Hello again,

The Court of Appeal released a number of interesting decisions this week.  In Meridian Credit Union Limited v. Baig, the Court confirmed that silence and half-truths can amount to misrepresentation, and found a purchaser had engaged in fraudulent misrepresentation by silence in the context of a court-approved sale of assets by a receiver.   Other topics addressed by the Court include entitlement to commissions, and the high threshold that must be met to permit an action against a monitor and/or receiver.

Table of Contents

Civil Decisions

Meridian Credit Union Limited v. Baig, 2016 ONCA 150

Keywords: Real Property, Creditor and Debtor, Court Appointed Receiver, Sale of Land, Fraudulent Misrepresentation, Misrepresentation by Silence, Corporate Veil, Hryniak v Mauldin, Intervener, Fresh Evidence, audi alteram partem

Crate Marine Sales Limited (Re), 2016 ONCA 140

Keywords: Bankruptcy, Receivership, Occupancy, Leave to Appeal, Bankruptcy and Insolvency Act, s. 193(c) & (e)

Holmes v. Schonfeld Inc., 2016 ONCA 148

Keywords: Civil Procedure, Tax, Income Tax, Administration and Enforcement, Creditors and Debtors, Receivers, Court Appointed Receivers, Motion to Dismiss, Leave Nunc Pro Tunc

Kloos v. Tangas, 2016 ONCA 149

Keywords: Commercial Law, Mortgage, Fraudulent Conveyance, Fraudulent Preference, Litigation Guardian, Doctrine of Laches, Estoppel, Perry, Farley & Onyschuk v. Outerbridge Management Ltd.

Dysart, Dudley, Harcourt, Guilford, Harburn, Bruton, Havelock, Eyre and Clyde (United Townships) v. Mohammed, 2016 ONCA 153

Keywords: Vexatious Litigant, s. 140(1) Courts of Justice Act, Motion for Extension of Time to File Appeal, Res Judicata, Abuse of Process

First Contact Realty Ltd. (Royal LePage First Contact Realty) v. Prime Real Estate Holdings Corporation, 2016 ONCA 156

Keywords: Real Estate law, Motion for Summary Judgment, Hyrniak Principles, Finding of Fact, Real Estate Commission, Restraint Order, Marijuana Grow-op, Controlled Drugs and Substances Act

Gray v. Rizzi, 2016 ONCA 152

Keywords: Family Law, Retroactive Variation Order, Divorce Act s.17, Material Change in Circumstances, Elimination of Child and Spousal Support Arrears, Overpayment of Support, Repayment Financial Hardship, D.B.S. v. S.R.G., L.M.P. v. L.S.

2274659 Ontario Inc. v. Canada Chrome Corporation, 2016 ONCA 145

Keywords: Standard of Review, Correctness, Remedy, Palpable and Overriding Error, Mining Act, S. 50(2), S. 51(1), Statutory Interpretation

Spylo v. Spylo, 2016 ONCA 151

Keywords: Estate Law, Trusts, Secret Trust, Lack of Evidence, Judicial Impartiality, Apprehension of Bias

Children’s Aid Society of Toronto v. L.T. (Publication Ban), 2016 ONCA 146

Keywords: Child Protection, Motion to Dismiss for Delay, Adjournment, Best Interest of the Child

Murphy v. Wheeler, 2016 ONCA 166

Keywords: Civil Litigation, Mortgage, Equitable Mortgage, Unregistered Amending Agreements, Proceeds of Sale,  Interest, Costs

Warburg-Stuart Management Corporation v. DBG Holdings Inc., 2016 ONCA 157

Keywords: Contracts, Contract Interpretation, Advisory Services, Lending, Joint and Several Liability, Costs, Partial Indemnity, Summary Judgement

Civil Decisions

Meridian Credit Union Limited v. Baig, 2016 ONCA 150 

[Strathy C.J.O., LaForme and Huscroft JJ.A.]

Counsel:

Milton A. Davis and John Adair, for the appellant

J. Anthony Caldwell, for the respondent

Clifford Lax, Q.C., James Renihan and Linda Galessiere, for the interveners Miller Thomson LLP and Peter Kiborn

Keywords: Real Property, Creditor and Debtor, Court Appointed Receiver, Sale of Land, Fraudulent Misrepresentation, Misrepresentation by Silence, Corporate Veil, Hryniak v Mauldin, Intervener, Fresh Evidence, audi alteram partem

Facts:

Ahmed Baig, the appellant, agreed to purchase a building located at 984 Bay Street, Toronto (the “Property”), from the court appointed receiver and manager of the Property (the “Receiver”) for $6.2 million (the “Agreement”). Unknown to the Receiver and prior to closing, the appellant agreed to re-sell the Property to Yellowstone Property Consultants Corp. (“Yellowstone”) for $9 million. The appellant retained Miller Thomson LLP (“Miller Thomson”) where Peter Kiborn acted for him in structuring the transaction.

To avoid land transfer tax, Kiborn recommended that title to the Property be transferred directly to Yellowstone. The Receiver erroneously believed Yellowstone was the appellant’s corporation incorporated for the purposes of the Agreement. Neither Kiborn nor the appellant corrected this misunderstanding. Had it known, the Receiver claims it would not have recommended approval of the sale to the court in the receivership proceeding. However, it obtained court approval for the Agreement and the transaction closed.

Meridian Credit Union Limited (“Meridian”), the respondent, discovered the re-sale and informed the Receiver. As Meridian had not recovered the full amount owing to it in the receivership proceeding, the Receiver assigned its cause of action against the appellant to Meridian. Meridian then commenced the within action against the appellant.

In the decision under appeal, the motion judge dismissed the summary judgment motion brought by the appellant and instead found him liable for fraudulent misrepresentation.

Issues:

(1) Did the motion judge err by finding the appellant personally liable for fraudulent misrepresentations?

(2) Did the motion judge err by concluding that the interveners had made misrepresentations in their absence?

(3) The interveners also seek to introduce fresh evidence on appeal.

Holding: Appeal dismissed.

Reasoning:

(1) No. The court cited the test for civil fraud from Hryniak v Mauldin, 2014 SCC 7 and found there was sufficient evidence to prove all four elements and to find the appellant personally liable. Further, the motion judge’s findings were reasonable and amply supported by the evidence before him. First, the record disclosed that the appellant engaged in actions that amounted to misrepresentations. Second, the appellant had some level of knowledge about the misrepresentations. Third, the representations caused the Receiver to seek court approval and to transfer title directly to Yellowstone. Lastly, as a result of the misrepresentations, the Receiver lost an opportunity to negotiate a higher price with the appellant or another party. The lost opportunity is a sufficient loss to ground a claim for civil fraud.

As it relates to the appellant’s submission that he was protected by the corporate veil, the court found it inappropriate that the appellant tried to withdraw the concession made before the motion judge that he would be liable for any tortious misrepresentation made by his lawyers. In addition, the court stated it was consistent law in Canada that officers, directors and employees of corporations are responsible for their tortious conduct even if done in the best interests of the company.

(2) No. The interveners relied on the principle of audi alteram partem, composed of two elements: a right to be heard by a decision-maker, and a right to notice of a hearing sufficient in time and substance to enable a party to present their case. The court did not find the interveners had a right to be heard or to receive notice in this case.

The court stated audi alteram partem applies whenever a person’s rights, interests, or privileges are affected by a decision. As non-parties to the action, the interveners were not directly impacted by the order. They were not bound by the motion judge’s finding that they made fraudulent misrepresentations. The only tangible manner in which the court found they were impacted was indirect: now with the appellant liable for damages, the interveners were exposed to a greater risk that they may be found liable for a portion of the appellant’s liability.

The court reiterated the principle that the common law does not provide non-parties with the right to notice, to adduce evidence, or to make submissions whenever an adverse credibility finding may be made in judicial proceedings that involve them. Non-parties are limited to whatever procedural rights they have under the rules.

(3) Lastly, the fresh evidence application failed because the evidence was irrelevant to the validity of the process followed by the motion judge and the criteria in R v Poulos does not apply. Further, the criteria in R v Palmer also does not apply for similar reasons, because the interveners’ belief is irrelevant to the issues raised. Therefore, the fresh evidence could not have affected the results of the motion below.

Crate Marine Sales Limited (Re), 2016 ONCA 140 

[Hourigan J.A. (In Chambers)]

Counsel:

Harvey G. Chaiton and Doug Bourassa, for Crawmet Corp., the moving party

James P.  McReynolds, for the appellant 2124915 Ontario Inc.

R. Brendan Bissell, for the A Farber & Partners Inc., the Receiver

Keywords: Bankruptcy, Receivership, Occupancy, Leave to Appeal, Bankruptcy and Insolvency Act, s. 193(c) & (e)

Facts: The appellant, 2124915 Ontario Inc., brought a motion seeking a declaration that that the receiver occupied Lagoon City Marina for a specified period and an order that the receiver pay occupation rent. The motion judge held that the receiver did not occupy the marina and that if rent was owed; it should be reduced by whatever the receiver paid for utilities. The motion was dismissed.

At issue was whether the appellant requires leave to appeal.

Issues:  Does the appellant require leave to appeal the order pursuant to s. 193(e) of the Bankruptcy and Insolvency Act or is there an automatic right of appeal pursuant to s. 193(c)?  Under s. 193(c), if the property involved in the appeal “exceeds in value ten thousand dollars”, then leave is not required.

Holding: Motion dismissed. No leave required.

Reasoning:  The appellant argued that it has an automatic right of appeal pursuant to Section 193(c) of the Bankruptcy and Insolvency Act (“BIA”) and the moving party argued that leave was required under s. 196(e).

The court identified two principles that have emerged from case law that establish the parameters for the interpretation of s. 193(c).  First, the broad nature of the stay imposed by s. 195 of the BIA requires the right of appeal under s. 193(c) to be clearly applicable and narrowly construed. Second, the appeal must directly involve property exceeding $10,000 in value.

The moving party cited cases in which the property was secondary to the appeal.  Fundamental to the within appeal was the issue of property with a value of far more than $10,000 that is directly involved with this appeal.  Accordingly, leave was not required, and the appeal was directed to proceed without the requirement of leave of the court of appeal.

Holmes v. Schonfeld Inc., 2016 ONCA 148 

[Weiler, LaForme and Huscroft JJ.A.]

Counsel:

Marc Munro, for the appellants Scott Holmes and Jennifer Flynn

Frank Bowman and Deepshikha Dutt, for the appellant Bossy Nagy Geoffrey (BNG), previously known as the Michael Bossy Group

Aubrey Kauffman and Dylan Chochla for the respondent Schonfeld Inc.

Keywords: Civil Procedure, Tax, Income Tax, Administration and Enforcement, Creditors and Debtors, Receivers, Court Appointed Receivers, Motion to Dismiss, Leave Nunc Pro Tunc

Facts:

This action relates to the litigation involving Holmes, Flynn, their companies and others, against the Canadian National Railway Company (“CN”). In August 2008, CN obtained a Mareva Order and an Anton Pillar order against Holmes and Flynn and their companies (the “Monitored Parties”).

Shortly thereafter, Schonfeld was appointed Monitor and Receiver over the assets, undertaking and properties of the Monitored Parties. After Schonfeld was discharged, Holmes and Flynn were told by the Canada Revenue Agency (“CRA”) that, following a reassessment, they owed over one million dollars in unpaid taxes. The liability arose because Holmes and Flynn failed to repay loans made to them by their corporations; when not repaid within one year, the loans were considered income and taxed as such resulting in the assessment for unpaid taxes.

Holmes and Flynn brought an action against Schonfeld, claiming that Schonfeld did not exercise reasonable care in managing Holmes and Flynn’s assets, and that Schonfeld was obliged to engage in reasonable tax planning.  Holmes and Flynn also sued Bossy Nagy Geoffrey (“BNG”), their accountants and tax advisers before and during the receivership. BNG also sought leave to bring a Crossclaim (or, alternatively, a Third Party Claim) against Schonfeld.

Schonfeld successfully brought a motion to dismiss all claims against it because Holmes and Flynn’s action was commenced without Schonfeld’s consent and without leave of the court (one or the other of which was required when reading together the terms of the Monitor Order, Receiver Order and Discharge Order).

BNG’s motion for leave was dismissed because there was no foundation for a claim that Schonfeld’s conduct constituted a “very marked departure” from the standards by which a reasonable and competent receiver in the same circumstances would have conducted itself, nor was there a foundation for the claim that Schonfeld conducted itself with reckless indifference or in a manner that it knew was wrong.  This onus on BNG in order to obtain leave to claim against Schonfeld arose out of the terms of the orders releasing Schonfeld of liability, excepting gross negligence and wilful misconduct.

Issues:

The appellants Holmes and Flynn raised the following issues:

(1) Did the motions judge err in law in concluding that leave was required?

(2) Did the motions judge misapprehend the evidence and/or fail to consider relevant evidence?

(3) Did the motions judge apply the wrong test for granting leave?

(4) Did the motions judge err in concluding that the appellants Holmes and Flynn had not met the test for leave?

The appellant BNG raised the following issues:

(1) Did the motions judge err in concluding that the “strong prima facie case” standard should be applied to BNG?

(2) Did the motions judge err in failing to take into account the totality of evidence in concluding that BNG’s claim against Schonfeld was without foundation and was frivolous and vexatious?

(3) Did the motions judge exceed its jurisdiction on a leave motion when he concluded that Schonfeld’s conduct did not meet the test for gross negligence?

Holding: Appeal Dismissed.

Reasoning:

Holmes and Flynn’s Appeal

(1) No. Properly interpreted, Schonfeld as Receiver was entitled to the protections of Paragraph 7 of the Monitor Order which stated that no proceeding shall be commenced against the Monitor without the Monitor’s consent or leave of the court. The appellants relied on the Receiver Order to bring the action, but the court found the Receiver Order was supplemental to the Monitor Order and leave was required.

(2) No. First, there was ample evidence to support the motions judge’s finding of fact that the tax liabilities began prior to Schonfeld becoming involved in the matter.

Second, the powers and authorizations given to Schonfeld as Receiver and Monitor were detailed and precise. Had Schonfeld moved funds as the appellants submit it ought to have done, it would not have been in compliance with the orders.

Third, there was evidence to support the trial judge’s finding that Schonfeld’s mandate as Monitor and Receiver did not include providing the type of services to Holmes and Flynn that they complained they did not receive.

Lastly, the motions judge was entitled to consider that Holmes and Flynn had actual knowledge of their shareholder loans, but Schonfeld did not.

(3) No. In such circumstances, the test was whether the Receiver “demonstrated a very marked departure from the standards by which responsible and competent people in such circumstances would have acted or conducted themselves, or in a manner such that it knew what it was doing was wrong or was recklessly indifferent in its conduct” (Alberta Treasury Branches v Elaborate Homes Ltd, 2014 ABQB 350). This was the proper test and the motions judge applied it.

(4) No. The court upheld the motions judge’s findings of fact, and his conclusion that there was no foundation for a claim in gross negligence or wilful misconduct. Accordingly, the motions judge did not err in concluding that Holmes and Flynn should not be granted leave to commence their action against Schonfeld.

BNG’s Appeal

The motions judge observed that the strong prima facie case standard may be appropriate where the issues raised in the action could have been raised in the discharge proceedings, and concluded that the reasonableness of Schonfeld’s conduct from a tax planning perspective and the potential tax liability of Holmes and Flynn were issues that could have been raised in the discharge proceedings.

BNG was a third party to the receivership and was not present at the discharge hearing. However, it was barred from instituting proceedings in negligence by the release clause of the discharge order. The release clause allowed the court to protect the discharged receiver, a former court officer, from claims arising out of the exercise of its role (Ed Mirvish Enterprises Ltd. v. Stinson Hospitality Inc., 2009 CanLII 55113).

While the allegedly negligent conduct BNG raised may be different than the allegations of negligence pleaded by Holmes and Flynn, the court found all of this conduct could have, and should have, been raised by Holmes and Flynn during the course of the discharge proceedings.

The court held that BNG could not do indirectly – hold Schonfeld responsible for Holmes and Flynn’s losses – what Holmes and Flynn could not have done directly. Given the motion judge’s conclusion that Holmes and Flynn had not made out a prima facie case, and so accordingly should not be granted leave nunc pro tunc, this was sufficient to also dispose of BNG’s claim.

Kloos v. Tangas, 2016 ONCA 149 

[Gillese, Hourigan and Brown JJ.A.]

Counsel:

Alfred Schorr, for the appellant

Constantine Alexiou and Ann Hatsios, for the respondent

Keywords: Commercial Law, Mortgage, Fraudulent Conveyance, Fraudulent Preference, Litigation Guardian, Doctrine of Laches, Estoppel, Perry, Farley & Onyschuk v. Outerbridge Management Ltd.

Facts:

Between 1999 and 2003, Tangas borrowed significant monies from Kloos and granted her various mortgages on his residence. In April 2001, Tangas executed a promissory note in favour of his mother for $90,000 and one month later granted her a collateral mortgage on his residence for $90,000 (“Dom Mortgage”), allegedly in return for monies she had advanced to him over the years.

Following the discharge of Kloos’ 1999 Mortgage, two of the mortgages Tangas granted her stood in third place on title, subordinate to a first mortgage to a bank and the $90,000 Dom Mortgage. Master McAfee issued a report in 2013 finding that Tangas did not make a single payment to Kloos on her loans to him from 2001 onward and that the Dom Mortgage was a fraudulent conveyance and therefore void.  The report was confirmed by Order of Justice Myers in 2014.  It is this Order that is the subject of the appeal.

Dom appealed on the basis that (1) the motion judge erred in upholding the Master’s finding that Kloos was not estopped from raising the issue of the validity of the Dom Mortgage and (2) that the motion judge erred in failing to find that Kloos’ delay in challenging the validity of the Dom Mortgage gave rise to laches.

Issues:

(1) Did the motion judge err in upholding the finding that Kloos was not estopped from raising the issue of the validity of the Dom Mortgage?

(2) Did the motion judge err in failing to find that Kloos’ delay in challenging the validity of the Dom Mortgage gave rise to laches?

Holding: No to both – Appeal Dismissed.

Reasoning:

(1) Dom contended that when Kloos took mortgages from Tangas, she was aware that they were subordinate to the Dom Mortgage. However, Kloos did not become aware of this until 2010, during discoveries in her own mortgage enforcement action. The Court thus found no merit in Dom’s argument that Kloos’ silence constituted acquiescence.

The Court also refused to accept that Dom had suffered any prejudice from Kloos’ delay in challenging the validity of the Dom Mortgage. There was no evidence regarding advances of money from Dom to Tangas and, as his mother’s litigation guardian, it was open to Tangas to locate banking records if they existed. Finally, Master McAfee did not accept Tangas’ evidence that he had borrowed money from his mother and the Court of Appeal found no basis to interfere with this finding.

(2) At the hearing, appellant’s counsel acknowledged that the timing of events brought them within the analytical framework regarding laches pursuant to Perry, Farley & Onyschuk v. Outerbridge Management Ltd., but argued that delay can amount to laches without prejudice.  However, Perry, Farley & Onyschuk v. Outerbridge Management Ltd. held that “[a] party relying on the defence [of laches] must show a combination of delay and prejudice.” Thus, delay without prejudice could not give rise to laches.

Dysart, Dudley, Harcourt, Guilford, Harburn, Bruton, Havelock, Eyre and Clyde (United Townships) v. Mohammed, 2016 ONCA 153 

[Gillese, Hourigan and Pardu JJ.A.]

Counsel:

Jameel Mohammed, acting in person

Nikita Rathwell, for the responding party Her Majesty the Queen in Right of Ontario

No one appearing for the responding party the Corporation of the United Townships of Dysart, Dudley, Harcourt, Guilford, Harburn, Bruton, Havelock, Eyre and Clyde

Keywords: Vexatious Litigant, s. 140(1) Courts of Justice Act, Motion for Extension of Time to File Appeal, Res Judicata, Abuse of Process

Facts: The moving party, Mr. Mohammed, was the subject of two separate applications to have him declared a vexatious litigant. One application was brought by Her Majesty the Queen and the other by the Corporation of the United Townships of Dysart, Dudley, Harcourt, Guilford, Harburn, Bruton, Havelock, Eyre and Clyde. The applications were heard together, and Mr. Mohammed was declared a vexatious litigant pursuant to s. 140(1) of the Courts of Justice Act. Mr. Mohammed brought a motion to extend the time to file an appeal which was dismissed. Mr. Mohammed then brought another motion for the same relief which was also dismissed. A further motion to the same effect was again brought and dismissed.

Issues: Should the moving party be granted an extension of time to file notices of appeal?

Holding: Motion dismissed.

Reasoning: The matter was res judicata and the motion was an abuse of process.

First Contact Realty Ltd. (Royal LePage First Contact Realty) v. Prime Real Estate Holdings Corporation, 2016 ONCA 156 

[Gillese, Hourigan and Brown JJ.A.]

Counsel:

Richard Quance, for the appellant

Eric Gionet, for the respondent

Keywords: Real Estate law, Motion for Summary Judgment, Hyrniak Principles, Finding of Fact, Real Estate Commission, Restraint Order, Marijuana Grow-op, Controlled Drugs and Substances Act

Facts:

The plaintiff/respondent (“Royal LePage”) worked with the defendant/appellant (“Prime”) on a number of real estate transactions. Prime was interested in a property in Barrie that was once a Molson Brewery but became a substantial marijuana grow-op. A restraint order was placed against it under the Controlled Drugs and Substances Act requiring the owner to obtain written consent from the Attorney General Canada before dealing with the property. This caused complications and significant delays.

The parties to the action executed three Buyer Representation Agreements covering different time frames. Royal LePage prepared an agreement on behalf of Prime for Prime to purchase the property for $7,350,000. This agreement was eventually terminated by mutual release.

The parties entered into a second agreement of purchase and sale for the Property. The vendor changed and was now First Ontario, who proposed to sell the Property under power of sale provision in its charge against the Property. This agreement closed, and Prime purchased the Property for $7,350,000. Prime refused to pay the real estate commission of approximately $92,000.

Royal LePage sued prime and brought a motion for summary judgment. Royal LePage won the motion, and was awarded approximately $100,000 plus HST, interest and costs.

Issues:

(1) Was the motion judge wrong in her application of the Hyrniak priniples?

(2) Did the motion judge err in her findings of fact?

Holding: Appeal dismissed

Reasoning:

(1) No.  The motion judge was correct in noting that on a motion for summary judgment under rule 20.04 and applying Hyrniak, first the motion judge is to determine if there is a genuine issue requiring trial based only on the evidence before her. The motion judge stated she had no difficulty making the necessary findings of fact and there was no need for a trial to reach a determination on the merits.

(2) No. The motion judge did not err in her findings of fact. The other grounds on appeal rely on the motion judge’s finding of fact, which requires defence. The motion judge gave thorough reasons for rejecting Prime’s argument that the parties terminated the representation agreement.

Gray v. Rizzi, 2016 ONCA 152 

[Sharpe, Brown and Miller JJ.A.]

Counsel:

Cheryl Goldhart and Maneesha Mehra, for the appellant/respondent by way of cross appeal

Peter B. Cozzi, for the respondent/appellant by way of cross-appeal

Keywords: Family Law, Retroactive Variation Order, Divorce Act s.17, Material Change in Circumstances, Elimination of Child and Spousal Support Arrears, Overpayment of Support, Repayment Financial Hardship, D.B.S. v. S.R.G., L.M.P. v. L.S.

Facts: This appeal concerned the principles informing a retroactive variation order under s. 17 of the Divorce Act. In this case, the variation granted by the trial judge resulted in the elimination of substantial child and spousal support arrears and imposed substantial repayments from recipient to payor. Nadine Ellen Gray and Mario Rizzi were married in 1989, and had two children. Nadine commenced an application for divorce in 2003. A Final Order was made dealing with custody, access, child support, and spousal support in 2005. The Final Order granted Nadine sole custody of both children and placed Mario’s access to the children in her sole discretion. It imputed annual income to Mario in the amount of $133,000. Finally, it ordered Mario to pay monthly child support of $1,584.00, monthly spousal support of $2,874.00, all retroactive to the date of separation.

In 2009, Mario brought a motion to change the Final Order pursuant to s. 17 of the Divorce Act on the ground that Mario had experienced a material change in circumstances as a result of a significant reduction in his income. In 2014, the motion was disposed of by a Variation Order. The trial judge held that Mario had demonstrated he experienced a material change in circumstances, which justified a reduction in his child and spousal support obligations retroactive to the date of the parties’ separation. Re-calculations eliminated about $320,000 in support arrears owed by Mario. It also imposed on Nadine an obligation to reimburse Mario a significant amount for overpayment of support. On appeal, Nadine asks that the variation order be set aside and Mario’s motion to change be dismissed.  Both parties appeal from the trial judge’s cost award of $15,000 in favour of Mario.

Issues:

(1) Did the trial judge err in relying on events that pre-dated the Final Order to grant a variation?

(2) Did the trial judge err in making retroactive adjustments to Mario’s child support obligations?

(3) Did the trial judge err in making retroactive adjustments to Mario’s spousal support obligations?

(4) Did the trial judge err in awarding Mario costs of $15,000?

Holding: Appeal allowed. Portions of child and spousal support obligations in the Variation Order set aside. In their place, order granted varying the Final Order. Costs granted to Nadine Ellen Gray.

Reasoning:

(1) Yes. The trial judge improperly relied on events that pre-dated the Final Order to conclude that Mario had met the threshold for a variation of support under the Divorce Act s.17. In so doing, the trial judge committed an error in principle. The trial judge also improperly reviewed the correctness of the Final Order by impermissibly substituting her view about what order should have been made at first instance. The trial judge further erred in accepting that a motion to change is available to a payor on the basis of financial information that is new to the court simply because the payor had failed to meet his prior financial disclosure obligations. However, the trial judge properly considered all of the evidence and made no errors in calculating Mario’s income for the period 2006 – 2012. It was clear from her findings that Mario experienced a significant and sustained reduction in his annual income that constituted a material change in Mario’s means and circumstances, meeting the threshold for a variation of the Final Order during that time period.

(2) Yes. In D.B.S. v. S.R.G, the Supreme Court of Canada identified four factors that a court should consider before making a retroactive child support order: (i) the reason why a variation in support was not sought earlier; (ii) the conduct of the payor parent; (iii) the circumstances of the child; and (iv) any hardship occasioned by a retroactive award. Although the factors require some minor alteration to suit circumstances where the payor’s income has gone down, not up, the fundamentals still apply.  Accordingly, the trial judge erred in principle in concluding that she need not consider the factors identified in D.B.S. Although the evidence supported the conclusion that Mario’s change in circumstances contributed, to an extent, to his inability to make all ordered support payments, the evidence did not support a finding that Mario would not be able to pay the arrears in the future. By not considering the D.B.S. factors in the variation analysis, the trial judge erred in failing to advert to the fact that the elimination of support arrears would require Nadine to repay Mario a substantial amount of the support previously paid, causing financial hardship. Mario was not entitled to any retroactive variation of his child support obligations for his daughter. However, Mario was entitled to variation in child support for his son after 2010 when he started receiving ODSP payments.

(3) Yes. In L.M.P. v. L.S. the Supreme Court of Canada enunciated the approach courts should take to motions to vary spousal support under the Divorce Act by stating that any variation should properly reflect the objectives set out in s. 17, take account of the material changes in circumstances, and consider the existence of a separation agreement and its terms as a relevant factor. The trial judge erred in principle by holding that L.M.P. did not apply because there was no separation agreement, and thereby terminating spousal support. Nadine’s income history indicated that by 2011 she had overcome the economic disadvantages she suffered from the break-down of the marriage and had achieved a level of economic self-sufficiency. There was no basis for retroactively varying Mario’s spousal support obligations before 2012. His delay in pursuing the variation application, his failure to make timely financial disclosure, and his failure to co-operate with the support enforcement agencies, all worked against any earlier retroactive variation date.

(4) Yes. Although there was mixed success by the parties on the issues on this appeal, in the result Nadine was relieved of the obligation under the Variation Order to reimburse Mario for support previously paid, and Mario remained under an obligation to pay substantial, but reduced, support arrears. Given that result, Nadine was entitled to some costs of the motion to change and the appeal. Costs were awarded at $10,000 for the motion to change and $7,500 for the appeal.

2274659 Ontario Inc. v. Canada Chrome Corporation, 2016 ONCA 145 

[Strathy C.J.O., LaForme and Huscroft JJ.A.]

Counsel:

Neal Smitheman, for the appellant

Paul Schabas, Robin Linley and Iris Antonios, for the respondent

John Kelly and Michael Burke, for the intervener

Keywords:  Standard of Review, Correctness, Remedy, Palpable and Overriding Error, Mining Act, S. 50(2), S. 51(1), Statutory Interpretation

Facts: The respondent wanted to build a publicly-accessible road leading to its proposed mine in northern Ontario. The road would cross 108 of the appellant’s mining claims. To obtain the right to build on those claims, the respondent applied to the Minister of Natural Resources under s. 21 of the Public Lands Act for a disposition of the surface rights over portions of the appellant’s claims. It also sought an easement over Crown lands to permit it to build the road. The respondent asked the appellant to consent to an easement. When the appellant refused, the Minister of Natural Resources referred the application to the Mining and Lands Commissioner (the “MLC”) under s. 51(2) of the Mining Act. The MLC dismissed the application, and the respondent appealed as of right under s. 133 of the Mining Act. The Divisional Court allowed the appeal, finding the MLC’s decision, and its interpretation of the Act, were unreasonable. Rather than remit the matter to the MLC, the Divisional Court made an order dispensing with the appellant’s consent.

Issue:

Did the Divisional Court correctly find that the MLC’s decision was unreasonable?

Holding: Appeal dismissed.

Reasoning: Yes, the Divisional Court correctly found that the MLC’s decision was unreasonable. The interpretation given to ss. 50(2) and 51(1) of the Mining Act by the Divisional Court was the only reasonable interpretation of those sections. The Divisional Court properly considered the legislative history and purpose of those provisions. The Divisional Court was correct to hold that it was unreasonable for the MLC to have considered whether the proposed easement to build a road would interfere with the appellant’s plan to build a railway because the appellant could not claim priority for that project under s. 51(1). The Divisional Court was also correct in holding that the application would have been allowed if the Act had been applied in a reasonable manner, since there was no evidence that the proposed easement would interfere with the appellant’s exploration or mining of its claims. The Divisional Court applied the correct legal principles in deciding to substitute its own decision for that of the tribunal’s and did not commit any palpable and overriding errors.

Spylo v. Spylo, 2016 ONCA 151 

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

Counsel:

Brendan Donovan, for the appellants

Jamie Spotswood, for the respondents

Keywords: Estate Law, Trusts, Secret Trust, Lack of Evidence, Judicial Impartiality, Apprehension of Bias

Facts:

The respondent, Gordon Spylo, was named an estate trustee for his parent’s estate following their death.  Gordon and his sister Katherine were named as the beneficiaries.  The appellant, the other son Andrew Spylo, was left nothing in both his parents’ wills.

Andrew argued that a secret trust was created in his favour by the estate trustee Gordon and acquiesced by his sister Katherine.  Andrew also claimed that he had a right to the surplus proceeds from the sale of a property because Gordon held it in trust for Andrew and the appellant, Annemarie Nittel.

The appellants brought a claim against Gordon both in his personal capacity and in his capacity as the estate trustee for the estates of their parents.  The trial judge rejected these claims.

Issues:

(1) Did the trial judge err by finding that there was no secret trust in Andrew’s favour?

(2) Did the trial judge err by concluding that Gordon did not hold the Castlefield property in trust for Andrew after Gordon purchased it from Andrew?

(3) Did the intervention by the trial judge during Andrew’s testimony destroy the image of judicial impartiality?

Holding: Appeal dismissed.

Reasoning:

(1) No.  The appellants relied on evidence relating to the T3 tax forms that showed that money was paid to Andrew from each estate and that these forms which were never provided to Andrew establish the existence of a trust in his favour.  The court rejected this argument on the basis that both parties were self-represented which resulted in a significant evidentiary gap and confusing evidence.  The court found no error in the trial judge’s conclusion that the T3’s had nothing to do with the alleged secret trust.

(2) No.  Andrew provided only one document to support the existence of this trust.  The trial judge drew an adverse inference against him the basis. that he could not produce the original of this document.  The judge made no palpable and overriding error by concluding that he did not believe Andrew’s evidence with respect to the document.

(3) No.  The appellants argued that a single intervention in relation to other judgements against him by the trial judge during Andrew’s testimony “crossed the line” and destroyed the image of judicial impartiality.  This single question about other judgements did not reach the high threshold required for apprehension of bias.

Children’s Aid Society of Toronto v. L.T. (Publication Ban), 2016 ONCA 146 

[Hoy A.C.J.O., Lauwers and Hourigan JJ.A.]

Counsel:

Reide Kaiser, for the appellant father

Caroline Handelman, for the respondent, Children’s Aid Society of Toronto

Catherine Bellinger and Herschel Gold, for the respondent, Office of the Children’s Lawyer representing the Child

Keywords: Child Protection, Motion to Dismiss for Delay, Adjournment, Best Interest of the Child

Facts:

The appellants appealed an order dismissing for delay their appeal of an order obtained by the Children’s Aid Society (“C.A.S.”) in which the appellants lost custody of their daughter.  This order was made following a trial in the Ontario Court of Justice.  The appeal was made to the Superior Court of Justice.

At the time of the dismissal for delay, the daughter was 11 years old and had been in the continuous care of a foster family since 2013. She indicated that she wants to be adopted by her foster family.

During case conferences, C.A.S. discussed the possibility that they would bring a motion to dismiss for delay. C.A.S. attempted a motion to dismiss for delay, but it was adjourned twice at the appellants’ request. The appellants’ wanted yet another adjournment, but the motion judge declined, and dismissed the appeal.

The parents appealed the motion judge’s order arguing that motion judge did not consider and apply all the elements of the test for dismissing an appeal for delay.

The motion judge decided that there was no prospect that the appeal which was scheduled to be heard in three weeks because the appellants were missing key documents (eg an appeal record, factum, and copies of transcripts). An adjournment would not have meant the appeal would be heard in three weeks, and it would have only delayed things further.

Issue: Did the motion judge turn her mind to the merits of the appeal?

Holding: Appeal dismissed.

Reasoning:

The appellants argued that the motion judge did not turn her mind to the merits of the appeal because she did not refer to them in her reasons. Unfortunately, the motion judge did not explicitly state her reasons when she dismissed the appeal for delay.

During oral argument on the appeal, the court asked the parties to address the merits of the appeal from the trial decision. The appellants’ challenges were all fact-based and counsel was unable to point to any legal errors in this regard that were “palpable and overriding.”

The motion judge’s refusal to adjourn the motion to dismiss for delay had no effect on the outcome of this appeal. Because the daughter wants to be adopted by the family, it is in the best interest of the child to bring the proceedings to a close.

Murphy v. Wheeler, 2016 ONCA 166 

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

Counsel:

Kevin Sherkin and Ryan Wozniak, for the appellant 1269825 Ontario Inc.

Michelle Murphy, acting in person

James McReynolds, for the respondent Victoria Wood (Main Square) Inc.

Keywords:   Civil Litigation, Mortgage, Equitable Mortgage, Unregistered Amending Agreements, Proceeds of Sale,  Interest, Costs

Facts:

The matrimonial home of Michelle Murphy (“Murphy”) and John Wheeler (“Wheeler”) had two mortgages on it.  It was registered in Wheeler’s name.

The home was sold, and the first mortgage was paid out in its entirety. The second mortgage granted by the appellant, 1269825 Ontario Inc. (“126”), had a face value of $397,000 and interest of 0%. It was registered on title in July 2010.  At an unspecified date, though after July 2010, Victoria Wood (Main Square) Inc.’s (“VW”) obtained judgment against Wheeler and registered a writ of execution.

There were a series of amending agreements to 126’s second mortgage, none of which were registered on title. The main one increased the principal to $494,785.74 and set the interest rate at 11.75%.

The matrimonial home was placed on the market. Murphy brought an emergency motion in May 2013. The order arising from the motion provided for payment from the proceeds of sale of the matrimonial home to discharge the first mortgage and to pay other expenses, and for payment of $259,500 to the respondent counsel in trust and the balance of the proceeds into court, pending further order. The order discharged from title 126’s mortgage and VW’s writ of execution, thereby enabling the sale to be completed in June 2013. The order provided that it was without prejudice to the rights of the parties and that the priorities of the parties to the funds paid in trust and into court were preserved.

The order was subsequently amended so that 126 received $397,000 from the proceeds of the sale ($259,500 of which was to come from the trust account of VW’s counsel), being the face value of the registered mortgage. The order stated that a motion could be brought to determine, among other things “126’s claims for interest under its mortgage registered against the matrimonial home” and “any and all claims to the proceeds of the sale held in court”.

On a subsequent motion (which is the subject of this appeal), the motion judge ruled against 126’s claim for the additional funds based on the unregistered amendments (about $200,000). Among other things, the motion judge relied on previous submissions made by former counsel for 126 that 126’s security was only for the registered face value of the mortgage (plus interest and costs), and that any additional amount owed to it was unsecured.

126 appealed.

Issues:

(1) Does the Appellant’s claim for principal and interest based on the unregistered  mortgage amendments trump VW’s claim as an execution creditor of John Wheeler (and whose interest arose after the second mortgage was registered), entitling the Appellant to the full amount of its claim, $599,136.74?

(2) Did the motion judge err by awarding costs to the respondent and to Murphy?

Holding: Appeal dismissed.

Reasoning:

(1) No. This submission is inconsistent with the position taken before the court in a hearing leading up to 126’s motion. In the previous hearing, the appellant’s counsel (not current counsel), expressly submitted that only the $397,000 plus interest and costs was secured by the mortgage, and that the rest was unsecured. The motion judge relied on this admission in her reasons, which the Court of Appeal held that she was entitled to do.  The previous statement, and the sharp increase in interest rate (from 0% to 11.75%) belies any serious foundation for an argument that the appellant is entitled to an equitable mortgage.

(2)  No, the costs awarded by the motion judge are deserved. By August 2014, 126 had received, on consent of the other parties, $397,000, which was precisely the full amount of its registered mortgage. Everything it has done since then in an attempt to obtain more money from these matrimonial proceedings has been unsuccessful.

Warburg-Stuart Management Corporation v. DBG Holdings Inc., 2016 ONCA 157 

[Simmons, LaForme and Huscroft JJ.A.]

Counsel:

Douglas D. Langley, for the appellants

Peter I. Waldmann, for the respondent

Keywords: Contracts, Contract Interpretation, Advisory Services, Lending, Joint and Several Liability, Costs, Partial Indemnity, Summary Judgement

Facts:

The appellants retained the respondents, Warburg-Stuart Management Corporation (“Warburg”) to assist them with restructuring their financial affairs.  There were two engagement agreements signed; the building engagement agreement (to obtain mortgage financing) and the operating engagement agreement (to obtain a revolving credit facility).  Schedule A to the operating engagement agreement stated that a $12,500 retainer was required to commence “Advisory Services”.   The engagement agreements would automatically terminate 90 days after the appellants provided certain specified information and documentation to Warburg.

Warburg contacted various financial institutions with financing proposals and in March 2013, approached the appellants’ long-time lender, RBC.  On April 15, 2013, RBC responded with a proposal for refinancing with very similar terms to what Warburg had proposed.

Without informing Warburg, RBC separately delivered a term sheet to the appellants which they eventually signed.

The appellants signed the commitment letter with RBC 91 days after they purported to end their arrangement with Warburg.

Warburg brought a motion for summary judgement for its commission. The motion judge granted the summary judgment on a joint and several basis for commissions owing on the two engagement agreements, but dismissed Warburg’s action against the personal defendants.  The motion judge’s decision was appealed, and the dismissal of the personal action was the subject of a cross-appeal by Warburg.

On the underlying motion, Warburg sought substantial indemnity costs of $73,168.88 based on allegations of reprehensible conduct; or, in the alternative, partial indemnity costs to October 31, 2014 and substantial indemnity costs thereafter, totaling $70,538.79 taking account of offers to settle; or, in the further alternative, partial indemnity costs of $59,376.26.

Taking account of a number of factors, including the fact that Warburg recovered nearly 100% of the amount truly in issue, the motion judge awarded Warburg partial indemnity costs.  However, they were fixed in the amount of $65,000, inclusive of disbursements and applicable taxes.

Issues:

Did the motion judge err in:

(1) Holding that the term “lender disclosed by [Warburg]” in para. 9 of the engagement agreements could include the appellants’ long-time lender, RBC?

(2) Calculating the amount owing to Warburg?

(3) Ordering that the appellants are jointly and severally liable?

(4) Awarding higher costs than Warburg sought on a partial indemnity basis?

(5) Giving the appellants credit for $12,500 on account of the initial retainer for Advisory Services?

(6) Dismissing the action against the personal defendants?

Holding: Appeal and cross-appeal allowed in part.  

Reasoning:

(1) No.  The motion judge’s interpretation of the phrase “lender disclosed by [Warburg]” was neither strained nor inconsistent with the rest of the contract.  The appellants argued that RBC was not disclosed to them by Warburg because RBC had been their long-time lender and was well known to the appellants.  There were many potential lenders well known to the appellants. Warburg’s role was to obtain financing proposals and it was by reporting on the willingness of the lender to make a financing proposal that it “disclosed” the lender to the appellants.  RBC fell within the definition of “lender disclosed by [Warburg]” on the basis that before Warburg’s involvement, the appellants were not aware that RBC was willing to make a financing proposal to them; this occurred as a result of Warburg’s efforts.

(2) Yes.  The appellants argued that the motion judge erred in two ways in calculating the amount owing to Warburg.

The court disagreed that the motion judge erred in finding that commission was owed to Warburg on loans that had been fully advanced by RBC years earlier instead of on only the new facilities obtained under the 2013 agreement.  RBC made a fresh financing decision for all loan facilities it provided, and Warburg was entitled to commission on these.

However, the motion judge did err in determining the amount owed in calculating commissions on what Warburg titled “Free Cash” in its claim.  The “Free Cash” involved the increase of the portion of an operating loan that was not subject to margins.  Since the amount was part of the operating loan on which commission had already been calculated, the additional commission awarded by the motion judge amounted to double-counting.

(3) Yes.  The motion judge provided no reasons in ordering the appellants jointly and severally liable, and the court could see no basis for this decision.  Liability should be restricted to the contracting parties under each agreement.

(4) Yes.  The appellants submitted that the motion judge erred in awarding higher costs than Warburg sought on a partial indemnity basis.  Taking into account the reduction made to the amount Warburg recovered, the court reduced the costs awarded to Warburg to the amount claimed for partial indemnity costs.

(5)  No.  Warburg did not terminate the engagement agreement and therefore cannot rely on the provision that they allege entitled it to terminate the agreement and treat as forfeit all amounts paid under the agreement if the appellants did not disclose all relevant facts.

(6) Yes. The order dismissing the action against the personal defendants should be set aside, as on the basis that the summary judgement motion did not address this issue.

Civil Endorsements 

M.M. v. de Souza, 2016 ONCA 155

[Simmons, LaForme and Huscroft JJ.A.]

Counsel:

M.M., acting in person

Mercedes Perez, appearing as amicus curiae

Keywords: Incapacity, Standard of Review, Amicus Curiae, Sawdon Estate v. Sawdon

Bryce v. Bryce (Costs), 2016 ONCA 159

[Sharpe, Cronk and Miller JJ.A.]

Counsel:

Karen Bryce, acting in person

Michael J. Polisuk, for the respondent

Keywords: Matrimonial Home, Family Law, Proceeds of Sale, Child Support, Spousal Support

Conway v. The Law Society of Upper Canada (Costs),  2016 ONCA 163

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

Counsel:

David Robert Conway, in person

Brendan van Niejenhuis, for the respondent

Keywords: Order to Strike, Costs

Criminal Decisions 

R. v. Darteh, 2016 ONCA 141

[Doherty, Cronk and LaForme JJ.A.]

Counsel:

Janani Shanmuganathan, for the appellant

Michael Medeiros, for the respondent

Keywords: Criminal Law, Assault, Arbitrary Detention, Charter of Rights and Freedom, s. 9, s. 24(2), Appeal Dismissed

R. v. Hawley, 2016 ONCA 143

[Doherty, Cronk and LaForme JJ.A.]

Counsel:

Sam Scratch, for the appellant

Karen Papadopoulos, for the respondent

Keywords: Criminal Law, Manslaughter, Neglect, Abuse, Sentencing, Aggravating Factors, Pre-Sentence Custody, Credit for Time Served, Appeal Allowed, Sentence Varied

R. v. Jean, 2016 ONCA 137

[MacPherson, Tulloch and Benotto JJ.A.]

Counsel:

Frantzy Jean, in person

Delmar Doucette, duty counsel

Robert Hubbard, for the respondent

Keywords: Criminal Law, Possession of Restricted Firearm, Pre-Sentence Custody, Credit for Time Served, Appeal Allowed in Part

R. v. Jupiter, 2016 ONCA 144

[Doherty, Cronk and LaForme JJ.A.]

Counsel:

Lisa Mathews, for the appellant

Elizabeth Bingham and Gary Grill, for the respondent

Keywords: Criminal Law, Search and Seizure, Canadian Charter of Rights and Freedoms, s. 24(2), Appeal Dismissed

R. v. McGill, 2016 ONCA 139

[Gillese, Watt and Tulloch JJ.A.]

Counsel:

Benita Wassenaar, for the appellant

Frances Brennan, for the respondent

Keywords: Criminal Law, Fraud, Ponzi Scheme, Sentencing, Conditional Sentence, R. v. Dobis, Leave to Appeal Sentence Granted, Appeal Allowed, Trial Sentence Varied

R. v. Lapps, 2016 ONCA 142

[Doherty, Cronk and LaForme JJ.A.]

Counsel:

Daniel C. Santoro, for the appellant

Roger A. Pinnock, for the respondent

Keywords: Criminal Law, Possession, Evidence, Trafficking, Mistrial, Unsafe Verdict, Jury Charge, R. v. W. (D.), Appeal Allowed

R. v. Oswald, 2016 ONCA 147

[Doherty, Cronk and LaForme JJ.A.]

Counsel:

Kim Schofield and Melina Macchia, for the appellant

Michael Medeiros, for the respondent

Keywords: Criminal Law, Robbery, Evidence, Identification, Curative Proviso, Appeal Dismissed

R. v. McFarlane, 2016 ONCA 158

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

Mark Halfyard, for the appellant

Lucas Price, for the respondent

Keywords: Criminal Law, Drug Trafficking, Possession of Ammunition, Possession of Proceeds of Crime, Evidence, Circumstantial Evidence, R. v. Bui, Appeal Dismissed