Court of Appeal Summaries (October 14 – October 18)

October 22, 2024
John Polyzogopoulos

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Civil Decisions

Pinnacle International (One Yonge) Ltd. v. Torstar Corporation, 2024 ONCA 755

Keywords: Contracts, Interpretation, Real Property, Commercial Leases, Subleases, Assignments, Civil Procedure, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, s. 4, Real Property Limitations Act, R.S.O. 1990, c. L. 15, ss. 1, 2, 17, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc., 2024 SCC 20, Fuller v. Aphria Inc., 2020 ONCA 403, Northwinds Brewery Ltd. v. Caralyse Inc., 2023 ONCA 17, Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, Ontario Securities Commission v. Bridging Finance Inc., 2023 ONCA 769, Canderel Ltd. v. R, [1998] 1 S.C.R. 147, Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (Ont. C.A.), Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, Pinnacle International (One Yonge) Ltd. v Torstar Corporation, 2022 ONSC 4879, Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179, Svia Homes Limited v. Northbridge General Insurance Corporation, 2020 ONCA 684, Kaiman v. Graham, 2009 ONCA 77, Intact Insurance Company of Canada v. Lombard General Insurance Company of Canada, 2015 ONCA 764, M. (K.) v. M. (H.), [1992] 3 S.C.R. 6, Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748, Merriam-Webster Dictionary (September 6, 2024), Graeme Mew, Debra Rolph & Daniel Zacks, The Law of Limitations, 4th ed. (LexisNexis Canada, 2023)

GlycoBioSciences Inc. (Glyco) v. MAGNA Pharmaceuticals, Inc. (Magna), 2024 ONCA 760

Keywords: Civil Procedure, Appeals, Corporations, Representation by a Lawyer, Courts of Justice Act, R.S.O. 1990, c.43, s. 7(5), Rules of Civil Procedure, rule 15.01(2), Leisure Farm Construction Limited v. Dalew Farms Inc. et al., 2021 ONSC 105, Correct Building Corporation v. Lehman, 2022 ONCA 723, Machado v. Ontario Hockey Association, 2019 ONCA 210, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, GlycoBioSciences Inc. v. Herrero and Associates, 2023 ONCA 331

AFC Mortgage Administration Inc. v. Sunrise Acquisitions (Elmvale) Inc., 2024 ONCA 764

Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Vesting Orders, Appeals, Leave to Appeal, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, First National Financial GP Corporation v. Golden Dragon HO 10 Inc., 2019 ONCA 873, Hillmount Capital v. Pizale, 2021 ONCA 364, Re Harmon International Industries Inc., 2020 SKCA 95, Peakhill Capital Inc. v. 1000093910 Ontario Inc., 2024 ONCA 59, Comfort Capital Inc. v. Yeretsian, 2019 ONCA 1017, Firepower Debt GP Inc. v. TheRedPin, Inc. (12 February 2019), M50109 (C66336) (Ont. C.A.), QRD (Willoughby) Holdings Inc. v. MCAP Financial Corporation, 2024 BCCA 318, Business Development Bank of Canada v. Pine Tree Resorts, Inc., 2013 ONCA 282, Laurentian University of Sudbury (Re), 2021 ONCA 199

Mathur v. Ontario, 2024 ONCA 762

Keywords: Environmental Law, Emissions, Constitutional Law, Charter Rights, Right to Life, Liberty and Security of the Person, Equality Rights, Freedom from Discrimination, Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11, ss. 7 and 15, Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11, s. 35, Cap and Trade Cancellation Act, 2018, S.O. 2018, c. 13, ss. 3(1) and 16, Climate Change Mitigation and Low-carbon Economy Act, 2016, S.O. 2016, c. 7, Framework Convention on Climate Change, U.N. Doc. A/AC.237/18 (Part II)/Add.1, May 15, 1992, Canadian Council for Refugees v. Canada (Citizenship and Immigration), 2023 SCC 17, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Gosselin v. Québec (Attorney General), 2002 SCC 84, R. v. Sharma, 2022 SCC 39, Chaoulli v. Québec (Attorney General), 2005 SCC 35, Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux, 2018 SCC 17, Carter v. Canada (Attorney General), 2015 SCC 5, Canada (Attorney General) v. Bedford, 2013 SCC 72, Ontario (Attorney General) v. G, 2020 SCC 38, Canada (Prime Minister) v. Khadr, 2010 SCC 3

Heliotrope Investment Corporation v. 1073650 Ontario Inc., 2024 ONCA 767

Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Leave to Appeal, Extension of Time, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 s. 193(e), s. 243, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, R. v. Walker, 2008 SCC 34, R. v. Sheppard, 2002 SCC 26

A.A. v. Z.M., 2024 ONCA 768

Keywords: Family Law, Parenting, Relocation, Civil Procedure, Appeals, Stay Pending Appeal, Security for Costs, Convention on the Civil Aspects of International Child Abduction, Can. T.S. 1983 No. 35 (“Hague Convention“), Children’s Law Reform Act, R.S.O. 1990, c. C.12, ss. 22(1)(a), 22(1)(b), 23, 40, F. v. N., 2022 SCC 51, A. (M.A.) v. E. (D.E.M.), 2020 ONCA 486, Yaiguaje v. Chevron Corporation, 2017 ONCA 827

CIVIL DECISIONS

Pinnacle International (One Yonge) Ltd. v. Torstar Corporation, 2024 ONCA 755

[Gillese, Brown and Sossin JJ.A.]

Counsel:

T. Pinos and E. Carver, for the appellant

J. Schatz and M. Bennett, for the respondent

facts:

This appeal arose from a commercial lease requiring the appellant tenant, Torstar, to pay the respondent landlord, Pinnacle, net “profit” earned from a sublease. Pinnacle sued Torstar for profit it allegedly made on a sublease. Torstar maintained that it made no profit because it had paid Pinnacle more rent for the sublet premises than what it received from its subtenant. Torstar also contended that Pinnacle’s claim was subject to a two-year limitation period because it was governed by the Limitations Act, 2002 (“LA”).

The parties brought dueling summary judgment motions. The motion judge found that Torstar was not permitted to consider its full rental costs when determining whether it had profited from the sublease, and that the Real Property Limitations Act (“RPLA”) applied, not the LA. Consequently, she ordered Torstar to pay Pinnacle over $1.1 million plus interest and costs. Torstar appealed.

issues:

Did the motion judge err in her interpretation of the Lease and Boreal Sublease?
Did the motion judge err in applying the RPLA rather than the LA?
Did the motion judge err in rejecting Boreal’s five-month rent-free period as a reasonable cost incurred by Torstar?

holding:

Appeal allowed.

reasoning:

1. Did the motion judge err in her interpretation of the Lease and Boreal Sublease?

MAJORITY (Gillese J.A. and Sossin JJ.A.)– YES.

Article 8.1 of the Lease required Torstar to pay Pinnacle any profit (net of reasonable costs incurred) earned in subletting any part of the premises. The majority found that the overriding issue was whether Torstar could deduct, as “reasonable costs”, the full rent it paid Pinnacle for the third floor of the Building, for the purpose of determining whether it made a profit from the Boreal Sublease. The motion judge interpreted art. 8.1 as precluding Torstar from making that deduction.

a. The factual matrix

Relying on Sattva, the majority stated that the modern approach to interpreting contracts is rooted in practicalities and common-sense and “not dominated by technical rules of construction”. The overriding concern is the intent of the parties and the scope of their understanding, which requires the Court “to read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances [the “factual matrix”] known to the parties at the time of formation of the contract”. The majority explained that the factual matrix should consist only of objective evidence at the time of the execution of the contract – knowledge that was, or reasonably ought to have been, known by both parties at or before the date of contracting. The majority held that while the motion judge set out the factual background at various points, she failed to identify objective evidence known by Torstar and Boreal when they entered the Sublease. Thus, the majority held that she failed to consider the factual matrix and therefore erred in law.

b. Failure to consider the whole of the Boreal Sublease in light of the factual matrix

The majority held that to decide the overriding issue, the motion judge had to answer (1) what “profit” meant for the purposes of art. 8.1; and (2) whether Torstar could deduct the full rental costs it paid for the third floor of the Building as reasonable costs incurred in connection with the Boreal Sublease. The motion judge did not address the first question, but the majority stated that profit should be given its ordinary meaning of the excess of revenue over the expenses incurred. Regarding the second question, the majority explained that the motion judge erred by not considering the Boreal Sublease as a whole, in light of the factual matrix. The majority held that when the recitals and relevant provisions of the Sublease were interpreted in light of the factual matrix, the sublet premises were the full third floor of the Building, with rent to be calculated based on the usable portion of the third floor. In the majority’s view, the balance of recital C of the Sublease resolved any ambiguity by stating that the parties agreed that the sublet space was the full third floor of the Building, but the parties deemed it to be only the 46,707 square feet of usable space in the Office Tower. In light of the surrounding circumstances, it made no commercial sense that Torstar intended to sublet only the usable third-floor space.

c. A commercially absurd result

The majority explained that commercial contracts must be interpreted in accordance with commercial reasonableness, good business sense, and in a manner that “avoids a commercial absurdity”: Ventas v. Sunrise Senior Living; OSC v. Bridging Finance. The majority held that the motion judge’s interpretation ran afoul of these principles and resulted in commercial absurdity for three reasons. First, the motion judge took an overly technical approach when determining whether Boreal subleased the full third floor of the Building – the majority stated that this interpretation ignored the factual matrix and the practicalities of the situation. Second, the majority held that it was commercially absurd to interpret the word “profit” in art. 8. 1 to require Torstar to pay Pinnacle over $1.1 million for subleasing space when Torstar actually incurred a $2.6 million loss on the sublet premises. “Profit” is not defined in the Lease, so the majority held that it was to be given its ordinary meaning considering the factual matrix: Sattva. The dictionary definition of profit is “the excess of returns over expenditure in a transaction or series of transactions”: Merriam-Webster Dictionary. Because Torstar paid more rent for the third floor than it received in rent under the Boreal Sublease, the majority held that Torstar made no profit within the meaning of art. 8.1.

Third, the majority held that the motion judge’s interpretation would have given Pinnacle an unintended windfall because only Pinnacle could benefit from the third-floor Open Air Space during the term of the Sublease. Thus, in addition to receiving full rent for the entire third floor from Torstar, Pinnacle received rental income from third parties. On the motion judge’s interpretation, Pinnacle would receive a further $1.1 million from Torstar, and the majority held that this offended notions of commercial reasonableness and good business sense.

DISSENT (Brown J.A.) – NO.

Brown J., dissenting, disagreed with the majority’s contention that the motion judge failed to identify the objective evidence that constituted the material factual matrix, noting that she specifically found that Torstar never surrendered the third-floor atrium space before the expiry of the Lease in August 2020 and that it paid rent on the entire 65,534 square feet third-floor area stipulated in the lease until that time.

a. The demised premises in the Lease and surrendered rights to sublease

Brown J. explained that the premises demised to Torstar under the Lease included the third-floor open-air space. Regarding the Lease’s description of the demised Premises, Brown J. noted that the Lease used the concept of “rentable area”, not “usable space” to calculate rent. In his view, Torstar’s main submission attempted to convert the agreed-upon concept of “rentable area” into “usable area”, thereby attempting to re-write the terms of the Lease. Second, Brown J. noted that the “rentable area” for the first five floors of the Building included space in both the “Plant and Tower”. Although the Lease did not contain definitions of “plant” and “tower”, Brown J. held that there was no dispute that the leased Building consisted of two parts. The floor plans that made up Schedule “B-1” of the Lease clearly identified the rentable areas in the “plant” and “tower” areas of each relevant floor. The rentable area for the third floor included both tower and plant space.

Brown J. held that the Lease granted Torstar a broad right to sublet and narrower surrender privileges. Article 2 of Schedule D of the Lease granted Torstar the right to surrender portions of the Premises during the Lease. However, Brown J. held that the Lease did not grant Torstar the unilateral right to surrender the warehouse portion of the third floor as that portion of the space was not located in the “tower” portion of the Building. A surrender of that portion would require “the specific consent of the Landlord”. Brown J. explained that Torstar’s lack of a unilateral right to surrender the third-floor warehouse space undercut its contention that the motion judge’s interpretation of the Lease and Boreal Sublease resulted in a commercial absurdity.

b. Analysis of Torstar’s interpretation submissions

Citing Earthco, Brown J. noted that the actual words chosen by the parties to a contract are “central” to the interpretative analysis. Art. 1.4 of the Lease stipulated that the “Rentable Area” for the third floor was 65,534 square feet, consisting of “Plant and Tower.” Recital C in the Boreal Sublease described the “Sublet Premises” as “being the entire 3rd floor of the Building and comprising an area of” 46,707 sq. ft. Torstar contended the motion judge erred by not using the rent it paid Pinnacle for the 65,534 square feet of the third floor for purposes of comparison with the rent it received from Boreal. Brown J. disagreed, holding that the motion judge’s finding accorded with the record and that the phrase “the entire 3^rd floor of the Building” on which Torstar rested its submission and the majority their analysis could not be read in isolation from the words that appeared before and after it. Those words incorporated the floor plan sketches attached to the Boreal Sublease and Consent to Sublease that clearly set out the boundaries of the sublet premises.

Brown J. found that the amount of area on the third floor sublet to Boreal was clearly set out in the sentence following the words upon which Torstar relied – “[t]he parties agree that the area of the Sublet Premises has been deemed to be…(46707 sq. ft.) (“the Deemed Rentable Area”).” Brown J. speculated that including a “deemed” rentable area that would “not be subject to re-adjustment by any of the parties” sought to prevent one party from pulling out a measuring tape post-execution to alter the sublet area on which rent was payable. Brown J. concluded that the inclusion of a “Deemed Rentable Area” meant that (i) the “deemed” area corresponded to the agreed rented area mentioned earlier in the recital and (ii) neither area included open-air space. Brown J. held that when the provisions of the Boreal Sublease and Consent to Sublease were considered as a whole, they disclosed that the motion judge did not make a palpable and overriding error.

Torstar described the parties’ agreement on the Deemed Rentable Area in the Boreal Sublease as a “technicality” that should not play a role in the application of art. 8.1 to the calculation of “profit”. Brown J. rejected this. The definition of “Deemed Rentable Area” clearly reflected a key agreement as Boreal paid Torstar rent calculated using the area agreed. Brown J. held that Torstar’s submission that the Court should ignore this agreement amounted to an effort to adjust the terms of the Boreal Sublease, an adjustment expressly prohibited by the terms of Recital C.

Torstar argued that when the Lease and Sublease were read as a whole, “Torstar and Boreal rented the space on the same physical basis.” Brown J. held that this interpretation completely misread the Lease and Boreal Sublease and made no commercial sense that Boreal would agree to such an arrangement. The Boreal Sublease and Consent to Sublease stated that Boreal intended to use the subleased premises as an educational facility and associated administrative offices. The more sensible interpretation of the Boreal Sublease was that Boreal agreed to sublease the entirety of the usable third-floor office space – 46,707 sq. ft. and what the recital defined.

Torstar advanced what Brown J. understood to be an “implied surrender” argument: although the Lease required Torstar to pay rent for the open-air space at the third-floor level, it did not use that space. Rather, Pinnacle used it for various events towards the end of the original term of the Lease, which somehow resulted in Torstar’s “implied surrender” and Pinnacle’s acceptance of the third-floor open-air space. Brown J. rejected this. The record disclosed that: (i) during the time of Torstar’s sublease of part of the third floor to Boreal, Torstar remained the tenant of the entire third floor under its Lease with Pinnacle; (ii) Torstar continued to pay Pinnacle rent on that entire area; and (iii) Torstar did not surrender or attempt to secure Pinnacle’s consent to the surrender of the open-air portion of the third floor. Absent such a surrender, Brown J. held that whether or not Pinnacle used the third-floor open-air space was not relevant.

c. The commercial absurdity and “costs-incurred-in-connection-with” arguments

Brown J. held that no commercial absurdity resulted from the motion judge’s interpretation given the factual matrix. The third-floor premises demised to Torstar on which its rent to the Landlord was calculated consisted of 65,534 square feet of both “plant” and “tower” space. The Lease permitted Torstar to sublet any of that third-floor space. However, the Lease only granted Torstar a right to surrender the tower space after 10 years. If Torstar wanted to surrender the warehouse portion of the third-floor space, it would require the landlord’s consent. As well, once the Canada Post Sublease expired, the first and second floor warehouse space it had rented had to be surrendered to the landlord. Brown J. held that, when read together, these provisions clearly indicated that once Canada Post ended its sublease, Torstar would be left with “orphaned” third-floor warehouse open-air space. Accordingly, an interpretation of the Lease that would result in Torstar holding the “cost bag” for unusable third-floor open-air warehouse space would not result in a commercial absurdity. Brown J. explained that the risk of such a possibility was a foreseeable commercial risk. That was the deal Torstar struck.

Brown J. held that the language of art. 8.1 made clear that the costs deductible from any profit earned had to be “costs incurred … in connection” with the sublease. However, Torstar’s obligation to pay rent on the entire third-floor originated with the Lease. The Profit Clause used the rent Torstar paid to Pinnacle pursuant to the Lease for space it subleased to a third party for the purpose of determining whether Torstar earned a “profit” on the subleased space. That subleased space was integral to the “apples-to-apples” rent comparison required. However, Torstar’s payment of rent to Pinnacle that was not subleased could only be offset against rent it received under the Boreal Sublease if it was a cost “incurred … in connection” with the Sublease. But it was not – it was an obligation, or cost, in connection with non-subleased space that flowed from, or was incurred in connection with, the Lease with Pinnacle.

2. Did the motion judge err in applying the six-year limitation period in the RPLA rather than the two-year limitation period in the LA?

MAJORITY – YES.

In the majority’s view, the claim was not based on an obligation to pay “rent” as that term is defined in the RPLA. The claim was for an alleged breach of a term of the Lease that was governed by the LA. The majority rejected the motion judge’s finding that the claim was subject to the six-year limitation period under the RPLA and held that it was subject to a two-year limitation period.

“Rent” is defined in s. 1 the RPLA to include “all annuities and periodical sums of money charged upon or payable out of land”. The majority cited Pickering Square Inc. v. Trillium College Inc., where Mew J. observed that the word “rent” in s. 17 of the RPLA means a payment due under a lease between a tenant and landlord as compensation for the use of land and premises. It does not depend on whether the parties to the lease define a matter as “rent” – obligation must be interpreted in light of the context, scheme, and object of the RPLA, and the law of limitations in Ontario. The majority further relied on Mew J. for his explanation that the application of the LA should be construed broadly and that of the RPLA narrowly because with the enactment of the LA “the legislature created a single, comprehensive general limitations law that is to apply to all claims for injury, loss or damages except, in relevant part, when the RPLA specifically applies”. The majority found that determining whether a matter is “rent” within the meaning of the RPLA, by reference solely to the words used by the parties, would defeat the legislative purpose behind the LA.

The majority distinguished Northwinds Brewery, holding that the obligation to remit net profit under art. 8.1 of the Lease was not an “annuity” nor was it a “periodical sum of money charged upon or payable out of land”. Rather, Torstar was obliged to pay the landlord net “profit”, a variable amount calculated by reference to a formula in art. 8.1 which permitted Torstar to deduct “reasonable expenses” from earnings from the sublease. Thus, the majority concluded that even though art. 8.1 labelled the net profit Torstar was to pay the landlord as “Additional Rent”, that obligation was not to pay “rent”, within the meaning of s. 17(1) of the RPLA.

DISSENT – NO.

In Brown J.’s view, the substantive nature of Pinnacle’s action was one for the recovery of “arrears of rent” under s. 17 of the RPLA. Regarding the meaning of “rent,” Brown J. explained that the statute does not provide an exhaustive definition. However, citing Pickering Square, he explained that the inclusionary language of s. 1 simply means that “rent” can refer to either (i) “rent charge or (ii) “rent service” or “rent reserved”. Brown J. also accepted Mew J.’s conclusion that “‘rent’ in s. 17 of the RPLA, as it applies to rent service or rent reserved, means the payment due under a lease between a tenant and landlord as compensation for the use of land or premises.”

Brown J. explained that to determine whether the debt created by a tenant’s failure to make a payment constitutes “arrears of rent” it is necessary to assess the nature of the obligation to pay created by the lease. Brown J. held that the main financial effect of the Profit Clause was that the economic cost to the tenant, Torstar, of the space it leased from Pinnacle would be the rent it was required to pay under the terms of the Lease. If Torstar subleased any of that space, any excess of the sublease rent over the Lease rent was for the benefit of the owner of the land, not Torstar as tenant. That the Profit Clause permitted Torstar to deduct its reasonable costs before remitting any excess did not change the nature of the payment obligation as one of “rent”.

Torstar argued that should the RPLA apply, time would have started to run in 2012, meaning that Pinnacle’s entire claim was statute-barred since it started this action in 2020. Brown J. rejected this. First, Torstar’s obligation to pay Pinnacle any amount under the Profit Clause only arose when Torstar earned a “profit”. The evidence clearly supported the motion judge’s finding that “the earliest date at which Torstar could have realized a profit from the Boreal Sublease is in October of 2014.” Second, Torstar’s argument mischaracterized the nature of its payment obligation. By the terms of the Lease, if Torstar earned “profit”, its obligation to pay arose monthly. The Lease defined “Rent” to include “Additional Rents”, which included the payment of any “profit”. Any failure by Torstar to pay, when due, any rent, including additional rent, “whether lawfully demanded or not”, which continued for a period of 10 days after notice from the landlord, triggered several rights of the landlord, including payment of accelerated rent, re-entry of the premises, and forfeiture of the term of the Lease. Brown J. held that the Lease created a periodic obligation to pay “profit” and that it was open to Pinnacle to sue on each breach until the end of the Boreal Sublease, which was August 2020.

3. Did the motion judge err in rejecting Boreal’s five-month rent-free period as a reasonable cost incurred by Torstar?

The majority declined to decide on this issue. In dissent, Brown J. agreed with the motion judge’s rejection of Torstar’s entitlement to the inclusion of the five-month rent-free period on grounds of procedural fairness: it was a new argument not previously raised by Torstar and consideration of such a late argument would work an unfairness to Pinnacle.

GlycoBioSciences Inc. (Glyco) v. MAGNA Pharmaceuticals, Inc. (Magna), [2024 ONCA 760]

[Simmons, Coroza and Sossin JJ.A.]

Counsel:

K.D., acting in person for the moving party

A. Moeser and D. Malone, for the responding parties

facts:

The underlying dispute related to contracts for the manufacture and distribution of a “wound gel” product. Each contract in dispute contained an arbitration or forum selection clause, none of which favoured Ontario. The underlying appeals were dismissed for lack of jurisdiction. On both of these appeals, leave was sought by K.D. under rule 15.01(2) of the Rules of Civil Procedure to represent the appellant, GlycoBioSciences Inc. (“Glyco”) as a non-lawyer.

The motion judge declined to exercise his discretion to grant leave to K.D. to represent Glyco on its appeal. K.D. on behalf of Glyco sought a review of this decision by a single judge of the Court to a full panel.

issues:

Did the motion judge err in denying leave to the corporate appellant to be represented by a non-lawyer director of the corporation?

holding:

Motion dismissed.

reasoning:

Prior to deciding the main issue, the Court considered two preliminary issues that would determine whether the Court could hear the main issue on appeal.

a. Can K.D. argue this appeal given that he was not given leave to represent Glyco

Yes. the Court found that K.D. was not precluded from arguing the motion to set aside the decision that denied leave for him to represent Glyco.

b. Can K.D. make submissions on the basis of evidence that was not brought before the motion judge?

Yes. The Court found that K.D. did not first have to bring a motion to have the evidence in question admitted as fresh evidence. K.D. sought to file financial information in response to the responding parties’ motion for security for costs rather than in support of the Rule 15 motion. The motion judge decided that the Rule 15 motion had to be addressed prior to the security for costs motion. Given that decision, the financial record appeared not to be before the motion judge. In oral submission, K.D. argued that he was relying on the motion judge’s failure to consider this evidence as the basis for setting aside the motion decision. As such, K.D. was permitted to make submissions regarding this evidence without first being required to bring a motion to have it admitted as fresh evidence.

The motion judge did not err in denying leave to K.D. to represent Glyco as a non-lawyer. The Court found no error of principle, unreasonable result nor legal error. The appellant argued that the motion judge did not consider the financial information that was reflective that Glyco was impecunious and accordingly, required non-lawyer representation in light of access to justice. The Court found that irrespective of Glyco’s financial position, the motion judge’s conclusion to deny leave was justified on the grounds that (a) Glyco was seeking Ontario courts to assert jurisdiction over claims against foreign corporations that do not conduct business in Ontario and; (b) whether or not K.D. referred to the bank records of Glyco was immaterial as those records did not establish the financial position of the company.

Additionally, the motion judge relied on the conduct of K.D. in litigating prior and similar claims. The Court found that K.D.’s conduct was problematic and had in past led to substantial indemnity costs orders against him.

The Court gave the appellant 30 days to appoint a solicitor of record, failing which, the pending appeals would be procedurally dismissed.

AFC Mortgage Administration Inc. v. Sunrise Acquisitions (Elmvale) Inc., 2024 ONCA 764

[Zarnett J.A. (Motions Judge)]

Counsel:

J. Kulathungam and C. E. Allen, for the respondent/responding party (M55415)/moving party by way of cross-motion (M55416), Rosen Goldberg Inc.

J. A. Wadden and S. Sherrington, for the appellants/moving parties (M55415)/responding parties by way of cross-motion (M55416)

facts:

On August 15, 2024, in the context of a receivership proceeding, Conway J. made two orders. The first, an Approval and Vesting Order (“AVO”), approved and authorized the completion by the Receiver of sales of two residential properties owned by the individual debtors. The second, a Sale Procedure Order (“SPO”), concerned vacant development lands owned by the corporate debtor. The SPO approved the retention of a real estate brokerage firm, the entering into of a stalking horse agreement, and a process for marketing the lands, obtaining bids and selecting a suitable bidder to buy those lands, with any actual purchase to be subject to further court approval.

This motion by the corporate and individual debtors (the “Debtors”) and cross-motion by the Receiver raised three issues: i) whether the Debtors may appeal the orders of Conway J. without leave under the Bankruptcy and Insolvency Act; (ii) if not, whether leave under the BIA should be granted; and (iii) whether Conway J.’s orders should be stayed pending appeal. The Court did not address the third issue.

issues:

Is leave to appeal required?
Should leave to appeal be granted?

holding:

Motion and cross-motion dismissed.

reasoning:

Yes.

The parties agreed that the BIA governed the appeal rights in issue. A party seeking to appeal an order under the BIA may do so without leave if the appeal comes within one of the categories in ss. 193(a) through (d) of the BIA:

a. if the point at issue involves future rights;

b. if the order or decision is likely to affect other cases of a similar nature in the bankruptcy proceedings;

c. if the property involved in the appeal exceeds in value ten thousand dollars;

d. from the grant of or refusal to grant a discharge if the aggregate unpaid claims of creditors exceed five hundred dollars […]

Any other appeal requires leave: s. 193(e).

The Court determined that sections 193(a) through (d) were inapplicable to the matter at hand. 193(a) would not apply since the AVO authorized and approved the sales and sets out the procedure for their completion that only affects present rights and does not affect future rights. 193(b) would not apply because the AVO is not likely to affect other cases of a similar nature in the receivership. Although the Debtors argued that they may raise the sequencing issue again when the Receiver proposes other sales, a party cannot “create a ‘case’ after the impugned order was made in order to invoke s. 193(b). 193(c) would not apply as well since the property involved in an appeal from the AVO does not involve more than $10,000, in the sense used in s. 193(c).

The Court determined that there was no evidence-based assertion of improvident sale, nor did the Debtors quarrel with the prices obtained, just the timing of the sales. Accordingly, the AVO did not put the value of the Debtors’ property into play or finally determine the economic interest of a claimant in the Debtors resulting in a gain or a loss. For similar reasons, the Court found that the SPO was not an order that may be appealed without leave. The Court disagreed with the Debtors’ contention that s. 193(c) applied to the appeal of the SPO and stated that s. 193(c) “does not apply to … orders concerning the methods by which receivers or trustees realize on an estate’s assets”.

Next, the Court disagreed with the Debtors’ contention that because the SPO included approval of the Stalking Horse Agreement as a step in a more extensive sales process, it no longer was an order concerning a method of realization. In this case, there was no pre-existing unconditional APS, nor a refusal to consider enforcing one. The receiver had the choice as to which stalking horse purchaser and terms to use in connection with a sales method with further steps aimed at maximizing value is about the process of realization.

2. No.

The principles guiding the consideration of a request for leave to appeal under s. 193(e) of the BIA were summarized in Business Development Bank of Canada v. Pine Tree Resorts Inc.:

a. raises an issue that is of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole, and is one that this Court should therefore consider and address;

b. is prima facie meritorious, and

c. would unduly hinder the progress of the bankruptcy/insolvency proceedings.

Applying these factors, the Court was not persuaded that the proposed appeal was prima facie meritorious. There was no arguable error in the decision of Conway J. to grant the AVO and reject the request to postpone the sale of the Properties. The timing of sales to maximize recovery was a matter for the Receiver’s business judgment, via the receivership order. Whether to approve that exercise of judgment was within the discretion of Conway J. Discretionary decisions of judges supervising insolvency proceedings are entitled to a high degree of deference. Absent an error in principle, the Court cannot interfere with the discretion of the Court.

Similarly, with respect to the SPO, the Court did not see any arguable error that would displace deference to Conway J.’s decision to defer to the Receiver’s recommendation as to how to maximize value, including the use of a particular stalking horse agreement. Stalking horse arrangements set a baseline and structure for other bidders to consider in deciding whether to bid, but because that baseline price can affect future bids, safeguards are appropriate. The Court did not agree with the Debtors that Conway J. lost sight of these considerations and found the SPO makes it clear that it forms part of an extensive marketing process designed to solicit other bids so that “the market will speak” and determine the sale price.

As to the other factors relevant to granting leave, the Court held that this was a fact-specific case that did not raise issues of general importance. Granting leave would also risk unduly hindering the insolvency proceeding, which is by its nature time sensitive, as it might delay pending sales and the sales process.

Mathur v. Ontario, 2024 ONCA 762

[Roberts, Coroza and Gomery JJ.A.]

Counsel:

N. Hasan, J. Safayeni, S. Bass, F. Thomson, D. Gallant, J. Croome and R. Gomme, for the appellants

S.Z. Green, P. Ryan and S. Kissick, for the respondent

N. Chalifour and E. Dobbelsteyn, for the intervener, Friends of the Earth Canada

S. Beamish, for the interveners, Greenpeace Canada and Stichting Urgenda

T. Markin and N. Effendi, for the intervener, British Columbia Civil Liberties Association

A. Lokan and D. Glatt, for the intervener, Canadian Civil Liberties Association

A. Johnston and A. Gage, for the interveners, Environmental Defence Canada and West Coast Environmental Law Association

L. Koerner-Yeo and K. Drake, for the intervener, Grand Council of Treaty #3

E. Krajewska, B.A. Chung and É. Arsenault, for the intervener, David Asper Centre for Constitutional Rights

H. M. Ahmad and B. MacKenzie, for the intervener, Citizens for Public Justice

L. Century and E. Cartwright, for the intervener, Canadian Association of Physicians for the Environment

M. Daniel, for the interveners, For Our Kids and For Our Kids Toronto

L. Kassis, S. Wuttke and A. Williamson, for the intervener, Assembly of First Nations

N. M. Rouleau and V. Sharma, for the interveners, Canadian Lawyers for International Human Rights and Center for International Environmental Law

facts:

In 2018, the Government of Ontario enacted the Cap and Trade Cancellation Act, 2018, SO 2018, c 13 (“CTCA”). Section 16 of the CTCA repealed the former Climate Change Mitigation and Low-carbon Economy Act, 2016, SO 2016, c 7 (“Climate Change Act”). A notable difference between the CTCA and the Climate Change Act is that the Climate Change Act provided for quantifiable emission reduction targets. In contrast, the CTCA did not prescribe emission reduction targets. Instead, s. 3(1) of the CTCA provided that the “Government shall establish targets for the reduction of greenhouse gas emissions in Ontario and may revise the targets from time to time.” It accordingly does not itself set a new target but requires Ontario to do so. The target was articulated in a plan which Ontario released a few months after the CTCA was enacted. The plan indicated that Ontario would use “the best science, real-time monitoring where available, and strong, transparent enforcement to protect our air and water…” In the plan, Ontario undertook to reduce greenhouse gas emissions by 30% below 2005 levels by 2030 which was a smaller reduction than stipulated under the repealed Climate Change Act.

The appellants, who are Seven Ontario youth, brought an application for a declaration that Ontario’s target and the enacting provisions of ss. 3 and 16 of the CTCA are unconstitutional, as they violated their rights under ss. 7 and 15(1) of the Charter. The application judge dismissed their application and they appealed.

issues:

Did the application judge err in finding that the application sought to impose a freestanding positive obligation on Ontario and in doing so, failed to address whether the execution of Ontario’s statutorily imposed obligation to combat climate change was constitutionally compliant?

holding:

Appeal allowed.

reasoning:

Yes.

The application judge erred by mischaracterizing the application as a positive rights case and in doing so, failed to consider whether Ontario’s alleged failure to comply with its statutory obligation violated the appellants’ Charter rights.

The Court explained the difference between positive obligations and statutory obligations. The Court stated that the Charter has not yet been interpreted to place a positive obligation on the state to ensure that each person enjoys life, liberty or security of the person. However, where the state does legislate, it must do so in a manner that complies with the Charter. In this case, the Court found that the appellants were not challenging the inadequacy of the target, but rather the target itself, which Ontario was statutorily obliged to make.

The Court looked at the appellants’ rights under ss. 7 and 15(1) of the Charter:

a. Section 7 – Life, Liberty and Security of the Person

Regarding s. 7, the Court found that the application judge erred in failing to consider the correct question. The Court stated that the question before the application judge was not whether Ontario’s target did not go far enough in the absence of a positive obligation to do anything. Rather, the application judge should have considered whether, given Ontario’s positive statutory obligation to combat climate change, the Target was Charter compliant.

The Court went through the application judge’s analysis of the two-step test required by s. 7. The Court found that the application judge correctly found that the increased risk of death as a result of climate change amounts to an increased risk to security of the person. However, the application judge incorrectly found that the application sought to place a freestanding positive obligation on the state to ensure that each person enjoy life and security of the person.

b. Section 15(1) – Equality and Freedom from Discrimination

Regarding s. 15(1), the Court found while the application judge correctly set out the test for s. 15(1) claims, she erred in two ways. Again, her overall assessment of the appellants’ claim was principally flawed because she viewed the issue as a positive rights case.

First, the Court stated that the application judge erred by failing to acknowledge that Ontario had imposed on itself a positive statutory obligation to execute constitutionally compliant measures to combat climate change through the target, plan, and CTCA. Subsequently, the application judge erred by failing to address whether there was a nexus between the impact of the target, and the disproportionate impact on a protected ground. The Court found that the application judge should have considered whether Ontario committed itself to a level of greenhouse gas emissions that contributed to a disproportionate impact on the basis of an enumerated or analogous ground.

Second, the Court found that the application judge’s s. 15 conclusion on causation were inconsistent with her evidentiary findings in her s. 7 causation analysis. The application judge correctly noted that a claimant must first prove that the impugned state action is causally connected to the impact. The application judge found that the appellants met this causation test under s. 7, that climate change was a risk to security of the person, and that Ontario failed to enact targets that were in line with scientific consensus. Under the s. 15(1) analysis, the application judge agreed that climate change disproportionately impacted youth but incongruously stated that the impact was not attributable to the plan, the target, or the CTCA. The Court found that the application judge failed to explain this inconsistency.

The Court ordered the matter be considered afresh through the correct analytical lens and left open the range of possibilities for remedy to the judge situated to hear the remitted matter.

Heliotrope Investment Corporation v. 1073650 Ontario Inc., 2024 ONCA 767

[Zarnett J.A. (Motions Judge)]

Counsel:

D. Sayer and P. Ostroff, for the respondent/moving party (M55301)/responding party by way of cross-motion (M55412), Heliotrope Investment Corporation

K. A. Dhirani, for the appellant/responding party (M55301)/moving party by way of cross-motion (M55412), G. B.

facts:

In 2024, the bankruptcy judge made an order, on a motion brought in the bankruptcy of M. B., appointing MNP as receiver of the assets and undertakings of three corporations: 1073650 Ontario Inc., 1324789 Ontario Inc. and 2290998 Ontario Inc. M. B. was the sole shareholder and director of the corporations.

G. B. is the spouse of M.B. G. B., who was not named as a responding party to the motion to appoint the receiver but was served and participated in the hearing, filed an appeal of the receivership order and then perfected the appeal. M. B. was adjudged bankrupt in 2022, after a contested hearing. That determination was upheld by the Court in 2023. MNP is the trustee in bankruptcy for M. B.

G. B. filed the appeal from the receivership order as though that order could be appealed as of right. However, an order appointing a receiver under the Bankruptcy and Insolvency Act may not be appealed without leave by virtue of s. 193 of the BIA: Business Development Bank of Canada v. Pine Tree Resorts Inc.

G.B. acknowledged that he required leave under s. 193(e) of the BIA for the appeal that he filed. He moved for leave and an extension of time within which to seek it. Heliotrope, which brought the motion to appoint the receiver, opposed the extension and the granting of leave. It brought its own motion contending that leave was required for the appeal (a point that is conceded) and that leave should not be granted.

issues:

Should leave to appeal be granted?

holding:

Motion dismissed.

reasoning:

No.

The principles guiding consideration of a request for leave to appeal under s. 193(e) of the BIA were summarized in Pine Tree Resorts, Inc., at para. 29. The Court is to consider whether the proposed appeal:

b. is prima facie meritorious, and

c. would unduly hinder the progress of the bankruptcy/insolvency proceedings.

G. B.’s proposed appeal raised four grounds: first, that the bankruptcy judge did not identify the test for appointing a receiver; second, that he gave no reasons; third, that parts of the formal order were settled without G. B.’s involvement; fourth, that assurances G. B. alleged he received during the hearing were not reflected in the receivership order.

The Court held that regarding the first ground, a judge is presumed to know the law. The Court saw no significance in the failure of the bankruptcy judge to expressly refer to the statutory tests for a receiver’s appointment in s. 243 of the BIA and s. 101 of the Courts of Justice Act. These provisions were referred to in Heliotrope’s motion material requesting the appointment of the receiver. It was fully apparent from the record why it was just or convenient to appoint the receiver.

Regarding the second ground, the Court held that it did not accept the argument that the bankruptcy judge gave no reasons. The Court noted that the judge conducted an oral hearing. He heard submissions from Heliotrope and other interested parties. The creditors of the corporations who attended either consented to or did not oppose the appointment. The Court noted that the bankruptcy judge did not give written or oral reasons beyond what he stated while conducting the oral hearing. But viewed contextually, his rulings at the oral hearing served, and fulfilled, the function of reasons.

The Court held that G. B.’s third ground of appeal came from the fact that, toward the conclusion of the hearing, another party (not G. B.) raised a point that the bankruptcy judge asked counsel for Heliotrope to address by adding language to the proposed form of order. G. B. did not, however, point to any error in the language of the order that resulted, nor to how he was affected by it. In the absence of any prejudice or alleged error, there was no prima facie merit to this ground of appeal.

Lastly, the Court held that G. B.’s fourth ground of appeal was something to be addressed by a further attendance before the bankruptcy judge, rather than an appeal. Indeed, at the hearing of this motion, G. B.’s counsel advised that at a recent hearing before the bankruptcy judge, orders were made to address this concern.

A.A. v. Z.M., 2024 ONCA 768

[Nordheimer J.A. (Motions Judge)]

Counsel:

M. Mehra and A. Medhekar, for Z.M.

M. J. Stangarone, T. Guo and S. Kabir, for A.A.

facts:

This matter was concerning a family who travelled to Canada for a vacation on visitor visas, where Z.M. (“the mother”) expressed her unilateral wish for the family to remain in Canada permanently by seeking asylum here. A.A. (“the father”) opposed. The parties argued with each other, leading to the mother calling the police, and the father being criminally charged. In these proceedings, the mother caused numerous delays in the hearings, with her 3^rd request for an adjournment was denied by the motion judge. The father was successful in obtaining an order requiring the child to be returned to Bangladesh. The mother appealed this order.

There were two motions before the Court. The mother brought a motion to stay the order that, among other things, ordered the return of the child of the marriage to Bangladesh. The mother also sought an order initializing the proceeding (use initials rather than full names in the style of cause) and granting a limited publication ban. The father brought a motion for an order requiring the mother to post security for costs for her appeal.

issues:

Should the Court grant the motion to stay the order?
Should the Court grant the motion to initialize the proceedings?
Should the Court grant the motion for the applicant to post security for costs?

holding:

Motions to stay and for security for costs dismissed. Motion to initialize proceedings allowed.

reasoning:

Before addressing the test for staying an order, the Court rejected the submission by the mother that a refugee claim would stay the return order until the refugee claim is determined, even if there was no merit, as per A. (M.A.) v. E. (D.E.M.). The Court distinguished A. (M.A.) from this case, stating that the decision in A. (M.A.) did not stand for the blanket proposition that where a refugee claim is made, the court is without jurisdiction to exercise its authority under the CLRA.

The Court also addressed the issues surrounding the “best interests” of the child. Since allowing this submission would have effectively required the child to stay in Canada until the refugee claim concluded, this could mean spending more time in a foreign country than their home country. The current status of the child living in a shelter with no support structure was problematic, particularly where return to Bangladesh would provide a home, steady income, and supportive relatives.

Finally, the Court applied the test to stay the order, which requires a (1) serious issue, (2) irreparable harm to the applicant, and (3) the balance of convenience favouring the applicant. First, the Court noted the threshold for a “serious issue” was very low and accepted that this appeal raised a serious issue. However, the Court did not find that the mother would suffer irreparable harm. The mother was not subject to the return order to Bangladesh, and so she could remain here as a refugee and seek custody of the child through the Bangladesh courts. Additionally, the father had undertaken to return the child to Ontario if the appeal was successful, and this could have been enforced by the Bangladesh courts. Third, the child was born in Bangladesh, had only known that country, and had support and security there. The balance of convenience favoured her return. Accordingly, the Court found that the mother did not meet the test for a stay and dismissed this motion.

2. Yes.

The Court granted the order permitting parties to use their initials based on the recognized exception to the open courts principle where the interests of children are involved.

3. No.

The Court dismissed the motion for security on costs on the basis that, while there were concerns over the merits of the appeal, this did not disentitle the mother from pursuing it. Requiring her to post security would preclude her from doing so, as she had no assets in Ontario.

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.

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