Hello everyone. Below are summaries of this week’s OCA civil decisions (non-criminal). Topics covered include contractual interpretation, child and spousal support payments, conversion, the equitable remedy of rectification, non-possessory liens, and the State Immunity Act.
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Blaney McMurtry LLP
[MacPherson, Esptein, and Roberts JJ.A]
C. Sefton, M. Cowan for the appellant.
W. J. Earle, M. Furrow for the respondent.
Keywords: Contract Law, Contractual Interpretation
Metrolinx purchased a corridor from Canadian National Railway (CN) on which Metrolinx operates a railway. Enbridge owns six gas pipelines that run along municipal road allowances and cross under the railway. Metrolinx asked that the pipelines be relocated, and a dispute arose over which party should bear the costs.
CN and Enbridge’s predecessor had an agreement that provided that Enbridge was responsible for relocating the pipelines. In the sale from CN to Metrolinx, Metrolinx assumed all of CN’s rights and obligations, including the ability of Metrolinx to require Enbridge to pay the relocation costs in issue.
The application judge ordered Enbridge to pay. Enbridge appealed.
- Did CN only have a contractual right to require Enbridge to pay to relocate pipelines on CN owned lands, not municipal road allowances? No.
- If CN did have these rights, were they conveyed to Metrolinx? Yes.
The decision rests on the interpretation of three complex agreements between CN, Metrolinx, and Enbridge.
Contractual interpretation is a question of mixed fact and law as it requires an examination of the agreement in issue as well as the surrounding circumstances known to the parties at the time the contract was entered into.
The interpretation urged by Enbridge of certain relevant terms in the agreements would represent a change in the historical financial arrangements between the parties of such significance that the agreements would contain express wording to this effect.
The wording of the relevant documents supports the application judge’s interpretation. Furthermore, the application judge’s reasoning that the intention of CN and Metrolinx when they entered into their contracts that Metrolinx would fully “step into the shoes” of CN and assume all of CN’s rights and obligations makes commercial sense.
Finally, the fact that the contracts at issue arose in a federally regulated context does not alter the interpretation of the agreements in issue. They are valid contracts, and remain so whether or not the relevant federal regulations continue to govern either of the parties.
[Simmons, Cronk and Blair JJ.A.]
A. Pyper, for the appellant.
I. I. Frisch, for the respondent.
Keywords: Endorsement, Family Law, Retroactive Child Support, Spousal Support, Appellate Court Intervention, Van de Perre v. Edwards, Filing Fresh Evidence on Appeal
The appellant appeals from an order declaring G.A. to be a child of the marriage, and requiring that the appellant pay Guideline child support so long as the child remains a child of the marriage, retroactive child support fixed at $10,000 and spousal support in the amount of $959.00 per month for one year.
- Did the trial judge err in finding that the child is a child of the marriage?
- Did the trial judge err in her findings regarding the amount of child support or spousal support?
The appeal is dismissed and leave to appeal costs is denied. Costs of the appeal are to the respondent on a partial indemnity scale fixed in the amount of $7500, inclusive of disbursements and applicable taxes.
- No, the trial judge did not err in finding that the child is a child of the marriage. The trial judge reviewed the evidence and the relevant authorities and made detailed findings supporting her conclusions. Since the applicant could not show that the trial judge committed an error in principle, a serious misapprehension of the evidence, or an award that is clearly wrong, an appellate court must not intervene.
- No, the trial judge did not err in her decision on the amount of child and spousal support the applicant is required to pay. The additional evidence of the applicant’s 2013 Notice of Assessment from Revenue Canada lacks the necessary cogency to warrant admission on appeal. In any event, the trial judge’s order sets out a procedure for adjusting the child support payable under the order based on annual production of the appellant’s income tax return and notice of assessment.
[MacPherson, Epstein and Roberts JJ.A.]
M. Bordin, for the appellant.
A. J. Butcher, for the respondent.
Keywords: Endorsement, Tort of Conversion, Damages, Deference, Evidence, Palpable and Overriding Error, Costs
The appellant, International Marine Salvage Inc. (“IMS”), appeals from the judgment of the Superior Court of Justice, granting judgment to the respondent, Canada Forgings Inc. (“CF”), in the amount of $270,735 for committing the tort of conversion of several very large metal die blocks. The appellant does not appeal the trial judge’s conclusion that it committed the tort of conversion. It does appeal, on three grounds, the trial judge’s damages assessment.
- Did the trial judge err in awarding replacement costs for the 26 missing die blocks?
- Did the trial judge misapprehended evidence and commit a palpable and overriding error in finding that IMS purchased approximately 90% of the missing die blocks?
- Did the trial judge err in compensating CF $7, 500 for lost time and productivity as a result of IMS’s conversion of CF’s die blocks?
The appeal is dismissed. The respondent is entitled to its costs of the appeal fixed at $15,000, inclusive of disbursements and applicable taxes.
- No. The die blocks were an unusual, bordering on unique, product. It follows that the trial judge did not err by awarding damages on the basis of replacement cost.
- No. The evidence supports the trial judge’s conclusions. In any event, the important legal point is that the conclusion is far removed from being a palpable and overriding error.
- No. There is a direct connection between these employee costs and IMS’s receipt of the stolen die blocks, which is the basis for the uncontested finding that IMS committed the tort of conversion.
[Juriansz, Lauwers and Huscroft JJ.A.]
D. C. Boswell and J. Vizzaccaro, for the appellants.
D. O. Smith and A. Collier, for the respondents.
Keywords: motion to dismiss, jurisdiction, waste, fraud, negligent misrepresentation, conspiracy
Facts: The respondent is The Regional Municipality of York (the “Region”). It brought an action against the appellants in Ontario. It claimed that the appellants fraudulently conspired with each other to induce the Region into a waste management contract. The appellants brought a motion to dismiss the action against for want of jurisdiction, and in the alternative, staying the action against all appellants on the basis that Ontario is not the most convenient forum. The motion judge dismissed the appellants’ motion; she concluded the appellants had not rebutted the presumption of jurisdiction.
Did the motion judge err in dismissing the appellants’ motion?
Holding: The appeal is dismissed, and costs are fixed in favour of the respondent in the amount of $10,000 inclusive, as agreed by counsel.
Reasoning: Regarding jurisdiction, it was only necessary for the motion judge to conclude that there was a “good arguable case” for assuming jurisdiction on a consideration of the pleadings and the evidence filed. The “good arguable case” standard is a low one: the plaintiff must simply demonstrate that the claim has “some prospect of success” and that the cause of action is sufficiently connected to Ontario.
The motion judge noted that the Region claimed: the torts were committed in Ontario; fraudulent misrepresentations were made in Ontario; false invoices were sent to Ontario; and damages were sustained in Ontario. The Court concluded that the motion judge’s decision dismissing the appellants’ motion that Ontario was not the appropriate forum was entitled to deference.
[Juriansz, Lauwers and Huscroft JJ.A.]
Counsel: K. Peacocke and M. Kropp for the appellant/moving party/A. Servello. G. Mackenzie for the respondent R. Servello. J. Butson, for Home Equity Bank.
Keywords: Endorsement, transfer of property, misrepresentation, non est factum, undue influence
Facts: The appellant is appealing a trial decision that set aside the transfer of his respondent mother’s property to him, and which restored the respondent as owner of the property and dismissed the appellant’s counterclaim for various equitable remedies. The appellant also brings a motion seeking to set aside or vary an order quashing his motion for an order vacating a reverse mortgage placed on the property by the respondent.
Issues: Was the evidence of misrepresentation sufficient to permit a conclusion of non est factum? Did the trial judge err in concluding that the respondent was subject to undue influence?
Holding: The trial judge’s ruling is upheld. The trial judge’s costs order of over $56,000 on a partial indemnity basis for trial is upheld. Appeal dismissed. Appellant has until July 31, 2015 to vacate the workshop premises and remove his property. The motion is dismissed. The appellant shall pay the respondent costs of $20,000 for the appeal and motions. The appellant shall pay Home Equity $2,000 for the motion.
Reasoning: The trial judge correctly concluded the defence of non est factum was made out. That was sufficient to void the transfer, as well as subsequent deeds entered after the transfer. The trial judge also found that the respondent’s signature on the transfer was obtained as result of undue influence, which is supported by the evidence. The trial judge concluded the counterclaim failed because the appellant did not “come to court with clean hands” and because it was premature (because it had not crystallized when the counterclaim began). There is no error in this analysis. Finally, the appellant’s motion to vacate a reverse mortgage on the property is dismissed as redundant because this court has decided the appellant has no proprietary interest in the property
[Simmons, Cronk and Blair JJ.A.]
N. Arnold and D. Aird, for the appellant.
C. Chua, G. R. Hall and B. Siegal, for the respondents.
Keywords: Endorsement, Equitable Remedy of Rectification, Canada (Attorney General) v. Juliar (2000), 50 O.R. (3d) 728 (C.A.)
Facts: The respondent had a continuing intention from 2002 onwards that its loan arrangements with Legacy would be carried out on a tax and accounting neutral basis through a plan whereby any foreign exchange gains would be offset by corresponding foreign exchange losses.
The respondent also had a continuing intention from 2006 onwards – after the change in control occurred – that the preferred shares of the two relevant companies – the respondent, FHIW Hotel Investments (Canada) Inc. (“FHIW”), and the respondent, FHIS Hotel Investments (Canada) Inc. (“FHIS”) – would not be redeemed.
Due to a mistake by a member of the respondent’s senior management team, the preferred shares of FHIW and FHIS were redeemed in 2007, triggering serious adverse, unintended tax consequences.
Issue: Did the application judge err by granting the equitable remedy of rectification in the circumstances of this case?
Holding: The application judge did not err in granting the equitable remedy of rectification. Appeal dismissed.
Reasoning: Juliar is a binding decision on this court. It does not require that the party seeking rectification must have determined the precise mechanics or means by which the party’s settled intention to achieve a specific tax outcome would be realized. Juliar holds, in effect, that the critical requirement for rectification is proof of a continuing specific intention to undertake a transaction or transactions on a particular tax basis.
In this case, on the application judge’s findings, the respondent had a specific and unwavering intention from the outset of its dealings with Legacy to ensure that the Legacy-related transactions were tax neutral and therefore no redemptions of the relevant preference shares should occur. Nonetheless, the redemptions were mistakenly authorized by corporate resolutions.
Contrary to the appellant’s argument, in these circumstances, it was unnecessary that the respondent prove that it had determined to use a specific transactional device – loans – to achieve the intended tax result. That the respondent mistakenly failed to employ an appropriate transactional device to achieve the intended tax result does not alter the nature of the respondent’s settled tax plan: tax neutrality in its dealings with Legacy and no redemptions of the preference shares in question.
[Simmons, Cronk and Blair JJ.A.]
S. N. Zeitz and I. Klaiman, for the appellant.
K. Prehogan and S. McGrath, for the respondent.
Keywords: Non-possessory Liens, Repair and Storage Liens Act, s. 1(1) and 7, Injunctive Relief, Undertaking as to Damages, Letter of Credit, Expiry of Leave of Appeal
The appellant, SG Air Leasing Limited (“SG Air”), appeals from the motion judge’s ruling dated March 27, 2015 dismissing its claims for: i) a declaration that it has a non-possessory lien under the Repair and Storage Liens Act in respect of an aircraft owned by the respondent, Inchatsavane Company (Proprietary) Limited (“ICPL”); ii) a declaration that, at the time of the motion, SG Air was in lawful possession of the same aircraft; and iii) an extension of an ex parte injunction obtained by SG Air by court order dated January 12, 2015 concerning the aircraft.
- Did the motion judge err in holding that SG Air is not entitled to a repairer’s non-possessory lien in respect of the aircraft?
- Did the motion judge err in denying further injunctive relief?
- Did the motion judge err in ordering that SG Air must pay Goderich companies’ unpaid storage charges concerning the aircraft from the sum held in trust by SG Air’s Ontario solicitors (the “SG Air Trust Funds”)?
- Should the court release ICPL’s $3.5 million USD letter of credit held by their Ontario solicitors?
The appeal is dismissed. ICPL is entitled to its costs of the appeal, fixed in the amount of $11,540.62, inclusive of disbursements and all applicable taxes
- No, the motion judge did not err in holding that SG Air is not entitled to a repairer’s non-possessory lien in respect of the aircraft. Section 1(1) of the Repair and Storage Liens Act defines the word “repairer” and “repair”. SG Air did not carry out the aircraft repairs in question, they merely loaned funds to the Goderich companies in 2011 to allegedly finance repairs to the aircraft. The Repair and Storage Liens Act does not extend a repairer’s lien to lenders who merely lend money to repairers or storers. Even if, as SG Air contends, the funds were advanced for the ultimate benefit and account of ICPL – a matter not before this court for determination – the fact remains that the funds in question were still a loan. Thus, SG Air does not fall within the class of workers and artisans that s. 7 of the Repair and Storage Liens Act seeks to protect. Therefore, SG Air cannot claim a nonpossessory lien in respect of the aircraft.
- No, the motion judge’s denial of further injunctive relief was correct. SG Air is not entitled to a possessory or non-possessory lien under the Repair and Storage Liens Act because SG Air is not a “repairer” within the meaning of the Act. As a result, any claim for continued or fresh injunctive relief is based solely on SG Air’s alleged status as an unpaid creditor of ICPL. There was nothing before the motion judge or the appellate court that established that SG Air will be unable to sue ICPL on any alleged debt owing to it by ICPL or that it will be unable to enforce any judgment it might obtain against ICPL. Therefore, no injunctive relief is required.
- No, the motion judge did not err in ordering that these trust funds be paid to the Goderich companies for their unpaid storage charges concerning the aircraft. The SG Air Trust Funds constitute security provided by SG Air for ICPL’s costs of this litigation and in respect of SG Air’s undertaking as to damages. The storage charges were incurred because SG Air, through its injunctive proceedings, prevented ICPL, the lawful owner of the aircraft, from removing the aircraft from Ontario. Therefore, the storage charges represent a direct expense that falls within SG Air’s undertaking as to damages.
- No, ICPL’s Ontario solicitors will continue to hold the letter of credit until expiry of the time allowed for SG Air to seek leave to appeal from this judgment to the Supreme Court of Canada. Justice Weiler’s order dated April 14, 2015 held that ICPL must give a letter of credit in the amount of $3.5 million USD to be held by their Ontario solicitors. ICPL wanted this letter of credit released, but SG Air requested that the letter of credit continue to be held by ICPL’s Ontario solicitors until the expiry of the time allowed to seek leave to appeal to the Supreme Court of Canada. Since ICPL faces no prejudice by having their Ontario solicitors continue to hold the letter of credit, ICPL’s Ontario solicitors will continue to hold the letter of credit.
[Feldman, Hourigan, and Benotto JJ.A.]
R. R. Housen, for the appellant.
B. Sherman, for the respondent.
Keywords: Family Law, Disclosure, Power to strike out pleadings
Facts: This appeal involves the importance of disclosure in a family law proceeding. The parties were married in 2001 and separated in 2012. Together they owned and operated five nursing homes. Respondent alleged that the appellant was using his companies to hide funds. The appellant failed to comply with three separate and subsequent orders from the court to produce documents. The judge struck his pleadings.
Issues: Should the appellant’s pleadings have been struck out?
Reasoning: The most basic obligation in family law is the duty to disclose financial information. Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice.
The power to strike out pleadings is to be used sparingly and only in exceptional cases. As a result of the appellant’s conduct in ignoring court orders and failing to follow the basic principles of family law litigation, he falls into the exceptional category where the judge’s discretion to strike his pleadings was reasonably exercised.
[Hoy A.C.J.O., Feldman and Lauwers JJ.A]
J. B. Casey and M. Saunders, for the appellant.
G. J. Pollack and S. G. Frankel, for the respondent.
Keywords: S. 9 of the State Immunity Act, RSC 1985 C. S-18, Rules of Civil Procedure, Effective Service
In 1992, Sistem entered into a joint venture with a Kyrgyz company to build the Hotel Pinara in Bishkek, Kyrgyz Republic. The Kyrgyz company went bankrupt and Sistem purchased its interest in the project. Sistem became the sole owner of the project in 1999. The property was expropriated in 2005. Sistem commenced arbitration proceedings against the Republic. The arbitral tribunal held that the Republic was responsible for illegal expropriation and was ordered to pay to Sistem over $9M. Sistem has unsuccessfully tried to enforce the award.
Sistem filed an Application in the Ontario Superior Court for an order recognizing the Award and rendering it enforceable in Ontario, which was granted. In 2011, Sistem brought a motion to add Kyrgyzaltyn as a party to this proceeding and to seek declaratory relief to permit the seizure of enough of the Centerra shares to satisfy the award. Both the Republic and Kyrgyzaltyn were served and neither filed responding materials. Cumming J. allowed Sistem’s motion and found that “given the evidentiary record, Sistem has an arguable case that the subject shares in Centerra are properly subject to attachment in satisfaction of the Award.” Brown J. dismissed Kyrgyzaltyn’s motion to set aside the Recognition Order.
In 2012, an ex parte motion for a Mareva injunction was granted to prevent Kyrgyzaltyn’s disposition of shares in Centerra (a Canadian mining company) or dividends declared on those shares.
- Was the Amended Notice of Application at issue in the case effectively served on the Republic in accordance with s. 9(1)(a) of the SIA?
- If not, can service be validated under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194?
- Has the issue of service been determined by previous decisions in this proceeding?
- If there was no effective service, what is the appropriate disposition of this appeal?
- If there was effective service, did the application judge err by finding that the Republic has a beneficial interest in the Centerra shares that is exigible under s. 18 of the Execution Act?
Holding: Appeal allowed. Judgment set aside. A new hearing may be held following service of the Amended Notice of Application on the Republic in accordance with s. 9(1) or (2) of the SIA.
1) Was the Amended Notice of Application effectively served on the Republic under s. 9(1)(a) of the SIA?
The State Immunity Act
Section 3 of the SIA establishes the general principle that foreign states have immunity from the jurisdiction of the Canadian courts, except as provided in the Act. Importantly, under s. 3(2), a court must give effect to that immunity even if the foreign state does not take any step in the proceeding. As Lebel J. put it, “the court must give effect to the immunity on its own initiative if applicable.”
Was the Republic properly served under s. 9(1)(a) of the SIA?
There is no provision in the Vienna Convention that deals with service specifically. Article 3 of the Vienna Convention was referred to in the GRATA opinion. However, that article deals with the functions of a diplomatic mission. These functions do not specifically include accepting service of an originating process.
If service in accordance with the Vienna Convention cannot be claimed using s. 9(1)(b), it is unclear how that same Convention can be used to find that the Republic agreed to be served at its embassy in Washington.
The jurisprudence indicates that service on an embassy is not available as a means of effecting service on a foreign state. There is no basis in fact or in law for this court to find that the Republic was served in a manner to which it has agreed in accordance with s. 9(1)(a) of the SIA.
2) Can service be validated under Rule 16 of the Rules of Civil Procedure?
Reading s. 9 as a whole, it is clear that ss. 9(1) and (2) provide the sole methods for service of initiating documents on a foreign state and preclude resort to the Rules of Civil Procedure. Based on the wording and logic of s. 9, as reinforced by the principles of statutory interpretation, that ss. 9(1) and 9(2) are mandatory and exhaustive and do not permit service on a foreign state in accordance with provincial rules of civil procedure. The court is therefore precluded from validating service under Rule 16.
3) Has the service issue been decided by previous decisions in this proceeding?
In none of the previous proceedings has the court directly considered and ruled on the issue of whether service on the Republic’s Washington embassy was in accordance with s. 9(1)(a) of the SIA. To the extent that in other decisions involving these parties, courts may have declined to address that issue based on Kyrgyzaltyn’s lack of standing, that position was taken per incuriam. As a preliminary matter, a court must always determine whether service was properly made on an absent named party whose interests will be affected by the order sought. The question of standing is irrelevant to this issue, as it is the court’s role to ensure that the procedural rights of a party that does not appear are protected
4) If there was no effective service, what is the appropriate disposition of this appeal?
As the Republic was not served with the Amended Notice of Application in accordance with ss. 9(1) or (2) of the SIA, the decision below must be set aside.
[Feldman, Hourigan and Benotto JJ.A]
M. Farid, acting in person.
G. Elliott, for the respondent.
Keywords: Endorsement, Civil Procedure, Real Estate, Summary Judgment, Specific Performance, Damages
[Laskin, Sharpe and Simmons JJ.A.]
J. T. Curry and J. E. Lilles, for the appellant.
P. J. Pape and J. Nairn, for the respondent.
M. Gourlay and S. Walker, for the intervener Criminal Lawyers’ Association.
R. Halpern and B. Cameron, for the intervener Ontario Trial Lawyers Association.
W. D. Black, J. R. Morse and J. J. Morris, for the intervener The Holland Group.
J. A. Olah and S. Libin, for the intervener Canadian Defence Lawyers Association.
C. Raphael, for the intervener Canadian Institute of Chartered Business Valuators.
L. R. Rothstein and J. Killey, for the intervener The Advocates’ Society.
Keywords: Endorsement, Costs, Indemnity, Public Importance.
[Simmons, Cronk and Blair JJ.A.]
C. Alexiou, for the appellant.
W. Greenspoon-Soer, for the respondent.
[MacPherson, Epstein and Roberts JJ.A]
P. Khaiter, acting in person.
D. Kleze, for the respondents.
Endorsement, Ontario Labour Relations Board, , Improper Notice, Limitation Period, Proceedings Against the Crown Act, Collateral Attack, Abuse of Process
[Weiler, Tulloch and van Rensburg JJ.A.]
M. Ranieri, appellant, acting in person.
A. Szigeti, Amicus Curiae.
A. B. Rose, for the respondent Attorney General of Ontario.
J. Blackburn, for the respondent Person in Charge of St. Joseph’s Healthcare Hamilton.
Keywords: Criminal Law, Ontario Review Board, Not Criminally Responsible on Account of Mental Disorder, Uttering Threats to Cause Death or Bodily Harm, Assaulting a peace officer, Resisting arrest, Conditional discharge, Hearsay
[Weiler, Tulloch and van Rensburg JJ.A.]
J. Presser and C. Martell, for the appellant.
M. Perlin, for the respondent.
Keywords: Endorsement, Criminal Law, Sentencing, Fraud, Fine in Lieu of Forfeiture, Credit for Pre-Trial Custody
[Doherty, Pepall and Hourigan JJ.A.]
D. J. Brodsky, for the appellant.
A. Baiasu, for the respondent.
Keywords: Endorsement, Criminal Law, s. 153(1) of Criminal Code
[Strathy C.J.O., Pardu and Benotto JJ.A.]
J. Hale, for the appellant.
R. Gattrell, for the respondent.
Keywords: Criminal Law, Sentencing, Break and Enter, Credit for Pre-Trial Custody
[Cronk, Gillese and Huscroft JJ.A.]
T. Brown and E. Granger, for the appellant.
J. Barrett, for the respondent.
Keywords: Criminal Law, Evidence, Admissibility of Evidence by Drug Recognition Expert, s. 254(3.1) of Criminal Code, Operation of Motor Vehicle while impaired
[Laskin, Gillese and van Rensburg JJ.A.]
M. Hurman, for the appellant.
D. Doucette, for the respondent.
Keywords: Endorsement, Criminal Law, Credit for Pre-Sentence Custody
[Strathy C.J.O., Pardu and Benotto JJ.A.]
J. Norris and M. Conway, for the appellants.
M. Perlin, for the respondents.
Keywords: Endorsement, Criminal Law, Constitutional Questions, Canadian Charter of Rights and Freedoms, Freedom of Expression
[Watt, Tulloch and Benotto JJ.A.]
J. Rosen and P. Alexander, for the appellant.
A. Alyea, for the respondent.
Keywords: Criminal Law, Second Degree Murder, Circumstantial Evidence, Hearsay, Instructions to Jury