Good evening.

Following are this week’s summaries of the civil decisions of the Court of Appeal for Ontario.

The court summarized the law on the doctrine of frustration in the context of the failure close the purchase of a residential property under an agreement of purchase and sale of land in Perkins v Sheikhtavi. The appellants bought at the height of the real estate market just before the government tightened the mortgage lending rules in April 2017, following which prices precipitously dropped 20-30%. They could not sell their home or get mortgage financing and therefore could not close. They claimed the government policy change was a supervening event that would make “performance of the contract become a ‘thing radically different from that which was undertaken by the contract’”. The court did not accept this argument. The defendant was found liable for almost $600,000 for the purchase price of a house they never purchased!! One cringes at the thought of what would happen if the market eventually turned into a prolonged and deep slump.

In National Steel Car Limited v. Independent Electricity System, the Court allowed an appeal from the dismissal of National Steel Car’s claim on a Rule 21 motion that the Feed in Tariff program that encourages the development of renewable electricity is actually an unconstitutional tax and a reason why our electricity bills have gone up. Barring an appeal to Ottawa, the matter can now proceed on the merits.

Other topics covered were fraud and conversion and appealing from interim injunction orders (you need leave to appeal to the Divisional Court). Wishing everyone a nice weekend.

Table of Contents

Civil Decisions

Perkins v. Sheikhtavi , 2019 ONCA 925

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Summary Judgment, Doctrine of Frustration, Implied Conditions, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Capital Quality Homes Ltd. v. Colwyn Construction Ltd. (1975), 9 O.R. (2d) 617 (C.A.), Bang v. Sebastian, 2018 ONSC 6226, Gerstel v. Kelman, 2015 ONSC 978

National Steel Car Limited v. Independent Electricity System , 2019 ONCA 929

Keywords: Constitutional Law, Division of Powers, Taxation, Constitution Act, 1867, s 53

Amphenol Canada Corp. v. Sundaram , 2019 ONCA 932

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Interlocutory Injunctions, Mareva Injunction, Certificates of Pending Litigation, Norwich Orders, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 19(1)(b), Ontario Medical Association v. Miller (1976), 14 O.R. (2d) 468 (C.A.), Grand River Enterprises v. Burnham (2005), 197 O.A.C. 168 (C.A.)

St. Laurent Automotive Group Inc. v. Sami’s Garage Ltd. , 2019 ONCA 941

Keywords: Torts, Conversion, Fraud, Negligent Misrepresentation, Contracts, Sale of Goods, Unjust Enrichment, Damages, Mitigation, Contribution and Indemnity, Costs, Sale of Goods Act, R.S.O. 1990, c. S.1, s. 25

Short Civil Decisions

Metropolitan Toronto Condominium Corporation No. 1328 v 2145401 Ontario Inc., 2019 ONCA 944

Keywords: Real Property, Condominiums, Right to Inspect, Torts, Tresspass, Condominium Act, 1998, S.O. 1998, ss 17(3) and 119(3)

Criminal Decisions

R. v C.,, 2019 ONCA 924

Keywords: Criminal Law, Soliciting Prostitution from Minor, Search and Seizure, Arbitrary Detention, Immigration, Canadian Charter of Rights and Freedoms, ss. 8 and 9, Immigration and Refugee Protection Act, S.C. 2001, c. 27, R. v Pham, 2013 SCC 15

R. v L., 2019 ONCA 928

Keywords: Criminal Law, Child Pornography, Search Warrants, R. v Mian, 2014 SCC 54

R. v B.G., 2019 ONCA 926

Keywords: Criminal Law, Child Pornography, Circumstantial Evidence, R. v Villaroman, 2016 SCC 33

R. v. G. , 2019 ONCA 934

Keywords: Criminal Law, Second Degree Murder, Character Evidence, Prior Bad Acts, R. v Handy, [2002] 2 SCR 908

R. v. V., R. v. V., 2019 ONCA 927

Keywords: Criminal Law, Sexual Assault, R. v Vuradin, 2013 SCC 38, R. v Khan, 2017 ONCA 114, R. v Dinardo, 2008 SCC 24, R. v Radcliffe, 2017 ONCA 176

R. v. J.A.S., 2019 ONCA 936

Keywords: Criminal Law, Sexual Abuse, Threatening Bodily Harm, Assault

Ontario Review Board Decisions

L.F.(Re),2019 ONCA 930

Keywords: Ontario Review Board, Criminal Law

P. (Re), 2019 ONCA 931

Keywords: Ontario Review Board, Criminal Law, Dangerous Operation of a Motor Vehicle, R. v Sheikh, 2019 ONCA 692

CIVIL DECISIONS

Perkins v. Sheikhtavi, 2019 ONCA 925

van Rensburg, Paciocco and Thorburn JJ.A.

Counsel:

Brian Sherman, for the appellant Dylan O’Leary, for the respondents Allan D. Powell, for the third parties

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Summary Judgment, Doctrine of Frustration, Implied Conditions, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Capital Quality Homes Ltd. v. Colwyn Construction Ltd. (1975), 9 O.R. (2d) 617 (C.A.), Bang v. Sebastian, 2018 ONSC 6226, Gerstel v. Kelman, 2015 ONSC 978

facts:

The respondents listed their home for sale and the appellant made one of the thirteen offers to purchase the home. The appellant’s offer was the second highest and was accepted by the vendor. After the unconditional offer was accepted but before closing, the Ontario government made a policy announcement. Within days of this announcement, real estate prices in the area dropped 20-30 per cent. On the day of closing, the appellant advised that she could not close, as she had been unable to sell her own home and could not obtain sufficient mortgage financing. Because of this, the respondent put the property back on the market and it sold for $619,112 less. The respondent commenced legal proceedings against the appellant, and the appellant was ordered to pay $619,112 and carrying costs of $4,621.05.

issues:

(1) Did the motion judge err by failing to find frustration of the agreement? (2) Did the motion judge err by failing to find that there was an implied condition in the offer? (3) Did the motion judge err by rejecting uncontested evidence?

holding:

Appeal dismissed.

reasoning:

(1) No. While there was a supervening event (the policy announcement), this did not constitute frustration of the agreement, as the announcement was not such that “performance of the contract becomes a ‘thing radically different from that which was undertaken by the contract’”. A contract is not frustrated if the supervening event was contemplated by the parties at the time of contracting and was provided for or deliberately chosen not to be provided for in the contract. A party claiming that a contract has been frustrated has the onus of proving the constituent elements necessary to establish frustration. (2) No. The agreement contains a clause that the written agreement is the entire agreement between the parties. The Court found no error in the motion judge’s conclusion that this precluded any implied condition or term as asserted by the appellant. (3) No, the motion judge did not reject uncontested evidence. He accepted that there was an unforeseen event. While his reasons do not specifically mention the 20 to 30 per cent decrease in home prices cited by the real estate agents who filed affidavits in support of the appellant’s position, he accepted that there was a supervening event but found it was not a “radical change” such that the appellant should be relieved of her obligations under the contract.

National Steel Car Limited v. Independent Electricity System, 2019 ONCA 929

[Lauwers, van Rensburg and Trotter JJ.A.]

Counsel:

Earl A. Cherniak, Q.C., Jerome R. Morse and David Trafford, for the appellant Alan H. Mark and Melanie Ouanounou, for the respondent Independent Electricity System Operator Robin K. Basu and Padraic Ryan, for the respondents Ministry of Attorney General (Ontario) and Her Majesty the Queen in Right of Ontario

Keywords: [KEYWORDS]

facts:

Changes to the electricity pricing formula in Ontario have led to dramatic increases in the cost of electricity. The electricity pricing formula in Ontario is administered by the Independent Electricity System Operator (“IESO”) under the Electricity Act, 1998, S.O. 1998, c. 15, as amended. When it sets electricity prices, the IESO makes a “Global Adjustment” to the price of electricity. A component of the Global Adjustment funds electricity procurement contracts under the feed-in tariff program (“FIT program”) which the appellant alleges is the main culprit behind the dramatic electricity price increases. The appellant asserts that the FIT program was actually designed to accomplish the social goal of providing economic stimulus and subsidies to certain communities and is unrelated to the generation of electricity. Because of this, the Appellant argues that the component is not really a regulatory charge but is instead a tax and is thus unconstitutional under s. 53 of the Constitution Act, 1867 and also in breach of the Taxpayer Protection Act, 1999, S.O. 1999, c. 7. The appellant brought two applications for declarations under Rule 14 of the Rules of Civil Procedure. The respondents brought motions to strike both applications under Rule 21.01(1)(b) of the Rules without filing responding materials. The motion judge nonetheless ruled on the merits of the applications and held that that the Global Adjustment was a regulatory charge and not a tax. She further held that it could not be a tax because of the way the pricing formula was constructed as a “closed system”. She then struck the applications on the basis that it was plain, obvious, and beyond doubt that they could not succeed.

issues:

(1) Did the trial judge err in finding that it is plain, obvious and beyond doubt that the component of the Global Adjustment that pays for the FIT program was a regulatory charge and not a tax and striking the applications? (2) Did the trial judge err in striking the application in finding that even if the component is a tax, it did not fail because its imposition complied with s. 53 of the Constitution Act, 1867? (3) Should the court stay the applications pending determination of the issues by the Ontario Energy Board?

holding:

Appeal allowed.

reasoning:

(1) Yes. The appellant argues that the FIT program component of the Global Adjustment is actually in place to achieve a collateral purpose and is therefore caught by the colourability doctrine, where a statute is invoked in an intra vires form but in reality performs an ultra vires function.

Ontario cannot levy indirect taxes but can levy regulatory charges. A levy is a tax if it is: (1) enforceable by law; (2) imposed under the legislature’s authority; (3) levied by a public body; and (4) intended for a public purpose (620 Connaught Ltd. v. Canada (Attorney General), 2008 SCC 7, [2008] 1 S.C.R. 131 [Connaught]). The distinction between a tax and a regulatory charge is whether the levy’s primary purpose is, in pith and substance: (1) to raise revenue for general purposes; (2) to finance or be ancillary to a regulatory scheme; or (3) to charge for services directly rendered (Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134). Even if the levy has all the other indicia of a tax, it will be a regulatory charge if it is connected to a regulatory scheme (Connaught). The first step in the analysis is to identify the existence of a relevant regulatory scheme. The indicia are: (1) a complete, complex and detailed code of regulation; (2) a regulatory purpose which seeks to affect some behaviour; (3) the presence of actual or properly estimated costs of the regulation; and (4) a relationship between the person being regulated and the regulation, where the person being regulated either benefits from, or causes the need for, the regulation. Once such a regime has been identified, the second step is to find a relationship between the charge and the scheme itself (Connaught). The motion judge found that there was a regulatory regime, that its purpose seeks to affect some behaviour, and that a sufficient relationship between the levy and the regulatory scheme exists because the charges themselves have a regulatory purpose, thereby rejecting the colourability arguments of the appellant. The ruling, however, was premature. Additional arguments are necessary to establish either that the levy was a proper regulatory charge, or that it was a tax, and to consider the consequences of the determination. The mere fact of express legislative authority does not immunize the program from a colourability doctrine challenge.

Indicia of a Relevant Regulatory Scheme The affidavit evidence establishes that much of the electricity generated under the FIT program is both very expensive and useless and the motion judge failed to address the critical question: Was the dominant purpose of the FIT program to generate useful electricity, or was it to produce a substantial revenue surplus for redistribution to the Preferred Communities? This calls into question whether the FIT program had “a regulatory purpose which seeks to affect some behaviour”. The motion judge misstated the appellant’s position by suggesting that the appellant believes the FIT program to be improvident. The appellant’s actual position was that in funding the FIT program, the Global Adjustment was a colourable attempt to “disguise a tax as a regulatory charge,” an argument the motion judge failed to address. The appellant challenges the indicium of a proper “relationship between the person being regulated and the regulation where the person being regulated either benefits from, or causes the need for, the regulation” by arguing that there is no real effort to tie the revenue to the cost of the regulatory scheme. While an exact correspondence between the levy and its costs is not required, the concept of proportionality between the component of the Global Adjustment that pays for the FIT program and the balance of the amount charged under the Global Adjustment was not addressed by the motion judge.

Closed System The respondents argued that the Global Adjustment revenues did “not raise revenue for the government or any other public authority” and thus was a closed system. The motion judge’s “closed system” analysis, however, failed to address the appellant’s colourability argument that the electricity pricing formula was manipulated to provide a windfall surplus to certain communities at the expense of all Ontario electricity consumers or that it was an off-book wealth transfer mechanism that lacked a regulatory purpose and was meant to achieve a certain policy goal.

(2) Yes. This issue deserves more comprehensive development before it is addressed by the court and ought to have proceeded to a full trial. The motion judge did not address the Taxpayer Protection Act at all and the court declined to address it as well.

(3) Not yet. Ontario only sought this relief in the alternative and given her substantive ruling, the motion judge did not address the issue of a stay. It would be premature for the court to rule on the issue.

Amphenol Canada Corp. v. Sundaram,2019 ONCA 932

[van Rensburg, Paciocco and Thorburn JJ.A.]

Counsel:

Brendan Wong, for the moving party Amphenol Canada Corp. Nikolay Y. Chsherbinin, for the responding parties N.S., a.k.a. K.S. and Sundev Technologies Inc.

Keywords: [KEYWORDS]

facts:

The underlying action in this appeal is a claim that fraud was perpetrated against Amphenol Canada Corp. (“Amphenol”). Before serving the Statement of Claim, Amphenol obtained an ex parte order which included a Mareva injunction to freeze the assets of the appellants, certificates of pending litigation against properties owned by some of the appellants, and Norwich orders (“Initial Order”). After issuing the Statement of Claim, Amphenol sought an order to continue the injunctive relief. On the return date, the appellants did not file affidavit evidence, nor did they oppose the continuation of the Initial Order. Faieta J. granted an order continuing the Initial Order (“Continuation Order”). The appellants brought a motion to set aside aspects of the Initial Order and the Continuation Order (the “Set Aside Motion”). Faieta J. quashed the Set Aside Motion on the grounds that the matter was res judicata and an abuse of process (the “Quash Order”).

The appellants filed a Notice of Appeal, seeking leave to appeal the Quash Order. Amphenol brought a motion to quash the appeal on the basis that the Court of Appeal lacks jurisdiction.

issues:

(1) Is the Quash Order a final order properly appealed to this court?

holding:

Motion granted.

reasoning:

(1) No. The appellants argued that the Court of Appeal has jurisdiction to hear the appeal from the Quash Order because the motion judge’s order was final, and unless they are entitled to appeal the order, they will be forever precluded from being heard on the issue of the granting of a Mareva injunction and the finding that there was a prima face case of fraud against them. The Court disagreed, finding instead that the Quash Order did not finally determine the real matter in dispute, that is, whether the appellants committed fraud.

The characterization of an order depends on its legal nature not its practical effect: Ontario Medical Association v. Miller (1976), 14 O.R. (2d) 468 (C.A.). Moreover, an appeal lies from the order, not the reasons for granting the order: Grand River Enterprises v. Burnham (2005), 197 O.A.C. 168 (C.A.), at para. 10. While Faieta J. accepted that Amphenol satisfied him that there was a prima facie case of fraud in this case, the Court noted that the issue was not finally disposed of.

The Initial Order, Continuation Order, and Quash Order were all interlocutory decisions, which specifically related to a Mareva injunction, certificates of pending litigation, and Norwich orders. Those orders are imposed pending a determination of the issues at trial and do not finally determine the essence of the dispute. As such, the Court held that the orders must be appealed with leave to the Divisional Court pursuant to s. 19(1)(b) of the Courts of Justice Act.

St. Laurent Automotive Group Inc. v. Sami’s Garage Ltd., 2019 ONCA 941

[Watt, Hourigan and Trotter JJ.A.]

Counsel:

Diane Condo, for the appellants Gary Boyd, for the respondents

Keywords: Torts, Conversion, Fraud, Negligent Misrepresentation, Contracts, Sale of Goods, Unjust Enrichment, Damages, Mitigation, Contribution and Indemnity, Costs, Sale of Goods Act, R.S.O. 1990, c. S.1, s. 25

facts:

The appellants, DK and YJ, perpetuated a scheme in which they fraudulently sold used vehicles at wholesale. The respondents were the victims of the scheme. The respondents commenced an action for conversion against the appellants, and the appellants brought a similary counterclaim. The trial judge found the appellant Sami’s Garage liable for conversion in relation to five missing vehicles and fixed damages at $40,792. The trial judge dismissed the respondents’ claim for conversion regarding certain consigned vehicles and the counterclaim for other consigned vehicles, as she found that the parties acquired the vehicles in good faith without notice of the sellers’ defect in title. No costs were ordered. The appellants appealed and the respondents cross-appealed.

issues:

Appeal (1) Did the trial judge err in finding that the five vehicles were stolen? (2) Did the trial judge err in misapplying the law regarding mitigation of damages? (3) Did the trial judge err in fixing the quantum of damages? (4) Did the trial judge err in failing to adjudicate the counterclaims for misrepresentation and unjust enrichment against the respondent? (5) Did the trial judge err in failing to adjudicate the counterclaim for contribution and indemnity against YJ? Cross-appeal (1) Did the trial judge err in finding that DK was a “mercantile agent” within the meaning of s. 25 of the Sale of Goods Act? (2) Did the trial judge err in her costs award?

holding:

Appeal allowed in part. Cross-appeal dismissed.

reasoning:

Appeal (1) No. The factual finding that the vehicles were stolen was rooted in the evidence and did not disclose a palpable and overriding error. (2) No. The appellants’ submission regarding the mitigation of damages was based on a conflation of the law of contributory negligence and mitigation. The court held that the trial judge properly applied the law of mitigation. (3) No. The court found no error in the fixing of damages as the trial judge’s calculation was based on the evidence in the record. (4) No. While the respondents conceded that the trial judge failed to adjudicate the claims for unjust enrichment and negligent misrepresentation, the court was not satisfied that either claim could succeed. With respect to unjust enrichment, the court noted that the respondents actually lost money on the counterclaim vehicles and therefore did not obtain any enrichment. In any event, the court found that based on the trial judge’s finding that the respondents acted in good faith and in the absence of any notice of defect in title when they purchased the counterclaim vehicles, there was also a juristic reason for any enrichment. With respect to negligent misrepresentation, the court found that there was no evidence of a special relationship between the parties and no specific representations were alleged to have been made. Therefore, a claim for negligent misrepresentation could not succeed. (5) Yes. The court found that the respondents did not object to an order being made for contribution and indemnity as against YJ, and the trial judge did not advert to this issue in her reasons. The court thus granted this order.

Cross-appeal (1) No. The court held that because the trial judge’s finding that the respondent provided DK with free reign to take consigned vehicles off the lot to sell them to customers, there was a proper evidentiary basis for making this finding. (2) No. The court was not satisfied that the trial judge erred in her costs award. There was mixed success at trial and therefore it was within the trial judge’s discretion to award no costs. Given that success was also divided here, the court made no order as to costs of the appeal and cross-appeal.

CRIMINAL DECISIONS

R. v C. , 2019 ONCA 924

[Feldman, Gillese and Miller JJ.A.]

Counsel:

David Butt and David M. Reeve, for the appellant Katie Doherty, for the respondent

Keywords: Criminal Law, Soliciting Prostitution from Minor, Search and Seizure, Arbitrary Detention, Immigration, Canadian Charter of Rights and Freedoms, ss. 8 and 9, Immigration and Refugee Protection Act, S.C. 2001, c. 27, R. v Pham, 2013 SCC 15

R. v L., 2019 ONCA 928

[Simmons, Huscroft and Nordheimer JJ.A.]

Counsel:

Ronald Guertin, for the appellant Jeremy Tatum, for the respondent

Keywords: Criminal Law, Child Pornography, Search Warrants, R. v Mian, 2014 SCC 54

R. v B.G., 2019 ONCA 926

[Hoy A.C.J.O., Doherty and Zarnett JJ.A.]

Counsel:

Dano Sahulka, D. Lea Scardicchio and Efstathios Balopoulos, for the appellant Michael Perlin, for the respondent

Keywords: Criminal Law, Child Pornography, Circumstantial Evidence, R. v Villaroman, 2016 SCC 33

R. v. G.,2019 ONCA 9

[Simmons, Huscroft and Nordheimer JJ.A.]

Counsel:

Philip B. Norton for the appellant Karen Papadopoulos for the respondent

Keywords: Criminal Law, Second Degree Murder, Character Evidence, Prior Bad Acts, R. v Handy, [2002] 2 SCR 908

R. v. V. , 2019 ONCA 927

[Simmons, Huscroft and Nordheimer JJ.A.]

Counsel:

David Humphrey and Jill Makepeace, for the appellant Caitlin Sharawy, for the respondent

Keywords: Criminal Law, Sexual Assault, R. v Vuradin, 2013 SCC 38, R. v Khan, 2017 ONCA 114, R. v Dinardo, 2008 SCC 24, R. v Radcliffe, 2017 ONCA 176

R. v. J.A.S., 2019 ONCA 936

[Feldman, Gillese and Miller JJ.A.]

Counsel:

Michael Dineen, for the appellant Jamie Klukach, for the respondent

Keywords: Criminal Law, Sexual Abuse, Threatening Bodily Harm, Assault

ONTARIO REVIEW BOARD DECISIONS

L.F.(Re) ,2019 ONCA 930

[Lauwers, van Rensburg and Hourigan JJ.A.]

Counsel:

Anita Szigeti, for the appellant Geoffrey Le Feuvre Ken Lockhart, for the respondent Attorney General of Ontario Michele Warner, for the respondent Centre for Addiction and Mental Health

Keywords: Ontario Review Board, Criminal Law

P. (Re), 2019 ONCA 931

[Feldman, Gillese and Miller JJ.A.]

Counsel:

Anita Szigeti, for the appellant Natalya Odorico, for the respondent

Keywords: Ontario Review Board, Criminal Law, Dangerous Operation of a Motor Vehicle, R. v Sheikh, 2019 ONCA 692