
person used to test whether, objectively, a loss of control could occur, must
be conceptualized as someone who themselves had been raised in a sexually
abused family and in a sexually abusive environment. Not doing so would be
unfair to Mr. Land, for whom sexual abuse takes on particular significance.
[Emphasis added].
[51]
Paciocco J.A. went on to clarify that this
contextual approach does not mean that the ordinary person is someone who,
like Mr. Land, habitually reacts violently to sexual abusers as the ordinary
person is not someone who is exceptionally excitable or pugnacious:
Land,
at
para. 97, citing
R. v. Hill
, [1986] 1 S.C.R. 313, at p. 331. The court
must bear in mind the distinction between contextualizing the objective
standard, which is necessary and proper, and individualizing it, which defeats
the purpose of this prong of the test:
Tran,
at para. 35. As
Paciocco J.A. explained in
Land,
at para. 97
:
The question
is how an ordinary person with Mr. Lands life experiences with sexual abuse
would be apt to respond.
[52]
With respect to the first inquiry under the
objective component whether there was a wrongful act or insult there was
evidence upon which a properly instructed jury acting reasonably could conclude
that the deceased was about to strike one of the women outside the bar. Again,
the appellant said the deceased formed a fist and brought his arm up like he
was going to strike one of the women; Ms. Déscoteaux indicated that the
deceased lunged at her; and Ms. Isaacs recalled the deceased raising his arm in
a punching motion.
[53]
As for the second inquiry under the objective
component, the court must consider whether the wrongful act or insult was
sufficient to deprive an ordinary person of the power of self-control. The
suddenness of the provocative act is germane to this question:
Land,
at
para. 57. As Paciocco J.A. reasoned in
Land,
at para. 57: [I]f a
wrongful act or insult is not sudden and unexpected, it is unlikely to satisfy
the objective requirement that the wrongful act or insult must be sufficient
to deprive an ordinary person of the power of self-control.
[54]
The question is how an ordinary person with the
appellants life experiences would be apt to respond:
Land,
at para.
97. The appellant is someone with a relatively small stature, health
conditions, and a history of bearing witness to violence against women. The
ordinary person in this context would be apprised of the deceaseds previous assault
on Ms. Isaacs, and the precipitous conduct of the deceased, a large man who
towered over the appellant, Ms. Isaacs, and Ms. Déscoteaux.
[55]
Understood in that context, there is an air of
reality to the prospect that an ordinary person in the appellants shoes could
lose self-control when faced with a credible threat that the deceased would
again assault one of his female companions. Moreover, in this moment of
apparent escalation, an ordinary person may resort to a disproportionate
response, particularly in light of the size differential between himself and
the person acting in a threatening manner.
(b)
Subjective Components
[56]
Turning to the subjective components of the test,
the court must ask: (1) whether the accused acted in response to the
provocation; and (2) whether the accuseds actions were on the sudden before
there was time for [their] passion to cool:
Tran
, at para. 36.
[57]
I am persuaded that there was an air of reality
to the notion that the appellant acted in response to the provocation. The
stabbing followed immediately on the heels of the deceased making a threatening
gesture towards the women. It was at this juncture that the appellant reacted. Before
this point, he demonstrated restraint.
[58]
The more contentious question on this appeal is
the second inquiry under the subjective component: whether the appellant acted
on the sudden before there was time for his passion to cool:
Tran,
at
para. 36. Again, all parties at the proceedings below, including the trial
judge, were of the view that no properly instructed jury could reasonably
conclude that: (a) the unlawful act was sudden and unexpected; and (b) the
appellants actions occurred on the sudden before he had time to regain
self-control.
[59]
On appeal, the respondent argues that the
evidence does not satisfy the suddenness requirement. The respondent first points
to the cooling off period between the initial assault on Ms. Isaacs and the
later interaction outside. However, I am not persuaded that the cooling off
period forecloses the reliance on the defence of provocation in this case. In
my view, there were two incidents that constituted potential provocative acts.
The first was the assault on Ms. Isaacs; the second was the deceaseds
threatening gesture outside. There was no cooling off period between the
threatening gesture outside and the stabbing. Indeed, taking the evidence at
its highest, the stabbing was an immediate response to the deceased lunging,
swinging, or forming a fist in the direction of his female companions. Put
another way, he acted on the sudden to the physical threat in front of him before
there was time for his passion to cool.
[60]
The respondent also argues that the appellant
did not have an unprepared mind because he engaged in a deliberate thought
process in preparation for an altercation outside, and the nature of this
altercation was entirely predictable. In support of this second argument, the
respondent points to the fact that the appellant joined his female companions
outside when he knew the deceased was on his way out; he did so while armed
with a knife; he did not shy away from the confrontation; during said
confrontation, he braced his knife just in case; and he admitted that he
meant to stab the deceased in the chest, not his throat. The respondent also
seems to imply that these acts of planning or preparation show that the
appellant played an instigating role in the confrontation, and therefore subjectively
expected the deceaseds response.
[61]
With respect, it remained open for the jury to
conclude otherwise on this record. Another plausible read of the facts is that
the appellant feared a confrontation with the deceased and went outside to
stand with his female companions as a safety precaution. It seems to me that a
violent altercation was not a foregone conclusion, and neither was his own
participation in what ultimately unfolded. The deceased and his friend were
leaving the bar; they could have left without incident but for the verbal
confrontation that ensued between the deceased and Ms. Déscoteaux. And again,
by all accounts, the appellant did not start the verbal confrontation, nor did
he resort to violence until the deceased made a threatening gesture. It is
difficult to see how he acted as an instigator, and I am not convinced that the
appellant was wholly prepared for the threatening act of the deceased. In any
event, the fact that a violent altercation may have been predictable is
certainly relevant, but not necessarily determinative:
Cairney,
at
paras. 44-46;
Land,
at para. 62.
[62]
Nor do I see the appellants anticipation of a conflict and possession
of a knife as fatal to this stage of the air of reality test. The defence of
provocation is not necessarily defeated in situations where the accused arms
himself with a knife in preparation for an encounter he could anticipate. In
R.
v. Gill
, 2009 ONCA 124, 246 O.A.C. 390, a decision cited with approval in
R.
v. Buzizi
, 2013 SCC 27, [2013] 2 S.C.R. 248, this court found that there
was an air of reality to the defence of provocation notwithstanding the fact
that the accused retreated from a confrontation, retrieved a knife, and then
returned to the confrontation.
[63]
The
majority of the Supreme Court in
Cairney
emphasized that where there are doubts about the
evidential foundation for the defence, judges should resolve any doubts as to
whether the air of reality threshold is met in favour of leaving the defence to
the jury:
Cairney,
at paras. 22, 46. On this
aspect of the test, there may be some doubt, but that doubt must be resolved in
the favour of the accused.
(c)
Conclusion on the Defence of Provocation
[64]
In my view,
the defence
of provocation had an air of reality. I
t
was for the
jury to decide whether the deceased's wrongful act was sufficient to deprive an
ordinary person of the power of self-control and whether the appellant was, in
fact, so deprived and acted suddenly, in the heat of passion.
[65]
I would allow this ground of appeal.
E.
CONCLUSION AND DISPOSITion
[66]
I would allow the appeal on the first ground
alone and order a new trial.
M.
Tulloch J.A.
I
agree. P. Lauwers J.A.
MacPherson
J.A. (dissenting):
[67]
I have had the opportunity to review the draft
reasons prepared by my colleague in this appeal. He would allow the appeal and
order a new trial on the basis that the trial judge erred by not putting the
defence of provocation to the jury. My colleague states his conclusion in this
fashion:
In my view,
the defence of provocation had an air of reality. I
t
was for the
jury to decide whether the deceased's wrongful act was sufficient to deprive an
ordinary person of the power of self-control and whether the appellant was, in
fact, so deprived and acted suddenly, in the heat of passion.
[68]
With respect, I do not agree with this
conclusion. At trial, defence counsel and Crown counsel took the position in
pre-jury charge discussions that the defence of provocation should not be put
to the jury. The trial judge agreed - indeed, strongly agreed - with both
counsel. He concluded a lengthy discussion with two active counsel on this
issue by saying:
I could go away and think
about this and come back later today but I have given it a lot of thought. With
some counsel, I would go away and think about it and make up my own mind but
given the competence of defence counsel in this case
and Crown counsel as well
for that matter
I haven't heard anything that I disagree with and I don't
think there is an air of reality to provocation.
In fact,
I'm sure there is no air of reality to provocation and so I, I will not leave
it to the jury
. [Emphasis added.]
[69]
I agree with my colleague that whether there is
an air of reality to a potential defence is a question of law assessed on a
standard of correctness:
R. v. Cinous
, 2002 SCC 29, at para. 55;
R.
v. Tran
, 2010 SCC 58, at para. 40.
[70]
In my view, the trial judges ultimate decision
on this issue, set out above, was correct. Indeed, all three of the trial
participants - defence counsel, Crown counsel and the trial judge, who saw and
heard all the witnesses and their evidence - got it right.
[71]
As my colleague states, there are four
components - two objective and two subjective - to the provocation defence: (1)
there must be a wrongful act or insult; (2) the wrongful act or insult must be
sufficient to deprive an ordinary person of the power of self-control; (3) the
accused must have acted in response to the provocation; and (4) the accused
must have acted on the sudden before their was time for their passion to cool:
Tran
,
at paras. 25, 36.
[72]
My colleague identifies the central issue on the
appeal in this fashion:
The more contentious
question on this appeal is the second inquiry under the subjective component:
whether the appellant acted on the sudden before there was time for his
passion to cool:
Tran
, at para. 36. Again, all parties at the
proceedings below, including the trial judge, were of the view that no properly
instructed jury could
reasonably conclude that: (a) the
unlawful act was sudden and unexpected; and (b) the appellants actions
occurred on the sudden before he had time to regain self-control.
On appeal, the respondent
argues that the evidence does not satisfy the suddenness requirement. The
respondent first points to the cooling off period between the initial assault
on Ms. Isaacs and the later interaction outside. However, I am not persuaded
that the cooling off period forecloses the reliance on the defence of
provocation in this case. In my view, there were two incidents that constituted
potential provocative acts. The first was the assault on Ms. Isaacs; the
second was the deceaseds threatening gesture outside. There was no cooling off
period between the threatening gesture outside and the stabbing. Indeed, taking
the evidence at its highest, the stabbing was an immediate response to the
deceased lunging, swinging, or forming a fist in the direction of his female
companions. Put another way, he acted on the sudden to the physical threat in
front of him before there was time for his passion to cool.
[73]
With respect, this rewrites the evidentiary
record that was agreed to by all three of defence counsel, Crown counsel and
trial judge.
[74]
First, there was a clear and fairly lengthy
period between the deceased's interaction with Ms. Isaacs both inside and
outside the bar and the subsequent interaction outside after everyone left the
bar. After the first set of incidents, the appellant appeared to be very angry.
However, Ms. Isaacs told him to leave it alone and the appellant appeared to
calm down and resume playing pool inside the bar.
[75]
Second, a bit later Ms. Isaacs and a friend went
outside the bar again to smoke. Then the deceased and the appellant left the
bar at about the same time and joined them. The deceased was rude towards the
two women but did not verbally threaten them.
[76]
Third, the deceased did not have physical
contact with the women, although he may have raised a finger or a fist close to
one of the womens face while he was haranguing them.
[77]
Fourth, as the verbal confrontation between the
deceased and the women continued, the appellant, who was watching but said
nothing, transferred a knife from his pants pocket to his jacket pocket. He did
so even though the confrontation between the deceased and the women was verbal
and the deceased was not displaying a weapon (he did not have one).
[78]
Fifth, the appellant admitted to police that at
this juncture, he saw the deceased form a fist. He jumped in and tried to stab
the deceased in the chest (obviously, a very vulnerable location). He missed
and stabbed the deceased in the throat.
[79]
Sixth, the appellant continued to stab the
deceased. The deceased suffered six, not one, stab wounds - to the throat,
right thigh, left forearm, right hand, and two to the head. The attack, against
an unarmed man engaged in a verbal confrontation with two other people (not the
appellant), was sustained and deadly.
[80]
Against this backdrop, I turn to how the three
relevant trial participants approached and resolved the legal issue of
provocation. This issue was discussed on two days, briefly on the first day and
extensively at the formal pre-charge conference several days later.
[81]
At the pre-charge conference, defence counsel
explicitly and in some detail opposed a provocation instruction in the jury
charge. He said, in part:
I think that there are two
key components that were eliminated as a possible defence for Mr. Alas. First
of all, it appears on the facts that he's notified inside the bar prior to going
outside by Ms. Isaacs that there may be an altercation and he says from her
evidence, that he wants to go hit him with a pool cue.
He gets convinced not to
and there appears to be a cooling down period. On that alone, I think it's
insufficient to proceed because he's aware of a potential assault or a violent
altercation and has a cooling off period such that it doesn't reach the
component which is necessary to establish provocation such that it shocks the
mind allowing the
mens rea
to be vitiated.
Additionally and even more
in support of removing provocation would be Mr. Alas own statement in it he
declares I'm standing outside and something to the effect of, I move the knife
from my pocket of my pajamas up to the pocket of my hood in preparation or as a
prepared measure in case something were to happen.
To me, again, that
demonstrates a mind consciously aware of something that may occur such that
it's not a shock. Again, it doesn't really put him on the sudden - under the
necessary legal test. So
I don't think it would be appropriate to go ahead
with it. Unless Your Honour sees something differently from the facts as they
came out, I just don't see it.
[82]
Similarly, Crown counsel, explicitly and in
considerable detail, opposed a provocation instruction in the jury charge.
After a lengthy review of the evidence, Crown counsel concluded:
What takes provocation
away
the very actions of Mr. Alas show a cooling off period such that
it's not one continuous transaction.
If you're looking at the
three distinct actions, obviously all different, that may have led to the
stabbing, a sudden provocation and a sudden response, looking at the case law were
talking about firing at an unprepared mind. And when that happens, Mr. Alas
does not have an unprepared mind because he already has his hand on that knife.
[H]es still angry at the
whole situation but there is that cooling off period in the actions of playing
pool.
The main point being that
when Mr. Alas uses a weapon to stab Mr. Khalif
what happens is not to an
unprepared mind as its dictated by the case law. What it ultimately means is
theres no air of reality to
the defence.
[83]
After hearing counsels submission, the trial
judge made his ruling. His language was unequivocal:
I haven't heard anything I
disagree with and I don't think there is an air of reality to provocation. In
fact, I'm sure there is no air of reality to provocation and so I, I will not
leave it to the jury.
[84]
A trial judge must instruct the jury on all
defences which arise on the evidence, even if they are not raised by the
defence. A failure to object to a jury charge is not fatal to an appeal:
R.
v. L.K.
, 2020 ONCA 262, at para. 15. However, the position taken by
counsel at trial will assist an appellate court in determining whether the
defence does properly arise on the evidence:
R. v. Jackson
(1991), 68
C.C.C. (3d) 385 (Ont. C.A.), at p. 409. In addition, an accused has a limited
right to control his defence and, sometimes, counsel may not want to leave a
defence with the jury, a decision which is often laced with tactical and
practical considerations:
R. v. Luciano
, 2011 ONCA 89, at para. 76.
[85]
In this case, the appellants defence at trial,
as reflected in a lengthy and forceful closing address by his trial counsel,
was, explicitly, self defence of another person, namely the two women the
deceased interacted with outside the bar. He did not say a word about the
deceased provoking the appellant. To insist, as does my colleague, that the
trial judge was required to put both of the very different defences of self
defence of another person and provocation to the jury second guesses defence
counsels explicit choice about how to defend his client and injects a
dangerous element of confusion and even conflict into the appellants defence.
[86]
As I said earlier, whether there is an air of
reality to a potential defence, including provocation, is a question of law
addressed on a standard of correctness:
Cinous
, at para. 55, and
Tran
,
at para 40. For the above reasons, I conclude that the trial judges decision not
to put the defence of provocation to the jury was correct.
[87]
I agree with my colleague that there is no merit
in the appellants other two grounds of appeal.
[88]
For these reasons, I would dismiss the appeal.
Released: April 9, 2021 J.C.M.
J.C. MacPherson
J.A.
[1]
The offence took place on March 15, 2014. Amendments to s. 232(2)
of the
Criminal Code
under the
Zero Tolerance for Barbaric Cultural
Practices Act
, S.C. 2015, c. 29, (Bill S-7). Bill S-7 came into effect on
July 17, 2015 restricting the application of the defence of provocation to
instances where the wrongful act or insult constituted an indictable offence
punishable by five or more years of imprisonment.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Al-Enzi, 2021 ONCA 81
DATE: 20210205
DOCKET: C63998
Tulloch, Roberts and Thorburn
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Nawaf Al-Enzi
Appellant
Michael W. Lacy and Bryan Badali, for
the appellant
Jamie Klukach and Katie Doherty, for
the respondent
Heard: June 18, 2020 by video conference
On appeal from the conviction entered on
December 18, 2016 by Regional Senior Justice Bonnie R. Warkentin of the
Superior Court of Justice, sitting with a jury.
Tulloch J.A.:
OVERVIEW
[1]
On August 19, 2006, the
body of Mohamed Zalal (Mr. Zalal or the deceased) was found in a field by Highway
417, outside of Ottawa. He had been killed by a single gunshot wound to the
back of his head.
[2]
In June 2008, after a
lengthy police investigation, the appellant, Nawaf Al-Enzi, and two others,
Mahmoud Kayem, and Ali Abdul-Hussein, were charged with first degree murder in
relation to Mr. Zalals death.
[3]
On September 26, 2010, the
appellant was convicted of first degree murder by a jury. On appeal, this court
set aside the conviction, finding that the appellant had not been afforded a
fair trial. A new trial was ordered:
R. v. Al-Enzi
,
2014 ONCA
569, 121 O.R. (3d) 583, leave to appeal refused, [2014] S.C.C.A. No. 405.
[4]
On December 18, 2016,
after a second trial, the appellant was convicted of first degree murder in the
death of Mr. Zalal. He now appeals his conviction.
[5]
For the following
reasons, I would dismiss the appeal.
BACKGROUND
[6]
The following summary of
evidence provides context for understanding the issues on appeal. Additional
facts will be added, where required, to address each ground of appeal.
I.
Discovery of the body and forensic evidence
[7]
On August 19, 2006, the
body of Mr. Zalal was discovered around noon, in a field outside of Ottawa.
[8]
It was determined that
Mr. Zalal had died of a single, perforating gunshot wound to the back of his
head. The firearms evidence suggested that the gun had been fired at close
range. No other injuries were present.
[9]
The police found two cigarette
butts near the body. DNA testing later revealed that the deceaseds DNA profile
matched the DNA found on one of the cigarettes, and Mr. Kayems profile matched
the DNA found on the other.
II.
Police investigation
[10]
During the two years
following the discovery of the body, the police conducted an extensive
investigation into the circumstances of Mr. Zalals death. The investigation
revealed the following:
·
the appellant, Mr. Kayem, and Mr. Abdul-Hussein
were known associates of Mr. Zalal;
·
phone records revealed that, on August 18, 2006,
there were numerous calls between the cell phones being used by the appellant,
Mr. Kayem, and Mr. Zalal;
·
cell tower records revealed that at
approximately 11:10 p.m. on August 18, 2006, Mr. Kayems cell phone accessed the
cell tower nearest to where the deceaseds body was found. The appellants cell
phone accessed that same tower at approximately 12:01 a.m. on August 19, 2006;
·
while he denied any involvement, Mr. Kayems DNA
was found on a cigarette butt discovered near the body;
·
the appellant claimed that he had been with Mr.
Zalal on the day prior to his body being found, but that he had spent that
evening with his then-wife, Zeinab Abdul-Hussein, at an exhibition and at a bar
in Québec. However, security footage from the only entrance and exit at the bar
did not show the appellant or his wife in attendance. Cell tower records also
showed that the appellants cellphone did not access any of the cell towers near
the bar;
·
intercepted communications revealed a number of potentially
incriminating conversations, including:
i.
a November 2007 conversation between the
appellant and Mr. Abdul-Hussein, in which the appellant reassured Mr.
Abdul-Hussein after an interaction with police, telling him that [t]hey gotta
prove it;
ii.
a November 2007 conversation between the
appellant and his brother, in which the appellant repeatedly asked his brother
to confirm that he took apart and threw away the nine;
iii.
a conversation between the appellant and a
friend, in which the appellant appears to acknowledge a dispute between himself
and Mr. Zalal over a firearm that he had borrowed from Mr. Zalal;
iv.
multiple conversations between the appellant and
Mr. Kayem, in which they repeatedly mention that no one has said anything and
that the police dont have anything; and
v.
multiple conversations between the appellant and
Ms. Abdul-Hussein, in which they repeatedly made mention of a person they
referred to as Auntie. Based on the content and context of the calls, it was
possible that Auntie referred to Mr. Kayem, and that the conversations were
about how to keep Mr. Kayem, who had travelled to Dubai after the murder, from
returning to Canada.
·
a witness, Ramin Khaleyi, told police that the
appellant had confessed to murdering Mr. Zalal, and that Mr. Kayem and Mr.
Abdul-Hussein had also been involved.
[11]
In June 2008, on the
basis of this evidence, the police arrested the appellant, Mr. Kayem, and Mr.
Abdul-Hussein in connection with the death of Mr. Zalal. All three were charged
with first degree murder. The appellant and Mr. Abdul-Hussein were charged
jointly, and Mr. Kayem was charged separately.
III.
Events leading up to the appellants first trial
[12]
After his arrest, Mr.
Kayem was interviewed by police and confronted with the DNA evidence linking
him to the scene. Though he had previously maintained that he had not been
involved in Mr. Zalals death, he provided a statement in which he admitted
that he had been present at the murder. He claimed that the appellant was
responsible for Mr. Zalals killing. Mr. Kayem was subsequently committed to
trial after a preliminary hearing.
[13]
In October 2009, after
a joint-preliminary hearing for the appellant and Mr. Abdul-Hussein, Mr.
Abdul-Hussein pleaded guilty to being an accessory after the fact and received
a sentence of time served. He subsequently provided a statement to police in
which he identified the appellant as the killer. After obtaining the statement,
the Crown decided to proceed jointly against the appellant and Mr. Kayem.
IV.
First trial and appeal
[14]
Midway through the
appellants first trial, the appellants lawyer withdrew from the case pursuant
to the Law Society of Ontarios Rules of Professional Conduct. He claimed that
he was required to withdraw as a matter of ethics, but that the appellant was
blameless and not to be faulted for the withdrawal.
[15]
As the appellant was
now unrepresented, the trial judge adjourned proceedings for nearly four months
to allow the appellant to find another lawyer. Despite engaging in a thorough
search, however, the appellant was unable to find a defence lawyer prepared to
step into the middle of a first degree murder trial.
[16]
As a result of his
inability to find representation, the appellant brought an application for
severance on the grounds that he was not capable of representing himself and
would suffer prejudice. The trial judge dismissed the application, instead
appointing
amicus
in an expanded role to assist the appellant.
[17]
At the conclusion of
the trial, a jury convicted the appellant of first degree murder. The
appellants co-accused, Mr. Kayem, was acquitted.
[18]
The appellants
conviction was subsequently overturned by this court. At para. 96 of his
reasons, Laskin J.A. found that the trial judge had:
exercised his discretion unreasonably by
denying Al-Enzi a severance or a mistrial so that he could retain a lawyer to
represent him at a new trial. The appointment of
amicus
, even with an
expanded mandate, was not an adequate substitute for counsel for Al-Enzi. The
trial judges denial of a severance or a mistrial deprived Al-Enzi of a fair
trial, both in appearance and in reality. It produced a miscarriage of justice.
[19]
The appeal was thus
allowed, the conviction set aside, and a new trial ordered.
V.
Second trial
[20]
At his second trial, the
appellant was tried by a jury and convicted of first degree murder.
ISSUES ON APPEAL
[21]
The appellant challenges
his conviction on six grounds:
1)
the trial judge erred in her instruction to the
jury on the issue of post-offence conduct;
2)
the trial judge erred in concluding that the
appellants statements to police were voluntary and admissible;
3)
the trial judge erred in admitting Mr. Khaleyis
May 4, 2007 statement to police into evidence for the truth of its contents;
4)
the trial judge erred in leaving constructive
first degree murder by way of forcible confinement with the jury, or in her instruction
to the jury on this route of liability;
5)
the trial judge erred in finding that the communications
between the appellant and his wife made while they were still married were not
protected by spousal privilege; and
6)
the trial judge erred in dismissing the appellants challenge to the
lawfulness of the intercepts.
[22]
In the event that the
appeal is allowed, the Crown raises an additional issue whether the trial
judge erred by excluding the prior testimony and sworn police statement of Mr.
Abdul-Hussein. However, given that I would dismiss the appeal, there is no need
to address this issue.
ANALYSIS
I.
Did the trial judge err in her instruction to
the jury on the issue of post-offence conduct?
(1)
Background
[23]
On August 22, 2006,
three days after the discovery of Mr. Zalals body, Detective Krista Hill was
assigned to interview the appellant as part of the investigation into Mr.
Zalals death.
[24]
That same day, the
appellant contacted Detective Hill in order to retrieve his passport, which had
been seized following his arrest in 2005 for an unrelated matter. The appellant
left two voice mail messages. Detective Hill returned the appellants calls,
using the passport matter as an opportunity to invite the appellant to discuss
the death of Mr. Zalal. While at the time, the appellant was not a suspect, he
was a known associate of Mr. Zalal. Detective Hill took contemporaneous notes
of the call. She testified that, while her notes were not a verbatim summary of
the discussion, they covered everything that had been discussed.
[25]
Detective Hill also testified
that, although the appellant stated that he had no information to provide about
Mr. Zalals death, he provided the following information regarding his contact
with Mr. Zalal on August 18, 2006:
·
at about 2:00 p.m., he had picked up Mr. Zalal
and two others to buy t-shirts;
·
he dropped off Mr. Zalal and the others at one
of their homes;
·
at around 6:00 p.m., he spoke to one of the
other men, at which time Mr. Zalal was still with him; and
·
he was planning to meet Mr. Zalal and the others
at a strip club in Gatineau, but did not end up meeting him there. Instead, he
went with his wife to an exhibition and later to a bar in Québec.
[26]
Contrary to the
appellants narrative, however, security footage from the only entrance and exit
at the bar did not show the appellant or his wife in attendance. Cell tower
records also showed that the appellants cellphone did not use any of the cell
towers near the bar.
[27]
Prior to trial, the
Crown brought an application to have the appellants statement to Detective
Hill admitted as voluntary:
R. v. Al-Enzi
, 2016 ONSC 3574
(Voluntariness Reasons). The Crown sought to use the statement as evidence
that the appellant had deliberately lied to conceal his guilt. The appellant
challenged the application, arguing, among other things, that the statement
should not be admitted on the basis that it had limited probative value.
[28]
According to the
appellant, the statement served no purpose other than to memorialize the
alleged falsehood that he had been at a bar in Québec on the night of August
18. Even if the statement was proven false, its falsity could not be used to
further the Crowns case, as a falsehood cannot be used to support an inference
that an accused deliberately lied to conceal their guilt, absent independent
evidence of fabrication. In support of this proposition, the appellant referred
to this courts decision in
R. v. OConnor
(2002), 170 C.C.C. (3d) 365
(Ont. C.A.).
[29]
The appellant argued
that, while such independent evidence would potentially be available in the
form of the anticipated evidence of Mr. Kayem and Mr. Abdul-Hussein (who both
claimed that the appellant had murdered Mr. Zalal), acceptance of that evidence
would effectively render the appellants concoction inconsequential (as the jury
would already have accepted that he murdered Mr. Zalal). The evidence thus
served no purpose.
[30]
The trial judge
rejected this argument, finding that the statement was admissible, as the jury
was entitled to consider the cumulative effect of all the evidence.
[31]
It was subsequently
determined, however, that the hearsay evidence of both Mr. Kayem and Mr.
Abdul-Hussein which was to serve as the independent evidence of fabrication
was inadmissible:
R. v. Al
-
Enzi
, 2016 ONSC 6911;
R. v.
Al-Enzi
, 2016 ONSC 6972.
[32]
As a result, there was
an issue at the end of the trial as to whether there was, in fact, any
independent evidence of fabrication and, consequently, how the jury should be
instructed on the proper use of the appellants alleged lie to police.
[33]
In pre-charge
discussions it was agreed that, if the trial judge found that there was
independent evidence of fabrication, an instruction to the jury would be
necessary to explain that an inference of consciousness of guilt could only be
drawn if the independent evidence of fabrication was accepted.
[34]
Then, during mid-charge
discussions, the following exchange occurred, in which the trial judge noted
her intention to find that there was no independent evidence of fabrication:
Trial judge: Well I intended to make it a
prohibited use of the evidence and so maybe Ive just not used the wording the
way it should have been used. I have to say, it was rather tricky as the fellow
said it is going to be.
Defence counsel: My might I I respectfully
perhaps ask Your Honour is is
is it Your Honours
meaning that there was no evidence of fabrication?
Trial judge:
Thats
right.
[Emphasis added.]
[35]
In light of this
finding, further discussion ensued regarding the specific wording of the charge
to the jury. The trial judge proposed the following language:
So are you happy with in all of the
circumstances of in all the circumstances
this evidence
is part of the narrative for you to consider along with the rest of the evidence
or do you want me to change it even more than that? [Emphasis added.]
[36]
Defence counsel
indicated that he could live with the instruction. Crown counsel, however,
opposed the use of the word narrative, arguing instead that it should be
characterized as part of the evidence. The trial judge noted that she would
consider the Crowns submission.
[37]
The relevant portion of
the trial judges final instruction was as follows:
It is for you to decide whether Nawaf
Al-Enzis statement to the police about being at Cosmos Bar was true or false
based on all the evidence presented by the Crown.
When considering what inference, if any, to
draw from the evidence of Mr. Al-Enzis claim that he was at Cosmos Bar on the
night of August 18 or early morning of August 19, 2006,
keep
in mind that people sometimes lie for entirely innocent reasons
.
This is just one piece
of evidence to be considered with all the other evidence
when you decide whether the Crown has proven Mr. Al-Enzis guilt
beyond a reasonable doubt. [Emphasis added.]
(2)
Governing Principles
[38]
In Canadian law, there
is a well-established distinction between an exculpatory statement by an
accused that is disbelieved, and one that is determined to have been fabricated
or concocted to avoid culpability:
R. v. Wright
, 2017 ONCA 560, 354
C.C.C. (3d) 377, at para. 38. The importance of this distinction lies in the
fact that, while a statement that is merely disbelieved is not evidence that
strengthens the Crowns case, a statement that has been deliberately concocted
can be capable of supporting an inference of guilt:
OConnor;
at para.
38. In other words, where the Crown can prove that an accuseds exculpatory
statement was not simply untrue, but an intentional fabrication, the trier of
fact is entitled to draw an inference that the accused lied to conceal their
guilt.
[39]
However, in order to
prove an intentional fabrication, the Crown must adduce evidence of that
fabrication, independent of the evidence that contradicts or discredits the
exculpatory statement:
Wright
, at paras. 40-41;
OConnor
, at
paras. 21-22;
R. v. Laliberté
, 2016 SCC 17, [2016] 1 S.C.R. 270, at
paras. 3-4. Put differently, the Crown must not only adduce evidence that
disproves the exculpatory statement, but also adduce independent evidence that proves
that the exculpatory statement was made for the purpose of deflecting guilt
from the accused. This point was also recently made by this court in the case
of
R. v. Ching
, 2019 ONCA 619, 378 C.C.C. (3d) 284, at para. 47, where
the court stated:
Independent
evidence of concoction can, however, be found in the very content of the
impugned statements, depending on the context in which they were made.
Independent, in this sense, means that the evidence of concoction is separate
from the evidence of guilt, not necessarily separate from the statements
themselves.
For example, where an accused has made
contradictory exculpatory statements, the self-contradiction of an accused may
constitute independent evidence of fabrication: see
R. v. Shafia
,
2016 ONCA 812, 341 C.C.C. (3d) 354, at para. 288, leave to appeal refused,
[2017] S.C.C.A. No. 17. This requirement ensures that the Crown is made to
prove an accuseds guilt beyond a reasonable doubt, and that mere disbelief of
an accused does not automatically lead to a guilty verdict:
OConnor
,
at para. 20, citing
R. v. Coutts
(1998), 126 C.C.C. (3d) 545 (Ont.
C.A.), at pp. 551-552, leave to appeal refused, [1998] S.C.C.A. No. 450.
[40]
Where the exculpatory statement
is made out of court, independent evidence of fabrication may emerge from the
evidence of the circumstances in which the statement was made. Such evidence
will necessarily be case and fact specific. Some examples of such evidence are
pre-arrest exculpatory statements that are specific and detailed or
post-arrest statements that are inherently implausible:
Wright
, at
para. 48.
[41]
Where such independent
evidence of fabrication exists, these principles should be made clear to the
trier of fact. In particular, the following should be communicated:
1) the trier of fact may, but does not have
to, disbelieve the accuseds exculpatory statement;
2) if they disbelieve the statement, is there other,
independent evidence upon which they may, but do not have to, find that the
accused fabricated the exculpatory statement;
3) if, on the basis of the independent
evidence, they do not find that the accused fabricated the statement, they must
ignore the statement and treat it as if it had never been given;
4) by contrast, if they do find that the
accused fabricated the statement, they may consider the reason why the accused
fabricated the statement, including whether it was to conceal their involvement
in the offence(s) charged. This determination must be made in light of all the
evidence.
See
R.
v. Oland
, 2016 NBCA 58, at para. 69, leave to appeal refused, [2016]
S.C.C.A. No. 188; D. Watt,
Watts Manual of Criminal Jury Instructions
,
2nd ed. (Toronto: Thomson/Carswell, 2015).
[42]
Where an instruction
regarding fabrication is provided, a trial judge should carefully outline what
evidence is capable of constituting independent evidence of fabrication:
OConnor
,
at para. 38;
R. v. Clause
, 2016 ONCA 859, 133 O.R. (3d) 321, at para.
62.
[43]
However, as noted in
R.
v. Polimac
, 2010 ONCA 346, 254 C.C.C. (3d) 359, leave to appeal refused,
[2010] S.C.C.A. No. 263, the failure of a trial judge to provide such an
instruction will not always constitute a reversible error. Rather, the question
for an appellate court is not whether an
OConnor
instruction would
have been appropriate, but whether the instruction given prejudiced the
appellants right to a fair trial: at para. 106. The need for a reviewing
court to determine whether the instruction that the trial judge
did
provide
caused the accused prejudice has been repeatedly emphasized by this court: see
R. v. Selvanayagam
,
2011 ONCA 602, 281 C.C.C.
(3d) 3, at paras. 30-33;
R. v. Stevenson
, 2014 ONCA 842, 317 C.C.C.
(3d) 385, at para. 103, leave to appeal refused, [2015] S.C.C.A. No. 37;
R. v.
Zekarias,
2018 ONCA 585, at para. 21.
[44]
In determining whether an
accused was prejudiced by a trial judges instruction to the jury, an appellate
court must undertake a functional assessment of the charge. This point was
explained by this court in
R. v. Badgerow
, 2019 ONCA 374, 146 O.R.
(3d) 35, at paras. 17-18:
Appellate review of the adequacy of a jury
instruction requires a functional assessment.
The court
asks whether the charge, read as a whole in the context of the specific case,
properly equipped the jury to decide the case based on the application of the
applicable legal principles to the evidence.
The context of the case includes
the evidence, the positions of the parties, the closing
arguments, the submissions of counsel in advance of the charge, and any
objections
taken to the charge. [Emphasis added; citations omitted]
[45]
This court has also
recognized that the failure of a trial judge to outline for the jury the
circumstances supporting a finding of fabrication may inure to the benefit of
the accused. This point was made in
Polimac
, at para. 106:
[A]n instruction that highlighted the
circumstances that would support a finding of fabrication were the jury to find
inaccuracies in the appellants statements
may well have
only emphasized the powerful case to be made for fabrication in the
circumstances of this case
. [Emphasis added.]
[46]
The risk of prejudice
arising from a trier of facts confusion of mere disbelief with affirmative
evidence of guilt underscores the law in this area. However, this risk is
lessened where the statement to be adduced is an out-of-court statement of the
accused, as compared to the accuseds in-court testimony. OConnor A.C.J.O.,
writing for this court in
OConnor
, described this distinction at
para. 25:
When an out-of-court statement of an accused
is introduced into evidence it does not have the same immediate connection to
the trial itself as an accused's testimony and for that reason, even if shown
to be false, it does not present the same threat that the trier of fact will
confuse mere disbelief with affirmative evidence of guilt and improperly lessen
the burden on the Crown.
(3)
Arguments on Appeal
[47]
The appellant makes two
arguments on appeal on this issue.
[48]
First, as the trial
judge had indicated that she had found that there was no independent evidence
of fabrication, she ought to have instructed the jury that the alibi, if
disbelieved, had no probative value and was simply part of the narrative. The
instruction that the statement was just one piece of evidence to be considered
with all the other evidence invited the jury to draw the improper inference
that the appellants lie was indicative of a consciousness of guilt. The
instruction thus invited the very mischief that was to be avoided.
[49]
Second, if there was,
in fact, independent evidence of fabrication, the instruction failed to provide
the jury with the necessary tools to assess that evidence and determine whether
they could find that the appellant had deliberately lied to conceal a
consciousness of guilt.
[50]
In response, the Crown
argues that the circumstances in which the appellant made the statement to
Detective Hill provided independent evidence of fabrication. In light of this
evidence, it would have been appropriate for the trial judge to provide an
instruction regarding the proper use of this evidence. However, in this case, the
absence of an instruction did not cause prejudice.
(4)
The Principles Applied
(a)
The Circumstances of the Appellants Statement Provide Independent
Evidence of Fabrication
[51]
To begin, I first
consider whether there was independent evidence of fabrication capable of
supporting an inference of the accuseds consciousness of his guilt. In my
view, there was. Accordingly, I conclude that the trial judge erred in
determining otherwise.
[52]
In reaching this
conclusion, I consider the circumstances of the appellants exculpatory
out-of-court statement. I note that this courts description of the
circumstances providing independent evidence of fabrication in
OConnor
,
at para. 31,
are apposite:
His first statement was made the same day as
the shooting and, importantly,
was made to the police at
a time when the police did not suspect the appellant
and the appellant
did not have reason to believe that he was a suspect. The police, as a matter
of routine, questioned witnesses who might have information about the
deceased's whereabouts prior to the shooting. The appellant's initial statement
furnished a complete alibi and if true,
would lead the
police to conclude that he was not involved in the offence
. That
statement and the next two statements were
very precise,
both as to the appellant's whereabouts and the times he was in the various
places.
If the jury were to disbelieve the appellant's statements, they
might fairly ask why would the appellant tell such
detailed
and specific lies
to the investigators. Why not tell the truth? And how
was it that the
appellant was so well prepared with a
detailed and precise statement
about his whereabouts when questioned by
the police? [Emphasis added.]
[53]
I conclude that the
circumstances of the appellants statement to the police constitute independent
evidence of fabrication. As in
OConnor
, the appellant provided his
statement to Detective Hill shortly after the shooting, at a time when he was
not a suspect. The appellants statement was detailed and precise with respect
to the appellants whereabouts and timing. The appellant volunteered this
information without any prompting, and if believed, the information would
deflect suspicion away from him. These circumstances, taken together, could
reasonably constitute independent evidence of fabrication.
[54]
Given the overt
similarities between the circumstances arguably giving rise to independent
evidence of fabrication in this case and
OConnor
, I conclude that the
trial judge erred in law in her understanding of what circumstances can give
rise to such evidence. Applying the appropriate understanding of the law to
this case, it is clear that there was evidence that arguably constituted
independent evidence of fabrication. This, however, does not end the analysis.
(b)
The Trial Judges Instruction Did Not Prejudice the Appellant
[55]
The trial judge
concluded that there was no independent evidence of fabrication and should have
instructed the jury that if they disbelieved the accuseds evidence, they
should disregard it. This did not occur. However, any resulting prejudice is
lessened by the circumstances I have discussed demonstrating independent
evidence of fabrication.
[56]
As independent evidence
of fabrication existed, the trial judge should have provided an instruction for
the jury outlining the evidence that supported such a finding. The trial judge
did not do so.
[57]
As I have indicated, however,
the question on appeal is not whether the trial judge should have given such an
instruction, but whether the trial judges failure to do so prejudiced the
appellants right to a fair trial:
Polimac
, at para. 106.
[58]
I conclude that the
trial judges instruction did not prejudice the appellant. To the contrary, and
similar to
Polimac
, the trial judges failure to outline the
independent evidence of fabrication may have inured to the appellants benefit.
[59]
I first consider
whether the trial judges approach to the jury instruction on this issue prejudiced
the appellant. I note that, unlike in
Polimac
(see para. 94 of that
case), defence counsel in this case asked for an
OConnor
warning if
the trial judge found independent evidence of fabrication. As the trial judge
concluded that no such independent evidence existed, defence counsel was
essentially deprived of any potential benefit of their requested instruction.
[60]
Similarly, I note that
defence counsel agreed to a specific version of the draft charge when the trial
judges proposed charge was circulated to counsel. This draft included the
statement that the evidence was part of the narrative for you to consider
along with the rest of the evidence. The version that was given, however, did
not include this language, instead stating that it was one piece of evidence
to be considered with all the other evidence.
[61]
In my view, any
prejudice arising from the trial judges approach was mitigated by various
factors.
[62]
First, despite the
appellants argument on appeal that the trial judge ought to have instructed
the jury that the alibi, if disbelieved, had no probative value, defence
counsel at trial resiled from this position. Instead, trial defence counsel
agreed to the proposed charge stating: In all the circumstances this evidence
is part of the narrative for you to consider along with the rest of the
evidence.
[63]
Furthermore, and more
importantly, the trial judges failure to outline the circumstances supporting
independent evidence of fabrication may have inured to the appellants benefit.
This instruction would have focused the trier of facts attention on the
circumstances supporting a strong inference of fabrication. An instruction
highlighting the circumstances supporting a finding of fabrication may well
have only emphasized the powerful case to be made for fabrication in the
circumstances of this case:
Polimac,
at para. 106.
[64]
Finally, I note that
the trial judges instructions to the jury otherwise equipped the jury with the
tools necessary to assess the importance, or lack thereof, of the appellants
disbelieved evidence. In this respect, the trial judge instructed the jury to
keep in mind that people sometimes lie for entirely innocent reasons when
assessing the appellants evidence that he was at the Cosmos Bar at the
relevant time. The trial judge then referenced the testimony of multiple trial
witnesses who were involved in the criminal subculture, reminding the jury that
[t]hey all testified that they typically lie to the police when questioned
about any matter.
[65]
In my view, these
instructions made clear to the jury that the simple presence of a lie did not
necessarily give rise to a consciousness of guilt by the appellant. While the
safer course would have been to include a more precise
instruction, I
cannot say that the manner in which this issue was left with the jury
undermined the appellants right to a fair trial:
Zekarias
, at para.
21.
[66]
In all the circumstances,
I conclude that the trial judges failure to provide the
OConnor
instruction
did not prejudice the appellant. Accordingly, I would dismiss this ground of
appeal.
II.
Did the trial judge err in concluding that the
appellants statements to police were voluntary and admissible?
(1)
Background
[67]
As outlined above, on
August 22, 2006, the appellant had a telephone conversation with Detective Hill
in which he provided details about his contact with Mr. Zalal on August 18. The
appellant attended the police station the next day to retrieve his passport. He
reiterated that he had no information about the events of Mr. Zalals death.
[68]
A few months later,
Sergeant Michael Hudson contacted the appellant for an interview. The appellant
agreed, and on November 8, 2006, he attended the Ottawa police station to give
a statement. The interview, conducted by Detective John Monette, was
video-taped and recorded. The appellant acknowledged that he was there
voluntarily. He was informed that he was not a suspect and that he was free to
leave at any time. The appellant maintained a story consistent with the
statement he had given to Detective Hill on August 22. He eventually indicated
that he had nothing more to say.
[69]
Before leaving the
station, however, the appellant agreed to speak to Sergeant Hudson about
something that the appellant had told him on the phone the night before the appellant
had stated, Mike, they are going to kill me. The appellant proceeded to speak
with Sergeant Hudson in a second interview room without cameras. Sergeant
Hudson brought a small audio recorder into the room and surreptitiously
recorded the conversation. Sergeant Hudson expressed concern for the
appellants safety and mentioned the possibility of the appellant serving as a
witness or confidential informant. The appellant stated that he would consider
the proposal. He then left.
[70]
As mentioned above, prior
to trial, the Crown brought an application to admit the appellants statements
to police as voluntary. The appellant opposed the application. He argued that the
record of the August 22 statement was incomplete and that he had been induced
to make the statement in exchange for his passport. He also argued that the
statements probative value (the potential falsehood that he attended the bar
on August 18) was outweighed by its prejudicial effect (that his refusal to
cooperate would indicate guilt). The November 8 statements were similarly
involuntary, as, among other things, they were tainted by the inadmissible
statement on August 22 and the appellant had been misled about his status in
the investigation.
[71]
The trial judge allowed
the Crowns application, admitting the statements as voluntary. There was no
evidence that Detective Hill threatened to withhold the appellants passport
unless he gave a statement. In fact, the evidence showed the opposite, as
Detective Hill returned the passport in spite of the appellants refusal to
provide a statement. Although there was no recording of the phone call,
Detective Hills notes were detailed enough to provide adequate clarity as to
the nature of the conversation that took place. The ultimate reliability of
Detective Hills evidence could be assessed by the jury. Any potential
prejudice could be addressed by way of instruction, and the jury was entitled
to consider whether the appellant gave a deliberately false statement. With
regard to the November 8 statements, there was no tainting and, while there was
some evidence at the time to implicate the appellant in the murder, Detective
Monette and Sergeant Hudsons actions demonstrated that he was not a suspect.
(2)
Arguments on Appeal
[72]
The appellant
effectively makes four arguments on appeal. First, as the record provided by
Detective Hill is not a verbatim record of the phone conversation, the court
cannot be satisfied that Detective Hill did not hold out the return of the
passport as an inducement for the statement.
[73]
Second, even if the
August 22 statement was voluntary, it should not have been admitted, as its
prejudicial effect outweighs its probative value. A trier of fact can only find
that an accused deliberately lied where there is independent evidence of
fabrication above and beyond a simple finding that the accuseds alibi is
false. In this case, no such independent evidence was available. The
prejudicial effect, however, was significant. Admission of the statement
created a real risk that jurors would presume that only a guilty person would
lie to police.
[74]
Third, the November 8
statements were tainted, as they were the result of a continuation of the
involuntary statement made on August 22.
[75]
And fourth, the
appellants rights under s. 10(b) of the
Canadian Charter of Rights and
Freedoms
were breached when he was not provided his rights to counsel
prior to the November 8 interviews. Since the appellant was objectively a
suspect at that point in time (given that investigative documents identified
him as a possible suspect), the police failed to make clear his level of
jeopardy.
[76]
I note that counsel for
the appellant originally argued that the officers surreptitious recording of
the second statement on November 8 was unlawful under s. 8 of the
Charter
,
and the trial judge should have considered this under her residual discretion
to exclude evidence. However, as this argument was abandoned at the hearing, I
will not address it.
[77]
In response, the Crown
argues that: i) the trial judge was entitled to find that Detective Hills
handwritten notes provided a complete record of the substance of the August 22
telephone call; ii) the trial judge was correct not to exclude the statements
on the basis of her residual discretion to exclude evidence; iii) even if the
August 22 statement was involuntary and, thus, inadmissible, there was no
connection between the August 22 interview and the November 8 interviews; and iv)
the trial judge properly considered whether the appellant was a suspect at the
time of the November 8 interviews and determined that he was not.
(3)
The Principles Applied
(a)
The August 22 Statement was Voluntary and Properly Admitted
[78]
I reject the
appellants arguments regarding the voluntariness of the August 22 statement.
[79]
The confessions rule
establishes that any statement made to a person in authority is admissible only
where the Crown can demonstrate, beyond a reasonable doubt, that it was made
voluntarily:
R. v. Oickle
, 2000 SCC 38, [2000] 2 S.C.R. 3, at para. 30;
R. v. Hayes
, 2020 ONCA 284, 391 C.C.C. (3d) 453, at para. 38.
[80]
Where a trial judge
applies the correct test and considers all relevant circumstances, deference is
owed to the trial judges ultimate determination on voluntariness:
Oickle
,
at para. 71;
R. v. Pearson
, 2017 ONCA 389, 348 C.C.C. (3d) 277, at
para. 14, leave to appeal refused, [2017] S.C.C.A. No. 465.
[81]
In this case, it is
alleged that the appellants statement was made subject to an inducement by
Detective Hill. At the time this statement was given, the appellant was not a
suspect, and he was not treated as such by the officer. Accordingly, he was not
facing any jeopardy that could have compromised his willingness to cooperate
with the officer. In my view, there is no evidence of any inducement, much less
an inducement strong enough to raise a reasonable doubt as to whether the appellants
will was overborne. The trial judge was entitled to accept Detective Hills
evidence that her notes, while not a complete recording, sufficiently detailed
the substance of the appellants statement. Non-recorded interrogations are not
inherently suspect:
Oickle
, at para. 46;
R. v. Culotta
, 2018
ONCA 665, 142 O.R. (3d) 241, at para. 23, affd 2018 SCC 57, [2018] 3 S.C.R.
597.
[82]
I also find no error in
the trial judges decision to refrain from exercising her residual discretion
to exclude the statement. As discussed above, the circumstances of the
statement provided independent evidence of fabrication. Consequently, the jury
was entitled to consider whether the appellant had engaged in a deliberate
concoction to avoid culpability.
(b)
The November 8 Statements were Voluntary and Properly Admitted
[83]
Where a statement by an
accused is determined to have been made involuntarily and is accordingly
inadmissible, any subsequent statement may also be excluded if the tainting
features which disqualified the first confession continued to be present or if
the fact that the first statement was made was a substantial factor
contributing to the making of the second statement:
R. v. Foster
,
2017 ONCA 751, at para. 10, quoting
R. v. I. (L.R.) and T. (E.)
,
[1993] 4 S.C.R. 514, at p. 526.
[84]
In this case, as I have
found that the August 22 statement was voluntary, there is no need to address
the issue of whether the November 8 statements were tainted.
[85]
With regard to the
appellants argument that he was a suspect at the time of the November 8
interviews and, consequently, had a right to be informed of his right to
counsel, this issue was sufficiently addressed by the trial judge. She accepted
the evidence of Detective Monette and Sergeant Hudson that they had no
particular suspect in mind in November 2006 and that they wanted to interview
the [appellant] because of his involvement with Mr. Zalal on the afternoon of
his death as well as the fact that they believed that the [appellant] knew more
about the murder than he had told Detective Hill: Voluntariness Reasons, at
para. 74. The trial judge was entitled to make this finding. I see no reason to
interfere.
[86]
In any case, this
court, per Fairburn J.A. (as she then was), recently held in
R. v. Joseph
,
2020 ONCA 73, 385 C.C.C. (3d) 514, at para. 49, that police are not obliged to
caution a suspect simply because he or she is a suspect. Rather, s. 10(b)
of the
Charter
is engaged at the time of arrest or detention: at para.
50, citing
R. v. Suberu
, 2009 SCC 33, [2009] 2 S.C.R. 460, at para.
20. I agree with this position. The appellant in this case was neither arrested
nor detained, and the mere fact that he may have been a suspect did not engage
his rights under s. 10(b) of the
Charter
. There was no
Charter
violation. The November 8 statements were voluntary and properly admitted.
III.
Did the trial judge err in admitting Mr. Khaleyis May 4, 2007
statement to the police for the truth of its contents?
(1)
Background
[87]
Mr. Ramin Khaleyi was a
close associate of the appellant. Between early February 2007 and May 2007, Mr.
Khaleyi contacted the police with an offer to provide information regarding the
death of Mr. Zalal, as well as other criminal activities. At the time, Mr.
Khlaleyi was facing charges for breaching a court order and fraud.
[88]
During this period, Mr.
Khaleyi made numerous statements to the police pertaining to information he had
about Mr. Zalals murder. Some of this information was based on his direct
knowledge. In other instances, he was simply repeating what he had gathered
from various sources.
[89]
When testifying as a
witness at the appellants trial, Mr. Khaleyi recanted much of what he had told
police, including the statements that inculpated the appellant. As a result,
the Crown sought to have several of his pre-trial statements admitted under the
principled exception to the hearsay rule. The relevant statements were provided
on the following dates: February 7, 2007, February 11, 2007, April 20, 2007,
April 24, 2007, May 3, 2007, and May 4, 2007.
[90]
The trial judge
admitted Mr. Khaleyis May 4, 2007 statement under the principled exception to
the rule against hearsay, concluding that the statement was both necessary and
reliable. The appellant challenges the trial judges conclusions on both
necessity and reliability.
[91]
A summary of the
various conversations with the police, which culminated in the May 4, 2007
statement, is provided below.
(2)
The Statements
(a)
February 7, 2007:
[92]
On February 7, 2007, Mr.
Khaleyi provided his first statement to the police. He agreed to be a
confidential informant in exchange for payment and assistance with his
outstanding criminal charges. No promises were given, but an indication was
made that if the information provided was reliable, assistance might be
possible. On this occasion, Mr. Khaleyi identified the appellant, Mr.
Abdul-Hussein, and Mr. Kayem as involved in the murder. He also stated that the
appellant told him that the gun used was thrown in a sewer on Marlin Private, a
neighbourhood in Ottawa, along with a crowbar and two masks.
(b)
February 11, 2007:
[93]
Mr. Khaleyi gave
another statement on February 11, 2007. On this occasion, he still wanted to
become a confidential informant and again expressed a desire to be paid. He
provided details about the information he had heard from others, including the
appellant, about the location of the homicide.
(c)
April 20 & 24 2007:
[94]
Mr. Khaleyi provided additional
statements to the police.
(d)
May 3, 2007:
[95]
Mr. Khaleyi was
interviewed on May 3, 2007 after he alleged that he had been kidnapped and
beaten by associates of the appellant the night before. He expressed a desire
to become a witness against the appellant, as opposed to merely a confidential
informant. He was upset and displayed clear animosity toward the appellant. In
this statement, he mentioned that he had been with the appellant at a hotel
where the appellant had confessed to committing the murder. He was told by
police to take some time to compose himself before deciding to become a witness.
(e)
May 4, 2007:
[96]
On May 4, 2007, Mr.
Khaleyi provided a videotaped statement to the police. He was under oath and received
a caution about the consequences of lying. He was taken through the evidence he
provided between February 7, 2007 and May 3, 2007.
[97]
Mr. Khaleyi claimed
that the appellant had confessed to him about the murder of Mr. Zalal, as well
as provided other information that placed the appellant with Mr. Kayem and Mr.
Abdul-Hussein on the night of the shooting.
[98]
Concerning the
confession, Mr. Khaleyi alleged that, shortly before Christmas in 2006, he
spent the night at a hotel with his girlfriend, the appellant, and the
appellants wife. At that time, Mr. Khaleyi had recently been released from
jail. On the evening in question, he told the appellant that he had heard a rumour
while in custody that the appellant had killed Mr. Zalal. Mr. Khaleyi asked the
appellant if the rumours were true and if he had killed Mr. Zalal. The
appellant replied yes and added that he had the boys drop off the body.
[99]
Mr. Khaleyi stated that
the next day, the appellant told Mr. Khaleyi to keep [his] mouth shut or [he
is] gonna die.
[100]
Mr. Khaleyi also told
police that the day before Mr. Zalals murder, he met briefly with the
appellant at Marlin Private. The appellant met with Mr. Khaleyi to drop off two
cigarettes. The appellant, who was driving a Chevrolet Avalanche, then left, following
Mr. Abdul-Hussein and Mr. Kayem in their silver and white, two-door car.
[101]
Mr. Khaleyi also
provided information that was proved inaccurate, including: i) that Mr. Zalal
had been bound and beaten prior to being shot; ii) that the shooting had
occurred in a house; and iii) that the gun, a crowbar, and two masks used in
the killing had been disposed of in an area of Ottawa.
(3)
Examination-in-chief
and Testimony in
voir dire
:
[102]
At trial, Mr. Khaleyi,
essentially recanted from his earlier statements. He repeatedly claimed that he
had no memory of his interactions with the police. In his examination-in-chief,
Mr. Khaleyi provided some evidence confirming his recollection of his
statements to police. However, he also claimed that as a result of the passage
of time, his poor memory due to alcohol and drug use, and his change in
lifestyle, he was uncertain about the accuracy of the events he described in
his statements. Since he consumed a large quantity of drugs on the night of the
alleged confession, he could only say that he thought that the appellant had
confessed. He stated that he had a limited independent memory of what he told
the police. He claimed that he suffers from significant hearing loss and that
this may have played a factor in what he believed he heard the appellant say at
the hotel. He was given the chance to review his audio and video statements,
including transcripts. Ultimately, he testified that he no longer believed that
he heard the appellant confess to murder.
[103]
In light of Mr.
Khaleyis inconsistent testimony (and his expressions of frustration while
testifying), the Crown brought an application to declare Mr. Khaleyi an adverse
witness and for permission to cross examine him on prior inconsistent
statements, pursuant to ss. 9(1) and 9(2), respectively, of the
Canada
Evidence Act,
R.S.C., 1985, c. C-5.
[104]
The Crown argued that
Mr. Khaleyi was exaggerating the extent of his memory loss and that it was
necessary to cross examine him on the inconsistencies in his testimony. They further
argued that Mr. Khaleyi was an adverse witness, in light of the fact that he
claimed:
i)
that he had repeated his position numerous times;
ii)
that the Crown had ruined his life; and
iii)
that reviewing his prior statements was unlikely
to assist with his memory.
[105]
The trial judge allowed
the Crowns application under s. 9(2) to cross examine Mr. Khaleyi on his May 4,
2007 video statement, among others. She later held that Mr. Khaleyi was an adverse
witness under s. 9(1).
[106]
However, Mr. Khaleyis cross-examination
did not prove fruitful. The Crown therefore brought an application to admit Mr.
Khaleyis prior statements to police for the truth of their contents.
[107]
The trial judge
admitted Mr. Khaleyis May 4, 2007 statement for the truth of its contents. She
held that the statement:
i)
was necessary, because Mr. Khaleyi had recanted
from his prior statements, and
ii)
satisfied the threshold reliability requirement,
as the statement was taken under oath and videotaped, the defence would have an
opportunity to cross examine Mr. Khaleyi, and parts of the statement were
independently corroborated.
(4)
Arguments on Appeal
[108]
The appellant argues
that the trial judge erred in admitting the May 4, 2007 statement for four
reasons.
[109]
First, she erred in her
assessment of necessity by misapprehending the extent of the witness lack of
memory. While Mr. Khaleyi did profess a lack of memory on some aspects of his
former testimony, he did testify about other aspects, including his encounter
with the appellant on the evening of the murder, and about a threat allegedly
made by the appellant. Accordingly, there was no need for the witness prior
statement to be admitted and the necessity requirement was not met.
[110]
Second, the trial judge
erred in her assessment of threshold reliability by finding that the defence
had a meaningful opportunity to cross-examine Mr. Khaleyi, given his
professed lack of memory.
[111]
Third, Mr. Khaleyis
statement lacked sufficient circumstantial or evidentiary guarantees of
reliability, as the corroborative evidence adduced by the Crown did not
eliminate alternative explanations for the statement, such as the declarant not
being truthful.
[112]
Fourth, even if the
threshold requirements for admissibility were met, the trial judge erred by
failing to consider and exercise her residual discretion to exclude the
statement. The appellant argues that Mr. Khaleyi was a manifestly unreliable
witness who was motivated by a desire for financial compensation and
assistance with criminal charges, as well as animosity toward the appellant. As
Mr. Khaleyis evidence was not adequately corroborated, there was a real
risk of a wrongful conviction based on his flawed testimony:
R. v. Khela,
2009
SCC 4, [2009] 1 S.C.R. 104, at para. 2. Since the alleged confession was
central to the Crowns case, the trial judge should have noted the risk that
the jury would be unable to see past the allegation of the confession and thus
be unable to properly assess Mr. Khaleyis credibility. The verdict may have
been different had the statement been excluded.
[113]
In response, the Crown
argues that the May 4, 2007 statement was necessary given how Mr. Khaleyi provided
only slivers of his prior statements to police in his trial testimony, and
otherwise effectively recanted.
[114]
The statement was also reliable, both procedurally and
substantively.
[115]
The Crown next argues that it is implicit from the trial judges
brief oral reasons that she consciously declined to exercise her residual
discretion, which she had exercised at other times throughout the trial.
[116]
Finally, if the trial judge made any errors, the curative proviso is
applicable, as no substantial wrong or miscarriage of justice occurred.
(5)
Governing Principles
(a)
Standard of Review
[117]
A trial judges decision on the admissibility of evidence is
entitled to deference on appeal, provided that it is compliant with the correct
legal applicable principles and does not disclose a material misapprehension of
the evidence central to the assessment:
R. v. Blackman
, 2008 SCC 37,
[2008] 2 S.C.R. 298, at para. 36;
R. v. Dupe
, 2016 ONCA 653, 340
C.C.C. (3d) 508, at para. 50.
(b)
Principled Exception to the Rule Against Hearsay Evidence
[118]
Hearsay evidence is presumptively inadmissible on the basis that,
absent contemporaneous cross-examination of the declarant, the party against
whom the evidence is offered cannot effectively test the reliability and
veracity of the out-of-court statement:
Dupe
, at para. 44. Such
evidence is generally excluded both to protect the integrity of the truth-seeking
function of the trial and to preserve the fairness of the trial: at para. 44.
[119]
However, under the principled approach to hearsay, hearsay can
exceptionally be admitted into evidence when the party tendering it
demonstrates that the twin criteria of necessity and threshold reliability are
met on a balance of probabilities:
R. v. Bradshaw
, 2017 SCC 35,
[2017] 1 S.C.R. 865, at para. 23.
(c)
The Principled Exception - Necessity
[120]
In
R. v. Srun,
2019 ONCA 453, 146 O.R. (3d) 307, Watt J.A.
described the necessity requirement in the following terms, at para. 123:
The
necessity
requirement of the
principled approach to the hearsay rule may be established where the party
seeking admission of the hearsay statement cannot compel testimony from the
declarant.
Indeed, unavailability and thus necessity
can be established even where the declarant is not unavailable in the strict
physical sense.
[Emphasis added; citations omitted.]
[121]
Prior jurisprudence demonstrates that the necessity requirement
should not be narrowly construed. Lamer C.J. (as he then was) writing in
R.
v. B. (K.G.)
, [1993] 1 S.C.R. 740, described the flexible analysis of this
criterion, at p. 796:
However, it is important to remember that the
necessity criterion "must be given a flexible definition,
capable of encompassing diverse situations"
. Wigmore
referred to
two classes of necessity:
(1) The person whose assertion is offered
may now be dead, or out of the jurisdiction, or insane, or otherwise
unavailable for the purpose of testing. This is the commoner and more palpable
reason ....
(2) The
assertion may
be such that we cannot expect, again, or at this time, to get evidence of the
same value from the same or other sources
.... The necessity is not so
great; perhaps hardly a necessity, only an expediency or convenience, can be
predicated. But the principle is the same. [Emphasis added; citations omitted.]
[122]
Finally, [w]here a witness recants from a prior statement,
necessity is established:
R. v. Youvaraj
, 2013 SCC 41, [2013] 2
S.C.R. 720, at para. 22; see also
R. v. McMorris
, 2020 ONCA 844, at
para. 22.
(d)
The Principled Exception Threshold Reliability
[123]
Watt J.A. observed in
Srun
, at paras. 125-127, that the threshold
reliability requirement can be met in one of two, non-mutually exclusive ways,
generally referred to as procedural reliability and substantive reliability:
Procedural
reliability
is established when there are
adequate safeguards for testing the evidence despite the fact that the
declarant has not given the evidence in court, under oath or its equivalent and
under the scrutiny of contemporaneous cross-examination. These substitutes must
provide a satisfactory basis for the trier of fact to rationally evaluate the
truth and accuracy of the hearsay statement.
Among the
substitutes for traditional safeguards are video recording the statement,
administration of an oath and warning the declarant about the consequences of
lying. However, some form of cross-examination, as for example of a recanting
witness at trial is usually required.
Substantive
reliability
is established where the hearsay statement is inherently
trustworthy. To determine whether the statement is inherently trustworthy, a
trial judge
considers the circumstances in which the
statement was made and any evidence that corroborates or conflicts with the
statement
. The standard for substantive reliability is high: the judge
must be satisfied that the statement is so reliable that contemporaneous cross-examination
on it would add little if anything to the process.
Procedural and
substantive reliability are not mutually exclusive.
They may work in tandem in that elements or both can combine to
overcome the specific hearsay dangers a statement might present even where
each, on its own, would be insufficient to establish reliability. [Emphasis
added; citations omitted]
[124]
A trial judge assessing the admissibility of evidence in a
voir
dire
must keep in mind the distinction between
threshold
and
ultimate
reliability. At the admissibility stage, a trial judge has a limited
role in assessing the evidences threshold reliability on a balance of
probabilities. It is for the trier of fact to determine the evidences
ultimate
reliability; it is crucial to the integrity of the fact-finding process
that the question of ultimate reliability not be pre-determined on the
admissibility
voir dire
:
R. v. Khelawon
, 2006 SCC 57, [2006]
2 S.C.R. 787, at para. 93; see also
Bradshaw
, at para. 42;
McMorris
,
at para. 23.
(e)
Residual Discretion to Exclude Unduly Prejudicial Evidence
[125]
Satisfying the twin criteria of the principled exception to the
hearsay rule does not end the admissibility analysis, however, as a trial judge
maintains a residual discretion to exclude otherwise admissible hearsay where
its probative value is outweighed by its prejudicial effect:
Srun
, at
para. 128.
(6)
The Principles Applied
(a)
The Statement was Necessary and Reliable
[126]
I am satisfied that the trial judge correctly admitted Mr. Khaleyis
May 4, 2007 statement. As I will explain, it met the necessity and reliability
requirements under the principled exception to the hearsay rule. Furthermore,
the trial judge was correct not to use her residual discretion to exclude the
statement, given its significant probative value.
[127]
At trial, Mr. Khaleyi effectively recanted much of what he had told
the police. He repeatedly claimed that he had a limited memory of his
interactions with police and refused to adopt the content of his earlier
statements as true. He provided several explanations as to why his evidence
differed from his statements, including how he: was using drugs heavily,
including when he heard the alleged confession; was suffering from mental
health issues; suffered from hearing loss, which likely impacted his earlier
belief that he heard the appellant confess; was manipulated by the police;
wanted assistance with his charges; and wanted money for his evidence. He commented
that reviewing transcripts of his past statements was unlikely to refresh his
memory. Ultimately, he stated that he could not now swear under oath that he
heard the appellant confess to the murder. These circumstances formed the
context in which the Crown sought to adduce the May 4 statement for the truth
of its contents.
[128]
The trial judge, as the evidentiary gate keeper, was obliged to
satisfy herself that the May 4 statement satisfied the threshold admissibility
requirements before it could be admitted for its truth. Once admitted, it could
then be considered by the jury, who as the triers of fact, were responsible for
the determination of the ultimate reliability and consideration of the
statement. In my view, the trial judge correctly carried out her function.
[129]
First, the necessity criterion was satisfied. By recanting from the
statement, Mr. Khaleyi was effectively depriving the court of his evidence.
This was sufficient to satisfy this requirement:
Youvaraj
, at para. 22;
McMorris
, at para. 22.
[130]
Second, the reliability requirement was also met.
[131]
The statement was procedurally reliable. Both parties acknowledge
that the May 4 statement was made under oath and video recorded in its
entirety. Further, Mr. Khaleyis explanations for his statements and
recantation were subject to cross-examination by the defence.
[132]
The appellant argues that the trial judge was wrong to rely on Mr.
Khaleyis availability for cross-examination as an indicium of procedural
reliability in this case. I do not agree.
[133]
While Mr. Khaleyi offered multiple explanations for his changed
testimony, I do not consider this as having rendered the cross-examination a
nullity. In this regard, I note that Mr. Khaleyi generally admitted to making
the prior statement and provided explanations for changing his testimony. As
noted earlier, he claimed he made the past statements because he: was using
drugs; had mental health issues; was manipulated by the police; wanted
assistance with other charges; and wanted money for his information. Defence
counsel cross examined Mr. Khaleyi on these explanations. Where a witness
provides explanations for their changed testimony, the trier of fact is able to
assess both versions of their story and the explanation:
Youvaraj,
at
para. 49, citing
R. v. U. (F. J.)
, [1995] 3 S.C.R. 764, at para. 46.
In my view, the defence had a full opportunity to cross examine Mr. Khaleyi
on these issues.
[134]
In conclusion, Mr. Khaleyis availability for cross-examination
supports the May 4 statements procedural reliability. As the inquiry into
threshold reliability is not so focused on the question of whether there is
reason to believe the statement is true, as it is on the question of whether
the trier of fact will be in a position to rationally evaluate the evidence, I
conclude that the nature of Mr. Khaleyis changed testimony did not deprive the
appellant of a meaningful opportunity for
cross-examination or undercut the statements
procedural reliability:
Khelawon
, at para. 76. The trier of fact was
positioned to evaluate the evidence, including Mr. Khaleyis explanations for
his changed testimony. The May 4 statement was procedurally reliable.
[135]
I also conclude that
the May 4 statement had certain markers of substantive reliability. The trial
judge did not have the benefit of the Supreme Courts reasons in
Bradshaw
.
However, I note that certain material aspects of Mr. Khaleyis May 4 statement
were corroborated by other pieces of evidence. The material points and their
relevant corroborative evidence include:
·
The appellants involvement in the
murder:
The wiretap evidence suggesting the
appellant was directly involved in the murder;
·
Mr. Kayems involvement in the murder:
Mr. Kayems DNA evidence was found on a cigarette butt located near
the deceaseds body; and
·
Mr. Khaleyis interaction with the
appellant and Mr. Kayem at Marlin Private on the night of the murder:
The cell phone tower evidence demonstrating that both the appellant
and Mr. Kayem accessed the cell tower near Marlin Private, at around 10 p.m.
[136]
Here, alternative
explanations for Mr. Khaleyis statement include that he was lying because he
wanted financial compensation, assistance with his charges, revenge against the
appellant, or to secure his safety from the appellant.
[137]
I agree with the
respondent that, to an extent, Mr. Khaleyis financial and safety interests
were contingent on the information being provided to police being true.
However, I agree with the appellant that the available corroborative evidence
is not capable, standing alone, of ruling out these alternative explanations.
[138]
Despite these
evidentiary shortcomings, I conclude that the markers of procedural
reliability, either alone or in tandem with the corroborative evidence and
circumstances suggesting substantive reliability, are sufficient to demonstrate
threshold reliability. The statement bore the traditional markers of procedural
reliability. Mr. Khaleyis testimony at trial provided the defence with the
opportunity to cross examine him and impeach the credibility of the May 4
statement. Accordingly, the trial judge was correct to admit Mr. Khaleyis
evidence and to leave an assessment of ultimate reliability to the trier of
fact.
(b)
The Trial Judge Did Not Err by Failing to Exclude the Evidence Under
Her Residual Discretion
[139]
I also conclude that
the trial judge was correct not to exclude the evidence under her residual
discretion.
[140]
As indicated earlier,
the May 4 statement was highly probative. This evidence, were it believed to be
true, would directly implicate the appellant in the victims murder.
[141]
The prejudicial risk
from admitting the statement is outweighed by the probative value. I
acknowledge that there is a risk inherent to relying on the testimony of
unsavoury witnesses. However, this risk can be mitigated by counsels
submissions and the instructions to the jury, as was done here. In this regard,
I repeat for convenience portions of the trial judges charge to the jury:
Now Im going to talk to you about some of the
Crown witnesses who were of unsavoury character.
Experience teaches us that testimony from
Crown witnesses with these backgrounds must be
approached
with the greatest care and caution.
Common sense also tells you that, in light of
these circumstances, there is good reason to look at Ms. Smith-Banks, Mr.
Abdullahi, Mr. Ahmed and
Mr. Khaleyis evidence with the
greatest care and caution
. You are entitled to rely on their evidence,
however, even if it is
not
confirmed by another witness or other
evidence, however
rather, but it is dangerous for you
to do so.
Accordingly, you should
look
for some
confirmation
of their evidence from somebody or something other than their
own testimony
before you rely upon their evidence in deciding whether
Crown counsel has proven the case against Nawaf Al-Enzi beyond a reasonable
doubt.
These witnesses and the circumstances in which
they testified might well make you wish that somebody or something else
confirmed what they said. You may believe their testimony, however, if you find
it trustworthy, even if no one or nothing else confirms it.
When you consider it, however, keep in mind who gave the
evidence and the circumstances under which they testified
. [Italics in
original; underlining added.]
[142]
While I acknowledge
that there may be issues with Mr. Khaleyis evidence, I conclude that the trial
judge was correct in finding that these difficulties were matters properly left
to the ultimate trier of fact. It was open to the trial judge to refuse to
exercise her residual discretion to admit the evidence.
[143]
In conclusion, I do not
see any errors with the trial judges ruling necessitating appellate
intervention. This decision was informed by correct principles of law and a
proper understanding of the evidence. It is therefore entitled to deference. I
would uphold the ruling that Mr. Khaleyis May 4 statement was properly admitted
under the principled approach to hearsay.
IV.
Did the trial judge err in leaving constructive first degree murder
by way of forcible confinement with the jury, or in her instruction to the jury
on this route of liability?
(1)
Background
[144]
The Crowns theory at
trial was that the appellant murdered Mr. Zalal due to a dispute over a firearm
that Mr. Zalal had loaned him. According to the Crown, the appellant arranged
to have Mr. Zalal picked up under the pretence that he would have his firearm
returned to him. After the appellant and his friends picked up Mr. Zalal, the
appellant shot him in the back of the head and had his body left in a field.
[145]
At the close of the
Crowns case, the appellant brought a motion for a directed verdict, arguing
that the trial judge should remove first degree murder as a viable route of
liability. He argued that there was insufficient evidence that the murder was
planned and deliberate or committed during a kidnapping.
[146]
The trial judge denied
the application. She found that the circumstantial evidence, including the
evidence demonstrating the existence of the firearm dispute and showing that Mr.
Zalal was with the appellant and his friends on August 18, 2006, satisfied her
that first degree murder should be left to the jury.
[147]
In her charge, the
trial judge thus instructed the jury on two routes of liability for first degree
murder: by planning and deliberation, pursuant to s. 231(2) of the
Criminal
Code
, and by way of forcible confinement, pursuant to s. 231(5)(e) of the
Criminal
Code
. In doing so, the trial judge outlined for the jury the elements the
Crown had to prove beyond a reasonable doubt to establish constructive first
degree murder.
(2)
Governing Principles
[148]
When counsel for an
accused applies for a directed verdict at the end of the Crowns case, the
trial judge must decide whether there is some evidence on the basis of which a
reasonable jury, properly instructed, could return a verdict of guilty for the
offence in question:
Hayes
, at para. 65;
R. v. Tomlinson
,
2014 ONCA 158, 307 C.C.C. (3d) 36, at para. 151.
[149]
For a trial judge to
make this finding, the Crown must adduce evidence on every essential element of
the offence for which the Crown has the evidential burden:
Hayes
, at
para. 65;
Tomlinson
, at para. 151. If the Crowns case is
circumstantial, as was the case here, the trial judge must engage in a limited
weighing of the evidence to determine whether it is reasonably capable of
supporting the inferences the Crown seeks to have the jury draw:
Hayes
,
at para. 65;
Tomlinson
, at paras. 153-154.
[150]
The ultimate test for
leaving a route of liability with the jury is whether the evidence, if
believed, could reasonably support an inference of guilt:
Hayes
, at
para. 65;
Tomlinson
, at para. 154.
[151]
A decision to leave a
route of liability with the jury is to be reviewed on a standard of
correctness:
Hayes
, at para. 65;
Tomlinson
, at para. 155.
[152]
In
R. v.
McGregor
,
2019 ONCA 307, 145 O.R. (3d) 641, this court described the five essential
elements of constructive first degree murder under s. 231(5)(e), at para. 60.
They are reproduced below, with slight modifications:
1) that the accused committed or attempted to
commit kidnapping or unlawful confinement, contrary to ss. 279(1) and
279(2) of the
Criminal Code
;
2) that the accused murdered the victim;
3) that the accused participated in the murder
in such a manner that they were a substantial cause of the victims death;
4) that no intervening act by somebody else
resulted in the accused no longer being substantially connected to the victims
death; and
5) that the kidnapping and the murder were
part of the same transaction.
(3)
Arguments on Appeal
[153]
The appellant argues
that the trial judge erred in leaving constructive first degree murder with the
jury. There was no evidentiary basis on which the jury, properly instructed,
could have concluded that Mr. Zalal was kidnapped for any reason other than as
part of a plan to kill him. Planned and deliberate murder should thus have been
the only route of liability put to the jury.
[154]
The appellant also
argues that, even if such an evidentiary basis did exist, the trial judge erred
in her instruction by failing to explain how the jury could reject planning and
deliberation but accept murder by way of kidnapping and forcible confinement.
According to the appellant, the trial judges error is the same as the one
identified by Brown J.A. in
R. v. Saleh
, 2019 ONCA 819, 380 C.C.C.
(3d) 445, at para. 163:
The instructions did not provide any guidance to
the jury about how they could have a reasonable doubt that the murder for which
Saleh was responsible at law was a planned and deliberate one with kidnapping
forming a key part of the plan but was one caused by Saleh while committing
the predicate offence of kidnapping.
[155]
In response, the Crown
argues that the trial judge did not err. The evidence supported the inference
that the appellant had planned to kidnap Mr. Zalal for a purpose other than
murdering him (for example, to intimidate him), but subsequently decided to
murder him. The Crown also argues that the instruction properly equipped the
jury to consider the evidence.
(4)
The Principles Applied
[156]
My conclusions on this
issue are as follows.
[157]
First, I disagree with
the appellant that trial judge lacked the sufficient evidentiary basis
necessary to leave constructive first degree murder with the jury.
[158]
Second, I agree with
the appellant that the trial judge failed to explain to the jury how they could
reject planning and deliberation as a route to first degree murder, but still
find that the appellant is guilty of first degree murder by way of constructive
murder. However, for the reasons that follow, I am of the view that this error did
not cause a substantial wrong or miscarriage of justice.
(a)
There Was Sufficient Evidence to Leave Constructive First Degree Murder
With the Jury
[159]
On appeal, the
appellant does not contest the trial judges charge to the jury with respect to
the planning and deliberation route to first degree murder. The issue alleged
is in the trial judge also leaving an alternative route to liability for first degree
murder by way of constructive murder, pursuant to s. 231(5)(e) of the
Criminal
Code
.
[160]
I disagree with the
appellant on this issue. In my view, there was ample circumstantial evidence
which justified the trial judge leaving constructive first degree murder with
the jury. This evidence included:
·
The evidence that the appellant and the
deceased did not get along:
First, there was
evidence that in the spring of 2006, Mr. Zalal was angered that the appellant
test fired, without his permission, a gun that they had purchased together. Mr.
Zalal called this a bitch move. Second, there was evidence that on August 18,
2006, Mr. Zalal was again with the appellant when he refused to return a gun
that he had borrowed while Mr. Zalal was in prison. Mr. Zalal was
overheard yelling at the appellant on the phone, at which time he called the
appellant a bitch.
·
The evidence that the deceased was with
the appellants associates on the day he was murdered:
There was evidence that on August 18, 2006, the deceased told his
close friend that he was with a driver named Moe or Moo (Moe was a
nickname for the appellants friend and subsequent co-accused, Mr. Kayem) on
his way to get his gun back. Mr. Zalal used Mr. Kayems cell phone to
carry out this conversation. This was the last contact the deceased had with
his friend.
·
The evidence that neither Mr. Kayem nor
Mr. Abdul-Hussein had any motive to harm the deceased:
The evidence disclosed no motive by the appellants associates to
harm the deceased. Further, the appellants associates were not well known to
the deceased. The appellant was the only one who had a motive to harm the
deceased, grounded in the evidence.
·
The evidence allegedly demonstrating the
appellants plan to separate the deceased from his friends:
the evidence from the cell phone records showed a series of
intertwined calls from the appellant to Mr. Kayem. Under the Crowns theory,
the appellant made these calls to orchestrate the pick-up of the deceased by
Mr. Kayem and Mr. Abdul-Hussein.
[161]
The trial judge
reviewed this relevant circumstantial evidence. In my view, it could ground an inference
that the appellant had lured Mr. Zalal to a location under the pretence of
having his firearm returned to him. If the jury had doubt that the appellant
had planned to kill Mr. Zalal, they could find that the appellant had kidnapped
him for the alternate purpose of intimidating him, but instead decided to
murder him during the kidnapping, per the Crowns alternate theory. Accordingly,
I conclude that there was a sufficient evidentiary basis for the trial judge to
leave constructive first degree murder with the jury.
(b)
The Jury Charge was Insufficient, but this Error can be Cured by the
Curative Proviso
[162]
I would also dismiss
the appellants second argument, namely that the trial judge in her charge erred
in a manner identical to what justified the ordering of a new trial in
Saleh
.
In my view,
Saleh
is distinguishable. While the trial judge did err in
her jury charge, a functional assessment of the charge demonstrates that this
error does not warrant appellate intervention.
[163]
In
Saleh
,
Brown J.A. found that the Crowns case had rested on demonstrating Salehs
participation in a planned and deliberate murder: at para. 198. In
earlier written submissions, Crown counsel took the position that this is a
planned and deliberate first degree or nothing: at para. 146. However, the
trial judge added two other routes of liability during the course of the
pre-charge conference. One additional route was constructive murder premised on
kidnapping. In the Crowns brief closing submissions on this path to first
degree murder, Crown counsel did not offer the jury a reason for a kidnapping
other than to kill the deceased: at para. 159. Brown J.A.s finding meant
that, when viewed in context, the error was serious: at para. 198. The
trial judge had increased the number of routes of liability with paths
not
requested by the parties at the start of the pre-charge conference, and without
properly equipping the jury with the tools necessary to understand them: at
paras. 168, 198.
[164]
In this case, the
Crowns case was predicated on both theories of liability. The Crowns
submissions would have therefore aided the jury in understanding how they could
reject planning and deliberation, yet accept the Crowns kidnapping theory. In
this respect, I reproduce the relevant portions of the Crowns closing address,
where Crown counsel stated the following:
Theres another way of first degree murder,
and that would involve a last minute shooting with the intent to kill by Nawaf
Al-Enzi,
but if you had some doubt that he actually
intended to kill him until he got him into the car, but that he thought he was
going to intimidate him, or rough him up, or let him know that Nawaf was boss
but maybe let him live, and then decide at the last minute, Im going to shoot
him, once he gets him into the car, lured him away by fraud in order to do
some harm to him, and then kidnapped by fraud
so, kidnapping can
happen by force, as we all thats what we usually think of, but kidnapping
can happen by a lure or a fraud as well, thats another way to kidnap someone.
So, if Nawaf if you find that Nawaf suckered
Mohamed Zalal into that ride, why else is he separating him from his friends
but that he has some evil intent, but if youre not satisfied that he had
formed the intent to kill until the last minute thats still first degree.
Where he had the intent to kidnap, to lure into the car by
fraud to get him away from his friends so he could threaten, menace,
intimidate, harm in some lesser degree than murder, and then decide at the last
minute to convert it into murder, that is also a route to first degree.
[165]
In this context, while
the trial judge erred in failing to explain to the jury how to differentiate
between the two routes of liability, this error was minor and can properly be saved
under the curative proviso in s. 686(1)(b)(iii) of the
Criminal Code
:
R.
v. Nguyen
, 2015 ONCA 278, 125 O.R. (3d) 321, at paras. 160-162, 164,
per
Weiler J.A. (concurring), leave to appeal refused, [2015] S.C.C.A. No. 365.
[166]
In my view, no
substantial wrong or miscarriage of justice occurred here. The jury would have
understood that they could only find the appellant guilty of constructive first
degree murder if they did not accept that the murder had been planned and
deliberate, yet accepted that the appellant had kidnapped Mr. Zalal for another
purpose and changed his mind during the kidnapping. The Crowns closing
submissions identified the relevant potential scenarios and explained to the
jury how they could reach a verdict of constructive first degree murder. I note
that the Crowns submissions on this point resemble Brown J.A.s hypothetical
instruction in
Saleh
, at paras. 161 and 164.
[167]
Accordingly, I would
dismiss this ground of appeal.
V.
Did the trial judge err in finding that the communications
between the appellant and his wife, made while they were still married, were
not protected by spousal privilege?
(1)
Background
[168]
On August 9, 2007, the
police sought a judicial authorization under ss. 185 and 186 of the
Criminal
Code
. They wished to intercept the private communications of the appellant,
Mr. Kayem, and Mr. Abdul-Hussein, on the basis that they were involved in the
murder of Mr. Zalal.
[169]
The first authorization
was granted on August 10, 2007, and five subsequent authorizations were granted
over the course of the investigation.
[170]
Between August 13, 2007 and June 17, 2008, the police intercepted 33
private communications between the appellant and his then wife, Zeinab Abdul-Hussein.
The appellant and Ms. Abdul-Hussein divorced following the appellants first
conviction.
[171]
As described above, many of these conversations can be seen as
evidence of the appellant attempting to prevent Mr. Kayem (or Auntie) from
returning to Canada.
[172]
The Crown sought to introduce these conversations as evidence. They
argued that, while the communications occurred while the appellant and Ms. Abdul-Hussein
were married, any spousal privilege that may have attached to those
communications was no longer in effect, as the appellant and his former wife were
now divorced.
[173]
The appellant disagreed, arguing that spousal privilege still
attached to the communications. He suggested that the operation of spousal
privilege was dictated by the nature of the relationship at the time of the
communication, instead of the relationship status at the time the privilege is
claimed. As the communications had occurred during the marriage, the privilege
was still operative.
[174]
The trial judge agreed with the Crown, holding that spousal
privilege does not survive divorce. In reaching this conclusion, she noted
that, while the issue has not been definitively addressed, it is clear from
the jurisprudence that the legislative purpose of the spousal privilege is
intended to ensure that marital harmony is preserved. To extend spousal
privilege to communications between former spouses after divorce would not
accord with this legislative purpose, as there is no longer any marital harmony
to protect. Therefore, since the appellant and Ms. Abdul-Hussein were no longer
married, their communications were not privileged and could be admitted as
evidence.
[175]
The trial judge also considered whether to exercise her discretion
to exclude the communications on the basis that the privilege did exist during
the appellants first trial. However, she concluded that, given that she was
conducting a new trial on the current state of affairs, it would not be in
societys interest to restrict the Crown from introducing evidence that is now
properly admissible.
(2)
Arguments on Appeal
[176]
On appeal, the appellant argues that the trial judge erred in
finding that spousal privilege does not survive divorce. He argues that,
contrary to the findings of both the trial judge and Sharpe J. (as he then was)
in
R. v.
Rendon
, [1997] O.J. No. 5505 (Gen. Div.), the
conclusion that spousal privilege dissolves upon the dissolution of marriage does
not accord with the wording of s. 4(3) of the
Canada Evidence Act
.
[177]
In support of this argument, he points to the language in s. 4(3)
that no husband or wife is compellable to disclose any communication made
during their marriage
(emphasis added). According to
the appellant, this phrasing indicates that privilege extends to all
communications made during the marriage.
[178]
The appellant also argues that, contrary to the conclusion of Sharpe
J., extending the privilege beyond the period of marriage would promote and
protect marital harmony. Society has an interest in former spouses maintaining
harmonious relationships, including for the sake of any children. Further, as
divorce is commonplace in modern society, the choice not to protect marital
communications after divorce may undermine marital harmony by discouraging
honest communication during the marriage.
[179]
Finally, the appellant takes the position that, even if privilege
does not attach to the communications, the trial judge erred in admitting them
in light of the fact that the divorce was a direct result of the appellants
first conviction. Under this argument, the admission of the communications continued
the miscarriage of justice occasioned by the first trial.
[180]
The Crown makes three arguments in response:
i)
as s. 4(3) requires that the person invoking
the privilege be a husband or wife at the time of their testimony, the
provision cannot extend to former or future spouses;
ii)
extending spousal privilege to former spouses
would not accord with the purposes of the privilege; and
iii)
the trial judge was correct not to exclude the
communications under her residual discretion.
(3)
Governing Principles
[181]
The parties arguments on spousal privilege focused on section 4(3)
of the
Canada Evidence Act
, which states:
No husband is compellable to disclose any
communication made to him by his wife during their marriage, and no wife is
compellable to disclose any communication made to her by her husband during
their marriage.
[182]
In
R. v. Couture,
2007 SCC 28, [2007] 2. S.C.R. 517, the
Supreme Court of Canada described the effect of this privilege at para. 41:
The privilege is testimonial in nature, giving
a right to withhold evidence but the communications themselves are not
privileged. The privilege belongs to the spouse receiving the communication and
can be waived by him or her.
[183]
Two historic rationales for this privilege have survived to this
day, including: i) the promotion of marital harmony, and; ii) the prevention of
the indignity of having one spouse testify against another:
Rendon
, at
para.
46;
R. v. Salituro,
[1991] 3 S.C.R. 654, at
p. 672;
Couture
, at para. 43;
Nguyen
, at para.
20.
[184]
Of note is how this court has previously held, albeit in a different
context, that spousal privilege does not extend to common-law spouses:
R.
v. Nero
, 2016 ONCA 160, 334 C.C.C. (3d) 148, at para. 185, leave to appeal
refused, [2016] S.C.C.A. No. 184;
Nguyen.
[185]
Competency, compellability, and privilege are distinct but related
concepts.
[186]
Competency refers to a persons legal capacity to give evidence in a
court of law.
[187]
Compellability refers to the ability to force a witness by subpoena
to give evidence in court under the threat of contempt proceedings.
[188]
Under the spousal incompetency rule as it existed previously,
married spouses of accused persons were neither competent nor compellable
witnesses for the Crown, subject to limited exceptions.
[189]
Privilege is the right of a person or class of persons to exclude
certain communications from evidence or to refuse to testify about matters
covered by the privilege. The relevant privilege here is the spousal privilege
under s. 4(3). This court previously observed that the goals of protecting
marital harmony and avoiding the natural repugnance resulting from one spouse
testifying against the other animate the rules governing spousal incompetency
compellability, and privilege:
Nguyen
, at paras. 10-20.
[190]
The admissibility of lawfully intercepted spousal communications is
governed by the combined effect of two statutory provisions: s. 4(3) of the
Canada
Evidence Act
and s. 189(6) of the
Criminal Code
.
[191]
Section 189(6) of the
Criminal Code
states that:
Any information obtained by an interception
that, but for the interception, would have been privileged remains privileged
and inadmissible as evidence without the consent of the person enjoying the
privilege.
[192]
In
Rendon
, Sharpe J. addressed the issue of the combined
effect of s. 4(3) and s. 189(6). He explained that it is clear that the effect
of s. 189(6) is to prevent the [C]rown from adducing into evidence
communications between husband and wife, although lawfully intercepted, if at
the time of the trial the parties are still married: at para. 38; see also
Nero
,
at paras. 187-189.
[193]
Sharpe J. went on to consider whether spousal privilege survived the
dissolution of a marriage, concluding it did not. His reasoning on this issue
was set out at para. 46:
As a matter of
principle, it is difficult to see why the privilege should survive the marriage
. The various decisions that have been cited indicate that the
purposes of the privilege are the promotion of marital harmony and the
prevention of the indignity of having one spouse testify against another.
Plainly, neither purpose is served once the marriage has been
dissolved
. There is a clear trend in the case law, signalled in
particular by the
Salituro
case, to limit the scope of evidential
disability of spouses. [Emphasis added.]
(4)
The Principles Applied
(a)
Spousal Privilege Under the
Canada
Evidence Act
Does Not Survive Divorce
[194]
I conclude that spousal testimonial privilege under s. 4(3) of the
Canada
Evidence Act
does not survive divorce. I reach this conclusion by
considering the statutory language in its entire context, in its grammatical
and ordinary sense harmoniously with the scheme of the Act, the object of the
Act, and the intention of Parliament:
R. v. Gallone
, 2019 ONCA 663,
147 O.R. (3d) 225, at para. 30, citing Ruth Sullivan,
Sullivan on the
Construction of Statutes
, 6th ed. (Markham: LexisNexis, 2014), at p. 7. I
place emphasis on both the plain language of the statute and the policy
rationale underlying the privilege in reaching this conclusion.
[195]
Accordingly, the intercepted communications between the appellant
and Ms. Zeinab Abdul-Hussein were not privileged at the time of trial, as
the two were no longer married. The trial judge did not err on this issue, nor
in refusing to exercise her gatekeeper function to exclude this otherwise
admissible evidence.
[196]
The first source of my conclusion on the limitations of spousal
privilege under s. 4(3) is the language of the statute itself. I reproduce it
again for emphasis:
No
husband
is
compellable to disclose any communication made to him by his wife
during their marriage
, and no
wife
is compellable to disclose any communication made to her by her husband
during their marriage
. [Emphasis added.]
[197]
The plain language of this section does not support the appellants
interpretation that the privilege survives divorce. Section 4(3) makes clear
that the class of people who are not compellable to disclose marital
communications are husbands and wives. This is distinct from the language describing
what constitutes a marital communication, namely communications made during a
marriage.
[198]
I do not agree with the appellants argument that the language of
any communication made
during their marriage exclusively governs the scope of
the provision, such that the privilege attaches to any communication made
during the marriage regardless of the marital status of the one claiming the
privilege. This interpretation would deprive the references to No husband and
no wife of meaning. Such an interpretation violates the presumption against
tautology, according to which it is presumed that the legislature avoids
superfluous or meaningless words. Instead, every word has a specific role to
play in advancing the legislative purpose:
Canada (National Revenue) v.
Thompson
, 2016 SCC 21, [2016] 1 S.C.R. 381, at para. 32;
Gallone
,
at para. 31.
[199]
In my view, there are two relevant requirements in subsection 4(3):
i) that the
communication
is one that is made
during the marriage
; and ii) that the
person
claiming the privilege is,
at
the time of the claim
, a
husband or wife
.
[200]
I am also of the view that the appellants interpretation of this
privilege does not meaningfully promote the relevant policy goals underlying
the privilege. The appellant argues that extending spousal testimonial
privilege to divorcees will promote and protect marital harmony. In
Salituro
,
Iacobucci J. observed that [s]ociety can have no interest in preserving
marital harmony where spouses are irreconcilably separated because there is no
marital harmony to be preserved: at pp. 675-76. While it is arguable that
Iacobucci J.s comments apply to divorcees as well, I will nevertheless consider
the parties arguments on this point.
[201]
First, I agree with the respondent that extending this privilege to
divorcees is inconsistent with the scope of communications protected by the
privilege namely, those made during the marriage.
[202]
Second, prior judicial treatment of the scope of the spousal incompetency
rule demonstrates how the policy justification for the rule, as it then
existed, disappeared in the context of divorced spouses and spouses with no
reasonable prospect of reconciliation. As noted earlier, the protection of
martial harmony and the avoidance of the natural repugnance resulting from one
spouse testifying against another are purposes governing both spousal
incompetency and privilege:
Nguyen
, at para. 20. In
Sallituro
,
Iacobucci J. observed, during his analysis of spousal incompetency, that the
conclusion that a divorced spouse should not be a competent witness because of
his or her former marital status is contrary to common sense:
Salituro
,
at p. 677. In his view, the policy justification for the spousal incompetency
rule disappeared in the context of divorced or irreconcilably separated spouses,
and he concluded that irreconcilably separated spouses were competent witnesses
for the prosecution:
Salituro
, at pp. 671 and 677; see also
R. v.
Nguyen
, 2010 ONSC 5843, 278 C.C.C. (3d) 490, at para. 18, affd 2015 ONCA
278, 125 O.R. (3d) 321, leave to appeal refused, 2015 S.C.C.A No. 365.
[203]
As the policy goals underlying the spousal incompetency rule were
said to disappear in the context of divorcees, I consider this relevant in
determining whether these same policy goals warrant extending spousal privilege
to that same group.
[204]
Third, I note that even if the privilege was extended to divorced
spouses, it could still be waived by the recipient of the communication at any
time. Extending the privilege to divorcees would not meaningfully address the
risk raised by the appellant, namely that marital harmony will be undermined if
the privilege did not apply to divorcees, as spouses cannot be certain, should
they divorce, that their communication will remain confidential. This risk will
still exist regardless of whether the privilege can be claimed by divorcees, as
the recipient can always simply waive the privilege.
[205]
While I agree with the appellant that societys interest in
promoting harmony between spouses may not necessarily end with the dissolution
of their marriage, I am of the view that extending the privilege to divorcees
is a legal reform best left to the legislature. I am persuaded by Iacobucci Js
comments in
Salituro
on this point. I do not consider an
interpretation of a statute that effectively amounts to a rewriting of it to be
the kind of incremental change to the law that Iacobucci J. spoke of as
permissible for courts to undertake:
Salituro
, at p. 670. Nor do I
think reading into s. 4(3) the phrase divorced spouse is necessary to keep
the law in step with the dynamic and evolving fabric of our society:
Salituro
,
at p. 670. This is particularly so, given the arguable legal trend away from
recognizing spousal privilege at all, or at least not significantly expanding
its scope:
R. v. Oland
, 2015 NBQB 247, 446 N.B.R. (2d) 317, at para.
18, affd 2016 NBCA 58, leave to appeal refused, [2016] S.C.C.A. No. 188.
[206]
My conclusion that the policy underlying the privilege does not
justify the appellants interpretation is strengthened when I consider that
this privilege does not apply to common-law spouses. The goals governing the
privilege were insufficient to warrant this court extending the privilege to
such spouses, who in my view have a greater interest in protecting marital
harmony and avoiding the repugnance of testifying against one another than
divorcees:
Nero
, at para. 185. While I acknowledge that these
determinations were made in different analytical contexts from that in the
present case, I find these cases helpful in resolving this issue.
[207]
In conclusion, an examination of the language of s. 4(3) and the
policy goals underlying spousal privilege demonstrate that spousal privilege
cannot be claimed by an individual where his or her marriage ended by divorce.
(b)
Admitting the Communication Does not Perpetuate the Initial Trials
Miscarriage of Justice
[208]
I also disagree with the appellants argument that admitting the
appellants communications with his spouse would perpetuate the miscarriage of
justice occasioned by the first trial.
[209]
As I understand the appellants position, he argues that: i) at the
time of his first trial, he was married to his spouse; ii) his subsequent divorce
was a direct result of his original overturned conviction; iii) a new trial was
ordered as a result of a miscarriage of justice; iv) and, at the time of this
new trial, the appellant was no longer married and the communications became
admissible. Since this admissibility is only possible because there was an
initial miscarriage of justice and the subsequent ordering of a new trial, to
admit the evidence would perpetuate the miscarriage.
[210]
I do not agree. The reasoning inherent to this argument is strained,
and in any event the appellant adduced no evidence before the trial judge to
demonstrate a causal connection between the appellants first conviction and
his subsequent divorce. Given the centrality of such a causal connection to the
appellants reasoning on this issue, I cannot accept the argument. The trial
judge did not err by refusing to exclude the communications on the basis of
this unproven assumption.
[211]
In conclusion, the trial judge did not err in her interpretation of
section 4(3) of the
Canada Evidence Act
, nor in refusing to exercise
her discretion to exclude the communications. I would dismiss this ground of
appeal.
VI.
Did the trial judge err in dismissing the appellants challenge to
the lawfulness of the intercepts?
(1)
Background
[212]
On July 20, 2007, the police completed DNA analysis on two cigarette
butts found at the scene where Mr. Zalals body was discovered. The analysis
confirmed that the deceaseds DNA was present on one of the cigarette butts,
and that Mr. Kayems was on the other. This evidence led police to believe
that Mr. Kayem had been present when Mr. Zalals body was dumped. The police
then sought authorization to intercept the communications of the appellant, Mr.
Kayem, and Mr. Abdul-Hussein, all of whom police believed were involved in
the murder.
[213]
On August 9, 2007, Sergeant Bruce Pirt swore an affidavit in support
of a wiretap under ss. 185 and 186 of the
Criminal Code
. The
Information to Obtain (ITO) provided information on the cell phone evidence,
cell tower evidence, and summaries of interviews with Mr. Khaleyi and Shadra
Morales. However, not all of the interviews with Mr. Khaleyi were described.
[214]
The authorization was provided on August 10, 2007. Following this
initial authorization, five additional wiretaps were authorized on October 12,
2007, December 21, 2007, February 15, 2008, March 18, 2008, and April 18, 2008.
[215]
Prior to trial, the Crown sought to introduce transcripts and
recordings of 104 private communications that had been intercepted by way of
the six wiretap authorizations.
[216]
The appellant brought an application for an order: i) declaring the
authorizations invalid; ii) declaring that the communications had been
intercepted in violation of the appellants rights under s. 8 of the
Charter
;
and iii) excluding any direct or derivative evidence obtained as result of the
authorizations pursuant to s. 24(2) of the
Charter
.
[217]
Among other things, the appellant argued that the wiretap
authorizations were invalid on the basis that:
i)
the affiant, Sergeant Pirt, did not make full,
frank, and fair disclosure in the ITO for the first authorization, and the
following authorizations were therefore tainted. According to the appellant, if
the issuing justice had been aware of certain inconsistencies in the evidence
of Mr. Khaleyi, the initial authorization would never have been issued; and
ii)
the requirement of investigative necessity had
not been established, as other reasonable alternative methods of investigation
existed, including searching for the murder weapon and searching a possible
location of the shooting. As the intercepts were unlawful, the appellant argued
that his s. 8
Charter
rights had been violated and the evidence should
be excluded under s. 24(2).
[218]
In response, the Crown argued that, while Sergeant Pirt had failed
to include some details in the ITO, he was not expected to include every
detail. And, even if the information had been included, it would not have
resulted in the authorizations being denied.
[219]
The trial judge ruled that the two conditions precedent to granting
a wiretap authorization under s. 186(1) of the
Criminal Code
were met.
Our court has referred to these conditions precedent as the probable cause
and investigative necessity requirements:
Nero
, at para. 114.
[220]
With respect to the probable cause requirement, the trial judge
found that it was met given the evidence that a crime had been committed and
that granting the interception would afford evidence of the offence. In
reaching this conclusion, the trial judge observed that the affiant had not
been cross examined and therefore had no opportunity to correct errors or
address questions relating to the credibility of Mr. Khaleyi or Ms. Morales.
[221]
While the trial judge acknowledged that the affiant made some
errors, she concluded there was no basis to excise anything in the ITO or to
find that he was intentionally or grossly negligent.
[222]
The trial judge also found that the investigative necessity
requirement was met. She found that, while it was possible that the reasonable
alternative methods of investigation proposed by the appellant may have yielded
some useful evidence, it was unlikely or unrealistic that those searches would
solve the murder. The purpose of the wiretaps was to develop a viable
prosecution of the persons believed to have murdered Mr. Zalal. While other
techniques would continue, the police were forced to resort to other
techniques, such as the wiretaps, to develop a proper foundation for any
effective prosecution of the murder. The authorizing justice therefore had a
sufficient basis to grant the initial authorization. The trial judge concluded
that there was no breach of the appellants s. 8 rights.
(2)
Arguments on Appeal
[223]
The appellant argues that the authorization should have been set
aside on two bases.
[224]
First, the affiant did not make full, frank, and fair disclosure
regarding the substance of Mr. Khaleyis various police interviews. The
affiants summary of the witness statements were inaccurate and minimized the
inconsistencies in his account. The appellant references
R. v. Booth
,
2019 ONCA 970, at para. 56, to argue that the trial judge should have
recognized the obligation on the affiant to include all information that
challenges the reliability and credibility of the evidence used to support the
application. The affiants errors were not minor or technical and they deprived
the authorizing justice of the opportunity to properly address the witness
evidence.
[225]
Second, the trial judge erred in finding that the ITO satisfied the
requirement for investigative necessity. Before seeking wiretap authorization,
the police should have investigated the information provided by Mr. Khaleyi
regarding the location of the murder and the location of the murder weapon. The
ITO failed to explain why these leads were not followed up on. If the police
had been able to locate the murder weapon or the location of the murder, they
may have been able to find evidence that could have advanced the case. These
were reasonable alternative options that should have been pursued. The
appellant further submits that the trial judge erred in finding that he had to
show that these methods were likely to solve the murder; they only needed to be
likely to advance the investigation.
[226]
The appellant also argues that, if this court holds that the
appellants statements to the police were not voluntary, the corresponding
portions of the ITO should be excised and a reassessment should be undertaken.
[227]
Given these errors, the appellant argues that his s. 8 rights were infringed
and the evidence should be excluded pursuant to s. 24(2) of the
Charter
.
The affiants conduct was not in good faith and the state conduct was serious.
The impact on the appellants privacy interests was extreme. Both factors
favour exclusion.
[228]
The respondent submits that the trial judge did not commit any error
and that this ground of appeal should be dismissed.
(3)
Governing Principles
[229]
The legal basis for the issuance of a wiretap authorization is set
out in Section 186(1) of the
Criminal Code
. It states the following:
An authorization under this section may be
given if the judge to whom the application is made is satisfied
a)
that it would be in the best interests of the administration of
justice to do so; and
b)
that other investigative procedures have been tried and have failed,
other investigative procedures are unlikely to succeed or the urgency of the
matter is such that it would be impractical to carry out the investigation of
the offence using only other investigative procedures.
[230]
This section was recently considered in
Nero
, where Watt
J.A. explained that these two sections can be described as the probable cause
(s. 186(1)(a)) and investigative necessity (s. 186(1)(b)) requirements: at
para. 114.
[231]
Watt J.A. first described the probable cause requirement, at paras. 115- 117:
The probable cause requirement demands that
the authorizing judge be satisfied by the supportive affidavit that
there are reasonable and probable grounds to believe that
:
i.
a specified crime
, and offence as defined in s. 183(1) of the
Criminal Code
,
has been or is being committed
; and
ii.
the interception
of the private communication sought
will
afford evidence of the, or an, offence
for which authorization is
sought.
The probable cause
requirement and the capacity of the contents of the supportive affidavit to
satisfy it involve a commonsense approach
that
takes into account the nature of the subject-matter investigators seek to
acquire: future communications, not yet in existence, perhaps not even in
contemplation at the time the authorization is sought or granted. These
communications may never take place. But if they do, the likelihood of anything
said affording evidence of a listed offence is enhanced by their probable
participation in that offence. It is in that sense that interception of what
they say will afford evidence of the offences.
It is also important to
keep in mind that the affidavit is required to establish a
reasonably grounded belief
in the commission of the offence and the
collection of evidence about it, not proof beyond a reasonable doubt or a
prima facie
case of either
.
[Italics in original; underlining added; citations omitted.]
[232]
Watt J.A. next considered the investigative necessity requirement,
at paras. 118-122:
Under s. 186(1)(b),
investigative necessity may be established where the affidavit demonstrates
that other investigative procedures are unlikely to succeed
. Interception of private communications is
not
an investigative tool of last resort
. The second branch of investigative
necessity is met where,
practically speaking, there is no
other reasonable alternative method of investigation, in the circumstances of
the particular criminal inquiry
.
Whether investigative necessity is established
is
informed by the investigative objectives pursued
by the police.
The investigative necessity requirement of s.
186(1)(b) applies to the investigation as a whole, not to each individual
target. The supportive affidavit need not demonstrate investigative necessity
on an individual target basis.
The requirement of investigative necessity may
be met where it anticipates the vicissitudes of proof in a criminal trial. An
investigative purpose or objective may then be to obtain evidence confirmatory
of information provided by a source whose testimony is not available through no
fault of or connivance by the authorities, or is subject to special scrutiny. [Italics
in original; underlining added; internal citations omitted.]
[233]
The test to be applied by a trial judge when reviewing an
authorization is whether the ITOs contained sufficient reliable evidence that
might reasonably be believed on the basis of which the authorizing justice
could
have concluded that the conditions precedent required to be established had
been met:
Nero
, at para. 70 (emphasis in original).
[234]
In conducting the analysis, the reviewing judge is entitled to draw
reasonable inferences from the contents of the ITO: at para. 71. Inaccuracies
and omissions in the ITO are not, without more, fatal to the adequacy of the
material to establish the necessary conditions precedent: at para. 72.
[235]
On appeal, an appellate court must give
deference to the findings of fact made by the reviewing judge in [his or her]
assessment of the record, as well as to [his or her] disposition of the s. 8
Charter
challenge. This court should not interfere in the absence of an error of law,
a misapprehension of material evidence or a failure to consider relevant evidence:
Nero
, at para. 74.
(4)
The Principles Applied
[236]
In my view, the trial judge made no error in law or fact that that
would warrant this courts interference with her findings. She considered the
relevant record and concluded that the affiant did not breach his obligation to
make full, fair, and frank disclosure, and that the ITO satisfied investigative
necessity. I see no errors in these conclusions.
[237]
First, the trial judge did not err in concluding that the affiant
met his obligation to make full, fair, and frank disclosure. The trial judge
specifically noted that the affiant did not fail to supply evidence that was
germane to a proper assessment of Mr. Khaleyis credibility. The ITO set out relevant
and pertinent information, such as Mr. Khaleyis age and criminal background, as
well as his demands for financial benefits, among others. It also highlighted
Mr. Khaleyis animosity towards the appellant.
[238]
While there were some inconsistencies in Mr. Khaleyis statements, I
agree with the trial judges assessment of the law that the affiant is not
required to include every detail.
[239]
Furthermore, the issuing justice did not have to assess whether all
the information provided by Mr. Khaleyi was true, but only whether the ITO
established
a reasonably grounded belief
in the commission of the
offence and the collection of evidence about it (emphasis added):
Nero
,
at para. 117.
[240]
I also agree with the trial judge that any errors in the ITO were
not fatal. The trial judge made specific findings that errors within the
affidavit were not intentional or the result of gross negligence. This finding
is entitled to deference. Reviewing justices are not to microscopically review
the ITO for errors. Instead, they must determine whether the issuing judge
could have been satisfied that the information in the affidavit made out a
reasonably grounded belief in the prerequisites for issuance. The trial judge
did not err in her conclusion on this issue.
[241]
The trial judge was also entitled to conclude that the investigative
necessity requirement had been met. Wiretap authorizations are not a measure of
last resort. They can also be used when other investigative methods appear to
have little chance of success. As noted in
Nero
, the requirement is to
be interpreted in a practical, common sense fashion with due regard to the
nature of the investigation and the objectives of the investigators: at para. 110.
In this case, the trial judge correctly assessed what would be required to
solve the murder and determined that, while other methods may assist, the
wiretap was necessary to gather evidence demonstrating who was responsible for
Mr. Zalals murder.
[242]
This ground of appeal is dismissed. Accordingly, it is not necessary
for me to analyze s. 24(2) of the
Charter
.
CONCLUSION
[243]
I would dismiss the appeal.
[244]
Given this outcome, it is unnecessary for me to consider the respondents
ground of appeal with respect to the exclusion of the prior testimony and sworn
police statement of Mr. Abdul-Hussein.
Released: M.T. February 5, 2021
M.
Tulloch J.A.
I
agree. L.B. Roberts J.A.
I
agree. Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Ali, 2021 ONCA 362
DATE: 20210528
DOCKET: C63315
Doherty, Watt and van Rensburg
JJ.A.
BETWEEN
Her
Majesty the Queen
Respondent
and
Cindy Ali
Appellant
James Lockyer and Jessica Zita, for the
appellant
Jamie Klukach and Kevin Rawluk, for the
respondent
Heard: February 24 and 25, 2021 by video
conference
On
appeal from the conviction on a charge of first-degree murder entered by
Justice T. Ducharme of the Superior Court of Justice, sitting with a jury,
dated March 6, 2016.
Doherty J.A.:
I
overview
[1]
The appellant was, by all accounts, a loving and
devoted mother to her 16-year old, profoundly disabled daughter, Cynara. The
Crown alleged the appellant decided to murder her daughter and make it appear
as though she had died during a home invasion. The Crown alleged, that in
furtherance of this plan, the appellant suffocated Cynara with a pillow and
then called 9-1-1, reporting a home invasion and indicating her daughter was
unconscious. According to the Crowns theory, before the first responders
arrived, and probably before she killed Cynara, the appellant went through her
home attempting to make it look as though there had been a home invasion. When
the first responders arrived, the appellant pretended to be disoriented and in
shock. She described the home invasion to the police in some detail over the
next several hours.
[2]
The first responders found Cynara on the couch.
She was not breathing and did not have a pulse. The paramedics were able to
restore Cynaras pulse and rushed her to the hospital. Sadly, Cynara was never
able to breathe on her own. On medical advice, her parents removed her from
life support and she died the next day.
[3]
The police initially charged the appellant with
manslaughter, but later substituted a first degree murder charge.
[4]
At her trial, the appellant testified and told
basically the same story she had been telling since she made the 9-1-1 call. Two
robbers had entered her home, apparently looking for a package. One of the
robbers rummaged through her home. The other remained with Cynara. They left
when they decided they were at the wrong address. By the time they left, Cynara
was unconscious. The defence argued the robber who stayed with Cynara may have
suffocated her with a pillow, or she may have become upset during the robbery,
suffered a seizure, choked and aspirated food into her lungs, causing
respiratory distress, leading to cardiac arrest.
[5]
The defence called evidence of the appellants
good character. Everyone agreed the appellant was a devoted and loving mother,
particularly to Cynara. The defence contended there was no evidence of any
motive for the appellant to murder her daughter.
[6]
The evidence at trial focused on the appellants
claim she and her daughter had been the victims of a home invasion. It was
central to the Crowns case that the appellant had fabricated an elaborate home
invasion narrative. The Crown argued, if the jury was satisfied the appellant
fabricated the home invasion story, her fabrication provided strong evidence,
not only that the appellant had murdered Cynara, but that the murder was planned
and deliberate. It was equally central to the defence case that the home
invasion had occurred. The defence argued there was other evidence supporting
the appellants testimony there had been a home invasion and that any doubt
about whether the home invasion had occurred required the appellants
acquittal.
[7]
The jury convicted the appellant of first degree
murder.
[8]
The appellant raises four grounds of appeal.
Three allege errors in the charge to the jury and one contends the conviction
for first degree murder was unreasonable on the totality of the evidence.
[9]
I would allow the appeal. The trial judges
instructions with respect to whether the appellant caused Cynaras death,
combined with his instructions on the inference available if the jury found the
appellant had fabricated the home invasion story, effectively invited the jury
to convict the appellant of at least second degree murder if the jury was
satisfied she had fabricated the home invasion story. For reasons I will set
out below, this instruction amounts to reversible misdirection.
II
the evidence
A.
THE ALI FAMILY
[10]
In February 2011, the appellant, her husband,
Allan, and their four daughters lived in a townhouse in Scarborough. Cynara was
the second oldest daughter. They were a happy, busy family. Allan had a good
job, the oldest daughter worked, and the two youngest, who were twins, attended
high school. Their lives centered around church and family. The appellant is a
deeply religious person. Her faith includes a strong belief in the sanctity of
life.
[11]
Cynara was born with severe cerebral palsy. She
could not talk, walk, feed herself, shake her head, or change her position
without assistance. Cynara communicated by laughing or kicking. Different
laughing sounds conveyed different meanings to Cynaras family. All of the
family members, particularly the appellant, were very attentive to Cynaras
needs.
[12]
Cynaras life was a difficult one from the day
she was born. Her doctors did not expect her to live past the age of three.
Cynara was prone to seizures and pneumonia. She had trouble swallowing her
liquid food.
[13]
The appellant was Cynaras primary caregiver.
She devoted herself to Cynara, making sure her daily needs were met and that
Cynara participated in family activities to the extent possible. The
appellants pastor, who had known her for over 10 years, testified the
appellants care of Cynara set an example for others. She described her as an
amazing mother of her children.
[14]
In her evidence, the appellant acknowledged
there were days when it was difficult looking after Cynara. She insisted,
however, she had no complaints and loved caring for her daughter. Other family
members also described the importance of Cynara to the family and the joy she
brought to all of them.
[15]
The Ali family first applied for permanent
residence status in Canada in 2003. Cynara was declared inadmissible on health
grounds. The family was able to obtain a waiver of Cynaras inadmissibility in September
2010 by presenting a financial plan that satisfied the authorities Cynaras
care would not impose a burden on the Canadian health care system. The plan
required the family to assume any financial burden resulting from Cynaras
health problems. The family became permanent residents in January 2011.
[16]
Most of Cynaras medical needs were covered by a
combination of OHIP and the health insurance Mr. Ali had through his employer.
That insurance covered the costs of devices like wheelchairs, and some medications.
There was no evidence about the amount, actual or estimated, of any uncovered
medical costs associated with Cynaras past or future care. The evidence indicated
those costs had not been significant up to the time of Cynaras death. She did
not require specialized care or housing, the family did not employ outside help
and, all things considered, Cynara was relatively healthy.
[17]
The Ali family finances were unremarkable for a
family living in Toronto with four children. They had a mortgage on the family
home and credit card debt that had increased somewhat after the Christmas
season. That debt was paid down in February. There was no evidence Mr. Ali or
the appellant felt any unusual financial pressure as of February 2011.
B.
The Events of February 19, 2011
(i)
The appellants version of events
[18]
February 19, 2011 was the Saturday of a long
weekend. Cynara had suffered three seizures on the Friday night. After the
seizures subsided, the appellant medicated Cynara, bathed her and lay with her
until she fell asleep. The appellant recalled seeing some blood around Cynaras
mouth.
[19]
On the Saturday, the family members all had
different things to do. The appellant planned to stay home with Cynara. As she
did every day, the appellant gave Cynara a bath, brushed her teeth, dressed her
and took her downstairs for breakfast. The appellant gave Cynara her breakfast
in the living room. The appellant went to the kitchen to do dishes, leaving
Cynara on the couch. Cynara was fussy, so the appellant returned to the
living room and sat on the couch with Cynaras head resting on a pillow on the
appellants lap. By 10:30 a.m., all of the other family members had left. The
appellant expected her husband home around 1:00 p.m. The appellant testified,
that after everyone left the townhouse, she sat on the couch with Cynara. She
spoke briefly on the telephone with her sister at 10:47 a.m.
[20]
A short time after the appellant had spoken with
her sister, the front doorbell rang. The appellant opened the door a little bit
to see who was there. Two masked men burst through the door. The appellant
described them as very dark skinned, 6 to 62, wearing black balaclavas, gloves
and black coats over suits with white shirts and a tie.
[21]
The appellant tried to get to the phone, but one
of the intruders pulled it off the wall. The appellant threw two or three
knives from the kitchen counter at one of the intruders. He pointed a gun at
her and, in a heavy Jamaican accent, demanded to know where the package was. He
asked the question several times. The appellant repeatedly told him she had no
idea what he was talking about.
[22]
The man with the gun grabbed the appellant and
dragged her upstairs. The other man remained with Cynara. Once they were
upstairs, the intruder looked through various cupboards and drawers. The
appellant could hear Cynara making a laughing noise. She panicked and tried to get
to her daughter downstairs. The man with the gun caught her by the nightgown
and pulled her back into one of the bedrooms. He continued to search for the
package. The appellant could still hear Cynaras laugh, but it now sounded like
she was in distress. The appellant tried again to get down the stairs. This
time she got past the robber and made her way back down to the living room. She
tripped on the rug. The man who had chased the appellant down the stairs threw something
at her and kicked her as she lay on the floor.
[23]
The appellant saw the other robber standing in
the living room holding a pillow to his chest. Cynara looked like her normal
self. The robber with the gun pulled the appellant down to the basement. He
continued his search, going through a bedroom and Mr. Alis home office.
[24]
The appellant again tried to escape. She pushed
a chair toward the gunman and ran upstairs. She saw the other robber still
holding the pillow in his hand, but now her daughter was very pale, quiet and
not moving.
[25]
The robber with the gun followed the appellant
up the stairs. He told the other robber they were in the wrong house. They left
the appellants townhouse through the basement door, which led to the
underground parking area that serviced the housing complex.
(ii)
The arrival of the first responders
[26]
The appellant called 9-1-1 at 11:37 a.m. She was
hysterical, indicating someone had broken into her home and her baby was not
breathing. The jury heard the recording of the 9-1-1 call. In the call, the
appellant appears to be very upset. Near the end of the recording of the 9-1-1
call, the first responders can be heard arriving at the scene. One paramedic
quickly examined the appellant and then turned his attention to Cynara. A
firefighter, who arrived with the paramedics, and who was aware the appellant
had indicated in the 9-1-1 call that robbers had entered her home, could be
heard on the 9-1-1 call saying to the appellant:
Get off the floor! There are no footprints in
the front, dont bullshit me.
[27]
That firefighter testified there was an inch or
two of fresh snow on the steps leading into the appellants townhouse. There
were no footprints in that snow. He also indicated there were no signs of snow
or water inside the appellants front door. The defence challenged the
firefighters testimony, arguing the evidence showed there was no appreciable
snow accumulation at the relevant time.
[28]
When the first responders arrived, the appellant
was lying on the floor. She was unresponsive and appeared afraid. A quick
physical examination revealed no injuries.
[29]
The first responders saw Cynara lying on the
couch with one hand hanging off the side of the couch. She had a pillow on her
head and a towel lying across her neck. Cynara had no vital signs. The
paramedics worked on her for about 24 minutes and managed to restore her pulse.
They rushed her to the hospital.
(iii)
The Appellants Statements to the Police
[30]
The appellant spoke with several police officers
between the arrival of the first responders at her home and shortly after
midnight, about 13 hours later. Her various descriptions of the relevant events
were largely consistent with each other and the evidence she gave at trial.
[31]
The Crown did, however, rely on inconsistencies
between what Officer Minhas testified the appellant said to him when they were driving
to the hospital in the ambulance, and the appellants statements to other
police officers, and her testimony. Two of those inconsistencies were arguably
significant.
[32]
Officer Minhas testified the appellant told him Cynara
was sitting on the loveseat when the robbers arrived. He also testified the
appellant told him one of the robbers put a pillow over Cynaras face. In her
other statements, and in her testimony, the appellant placed Cynara on the
couch and described the robber as holding a pillow.
[33]
The defence challenged the reliability of
Officer Minhas evidence, contending that he was relying on incomplete notes to
refresh his recollection.
(iv)
The neighbours evidence
[34]
Ms. Sureerat Chariyaudom lived in the same
housing complex as the appellant. They knew each other and were friendly. On
the Saturday of the homicide, at about 11:20 a.m., Ms. Chariyaudom was driving
out of the underground parking at the housing complex. She saw two men standing
inside the garage by the garage door. They were about 6 feet tall and very,
very dark skinned. They were dressed in dark clothing and wearing dark toques.
The garage door opened and Ms. Chariyaudom drove out. From where the two men
were standing, they could have walked out of the garage door before it closed and
had ready and quick access to the front door of the appellants townhouse.
[35]
Ms. Chariyaudom gave a statement to the police
the next day. There is no evidence she could have colluded with the appellant
before making that statement.
[36]
Ms. Chariyaudom was shown a series of
photographs of different styled coats. She picked the one with a hood as
looking the most similar to the coats worn by the two men she saw in the
garage. The appellant described the coats worn by the robbers as long, black
coats made of sort of a wool material.
[37]
At trial, counsel for the appellant argued that
the two men Ms. Chariyaudom described were the two persons who entered the
appellants home in search of the package. Counsel pointed to aspects of Ms.
Chariyaudoms description of the two men, which were consistent with the
appellants description of the robbers. Counsel also relied on the timing of
Ms. Chariyaudoms observations of the two men, which was consistent with the appellants
evidence as to when the robbery occurred. The Crown argued there were
significant differences in the descriptions provided by the appellant and Ms.
Chariyaudom, particularly in respect of their descriptions of the coats worn by
the two men.
(v)
The letter
[38]
Mr. Ali testified he found a letter in his
mailbox on May 16, 2011, about two months after the homicide. On its face, the
letter purported to have been written by the robbers. The letter provided
details of the robbery that were consistent with the details in the appellants
statements to the police. In the letter, the robbers indicated they had gone
to the appellants home on the orders of their boss to pick up a package, but
it turned out they had gone to the wrong home.
[39]
At trial, the Crown argued the letter had been
written by, or at the direction of, the appellant, as yet another attempt to
convince the authorities she had been the victim of a home invasion. The Crown
argued the letter referred to details found in the appellants statement to the
police, which only she could know she had given to the police. The Crown also
argued that a part of the letter, which purported to offer an explanation for
the absence of footprints at the appellants front door, could only have been authored
by someone who appreciated the significance of the evidence concerning the
presence or absence of footprints in the snow on the stairs.
[40]
At trial, the defence did not suggest the letter
had actually been written by the robbers. The appellant testified she did not
send the letter and did not know who had sent the letter. It made no sense to
her. She wondered whether the police had sent the letter in an effort to prompt
some kind of response from her. They had used other stimulation techniques
while intercepting her private communications. The appellant also indicated
there were many others who knew the details of her description of the events
and the significance of the presence or absence of footprints at the front
door. The defence argued the letter was written by someone other than the
appellant, perhaps a well-meaning, but badly misguided friend.
C.
Cause of Death
[41]
Cynaras heart stopped for about 30 minutes,
causing a fatal loss of blood and oxygen to the brain. The experts agreed there
were three possible causes of the cardiac arrest:
·
manual suffocation;
·
aspiration pneumonia; or
·
sudden unexpected death in epilepsy (SUDEP).
[1]
[42]
Cynara had a long history of seizures and
aspiration pneumonia. Aspiration pneumonia occurs when food is inhaled into the
lungs. This may occur during choking or vomiting brought on by seizures. The
appellant knew Cynaras seizures were dangerous and potentially life
threatening. The autopsy revealed pneumonia and food particles in Cynaras
lungs.
[43]
The pathologist who performed the autopsy testified
for the Crown at trial. She indicated Cynara could have suffered a seizure and
during that seizure aspirated food into her lungs. Food in her lungs could have
led her to develop pneumonia. Pneumonia can lead to respiratory arrest and
death. The pathologist further testified the process leading to pneumonia and
ultimately to respiratory arrest could have been going on for hours or even a
few days before Cynara lost consciousness. The pathologist indicated, however,
that had the pneumonia been developing for some time, she would have expected
Cynaras family to have noticed signs of illness. On their evidence, Cynara had
not exhibited any such signs.
[44]
The pathologist identified a second possible
scenario that could have led to Cynaras death. The pathologist testified that
Cynara may have suffered a seizure leading to food aspiration within minutes or
seconds of Cynara going into respiratory distress. On this scenario, the food
aspirate would have gone into Cynaras trachea, blocked her airway and eventually
led to cardiac arrest. The pneumonia found in her lungs at the autopsy would
have developed after Cynaras resuscitation. The pathologist agreed the absence
of any indication Cynara had vomited immediately before being attended by the first
responders made this scenario less likely than it would have been had evidence
of vomiting been found.
[45]
The defence expert was in substantial agreement
with the pathologists evidence. In his view, aspiration pneumonia, in
combination with the seizure disorder, was the more likely cause of death.
[46]
Both experts agreed manual suffocation was also
a possible cause of death. There were no medical indicators to support a
finding of manual suffocation. Nor, however, according to both experts, would
one necessarily expect to find any such indicators had Cynara, who was unable
to offer any resistance, been suffocated using a soft object like a pillow. The
experts also agreed medical findings provided only part of the picture when it
came to determining cause of death.
[47]
There was some physical evidence supporting the
Crowns suffocation theory. Traces of Cynaras blood and saliva were found on the
pillowcase of the pillow the investigators took from Cynaras head. There was,
however, evidence Cynaras mouth had been bleeding the night before. In
addition, traces of blood were found on the towel around Cynaras neck. The
Crown relied on the evidence that the appellant put a clean towel around
Cynaras neck every morning. The Crown argued the blood must have gotten on the
towel that morning. There was, however, some evidence that a bloodstain could
survive washing.
D.
did the appellant fabricate the home invasion
story?
[48]
The veracity of the appellants home invasion
narrative became the focus of the trial. The defence pointed to physical
evidence in the house supporting the appellants version of events. The defence
relied on evidence another unit in the townhouse complex had the same number as
the appellants and that the two units had been confused in the past. The
defence also relied on the evidence of the neighbour, Ms. Chariyaudom.
[49]
The Crown argued that the condition of the home
supported the inference the appellant had made a somewhat ineffective attempt,
before or after she killed Cynara, to make the house appear as though there had
been a home invasion. The Crown also relied on the evidence of the absence of any
footprints at the front door when the first responders arrived, and the
evidence of the fabricated robbers letter provided to the police by Mr.
Ali.
[50]
I do not propose to review the evidence in support
of the competing arguments in detail. It is fair to say there was evidence
supporting the arguments going both ways and counsel vigorously pressed those
arguments before the jury.
III
the grounds of appeal
A.
Did the instruction on whether the appellant caused Cynaras death,
combined with the instruction on the inferences available should the jury find
the appellant fabricated the home invasion story, result in misdirection?
[51]
Jury instructions are assessed from a functional
perspective in the context of the evidence and issues in the specific case:
R.
v. Jacquard
, [1997] 1 S.C.R. 314, at para. 14;
R. v. Figliola
,
2018 ONCA 578, at para. 11;
R. v. Largie
, 2010, ONCA, 548, at para.
126. The error alleged by the appellant in this ground of appeal is the product
of a combination of instructions given with respect to cause of death and
after-the-fact conduct considered in the specific evidentiary context of this
case. It is necessary to begin with some background before examining the actual
instructions.
(i)
The parties closing arguments
[52]
The positions advanced by the Crown and the
appellant before the jury were straightforward and diametrically opposed. The
Crown argued the appellant had decided to kill her daughter and, in furtherance
of that purpose, fashioned and implemented a false home invasion narrative intended
to cover up the murder.
[53]
The Crown submitted the appellant had suffocated
Cynara with the pillow found on her head by the first responders. The Crown
relied heavily on evidence which the Crown said demonstrated the appellant had
fabricated the detailed home invasion story. The fabrication included:
·
the staging of the scene in the house to make it
appear as though there had been a home invasion;
·
making false statements to the 9-1-1 operator
and the first responders alleging a robbery;
·
feigning physical injury and disorientation upon
the arrival of the first responders;
·
giving a detailed and false narrative of the
home invasion to the police on various occasions during questioning on the day
of the homicide; and
·
providing a letter to the authorities supposedly
written by the robbers confirming material parts of the appellants home
invasion story.
[54]
The Crown argued that the evidence showing the
appellant had fabricated the home invasion story was relevant to three crucial
issues at trial:
·
Did the appellant kill Cynara?
·
Was the killing a murder?
·
Was the murder planned and deliberate?
[2]
[55]
Not surprisingly, given the appellants
evidence, counsel advanced only one defence in his submissions to the jury. He
argued, just as the appellant had insisted from the time she called 9-1-1 until
she testified, Cynara had died during a home invasion and the appellant had
nothing to do with her death. Counsel argued, while the exact cause of Cynaras
respiratory distress and subsequent cardiac arrest could not be determined with
certainty, it was more likely her death was connected to the consequences of a
seizure than to suffocation. The defence pointed to the evidence supporting the
appellants evidence about the home invasion, the strong character evidence,
and the absence of any evidence lending an air of reality to the suggestion the
appellant had a motive to kill Cynara.
(ii)
The pre-charge discussions
[56]
In pre-charge discussions, the Crown argued that
a jury could convict the appellant only if satisfied beyond a reasonable doubt
that the appellant had smothered Cynara. Crown counsel argued there was no air
of reality to the contention the appellant had caused Cynaras death by some
unlawful act other than smothering her. Counsel submitted, if the jury had a
doubt whether the appellant smothered Cynara, the jury should be told to acquit
the appellant. If, however, the jury was satisfied beyond a reasonable doubt
the appellant smothered Cynara, the Crown argued a conviction on either first
or second degree murder were the only available verdicts. Crown counsel argued
manslaughter should not be left with the jury.
[57]
During pretrial discussions, defence counsel acknowledged
the defence would go to the jury exclusively on the basis that Cynara had gone
into cardiac arrest during the home invasion and the appellant had nothing to
do with Cynaras death. However, the defence maintained the evidence supported
an alternative possibility that the trial judge was obliged to leave with the
jury. The defence argued the jury could conclude Cynara was not suffocated but
that her death was seizure-related. They could further conclude that Cynara had
died as a consequence of the appellants failure to take the steps necessary to
assist Cynara after she suffered a seizure. The defence submitted, that on this
view of the evidence, the appellant could be found to have caused Cynaras
death by a culpable act (criminal negligence or failure to provide necessaries),
other than suffocation.
[58]
The defence further argued that the jury could
conclude the appellant had fabricated the home invasion story to hide her
failure to take the proper steps to protect Cynara after she had a seizure. On this
view of the evidence, the jury would conclude the appellant had caused Cynaras
death by an unlawful act, but could well have a reasonable doubt as to whether she
had the
mens rea
for murder. If that doubt existed, manslaughter was
the proper verdict.
[59]
The defence contended leaving suffocation with
the jury as the only possible culpable act would cause substantial prejudice to
the appellant. Counsel submitted, if the jury was told suffocation was the only
potential culpable act, and if the jury concluded the appellant fabricated the home
invasion story, the jury would move directly from a finding the appellant had fabricated
the home invasion story to a finding she had suffocated Cynara. That finding
would, in turn, lead inevitably to a murder conviction. Counsel said:
And this is exactly the type of situation that
the defence fears the jury will be put in where they could have a reasonable
doubt on the smothering, but not on the post offence conduct and thus, be left
only with coming to the conclusion that she murdered, even if they would have
had otherwise a doubt about the intent to kill.
[60]
The trial judge, in large measure, accepted the
Crowns position, stating:
To me, this case has always been about whether
she smothered Cynara with a pillow.
[61]
The trial judge determined that, in the absence
of evidence a prompter medical response could have saved Cynaras life, there
was no evidentiary basis for a finding of liability based on criminal
negligence or a failure to provide necessities. He said:
There is no medical evidence before me that
talks about the importance of a prompt response to a seizure situation.
Neither pathologists gave any evidence with respect to what might have what
could have been done to save Cynaras life; what difference it made that some
prompter response was made was not made, and, in my view the jury would be
speculating to come to the conclusion that Cynara died in those circumstances
and that somehow Ms. Alis intentional failure to respond to her daughters
situation of crisis was an unlawful act that led to her death resulting in a
manslaughter charge.
[62]
Ultimately, the trial judge decided he would
leave manslaughter with the jury, but only on the basis that the appellant had
smothered Cynara with a pillow but had done so without the intent required for
murder. Everyone thought it highly unlikely the jury would return a verdict of
manslaughter if it was satisfied the appellant had suffocated Cynara.
(iii)
The charge to the jury
[63]
In keeping with his ruling, the trial judge told
the jury that, to prove the appellant had caused Cynaras death, the Crown had
to prove beyond a reasonable doubt the appellant smothered Cynara. He told the
jury:
Did Cindy Ali cause Cynara Alis death? And in
this case the central question is really Did Cindy Ali smother Cynara with the
pillow?
This is the allegation Cindy Ali faces. If you
find that Cynara Ali died for any other reason, or if you have any reasonable
doubt about that, you must find Cindy Ali not guilty.
[64]
The trial judge proceeded to outline evidence
relevant to whether the appellant had smothered Cynara. That evidence included the
evidence of the alleged fabrication of the home invasion story. The trial judge
referred to this as post-offence conduct.
[3]
He told the jury:
Consider the post-offence conduct, especially
if you conclude that Cindy Ali fabricated stories and staged the crime scene
because she was conscious of having killed Cynara.
[65]
Considered in isolation, the trial judges
instructions would seem to benefit the appellant in that the jury was told to
acquit if it had a doubt as to whether the appellant smothered Cynara.
Certainly, the medical evidence indicated smothering was not the only possible
cause of death.
[66]
The effect of the trial judges instructions on
cause of death must, however, be considered along with his instructions
relating to the use the jury could make of the appellants alleged fabrication
of the home invasion story. The trial judge instructed the jury at length on
the evidence the Crown alleged showed the appellant had fabricated the home
invasion story. The detailed instructions reflected the importance that
evidence took on in the course of the trial.
[67]
In his instructions, the trial judge explained
to the jury that, if it concluded the appellant fabricated the home invasion
story, that fabrication may or may not point to the appellants involvement in
Cynaras death. The trial judge cautioned the jury to consider explanations
other than that of the appellants involvement in Cynaras death.
[68]
After reviewing the evidence relevant to the Crowns
claim, the appellant fabricated the home invasion story, the trial judge came
back to the applicable law. He told the jury:
Now for all of this post-offence conduct, if
you find that Cindy Ali did not do or say what she is alleged to have done or
said after the offence was committed, you must not consider the evidence in
reaching, or helping you reach your verdict.
On the other
hand, if you find that Cindy Ali actually did or said what she is alleged to
have done or said after the offence was committed, you must consider next
whether this was because Cindy Ali committed the offence charged or whether it
was for some other reason
. If you find that Cindy Ali actually did or
said what she is alleged to have done or said after the offence was committed,
you must be careful not to immediately conclude she did or said so because she
was conscious of having committed the offence charged.
To decide the reason for what Cindy Ali did or
said afterwards, you should consider all of the evidence, of particular
importance is evidence that offers another explanation for this conduct, or
these statements. But while you should consider the possibility of other
explanations for this conduct, you must not speculate.
Any
other explanations must be founded in the evidence.
I do not see any other evidence on the evidence before you, or
any other explanations on the evidence before you, but that is for you to
decide
. [Emphasis added.]
[69]
The trial judge repeated a similar instruction
aimed specifically at the appellants statements to the police. He told the
jury, that if they were satisfied those statements were fabricated, they could
conclude she fabricated the events because she was conscious that she had
killed Cynara. He instructed the jury they should also consider other possible
explanations.
[70]
After a mid-charge discussion with counsel, the
trial judge returned to the evidence relating to the alleged fabrication of the
home invasion. He correctly told the jury the evidence may or may not assist
them, depending on the inference they drew from the evidence. He reminded them
to consider that evidence together with the rest of the evidence. He went on to
instruct the jury:
I am cautioning you here, as I did to a
certain degree already, about putting too much emphasis on the post-offence
conduct. You have to consider it in the context of all of the evidence in the
case. Now circumstantial evidence, evidence of after-the-fact conduct, has only
an indirect bearing on the issue of Cindy Alis guilt, you must be careful
about inferring that Cindy Ali is guilty on the basis of evidence of
after-the-fact conduct because there might be other explanations for that
conduct something unconnected with participation in the offence charged. You
may use this evidence of after-the-fact conduct, along with other evidence, to
support an inference of guilt only if you have rejected any other explanations
for the conduct.
I have already suggested to you that on
the evidence you have heard I do not see any other explanations for the
post-offence conduct if you find that she did these things, but that is
entirely for you to determine
. [Emphasis added.]
[71]
The trial judges instruction that if the jury
concluded the appellant had fabricated the home invasion story, it could use
that fabrication as evidence the appellant committed the offence, or was
conscious she killed Cynara, or as evidence she participated in the offence
charged must be read with the trial judges instruction that the only way the
jury could find the appellant committed the offence, or participated in the
offence was if she had smothered Cynara. By limiting the appellants potential
culpable act to suffocation and telling the jury it could infer the appellant
committed the offence if the jury concluded she fabricated the home invasion
story, the trial judges instructions allowed the jury to reason as follows:
·
the
appellant fabricated the home invasion story;
·
there was no innocent explanation for that
fabrication, (bearing in mind the trial judge twice told the jury he could not
see any possible innocent explanation on the evidence);
·
the
appellant fabricated the home invasion story to hide her participation in
Cynaras death;
·
on the
trial judges instructions, the appellant could only have participated in
Cynaras death by smothering her;
·
the appellant smothered Cynara.
[72]
On this reasoning, the jury could have concluded
the appellant smothered Cynara without ever coming to grips with the expert
evidence as to the cause of Cynaras death. That evidence, while certainly not
determinative, was important and suggested other possible causes of death,
including aspiration associated with seizures.
[73]
Furthermore, on the same reasoning, just as
counsel for the appellant suggested in the pre-charge discussions, a finding by
the jury the appellant fabricated the home invasion story would lead almost
inevitably to the conclusion the appellant smothered Cynara and thereby committed
at least second degree murder. That finding would also go a long way to the determination
the murder was planned and deliberate. On the path cut by the trial judges
instructions, the jurys verdict of guilty of first degree murder could have
been based almost entirely on finding the appellant fabricated the home
invasion story.
[74]
In my view, the jury instructions wrongly
narrowed the proper scope of the jurys deliberations. It is essential that all
defences and verdicts reasonably available on the evidence be left with the
jury for its consideration. Similarly, any defence theory realistically
available on the totality of the evidence should be left with the jury:
R.
v. Grewal
, 2019 ONCA 630, at paras. 36-37;
R. v. Ronald
, 2019
ONCA 971, at paras. 43-48.
[75]
I agree with the submission made by defence
counsel at trial. On this evidence, it was reasonably open to the jury to conclude,
or at least have a doubt as to whether Cynara was suffocated. The jury could
have determined, or at least had a doubt, that Cynara died as a result of a respiratory
failure brought on by the aspiration of food during a seizure leading to
Cynaras unconsciousness and eventual cardiac arrest. In fact, the Crown
accepted that respiratory distress brought on by the aspiration of food during
a seizure was a possible cause of death. The Crown took the position, however, that
if the death was seizure-related, the appellant should be acquitted.
[76]
I also think it was open to the jury to conclude
that the appellant failed to properly respond to Cynaras seizure. Cynara was
prone to seizures and the appellant knew those seizures could lead to sequelae,
endangering Cynaras life. The appellant was well aware of the dangers and the
steps required to protect Cynara once she began to experience a seizure. Just
the night before, the appellant had responded appropriately when Cynara
suffered a series of seizures. Cynara did not lose consciousness, and did not
stop breathing.
[77]
In my view, it was open to the jury to conclude
the appellant, who was responsible for Cynaras wellbeing, failed to take the
steps necessary to protect Cynara once she began to experience a seizure. The
jury could have concluded the appellants failure to respond to Cynaras
seizure, as she knew she was required to do, caused Cynaras condition to
worsen to the point where she lost consciousness and stopped breathing. On those
findings, it was open to the jury to conclude the appellant caused Cynaras
death by her failure to respond appropriately to the seizure suffered by Cynara.
That failure could constitute criminal negligence under s. 219 of the
Criminal
Code
, or the failure to provide necessaries under s. 215. Either
characterization would render the appellants conduct culpable homicide for the
purposes of s. 222 of the
Criminal Code
.
[78]
If the jury concluded the appellants failure to
take the appropriate steps to help Cynara after she had a seizure caused
Cynaras death, the jury could well have returned a verdict of guilty on the
included offence of manslaughter, although a conviction for murder would still
have been available, depending on the appellants state of mind when she failed
to render the necessary care.
[79]
A finding by the jury that the appellant fabricated
the home invasion narrative would also take on a very different significance
had the jury been left with the possibility that the appellant caused Cynaras
death by failing to provide the appropriate assistance once Cynara suffered a
seizure. If the jury had been left with that option, it may have concluded the
home invasion narrative was fabricated by the appellant to hide her failure to
do what she knew she should have done to help her daughter. That inference, while
still pointing to the appellants culpability, could have led to a manslaughter
verdict.
[80]
Crown counsel, in their factum, offer several
submissions to support the trial judges instruction that the appellant could
be convicted only if the jury was satisfied Cynara had been smothered to death.
First, counsel submits the trial judge correctly held there was no evidence
that a faster response, once Cynara lost consciousness, would have made any
difference in the outcome.
[81]
This submission takes an unduly narrow view of
the appellants potential liability if she failed to properly respond to
Cynaras seizure. If the appellant did not respond appropriately, the jury
could conclude the appellants failure to do so caused Cynaras condition to
worsen to the point where she lost consciousness and stopped breathing. On that
view, the appellants culpability lies in her failure to intervene when the
seizure that ultimately led to Cynaras death began. It is irrelevant to that
basis of liability that once Cynara stopped breathing, there was no evidence
that a more timely intervention could have saved her life. The appellants culpable
conduct on this view of the case rests in her failure to respond, as she should
have, from the outset of the seizure.
[82]
Crown counsel also argues, there is no realistic
basis in the evidence for a finding of any culpable act other than smothering.
Counsel submit, that of the potential causes of death put forward by the
medical experts, only suffocation is consistent with an intentional action by
another person.
[83]
I cannot agree with this submission. The medical
experts agreed that cardiac arrest as a consequence of respiratory distress
brought on by seizure-induced aspiration of food into the lungs was a
possibility. The defence expert saw this as the most likely cause of death. There
was uncontested evidence that Cynara regularly suffered seizures and that the aspiration
of food into her lungs was associated with those seizures. In addition, the
evidence showed the appellant knew seizures posed a life-threatening danger to
Cynara. The appellant knew how to respond to those seizures to mitigate the
risk they posed to Cynara. On all this evidence, the jury could reasonably conclude
Cynara suffered a seizure and for some reason the appellant failed to take the
steps she knew were necessary to protect her daughter. That failure, in light
of the appellants obligations to Cynara, could, on an appropriate jury
instruction, be viewed as an intentional culpable act causing Cynaras death.
[84]
Crown counsel also make the point that the
suggestion the appellant failed to take the necessary steps in respond to a
seizure by Cynara flies in the face of the appellants own testimony and every
statement she gave to the police. That is true. However, an inconsistency
between the position advanced through an accuseds testimony and an alternative
defence theory will not justify the refusal to leave that theory with the jury,
if, on the totality of the evidence, there is an air of reality to the theory and
the verdict that theory could generate:
R. v. Grover
, [2007] 3 S.C.R.
510, at paras. 512-13;
R. v. MacLeod
, 2014 NSCA 63, at paras. 121-23.
[85]
I accept that the appellants statements to the
police and her testimony might well make it less likely the jury would conclude
the appellant caused Cynaras death by failing to take the necessary steps to help
Cynara after she suffered a seizure. The jury could have rejected outright the
appellants evidence without necessarily accepting the Crowns claim Cynara was
smothered. It the jury rejected both the appellants testimony and the theory
of the Crown, it could have found the appellant caused Cynaras death by
failing to provide the necessary assistance.
[86]
This is also not a case in which it could be
argued that the failure to put a defence theory inconsistent with the
appellants testimony reflected a tactical decision made at trial. Defence
counsel specifically asked the trial judge to instruct the jury on the
possibility the appellant caused Cynaras death by failing to take the
necessary steps when Cynara suffered a seizure. The appellant takes the same
position on appeal as she took at trial.
[87]
Finally, the Crown argues, the jurys verdict
of guilty of first degree murder renders any failure to instruct the jury on
the appellants potential liability for an unlawful act other than smothering
irrelevant to the outcome. The Crown submits, the jurys finding the murder was
planned and deliberate makes it absolutely clear the jury would have rejected
any suggestion the appellant caused Cynaras death by failing to take the
necessary steps after Cynara suffered a seizure.
[88]
In some situations, an argument moving backwards
from the verdict returned can be persuasive in demonstrating that a failure to
leave a certain theory of the defence or an included offence with a jury had no
effect on the verdict returned:
R. v. Sarrazin
, 2011 SCC 54, at paras.
30-31. Given the structure of this charge, that reasoning does not assist the
Crown.
[89]
The jury was told if it determined the home
invasion story was fabricated, it could infer the appellant participated in
Cynaras death. On the instructions as given, the only way the appellant could
have participated in Cynaras death was by smothering her. On the trial judges
instructions, the jury would have only reached the question of planning and
deliberation after deciding the appellant had smothered her profoundly disabled
daughter with a pillow.
[90]
Had the jury been properly instructed, and
assuming it concluded the appellant had fabricated the home invasion story, the
jury may have inferred that she fabricated that story to hide her failure to
properly react to the seizure suffered by Cynara. If the jury concluded the
appellants failure to act caused Cynaras death, I do not see how it could
have concluded that a murder, based on that culpable act, was planned and
deliberate. Indeed, the jury may not have been satisfied it was murder at all.
The jurys verdict of guilty on first degree murder provides no insight into
what it might have done had the possibility of a culpable act other than
suffocation been left with the jury.
[91]
In addition to wrongly narrowing the ambit of
the jurys deliberations by excluding the possibility the appellant caused
Cynaras death by a culpable act other than suffocation, the trial judge unduly
restricted the jurys consideration of what inference, if any, it should draw
from a finding the appellant fabricated the home invasion narrative.
[92]
In his instructions, the trial judge told the
jury more than once that, if it determined the appellant fabricated the home
invasion story, it must consider other possible explanations for the
fabrication, before inferring that the appellant fabricated the story because
she had killed Cynara. The trial judge cautioned the jury against jumping too
quickly to the conclusion the home invasion story was fabricated to cover up
the killing. He reminded the jury they could draw that inference only if they
first rejected any other explanations.
[93]
All of these instructions were legally correct
and necessary in a case like this one, when so much turned on what the jury
made of the evidence said to demonstrate the appellant had fabricated the home
invasion story: see
R. v. Calnen
, 2019 SCC 6, per Martin J., at paras.
116-17 (in dissent but not on this point);
R. v. White
, 2011 SCC 13,
at para. 23.
[94]
The trial judge also instructed the jury,
however, that any alternative explanation for the fabrication of the home
invasion story must be based on the evidence. He said:
But while you should consider the possibility
of other explanations for this conduct, you must not speculate. Any other
explanations must be founded in the evidence.
[95]
The trial judge reinforced this instruction by
twice offering the opinion he could see no other explanation in the evidence
should the jury conclude the appellant fabricated the home invasion story.
[96]
The Crown relied on evidence, which it claimed
showed the appellant had fabricated the home invasion, as circumstantial
evidence of the appellants guilt. In
Calnen
, Martin J., at para. 112,
drawing on the judgment of Watt J.A. in
R. v. Smith
, 2016 ONCA 25, at
para. 77, aptly described the jurys function when considering the Crowns claim,
it should draw an inference of guilt from an accuseds after-the-fact conduct:
In order to draw inferences, the decision maker
relies on logic, common sense and experience. As with all circumstantial
evidence a range of inferences may be drawn from after-the-fact conduct
evidence. The inferences that may be drawn must be reasonable according to the
measuring stick of human experience and will depend on the nature of the
conduct, which is sought to be inferred from the conduct, the parties
positions, and the totality of the evidence. [citation omitted] That there may
be a range of potential inferences does not render the after-the-fact conduct
null.
[97]
An inference of guilt drawn from circumstantial
evidence must be rooted in the evidence and must be the only reasonable
inference available on the totality of the evidence. However, when the jury is considering
whether the Crown has met its burden to show that guilt is the only reasonable
inference, the jury is not engaged in fact-finding and is not limited to
considering alternative explanations founded on the evidence. Instead, the jury
is testing the force of the inference urged by the Crown against the reasonable
doubt standard. In doing so, the jury can consider other reasonable alternative
explanations for the conduct. Those alternative explanations may or may not
lead the jury to conclude the Crown has failed to prove that guilt is the only
reasonable inference available on the evidence:
R. v. Villaroman
, 2016
SCC 33, at paras. 28, 35-42.
[98]
In determining whether the Crown has met that
burden in a circumstantial evidence case, the jury may apply its logic and
common sense to the totality of the evidentiary picture, including gaps in that
picture, and consider whether other reasonable possibilities not only exist,
but preclude a finding that an inference of guilt is the only reasonable
inference available. As explained in
Villaroman
, at para. 36:
a reasonable doubt or theory alternative to
guilt, is not rendered speculative by the mere fact that it arises from a
lack of evidence
a certain gap in the evidence may result in inferences other
than guilt. But those inferences must be reasonable given the evidence and the
absence of evidence, assessed logically, and in light of human experience and
common sense.
[99]
The jury should have been instructed that, if it
concluded the appellant fabricated the home invasion story, it should, in
deciding what inference, if any, to draw from that finding, consider other
reasonable possibilities which, as a matter of logic and human experience, arose
from the totality of the evidentiary picture, including any gaps in the
evidence.
[100]
In my view, human experience and common sense suggested various
explanations, should the jury conclude the appellant fabricated the home
invasion story. Some of those possibilities point toward guilt, others do not.
[101]
It was a reasonable possibility the appellant fabricated the story
to hide the fact she smothered Cynara to death. It was also reasonably possible
she fabricated the story to hide the fact she had failed in her duty to protect
Cynara after Cynara suffered a seizure. Alternatively, it was reasonably
possible that the appellant fabricated the story because she felt responsible
for what had happened to Cynara, regardless of whether her conduct would
actually attract criminal responsibility, and she was attempting to shift the
blame elsewhere. Finally, it was reasonably possible that the fabrication of
the home invasion story was explained by the appellants panic associated with a
fear of being accused by the authorities of killing Cynara, regardless of
whether the appellant was in fact responsible for her death:
Calnen
, at
para. 117.
[102]
I do not suggest the possibilities listed above exhaust the reasonable
possibilities that the jury would have been entitled to consider in deciding
what inference, if any, to draw from the fabrication of the home invasion. Nor
do I suggest the trial judge was required to catalogue the reasonable
possibilities. He was required, however, to instruct the jury, that when it was
considering whether the Crown had met its onus, it should consider reasonable
possible explanations for fabricating the home invasion story, other than the
explanation urged by the Crown. One or two examples of what the trial judge
regarded as reasonable possibilities open for consideration may have been
helpful in explaining to the jury how it should approach its task if it
concluded the appellant fabricated the home invasion story.
[103]
The trial judge should also have instructed the jury to consider
those other possible reasonable explanations in the context of the entirety of
the evidence. For example, while the appellants character and long-time
devotion to Cynara might suggest a non-culpable explanation for the fabrication
of the home invasion story, the details and effort involved in constructing and
repeating the fabricated story might well suggest a more sinister explanation.
Ultimately, it was for the jury, having considered other possible reasonable
explanations, to decide whether, on the totality of the evidence, the Crown had
proved the case against the appellant.
B.
did the trial judge unfairly review ms. Chariyaudoms
evidence in his instructions to the jury?
[104]
The appellant submits the trial judge unfairly reviewed the evidence
of Ms. Chariyaudom and made a series of misstatements in the course of that
review. According to the appellant, the trial judges treatment of Ms.
Chariyaudoms evidence substantially undermined its potential value to the
defence.
[105]
The trial judge referred to Ms. Chariyaudoms evidence several times
during his instructions. In his review of Ms. Chariyaudoms evidence, the trial
judge identified features of her evidence supporting the appellants position
and other aspects of her evidence relied on by the Crown. For example, the
trial judge referred to the timing of Ms. Chariyaudoms sighting of the two men,
and her general description of those men, as supporting the defence. He also
told the jury to take into account the arguably significant difference between
the appellants description of the coats worn by the robbers and the coat
identified by Ms. Chariyaudom in the coat lineup.
[106]
The appellant contends there was in fact no inconsistency between
the appellants evidence and Ms. Chariyaudoms evidence about the coats worn by
the persons they saw. The appellant argues, Ms. Chariyaudoms vantage point did
not allow her to see below the chest level of the two men she observed in the
garage. The appellant, on the other hand, saw the full figures of the robbers.
[107]
The interpretation of the evidence advanced in this argument comes
for the first time on appeal. At trial, the defence acknowledged some
inconsistencies in the descriptions of the coats but pointed to various
explanations for those inconsistencies. In any event, the extent to which the
descriptions of the coats were inconsistent, and the significance of any
inconsistencies, were questions for the jury. The trial judge reviewed the
relevant evidence and properly left it with the jury.
[108]
The appellants suggestion that the trial judge made several
misstatements about Ms. Chariyaudoms evidence identifying the men in the
garage is not supported by a review of the jury instructions. The trial judge
arguably made one error in his review of the evidence pertaining to Ms.
Chariyaudoms identification. One passage from the jury charge, although
somewhat ambiguous, would appear to indicate that Ms. Chariyaudom had picked
out more than one photograph from the coat lineup shown to Ms. Chariyaudom. She
had in fact picked out only one photograph.
[109]
There was no objection to the trial judges instructions relating to
the evidence of Ms. Chariyaudom. At its highest, the appellant has demonstrated
an error in the review of Ms. Chariyaudoms evidence. Bearing in mind the jury was
told it was their recollection of the evidence that mattered, a single minor
factual error in the course of an extensive review of the evidence by the trial
judge is no reason to set aside a conviction.
[110]
I would not give effect to this ground of appeal.
C.
the instruction on motive
[111]
The appellant submits the jury instructions on motive reveal two errors.
First, the trial judge failed to correct improper submissions made by Crown
counsel in her closing and, second, the trial judge should have told the jury
the evidence showed the appellant had no motive to kill Cynara. Counsel
contends the trial judge should have told the jury a proved absence of motive
constituted circumstantial evidence supporting the defence position the
appellant did not cause Cynaras death.
[112]
Motive is usually not an element of the offence and the Crown is not
required to prove motive. Motive describes a state of mind. That state of mind
can constitute circumstantial evidence relevant to proof of the
actus reus
and/or
mens rea
of the offence:
R. v. McDonald
, 2017 ONCA
568.
[113]
If the Crown asks the jury to infer from the evidence that an
accused had a certain motive, the evidence must be reasonably capable of
supporting that inference. If the inference does not arise reasonably from the
evidence, the trial judge should tell the jury to disregard the Crowns
submission.
[114]
In her closing, Crown counsel acknowledged that the appellants
motive may never be known. She went on to suggest at least three possible
motives.
[115]
The Crown argued, based on a conversation the appellant had with her
pastor many years earlier, that the appellant had let Cynara go from her
heart and stopped loving her. There was simply no evidence to support this
submission. In fact, all of the evidence was to the contrary. If anything, the
conversation with the pastor indicated that the appellant, a devout Christian,
had come to grips with Cynaras tenuous mortality and was prepared to accept
the will of God. The trial judge effectively put this interpretation of the
conversation with the pastor to the jury when he characterized the conversation
with the appellant as a theological discussion.
[116]
Crown counsel also suggested the timing of Cynaras death could be
explained by the appellants desire to avoid attracting the suspicion of the
immigration authorities. It was only after the family obtained permanent
residence status that the appellant felt she could proceed with the plan to
kill Cynara without attracting that attention. This submission suggests the
appellant had decided to kill Cynara months before she put the plan into
motion.
[117]
Once again, there was no evidence to support this submission.
Unfortunately, the submission could also have played into the false and
negative stereotypes that some people have about immigrants who are attempting
to gain permanent status in Canada. The trial judge should have told the jury
there was no basis in the evidence for the claim the appellant may have been
planning to kill Cynara for months and was only waiting until the family had
its permanent residence status.
[118]
The Crown also argued that Cynaras killing may have been motivated by
financial concerns. I have difficulty finding any firm evidentiary basis for
this argument. It is true the Ali family, like many families, had debts and
were far from well off. It is also true that Cynaras future care may well have
involved costs not covered by Mr. Alis insurer or OHIP. However, there is no
evidence that Cynaras care and medical needs imposed a significant burden on the
familys finances, or that the appellant believed Cynaras future needs would
overwhelm the familys financial resources.
[119]
The trial judge left financial stress as a possible partial
motive. He did so in a single sentence, followed immediately by the
observation the defence says there is no evidence of any motive.
[120]
In my view, the evidence capable of supporting the submission the
killing of Cynara was motivated by financial stress was so meagre as to
render the inference that the killing was motivated by financial stress
speculative. The suggestion that the appellant was motivated by financial
stress should not have been left with the jury as a possible motive: see
R.
v. Johnson
(2010), 262 C.C.C. (3d) 404 (Ont. C.A.), at paras. 99-101,
119-20.
[121]
While I am satisfied the Crown put suggestions of motives to the
jury unsupported by the evidence, I do not agree with the appellants
submission the evidence justified a proved absence of motive instruction. No
such instruction was sought at trial. There is a well recognized difference
between the absence of evidence of motive and a proved absence of motive:
R.
v. Lewis
, [1979] 2 S.C.R. 821, at para. 38;
R. v. Barton
, 2019
SCC 33, at paras. 133-36;
R. v. White
(1996), 29 O.R. (3d) 577 (C.A.),
at para. 101, affd [1998] 2 S.C.R. 72, at para. 59. The trial judge made it
clear to the jury that it was the defence position there was no evidence of
motive. He was not required to go further than that on this evidence.
[122]
As I would allow the appeal on another ground, I need not decide
whether the trial judges failure to remove certain motives suggested by the
Crown from the jurys consideration would constitute reversible error. Hopefully,
and assuming no material changes in the evidence, my comments will provide some
assistance at the retrial.
D.
was the conviction for first degree murder
unreasonable?
[123]
The appellant submits a conviction on the charge of first degree
murder was not reasonably open on the evidence. Counsel contends, even if the
jury concluded the appellant killed her daughter and fabricated the home
invasion story to cover up the killing, the only reasonable inference from the
evidence is that the cover up occurred after the appellant killed Cynara.
Counsel submits, that if the cover up followed the killing, there was no basis
for a finding the murder was planned and deliberate.
[124]
I agree a finding the home invasion story was fabricated was
essential to a conviction for first degree murder. I also agree that the fabrication
of the home invasion story could only assist in proving first degree murder if
the fabrication, or at least the planning for the fabrication, occurred before
the appellant killed Cynara.
[125]
I do not, however, agree it would have been unreasonable, on the
totality of the evidence, to infer that the fabrication of the home invasion
story, if not the actual staging of the home invasion, took place before the
appellant killed Cynara.
As Crown counsel argued, the details of the story provided to
the police, almost immediately by the appellant, the steps taken throughout the
house to corroborate the home invasion narrative, and the brief time period the
appellant would have had to take all those steps after killing Cynara, but
before calling 9-1-1, were capable of reasonably supporting the inference the
appellant had thought about and planned what she would do and say to explain Cynaras
death before killing her daughter.
[126]
The
evidence warranted leaving first degree murder with the jury.
conclusion
[127]
I would
allow the appeal, set aside the conviction and order a new trial on the charge
of first degree murder.
[128]
The
appellant will attend before the trial court as required. She will remain
subject to the terms of her bail order dated February 25, 2021, subject to
variation by this court or the trial court.
Released: DD May
28, 2021
Doherty
J.A.
I
agree David Watt J.A.
I
agree K. van Rensburg J.A.
[1]
As I understand the medical evidence, SUDEP will only be
described as the cause of death in the absence of evidence pointing to other
causes. Here, both experts agreed there was evidence of other causes.
[2]
The trial judge instructed the jury that all of the evidence
said to show the appellant fabricated the home invasion story, with the
exception of the robbers letter, was relevant to all three issues. He instructed
the jury the letter was not relevant to the question of planning and
deliberation. The appellant does not take issue with this part of the instructions.
[3]
The appellant argued that the trial judges repeated use of
phrases like post-offence conduct and staging of the crime scene prejudiced
the appellant in that they may have led the jury to assume an offence had
occurred. I would not go that far, but phrases like post-offence conduct and
consciousness of guilt are best avoided in jury instructions:
R. v. Peavoy
(1997), 117 C.C.C. (3d) 226, at para. 23
(Ont. C.A.);
R. v. Campbell
(1998), 122 C.C.C.
(3d) 44, at para. 24 (B.C.C.A.), affd, [1998] 3 S.C.R. 533.
|
COURT
OF APPEAL FOR ONTARIO
CITATION: R. v. Ali, 2021 ONCA 218
DATE: 20210409
DOCKET: M52083
(C68555)
Pardu
,
Brown and Paciocco
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Zulfiqar Ali
Applicant
Zulfiqar Ali, acting in person
Nicole Rivers, for the respondent
Heard: April 6, 2021 by video conference
REASONS FOR DECISION
[1]
The applicant asks this panel to review the
decision of a single judge of this court refusing an extension of time.
[2]
The applicant was convicted on April 3, 2018 of
failure to comply with a term of an undertaking requiring that he not
communicate with the mother of his son and, on August 24, 2018, of an assault, for
slapping his son on the face. He received 15 months probation for the breach
of undertaking, and he was ordered to enter into a common law peace bond. He
received a conditional discharge for the assault, with one year of probation.
[3]
The applicant appealed to the summary conviction
appeal court, and his appeal was dismissed on November 1, 2018. He had not
filed the transcripts of the trials and there was no basis for the summary
conviction appeal court judge to assess his claims of error. Some 20 months
later, the applicant sought an order from this court seeking an extension of
time within which to seek leave to appeal from the summary conviction appeal
court dismissal.
[4]
On October 5, 2020, MacPherson J.A. dismissed
the application for an extension on the grounds that there was no explanation
for the delay, no evidence that the applicant had formed a
bona fide
intention to appeal in a timely fashion, and on the ground that there was no
apparent merit to the appeal. The applicant attempted to appeal this refusal to
the Supreme Court of Canada, which would not entertain the matter. The
applicant then returned to this court, seeking an extension of time to seek a
panel review of the decision of MacPherson J.A. That application was also
dismissed on December 29, 2020 by Coroza J.A., who concluded that there was no
merit to the appeal and that the applicant could not satisfy the test for
granting leave to appeal to this court from the summary conviction appeal
judge. Coroza J.A. also concluded that there were no new or changed
circumstances that would justify a departure from the decision of MacPherson
J.A.
[5]
The applicant now asks this court to review the
decision by Coroza J.A.
[6]
The applicants disagreement with his
convictions seems largely factual. No error of law on the part of the trial
judge is alleged. There is no explanation for the delay between the time of the
dismissal of the summary conviction appeals and the motion to this court to
extend time.
[7]
We agree with the decisions by MacPherson J.A.
and Coroza J.A. and see no basis to depart from the decision of Coroza J.A.
[8]
The application is dismissed.
G.
Pardu J.A.
David
Brown J.A.
David
M. Paciocco J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Antoine, 2021 ONCA 167
DATE: 20210316
DOCKET: C68173
Tulloch, Huscroft and Thorburn
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Crystal Joanne Antoine
Appellant
Crystal
Joanne Antoine, acting in person
Gerald
Chan, appearing as duty counsel
Kerry Benzakein,
for the respondent
Heard
and released orally: March 9, 2021 by video conference
On appeal
from the conviction entered and sentence imposed on December 24, 2019 by
Justice Alain H. Perron of the Ontario Court of Justice.
REASONS
FOR DECISION
[1]
On December 24, 2019, the
appellant Crystal Joanne Antoine pled guilty to possession for the purpose of
trafficking 171 pills of methamphetamine, four counts of failure to comply with
the conditions of her probation, five counts of failure to comply with the
terms of her recognizance, and two counts of failure to attend court.
[2]
She did so after her counsel advised the Court
that he had conducted a pre‑plea inquiry, and the appellant confirmed
that her plea was voluntary. The trial judge reminded her of the implications
of pleading guilty and she confirmed that she understood and wished to plead
guilty to all charges.
[3]
The judge then considered the possibility of a
conditional sentence but decided that a conditional sentence would be
inappropriate because of the appellants serious addiction and her failure to
comply with many court orders. He told her that in order to be enrolled in the
drug treatment plan, she was required to serve a sentence of at least 9 months and
advised that he would impose a sentence of 9 months in custody. She then agreed
to be enrolled in the drug treatment plan. He did not address the Gladue principles
as he was not told the appellant was Indigenous.
[4]
The appellant was
sentenced to 9 months in custody on the drug trafficking offence and an
additional 30 days for breach of the court orders.
[5]
She appeals both her
conviction and sentence.
[6]
At the hearing, the
Crown submitted that the sentence should be reduced to 6 months in light of the
fact that the Gladue principles were not addressed. The appellant also informed
the court that she was abandoning her conviction appeal. The appellant agrees
with the Crowns submission to reduce the sentence.
[7]
In view of the sentencing judges failure to
apply the Gladue principles as set out in s. 718.2(e) of the
Criminal
Code,
as he was required to do, the sentence will be reduced to six months.
[8]
Leave to appeal sentence is therefore granted
and the sentence is reduced to 6 months. The appeal from conviction is
dismissed as abandoned.
M. Tulloch
J.A.
Grant
Huscroft J.A.
J.A.
Thorburn J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Aslami, 2021 ONCA 249
DATE: 20210421
DOCKET: C66326
Simmons, Lauwers and Nordheimer JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Milad Aslami
Appellant
Jill R. Presser and Cate Martell, for the appellant
Emily E. Marrocco, for the respondent
Heard: November 19, 2020 by video conference
On appeal from the convictions entered on December 8,
2017, and the sentence imposed on April 26, 2018, by Justice W. Vincent
Clifford of the Ontario Court of Justice.
Nordheimer J.A.:
[1]
Milad Aslami appeals from his convictions on multiple charges related to
the firebombing of a home in Ottawa that occurred on November 12, 2016. The
issue at trial was whether the appellant was the firebomber. In my view, the
trial judge made three serious errors in his analysis that led to the
convictions. As a result of these errors, the convictions cannot stand.
Background
[2]
The events leading up to the firebombing began with the appellants ex-wife
having sex with a man, S.F., who had been the appellants friend, but was now a
bitter enemy.
[1]
The appellants ex-wife, who had only recently separated from the appellant,
engaged in this activity as a way of hurting the appellant. She ensured that the
appellant learned of her sexual encounter with S.F. when, the day after the
sexual encounter, and shortly before the firebombing occurred, she sent the
appellant a picture of her and S.F. in bed together.
[3]
It was those few hours, after the picture was sent, when the home of S.F.s
former partner (and the mother of his children), was firebombed. At 2:00 p.m.,
a stolen van was driven into a vehicle parked in the carport of the home. A
homemade incendiary device was then thrown through the living room window.
Fortunately, the occupants of the home escaped unharmed.
[4]
Before and after the firebombing, the appellants ex-wife and S.F.
received several messages, both by text and on social media platforms. The
contents of some of those messages suggested that the sender was involved in
the firebombing. At trial, both the appellants ex-wife and S.F. testified to
their belief that it was the appellant who had sent these messages. Indeed, it
was the appellants ex-wife who showed the messages she received to the police,
which led to the appellants arrest.
[5]
At trial, the prosecution relied on evidence of the appellants motive
(revenge for the sexual encounter) and the fact that the appellant had the opportunity
to commit the attack. There was also a purported identification of the
appellant as the firebomber, from a surveillance video, of which I will have
more to say later. A crucial part of the prosecutions case, however, were the
messages received by the appellants ex-wife and S.F.
[6]
The defence theory was that some, or all, of these messages were, in
fact, created by the appellants ex-wife and S.F. in order to frame the
appellant for the firebombing and cause his removal from Canada. The appellant
did not testify, nor did the defence lead any other evidence.
The trial decision
[7]
This was a judge alone trial. The trial judge recognized that the
prosecutions case was largely circumstantial. He referred to the decision in
R. v. Villaroman
, 2016 SCC 33, [2016] 1
S.C.R. 1000. The trial judge acknowledged that the prosecution may need to
negative other reasonable possibilities that arose from the evidence.
[8]
After reviewing the evidence, the trial judge found that it was the
appellant who had sent the various messages that provided the crux of the
prosecutions case. He also admitted, and relied upon, identification evidence
from the appellants ex-wife, who had watched a video of a person believed to
be the firebomber that had been taken from a transit station surveillance
camera. The appellants ex-wife identified the appellant as the person in this
surveillance video. Finally, the trial judge made reference to the fact that
the appellant had not testified. He followed this observation by finding that
the appellant had, thus, not put forward any evidence of an affirmative
defence. The trial judge concluded that there was an overwhelming body of
evidence that established the guilt of the appellant beyond a reasonable
doubt.
Analysis
[9]
It is not necessary to address
every complaint that the appellant makes regarding the trial judges reasoning.
I said at the outset that the trial judge committed three serious errors in his
analysis. It is only those errors that I will address, in turn. I begin with
the trial judges handling of the messages.
(a)
The messages
[10]
As I earlier observed, the various messages were central to the
prosecutions case. In my view, the trial judge did not recognize the inherent fallibility
of this evidence.
[11]
This case demonstrates the risks associated with not paying
adequate heed to the dangers that are associated with relying on text and other
messages, absent expert evidence explaining how various pieces of software, or
apps, can be used to generate these messages, and how reliable the resulting
messages are in different respects. Put simply, it is too easy to use various
pieces of software to create, or manipulate, messages such that they can appear
to be from someone when, in fact, they emanate from an entirely different
person. Similarly, the timing of the messages can be altered to suit a
particular purpose.
[12]
There were three sources of the messages in this case: SMS text
messages, messages from
an app called
TextNow,
and messages on a Facebook page. Each of these different sources has its own particular
frailties.
[13]
It was part of the defence theory in this case, that these
messages could have been sent by the appellants ex-wife, on her own or in
conjunction with S.F., and could have been made to look like they came from the
appellant, in order to frame the appellant for the firebombing. The appellant
notes that this conduct would be consistent with the desire of his ex-wife to
hurt him, or otherwise get revenge on him, arising from the breakdown of their
relationship. It would also be consistent with the longstanding animus that
existed between S.F. and the appellant. The appellant asserts that
the trial judges finding that he authored the
messages was based on logically flawed reasoning.
(i)
The SMS Messages
[14]
There
is no dispute that the appellants ex-wife and S.F. received various SMS
messages from someone. The police extracted the SMS messages both from the
phone that belonged to the appellants ex-wife and from the phone that belonged
to S.F.
[15]
In
the case of the messages from the phone of the appellants ex-wife, the cellphone
number from which the messages were sent was registered to someone other than
the appellant. The only connection between the appellant and that cellphone
number was the fact that the appellants ex-wife had saved the number as a
contact in her phone under the name Sumal Jan, with a photo of the appellant.
The appellants ex-wife testified that Sumal Jan was the appellants real
name from back home and what his family called him. The appellants ex-wife testified
that she also recognized the number as one used by the appellant. She added
that she believed that she was communicating with him. A police detective gave
evidence that there were several entries on the appellants ex-wifes cellphone
for the name Sumal Jan that had different phone numbers associated to them.
[16]
S.F.
also received some SMS text messages on the day of the firebombing, but only a
few, and they were sent in the space of two or three minutes. While these messages
were extracted from S.F.s cellphone by the police, the senders phone number could
not be identified. There was no evidence that the phone number, from which
these messages emanated, was connected to the appellant, other than S.F.s
evidence that he thought the messages came from the appellant.
(ii)
The TextNow messages
[17]
Between the day of the firebombing, November 12, 2016, at 12:59
p.m., and the next day, November 13, 2016, at 4:23 a.m., the appellants
ex-wife exchanged a great many messages using the TextNow app with a contact that
was, once again, saved by her as Sumal Jan. The appellants ex-wife again testified
that she believed she was texting with the appellant.
[18]
Because these messages were received through the TextNow app,
they could not be extracted from the appellants ex-wifes phone. A witness
from Rogers Communications provided technical evidence that only SMS text
messages and voice calls appear in cellphone records, not communications sent
through text apps like TextNow.
[19]
A
police detective explained how they obtained the TextNow messages from the
phone of the appellants ex-wife. The detective explained that the messages
were contained in screenshots taken by the appellants ex-wife, while a detective
watched, between 11:26 p.m. and 11:57 p.m. on November 13, 2016, the day the
appellant was arrested, and then again in October 2017.
[20]
The
TextNow messages raise a number of issues. For one, the prosecution did not
lead any evidence to establish precisely when the TextNow messages were sent. The
police officer testified that the data connected to each TextNow image shows
only the time when the screenshot was created and not exactly when each of the captured
messages was sent or received. The prosecution also did not lead any expert
evidence regarding the functioning of the TextNow app, or its reliability, or any
ability to manipulate the date, number, name of the sender, or any other
details as to the operation of the app.
[21]
The
appellants ex-wife testified to her belief that the times shown on the
screenshots, in the small circles embedded at indefinite intervals between the messages,
corresponded with when the TextNow messages were exchanged. However, because
the timestamps appear infrequently, often with many messages in between, they
only provide, at best, a rough sense of the timing of each message on the day it
was sent or received.
(iii)
The Facebook messages
[22]
The
third form of messaging was through Facebook. Facebook messages were exchanged
between S.F. and someone using a Facebook account with the moniker, Trustnoone
Mob. S.F. testified that he believed this account was associated with the
appellant. He also testified that he believed he had been messaging with the
appellant. The messages in question were sent between 2:40 p.m. on November 12,
and 3:28 a.m. on November 13. Once again, the messages were obtained by the
police through screenshots, taken by S.F. on his cellphone.
(iv)
The evidentiary value of the messages
[23]
I accept that there were SMS text messages, sent towards the end
of the events leading to the arrest of the appellant, that could be used to
support a finding that it was the appellant who sent those
text messages to his ex-wife. In particular, the last
of the text messages that were sent while the appellant was hiding from the
police, who were actively searching for him, could be reasonably concluded to
have been sent by the appellant. I should note, however, that even that
conclusion is not without its difficulties since, when the appellant was
arrested, no cellphone was found on his person and, for reasons that are not
explained, the police did not search the residence for one.
[2]
In any event, those later text messages did not implicate the sender in the
firebombing.
[24]
The bigger problem for the prosecution, however, is that the case
did not rest on the contents of the SMS text messages. Rather,
the incriminating messages were obtained from the
TextNow app. Indeed, the appellants ex-wife testified that [o]ur whole
argument was over the TextNow app. Unlike the SMS text messages, not only were
the TextNow messages obtained in an unusual and not especially reliable way, there
was nothing in the content of those messages that objectively established the
appellant as the sender nor, as I have mentioned, was there any expert evidence
offered regarding the functioning and reliability of the TextNow app.
[3]
[25]
The trial judge did not deal directly with the
problems surrounding the reliability of the TextNow messages. Instead, the
trial judge engaged in an exercise of comparing the TextNow messages with the
SMS messages, which led him to conclude that they all
originated from the same person, namely, the appellant. The trial judge said
:
I find
that there are striking similarities in the substantive content, specific
terms, tone, grammar and spelling when comparing the messages at tabs 1 and 3.
[26]
In my view, this represents a
flawed and unreliable foundation for the conclusion that the trial judge
reached. Grammar and spelling are not, generally, unique to a single person.
Further, there are many unusual expressions that are routinely used in text
messages that do not reflect proper grammar or proper spelling. Further, any
person who has ever sent a text message has very likely engaged in spelling
errors or, worse, has had their intended language changed by the spell check
function.
[27]
I also do not understand what the
trial judge meant by, or how he could extract, the tone of the text messages.
It is also not clear how tone would be unique to the appellant. If the sender
appeared angry or frustrated, he would not be the only sender of text messages
who might be operating with those emotions. Further, there was no dispute that
there was animus between the appellant and his ex-wife, and an even greater
animus between the appellant and S.F., at this time.
[28]
Further, the reference to
substantive content is troubling because it effectively assumes that the
appellant is the sender. In other words, reliance on the content of the
messages engages somewhat circular reasoning. It assumes that, because the
sender of the messages knew about the firebombing, it must be the appellant who
sent the messages. This approach also fails to give any consideration to the
defence position that, in fact, it was the appellants ex-wife and S.F. who
were sending the messages as a way of framing the appellant.
[29]
Last, are the Facebook messages.
In my view, these messages had no evidentiary value. There was no evidence
whatsoever tying the appellant to these messages, save for the evidence of S.F.
that he believed that they came from the appellant. The problem with relying
solely on S.F.s evidence on this point, given the obvious animus between the
two, is self-evident. S.F., more than any other person, had reason to falsely
implicate the appellant.
[4]
[30]
As
I said at the outset, trial judges need to be very careful in how they deal
with electronic evidence of this type. There are entirely too many ways for an
individual, who is of a mind to do so, to make electronic evidence appear to be
something other than what it is. Trial judges need to be rigorous in their
evaluation of such evidence, when it is presented, both in terms of its
reliability and its probative value. The trial judge did not engage in that
rigorous analysis in this case. In fairness, the trial judge was not assisted
by the prosecution in this task. The prosecution ought to have called expert
evidence to address the issues that the evidence posed, but they did not.
(b)
The identification evidence
[31]
There
are two specific problems that arise from the identification evidence that was
led in this case. One has to do with the appellants ex-wifes identification
of the appellant as the individual in a surveillance video. The other has to do
with the clothing that the firebomber was observed by an independent witness to
be wearing, proximate to the time when the firebombing occurred.
[32]
The
first problem arises from a transit video camera that captured footage of the
man, who the police believed was the firebomber. The man was wearing what a
police officer described as bright white pants and a dark jacket. He ran past
the camera, at 2:07 p.m., in an area that happens to also include the home of C.C.,
a friend of the appellants ex-wife.
[33]
On the day of the firebombing, the appellant arrived
at this home, although the exact time when he arrived was a matter of dispute.
The appellant
asked to use the Wi-Fi to call for a ride. C.C. was not
home but her boyfriend, H.M., was, as were C.C.s children. According to H.M.,
the appellant stayed for about ten minutes. During that time, the appellant
appeared to H.M. to be texting. H.M. testified that the appellant was wearing
black jogging pants and possibly a black shirt. C.C. arrived home shortly after
the appellant had left. Her children told her excitedly that the appellant had just
visited.
[34]
There
was a difference between H.M. and C.C. as to the timing of the appellants
visit. H.M. believed the appellant visited at about 1:00 p.m. or 2:00 p.m.,
while C.C. was doing groceries or running errands. C.C. could not remember what
she had been doing that day, but she believed that she would have returned home
before naptime, because I have to nap the
kids, [s]o, 12, 12:30, 1, maybe, its usually.
[35]
The
trial judge accepted H.M.s evidence on the timing of the appellants arrival.
He appears to have dismissed C.C.s evidence because she was equivocal about
the time she returned. The trial judge then used the timing of the visit to
authenticate some of the text messages. He said:
Based on the evidence before me, I find that [the appellant]
was at [C.C.s] residence on November 12
th
,
2016 during the afternoon at which time he had access to WiFi and that he was
texting. This has significant relevance to the determination of who authored
the texts sent to [the appellants ex-wife] at that time. The timing and the
description within the texts of what is occurring is astonishingly similar to
what had actually occurred; as described in detail by [H.M.]. This is very
persuasive evidence which clearly supports the position that [the appellant]
authored the above-mentioned texts.
[36]
In
my view, there are two problems with the trial judges treatment of this
evidence. For one, you cannot use the fact that the appellant appeared to be
texting to, in some fashion, link the appellant to the various text messages
sent. One does not simply follow from the other. For another, it seems curious
for the trial judge to dismiss C.C.s evidence as to when she returned home,
given the reason that she gave for establishing when that was, i.e., putting
her children down for their regular nap. For yet another, even accepting H.M.s
evidence as to the time (between 1:00 and 2:00 p.m.), it remains a problem for
the prosecution as that time is still before the firebombing occurred. It was
the prosecutions position at trial that the appellant visited the home after
abandoning the van used in the firebombing.
[37]
That
fact leads into the second problem with the identification evidence. It arises
from the evidence of H.M. that the appellant was wearing black pants. The
transit video shows the apparent firebomber, and he is wearing white pants. There
is no suggestion, nor is there any evidence, that the appellant had the
opportunity to change pants between his visit to C.C.s home and the time of
the firebombing. Further, the closer the appellants visit was to 2:00 p.m.,
the less time he would have had to both change his clothes and get to the
firebombing.
[38]
The
trial judge never addresses the evidence about the appellants clothing,
although its importance in terms of the identification of the appellant, as the
firebomber, is obvious.
[39]
The appellants ex-wife was shown the transit video. There was no
dispute that she had sufficient familiarity with the appellant that, in
appropriate circumstances, she could give opinion evidence whether a person
seen in a video was, or was not, the appellant. The issue here was that the
length and quality of the video did not provide those appropriate
circumstances. Further, after viewing the video, the appellants ex-wife testified
in chief that [i]t looks to be [the appellant] and then agreed in
cross-examination that her evidence was that [she] guess[ed] it kind of looks
like him. The appellants ex-wife did not explain what led her to believe that
the person she saw on the video was the appellant.
[40]
The trial judge said that the video portion, showing the
individual, was short (it was five seconds) and that the videos resolution was
less than ideal. Indeed, the appellants ex-wife agreed that it was blurry.
The trial judge found that the appellants ex-wifes opinion as to the identity
of the person in the video would clearly fall short of establishing the
identification of the appellant beyond a reasonable doubt, but he found that
the evidence was nonetheless not worthless. The trial judge said it could be
considered alongside other evidence.
[41]
The trial judge also noted, on this point, that the appellants
ex-wife had seen how the person had moved in the video, in terms of her
identification. However, the appellants ex-wife had not said that she relied
on the physical movement of the person as a reason for her identification.
[42]
In my view, this evidence was worthless. It had no probative
value on the issue of identification. As Hourigan J.A. observed in
R. v.
Olliffe
, 2015 ONCA 242, 322 C.C.C. (3d) 501, at para. 39:
The level of familiarity between the accused and the witness
may serve to enhance the reliability of the evidence. It must be remembered,
however, that recognition evidence is merely a form of identification evidence.
The same concerns apply and the same caution must be taken in considering its
reliability as in dealing with any other identification evidence. [Citations
omitted.]
[43]
This was not a case like
R. v. Carroo
, 2010 ONCA 143,
259 O.A.C. 277, at paras. 10 and 27, which the respondent relies on, where the
identification was based on the witness close contact with the perpetrator directly
in the close quarters of a car with relatively good lighting and where the
witness had a clear view of the perpetrators face and body type. Quite the
contrary. The trial judge erred in relying at all on the appellants ex-wifes
identification from the blurry video.
(c)
The van
[44]
The third serious error involves
the evidence of the van that was used by the firebomber. It was a white van
with signage on the side. The van belonged to a company that had reported it
stolen the day prior to the firebombing. In other words, the van was stolen more
than 24 hours prior to the appellant learning of the sexual encounter between
his ex-wife and S.F., which is said to have been the catalyst for the
firebombing.
[45]
There is no evidence implicating the appellant in the original
theft of the van nor is there any evidence as to how it came into his
possession, assuming of course, that it did come into his possession. The
prosecution attempted to avoid this problem by suggesting that the appellant
may have stolen the van some time after it was originally stolen. That would
mean that the van would have had to have been stolen twice in under 24 hours. The
prosecutions suggestion would involve an incredible coincidence, and one for
which there is absolutely no evidence.
[46]
The trial judges response to this issue was succinct. He said
simply that it did not support a plausible theory that is inconsistent with
guilt and it [did] not raise a reasonable doubt. That was, in my view, an
inadequate response to this issue. It was also incorrect.
SUMMARY
[47]
As
I noted at the outset, this was an entirely circumstantial case. Consequently,
the trial judge was required to follow the analytical route set out in
Villaroman
,
where Cromwell J. said, at para. 37:
When assessing circumstantial evidence, the trier of fact
should consider "other plausible theor[ies]" and "other
reasonable possibilities" which are inconsistent with guilt. I agree with
the appellant that the Crown thus may need to negative these
reasonable
possibilities, but certainly does not need to "negative every possible
conjecture, no matter how irrational or fanciful, which might be consistent
with the innocence of the accused". "Other plausible theories"
or "other reasonable possibilities" must be based on logic and
experience applied to the evidence or the absence of evidence, not on
speculation. [Citations omitted.] [Emphasis in original.]
[48]
The
trial judge purported to comply with this approach, but it is clear that he did
not do so. He said that he could see no other plausible theories/reasonable
possibilities other than that of the guilt of [the appellant.] It seems
likely that it was the errors, to which I have referred above, that caused him
to reach that conclusion.
[49]
It
also seems likely that that conclusion was the result of the trial judge not
considering the evidence as a whole.
Viewing
the evidence as a whole is a critical part of its necessary evaluation,
especially in a circumstantial case, in determining whether it proves guilt beyond
a reasonable doubt. As Watt J.A. said in
R. v. Smith
, 2016 ONCA 25, 333 C.C.C. (3d) 534, at para. 81:
It
is essential to keep in mind that it is the cumulative effect of all the
evidence that must satisfy the criminal standard of proof, not each individual
item which is merely a link in the chain of proof (citations omitted).
[50]
The
problems with the text messages, combined with the evidence of the clothing
that the appellant was wearing and his presence at the home of his friend at,
or only shortly before, the time that the firebombing occurred, combined with
the timing of the theft of the van used in the firebombing, had to raise a
reasonable doubt, on any fair and objective view of the evidence, as to the
appellants guilt. It was certainly sufficient to raise a plausible theory, or
reasonable possibility, consistent with the defence theory.
[51]
In
my view, the trial judge, in coming to his conclusions, manifestly failed to
consider
all
of the evidence. Rather, he focussed on the evidence that
supported a finding of guilt and ignored, or at least failed to adequately
address, the evidence that raised other reasonable possibilities" which were
inconsistent with guilt and, thus, would have raised a reasonable doubt.
CONCLUSION
[52]
I
would allow the appeal, set aside the convictions, and order a new trial on all
charges. In view of my conclusion on the conviction appeal, I do not reach the
sentence appeal.
Released: April 21, 2021 J.S.
I.V.B. Nordheimer
J.A.
I agree. Janet Simmons
J.A.
I agree. P. Lauwers
J.A.
[1]
The appellant and his wife were separated. Given the context of this case, and
to avoid the use of names, I will refer to her throughout these reasons as the
appellants ex-wife.
[2]
The police returned to the residence the next day and did seize a cellphone.
However, it was registered to someone other than the appellant and its number was
not linked to these messages.
[3]
For example, the appellants ex-wife suggested that she was able to use the
TextNow app to conceal her phone number from the appellant.
[4]
S.F. had twice been charged in the past with drive-by shootings at the
appellants family home based on information provided to the police by the
appellant.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Awad, 2021 ONCA 285
DATE: 20210504
DOCKET: C66373
Rouleau, Pepall and Roberts JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Elia Simon Awad
Appellant
Howard L. Krongold, for the appellant
Christa Reccord and Brigid Luke, for the respondent
Heard: March 17, 2021 by video conference
On appeal from the convictions entered on August 15, 2018
by Justice Michelle OBonsawin of the Superior Court of Justice, with reasons reported
at 2018 ONSC 4901.
REASONS FOR DECISION
[1]
The appellant appeals from his convictions for possession of almost one
kilogram of cocaine for the purpose of trafficking and for possession of the
proceeds of crime in the amount of $1,990.
[2]
The Ottawa Police Service conducted surveillance of the appellant for 23
days in connection with suspected drug trafficking activities. The surveillance
revealed that the appellant and his associates had frequently engaged in
various activities consistent with drug trafficking, such as short meetings on
streets, in public parking lots, or in the parking lot of the garage next to
the appellants residence, hand-to-hand transactions, and counter-surveillance manoeuvres.
A few weeks before his arrest on the cocaine-related charges, police observed
the appellant helping an associate to mail coffee tins full of marijuana to
Nunavut. The appellant was arrested and charged with various offences related
to trafficking in marijuana, but those charges were subsequently withdrawn.
[3]
The police obtained four search warrants to search the appellants residence
and three other locations related to him or his associates. While the police
were in the process of executing a search warrant at the appellants residence,
the appellant arrived in the front passenger seat of a car driven by George Abou-Eid.
Mr. Abou-Eid attempted to drive away but his car became stuck in the snow. Officer
Grenier was wearing his police takedown vest on which POLICE was written in big
white letters. He reached the front passenger corner of the car, banged on the
hood, and yelled for the driver to stop. The appellant was locked in a stare
with Officer Grenier who concluded that he had his hands close together towards
the floor area in front of the passenger seat at his feet. Officer Grenier drew
his firearm to address the potential of the appellant retrieving a weapon from
the area of his feet and to address the vehicle not stopping. The car stopped.
Officer Grenier observed a grey plastic bag partially sticking out from under
the front passenger seat. The package was wedged fairly snuggly under the seat
and he had to use a little bit of force to pull it out. His search of the car disclosed
a 985.85-gram brick of cocaine wedged under the passenger seat where the
appellant had been sitting. Cash in the amount of $1,990 was seized from the
appellants jean pocket at the time of his arrest.
[4]
The appellant submits that the trial judge made several errors: she
incorrectly used his apparent involvement in marijuana trafficking as evidence
of his involvement in cocaine trafficking; she failed to make the necessary
finding that the appellants observed alleged trafficking activities were related
to cocaine trafficking; she failed to find that Mr. Abou-Eid had sole possession
of the cocaine in the car that he rented and was driving at the time of the
takedown by police; and she faulted the appellant for his failure to testify. He
submits that the proceeds of crime conviction arises from and falls with the cocaine
conviction. Finally, he submits that the proviso cannot be used to correct the trial
judges errors: while it was not an unreasonable verdict, this was not an
overwhelming case for the Crown where an acquittal would have been impossible
to obtain.
[5]
We do not accept these submissions.
[6]
First, the trial judge did not misuse the evidence of the appellants apparent
involvement in marijuana trafficking or engage in prohibited propensity reasoning,
as the appellant alleges. The appellant points to the trial judges reasons at
para. 118 as evidencing the prohibited propensity reasoning that, because the
appellant was a drug dealer, he was trafficking cocaine. Moreover, the
appellant argues, the trial judge erred in failing to grasp the exculpatory distinction
of the appellant being a marijuana trafficker but not a cocaine trafficker.
[7]
As a starting point, Crown counsel expressly submitted that the Crown was
not seeking to use the evidence of the appellants drug trafficking activities
for propensity purposes but as evidence that the appellant ran a large drug-trafficking
scheme.
[8]
We do not read the trial judges reasons in the way that the appellant
suggests. In para. 118 of her reasons, the trial judge concluded that the appellants
apparent engagement in marijuana trafficking was not a relevant consideration
because of the expert evidence that drug dealers could traffic in more than one
kind of drug. As a result, she rejected, as she was entitled to do, the defence
argument that the evidence of the appellants participation in marijuana trafficking,
including the mailing of the marijuana-filled coffee cans and the seizure of
marijuana and related paraphernalia from his residence, negated or undermined
the conclusion that he was involved in cocaine trafficking.
[9]
Further, the trial judge was not required to conclude that the appellants
observed trafficking activities involved cocaine before she could link those
activities to the cocaine under his seat. The surveillance evidence was only one
part of all the evidence that the trial judge considered. The Crown explicitly proffered
the surveillance evidence of the appellants involvement in marijuana
trafficking, and drug trafficking generally, in relation to the appellants knowledge
and control of the cocaine under the front passenger seat of the car. Trial
counsel for the defence agreed that the trial judge would have to look at this surveillance
evidence, but he argued that there may be innocent explanations for the recorded
activities. Consistent with the submissions of counsel, the trial judge stated
at para. 114 of her reasons: Furthermore, I must consider the surveillance
evidence in the context of the evidence as a whole. It is clear that this plays
a significant role in my assessment of the elements of constructive possession.
[10]
The
trial judge did not consider the evidence in a piecemeal fashion. She correctly
instructed herself that she was required to review all the relevant facts presented
in totality to determine whether [the appellant] personally or jointly possessed
what was being transported in that vehicle
. The appellants
involvement in drug trafficking as revealed by police surveillance was only one
of the several pieces of circumstantial evidence upon which the trial judge was
entitled to rely to ground her finding that the appellant was guilty of possession
of cocaine for the purpose of trafficking. The trial judges reasons demonstrate
that she considered the totality of the evidence. As the appellants trial
counsel submitted, it is the cumulative effect of relevant circumstances which
must be assessed in determining whether proof beyond a reasonable doubt exists.
[11]
This
evidence also included the unchallenged expert evidence that the appellants
observed activities were consistent with drug trafficking and that drug traffickers
often deal in more than one type of drug, work with associates or runners, and use
different locations such as safe residences or stash houses. The trial judge
also accepted the expert testimony that it was highly unlikely that one kilogram
of cocaine was left in the car with individuals who did not know it was there,
and that this brick would likely be re-pressed or cut into smaller quantities
and mixed with cutting agents for sale. She noted the drugs, digital scales,
and drug paraphernalia that were seized at the appellants residence and the other
locations associated with him or his associates, including various baggies that
would not be used for marijuana, cocaine-cutting agents, and a large cocaine
press. She concluded that the garage attached to the appellants residence was
not a functional garage but the appellants hub where he had drug-related meetings
and exchanges. She accepted the Crowns theory that the appellant was running a
large drug operation. Finally, the trial judge relied on the appellants close proximity
to the cocaine under his seat and found that his crouched movements upon arrest
were attributable to him trying to push the brick of cocaine under his seat.
[12]
With
respect to the appellants argument concerning Mr. Abu-Eid, the trial judge expressly
considered the alternatives of sole or joint possession and her reasons are
responsive to the chief defence argument that Mr. Abu-Eid and not the appellant
was the cocaine trafficker. The trial judge was not obliged to conclude that
Mr. Abu-Eid alone possessed the cocaine found in the car he was driving or that
it should leave her with a reasonable doubt of the appellants guilt. The fact
that upon his arrest Mr. Abu-Eid had on his person a small amount of cocaine,
consistent with personal use, that could have come from the brick found under the
passenger seat of his rental car, was not dispositive of this issue. Based on
the evidence that we have just reviewed, it was open to the trial judge to conclude
that the appellant possessed the cocaine alone or jointly with Mr. Abu-Eid.
Proof of possession does not require exclusivity.
[13]
Finally,
the trial judge did not draw any adverse inference or inference of guilt from
the appellants silence. Rather, she rejected the theories raised by the defence
as being speculative and not based on any evidence, since the appellant elected
not to testify. It was open to her to conclude that the silence of the appellant
failed to provide any basis for concluding otherwise once [she determined that]
the uncontradicted evidence pointed to guilt beyond a reasonable doubt:
R.
v. Noble
, [1997] 1 S.C.R. 874, at para. 82.
[14]
We
see no error or basis for appellate intervention. Given this disposition, it is
not necessary to determine if the proviso would apply.
[15]
The
appeal is dismissed.
Paul Rouleau
J.A.
S.E. Pepall J.A.
L.B. Roberts J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Bebee, 2021 ONCA 33
DATE: 20210118
DOCKET: C68499
Rouleau, van Rensburg and Miller
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Michael Bebee
Appellant
Michael
Bebee, acting in person
Nicole
Rivers
, for the respondent
Dan Stein,
appearing as duty counsel
Heard:
January 11, 2021 by video conference
On appeal
from the sentence imposed on July 3, 2020 by Justice Riun Shandler of the Ontario
Court of Justice.
REASONS
FOR DECISION
[1]
At the conclusion of oral submissions, we
advised that we would allow the sentence appeal and vary the sentence from four
years to one of three and a half years with reasons to follow. These are those
reasons.
Facts
[2]
On January 2, 2020, the appellant pleaded guilty
to possession of a loaded restricted firearm and possession of a restricted
firearm knowing possession is unauthorized. He seeks to appeal his sentence of
four years less a total credit of 844 days for pre-sentence custody, resulting
in a net sentence of 616 days.
[3]
The convictions arose out of an incident that
occurred on May 11, 2019. On that day, the appellant entered a sports bar in
Toronto with a friend. At that time, there were a lot of people in the area
surrounding the bar. While at the bar, the appellant and his friend had an
exchange with another individual. The individual then left the bar. The
appellant and his friend soon left the bar as well and walked through the
parking lot to a side street. The individual from the bar shot at them from a
laneway behind the bar. The appellant then pulled out his handgun and
retaliated, firing three times. He then began running away but turned back to
fire one more shot before fleeing the scene.
[4]
On June 5, 2019, approximately one month after
the incident, the appellant surrendered to the police.
Sentencing Reasons
[5]
In his reasons, the sentencing judge noted the
seriousness of the offences, indicating that the appellants conduct posed a
very real and immediate danger to the public. In that regard, he opined that
the principles of deterrence and denunciation were paramount in sentencing the
appellant.
[6]
The sentencing judge considered the
Gladue
Report regarding the appellants Aboriginal status and the psychiatric report
of an expert with respect to the appellants post-traumatic stress disorder (PTSD).
The sentencing judge also recognized various background factors that may have
played a part in the appellants offending, including the separation of his
parents due to his fathers substance abuse and physical abuse of his mother,
his experience of gratuitous abuse from his stepmother, and his experience of
racism in school. The sentencing judge also accepted that the appellant was now
committed to a different lifestyle and that this has been demonstrated by his
significant efforts since being incarcerated. This was further confirmed by the
appellant and duty counsel in oral submissions on appeal.
Issues
[7]
The appellant argues that the sentencing judge
erred in his assessment of the experts report and the role that the
appellants PTSD played in the commission of the offences. Further, the
appellant contends that the sentencing judge failed to properly apply the
Gladue
factors. According to the appellant, these errors resulted in an unfit
sentence.
Analysis
[8]
The experts report regarding the appellants
PTSD referenced a number of significant incidents. The first occurred in 2007,
when the appellant claimed he was assaulted by a large group of police officers
in a case of mistaken identity. Charges were laid but the appellant was later
acquitted. That incident led to the appellants hospitalization for a series of
injuries to his chest, ribs, nose, and knees. In 2014, just prior to
participating as a kickboxer in a televised sporting event, the appellant fell
victim to a serious stabbing that occurred at a party. He was stabbed over 11
times in his arms, upper torso, and legs, requiring multiple surgeries and a lengthy
recuperation during which he used a wheelchair for several months. Finally, in
2018, the appellant was the victim in a shooting, having suffered gunshot
wounds in both feet resulting in serious damage to one foot.
[9]
In his report, the expert explained that following
the first incident in 2007, the appellant suffered PTSD, which was exacerbated
by the incidents of 2014 and 2018. For a period, he began abusing drugs and
alcohol. The expert went on to explain the link between the PTSD and the
offending conduct.
[10]
While considering this evidence, the sentencing
judge noted that the basis for the experts conclusions remains unclear, because
of apparent inconsistencies as to when the PTSD first arose and conflicting
accounts as to the appellants purchase of the firearm. Further, the sentencing
judge noted that the appellant did engage in treatment for his PTSD. In any
event, while sympathetic to the appellant, the sentencing judge rejected any
notion that purchasing a firearm illegally is an appropriate means of
self-protection.
[11]
We agree with the sentencing judge and the Crown
that the significant traumas suffered by the appellant and the PTSD that
resulted do not justify the appellants purchase of an illegal firearm and his subsequent
conduct. However, the traumas and PTSD were important factors to weigh in
fashioning an appropriate sentence.
[12]
In our view, the sentencing judge erred in his
assessment of the experts report. Although there were minor inconsistencies in
his report, the basis for his conclusions were well supported. Further, the
report was not tendered to somehow endorse the appellants acquisition and use
of the firearm. Rather, the expert provided an opinion about the role that the
PTSD played in the appellants commission of the offences. It was relevant both
to the circumstances of the offences and the rehabilitation prospects of the
appellant.
[13]
Giving the experts evidence appropriate weight
and taking into account the
Gladue
Report and other background factors
that apply to the appellant, including his guilty plea, and considering that
the appellant appears to be continuing to progress well while in custody, we
are of the view that the appropriate sentence is one of three and a half years
in custody.
Disposition
[14]
As a result, in this somewhat exceptional case, we
grant leave to appeal the sentence and vary the sentence from 4 years to one of
3.5 years, which, after taking into account the credit of 844 days for pre-sentence
custody, results in a net sentence of 433 days.
Paul
Rouleau J.A.
K.
van Rensburg J.A.
B.W.
Miller J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Beckford, 2021 ONCA 56
DATE: 20210127
DOCKET: C67382
Fairburn A.C.J.O., Watt and
Huscroft JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Kayon Beckford
Appellant
Jessica Zita, for the appellant
Victoria Rivers, for the respondent
Heard: January 25, 2021 by
video conference
On appeal from the conviction entered by
a jury presided over by Justice J. Ramsay of the Superior Court of Justice,
dated October 11, 2018, and the sentence entered on May 9, 2019.
REASONS FOR DECISION
[1]
The appellant was convicted of both importing cocaine and
possession of cocaine for the purpose of trafficking. The cocaine was found in
four hot chocolate containers, located in the trunk of a rental car as she
tried to cross into Canada at Fort Erie.
[2]
This is an appeal from conviction and sentence. At the end of the
hearing, we dismissed the appeals with reasons to follow. These are those
reasons.
[3]
The appellant contends that the jury charge was unfair in a few
respects.
[4]
First, the appellant suggests that the trial judge improperly used
rhetorical questions in the jury charge to convey his view of the case. We do
not agree these questions were rhetorical or improper. While the use of
questions in jury charges has the potential to create unfairness and, therefore,
should only be used with caution, the questions in this case did nothing more
than focus the jurys attention on the central issue to be decided: whether the
appellant knew that there was cocaine in her trunk.
[5]
In any event, even if the questions could be seen as an expression of
opinion, which suggestion we reject, the trial judge clearly brought home to
the jury that they were the sole triers of fact and should not feel bound by
any opinion or fact he expressed.
[6]
We also note the absence of any objection to what is now said to
constitute deep unfairness in the charge. The defence silence on this point at
trial is telling, especially given that trial counsel would have been in the
best position to assess the overall fairness of the charge within the context
of the entire trial and the issue to be decided.
[7]
Second, the appellant claims that the trial judge erred in failing to
present the defence position fully and fairly to the jury. It is correct to
observe that the trial judge said little about the defence position, other than
that the Crown had failed to prove knowledge beyond a reasonable doubt.
Importantly, though, the trial judge summarized the Crown position with equal
brevity.
[8]
This was a short trial and the jury had just heard the closing submissions
of counsel. Brevity can be a virtue in situations such as these. The defence
position could not have been lost on the jury and, in these circumstances,
there was no need for the trial judge to repeat what the jury had just heard.
[9]
The appellant also seeks leave to appeal from her 5.5-year sentence. She
says that a three-year sentence should have been imposed. She points to three
alleged errors in the sentencing reasons.
[10]
First,
the appellant contends that the trial judge did not consider her full rehabilitative
potential by failing to take into account her personal circumstances, including
her history of physical and sexual abuse, as well as her employment history.
Importantly, the appellant did not choose to have a pre-sentence report
prepared. While she wished to pursue a different type of report, in the seven
months between verdict and sentencing, she did not do so. In the end, the
appellants personal circumstances were conveyed to the court through counsels
submissions and not through evidence. Despite this fact, the trial judge was
prepared to accept some of the things that [he had] been told. We see no
error in his approach.
[11]
Second,
the appellant contends that the trial judge erred by failing to address many of
the sentencing decisions he had been provided. The trial judge was under no
obligation to address every authority provided to him. He grappled with the
central authorities, specifically referring to this courts decisions in
R. v.
Madden
,
1996 CanLII 10212 (Ont. C.A.)
and
R. v.
Cunningham
, 1996 CanLII 1311 (Ont. C.A.)
.
In
Madden
,
the sentencing range for first-time offenders importing
more or less one kilogram of cocaine was three to five years. In
Cunningham
,
the court referred to the
sentencing range for importing multiple kilograms of cocaine to be six to eight
years.
[12]
The
trial judge specifically noted that in this case, he considered the around 1.5
kilograms of cocaine, found in the four hot chocolate containers, to be a
little more than 1 kilo more or less. In his view, this drove the range to
somewhere between the
Madden
and
Cunningham
ranges.
We see no error in this approach.
[13]
Finally,
the appellant argues that the trial judge erred by failing to apply the
principle of restraint when sentencing a first-time offender. While the trial
judge did not specifically advert to the principle of restraint, he was well
alive to the fact that the appellant was a first-time offender. He was also
alive to the fact that the
Madden
and
Cunningham
ranges
are set for first-time offenders.
[14]
Sentencing
is an individualized process. We see no legal error in the trial judges
approach. The sentencing decision is owed deference.
[15]
The conviction appeal is dismissed. Leave to appeal sentence is
granted and the sentence appeal is dismissed.
Fairburn
A.C.J.O.
David
Watt J.A.
Grant
Huscroft J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Bell, 2021 ONCA 315
DATE: 20210513
DOCKET: C68736
Hoy, Hourigan and Zarnett JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Raynard Bell
Appellant
Raynard Bell, acting in person
Richard Litkowksi, acting as duty
counsel
Nicole Rivers, for the respondent
Heard: May 6, 2021, by
videoconference
On appeal from the sentence imposed by
Justice Douglas K. Gray of the Superior Court of Justice on May 25, 2020.
REASONS FOR DECISION
[1]
After a guilty plea, the appellant was convicted
of one count of human trafficking.
[2]
The sentencing judge accepted the parties
agreement that an appropriate base sentence would be five years. He applied a
1.5 multiplier to the appellants pre-sentence custody of 610 days, which
amounted to a credit of 30.5 months. The sentencing judge then went on to
consider two collateral consequences of the sentence.
[3]
First, he reviewed the impact of the COVID-19
pandemic on the appellant. The defence sought a credit of approximately 30
days, which was based on a 0.5 day credit for each of the approximate 60 days
of pre-sentence custody impacted by the pandemic. There was also reference in
the submissions to the impact of COVID-19 going forward, but no specific
submission that an additional credit should be granted to reflect the fact that
the sentence would be served during the pandemic.
[4]
The sentencing judge noted that there was no
evidence of an outbreak of COVID-19 in any of the institutions where the
appellant had been housed. He also observed that that the effect of the COVID-19
pandemic cannot result in an inappropriate sentence. The sentencing judge
declined to give any credit for the impact of the pandemic.
[5]
Second, the sentencing judge considered the
lockdowns in the institutions where the appellant was housed and the effect of
two in custody assaults on him. In so doing, the sentencing judge adverted to
the appellants affidavit regarding the personal impact of the lockdowns and
assaults.
[6]
The sentencing judge rejected the Crowns submission
that the credit pursuant to
R. v. Duncan
, 2016 ONCA 754 should be in
the four to six-month range. He also declined to accede to the defence's
position that the credit should reduce the sentence to time served. He
ultimately found that the appropriate
Duncan
credit for the conditions
experienced by the appellant was nine months. Consequently, he sentenced the
appellant to 20.5 months and made a series of ancillary orders.
[7]
On appeal, the appellant submits that the
sentence imposed was excessive. He argues that he should have been given credit
for the impact of COVID -19 both during his pre-sentence custody and his time
in custody after his sentencing.
[8]
We are not persuaded that we should interfere
with the sentence imposed. The sentencing judge accepted the base sentence
proposed by the parties and gave the appellant credit at the usual rate for his
pre-sentence custody. On the issue of
Duncan
credits, the sentencing
judge carefully considered the arguments advanced by the appellant and applied
a credit of nine months. In our view, this was a reasonable exercise of his
discretion and is owed deference by this court:
R. v. Ledinek
, 2018
ONCA 1017, at para. 13.
[9]
With regard to COVID-19, leaving aside that
there was no specific request for a credit based on the fact that the sentence
would be served during the pandemic, implicit in the sentencing judges
conclusion regarding the
Duncan
credit was that any additional credit
beyond nine months would render the sentence unfit. That was a conclusion that
was available to the sentencing judge, and we agree with his statement that any
credit for the pandemic cannot render the sentence unfit.
[10]
In summary, we see no error in principle committed
by the sentencing judge and the sentence is fit in the circumstances. Leave to
appeal sentence is granted, but the sentence appeal is dismissed.
Alexandra Hoy J.A.
C.W. Hourigan J.A.
B. Zarnett J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Bielli, 2021 ONCA 222
DATE: 20210409
DOCKET: C62930
Pepall, van Rensburg and Brown JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Andrew Bielli
Appellant
James Lockyer and Jack Gemmell, for the
appellant
Emily Marrocco, for the respondent
Heard: October 21, 2020 by videoconference
On appeal from the conviction entered on
January 5, 2017 and the sentence imposed on January 5, 2017 by Justice John B. McMahon
of the Superior Court of Justice.
Pepall J.A.:
[1]
At the centre of this appeal is
a planned and intentional
breach of s. 10(a) of the
Canadian Charter of Rights and
Freedoms.
The breach formed part of a
police ruse designed to search the appellant and his vehicle in furtherance of
a larger investigation into illegal gambling in Ontario.
[2]
The appellant appeals from his conviction of possession of proceeds of
crime over $5000 for the benefit of a criminal organization. Prior to trial,
the appellant applied to exclude evidence pursuant to s. 24(2) of the
Charter
on the basis that his
Charter
rights under ss. 8, 9, 10(a) and 10(b) had been infringed. M.G. Quigley J., the
application judge, concluded that although there had been no breach of ss. 8 or
9, the appellants rights under ss. 10(a) and 10(b) had been breached. However,
after conducting a s. 24(2) analysis, he dismissed the application. For the
reasons that follow, I would allow the appeal.
A.
Background Facts
(1)
The Investigation
[3]
In 2011, the police began an investigation into a suspected criminal
organization operating illegal gambling online and in the City of Toronto. The
investigation was called Project ORiver. Detective Kevin Leahy, an officer
with the Combined Forces Special Enforcement Unit, was the lead investigator.
[4]
Platinum SB (Sports Betting) operated a betting website. It had a
network of betting agents or bookies. The bookies dealt directly with the
bettors, and the bettors losses were physically collected weekly by the
bookies and ultimately remitted to management. The appellant was alleged to be
one of those collecting the proceeds from the bookies for the benefit of
members at the top level of the organization.
[5]
The investigative team hoped to arrest prominent members of the organization.
The take-down day was to be on the occasion of the 2013 Super Bowl party, an
annual event where members would congregate early in the year.
[6]
By November 2012, the lead investigators believed that the appellant was
a central figure within the Platinum SB organization. The police had conducted
wiretaps and surveillance and had observed the appellant exchange packages, and
on one occasion cash, with at least one person thought to be operating an
illegal gaming website that facilitated bookmaking activities and illegal
gaming on sports activities. In addition, the appellant was seen meeting with
subjects of the investigation on a number of different dates.
[7]
The officers suspected that the appellant travelled regularly between
London and Toronto on Tuesdays and Thursdays to collect money for Platinum SB. They
believed he returned to London with the proceeds of the transactions which might
be mixed with other monies when he got home. Det. Leahy testified that the
investigation was losing evidence every week.
[8]
Det. Leahy wanted to seize evidence from the appellant and his vehicle
without disclosing or compromising the ongoing investigation. Undercover
officers were engaged in the investigation and their safety was also of concern
to him.
(2)
Discussion with Crown Attorney
[9]
Det. Leahy spoke with Andrew Sabbadini, the Crown attorney assigned to
Project ORiver. Mr. Sabbadini had given advice to Det. Leahy previously on
general warrants and was familiar with the Project ORiver file.
[10]
Det. Leahy asked Mr. Sabbadini whether the police could apply for
judicial authorization using a general warrant under s. 487.01 of the
Criminal Code
,
R.S.C. 1985, c. C-46, so as to
obtain evidence from the appellants vehicle without disclosing the
investigation to him. Det. Leahy proposed that, using the
Highway
Traffic Act
, R.S.O. 1990, c. H.8 to stop the appellant, the police
would search his vehicle and seize the evidence pursuant to a general warrant,
but he would not be arrested. The application judge described Det. Leahys
discussion with Mr. Sabbadini at para. 16 of his reasons:
[W]e had asked whether we could type a general warrant to come
up with an excuse for a search of Mr. Biellis vehicle under the guise of a
general warrant. He [the Crown] told us that was not something you could do
because the accused would not know the full jeopardy of the circumstances.
He said a Judge would not authorize a warrant in that
particular scenario because Mr. Bielli would not know the full jeopardy of the
stop.
[11]
Thus, Mr. Sabbadini explained that he would not be willing to bring that
general warrant forward as he did not feel that it would be authorized by a
judge because the appellant would not know the full scope of the jeopardy he
was in at the time. Det. Leahy testified that the police needed Mr. Sabbadinis
endorsement to go ahead with the general warrant.
(3)
The Plan
[12]
Around two weeks after receiving this advice from Mr. Sabbadini, Det.
Leahy hatched a plan based on
R. v. Dibble
, 2011
ONSC 399, 230 C.R.R. (2d) 323, a case he learned about from a friend in another
unit. There the police told the accused that his vehicle was being searched for
a radar detection device when the true purpose of the search was to obtain
evidence of narcotics. The Crown in that case conceded that the police breached
ss. 10(a) and 10(b) of the
Charter
. The trial
judge found that the police had breached their s. 10 obligations
to protect an ongoing investigation and not to intentionally
circumvent Mr. Dibbles s. 10 rights. She
refused to exclude the
evidence seized. Det. Leahy familiarized himself with the
Dibble
decision
and came up with a plan using a ruse. He cleared the ruse with his superior and
prepared a typewritten Operational Plan (the Plan), the goal of which was
to conduct a vehicle stop on BIELLI, search the vehicle and seize evidence in
relation to offences being investigated for Project ORIVER.
[13]
The appellant would be stopped on the highway going to London from
Toronto after making his collections. If the appellant did not commit a
Highway Traffic Act
offence, the officer would initiate
a vehicle stop regardless. So as not to put the investigation into jeopardy, the
appellant would not be arrested. The vehicle and the appellant would be searched
for the evidence the police were seeking.
[14]
As Det. Leahy testified:
A: [T]he goal
was to get the money on Mr. Bielli prior to him returning home after we had
observed him doing these meets.
A: And the
ruse was devised so [as] not [to] raise any suspicion to Mr. Bielli that wed
actually been watching him for a number of months and that he was a subject
[of] a larger scale investigation that was occurring at the time.
[15]
Det. Leahy acknowledged in cross-examination that the Plan had nothing
to do with the arrest of the appellant, it had to do with the seizure of the
items in the vehicle. He instructed that the appellant should not be arrested
for criminal organization and gaming offences but that he should be told that
he was being investigated and detained for possession of proceeds of crime. He
specifically instructed that the term investigative detention be used and not
the term arrest. The appellant would not know what he was actually under
investigation for; he would know he was being investigated for money in the
car but not for criminal organization, booking or money laundering charges.
[16]
Det. Leahy appreciated that there were some issues with the Plan. He knew
that the appellant would not know his full jeopardy and that he might make some
self-incriminating remarks or statements. To mitigate the jeopardy, the
officers were going to give him his rights to counsel, put him in touch with
his lawyer, caution him, and would not elicit any incriminating evidence from
the appellant himself, just the evidence of what the police were looking for in
the vehicle and on his person.
[17]
The appellant was not being told he was under arrest; that was the whole
plan according to Det. Leahy. However, in Det. Leahys mind, even though the
appellant was told he was under investigative detention, he was under arrest.
[18]
That said, Det. Leahy acknowledged that because the appellant was told
he was under investigative detention and presumably the appellants lawyer
would be advised of the same, the appellant would get legal advice on the basis
of being under investigative detention, not on the basis of being under arrest.
Moreover, he acknowledged that the police could not search a vehicle incident
to an investigative detention in this scenario.
[1]
Det. Leahy recognized that the appellant was educated in police techniques and
might have refused to comply with an unlawful search pursuant to an
investigative detention. Therefore the officers were to try and persuade the
appellant to comply; they could try telling him that he would be arrested for
obstruction, although if he fled, they were not to engage him in a pursuit.
[19]
Det. Leahy agreed that the appellants lawyer inevitably had to be
misled about what was really going on; his lawyer could not be fully informed.
[20]
Det. Leahy offered that it was a unique situation. In hindsight it was
complex and it would have been prudent to speak with Mr. Sabbadini or another
lawyer. However, that was not the decision he made. In his mind, the appellant
was arrestable for proceeds of crime, gaming offences, and criminal
organization offences and they could search him and his vehicle incident to his
arrest for those offences.
[21]
On November 29, 2012, Det. Leahy briefed the two officers involved in
the execution of the Plan, P.C. Brisebois and D.C. Lee. He gave them a copy of
the
Dibble
decision, which they both read
, and told
them that the appellant was arrestable for proceeds of crime, gaming offences,
and criminal organization offences.
[22]
Under the Plan, P.C. Brisebois was to effect the
Highway
Traffic Act
stop and D.C. Lee would be
called in as backup. P.C. Brisebois would approach the car, get the documents
from the appellant, and return to the police vehicle to do certain checks.
Knowing that the appellant was associated with members of an outlaw biker gang
(Hells Angels), as part of the ruse, the officers would return to the appellants
vehicle, tell him they knew of his association with an outlaw motorcycle gang, and
would like to search the car for contraband, and give the appellant his rights
to counsel and a caution. Once the officers found the money, they were to stop
their search and inform the appellant that he was being detained [and] investigated
for proceeds of crime
and given his rights to counsel, again. P.C. Brisebois
and D.C. Lee were told not to question the appellant. The officers were told
that the appellant would not know the full jeopardy of the circumstances he
was in. Moreover, his lawyer would not be fully informed.
[23]
Det. Leahys notes after his briefing stated:
Brief PC Joe Brisebois & D/C LEE
on scenario. I advise them I have grounds to arrest BIELLI for gaming & crim
org related offences at this time but to protect integrity of investigation do
not want to arrest him for these offences at this time.
(4)
Execution of the Plan
[24]
The Plan proceeded to execution on November 30, 2012. P.C. Brisebois
stopped the appellant at 10:49 a.m., telling him that his speeding, abrupt lane
change, and quick exit raised suspicion. The appellant provided P.C. Brisebois with
his drivers documentation as requested. P.C. Brisebois called D.C. Lee for
backup. After conducting checks, P.C. Brisebois told the appellant that he was
placing him under investigative detention as records showed his connection with
the Hells Angels and that they would be searching his car for contraband and
weapons. The appellant, knowing his rights, told the police that they needed a
warrant. P.C. Brisebois testified that he gave the appellant two options:
investigative detention or be arrested for obstruct.
[2]
While P.C. Brisebois could not recall the appellants exact response, his
evidence was that the appellant became compliant and exited his vehicle. He was
not arrested for obstruction but was hand-cuffed, subjected to a pat-down
search, placed in the police cruiser, and given his rights to counsel and cautioned
at 11:15 a.m. D.C. Lee testified that P.C. Brisebois had placed the appellant
under investigative detention as soon as they reached the cruiser.
[25]
The appellant spoke with his lawyer, James Lockyer, in private while in
the police cruiser. D.C. Lee testified that he placed the call for the
appellant and told Mr. Lockyer that the appellant had been placed under
investigative detention. The call lasted 23 minutes, from 11:22 a.m. to 11:45
a.m.
[26]
P.C. Brisebois searched the car and found cash. He testified that his
lawful authority to search the appellant and his vehicle was incident to arrest
based on Det. Leahys instruction that the police had reasonable grounds to
arrest for possession of proceeds of crime. He advised the appellant at 11:55
a.m. that he was being investigated for possession of proceeds of crime. The appellant
was given his rights to counsel and cautioned again and the appellant spoke
with Mr. Lockyer again, from 12:08 p.m. to 12:16 p.m. At some point, P.C.
Brisebois told Mr. Lockyer that the traffic stop was for speeding and an unsafe
lane change and that the search was to look for contraband and weapons, based
on affiliation with Hells Angels.
[27]
The officers conducted a more thorough search of the vehicle which they
completed at 12:49 p.m. They gave the appellant a receipt for the property
taken: $74,835 in cash, a number of cellphones, and a laptop, among other
things. Contrary to their instructions, the two officers did question the appellant,
but he declined to answer them.
[28]
P.C. Brisebois testified that he gave the appellant a verbal warning
about his speed and improper lane change but did not issue a
Highway Traffic Act
ticket because he did not have
proper evidence for this. The appellant was released without charges at 1:46
p.m. He had been detained for nearly three hours.
(5)
Reporting on the Outcome
[29]
The officers completed their paperwork for the stop. The Plan prepared
and distributed by Det. Leahy instructed them to complete the necessary reports
but that [n]o mention of Project ORIVER will be included in the report. The
OPP Port Credit officer [P.C. Brisebois] will be provided with a project book
specific to ORIVER to make notes regarding the briefing to this stop. Duty
books of the officer will not have any reference to ORIVER.
[30]
P.C. Brisebois prepared two sets of notes, one set that referred to the
traffic stop with no reference to the underlying investigation, the true
purpose of the stop, or Det. Leahys grounds for arrest, and another set that
described Det. Leahys Project ORiver and the grounds to arrest the appellant.
D.C. Lee testified that he similarly kept a Project notebook and an
administrative notebook as well that would not mention the Project. P.C.
Brisebois testified that it was not typical to have two sets of notes.
(6)
The Eventual Arrest
[31]
The appellant was not told he was under arrest until over two months later,
on February 3, 2013. At that time, and as anticipated at the time of the execution
of the ruse, the police raided the annual Super Bowl party. The appellant was
arrested as were five others. He was charged with conspiracy to commit an
indictable offence, possession of proceeds of crime exceeding $5,000,
committing an indictable offence for the benefit of a criminal organization,
and two counts of possession of the proceeds of bookmaking exceeding $5,000. A
financial audit revealed that Platinum SB grossed over $103 million from 2009
to 2013.
B.
SUPERIOR
COURT Decisions
(1)
Charter
Application
[3]
[32]
The appellant brought a
Charter
application to exclude the evidence that the police had seized during the
course of the traffic stop ruse on November 30, 2012. He alleged that his ss.
8, 9 and 10(a) and 10(b) rights had been violated by the police. The Crown
contested the alleged ss. 8, 9, and 10(b)
Charter
breaches but conceded that the police had violated the appellants s. 10(a)
Charter
rights. The Crown argued that the evidence
should be admitted nonetheless.
[33]
The application judge determined that there was no s. 8 or s. 9
Charter
breach but that the
police had breached both ss. 10(a) and 10(b). He nonetheless concluded that the
evidence should not be excluded under s. 24(2) of the
Charter
.
[34]
Dealing first with s. 8 and s. 9, the application judge found that the search
of the vehicle was a lawful search incident to arrest. The appellant had been
de facto
under arrest when detained. It was not
necessary for the officers to state that he was under arrest. Although the
appellant was never told why he was pulled over, detained and searched, nor
told the full reason for the detention, the application judge found that the
appellant was aware of the gravity of the situation and was under arrest. Accordingly,
the search was conducted incident to that
de facto
arrest. As reasonable and probable grounds existed for the arrest, the search
was valid, and there was also no arbitrary detention. The application judge
considered the cases of
Dibble, R. v. Grant and Campbell
,
2015 ONSC 1646, and
R. v. Whipple
, 2016 ABCA
232, 39 Alta. L.R. (6th) 1, leave to appeal refused, [2016] S.C.C.A. No. 435, where
ruses were used to conceal an ongoing police investigation. In his view, the
Plan was a legitimate policing technique that was designed to preserve the
larger investigation while obtaining evidence from the appellant. He thus concluded
that the police had not infringed the appellants
Charter
rights under s. 8 and s. 9.
[35]
However, the operation of the ruse resulted in a breach of both ss. 10(a)
and 10(b). Putting the appellant in contact with counsel did not constitute a
meaningful exercise of his right to counsel. There could not be meaningful
communication between the appellant and his counsel when both were misled as to
the true nature of the appellants jeopardy. Misinformation necessarily tainted
counsels ability to provide meaningful and accurate legal advice. The failure
to inform the appellant of the true reason for his detention and
de facto
arrest necessarily resulted in a substantive
violation of ss. 10(a) and 10(b).
[36]
That said, the application judge determined that the evidence should not
be excluded under s. 24(2) of the
Charter
. The
police acted in good faith, they took steps to comply with the appellants
right to counsel and were directed not to question him, and there was a need to
protect the integrity of the ongoing investigation. The breaches therefore were
serious, but these factors significantly mitigated the seriousness of the
Charter
-infringing conduct. Moreover, there was no
meaningful impact on the appellants
Charter
-protected
interests as the police had prevented the appellant from incriminating himself.
Societys interest in the adjudication of the case on its merits favoured admissibility.
Accordingly, the appellants
Charter
application was dismissed.
(2)
The Conviction
[37]
The Crown amended one of the counts in the indictment and the appellant
entered a plea of not guilty to the amended count of committing the indictable
offence of possession of property obtained by crime over $5,000 for the benefit
of a criminal organization, contrary to s. 467.12 of the
Criminal
Code
. An agreed statement of facts was read into the record, and
the trial judge entered a conviction on the one count with brief reasons
delivered orally. The Crown withdrew the remaining counts.
(3)
The Sentence
[38]
Following a joint submission, the appellant was sentenced to 15 months
imprisonment. The trial judge observed that this was at the low end of the
range for the offence.
C.
Issues On Appeal
[39]
The appellant raises three grounds of appeal on his appeal of
conviction. First, he submits that the application judge erred in finding that
the appellant was under
de facto
arrest and in finding that his s. 8
Charter
right was not infringed.
Second, he submits that the application judges analysis of the s. 10 breaches
was flawed. Third, he argues that the application judge erred in his analysis
under s. 24(2) of the
Charter
. At the
suggestion of the Crown and given that the application judge found breaches of
ss. 10(a) and 10(b), the appellants s. 10 arguments are encompassed in my s.
24(2) discussion.
[40]
The appellant also seeks leave to admit fresh evidence for the purposes
of the conviction appeal and also seeks leave to appeal his sentence and to
admit fresh evidence for the purposes of the sentence appeal. The Crown seeks
to admit responding fresh evidence on the sentence appeal.
[41]
For the reasons that follow, I would dismiss the request for leave to
admit fresh evidence on the conviction appeal but would allow the appeal. There
is therefore no need to address the sentence appeal or the requests for leave
to admit fresh evidence on the sentence appeal.
D.
Discussion
(1)
Appeal from Conviction
(a)
Should fresh evidence be admitted on the conviction appeal?
[42]
The appellant seeks leave to introduce the Report to a Justice made by D.C.
Lee on December 10, 2012, after the seizure of the items from the appellants
vehicle on November 30, 2012. The police required the Report to obtain a
detention order for the items seized. The Report made no mention of the Project
ORiver investigation.
[43]
The appellant was represented by Kim Schofield as counsel at the
preliminary hearing and at trial. She considered the Report but decided against
using it for reasons explained in her affidavit filed as part of the fresh
evidence application:
1)
In the Report, D.C. Lee
did outline the details of the stop and did not try to fashion grounds for the
search. Ms. Schofield noted that the Report to a Justice often does not contain
the motive for the search and the form simply requires that the officer specify
the exact nature of the search (including the premises, place or person
searched) and the date and time of the search.
2)
Ms. Schofield did not
consider the Report to be crucial information; the argument was not that D.C. Lee
embarked on his own breach of rights, but that he was part of a project that
led to a warrantless search and a plan that resulted in breaches of ss. 8, 9
and 10 of the
Charter
.
3)
She confirmed that the
decision not to confront D.C. Lee with the Report was a strategic choice as
there was a potential downside in doing so. D.C. Lee had testified well before
the application judge. Ms. Schofield did not wish to call him a liar and lose
credibility with respect to the rest of her arguments. Instead, her strategy
was to say that all of the officers were following orders that put them in a
spot to ignore
Charter
rights.
[44]
In cross-examination, Ms. Schofield stated that with the benefit of
hindsight, she may have used the Report at trial and that another decision
could have been made and may have been successful.
[45]
The appellant asserted in his affidavit filed in support of the request
for leave that he had ineffective assistance from his counsel. However, he did
not pursue this argument in his factum or in oral submissions.
[46]
In cross-examination for the purposes of the fresh evidence application,
D.C. Lee agreed that the synopsis in the Report did not contain the full story
about the ongoing investigation and that this was to protect the integrity of
the investigation. However, he had been instructed to advise the justice of the
peace that the vehicle stop was a ruse and he had done so orally. The
transcript of his attendance before the justice of the peace on December 7,
2012 confirms that he advised the presiding justice of the peace who granted
the detention order that the traffic stop had been directed by the Combined
Forces Special Enforcement Unit as part of an ongoing project.
[47]
Due to an incorrect expiry date on the detention order, D.C. Lee
subsequently attended before another justice of the peace on December 10, 2012 and
swore to the truth of the information in the Report. The expiry date was then
corrected.
[48]
The test for leave to admit fresh evidence is described in
Palmer v. The Queen
, [1980] 1 S.C.R. 759, at p. 775. The
applicant must show that the proposed fresh evidence: (i) was not available at
the time of the hearing by the exercise of due diligence; (ii)
is relevant to a potentially decisive issue
; (iii) is
credible; and (iv) if believed and taken together with the rest of the
evidence, it could reasonably be expected to have affected the result.
[49]
The appellant submits that the test for admission of fresh evidence has
been met. The appellant argues that the Report perpetuated the ruse, failed to
comply with s. 489.1(1)(b) of the
Criminal Code
because it failed to make full and frank disclosure about the legal basis for
the search and its investigative purpose, and also amounted to a violation of
s. 8 of the
Charter
. Ms. Schofield as trial
counsel did not consider the
Charter
implications of the Reports failure to make full, frank and fair disclosure
and if she had, she may have relied upon the Report. Furthermore, the filing of
the deceptive Report was relevant to the appellants application under ss. 8
and 24(2) of the
Charter
and whether the
police acted in good faith. Appeal counsel submits that the Report was
probative and could reasonably be expected to have resulted in the exclusion of
the evidence against the appellant. Counsel also asserts that the record before
this court is sufficient to deal with this issue.
[50]
The Crown responds that the appellant is seeking to raise a new argument
on appeal and there is an insufficient record for this court to make the fact-specific
inquiry that is required. In addition, the test for admission of fresh evidence
has not been met.
[51]
I would dismiss the application for admission of fresh evidence. The
appellant has not met the requirements for raising a new argument for the first
time on appeal, nor has he met the
Palmer
criteria.
[52]
Clearly this is a new argument raised on appeal. There is a general
prohibition against such arguments on appeal:
R. v. Reid
,
2016 ONCA 524, 132 O.R. (3d) 26, leave to appeal refused, [2016] S.C.C.A. No.
432, at paras. 37-41. To avoid the general prohibition, the appellant must
satisfy three pre-conditions:
i.
the evidentiary record must be sufficient to permit the appellate court
to fully, effectively, and fairly determine the issue raised on appeal;
ii.
the failure to raise the issue at trial must not be due to tactical
reasons; and
iii.
the court must be satisfied that no miscarriage of justice
will result from the refusal to consider the new argument on appeal.
The
decision to consider the new argument is discretionary and informed by a
balancing of the interests of justice as they affect all parties: see
Reid
, at
paras. 42-44.
[53]
The appellant has not satisfied any of the three pre-conditions.
[54]
The evidence surrounding the Report emanated from D.C. Lee in
cross-examination. He filed the Report on the instructions of Det. Sgt. Goodwin
who did not testify. D.C. Lee did not recall whether he had authored the
Report. This raises the spectre that the evidentiary record is incomplete.
[55]
More significantly, this evidence was available to the appellant at the
time the
Charter
application was heard. Experienced
counsel considered and rejected the use of the Report at trial, a tactical
decision based on a reasonable assessment of the evidence. The integrity of the
trial process is undermined if those tactics can now be reassessed in hindsight:
see
R. v. Perlett
(2006), 212 C.C.C. (3d) 11 (Ont.
C.A.) at paras. 142-144, leave to appeal refused, [2007] S.C.C.A. No. 96.
[56]
I also am not persuaded that any miscarriage of justice would ensue from
the refusal to consider this new argument. Significantly, D.C. Lee orally advised
the presiding justice of the peace of the ruse in that the traffic stop and
seizure of property had been directed as part of an ongoing investigation. In
addition, the alleged deficiencies with the Report consisted of its failure to
disclose the quantum of money seized and the description of the legal basis for
the search. Section 489.1(1) does not specifically require that the quantum and
grounds be provided. Indeed, Ms. Schofield testified that based on her
experience, Reports often do not provide exact amounts or the motive for the
search. Nor did she agree that such Reports typically refer to the legal basis
for the search.
[57]
Accordingly, the appellant has not met the three pre-conditions nor do
the interests of justice require that this new argument be addressed. I would
decline to entertain this new argument on appeal.
[58]
This is determinative of the leave application, but quite apart from the
issue of a new argument on appeal, for many of the same reasons, the
application for leave to admit fresh evidence should also not succeed. In
particular, the evidence was available to the appellant at the time of the
Charter
application and, taken together with the rest of
the evidence, could not reasonably be expected to have affected the result.
[59]
In conclusion, I would dismiss the appellants application to admit fresh
evidence on the conviction appeal.
(b)
Did the
application judge err in concluding that there was a
de facto
arrest and that therefore the search was reasonable within the meaning of s. 8
of the
Charter
?
(i)
Background and Context
[60]
Before the application judge, the appellant conceded that the police had
reasonable and probable grounds to arrest. The Crown took the position that the
appellant was under arrest at the time of his detention and that the search was
incidental to a lawful arrest. In contrast, the appellant argued that
regardless of the existence of reasonable and probable grounds to arrest, the appellant
reasonably thought he was detained. Indeed, he was not put under arrest until
two months later in February. The search was not incident to a lawful arrest,
and as such was illegal and breached the appellants s. 8
Charter
right.
[61]
Given their respective positions, the application judge had to
consider whether the appellant was under
de facto
arrest. T
he application judge found that there was a lawful
de
facto
arrest in November and that the searches of the appellant and his vehicle
were lawfully conducted incident to that arrest.
(ii)
General Principles
[62]
Everyone has the right to be secure against unreasonable search or
seizure. So states s. 8 of the
Charter
.
[63]
The Supreme Court has directed that a search is reasonable if it is
authorized by a reasonable law and is conducted reasonably: see
R. v. Collins
, [1987] 1 S.C.R. 265, at p. 278;
R. v. Caslake
, [1998] 1 S.C.R. 51, at para. 10; and
R. v. Fearon
, 2014 SCC 77, [2014] 3 S.C.R. 621, at para.
12. Police may search based on a warrant. Or, if there is no warrant, the
police have a common law power to search incident to an arrest. To be valid,
the arrest must be lawful, the search must have been conducted as an incident
to the arrest, and it must be carried out in a reasonable manner: see
R. v. Stillman
, [1997] 1 S.C.R. 607, at para. 27. As
stated by Lamer C.J. in
Caslake
, at para. 17,
searches which derive their legal authority from the fact of arrest must be
truly incidental to the arrest in question.
[64]
The power to search incident to arrest is contrasted with the police
power to search incident to an investigative detention. The power to search
incident to an investigative detention is limited to safety concerns: see
R. v. Mann
, 2004 SCC 52, [2004] 3 S.C.R. 59, at para. 40.
There is no dispute that the power to search incident to an investigative
detention did not authorize the search of the appellants vehicle in the
circumstances.
[65]
In this case, the Crown relied on the common law power of search
incident to arrest to provide the legal authority for the search. The right to
search had to arise from the fact of the arrest:
Caslake
,
at para. 13. Thus, the lawfulness of the search turns on whether the appellant
was under a
de facto
arrest. If there was no
de facto
arrest, the common law power to search incident
to arrest could not be relied upon.
[66]
The subject of a
de facto
arrest was
addressed by the Supreme Court in
R. v. Latimer
,
[1997] 1 S.C.R. 217 in the context of an alleged breach of s. 9 of the
Charter
. That case bears some similarities to this one. The
accused was the father of a severely disabled daughter who died while in his
care. The RCMP began to treat the death as a homicide investigation. The
officers attended at the accuseds farm, an officer told Mr. Latimer that what the
officer was about to say had very serious consequences, and that Mr. Latimer
was being detained for investigation into the death of his daughter. The RCMP
officers decided prior to attending at the farm that they did not wish to
arrest the accused.
[67]
The accused was cautioned and advised of his right to retain counsel. At
the police station, he confessed to the crime and gave a written statement.
[68]
One of the issues to be addressed was whether the appellant had been arbitrarily
detained in violation of s. 9 of the
Charter
. The
Supreme Court concluded that the detention was not arbitrary. The RCMP had put
the accused under
de facto
arrest. That arrest
was entirely lawful because it was based on reasonable and probable grounds to
believe that the accused had taken his daughters life. A
de
facto
arrest which is lawful cannot be an arbitrary detention for
the purpose of s. 9.
[69]
In response to the accuseds argument that no arrest occurred because
the officers deliberately chose not to arrest him, Lamer C.J. wrote that
notwithstanding what their intention may have been, the conduct of the officers
had the effect of putting the accused under arrest. He noted the definition of
arrest found in
R. v. Whitfield
, [1970] S.C.R.
46: an arrest consists either of (i) the actual seizure or touching of a
persons body with a view to his detention, or (ii) the pronouncing of words
of arrest to a person who submits to the arresting officer. As such, he
declined to accept that only the word arrest will suffice to amount in fact to
an arrest. At para. 24, he quoted from
R. v. Evans
,
[1991] 1 S.C.R. 869, at p. 888, where McLachlin J. (as she then was) wrote for
the majority that what counts is:
[T]he substance of what the accused can reasonably be supposed
to have understood, rather than the formalism of the precise words used.
The question
is
what the accused was told, viewed reasonably in all the circumstances of
the case
.
[70]
Thus the test asks what the accused can reasonably be supposed to have
understood in light of what he was told, viewed reasonably in all the circumstances
of the case.
[71]
Lamer C.J. concluded that on the facts of
Latimer
,
a
de facto
arrest had occurred through the use
of words that conveyed clearly that Mr. Latimer was under arrest coupled with
the conduct of the officers and the accuseds submission to the authority of the
officers: at para. 25. Lamer C.J. was also satisfied that the arrest was lawful
and hence concluded that the trial judge had correctly decided that there were
reasonable and probable grounds for an arrest and accordingly the accused had
not been unlawfully detained.
(iii)
Positions of the Parties
[72]
Before this court, the appellants argument is
that the application judges finding that the appellant was under
de facto
arrest was unreasonable whereas the Crown submits that his finding was both
reasonable and amply supported by the record. The Crown points to evidence that
includes the police taking control of the appellant, the handcuffing, the
cautions, giving the rights to counsel, informing the appellant of his known
association with the Hells Angels and that his car would be searched for
contraband, telling him he would be charged with obstruction if he did not
cooperate, holding him for over two hours in the cruiser, permitting him to
have extensive consultations with his lawyer, and his submission to the
authority of the police.
(iv)
Analysis
[73]
There is no issue that the police had grounds to
arrest the appellant when they conducted the vehicle stop on November 30, 2012.
It is this alleged arrest that is relevant to the search, not the actual arrest
of February 3, 2013.
[74]
As discussed, the test for a
de facto
arrest asks what the accused can reasonably be supposed to have understood in
light of what he was told, viewed reasonably in all the circumstances of the
case.
[75]
As in
Latimer
, the police Plan was not
to arrest the appellant. Indeed, the Plan did not contemplate an arrest unless the
appellant obstructed the police or was in possession of a gun or drugs. Det.
Leahy told P.C. Brisebois and D.C. Lee that the appellant was arrestable but
instructed that he not be arrested for criminal organization and gaming
offences. In addition, he instructed the officers not to pursue the appellant
if he fled.
[76]
P.C. Brisebois testified that he did not arrest
the appellant and that part of the ruse was to put him under investigative
detention and then search the car.
[77]
So from the police perspective, clearly there
was no intention to arrest the appellant nor did they formally do so. In
addition, there was no intention to tell the appellant that he was under arrest
and the officers did not do so. As seen from
Latimer
, however, the absence
of an intention by the police to arrest and the failure to advise the appellant
that he is under arrest are not fatal. To reiterate, in addition to what he was
told, what counts is the substance of what the accused can reasonably be
supposed to have understood: see
Evans
, at p. 888.
[78]
The appellant did not testify on the
voir
dire
. That said, his circumstances were very different from those of Mr.
Latimer. He was no ingenue as far as the criminal justice system was concerned.
Det. Leahy testified that he believed that the appellant was educated in the
area of police techniques and counter surveillance, and he was someone Det.
Leahy believed would possibly know his rights. D.C. Lee also testified as to the
appellants sophistication.
[79]
P.C. Brisebois testified that the appellant was
told he was under investigative detention. Indeed, P.C. Brisebois was told to
use those words. In cross-examination, he confirmed that he was going to convey
as much as he could that the appellant was not under arrest. The appellant
refused to get out of his car and told P.C. Brisebois that he needed a warrant.
P.C. Brisebois gave him two options: investigative detention or arrest for obstruction.
The appellant chose not to be arrested and instead submitted to an
investigative detention. He exited his vehicle, and he and P.C. Brisebois made
their way to the police cruiser. It follows that having chosen not to be
arrested for obstruction, he would have reasonably understood that he was under
investigative detention rather than arrest. Although he was cuffed and sat in
the police cruiser for a number of hours, viewed reasonably, one would expect
that the appellant would take the police at their word that he was under
investigative detention and not under arrest. D.C. Lee also recorded in his
notes that Brisebois placed Bielli under investigative detention. He also
told Mr. Lockyer that P.C. Brisebois had placed the appellant under
investigative detention.
[80]
The police gave the appellant an option and he
chose investigative detention. The police planned not to arrest the appellant
and they executed that plan. Considering the evidence as a whole, there was no
de
facto
arrest. Again, the test turns on what the accused can reasonably be
supposed to have understood. The application judges finding that the appellant
knew he was under arrest cannot be reconciled with his factual finding that the
police told the appellant that if he complied with the search, he would not be
arrested. The application judge did not explain why, in light of the option the
police gave the appellant, he would have believed himself to be under arrest. In
conclusion, I agree with the appellant that the application judges finding
that there was a
de facto
arrest was unreasonable and that the search
was not incident to arrest. As such, the search was unlawful. The application
judge erred in finding that there was no s. 8 breach.
(c)
Did the application judge err in his s. 24(2)
Charter
analysis?
[81]
In determining whether evidence should be
excluded under s. 24(2), the court is to consider (i) the seriousness of the
Charter
-infringing
state conduct; (ii) the impact of the breach on the
Charter
-protected
interests of the accused; and (iii) societys interest in an adjudication of
the case on the merits: see
R. v. Grant
, 2009 SCC 32, [2009] 2 S.C.R.
353, at para. 71. If the application judge considered the proper factors and
has not made any unreasonable finding, the decision is owed considerable
deference on appeal: see
Grant
, at para. 86;
R. v. Côté
, 2011
SCC 46, [2011] 3 S.C.R. 215, at para. 44; and
R. v. Mian
, 2014 SCC 54,
[2014] 2 S.C.R. 689, at para. 77.
[82]
In light of my conclusion on s. 8, the
Grant
factors must be reassessed and the balancing of the factors reconsidered.
However, as I will explain, quite apart from the s. 8 breach, I would also
conclude that the s. 24(2) decision should not survive scrutiny.
(i)
Background and General Principles
[83]
At its heart, this case involves the planned and
deliberate violation of the
Charter
. The Crown attorney, Mr. Sabbadini,
advised the police that a general warrant would not be granted because the
appellant would not be advised of his jeopardy. Put differently, the proposed plan
would not legally justify the granting of a general warrant. The police did not
pursue a general warrant. Rather, based on their reading of
Dibble
which served as their legal anchor and which involved breaches of ss. 10(a) and
10(b) of the
Charter
, they pursued a Plan which they knew would result
in a
Charter
violation. This was not an incidental violation; it
formed part of the Plan itself. The Plan, as formulated, anticipated a breach
of the
Charter
.
[84]
Section 10 of the
Charter
provides that
everyone has the right on arrest or detention:
(a) to be informed promptly of the
reasons therefor;
(b) to retain and instruct counsel
without delay and to be informed of that right.
[85]
Section 10 ensures that people have a chance to
challenge the lawfulness of an arrest or detention. Police are to advise promptly
the reasons for the arrest or detention, and individuals then have the right to
receive legal advice about their situation from counsel. The information
provided pursuant to s. 10(a) serves to inform the advice provided as a result
of the invocation of s. 10(b). If the information is inaccurate, it taints the
ability of counsel to give meaningful and responsive advice.
[86]
In this case, even though the police took steps
to attenuate the prejudice to the appellant by facilitating the right to
counsel and by at least planning not to question the appellant (even though
they ultimately did do so), their approach ignores the foundation of the s.
10(a) right. As McLachlin J., as she then was, said in
Evans
,
at
pp. 886-87:
The right to be promptly advised of the reason
for ones detention embodied in s. 10(a) of the
Charter
is founded
most fundamentally on the notion that one is not obliged to submit to arrest if
one does not know the reasons for it. A second aspect of the right lies in its
role as an adjunct to the right to counsel conferred by s. 10(b) of the
Charter
.
As Wilson J. stated for the Court in
R. v. Black
, [1989] 2 S.C.R. 138,
at pp. 152-153, [a]n individual can only exercise his s. 10(b) right in a
meaningful way if he knows the extent of his jeopardy. In interpreting s.
10(a) in a purposive manner, regard must be had to the double rationale
underlying the right. [Citation omitted.]
(ii)
Positions of the Parties
[87]
The appellant advances three arguments in
support of his position that the application judge erred in his s. 24(2)
analysis. First, he submits that the application judge placed excessive weight
on the
cases on police ruses, and in any event, these
cases were all distinguishable. Second, he submits that the application judge erred
in finding that the police conduct in designing and implementing the ruse was
indicative of good faith when in fact, the conception and execution of a Plan
designed to deliberately violate the appellants rights were indicative of bad
faith. Third,
he made errors in his analysis of the
impact of the breaches on the
Charter
-protected interests of the
appellant.
[88]
The Crown submits that the principles from the ruse
case law relied upon supported the application judges conclusion, including
that the seriousness of the breach can be mitigated by the motivation of the
police to protect an ongoing investigation. The application judge engaged in a
fact-specific analysis into the seriousness of the breaches. The finding of
good faith is entitled to deference and supported by the evidence. As to
impact, the appellant was only briefly questioned after he had spoken with counsel
and only to assist with completing a form. The police had reasonable grounds to
arrest and search at the time of the stop and the evidence would have been
discovered regardless. In addition, the application judge correctly observed
that informing the appellant about the offence of proceeds of crime for which
he was being investigated mitigated the seriousness of the breaches.
(iii)
Reliance on Ruse Authorities
[89]
The appellants first argument was that the application
judge relied excessively on cases involving police ruses that were distinguishable
and that this infected his s. 24(2) analysis and more particularly, his
treatment of the seriousness of the
Charter
-infringing conduct. At
para. 70 of his reasons, the application judge concluded that the use of the
ruse was a legitimate policing technique:
In summary, in my
view,
the operational plan developed by the police in
this case was a legitimate policing tool designed and implemented by them based
on this well-recognized existing line of judicial authority.
[90]
The cases relied upon by the application judge
that constituted the well-recognized existing line of judicial authority were
Dibble
,
Grant
and Campbell
, and
Whipple
.
He also referred to the oft-quoted dicta of Lamer J. in the pre-
Charter
decision of
Rothman v. The Queen
, [1981] 1 S.C.R. 640, at p. 697, to
the effect that the investigation of crime and the detection of criminals is
not a game to be governed by the Marquess of Queensbury rules.
[91]
In
Dibble
, the police were engaged in a
Guns & Gangs Task Force investigation. Mr. Dibble was not a target. However,
he was observed leaving a building with a gym bag suspected to be holding
illicit drugs and getting into a car with a driver. One of the surveillance
officers immediately contacted the OPP to stop and search the car but to avoid
divulging the reason for the search, they were asked to create a false reason
for the search. The car was stopped and the police told Mr. Dibble and the
driver that this was due to a radar detector signal. On searching the car,
including the gym bag, the police found cocaine. Mr. Dibble was then arrested
for possession of cocaine for the purpose of trafficking.
[92]
Relying on alleged violations of ss. 8, 10(a),
and 10(b) of the
Charter
, Mr. Dibble applied for an order excluding
the evidence of the search pursuant to s. 24(2). Croll J. reasoned that Mr.
Dibble did not have a reasonable expectation of privacy in relation to the
vehicle or the gym bag, but she went on to consider whether the search was
reasonable. She determined that this was a continuing and dynamic investigation
and the police had grounds to believe that Mr. Dibble was in possession of
cocaine. As such, there was no s. 8 breach. The Crown conceded a s. 10(a) and a
s. 10(b) breach. In considering s. 24(2), Croll J. stated that the police did
not comply with the s. 10 requirements
but did so to protect
the investigation
and not to intentionally circumvent Mr. Dibbles section 10
rights. The police did not ask any questions about the drugs or take advantage
of his lack of access to counsel. Given the nature of the ongoing
investigation, the breaches were minor and made in good faith. She also found
in favour of the Crown on the other two lines of inquiry under
Grant
.
As such, Mr. Dibbles application was dismissed.
[93]
In
Grant and
Campbell
, relying
on ss. 8, 10(a), and 10(b) of the
Charter
, the two accused argued that
they were subjected to unlawful searches of their persons and vehicle and were
not promptly advised of the reasons for detention or arrest or provided with
their rights to counsel. They sought an order excluding evidence of two
prohibited firearms pursuant to s. 24(2) of the
Charter
. The police
had information from a confidential informant that individuals would be
attending a certain nightclub, carrying firearms, on the night in question. Based
on surveillance of the area outside the nightclub that night, the police
believed that one of the two accused had placed a firearm in a vehicle. The
police were not going to let the vehicle travel far from the nightclub without
stopping it but given public safety concerns for people around the nightclub,
they did not want the interaction to take place in the parking lot. The police
plan was to stay with the vehicle and later effect an arrest when it was safe
to do so; the only question was where and how to effect the arrest safely.
[94]
After allowing the vehicle to leave the
nightclub area and travel a short distance, the police stopped the vehicle for
two purposes: the criminal firearms investigation and evident seat-belt
infractions under the
Highway Traffic Act
. However, the police only
told the occupants of the vehicle, including the two accused, of the
Highway
Traffic Act
infraction. This was thought to be safer and would allow for a
more controlled stop and interaction. The police told the occupants they were
detained, walked them to the police scout car, conducted pat-down searches,
searched the vehicle, and found a firearm. The police then informed the occupants
that they were under arrest for possession of a firearm and advised them of
their rights to counsel. The police subsequently found a second firearm in the
vehicle.
[95]
Campbell J. found that there was a
de facto
arrest when the police first stopped the vehicle and had the accused exit the
vehicle. This permitted the police to conduct searches of the occupants and the
vehicle as incident to the arrest in an effort to discover the firearm that the
police honestly and reasonably believed was in the vehicle. Campbell J.
accepted the evidence of the police that they always intended to arrest the
occupants of the vehicle as soon as they could do so safely. The fact that the
search and seizure preceded the arrest by a few minutes did not mean that it
was not incidental to the subsequent formal arrest. He found no s. 8 violation
but did find both s. 10(a) and s. 10(b) violations. However, he found that compliance
with s. 10(a) took place about three minutes after it should have and the delay
was motivated by a continuing police concern over the whereabouts of the
firearm reasonably believed to be inside the vehicle and by an interest in
gaining control over it. As such, the s. 10(a) breach was not a serious breach.
It was technical, very short-lived, and committed honestly and in good faith. The
second and third prongs of the
Grant
s. 24(2) analysis also favoured
the Crowns position. Accordingly, the evidence was admissible.
[96]
These two cases are materially different from
that of the appellant. First, the
Charter
breaches in those cases were
not planned in advance. Second, the ruses in those cases developed in dynamic circumstances.
The police conduct was immediately responsive to the circumstances that
presented themselves. Both
Dibble
and
Grant
and Campbell
involved spur-of-the-moment decision making by the police, not a planned,
intentional violation of the
Charter
as occurred here. The cocaine in
Dibble
and the firearm in
Grant and Campbell
were dangerous contraband that
could cause harm to the public, and the conduct in
Grant and Campbell
was motivated by safety concerns. Here, there was no urgency to the alleged
de
facto
arrest. Moreover, the s. 10(a) breaches in
Grant and Campbell
were momentary, and the accused were advised of the real reason for their
arrests within just a few minutes, unlike this case. The accused in
Dibble
was similarly advised of the real reason for his arrest not long after he was
stopped, and before he was afforded access to counsel.
[97]
The police conduct in
Whipple
also
differed from that in this case. There the police had obtained a general
warrant that authorized the police to use a ruse to effect a traffic stop. As
in
Dibble
and
Grant and Campbell
, the accused was advised of
the real reason for his arrest within minutes of the vehicle stop. In addition,
unlike the application judge, I do not read
Whipple
as authorizing
police conduct that intentionally breaches s. 10(a). The Alberta Court of
Appeal expressly concluded that the warrant did not authorize a breach of s. 10(a)
and in any event, there was no breach of s. 10(a). This is in contrast to the
case under appeal: the police both planned to breach s. 10(a) and actually
breached s. 10(a) as planned. Furthermore, here, the Crown attorney, Mr. Sabbadini,
had previously advised Det. Leahy that a warrant would not be granted because
the appellant would not know the full scope of the jeopardy he was in.
[98]
In
Evans
, Sopinka J. stated in
concurring reasons, at p. 875, that the purpose of s. 10(a) is
inter alia
,
to enable the person under arrest or detention to immediately undertake his or
her defence, including a decision as to what response, if any, to make to the
accusation. The accused in
Dibble
,
Grant and Campbell
, and
Whipple
could undertake their defences shortly after their detentions or arrests
whereas here, the appellant was not informed that he was under investigation for
possession of proceeds of crime until nearly an hour into his detention and was
not charged for over another two months.
[99]
Contrary to the conclusion of the application
judge, the Plan developed by the police in this case was not based on a
well-recognized existing line of judicial authority. As explained, the police
conduct in those cases was materially different from that engaged by this
appeal. Those cases do not support the police conduct in issue. The application
judges finding that the police in this case had engaged in a legitimate
policing technique was an error and infected his analysis of the first prong of
Grant
.
(iv)
Good Faith Conduct
[100]
Second and as mentioned, the appellant submits
that the application judge erred in finding that the police acted in good
faith. He argues that, to the contrary, the conception and execution of a plan
designed to deliberately breach the appellants rights was indicative of bad
faith. Det. Leahy knew that a traffic stop ruse was unlawful, there was no
urgency to the operation, and he designed the Plan in a way that would ensure
that the appellant would remain ignorant long after the operation was
completed. The Crown submits that the application judges finding of good faith
was open to him on the record and is entitled to deference.
[101]
In assessing the seriousness of the infringement
of the appellants ss. 10(a) and 10(b) rights, the application judge found that
the violation was plain and serious but resulted from good faith police work
based on the line of judicial authority including
Dibble
which
permitted the police to conduct such a deceptive ruse in order to preserve the
integrity and secrecy of a larger police investigation. Moreover, he concluded
that there was no need for the court to disassociate itself from this conduct.
[102]
In
Dibble
and
Grant and Campbell
,
the accused were arrested shortly after their initial detention and could
undertake their defence immediately; not so here. In addition, Det. Leahy had
familiarized himself with
Dibble
and knew that the timing in
Dibble
differed from his conceived ruse. He also knew from Mr. Sabbadini, the Crown
attorney, that a general warrant would not be granted for a plan where the
police would stop his car for a
Highway Traffic Act
offence and
search his vehicle and just take the evidence because the appellant would not know
the full scope of his jeopardy. The plan in support of a general warrant was
considered to be unlawful. Nonetheless, on discovering the
Dibble
decision, Det. Leahy made no further inquiries of Mr. Sabbadini and instead
proceeded with a plan that would necessarily result in a
Charter
breach.
Indeed, the breach was an integral part of the ruse. The breach was planned and
deliberate.
Dibble
did not depend on an absence of any
Charter
breach; rather it depended on a s. 24(2) rescue. This would have been evident
to Det. Leahy, P.C. Brisebois and D.C. Lee, all of whom testified to having read
the decision. The application judge failed to consider the reasonableness of the
police reliance on
Dibble
and how the facts in that case differed from
the Plan they were pursuing.
[103]
In addition, as argued by the appellant, there
were no pressing or exigent circumstances here. To use Det. Leahys
terminology, the excuse for the stop was practical. There was no evidence of urgency
nor was this a spontaneous police response. Indeed, the police already had
plans to conduct a takedown at the annual Super Bowl party a few months later. As
stated by Michelle Fuerst J., Fairburn J. (as she then was), and Scott Fenton
in Ruse Traffic Stop for the Purpose of Conducting Search Incident to Arrest
(Two Months Prior to Arrest) is
Charter
Compliant,
Police Powers
Newsletter
2017-1 (January 2017), it was a strategic mid-investigation
decision designed to benefit the investigation at the intended cost of
breaching the [appellants] rights. Although I acknowledge that deference is
owed to an application judges finding of good faith, the finding in this
constellation of facts was unreasonable.
[104]
As a result of my conclusions and given that it
is necessary to conduct the
Grant
analysis anew, there is no need to
address the appellants third argument on the impact of the breaches on the
Charter
-protected
interests of the appellant. The appellant had submitted that the application
judge erred in minimizing the impact of the s. 10 breaches based on the fact
that the police provided semi-accurate information partway through the ruse and
had also argued that the application judge erred in concluding that the
impugned evidence was discoverable in any event regardless of the premeditated
breach of his
Charter
rights. In light of the s. 8 breach and the
other s. 24(2) errors I have found, it is unnecessary to consider these
arguments. Even accepting the application judges findings on these points, as
I will explain, on a fresh
Grant
analysis, the evidence should be
excluded.
[105]
In conclusion, quite apart from the s. 8 breach,
there were errors in the application judges s. 24(2) analysis.
(v)
Fresh
Charter
s. 24(2) Analysis
[106]
Due to my determination that there was a s. 8
violation, which the application judge did not find, coupled with those of ss. 10(a)
and 10(b), it now falls to me to conduct a s. 24(2)
Charter
analysis. As
I have explained, it is unnecessary to address the appellants arguments
regarding the expanded impact of the s. 10 breaches, because even on the
application judges more limited findings, the evidence should be excluded.
[107]
First, regarding the seriousness of the
Charter
-infringing
state conduct, as I have explained, the police were not relying on a
well-established line of authority when they engineered this ruse. On the
contrary, the police proceeded with a Plan which they knew or should have known
would breach the appellants s. 10 rights. The fact that the police also
planned to search the appellant incident to arrest without actually arresting
the appellant makes the state conduct all the more troubling. The violation of
the appellants
Charter
rights was integral to the police Plan. They
would not have proceeded with the Plan had it not involved violating the
appellants
Charter
rights.
[108]
I would also add that the police conduct is
elusive of public confidence and ought not to be sanctioned by the court. Put
differently, and adopting the language of McLachlin C.J. and Charron J. in
Grant
,
the court should dissociate itself from such police conduct. I fail to see how
the police conduct in this case does not threaten the integrity of the criminal
justice system. Protection of
Charter
rights is the operative
principle, not planned circumvention for investigative purposes however
laudable they may be.
[109]
Second, the impact on the appellants
Charter
-protected
interests was significant. He was subjected to a search without lawful
authority. The appellant was, at least initially, unable to have a meaningful
consultation with counsel because the police left him in ignorance of his full
jeopardy. His counsel was equally misled about the reason for his detention.
Assuming the application judge correctly concluded that the impact of the
breach was somewhat mitigated by the semi-accurate information the police
provided partway through the ruse, in light of the s. 8 breach, the impact
remains serious. I acknowledge that the police attempted to mitigate the impact
of the breach by affording the appellant access to counsel, but those steps
fall short given that he was misinformed. This factor favours exclusion.
[110]
Finally, I accept, as the application judge did,
that the third
Grant
factor, societys interest in an adjudication of
the case on its merits, weighs in favour of admitting the evidence. The weight
of this factor is somewhat attenuated because, as the application judge found,
while important, this evidence is not crucial to the Crowns case.
[111]
For these reasons, I would exclude the impugned
evidence under s. 24(2) of the
Charter
, allow the appeal from
conviction and order a new trial.
(2)
Appeal from Sentence
[112]
Under the circumstances, there is no need to
address the appellants request for leave to appeal sentence and to admit fresh
evidence or the Crowns responding fresh evidence in support of the sentence
appeal.
E.
Disposition
[113]
For these reasons, I would dismiss the
application for the admission of fresh evidence on the conviction, allow the
appeal from conviction, and order a new trial.
Released April 9, 2021
"S.E.P."
"S.E. Pepall J.A."
"I agree. K. van Rensburg J.A."
"I agree. David Brown J.A."
[1]
Det.
Leahy stated that the appellants vehicle
could be searched incident to
an investigative detention if the officer saw a weapon in the vehicle. This did
not become an issue.
[2]
P.C. Brisebois
could not recall whether he said obstruct
police or obstruct justice.
[3]
The application judges reasons are reported at 2016 ONSC
6866, 367 C.R.R. (2d) 219.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Biya, 2021 ONCA 171
DATE: 20210319
DOCKET: C66597
Watt, Benotto and Jamal JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Abadula Biya
Appellant
Najma Jamaldin, for the appellant
Jeremy D. Tatum, for the respondent
Heard: March 3, 2021 by video
conference
On appeal from the conviction entered on
August 8, 2018 and the sentence imposed on December 14, 2018, with reasons
reported at 2018 ONSC 6887, by Justice Carole J. Brown of the Superior Court of
Justice.
REASONS FOR DECISION
Introduction
[1]
The appellant, Abadula Biya, appeals his
conviction and sentence for charges relating to the
unauthorized
possession of a firearm and ammunition, possession of a Schedule I controlled substance
(MDEA) for the purpose of trafficking, and possession of the proceeds of crime in
the amount of $1,725
.
[2]
The appellants main argument on the conviction
appeal is that the trial judge materially misapprehended the evidence in
rejecting the appellants third party suspect defence. The appellant claims this
error leaves the trial judges reasoning on which the conviction depends on unsteady
ground, resulting in a miscarriage of justice.
[3]
We agree with the appellant. For the reasons that
follow, we allow the appeal, quash the conviction, and order a new trial.
Background
[4]
On September 11, 2015, the police received a tip
that a person was selling drugs outside a Drake concert at Ryerson University.
The person was described as a black male with cornrows, wearing a black
t-shirt, and carrying a bouquet of flowers and a red and black GoodLife gym bag.
[5]
Police officers located a person matching this
description talking to two other men at a gas station. The police watched the three
men and noticed that when a mounted police unit approached the area the men
slinked back into the gas station. When a second mounted police unit approached,
the men retreated further and entered a Honda SUV parked at the gas station.
The appellant had the gym bag and bouquet with him when he entered the drivers
seat of the Honda. The officers did not see who had control of the gym bag
after the three men entered the Honda.
[6]
A group of uniformed police officers and two
plainclothes officers huddled for between one to two minutes about 30 metres
from the Honda. The men inside the Honda could see the officers. The police
believed the men inside the Honda noticed the officers approaching when they
were 5 to 10 metres away. The officers could see the appellant, who was in the drivers
seat, and Simeon George-McCool, who was in the front passenger seat. They could
not see Jevon Moore, who was in the back seat directly behind George-McCool.
The appellants gym bag and flowers were also in the back seat directly behind the
appellant.
[7]
Six uniformed officers rode their bicycles towards
the Honda. This took about 30 to 40 seconds. As the police approached they saw
the appellant appear nervous and wide-eyed. He shoved his hand between the door
and the seat and then into the pockets of his pants. An officer also saw
George-McCool in the front passenger seat appearing to move quickly and looking
towards the back seat. But the officers could not see Moore in the back seat.
[8]
Two officers approached on the drivers side and
smelled marijuana. Based on that smell and the appellants apparent nervousness,
the occupants were arrested and directed to get out of the car. Moore and
George-McCool got out voluntarily and complied with the police. The appellant
did not comply and was forcibly removed. He resisted arrest but was quickly subdued.
[9]
The police searched the three men incident to
arrest. On George-McCool the police found cocaine, marijuana, and MDMA in the bag
he was carrying as he got out of the car, three cellphones, and $1,070 in cash.
On Moore the police found $1,080 in cash but no drugs or drug packaging. On the
appellant the police found packaged marijuana and $1,725 in cash. In the
drivers seat area the police found a cellphone and a digital scale.
[10]
The police searched the gym bag incident to
arrest and at the bottom of the bag found a handgun, ammunition, a bottle of MDEA
pills, and packaging like that used in the packaged marijuana found on the
appellant. They also found some of the appellants personal items, including two
condolence cards (the appellant was going to a funeral visitation for a
friends mother later that night).
[11]
All three men were charged with various offences.
The charges against Moore were later withdrawn before trial.
The Trial Judges Decision
[12]
The appellant and George-McCool were tried
together.
[13]
The trial judge convicted George-McCool of possession
of cocaine and MDMA for the purpose of trafficking. The trial judge inferred
from the quantities of drugs he had in his bag as he got out of the car that
the drugs were in his possession for the purpose of trafficking rather than
personal use. George-McCool did not appeal his conviction.
[14]
Neither the appellant nor Moore testified. The appellant
did not dispute he had knowledge and control of the marijuana found on his
person, but he did dispute any knowledge of or control over the gun, magazine,
and pills in the gym bag. His defence centred on Moore as a third party suspect.
He posited that Moore had one to two minutes in the back seat to place the contraband
in the bag while the officers huddled across the street and then approached the
car in plain view of the three suspects. He claimed that Moore had on his
person a quantity of cash consistent with drug trafficking but no contraband
because he had stashed it in the gym bag. The appellant also adduced Moores
criminal record for gun and drug trafficking offences to show his propensity as
a third party suspect.
[15]
The trial judge rejected the appellants third
party suspect defence and convicted the appellant. She found that Moore did not
have the time to remove the magazine from the handgun and to stow the handgun,
magazine, and bottle of pills at the bottom of the bag. She also found that
Moore did not have the opportunity and propensity to have had the firearm, ammunition,
and pills on his person and to have put them surreptitiously in the gym bag as the
police approached. She found there was no real evidence for this proposition, which
she found was speculative. Finally, the trial judge found overwhelming evidence
that the appellant had knowledge of and control over the contraband in the gym
bag. She noted that the packaging in the bag resembled the packaging of the marijuana
found on the appellant; the condolence cards were for a visitation the appellant
was to attend that evening; the appellant had been seen carrying the gym bag; drugs
such as MDEA are often sold at concerts, where the appellant was arrested; and
the cash found on the appellant was in smaller denominations.
[16]
The trial judge sentenced the appellant to four
years incarceration, less credit for pre-trial custody and bail conditions,
and various ancillary orders.
[17]
The appellant now appeals his conviction and seeks
leave to appeal his sentence.
Discussion
[18]
Although the appellant advances several grounds
of appeal from conviction and sentence, we have concluded that the appeal should
be allowed because the trial judge materially misapprehended the evidence in
concluding that Moore lacked enough time to remove the magazine from the gun
and place it in the gym bag. The trial judge then repeated this error in
concluding that Moore did not have the propensity and opportunity to have
placed the contraband in the bag. These errors led the trial judge to conclude erroneously
there were no reasonable possibilities inconsistent with the appellants guilt:
R. v. Villaroman
, 2016 SCC 33, [2016] 1 S.C.R. 1000, at para. 37.
[19]
The uncontradicted evidence was that the police
huddled for one to two minutes and then took another 30 to 40 seconds to bike
to the car, all while in plain view of the cars occupants. The elapsed time
was therefore between
1 minute 30 seconds and 2 minutes
40 seconds, during which the police could not see Moore because he was in the
back seat.
[20]
The trial judge explained her reasons for concluding
that Moore did not have enough time to stow the contraband in the gym bag as
follows:
I am not satisfied that it would have been possible
within the timeframe from the police approaching the vehicle to Mr. Moore and
Mr. George-McCool exiting the vehicle, for Mr. Moore to have taken all the
items from his person and put them in the bag, and
particularly taking the
magazine out of the handgun
and stowing the handgun, ammunition, and drugs
at the bottom of the bag under
all of
the
other contents. I do not find this
to be
feasible
and reject this argument. [Emphasis added.]
[21]
However, there was no evidence before the trial
judge as to how long it would have taken to remove a magazine from a gun, or
this magazine from this gun. There was also no evidence that the magazine was
even in the gun and needed to be removed. The trial judge therefore
misapprehended the evidence on this point.
[22]
The Crown concedes that the trial judge
misapprehended the evidence but contends the misapprehension was not material.
The Crown asserts that even if this finding is excised, the other evidence the
trial judge relied on allowed her to conclude that Moore had insufficient time
to put the contraband in the gym bag.
[23]
We do not accept this submission. The trial
judge herself highlighted that her conclusion was based particularly on the
lack of time to remove the magazine from the gun. Her own wording suggests this
error about the substance of the evidence was material to her reasoning in
rejecting the third party suspect defence. Striking this error in the
assessment of the evidence from the judgment leaves the trial judges reasoning
on which the conviction depends on unsteady ground, leading to a miscarriage of
justice: see
R. v. Lohrer
, 2004 SCC 80, [2004] 3 S.C.R. 732, at paras.
1-2;
R. v. Sinclair
, 2011 SCC 40, [2011] 3 S.C.R. 3, at para. 56; and
R.
v. Morrissey
(1995), 22 O.R. (3d) 514 (C.A.), at p. 541.
[24]
The trial judge repeated this error in concluding
that Moore did not have the opportunity and propensity to have surreptitiously placed
the contraband in the bag as the police huddled and approached the car. She
stated:
It is the position of [counsel] on behalf of
[the appellant] that the police had huddled with [one of the other police officers]
for one to two minutes before they approached the car, and that the lapse of
time was sufficient for Mr. Moore to have taken the seized items from his
person and put them into the gym bag in the back seat behind the drivers seat.
As set forth above,
I do not accept the
arguments of counsel for [the appellant], which suggests that Mr. Moore had the
opportunity and propensity to have had the firearm, ammunition, and drugs on
his person and put them surreptitiously into the gym bag when the police
approached the vehicle. There is no real evidence for this, and I find the
proposition to be speculative. I reject the submission
. [Emphasis added.]
[25]
The trial judge did not separately address
Moores opportunity and propensity. She seems to have rejected the appellants third
party suspect defence only because she found that Moore lacked opportunity.
[26]
However, Moores criminal record provided a
reasonable basis to claim he had the propensity to have placed the contraband
in the gym bag: see
R. v. Arcangioli
, [1994] 1 S.C.R. 129, at p. 141;
R.
v. Tomlinson
, 2014 ONCA 158, 207 C.C.C. (3d) 36, at para. 76. His criminal
record included several recent firearms and drug-related convictions: for robbery
with a firearm in 2012; possession of a Schedule I substance in 2014; possession
of an unauthorized firearm, breach of a firearm prohibition order, and possession
of a Schedule I substance in June 2014; possession of an unauthorized firearm
and breach of a firearm prohibition order in July 2014; and trafficking in a
Schedule I substance in 2015. The trial judge thus erred in summarily rejecting
the third party suspect defence.
Conclusion
[27]
The trial judge erred by convicting the appellant
based on a material misapprehension of the evidence about Moores opportunity
as a third party suspect. There was also evidence that Moore had the propensity
as a third party suspect, which the trial judge failed to address. The trial
judges errors leave the conviction on unsteady ground and resulted in a
miscarriage of justice.
[28]
Because there was evidence on which a properly
instructed trier of fact could reasonably have convicted the appellant, the appropriate
remedy is to order a new trial on all counts under s. 686(2)(b) of the
Criminal
Code
, R.S.C. 1985, c. C-46: see
Morrissey
, at p. 540. There is no
need to address the appellants request for leave to appeal the sentence.
Disposition
[29]
The appeal from conviction is allowed, the appellants
conviction is quashed, and a new trial is ordered on all counts.
David
Watt J.A.
M.L.
Benotto J.A.
M.
Jamal J.A.
|
WARNING
The President of the panel
hearing this appeal directs that the following should be attached to the file:
An order restricting
publication in this proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or
(4) or 486.6(1) or (2) of the
Criminal Code
shall continue. These
sections of
the Criminal Code
provide:
486.4(1) Subject
to subsection (2), the presiding judge or justice may make an order directing
that any information that could identify the victim or a witness shall not be
published in any document or broadcast or transmitted in any way, in
proceedings in respect of
(a) any of the
following offences;
(i) an offence
under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1,
172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02,
279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or
(ii) any offence
under this Act, as it read at any time before the day on which this
subparagraph comes into force, if the conduct alleged involves a violation of
the complainants sexual integrity and that conduct would be an offence
referred to in subparagraph (i) if it occurred on or after that day; or
(iii) REPEALED: S.C.
2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49).
(b) two or more offences being dealt
with in the same proceeding, at least one of which is an offence referred to in
paragraph (a).
(2) In proceedings
in respect of the offences referred to in paragraph (1)(a) or (b), the
presiding judge or justice shall
(a) at the first
reasonable opportunity, inform any witness under the age of eighteen years and
the victim of the right to make an application for the order; and
(b) on application
made by the victim, the prosecutor or any such witness, make the order.
(2.1) Subject to
subsection (2.2), in proceedings in respect of an offence other than an offence
referred to in subsection (1), if the victim is under the age of 18 years, the
presiding judge or justice may make an order directing that any information
that could identify the victim shall not be published in any document or
broadcast or transmitted in any way.
(2.2) In proceedings in
respect of an offence other than an offence referred to in subsection (1), if
the victim is under the age of 18 years, the presiding judge or justice shall
(a) as soon as feasible,
inform the victim of their right to make an application for the order; and
(b) on application of
the victim or the prosecutor, make the order.
(3) In proceedings
in respect of an offence under section 163.1, a judge or justice shall make an
order directing that any information that could identify a witness who is under
the age of eighteen years, or any person who is the subject of a
representation, written material or a recording that constitutes child
pornography within the meaning of that section, shall not be published in any
document or broadcast or transmitted in any way.
(4) An order made
under this section does not apply in respect of the disclosure of information
in the course of the administration of justice when it is not the purpose of
the disclosure to make the information known in the community. 2005, c. 32, s.
15; 2005, c. 43, s. 8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25,
ss. 22, 48; 2015, c. 13, s. 18.
486.6(1) Every
person who fails to comply with an order made under subsection 486.4(1), (2) or
(3) or 486.5(1) or (2) is guilty of an offence punishable on summary conviction.
(2) For greater
certainty, an order referred to in subsection (1) applies to prohibit, in
relation to proceedings taken against any person who fails to comply with the
order, the publication in any document or the broadcasting or transmission in
any way of information that could identify a victim, witness or justice system
participant whose identity is protected by the order. 2005, c. 32, s. 15.
WARNING
THIS JUDGMENT REFERS TO AN OFFENCE UNDER
THE
YOUTH CRIMINAL JUSTICE ACT
AND IS SUBJECT TO:
111(1) Subject to this
section, no person shall publish the name of a child or young person, or any
other information related to a child or a young person, if it would identify
the child or young person as having been a victim of, or as having appeared as
a witness in connection with, an offence committed or alleged to have been
committed by a young person.
138(1)
Every person who contravenes subsection 110(1) (identity of offender not
to be published), 111(1) (identity of victim or witness not to be published),
118(1) (no access to records unless authorized) or 128(3) (disposal of R.C.M.P.
records) or section 129 (no subsequent disclosure) of this Act, or subsection
38(1) (identity not to be published), (1.12) (no subsequent disclosure), (1.14)
(no subsequent disclosure by school) or (1.15) (information to be kept
separate), 45(2) (destruction of records) or 46(1) (prohibition against
disclosure) of the
Young
Offenders Act
, chapter Y-1 of the Revised Statutes of Canada,
1985,
(a) is guilty of an
indictable offence and liable to imprisonment for a term not exceeding two
years; or
(b) is guilty of an offence
punishable on summary conviction.
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Booth, 2021 ONCA 80
DATE: 20210205
DOCKET: C68094
Huscroft, Miller and Nordheimer
JJ.A.
BETWEEN
Her Majesty the Queen
Appellant
and
Caelan Booth
Respondent
Emily E. Marrocco, for the appellant
Mark C. Halfyard and Chris Rudnicki,
for the respondent
Heard: November 6, 2020 by
video conference
On appeal from the sentence imposed on February
4, 2020 by Justice Jennifer Broderick of the Ontario Court of Justice.
Huscroft J.A.:
OVERVIEW
[1]
Caelan Booth, the respondent, was convicted of sexual assault and breach
of a youth probation order. The assault included intercourse he forced on a
woman who was asleep. The assault was brief but ended only when someone turned
on a light in the bedroom where the assault was occurring.
[2]
The respondent was 19 years of age when he committed the offence. He was
on probation for a sexual assault he committed less than two years earlier.
That sexual assault also included intercourse.
[3]
The sentencing judge sentenced the respondent to 18 months imprisonment
for the sexual assault and 30 days concurrent for the breach of probation, and
put him on probation for a two-year period.
[4]
For the reasons that follow, I conclude that the sentence was
demonstrably unfit. The appropriate sentence was three years, as sought by the
Crown. In the unusual circumstances of this case, I would not require the
respondent to serve additional time in prison. However, I would vary the terms
of the original sentence to increase the period of his probation from two years
to three.
BACKGROUND
[5]
The complainant, a 24-year-old woman, attended a house party along with
several others, including the respondent. The complainant and the respondent
had never met before the night of the assault.
[6]
The complainant and some friends left the house party to go to a bar,
while the respondent and some of his friends went to a different bar. The
complainant and respondent returned to the house at different times later that
evening. At approximately 3:00 a.m. the complainant, who was intoxicated, went
upstairs to sleep in the hosts bedroom along with several friends. The respondent
followed the group into the bedroom but was asked to leave. He returned downstairs.
[7]
The complainant testified that she went to sleep on the bedroom floor
and awoke sometime later to find a man on top of her. He was kissing and
touching her. She was groggy and felt as though she was dreaming. She testified
that the man told her to lay down and be quiet, but she did not recognize his
voice or who he was.
[8]
The host, who was also sleeping in the bedroom, testified that he heard
noises that seemed like sex. He turned a light on and saw the respondent,
naked, rolling off the complainant, who appeared to him to be asleep. The trial
judge found that the respondent penetrated the complainants vagina with his
penis just before the light came on. The respondent was confronted by the complainants
friends and forced out of the house, following which the police were called.
The sentencing judges decision
[9]
The sentencing judge reviewed the complainants Victim Impact Statement,
which described the emotional, physical, and economic impact of the offence on
her. She felt distant from her friends, found it difficult to focus when school
and work were difficult, and experienced anxiety and a feeling of a loss of autonomy.
She had to take medication to prevent sexually transmitted infection, which
made her feel ill, and incurred the expense of travelling in order to obtain
that medication.
[10]
The
sentencing judge then reviewed the circumstances of the respondent. She noted
that he was completing a business administration and marketing diploma while
working three part-time jobs, in addition to a seasonal position at a golf
course. He was in a two-year relationship with a young woman who reported that
he was respectful, caring, and supportive. The sentencing judge found that the
respondent expressed remorse for the offence and that his pre-sentence report
and character letter portrayed him in a very positive light.
[11]
The
sentencing judge found that the case law distinguishes between acts of
completed intercourse and penetration short of ejaculation. She characterized
this as a case of momentary penetration but added that she did not want to
minimize the impact of penetration on the complainant.
[12]
The
sentencing judge rejected the Crowns submission that the range of three to
five years applied in the case of momentary penetration of an unconscious or
sleeping victim. She referred to this courts decision in
R. v. Ghadghoni
,
2020 ONCA 24, in which the complainant was penetrated for a brief period while
asleep. The accused had no criminal record. In that case, Pardu J.A. stated, at
para. 48, that the usual range in past jurisprudence for sexual assaults
committed in similar circumstances has been between 18 months and three years.
The sentencing judge adopted this as the appropriate range for this case. She
stated that the primary objectives of sentencing in this case were
denunciation, deterrence, and rehabilitation, but that denunciation and deterrence
took precedence. She found that the prior conviction for sexual assault
required the sentence to address specific deterrence and went on to consider
aggravating and mitigating factors.
[13]
The
sentencing judge considered three aggravating factors: 1) the prior and recent
finding of guilt for sexual assault; 2) the fact that there was penetration;
and 3) the impact of the offence on the victim. She considered six mitigating
factors: 1) the respondents youth; 2) his good prospects for
rehabilitation; 3) his hard-working character and contribution to the
community; 4) his character traits of kindness, empathy, and loyalty; 5) his
family and girlfriends support; and 6) his remorse.
[14]
Having
identified a range of 18 months to three years, the sentencing judge considered
whether anything justified a sentence outside of the range. She noted the
serious nature of sexual assault, that it took place while the complainant was
intoxicated and asleep, and that the impact on the complainant was significant.
She found, further, that the respondents degree of responsibility was high.
Although the respondent was under the influence of alcohol, he was not so
intoxicated that did not know what he was doing. On the contrary, the
respondent attempted to sexually assault the complainant without waking up
others in the room.
[15]
The
sentencing judge recognized that the respondent was not a first offender and
that he was on probation for a prior sexual assault when he committed the
offence. Despite the many aggravating factors in this case, the sentencing
judge imposed a sentence at the bottom of the range she identified. She stated:
Had [the respondent] not had a relatively recent prior
conviction for sexual assault, I may have found it appropriate to impose a
sentence outside of the lower end of the range of 18 months given the factual
circumstances of the offence. His prior conviction, however, is an aggravating
factor that I must consider in respect of the circumstances of the offender,
and that in my view requires a sentence within the range set out.
I am also mindful of the sentencing principle of restraint. The
sentence should only be as long as is required to achieve the sentencing
objectives of denunciation and deterrence, and further, the sentence must
promote, rather than frustrate, [the respondents] rehabilitation.
In my view, the sentence that takes into account all of the relevant
factors and that will achieve denunciation and deterrence, and one that will
not have a devastating effect on [the respondents] rehabilitation, is one at
the very bottom of the range and that is 18 months imprisonment.
ISSUES ON APPEAL
[16]
The
Crown raises three arguments on the sentence appeal:
1.
The sentencing judge erred when she found that
the fact that the penetration was momentary was mitigating;
2.
The sentencing judge erred in her consideration
of the rehabilitative potential of the respondent and failed to properly
account for his prior record; and,
3.
The sentence was demonstrably unfit and did not reflect the gravity of
the offence or the moral blameworthiness of the respondent.
DISCUSSION
[17]
The
principles governing the appellate review of sentences are not in dispute. In
general, the decisions of sentencing judges are entitled to deference but an
appeal court may intervene if: 1) the sentencing judge errs in law or in
principle and that error has an impact on the sentence, or 2) the sentence is
demonstrably unfit regardless of any error:
R. v. Lacasse
, 2015 SCC
64, [2015] 3 S.C.R. 1089, at para. 11.
[18]
The
Crowns argument focuses on the sentencing judges treatment of the duration of
the assault. In essence, the Crown argues that the sentencing judge minimized
the harm caused by sexual assault involving penetration by emphasizing the
brief duration of the assault committed by the respondent.
[19]
I agree that the some of the sentencing judges remarks can be
read in this way. Although the sentencing judge was careful to state that she
did not wish to minimize the impact of penetration, at several points in her
decision she appears to do just that by emphasizing the momentary nature of
the penetration. She also states that there was no overt violence by the
respondent, which appears to overlook the inherently violent nature of the assault
committed by the respondent.
[20]
Read in context, however, these remarks can be understood as
distinguishing the facts of this case from the cases proffered by the Crown
that involved longer, completed acts of vaginal intercourse and threats of
violence.
[21]
Nevertheless,
in my view the sentence imposed in this case is demonstrably unfit regardless
of any error in law or principle and the appeal must be allowed on this basis.
The sentence is demonstrably unfit
[22]
It
is not necessary to reconcile what the Crown submits is conflicting case law
concerning the appropriate range for sexual assaults involving intercourse with
incapacitated complainants. The sentence imposed is demonstrably unfit
regardless of any error identifying the range, for it does not satisfy the
principle of proportionality: it is not proportionate to the gravity of the
offence and the degree of responsibility of the offender: s. 718.1 of the
Criminal
Code
,
R.S.C., 1985, c. C-46.
[23]
The
moral blameworthiness of the respondent is high. He sexually assaulted a victim
who was extremely vulnerable she was incapacitated by alcohol and
unconscious. This is intolerable conduct that requires denunciation and general
deterrence.
[24]
The
fact that this is the respondents second conviction for sexual assault
involving penetration emphasizes the need for specific deterrence. Thirteen
months prior to committing the assault in this case, the respondent pleaded
guilty to sexually assaulting a 15-year-old girl. The respondent was 17 years old
at the time. These facts are taken from the transcript of his guilty plea.
[1]
[25]
The
assault occurred when the girl became separated from her friends at a large
graduation party. She walked off with a boy, whom she knew, and the accused,
whom she had never met. She described kissing and sexually touching both boys.
She was intoxicated and was panicking. Eventually one or both of the boys
removed her shirt against her will and she backed away. She fell to the ground
and the respondent ended up on top of her. He penetrated her with his penis
without her consent.
[26]
The
respondent received a non-custodial sentence for this sexual assault six
months of deferred custody and an 18-month probation order. Plainly, this
sentence failed to achieve the objective of deterrence as the respondent
committed another sexual assault within 13 months of his first conviction, a
mere six months into his probation.
[27]
What
we have, in summary, is this: Despite the respondents relative youth, he is a
repeat sexual offender. He committed a second sexual assault involving
penetration against a vulnerable/intoxicated victim a victim who was asleep
at the time. These were significant aggravating factors, requiring a sentence
that emphasized denunciation as well as general and specific deterrence.
[28]
Although
the sentencing judge acknowledged the relevant considerations, with respect, she
failed to accord them the significance they were due. On the contrary, she stated
that, but for the respondents relatively recent conviction for sexual assault,
she may have found it appropriate to impose a sentence outside the lower end
of the 18-month to three-year range she identified as appropriate.
[29]
These
remarks wrongly downplay the seriousness of the sexual assault committed by the
respondent. Again, the offence involved intercourse forced upon a highly
vulnerable woman. Yet, even though she acknowledged the need to address specific
deterrence, the sentencing judge concluded that the respondent should be
sentenced at the very bottom of the range in order to avoid a devastating
effect on his rehabilitation.
[30]
The
18-month sentence that was imposed fails to reflect the fact that not only was this
the respondents second serious sexual offence, but it was committed while he
was on probation for having committed the first. The sentence is neither proportionate
to the gravity of the respondents offence nor his degree of responsibility in committing
that offence, as required by s. 718.1 of the
Criminal Code
.
[31]
Taking
into account the mitigating factors as well as the aggravating factors, I agree
with the Crown that a sentence of three years should have been imposed. However,
the court is required to sentence the respondent having regard to the
circumstances now obtaining.
[32]
The
respondent has proffered fresh evidence in this regard. The Crown does not
object to the admission of the fresh evidence but argues as to the implications
of requiring the respondent to serve additional time in prison.
[33]
I
would admit the fresh evidence.
The fresh evidence
[34]
The
respondent was released on parole on August 7, 2020, having served one-third of
the 18-month sentence that was imposed. He is now employed full time and is working
approximately 48 hours per week. He is re-enrolled in college and is working
towards completing a diploma in business and marketing administration in the
spring of 2021.
[35]
The
respondent has attended counselling for alcohol abuse twice monthly as well as
sexual offending on a weekly/biweekly basis and is seeing a personal therapist.
His addiction counselor reports that the respondent has attended all scheduled
appointments and presents as motivated to engage in his treatment. The
executive director of the sexual accountability support program reports that
the respondent is dedicated to the process and committed to making the personal
changes required so that he will not reoffend.
[36]
The
respondent notes that, as of the date of the appeal, he would have served the
equivalent of over one-half of his original sentence, part in custody and part
on parole. Assuming that he received the three-year sentence now sought by the
Crown and would qualify for one-third release in the federal system, he would
have had the equivalent of three months remaining on his sentence. However, the
respondent argues that if he were reincarcerated, it is unlikely he would
receive a parole hearing in time to obtain release following the service of one-third
of the higher sentence, as he would have to be re-assessed and another parole
hearing would have to be convened. The respondent argues that serving this additional
period pending a parole hearing would constitute an undue hardship and that
this is an appropriate case for staying the balance of any increased sentence
imposed.
[37]
The
Crown does not accept that the respondents ability to seek parole would be
prejudiced by requiring him to serve additional time in the federal system and submits
that he should be required to serve additional time.
[38]
In
my view, although a three-year sentence of imprisonment should have been
imposed by the sentencing judge, in light of the fresh evidence that sentence
is no longer appropriate. Further incarceration of the respondent for a brief
period is not required to achieve the goals of denunciation and deterrence.
[39]
The
respondent is a young man. He has now completed a substantial portion of the
sentence that was imposed by the sentencing judge, part in custody and part on
parole. Importantly, he has made the most of the opportunity presented by his
parole. The fresh evidence demonstrates that he has taken meaningful steps
towards rehabilitation and reintegration into the community. These steps would
be undermined if he were required to return to prison to serve additional time
time that would presumably be brief before he would again be eligible for
parole.
[40]
However,
I do not accept the respondents submission that it would be appropriate to
impose the three-year sentence sought by the Crown, only to stay the balance of
that sentence and not re-incarcerate the respondent. If a three-year sentence were
imposed, the probation order could no longer remain in place, as a probation
order can accompany only sentences of two years or less:
Criminal Code
,
s. 731(1)(b).
[41]
Although
the respondent appears to be making progress on parole, it must be recalled
that he breached the terms of a prior probation order. In these circumstances, I
would vary the respondents sentence by increasing the period of his probation
from two years to three, the maximum period of probation that is permitted. An additional
year of the supervision afforded by probation is the best means of supporting
his rehabilitation and reintegration into the community.
CONCLUSION
[42]
I
would grant leave to appeal sentence and admit the fresh evidence.
[43]
I
would allow the appeal and vary the sentence to increase the term of the respondents
probation from two years to three. I would otherwise leave the terms of the
probation order and the other orders in place.
Released: February 5, 2021 (G.H.)
Grant
Huscroft J.A.
I agree. B.W.
Miller J.A.
I agree.
I.V.B. Nordheimer J.A.
[1]
The respondent was a young person within the meaning of the
Youth
Criminal Justice Act
, S.C. 2002, c. 1 when he committed this offence. Because
his adult conviction was within the access period for the youth offence, the
records relating to his youth offence are to be dealt with as records of an
adult, which includes being available for publication: see
YCJA
, ss.
119(2)(h) and 119(9)(b).
The transcript of the respondents
guilty plea to the youth offence was sealed by the trial judge. The parties to
this appeal agree that this was not required by the
YCJA
and that this
court can unseal the transcript. By order dated January 21, 2021, this court ordered
the transcript unsealed on consent.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Borel, 2021 ONCA 16
DATE: 20210112
DOCKET: C62693
Lauwers, Miller and Nordheimer
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Mark
Anthony Borel
Appellant
Philip Norton, for the appellant
Philippe G. Cowle, for the respondent
Heard: November 30, 2020 by video conference
On appeal from the conviction entered by
Justice Linda M. Walters of the Superior Court of Justice, sitting with a jury,
on May 22, 2014, and from the sentence imposed on August 15, 2014.
Nordheimer J.A.:
[1]
Mr. Borel appeals from his conviction for
attempted murder. He also seeks leave to appeal the sentence of 19 ½ years imposed
upon him. For the reasons that follow, I would allow the conviction appeal and
order a new trial. As a consequence, I do not reach the sentence appeal.
Background
[2]
In September 2010, the appellant and the complainant
began an affair. The complainant was married and lived with her husband and her
teenaged children. The appellant was not married and lived with the mother of
his children in a platonic relationship. In December 2010, the complainants
husband found out about the affair. The complainant told her husband that it
was over, but in fact she continued the affair. The complainant, who had a
drinking problem, began to drink more heavily.
[3]
At trial, the evidence of the complainant and
the appellant differed as to the state of their relationship in July 2011. Each
claimed to be the one trying to end it. On July 23, 2011, sometime around 6:00
pm, the complainant left her house telling her husband that she was going
shopping and then to a friends house. The story was a lie. The complainant was
actually going to meet the appellant.
[4]
The complainant and the appellant met in the
parking lot of a community centre. The appellant arrived first. A little before
6:45 pm, the appellant called 911. When the police and EMS arrived, the complainant
was lying on the ground in the parking lot very badly burned. The appellant and
some passersby were with her. The complainant smelled of gasoline.
[5]
The appellant initially told the paramedic that
he was driving past the community centre and noticed his friend in the parking
lot. In contrast, he told the police officer at the scene that he did not know who
the complainant was. He later told the police officer that he did know the complainant
and that they had arranged to meet that evening. Later that evening at the
police station, the appellant gave a videotaped statement to the police. Four
days later, the appellant was arrested and charged with attempted murder. He then
gave another, more detailed, videotaped statement to the police. Throughout his
interactions with the police and others, the appellant consistently denied
having doused the complainant with gasoline and setting her on fire.
[6]
At trial, the complainant gave evidence about
her relationship with the appellant. According to the complainant, there were a
lot of trust and jealousy issues. She said that the appellant started getting
physically and verbally aggressive. She described an incident in October or
November of 2010 where the appellant grabbed her around the neck and strangled
her to the point that she could not breathe. In response, she kicked him. He
then let go but grabbed her by the arms leaving bruises.
[7]
The complainant told her husband that the affair
was over in December 2010 but it continued into 2011, although the complainant
testified that it was getting harder and harder to sneak around. According to
the complainant, the appellant was getting more aggressive and wanted her to
leave her husband.
[8]
The complainant testified about a second violent
incident sometime in January or February 2011 when she and the appellant were
at a motel. She testified that the appellant took her phone and saw that she
had been talking to a male friend. The appellant became jealous and aggressive
and proceeded to smother her head and face with a pillow.
[9]
The appellant gave evidence at trial and denied
that either of these violent incidents had occurred. The appellant testified
that he did see marks on the complainant, who told him a few times that she was
fighting with her husband.
[10]
In early 2011, the complainant got pregnant with
the appellants child. She terminated the pregnancy in April. Following the
abortion, she and the appellant stayed together in a hotel for a number of days.
The complainant did not think she told her husband at the time about the
pregnancy. She and the appellant also got similar tattoos in memory of the
baby. Each testified that it was the others idea.
[11]
Following her abortion, the complainant kept
seeing the appellant. The complainant testified that she cared for the
appellant and was scared to leave because she knew there would be consequences.
In May 2011, she suggested that they should end it. She said that the appellant
seemed upset but accepting. Afterwards, however, the complainant received
several emails from the appellant stating, fuck you baby killer, you fucked
with the wrong guy, wait till the real fireworks start, and I fucking hate
you. The appellant testified that they argued a lot, but it was mostly over the
complainants excessive drinking.
[12]
Sometime in March to June 2011, the complainant
told her husband that she did not love him anymore and that she wanted to move
out. During the time after her abortion, the complainant drank heavily. She was
depressed. The complainant once told her husband that she was going to take all
the sleeping pills. Her husband thought that this was a dramatic gesture to
make him feel guilty.
[13]
On July 23, 2011, the day of the incident, the complainant
testified that she met the appellant at Rockway Community Centre. She left home
around 5:50 pm. She had been drinking and admitted that it was possible that
had she had alcohol in the car with her. The appellant was already present in
the parking lot when the complainant pulled up at the community centre. They
both got out of their cars and were standing in the parking lot. According to
the complainant, the appellant told her that he had a present in his car for
her. He proceeded to walk to his car and then walked back to her location with a
black jug full of gas. The appellant started swishing the gas at the complainant.
He took a match out of his pocket and threw it at her, setting her on fire.
According to the complainant, the appellant stood there with his arms crossed
and said, fuck you bitch, you mess with the wrong peoples feelings and youll
pay.
[14]
The appellant acknowledged arriving at the
community centre. He arrived first. When the complainant arrived, the appellant
said that he knew right away that she had been drinking. The appellant said
that he immediately got upset and asked her why she was drinking again. He told
her that he did not want her driving to her friends home, which is where the complainant
was intending to go after meeting the appellant. The complainant told the
appellant that she could drive to the friends home on her own. The complainant
and the appellant continued to argue about her drinking and driving. The appellant
told the complainant that, if she refused to take a ride from him or call
someone else, he was going to call the police. The appellant said that he had
done this before.
[15]
The appellant went back to his car to make a
call. He then heard a scream. This was approximately 10 minutes from the time the
complainant had arrived at the community centre. He thought the complainant was
just trying to get his attention. The appellant glanced over his shoulder and
saw the complainant enter a trail that leads from the parking lot. She was screaming
loudly. The appellant then ran to the trail and found the complainant lying
face down and kind of rolling around. She appeared to be burning. The complainant
rolled over. The appellant saw that she was burnt. He asked her What happened?
Who did this? She was screaming and replied nobody. The appellant testified
that it was horrifying and that he did not know what to think. He helped the complainant
up and back to the parking lot and then called 911.
[16]
While waiting for the police to arrive, the
appellant says that the complainant kept getting up and wandering towards the
road. While waiting for the police, the complainant pleaded with the appellant
not to tell the police who she was. The appellant repeatedly asked her: Did someone
do this to you? Did somebody attack you or something? The complainant answered
nobody.
[17]
Prior to the arrival of the EMS and the police,
several people driving by stopped to assist. One testified that the appellant
said he did not know the woman or know what happened. Another testified that
the appellant said he did not know what happened and that he had made
arrangements with the complainant to go hiking and that he arrived to find her
in that state. A third testified that the appellant said that he did not know
who did this and was supposed to meet the complainant. The appellant was on the
phone to 911 while the on-scene witnesses were present.
[18]
The police and EMS arrived. The appellant told
EMS that he had been driving by and noticed his friend in the parking lot. He
told them that he knew her and told them her name. However, the first officer
on scene said that he asked the people present, including the appellant, if
they knew the complainant. Everyone, including the appellant, stated that they
did not know who the woman was. The appellant testified he did this because of the
complainants request, prior to the police attending, not to say her name. Upon
being questioned by the same officer, the complainant also refused to tell him
her name. The appellant later told the officer and EMS personnel the complainants
name and that she was a friend of his and that they were supposed to meet
there. He handed the officer a set of keys, a lighter and matches telling the
officer that they were in the complainants hand and that they belonged to her.
He also told the officer that the complainant was not his girlfriend but had
met up with her because she was an alcoholic needing support.
[19]
A five-hour search of the immediate area at the
community centre by a number of police officers did not reveal any evidence of
an accelerant container. An expert in the behaviour of gasoline and ignition
source testified that if one swished gas in a backward motion (as described by the
complainant), one would expect a transfer of gasoline onto that persons clothes
and shoes. One would also expect to find some gasoline on the ground. The appellants
clothes (t-shirt and shorts) were tested for gasoline. They showed no traces of
gasoline. There was no odour of gasoline around the appellants car. However,
there was a strong odour of gasoline in the complainants car - gasoline was
located on the drivers seat of the complainants car, in her purse, and in a
cup holder.
[20]
The appellant denied throwing gasoline on the complainant
and setting her on fire. He was unsure how the fire was caused. He denied that
he went to the location with the intention of harming the complainant.
Issues
[21]
The appellant raises three issues on his conviction
appeal:
1.
The trial judge erred in erred in
admitting opinion and demeanor evidence of the 911 dispatcher and in failing to
give a limiting instruction to the jury regarding that evidence;
2.
The trial judge erred in admitting opinion
and demeanour evidence of the homicide detective, who conducted the second
videotaped interview of the appellant, and in failing to give a limiting
instruction to the jury regarding that evidence; and
3.
The trial judge erred in admitting
statements that the complainant made to EMS personnel during the ambulance ride
to the hospital and in failing to properly instruct the jury as to the proper
use of those statements.
Law and analysis
(1)
The 911
dispatcher
[22]
In terms of the
first ground of appeal, the 911 dispatcher gave evidence at trial. The Crown
played the 13-minute 911 call. Then, following a few brief introductory
questions, the Crown began his examination-in-chief by asking the dispatcher,
given her experience: was there anything unusual about this, about this particular
[911] call. The dispatcher testified that, in her opinion, the call she
received from the appellant was weird. The dispatcher noted that the appellant
initially stated that the patient was assaulted and then later in the call said
she had been burned. Further, the dispatcher found it odd that if the appellant
had just come upon the patient, who was unable to communicate, why would he not
have just told her that the patient was burned rather than assaulted.
[23]
The dispatcher
also told the jury that, in her opinion, while the appellant stayed at the
scene, he didnt really help or ask the patient any questions that the
dispatcher needed answered.
[24]
The Crown then
re-played the 911 call and asked the dispatcher to point out, in her opinion,
the point that [she] found unusual or troublesome. Throughout the 13-minute
recording, the dispatcher requested the tape be stopped several times. Each
time she identified portions of it for the jury that she found unusual and
troubling, including that the appellant gave answers to questions that he
should not know without asking the patient and that it was weird that the appellant
did not initially say the patient was burned.
[25]
Trial counsel
did not object to the dispatchers evidence regarding her interpretation of the
911 call or her opinion as to the appellants actions or inactions. Trial
counsel did cross-examine the dispatcher.
[26]
It is a
fundamental principle of our trial process that the ultimate conclusion as to
the credibility or truthfulness of a particular witness is for the trier of
fact. It was improper for the Crown to elicit what was, in essence, opinion
evidence as to the appellants truthfulness from the dispatcher because it is
not proper for a witness to give an opinion about the credibility of any other witness:
R. v. Marquard
, [1993] 4 S.C.R. 223.
[27]
Much of the
dispatchers evidence might have been elicited by the Crown in a proper fashion,
by questions that avoided having the dispatcher express her opinions about the
appellant. In other words, the Crowns questions could have been restricted to
asking the dispatcher factual questions as to what had occurred, leaving it to
the jury to draw their own conclusions regarding the appellants actions.
[28]
The trial judge
ought to have curtailed this line of questioning. She also should have
instructed the jury on the use to which they could put the dispatchers
evidence, including instructing them not to consider the dispatchers opinions.
She should have reminded the jury that it was their job alone to consider and
reach conclusions on the credibility of every witness. None of this was done.
[29]
That said, I
do not view this error, by itself, as being serious enough to warrant a new
trial, especially in light of trial counsels failure to object or request a
jury instruction about it. The failure to object to inadmissible evidence or to
request a jury instruction is not determinative, but it is relevant to the
treatment of the objection on appeal:
R. v.
L.K
.,
2020 ONCA 262, at para. 15.
(2)
The homicide
detectives evidence
[30]
As one of his
last witnesses, the Crown called the homicide detective, from the Niagara
Regional Police, who had conducted a three-hour interview of the appellant. In
introducing the homicide detective to the jury, the Crown elicited evidence
from him that he had worked as a police officer for 27 years and was assigned
to the major crimes/homicide unit as an investigator. In his evidence, the
homicide detective highlighted his extensive training with respect to
interviewing and interrogating people in custody. He made a point of telling
the jury that he had interviewed approximately 500 accused persons during his
17 years as a criminal investigator. Once again, the Crown did not seek to have
the homicide detective qualified as an expert witness.
[31]
The homicide
detective testified that, in preparation for the interview of the appellant, he
had staged an area of the police station in which he set up a number of
surveillance photographs on an investigation board in an office. Upon his
arrival at the station, the appellant was placed in a seat adjacent to this
staged room, where he could see the investigative photos for approximately 30
seconds, before he was moved to another location. According to the detective, the
purpose of this technique was to project to the appellant that an extensive
investigation has taken place before his arrest.
[32]
The Crown played
the three-hour interview for the jury. Thereafter, the Crowns very first
question to the homicide detective was: what did [he] find unusual about the
video [interview of the appellant]? The homicide detective responded that he
found three major things
unusual:
·
First, the appellants
general demeanour and body language was inconsistent with someone in custody
for attempt murder;
·
Second, the appellants
version of events changed throughout the interview; and
·
Third, the appellants
denials [about being involved in the crime] were relatively weak.
[33]
The Crown then asked the homicide
detective to expand on his opinion that the appellants denials were relatively
weak. In response, the homicide detective said:
From my experience
and training, if
someones
in custody for an offence, a serious offence that they, that they did not
commit, they would, they would likely be denying it strongly and asking why
theyre in custody.
[34]
The Crown then played several clips from
the interview. The Crown asked the homicide detective to comment on whether he
could identify: (1) any internal inconsistencies within the interview and (2)
any other inconsistencies by comparing the interview with other information the
homicide detective knew about prior to interviewing the appellant. During this
portion of his evidence, the homicide detective offered his opinion about the
differences he identified in the appellants versions as ones that were
subtle, but
important.
[35]
Trial counsel once
again did not object to the homicide detectives evidence. Nor did trial
counsel cross-examine the homicide detective. Also, the trial judge did not
question the route of admissibility of the homicide detectives opinion
evidence or provide the jury with directions as to its proper use, if any.
[36]
As was the case
with the 911 dispatcher, this opinion evidence ought not to have been elicited
by the Crown. However, unlike the evidence of the 911 dispatcher, this evidence
could not have been properly elicited and it was highly prejudicial. As this
court observed in
R. v. Quazi
, 2014 ONCA 94, at para. 7:
We also observe that
the trial judge permitted the jury to hear the opinion of another police
officer who characterized the appellant's demeanour during his police interview
as indicative of guilt. Such an opinion was irrelevant and should not have been
permitted. Its intrusion into the trial record was highly prejudicial and
contributed to the overall unfairness of the appellant's trial.
[37]
Demeanour evidence is, itself, highly
suspect:
R. v. Levert
(2001), 159 C.C.C. (3d) 71 (Ont. C.A.),
at para. 27. For a jury to hear, from what appeared to them to be a highly
experienced police officer, evidence that the appellant was, in essence, acting
like a person who was guilty of the offence, was highly prejudicial. It was
only made worse by the failure of the trial judge to give any form of limiting
instruction on its use. The trial judge ought to have told the jury to ignore
the detectives opinions.
(3)
The EMS
evidence
[38]
At trial, the Crown sought and received a
pre-trial ruling permitting it to lead evidence of the complainants out of
court statements to an EMS attendant, who was accompanied by two firefighters, in
the ambulance that transported the complainant to hospital. The EMS attendant
testified that the complainant had said that she did not want to die and that
he had done this to her. The EMS attendant further testified that the complainant
said it was unsafe to disclose the attackers name because she was worried he
would hurt her family.
[39]
Notwithstanding
the reluctance of the complainant to identify her attacker, the EMS attendant continued
to press her on the subject. She did so by listing categories of people, such
as aunt, uncle, husband, etc., who could have done this to the complainant. The
EMS attendant said that the complainant nodded her head in agreement when the EMS
attendant suggested boyfriend. She shook her head when asked about other
people, including husband.
While both firefighters, who were present in the ambulance,
recalled the complainant saying that he did this to her, neither of them
recalled the EMS attendant listing possible perpetrators nor did they remember the
complainants positive response when boyfriend was mentioned.
[40]
At trial, the complainant
had no recollection of the events in the ambulance. The trial judge ruled that her
statements were admissible.
[1]
However, the basis for the ruling is confused.
The Crown had sought admission of the statements (including the head nodding) pursuant
to the principled exception to the hearsay rule, encapsulated in
R. v. Khelawon
, 2006 SCC 57, [2006] 2 S.C.R. 787, on two bases. One was that they
formed part of the narrative. The other was to rebut a possible defence that
the incident was the result of a suicide attempt or an accident. Towards the
end of her reasons, the trial judge said:
It is also important
to note that the Crown is not asking that the statements be admitted for the
truth of their content, but simply as part of the narrative as it unfolds, and
in order to rebut any presumption raised by the defendant that this burning was
accidental or caused by [the complainant] herself.
[41]
The problem with the trial judges
acceptance of the Crowns position is that it does not coincide with the actual
purpose for admitting the evidence, at least on the second stated basis.
Insofar as the evidence was being admitted to rebut accident or suicide, it
could only achieve that purpose if the evidence was admitted for the truth of its
contents, which would carry with it the risk that the jury would also use it as
confirmation on the issue of identity.
[42]
There is
another confusing aspect of the trial judges ruling. Early in her reasons, the
trial judge held that the actions of the complainant, in shaking her head or
nodding, were not statements, and thus were not hearsay. She said: However,
any actions observed by someone else, in this case, the emergency care
personnel, are not hearsay, and [the EMS attendant] is free to testify about
what she says she observed [the complainant] do. Consequently, the trial judge
held that those actions were admissible without any hearsay analysis. The respondent
admits that this latter finding is clearly wrong. Hearsay typically consists
of spoken words. It can, however, consist of conduct.:
R. v. Badgerow
, 2014 ONCA 272, 119 O.R. (3d) 399, at para. 106, leave to appeal refused,
[2014] 3 S.C.R. v. The same point is made in
Khelawon
, at
para. 34: hearsay evidence includes communications expressed by conduct.
[43]
Unfortunately,
the issue became even more confused when it reached the stage of the
instructions to the jury. The trial judge first told the jury that they had
heard the evidence about the statements for the two purposes stated above but
not to prove that what she said is true, but only to establish that the
statements were made. However, only a short time later, the trial judge told
the jury:
If you decide that
[the complainant] did make these statements, you may consider that evidence in
deciding whether or not [the complainant] would have made these statements if
her injuries were self-inflicted or occurred as a result of an accident.
In determining how much or how little you will
rely on this evidence, to help you decide this case, you may consider that it
may be less reliable than other evidence that has been given. [The complainant]
has no memory of this point in time. Accordingly, she was not subject to cross-examination
on this issue. At the same time, you may consider whether there is any evidence
to suggest a motive on the part of [the complainant] to lie to the emergency
responders.
It is evident
that, at this point in her charge, the trial judge is clearly indicating to the
jury that the evidence can be used for the truth of its contents.
[44]
Further, the
critical piece of evidence arising from this issue is the evidence of the complainant
apparently nodding in the affirmative when she was asked whether the attacker
was her boyfriend. The trial judge did not isolate this piece of evidence in
her instructions to the jury and, consequently, she did not give any cautionary
instruction to the jury about its use, presumably because she continued to view
it as direct evidence and not as hearsay.
[45]
Yet, this
evidence went to the central issue of the identity of the attacker and was the
evidence that carried with it the highest danger of misuse. This fact is
important because evidence is admitted for a purpose, and that purpose must be
clearly identified. Here the Crown was tendering the evidence that the
complainant nodded her head in response to questions in order to prove the
identity of the appellant as her attacker even though the Crown had the direct
evidence of the complainant on this point.
(a)
The principled
exception
[46]
As I have
already said, the complainants statements, including the head nodding, were
hearsay. Their admissibility ought to have been reviewed under the principles
that apply to the admission of hearsay evidence. In the circumstances of this
case, none of this evidence was admissible for either of the purposes it was
offered by the Crown. More specifically, it was not admissible under the
principled exception to the hearsay rule for the truth of its contents as a
positive identification of the appellant as the complainants attacker. For
that purpose, the evidence does not fit within the principled exception because
the evidence does not meet the twin requirements of necessity and reliability. I
would reject trial counsels concession and the trial judges conclusion that all
of this evidence, including the head nodding, met the necessity requirement. I
note that the trial judge separately concluded that the necessity requirement
was established for the utterances.
[47]
The only
purpose for admitting the specific evidence of the head nodding was to prove,
or help prove, that the appellant was the person who committed the attack. However,
it was not necessary for this evidence to be admitted for that purpose. While
the complainant may not have remembered the events in the ambulance, as
recounted by the EMS attendant, the complainant was available to give evidence about
the actual event and she identified the appellant as her attacker. Indeed, she
did so at the very first opportunity after she awoke from a coma that resulted
from her injuries. There was, therefore, no need for this evidence to fill any
evidentiary gap on that central point. Because the necessity requirement could
not be met, the only purpose for admitting this evidence was as a prior
consistent statement by the complainant to buttress her evidence as to the
identity of her attacker. Prior consistent statements are presumptively
inadmissible because they lack probative value:
R. v. Stirling
, 2008 SCC 10, [2008] 1 S.C.R. 272, at paras. 5-7.
(b)
The narrative
exception
[48]
My conclusion
that this evidence, especially the nodding of the complainants head, was
inadmissible hearsay is not altered by attempting to have it admitted as part
of the narrative. The simple fact is that there was no need for this evidence
to be admitted for that purpose. No part of outlining the narrative or chain of
events for the jury required its admission. The only part of the narrative that
was involved at this stage was the transportation of the complainant to the
hospital. That part of the narrative could have been adequately conveyed
without any reference to this evidence. On this point, narrative is too often
used by counsel, supported by trial judges, as a vehicle for the admission of
evidence that is otherwise inadmissible and prejudicial. The practice of using
this route to admit prejudicial evidence must stop because this error will
often lead to the requirement for a new trial, with the resulting hardships and
expense that inevitably flow. Trial judges must be alert to the potential for
such misuse and be on guard to bar this door.
(c)
Spontaneous
utterance
[49]
On appeal, the
respondent also attempts to justify the admission of this evidence as being
part of the
res gestae
. This basis for admitting any of this
evidence was not advanced at the trial. It is generally problematic to consider
a basis for the admission of evidence that was not dealt with at trial,
especially when the basis for admission rests on necessary factual findings
that were not fully explored.
[50]
The modern expression
for the
res gestae
exception to the hearsay rule is
spontaneous utterance:
R. v. Nurse
, 2019 ONCA 260, 145 O.R. (3d) 241, n. 2. There
is serious criticism of the use of the term
res gestae
to describe this exception. Indeed, the
authors of James H. Chadbourn, ed.,
Wigmore
on Evidence
,
vol. 6
(Toronto: Little, Brown and
Company, 1976), at §1767, p. 255., have this to say on the use of the term:
The phrase res
gestae has long been not only entirely useless, but even positively harmful.
Even if there were no accepted name for one or another doctrine, any name would
be preferable to an empty phrase so encouraging to looseness of thinking and uncertainty
of decision.
[51]
That said, I do not accept that the
evidence could be properly admitted on the basis of spontaneous utterance
because, on the evidence before us, there was nothing apparently spontaneous
about the complainants conduct regarding the list of categories of possible attackers.
Rather, the nodding or shaking of her head was the result of repeated
questioning by the EMS attendant repeated questioning that neither of the
firefighters recollects having occurred. As Catzman J.A. said in
R. v. Aguilar
(1992), 10 O.R. (3d) 266 (C.A.), at para. 34:
Assuming, without
deciding, that Ms. Cooper's submission is correct, I do not consider the
statements in the present case to fall within the spontaneous declaration
exception to the hearsay rule, for they do not attain the level of spontaneity
that is an essential element of that exception.
They were made in response to very particular
questions
. [Emphasis
added.]
(d)
Recent fabrication
[52]
Lastly, there is the exception of
admitting the evidence to rebut suicide or accident, in other words, to rebut recent
fabrication. But, in this case, there was no suggestion of recent fabrication.
The defence clearly took issue with the complainants claim that she was
attacked, along with her identification of the appellant as her attacker. Suicide
or accident were other possible explanations for the incident. With respect to
those explanations, however, it was never suggested that the complainants
identification of the appellant as her attacker was triggered by a motive to
fabricate that arose after the statements to EMS were made. To the contrary, the
defence position was that the complainant had falsely claimed an attack by the
appellant from the outset.
[53]
As Hourigan
J.A. explained in
R. v. Khan
, 2017 ONCA 114, 136 O.R. (3d) 520, at
para. 28:
For example, where a
prior consistent statement is admitted to rebut an allegation of recent
fabrication, it is admitted solely to provide a direct response to the
suggestion that the witness concocted allegations after a triggering event.
[54]
There was no such triggering event in this
case. The complainant did not suddenly alter her position and accuse the
appellant of being her attacker after being confronted with some other fact or
event. The complainant identified the appellant as her attacker from the first
moment that she was physically able to do so. The defence did not suggest that a
discrete event occurred after her attack that caused her to change her story.
The
proviso
[55]
In the final
analysis, the respondent seeks to avoid the impact of these evidentiary errors
by asserting that the
proviso
(
Criminal
Code
, s. 686(1)(b)(iii))
can be used to alleviate against their effect.
[56]
The situations
where the
proviso
is properly utilized to remedy errors made at a trial
are set out in
R. v. Sekhon
, 2014 SCC 15, [2014] 1 S.C.R. 272, where Moldaver
J. said, at para. 53:
Flowing from this
principle, this Court affirmed in Khan that there are two situations where the
use of s. 686(1)(b)(iii) is appropriate: (1) where the error is harmless or
trivial; or (2) where the evidence is so overwhelming that, notwithstanding
that the error is not minor, the trier of fact would inevitably convict.
[57]
The errors here were not harmless nor
trivial and the respondent does not suggest otherwise. Rather, the respondent relies
on the fact that the case was so overwhelming that the result would have been
the same regardless of the errors.
[58]
I do not agree.
I do not dispute that the case against the appellant was a strong one, but it does
not rise to the very high level of being overwhelming. There are questions that
arise on the evidence, with which the jury would have had to contend, in
arriving at their verdict beyond a reasonable doubt. Those questions include:
·
How gasoline
came to be inside the complainants car including in the cup holder?
·
How the appellant, if he threw the gasoline as
described by the complainant, managed to not get any of the gasoline on his
clothes or on the ground?
·
What happened to the gasoline container?
·
If the complainant crawled towards the road
after being lit on fire, as she described, how did her shoes, burned hair, and
blood stains wind up on a pathway that led from the opposite side of the
parking lot?
[59]
It cannot, in my view, be said that there is no
possibility that these questions, taken in conjunction with the appellants
evidence as to what he says happened, would not have led one or more jurors to
have a reasonable doubt.
Conclusion
[60]
Unfortunately,
the evidentiary errors I have discussed infected the fairness of the trial. A
new trial is required. That result is never a desirable one, but it is
especially concerning, in this case, given that the events occurred more than
nine years ago. However, it is a consequence that cannot be avoided.
[61]
I would allow the
appeal, set aside the conviction, and order a new trial.
Released: January 12, 2021 PL
I.V.B. Nordheimer J.A.
I agree. Peter Lauwers J.A.
I agree. B.W. Miller J.A.
[1]
R. v. Borel
,
2014 ONSC 2605
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Brown, 2021 ONCA 35
DATE: 20210120
DOCKET: C66990 & C66991
MacPherson, Tulloch and Lauwers
JJ.A.
C66990
BETWEEN
Her Majesty the Queen
Respondent
and
David Brown
Appellant
C66991
AND BETWEEN
Her Majesty the Queen
Respondent
and
Daimian Johnson
Appellant
Nathan Gorham and Breana Vandebeek, for
the appellants
Diana Lumba, for the respondent
Heard: December 18, 2020 by
video conference
On appeal from the sentences imposed by
Justice Michael K. McKelvey of the Superior Court of Justice on May 2, 2019.
REASONS FOR DECISION
[1]
The appellant David Brown pleaded guilty to one
count of possession of cocaine for the purpose of trafficking contrary to s.
5(2) of the
Controlled Drugs and Substances Act
, S.C. 1996, c.19. The
appellant Daimian Johnson pleaded guilty to three counts of trafficking in
cocaine contrary to s. 5(1) of the
CDSA
.
[2]
Brown and Johnson submitted agreed statements of
facts for the purposes of sentencing.
[3]
The agreed statements of facts stated that Brown
obtained two kilograms of cocaine from Johnson on June 6, 2016. Brown was
arrested on June 28, 2016 and found in possession of one kilogram of cocaine
pressed into a brick. Police executed a search warrant at Browns residence the
following day and found cash, cellular phones, a money counter, drug
paraphernalia and a debt list.
[4]
Johnson sold large volumes of cocaine in May
2016, including one kilogram to a client on May 17, 2016. On June 6, 2016,
Johnson sold Brown two kilograms of cocaine. On June 13, 2016, Johnson sold one
kilogram of cocaine to a different client. Like Brown, Johnson was arrested on
June 28, 2016. Police discovered nearly $75,000 in cash and three cellular
phones in his car.
[5]
Brown was sentenced to four years and seven
months incarceration. Johnson was sentenced to six years and five months
incarceration. Both men appeal their sentences.
[6]
The basis of the two appeals is the same the
appellants assert that the sentencing judge took no or insufficient account of
several important mitigating factors. If the sentencing judge had taken proper account
of these mitigating factors, the sentences should have been lower.
[7]
Before considering the specific mitigating
factors raised by the appellants, we observe that the sentencing judge
identified numerous mitigating factors. Both appellants pleaded guilty. Both
appellants were arrested twice and had two bail hearings. Both appellants were
subject to restrictive bail conditions. Both appellants chose to speak at the
sentence hearing. They expressed genuine remorse for their engagement in criminal
commercial drug activity and the sentencing judge believed them, saying Mr.
Brown appeared genuinely remorseful about his conduct and As with Mr. Brown,
I had no reason to doubt Mr. Johnsons sincerity.
[8]
Against this backdrop, we turn to the legal
issues raised by the appellants. Importantly, we do so under the umbrella of
the deference that an appellate court must accord to the decisions of
sentencing judges:
R. v. Lacasse
, 2015 SCC 64, at paras. 39-44.
[9]
The appellants submit that the sentencing
judges starting point for sentences involving possession for the purpose of
trafficking five to eight years was too high. We do not accept this
submission. This range is supported by case law:
R. v. Bryan
, 2011
ONCA 273.
[10]
Moreover, the Crown in this case proposed a
seven year sentence for Johnson and a five year sentence for Brown. And the
sentencing judge recorded: The defence accepts that the sentences proposed by
the Crown are reasonable generally.
[11]
The real issue on this appeal is the same as
that recorded by the sentencing judge, namely the proposed sentences do not
adequately reflect all of the mitigating circumstances which need to be taken
into account. In this domain, the appellants make two joint submissions and
Johnson makes a separate submission.
[12]
First, the appellants contend that the
sentencing judge erred by giving no credit for the fact that the appellants had
been arrested twice (the second time when new charges were laid) and went
through a second bail hearing.
[13]
We do not accept this submission. The sentencing
judge expressly considered this issue under the heading Mitigating Factors
Two Separate Arrests. He said:
I agree with the defence that having to go
through a second arrest and bail review would have caused the defendants some
additional anxiety and frustration. I disagree, however, with the suggestion that
their sentences should be further discounted by six months on this account.
In my view, the proposed sentences adequately reflect
this mitigating factor
. [Emphasis added.]
[14]
We can see no error in this analysis. The
sentencing judge identified and considered the issue and, importantly, employed
it as a factor supporting the sentences proposed by the Crown, which already
reflect[ed] some very significant mitigating factors.
[15]
Second, the appellants submit that the sentencing
judge failed to give sufficient credit for the stringent bail conditions that
both appellants faced after their arrests and for the fact that the appellants,
through counsel, turned in three firearms to the police.
[16]
We are not persuaded by this submission. The
sentencing judge explicitly stated that he was going to give credit for these mitigating
factors to reduce the sentences proposed for each of the defendants below
those which have been proposed by the Crown. At the end of his reasons, he
fulfilled this pledge by reducing Johnsons sentence by seven months, and
Browns sentence by five months, below what the Crown had sought. We cannot
quarrel with the sentencing judges decision to give credit for these two
factors or with the quantum of the credit he chose.
[17]
Third, the appellant Johnson contends that the
amount of credit two months the sentencing judge gave him for his testimony
at the drug trial of one of his customers was insufficient.
[18]
We do not accept this submission. At the
sentence hearing, the Crown took the position that no credit should be given
because Johnsons testimony was not helpful to the Crown and the charges
against the customer were dismissed. The sentencing charge carefully reviewed
Johnsons role in his customers trial and the relevant case authorities. We cannot
say that his allocation of two months credit for Johnsons testimony was
unreasonable, or even parsimonious.
[19]
The appeals are dismissed.
J.C.
MacPherson J.A.
M.
Tulloch J.A.
P.
Lauwers J.A.
|
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Brown, 2021 ONCA 119
DATE: 20210226
DOCKET: C61879
Strathy C.J.O., Watt and Zarnett
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Jeffrey Ronald Brown
Appellant
Paul J. I. Alexander, for the appellant
Jeffrey E. Pearson, for the respondent
Heard: November 9, 2020
On appeal from the convictions entered
by Justice Paul M. Taylor of the Ontario Court of Justice, on July 30, 2013,
and from the sentence imposed on September 26, 2013.
Strathy C.J.O.:
A.
OVERVIEW
[1]
This appeal concerns the application of Step Six
in
R. v. Garofoli
, [1990] 2 S.C.R. 1421.
[2]
The appellant was arrested and charged with
various firearms offences. At trial, the Crowns case turned primarily on the
handgun evidence that had been found by police during their execution of a
search warrant on the appellants car. The warrants, one for the appellants
car and one for a dwelling at 121 Dollery Court, were issued on the basis of an
Information to Obtain (ITO) that relied heavily on the tips of a
confidential informant (CI).
[3]
The appellant brought an application to
challenge the validity of the warrants. He asserted that if the warrants were
quashed, the resulting warrantless search of his car violated his rights under
s. 8 of the
Canadian Charter of Rights and Freedoms
, and that the
handgun evidence should be excluded under s. 24(2) of the
Charter
.
[4]
At the request of the
Crown, the trial judge applied Step Six of
Garofoli
and produced a judicial summary of the
portions of the ITO that had been redacted in order to protect the CIs
identity. The trial judge determined that the redacted ITO and the judicial
summary disclosed reasonable grounds for the warrants to be issued. The trial
judge rejected the appellants application, upheld the warrants, and admitted
the handgun evidence.
[5]
After the ensuing trial, the trial judge
convicted the appellant of all charges and imposed a global sentence of six
years, less the credit for pre-sentence custody. The appellant has since served
that sentence.
[6]
The appellant appeals his convictions on the
ground that the trial judge erred in upholding the warrants. The appellant
submits that: (a) the ITO did not meet the criteria set out in
R. v. Debot
,
[1989] 2 S.C.R. 1140; (b) the judicial summary was inadequate; and (c) the
trial judge erred in relying on redacted information that he could not
challenge. The appellant argues that if the warrants were erroneously
authorized, the subsequent search of his car constituted a serious breach of
his
Charter
rights, and that the admission of the handgun evidence
would bring the administration of justice into disrepute. Because the handgun
evidence was essential to the Crowns case, the appellant requests that his
convictions be set aside, and acquittals entered.
[7]
For the reasons that follow, I would dismiss the
appeal.
B.
BACKGROUND
[8]
On June 13, 2011, Toronto police obtained two
warrants under s. 487 of the
Criminal Code
, R.S.C. 1985, c. C-46, to
search a 1997 Acura motor vehicle that allegedly belonged to the appellant, and
a residence at 121 Dollery Court.
[9]
The following day, at about 8:41 p.m., a police
officer, conducting surveillance of the appellant, observed him walking to his car,
which was parked at another location in Toronto. The officer noted that the
appellant was holding onto something underneath his shirt at waistband level
an object that appeared to have some weight.
[10]
The officer observed the appellant enter his car on the drivers
side, still holding onto the object. Once seated, the appellant reached over to
the passenger-side airbag compartment, manipulat[ed] something up in that
area, and closed the lid of the compartment by banging down on it with his
fist. The officer then observed the appellant start his car and drive off.
[11]
Several police surveillance vehicles followed the appellants car,
ultimately making the decision to stop it on Black Creek Drive in Toronto. They
arrested the appellant, and searched his car pursuant to the warrant issued on
the previous day. They found a loaded semi-automatic handgun in the
passenger-side airbag compartment. They charged the appellant with various
firearms offences.
C.
THE ITO and the judicial summary
[12]
As the ITO relied on information provided by a CI, it had been heavily
redacted before its disclosure to the trial judge and defence counsel. The
redacted ITO contained the following information about the appellant and his
alleged offences:
·
In March 2011, the affiant of the ITO learned
from the CIs handler that a male by the name of Jeffrey Brown was currently
in possession of a firearm and was dealing drugs. The CI described Mr. Brown as
male, black, in his twenties, 57 in height, with a medium build. The CI
disclosed that Mr. Brown owned a four-door green Acura and hung out in the
Jane and Finch area.
·
The affiant confirmed through investigation that
the appellant owned a 1997 four-door green Acura.
·
In April 2011, the affiant was informed that the
appellant was receiving welfare cheques at 121 Dollery Court.
·
In May 2011, police officers conducted
surveillance at 121 Dollery Court on two occasions, and observed the appellant
and his Acura vehicle at that location.
·
In May 2011, the affiant learned from the CIs
handler that Mr. Brown was still in the possession of a firearm.
·
The affiant conducted additional database searches,
and he ascertained that the appellant was prohibited from the possession of firearms
due to a conviction for first-degree murder; that the appellant had three
convictions, including second-degree murder; and that both the appellants
drivers license and his Acura were registered to an address in Ajax.
·
The affiant discovered from reports in Field
Information cards that the appellant had been investigated on three occasions
between 2010 and 2011 in and around the Jane and Finch area. Those reports
matched the CIs description of Mr. Brown and his car.
[13]
The Crown subsequently produced a second redacted version of the
ITO, which disclosed portions that had previously been redacted. In particular,
the new ITO revealed that, on a redacted date in June, the CI had told his
handler that, Jeffrey Brown has a gun on him.
[14]
The redacted ITO contained the following information about the CI:
·
The CI had worked with police in the past and
had been assigned a confidential source number.
·
The CI had previously provided information to
police in relation to drug trafficking, homicides, and shootings. The CIs
information had led to the seizure of firearms.
·
The CI provided information that he saw Mr.
Brown in the possession of a firearm and drugs.
·
The CI had no convictions, to date, for
perjury-related offences.
[15]
The affiant stated that he had no reason to believe the CIs tips
about the appellant were false or malicious in nature.
[16]
The Crown asked the trial judge to apply
Garofoli
Step
Six and provided the judge with a summary of the information that had been
redacted from the ITO. After reviewing the summary and the unredacted ITO, the
trial judge approved the summary. That summary, in its entirety, read as
follows:
·
The information provided by the confidential
informant is current.
·
The confidential informant is a carded and
registered informant of the Toronto Police Service.
·
The information provided by the confidential
informant has lead [
sic
] to the seizure of several firearms.
·
The information provided by the confidential
informant is detailed and specific as it relates to Jeffrey Browns firearm.
·
The means of the confidential informants
knowledge is disclosed.
·
The confidential informant advised that Jeffrey
Brown confirmed that wherever Jeffrey Brown is, the firearm is.
·
The confidential informant has been in Jeffrey
Browns presence many times.
[17]
The defence was provided with this summary. The defence applied for
and was granted leave to cross-examine the affiant of the ITO.
D.
THE TRIAL JUDGES RULING
[18]
After hearing the submissions of counsel, the trial judge reserved
judgment. He subsequently dismissed the appellants application to quash the
warrants and exclude the handgun evidence.
[19]
The trial judge began his analysis by summarizing the jurisprudence
on judicial review of an authorizing judges decision to grant a warrant. He correctly
stated that the question before him was whether the search warrants, as
amplified on review, could have been issued:
R. v. Grant
, [1993] 3
S.C.R. 223, at p. 251, citing
Garofoli
, at p. 1452.
[20]
The trial judge appreciated that in a case involving a confidential
informant, the sufficiency of the ITO must be assessed according to the three
Debot
factors: whether the tip is compelling, whether the CI is credible, and whether
the tip has been confirmed by independent police investigation:
R. v. Rocha
,
2012 ONCA 707, 112 O.R. (3d) 742, at para. 16, citing
Debot
, at p. 1168.
[21]
The trial judge determined that the redacted ITO contained some
information on the credibility of the CI, but omitted details such as the CIs
criminal record. He noted that the ITO was sloppily drafted and used
remarkably similar language to the phraseology this court criticized in
Rocha
.
However, he found that there was confirmatory evidence of the CIs tips in
the form of police observations and street checks. Furthermore,
The Judicial Summary indicates that the
Informants information is detailed and specific, the means of his knowledge is
disclosed, the informant has been in the Applicants presence many times, and
the Informant confirms that the Applicant is always in possession of the
firearm.
[22]
The trial judge held that, based on the redacted ITO and the
judicial summary, the
Debot
factors for the issuance of the warrants
had been satisfied. In the alternative, he mentioned that if he had erred in
his analysis, his review of the unredacted ITO and the search warrants met the
Debot
standard.
E.
PARTIES SUBMISSIONS
(1)
The Appellants submissions
[23]
The appellant submits that the trial judge erred in finding that the
ITO satisfied the
Debot
criteria, in applying the
Garofoli
Step Six procedure, and in admitting the handgun evidence.
[24]
With respect to the
Debot
criteria, the appellant contends
that the CIs tips were neither credible nor corroborated. He argues that the
ITO disclosed minimal information about the CIs credibility in order to create
a veneer of honesty, but failed to include essential details, such as the
CIs motive and full criminal record. The trial judge properly acknowledged
these omissions, but failed to explain why he concluded that the CI was
credible. The appellant also submits that the trial judge failed to conduct a
meaningful analysis of whether the ITO was corroborated. Most of the
corroborative information obtained by police investigation concerned commonplace
details about the appellant, and the only other source relied upon by the
affiant was a dated and unrelated youth criminal record. While the appellant
also disputes the trial judges finding that the CIs tips were compelling, he asserts
that in the absence of credibility and corroboration, the ITO cannot stand.
[25]
The appellant further submits that the trial judge erred in his
application of
Garofoli
Step Six because the judicial summary did not
provide a reasonable basis on which to challenge the ITO. Moreover, the trial
judge based his decision to uphold the warrants on redacted information that
had not been summarized.
[26]
The appellant contests the Crowns argument that if the ITO is quashed,
the police had reasonable and probable grounds to carry out a warrantless
arrest and a search incident to that arrest. The appellant maintains that the
Crown did not adduce any evidence at trial as to whether the arresting officer
had subjective grounds to justify a warrantless arrest, and that this court
should not make that inference from the officers evidence.
[27]
The appellant consequently submits that the trial judge should have
excluded the handgun evidence under s. 24(2) of the
Charter
. The
affiants sloppy drafting of the ITO, with its omissions, exaggerations, and
misleading statements, discussed below, pushed the
Charter
breach to
the serious end of the spectrum. In addition, the impact on the appellants
Charter
rights was significant. The appellant claims that the public interest in
prosecuting the case cannot tip the balance towards admission of the handgun
evidence when the other two branches of the s. 24(2) test favour its exclusion.
(2)
The Crowns submissions
[28]
The Crown submits that the trial judges decision is entitled to
deference. While some of the appellants criticisms of the ITO may be fair, the
Crown asserts that they do not undermine the basis for the issuance of the
search warrants. The trial judge was aware of the need to balance the interest
in protecting the CIs identity with the appellants fair trial rights. The
trial judge analyzed the
Debot
factors in that context, and found that
the CIs tips were credible, corroborated and compelling.
[29]
The Crown submits that the trial judge correctly applied
Garofoli
Step Six. He could not have allowed more information to be disclosed, either in
the judicial summary or in the cross-examination of the affiant by defence
counsel, without exposing the CIs identity. When the judicial summary is read
together with the redacted ITO, it demonstrates that the warrants
could
have been issued.
[30]
The Crown submits that if the ITO is struck down, there were exigent
circumstances to justify the arrest of the appellant and the search of the Acura
incident to arrest. As a result, the handgun evidence was properly admitted at trial.
F.
analysis
(1)
Applicable principles
(a)
The requirements for issuing a warrant
[31]
A justice issuing a search warrant must have reasonable grounds to
believe that an offence has been committed. The material in support of the
warrant must raise a reasonable probability of discovering evidence of the
crime at the place of the proposed search:
R. v. MacDonald
, 2012 ONCA
244, at para. 6;
R. v. Herta
, 2018 ONCA 927, 143 O.R. (3d) 721, at
para. 20, citing
Hunter v. Southam Inc.
, [1984] 2 S.C.R. 145, at pp.
167-68.
[32]
Debot
confirms that where the ITO is
based primarily on the information obtained from a CI, the authorizing justice
must make three inquiries: whether the information about the crime was compelling;
whether the source of the information was credible; and whether the information
was corroborated by the police before applying for a search warrant. These are
not watertight inquiries. Weaknesses in one of the factors may be compensated
by the strength of others. The totality of the circumstances must be
considered in order to meet the standard of reasonable probability:
Debot
,
at p. 1168;
MacDonald
, at paras. 6-7.
(b)
The test for the sufficiency of a warrant
[33]
A warrant is presumptively valid:
R. v. Sadikov
, 2014 ONCA
72, 305 C.C.C. (3d) 421, at para. 83;
R. v. Pires; R. v. Lising
, 2005
SCC 66, [2005] 3 S.C.R. 343, at para. 30. A party challenging the issuance of a
warrant bears the onus of demonstrating that it was not validly issued.
[34]
The trial judge correctly identified the test for the sufficiency of
a warrant. A reviewing court is not entitled to conduct a rehearing of the
application for the issuance of a warrant, or to substitute its opinion for
that of the authorizing justice. As stated by Sopinka J. in
Garofoli
,
at p. 1452, [i]f, based on the record which was before the authorizing judge
as amplified on the review, the reviewing judge concludes that the authorizing
judge
could have
granted the authorization, then
he or she should not interfere (emphasis added). See also
R. v. Araujo
,
2000 SCC 65, [2000] 2 S.C.R. 992, at para. 51;
R. v. Reid
, 2016 ONCA
524, 132 O.R. (3d) 26, at para. 73, leave to appeal refused, [2016] S.C.C.A.
No. 432.
(c)
Garofoli
Step Six
[35]
In
R. v. Crevier
, 2015 ONCA 619, 330 C.C.C. (3d) 305,
Rouleau J.A. provided a detailed description of the
Garofoli
Step
Six procedure. Step Six arises in the context of an accuseds challenge to a
search warrant that is issued on the basis of a CIs tips. In order to protect
the CIs identity, the ITO containing the CIs tips is redacted before its
disclosure to the accused. The ITO may consequently become incapable of
supporting the warrants authorization. Step Six allows the Crown to rely on
the unredacted ITO to defend the warrants validity. In so doing, Step Six
attempts to address the underlying tensions between the courts duty to protect
the confidential communications of CIs and police officers, and the
constitutional right of the accused to make full answer and defence.
[36]
When Step Six is invoked, the trial judge provides defence counsel
with a summary of the redacted portions of the ITO:
Garofoli
, at p.
1461. The summary is usually drafted by the Crown and is then vetted by the
judge before it is provided to the defence.
[37]
A summary is just that: By its very nature, a summary is general,
not detailed. Its predominant characteristics are conciseness and brevity:
Reid
(2016), at para. 88. However, the summary must provide the accused with
sufficient information to mount both a facial and sub-facial challenge to the
ITO, and to question whether the affiant made full and frank disclosure
regarding the reliability of the CI and of their tips:
Crevier
, at
para. 83. This would also include information related to the three
Debot
factors, namely whether the CI is credible, and whether the information is
compelling and corroborated:
Crevier
, at para. 84.
[38]
In determining whether or not to uphold a warrant, the trial judge
can consider the unredacted ITO, but only if satisfied that the accused is
sufficiently aware of the nature of the redacted material such that they can
mount a challenge in argument or by evidence. Put another way, the judicial
summary of the redacted material provided to the accused, combined with the
redacted ITO, must be enough to ensure that the accused is in a position to
exercise his or her right to make full answer and defence. Only then can step
six be employed:
Crevier
, at para. 43.
[39]
Once in receipt of the judicial summary, the defence, using evidence
from Crown disclosure, evidence from the preliminary hearing, and/or evidence
from other sources, such as cross-examination of the ITOs affiant, may attempt
to persuade the trial judge that the unredacted ITO cannot justify the issuance
of the warrant.
(d)
The standard of review on
Garofoli
applications
[40]
A trial judges decision on a
Garofoli
application is
entitled to deference. An appellate court should not interfere with that
decision in the absence of an error of law, a misapprehension of the evidence,
or a failure to consider relevant evidence:
R. v. Reid
, 2017 ONCA 430,
at para. 8.
(2)
Application of the principles
[41]
It is important to contextualize this case in the evolution of the
Garofoli
Step Six jurisprudence. This courts judgment in
Rocha
was released
more than a year after the ITO was sworn on June 13, 2011. Thus, while the
trial judge had the benefit of
Rocha
when he heard the application in late
2012 and early 2013, and when he issued his reasons on July 30, 2013, the
affiant of the ITO did not have the benefit of
Rocha
s guidance when
he swore the ITO. Moreover, the development of the
Garofoli
jurisprudence
was at a relatively early stage at the time the application was heard. As
defence counsel put it, they were in a new frontier of the law.
[42]
I now turn to the requirements of
Debot
, set out earlier.
(1)
The
Debot
Factors
(i)
Was the CI credible?
[43]
While the three Cs of
Debot
are to be considered
together, I agree with the appellant that if the CIs credibility is weak, it
can impact the assessment of the other two factors. Evidence that appears to be
compelling may be rendered less so if the credibility of the CI is weak. Corroboration
of evidence of low credibility obviously carries less weight than corroboration
of evidence of high credibility.
[44]
Typically, the authorizing justice will be concerned to know the
CIs criminal record, their track record in providing useful information to
police, and whether they had a particular motive for providing the information
to police.
[45]
Here, the appellant notes that the affiant did not disclose the full
criminal record of the CI, or whether there were any outstanding charges, to
the authorizing justice. The affiant simply stated that the CI had no
convictions, to date, for perjury related offences. The affiant testified that
at the time of drafting the ITO, it was not his practice to inquire about the
CIs criminal record, and that he obtained the information stated above from
the CIs handler. He candidly acknowledged, on cross-examination, that the
language he had used to describe the CIs criminal record was no longer part of
the acceptable lexicon.
[46]
The appellant argues that in light of
Rocha
, the affiants
odd language and omissions with respect to the CIs criminal record made the
CIs credibility weak. The appellant emphasizes that the Crown counsel at trial
had conceded the ITOs insufficient details, and that the trial judge had criticized
the same in his decision. The appellant asserts that the trial judge failed to
explain how he came to his conclusion about the CIs credibility, and draws our
attention to the affiants other omissions.
[47]
In particular, the appellant submits that the affiant failed to disclose
any motive the CI might have had for assisting police, such as financial or
other consideration, public spiritedness, or some form of
animus
.
There was also no meaningful information as to the CIs reliability, whether
the CI had previously provided false or unreliable information, or whether the
CIs tips had led to convictions in the past.
[48]
The Crown acknowledges that there is some merit to the appellants
submissions about the embarrassing shortcomings in the ITO. The language is
sloppy, referring, for example, to the appellant having a previous conviction
for first-degree murder when, in fact, he had been charged with first-degree
murder, but convicted of second-degree murder. In addition, the Crown noted
that the affiants failure to disclose the CIs criminal record was
inexcusable. However, unlike the trial Crown, the appeal Crown did not concede
that the CIs credibility was weak. He submitted that the trial judge was alive
to all these shortcomings, and yet he made no finding that the affiant
deliberately misled the authorizing justice.
[49]
I am inclined to agree with the Crowns position. The redacted ITO
stated that:
The [CI] has provided information to police in
the past and has been assigned a confidential source number. There is no
indication that the information provided would be false or malicious in nature
as the confidential source has been proven in the past to be
reliable
. [Emphasis added.]
[50]
Moreover, the judicial summary disclosed that the [CI] is a carded
or registered informant of the Toronto Police Service, and that the
information provided by the [CI] has lead [
sic
] to the seizure of
several firearms. The fact that the CI was formally registered on police records
spoke to their reliability, as did the fact that the CI had previously provided
information leading to the seizure of firearms the very crime at issue here. While
it would have been preferable for the affiant to have included information
about the CIs motive, it can be inferred that the CI had some motive for
providing the information, although no motive for providing false or misleading
information, and a history of providing reliable information.
[51]
In summary, while the trial judge did not thoroughly explain why he
found the CI to be credible, and while there were some shortcomings in the
affiants disclosure of the CIs criminal record, track record, and motive,
these were balanced by the CIs history as a registered police informant with
a record of providing reliable information that had led to the seizure of
firearms. Deference is owed to the trial judges conclusion on this factor.
(ii)
Was the CIs information corroborated?
[52]
The appellant submits that the police only corroborated the CIs
information in relation to neutral details that would have been known to
anyone. Specifically, the police corroborated:
·
the colour and make of the appellants vehicle
a four-door green Acura;
·
the description of the appellants appearance
a black male in his twenties, 5 7 tall, medium build; and
·
the fact that the appellant was a drug dealer
and hung out in the Jane and Finch area of Toronto.
[53]
I agree with the respondent that the corroborative effect of some of
this information is minimal when viewed in isolation. However, the information
cannot be viewed in isolation. When taken together, as it must be, the
information of the CI was corroborated by the polices independent inquiries. A
police database check confirmed the appellants birth date, and the fact that
he owned a four-door green Acura. The ITO also disclosed that the affiant had obtained
police Field Information cards, indicating that the appellant had been
observed on March 23, 2010, February 15, 2011, and April 2, 2011 in the Jane
Street area. On one of those occasions, the appellant produced his drivers
licence as identification, and on two of those occasions, he was observed in the
Acura registered under his name.
[54]
In addition, on two occasions in May 2011, police observed the
appellant at 121 Dollery Court, the location where his welfare payments were
sent. On the first occasion, May 17, he was observed leaving the dwelling,
entering the Acura which was parked in the driveway, and driving away. On the
second occasion, May 30, he was observed leaving the dwelling, walking up to
the drivers side of the vehicle, removing something from the front of the
vehicle, placing it under his sweater, and returning to the dwelling.
[55]
As this court explained in
MacDonald
, at para. 20, police
are not obliged, before conducting the search, to confirm the very criminality
alleged by the tipster. There was, therefore, corroboration of the CIs information
on the appellant. The police confirmed the fact that the appellant drove a
four-door green Acura, and that he hung out in the Jane and Finch area.
Although the CI was not able to identify the appellants residence, police were
able to corroborate the appellants ownership of the Acura and his connection
to 121 Dollery Court, where they observed both the appellant and his Acura.
(iii)
Was the CIs information compelling?
[56]
The appellant submits that he has limited ability to assess whether
the CIs information was compelling because the redactions were substantial,
and the judicial summary was thin. He argues that, based on the information
available to him, there was no compelling evidence to indicate that a firearm
would be found in either the Acura or the residence at 121 Dollery Court at the
time of the search. He relies on
Herta
, at para. 51, in which this
court found that the CIs statement that the accused would not go anywhere
without the gun was not sufficiently compelling to justify a search at any
location the accused had attended as [t]his would have turned [the accused]
into walking, ready-made grounds for belief.
[57]
To assess whether the information was compelling, it is necessary to
examine both the redacted ITO and the judicial summary. The summary indicates
that the CI had been in the appellants presence many times; that the CIs
information about the firearm was detailed and specific; that the means of
the CIs knowledge was disclosed; and that the CIs information was current. The
summary also mentioned that the CI had advised his handler that wherever
Jeffrey Brown is, the firearm is.
[58]
This information is compelling because it established that the CI
was familiar with the appellant, that the CIs observations were first-hand,
and that the information was current. The CI was able to give a detailed and
specific description of the firearm, which indicated that the CI had personally
seen it. Furthermore, the appellant confirmed to the CI that he always had the
firearm with him. Read together, the redacted ITO and the judicial summary established
that the CIs information was compelling.
[59]
Despite the appellants submissions, I do not regard this as a case
similar to
Herta
. In
Herta
, there was little information
about the CIs credibility, and the court found that corroboration was weak.
The court rejected the proposition that if a CI has seen someone with a gun at
some point in the past, [it] means a search warrant can necessarily [be issued]
for any place attended by that person in the future. In this case, the CIs similar
statement was based not on speculation, but on what the appellant had said
about his own possession of his weapon: effectively, I carry it wherever I
go.
(iv)
Conclusion on the
Debot
factors
[60]
In conclusion, the trial judge was alive to the shortcomings in the
ITO, and appropriately recognized that some of them were attributable to the lack
of judicial guidance at the time of its preparation. The trial judge applied
the
Debot
factors and did not find that the shortcomings reflected a
deliberate attempt by the police to mislead the authorizing justice. The trial
judge concluded that the information in the ITO was credible, compelling, and
corroborated. The trial judges reasons demonstrate no misunderstanding of the
evidence and no error of law. The trial judges decision is entitled to
deference. I would not give effect to this ground of appeal.
(a)
Garofoli
Step
Six
[61]
The appellant submits that the trial judge committed two additional
errors in applying
Garofoli
Step Six. First, the trial judge failed to
appreciate that the judicial summary was inadequate; and second, the trial
judge relied on information that was contained in the unredacted ITO and was
not summarized. I do not accept either submission.
[62]
On the first point, I note that the appellant not only had the
benefit of the judicial summary, but also of a cross-examination of the
affiant, which was conducted with leave of the trial judge. More importantly,
the judicial summary complied with the suggestions set out in
Crevier
.
It described the
nature
of the redacted
information. The appellant, armed with the ITO, the judicial summary, and the
cross-examination, had sufficient information to mount a facial or subfacial
challenge to the ITO, and to argue that the requirements of
Debot
had
not been met. That his challenge failed was not due to his inability to effectively
challenge the ITO.
[63]
On the second point,
Crevier
, at para. 90, states that [t]o
the extent that the accused is not sufficiently equipped to challenge certain
redactions, the trial judge must not consider them. The trial judge followed
Crevier
and made it clear that his reference to the unredacted ITO was an alternative
in case he erred in his analysis of the
Debot
factors. As I would
uphold his analysis on the
Debot
factors, I consider it unnecessary to
address this submission.
(b)
Other issues
[64]
Although the trial judge suggested a Step Seven to
Garofoli
,
which would permit an appellate court to review the unredacted ITO, I do not
find it necessary to address that issue, and have not opened the sealed ITO
packet.
[65]
Nor do I find it necessary to address the respondents alternative
submission that exigent circumstances permitted the police to conduct a
warrantless search of the appellants car, pursuant to ss. 487.11 and 495(1)(a)
and (b) of the
Criminal Code
.
G.
Disposition
[66]
For these reasons, I would dismiss the appeal.
Released: February
26, 2021 G.R.S.
George R. Strathy C.J.O.
I agree. David Watt J.A.
I agree. B. Zarnett J.A.
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