Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of October 17, 2022.

In Caja Paraguyaya De Jubilaciones Y Pensiones Del Personal De Itaipu Binacional v. Obregon, the Court clarified the issue of whether the civil standard for stay pending appeal, or the criminal standard for bail pending appeal, applies to a party being held in civil contempt. The Court held that the proper procedure is to apply the civil standard for stay pending appeal, but the factors in the RJR-MacDonald test can be influenced by the principles underlying applications for bail pending appeal as outlined in R. v. Oland.

In 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc., the Court was asked by a Landlord to determine whether a deposit held by the Landlord had been wrongfully ordered to be returned to the Tenant pursuant to the default provision of the Lease. The Court determined that, as the Tenant was in default under the Lease, the Landlord should not have been ordered to return the deposit. The Court also considered the Tenant’s cross-appeal, where the Tenant sought relief from paying for roof repairs, amortized over the course of two years. The Court held that the repairs to the roof were properly a capital repair pursuant to the Lease, and therefore should be amortized over its useful life.

In Fair v. BMO Nesbitt Burns Inc., a claim by a disappointed beneficiary of certain investment accounts of her late husband, the Court upheld the motion judge’s determination that a bank or financial adviser do not owe a duty to their customer to disclose the fact that their partner had changed the beneficiary designation on their registered investment accounts, even though the bank/financial adviser had both of them as clients and had shared information about both of them to the other in the past. To recognize such a duty would be contrary to the concurrent obligations of confidentiality that a bank/financial adviser has to its clients.

Other topics this week included the Court’s review of a motion judge’s decision to deny an extension of time for perfecting an appeal, an appeal that was dismissed as being vexatious (congratulations to our very own Sheldon Inkol on that one), a Will challenge and an appeal of a power of sale as being fraudulent and improvident.

Finally, the second edition of Civil Procedure and practice Ontario, 2022 ONCA 720(CPPO) is now live on CanLII’s website. For those who may not know, CPPO offers to the public, the profession and the judiciary, a free online set of annotated Rules of Civil Procedure, as well as the Courts of Justice Act and the Limitations Act, 2002, complete with commentary and case law. The project was coordinated by Professor Noel Semple of Windsor Law School, and the chapters were written by a host of prominent and knowledgeable practitioners and judges. I had the privilege of co-authoring the chapters on references (Rules 54 and 55). Wishing everyone an enjoyable weekend.

Table of Contents

Civil Decisions

Sheth v. Randhawa, 2022 ONCA 707

Keywords: Contracts, Real Property, Mortgagee, Settlements, Enforcement, Power of Sale, Setting Aside, Improvident Sale

M.E. v. Ontario, 2022 ONCA 714

Keywords: Family Law, Crown Wardship, Civil Procedure, Vexatious Litigants, Rules of Civil Procedure, r. 2.1.01, M.E. et al. v. Her Majesty the Queen in Right of Ontario et al., 2019 ONSC 7325, M.E. v. R., 2020 ONCA 429M.E. et al. v. HMTQ et al., 2021 ONSC 2862, Lochner v. Ontario Civil Police Commission, 2020 ONCA 720, Mukwa v. Farm Credit of Canada, 2022 ONCA 320

Fair v. BMO Nesbitt Burns Inc. , 2022 ONCA 711

Keywords: Wills and Estates, Constructive Trusts, Contracts, Financial Advisors, Duty to Disclose, Family Law Act, R.S.O. 1990, c. F.3, s. 13, Evidence Act, R.S.O. 1990, c. E.23, s. 13, Davidson v. Noram Capital Management Inc. (2005), 13 B.L.R. (4th) 35 (Ont. S.C.)., Moore v. Sweet, 2018 SCC 52, Edell v. Sitzer (2001), 55 O.R. (3d) 198 (S.C.), Hryniak v. Mauldin, 2014 SCC 7

Caja Paraguyaya De Jubilaciones Y Pensiones Del Personal De Itaipu Binacional v. Obregon, 2022 ONCA 724

Keywords: Civil Procedure, Civil Contempt, Stay Pending Appeal, Bail Pending Appeal, Courts of Justice Act, R.S.O 1990, c. 43, s. 106, Criminal Code, R.S.C. 1985, c. C-46, ss. 673, 679, Rules of Civil Procedure, r. 60.11, 63.02(1), Criminal Appeal Rules, r. 22, Directv, Inc. v. Boudreau (2005), 42 C.P.R. (4th) 388 (Ont. C.A.), T.(M.) v. A.(H.), [1995] 1 S.C.R. 445, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Chiang (Trustee of) v. Chiang, 2007 ONCA 529, R. v. Oland, 2017 SCC 17, Kopaniak v. MacLellan (2002), 159 O.A.C. 37 (C.A.), DM v. WS, 2019 ABCA 422, R. v. Hassan, 2017 ONCA 1008, R. v. Bissonnette, 2022 SCC 23, Master Linda S. Abrams et al., Halsbury’s Laws of Canada, “Civil Procedure”, (Toronto: LexisNexis Canada, 2021 Reissue)

402 Mulock Investments Inc. v. Wheelhouse Coatings Inc., 2022 ONCA 718

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Default, Security Deposits, Additional Rent, Capital Replacement, Amortization, Civil Procedure, Orders, Enforcement, Writs of Possession, Res Judicata, Issue Estoppel, Abuse of Process, Commercial Tenancies Act, R.S.O. 1990, c. L.7, ss. 80, 82, Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020, S.O. 2020, c. 36, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, Behn v. Moulton Contracting Ltd., 2013 SCC 26, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Corner Brook (City) v. Bailey, 2021 SCC 29

Correct Building Corporation v. Lehman, 2022 ONCA 723

Keywords: Civil Procedure, Appeals, Perfection, Extensions for Time, Courts of Justice Act, RSO 1990, c C43, s. 7(5), Municipal Act, 2001, SO 2001, c 25, s. 448, Rules of Civil Procedure, r. 61.16(6), Machado v. Ontario Hockey Association, 2019 ONCA 210, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, Iqbal v. Mansoor, 2022 ONCA 198, 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2015 ONCA 5, Sheth v. Randhawa, 2022 ONCA 89, Howard v. Martin, 2014 ONCA 309, Derakhshan v. Narula, 2018 ONCA 658, 40 Park Lane Circle v. Aiello, 2019 ONCA 451, Duca Community Credit Union Ltd. v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), Auciello v. Mahadeo, 2016 ONCA 414

Short Civil Decisions

Van Decker Estate v. Van Decker, 2022 ONCA 712

Keywords: Real Property, Landlord and Tenant, Occupation Rent, Wills and Estates, Civil Procedure, Adjournments, Corroborating Evidence, Evidence Act, R.S.O. 1990, c. E. 23, s. 13, Toronto Dominion Bank v. Kylton, 2010 ONCA 752, Khimji v. Dhanani (2004), 69 O.R. (3d) 790

Hategan v. Frederiksen, 2022 ONCA 715

Keywords: Civil Procedure, Security for Costs

Rebello v. Del Property Management , 2022 ONCA 720

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Security for Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(2)

CIVIL DECISIONS

Sheth v. Randhawa, ONCA 707

[Doherty, Benotto and Copeland JJ.A.]

COUNSEL:

D. LaFramboise, for the appellant

M. R. Kestenberg and A. Hershtal, for the respondent, K.R

S. Chhina, for the respondents, 11035738 Canada Inc., S.M. and G.S.

D. Yiokaris and A. Shamim, for the respondents, TSD Law Professional Corporation and A.S.D

M. Harris, for the respondents, Bindaas Capital, A. K, S.P, and Dr. Mangesh Inamdar Medicine Professional Corporation

Keywords: Contracts, Real Property, Mortgagee, Settlements, Enforcement, Power of Sale, Setting Aside, Improvident Sale

FACTS:

The appellant had three mortgages on a property purchased in November 2017. The Respondents Bindaas Capital (“Bindaas”) held the first and second mortgage. Park Lane held the third mortgage. The respondents A.K. and S.M were the principals of Bindaas.

By July 2018, the appellant defaulted on the first and second mortgages and Bindaas issued a Notice of Sale with demand for payment. No payment was made. The third mortgagee was served with the Notice of Sale under the first mortgage. The first mortgage was then transferred to Bindaas and B.N. (“Bindaas Group”) in July 2019. This led to lawsuits by the appellant against Bindaas and the Bindaas Group relating to the appellant’s defaults.

On December 4, 2019, the parties entered into a settlement agreement to resolve the two enforcement actions. The appellant did not pay on time and the Bindaas Group proceeded with an ex parte motion for enforcement. On February 13, 2020, the motion for enforcement of the settlement was heard and the motion judge ordered the appellant to pay the Bindaas Group.

Meanwhile, both the appellant and the respondents were trying to sell the property. Neither kept the other informed. The Bindaas group accepted an offer of $970,000 from 11035738 Canada Inc. (“1103 Corp.”) on an “as is” basis. The appellant accepted an offer from B.A. for $1,000,000, which included a collateral agreement allowing her to remain on the property.

On March 9, 2020, the deal between Bindaas and 1103 Corp. closed, and the property was transferred to 1103 Corp. The sale occurred by Power of Sale under the first mortgage. The second mortgage was discharged. The third and fourth mortgages were extinguished by the Power of Sale.

The appellant was not immediately advised the property was sold. On March 16, 2020, the appellant brought an emergency motion and obtained an order setting the amount required to discharge the two mortgages at $929,498. The appellant did not attempt to register the March 16, 2020 order discharging the mortgages until May 7, 2020. The appellant continued to occupy the property and paid no rent to 1103 Corp.

On May 12, 2020, 1103 Corp. issued a notice requiring the appellant to vacate on or before May 17, 2020. On May 13, 2020, the appellant issued a statement of claim suing all the respondent’s conveyance to 1103 Corp., seeking an order setting aside the sale and requiring the transfer of the property to B.A alleging that the conveyance was the product of fraud and conspiracy.

The motion judge dismissed all the appellant’s claims except for the accounting by Bindaas. She held that there was no direct evidence of fraud. The traditional “badges of fraud” were absent. The only two “badges of fraud” potentially present were secrecy in the manner of conveyance, because the appellant was not told of the sale, and the rushed closing of the deal between Bindaas and 1103 Corp. She found that the secrecy and the short closing were explained by the appellant’s history of default and delay.

ISSUES:

(1) Did the motion judge err by considering the traditional “badges of fraud” generally, without consideration of the appellant’s circumstances?

(2) Was the sale to 1103 Corp. improvident and did the motion judge err in concluding otherwise?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The Court found the motion judge was alive to the badges of fraud relied on by the appellant. The motion judge concluded that, given the appellant’s history of default, it was understandable that the appellant was not advised of the sale to 1103 Corp. It was reasonable for the respondents to be concerned that the appellant would seek to frustrate the sale. The short closing was not unusual or suspicious, given that Bindaas had given the appellant ample time to pay out the money owed on the two mortgages.

(2) No.

The property was sold under Power of Sale. The purported sale to B.A., upon which the appellant relied as a comparator, was for $1 million with a collateral agreement that she be allowed to remain in possession. The sale to 1103 Corp. was for $970,000 “as is”. Thus, 1103 Corp. would assume the arrears in property taxes and no real estate fees were payable. The sale to 1103 Corp., therefore, was more beneficial than the purported arrangement with B.A. 1103 Corp. was an arm’s length purchaser. It was open to the motion judge to determine that the sale was not improvident.


M.E. v. Ontario, 2022 ONCA 714

[Fairburn A.C.J.O., Huscroft and George JJ.A.]

COUNSEL:

M.E., acting in person

Sheldon Inkol, for the respondent, Children’s Aid Society of Toronto

S.C. Hutchison, for the respondents, G.A. and A.I.

Keywords: Family Law, Crown Wardship, Civil Procedure, Vexatious Litigants, Rules of Civil Procedure, r. 2.1.01, M.E. et al. v. Her Majesty the Queen in Right of Ontario et al., 2019 ONSC 7325, M.E. v. R., 2020 ONCA 429, M.E. et al. v. HMTQ et al., 2021 ONSC 2862, Lochner v. Ontario Civil Police Commission, 2020 ONCA 720, Mukwa v. Farm Credit of Canada, 2022 ONCA 320.

FACTS:

The appellant commenced an action in April 2016 (the “underlying action”) against the Children’s Aid Society of Toronto (“CAST”) and Her Majesty the Queen in Right of Ontario (“Ontario”), among others. Within this action, the appellant brought a motion for contempt against multiple respondents, including the CAST. The CAST opposed the motion and moved for summary judgment as did Ontario. The contempt motion and the motions for summary judgment were heard in August 2019. The motions for summary judgment were granted and the action was dismissed. The motion for contempt was also dismissed. Costs were awarded against the appellant. In June 2020, the Court of Appeal upheld the dismissal of the contempt motion as well as the finding on costs. Costs were again awarded against the appellant on the appeal from the dismissal of the contempt motion. The Court of Appeal allowed the appellant to appeal from the summary judgment decisions as it related to the action against CAST on the narrow issue involving damages for alleged wrongful disclosure of the appellant’s pre-disposition report to third parties in 2013. Costs were again awarded against the appellant. In total, the costs orders from both levels of court totalled $22,500 and have never been paid.

Following the release of the Court of Appeal’s decision, the appellant attempted to relitigate the issues disposed of by the Court before the Superior Court of Justice. The appellant also attempted to add new parties, specifically some of the respondent’s counsel, to the action. In her capacity as a case management judge, and having received written submissions from the parties, Vella J. dismissed the appellant’s motion under r. 2.1.02(1) as frivolous, vexatious and an abuse of process. The order required that before the appellant could file any further motions within the proceeding she would have to pay the outstanding costs, seek leave to file materials, and provide an affidavit setting out why the motion was meritorious. Further motions were nevertheless heard by the Court of Appeal. The appellant filed a Notice of Appeal from the order of Vella J. on November 1, 2021, but failed to perfect the appeal or request an extension of time to perfect.

The appellant sought various forms of relief in her outstanding appeal, including: (1) a sealing order; (2) leave to amend her pleadings to add six lawyers as defendants; and (3) relief from compliance with the Rules of Civil Procedure. On January 20, 2022, Tulloch J.A. dismissed the appellant’s motions, including finding that there is no jurisdiction to amend the pleadings.

The appellant sought to have Tulloch J.A.’s decision reviewed by the Court, but like the appeal, she did not perfect the motion. The appellant also sought to file a motion for “criminal contempt” against various parties, including counsel for various respondents on appeal and Crown counsel. On July 7, 2022, the parties were notified that the court had stayed their appeal and was considering making an order under rule 2.1.01 to dismiss the appeal. Concurrently, the Court asked the appellant for submissions as to why the appeal should not be dismissed and why the appellant’s request to amend the title of proceedings should be granted. Both the appellant and the respondents only provided submissions on the first question.

ISSUES:

Did the case management judge err in finding that the appellant was a vexatious litigant under rule 2.1.01?

HOLDING:

Appeal dismissed.

REASONING:

The Court held that the case management judge made no errors of fact or law and this appeal was frivolous, vexatious, and an abuse of process by the appellant. The appellant failed to comply with court orders and Rules, pay costs, and to perfect prior appeals. The Court noted that the purported appeal was from a case management judge’s decision to dismiss a motion on the basis that the motion itself was frivolous, vexatious and an abuse of process. The Court held that the motion was a clear attempt to relitigate what had already been decided by the Court and the proposed new causes of action were devoid of merit.

Further, the Court stated that the Notice of Appeal included no arguable ground of appeal and the appellant made baseless and serious allegations about opposing counsel, including allegations about acting fraudulently, illegally modifying files, and concealing criminal conduct. Many of the characteristics of a vexatious litigant, as set out in Lochner v. Ontario Civil Police Commission, were applicable in this case, such as: attempting to bring multiple proceedings; attempting to relitigate issues decided in past proceedings; failing to pay costs awards; pursuing proceedings where a reasonable person would not expect to receive the relief sought; and inappropriate conduct such as rambling and rhetorical submissions.

The Court repeated that it has implicit powers that derive from its authority to control its own process to make procedural orders to prevent an abuse of process and to ensure the just and efficient administration of justice. Accordingly, the Court held that, in order to prevent further abuses of process, the appellant would not be permitted to file any further materials without leave of a judge of the Court.


Fair v. Nesbitt Burns Inc., 202 ONCA 711

[Simmons, Paciocco and Zarnett JJ.A.]

COUNSEL:

A.S. Schorr, for the appellant

N. Holovaci, for the respondent BMO Nesbitt Burns Inc.

J. D. Harris-Lowe, for the respondents A. R. F., A. C. A., and A. R. F. and A. C. A., Estate Trustees on Behalf of the Estate of the L. L. F. F.

Keywords: Wills and Estates, Constructive Trusts, Contracts, Financial Advisors, Duty to Disclose, Family Law Act, R.S.O. 1990, c. F.3, s. 13, Evidence Act, R.S.O. 1990, c. E.23, s. 13, Davidson v. Noram Capital Management Inc. (2005), 13 B.L.R. (4th) 35 (Ont. S.C.)., Moore v. Sweet, 2018 SCC 52, Edell v. Sitzer (2001), 55 O.R. (3d) 198 (S.C.), Hryniak v. Mauldin, 2014 SCC 7

FACTS:

Shortly before his death on November 13, 2016, L.F. F. (“Mr. F.”) changed the beneficiary designations on three investment accounts he held with the respondent BMO Nesbitt Burns Inc. (“BMO Nesbitt”). Before the change, the beneficiary of the accounts was Mr. F’s wife, the appellant A. F. F. (“Ms. F.”). After the change, the beneficiaries were Mr. F’s children from a former marriage, the respondents A. R. F. and A. C. A. (collectively, the “Children”).

Ms. F. learned of the change after Mr. F’s unexpected death and alleged that the change was a breach of an agreement she had with Mr. F. Ms. F. brought an action against BMO Nesbitt, alleging that it violated a duty to advise her of the change when it occurred. Ms. F. also sued Mr. F’s Estate and his Children, alleging a constructive trust over the proceeds of the investment accounts based on the doctrine of unjust enrichment.

On a motion for summary judgment, the action was dismissed. The motion judge dismissed Ms. F’s action against BMO Nesbitt because it was premised on a duty to disclose, and no such duty existed. After referring to the fact that Mr. F’s accounts were not held jointly with Ms. F., and referring to the duty of confidence in a bank-customer relationship, the motion judge found that there was no obligation either in statute or common law to notify third parties about an individual’s beneficiary choices. To impose such an obligation would be an absolute breach of the individual’s privacy and their right to dispose of assets as they choose.

Ms. F. appealed on the basis that the motion judge erred in failing to find that there was a genuine issue requiring a trial with respect to her claim that BMO Nesbitt is liable for failing to disclose the change in beneficiary. She submitted that BMO Nesbitt is not a bank but an investment advisor, so the motion judge’s reference to bank-customer privacy was off point. Ms. F contended that, as an investment advisor, BMO Nesbitt had a duty to ensure that their clients were fully informed as to all material matters relevant to their portfolio and non-disclosure was a breach of this duty.

ISSUES:

(1) Did the motion judge err in referring to Mr. F. and BMO Nesbitt’s relationship as one of bank-customer?

(2) Did the motion err in dismissing Ms. F.’s action against Mr. Fair’s Estate and his Children?

(3) Did the motion judge err in failing to find that there was a genuine issue requiring a trial with respect to the Ms. F.’s claim that BMO Nesbitt violated their duty to advise her of the beneficiary change?

HOLDING:

Appeal dismissed.

REASONING:

(1) Yes.

The Court held that the motion erred in referring to Mr. F’s investment account as one of bank-customer relationship, but the error was inconsequential. The Court concluded that the motion judge’s essential finding, that there was nothing in the record to support the existence of a duty to disclose the change, was free of error. The Court noted that Mr. and Ms. F both maintained separate investment accounts at BMO Nesbitt. BMO Nesbitt had shared, on consent of both parties, information about the performance of those investment accounts. However, sharing of information on consent of both parties does not create a duty on the financial institution to disclose account changes made by one owner, to the other owner.

The Court further stated that Ms. F’s reliance on Davidson v. Noram Capital Management Inc. was misplaced. The duty referred to in Noram was to disclose matters material to the account holder’s investments. The Court noted that in the present case, Ms. F. claimed that BMO Nesbitt should have disclosed a matter relating to Mr. F’s accounts, not her own.

(2) No.

Ms. F’s claim against Mr. F’s Estate and his Children were asserted on the basis of the Supreme Court’s decision in Moore v. Sweet (“Moore”). The motion judge disagreed that Moore was applicable because: (1) there was no conduct of Ms. F.’s that was analogous to the payment of premiums in Moore; and, (2) apart from Ms. F.’s assertion, there was nothing that would support the existence of an actual “agreement”.

The Court found that it was open to the motion judge to view Ms. F’s evidence as insufficient to form a claim on the basis of Moore. In Moore, the agreement that formed the basis of the claim was clearly established. The Court held that, in this case, Ms. F’s affidavit asserted that Mr. F. and herself had agreed that, except for the monies from Hydro One, all of the other investments that both of the parties had would pass on to the survivor when one had died. Ms. F. did not provide particulars in her affidavit as to when or how this agreement was made.

The Court also noted that Ms. F’s affidavit and examination for discovery contradicted one another. The affidavit described the agreement as Mr. F. leaving Ms. F. his whole estate except the funds from Hydro one, while in the examination for discovery Ms. F. described the agreement as one covering all investment accounts, not just those Mr. F. had designated Ms. F. as beneficiary. The motion judge found that the appellant’s characterization of the agreement was unclear since the subject matter of the purported agreement had changed. The Court held that the motion judge was entitled to make this finding of fact and such a finding was sufficient to distinguish the case from Moore.

(3) No.

The Court held that the motion judge’s finding as to whether there was a genuine issue requiring a trial, and whether it was necessary to resort to the additional fact-finding powers the summary judgment rule provides for in order to make that determination, were entitled to deference.


Caja Paraguyaya De Jubilaciones Y Pensiones Del Personal De Itaipu Binacional v. Obregon , 2022 ONCA 724

[Sossin J.A. (Motion Judge)]

COUNSEL:

A.D., acting in person

M. Anevich, appearing as duty counsel

J. De Vellis and J. King, for the responding party

E. Whitford, for the Attorney General of Ontario

Keywords: Civil Procedure, Civil Contempt, Stay Pending Appeal, Bail Pending Appeal, Courts of Justice Act, R.S.O 1990, c. 43, s. 106, Criminal Code, R.S.C. 1985, c. C-46, ss. 673, 679, Rules of Civil Procedure, r. 60.11, 63.02(1), Criminal Appeal Rules, r. 22, Directv, Inc. v. Boudreau (2005), 42 C.P.R. (4th) 388 (Ont. C.A.), T.(M.) v. A.(H.), [1995] 1 S.C.R. 445, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Chiang (Trustee of) v. Chiang, 2007 ONCA 529, R. v. Oland, 2017 SCC 17, Kopaniak v. MacLellan (2002), 159 O.A.C. 37 (C.A.), DM v. WS, 2019 ABCA 422, R. v. Hassan, 2017 ONCA 1008, R. v. Bissonnette, 2022 SCC 23, Master Linda S. Abrams et al., Halsbury’s Laws of Canada, “Civil Procedure”, (Toronto: LexisNexis Canada, 2021 Reissue)

FACTS:

The moving party, AD, sought release from custody pending an appeal of his sentence for civil contempt. This contempt related to the dissipation of funds contrary to court orders after AD was found civilly liable for defrauding the responding party. He was originally sentenced by Dunphy J. on April 5, 2019, for a period of 12 months (with no restrictions on parole). This sentence was upheld on appeal. AD was granted parole after he served seven months of his sentence, and was subsequently found to have engaged in further acts of contempt while on parole. On February 5, 2021, Koehnen J. found AD in contempt for the second time. This finding was also upheld on appeal. On April 28, 2022, AD was sentenced by Koehnen J. to 16 months in jail without the possibility of parole. However, this sentence was subject to the condition that he may be released at any point if he can demonstrate that he has purged his contempt. AD brought a motion for release from custody pending an appeal of his sentence for civil contempt.

ISSUES:

(1) Is the applicable test for the stay pending appeal of a of a civil order for contempt the normal test of a stay pending appeal of a civil order or the test for bail pending appeal applicable under the criminal law?

(2) Is there a serious issue to be determined?

(3) Would the moving party suffer irreparable harm if the stay is not granted?

(4) Does the balance of convenience favour granting the stay?

HOLDING:

Motion dismissed.

REASONING:

(1) The applicable test for the stay pending appeal of a civil contempt order.

Generally, bail pending an appeal is governed by s. 679 of the Criminal Code, R.S.C. 1985, c. C-46. However, civil contempt is not governed by the Criminal Code. AD was subject to a warrant of committal pursuant to the Courts of Justice Act, R.S.O 1990, c. 43 and r. 60.11 of the Rules of Civil Procedure. The moving party argued that where the purpose of the sentence is to incent compliance with a civil order, a civil stay may be the preferred framework, but where the purpose is punishment for a contemnor who is unable or unwilling to purge the contempt, s. 679 of the Code is appropriate. The observing Attorney General of Ontario submitted that s. 679 is not available to an individual serving a custodial sentence for civil contempt. This is because the definition of “sentence” in s. 673, which applies to criminal appeals, does not include sentencing orders made in relation to the common law offence of civil contempt.

The Court noted that there was conflicting case law on the correct standard to apply. In T.(M.) v. A.(H.), on an application for release pending appeal of a sentence for civil contempt, Sopinka J. stated that s. 679 “arguably” does not apply to civil contempt, and he therefore applied the test for a stay from RJR-MacDonald Inc. v. Canada. In Chiang (Trustee of) v. Chiang, Doherty J.A. did not specifically refer to the uncertainty between the two standards, but stated that he would “bear in mind” the principles underlying a stay motion as well as a motion for bail pending appeal. In this case, however, both parties approached the matter as an application under s. 679 of the Code.

The Court held that the proper procedural route for the release of a person serving a sentence for civil contempt is a stay of that civil order through the RJR-MacDonald test, but the factors of this test may be informed by the principles underlying applications for bail pending appeal as outlined in R. v. Oland. In reaching this conclusion, the Court stated three characteristics that distinguish sentences for civil contempt from sentences for criminal convictions: (1) civil contempt is not purely penal – it is intended to incent compliance with court orders, (2) a sentence for civil contempt will generally end when the contempt is purged, and (3) with civil contempt the court does not generally have the benefit of Crown submissions on the public interest.

(2) Yes.

The moving party argued that the sentence imposed was disproportionate and following the Supreme Court of Canada’s decision in R. v. Bissonnette, any sentence which precludes eligibility for parole violates the Canadian Charter of Rights and Freedoms. The Court held that this ground of appeal easily met the threshold of “sufficient merit” and the question of whether Bissonnette alters the use of contempt sentences without the possibility of parole is an important matter to be settled.

(3) No.

Continued detention would appear to constitute irreparable harm. However, this factor depended on the length of time before AD was able to have his appeal heard. The Court noted that AD’s appeal had not yet been scheduled. Though this consideration was relevant, the Court held that it did not rise to irreparable harm because AD was in the inmate appeals stream and could schedule an appeal without the delay that would accompany a solicitor appeal. Further, the harm was not irreparable because AD could end his detention at any time by purging his contempt.

(4) No.

The Court held that the seriousness of AD’s actions must be considered at this stage of the analysis. AD disregarded court orders and acted contrary to his own sworn affidavit. The Court noted that the contempt was by any measure extreme. As stated by Koehnen J., this was not a single act of contempt but an ongoing pattern of serial breaches of court orders. Even a brief stay pending appeal would frustrate the purposes of the court’s response to AD’s contempt by allowing him the opportunity to continue actively disregarding the court’s orders. The Court agreed with Doherty J.A. in Chang in that the public interest in the enforcement of the committal order must outweigh the moving party’s liberty interest.


402 Mulock Investments Inc. v Wheelhouse Coatings Inc. , 2022 ONCA 718

[Feldman, Hoy and Lauwers JJ.A.]

COUNSEL:

R. B. Moldaver, for the appellant/respondent by way of cross-appeal

P. V. Hiebert, for the respondent/appellant by way of cross-appeal

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Default, Security Deposits, Additional Rent, Capital Replacement, Amortization, Civil Procedure, Orders, Enforcement, Writs of Possession, Res Judicata, Issue Estoppel, Abuse of Process, Commercial Tenancies Act, R.S.O. 1990, c. L.7, ss. 80, 82, Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020, S.O. 2020, c. 36, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, Behn v. Moulton Contracting Ltd., 2013 SCC 26, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Corner Brook (City) v. Bailey, 2021 SCC 29

FACTS:

On December 9, 2020, a bailiff posted a lockout notice advising Wheelhouse Coatings Inc. (the “Tenant”) that 402 Mulock Investments Inc. (the “Landlord”) had terminated the lease for the unit. On December 24, 2020, the Landlord entered the unit and removed all of the Tenant’s property. The Landlord leased the premises to a third party, which, in turn subleased a portion of the premises. On January 6, 2021, the Tenant issued a Notice of Action, alleging that the Landlord had illegally terminated the Lease and distrained the Tenant’s property. The Tenant also served a Notice of Motion seeking various interlocutory relief, including an injunction and the return of the Second Security Deposit (the “Deposit”) in the amount of $65,000 held by the Landlord under s. 1.9 of the Lease.

Justice Bird found that, in re-entering the leased premises at the time that it did, the Landlord violated s. 82 of the Commercial Tenancies Act (the “CTA”), as amended by the Protect, Support and Recover from COVID-19 Act (Budget Measures). That section provides that no landlord shall exercise a right of re-entry in respect of a tenancy referred to in ss. 80(1) or 80(2) during the applicable non-enforcement period. Justice Bird found that the non-enforcement period was in effect from December 8, 2020 to January 31, 2021. She noted that during the period from October 31, 2020 to December 8, 2021 there was nothing prohibiting landlords from re-entering the premises. She ordered the Landlord to give vacant possession of the portion of the leased premises not subject to subleases to the Tenant no later than April 15, 2021, and to deliver the Tenant’s property in its possession to the Tenant. She made no order in relation to the Deposit.

After Bird J. released her reasons, the Landlord invoiced the Tenant for a share of the cost of replacing the roof membrane, amortized over two years. The Landlord deducted the invoiced amount from the Deposit when the invoice was not paid. The Landlord asserted that s. 1.9 of the Lease required the Tenant to then “top up” the Deposit to $65,000 and relied on the Tenant’s failure to do so as a further default warranting an order granting it a writ of possession. The application judge held that the invoice was in conformity with ss. 2.6 and 1.9 of the Lease and was payable by the Tenant; however, s. 1.9 of the Lease required the Landlord to have returned the Deposit. Accordingly, the Landlord should not have deducted the invoiced amount from the Deposit and no “top up” was required. The application judge ordered the Tenant to pay the invoice, amortized over two years, and declared that the Landlord should have returned the Deposit on August 15, 2020. She offset the amount of the invoice against the Deposit and ordered the net amount to be paid by the Landlord to the Tenant. The application judge declined to issue a writ of possession.

The Landlord appealed the application judge’s order declaring that it should have returned the Deposit and, because the Lease soon expired, the Landlord no longer sought a writ of possession. The Tenant cross-appealed, arguing that the application judge erred in concluding that the invoice was in accordance with ss. 2.6 and 1.6 of the Lease and permitting the Landlord to deduct the amount of the invoice from the Deposit before returning the balance of the Deposit to the Tenant.

ISSUES:

On Appeal

(1) Did the application judge err in failing to conclude that the issue of the return of the Deposit was barred by res judicata or as an abuse of process?

(2) Did the application judge err in declaring that the Landlord should have returned the Deposit in the absence of a motion or counter application for a return of the Deposit?

(3) If the issue of the Deposit was properly before the application judge, did the application judge err in interpreting s.1.9 of the Lease as requiring the return of the Deposit in the absence of evidence that the Tenant was not in default?

On Cross-Appeal

(1) Did the application judge err in finding that the cost of replacing the roof membrane was to be amortized as Additional Rent payable by the Tenant over two years?

HOLDING:

Appeal allowed.

Cross-appeal allowed.

REASONING:

(1) No.

The Court held that the requirements for res judicata and abuse of process had not been made out. Res judicata prevents the re-litigation of previously adjudicated and finally decided matters. The doctrine contains two branches: cause of action estoppel and issue estoppel. Cause of action estoppel precludes the parties from litigating claims that have been determined in a prior action. Issue estoppel precludes the re-litigation of issues that have been previously decided in another proceeding. Abuse of process engages the inherent and residual discretion of the court to prevent the misuse of its procedure.

The Court found that the preconditions to cause of action estoppel and issue estoppel had not been made out. Although the Tenant sought the return of the Deposit in its Notice of Motion, Bird J. indicated she would only deal with the issue of the applicability of Part IV of the CTA and what remedy was appropriate if the re-entry was unlawful. Accordingly, the Court held that the issue of whether the Landlord was entitled to retain the Deposit was not res judicata because Bird J. did not decide whether the Landlord was entitled to retain the Deposit.

The Court rejected the Landlord’s argument that, even if not determined by Bird J., the issue of the Deposit was barred by cause of action estoppel because the Tenant could have argued the issue or appealed the order of Bird J. on the basis that she erred by not addressing all the relief sought by the Tenant in its Notice of Motion. The Court held that the issue was not determined because Bird J. decided not to determine it. The Court noted that the Landlord brought its application for a writ of possession only about six weeks after Bird J. released her reasons. The Court determined that it was the Landlord’s application in seeking relief in the form of a writ for possession that put in issue whether the Landlord was entitled to have retained the Deposit. Therefore, the Court noted that the issue of the Deposit could not have been argued before Bird J. through the exercise of reasonable diligence.

Finally, the Court held that the Tenant raising the issue of the Landlord’s entitlement to the Deposit before the application judge, in response to the application for a writ of possession, was not a misuse of the court’s procedure nor an abuse of process. The Court noted that it was likely the most efficient manner of determining the issue.

(2) No.

The Court held that the application judge appropriately declared in her judgment that the Landlord should have returned the Deposit. The application judge had to consider whether the facts underlying the Landlord’s application for the writ of possession were made out, including whether the Landlord was entitled to deduct the amount of the invoice from the Deposit and require the Tenant to “top up” the Deposit, or whether, as the Tenant argued, the Landlord should have returned the Deposit. The Court held that, having made these determinations in her judgment provided clarity that the issue was judicially determined.

(3) Yes.

The Court found that the application judge’s interpretation of section 1.9 of the Lease gave no effect to the clear provision that the Deposit shall be returned “provided that the tenant is not then in default at that time” (emphasis added) was clearly wrong. Therefore, deference was displaced. The Court held that the only reasonable interpretation of the Lease was that if the Tenant was in default on August 14, 2020, the Landlord was entitled to continue to hold the Deposit for the remainder of the Lease, and was required to return the remainder, if any, to the Tenant upon expiry of the Lease.

The Court found that the application judge had erred by not considering whether the Tenant was in default under the Lease. The Court found that the Tenant was in default as the Tenant had conceded that if amounts paid by the government under the Canada Emergency Commercial Rent Assistance program for August 2020 were not treated as having been paid on August 1, 2020, then the Tenant was in default on August 14, 2020. The Tenant was unable to point to any term in the Lease or legislative provision that would have deemed the rent subsidies to have been paid when the rent was due. Therefore, the Tenant was in default, and the Landlord was not required to return the Deposit.

Cross-Appeal

(1) Yes.

The application judge agreed with the Landlord that, by operation of sections 2.6 and 1.6 of the Lease, the cost of replacing the roof membrane was to be amortized as Additional Rent. The Tenant argued that the application judge’s interpretation of these sections was tainted by four palpable and overriding errors or extricable questions of law. The Court disagreed that the first three were errors, but agreed with the fourth.

First, the Tenant argued that the application judge’s rejection of its interpretation of ss. 2.6 and 1.6 amounted to a palpable and overriding error. The Tenant argued that the words “serving the Leased Premises” in s. 2.6 made it clear that its responsibility for costs was limited to the roof covering its unit serving the Leased Premises. The Court disagreed as section 2.6 described the Landlord’s obligation to the Tenant to maintain, repair, and/or replace the roof membrane. Further, the Court agreed with the application judge that s. 1.6 addressed the extent to which such costs are to be paid by the Tenant as Additional Rent. In any event, the evidence before the application judge was that the roof membrane of the roof for the entire building was being replaced.

Second, the Tenant argued that the application judge erred in their interpretation of s. 1.6 because she failed to consider whether the replacement of the roof was a structural repair or replacement, within the meaning of s. 1.6, or made a clear error in concluding that it was not. The Court disagreed as the application judge had adverted to the Tenant’s argument that the work done to the roof constituted structural repairs and that under the Lease the tenant was not required to pay for structural repairs, and implicitly rejected it. The Court concluded that there was no extricable error of law and was not persuaded that this amounted to a palpable and overriding error.

Third, the Tenant argued that the replacement of the roof membrane did not relate to the “Leased Premises” and therefore could only relate to the premises of a different or other tenant. The Court rejected this argument as the record supported that repairs were not “done specifically for other tenants”.

Finally, the Tenant argued that the application judge had failed to address the its argument, that, if not a structural repair, the replacement of the roof membrane was a capital replacement within the meaning of s. 1.6 and therefore was to be amortized over its useful life, determined in accordance with generally accepted accounting principles. The Court agreed with the Tenant, and struck that portion of the application judge’s judgment, declaring that the Tenant was responsible for the payment of the invoice, without prejudice to either party seeking a determination of the applicable amortization period and, as a consequence, the amount of Additional Rent payable by the Tenant as a result of the replacement of the roof membrane.


Correct Building Corporation v. Lehman, 2022 ONCA 723

[Feldman, Hoy and Lauwers JJ.A.]

COUNSEL:

C. Stevenson, for the moving party

A. Formosa and C. Steven, for the responding parties

Keywords: Civil Procedure, Appeals, Perfection, Extensions for Time, Courts of Justice Act, RSO 1990, c C43, s. 7(5), Municipal Act, 2001, SO 2001, c 25, s. 448, Rules of Civil Procedure, r. 61.16(6), Machado v. Ontario Hockey Association, 2019 ONCA 210, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, Iqbal v. Mansoor, 2022 ONCA 198, 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2015 ONCA 5, Sheth v. Randhawa, 2022 ONCA 89, Howard v. Martin, 2014 ONCA 309, Derakhshan v. Narula, 2018 ONCA 658, 40 Park Lane Circle v. Aiello, 2019 ONCA 451, Duca Community Credit Union Ltd. v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), Auciello v. Mahadeo, 2016 ONCA 414

FACTS:

Correct Group Inc. (“CGI”) was one of the plaintiffs who started an action against individual defendants and the City of Barrie (the City”). The defendants brought a motion for summary judgment. The issue before the summary judgment judge related to the concern of the development of the Allandale Station lands in the City and CGI’s allegation that certain archaeological and environmental reports in the possession of the City should have been disclosed to CGI. The summary judgement judge dismissed CGI’s action against the City and the individual defendants. CGI sought a 90-day extension of time to perfect its appeal from a single judge of the Court. The motion judge granted the 90-day extension with respect to CGI’s appeal against the City, but denied the extension in respect of its appeal against the individual respondents. The motion judge granted the extension of time on the grounds that: (1) the delay was a short one; (2) the moving party’s explanation for the delay was reasonable; and (3) if there was any prejudice caused by the brief delay, it was not significant.

The motion judge examined the merits of the appeals against the City and the individuals, who were city staff and councillors. He noted that there were a number of grounds of appeal from the dismissal of the action against the City, including both legal and factual matters, and concluded that he could not say that the appellant’s appeal against the City “lacks merit so as to make denying it the right of appeal reasonable.”

The motion judge noted that the summary judgment judge dismissed the action against the individual city councillors and staff members “in a relatively summary fashion”, finding that the allegation of bad faith, which was necessary to overcome the immunity provided in s. 448 of the Municipal Act, 2001, lacked any evidence and was without merit. The motion judge saw “no likelihood of successfully challenging this finding on appeal”. He likened this appeal to the one in 1250264 Ontario Inc. v. Pet Valu Canada Inc., where the motion judge denied the extension because she found no “scintilla suggesting that the appeal ha[s] merit”.

The appellant moved under r. 61.16(6) of the Rules of Civil Procedure and s. 7(5) of the Courts of Justice Act, before a panel to review the motion judge’s decision denying the extension of time in respect of the appeal against the individuals.

ISSUES:

(1) Did the motion judge commit a reviewable error requiring intervention by a panel of the Court pursuant to r. 61.16(6)?

HOLDING:

Motion granted.

REASONING:

(1) Yes.

The Court held that a panel review of a motion judge’s decision under s. 7(5) of the Courts of Justice Act is not a de novo determination. Discretionary decisions of a motion judge are entitled to deference. However, a reviewing panel may intervene if the motion judge erred in principle or reached an unreasonable result, or if the motion judge’s decision reflects legal error or a misapprehension of material evidence.

Accordingly, the Court determined that the motion judge made two reviewable errors: he misapprehended and minimized the potential strength of the merit of the appeal, and he erred in law by failing to apply the principle from 40 Park Lane Circle v. Aiello that even where it is difficult to see the merits of the proposed appeal, a party should not be deprived of their right of appeal when there is no real prejudice to the other side. Accordingly, the Court held that motion judge’s decision to deny an extension of time was subject to review. The Court reiterated the test for granting an extension of time to appeal, citing Sheth v. Randhawa:

“The test on a motion of this kind is well-established. The ultimate question is whether the justice of the case warrants the order requested. Factors to be considered in making the decision are: (i) whether the appellant formed an intention to appeal within the appeal period; (ii) the length of the delay; (iii) the explanation for the delay; (iv) the merits of the proposed appeal; and (v) prejudice to the responding parties.”

The Court noted that the appellant had appealed on time and only needed a brief extension to perfect because of the volume of material to be assembled and that there was no discernable prejudice to the respondents. The question that remained for the motion judge was (1) whether there was some potential merit to the appeal and (2) whether the justice of the case required that the extension be granted.

The Court stated that the merits factor is to be used to support granting an extension when the other factors do not favour the applicant, but because there may be some potential merit to the case, it is still in the interests of justice that the applicant’s right of appeal not be removed, just because of lateness. The Court endorsed the 40 Park Lane decision where the motion judge in that case stated that the question is only whether there is “so little merit in the proposed appeal that the appellant should be denied [his] important right of appeal.” Even where it is difficult to see the merits of a proposed appeal, a party is entitled to appeal and should not be deprived of that entitlement where there is no real prejudice to the other side.

The Court stated that the decision relied on by the motion judge, Pet Valu, was a case where the absence of any merit was used by the motion judge to deny the extension. There, the notice of appeal was generically framed, and did not address the merits. As a result, there was no basis to find any potential merit in the appeal, therefore the justice of the case did not require an extension. The Court held that the Pet Value decision did not apply in this case, as the record showed significant evidence of failure by staff to disclose relevant reports to the former mayor of Barrie or to the appellant, and evidence that staff had different views on whether development should proceed on the site.

The Court concluded that the delay was short, the moving party’s explanation for the delay was reasonable, and in any event, the appeal from the dismissal of the claim against the City was proceeding in any event. The voluminous record was already being produced and there was no prejudice to the other side or to the Court to hear both matters together. The Court held that it would be more efficient and effective for the Court to consider the merits of both matters together, on a full record. The Court determined that the justice of the case required an extension to be granted to perfect the appeal against the individual respondents.


SHORT CIVIL DECISIONS

Van Decker Estate v. Van Decker, 2022 ONCA 712

[Feldman, Hoy and Favreau JJ.A.]

COUNSEL:

K. Sanchez, for the appellants

D. Lobl and K. Domratchev, for the respondent

Keywords: Real Property, Landlord and Tenant, Occupation Rent, Wills and Estates, Civil Procedure, Adjournments, Corroborating Evidence, Evidence Act, R.S.O. 1990, c. E. 23, s. 13, Toronto Dominion Bank v. Kylton, 2010 ONCA 752, Khimji v. Dhanani (2004), 69 O.R. (3d) 790

Hategan v. Frederiksen, 2022 ONCA 715

[Lauwers, Roberts and Trotter JJ.A.]

COUNSEL:

J. Kary, for the moving party

M. J. Freiman, for the responding party, B. F.

L. Cadieux-Shaw, for the respondent, E.M. F.

Keywords: Civil Procedure, Security for Costs

Rebello v. Del Property Management, 2022 ONCA 720

[Feldman, Hoy and Favreau JJ.A.]

COUNSEL:

E. Turkienicz, for the moving parties/responding parties by way of cross-motion

T. R., acting in person (by Zoom, audio only)

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Security for Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(2)