Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario released last week.

There were quite a few lengthy decisions.

Topics covered included:

  1. The availability of specific performance to vendors for the breach of an agreement of purchase and sale of land.
  2. Relief from forfeiture of office for breach of campaign finance spending limits in municipal elections.
  3. Striking pleadings for failure to comply with court orders in the family law context.
  4. Dismissal for delay.
  5. Knowing assistance in breach of fiduciary duty and knowing receipt of trust money.
  6. The test for access in a Crown wardship context.
  7. The ongoing suspension of the running of limitation periods even after a motion to certify a class proceeding is dismissed.
  8. A coverage and bad faith claim against an insurer that refused to pay out on a fire policy that was dismissed following a lengthy and hard-fought jury trial. Issues covered in this lengthy decision included the sufficiency of jury instructions, the availability of relief from forfeiture, and most interestingly, whether substantial indemnity costs were appropriate when allegations of bad faith were not proved (the court determined that the higher scale of costs was not appropriate in this case).

Wishing everyone a Happy Canada Day week!

CIVIL DECISIONS

Country Wide Homes Upper Thornhill Estates Inc. v. Ge, 2020 ONCA 400

[Doherty, Hourigan and Fairburn JJ.A.]

Counsel:

Derrick M. Fulton, for the appellant
Emilio Bisceglia and Sonja Turajlich, for the respondent

Keywords: Contracts, Breach, Real Property, Agreements of Purchase and Sale of Land, Remedies, Specific Performance, Civil Procedure, Summary Judgment, Standard of Review, Hryniak v. Mauldin, 2014 SCC 7, Matthew Brady Self Storage Corporation v. InStorage Limited Partnership , 2014 ONCA 858, leave to appeal refused, [2015] S.C.C.A. No. 50, Landmark of Thornhill Limited v. Jacobson, [1995] 25 O.R. (3d) 628 (CA), Semelhago v. Paramadevan, [1996] 2 S.C.R. 415

facts:

The appellant backed out of an agreement of purchase and sale of land to purchase a new home built by the respondent (APS). The respondent successfully moved for summary judgment awarding specific performance and requiring the appellant to complete the transaction within 120 days. The appellant appealed.

issues:

  1. Did the motion judge err in concluding that the appellant did not provide any foundation for setting aside the agreement?
  2. Was the appellant denied a fair hearing when his adjournment request was denied?
  3. Did the motion judge err in granting specific performance?
  4. Should fresh evidence on appeal be admitted?

holding:

Appeal dismissed.

reasoning:

1. No. The Court first reiterated that the question of whether a genuine issue requiring a trial exists on a motion for summary judgment is a question of mixed fact and law, and therefore the standard of review is "palpable and overriding error".

The Court agreed with the motion judge that the appellant's affidavits did not disclose any material misrepresentation or other evidence that would support setting aside the APS.

2. No. Even though the adjournment was denied, the hearing was not completed and had to be adjourned for completion anyway. The appellant was then permitted to file fresh evidence. If there were other purchasers who also refused to close their purchases with the same builder, those transactions would turn on their own details and there is therefore no risk of inconsistent findings. There was therefore no denial of natural justice.

3. No. Specific performance is available to vendors, as per the test set out in Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, leave to appeal refused, [2015] S.C.C.A. No. 50:

(i) whether on the facts as a whole, damages will afford the vendor an adequate and complete remedy or whether a money award will be sufficient to purchase substitute performance;

(ii) whether the vendor has established some fair, real and substantial justification for the granting of specific performance; and

(iii) whether the equities as between the parties favour the granting of specific performance.

The Court declined to comment on whether the motion judge erred in relying on Landmark of Thornhill Limited v. Jacobson, [1995] 25 O.R. (3d) 628 (CA) for the proposition that the defaulting party bears the onus of showing the property is not unique (and therefore specific performance should not be granted as a remedy). That decision was released a year before Semelhago v. Paramadevan, [1996] 2 S.C.R. 415, which confirmed that specific performance should not be granted as a matter of course absent evidence of uniqueness, and that a substitute is not readily available. The motion judge's decision in this case did not turn on who bore the onus. In this case, the home at issue was a $3 million home with a variety of changes and customizations unique to the appellant. This was sufficient to support a conclusion that the property was unique and that damages would not be a complete remedy or substitute for specific performance.

4. No. The appellant submitted fresh evidence that the respondent had listed the property in question for sale. He argued that this was inconsistent with the remedy of specific performance. The evidence also established that the listing for sale was an administrative error, and that the property therefore was not actually listed for sale.

M.E. v. R., 2020 ONCA 289

[Lauwers, Hourigan and Fairburn JJ.A.]

Counsel:

The appellant, acting in person
Domenico Polla, for the respondent Her Majesty the Queen in Right of Ontario
Scott C. Hutchison, for the respondents Children's Aid Society of Toronto, Giovanna Asaro and Ada Lee (contempt appeal)
Giovanna Asaro, for the respondent Children's Aid Society of Toronto (summary judgment appeal)

Keywords: Torts, Negligence, Breach of Fiduciary Duty, Defamation, Breach of Privacy, Civil Procedure, Contempt, Summary Judgment, Pleadings, Defences, Appeals, Jurisdiction, Final or Interlocutory, Young Offenders Act, R.S.C. 1985, c. Y-1, ss. 38(1), 44.1(1)(d), 45(1), 45(3), Youth Criminal Justice Act, S.C. 2002, c. 1, ss. 119(1)(e), 119(2), 123, 128(2), 138(1), Rules of Civil Procedure, Rule 16, The Catalyst Capital Group Inc. v. Moyse, 2015 ONCA 784, Chirico v. Szalas, 2016 ONCA 586, Rogacki v. Belz (2003), 67 O.R. (3d) 330 (C.A.)

Karygiannis v. Toronto (City), 2020 ONCA 411

[Benotto, Zarnett and Thorburn JJ.A.]

Counsel:

Stephen Aylward and Zachary Al-Khatib, for the appellant
Sean Dewart and Adrienne Lei, for the respondent James Karygiannis
Mark Sibioni for the respondents, the City of Toronto and Ulli S. Watkiss

Keywords: Election Law, Municipal Elections, Campaign Financing, Forfeiture of Office, Relief from Forfeiture, Statutory Interpretation, Municipal Elections Act, 1996, S.O. 1996, c. 32, Sched, s. 88.23(2), ss. 88.33(17)-(18), s. 92(2), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98, Poplar Point First Nation Development Corporation v. Thunder Bay (City), 2016 ONCA 934, leave to appeal refused, [2017] S.C.C.A. No. 60, Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, 65302 British Columbia Ltd. v. Canada, [1999] 3 S.C.R. 804, Blue Mountain Resorts Limited v. Ontario (Labour), 2013 ONCA 75, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27

facts:

The respondent, Toronto City Councillor, Jim Karygiannis, was found to have exceeded the allowable spending limit for expressions of appreciation during the 2018 Toronto election. Section 88.23(2) of the Municipal Elections Act (the "Act") provides that the penalty for doing so is, among other things, automatic forfeiture of office. Less than a month later, the respondent's application for relief from forfeiture of his office was granted and he was reinstated to his office. The appellant, who is a Toronto voter, appealed.

issues:

Did the application judge err in granting the respondent relief from forfeiture of his office?

holding:

Appeal allowed.

reasoning:

Yes. The application judge had no jurisdiction to award the respondent relief from forfeiture of his office.

The conduct captured by s. 92(1) of the Act overlaps with the conduct captured by s. 88.23(1)(c). Subsections 88.23(1) and (2) stipulate that it will be an act of "default" to file a document that, on its face, shows that the candidate exceeded the permissible spending limit. Section 92(1) makes it an offence for a candidate to exceed the permissible spending limits or file a financial statement under s. 88.25 that is incorrect or otherwise does not comply with the Act. In that sense, the conduct captured under s. 88.23(1)(c) is also captured by s. 92(1). Both sections set out specific penalties for candidates who contravene those provisions that include forfeiture of office. However, unlike s. 88.23, s. 92: a) provides broader penalties than just forfeiture of office and ineligibility to run in the next election, as provided in s. 88.23(2); and b) allows a judge to grant relief from the penalties set out in s. 88.23(2). This exception under s. 92(2) reads as follows: If the presiding judge finds that the candidate, acting in good faith, committed the offence inadvertently or because of an error in judgment, the penalties described in subsection 88.23(2) do not apply. Section 92(2) does not authorize a judge to grant relief from forfeiture before prosecution and conviction. The respondent has not been charged with an offence under the Act as the compliance audit process is still ongoing. As a result, the application judge erred by relying on s. 92(2) to grant relief in these circumstances.

The only question, therefore, was whether s. 98 of the Courts of Justice Act provided jurisdiction to grant relief from forfeiture. That section states that a "court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just." The mere fact that a statutory scheme is involved does not preclude relief under s. 98: Poplar Point First Nation Development Corporation v. Thunder Bay (City) , 2016 ONCA 934, leave to appeal refused, [2017] S.C.C.A. No. 60. However, the Court had held in Poplar Point that relief from penalties or forfeiture is not available under s. 98: (a) in cases involving a true statutory penalty, or (b) when the statutory regime expressly or by necessary implication precludes relief.

The reason s. 98 is not applicable to a true statutory penalty is that "granting relief from forfeiture would amount to rewriting or repealing the statute, revoking the very consequence for breach of the statute that the legislature prescribed": Poplar Point.

The respondent claimed the automatic forfeiture rule is not a "true statutory penalty". He argued that a statutory penalty only includes criminal or statutory offences and that s. 88.23(2) of the Act by itself does not create a statutory offence as it is a "purely administrative provision."

The Court disagreed. In Poplar Point, the Court made clear that a "statutory penalty" is any penalty imposed for breach of any requirement of the statute: Poplar Point. The observation in Poplar Point that "the ability to grant such relief from forfeitures and penalties is in the context of civil proceedings, and not criminal or statutory offences" simply acknowledges that s. 98, as part of Part VII of the Courts of Justice Act, only applies to "civil proceedings in courts of Ontario": Courts of Justice Act, s. 95(1). [94]

The Court concluded that s. 88.23(2) is a statutory penalty. Section 98 of the Courts of Justice Act cannot apply where granting relief would undermine the very consequences that the legislature prescribed for violating the provisions of the Act. Because s. 88.23(2) is a statutory penalty, relief from forfeiture is not available to the respondent.

In any event, the Court addressed the second part of the test for obtaining relief from forfeiture pursuant to s. 98 of the Courts of Justice Act (whether the statutory scheme in the Act necessarily precluded relief from forfeiture).

The respondent submitted that candidates who commit trifling errors that do not warrant prosecution forfeit their seat automatically and with no further recourse, while candidates who are subject to prosecution under s. 92 are able to request relief from forfeiture. The respondent says that without relief from forfeiture under s. 98 of the Courts of Justice Act, his only recourse is to encourage the compliance audit committee to bring legal proceedings against him pursuant to s. 88.33(17) of the Act so that he can be prosecuted and convicted under s. 92(1) and then seek relief from forfeiture under s. 92(2). That, he submitted is absurd.

The Court disagreed. It reviewed the legislative debates into amendments that led to the removal of relief from forfeiture under s. 88.23, while keeping that relief in section 92. There was a deliberate choice by the legislature to simplify the enforcement process and remove the ability of the court to grant relief from forfeiture. Unlike s. 92, s. 88.23 was meant to be a cost-effective and expeditious means of deterring and enforcing specific violations of the Act. Councillors are given the opportunity to change their financial statements before the filing deadline. Where there is a clear violation of these specific provisions of the Act, the municipality can remove the candidate immediately and at little cost. The legislative policy discussions describe the challenges resulting from including a good faith exception in s. 88.23 and the reasons for its removal.

Martin v. Watts , 2020 ONCA 406

[Rouleau, van Rensburg and Roberts JJ.A.]

Counsel:

Michael Rappaport, for the appellant
Gordon S. Campbell, for the respondent

Keywords: Family Law, Civil Procedure, Orders, Enforcement, Striking Pleadings, Family Law Rules, O. Reg. 114/99, Rule 1(8)(c), Roberts v. Roberts, 2015 ONCA 450, Kovachis v. Kovachis, 2013 ONCA 663, Manchanda v. Thethi, 2016 ONCA 909, leave to appeal refused, [2017] S.C.C.A. No. 29

facts:

The motion judge struck the appellant's answer and amended answer and removed the appellant's counsel as counsel of record about a month before the scheduled trial date because of the appellant's ongoing failure to comply with several court orders to pay costs, as well as his share of household expenses for the matrimonial home, and to provide material financial disclosure.

issues:

Did the motion judge err in striking the appellant's pleadings?

holding:

Appeal dismissed.

reasoning:

No. The motion judge applied the relevant legislative provisions and legal principles. Rule 1(8)(c) of the Family Law Rules permits the court to strike out documents filed by a party for failure to comply with a court order. She also applied the correct case law, which provides that the exercise of the court's discretion to strike pleadings and exclude trial participation is one that should be exercised sparingly, in exceptional cases, and only where no other remedy would suffice: Roberts v. Roberts , 2015 ONCA 450, Kovachis v. Kovachis, 2013 ONCA 663.

The motion judge's findings that the appellant had wilfully and egregiously breached court orders to pay costs and outstanding household expenses and to make financial disclosure were fully justified on the record. The most basic obligation in family law proceedings is the duty to disclose financial information and this obligation is immediate and ongoing: Roberts; Manchanda v. Thethi, 2016 ONCA 909, leave to appeal refused, [2017] S.C.C.A. No. 29.

The appellant's contention that the motion judge's order was in retaliation for his complaint to the Canadian Judicial Council about the motion judge's colleague who had made one of the costs orders in question was completely unfounded.

It was unnecessary to decide other issues raised on the appeal, such as the removal of appellant's counsel of record.

Samuels v. Mai , 2020 ONCA 408

[Strathy C.J.O., Lauwers and van Rensburg JJ.A.]

Counsel:

David Silver, for the appellant
Pulat Yunusov, for the respondents

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Dismissal for Delay, Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80 (Ont. S.C.), rev'd (2002), 48 C.P.C. (5th) 93. (Ont. Div. Ct.), Prescott v. Barbon, 2018 ONCA 504, Jadid v. Toronto Transit Commission, 2016 ONSC 1176, aff'd 2016 ONCA 936, Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544, Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited , 2015 ONCA 592, Cardon Developments Ltd. et al. v. Butterfield , 1999 BCCA 642

facts:

This was a claim by the appellant for the return of a deposit paid by him to the respondents for the purchase of real property. The agreement was conditional on the appellant obtaining financing, and the transaction was aborted because the appellant claimed he could not obtain financing. The respondents counterclaimed for the appellant backing out of the transaction.

The action was stalled for many years and the appellant's claim was ultimately dismissed for delay. However, the counterclaim was not dismissed for delay, and the respondents maintained that they intended to proceed with it. The appellant appealed.

issues:

Did the motion judge err in dismissing the appellant's claim but not the counterclaim?

holding:

Appeal allowed.

reasoning:

Yes. While the motion judge relied on the correct test and her decision was normally entitled to deference, in this case, she failed to consider a critical contextual factor: the dismissal of the appellant's claim left the respondents' counterclaim alive.

The counterclaim was a mirror image of the appellant's claim. Success on one claim would necessarily mean failure on the other. Since the two claims were inextricably wound up with the other and the respondents planned to proceed with their counterclaim, the interests of justice would not be properly served if the appellant's claim was not also permitted to proceed.

The Court made two comments in obiter. First, the motion judge should not have indicated that she would have recused herself from deciding the alternative motion for summary judgment that was before her (had she not decided the motion on the basis of dismissal for delay). The parties had put their settlement offers before her and had therefore waived privilege. Neither of them had asked the motion judge to recuse herself. Second, the Court noted that this matter could have been resolved by a one-day trial. Sometimes, a trial is the just, most expeditious, and least expensive determination of a civil proceeding on the merits.

Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Garcia , 2020 ONCA 412

[Pepall, Pardu and Paciocco JJ.A.]

Counsel:

Kevin Sherkin and Allison Farley, for the appellant
Jacqueline L. King and Christopher Gaytan, for the respondent

Keywords: Torts, Knowing Assistance of Breach of Fiduciary Duty, Knowing Receipt of Trust Funds, Remedies, Tracing, Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, Bikur Cholim Jewish Volunteer Services v. Penna Estate, 2009 ONCA 196, DBDC Spadina Ltd. v. Walton, 2019 SCC 30, R. v. Morrison, 2019 SCC 15, Sansregret v. The Queen , [1985] 1 S.C.R. 570, Citadel General Assurance Co. v. Lloyds Bank Canada , [1997] 2 S.C.R. 805, Gold v. Rosenberg, [1997] 3 S.C.R. 767, Paton Estate v. Ontario Lottery and Gaming Corporation (Fallsview Casino Resort and OLG Casino Brantford), 2016 ONCA 458, Air Canada v. British Columbia, [1989] 1 S.C.R. 1161, B.M.P. Global Distribution Inc. v. Bank of Nova Scotia , 2009 SCC 15, [2009] 1 S.C.R. 504, Wescom Solutions Inc. v. Minetto, 2019 ONCA 251

facts:

With the assistance of insider officers and others, EG spearheaded a massive fraud against a Paraguayan pension fund, Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional ("Cajubi"). As a result, Cajubi lost $12,460,930.

One of EG's former business associates, AD, assisted in rerouting approximately $7.4 million of the money that Cajubi ultimately lost. AD filtered approximately $3 million of this money through a corporation, Catan Canada Inc. ("Catan"). His wife, LD, testified that she was the sole shareholder of Catan.

When Cajubi brought an action against multiple defendants in Canada, LD was added as a defendant. The trial judge granted judgment against her in the amount of $3 million jointly and severally with her husband and Catan, finding her to have been a knowing assister relating to the Cajubi money that was routed through Catan.

The trial judge found liability on the part of LD on the basis of knowing assistance in Catan's breach of trust. Her husband, AD was one of the architects of the fraud perpetrated upon Cajubi and he actively and knowingly authorized and directed the dissipation of funds received by Catan that he knew or ought to have known came subject to a constructive trust in Cajubi's favour. In LD's case, the trial judge found that her passive acquiescence in her husband's schemes went beyond mere trust and faith and crossed the line to wilful blindness. He found that she knew that her husband had filed for bankruptcy earlier that year and she knew generally what reverses had led him there. She continued to sign as needed cheques and authorizations for very large quantities of money to transit through her company without due inquiry and in circumstances where she ought to have been on inquiry. The trial judge found that she could not hide behind her own wilful blindness to avoid the consequences of facilitating her husband's fraud.

LD alone appealed that portion of the decision.

issues:

A. Did the trial judge err by applying a constructive knowledge standard in finding LD liable based on knowing assistance?

B. Did the trial judge make palpable and overriding errors in finding LD liable for knowing assistance?

C. Did the trial judge base LD's liability alternatively on the doctrine of knowing receipt?

holding:

Appeal allowed.

reasoning:

Majority (Paciocco J.A. and Pardu J.A.):

A. Yes. The trial judge misapplied the test for a finding of liability on the basis of knowing assistance of breach of fiduciary duty.

The doctrine of knowing assistance is a mechanism for imposing liability on strangers to a fiduciary relationship who participate in a breach of trust by the fiduciary. Strangers to a fiduciary relationship who are made liable on this basis are held responsible because of their "want of probity", "meaning lack of honesty".

The elements of knowing assistance in a fiduciary breach are: (1) a fiduciary duty; (2) a fraudulent and dishonest breach of the duty by the fiduciary; (3) actual knowledge by the stranger to the fiduciary relationship of both the fiduciary relationship and the fiduciary's fraudulent and dishonest conduct; and (4) participation by or assistance of the stranger in the fiduciary's fraudulent and dishonest conduct.

It is not enough for the stranger to know or suspect in some unspecified way that the fiduciary was up to no good. In this case, LD would be liable as a knowing assister only if she had "actual knowledge" that Catan held funds as trustee, and that she was participating or assisting Catan in fraudulent and dishonest conduct relating to those funds. However, the concept of "actual knowledge" is more expansive than the term "actual knowledge" denotes. "Actual knowledge" includes "recklessness or wilful blindness to the fiduciary relationship and the fiduciary's fraudulent and dishonest conduct". Wilfull blindness is "deliberate ignorance", where the subject suspect the relevant facts but deliberately chooses not to inquire because they do not wish to know the truth. Wilful blindness is a subjective standard of fault that depends on the stranger's actual state of mind. This distinguishes wilful blindness from objective standards of fault based on what the subject ought to have known, such as negligence.

There was evidence on the record that could have supported a finding of subjective knowledge or subjective suspicion on LD's part. However, while the trial judge identified certain facts that LD knew, he made no finding as to whether she knew or suspected that the money transiting through her company was trust money that was being employed in a dishonest or fraudulent breach of trust. This was a critical omission. Without such findings, a proper determination of wilful blindness cannot be made. He spoke instead of how LD "ought to have been on inquiry". Describing what someone ought to have known or done is the language of objective fault or constructive knowledge, not the language of subjective wilful blindness.

B. Yes. The trial judge committed a palpable error relating to his finding that LD continued to sign cheques and authorizations for very large quantities of money. However, there was no evidence that LD signed cheques after the Cajubi funds were deposited in the Catan account. Since this was the only finding the trial judge made that could show assistance by LD, a necessary condition to "wrongful assistance" liability, this error was overriding.

C. No. While the knowing receipt claim against LD was made, she not found liable for knowing receipt. There was no adjudication on the knowing receipt claim, even though it was pleaded and even though the trial judge's findings of fact could have supported liability on that claim.

The legal test for knowing receipt therefore requires that: (1) the stranger receives trust property (2) for his or her own benefit or in his or her personal capacity, (3) with actual or constructive knowledge that the trust property is being misapplied. In addition to actual knowledge, including wilful blindness or recklessness, requirement (3) can be met where the recipient, having "knowledge of facts which would put a reasonable person on inquiry, actually fails to inquire as to the possible misapplication of the trust property". Where liability is imposed, the "measure of the restitutionary recovery is the gain the [defendant] has made at the [plaintiff's] expense".

In the circumstances, the Court declined to impose liability on LD on the basis of knowing receipt. A new trial was ordered on the knowing receipt claim.

The Court commented that its conclusions did not affect the contingent tracing order that was imposed. A tracing order does not depend upon a finding of liability for knowing receipt. Liability in tracing flows from the fact of receipt, and the extent of liability is dependent on the amount received.

Dissent (Pepall J.A.):

Pepall J.A. would have dismissed LD's appeal with costs.

The trial judge made a finding of wilful blindness on the correct subjective standard. While the trial judge's reasons in the case under appeal would have benefitted from elaboration and more precision, the trial judge in this case applied the correct standard for a finding of wilful blindness. He noted that knowing receipt requires a finding that the stranger had actual or constructive knowledge of the breach of trust. In the next paragraph, he explained that knowing assistance requires a finding that the stranger had actual knowledge (which includes wilful blindness or recklessness) of the breach of trust. He specifically left "constructive knowledge" out of the explanation of knowing assistance, after including it in the explanation of knowing receipt the paragraph immediately before. Pepall J.A. therefore could not conclude that the trial judge's finding of wilful blindness was grounded in an objective standard rather than on a subjective one.

Even if it were the case that the trial judge grounded his wilful blindness finding on an objective standard, the Court was permitted to review the record in order to determine if the finding of wilful blindness was open to the trial judge. In Wescom Solutions Inc. v. Minetto, 2019 ONCA 251, the trial judge mistakenly applied an objective standard for wilful blindness, but the Court nevertheless held that the trial judge's error "in law in his articulation of the concept of wilful blindness" did not mean that the trial judge was wrong to conclude that the appellant was wilfully blind. The trial judge's mischaracterization of wilful blindness was not fatal because he had made findings of fact that established that the appellant was wilfully blind on a subjective standard. The majority agreed that there was evidence on the record that could have supported a finding of subjective knowledge on Mrs. Duscio's part.

Contrary to the majority's determination, Pepall J.A. concluded that, read as a whole within the context of the entire record before him, it could not be said that the knowledge component needed to anchor a finding of wilful blindness by LD is absent from the trial judge's reasons. Moreover, the trial judge's conclusion was supported by the record. He was fully conversant with the detailed record, having presided over the trial for over three weeks and having trial managed the case beforehand. It was open to the trial judge to conclude that LD was wilfully blind. In addition to evidence of specific knowledge that LD did have, she and her husband also had a modest income, yet she received extensive benefits from the company of which she was the sole officer, director and shareholder, and maintained an opulent lifestyle. She permitted her company to be used, signed Catan's documents, and accepted the substantial fruits of her efforts. The trial judge understood the requirements of wilful blindness, determined that they were met, and did not simply apply a constructive knowledge standard to LD's conduct. Carelessness this was not.

Pepall J.A. also did not agree that the lack of evidence of LD signing cheques after Cajubi's funds entered the Catan account was a basis to allow the appeal. That ground was not raised in the appellants' notice of appeal. There was no question that LD knowingly permitted her company to be used for improper purposes.

Children's Aid Society of Toronto v. J.G., 2020 ONCA 415

[Doherty, Hourigan and Benotto JJ.A.]

Counsel:

Andrew Burgess and Jessica Gagne, for the appellant
Ian Ross and Elizabeth McCarty, for the Intervener the Office of the Children's Lawyer
Simon Fisch and Karen Freed, for the respondent Children's Aid Society

Keywords: Family Law, Crown Wardship, Access, Child, Youth and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1, s. 59, Child and Family Services Act, R.S.O. 1990, c. C.11, ss 105(5) and (6), Family Law Rules, O. Reg. 114/99, Rule 16(6.2), Kawartha-Haliburton Children's Aid Society v. M.W. , 2019 ONCA 316, L.M. v. Peel Children's Aid Society, 2019 ONCA 841, Children's Aid Society of the Niagara Region v. M.J., 2004 CanLII 2667 (Sup. Ct.)

facts:

The appellant is the mother of A.G., who is two years old. The child is the fifth child born to the appellant. The other four children are in care. The mother is not able to care for the child. In fact, she did not dispute the finding that the child be in the extended care of the respondent, the Children's Aid Society of Toronto ("the Society"). She only seeks continued access. The visits had been once-a-week on a fully supervised basis at the Society offices. The father of the child took no part in the proceedings.

Following a mini-trial on the Society's motion for protection, the Ontario Court trial judge granted the mother access. He rejected the old strict "beneficial and meaningful" relationship test under the Child and Family Services Act , R.S.O. 1990, c. C.11 ("CFSA"), and applied the new broadly-based best-interests analysis under the Child, Youth and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1 ("CYFSA").

The Superior Court allowed the Society's appeal and set aside the access order, relying on the old test under the CFSA. The mother appealed.

issues:

  1. Has the test for access under the CYFSA changed the meaning of a "beneficial and meaningful" relationship?
  2. Can the benefits of a future relationship be considered?
  3. Did the trial judge err by referring to the child's medical information and family history?

holding:

Appeal allowed.

reasoning:

1. Yes. The new access test is no longer a "beneficial and meaningful" test. It is now a best interests test with a statutory requirement to consider whether the relationship is beneficial and meaningful for the child as one aspect of that analysis. When a court considers a child's best interests it should consider all relevant factors, including whether past, present or future. The new access test now permits the court to conduct a more holistic and comprehensive analysis of what is best for a child. Subsections 105(5) and (6) of the CYFSA changed the criteria for access to children in extended care by removing the presumption against access found in s. 59 of the CFSA and making the child's "best interests" predominant in determining access.

The change was not "just semantics" but represented "a significant shift in the approach to access for children in extended care." Some of the changes to the test for access include:

  • The burden is no longer on the person requesting access to demonstrate that their relationship to the child is beneficial and meaningful and in no way will impair the child's future adoption opportunities.
  • When the court undertakes a best interests analysis, it assesses whether the relationship is beneficial and meaningful to the child, and considers the potential impairment to future adoption opportunities, but only as part of this assessment and only where relevant
  • There is no longer a "presumption against access" and it is no longer the case that a parent who puts forward no evidence will not gain access
  • While any evidence of possible impairment to adoption opportunities would have thwarted previous requests for access, under the CYFSA, access is to be ordered for a child with otherwise excellent adoptive prospects if it is in her overall best interests
  • Children are "individuals with rights to be respected and voices to be heard" and their wishes are to be considered and given due respect when any decision is made that affects their lives
  • The aim of the CYFSA is to be consistent with, and build upon, the principles expressed in the United Nations Convention on the Rights of the Child
  • The protections and unique considerations for all First Nations, Inuit and Métis children were expanded
  • The age of "protection" was expanded to include 16 and 17 year olds
  • Siblings were specifically referenced in the non-exhaustive list of persons who may seek access. This inclusion was made to specifically "promote the consideration of [sibling] access application[s], and as part of efforts to promote the rights and voice of children throughout the Act"

2. Yes. There was simply nothing in the plain wording of the CYFSA to suggest that access should be decided without reference to the future.

3. No. As indicated, the best interests analysis properly includes consideration of the future. Furthermore, this factor was only one of ten listed by the trial judge in his consideration of the benefits of access. Finally, this factor was not speculative: the child had significant medical issues as a result of premature birth. There was no error in the trial judge's common-sense conclusion that a child with significant medical issues could benefit from some form of continuing contact with his biological mother.

The Court concluded with a comments on the burden of proof and onus. It reiterated that there is no longer a presumption against access. Regarding onus, the Court commented that a child's best interests in connection with future access involve a delicate weighing and balancing of multiple factors. It is not a fact-finding mission and the exercise is not assisted by determining what the onus is or where it lies.

Green v. The Hospital for Sick Children , 2020 ONCA 414

[Juriansz, Lauwers and Huscroft JJ.A.]

Counsel:

Naveen Hassan, Logan Crowell, Kate Crawford and Barry Glaspell, for the appellants The Hospital for Sick Children and JG
Jessica Laham, Darryl Cruz, Gabrielle Schachter, Erica Baron and Jessica Firestone, for appellant GK
Kirk M. Baert, Adam Tanel and Celeste Poltak, for the respondent RG

Keywords: Civil Procedure, Class Proceedings, Certification, Limitation Periods, Suspension, Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 7, 28(1), Limitations Act, 2002 , S.O. 2002, c. 24, Logan v. Canada (2004), 71 O.R. (3d) 451 (C.A.), Ragoonanan v. Imperial Tobacco Canada Ltd., 2011 ONSC, Coulson v. Citigroup Global Markets Canada Inc., 2010 ONSC 1596, aff'd 2012 ONCA 108, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 6187

facts:

The respondent was the representative plaintiff in a proposed class action alleging that the appellants were negligent in operating the Motherisk Drug Testing Laboratory, which screened hair samples for the presence of drugs and alcohol and delivered false positive results. Test results were used for various purposes, including the treatment of patients, criminal proceedings, and family law disputes. The respondent's motion for certification of the class action was dismissed.

The respondent brought a motion for an order: 1) declaring that the putative class members' limitation periods continued to be suspended; 2) permitting her to continue the proceeding as a multi-plaintiff action pursuant to s. 7 of the Class Proceedings Act, 1992 ("CPA"); and 3) granting leave to file an amended statement of claim to join approximately 200 individual claimants to her claim. Numerous proposed co-plaintiffs on the motion were already included in other actions that were ongoing, and counsel for the respondent refused to confirm that he represented the proposed co-plaintiffs, despite the request that he do so.

The motion judge declared that the limitation period of all former putative class members remained suspended pursuant to s. 28(1) of the CPA, but granted only the respondent representative plaintiff's motion to continue her individual action under s. 7 of the CPA. Her motion in respect of the co-plaintiffs was dismissed without prejudice to her right to reapply to join co-plaintiffs on proper material.

issues:

Did the motion judge err in declaring that the suspension of limitation period under section 28 of the CPA continued following the dismissal of the certification motion?

holding:

Appeal dismissed.

reasoning:

No. Section 28(1) of the CPA establishes an exhaustive list of circumstances that govern the commencement and suspension of limitation periods in the context of class action proceedings. The provision means what it says: limitation periods are suspended when the respondent asserts a cause of action in a class proceeding and resume only when one of the specific circumstances in paragraphs (a)-(f) of s. 28(1) occurs. The denial of certification is not one of those circumstances. As a result, the suspension of the limitation period remains in place following the denial of certification.

The Court accepted that this result was not ideal. It means that the Limitations Act, 2002 has been suspended indefinitely in respect of individual claimants even though the rationale for continuing to toll limitation periods no longer applies once certification has been denied. This problem is by no means new and it did not result from the Court's decision in this case. Instead, it is the consequence of the clear wording of s. 28(1).

The motion judge asserted that the appellants can bring the suspension of the limitation period to an end by bringing a motion to have the class proceeding dismissed without an adjudication on the merits. He considered that such a motion would provide fair notice to putative class members that the certification motion had failed. The Court agreed that notice to potential plaintiffs is important, but without more, a motion by the appellants to have the class proceeding dismissed would not be sufficient to provide that notice. The motion judge would have to make an order that notice be given to potential plaintiffs.

The Court saw no basis for the motion proposed by the motion judge. A motion to dismiss the proceedings contemplates that a class action has begun, but the denial of certification means that no class action ever came into being. Thus, no action could be dismissed, nor could an action be discontinued, and in any event discontinuance contemplates a motion brought by the plaintiffs in an action, not the defendant. Nor was it clear what the appellants would be required to establish on such a motion.

A denial of certification is akin to the decertification of a class action, but while the latter causes the limitation period to resume running, the former does not. That is a feature of s. 28(1). The Court noted that the Legislature is considering a bill that would amend s. 28(1) to add the refusal to certify a class proceeding as a circumstance that causes the limitation period to resume running, although that bill was irrelevant to the decision in this case.

Pinder Estate v. Farmers Mutual Insurance Company (Lindsay), 2020 ONCA 413

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

Counsel:

Earl A. Cherniak, Q.C. and Alfred M. Kwinter, for the appellants
Martin P. Forget, for the respondent

Keywords: Contracts, Fire Insurance, Coverage, Rescission, Material Misrepresentations, Material Change in Risk, Statutory Conditions, Duty of Good Faith, Remedies, Relief from Forfeiture, Civil Procedure, Jury Instructions, Costs, Substantial Indemnity, Insurance Act, RSO 1990, c I 8, s. 129, Courts of Justice Act, RSO 1990, c C 43, and s. 98, R. v. Grandine, 2017 ONCA 718, Samms v. Moolla, 2019 ONCA 220, Little v. Floyd Sinton Limited, 2019 ONCA 865, Johnson v. British Canadian Insurance Co., [1932] S.C.R. 680, Wolfe v. Western General Mutual Insurance (2000), 21 C.C.L.I. (3d) 210 (Ont. S.C.), Monk v. Farmers' Mutual Insurance Company (Lindsay), 2019 ONCA 616, Kozel v. Personal Insurance Co., 2014 ONCA 130, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), Hobbs v. Hobbs, 2008 ONCA 598, Risorto v. State Farm Mutual Automobile Insurance Co., 2003 ONSC 43566, Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722, Young v. Young, [1993] 4 S.C.R. 3, Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, Sagan v. Dominion of Canada General Insurance Company, 2014 ONSC 2245, DiBattista v. Wawanesa Mutual Insurance Co. (2005), 78 O.R. (3d) 445 (S.C.), aff'd on other grounds 83 O.R. (3d) 302 (C.A.), Bustamante v. Guarantee Co. of North America, 2015 ONSC 94, Alguire v. The Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202, Upchurch v. Oshawa (City), 2014 ONCA 425, Hunt v. T.D. Securities Inc. (2003), 229 D.L.R. (4th) 609 (Ont. C.A.), leave to appeal refused, [2003] S.C.C.A. No. 473

facts:

The appellants' home was destroyed by fire. The respondent insurer denied coverage on the basis of violation of statutory condition 4 for failing to notify the insurer of a material change in risk, and a violation of statutory condition 7 for making wilfully false statements in their proof of loss. The appellants sued for coverage and for damages, including punitive damages for bad faith. The insurer counterclaimed for the amount it had paid out to the appellants' mortgagee.

The jury dismissed the appellants' action. The trial judge dismissed the claim to relief from forfeiture and awarded damages to the insurer in the amount of approximately $97,000 for the amount paid to the mortgagee. The trial judge also awarded substantial indemnity costs against the appellants in the amount of almost $617,000, as a result of their unproven allegations regarding the insurer's conduct in denying the claim. The appellants appealed the dismissal of their action and the costs award.

issues:

1. Was there a reversible error with respect to statutory condition 4? In particular:

a. Was there evidence to support the jury's finding (in response to Question 1) that electric heaters were the primary heat source in the house?
b. Did the trial judge err in her instructions in response to a question from the jury about the meaning of "primary heat source"?
c. Was there evidence to support the jury's finding (in response to Question 3) that the change in heat source constituted a material change in risk?

2. Was there a reversible error with respect to statutory condition 7? In particular:

a. Did the trial judge err in her instructions to the jury about the evidence of certain witnesses?
b. Did the trial judge err in her instructions about the intention required for a "wilfully false statement"?
c. Did the trial judge err in failing to instruct the jury to consider separately whether each of the appellants made wilfully false statements?

3. Did the trial judge err in refusing relief from forfeiture?

4. Did the trial judge err in her award of costs?

holding:

Appeal dismissed. Costs appeal allowed.

reasoning:

1. Yes. If this had been the only basis to deny the appellants' claim it would have constituted reversible error. However, see 2 below.

a. Yes. The insurer's position was that the electric heaters, which were turned half on when the fire occurred, were used as the primary heat source, and that this was a material change in risk that was not disclosed to the insurer. The appellant had testified that she was using a wood stove as her primary heat source, which she supplemented with electric heaters when it got very cold. It was for the jury to decide what the primary heat source was, and there was enough circumstantial evidence to support a factual finding by the jury that the primary heat source were the space heaters.

b. Yes. The trial judge erred in the response to the following question from the jury: We would like to know the correct meaning of primary heat source, what is the definition? Is the only source of heat the same as primary source of heat? That is, if the wood stove is out and the electric heaters are on, they are the only source of heat, but are they now the primary source of heat?

The answer the judge gave to this question was that "there is no definition of the meaning of primary heat source", following by quoting from the evidence as to the two sources of heat in this case (the wood stove and the space heaters).
It is important for judges to provide a full and proper answer to any question asked by a jury. While not all errors in a jury charge will amount to misdirection, the question on appellate review is whether the charge provided the jury with adequate assistance to determine the questions it had to decide. The judge's answer to the jury's question in this case was inadequate.

c. No. There was no evidence at trial by an underwriter, or any other qualified witness, as to what would constitute a material change in risk for an insurer in accepting the contract or fixing the amount of the premium. Without evidence to support the jury's affirmative answer to Question 3, there could be no finding that the appellants had failed to notify the insurer of a material change in risk, and that they therefore were in breach of statutory condition 4.

2. No.

a. No. The Court reviewed fact-specific issues relating to the evidence of the witnesses in detailed and concluded that there was no error in the jury instructions regarding those witnesses.

b. No. The trial judge's instruction about what was required to establish a wilfully false statement addressed the necessary mental element: that the appellants must have known that the statements in the Proof of Loss were false, or alternatively that they made the statements without belief in their truth or recklessly without caring whether they were true or not. She also explained how a statement would not be wilfully false if the person making it held an honest belief in its truth.

c. No. The appellants' trial counsel explicitly took the position as part of deliberate trial strategy that the two appellants should be grouped together in the questions to the jury as to whether they had made false statements in their proof of loss. It was therefore not open to them to take the contrary position on appeal on the basis that they had separate insurable interests, and that therefore a misrepresentation by one did not necessarily bind the other.

3. No. The judge did not err in decline to grant relief from forfeiture in this case. She concluded that relief from forfeiture was available in the case of imperfect compliance with a requirement. She rejected the appellants' submission that "in the absence of fraud, errors on the proof of loss were made only inadvertently or carelessly, that they constitute only imperfect compliance and, therefore, the court can grant relief from forfeiture". She concluded that this was not a case of imperfect compliance and that relief from forfeiture was thus not available.

Relief from forfeiture requires the consideration of three factors: 1) the reasonableness of the insured's conduct; 2) the gravity of the breach; and 3) the disparity, if any, between the value of the property forfeited and the damages caused by the breach: Monk v. Farmers' Mutual Insurance Company (Lindsay), 2019 ONCA 616. While these three elements must be considered and balanced by the court in determining whether the insured is entitled to relief from forfeiture in the circumstances of each case, the reasonableness of the insured's conduct "lies at the heart of the relief from forfeiture analysis." Accordingly, a "party whose conduct is not seen as reasonable will face great difficulty in obtaining relief from forfeiture".

A decision to grant or refuse relief from forfeiture is highly discretionary. Appellate intervention is warranted only where the judge below erred in principle, failed to take into consideration a major element of the case, misapprehended, disregarded or failed to appreciate relevant evidence, or made a finding or drew an inference not reasonably supported by the evidence.

The Court left open the question of whether s. 98 of the Courts of Justice Act can apply to a "post-loss" breach of a statutory condition, or whether only s. 129 of the Insurance Act applied. In this case, the appellants were not entitled relief from forfeiture in any event.

4. Yes. The trial judge erred in awarding substantial indemnity costs.

The appellants' conduct did not reach the level of conduct that is deserving of sanction. The conduct that the trial judge viewed as reprehensible did not extend beyond vigorously challenging the insurer's conduct in the context of their punitive damages and bad faith claims.

The trial judge cited the following examples in support of the award of substantial indemnity costs: that the insurer's investigation was a sham; that the insurer had called the appellants fraudsters; that they had to bring the insurer to court kicking and screaming regarding the appraisal issue; and that the insurer had dragged out the litigation in the hope that they would give up and that the appellants would not last until the trial.

In making these claims, the appellants necessarily challenged the insurer's handling of their claim and relied on the alleged misconduct of the insurer. Some of the allegations were made in the opening address of the appellants' trial counsel, prompting an unsuccessful motion for a mistrial. There was nothing improper per se in the fact that the allegations were made or in the way they were stated by counsel; indeed, there is no indication that the trial judge issued any form of corrective instruction to the jury following the opening addresses. The fact that the appellants persisted with these allegations, despite certain weaknesses in their case, and were ultimately unsuccessful, is not egregious or reprehensible conduct warranting an award of substantial indemnity costs.

The vigorous pursuit of an unsuccessful claim does not by itself justify an award of costs on an elevated scale. Moreover, adverse findings of credibility do not justify an award of substantial indemnity costs. The appellants' bad faith and punitive damages claims, which were asserted in the context of seeking coverage under their insurance policy, were not empty, baseless or entirely without foundation. This case is distinguishable from those where plaintiffs made gratuitous claims of bad faith against their insurer for ulterior purposes or without any foundation or evidence to substantiate their allegations.

Although the trial judge characterized the allegation that the appellants might "give up or die" because of delay as "particularly reprehensible" when the appellants were responsible for a good part of the delay in the action, this submission of counsel was not the kind of reprehensible conduct that would justify an award of substantial indemnity costs against the appellants. The insurer was responsible for some delay in the proceedings and the trial judge did not instruct the jury to disregard this submission. A distinction must be made between hard-fought litigation that turns out to have been misguided, on the one hand, and malicious counterproductive conduct, on the other.

Regarding the amount of costs, the appellants essentially only argued entitlement in their costs submissions to the trial judge. They did not question the time spent or amount claimed, and did not provide information about their own costs. They could not now be permitted to argue that the amount awarded was excessive. A claim that the opposing party's costs are excessive without providing evidence of one's own costs in the litigation is "no more than an attack in the air".

Since the appellants did not provide their own bill of costs to assist the Court in assessing the appropriate amount of the respondent's costs, the Court simply applied a discount to the substantial indemnity costs that were awarded in order to get to a partial indemnity amount. The costs were therefore reduced from almost $647,000 to $430,000.

SHORT CIVIL DECISIONS

2377351 Ontario Inc. v. Evbian Construction & Design Inc., 2020 ONCA 399

[MacPherson, Pardu and Huscroft JJ.A.]

Counsel:

Anca Paduraru for the appellant
Louis Vittas, for the respondent

Keywords: Contracts, Real Property, Mortgages, Enforcement, Possession

Deutsche Postbank AG v. Kosmayer, 2020 ONCA 410

[Juriansz, Pardu and Huscroft JJ.A.]

Counsel:

Jonathan Bell, for the appellant
Douglas B.B. Stewart, for the respondents

Keywords: Civil Procedure, Dismissal for Delay

Weisdorf v. Toronto , 2020 ONCA 401

[Juriansz, Pardu and Huscroft JJ.A.]

Counsel:

CW, acting in person
Brennagh Smith, for the respondent

Keywords: Administrative Law, Municipal Law, Bylaws, Validity, Parking Enforcement, Administrative Penalty Tribunal, Canadian Charter of Rights and Freedoms, ss. 7 and 11(d), Provincial Offences Act, R.S.O. 1990, c. P.33, Municipal Act, 2001, S.O. 2001, c. 25, s. 102.1(1), City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A, Section 81(1), Administrative Penalties, O. Reg. 611/06, Statutory Powers and Procedures Act, R.S.O. 1990, c. S.22, City of Toronto Municipal Code, Chapter 610

Rudan v. Nightwatch Security and Surveillance Inc. (Night Watch Security), 2020 ONCA 409

[MacPherson, Pardu and Huscroft JJ.A.]

Counsel:

J. Leigh Daboll, for the appellant
Michael J. Valente and Kaushik Parameswaran, for the respondents

Keywords: Torts, Trespass, Intentional Infliction of Mental Distress, Civil Procedure, Summary Judgment

Aga v. Ethiopian Orthodox Tewahedo Church of Canada , 2020 ONCA 421

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

Counsel:

Anthony Colangelo, for the appellants
Gordon E. Wood, for the respondents

Keywords: Civil Procedure, Appeals, Orders, Variation, Costs

Beniuk v. Leamington (Municipality), 2020 ONCA 424

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

Counsel:

Raymond G. Colautti and Eric Florjancic, for the appellants
Tom Serafimovski and Samuel Atkin, for the respondent

Keywords: Costs Endorsement

Peter B. Cozzi Professional Corporation v. Cato , 2020 ONCA 423

[Juriansz, Pardu and Huscroft JJ.A.]

Counsel:

D. Jared Brown, for the appellant
Kate Barretto, for the respondent

Keywords: Costs Endorsement

The University of Western Ontario v. Simpson , 2020 ONCA 416

[Hourigan, Brown and Paciocco JJ.A.]

Counsel:

Drew Barry John Simpson, acting in person
Alexander D. Pettingill and Josh R. Knox, for the respondent the University of Western Ontario
Alexandre T. Mouret, for the respondent the University Students' Council of the University of Western Ontario

Keywords: Civil Procedure, Vexatious Litigants

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