Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of October 16, 2023.

In Volpe v. Wong Tam, the appellant, the publisher of Corriere Canadese, criticized certain trustees of the Toronto Catholic District School Board (TCDSB) for policies he believed went against Roman Catholic teachings on sexuality and gender. After using strong language against a TCDSB's link to an LGBTQ2S+ resource, the City of Toronto was urged to cease advertising in Corriere Canadese. The appellant sued the respondents for defamation, but the case was dismissed as a potential SLAPP (Strategic Lawsuit Against Public Participation) under s. 137.1 of the Courts of Justice Act. The appeal from that decision was dismissed.

In Greenspan v Van Clieaf, a mortgage interpretation case, the appellants had extended two loans to Jaymor Securities Ltd., securing the first loan with a third mortgage on Jaymor's property. A promissory note outlined repayment terms at 2% interest per month. A discrepancy arose when the mortgage registration document listed the interest rate as 0.02%. The second loan was subject to a fourth mortgage if not repaid promptly, but Jaymor defaulted on both loans without agreeing to the registration of the fourth mortgage. The Court allowed the appeal, finding that the court below erred in several aspects. Firstly, subsequent events should not have been considered to determine contract ambiguity. Secondly, the promissory note's interest rate, though stated as "2% or $5,000 per month," did not introduce uncertainty. Thirdly, the delay in seeking an equitable fourth mortgage did not warrant the application of the doctrine of laches. As for the interest rate, the lower court's decision to terminate the accrual of interest at the time of the sale of the property was correct given the finite proceeds available for payout.

In Pereira v. TYLT Technologies Inc. (TYLTGO), the Court allowed an appeal from the dismissal of an oppression application, in the process converting the application to a trial and remitting it to the Superior Court.

Other topics this week included consolidation of leaves to appeal from judicial review applications in the provincial offences context, stay pending appeal and stay of an appeal in a dispute over mining royalty interests where the damages trial had not yet been completed, the enforcement of a no-claims over provision in a release in a subsequent claim against a lawyer for professional negligence resulting in the dismissal of the claim against the lawyer, and the setting aside of a costs order against an intervener in public interest litigation, and remitting the matter back to the Superior Court for determination on proper principles.

Wishing everyone a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Volpe v. Wong-Tam, 2023 ONCA 680

Keywords:Torts, Defamation, Defences, Qualified Privilege, Civil Procedure, Anti-SLAPP, Statutory Immunity, Canadian Charter of Rights and Freedoms, s. 2(b), Constitution Act, 1867, s. 93, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, Mondal v Kirkconnell, 2023 ONCA 523, 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, Reference re Bill 30, An Act to Amend the Education Act(Ont), [1987] 1 S.C.R. 1148, Levant v. DeMelle, 2022 ONCA 79

Pereira v. TYLT Technologies Inc. (TYLTGO), 2023 ONCA 682

Keywords: Contracts, Corporations, Oppression, Civil Procedure, Applications, Trial of Issues, Canada Business Corporations Act, R.S.C. 1985, c. C-44, s.241, BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, Baylin Technologies Inc. v. Gelerman, 2021 ONCA 45, Menillo v. Intramodal Inc., 2016 SCC 51, Gordon Glaves Holdings Ltd. v. Care Corp. of Canada Ltd. (2000), 48 O.R. (3d) 737 (C.A.)

Greenspan v. Van Clieaf, 2023 ONCA 681

Keywords: Contracts, Real Property, Mortgages, Interpretation, Interest, Defences, Laches, Interest Act, R.S.C., 1985, c. I-15, s. 4, Housen v. Nikolaisen, 2002 SCC 33, Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills (1991), 3 O.R. (3d) 123 (C.A.), Solar Power Network Inc. v. ClearFlow Energy, 2018 ONCA 727, V.K. Mason Construction Ltd. v. Bank of Nova Scotia, [1985] 1 S.C.R. 271, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Elias Markets Ltd., Re, (2006) 274 D.L.R (4th) 166 (Ont. C.A.), Emmott v. Edmonds, 2010 ONSC 4185, 1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd., 2020 ONCA 250, Trang v. Nguyen, 2011 ONSC 7076, aff'd 2012 ONCA 885, Jellett v. Wilkie (1896), 26 S.C.R. 282, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Canada Square Corporation Ltd. et al. v. VS Services Ltd. et al. (1981), 34 O.R. (2d) 250 (C.A.), Cohen v. Woodcliffe Corporation, 2022 ONSC 5599, McKenzie v. Walsh, [1920] 61 S.C.R. 312, Green v. Bank of Montreal, 1999 CanLII 821 (Ont. C.A.), M.(K.) v. M.(H.), [1992] 3 S.C.R. 6, Chippewas of Sarnia Band v. Canada (Attorney General) (2000), 51 O.R. (3d) 641 (C.A.), leave to appeal refused, [2001] S.C.C.A. No. 63, K.(K.) v. G.(K.W.), 2008 ONCA 489, Anne Warner LaForest, Anger and Honsberger Law of Real Property, 3rd ed. (Thomson Reuters Canada Ltd.)

Windrift Adventures Inc. v. Chief Animal Welfare Inspector, 2023 ONCA 690

Keywords: Civil Procedure, Leave to Appeal, Consolidation, Rules of Civil Procedure, r. 6.01, Provincial Animal Welfare Services Act, 2019, S.O. 2019, c. 13, Li v Bank of Nova Scotia, 2023 ONSC 4235, CN v Holmes, 2011 ONSC 4837, Re Sault Dock Co Ltd v City of Sault Ste Marie [1973] 2 OR 479 (CA)

Lithium Royalty Corporation v. Orion Resource Partners, 2023 ONCA 697

Keywords: Contracts, Mining Rights, Royalties, Civil Procedure, Bifurcated Trials, Appeals, Stay Pending Appeal, Stay of Appeals, Rules of Civil Procedure, r. 5.04(2), Circuit World Corp v Lesperance (1997), 33 O.R. (3d) 674 (CA), Club Resorts Ltd. v Van Breda, 2012 SCC 17, MJ Jones Inc v Kingsway General Insurance Company et al, (2004) 72 O.R. (3d) 68, (CA), Sakab Saudi Holding Company v Al Jabri, 2021 ONCA 548, Yaiguaje v Chevron Corporation, 2014 ONCA 40, Essar Steel Algoma Inc, Re, 2016 ONCA 138, Longley v Canada, 2007 ONCA 149, Sodhi v Sodhi, (2002), 158 O.A.C. 83 (CA), Korea Data Systems (USA), Inc v Amazing Technologies Inc, 2012 ONCA 756, Toronto (City) v 1291547 Ontario Inc, (2001) 148 O.A.C. 212 (CA), Esquimalt & Nanaimo Railway Company v Dunlop, [1918] 3 W.W.R. 828 (BCCA), Popovich v Financial Investment Centre Inc., 2017 ONSC 1514, Dieffenbacher v Dieffenbacher IV, 2023 ONCA 189, Zafar v Saiyid, 2017 ONCA 919, RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311, Fontaine v Canada, 2021 ONCA 313

Fehr v. Gribilas, 2023 ONCA 686

Keywords: Contracts, Interpretation, Releases, No Claims-Over Provisions, Professional Negligence, Lawyers, Torts, Negligence Misrepresentation, Civil Procedure, Third Party Claims, Summary Judgment, Stay of Proceedings, Abuse of Process, Courts of Justice Act, R.S.O. 1990, c. C.43, s 106, Sinclair-Cockburn Insurance Brokers Ltd. v. Richards (2002), 61 O.R. (3d) 105 (C.A.), Ieradi v. Gordin, 2007 CanLII 48637 (Ont. S.C.), Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Winter v. Sherman Estate, 2018 ONCA 703, 42 E.T.R. (4th) 181, Owen v. Zosky (2000), 14 C.P.C. (5th) 50 (Ont. C.A.), Searle v. McCabe, 2011 ONSC 6344 (Div. Ct.), Woodcliffe Corp. v. Rotenberg, 2005 CanLII 23675 (Ont. C.A.)

Costa v. Seneca College of Applied Arts and Technology, 2023 ONCA 673

Keywords: Civil Procedure, Interveners, Public Interest Litigation, Costs against Non-Parties, Abuse of Process, Maintenance, Friends of Toronto Public Cemeteries Inc. v. Ontario (Public Guardian and Trustee), 2020 ONCA 509, 1318847 Ontario Ltd v. Laval Tool & Mould Ltd., 2017 ONCA 184, Servatius v. Alberni School District No. 70, 2022 BCCA 421

Short Civil Decisions

OZ Optics Ltd. v. Evans, 2023 ONCA 677

Keywords: Contracts, Employment, Holdover Clauses, Civil Procedure, Summary Judgment

Dharmarajan v. York Condominium Corporation No. 308, 2023 ONCA 694

Keywords: Real Property, Condominiums, Compliance Orders, Condominium Act, 1998, S.O. 1998, c. 19, ss. 134 and 135

Aboutaleb-Maragheh v. Khanlari, 2023 ONCA 695

Keywords: Civil Procedure, Appeals, Summary Judgment, Orders, Variation

CIVIL DECISIONS

Volpe v. Wong-Tam, 2023 ONCA 680

[Fairburn A.C.J.O. MacPherson and Miller JJ.A.]

COUNSEL:

P. Slansky, for the appellants

K. A. McGivney, N. D. Kolos, and B. B. Fuhrmann, for the respondents KWT and PA

A. W. MacDonald and E. K. Romano, for the respondents Yahoo Media Group Inc. and EDF

J. Opolsky, T. R Lax and A. Oake, for the respondent MR

T. Gleason and A. Rauff, for the respondents NDP, MDD and ILP

Keywords: Torts, Defamation, Defences, Qualified Privilege, Civil Procedure, Anti-SLAPP, Statutory Immunity, Canadian Charter of Rights and Freedoms, s. 2(b), Constitution Act, 1867, s. 93, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, Mondal v Kirkconnell, 2023 ONCA 523, 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, Reference re Bill 30, An Act to Amend the Education Act (Ont), [1987] 1 S.C.R. 1148, Levant v. DeMelle, 2022 ONCA 79

facts:

The appellant JV is the publisher of Corriere Canadese, a newspaper that has been sharply critical of some trustees of the Toronto Catholic District School Board (the "TCDSB") who promoted policies that JV believes undermine Roman Catholic teaching on sexuality and gender. In criticizing the policies of the TCDSB, JV engaged in personal attacks on the trustees who championed them. After JV used highly pejorative language to object to the TCDSB providing a link on its website to an LGBTQ2S+ resource website which itself linked to sexually explicit material, the respondent councillors – supported by the respondent trustees – took action to have the City of Toronto stop advertising in Corriere Canadese. The appellants sued the respondents for defamation and other causes of action. The respondents moved successfully to have the action dismissed under the anti-SLAPP provisions of s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43. This was an appeal from the motion judge's order dismissing the action.

ISSUES:

  1. Did the motion judge err in his s. 137.1 analysis by failing to consider that the Notice of Motion brought by the City Councillors violated s. 2(b) of the Canadian Charter of Rights and Freedoms?
  2. Did the motion judge err in principle by not accepting the proposition that the appellants' statements were protected by s. 93 of the Constitution Act, 1867 and could not constitute discriminatory speech?
  3. Did the motion judge err in his assessment of the respondents' defences?
  4. Did the motion judge err in characterizing the expression as arising from a matter of public interest because he failed to address the appellants' argument that the substance of the Notice of Motion was to censor or suppress the expression of the media?
  5. Did the motion judge err in the weighing analysis by failing to find the appellants' suffered serious harm and failing to actually weigh the harm to the appellants against the harm to the respondents?
  6. Did the motion judge err by awarding costs on a full indemnity basis in the absence of indicia of a SLAPP?

HOLDING:

Appeal dismissed.

REASONING:

  1. No.

Before considering the arguments at each step of the s. 137.1 analysis, the court addressed the appellants' overarching constitutional arguments, which were dismissed after oral argument. The appellants argued that the Notice of Motion itself was legally defective and that by introducing the motion to City Council, WT had breached the appellants' rights to freedom of expression under s. 2(b) of the Charter. They characterized the Notice of Motion as a nullity, and its introduction as an illegality, forming a foundation for their non-defamation tort claims. However, the appellants did not provide the court with any authority establishing that bringing a motion to city council for a vote is government action to which the Charter applies. The appellants thus failed to satisfy their burden of establishing that any Charter right was in issue.

  1. No.

The appellants advanced arguments related to the proposition that their speech, being an articulation of Roman Catholic doctrine, was protected by s. 93 of the Constitution Act, 1867. This argument was rejected at the conclusion of the appellants' oral submissions. Section 93 entrenches the rights of Roman Catholic separate school supporters to have their children receive a Roman Catholic education based on that doctrine, but these rights were not engaged by the matters in dispute between the parties. The motion judge found that the issue with the appellants' articles was not their position on Roman Catholic doctrine, but rather that they "used derogatory and prejudicial language" using stereotypes of "predation, pedophilia, and socially destructive behaviour." The appellants' constitutional arguments thus failed.

  1. No.

The Court considered the defences advanced with respect to the defamation action: justification, fair comment, qualified privilege, statutory immunity, and responsible communication. The Court concluded that the motion judge did not make any reversible error with respect to the fair comment defence, which was asserted by each of the respondents. The appellants accepted that the motion judge set out the elements of the fair comment defence accurately. The appellants' central argument was that the motion judge misunderstood the articles that the respondents identified as the factual basis for their claims that the appellants hold homophobic, transphobic, and anti-LGBTQ2S+ beliefs. The appellants argued that the articles address the obligation of Roman Catholic schools to teach specific doctrines and that these students needed to be accommodated. However, when the appellants made statements connecting persons who identify as LGBTQ2S+ with pedophilia and moral depravity, they could not then complain when other parties called them homophobic.

  1. No.

The Court found that the only argument with any force concerned the motion judge's weighing of the public interest in his s. 137.1 analysis. The appellants argued that the motion judge erred in characterizing the expression as arising from a matter of public interest, because he failed to address the appellants' argument that the substance of the Notice of Motion was to censor or suppress the expression of the media. The text of s. 137.1(3) references expression "that relates to a matter of public interest", not "what is in the public interest". The motion judge found that the appellants satisfied their burden of establishing that "there [were] grounds to believe" that the defamation claim had substantial merit. He found that the sting of the impugned statements was that the appellants held homophobic, transphobic, and anti-LGBTQ2S+ views. The motion judge instead found that the intention of the councillors and trustees was to protect the interests of their constituents and the integrity of the City in its expenditure of funds. The respondent trustees did not want the City to continue placing advertising in Corriere and Wong-Tam clearly communicated the belief that no other government should do so either. However, these actions were consistent with these respondents' stated rationale that they believed it harmful to their constituents to see government advertising alongside newspaper articles they believed to be advocating for discrimination.

  1. No.

The appellants' failure at the merits stage meant that the appeal failed, making it unnecessary to address the weighing stage. Nevertheless, the motion judge found that there was no evidence that any of the appellants' advertising contracts were affected because of the impugned statements. However, on WT's evidence, before the Notice of Motion, the City purchased advertising from Corriere Canadese, which it then stopped after the motion. For the purposes of a s. 137.1 motion, this suggested that the appellants had suffered damage. Additionally, there was merit to the appellants' argument that not all impugned statements should be treated equally, but due to the conclusion on the merits of the action, further analysis was unnecessary.

  1. No.

Applying the statutory presumption under s. 137.1(7), the motion judge awarded costs on a full indemnity basis to all of the respondents. The appellants argued that they defeated the statutory presumption and that the action did not have strong indicia of a SLAPP. However, the relative power dynamics in the case indicated that the respondents could potentially cause economic harm to the appellants. The case involved a journalist and newspaper seeking vindication against government office holders. Despite the nuanced dynamics, the action was misconceived. Section 137.1 exists to keep political speech flowing and the action should have been stopped with a s. 137.1 motion, hence there was no basis to interfere with the motion judge's award of costs.

Pereira v. TYLT Technologies Inc. (TYLTGO), 2023 ONCA 682

[Roberts, Favreau and Copeland JJ.A.]

COUNSEL:

K.J. Scullion, for the appellant

J. Ormston, for the respondents

Keywords: Contracts, Corporations, Oppression, Civil Procedure, Applications, Trial of Issues, Canada Business Corporations Act, R.S.C. 1985, c. C-44, s.241, BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, Baylin Technologies Inc. v. Gelerman, 2021 ONCA 45, Menillo v. Intramodal Inc., 2016 SCC 51, Gordon Glaves Holdings Ltd. v. Care Corp. of Canada Ltd. (2000), 48 O.R. (3d) 737 (C.A.)

facts:

In August 2018, Mr. Pe. and a former partner incorporated Tylt Innovations Inc., a business that performed the last-mile delivery services for merchants and fulfillment centres using gig economy couriers. In July 2019, Mr. Pa. joined the business and on January 30, 2020, Mr. Pe. and Mr. Pa. entered into a shareholder agreement which included a provision that their shares were to vest over time until August 1, 2020, provided that they each continued to be employed by the corporation.

In May 2020, to grow the business and get more investors the corporation enrolled into the Y Combinator Program, based in Silicon Valley, California. As part of their recommendation by their lawyer they re-incorporated their company as a new federal corporation, TYLTGO. A new shareholder agreement was prepared, including a stock restriction agreement. The stock restriction agreement included a vesting provision for the common shares stipulating that 25% of each of Mr. Pe.'s and Mr. Pa.'s respective common shares were to vest on July 31, 2020, with the balance of the shares vesting in 25% increments over the following three years, to be fully vested by July 31, 2023. The stock restriction agreement defined a "triggering event" as including the termination of a shareholder "for any reason, whether with or without cause and including the death or permanent disability of the Shareholder, or any voluntary resignation of such employment or engagement by the Shareholder".

In the fall of 2020, through the Y Combinator Program S.S. and K.H., invested $1 million in the company. As a condition of this investment, S.S. appointed K.H. as his representative on TYLTGO's board, forming a three-member board of Mr. Pe., Mr. P. and Mr. S. formed the three-member board, with Mr. Pe. as CEO.

Soon after the investment was completed, allegations of senior management interpersonal conflict and mismanagement arose, most of which involved Mr. Pe. in his role in the Corporation. S.S. and K.H. proposed that Mr. Pe. step aside as CEO. Mr. Pa. replaced Mr. Pe. as CEO.

In late August 2021, Mr. Pa. and K.H. voted as a majority of the board of directors to terminate Mr. Pe.'s employment. They also exercised repurchase rights under the stock restriction agreement and bought Mr. Pe.'s unvested shares for "a fraction of their true value". In late October 2021, Mr. Pa. and K.H. further voted to remove Mr. Pe. as a director of TYLTGO.

Mr. Pe. sued for oppression, but his action was dismissed. He appealed.

issue:

Did the application judge err in focusing on whether the applicant had a reasonable expectation that he would continue as an employee of TYLTGO indefinitely, rather than considering his reasonable expectations as a director and shareholder of the company?

HOLDING:

Appeal allowed.

REASONING:

Yes.

The application judge's statement of the legal principles was correct but the application of those principles to the circumstances of this case was antithetical to the equitable nature of the oppression remedy. The application judge failed to consider relevant factors referred to in BCE, in determining whether Mr. Pe.'s expectations were objectively reasonable. For example, the failure to consider the size and nature of TYLTGO, the relationship between the parties, including Mr. Pe.'s role as a founder of the company, and whether Mr. Pe.'s termination and divestment were a fair resolution of the conflict between the parties.

In determining whether the court should grant an oppression remedy, the first part of the inquiry requires the court to determine the applicant's expectations and whether they were reasonable. The application judge described Mr. Pe.'s expectations in terms that made them sound unreasonable, as he expected to be with TYLTGO indefinitely. This was without considering the factual context of this case. The application judge failed to consider the applicant's expectations as one of the founders of this small company, failing to apply the legal framework established in BCE. Rather, he focused on the language of the agreements between the parties, which is only one of the relevant factors. For example, he gave no consideration to the applicant's role in founding TYLTGO and his history with the corporation. As held in BCE, at paras. 74 and 75, in considering the reasonableness of an applicant's expectations, the size and nature of the corporation are relevant as is the relationship between the "claimant and the other corporate actors".

Given the applicant's role as one of the founders of the company, it may not be unreasonable for the applicant to expect that he would continue as an officer, director and/or shareholder of TYLTGO for some period of time, at least until his shares fully vested, unless his continued role in TYLTGO was harmful to the corporation or not in the company's best interests. While TYLTGO was seeking to expand and obtain additional funding, it was nevertheless still a small corporation. Mr. Pe. was the founder of its predecessor, and one of two of its original founders. The application judge failed to consider these circumstances in deciding whether Mr. Pe.'s expectations were reasonable.

Similarly, the application judge gave no consideration to whether the decision to remove Mr. Pe. as an officer and director and to divest him of his unvested shares was "the fair resolution of conflicting interests between corporate stakeholders". There was conflicting evidence on the issue. The application judge did not seek to resolve the conflicts in the evidence, nor did he address the issue of whether there was any justification for Mr. Pa.'s view that it was in TYLTGO's best interest for Mr. Pe. to be dismissed from the company. However, as part of the inquiry of whether it was fair and reasonable to remove Mr. Pe.a from his position and divest him of his shares, it was relevant to consider whether Mr. Pe.'s conduct justified such a termination. In other words, it was relevant to consider whether it was in the best interests of TYLTGO to divest Mr. Pe. of any further role in the company and of all his unvested shares.

The matter was originally brought as an application. It did not appear that the parties requested that the matter be converted to a trial. However, it was evident that in order to properly adjudicate the issues between the parties, the court will have to make findings of fact, including findings of credibility regarding the circumstances under which Mr. Pe.'s role at TYLTGO was terminated and his shares were bought out. As a general rule, if the determination of the issues, including issues of credibility, cannot properly be made on the application record, then the application should be converted to a trial: see Gordon Glaves Holdings Ltd. v. Care Corp. of Canada Ltd. In the circumstances of this case, with the agreement of the parties, this matter was remitted back to the Superior Court to be decided at a trial.

Greenspan v. Van Clieaf, 2023 ONCA 681

[Miller, Harvison Young and Favreau JJ.A.]

COUNSEL:

I. Klaiman, for the appellants and respondents by cross-appeal

S. M. Turk, for the respondents and appellants by cross-appeal

Keywords: Contracts, Real Property, Mortgages, Interpretation, Interest, Defences, Laches, Interest Act, R.S.C., 1985, c. I-15, s. 4, Housen v. Nikolaisen, 2002 SCC 33, Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills (1991), 3 O.R. (3d) 123 (C.A.), Solar Power Network Inc. v. ClearFlow Energy, 2018 ONCA 727, V.K. Mason Construction Ltd. v. Bank of Nova Scotia, [1985] 1 S.C.R. 271, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Elias Markets Ltd., Re, (2006) 274 D.L.R (4th) 166 (Ont. C.A.), Emmott v. Edmonds, 2010 ONSC 4185, 1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd., 2020 ONCA 250, Trang v. Nguyen, 2011 ONSC 7076, aff'd 2012 ONCA 885, Jellett v. Wilkie (1896), 26 S.C.R. 282, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Canada Square Corporation Ltd. et al. v. VS Services Ltd. et al. (1981), 34 O.R. (2d) 250 (C.A.), Cohen v. Woodcliffe Corporation, 2022 ONSC 5599, McKenzie v. Walsh, [1920] 61 S.C.R. 312, Green v. Bank of Montreal, 1999 CanLII 821 (Ont. C.A.), M.(K.) v. M.(H.), [1992] 3 S.C.R. 6, Chippewas of Sarnia Band v. Canada (Attorney General) (2000), 51 O.R. (3d) 641 (C.A.), leave to appeal refused, [2001] S.C.C.A. No. 63, K.(K.) v. G.(K.W.), 2008 ONCA 489, Anne Warner LaForest, Anger and Honsberger Law of Real Property, 3rd ed. (Thomson Reuters Canada Ltd.)

facts:

The appellants, KG and JKSD Management Inc. ("JKSD"), had made two loans to Jaymor Securities Ltd. ("Jaymor"). The first loan was for $250,000 and was secured by a third mortgage on property owned by Jaymor, namely Units 9 and 10 at 104 West Beaver Creek Road in Richmond Hill (the "property"). On the day of the first loan, a promissory note was executed in favour of KG, stating that Jaymor agreed to repay $250,000 plus interest at the fixed rate of Two Percent (2% or $5,000) per month commencing on October 27, 2017. The loan maturity date was April 27, 2018. The note also stated that the primary security for the loan would be in the form of a third mortgage on the property, and that interest was to run at 20% per year if the loan was not repaid by the maturity date. KG's daughter registered the mortgage in the land titles system, which included a copy of the promissory note. The registration document stated that the interest rate was 0.02%, instead of 2% as stated in the note.

The second loan was for $125,000 and was subject to an agreement that, if Jaymor had not paid the amount owed within thirty days of its due date, the debt would be secured by a fourth mortgage on the property. Jaymor defaulted on both loans. No fourth mortgage was registered on the property.

The respondents, AVC, JVC and RW, obtained a judgment for $1,152,373.72 against Jaymor. They subsequently registered a writ of seizure and execution against the property. The property was sold on March 12, 2021, for $1,560,000.00. The pay out for the first and second mortgages, tax arrears and the real estate commission left $548,437.08 to be paid to the appellants and the respondents. A dispute arose between these parties over how the funds were to be paid out. Specifically, the parties disagreed on the rate of interest that applied to the appellants' third mortgage, whether the appellants had an equitable fourth mortgage over the property that took precedence over the writ of execution, and, if so, the amount to be paid out to the appellants pursuant to the fourth mortgage. By agreement of the parties, in order to allow for the closing of the sale, the outstanding mortgages and writs were discharged and the amount of $548,437.08 was paid into the trust account of the appellants' lawyer pending resolution of the dispute.

On an application brought by the appellants, the application judge found that the rate of interest on the third mortgage was 20% per annum and that interest was payable up to the day before the property sale transaction closed. She also held that the appellants did not have an equitable fourth mortgage on the property, stating that Jaymor's refusal to register the mortgage after default demonstrated that there was no common intention between JKSD and Jaymor, and that JKSD had other means of enforcing the debt.

ISSUES:

  1. Did the application judge err in finding that the appellants did not have a valid equitable fourth mortgage?
  2. Did the application judge err in finding that the rate of interest on the third mortgage was 20%?
  3. Did the application judge err in finding that interest on the third mortgage only ran to the date the property was sold?

HOLDING:

Appeal allowed in part.

REASONING:

  1. Yes.

The Court noted that the application judge failed to look at the terms of the promissory note at the time it was made. From the note, it was clear that the parties agreed that the JKSD would have a mortgage on the property if Jaymor defaulted on the loan. The terms were not uncertain and the application judge should not have looked at subsequent events to find uncertainty.

The Court first set out general principles that apply to equitable mortgages. An equitable mortgage is distinct from a legal mortgage. An equitable mortgage is meant to enforce "a common intention of the mortgagor and mortgagee to secure property for either a past debt or future advances, where that common intention is unenforceable under the strict demands of the common law": Elias Markets Ltd. at para 65.

Determining whether there was an equitable mortgage is a matter of contract interpretation. The court is to determine the intent of the parties, based on the words in the contract used in their ordinary and grammatical meaning, consistent with the surrounding circumstances reasonably known to the parties at the time the contract was formed: Sattva at para 47. The surrounding circumstances do not include the parties' conduct following the formation of the contract: Shewchuk at para 41.

The Court noted that the application judge had made an error of law in taking into consideration the conduct of JKSD and Jaymor subsequent to the formation of the promissory note without first determining whether there was an ambiguity in the note. The application judge relied on the fact that Jaymor refused to register a fourth mortgage as evidence that the parties had not intended that a fourth mortgage be registered. However, these events took place after Jaymor and JKSD had entered into the promissory note. The terms of the promissory note itself had made clear that the parties intended that a fourth mortgage would be registered on the property if Jaymor defaulted on the loan. The fact that Jaymor sought to resile from the agreement had not created ambiguity or uncertainty in the agreement. To accept that this conduct created ambiguity would give undue power to contracting parties to create ambiguity where none existed by refusing to follow through on their obligations in an agreement, or by acting in a self-serving manner after the formation of an agreement.

The Court also noted that the application judge had made an error of law in finding that the terms of the promissory note were uncertain because of the description of the interest rate. In making this finding the application judge relied on the fact that the promissory note referred to a rate of interest of "2% or $5,000 per month", noting that $5,000 per month was not 2% of $125,000. The application judge failed to try to give effect to the intentions of the parties and to consider whether this was an essential term of the agreement: VS Services Ltd at para 27, 32-34; Cohen at paras 134-136. While the interest rate formed part of the price of the contract and may therefore be characterized as an essential term of the agreement: McKenzie at p. 313, the erroneous reference to $5,000 on its own was held not to have created any uncertainty or ambiguity. The wording used was "Two Percent (2% or $5,000) per month". The use of "Two Percent" outside the parenthesis and repeated inside the parenthesis on its own strongly suggested that the parties intended that the interest rate was to be 2% and that the reference to $5,000 was an error in drafting based on the use of the first promissory note as a precedent. Given that the loan was meant to be for one month at a rate of interest of 2% for that month, after which the rate of interest was to be 20% per year in the event Jaymor defaulted on the loan, the Court noted that the erroneous reference to $5,000 per month in a parenthesis could hardly be characterized as an essential term of the agreement. Accordingly, the application judge had failed to conduct the proper analysis to determine whether the reference to $5,000 was a true ambiguity in an essential term that would warrant invalidating the agreement.

The application judge had made a legal error in relying on the fact that JKSD had delayed in taking steps to enforce its right to an equitable fourth mortgage. In considering that delay weighed against JKSD's claim, the application judge failed to consider whether it was appropriate to rely on the doctrine of laches to bar the appellants' equitable claim. Delay on its own is not sufficient for the doctrine of laches to apply: M.(K.) at para. 98. In order for the doctrine of laches to apply, the application judge would have had to be satisfied that, by delaying the institution of its application, JKSD acquiesced to the nonregistration of a fourth mortgage after Jaymor defaulted on the loan or that the respondents relied on the delay to their detriment: M.(K.), at para. 98. In this case, there was no evidence that would support a finding favourable to the respondents on either branch of this test. There was no evidence that the appellants agreed to forego registration of a fourth mortgage. Further, they notified the respondents about their claim and commenced the application relatively soon after learning about the respondents' writ of execution. There was no evidence that the respondents suffered any prejudice in reliance on JKSD's conduct. The application judge erred in failing to apply the correct legal principles to the issue of whether any delay on JKSD's part should have precluded the court from granting an equitable remedy, namely from finding that it was entitled to an equitable fourth mortgage.

  1. No.

The Court found there were no merit to the respondents' arguments. The respondents sought to revisit findings of fact or mixed fact and law made by the court below, which is not the role of the Court, unless the court below made a palpable and overriding error: see Housen.

The respondent's argued that the application judge erred in finding the 0.02% in the mortgage registration was not the applicable rate of interest. However, the Court stated that the application judge's finding that this was a typographical error was a finding of fact to which the court owed deference.

The respondents also argued that if the 0.02% interest rate in the registration document did not apply, the application judge should have found that the interest rate in the promissory note was contrary to s. 4 of the Interest Act. The Court noted that regardless of whether s. 4 applied, the application judge made a finding of fact, which was clearly supported by the terms of the promissory note, that the rate of interest on the loan as of April 27, 2018, was 20% per year, and thereby not contrary to s. 4. Further, the interest rate was found by the application judge to be 2% interest per month from October 27 to April 27, which was clear and would not have led to any uncertainty. These were findings of mixed fact and law to which the Court owed deference. The Court also distinguished this case with Elcano, where the court in that case found that a 2% per month rate of interest in a promissory note was unlawful because it was unclear given that it was not expressed as a yearly rate. The Court stated that a stipulated rate of interest that applies for a specified period of time that is clear and ascertainable by calculation or formula complies with s. 4 of the Interest Act even if it is not explicitly expressed as an annual rate of interest: ClearFlow Energy at para 53; V.K. Mason Construction Ltd at p. 287.

  1. No.

The application judge had found that interest on the loan ran up to the date before the closing of the property sale transaction. Based on general principles of contract interpretation, the Court agreed with the application judge's disposition on this issue.

Reviewing courts approach questions of contractual interpretation by a court below with deference: Sattva at para. 53. The Court had found no error in the application judge's interpretation of the agreement. By expressly tying the preservation of rights to the point in time immediately prior to closing, the parties had agreed to a date upon which to determine their respective rights and interests.

The surrounding circumstances also supported the application judge's interpretation. This was not a power of sale or foreclosure; rather the parties waited for the properties to be sold, after which the proceeds became available to satisfy the creditors.

Furthermore, as a matter of common sense, the Court noted that it would be reasonable to infer that the parties had not intended that interest would continue to accrue to the appellants' benefit during the course of the litigation, including during any appeal period. The proceeds from the sale of the properties available to be paid out to the parties were finite. Paying out additional interest to the appellants because of the time taken up by litigation meant that the respondents would have gotten a smaller pay out, and possibly no pay out. The Court concluded that this could not have been the parties' intention unless it was expressly stated.

Windrift Adventures Inc v Chief Animal Welfare Inspector, 2023 ONCA 690

[Sossin J.A. (Motion Judge)]

COUNSEL:

E. K. Gillespie, for the moving parties

M. Valentini and M. J. Sims, for the responding party

Keywords: Civil Procedure, Leave to Appeal, Consolidation, Rules of Civil Procedure, r. 6.01, Provincial Animal Welfare Services Act, 2019, S.O. 2019, c. 13, Li v Bank of Nova Scotia, 2023 ONSC 4235, CN v Holmes, 2011 ONSC 4837, Re Sault Dock Co Ltd v City of Sault Ste Marie [1973] 2 OR 479 (CA)

facts:

The appellants sought an order for consolidation of two leave to appeal proceedings before the Court due to regulatory action taken by the respondent, Chief Animal Welfare Inspector. Animal Welfare Services ("AWS") inspected Windrift's business in 2021 and found their sled dogs in distress. After non-compliance with AWS orders, 230 dogs were removed. On December 31, 2021, the Board dismissed Windrift's appeal regarding the decisions to keep the dogs. Windrift sought judicial review, but the Divisional Court dismissed its application. Windrift then filed a notice for leave to appeal and Trotter J.A. directed that the leave to appeal should be given priority. On January 18, 2022, the respondent issued a statement of account to Windrift for the care of the dogs. After the hearing, the Board confirmed but varied the amount owing. Both parties sought judicial review of this decision, but it was dismissed in December 2022. Windrift then sought leave to appeal and an interim stay, which Monahan J.A. granted to prevent the forfeiture of the dogs.

ISSUES:

Should the two leave to appeal proceedings before the Court be consolidated?

HOLDING:

Motion dismissed.

REASONING:

No.

Rule 6.01(1) of the Rules of Civil Procedure provides criteria for the Court's discretion to consolidate proceedings, aiming to avoid multiple proceedings, promote timely resolutions, and avoid inconsistent findings. The test for consolidation involves meeting any of the criteria under r. 6.01(1) and assessing if the balance of convenience favors a consolidation order. In the present case, Monahan J.A. noted the complicated and overlapping nature of the litigation due to the respondent's regulatory action and the removal of the dogs. However, the distinct legal questions in each leave application, the potential for delay, and the risk of extending the interim stay without satisfying criteria meant the balance of convenience did not favor consolidation. Consequently, the motion for consolidation was dismissed, though this decision did not reflect on possible future consolidation of the appeals if both applications received leave.

Lithium Royalty Corporation v. Orion Resource Partners, 2023 ONCA 697

[Paciocco J.A. (Motion Judge)]

COUNSEL:

M. Mohamed KC, J. G. Bell, and I. W. Thompson, for the appellants/moving parties Orion Resource Partners, Orion Mine Finance Fund I, Alnitak Holdings, LLC, Orion Mine Finance (Master) Fund I LLP, and Bellatrix Ltd.

B. F. Morrison and K. R. Costin, for the respondent/responding party Lithium Royalty Corporation

No one appearing for the respondent/responding party Lithium Americas Corporation

Keywords: Contracts, Mining Rights, Royalties, Civil Procedure, Bifurcated Trials, Appeals, Stay Pending Appeal, Stay of Appeals, Rules of Civil Procedure, r. 5.04(2), Circuit World Corp v Lesperance (1997), 33 O.R. (3d) 674 (CA), Club Resorts Ltd. v Van Breda, 2012 SCC 17, MJ Jones Inc v Kingsway General Insurance Company et al, (2004) 72 O.R. (3d) 68, (CA), Sakab Saudi Holding Company v Al Jabri, 2021 ONCA 548, Yaiguaje v Chevron Corporation, 2014 ONCA 40, Essar Steel Algoma Inc, Re, 2016 ONCA 138, Longley v Canada, 2007 ONCA 149, Sodhi v Sodhi, (2002), 158 O.A.C. 83 (CA), Korea Data Systems (USA), Inc v Amazing Technologies Inc, 2012 ONCA 756, Toronto (City) v 1291547 Ontario Inc, (2001) 148 O.A.C. 212 (CA), Esquimalt & Nanaimo Railway Company v Dunlop, [1918] 3 W.W.R. 828 (BCCA), Popovich v Financial Investment Centre Inc., 2017 ONSC 1514, Dieffenbacher v Dieffenbacher IV, 2023 ONCA 189, Zafar v Saiyid, 2017 ONCA 919, RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311, Fontaine v Canada, 2021 ONCA 313

facts:

The motion was brought by the moving parties for a stay pending an appeal of a judgment obtained by Lithium Royalty Corporation ("LRC") after a bifurcated liability hearing. LRC had accused the moving parties of breaching a contract regarding royalty interests in the "Thacker Pass" lithium mining project in Nevada. The royalty interests at the core of the dispute were held by Alnitak Holdings, LLC, owned by Bellatrix Ltd., which was owned by Orion Mine Finance (Master) Fund I LP. When the trial judge released her decision, she allowed LRC to add "proposed Orion respondents" to the action and denied the jurisdiction challenge brought on behalf of the Orion Respondents. The judge emphasized that the entities named under "Orion Resource Partners" were relevant and involved in the dispute. After the trial judge released her decision, the Orion Respondents filed a Notice of Appeal. On August 22, 2023, LRC served a Notice of Motion for "protective orders" to prevent "Orion" from dissipating the Thacker Pass royalty interests. In support, LRC indicated Orion had already sold 60% of the royalty interests and tried to sell the remaining 40% after litigation began. In response, the Orion Respondents brought a motion to stay the proceedings pending their appeal.

ISSUES:

  1. Did the trial judge make a liability finding?
  2. Should a stay of the underlying proceedings be granted?
  3. Should a stay of the appeal be granted?

HOLDING:

Motion granted in part.

REASONING:

  1. No.

The Orion Respondents argued that the only substantive finding that the trial judge had made so far was that a valid and enforceable contract was concluded. They claimed the right to argue when the trial resumed over whether there was a breach of contract and if so, who was responsible for the breach. LRC argued to the contrary, claiming that the trial judge had already made a full liability finding. At the time the motion was argued before the Court, a formal order had not yet been issued precisely expressing the trial judge's formal findings. The Court did not resolve any uncertainty that remained in the absence of that formal order because this question would not have affected the outcome of the ruling. The Court based its decision on a consideration of all the grounds of appeal that the Orion Respondents were advancing. If no liability finding had yet been made, this would have only weakened the motion further.

  1. No.

The Court was not prepared to grant the stay of the underlying trial proceedings pending appeal that the Orion Respondents requested. However, the Court granted a partial stay of the proceedings pending appeal against Bellatrix Ltd., and Orion Mine Finance (Master) Fund I LP. The RJR-MacDonald test inquired whether the interests of justice called for a stay of proceedings pending appeal, informed by three key factors: (1) whether there was a serious question to be tried; (2) whether the moving party would suffer non-compensable harm if the stay was not granted, and (3) the balance of convenience.

The Orion Respondents had raised serious issues to be tried but, with the exception of the respondents, Bellatrix Ltd., and Orion Mine Finance (Master) Fund I LP, they had not persuaded the Court that their grounds of appeal were so strong that they offset the competing interests which the Court found in favour of denying the motion. The Court did not accept the primary submissions of the Orion Respondents relating to irreparable harm. The risk that attornment would be found based on participation in the continuation of the underlying trial was further reduced given that the trial judge had already determined that the Orion Respondents had attorned. The Court found that the balance of convenience strongly favoured rejecting the motion for a stay of proceedings pending appeal of the liability hearing judgment against all of the Orion Respondents. The Orion Respondents were foreign legal entities, and there was evidence that steps had been taken to dissipate the royalty interests that were the subject of the contract found by the trial judge. In light of the foregoing considerations, the Court was not persuaded that it was in the interests of justice to stay the underlying action pending the appeal in its entirety. However, in the case of Bellatrix Ltd., and Orion Mine Finance (Master) Fund I LP it was in the interests of justice to order a partial stay of the proceedings.

  1. Yes.

The Court found that the appeal brought by the Orion Respondents from the judgment of the trial judge — appeal COA-23-CV-1029 — should be stayed pending the outcome of the trial. LRC requested that the Court make this order, and it was in the interests of justice to do so. The court recognized in Korea Data Systems (USA), Inc. v. Amazing Technologies Inc that the "public interest in the fair, well-ordered and timely disposition of litigation, and the effective use of scare public resources" was an appropriate consideration in identifying the interests of justice. The Court found that it was in the interests of justice to have both the liability issues and any issues that may arise from the remedies hearing in one appeal. Given these considerations and the fact that the Court saw no compelling reason for hiving off the appeals on the issue of liability, the Court ordered that the appeal be stayed.

The Orion Respondents argued that the only substantive finding that the trial judge had made so far was that a valid and enforceable contract was concluded. They claimed the right to argue when the trial resumed over whether there was a breach of contract and if so, who was responsible for the breach. LRC argued to the contrary, claiming that the trial judge had already made a full liability finding. At the time the motion was argued before the Court, a formal order had not yet been issued precisely expressing the trial judge's formal findings. The Court did not resolve any uncertainty that remained in the absence of that formal order because this question would not have affected the outcome of the ruling. The Court based its decision on a consideration of all the grounds of appeal that the Orion Respondents were advancing. If no liability finding had yet been made, this would have only weakened the motion further.

Fehr v. Gribilas, 2023 ONCA 686

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

COUNSEL:

C. Carter, for the plaintiffs

E. Cherniak and S. Jones, for defendants

M. Kestenberg and A. Hershtal, for the respondent

J. Rosenstein, for the respondent

Keywords: Contracts, Interpretation, Releases, No Claims-Over Provisions, Professional Negligence, Lawyers, Torts, Negligence Misrepresentation, Civil Procedure, Third Party Claims, Summary Judgment, Stay of Proceedings, Abuse of Process, Courts of Justice Act, R.S.O. 1990, c. C.43, s 106, Sinclair-Cockburn Insurance Brokers Ltd. v. Richards (2002), 61 O.R. (3d) 105 (C.A.), Ieradi v. Gordin, 2007 CanLII 48637 (Ont. S.C.), Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Winter v. Sherman Estate, 2018 ONCA 703, 42 E.T.R. (4th) 181, Owen v. Zosky (2000), 14 C.P.C. (5th) 50 (Ont. C.A.), Searle v. McCabe, 2011 ONSC 6344 (Div. Ct.), Woodcliffe Corp. v. Rotenberg, 2005 CanLII 23675 (Ont. C.A.)

facts:

The appeal concerned the effect of a no-claims-over provision in a full and final mutual release on subsequent proceedings commenced by parties to the release. The appellants appealed the order of the motion judge that permanently stayed their professional negligence action on the basis that the action, which they had commenced in contravention of their obligations under a no-claims-over provision, was an abuse of process. The appellants sought an order restoring the action. The defendants sought an order dismissing the action on its merits.

In 2004, the appellants became directors and officers of J+W Foods and claimed they purchased J's interest for $6,000. On October 31, 2008, they resigned and claimed they never relinquished their ownership in J+W Foods. In 2009, PG prepared backdated resignations which the appellants signed, and he sent a reporting letter to J+W Foods confirming the resignations. The following year, the appellants made a $100,000 loan to J+W Foods, secured by a promissory note.

In 2018, the appellants retained their lawyer to collect on the loan. All involved parties signed a full and final mutual release (the "Release"), which addressed various claims ranging from corporate shareholdings of J+W Foods to claims regarding specific assets. The Release contained a no-claims-over provision, stipulating that no further claims or proceedings would be made or continued against any party released by the agreement. If violated, the offending party would be liable for all legal costs. The Release could also be used as a defense in any future proceedings.

The appellants started a professional negligence action. They alleged that, while trying to collect on the loan, they found out they were not listed as shareholders in J+W Food's records. They argued that the corporate lawyer and accountant for J+W, had a duty to ensure the company's records were correctly updated. They claimed that this duty was breached. Additionally, they alleged negligent misrepresentation. The appellants sought a declaration entitling them to 1/3 of the shares in J+W Foods or alternatively $1 million in damages for the loss of their shares.

The respondents presented a defense stating, among other things, that the appellants never had an equity interest in J+W Foods and that he never represented them. The respondents issued a third-party claim, seeking contribution and indemnity against the third party respondents, if he was found liable. The respondent's defenses, in relation to the alleged negligence, denied that the respondent had any role in the share transfers or in updating J+W Foods' records.

A motion for summary judgment dismissing the main action was brought. J+W Foods as third party, brought a motion based on the no-claims-over provision. The motion judge concluded that it was appropriate, fair, and just to decide the issues summarily. The motion judge concluded that the respondents were entitled to the benefit of the no-claims-over provision in the Release, and he stayed the action permanently as an abuse of process. Finally, the motion judge concluded that it would be an abuse of process to permit the appellants' action to proceed after signing the Release containing a no-claims-over clause.

ISSUES:

  1. Did the motion judge err in imposing a stay of the main action in the absence of a motion for a stay by the defendant respondents or a specific claim for a stay under s. 106 of the Courts of Justice Act?
  2. Did the motion judge err in concluding that the defendant respondents had a viable claim over in the professional negligence action, sufficient to trigger the protection of the no-claims-over provision?

HOLDING:

Appeal dismissed.

REASONING:

  1. No.

There was no procedural defect that prevented the motion judge from staying the main action. The appellants contended that, in the absence of a motion by the defendant respondents for a stay of proceedings, the motions judge did not have the authority to stay the main action. The defendant respondents did not specifically rely on s. 106 of the CJA or otherwise seek a stay of the professional negligence action. Instead, they sought its dismissal. The appellants argued that there was an onus on the moving parties to provide proper notice of the relief they were seeking, and they failed to do so. They asserted that the defendant respondents should have moved for a stay, and not to dismiss the main action in a summary judgment motion, and that because of this procedural defect, the order staying the main action should be set aside.

The motion judge had the authority to determine if the action was an abuse of process and could dismiss the action for that reason. An action can be dismissed as an abuse of process under the inherent jurisdiction of the court, including to prevent re-litigation of the same issue. The third party moved for an order based on the no-claims-over provision, and the defendant respondents were seeking to have the main action dismissed based on the merits and the no-claims-over provision. Irrespective of the failure to plead s. 106 of the CJA specifically, and of the defendant respondents' request for dismissal of the professional negligence action rather than a stay, whether the main action constituted an abuse of process and should not be permitted to proceed because of the terms of the Release was squarely and properly before the motion judge.

  1. No.

The motion judge did not err in staying the main action. The Court held that the appellants relied on three Ontario cases where professional negligence actions against lawyers were allowed to proceed in whole or in part notwithstanding that the plaintiffs had signed releases containing no-claims-over provisions. They asserted that these cases were authority that a lawyer will never have a viable claim over against their client in respect of their own negligence. Even if the third-party claim was dismissed, the main action should be permitted to proceed.

The appellants contended that, when properly considered, the claims in the main action did not in fact engage the matters raised in the third party proceedings. The Court disagreed. Further, the motion judge did not err when he concluded that the defendant respondents were being sued in the professional negligence action with respect to the subject matter of the Release. In the Release the appellants released, among other things, "any claim to an interest in the corporate shareholdings" of J+W Foods. There was no ambiguity in the terms of the Release. By the terms of the Release and in particular the no-claims-over clause, the releasees, bargained for "peace" – that is, that they would not be implicated in proceedings in which the appellants claimed ownership of J+W Foods.

The authority to stay an action at the behest of a stranger to a release on the basis of a no-claims-over clause is anchored in the Court's ability to respond to an abuse of process. The Court concluded that in this case, it was appropriate to stay the main action, as a result of which the third party proceedings were also stayed. The third party claim raised a "viable" third party claim, that is one that could be made out on proper evidence, that the defendant respondents reasonably relied on inaccurate information that was provided by one or more of the third parties.

As a final submission that was made in reply, the appellants' counsel suggested that the appellants were prepared to limit their claims in the main action to damages, and to not pursue the claim for a declaration that they are shareholders in J+W Foods. Apart from the fact that this offer was made too late in the proceedings to be given any effect, it would not be sufficient. The substance of the professional negligence claim was that the defendant respondents were negligent in not preserving and protecting the appellants' shareholdings. The claim in the action was inextricably linked to the third party claim, irrespective of the remedy sought by the appellants.

Costa v. Seneca College of Applied Arts and Technology, 2023 ONCA 673

[van Rensburg, Nordheimer and George JJ.A.]

COUNSEL:

J. Roth for the appellant, Justice Centre for Constitutional Freedoms

H. Levitt, K. Marshall and J. Buchan for the respondent, Seneca College of Applied Arts and Technology

S. Choudhry for the interveners, Canadian Civil Liberties Association, Canadian Constitution Foundation, and Democracy Watch

J. Manson for the respondents, M.C, C.L, A.B and A.M

Keywords: Civil Procedure, Interveners, Public Interest Litigation, Costs against Non-Parties, Abuse of Process, Maintenance, Friends of Toronto Public Cemeteries Inc. v. Ontario (Public Guardian and Trustee), 2020 ONCA 509, 1318847 Ontario Ltd v. Laval Tool & Mould Ltd., 2017 ONCA 184, Servatius v. Alberni School District No. 70, 2022 BCCA 421

facts:

In June 2021, Seneca College of Applied Arts and Technology had advised all of its students and employees that Seneca was making proof of vaccinations against Covid-19 a condition for all students and employees to come on Seneca's campus for the fall term commencing September 7, 2021. Seneca confirmed the policy in a series of emails leading up to the start of the 2021 fall term.

The respondents are both students enrolled in educational/training programs at Seneca. They sought an interlocutory injunction to prevent Seneca from enforcing its policy requiring all students who attend Seneca's campus to be fully vaccinated for Covid-19. The motion for an injunction did not succeed.

On November 24, 2024, the motion judge released an endorsement in which he ordered JCCF to pay the costs of the motion fixed in the amount of $110,000 on a partial indemnity basis together with disbursements in the amount of $46,461.99. In the course of his endorsement, the motion judge found that JCCF had ridden "the twin horses of advocate and interested party". He said that JCCF had actively and continuously promoted the case on its website and had inserted itself in the cause being litigated rather than maintaining "the posture of dispassionate advocate".

JCCF appealed the costs order. It complained that it did not receive notice that the motion judge was contemplating making an award of costs against it and it was improper, as a consequence, to make the order. In any event, JCCF said that the motion judge did not apply the proper tests for deciding whether a non-party should pay costs and that those tests, properly applied, would not justify an award in this case.

ISSUES:

Did the motion judge err in his costs award?

HOLDING:

Appeal allowed.

REASONING:

Yes.

The costs award was fundamentally flawed and could not stand.

First, the motion judge failed to make any finding whether the litigation constituted public interest litigation. This was a necessary initial step in considering the proper disposition of costs. If the litigation was public interest litigation, then the principles applicable to awards of costs in such litigation had to be considered. None of that took place.

Second, there are established bases for determining when it is appropriate for an award of costs to be made against a non-party. For the statutory jurisdiction, the court must be satisfied that the "person of straw" test is met.

The "person of straw" test is satisfied if:

  1. The non-party has status to bring the action;
  2. The named party is not the true litigant; and
  3. The named party is a person of straw put forward to protect the true litigant from liability for costs.

This test could not be made out in this case and Seneca did not suggest otherwise. JCCF would not have had status to bring the injunction motion, nor was there any evidence that the students were put forward to protect JCCF from liability for costs.

The inherent jurisdiction to award costs against a non-party invokes a different test. As set out in Laval Tool:

In particular, apart from statutory jurisdiction, superior courts have inherent jurisdiction to order non-party costs, on a discretionary basis, in situations where the non-party has initiated or conducted litigation in such a manner as to amount to an abuse of process.

On this basis that Seneca says that the motion judge was justified in awarding costs against JCCF.

The motion judge not only failed to make reference to the test for awarding costs under the court's inherent jurisdiction, he also does not make any finding that JCCF engaged in an abuse of process. Rather, the motion judge appeared to justify his award of costs against JCCF simply on the basis that it encouraged the case and then participated in it.

If there was evidence that JCCF had instigated the motion for an improper purpose, that would satisfy the abuse of process requirement. Similarly, if there was evidence that JCCF was in the position of a "maintainer", within the meaning of the tort of maintenance, that would also satisfy the abuse of process requirement. However, there is insufficient evidence of either.

Finally, JCCF persistently refused to advise whether it was indemnifying the students against any costs award. In the Court's view, JCCF was obliged to reveal that information and the motion judge ought to have required it to do so before making his costs award.

The basis for the costs order was fundamentally flawed. The appeal was allowed, the costs award was set aside. The matter was remitted to the motion judge to determine whether a costs award was appropriate in this case and, if so, against whom it should be made.

SHORT CIVIL DECISIONS

OZ Optics Ltd. v. Evans, 2023 ONCA 677

[Miller, Harvison Young and Thorburn JJ.A.]

COUNSEL:

M. B. Lesage, for the appellant

M. R. Kestenberg and A. Hershtal, for the respondent S. E. S.

W. Pepall and S. Jones, for the respondent D. L. E.

Keywords: Contracts, Employment, Holdover Clauses, Civil Procedure, Summary Judgment

Dharmarajan v. York Condominium Corporation No. 308, 2023 ONCA 694

[Doherty, George and Monahan JJ.A.]

COUNSEL:

M. J. Campbell and N. L. Mazzitelli, for the appellants

E. Schatzker, for the respondent

Keywords: Real Property, Condominiums, Compliance Orders, Condominium Act, 1998, S.O. 1998, c. 19, ss. 134 and 135

Aboutaleb-Maragheh v. Khanlari, 2023 ONCA 695

[Doherty, George and Monahan JJ.A.]

COUNSEL:

P. K., acting in person

G. Nayerahmadi and M. W. Taylor, for the respondent

Keywords: Civil Procedure, Appeals, Summary Judgment, Orders, Variation

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