Good afternoon
Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 8, 2023.
Bothwell v. London Health Sciences Centre considered the legal principles set out by the Supreme Court in Saadati v. Moorhead, for determining whether a plaintiff in a medmal case has proven a mental distress claim. The Court confirmed that phycological upset, without more, could not form the basis of compensable mental injury. In the result, the Court allowed the appeal and found that the respondent's persistent feelings of anger and frustration as a result of medical negligence, without any effect on his daily life, did not constitute compensable mental injury.
In All Communications Network of Canada v. Planet Energy Corp., the appellants brought an application to set aside an arbitral award in favour of the respondent on the basis that the arbitrator deprived the appellants of the opportunity to present their case, and the award to the respondent was contrary to public policy because it violated the Energy Consumer Protection Act, 2010, S.O. 2010, c. 8 ("ECPA"). The Court noted that the threshold for setting aside an arbitral award on the basis of a failure of due process is high. Parties must demonstrate that the arbitration process "offend[s] our most basic notions of morality and justice" to find that the arbitrator committed a breach of procedural fairness. The Court found that the appellants failed to meet this threshold.
In Ismail v. First York Holdings Inc., the appellant sought a stay in favour of arbitration pursuant to an arbitration clause in a share purchase agreement. The Court refused the stay on the ground that the target corporation to the share purchase agreement had not been incorporated. The contract therefore failed for lack of subject-matter and consideration. Without any contract, the arbitration clause in the contract was unenforceable. The Court distinguished cases such as this (where there is no contract), from cases where an arbitration clause can survive an otherwise unenforceable contract that is unenforceable due to breach.
Other cases this week included a summary judgment motion on a promissory note, setting aside a noting in default, and a tavern that was shut down by the city for operating without a business license.
Wishing everyone an enjoyable weekend.
CIVIL DECISIONS
Bothwell v. London Health Sciences Centre, 2023 ONCA 323
[Gillese, Benotto and Coroza JJ.A.]
Counsel:
A. McCutcheon, for the appellants
M. Miller and A. Wagman, for the respondents
Keywords: Torts, Negligence, MedMal, Damages, Mental Distress, Saadati v. Moorhead, 2017 SCC 28, Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, Housen v. Nikolaisen, 2002 SCC 33, Barker v. Barker, 2020 ONSC 3746, rev'd on other grounds, 2022 ONCA 567, Johnson v. Cline, 2017 ONSC 3916, aff'd on other grounds, 2019 ONCA 188, Weafer v. Vancouver Coastal Health Authority et al., 2007 BCSC 481, Owen v. Bains, 2020 ONSC 3958, aff'd 2021 ONSC 6666 (Div. Ct.)
facts:
The respondent had been diagnosed with Crohn's disease and underwent a number of resection surgeries. On September 22, 2011, he went to the London Health Sciences Centre, Victoria Hospital (the "Hospital") to undergo a reverse ileostomy for an earlier resection surgery at the Hospital. While recovering from his surgeries, the respondent's blood pressure began to drop and the doctor ordered that a blood volumizer be administered. The defendant nurse in the proceedings accidentally administered Heparin.
The respondent was aware of the incorrect administration of Heparin at the time, and as a paramedic, was aware of the fact that Heparin could cause massive bleeding. A short time later, the respondent underwent surgery to relieve abdominal cavity pressure as a result of substantial internal bleeding. Days later, he underwent further surgeries to close the abdomen and related procedures. When he later learned again of the administration of the Heparin, he was shocked, frustrated, and angry. His feelings of anger and frustration continued to the time of trial.
The respondent and his wife (together, the "respondents") are both paramedics and were at the time of the medication error. The respondent's wife thought she would lose her husband. The respondents sued the appellants for medical negligence (the "Claim").
In the Claim, the respondents alleged that the respondent had experienced an exacerbation of his symptoms of Crohn's disease, injuries to internal organs, digestive issues, neurologic injury, weakness, muscle wasting, sensory loss, nightmares, emotional distress, anxiety, depression, and psychological injury as a result of the erroneously administered medication.
The defence theory was that an intraoperative injury caused the hemorrhage, the respondent was already hemorrhaging before the Heparin administration error occurred, and he would have required the further operation to stop the bleeding in any event.
The trial of the Claim was bifurcated, with liability to be decided in the first trial and damages in the second. The first trial was focussed on causation: had the mistaken administration of Heparin (1) caused Mr. Bothwell to hemorrhage and suffer the ensuing physical consequences, and (2) caused the Respondents psychological damage amounting to a mental injury?
The trial judge rendered two decisions. In the first decision, the trial judge found against the respondents on the first causation issue, agreeing with the defence's theory. In the second decision, the trial judge accepted that the respondent was frustrated and angry about the medication error, and that those feelings had persisted.
The trial judge stated that the appellants owed the respondent a duty of care which they breached through administering Heparin to him. He concluded that the causation requirement between the breach and the respondent's psychological upset met the standard described in Saadati v. Moorhead: the respondent's feelings were objectively and subjectively serious and went beyond ordinary annoyances. It is the determination in the Second Decision that the respondent suffered a mental injury caused by the administration of Heparin which was the subject of this appeal.
issues:
(1) Did the trial judge err in failing to apply the correct legal test in determining whether the respondents sustained a compensable mental injury?
(2) Did the trial judge err in concluding that the respondent's anger about the medication error was sufficient to prove a compensable mental injury at law?
holding:
Appeal allowed.
reasoning:
(1) Yes.
The appellant argued that the trial judge had erred in law by failing to consider key factors set out in Saadati for determining whether the respondent sustained a mental injury: cognitive impairment; the effect on his daily activities; and, the nature of, and response to, any treatment for his emotional response to the medication incident. The Court found that the trial judge had failed to reflect the Supreme Court's instructions on how to determine whether the claimant had succeeded in proving mental injury.
The Court noted that Claimants must show that the disturbance they suffered was serious and prolonged and rose above the ordinary annoyances, anxieties, and fears that come with living in civil society. Accordingly, the Court found that Saadati instructs that it is insufficient for the trier of fact to find evidence of psychological upset, such as feelings of anger and frustration: the inquiry must include a consideration of the level of impairment that the claimant's particular feelings represent.
The Court held that, in concluding that the respondent had succeeded in showing a mental injury, the trial judge failed to consider the degree of disturbance the respondent experienced as a result of his psychological upset. These failures caused the trial judge to fail to determine whether the respondent's continuing psychological upset met the requisite degree of disturbance to become a compensable mental injury. The Court held that this amounted to an error in law, and the decision was owed no deference.
(2) Yes.
The Court held that the evidence fell short of establishing that the respondent's feelings of anger and frustration were sufficient to support a finding of mental injury. The Court found that there was no evidence to show that the respondent's continuing feelings of anger and frustration arising from the medication error led to impairment in his cognitive functions or participation in daily life.
The Court held that, while Saadati makes it clear that expert medical evidence is not necessary to prove a mental injury, it also makes clear that where claimants do not adduce relevant expert evidence to assist in considering the Saadati factors and other relevant considerations, "they run a risk of being found to have fallen short". In addition to an absence of evidence of impaired cognitive functions or participation in daily activities, there was no evidence that the respondent had a physical manifestation of his psychological upset or sought medical assistance to deal with his persistent feelings of anger and frustration due to the maladministration of Heparin.
The Court denied the respondents' argument that this case was analogous to ones involving "a near death experience". The Court stated that the question is not whether the respondent suffered a near-death experience but, rather, whether his persistent feelings of anger and frustration following the medication incident met the requisite "degree of disturbance" to be a compensable mental injury. The near-death cases were distinguishable because in those cases there was evidence of impairment.
The Court concluded that the medication error breached the standard of care owed to the respondent. However, feelings of anger and frustration as a result of that breach, without more, was evidence of psychological upset, and not compensable injury.
Trayanov v. Icetrading Inc., 2023 ONCA 322
[van Rensburg, Huscroft and George JJ.A.]
Counsel:
T. Simmonds, for the appellants
J. Vickery, for the respondents
Keywords: Contracts, Real Property, Options to Purchase, Commercial Tenancies, Civil Procedure, Noting in Default, Setting Aside, Rules of Civil Procedure, Rules 1.04(1), 2.01(1)(a), 19.02(1)(a), 19.02(1)(b), 19.03(1), Franchetti v. Huggins, 2022 ONCA 111, Intact Insurance Company v. Kisel, 2015 ONCA 205, Penner v. Niagara, 2013 SCC 19, H.B. Fuller Company v. Rogers, 2015 ONCA 173, Metropolitan Toronto Condominium Corp. No. 706 v. Bardmore Developments Ltd. (1991), 3 O.R. (3d) 278 (C.A.), Nobosoft Corporation v. No Borders Inc., 2007 ONCA 444, Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd., 2007 ONCA 333
facts:
The litigation concerned the rights and responsibilities of the parties in connection with a commercial property in Carleton Place, Ontario. The property was owned by Icetrading Inc., the corporate appellant. VT was the sole shareholder of the corporate appellant. The respondents operated a business in a free-standing building on Parcel 6 of the property.
Icetrading purchased the Carleton Place property in 2016 with the intention of developing a condominium with a number of commercial units. In an agreement dated September 21, 2016 (the "Agreement"), Icetrading agreed to sell Parcel 6 with the existing building to the respondents. The respondents paid an initial deposit that was used in Icetrading's purchase of the property.
The property was not converted into a condominium by the required deadline. The respondents did not demand a return of their deposit. Instead, on September 19, 2018, they registered a Notice of Option to Purchase on title to the property, and on November 1, 2018, they commenced an action (the "Action"). The statement of claimclaimed an equitable lien over the property or in the alternative $300,000 for breach of contract or breach of trust, $100,000 in general damages, a certificate of pending litigation ("CPL"), and other relief.
Settlement discussions began shortly after the Action was commenced and occurred in large part without the assistance of counsel. After 5:00 p.m. on September 26, 2019, counsel for the respondents advised the appellants that they would be noted in default the next day because they had not served their statement of defence. Counsel noted the appellants in default the next day.
The respondents brought a motion for various forms of relief, on notice to the appellants. On October 29, 2019, in the presence of VT, and with his consent, Labrosse J. granted leave for the issuance of a CPL against the property, and ordered the appellants to produce copies of various documents relating to the property conversion. The parties returned to court on February 10, 2020, at which time Labrosse J. directed that the respondents make their monthly payments into court effective March 1, 2020, and that, if the parties were unable to resolve the matter, the appellants would have until March 30, 2020, to file their statement of defence.
The appellants did not deliver a statement of defence by the March 30, 2020 deadline. It was only at the end of June 2020 that they retained their current counsel who contacted the respondents' counsel to discuss whether a motion to set aside the noting in default would be necessary. The respondents' counsel suggested that the deadline to file a defence may have been extended as a result of the pandemic.
The appellants' counsel served a statement of defence and counterclaim on July 3, 2020. The statement of defence pleaded and relied on the terms of the Agreement and denied that the respondents were entitled to compensation for Icetrading's failure to complete the condominium conversion. The appellants asserted that there was no cause of action against VT, and they claimed equitable set-off for the amounts the respondents ought to have been paying as commercial tenants. The appellants counterclaimed for an order for the payment to them of the monies paid into court, an order discharging the registration of the Notice of Option to Purchase on title to the property, an order for the payment to them of unpaid rent, and other relief.
In August 2020, the parties learned that the Ottawa court had refused to accept the statement of defence and counterclaim for filing without the respondents' consent, which was refused. On August 26, 2020, the appellants served a motion to set aside the noting in default, as well as for an order to vary the payment into court order, and for summary judgment. The motion judge dismissed the motion, concluding that, having weighed all relevant factors, she should decline to exercise her discretion to give the appellants a further opportunity to file a statement of defence.
issues:
(1) Did the motion judge err in disregarding and misapprehending relevant evidence?
(2) Did the motion judge err in her approach to and assessment of prejudice?
holding:
Appeal allowed.
reasoning:
(1) Yes.
The Court saw no merit to the challenge of the motion judge's findings of fact and her assessment of the evidence. The motion judge's characterization of VT's conduct, and his attitude toward the litigation, were fully supported by the evidence. She was critical of his failure to retain litigation counsel to defend the Action for over 18 months, which she described as strategic, or at the very least convenient. She was also entitled to find on the evidence that the appellants did not have a good excuse for failing to comply with the March 30, 2020 deadline for delivering their defence, and she fairly rejected the appellants' submission that the respondents were responsible for a good part of the delay.
Although there may have been settlement discussions, the respondents made it clear they required a defence; and, although the respondents' counsel appeared to accept the late delivery of a statement of defence and counterclaim, there was an evidentiary basis for the motion judge to conclude that they had not acquiesced in the delay and that the appellants should have sought an indulgence.
(2) Yes.
First, the Court held that the motion judge failed to consider the balance of prejudice, which looked to the potential prejudice to the moving party should the motion have been dismissed and balanced that against the potential prejudice to the respondent should the motion have been allowed. Contrary to the motion judge's assertion, the fact that the respondents would suffer no prejudice was a relevant factor that should have been balanced against the prejudice to the appellants.
Second, the Court held that the motion judge adopted too narrow a focus when she identified as the prejudice to the appellants their inability to bring a counterclaim for outstanding rent. In identifying this as the only consequence to the appellants, and the sole factor weighing in favour of setting aside the noting in default, the motion judge did not consider the full extent of the prejudice to the appellants, and the on the-ground consequences to the parties of refusing the relief requested.
By operation of r. 19.02, if the noting in default were not set aside, the appellants would be deemed to admit the facts alleged in the statement of claim, and would be exposed to a significant judgment - the equitable lien over the property that the respondents were seeking or an award of damages - that the respondents could obtain on default. There would be no ability to put before the court their defence that the respondents were not entitled to the relief they were seeking under the terms of the Agreement. As for the appellants' loss of their counterclaim, if the noting in default were not set aside, the appellants would have no ability to recover the monthly payments paid into court, or to pursue any of the other relief they were seeking in the counterclaim and the pending motions they had brought, for an order vacating the registrations against the property, for an order varying or vacating the payment into court order, and for summary judgment. There was unchallenged evidence to suggest that the respondents were paying an amount well below market rent, and effective March 2020, all amounts have been paid into court. The respondents continue to occupy and to operate their business from the property. The loss of the counterclaim arguably prevented the appellants from taking steps to remove the respondents from the property, and to recover compensation for their continued occupation.
Third, the Court held that the motion judge did not consider whether the appellants had an arguable defence on the merits. While on a motion to set aside a noting in default it was typically not required that a defendant demonstrate an arguable defence, where a defence is put forward, as in this case, it was a relevant factor that should have been considered. A review of the statement of claim, the statement of defence and counterclaim, and the parties' Agreement, as well as the evidence put forward on the motion, suggested that the appellants have not only an arguable defence to the Action, but also an arguable counterclaim.
The Court was satisfied that, while accepting the motion judge's valid concerns about the procedural history of the Action, it was just and appropriate to set aside the noting in default to permit the Action and counterclaim to proceed. The absence of prejudice to the respondents, the significant prejudice to the appellants, and the unsatisfactory status quo that would continue if the matter did not proceed on the merits, were reasons for setting aside the noting in default.
All Communications Network of Canada v. Planet Energy Corp., 2023 ONCA 319
[Lauwers, Paciocco and Thorburn JJ.A.]
Counsel:
D.S. Murdoch and Z. Smith, for the appellants
K. Borg-Olivier, for the respondent
Keywords: Contracts, Civil Procedure, International Arbitration, Procedural and Natural Justice, International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5, The United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (1985), International Commercial Arbitration Act, R.S.B.C. 1996, c. 233, Energy Consumer Protection Act, 2010, S.O. 2010, c. 8, Consolidated Contractors Groups S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939, Corporacion Transnacional de Inversiones, S.A. de C.V. v. STET International, S.p.A., [1999] O.J. No. 3573 (Sp. Ct.), aff'd (2000) 49 O.R. (3d) 414 (C.A.), leave to appeal refused, [2000] S.C.C.A. No. 581, lululemon athletica Canada inc. v. Industrial Color Productions Inc., 2021 BCCA 428, United Mexican States v. Cargill, Inc., 2011 ONCA 622, 0927613 B.C. Ltd. v. 0941187 B.C. Ltd, 2015 BCCA 457, Arbutus Software Inc. v. ACL Services Ltd., 2012 BCSC 1834, Williston Navigation Inc. v. BCR Finav No. 3, 2007 BCSC 190, Amos Investments Ltd. v. Minou Enterprises Ltd., 2008 BCSC 332, Depo Traffic v. Vikeda International, 2015 ONSC 999, Schreter v. Gasmac Inc. (1992), 7 O.R. (3d) 608 (Sup. Ct.)
facts:
This was an appeal of an order upholding an arbitral award in favour of the respondent, All Communications Network of Canada, Co. ("ACN"). The appellants, Planet Energy Corp., Planet Energy (Ontario) Corp. and Planet Energy (B.C.) Corp. (together "Planet"), provide fixed-price electricity and natural gas to residential customers in Canada and the U.S.
ACN was a marketing business that had contracts with thousands of Canadian independent business owners who earned commissions by referring customers to ACN or its third-party providers, including Planet. Planet and ACN entered into the Amended, Restated and Assigned Sales Agency Agreement (the "Agreement") on November 9, 2012.
Planet agreed to pay gross margin commission payments to ACN for every customer who successfully registered for Planet's products and services. ACN agreed to use its network of independent business owners to make commercially reasonable efforts to sell Planet products and to take no actions that would be harmful to Planet's business in the contractually defined territory of Ontario, British Columbia, and Manitoba (collectively, the "Territory"). Although the Agreement expired in November 2016, Planet's obligation to pay commissions to ACN survived the termination of the Agreement.
Planet claimed that in early 2015, contrary to the terms of the Agreement, ACN began working with Xoom Energy, LLC ("Xoom") to develop an energy retail business to compete with Planet, resulting in a significant decline in customer enrolments after January 2015. Moreover, in March 2018, Planet advised ACN that it would not pay any further commissions as there was a compliance investigation by the Ontario Energy Board ("OEB") into the conduct of the independent business owners who sold Planet's products. Planet told ACN that it would set-off the amounts it claimed were owed by ACN pursuant to the investigation against any commissions payable to ACN.
The Agreement provided that all claims be resolved by binding arbitration and that any award is "final, conclusive, non-appealable and binding upon the parties" and "enforced in any court of competent jurisdiction". In April 2018, the parties proceeded to arbitration. The arbitration was an international arbitration pursuant to the International Commercial Arbitration Act, 2017 ("ICAA") and the United Nations Model Law on International Commercial Arbitration (1985) (the "Model Law").
ACN claimed it was owed commissions under the Agreement. Planet disputed ACN's claim for commissions and claimed that ACN and its independent business owners failed to make reasonable efforts to sell Planet's products and breached their confidentiality obligations and commitment not to harm Planet by working with Xoom to compete with Planet in Ontario. Planet claimed that Xoom was the alter ego of ACN.
The arbitrator granted ACN's claims for commissions payable under the agreement and dismissed Planet's claims against ACN for breach of its confidentiality obligations and commitment not to harm Planet by working with a competitor.
Planet brought an application to set aside the arbitral award on the basis that the arbitrator deprived Planet of the opportunity to present its case, and the award to ACN was contrary to public policy because it violated the Energy Consumer Protection Act, 2010 ("ECPA"). ACN brought a separate application for an order recognizing and enforcing the award. The application judge rejected Planet's claims and upheld the arbitral award.
issues:
(1) Did the application judge err by not conducting a de novo hearing?
(2) Did the application judge err by holding that the arbitrator did not deny Planet the opportunity to present its case pursuant to article 34(2)(a)(ii) of the Model Law?
(3) Did the application err by concluding that the arbitral award was not contrary to public policy pursuant to article 34(2)(b)(ii) of the Model Law?
holding:
Appeal dismissed.
reasoning:
(1) No.
The onus on a party seeking to set aside an arbitral award on the basis of a failure of due process is high. The only authority cited by Planet in support of its claim that a de novo hearing should have been conducted was Lululemon athletica Canada Inc. v. Industrial Color Productions Inc. In the Court's view lululemon was distinguishable. In lululemon, the appellant challenged the jurisdiction of the arbitral decision. By contrast, the appellant challenged the procedural fairness of the proceeding. The correct test is whether the arbitrator's decisions respecting document production, cross-examination of witnesses, and closing submissions, "offend our most basic notions of morality and justice" such that the arbitrator committed a breach of procedural fairness.
It was incumbent on Planet to demonstrate that it was unable to present its case. In the absence of evidence to demonstrate how the arbitrator erred in making her findings in respect of the documents, and why more time was needed to prepare cross-examinations and make closing submissions, the application judge was entitled to rely on the findings of the arbitrator. Even if a de novo hearing were conducted, as the application judge said, "Planet's submissions . repeat the same submissions that were made to the Arbitrator". Planet had not challenged the finding that only eight of the 400 Xoom Documents were relevant, and no new evidence had been adduced to demonstrate how it had been deprived of its ability to present its case.
(2) No.
The Court saw no error in the application judge's finding that Planet was given the opportunity to adduce the documents necessary and present its case. Although the application judge did not specifically advert to the two missing attachments to emails identified on appeal, ACN furnished one attachment (an Excel spreadsheet) one week before the final submissions in the application and had confirmed that the other was no longer available. The content of the attachments was clear from the description provided in the emails to which they are attached.
The Court saw no error in the application judge's conclusion that, although "Planet clearly disagrees with the Arbitrator's findings and conclusions, . it has failed to furnish proof that it was unable to present its case because of the Arbitrator's decisions with respect to ACN's document production obligations." Moreover, at no time during the arbitration or since, had Planet articulated what additional documents it would have adduced and what prejudice was suffered by the failure to do so.
The application judge also rejected Planet's argument that the arbitrator erred by ignoring Planet's evidence about ACN's audit conducted pursuant to the Agreement and, instead, relied exclusively on the evidence of ACN's expert, which Planet said was inconsistent with the evidence as a whole and undermined on cross-examination. He noted that the auditor gave extensive reasons for his opinion. After studying the expert reports of each party, the arbitrator noted that Planet's auditing expert largely adopted Planet's representations with only limited attempts at verification. For this reason, she concluded that Planet's auditing expert's evidence should be accorded little weight. The Court saw no error in the application judge's conclusion that the arbitrator did not ignore the evidence of Planet's expert.
(3) No.
Planet argued before the arbitrator that ordering it to make commission payments to ACN was illegal under the ECPA and would expose Planet to penalties. ACN claimed that its entitlement to commissions arose from the acquisition of the customer, not the marketing and signing of new customer contracts and that, accordingly, there was no breach of the ECPA. The arbitrator considered the relevant provisions of the ECPA, along with submissions of both parties and concluded that the ECPA did not preclude payment of commissions for renewals that became effective on/after January 1, 2017.
The application judge noted that the public policy defence should be invoked "only if the judgment involves an act that is illegal in the forum or if the action involves acts repugnant to the orderly functioning of the social or commercial life of the forum": Depo Traffic v. Vikeda International. The public policy defence is a high standard, and the onus is on the claimant to demonstrate that such enforcement "offends our local principles of justice and fairness in a fundamental way": Consolidated Contractors.
The Court found the application judge correctly observed that the arbitrator addressed the issues raised by Planet in relation to the claim for unpaid commissions and directed her mind to the arguments raised by experts and the weight to be given to their evidence. He also correctly held that the arbitrator did not disregard the ECPA and considered the statutory provision and its purpose and applied it to the evidence. The Court saw no error in the application judge's conclusion.
Mitri v. 11054660 Canada Inc., 2023 ONCA 333
[Feldman, Gillese and Huscroft JJ.A.]
Counsel:
E. Snow and C. Beaudoin, for the appellant T.W.
R. He, for the appellants 11054660 Canada Inc., K.S., and R.C.
S. Zeitz and C. Madden, for the respondent
Keywords: Contracts, Debtor-Creditor, Promissory Notes, Interest, Civil Procedure, Summary Judgment, Statute of Frauds, R.S.O. 1990, c. S.19, Rules of Civil Procedure, rr. 20.04(2.1) and (2.2), Hryniak v. Mauldin, 2014 SCC 7
facts:
The appellants and T.R. (another party in the action) developed a plan to purchase and sell medical-grade protective gowns during the COVID-19 pandemic. The group sought to raise approximately $2 million to purchase gowns from a Chinese supplier on short notice.
On May 29, 2020, the respondent provided a loan of $460,000 to the corporate appellant. The loan was to be repaid in full by August 29, 2020, and the respondent would be entitled to a 50% share of the gross profits from the sale of the medical gowns. A promissory note was prepared to secure the loan.
Later in June 2020, the gowns arrived in Canada. They were of lower quality than had been represented and could not be sold for a profit. The respondent's loan was not repaid by August 29, 2020, and on August 31, 2020, he sent a demand letter seeking payment on the promissory note. The respondent did not have a fully executed copy of the note.
The appellants' lawyers, after the demand was made on the promissory note, contacted the appellants in order to have them re-sign the promissory note. In October 2021, the respondent received a fully executed copy of the promissory note from the appellants' lawyers, as well as a reporting letter confirming the loan he had provided to the corporate appellant and a trust ledger showing the law firm's receipt of the $460,000.
The respondent proceeded to bring a motion for summary judgment, seeking to recover, under the terms of the promissory note, the balance owing on the loan along with interest at the contracted rate of 20%.
The motion judge found that each of the appellants was aware of the loan, the promissory note, and the guarantees, and intended to be bound by their terms. The respondent did not initially pursue the debt through litigation because the appellants tacitly acknowledged the debt and made partial payment, which the motion judge described as incontrovertible evidence that the appellants knew of and intended to be bound by their obligation.
The motion judge concluded that there was no genuine issue requiring a trial and granted summary judgment.
issues:
(1) Did the motion judge err in applying the test for summary judgement set out in Hryniak v. Mauldin?
(2) Did the motion judge err by failing to apply the Statute of Frauds?
(3) Did the motion judge err in finding that the interest rate was a valid and enforceable term of the promissory note?
holding:
Appeal dismissed.
reasoning:
(1) No.
The appellants argued that the motion judge conflated the two-step analytical framework set out in Hryniak, making inferences he was not entitled to make and using enhanced fact-finding powers at the first step of the analysis rather than simply determining whether there was a genuine issue for trial based on the record alone.
The Court found that the motion judge was entitled to make the findings he did based on the record before him, including the validity of the loan and the commitment to repay it by the appellants. The Court held that the motion judge's reasons did not display any palpable and overriding errors, and that it was open to the motion judge to find no genuine issue requiring a trial.
(2) No.
The motion judge had found that this was not a case in which there was no written documentation. The Court saw no error in the motion judge's analysis. The Court held that this was sufficient to dispose of the matter, and felt no need to consider the motion judge's alternative reasoning that, given the circumstances surrounding the transaction and subsequent events, the appellants were estopped from relying on the Statute of Frauds in any event.
(3) No.
The appellants argued that the 20% interest rate was oppressive and should not be enforced. The Court held that there was no merit to this submission, as the interest rate was part of the parties' agreement and was the same rate that the appellants had agreed to pay to other investors.
Leamington (Municipality) v. Ramirez, 2023 ONCA 334
[Roberts, Miller and Coroza JJ.A.]
Counsel:
R. Colautti, for the appellant
J. Pritiko, for the respondent
Keywords:Municipal Law, By-Law Enforcement, Business Licences, Remedies, Injunctions, Administrative Law, Judicial Review, Municipal Act, 2001, S.O. 2001, c. 25, s. 151, s. 440, Licensing Powers, O. Reg. 583/06, s. 1(a), s. 1(e), Liquor Licence and Control Act, 2019, S.O. 2019, c. 15, Sched. 22, s. 40(1), Provincial Offences Act, R.S.O. 1990, c. P.33, Business Licensing By-law 05-19, s. 1, s. 8, s. 9, s. 23(g), Schedule 1, Paradise Night Club v. Municipality of Leamington, 2022 ONSC 6118, Newcastle Recycling Ltd. v. Clarington (Municipality), 204 O.A.C. 389 (C.A.)
facts:
The appellant, PNC, appealed the permanent stay of the operation of his tavern, the the Paradise Night Club ("Paradise"), granted pursuant to s. 440 of the Municipal Act, 2001. Prior to the issuance of the permanent injunction under appeal, the appellant operated Paradise under a valid liquor license issued by the province since 2011. In 2019, the respondent municipality enacted Business Licensing By-law 05-19 ("the Business By-law") that prohibited the operation of any business without a license issued by the municipality, except for those businesses that the Business By-law expressly exempted.
The appellant's application for a business license for an "eating establishment" was denied on March 29, 2021, as was his subsequent appeal to the Appeal Committee on May 31, 2021. His second license application for a "general business" that he submitted on February 1, 2022 was refused on July 20, 2022.
On October 28, 2021, the appellant was charged under the Provincial Offences Act, with operating a business without a license, contrary to s. 9 of the Business By-law. This charge is pending in the Ontario Court of Justice. The relevant provision of s. 9 of the Business By-law reads: "No person shall: (a) operate a Business . (i) without a Business License".
On August 7, 2022, the application judge allowed the respondent's application for a permanent injunction restraining the appellant from continuing to operate Paradise without a license under the Business By-law. The application judge found that the appellant knowingly operated a business without a business license contrary to s. 9 of the Business By-law and that "[s]imply stated, this continuing operation of this business without a business license is illegal." The application judge declined to exercise his residual discretion not to grant the requested permanent injunction because he found no exceptional circumstances existed.
On November 1, 2022, the Divisional Court allowed the appellant's application for judicial review of the Appeal Committee's decision and remitted the appeal for a rehearing, which is pending. On November 29, 2022, the Court dismissed the appellant's motion for a stay pending appeal.
Issues:
(1) Did the application judge err in holding that the Business By-law applied to and prohibited the appellant's business from operating without a business licence issued by the respondent?
(2) Did the application judge err in failing to conclude that the Business By-law directly or indirectly prohibits or attempts to regulate the sale of alcoholic beverages, which is within the exclusive jurisdiction of the Alcohol and Gaming Commission of Ontario?
(3) Did the application judge err in awarding a permanent injunction where exceptional circumstances existed?
holding:
Appeal dismissed.
reasoning:
(1) No.
The Court held that the Business By-law applied to the appellant's business and that he was required to have a license issued by the respondent under the Business By-law to operate it. In section 1 of the Business By-law, "Business" expressly incorporates different types of businesses, such as "trades and occupations", "exhibitions, concerts, festivals and other organized public amusements held for profit or otherwise", and the "display of samples, patterns or specimens of goods for the purpose of sale and hire" that are not listed in Schedule 1. When Schedule 1 is read in the context of the Business By-law as a whole, it is clear that it relates to a subset of businesses that have additional requirements for the application process. The Court found that this was the only interpretation that made sense in light of the broad general definition provision, and found that it was also consistent with the appellant's second licence application that was for "general business".
(2) No.
The Court did not accept the appellant's submission that the Business By-law purports to prohibit or otherwise regulate matters exclusively covered under the Liquor Licence and Control Act, 2019 ("LLCA") as the Business By-law did not purport to regulate aspects of the sale, consumption, distribution or possession of alcohol that are regulated by the LLCA. The Court held that although the refusal of a business licence may result in the closure of an establishment licensed to sell alcohol, it does not constitute the regulation of the sale of alcohol.
(3) No.
The Court saw no basis to interfere with the application judge's granting of a permanent injunction, holding that the application judge properly applied the governing legal principles and considered and weighed all relevant factors.
Ismail v. First York Holdings Inc., 2023 ONCA 332
[Doherty, Feldman and Trotter JJ.A.]
Counsel:
C. Yung, for the appellants
G.G. Boyd, for the respondents
Keywords: Corporations, Oppression, Contracts, Enforceability, Share Purchase Agreements, Arbitration Agreement,, Civil Procedure, Arbitration, Business Corporations Act, R.S.O. 1990, c. B.16, s. 237, Arbitration Act, 1991, S.O. 1991, c. 17, ss. 7, 17(2), Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612, Huras v. Primerica Financial Services Ltd. (2000), 137 O.A.C. 79 (C.A.), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Haas v. Gunasekaram, 2016 ONCA 744, Electek Power Services Inc. v. Greenfield Energy Centre Limited Partnership, 2022 ONSC 894, Heyman v. Darwins Ltd., [1942] A.C. 356 (H.L.), MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656, Fairfield v. Low (1990), 1990 CanLII 6955 (ONSC)
facts:
The appellant was an individual who had effective control of the operation of First York Global Holdings Inc. ("FYGH"), an Ontario medical device and healthcare distributor. The respondent was the manager of TART Medical Est., a Saudi Arabian medical supply company.
In 2014, the individuals agreed to purchase the shares of FYGH to conduct business in the middle east. The appellant was to purchase the shares himself, and the respondent was entitled to 20% of the shares. Ultimately, three agreements were signed: (1) a Purchase of Business Agreement (the "FYGH Agreement"), (2) a Shareholders' Agreement regarding the FYGH Agreement, and (3) a Purchase of Business Agreement of 20% of the shares of another company, National Trade of Canada ("National Trade"), by the respondent (the "National Trade Agreement"). National Trade was never incorporated. Each of the three agreements contained an identical arbitration clause.
The respondent brought an application for damages for oppression with respect to the carrying on of the business of FYGH by the appellant. He also claimed that misrepresentations were made by the appellant about National Trade. The parties later agreed that the application could not be determined on a paper record and should proceed as an action. By a Fresh as Amended Notice of Motion dated January 14, 2022, the appellant moved for a stay of various claims of the statement of claim issued on June 8, 2021, in favour of mediation and, failing that, arbitration "as agreed by the parties". The grounds for the motion refer to the two purchase agreements, one for FYGH shares and the other for National Trade shares, and the identical mediation/arbitration clauses contained in those agreements.
In deciding the arbitration issue, the motion judge referred only to the National Trade Agreement and not to the FYGH Agreement. He held that, as National Trade was never an incorporated entity, and so there were never any shares to transfer. As a result, there was no consideration for the National Trade Agreement, the contract did not exist, and therefore there was no arbitration agreement.
issues:
(1) Does s. 7(6) of the Arbitration Act, 1991 preclude this appeal?
(2) Did the motion judge err by failing to stay the action based on the arbitration clause contained in the FYGH Agreement?
(3) Did the motion judge err by finding that the National Trade Agreement did not exist because National Trade was never incorporated and its shares did not exist, and therefore there was no contract and no arbitration agreement?
holding:
Appeal dismissed.
reasoning:
(1) No.
Section 7(6) of the Arbitration Act, 1991 (the "Act") provides that there is no appeal from the court's decision made under s. 7, which generally pertains to a stay of proceedings where an arbitration agreement applies. However, the Court held that, where the decision to refuse a stay is based on a finding that there is no arbitration agreement, then the decision to refuse a stay is not made under the Act, and therefore an appeal is not barred by s. 7(6).
(2) No.
The appellant submitted that the question before the motion judge regarding whether there was an arbitration agreement was not limited to the National Trade Agreement, but included the FYGH Agreement. The Court disagreed, noting that the motion judge only referenced the FYGH Agreement because the facts of the transactions were intertwined. However, on reading the statement of claim, the Court held that the motion judge did not err in his conclusion that the motion for a stay was based on the arbitration clause in the National Trade Agreement only.
(3) No.
The motion judge first set out the five-part test for a stay in favour of arbitration, and held that the first part of the test was not met, which was whether there was an arbitration agreement at all. The National Trade Agreement was for the transfer of shares, but National Trade was never incorporated. Furthermore, the National Trade Agreement stated that it was made in reliance on the representations and warranties, one of which was that National Trade was duly incorporated and that the seller was the absolute beneficial owner of the shares. The National Trade Agreement further stated that it was null and void if any condition precedent was not satisfied or waived by the closing date. The Court concluded that it was open to the motion judge to find that the National Trade Agreement failed for lack of subject-matter and consideration, and therefore never existed as a legally binding agreement.
The appellant further argued that, even if the agreement did not exist, the meaning and effect of s. 17(2) of the Act is that the arbitration clause must be treated as an independent agreement that remains effective for the purpose of allowing the arbitrator to determine its own jurisdiction. The Court disagreed, stating that s. 17(2) is a codification of the common law principle that where an agreement is breached and becomes unenforceable or invalid, that does not rescind the agreement to arbitrate. However, the Court held that the agreement to arbitrate cannot "survive" where there was no contract to survive from.
SHORT CIVIL DECISIONS
Working Families Coalition (Canada) Inc. v. Ontario (Attorney General), 2023 ONCA 339
[Benotto, Zarnett and Sossin JJ.A.]
Counsel:
Goldblatt, C. Davies, and A. Goldfinch, for the appellants the Elementary Teachers' Federation of Ontario and F.P.
Cavalluzzo, A. Telford, M. Thomarat, and K. Sier, for the appellants Working Families Coalition (Canada) Inc. and the Ontario English Catholic Teachers' Association
Ursel, K. Allen, E. Home, and N. Abraham, for the appellants the Ontario Secondary School Teachers' Federation and L.W.
R.W. Staley, J.G. Bell, D.A. Fenton, A.N. Sahai, and M.E. Steeves, for the respondent the Attorney General of Ontario
Aylward and D. Rakic, for the intervener the Chief Electoral Officer of Ontario
Cameron, C.D. Bredt, M. Kakkar, and D. Milton, for the intervener Centre for Free Expression at Ryerson University
Smith, M. Law, and P. Wodhams, for the intervener Democracy Watch
Rauccio, St. Armstrong, W.D. Rankin, and G. Buitenhuis, for the intervener the Canadian Civil Liberties Association
Keywords: Election Law, Election Spending Restrictions, Constitutional Law, Freedom of Expression, Political Advertising, Notwithstanding Clause, Oakes Test, Civil Procedure, Costs, Canadian Charter of Rights and Freedoms, s. 3, Election Finances Act, R.S.O. 1990, c. E.7, s. 37,0.1, s. 37.10.1(2), s. 37.10.1(3)-(3.1), Working Families Coalition (Canada) Inc. v. Ontario (Attorney General), 2023 ONCA 139
GlycoBioSciences Inc. v. Herrero and Associates, 2023 ONCA 331
[Roberts, Miller and Coroza JJ.A.]
Counsel:
K. Drizen, acting in person for the appellant
R.T. Evans and R. Seidler, for the respondent
Keywords: Election Law, Election Spending Restrictions, Constitutional Law, Freedom of Expression, Political Advertising, Notwithstanding Clause, Oakes Test, Civil Procedure, Costs, Canadian Charter of Rights and Freedoms, s. 3, Election Finances Act, R.S.O. 1990, c. E.7, s. 37,0.1, s. 37.10.1(2), s. 37.10.1(3)-(3.1), Working Families Coalition (Canada) Inc. v. Ontario (Attorney General), 2023 ONCA 139
Land v. Dryden (Police Services Board), 2023 ONCA 329
[Fairburn A.C.J.O., Simmons and Zarnett JJ.A.]
Counsel:
J. Land, acting in person
S. Henry, acting in person
S. Blake and K. Yakimoski, for the respondents Dryden Police Services Board and its employees: SMS, JHO, PAH, and KH
A. Silver and D.Buxton, for the respondents Anishinaabe Abinooji Family Services and its employees: DG and KT
Keywords:Civil Procedure, Summary Judgment, Costs
Gueye v. DiNino, 2023 ONCA 342
[Trotter, Sossin and Copeland JJ.A.]
Counsel:
J.A. Layne and A. Gunarajah for the respondent/moving
party
O. Gueye, acting in person
Keywords:Family Law, Civil Procedure, Appeals, Jurisdiction, Orders, Contempt, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 110, Children's Law Reform Act, R.S.O. 1990, c. C.12, s. 19(1)(a.1), Bush v. Mereshensky, 2007 ONCA 679, Mantella v. Mantella, 2009 ONCA 194, Leeming v. Leeming, 2016 ONSC 1835, Wang v. Li, 2023 ONCA 119, Chirico v. Szalas, 2016 ONCA 586, Overtveld v. Overtveld, 2022 ONCA 269
Tovmasyan v. Petrosian, 2023 ONCA 345
[Trotter, Sossin and Copeland JJ.A.]
Counsel:
I. Lateran, for the appellant
V. Terentyeva, for the respondent
Keywords:Family Law, Parenting, Relocation, Child Support, Spousal Support, Imputed Income, Financial Disclosure, Children's Law Reform Act, R.S.O. 1990, c. C. 12, s. 39.4, s. 39.4(3) and s. 39.4(6)
Meyer-Schelbert v. Meyer, 2023 ONCA 347
[Trotter, Sossin and Copeland JJ.A.]
Counsel:
G.S. Joseph, for the appellant
M.F. White and A. White, for the respondent
Keywords: Family Law, Evidence, Credibility, Family Law Act, R.S.O. 1990, c. F.3
[Bell v. Amini, 2023 ONCA 344
[Simmons J.A. (Motion Judge)]
Counsel:
M. Bell, acting in person
S.M. Sack and D.R. Miller, for the respondent
Keywords: Civil Procedure, Appeals, Perfection, Extension of Time, Rules of Civil Procedure, Rule 61.09, Monteith v. Monteith, 2010 ONCA 78
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.