Court Of Appeal Summaries (September 4 – 8, 2023) - Insolvency/Bankruptcy

Good afternoon.

Following are this week's summaries of the Court of Appeal for Ontario for the week of September 4, 2023.

In AssessNet Inc. v. Ferro Estate, the Court set aside an order dismissing the action, finding that the summary judgment motion judge had erred in determining the issue of discoverability of a claim against a trustee in bankruptcy.

Torgersrud v Lightstone is a family law decision where the Court dismissed an appeal from an order setting aside a marriage contract entered into in Quebec in 1988.

Other topics covered this week included anti-SLAPP and dismissal for delay.

Wishing everyone a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

AssessNet Inc. v. Ferro Estate, 2023 ONCA 577

Keywords: Bankruptcy and Insolvency, Trustees in Bankruptcy, Liability, Causes of Action, Assignments, Civil Procedure, Summary Judgment, Limitation Periods, Discoverability, "Appropriate Means", Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 12, Bankruptcy and Insolvency Act, R.S.C., 1985 c. B-3, s. 38, Longo v. MacLaren Art Centre, 2014 ONCA 526, Crombie Property Holdings Ltd. v. McColl-Frontenac Inc., 2017 ONCA 16, Housen v. Nikolaisen, 2002 SCC 33, Ridel v. Goldberg, 2019 ONCA 636, Indcondo Building Corporation. v. Sloan, 2010 ONCA 890, Fennell v. Deol, 2016 ONCA 249, Morrison v. Barzo, 2018 ONCA 979, Hryniak v. Mauldin, 2014 SCC 7, Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, Douglas v. Stan Fergusson Fuels Ltd., 2018 ONCA 192

Torgersrud v. Lightstone, 2023 ONCA 580

Keywords: Family Law, Domestic Contracts, Setting Aside, Disclosure, Lack of Understanding, Net Family Property, Excluded Property, Inheritances, Family Law Act, R.S.O. 1990, c. F.3, s. 56(4), Webster v Webster (2006), 28 RFL (6th) 79 (Ont SC), Dochuk v Dochuk (1999), 44 RFL (4th) 97 (Ont Gen Div), Demchuk v Demchuk (1986), 1 RFL (3d) 176 (Ont HC)

Short Civil Decisions

Rodger v. London Hydro Inc., 2023 ONCA 578

Keywords: Civil Procedure, Appeals, Dismissal for Delay, Rules of Civil Procedure, Rule 24.01, Dupuis v. W.O. Stinson & Son Limited, 2019 ONSC 5762

Schwartz v. Collette, 2023 ONCA 574

Keywords: Torts, Defamation, Anti-SLAPP, Defences, Courts of Justice Act, RSO, 1990, c c 43, ss 137.1

Fabrikant v. Kelly, 2023 ONCA 579

Keywords: Civil Procedure, Vexatious Litigants, Inherent Jurisdiction, Rules of Civil Procedure, Rule 2.1.01, Visic v. Elia Associates Professional Corporation, 2020 ONCA 690, Scaduto v. Law Society of Upper Canada, 2015 ONCA 733

Bunker v. Veall, 2023 ONCA 583

Keywords: Wills and Estates, Civil Procedure, Jurisdiction, Illegality, Criminal Code, s. 83.03(b)

CIVIL DECISIONS

AssessNet Inc. v. Ferro Estate, 2023 ONCA 577

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

COUNSEL:

P. Waldmann, for the appellant

D. Smith and E. Baron, for the respondents

FACTS:

The appellant AssessNet Inc. ("AssessNet"), a medical assessment services company, was a creditor of lawyer LF (the "bankrupt"). LF was the principal of a law firm that operated as Ferro & Co. AssessNet supplied medical reports for the firm's clients in respect of their personal injury claims. On March 12, 2015, Ferro made an assignment in bankruptcy and the respondent Taylor Leibow Inc. ("Taylor Leibow") was appointed bankruptcy trustee. The licensed trustee with responsibility for the bankruptcy was the respondent JS. LF died on June 12, 2015.

During the Ferro bankruptcy, LF's associate, JP, managed client files and operated the law firm's bank account. The non-client functions for the law firm continued to be administered by LF's widow, EH, through her holding company 1312788 Ontario Ltd. ("131 Ontario").

On March 4, 2016, at one of several inspectors' meetings, the inspectors discussed with the trustee potential claims by the bankrupt against JP and EH.

There were four actions, some or all of the defendants moved for summary dismissal on the ground that the action was statute-barred. The motions were heard together. The motion judge granted summary judgment dismissing two actions: the Bankruptcy Trustee Action and the Client Assigned Claims Action (with the exception of one assigned claim), while permitting the s. 38 Bankruptcy and Insolvency Act ("BIA") Action and the Copyright Action to proceed.

The sole issue on the motion was in respect of the Bankruptcy Trustee Action, namely whether the action was statute-barred under the Limitations Act, 2002 ("LA"). The motion judge described the action as a claim alleging negligence and breach of fiduciary duties by Taylor Leibow and JS in: (i) failing to take possession of the books, records, documents and property of the bankrupt estate; (ii) allowing JP and EH to carry on the law firm's business after the date of the bankruptcy; (iii) allowing the law firm to settle files after the onset of the bankruptcy; and (iv) failing to properly market the client files of the law firm.

The motion judge concluded that there was no genuine issue requiring a trial as to whether the two-year limitation period had been postponed.

ISSUES:

Did the motion judge err in dismissing the Bankruptcy Trustee Action based on the expiry of the relevant limitation period?
Did the motion judge fail to take into consideration s. 12 of the LA, which was engaged because AssessNet was pursuing a claim that had been assigned to it for a wrong done to the bankrupt estate, and not a claim in its own right?

HOLDING:

Appeal allowed.

REASONING:

The motion judge erred in her articulation and application of the burden of proof. The motion judge concluded that the effect of s.5(2) of the LA was that the plaintiff bore the onus of showing that it lacked the requisite knowledge and ought not to have known the requisite facts prior to the expiry of the limitation period. The Court noted that this was incorrect.

A plaintiff's onus under s. 5(2) is to rebut the presumption that it had knowledge of the claim "on the day the act or omission on which the claim is based took place". Accordingly, once it was established that AssessNet and its predecessor in right did not know about the claim between March 12 and December 22, 2015, then its burden under s. 5(2) was discharged. The onus then fell on the respondents to prove, under s. 12, that AssessNet or its predecessor knew or ought reasonably to have known of the matters set out in s. 5(1)(a) at least two years before the action was commenced.

The motion judge did not meet her obligation to make the necessary findings of fact with respect to the limitation period defence, and to the extent that she could not do so, she ought to have concluded that discoverability was a genuine issue requiring a trial and dismissed the summary judgment motion.

The motion judge failed to consider the limitation period defence within the bankruptcy context. Section 12 of the LA applies to the determination of when a limitation period has expired where a claim has been assigned under s. 38 of the BIA. Further, s. 12 recognizes that, in relation to an assigned claim, the limitation period begins to run from the earlier of when the predecessor or the assignee first had actual or presumed knowledge of the s. 5(1)(a) elements in relation to the claim: (i) that injury, loss or damage had occurred; (ii) that it was caused by an act or omission; (iii) that the act or omission was that of the respondents; and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek a remedy.

The first step was for the motion judge to identify the "predecessor" for the purpose of s. 12, and then to determine when that party had or ought reasonably to have had knowledge of the matters listed in ss. 5(1)(a)(i) to (iv). The Court noted that the claim asserted was a claim by the bankrupt against the former trustee in respect of various causes of action arising from the administration of the bankruptcy. At the time the alleged acts and omissions took place (between March 12 and December 22, 2015) the respondents had charge of the bankrupt estate. Any cause of action the bankrupt had vested in Taylor Leibow under s. 71 of the BIA because, on bankruptcy, the property of the bankrupt vests in the trustee, and includes the bankrupt's rights to sue. Accordingly, the party with control over the claim before it was assigned − the "predecessor" for the purpose of s. 12, was, until April 29, 2016 − when the trustee was replaced, the respondent Taylor Leibow.

The second question under s. 5(1)(a)(iv) is when the "person with the claim" knew that the proceeding would have been an appropriate means to seek to remedy the injury, loss or damage caused by the defendant. The "appropriate means" analysis "depends upon the specific factual or statutory setting of each individual case". The motion judge failed to consider when AssessNet, in the circumstances, became, or ought to have become "the person with the claim" under s. 5(1). Instead, the motion judge incorrectly considered the issue of knowledge of the various matters under s. 5(1)(a) as though AssessNet was a claimant in its own right, and not as a party who had obtained the assignment of a claim in a bankruptcy.

Accordingly, the Court set aside the dismissal of the Bankruptcy Trustee Action, and directed the limitation period issue to proceed to trial, without prejudice to either party bringing a new summary judgment motion to determine the issue.

Torgersrud v Lightstone, 2023 ONCA 580

[Feldman, Benotto and Roberts JJ.A]

COUNSEL:

S. Duguay, for the appellant

M. Rankin and M.E. Jean, for the respondent

FACTS:

The parties met at university in Montreal and were married in 1987. The parties entered into a marriage contract in 1988 whereby the parties renounced their property rights and agreed that there would be no division of assets upon marriage breakdown under Quebec law. In 1990, they agreed to opt out of the family patrimony regime. The parties lived in Montreal until 1993, when they moved to Ottawa. They lived in Ottawa until their separation in 2015, after which time the wife claimed equalization under Part I of the Family Law Act ("FLA"). A focused hearing was ordered to determine whether the Quebec instruments that made up the marriage contract ousted the wife's claim for equalization.

The application judge concluded that the documents were marriage contracts, but they did not oust the application of the FLA. The application judge set aside the marriage contracts.

ISSUES:

Did the application judge err by concluding that the contracts did not oust the FLA's equalization provisions?
Did the application judge misapply the factors from the case law, leading her to wrongfully exercise her discretion to set aside the contracts?

HOLDING:

Appeal dismissed.

REASONING:

The Court concluded that the application judge's alternative analysis involved discretionary decisions, which were entitled to deference and disclosed no error. The application judge determined that s. 56(4) of the FLA was engaged and exercised her discretion under that section to set aside the contracts. With respect to s. 56(4)(a), the application judge found that the husband failed to disclose the value of assets as of the date of the marriage contracts. The application judge found that the wife "met her onus" under s. 56(4)(b) because she did not understand her entitlements under the law. The application judge concluded that the wife would have rethought her position if she knew what she was giving up. The Court noted that it was unclear on the record whether the application judge was referring to the total value of the inheritance or the income from the inheritance. Under both Ontario and Quebec law, inheritances are excluded from what is shared between spouses. The Court found that there was no evidence that the husband's family had specified such an additional exclusion. The application judge's finding that the wife did not understand this consequence at the time that she signed the contract was entitled to deference and supported by the evidence.

The appellant summited that the application judge misapplied the factors from the case law, leading her to wrongfully exercise her discretion to set aside the contracts. The application judge cited Dochuk and Demchuk for authority as to the factors the court must consider to decide whether it is appropriate in the circumstances to set aside a domestic contract. She then referred to factors from those cases that did not apply to her findings.

While the Court agreed that the factors cited did not arise on the application judge's findings, the Court found that she clearly articulated the facts that led to her conclusion that 'fairness dictated that the instruments be set aside'. The Court saw no error in the application judge's conclusion given the potential magnitude of the husband's earnings from his inheritances over time and the lack of disclosure regarding the extent of those inheritances.

SHORT CIVIL DECISIONS

Rodger v. London Hydro Inc., 2023 ONCA 578

[Tulloch, Thorburn and George JJ.A.]

COUNSEL:

D. Grigoras, for the appellant

J. DiFruscia and M. Vine, for the respondent

Keywords: Civil Procedure, Appeals, Dismissal for Delay, Rules of Civil Procedure, Rule 24.01, Dupuis v. W.O. Stinson & Son Limited, 2019 ONSC 5762

Schwartz v. Collette, 2023 ONCA 574

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

COUNSEL:

J. Lester, for the appellant

No one appearing for the respondents

Keywords: Torts, Defamation, Anti-SLAPP, Defences, Courts of Justice Act, RSO, 1990, c c 43, ss 137.1

Fabrikant v. Kelly, 2023 ONCA 579

[van Rensburg, Nordheimer and George JJ.A]

COUNSEL:

Dr. V.I.F, acting in person

C. Ritchie, for the respondent

Bunker v. Veall, 2023 ONCA 583

[Feldman, Benotto and Roberts JJ.A.]

COUNSEL:

K.C.R. Frater, and Y. Park, for the appellants

A. Kreaden and H. Mohamadhossen, for the respondents

Keywords: Wills and Estates, Civil Procedure, Jurisdiction, Illegality, Criminal Code, s. 83.03(b)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.

Canada: Court Of Appeal Summaries (September 4 – 8, 2023)
Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

Canada: Court Of Appeal Summaries (September 4 – 8, 2023) Blaney's Appeals

Table of Contents

Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

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Canada: Court Of Appeal Summaries (September 4 – 8, 2023)
Blaney's Appeals