Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of May 30, 2022.

In SS&C Technologies Canada Corp v The Bank of New York Mellon Corporation, the Court determined that the application judge had authority to amend his reasons for decision on liability after they were released and before signing judgment, which he will not sign until the conclusion of the upcoming damages phase of the proceeding. The Court found that in doing so, the application judge did not demonstrate a reasonable apprehension of bias warranting a stay of the liability aspect of the judgment pending appeal. The damages phase is to be concluded before the appellants can appeal the entire judgment.

In McGuire v Bator, the Court determined that the trial judge did not err in concluding that the respondent was not responsible for paying child support to the appellant and her son and in denying the claim for a constructive trust interest in the respondent’s home. The Court agreed with the trial judge that the appellant had a needs-based entitlement to spousal support because of her disability, however it found that the lump-sum award of spousal support by the trial judge was in error. It ordered ongoing support for an indefinite duration.

Other topics covered this week included more family law (joint decision making and stay pending appeal/service outside Canada) and franchise law (rescission and claim to unpaid royalties).

Table of Contents

Civil Decisions

McGuire v Bator , 2022 ONCA 431

Keywords: Family Law, Spousal Support, Child Support, Property, Remedies, Constructive Trusts, Civil Procedure, Costs, Offers to Settle, Spousal Support Advisory GuidelinesFamily Law Act, R.S.O. 1990, c.F.3, ss 43(5), 34(5), Family Law Rules, O. Reg. 114/99, Rules 18, 24, Chartier v Chartier, [1999] 1 S.C.R. 242, Bracklow v Bracklow, [1999] 1 S.C.R. 420, Gray v Gray, 2014 ONCA 659, Reisman v Reisman, 2014 ONCA 109, Djekic v Zai, 2015 ONCA 25, Fielding v Fielding, 2015 ONCA 901, Beaver v Hill, 2018 ONCA 840

Proulx v. Proulx , 2022 ONCA 428

Keywords: Family Law, Parenting, Joint Decision-Making, Civil Procedure, Costs, Children’s Law Reform Act, SO 1990, c C12, ss 24(3)(i) & (j), Divorce Act, RSC 1985, c 3 (2nd Supp), s. 2, Courts of Justice Act, R.S.O. 1990, c C.43, s 131(1), Family Law Rules, O. Reg. 114/99, Rules 24(1) and 24(12), Mattina v. Mattina, 2018 ONCA 867, Young v. Young, [1993] 4 S.C.R. 3

Coffee Time Donuts Incorporated v. 2197938 Ontario Inc., 2022 ONCA 435

Keywords: Contracts, Franchise Agreements, Royalties, Civil Procedure, Summary Judgment, Limitations Act, 2002, S.O. 2002, c. 24, Schedule B, Ventas Inc v Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, Saint John Tug Boat Co. Ltd. V Irving Refining Ltd., [1964] S.C.R. 614

Capone v Fotak , 2022 ONCA 430

Keywords: Family Law, Civil Procedure, Appeals, Stay Pending Appeal, Service of Documents, Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 15 November 1965, 658 U.N.T.S. 163, Can. T.S. 1989 No. 2 (entered into force 10 February 1969, accession by Canada 1 May 1989), Rules of Civil Procedure, Rules 17.05(3)(b), 16.01(2), 17.06(1), Family Law Rules, O. Reg. 114/99, Rules; 6(1), 6(15.1), Consolidated Practice Direction Regarding Proceedings in the Court of Appeal During the COVID-19 PandemicPopack v. Lipszyc, 2016 ONCA 135, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Wilson v. Servier Canada Inc., 50 O.R. (3d) 219 (S.C.)

SS&C Technologies Canada Corp v The Bank of New York Mellon Corporation , 2022 ONCA 373

Keywords: Contracts, Civil Procedure, Reasonable Apprehension of Bias, Appeals, Stay Pending Appeal, Bifurcation, Rules of Civil Procedure, Rule 38.10 (b), Montague v Bank of Nova Scotia (2004), 69 OR (3d) 87, leave to appeal refused, [2004] SCCA No 79, 1711811 Ontario Ltd v Buckley Insurance Brokers Ltd, 2014 ONCA 125, Brown v The Municipal Property Assessment Corp, 2014 ONSC 7137 (Div Ct), RJR-MacDonald Inc v Canada (AG), [1994] 1 SCR 311, Circuit World Corp v Lesperance (1997), 33 OR (3d) 674 (CA), International Corona Resources Ltd v LAC Minerals Ltd (1986), 21 CPC (2d) 252 (Ont CA), Yukon Francophone School Board Education Area #23 v Yukon (AG), 2015 SCC 25, Committee for Justice and Liberty v National Energy Board, [1978] 1 SCR 369, Marchand v The Public General Hospital Society of Chatham (2000), 51 OR (3d) 97 (CA), R v RDS, [1997] 3 SCR 484, Stuart Budd & Sons Limited v IFS Vehicle Distributors ULC, 2016 ONCA 60, R v Arnaout, 2015 ONCA 655, Urbacon Building Groups Corp v Guelph (City), 2014 ONSC 3840, Korea Data Systems (USA), Inc v Aamazing Technologies Inc, 2012 ONCA 756, Robert J Sharpe, Injunctions and Specific Performance (Toronto: Canada Law Book, 2021)

2611707 Ontario Inc. v Freshly Squeezed Franchise Juice Corporation , 2022 ONCA 437

Keywords: Contracts, Franchise Agreements, Disclosure, Rescission, Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c.3, Raibex Canada Ltd. v. ASWR Franchising Corp., 2018 ONCA 62, Mendoza v. Active Tire & Auto Inc., 2017 ONCA 471

Short Civil Decisions

Avedian v. Enbridge Gas Distribution Inc., 2022 ONCA 434

Keywords: Civil Procedure, Appeals, Jurisdiction, Functus Officio, Trials, Trial List, Summary Judgment, Contempt, Rules of Civil Procedure, Rule 20.05(2)(n)

Canadian Imperial Bank of Commerce v. Sutherland, 2022 ONCA 426

Keywords: Civil Procedure, Contracts, Debtor-Creditor, Mortgages, Assignment, Civil Procedure, Summary Judgment, Striking Pleadings, No Reasonable Cause of Action or Defence


CIVIL DECISIONS

McGuire v Bator, 2022 ONCA 431

[Benotto, Zarnett and Copeland JJ.A.]

COUNSEL:

M.M. in person A. Morrison and M Sretenovic, for the respondent

Keywords: Family Law, Spousal Support, Child Support, Property, Remedies, Constructive Trusts, Civil Procedure, Costs, Offers to Settle, Spousal Support Advisory GuidelinesFamily Law Act, R.S.O. 1990, c.F.3, ss 43(5), 34(5), Family Law Rules, O. Reg. 114/99, Rules 18, 24, Chartier v Chartier, [1999] 1 S.C.R. 242, Bracklow v Bracklow, [1999] 1 S.C.R. 420, Gray v Gray, 2014 ONCA 659, Reisman v Reisman, 2014 ONCA 109, Djekic v Zai, 2015 ONCA 25, Fielding v Fielding, 2015 ONCA 901, Beaver v Hill, 2018 ONCA 840

FACTS:

The appellant and the respondent were involved in a romantic relationship when the appellant moved into the respondent’s home with her nine-year-old son. The appellant sold her condo and used the net proceeds for household expenses in the respondent’s home. They cohabitated for five years during which the appellant became disabled by illness. The appellant was designated “disabled” by Canada Pension Plan and as of the date of trial her only source of income was her disability payment of about $1,200 per month.

Following the illness, the respondent was frustrated with the appellant’s inability to continue living as she had before. The respondent provided the appellant with an ultimatum: either she signed a contract to perform household services and pay the respondent rent of $1,250 retroactive to October 2017, or she would be evicted as a trespasser. She objected to the contract and was given a document entitled “Trespass Notice and Eviction” requiring her to leave within four days. The appellant had nowhere to go and was unable to work, resulting in the respondent calling the police to remove her. The respondent relied on the eviction to demonstrate that he had no parental role with the appellant’s son. The appellant then pursued a claim for child support for herself and her son and a constructive trust interest in the respondent’s home.

The appellant appealed the decision of the trial judge, whereby a lump sum payment of spousal support was ordered on a needs basis but the appellant was not entitled to child support, and the claim for a constructive trust interest in the home was dismissed. The respondent cross-appealed on the issue of costs.

ISSUES:

(1) Did the trial judge err in law in her determination on child support?

(2) Did the trial judge err in law in her dismissal of the claim for a constructive trust interest in the home?

(3) Did the trial judge err in law in her determination of spousal support?

(4) Did the trial judge err in her determination of costs?

HOLDING:

Appeal allowed in part. Cross-appeal dismissed.

REASONING:

(1) No

To establish an entitlement to child support, the appellant has the onus to prove that the respondent exhibited a settled intention to treat the child as his own. The court must look to the factors set out in Chartier v Chartier [1999] 1 S.C.R. 242, which include, but are not limited to: whether the child participates in the extended family in the same way as would a biological child; whether the person provides financially for the child (depending on ability to pay); whether the person disciplines the child as a parent; whether the person represents to the child, the family, the world, either explicitly or implicitly, that he or she is responsible as a parent to the child; the nature or existence of the child’s relationship with the absent biological parent.

The trial judge concluded that the respondent did not exhibit a settled intention to treat the child as his own. The parties did not share a bank account, the respondent expected the appellant to pay him back for the expenses relating to her child, the respondent did not discipline the child, the appellant’s child did not call the respondent dad, the respondent introduced the child as the appellant’s son, and the respondent treated the appellant’s son differently from his own children. These findings were open to the trial judge on the evidence.

(2) No

The trial judge did not err in dismissing the appellant’s claim for a constructive trust interest in the home, as the Court held that the findings made were open to the trial judge on the evidence. The appellant submitted that the respondent was unjustly enriched because she paid for new windows in his home ($15,705) and gave him $65,000 after the sale of her condo. She submitted that the respondent used the money to pay off the loan for a vehicle purchased for her and to pay down a line of credit. The respondent argued that once the appellant moved in, she needed help paying her mortgage and expenses, and that the appellant agreed to pay him back once she sold her condo. The trial judge accepted the respondent’s evidence that the $65,000 was a repayment. The Court agreed, noting that the trial judge was correct to find that there was no unjust enrichment, since there was no evidence that the home improvements increased the value of the home.

(3) Yes

The trial judge made a finding that the appellant had a needs-based entitlement to spousal support because of her disability. The trial judge awarded the appellant a lump sum payment to “permit the parties to move on with their lives”. The trial judge relied on the Spousal Support Advisory Guidelines (“SSAG”) formula inputted into a software programme. The trial judge chose the mid-range quantum, but the lowest-end duration. The Court held that this approach was problematic for three reasons:

1. There was no analysis of how the award achieved the objectives of spousal support.

2. There was no explanation of why, in the case of an ill and disabled spouse unable to work, a mid-range support amount for the lowest duration was appropriate.

3. A lump sum to achieve a clean break was not appropriate in the circumstances.

The objectives for needs-based spousal support are set out in Bracklow v Bracklow, [1999] 1 S.C.R 420, where the Court concluded that one is simply not allowed to abandon a spouse to destitution at the end of a marriage if one has financial resources which might assist in relieving the other spouse’s financial circumstances.

The Court concluded that the evidence here was that the appellant’s disability would continue. The Court relied on the statement in Gray v Gray, 2014 ONCA 659, that the duration of support is an issue that ought to be contemplated under SSAG. For the support to terminate, there must be a realistic prospect of the spouse being able to become self-sufficient, and here, the trial judge erred, as the appellant remains disabled and unable to support herself. There was no evidence that her situation had changed or will change in the future.

One of the purposes of a spousal support order is to relieve financial hardship and for a former spouse to fulfil a basic social obligation to provide support where they are able to do so and the recipient spouse is not. The trial judge did not explain how the termination of support after two-and-a-half years achieved these or other objectives.

The Court determined that the trial judge ignored the explicit exception to the SSAG that occurs in the event of disability. As stated in the SSAGs at chapter 12, illness and disability often require “restructuring” of duration and/or quantum. The trial judge erred in failing to explain her choices, and that consideration was required as to whether the circumstances of illness and disability should result in a departure from the basic formula.

Finally, the Court concluded that the trial judge misunderstood the notion of a clean break by converting the limited term support award to a lump sum, as without further explanation, the Court found it difficult to see how a clean break, which is normally appropriate for compensatory support, applies to needs-based support arising from disability.

The Court ordered continuing periodic spousal support payable to the appellant of $620 per month, to be indexed annually, as required by the SSAGs and in accordance with s. 34(5) of the Family Law Act, R.S.O. 1990, c. F.3, and for an indefinite duration subject to review based on any material change in circumstances.

(4) No

The respondent sought leave to cross-appeal on the issue of costs. The trial judge found that the respondent’s behaviour was unreasonable with respect to his original position on the length of cohabitation, the manner in which the appellant and her son were forced from the home, and in his position that the appellant was not entitled to any support. The Court concluded that the trial judge was correct in this determination, as the trial judge exercised her discretion under r. 24(4) to deny a party who has behaved unreasonably all or part of their costs.


Proulx v. Proulx , 2022 ONCA 428

[van Rensburg, Harvison Young and Copeland JJ.A.]

COUNSEL:

J. Dolgin, for the appellant

P. Liston, for the respondent

Keywords: Family Law, Parenting, Joint Decision-Making, Civil Procedure, Costs, Children’s Law Reform Act, SO 1990, c C12, ss 24(3)(i) & (j), Divorce Act, RSC 1985, c 3 (2nd Supp), s. 2, Courts of Justice Act, R.S.O. 1990, c C.43, s 131(1), Family Law Rules, O. Reg. 114/99, Rules 24(1) and 24(12), Mattina v. Mattina, 2018 ONCA 867, Young v. Young, [1993] 4 S.C.R. 3

FACTS:

The parties met in 1998 and moved in together shortly after. They married in 2011 and have one child, H.P., who is now ten years old. The parties separated on September 24, 2016, when the appellant moved herself and H.P. to her mother’s home. The appellant made criminal allegations against the respondent but the respondent was ultimately acquitted. However, the criminal proceedings forced him to reside in Ottawa with family and kept him from attending the matrimonial home except to retrieve some belongings. Since February 2017, the respondent has had parenting time with H.P. every second weekend from Friday evening to Sunday afternoon. The appellant and H.P. live in the matrimonial home with the appellant’s new partner. H.P. continues to attend school in Renfrew.

The trial judge ordered joint decision-making. Under the terms of the order, H.P. will continue to live primarily with his mother and spend time with his father from Friday to Monday on alternating weeks, and Sunday nights every other week. H.P.’s mother appealed on the grounds that the trial judge erred in granting joint decision-making with no evidence of effective communication between the parties. The appellant also argued that the trial judge erred in law by failing to categorize the father’s conduct as “family violence” under the recently amended s. 2 of the Divorce Act, RSC 1985, c 3 (2nd Supp), as amended by SC 2019, c 16, s 1(7). The appellant sought a return of the status quo that persisted after the parties separated.

ISSUES:

(1) Did the trial judge err in granting joint decision-making?

(2) Did the trial judge consider whether there was family violence?

(3) Did the trial judge err in her costs award?

HOLDING:

Appeal dismissed.

REASONING:

(1) No

The trial judge was well-aware of the test applicable to an order for joint decision-making. Throughout her careful and extensive reasons, she constantly centred her analysis on the best interests of the child, the only proper consideration in determining the child’s residence, decision-making, and parenting time: Young v. Young, [1993] 4 S.C.R. 3 at pp. 62-63. She ultimately fashioned an order that would increase the time that H.P. spends with his father and his extended family while taking account of the practical realities given the distances involved.

The trial judge expressly considered the parties’ ability to communicate and co-operate with the conditions of her order under section 24(3)(i) of the Children’s Law Reform Act (“CLRA”). She noted that the parties have managed to communicate with respect to the child, largely with the assistance of the respondent’s spouse, who gets along well with the appellant. The trial judge correctly stated that a standard of perfection is not required and concluded that the parties are able to make decisions jointly concerning the child in the future.

(2) Yes

The trial judge painstakingly considered all the appellant’s allegations within the meaning of s. 24(3)(j) of the CLRA. She devoted over 70 paragraphs of her decision to the issue of family violence. She cited the definition from the Divorce Act, weighed the relevant evidence and ultimately found against the appellant. Her findings were amply grounded in the record before her.

(3) Yes

The Court disagreed with the appellant’s argument that she was the successful party at trial due to important and complex financial issues determined in the appellant’s favour and the order that the child continue to reside primarily with her at trial. Addressing this argument, the trial judge concluded that the lion’s share of the time at trial was spent on the parenting issues and ruled that it was in the best interests of the child to maintain primary residence in Renfrew due to the status quo created by the mother’s conduct. The Court found no basis to interfere with the trial judge’s finding that the respondent was the successful party.

The Court found no basis to interfere with the assessment of the quantum of the costs awarded. In assessing the quantum, the trial judge properly considered the factors set out in rule 24(12) of the Family Law Rules, O. Reg. 114/99. In doing so, she was exercising her discretion and her award under s. 131(1) of the Courts of Justice Act attracts significant deference. The trial judge considered offers to settle, unreasonable conduct, and bad faith: Mattina v. Mattina, 2018 ONCA 867, at para. 14. In short, the appellant did not identify any error in law or principle, or palpable and overriding error that justified intervention.


Coffee Time Donuts Incorporated v. 2197938 Ontario Inc., 2022 ONCA 435

[Van Rensburg, Harvison Young, and Copeland, JJ.A.]

COUNSEL:

R.S. Mann, for the appellants

J.S. Quigley, for the respondent

Keywords: Contracts, Franchise Agreements, Royalties, Civil Procedure, Summary Judgment, Limitations Act, 2002, S.O. 2002, c. 24, Schedule B, Ventas Inc v Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, Saint John Tug Boat Co. Ltd. V Irving Refining Ltd., [1964] S.C.R. 614

FACTS:

The appellants appealed the summary judgment granted to the respondent. The parties entered into a franchise agreement on July 31, 2009, relating to the appellants operating their business as a “Coffee Time” store. The written agreement expired on July 31, 2014. However, the motion judge found that the appellants remained in operation pursuant to its terms.

The respondent commenced an action for unpaid royalties on the basis that the parties continued the agreement by their conduct after the expiration of the written agreement. At the summary judgment motion, the appellants contended that there were credibility issues that made the matter unsuitable for summary judgment, and that all or portions of the claim were statute-barred under the Limitations Act, 2002.

The motion judge relied on the principles of contractual interpretation set out by the Court in Ventas Inc v Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, and adopted the terms of the expired franchise agreement as effective until January 25, 2021, on the basis that the entirety of the agreement was being followed by the parties for almost 19 months following its expiry.

The motion judge further held that the portions of the respondent’s claim between February 16, 2026 and August 9, 2017 were brought outside the two-year limitation period.

ISSUES:

(1) Did the motion judge err in finding that the agreement between the appellants and the respondent continued after the term of the written agreement expired?

(2) Did the motion judge err in finding that the full machinery of a trial was not required to decide the issues in this claim?

(3) Did the motion judge err in using January 25, 2021, as the end date for calculating damages?

(4) Did the motion judge err in concluding that only a portion of the claim prior to August 9, 2017 was statute-barred?

HOLDING:

Appeal dismissed.

REASONING:

(1) No

The Court found no basis to interfere with the finding by the motion judge that the agreement was continued by the conduct of the parties after the expiration of the written agreement. The appellants continued to buy products from the exclusive suppliers under the franchise agreement after the end of the term of the written agreement, continued to use “Coffee Time” branding, and continued to pay franchise royalties to the respondent until February 16, 2016. Even after the appellants ceased paying the franchise royalties, they continued to use the “Coffee time’ branding for their business and to purchase products from authorized suppliers.

(2) No

The Court did not accept the appellants’ argument that the matter was not properly decided by summary judgment because the affidavits before the motion judge were “untested and unproven”. The basic facts and chronology of events after the term of the written agreement ended were not in dispute. Neither party opted to cross-examine on the affidavits filed on the motion. The Court determined that motion judge’s finding that the appellants’ position did not give rise to a genuine issue for trial was reasonable. There was no evidence of whether sales continued at their store after the term of the written agreement. Having chosen not to file any evidence on the summary judgment motion about their sales or to dispute the amounts in the invoices sent by the respondents, the appellants could not now complain about the absence of evidence on that issue.

(3) No

The Court concluded that January 25, 2021 was the date that the “Coffee Time” branding was removed from the appellant’s business, pursuant to the order of Diamond J, and that up until that date, the appellants’ business was operating as a “Coffee Time” store.

(4) No

The Court did not find issue with the motion judge’s conclusion that only the portion of the claim prior to August 9, 2017 was statute-barred. The appellants argued in their written submissions that the entire claim by the respondent was statute-barred, but did not pursue this argument in oral submissions.


Capone v Fotak , 2022 ONCA 430

[Strathy C.J.O., Sossin and Favreau JJ.A.]

COUNSEL:

Z.F. in person

H. Niman and J. Liew, for the respondent

Keywords: Family Law, Civil Procedure, Appeals, Stay Pending Appeal, Service of Documents, Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 15 November 1965, 658 U.N.T.S. 163, Can. T.S. 1989 No. 2 (entered into force 10 February 1969, accession by Canada 1 May 1989), Rules of Civil Procedure, Rules 17.05(3)(b), 16.01(2), 17.06(1), Family Law Rules, O. Reg. 114/99, Rules; 6(1), 6(15.1), Consolidated Practice Direction Regarding Proceedings in the Court of Appeal During the COVID-19 PandemicPopack v. Lipszyc, 2016 ONCA 135, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Wilson v. Servier Canada Inc., 50 O.R. (3d) 219 (S.C.)

FACTS:

The appellant appealed a decision of the motion judge dismissing a motion to stay a total of ten previous court orders in his family law dispute with the respondent. The appellant brought a motion to quash the decision of a case management judge, which found that the respondent’s responding materials in this appeal were properly and timely served.

ISSUES:

(1) Did the motion judge err in dismissing a motion to stay a total of ten previous court orders in the appellant’s family law dispute with the respondent?

(2) Did the case management judge err in finding that the respondent’s responding materials in this appeal were properly and timely served?

HOLDING:

Appeal and motion dismissed.

REASONING:

(1) No.

The motion judge did not error with respect to the analysis of jurisdiction which would warrant appellate intervention. There was no basis to interfere with the motion judge’s discretionary decision to refuse to grant the requested stay of the court orders.

The appellant submitted that the Court lacked jurisdiction to make the ten previous orders, as the originating materials in 2013 were not served on him in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. This argument was rejected, as the motion judge found that the Convention applied with respect to the service of documents outside of Canada, pursuant to Rule 17.05(3)(b) of the Rules of Civil Procedure. The motion judge found that the appellant was properly served under the Convention, as service by postal channels between Canada and the United States is permitted under Article 10 of the Convention. Further, the motion judge found that service complied with rule 6 of the Family Law Rules, as there was a court order permitting service by an alternative to personal service prior to the service taking place.

Secondly, the motion judge applied the three-part test for a stay set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at p. 334. The motion judge found the appellant’s challenge to the Court’s jurisdiction lacked merit. She also found no irreparable harm to the appellant, as any financial harm caused by not staying the continuing interim orders could be remedied by a final order. Further, she found that the appellant was the cause of his own situation in failing to comply with the continuing court orders. Finally, she found that a balance of convenience favoured refusing to grant the stay, as staying the orders would create chaos for the parties and a dire financial situation for the respondent.

(2) No.

The case management judge did not err in finding that the materials for the appeal were properly and timely served. The respondent’s materials were properly and timely served by email, as they were not an originating process. The Court’s Consolidated Practice Direction Regarding Proceedings in the Court of Appeal During the COVID-19 Pandemic, at paras. 37-38, permits electronic service of such documents.


SS&C Technologies Canada Corp v The Bank of New York Mellon Corporation , 2022 ONCA 373

[Lauwers J.A.]

COUNSEL:

J. T. Curry, B. Kolenda, C. Yung and B. Kain, for the moving parties

C. Paliare, R. Bucolz, G. Hawe and C. Fan, for the responding party

Keywords: Contracts, Civil Procedure, Reasonable Apprehension of Bias, Appeals, Stay Pending Appeal, Bifurcation, Rules of Civil Procedure, Rule 38.10 (b), Montague v Bank of Nova Scotia (2004), 69 OR (3d) 87, leave to appeal refused, [2004] SCCA No 79, 1711811 Ontario Ltd v Buckley Insurance Brokers Ltd, 2014 ONCA 125, Brown v The Municipal Property Assessment Corp, 2014 ONSC 7137 (Div Ct), RJR-MacDonald Inc v Canada (AG), [1994] 1 SCR 311, Circuit World Corp v Lesperance (1997), 33 OR (3d) 674 (CA), International Corona Resources Ltd v LAC Minerals Ltd (1986), 21 CPC (2d) 252 (Ont CA), Yukon Francophone School Board Education Area #23 v Yukon (AG), 2015 SCC 25, Committee for Justice and Liberty v National Energy Board, [1978] 1 SCR 369, Marchand v The Public General Hospital Society of Chatham (2000), 51 OR (3d) 97 (CA), R v RDS, [1997] 3 SCR 484, Stuart Budd & Sons Limited v IFS Vehicle Distributors ULC, 2016 ONCA 60, R v Arnaout, 2015 ONCA 655, Urbacon Building Groups Corp v Guelph (City), 2014 ONSC 3840, Korea Data Systems (USA), Inc v Aamazing Technologies Inc, 2012 ONCA 756, Robert J Sharpe, Injunctions and Specific Performance (Toronto: Canada Law Book, 2021)

FACTS:

SS&C Technologies Canada Corp sold data to BNY under a data services agreement. CIBC Mellon (a Canadian joint venture between Mellon Financial Corporation and CIBC) had its own data services agreement with SS&C, which it terminated. At that point, CIBC Mellon began taking SS&C’s data from BNY. In 2017, SS&C brought an application claiming damages from BNY, on the basis that BNY was sharing data in breach of its data sharing agreement with SS&C, and that CIBC Mellon was in knowing receipt of the data. BNY defended, asserting that it was entitled to share the data it purchased from SS&C with all BNY entities, including CIBC Mellon.

The application judge found BNY’s data sharing to be in breach of its contract with SS&C. He directed a trial on damages because he found that he needed the assistance of witnesses to understand the paper record.

In light of the application judge’s amendments to the liability reasons, the appellants brought a motion asking the application judge to recuse himself and to declare a mistrial based on a reasonable apprehension of bias. The recusal motion was dismissed as it was found that the appellants had not established a reasonable apprehension of bias.

The appellants, the Bank of New York Mellon Corporation (“BNY”) and CIBC Mellon Global Securities Services Company (“CIBC Mellon”), sought an order staying the recusal motion judgment. The appellants submitted that the amendments the application judge made to his reasons for judgment gave rise to a reasonable apprehension of bias on his part.

ISSUES:

(1) Did the application judge have authority to amend the reasons for decision after they were released?

(2) Did the application judge’s reasons give rise to a reasonable apprehension of bias on his part that warranted a stay pending appeal?

HOLDING:

Appeal dismissed.

REASONING:

(1) Yes.

The Court referred to Montague v Bank of Nova Scotia, which states: “There can be no doubt that until a judgment is formally entered in the court record, the judge has a very broad discretion to change it. A judge exercising this discretion bears a significant onus to explain the change. Giving clear reasons for decision is always a profoundly important part of judging.”

The Court found that the application judge amended the reasons within the window for doing so, since he had not yet signed the judgment. His reasons for making the amendments included a lengthy explanation for doing so. Whether he nonetheless fell afoul of the principles in Montague is a matter for the panel hearing the ultimate appeal. The immediate question was whether the changes should be seen as giving rise to an apprehension of judicial bias that would justify a stay pending appeal.

(2) No.

The first part of the test for a stay was whether the appellants established that judicial bias in the case constituted a serious issue to be tried.

The appellants’ complaint rested on the amendments to the liability reasons. These amendments to the liability reasons were submitted to have had the effect of eviscerating the appellants’ main ground of appeal in the Notice of Appeal. The appellants pointed to several actions by the application judge as demonstrating his personal investment in his liability decision. The first was in refusing to sign the order before the damages trial in order to prevent an immediate appeal on the liability issue. The application judge candidly acknowledged in his initial reasons refusing a stay that he did this in order to avoid an attempt by BNY “to bootstrap itself into a right of appeal”, which he noted again in his recusal reasons. The second is that in the amendment reasons the application judge granted a declaration by reaching back to the original application factum. He did this on his own and not in response to submissions from counsel.

The reasons given by the application judge for the amendments were cogent and responsive to the requests he faced, the arguments he heard, and to the evidence in the case with which he was deeply familiar. The reasons he gave did not reveal indicia of bias such as result-selectivity, tendentiousness, or defensiveness, all of which one might anticipate from a judge who was attempting to dispel an allegation of bias. The appellants pointed out that the application judge did not refer to the fact that the respondent waited until the appeal was firmly scheduled after the damages trial before asking for changes to the liability decision, which the respondent had never challenged in six prior appearances before the application judge and the Court.

The application judge faced a difficult situation. There had to be clear directions for the upcoming damages trial as to what was in issue, and the respondent had raised an obvious error in the reasons. Whether that error and the application judge’s amendments exemplified a deeper problem with his reasons was a matter for the panel hearing the appeal. The Court could not find any indicia of bias on the part of the application judge sufficient in the circumstances to have warranted a stay of the judgment pending appeal. Applying the measure in RDS, the appellants did not demonstrate a real likelihood or probability of bias beyond a mere suspicion. The Court did not find that the appellants raised a serious bias issue to be tried.

While this was sufficient to dispose of the motion, the Court completed the rest of the steps in the stay analysis.

The second part of the stay test was irreparable harm. Assuming that bias was sufficiently made out, this part would have weighed against proceeding to the damages trial, but the Court viewed that it should not be dispositive. The respondent pointed out that a damages trial was necessary in any event regardless of the status of the claim that flowed from CIBC Mellon’s data sharing. They asserted that the appellants “have now admitted that at least 65 different corporate entities were given access to SS&C’s proprietary data.” This was not denied by the Court. The Court found it hard to see how the “unconscious instincts” bias argument counsel made impacted the determination of damages related to the 64 entities other than CIBC Mellon, which appeared to comprise two-thirds of the amount of damages.

The third part of the stay test, the balance of convenience, did not weigh in favour of a stay, but against it. The balance of convenience shaded into the overarching consideration – the interests of justice, which favoured both the completion of the application process and a single appeal to hear both liability and damages. The application judge’s decision to order a tailored trial on the damages issue under Rule 38.10(b) of the Rules of Civil Procedure, as a continuous part of the application, was a discretionary decision on which appellate deference was owed. The civil justice system generally does not favour appeals between phases of a proceeding. The Court refused to schedule the liability appeal before the damages trial and gave leave to the appellants to file a Supplementary Notice of Appeal.


2611707 Ontario Inc. v Freshly Squeezed Franchise Juice Corporation, 2022 ONCA 437

[Gillese, Trotter and Harvison Young JJ.A.]

COUNSEL:

J. Kulathungam and N. Panamaldeniya, for the appellants

A. Boudreau and D. Hamson, for the respondents

Keywords: Contracts, Franchise Agreements, Disclosure, Rescission, Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c.3, Raibex Canada Ltd. v. ASWR Franchising Corp., 2018 ONCA 62, Mendoza v. Active Tire & Auto Inc., 2017 ONCA 471

FACTS:

The respondent franchisees successfully applied to rescind a franchise agreement with the appellant franchisors. The officer and director of the franchisee met with the sole officer and director of the franchisor, the respondents, after seeing an advertisement for the sale of a Freshly Squeezed franchise in a hospital food court. The appellant visited the location and the parties entered into a franchise agreement in January 2018. The appellants delivered the franchise disclosure document (“FDD”) on December 2017.

After three months of operation, the respondents served a notice of rescission on the appellants, alleging material non-disclosure in the franchise agreement under section 6(2) of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c.3 (“Act”). The application judge agreed with the respondents and declared the agreement validly rescinded. The application judge found that the respondents’ FDD was deficient to the point of non-disclosure in three areas:

1. The financial statements did not include explanatory notes; 2. The appellant failed to disclose that they had not yet entered into a head lease or whether the respondents would have the benefit of an escape clause should the terms of the lease be unacceptable; and 3. The appellants failed to advise the respondents that the franchise was their first non-mall location.

The appellants submitted that the application judged erred in reaching each finding of material deficiency. They argued that the application judge erred in finding that the test for assessing material deficiencies pursuant to section 6(2) is to be assessed objectively rather than subjectively.

ISSUES:

(1) Did the application judge err in determining that the respondents had met the test for a valid rescission without evidence of actual impairment?

(2) Did the application judge err by finding that the disclosure deficiencies justified rescission?

HOLDING:

Appeal dismissed.

REASONING:

(1) No

The application judge did not err in determining that the respondents had met the test for rescission without evidence of actual impairment. To justify rescission under section 6(2) of the Act, the franchisor’s FDD must be “so deficient as to effectively amount to a complete lack of disclosure”. Section 6(2) is only engaged where the deficient disclosure prevents the franchisee from making an informed decision about whether or not to invest in the franchise. The section 6(2) test focuses on the disclosure itself, not its recipient, because the Act seeks to ensure that the franchisor provides the same disclosure to every potential franchisee. (2) No

The application judge’s determination that the deficiencies were material was entitled to defence, absent palpable and overriding error. The application judge determined that the appellants’ failure to include the notes to the financial statement was a material deficiency. The Court concluded that these notes were necessary to allow the respondents to assess the financial health of the franchise system.

The Court did not identify an error in the application judge’s finding that the appellants’ failure to disclose a negotiated agreement to lease and the absence of a head lease prevented the respondents from making an informed investment. The application judge concluded that the appellants failed to disclose that the franchise was the first to be located outside of a mall, and that this failure rendered the FDD essentially worthless. The Court concluded that the Act imposes an obligation on the franchisor, not the franchisee. The appellants were duty-bound to inform the respondents that they were essentially test-driving the franchise in a non-mall setting. Their failure to do so caused the respondents to unknowingly invest in a business model with no record of success. The Court saw no error on the part of the application judge on this point.



SHORT CIVIL DECISIONS

Avedian v. Enbridge Gas Distribution Inc., 2022 ONCA 434

[Huscroft J.A.]

COUNSEL:

C. Carter, for the appellants

C. Sefton for the respondent Enbridge Inc.

J.G. Norton for the respondents Enbridge Gas Distribution and Lakeside Performance Gas Services

Keywords: Civil Procedure, Appeals, Jurisdiction, Functus Officio, Trials, Trial List, Summary Judgment, Contempt, Rules of Civil Procedure, Rule 20.05(2)(n)

Canadian Imperial Bank of Commerce v. Sutherland, 2022 ONCA 426

[Benotto, Zarnett, Copeland J.A.]

COUNSEL:

S.S., acting in person

R. Aisenberg for the respondent

Keywords: Civil Procedure, Contracts, Debtor-Creditor, Mortgages, Assignment, Civil Procedure, Summary Judgment, Striking Pleadings, No Reasonable Cause of Action or Defence