Canada: Ontario Court Of Appeal Summaries (October 2 – October 6, 2017)

Good evening.

Below are the summaries of this week's civil decisions of the Court of Appeal for Ontario.

In an insurance coverage decision in Reeb v. The Guarantee Company of North America, the Court held that there was a conflict of interest on the part of counsel for the insured who had been appointed by the insurer because the insurer would have benefited financially if the decision below was affirmed and the appeal was dismissed. Independent counsel was therefore required who did not take instructions from the insurer. On that ground alone, the appeal was allowed. The court appointed amicus curiae to assist with submissions on having new counsel appointed for the insured and on the issue of the costs of the appeal.

In a lengthy and important decision in Sacks v. Ross, the Court reviewed the test for causation involving multiple tortfeasors in delayed diagnosis medmal cases. In addition, the court detailed the process regarding the formulation of jury instructions and questions.

The Court also released four family law decisions. In Smith v. Smith and Moses Estate v. Metzer, the issue was the enforceability of cohabitation agreements.

In Fiorito v. Wiggins, the Court affirmed the lifting of the automatic stay of proceedings arising out of the wife's bankruptcy under section 69.4 of the Bankruptcy and Insolvency Act in order to allow a father to enforce a significant cost award against her RRSPs, even though RRSPs are exempt property and do not form part of a bankrupt's estate available to unsecured creditors. While there were compelling facts in support of the father in this case based on the conduct of the mother, this might be an example of "bad facts making bad law". The decision opens the door to unsecured creditors getting around the BIA exemption of RRSPs as property available to creditors of a bankrupt estate. In support of its decision, the court noted that while RRSPs are exempt property in bankruptcy, they are not exempt from seizure under the Execution Act. Following this line of reasoning, it may be open to any unsecured judgment creditor with sympathetic facts to attempt to move to lift the stay in order to pursue RRSPs.

In Slate Management Corporation v. Canada (Attorney General), the court dismissed an appeal from a rectification order that unwound a tax driven amalgamation as moot because CRA had not sought leave to stay the rectification order pending appeal.

Other topics covered included contracts and adverse possession.

Happy Thanksgiving.

Civil Decisions

Patel v. Borges, 2017 ONCA 761

[Hourigan, Brown and Roberts JJ.A]

Counsel:

L Menon and D Paul, for the appellant

R Piehler, for the respondent

Keywords: Real Property, Mortgages, Enforceability, Spousal Consent, Consideration

Facts:

The appellant brought an action to enforce a mortgage registered against a residential property solely owned by the respondent. The respondent's spouse, who had been borrowing large sums of money from the appellant, signed a promissory note agreeing to register a mortgage against the property in the appellant's favour as security for the loans. However, the respondent testified that she understood that the mortgage was to replace an existing second mortgage and not as a third mortgage to secure her husband's debts. She submitted that the mortgage was unenforceable as she received no consideration. The trial judge dismissed the appellant's action, finding that the respondent received no consideration for the mortgage and that the purpose of the mortgage was to pay off the existing second mortgage and not to secure the loans made to the respondent's spouse. The appellant submits that the trial judge erred in finding that the respondent received no consideration for the mortgage and that the purpose of the mortgage was to pay off the existing second mortgage.

Issues:

(1) Did the trial judge err in finding that the respondent received no consideration for the mortgage?

(2) Did the trial judge err in finding that the purpose of the mortgage was to pay off the existing second mortgage?

Holding: Appeal dismissed.

Reasoning:

(1) No. The trial judge conducted a thorough review of the evidence and his findings were open to him on the record. The mortgage commitment stated that the security sought was a second mortgage and the respondent signed an acknowledgment and a solemn declaration to that effect.

(2) No. The new mortgage was only in the amount of $165,000 and the existing second mortgage had a balance of $203,000. The trial judge specifically considered this issue. He accepted the respondent's evidence that she believed that the amount advanced would be sufficient to discharge the existing second mortgage once certain unreasonable charges in the discharge statement were resolved and removed.

Smith v Smith, 2017 ONCA 759

[MacFarland, Watt and Benotto JJ.A.]

Counsel:

P D Marshall, for the appellant

S Klotz and J Klotz, for the respondents

Keywords: Family Law, Cohabitation Agreements, Setting Aside, Divorce Act R.S.C., 1985, c. 3 (2^nd Supp.), Miglin v. Miglin, 2003 SCC 24

Facts:

The parties are husband and wife. Before their marriage, they signed a cohabitation agreement whereby the wife released her claims to spousal support. Upon separation, the wife sought to claim spousal support. The trial judge upheld the cohabitation agreement and dismissed her claim. The wife alleges that the trial judge erred in upholding the cohabitation agreement because the release of support does not meet the provisions of the Divorce Act R.S.C., 1985, c. 3 (2^nd Supp.).

Issue:

Did the trial judge err in upholding the cohabitation agreement?

Holding:

Appeal dismissed.

Reasons:

No. In Miglin v. Miglin, 2003 SCC 24, the Supreme Court set out a two-stage analysis to be applied in dealing with initial applications for spousal support in the face of a release. The first stage is subdivided into two parts and considers: (1) the circumstances surrounding the negotiation and execution of the agreement to determine whether there is any reason to discount it; and (2) a consideration of the substance of the agreement to determine whether it is in substantial compliance with the general objectives of the Divorce Act. The second stage requires the court to consider whether, at the time of the application, the applicant has established that the agreement no longer reflects the original intention of the parties and whether the agreement is still in substantial compliance with the objectives of the Divorce Act.

The objectives of the Divorce Act include "certainty, finality and autonomy." Subsection 15.2(6) of the Divorce Act provides that a spousal support order should: (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses financial consequences arising from childcare over and above any obligation for the support of the child; (c) relieve any economic hardship of the spouse arising from the breakdown of the marriage; and (d) in so far as practicable, promote economic self-sufficiency of each spouse.

The wife argues that there was a power imbalance between her and the husband, she had not discussed spousal support with the husband, the financial disclosure was incomplete, the trial judge misconstrued the evidence when he said that her income at the date of the agreement was $70,000, and she did not have independent legal advice.

The Court found that the trial judge properly considered the Miglin test, there was no error of law or misapprehension of fact on the part of the trial judge, and therefore the appeal was dismissed.

Sickinger v. Sickinger, 2017 ONCA 7640

[Brown J.A.]

Counsel:

B Ludmer, for the moving party
G Smith, for the responding party

Keywords: Family Law, Civil Procedure, Appeals, Administrative Dismissal, Setting Aside

Facts:

The moving party husband and the responding party wife married in 1991 and entered into a separation agreement in 2007. Divorce was granted in 2008. They have three children, now ranging in age from 17 to 23 years old.

In 2009 the husband brought a motion to change which ultimately resulted in the March 20, 2012 final order of Perkins J that all three children reside with the wife.

In April 2014 the husband commenced the present motion to change. Extensive case conferencing ensued.

After multiple adjournments, the motion to change initiated by the moving party in April 2014 finally was heard almost three years later in February 2017 by McWatt J. The husband was in serious default in payment of support and in making financial disclosure. The motion to change was dismissed.

The husband appealed but failed to perfect the appeal on time, even after being notified by the Court of Appeal that it would be summarily dismissed if he did not perfect on time. As a result, the appeal was administratively dismissed. The husband moved to set aside the administrative dismissal.

Issues:

(1) Should the motion to set aside an order dismissing the appeal be granted?

Holding:

Motion denied.

Reasoning:

(1) No. The overriding consideration on a motion to set aside an order dismissing an appeal is the justice of the case, which entails a consideration of the merits of the appeal: Akagi v. Synergy Group (2000) Inc., 2014 ONCA 731, at para. 8. In addition, factors analogous to those typically considered on a motion to extend the time to appeal inform a request to set aside the administrative dismissal of an appeal: (i) the explanation for not perfecting the appeal within the time stipulated by the rules; (ii) the length of and explanation for the delay in moving to set aside the administrative dismissal; and (iii) prejudice to the respondent.

More justification must be shown by a party moving to aside an administrative dismissal of an appeal than would have been required had the party earlier availed itself of its rights to move for an extension of time to perfect the appeal: Langer v. Yorkton Securities Inc. (1986), 57 O.R. (2d) 555 (C.A.), at para. 14.

The record strongly suggests the husband is delaying the preparation of the materials needed to perfect his appeal. It is also clear from the evidence that the husband was fully aware of his obligation to perfect the appeal in a timely fashion and the possibility of its dismissal for delay. In any event, the husband knew by May 19, 2017, that a notice of intention to dismiss had been issued by the court requiring perfection of his appeal by May 16 yet he did not try to perfect it.

Also, even though the husband's appeal was dismissed on May 23, 2017, the he did not file his motion to set aside the dismissal order until three months later on August 24, 2017. None of the reasons he offers for this delay provide a reasonable explanation. Instead, they disclose a persistent strategy of foot-dragging by the husband. His grounds of appeal have little merit.

The wife submits that she would be prejudiced if the dismissal order is set aside. She states arrears now exceed $100,000, and that she "ought not be required to continue in litigation in which the husband has refused to abide by the court process." This was accepted by the court.

Fiorito v. Wiggins, 2017 ONCA 765

[Laskin, Feldman and Miller JJ.A.]

Counsel:

B Jaffe, for the appellant

B Ludmer, for the respondent

Keywords: Family Law, Bankruptcy and Insolvency, Lifting Automatic Stay of Proceedings, Bankrupcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 69.4, Property of the Bankrupt, Exempt Property, RRSPs, Material Prejudice, Equitable Grounds, Execution Act, R.S.O. 1990, c. E.24, Orders, Security for Performance, Family Law Act, R.S.O 1990, c. F. 3, ss. 9, Schreyer v. Schreyer, 2011 SCC 35

Facts:

The parties were involved in years of custody and access litigation for their two daughters after their separation in 2008. They entered into minutes of settlement whereby the mother had custody of the girls with substantial access to the father. However, the mother did not comply with the access provisions of the settlement. The mother was found to be in contempt and was sentenced to six months' probation. Custody of the children remained with the mother, but she was required to grant access to the father in accordance with the order. The children were found to be in need of protection. There was to be a review of the custody and access order in six months' time.

Upon review, Justice Harper found that although the ordered access was occurring, the children refused to interact with the father and were rude and disrespectful to him and his new wife. As a result, he granted custody of the children to the father with access to the mother only during weekly sessions with the children's therapist. The mother could bring a change motion if she was able to demonstrate that she would promote a loving relationship between the children and both parents. Costs in the amount of $400,000 were awarded to the father for the 2011 and 2013 proceedings.

However, on appeal in October 2015, the Court set aside the contempt finding as there was no outstanding order at the time to be the subject of contempt, ordered another access review to be held by February 2016, and reduced the costs award to $200,000.

In January 2016, the father brought a motion for the purpose of obtaining or ensuring payment of the $200,000 costs award. He wanted security as a condition of proceeding with the review hearing. The court made a temporary order, on consent, that:

(i) the mother produce to the father copies of all bank and investment statements;

(ii) the mother produce to the father financial and accounting records for her corporation;

(iii) examinations be held according to a stated timetable; and

(iv) pending the return of the motion, the mother was restrained from disposing of her RRSP's and from dissipating assets.

On that motion, the mother filed evidence swearing that she intended to pay the awarded costs and denied a suggestion in the evidence submitted on behalf of the father that she intended to file for bankruptcy after the review to thwart the father's claim.

On the review hearing, the father brought a motion requesting the assistance of the court in enforcing the costs award by garnishment against the financial institutions where the mother had registered assets. The motion was never heard, as the mother made an assignment into bankruptcy on February 22, during the review hearing.

The current appeal is in relation to a subsequent motion brought by the father for an order annulling the bankruptcy or, alternatively, lifting the stay under s. 69.4 of the Bankruptcy and Insolvency Act (the "BIA"), and authorizing the father to continue his enforcement of the costs award against the mother's registered assets.

The motion judge determined that the father was entitled to have the stay lifted, based on three factual findings:

(i) this was an extreme case of one parent undermining the other parent with the children during eight years of litigation in which the father was trying to have a relationship with his children;

(ii) the Court of Appeal determined that the mother should pay the father $200,000 in costs for the two trials before Harper J., but she had paid nothing; and

(iii) when the court restrained the mother from disposing of her RRSP's or dissipating assets and allowed the review hearing to proceed without the payment of the costs award, the court and the father relied on the mother's representations in her affidavits that she intended to pay the costs and that she did not intend to thwart that payment by making an assignment into bankruptcy.

Issues:

(1) Did the motion judge err in law by lifting the stay under s. 69.4 of the BIA in order to allow the enforcement of a family law costs award?

(2) Did the motion judge err in law by misapprehending the meaning of "prejudice" and of "equitable" under s. 69.4 of the BIA?

(3) Did the motion judge misapprehend the evidence regarding whether the father would receive any payment towards his costs award in the bankruptcy?

Holding: Appeal dismissed.

Reasoning:

(1) No. The appellant relies on the Supreme Court of Canada case of Schreyer v. Schreyer, 2011 SCC 35. In that case, the husband made an assignment into bankruptcy without giving notice to the wife, who had an equalization claim under Manitoba family law legislation. He was also discharged without notice to her, thereby releasing him from her claim. However, the husband owned a farm, which was exempt from execution by creditors under s. 13 of Manitoba's The Judgments Act and could not be disposed of by the trustee in bankruptcy for distribution to creditors. Speaking for the court, LeBel J. stated that the appropriate remedy for the appellant would be to apply for leave to pursue a claim against the exempt property pursuant to s. 69.4 of the BIA. Lifting the stay of proceedings cannot prejudice the estate assets available for distribution. This procedure would allow bankruptcy law to maximize returns to the family rather than focusing on the needs of the bankrupt.

The appellant submits that LeBel's comments apply only to an equalization payment, not to custody cost awards. Her argument hinges on what she submits is a necessary link between a lift-stay order and a spouse's ability, before bankruptcy, to obtain an order granting a proprietary interest in the other spouse's property under s. 9(1) of the Family Law Act (FLA).

In Schreyer, LeBel J. explained that the only way Ms. Schreyer's equalization claim would not have been extinguished by Mr. Schreyer's discharge from bankruptcy was by obtaining an order lifting the stay so she could pursue a proprietary remedy under s. 17 of the Family Property Act of Manitoba. The appellant therefore submits that the lift-stay remedy is only applicable where the debtor spouse is then able to obtain a proprietary interest in exempt assets in pursuit of an equalization claim.

The Court rejected this submission, distinguishing the facts of Schreyer from those of the present case. In Manitoba, a farm property is exempt from execution by creditors. As a result, a proprietary order would have been necessary to allow a spouse to realize on such property outside bankruptcy. By contrast, in Ontario, outside of bankruptcy, RRSP's are not exempt from execution by creditors, as they are not a class of property specified under the Execution Act. Therefore no order under ss. 9(1)(b) or (d) of the Family Law Act is necessary to allow a spouse to execute any debt against an RRSP belonging to the other spouse. However, once a spouse makes an assignment into bankruptcy, that spouse's RRSP's become exempt property. Accordingly, the lift-stay remedy allows the creditor spouse to execute any debt against RRSP's; they are only exempt under the bankruptcy regime, not under the provincial property and creditor's rights laws.

Schreyer does not suggests that the equitable considerations for allowing a spouse to obtain the lift-stay remedy to execute against exempt or protected assets of the other spouse are limited to enforcing an equalization claim and would not apply, in appropriate circumstances, to a costs award arising out of protracted family litigation.

The Court highlights LeBel J.'s identification of maximizing returns to the family unit as a whole, not just the bankrupt, as a policy objective of bankruptcy law in Schreyer. This is the effect of lifting the stay and allowing the creditor spouse, where it is equitable to do so, to realize against exempt assets of the bankrupt spouse, which are not available to other creditors in the bankruptcy.

(2) No.

(A) Material Prejudice

The Court finds that while differential treatment may justify a finding of material prejudice, it is not a necessary factor. Material prejudice can arise from the size of the debt and the expected loss. In this case, the motion judges' three factual findings of: (i) the need for the father to pursue lengthy custody and access litigation in order to have any relationship with his children; (ii) the mother's failure to pay anything toward the costs ordered by the Court of Appeal; and (iii) the fact that the mother thwarted the enforcement of the costs award by reneging on assurances she made to the court about her intent to pay the costs and not use bankruptcy to thwart that payment, ground the finding of prejudice.

69. 69.4(a) also requires that the material prejudice be related to the "continued operation" of the stay. The motion judge was entitled to find that the father would "in all likelihood, receive nothing" absent a lifting of the stay.

(B) Equitable Grounds

Under s. 69.4, courts have a broad discretion based on the particulars of the case in a finding of equitable grounds. It was within the motion judge's discretion to take into account the circumstances regarding the background to the debt, particularly in the context where other creditors would not be affected by the order being sought. Although the appellant characterizes her decision to make an assignment into bankruptcy in the midst of the review hearing as a "change in [her] intention", there is no explanation on the record for that change. In addition, since the respondent would be enforcing the costs award against exempt assets in the bankruptcy, other creditors would not be affected.

(3) No. The motion judge's finding was reasonable based on the appellant's statement of affairs. Although it is open for any creditor to oppose the discharge of the bankrupt, there is no guarantee that any order will be made or that any funds will be available. Any potential increase in the value of the home is purely speculative.

Regardless, the bankruptcy regime includes s. 69.4 and the ability of the court to lift the stay in favour of a particular creditor in prescribed circumstances. The use of that provision in these circumstances is based on sound reasons consistent with the scheme of the BIA to relieve against the automatic stay.

Moses Estate v. Metzer, 2017 ONCA 767

[Hoy A.C.J.O., Huscroft and Paciocco JJ.A.]

Counsel:

S Morris and J Adair, for the appellant

I Ellyn and R Kniznik, for the respondent

Keywords: Family Law, Property, Cohabitation Agreements, Setting Aside, Family Law Act, ss. 56(4), Dochuk v. Dochuk (1999), 44 RFL (4th) 97

Facts:

The applicant and deceased respondent (represented by the deceased's estate) were in a common law relationship, but separated prior to the deceased respondent's death. The couple signed a cohabitation agreement in 2007, which stated that the rights of ownership would govern property division, the parties waived any claims to beneficial ownership, they agreed to deal with their property as though they were unmarried, and they specifically waived rights to the property of the other. At trial, the respondent claimed either a constructive or resulting trust interest in a property which the appellant alone held title, or an order setting the relevant clauses of the cohabitation agreement. The trial judge found that though never formalized, a property development agreement (the "PDA") existed between the former spouses, and that this agreement and not the cohabitation agreement governed the property. As evidence of the PDA, the trial judge relied upon the appellant's testimony and letters sent between the parties. The trial judge found that the PDA was not an enforceable agreement to amend the Cohabitation Agreement because it was not in writing, signed by the parties, and witnessed, as required by s. 55(1) of the Family Law Act, R.S.O. 1990 ("FLA"). However, relying on s. 56(4)(b) of the FLA, the trial judge set aside the Cohabitation Agreement as it applied to the properties. The trial judge granted an award in favour of the respondent for amounts owed under the PDA.

Issues:

(1) Did the trial judge err in setting aside the Cohabitation Agreement, only as it applied to the development properties?

(2) Did the trial judge err in not setting aside the whole Cohabitation Agreement, including the waiver of support clause?

(3) Did the trial judge err in calculating the amount owing under the terms of the PDA?

Holding: Appeal dismissed.

Reasons:

(1). Yes, in part. Section 56(4) of the FLA permits a court, on application, to set aside a domestic contract or a provision for a number of reasons, including if a party did not understand the nature or consequences of the domestic contract. In applying this section, the trial judge employed the two part test set out in Dochuk v. Dochuk (1999), 44 RFL (4th) 97. First, the party seeking to set aside all or part of a cohabitation agreement must demonstrate that one of the circumstances listed in s. 56(4) has been engaged. Next a court should consider whether it is appropriate to exercise discretion in favour of setting aside the agreement or a provision within it. On the first step, the trial judge correctly concluded that neither side fully understood the consequences of the Cohabitation Agreement with regard to the properties. Next, the trial judge justifiably set aside the agreement, stating that to do otherwise "would be a failure of justice." This decision was based on detailed factual findings that were supported by the record.

However, the court did find that the trial judge erred in setting aside the property waiver clause of the Cohabitation Agreement only as it related to the development properties. Section 56(4) permits a court to set aside a contract or provision in its entirety. It does not permit a court to amend a domestic contract by holding that it does not apply to certain assets. Therefore, the entirety of the relevant clauses in the cohabitation agreement were set aside. The respondent was entitled to the return of the deceased spouse's investment in the property and half of the profits from the sale of that property.

(2). No. This finding was open to the trial judge, and she reached it with reasonable basis, including the respondent's receipt of cash gifts and income from the properties. There was no finding that the parties did not understand or did not intend any aspect of the spousal support waiver.

(3). No. The trial judge relied on an expert report that was supported by other evidence in calculating the amount owing under the terms of the PDA.

Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766

[Hourigan, Roberts and Nordheimer JJ.A.]

Counsel:

R Swaine, for the appellant

C Salazar, for the respondent

Keywords: Contracts, Oral Contracts, Summary Judgment

Facts:

This case involves an oral agreement between the parties regarding the sale and installation of Shaw Cable packages in Ontario. The motion judge found that the appellants, Mobile Zone Inc., Mohammad Shahzad, and Swati Damle, were in breach of the agreement and had misappropriated funds owing to the respondents, Net Connect Installation Inc., under the agreement. He further found that the appellants owed monies to the respondents pursuant to loans made by the respondents.

The appellants appeal an order granting summary judgment to the respondents for damages and other related relief. The appellants also seek leave to appeal the full indemnity costs award made against them in the amount of $144,991.

Issues:

(1) Did the motion judge err in finding that the agreement was not a joint venture?

(2) Did the motion judge err in finding that the appellants breached the agreement?

(3) Did the motion judge err in finding that the agreement was not varied by further agreements made in March and November 2013?

(4) Did the motion judge err in finding that one of the appellants, Swati Damle, impermissibly dissipated her assets?

(5) Did the motion judge err in awarding judgment to a non-party?

Holding: Appeal dismissed, subject to one amendment to judgment below.

Reasoning:

(1) No. The Court found that the motion judge conducted a very thorough review of the evidence regarding the contractual arrangements entered into by the parties. Specifically, in reaching the conclusion that the parties were not engaged in a joint venture, the motion judge found that there was no common undertaking, no mutual control, and no expectation to share in profits. These findings were available on the record.

(2) No. The appellants' argument that there had been a breach of the agreement is premised on the incorrect notion that the parties were engaged in a joint venture.

(3) No. The motion judge's finding that there had not been variations to the agreement in March and November 2013 were available to him on the record and the appellants have not identified any error with that finding.

(4) No. With respect to the finding that Ms. Damle impermissibly dissipated her assets, the evidence established that she sold and encumbered properties during the course of these proceedings. Regardless, this was only one factor that the motion judge relied upon in support of his costs award. The Court declined to grant leave to appeal costs.

(5) Yes. The Court held that the motion judge erred in making his damage award in favour of all of the respondents, as only the corporate litigants were parties to the agreement. Accordingly, the Court ordered that the judgment be varied to remove the non-parties.

Slate Management Corporation v. Canada (Attorney General), 2017 ONCA 763

[Hoy A.C.J.O., van Rensburg and Roberts JJ.A.]

Counsel:

G R Hall and R MacIsaac, for the respondent

C Akey and D Aird, for the appellant

Keywords: Corporations, Tax Law, Amalgamations, Business Corporations Act, R.S.O. 1990, c. B.16, s. 183, Income Tax Act, R.S.C. 1985, s. 87 (11), Mistake, Rectification, Nunc Pro Tunc, Fairmont Hotels Inc. v. Canada (Attorney General), 2016 SCC 56, [2016] 4 S.C.R. 720, TCR Holding Corp. v. Ontario, 2010 ONCA 233, Norcan Oils Ltd. v. Fogler, [1965] S.C.R. 36, Civil Procedure, Appeals, Mootness, Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342

Facts:

On January 1, 2015, three subsidiaries of Slate Asset Management LP amalgamated under the Business Corporations Act, R.S.O. 1990, c. B.16, in a single step. SLAM intended to increase the cost amount of the real estate owned by Huntingdon Capital Corp., one of its amalgamating subsidiaries – obtaining what is colloquially referred to as a "tax bump" – through the amalgamation. Increasing the cost amount of the properties would reduce the amount of capital gains tax payable on any subsequent disposition.

SLAM later learned that it had not achieved its intended tax outcome because it amalgamated the three subsidiaries in a single step. Under s. 87(11) of the Income Tax Act, R.S.C. 1985, a "bump" is only available on an amalgamation where a parent amalgamates with one or more of its wholly owned subsidiaries.

On June 9, 2016, Slate (the corporation resulting from the amalgamation of the three subsidiaries) applied for a rectification order. By order dated June 27, 2016, the application judge granted the relief Slate had requested, including approving a plan of arrangement under the OBCA deeming the initial amalgamation not to have occurred and the required two-step amalgamation to have occurred on January 1, 2015, nunc pro tunc; and directing the Director under the OBCA to cancel the certificate of amalgamation in respect of the initial amalgamation and endorse the Articles of Arrangement pursuant to s. 183 of the OBCA with a certificate dated January 1, 2015.

On July 26, 2016, the Attorney General served a notice of appeal of the rectification order. However, it did not seek a stay of the rectification order pending appeal. On August 2, 2016, the plan of arrangement was implemented. This was more than five weeks after the application judge granted the rectification order.

On December 9, 2016, the Supreme Court of Canada released its decision in Fairmont Hotels Inc. v. Canada (Attorney General), 2016 SCC 56, overruling the test for rectification applied by the application judge, and clarifying the test for rectification in a tax context. The AG appeals the rectification order, arguing that Slate does not meet the test in Fairmont, and that the rectification order should be set aside. It seeks an order cancelling the certificate of arrangement and reinstating the certificate of amalgamation issued on January 1, 2015.

Issue:

Did the application judge err in issuing a rectification order to Slate?

Holding: Appeal quashed.

Reasoning:

No. The appeal was quashed as moot. While commercial certainty is important, it is also important that courts be able to relieve persons from the effect of their mistakes. In TCR Holding Corp. v. Ontario, 2010 ONCA 233, this court held that an application judge has equitable authority to set aside an amalgamation nunc pro tunc based on the Superior Court's equitable jurisdiction to relieve persons from the effect of their mistakes.

In the court's view, if there is authority to direct the Director to cancel a certificate of amalgamation and endorse the Articles of Arrangement nunc pro tunc with a certificate dated January 1, 2015 incident to a rectification order, then there is authority to order the Director to cancel that certificate of arrangement and reinstate the certificate of amalgamation if it is determined on appeal that the applicant was not entitled to rectification. However, in the exercise of that authority, the court should be guided by the principle in Norcan Oils Ltd. v. Fogler, [1965] S.C.R. 36. In the court's view, where, as here: (1) the Director under the OBCA issues a certificate pursuant to a rectification order; (2) the appellant could reasonably have sought a stay of the rectification order pending appeal; (3) the court is not satisfied that no third party acted, directly or indirectly, in reliance on the certificate issued pursuant to the rectification order and would not be prejudiced by its revocation; and (4) there are no special circumstances which justify exercising the power to cancel the certificate, thereby undermining certainty in a court-approved corporate fundamental change, the principle in Norcan requires the court to decline to exercise its authority to order the revocation of that certificate or otherwise unwind the court-approved corporate fundamental change.

While the AG is correct that the relief requested would not undermine third party reliance on the existence of the amalgamated company (as was the case in Norcan), Slate has provided evidence that third parties have relied on the financial consequences of the plan of arrangement implemented pursuant to the rectification order. The evidence of Slate's General Counsel that third parties indirectly relied on the certificate of arrangement was not challenged through cross-examination and the AG did not provide any evidence to contradict it. It is not disputed that the financial impact of the "bump" achieved through the plan of arrangement is material to Slate. It is reasonable to think it may also have been significant to the lender which increased the credit extended to Slate.

Finally, fraud is not alleged and there are no other special circumstances which justify exercising the power to cancel the certificate of arrangement. Because Norcan, properly interpreted, would not permit the court to give effect to a decision that Slate fails to meet the test for rectification in Fairmont, this appeal is purely academic.

Once a court determines that an appeal is moot, it is necessary to decide whether the court should nonetheless exercise its discretion to hear the case: Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342, at p. 353. Three factors are relevant in determining whether a court should entertain a moot appeal: (i) the presence of an adversarial context that will ensure that the issues are well and fully argued; (ii) concern for judicial economy; and (iii) awareness of the court's proper law-making function: Borowski, pp. 358-363.

Considering these factors, the court was not persuaded that it should exercise its discretion to hear the appeal. While the appeal involves two sophisticated parties represented by counsel and its resolution would not intrude on the role of the legislative branch of government, the second factor weighs heavily against hearing it. There are no special circumstances in this case that justify the use of scarce judicial resources to resolve the appeal: it will not have a practical effect on the rights of the parties; it does not entail an important issue that might independently evade review or of which a resolution is in the public interest; and the appeal is not of jurisprudential importance. It concerns the application of the recently revised test for rectification to very particular facts. As a result, there is no social cost in leaving the matter undecided.

Reeb v. The Guarantee Company of North America, 2017 ONCA 771

[Sharpe, Lauwers and Roberts JJ.A]

Counsel:

B R Mitchell, for the appellant

J M K Garrett, for the respondent

Keywords: Insurance Law, Coverage, Solicitor and Client, Conflict of Interest, Hoang v. Vicentini, 2015 ONCA 780, Amicus Curiae

Facts:

This is an appeal from the dismissal of an application for a declaration that the appellant, Ryan Reeb, is an insured under two policies issued by the respondent insurers. James Riley and Ryan Reeb ("Reeb") (both 14) were playing with pellet guns at Riley's house. Reeb shot Riley who lost an eye. The underlying action is by James Riley against Ryan Reeb and his parents. Reeb's parents were separated at the time of the incident. The mother had a homeowner's insurance policy that had third party liability limit of $1 million. The claim was for $1.5 million. The insurer appointed counsel to defend Reeb. The insurer was represented by another firm with regards to coverage. Reeb's counsel brought an application for a declaration that Reeb is insured under two additional policies. The first policy was that of Reeb's father and the second was that of the second wife of Reeb's father. These insurers are the respondents in this matter.

The motion judge dismissed the application to provide coverage under the respondents' policies on the grounds that coverage was excluded by the "intentional act" exclusion clause in those policies. Reeb appealed. If this appeal fails, Reeb will not be entitled to coverage under the respondents' policies. Moreover, it is likely that this will also eliminate coverage under the mother's policy, which has a similar "intentional act" exclusion.

The Court raised with the parties whether the Reeb's counsel was in a conflict of interest, as he was being instructed and paid by the mother's insurer to defend Reeb, but if the appeal fails, it will be to that insurer's financial advantage.

Issue:

Is there a conflict of interest?

Holding:

Appeal allowed.

Reasons:

Yes. When a lawyer is retained by an insurance company to represent its insured, a conflict of interest may arise where the interests of the insurance company and the insured are not in alignment. In Hoang v. Vicentini, 2015 ONCA 780, the Court of Appeal recently reiterated the criteria to be considered when determining whether there is a conflict of interest between an insured and his insurer with respect to the insured's legal representation. The balance is between the insured's right to a full and fair defence of the civil action against it and the insurer's right to control that defence because of its potential ultimate obligation to indemnify. That balance is appropriately struck by requiring that there be, in the circumstances of the particular case, a reasonable apprehension of conflict of interest on the part of counsel appointed by the insurer before the insured is entitled to independent counsel at the insurer's expense.

Here, there is a reasonable apprehension of a conflict between the interests of Reeb and the insurer. The apprehension of a conflict precludes the Court from ruling on the merits of the appeal. Reeb ought to have had independent counsel who did not report to or take instructions from the insurer to advise him on the advisability of bringing the underlying application in the face of a settlement offer, and representing him on this appeal. The appeal was therefore allowed on this ground alone. The Court then invited submissions as to what should happen next. It ordered that independent counsel should be appointed for Reeb. It also appointed amicus curiae to assist with submissions on Reeb's future representation and the costs of the appeal.

Beffort v. Zuchelkowski, 2017 ONCA 774

[Sharpe, Blair and Epstein JJ.A.]

Counsel:

M Z Tufman and G A P Tufman, for the appellants

J S G MacDonald, for the respondents

Keywords: Real Property, Adverse Possession, Fresh Evidence

Facts:

Ownership of a strip of land abutting two properties was disputed. The plaintiffs were awarded adverse possession at trial. The defendant appealed.

Issues:

(1) Did the trial judge err in finding that the respondent had established adverse possession?

(2) Did evidence from the president of a photogrammetric mapping company meet the test for the admissibility of fresh evidence on appeal?

Holding: Appeal dismissed.

Reasoning:

(1) No. The trial judge gave detailed reasons for accepting the evidence pled by the respondents, that for the relevant 10-year period prior to the land being converted to the Land Titles system, their predecessors in title had adversely possessed the disputed strip. The evidence established that a chain fence divided the lands, and had incorporated the strip of land into the area owned by the respondents. It was reasonable to reject the evidence of one of the prior owners, who testified that the chain link fence was not present when they owned the land. The trial judge did not err in finding that a statutory declaration relied upon by the appellants reflected a mutual mistake of all parties at the time that the chain link fence was the boundary.

(2) No. The fresh evidence was filed late without sufficient explanation. Further, the fresh evidence was not sufficiently reliable to overcome the direct evidence of the various witnesses and the contemporary photographs already submitted.

Sacks v. Ross, 2017 ONCA 773

[Lauwers, Hourigan and Benotto JJ.A.]

Counsel:

G MacKenzie and B MacKenzie, for the appellants

F McLaughlin, D E Charach and L Stanic, for the respondents Theodore Ross, Aliyah Kanji, Anna Maureen Bendzak and Jeffery Singer (the "respondent physicians")

A L Marrison, W D T Carter and J M McIntyre, for the respondents Sunnybrook Health Sciences Centre, Pamela Raye-Ilogu and X. Li (the "respondent hospital")

Keywords: Torts, Negligence, Medical Malpractice, Causation, Multiple Tortfeasors, Delayed Diagnosis and Treatment, "But For" Test, Juries, Instructions and Questions, Standard of Review

Facts:

The appellant, Jordan Sacks, suffered catastrophic injuries arising from complications after a routine bowel surgery. An anastomotic leak occurred after the surgery, spilling bowel contents into his abdominal cavity and sending him into septic shock. As a result, Mr. Sacks lost both legs below the knees, all of his fingertips and was in a coma for weeks following his emergency surgery.

At trial, the appellants asserted that the medical team's negligent delay in Mr. Sack's diagnosis and treatment at Sunnybrook Hospital caused his injuries. The responds argued that the delay was not material to the outcome of Mr. Sack's injury as he contracted a rare flesh-eating disease that could not have been diagnosed or treated when it first arose. Consequently, his injuries were unavoidable and not the result of anyone's breach of the standard of care.

The jury found that five of the defendants had breached their standard of care, however, it did not find that any of these breaches caused the injuries at issue. Therefore, the action was dismissed.

The appellants argued that the trial proceeded on a mistaken understanding of the appropriate causation test to be applied in a case of delayed diagnosis and treatment. The respondents submitted, to the contrary, that the trial judge did engage the correct causation test and formulated appropriate jury questions and instructions. The jury had before it two clearly opposed explanations of causation, and simply found the evidence and the arguments advanced by the respondents to be more persuasive.

This appeal concerns the proper test for causation in delayed diagnosis medical negligence cases involving multiple tortfeasors.

Issues:

(1) Did the trial proceed on a correct understanding of causation in negligence cases?

(2) Were the jury questions and the jury instructions on causation legally correct?

(3) Did any legal error in the jury questions or the jury instructions deprive the appellants of a fair trial?

Holding: Appeal dismissed.

Reasoning:

The Court held that the jury clearly and unambiguously accepted the defence evidence on the cause of the plaintiff's injuries. While the Court agreed with the appellants that the jury questions and instructions were problematic, the deficiencies in them did not affect the outcome.

The Court engaged with the "global but for" test issue in this appeal for two reasons. First, from the outset, the underlying question in this case was how to apply the "but for" test in cases of delayed medical diagnosis and treatment involving multiple defendant tortfeasors. Second, cases that engage jury questions, jury instructions and the causation test involving multiple tortfeasors do not often come to the Court of Appeal. Thus, the Court determined that it had a responsibility to consider the issues and to provide assistance to trial judges and counsel in such cases going forward.

(1) Yes. The Court outlined the workings of the "but for" test in various contexts.

(i) Simple Negligence Action: A simple negligence action is one in which a single defendant is alleged to have negligently done something that caused the plaintiff's injury. To succeed the plaintiff must prove both the defendant's breach of the standard of care and causation. The plaintiff must show on a balance of probabilities that "but for" the defendant's negligent act, the injury would not have occurred. In other words, the defendant's negligence must be necessary in causing injury to the plaintiff.

When the issue concerns an omission by the defendant rather than an action, the trier of fact is required to attend to the fact situation as it existed in reality the moment before the defendant's breach of the standard of care, and then to imagine that the defendant took the action the standard of care obliged her to take, in order to determine whether her doing so would have prevented or reduced the injury. Both types of simple negligence actions are factual inquiries.

(ii) The Causal Reasoning Process: Regardless of whether the defendant's breach of the standard of care is an act or an omission, the trier of fact's cognitive process in determining causation has three basic steps. The first is to determine what likely happened in actuality. The second is to consider what would likely have happened had the defendant not breached the standard of care. The third step is to allocate fault among the negligent defendants.

(iii) Negligence Actions Involving Multiple Defendants: The basic "but for" test also applies in these more complex cases where loss flows from a variety of negligence acts from different parties. The parties will be held to be jointly and severally liable and the judge apportions liability in relation to the degree of fault of each party.

(2) No. The appellants submitted that the jury instructions proceeded on the wrong legal understanding of causation in the context of a claim for delayed medical diagnosis and treatment against multiple tortfeasors. They asserted that a "global but for" test should have been applied. While the Court found errors in the jury questions, it found that using a "global but for" test for causation would not have resulted in a different verdict in this case. While the jury found five of the defendants breached the elements of their respective standards of care, it did not find that any of the breaches caused Mr. Sack's injuries.

The Court set out the governing principles for determining the jury questions and jury instructions, considered the trial judge's decision on the jury questions and instructions, and addressed the arguments of the parties.

(i) Civil Jury Questions

The jury is the trier of fact. Jury questions are intended to identify and track the findings of fact that must be made in a case. Jury questions should respond to the facts in issue and be logically sequential. They should be expressed as simply and clearly as possible. Jury questions should also be neutrally expressed and not contain any embedded assumptions. It is better if the questions can be answered in a "yes" or "no" format followed by a blank space in which the jury can insert a damages figure if it finds liability, and its reasons if called for. The jury's answers should permit the judge to complete the judgment.

The question to the jury with respect to negligence should require that the jury specify in what respects the defendant was negligent. In complex cases, counsel should be prepared to propose and discuss the questions during a case management meeting or at the trial management conference. A civil jury trial should start with a working set of jury questions to guide the court, subject to revision as the evidence unfolds.

(ii) The Trial Judge's Decision on the Jury Questions

To set the jury questions regarding causation, the trial judge cited the test prescribed by the Supreme Court. In Clements, McLachlin J. describes the test for loss that flows from different acts from various parties as follows:

The trial judge noted the distinction between the "but for" test for factual causation and the "material contribution to the risk of injury" test, but ultimately found this case not to be the exceptional one in which the material contribution test to determine cause-in-fact should be used. The trial judge also found that there was no compelling reason not to use the language in Clements and that the phrase "cause or contributed to" proposed by the plaintiffs would confuse the jury.

(iii) Civil Jury Instructions

The purpose of jury instructions is to explain to the jury what their role is in the trial and their corresponding duties. Jury instructions function to remind the jury as to the judge's opening remarks but also review the respective roles of the judge and the jury, the onus and burden of proof, the elements of the applicable law tailored to the case, how the jury ought to assess the evidence including credibility and expert evidence, and procedural instructions on how to deliberate. Jury charges usually contain statements of the positions of the parties prepared by them for inclusion in the charge.

The trial judge's duty is to be an educator and to instruct the jury on the law. The trial judge must balance the competing tasks of making the jury charge both comprehensive and comprehensible. At trial, the judge articulated the test for causation in language that echoed Clements:

In concluding her instructions on causation, the trial judge said to the jury:

In assessing the adequacy of a jury charge, the Court of Appeal must ask if the jury would have understood the issues of fact, the relevant legal principles, how the facts relate to the law, and the positions of the parties based on the trial judge's remarks.

A. The Causal Reasoning Process in Cases of Delayed Diagnosis and Treatment Against Multiple Tortfeasors: The normal causal reasoning process has three steps, as noted. First, the trier of fact must determine, on the evidence, whether the delay in treatment led to the plaintiff's injury, considering only what the plaintiff needed by way of timely diagnosis and treatment in order to avoid injury, and without considering the presence or absence of any breaches of the standard of care. Second, the trier of fact must determine what would likely have happened had the defendant not breached the standard of care. If an actual delay led to injury, the plaintiff must establish fault: there was a breach of the standard of care on the part of one or more of the defendants that caused or contributed to the delay in diagnosis and treatment. Third, the trier of fact is to allocate fault among the negligent defendants.

The analysis of the second and third steps requires the trier of fact to determine sequentially and separately with respect to each event in the chain of events leading to the plaintiff's injury, whether there was a breach of the standard of care on the part of one or more of the defendants that caused or contributed to the delay that led to the injury. The trier of fact, assisted by the trial judge and the parties, must separate for analytical purposes, the events in the flow, and apply the causal reasoning process to each event in sequence. The Court found that the jury charge did not provide such instructions.

B. Problems with Using the Clements' Wording of the "But For" Test in Jury Instructions: The appellants submitted that the jury was not asked to determine whether there was a delay in the diagnosis and treatment of the plaintiff's condition that caused his injuries, quite apart from any negligence, which is the first step in the causal reasoning process. The Court rejected this argument, noting that while it would have been preferable to have included a basic question to this effect in the jury questions, there is no doubt that in this case the jury was told the crux of the point.

The appellants further submitted that it was incorrect to ask the jury to determine whether the conduct of each defendant was necessary to bring about the plaintiff's injuries. The Court acknowledged that in delayed diagnosis cases involving multiple tortfeasors could present instances of "circular causation" in which the use of the word "necessary" could create confusion in the minds of the jury and lead to injustice. In such instances, it would be better if the word were not used in explaining the "but for" test to the jury. The Court found that the trial judge should not have rejected the use of the phrase "caused or contributed to" in the formulation of the jury questions and the instructions, and instead to have insisted on the language from Clements.

C. The Appellants' Proposed "Global but for" Test: The appellants submitted that the questions and instructions were deficient because they did not tell the jury to consider "whether Jordan's injuries would have been avoided but for the defendants' collective negligent conduct." They base the "global but for" test in Clements. Essentially, they argued that the traditional test applies in a case of multiple actors, but the question becomes whether it has been shown that one or more of the actors' negligence was a necessary cause of the injury. The Court rejected the appellant's argument that their proposed "global but for" test for causation would have resulted in a different verdict.

(3) No. A jury verdict in a civil trial will be set aside only if it is so plainly unreasonable and unjust as to satisfy the court that no jury reviewing the evidence as a whole and acting judicially could have reached it. The Court held that the competing injury causation theories in this case were clearly and unambiguously put to the jury via the evidence and particularly the expert evidence, in jury submissions by the parties, in the trial judge's explanation of the positions of the parties, and in her jury instructions. Further, the answers given by the jury demonstrate that even if the jury questions had been expressed differently, the jury would not have found in the appellants' favour.

The Court set out the jury submissions by the parties, the trial judge's explanation of each party's positon, her jury instructions and the jury's answers.

(i) The Jury Address:

1. The Defence Addresses: The jury heard first from counsel for the Sunnybrook defendants and then from the counsel for the doctors. Defence counsel submitted to the jury that the infection was not preventable on the evidence. They emphasized that the leak occurred in the plaintiff's abdomen, infecting his back muscles and eventually tracking down to his thigh. They represented that a necrotizing retroperitoneal soft tissue infection destroyed his back and thigh muscles on May 17^th and it only got worse from there. Due to the profound septic shock the plaintiff experienced, he required large amounts of vasopressor which caused the necrotic to travel to his feet. Therefore, the defence asserted that based on clinical data the damages were not preventable.
2. The Plaintiff's Jury Address: The plaintiff's counsel argued that the outcome was caused by the total failure of the healthcare team. This argument rested on proving that the plaintiff's injuries would have been prevented but not for the collective delay in his diagnosis and subsequent treatment. The plaintiff's counsel strongly challenged the defence expert regarding necrotizing fasciitis. They asserted that it was in fact a later development and would not have occurred had the sepsis been properly treated on May 17^th.

(ii) The Jury Instructions: In her jury instructions, the trial judge went over the positions of the plaintiffs and the defence, which were prepared by them for insertion into the instructions. At the very end of her instructions, just before reaching the jury questions, the trial judge summarized the expert evidence. She then dealt with causation throughout her instruction to the jury. She then returned to the issue in discussing the questions. There were no objections to the jury instruction.

(iii) The Jury's Answers: The competing causation theories were put clearly to the jury via the evidence and particularly the expert evidence, in jury submissions by the parties, in the trial judge's expression of the positions of the parties, and in her jury instructions. The jury's answers must be assessed in that light.

The jury's answers must be measured against the findings requested by trial counsel for the appellants. The jury found that five of the defendants breached the standard of care, but not of two defendants, Dr. Jeffery Singer nor Nurse Pamela Raye-Illogu. However, the jury did not find that any of the breaches of the standard of care by the defendants caused the injuries for which Mr. Sacks claimed compensation. The Court went through the events sequential and summarized the jury's finding based on each act of negligence.

The sequence of relevant events started with Mr. Sacks's surgery on May 13, 2008. Between then and early on May 16, 2008, when his condition started to deteriorate, he developed an anastomotic leak. The appellants do not allege that there was negligence in the surgery or in the fact that the anastomotic leak developed.

Against this backdrop, the first event to be assessed is Mr. Sacks's presentation of pain and distended abdomen starting at 7:50 a.m. on May 16, when he was under the care of Nurse Raye-Ilogu. At 4:30 p.m. she informed Dr. Bendzsak and Dr. Kanji about Mr. Sacks's pain. The jury found only that: "Dr. Kanji failed to document a complete assessment in the chart to assist in the communication of the patient's ongoing care."

The second event was that at 5:08 p.m. on May 16, at the direction of Dr. Kanji, Nurse Raye-Ilogu entered a bloodwork order in the hospital computer. She went off duty at 7:50 p.m. The jury made no adverse finding against her.

The third event is that the results of the bloodwork were entered into the hospital's computer system at 9:51 p.m. The jury found the following deficiencies respecting Sunnybrook:

– The true collect time of the blood was not entered into the system by Sunnybrook Health Sciences Centre.

– The hospital did not follow its own "turnaround time policy" when it failed to contact the "floor/requester to advise that results will be delayed."

The fourth event is that on the evening of May 16, Mrs. Sacks called Dr. Ross at home and expressed concern about Mr. Sacks's condition. Dr. Ross visited Mr. Sacks between 7:30 and 8:00 p.m. that evening. The jury found only that: "Dr. Ross did not communicate appropriately with his team when he failed to document, in the chart, his evening assessment on May 16th."

The fifth event occurred at 8:00 p.m. on May 16 when Nurse Li first examined Mr. Sacks, and continued throughout her shift. The jury found only that: "Nurse Lee [sic] failed to complete documentation with a specific failure to record pain scales before administering medication and a failure to record accurate locations of pain."

The sixth event was Dr. Singer's assessment of Mr. Sacks' in the early morning hours of May 17. The jury made no adverse findings respecting Dr. Singer. The seventh event occurred at 9:00 a.m. on May 17, when Dr. Ross resumed Mr. Sacks's care. He ordered immediate bloodwork, then a CT scan. Trial counsel requested the jury to find that Dr. Ross failed to start antibiotics in a timely way. The jury found that: "Dr. Ross failed to begin antibiotics within the first hour of recognizing severe sepsis."

Crucially, the jury did not find that any of the breaches of the standard of care by the defendants caused the injuries for which Mr. Sacks claimed compensation. Given the clarity and vigour of the positions considered by the jury, this is dispositive. The Court of Appeal determined that the appellants' case foundered at the first logical question in the causal reasoning process: have the plaintiffs proven, on a balance of probabilities, that a delay in treatment led to the plaintiff's injuries, considering only what he needed by way of timely diagnosis and treatment in order to avoid the injuries? The jury's answer to this question was clearly "no" and it rejected the appellant's causation theory on the evidence.

Holterman v. Fish, 2017 ONCA 769

[Feldman, Cronk and Miller JJ.A.]

Counsel:

F M Holterman and T. S. Tiffin, acting in person
H A Daley and S. Bieber, for the respondents

Keywords: Torts, Misfeasance in Public Office, Consent Discontinuance, Setting Aside, Fresh Evidence

Facts:

The CRA investigated the appellants for fraud under the suspicion that they had underreported their incomes for the years 1995-99. The respondent Andrew Fish was a CRA investigator who swore an Information to Obtain (ITO) in support of a search warrant for this investigation. A year after charges were laid against the appellants, the appellants filed Notices of Objection with the Minister of National Revenue ("MNR") to dispute that the monies they had received were payments rather than loans, and were therefore subject to income tax.

There was a criminal trial which found that the ITO contained misstatements and that Fish had been intentionally misleading. This finding was not overturned at the appeal.

The appellants then commenced a civil action against the respondents for misfeasance in public office. At trial, the judge said the onus is on the appellants to prove that the money that was the subject of the investigation was a loan and not income. In light of this, the appellants decided it was best to pursue a discontinuance of the action, which they obtained on consent of the respondents.

One month after discontinuance, the appellants received Notices of Reassessment from the MNR which reassessed the money that was the subject of the investigation as now non-taxable. The appellants then brought a motion to set aside the discontinuance on the basis of exceptional circumstances arguing that if the reassessments were available at trial, it would have likely changed the result of the trial.

The motion judge concluded that the reassessments could not help prove what Fish knew twelve years earlier, at a time before the search warrants were executed, before the CRA investigation was complete, and before the Notices of Objection setting out the appellants' argument had been received. The motion judge also found that this evidence could have been obtained by the appellants if they had exercised proper diligence.

Issue:

(1) Did the motion judge err in refusing to exercise his discretion to set aside the notice of discontinuance?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The appellants fall far short of meeting the high bar for setting aside the consent discontinuance. The test from 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., requires consideration of whether the new evidence, if presented at trial, would probably have changed the result and also whether the evidence could have been obtained before trial by exercise of reasonable diligence. This test includes the considerations of finality, apparent cogency of the evidence, delay, fairness and prejudice. The appellate court must in addition consider the importance of deferring to trial judges who are in the best position to decide whether at the expense of finality, fairness dictates that the trial be reopened.

Specifically, the interest of finality poses a great obstacle. Although there may be exceptional circumstances where departure from such a decision will be justified, courts should not allow significant and considered measures to terminate litigation to be lightly undone.

In this case, the MNR's conclusion that the appellants had no tax liability is not an empirically ascertainable event. Rather, it is a technical determination made by applying legal rules to established or apparent facts. For this reason, the argument cannot be made that because in 2016 the MNR concluded the appellants had no liability in 2002, then there could have been no good reason in 2002 for anyone to have suspected otherwise. The reassessments provide no evidence of what Fish knew in 2002. As well, the bare fact of the reassessment does not significantly advance the argument that, in 2002, Fish had no reason to believe that the appellants were in breach of the ITA. The reassessments do not provide the appellants with the evidentiary foundation to establish a case for misfeasance in public office.

However, the court did not agree with the motion judge that the appellants failed to exercise reasonable diligence in pursuing evidence by not having exercised their statutory right to appeal the CRA's original assessments to the Tax Court of Canada. That is an unduly harsh and costly onus to put on the appellants. Nevertheless, the appellants cannot succeed on this appeal because the fresh evidence is not of a nature that could have affected the result had the matter proceeded to judicial determination.

Short Civil Endorsements

Roda v. Toronto Police Services Board, 2017 ONCA 768

[Sharpe, Blair and Epstein JJ.A.]

Counsel:

F Roda, acting in person

R Oliver and P Ma, for the respondents, Toronto Police Services Board and P.C. Bronagh Fynes

Keywords: Torts, Negligent Investigation, Evidence, Perjury

CLE Leasing Enterprise Ltd. v. Dhuga, 2017 ONCA 764

[MacFarland, Watt and Benotto JJ.A.]

Counsel:

No one appearing for the appellants

B Waseil, for the respondent

Keywords: Meritless Appeal, Failure to Appear

Criminal Decisions

R v. Nnabuogor, 2017 ONCA 762

[Cronk, Juriansz and Paciocco JJ.A.]

Counsel:

R Litkowski, for the appellant

A Baiasu, for the respondent

Keywords: Criminal Law, Evidence, Motive to Lie, R v. L.(L.), 2009 ONCA 413

R v. Baron, 2017 ONCA 772

[Gillese, Huscroft and Trotter JJ.A.]

Counsel:

J P Baron, acting in person

D Stein, appearing as duty counsel

C Harper, for the respondent

Keywords: Criminal Law, Fraud, Canadian Charter of Rights and Freedoms, s. 11(b), Right to be Tried Within a Reasonable Time, Delay, Presumptive Ceiling, Transitional Exceptional Circumstances, Case Complexity, Seriousness of Offence, R v. Jordan, 2016 SCC 27, R v. Cody, 2017 SCC 31, R v. Morin, [1992] 1 S.C.R. 771, Joint Offenders, R v. L.G., 2007 ONCA 654

R v. Carty, 2017 ONCA 770

[Cronk, Juriansz and Paciocco JJ.A.]

Counsel:

M Dineen, for the appellant

C Bartlett-Hughes, for the respondent

Keywords: Criminal Law, First Degree Murder, Evidence, Hearsay, Motive to Mislead, Spontaneous Statement Exception, R v. Khan (1988), 27 O.A.C. 142 (C.A.), Post-Offence Conduct Jury Instruction, R v. White, 2011 SCC 13

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