Hello everyone. Below are summaries of this week’s Ontario Court of Appeal decisions. Topics covered include investigative receivership orders, reconsideration of a denied leave to appeal, summary judgment, extension of time to appeal, mortgages, and contract interpretation.
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Akagi v. Synergy Group (2000) Inc, 2015 ONCA 368
[Simmons, Blair and Juriansz JJ.A]
J. Lisus and J. Renihan, for the appellants, Student Housing Canada and RV Inc.
J. Spotswood and W. McDowell, for the appellants, Integrated Business Concepts Inc. and Vincent Villanti
D. Magisano and S. Puddister, for the appellant, Ravendra Chaudhary
M. Katzman, for the appellants, Synergy Group (2000) Inc., Shane Smith, Nadine Theresa Smith,
David Prentice, and Jean Lucien Breau and 1893700 Ontario Limited.
J. Leon and R. Promislow, for the respondent, J.P. Graci & Associates (the court-appointed receiver)
T. Corsianos, for the respondent, Trent Akagi
Keywords: Receiverships, Fraud, Civil Procedure, Default Judgments, Receivership in Aid of Execution, Investigative Receivership, Certificate of Pending Litigation
Facts: Mr. Akagi invested in a tax program marketed and sold by Synergy, which was supposed to generate tax loss allocations for him, but did not do so in the long term. The Canada Revenue Agency (“CRA”) became involved in the matter, and re-assessed Mr. Akagi’s tax claims, indicating that it was conducting an investigation into the affairs of Synergy, and that it believed the latter’s operations were a sham.
Mr. Akagi sued Synergy for fraud and obtained a default judgment. Shortly after, Mr. Akagi applied for and obtained an ex parte order appointing a receiver over all assets, undertakings and property of Synergy and another company, known as Integrated Business Concepts (“IBC”). The request was granted under s. 101 of the Courts of Justice Act.
Based on further ex parte applications, the receivership evolved into a wide-ranging “investigative receivership”, freezing and reaching assets of 43 additional individuals and entities, including authorizing registration of certificates of pending litigation against their properties. None of the additional targets was party to the receivership proceeding. Only three were connected to the underlying Akagi action. Only 2 were actually judgment debtors. The respondent’s claim also purported to protect the interests of some 3800 unnamed investors affected by the scheme.
In September of 2013, the appellants moved unsuccessfully before the application judge in a “come-back proceeding” to set aside the receivership orders. They appealed from the September 16th order and the previous ex parte orders to the Court of Appeal.
Issue: Whether the receivership orders should be set aside.
Holding: Appeal allowed. The contested orders were set aside.
- The Court relied on both procedural and substantive grounds to set aside the contested orders.
- On the procedural side, the court noted that ex parte proceedings are to be taken sparingly, and on full disclosure, in circumstances where it is demonstrated that notice to other parties would undermine the purpose of the proceeding. Here, the receiver failed to prepare a notice of motion or application, a motion or application record, or a proper evidentiary foundation for their request. Moreover, while the Court deferred to the applications judge on this point, the respondent’s failure to disclose that the CRA investigation upon which the ex parte receivership application was founded had been discontinued, raised doubts as to whether there had been full and fair disclosure.
- With regard to substantive issues, the Court noted that the orders were made on the faulty premise that the receiver be appointed to carry out a broad, stand-alone investigative inquiry—the civil equivalent of a criminal investigation or public inquiry—to determine whether wrongs were suffered by a myriad of non-party persons not represented by anyone in the proceedings, who had expressed no interest in becoming parties, or in having their interests protected in the proceedings. Moreover their interests did not need to be protected to preserve the interests of the creditor, which was a crucial consideration.
- The overarching nature of the relief granted was unnecessary to protect Mr. Akagi’s interests. The purpose of appointing a receiver in aid of execution under s. 101 of the Courts of Justice Act is to protect the interests of a claimant seeking an order where there is a real risk that recovery would otherwise be seriously jeopardized. There was no evidence that this was an issue in this proceeding.
- Finally, certificates of pending litigation relate to land. Mr. Akagi did not commence, nor did he intend to commence, an action asserting a claim to an interest in land. As such, the order authorizing the issuance of certificates of pending litigation must be set aside as well.
Mujagic v. Kamps, 2015 ONCA 360
[Doherty, Gillese and Lauwers JJ.A.]
R. M. Godard, for the moving parties
K. C. Dickson, for the responding party
Keywords: Torts, Motor Vehicle Accident, Motion for Leave to Appeal, Motion to Set Aside or Reconsider, Rules of Civil Procedure, Rules 59.06 and 61.16, New Facts Arising, Change in Law, Lack of Jurisdiction
Facts: The plaintiff, Ms. Mujagic, was involved in a car accident in 2001. She sued in 2011 for neck and back injury allegedly sustained during the accident. The jury found the defendant 30% responsible for the accident, but awarded zero damages. The plaintiff unsuccessfully appealed to the Divisional Court: Mujagic v Kamps, 2014 ONSC 5504. She sought leave to appeal from that decision to the Court of Appeal. Leave was refused on February 6, 2015; Westerhof v Gee Estate, 2015 ONCA 206, was released on March 26, 2015. Counsel for the plaintiff submits that Westerhof significantly changed the interpretation of rule 53.03, and in light of this new interpretation, the trial judge improperly excluded important opinion evidence from two of Ms. Mujagic’s treating physicians. Counsel sought a fresh opportunity, under Westerhof, to convince a panel that leave to the Court of Appeal should be granted.
- Does the Court of Appeal have jurisdiction to reconsider the motion for leave to appeal?
- If the Court has jurisdiction, should it order a reconsideration of the motion for leave to appeal?
Holding: The court has no jurisdiction to set aside or vary its prior decision refusing leave to appeal.
- Generally speaking, there is no jurisdictional impediment to the court reconsidering its decision when no order has been taken out and entered (which neither party had done in this case). However, counsel for the respondent referred the court to rule 61.16(6.1), brought into force July 2014 (see: O. Reg. 43/14, ss.19, 21). As the rule applies to this motion, the moving parties have to fall within rule 59.06 for the court to have jurisdiction to set aside or vary its original decision. Rule 59.06(2)(a) requires a “fact arising” after the decision refusing leave to appeal was made. Counsel attempted to paint the Westerhof decision as a “fact arising” after the decision. The clear and well-established distinction between fact and law rendered this submission unsuccessful.
- Disregarding the jurisdictional element, the motion would fail on the merits. Even where the court has power to reconsider a decision because an order has not been taken out, that power will be exercised sparingly and only where it is clearly in the interests of justice. The moving parties had the opportunity to challenge Westerhof on the motion for leave to appeal, as Westerhof was on reserve, but failed to do so. It is unclear if Westerhof would have had any impact on the admissibility of the plaintiff’s evidence, and there was no evidence to suggest that the treating physicians had the expertise required to give an opinion on the causation issue.
Hunter-Rutland Inc v. Huntsville (Town), 2015 ONCA 353
[Strathy C.J.O., LaForme and Tulloch JJ.A.]
W. A. Chalmers, for the appellant
D. J. Wyjad, for the respondent
Keywords: Endorsement, Commercial Tenancies, Conversion, Negligence, Limitation Periods, Summary Judgment
Facts: Hunter-Rutland Inc. (“HRI”) was a commercial tenant of the Town of Huntsville (“Town”). HRI defaulted on rent, was evicted, and then given 30 days to remove its possessions. HRI removed all possessions except for a router. The Town sold the router and donated the proceeds to a charity and did not apply the proceeds to arrears of rent.
HRI commenced an action for conversion and negligence in respect of the Town’s disposal of the router. The Town brought a motion for summary judgment, arguing that the limitation period had expired. HRI sought the dismissal of the Town’s motion.
The motion judge granted summary judgment in favour of HRI and directed that damages be assessed at a later date under Rule 20.05. The Town appeals the order.
Issue: Did the motion judge err in granting summary judgment in favour of HRI?
Holding: Appeal dismissed, with costs to the respondent in the agreed upon amount of $13,500, inclusive of disbursements and HST.
Reasoning: The motion judge was correct in granting judgment in favour of HRI. On summary judgment motions, a motion judge has the power to grant judgment for or against the moving party, as held in Whalen v Hillier (2001), 53 OR (3d) 550 (CA). In the absence of any prejudice, this was a fair process that resulted in just adjudication of the parties’ dispute.
With regard to the limitation period, the claim was discovered when HRI learned of the sale. The alleged wrongful conduct was related to the Town’s handling of the sale of the router, and not its seizure. The motion judge correctly held that the limitation period had not expired.
Even if the router became the property of the Town pursuant to clause 6.2 of the lease, the Town was obligated by clause 10.10 to apply proceeds of sale to rent arrears. The Town was also obligated to sell the router at a reasonable price pursuant to s. 53 of the Commercial Tenancies Act, RSO 1990 c L.7.
Lawlor v. Walton, 2015 ONCA 358
[Weiler, Cronk and Pepall JJ.A.]
H. Gerson, for the appellants
G. N. Cadogan, for the respondents
Keywords: Endorsement, Real Estate Law, Fraud, Decision of Deputy Director of Land Titles, Extension of Time to Appeal, Procedural Fairness
Facts: The appellants sought an order granting them an extension of time to appeal a decision by the Deputy Director of Titles. The respondents sought a motion under Rules 21 and 25.11 of the Rules of Civil Procedure. The motion judge concluded that the appellants’ action was an impermissible collateral attack on the Deputy Director’s decision. Accordingly, the motion judge granted the respondents’ motion and dismissed the appellants’ action.
Issues: Did the motion judge err in regards to the appellants’ request for an extension of time?
Holding: The appeal is allowed and the appellants’ action is reinstated.
Reasoning: The motion judge did not address the merits of whether the appellants had satisfied the test for an extension of time.
The motion judge made no mention of a decision by the Superior Court of Justice, which acquitted the appellant Linda Lawlor of fraud in relation to the transactions at issue. The core factual findings at Ms. Lawlor’s criminal trial were diametrically at odds with the decision by the Deputy Director of Titles. While the factual findings of a criminal trial were in no way binding on the motion judge, the findings were relevant to an assessment of the full circumstances of the case.
The record before the court also supports the appellants’ claim that procedural fairness at the hearing before the Deputy Director of Titles was compromised. There is evidence that service to the appellants of notice may have been defective. It is also uncontested that the appellants participated only on the second day of the hearing before the Deputy Director. They were afforded no opportunity to question the respondents’ witnesses who had testified in the appellants’ absence.
The interests of justice require that the appellants’ request for an extension of time to appeal the Land Titles Decision be heard on the merits, on a proper record.
Canada Mortgage and Housing Corporation v. Hollancid, 2015 ONCA 359
[Weiler, Cronk and Pepall JJ.A.]
C. A. Kazembe and J. K. Singha, for the appellant
G. Douglas, for the respondent
Keywords: Endorsement, Real Estate Law, Mortgages, Mortgage Fraud, Fraudulent Misrepresentation, Evidence, Deference, Self-represented litigants, Costs
Facts: The respondent, Canadian Mortgage and Housing Corporation, claimed that the appellant, Cathleen Beryl Hollancid, was a knowing participant in fraud for the purpose of obtaining a mortgage loan and that the Bank of Nova Scotia’s employees had no involvement in the scheme. The appellant claimed that she was an innocent dupe, and that mortgage fraud was perpetuated by a third party working in concert with Bank of Nova Scotia employees. The appellant appeals from a judgment ordering her to pay the respondent $128,927.03 plus prejudgment interest and $50,000 in costs.
- Did the trial judge err in the treatment and evaluation of the evidence?
- Did the timing of the mortgage approval process and closing of the transaction fail to reflect commercial reality?
- Did the trial judge err by providing insufficient assistance to the appellant who, at trial, was self-represented?
- Did the trial judge err in determining costs?
Holding: Appeal dismissed, with costs of the appeal to the respondent in the amount of $5,000.
- No. The trial judge made findings of fact and credibility. In doing so, he examined the totality of the evidence and rejected the appellant’s testimony. He was satisfied that, in applying for the mortgage loan, the appellant had fraudulently misrepresented her employment, her income, the source of the funds for the down payment, and her intention to occupy the property.
- No. Contrary to the appellant’s abbreviated chronology that suggests that the appellant signed the mortgage application on Thursday, July 27 with a closing on Tuesday, August 1, the appellant actually first met the Bank representative for the purpose of her mortgage application on July 21, 2006. Accordingly, the timeline reflects commercial reality.
- No. Up until a week before the trial, the appellant was represented by counsel. At trial, the appellant participated fully. She gave evidence, cross-examined each of the respondent’s witnesses, and filed written submissions at the conclusion of the trial. The record reveals no failure to assist by the trial judge.
- No. The trial judge’s costs award is neither plainly wrong nor infected by an error in principle.
Global Food Traders Inc. v. Massalin, 2015 ONCA 362
[MacPherson, Gillese and van Rensburg JJ.A.]
E. Peritz and S. Turgeon, for the appellant
M. Mendelzon, for the respondent
Keywords: Endorsement, Contract Law, Purchase Agreement, Guarantees, Summary Judgment
Facts: In April 2012, Global Food Traders (“GFT”) and Latinamerican Foods Inc. (“LAFI”) entered into a purchase agreement under which GFT sold its trademarks and customer base to LAFI for $500,000, payable by 50 post-dated cheques for $10,000 each (the “Agreement”). Mr. Massalin, the sole officer, director and controlling mind of LAFI, executed the agreement on behalf of LAFI. Underneath the signatures on the Agreement was a statement stating that “the undersigned is executing this Agreement solely in connection with his obligations as set forth in section 1 of this Agreement.” Section 1, in part, stated that “If Mr. Massalin’s obligations are called upon pursuant to this Section he shall within three days provide the Seller with immediately available funds to cover any bounced or NSF cheques.”
LAFI defaulted in payment for the assets it purchased and went bankrupt. Mr. Massalin failed to honour his guarantee of LAFI’s obligations as set out in the Agreement. GFT sued and brought a motion for summary judgment. The motion judge granted partial summary judgment against Mr. Massalin on Dec 8, 2014. The motion judge found that the “guarantee” in s. 1 of the Agreement was valid and enforceable.
- Should the summary judgment motion be remitted for rehearing because the motion judge gave brief reasons for the decision?
- Is the decision flawed because the motion judge failed to make a finding of liability as against LAFI?
- Did the motion judge err in finding that s. 1 of the Agreement constituted a guarantee?
Holding: Appeal is dismissed with costs to the respondent fixed at $6,930, all inclusive.
- No. The motion judge’s decision conveyed the reasoning as to the interpretation of the meaning of s. 1 of the Agreement.
- No. The motion judge’s decision is not flawed for failing to make a finding of liability against LAFI. First, the appellant did not dispute the amounts which GFT stated LAFI owed under the Agreement. Second, a personal guarantee provides a contracting party with recourse if the principal debtor is unable to pay, even where the principal debtor goes bankrupt.
- No. While the word “guarantee” is not used in s. 1, it is clear from that section and underscored by the statement at the foot of the Agreement, that section 1 contains Mr. Massalin’s personal guarantee of LAFI’s payment obligations under the Agreement. Additionally, Mr. Massalin acknowledged his liability both before and after signing the Agreement in his personal capacity.
Gold Leaf Products Ltd. v. Pioneer Flower Farms Ltd., 2015 ONCA 365
[Strathy C.J.O., LaForme and Tulloch JJ.A.]
J. Nairn and J. Rosenstein, for the appellant
R. L. Youd, for the respondent
Keywords: Endorsement, Contract Law, Interpretation, Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, Non est factum, Set-off, Bifurcation, Summary Judgment
Facts: Pioneer Flower Farms Ltd. (“Pioneer”) and Gold Leaf Garden Products Ltd. (“Gold Leaf”) entered an agreement whereby Gold Leaf would solicit new customers for Pioneer. In return, Pioneer was to pay Gold Leaf a 5% commission on sales to customers it brought in. Pioneer later terminated the agreement.
The parties disagreed on whether Pioneer was required to pay Gold Leaf ongoing commissions post-termination for sales to those customers Gold Leaf had brought in. Gold Leaf brought an action seeking the commissions for sales following the termination of the agreement. On Gold Leaf’s motion for summary judgment, the motion judge held that the agreement required Pioneer to continue to pay Gold Leaf the commissions.
- How should the agreement be interpreted?
- Can the appellant rely on the defence of non est factum?
- Did the motion judge, prior to hearing the summary judgment motion, misdirect Pioneer’s counsel such that counsel reasonably believed the court would not decide the question of equitable set-off on summary judgment?
Holding: The appeal is dismissed. Gold Leaf is awarded its costs of the appeal in the agreed upon amount of $12,500, inclusive of disbursements and HST.
- The motion judge found that para. 5 could be read in two alternative ways. First, that commission will be paid only during the period of the agreement. Or second, that commission will be paid only for new clients brought to Pioneer during the period of the agreement. Read in the latter way, para. 5 would not terminate commission from those customers recruited during the pendency of the agreement who continued to purchase from Pioneer. The motion judge chose the second reading because it gives reasonable meaning to each of the terms of the agreement. He determined the objective intentions of the parties, which is the goal of contractual interpretation: Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53. Pioneer has not satisfied the court that the motion judge made any error. Accordingly, the motion judge’s interpretation is entitled to deference.
- No. The law provides that a person who fails to exercise reasonable care in signing a document is precluded from relying on the defence of non est factum: Marvco Color Research Ltd. v. Harris,  2 S.C.R. 774. Henk Sikking Jr. did not read the agreement when he signed it on behalf of Pioneer. He accordingly failed to exercise reasonable care in signing the agreement.
- No. As Pioneer did not agree to bifurcation and the motion judge did not order it, Pioneer should have known that set-off had not been split off from the rest of the issues. Taking the notice of motion and the absence of a bifurcation order together, Pioneer should have known that set-off was at play in the summary judgment motion.
D.G. v. A.F., 2015 ONCA 366
[Laskin, Lauwers and Hourigan JJ.A.]
D.G., acting in person
A.F., acting in person
Keywords: Endorsement, Rules of Civil Procedure, Costs, Ordinary Costs Rule
National Bank of Canada v. Lemargo Inc., 2015 ONCA 367
[MacPherson, Gillese and van Rensburg JJ.A.]
No one appearing for the appellants
N. Marconi, for the respondent
Jiang v. Jade-Kennedy Development Corporation, 2015 ONCA 369
[Epstein, Pepall and Benotto JJ.A.]
J. O’Sullivan, for the appellant
S. Schwartz, for the respondent Jade-Kennedy Development Corporation
Ontario Review Board (Mental Health and Detention Decisions)
Thurston (Re), 2015 ONCA 351
[Doherty, Cronk and LaForme JJ.A.]
A. Szigeti, for the appellant
S. E. Fraser and K.J. Bryan, for the intervener, Mental Health Legal Committee
M. Warner, for the respondent, Person in Charge of the Centre for Addiction and Mental Health
G. Choi, for the respondent, Attorney General for Ontario
Keywords: Administrative Law, Mental Health, Ontario Review Board, Procedural Fairness, Early Review Hearing
R. v. Fountain, 2015 ONCA 354
[Laskin, LaForme and Rouleau JJ.A.]
B. Vandebeek, for the appellant
G. Skerkowski, for the respondent
Keywords: Criminal Law, Unlawful Detention, Unlawful Search, Exigent Circumstances, Toronto Anti-Violence Intervention Strategy (“TAVIS”), s. 24(2) of the Charter, R. v. Grant, 2009 SCC 32, R. v. Stevenson, 2014 ONCA 842
R. v. Huh, 2015 ONCA 356
[Gillese, Tulloch and Lauwers JJ.A.]
K. Doherty, for the appellant
B. Vandebeek, for the respondent
Keywords: Criminal Law, Sentencing, Conditional Discharge, Assault Causing Bodily Harm, R. v. Wood (1975), 24 C.C.C. (2d) 79 (C.A.), Deterrence, Denunciation, Public Interest
R. v. Shearer, 2015 ONCA 355 [Macpherson, Blair and Huscroft JJ.A.]
G. Zaman, for the appellant
R. Parker, Duty Counsel
Keywords: Endorsement, Criminal Law, Trafficking, Victim Surcharge, Criminal Code, s. 737(1), Forfeiture Order, s. 462.37(1)
R. v. Brown, 2015 ONCA 361
[Juriansz, Rouleau and Hourigan JJ.A.]
F. Addario, for the appellant
J. Patton, for the respondent
Keywords: Criminal Law, Sentencing, Young Offenders, First Time Offenders, Factors Governing Length of Imprisonment, R. v. Thurairajah, 2008 ONCA 91, Criminal Code, s. 718.2, General Deterrence, Denunciation, Individual Deterrence and Rehabilitation
R. v. Buckley, 2015 ONCA 364
[Hoy A.C.J.O., Doherty and Benotto JJ.A.]
M. Feldmann, for the appellant
C. Afonso, for the respondent
Keywords: Criminal Law, Endorsement, Charter of Rights and Freedoms, ss. 8 and 24(2), Unreasonable Search and Seizure, Admission/Exclusion of Evidence