Ontario Court of Appeal Summaries (February 12-16)

Civil Decisions

Lakehead Roofing & Metal Cladding Ltd. v. 1304808 Ontario Inc., 2018 ONCA 129

[Feldman, MacPherson and Huscroft JJ.A.]

Counsel:

D B Shanks and R Carlino, for the appellant

R W Johansen, for the respondent

Keywords: Real Property, Commercial Tenancies, Distraint, Commercial Tenancies Act, R.S.O. 1990, c. L.7, Rays Outfitters v. Lixo Investments, 2014 ONSC 3884

Facts:

The appellant was a commercial tenant in Thunder Bay, Ontario. The respondent was the landlord. The tenant sought a declaration under the Commercial Tenancies Act, R.S.O. 1990, c. L.7 (the “Act”), that: (i) the landlord had wrongfully and illegally distrained assets and equipment of the tenant after terminating the tenancy by changing the locks; or (ii) the distraint was excessive.

The tenant’s position was that its application could be granted based on the application record. The landlord’s position was that a trial was required to resolve one or more of the factual issues. The application judge found that: (i) terminating the lease was neither the intent of the landlord nor the effect of changing the locks, and therefore the lease was not terminated before the distraint; and (ii) a trial was necessary to determine whether the distraint was excessive, including the amount of any rent that remained owing, and the value of the distrained equipment. He also found that proof of any tenant’s damages also required a trial.

The appellant submitted that the application judge erred in concluding that: (i) the landlord’s notices and actions did not have the effect in law of terminating the lease before the distraint; and (ii) a trial was needed to find excessive distraint, when the values attributed to the distrained equipment by both parties exceeded the rent that remained owing.

Issues:

• Did the application judge err in finding that the lease had not been terminated and therefore that the distraint was legal?
• Did the application judge err in concluding that there was insufficient evidence to find that the distraint was excessive?

Holding:

Appeal dismissed.

Reasoning:

• The appellant submitted that, pursuant to Rays Outfitters v. Lixo Investments, 2014 ONSC 3884, the test to determine whether the changing of the locks terminated the lease is whether the intended and actual effect of changing the locks was to exclude the tenant from the premises, thereby terminating the lease. It argues that in his reasons, the application judge looked only at the written notice, which said that access would be given to the tenant on request, and did not consider or give effect to evidence that in fact the landlord denied access to the tenant on a number of occasions. The Court of Appeal rejected this submission. Both sides submitted affidavit evidence regarding the changing of the locks. While it is true that the application judge did not address the alleged denial of access specifically, the Court of Appeal found that it could be inferred that he did not consider it significant enough to have the effect in law of terminating the lease. Therefore this finding was reasonable.
• The appellant submitted that both its and the respondent’s estimates of the value of the chattels and equipment being held in distress exceed the value of the rent arrears that remain outstanding. The application judge found the record unclear on the issue of the amount of rent in arrears, or even whether there was any rent in arrears. He also was well aware of the estimated values ascribed by the parties to the equipment and chattels, but because they were merely estimates, he was not prepared to make findings without proper evidence of value. He concluded that proof of damages by the tenant also required a trial. The Court of Appeal found that the application judge could not be faulted for his disposition. He was able to make a determination on the record before him “in a summary way” on the first issue, whether the landlord had terminated the lease by changing the locks. However, the parties did not present sufficient evidence for him to determine the amount of rent that remained outstanding, if any, the value of the goods and equipment that had been distrained, and any damages suffered by the tenant if the distraint was excessive.

Luckevich v. Ivany, 2018 ONCA 144

[Doherty, Paciocco and Nordheimer JJ.A.]

Counsel:

Michael Katzman, for the appellant

Howard W. Reininger, for the respondents

Tim Duncan, for the Trustee in Bankruptcy

Keywords: Bankruptcy and Insolvency, Civil Procedure, Third Party Claims, Bankruptcy and Insolvency Act, ss. 2, 31, 69, 71 & 178

Facts:

In April of 2016, Howard Ivany (“the appellant”) was examined for discovery. The appellant says that during the examination it became clear to him, for the first time, that the respondents were seeking damages against him for actions or omissions of Reiber.

The appellant wished to commence a third party claim in each action against Reiber for contribution and indemnity. He took steps to obtain the consent of the respondents to issue the third party claims. The respondents refused to consent. The appellant then brought a motion for leave to issue the third party claims against Reiber and to extend the time for so doing.

The motion judge found that the appellant could not pursue the third party claims because he is an undischarged bankrupt and thus has no capacity to dispose of or otherwise deal with his property pursuant to s. 71 of the BIA. Consequently, she dismissed the appellant’s motion.

Issues:

(1) Did the motion judge err in dismissing the appellant’s motions for leave to issue third party claims?

Holding: Appeal allowed.

Reasoning:

(1) Yes. Precluding the bankrupt from bringing a claim for contribution and indemnity, in light of the Trustee’s refusal to do so, leaves the situation that the bankrupt could be faced with a judgment for the entire amount due to the respondents, that will come out of his or her estate, with no ability to reclaim some portion of that amount from another person who contributed to the loss. Not only does that result work to the detriment of the bankrupt, it also works to the detriment of all creditors who would otherwise share in the benefit that would result from a reduction (or possible elimination) of any judgment that the respondents might obtain. That result becomes even more egregious in a situation, such as this, where the respondents are seeking to have their claims declared to come within s. 178 of the BIA. If that relief is granted, then the appellant, once discharged, still has the judgment to honour and yet has no ability to then claim the contribution due to him by the third party. The inequity of that result is obvious.

Cana International Distributing Inc. v. Standard  Innovation Corporation, 2018 ONCA 145

[Laskin, Sharpe and Fairburn JJ.A.]

Counsel:

S Laubman and L M Wagner, for the appellants

P Mantas and T Khoury, for the respondent

Keywords: Contracts, Execution in Counterparts, Quantum Meriut, Defamation, Qualified Privilege

Facts:

The appellant, Cana International Distributing Inc. (“Cana”), is a distributor of adult sexual health and wellness products. Cana and the respondent, Standard Innovation Corporation (“SIC”), had extensive discussions relating to the distribution of SIC’s toy called the We-Vibe. These discussions involved two streams of distribution. The first was the mainstream industry targeting retail outlets such as food and drug stores. The second was the adult industry, also referred to as the “sex toy industry”. The appellants assert that separate agreements were reached giving them exclusive distribution rights for the We-Vibe in both streams. The trial judge rejected both contractual claims, finding that no binding agreement was reached for either stream.

Additionally, after the breakdown of the parties’ relationship, the appellant wrote a lengthy letter to Health Canada alleging that it had received 100 to 150 letters complaining of defects and safety concerns with respect to several We-Vibe products. The trial judge found that these statements to Health Canada were ill-founded and awarded SIC damages for defamation. The trial judge refused to consider the defence of qualified privilege.

Issues:

(1) Did the trial judge err in finding that there was no mainstream industry agreement reached between Cana and SIC for exclusive rights to distribute SIC’s We-Vibe product?

(2) Did the trial judge err in finding that there was no adult-industry agreement reached between Cana and SIC for exclusive rights to distribute SIC’s We-Vibe product?

(3) Did the trial judge err by failing to consider the appellant’s alternate claim for quantum meruit?

(4) Did the trial judge err by refusing to deal with the defence of qualified privilege to the respondent’s defamation counterclaim?

Holding: Appeal allowed, in part.

Reasons:

(1) Yes. The trial judge erred in finding no mainstream industry agreement. The terms of the agreement were negotiated by Nelson Wood, president of SIC, and Micheline Ciolli, owner and president of Cana. On August 18, 2009, they exchanged emails requesting signatures on a written “term sheet”.  Wood asked Ciolli to sign the signature page and fax it back and stated “I will sign and fax back a copy to you.” He added “I look forward to growing the mainstream market with you” and noted “[n]ow we can do a term sheet for the Sex Toy Industry.” Ciolli signed the term sheet and mailed it as requested. Wood was away from the office at the time but on September 22, 2009, returned by email a scanned signature page of what he described as “our mainstream agreement”.

Internal SIC emails and memoranda indicate that SIC was proceeding on the basis of a concluded agreement. Both parties conducted themselves in this manner until their relationship broke down in May 2010. Cana performed its obligations as exclusive distributor, secured new customers and dealt with warranty claims. In November 2009, SIC notified its Canadian customers that Cana was the exclusive distributor for the We-Vibe in Canada. SIC and Cana issued a joint press release to the same effect.

In his reasons for judgment, the trial judge described the August – September 2009 email exchange and the signing of the term sheet in the following way: “[A]t best, the two separate signed copies were two unique offers, neither having been accepted by the other party. This is evidenced by subsequent negotiation of their intended agreement.” At para. 124 he stated: “The emails of August and September 2009, referring to a signed copy of the agreement, evidence, at best, two distinct offers, neither of which was accepted by the other party. Moreover, the parties continued to negotiate the terms of this agreement.” These findings reflect both a palpable and overriding error and an extricable error of law. The trial judge’s characterization of the August and September 2009 exchange of emails as an exchange of “two unique offers” cannot be reconciled with the evidence. There were not “two unique offers” but rather two copies of the same document signed in counterpart by both parties. If the basis for the trial judge’s finding was that by signing in the way they did, the parties had not reached an agreement, he made an extricable error of law by ignoring the legal doctrine that an agreement signed in counterparts is a binding agreement.

(2) No. The trial judge did not err in finding that no agreement was reached for the adult-industry stream. The parties exchanged and discussed draft terms but Ciolli admitted they never signed an agreement. The draft term sheet they did discuss contained no reference to exclusivity. The trial judge recognized that the absence of a written agreement is not necessarily fatal, and that the terms of an oral agreement may be sufficiently clear and identifiable to establish an agreement, but concluded that in the present case, there were “too many conflicting documents and emails going back and forth over a lengthy course of time that create significant uncertainty.”

(3) No. The argument advanced on appeal was not made at trial and, in any event, is supported by the record. SIC did agree to reimburse Cana for certain expenses. Cana invoiced SIC for those expenses and SIC paid the invoice.

(4) No. It would take a strained reading of the facts pleaded in the reply and defence to counterclaim to discern a defence of qualified privilege. Moreover, even if the pleading were sufficient, the trial judge made the following finding: “The evidence demonstrates that the statements made are false and were timed and intended to cause harm to Standard Innovation and the sale of its products.”

Fawcett v. Fawcett, 2018 ONCA 150

[Rouleau, Trotter and Paciocco JJ.A.]

Counsel:

P. Pantel, for the appellant
F. F. Black, for the respondent

Keywords: Family Law, Net Family Property, Equalization, Pensions, Lump-Sum Payments, Periodic Payments, Pension Benefits Division Act, S.C. 1992, c. 46, Sch. II, Family Law Act, R.S.O. 1990, c. F.3, Canadian Forces Superannuation Act, R.S.C. 1985, c. C-17, Garnishment, Attachment and Pension Diversion Act, R.S.C. 1985, c. G-2

Facts:

The appellant has a Canadian Forces pension with a commuted value of $747,200. The pension has matured and the appellant is receiving monthly payments. To satisfy an equalization payment of $313,002, the trial judge ordered that a lump sum of this amount be transferred to the respondent. The appellant appeals this decision and requests to pay the respondent on a monthly basis by having her pension payments split at source.

Issues:

(1) Did the trial judge err in determining that the Pension Benefits Division Act only allows for a lump-sum division?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The appellant’s Canadian Forces pension entitlement derives from the Canadian Forces Superannuation Act, R.S.C. 1985, c. C-17 (“CFSA”). The PBDA governs the division of CFSApensions as well as pensions granted under many other federal statutes. The PBDA only provides for a lump-sum division of a member’s pension, whether the pension is in pay or not. Section 8 of the PBDA addresses the manner in which the pension is divided and only provides for a one-time transfer of funds into locked-in financial instruments.

The fact that the Garnishment, Attachment and Pension Diversion Act, R.S.C. 1985, c. G-2 permits pension payments to be split at source as family or matrimonial property does not apply in this case. That act only applies to the enforcement of support orders. Financial support orders do not encompass matrimonial property.

There is no federal legislation that clothes the PBDA administrator with the power to split pension payments as a method of dividing family property.

Under the FLA, s. 10.1(5) only allows a judge to order one form of division of pension payments, either lump-sum or pension payments, not both. Section 10.1(3) creates a general power to order an immediate lump-sum division. The combined operation of these two sections allow for the following options: before the pension is in pay, only a lump-sum division is available; once the pension is in pay, a judge may choose between the two options depending on all the circumstances of the case and guided by s. 10.1(4) of the FLA. This interpretation of the FLA is necessary in order to avoid frustration of the PBDA which applies to pensions created by many federal statutes.

Kidanemariam v. Toronto (City), 2018 ONCA 167

[Hourigan, Roberts and Nordheimer JJ.A.]

Counsel:

N P Kapelos, for the appellants

E D Farrell, for the respondent

Keywords: Torts, Negligence, Municipal Liability, Failure to Maintain Sidewalk, Summary Judgment, City of Toronto Act, 2006, S.O. 2006, s. 42(3)

Facts:

The appellant, Selome Walelenge, sustained injuries when walking in front of a building located at 8 Wellesley Street East, Toronto. Ms. Walelenge testified that she veered briefly off the concrete sidewalk and walked on an adjoining narrow strip that was covered with paving stones. She said that as she was walking on the strip, she felt as if she was pushed.  Her foot landed on a section of the strip that was missing a paving stone.  Ms. Walelenge then fell to the sidewalk and suffered injuries.

Ms. Walelenge brought an action in negligence against the City, alleging that it failed to maintain the sidewalk in order to make it safe for pedestrian use. Her husband and daughter asserted Family Law Act, R.S.O. 1990, c. F.3 claims.

The City brought a motion for summary judgment relying on the defences contained in s. 42(3) of the City of Toronto Act, 2006, S.O. 2006, c.11, Sch. A. The motion judge held that the City did not know, and could not reasonably have been expected to have known, about the alleged state of non-repair, given that it was not revealed in its annual walking inspection or in its twice weekly road patrols.  There was also no record of complaint about the area. The motion judge further found that the City took reasonable steps to prevent the default from arising. Accordingly, he concluded that the defences in s. 42(3)(a) and (b) of the Act were available to the City.

Issues:

(1) Did the motion judge err in his application of the summary judgment rule and/or misconstrue the evidence?

Holding: Appeal dismissed.

Reasons:

(1) No. The motion judge carefully considered the evidence from the City that it undertook reasonable steps to prevent any default or state of non-repair from arising. That evidence was essentially unchallenged and the motion judge therefore made no error in finding that the City could avail itself of each of the defences in s. 42(3)(a); (b) and (c) of the City of Toronto Act. Those defences are a complete answer to the appellants’ claims. There was no need for a trial in these circumstances.

Fleming v. Ontario, 2018 ONCA 160

[Cronk, Huscroft and Nordheimer JJ.A.]

Counsel:

Judie Im, Erin Rizok and Sean Hanley, for the appellants

Michael Bordin and Jordan Dicacur, for the respondent

Keywords: Torts, False Arrest, Wrongful Imprisonment, Excessive Use of Force, Constitutional Law, Aboriginal Law, Public Safety, Breach of Peace, Caledonia Conflict, Charter Damages

Facts:

On May 24, 2009, the respondent attended an event held by protestors opposed to the occupation of Douglas Creek Estates (“DCE”) in Caledonia at a private residence. The respondent had a Canadian flag with him. It was his intention to walk north on Argyle Street and watch a Canadian flag being raised at the entrance of DCE.

The respondent began walking north on the west shoulder of Argyle Street, with his Canadian flag. Two Alpha Support Squad police vehicles, and the Offender Transport Unit, spotted the respondent and turned around to approach him.

The respondent saw the approaching vehicles. The officers commanded him to stop. As the vehicles moved onto the shoulder of Argyle, he left the shoulder and continued walking down into a grassy ditch, over a low fence and onto DCE. The respondent’s entry onto DCE caused an immediate reaction from the DCE protesters at the front entrance of DCE. They became angry and upset.

Officer Miller followed the respondent over the fence and told him that he was under arrest to prevent a breach of the peace in accordance with O.P.P. policy. He then took the respondent’s right arm and escorted him over the low fence and off DCE. Officer Miller and some of the other appellant officers instructed the respondent to drop his flag and flag pole, as they viewed the flag pole as a potential weapon.

A struggle ensued. The respondent and some of the officers went to the ground. Eventually, the officers wrested the Canadian flag from the respondent’s hands and handcuffed him. Prior to the handcuffing, however, the respondent says that one of the officers yanked his left arm up behind his back. This action resulted in a serious injury to the respondent’s left elbow leaving him with what was later determined to be a permanent chronic pain condition.

The trial judge concluded that the respondent was falsely arrested and wrongfully imprisoned and that his rights under the Canadian Charter of Rights and Freedoms were violated. She awarded general damages of $80,000; damages for false arrest, wrongful imprisonment and breach of right to pass of $10,000; special damages of $12,986.97; and damages for breach of the respondent’s s. 2(b) Charter rights of $5,000. She declined to award aggravated or punitive damages.

The police appealed. The respondent cross-appealed.

Issues:

(1) Did the police have the authority to arrest the respondent for a breach, or an anticipated breach, of the peace?

(2) If so, did the police use excessive force in effecting the arrest?

Holding: Appeal allowed. Cross-appeal dismissed.

Reasoning:

(1) Yes. There is no doubt that the respondent was entitled, in normal circumstances, to walk along a public street carrying a Canadian flag. He was also entitled to participate in “political action” and to participate in a protest about the ongoing activities on DCE. The respondent was not entitled to engage in any of these activities, however, if his actions would likely lead to a breach of the peace. There are constraints on the exercise of any person’s rights and one of those constraints is where the exercise of a right will lead to a breach of the peace or other public safety concerns.

There is a long history of problems in the Caledonia area, including a long history of violent confrontations over Indigenous land claims. This was well-known to the O.P.P., who are responsible for policing the area and for maintaining public safety and order.

For reasons that are unclear, the trial judge held that the events of May 24, 2009, were not “Aboriginal Critical Incidents” as defined in the Aboriginal Framework. The Court of Appeal disagreed, stating that it is difficult to see how they could be reasonably characterized as anything else. The principal event was a planned flag raising directly across from the entrance to DCE that would undoubtedly lead to a reaction from the DCE protestors. As the Aboriginal Framework expressly notes, its purpose is to address such events before they become a problem.

As part of the Operational Plan, a “buffer zone” between the factions was an entirely legitimate one. Police have the authority to create such zones for proper purposes in order to carry out their duties. The Court found that the actions of the O.P.P. officers were being undertaken in order to avoid a breach of the peace and they were effective at doing that. The respondent was removed from the area without any further issue and without any further disturbance or confrontation with the DCE protestors.

The police had reasonable grounds to believe that there was an imminent risk to the public peace, and a substantial risk of harm to the respondent, that justified their decision to arrest the respondent. The trial judge’s holding to the contrary is fundamentally flawed and cannot stand. A new trial was ordered.

(2) The evidence before this court was insufficient to make those key determinations. As a result, a new trial on these issues was required to permit those factual determinations to be made.

Gourgy v. Gourgy, 2018 ONCA 166

[Sharpe, Watt and Benotto JJ.A.]

Counsel:

S Philbert, for the appellant

S Boulby and K Fishman, for the for the respondent

Keywords: Family Law, Divorce, Child Abduction, Jurisdiction, Hague Convention, Habitual Residence, Acquiescence, Burden of Proof

Facts:

This appeal concerns two related applications brought by the father of a six year old boy. The parties moved to the United States in 2012, first to California and then to Texas. The mother came back to Ontario from time to time with the father’s consent. On October 30, 2016, she came to Ontario with the child in order to visit her family and to work the necessary 15 days so that she could keep her status as a teacher in Ontario. She did not return. In November, she sent the father a text that she had filed for divorce.

The father sought his return to Texas pursuant to the Hague Convention and also sought to dismiss the mother’s Ontario divorce application for lack of jurisdiction. Both applications were allowed and the mother appealed.

Issues:

• Did the application judge err in his application of the Hague Convention?

Holding:

Appeal dismissed.

Reasoning:

• The Hague Convention requires that a child wrongfully removed or retained by a parent shall be promptly returned to the habitual residence unless the other parent has acquiesced in the removal pursuant to art. 13(a) or the return will place the child in an intolerable situation pursuant to art. 13(b).  With respect to habitual residence, the mother submitted that the application judge erred when he stated that there was no minimum amount of time necessary to establish habitual residence. In that regard, she relied on conflicting lower court decisions on this point. She also alleges that the child could not be returned to Texas because the father had no “custody” right in Texas, having moved there only six weeks earlier from California. The Court of Appeal disagreed. The question of habitual residence is one of fact. It is the location where the parents demonstrated a settled intention to reside. The application judge considered the parents’ move to the United States, the subsequent move to Texas; the fact that they obtained principal residence status; applied for US social security; bought a house and enrolled the child in school. On this basis, it was open to him to find that the parents had a settled intention to reside in the United States.
• The burden is on the parent alleging acquiescence or an intolerable situation to demonstrate it. The application judge reviewed the evidence and determined that the mother had not met her burden in this respect. The Court of Appeal found no reason to interfere with this finding of fact.

Short Civil Decisions

Royal Bank of Canada c. Poulin, 2018 ONCA 155

[Les juges Sharpe, Rouleau et Benotto]

Conseiller Juridique:

Maryse Poulin, en personne

James Riewald, pour l’intimée

Mots Clés: Procédure Civile, Droits Linguistiques, Mauvais Fois