Court of Appeal summaries (November 14, 2022 - November 18, 2022)

Date

Following are this week’s summaries of the Court of Appeal for Ontario for the week of November 14, 2022.

Notably, in the companion decisions of Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975 and Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, the Court considered two appeals from Divisional Court decisions that overturned Ontario Labour Relations Board (“OLRB”) rulings that had found the respondents in each case to be related employers. The Court held that each of the Divisional Court decisions had failed to comply with the Supreme Court of Canada’s directives from its landmark decision in Vavilov. The Court concluded that the OLRB’s decisions each bore the hallmarks of a reasonable decision – justification, transparency, and intelligibility. The Divisional Court had erred when it applied its “own yardstick and measured the Board Decision against it”, instead of considering the decision within the Vavilov framework.

In Bimman v. Igor Ellyn Professional Corporation (Ellyn Law), the Court clarified s. 24 of the Solicitors Act as it applies to a lawyer seeking to invalidate a retainer agreement. The Court determined that the motion judge did not err in his application of the two-part test from Raphael Partners v. Lam, but clarified that the lawyer bears the burden to rebut the presumption of fairness of the retainer agreement. As such, the Court allowed the appeal in part and varied the motion judge’s order.

McDonald v. Toronto-Dominion Bank dealt with the second largest Ponzi scheme in history. Stanford International Bank Ltd. (“SIB”) was used as a vehicle to defraud bank customers of over seven billion dollars. Upon its collapse, it was liquidated and the Joint Liquidators commenced an action on behalf of SIB against TD Bank, claiming: (1) it was liable to SIB for knowing assistance in breach of fiduciary duty; and (2) it was negligent in the provision of services. The trial judge dismissed the action finding that TD Bank had no actual knowledge of the fraud and was not reckless or wilfully blind. As for the negligence claim, the trial judge concluded that there was insufficient proximity to give rise to what would have been a novel duty of care. The Joint Liquidators appealed from the dismissal of the negligence claim. The Court held the trial judge did not err in both the duty of care and standard of care analysis, and that she did not make a flawed procedural finding resulting in an unfair trial process.

Other topics include whether a claim of assault was statute barred, whether mortgage financing was void ab initio for violating the Fraudulent Conveyances Act, the duty of good faith and honest performance in the context of a right of first refusal over assets, and the discoverability principle in the context of a negligent misrepresentation claim.

Table of Contents

Civil Decisions

Stevens v. Hutchens , 2022 ONCA 771

Keywords: Fraudulent Conveyance, Void Ab Initio, Mortgages, Constructive Trust, Lien, Legal Fees, Receivership, Rights of Creditors, Priority, Unjust Preference, Intent to Defeat, Abuse of Process, Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Assignments and Preferences Act, R.S.O. 1990, c. A.33, Ontario Securities Commission v. Money Gate Mortgage Investment Corporation, 2020 ONCA 812, Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, Indcondo Building Corp. v. Sloan, 2014 ONSC 4018, Mohammed v. Makhlouta, 2020 ONSC 7494

Deluca v. Bucciarelli , 2022 ONCA 774

Keywords: Summary Judgment, Torts, Assault, Limitation Periods, Intentional Infliction of Emotional Distress, Limitations Act, 2002, S.O. 2002, c. 24, s. 4, s. 5(1)(a)(iv) and s. 16(1)(h.2)(i), Bruce v. Dyer, [1966] 2 O.R. 705 (H.S.) aff’d [1970] 1 O.R. 482 (C.A.), Warman v. Grosvenor (2008), 92 O.R. (3d) 663 (S.C.), Dunne v. Gauthier, 2000 BCSC 1603, Barker v. Barker, 2022 ONCA 567

Bimman v. Igor Ellyn Professional Corporation (Ellyn Law), 2022 ONCA 781

Keywords: Contracts, Interpretation, Solicitor-Client Retainer Agreement, Solicitors Act, R.S.O. 1990, c. S.15., s. 16, s. 23, s. 24, English Attorneys’ and Solicitors’ Act 1870 (U.K.), 33 & 34 Vict., c. 28, ss. 8-9, The Conveyancing and Law of Property Act, 1886, S.O. 1886, c. 20, s. 23(4), Solicitors Remuneration Act 1881 (U.K.), 44 & 45 Vict., c. 44, s. 8(4), The Law Reform Act, 1909, S.O. 1909, c. 28, ss. 31-32, Moore v. John A. Annen Barrister Professional Corporation, 2017 ONSC 7720, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Raphael Partners v. Lam (2002), 61 O.R. (3d) 417 (C.A.)., Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, Re Stuart, Ex p. Cathcart, [1893] 2 Q.B. 201 (C.A.), Re Mendelson, Beatty & Wood and Iwan, [1969] 2 O.R. 393 (H.C.), Re Solicitor, [1972] 1 O.R. 694 (H.C.), Andrew Feldstein & Associates Professional Corporation v. Keramidopulos, 2007 CanLII 40202 (Ont. S.C.)

Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779

Keywords: Labour and Employment, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Subcontractors, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness,  Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Delios v. Canada (Attorney General), 2015 FCA 117, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

Keywords: Labour and Employment Law, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness, s. 1(4), s. 69, s. 133, Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, 133, Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, Wasaga Trim Supply (2006) Inc., [2010] O.L.R.D. No. 1854, Re Blouin Drywall Contractors Ltd. and United Brotherhood of Carpenters and Joiners of America, Local 2486 (1975), 8 O.R. (2d) 103 (C.A.), leave to appeal to S.C.C. refused, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, D’Errico v. Canada (Attorney General), 2014 FCA 95, Canada (Attorney General) v. Zalys, 2020 FCA 81, Canadian Broadcasting Corporation v. Ferrier, 2019 ONCA 1025, leave to appeal to S.C.C. refused [2020] S.C.C.A. No. 59

McDonald v. Toronto-Dominion Bank , 2022 ONCA 788

Keywords: Torts, Duty of Care, Standard of Care, Negligence, Novel Duty of Care, Proximity, Foreseeability, Established Categories, Rules of Civil Procedure, rr. 1.04(1), 53.07, Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L); Cooper v. Hobart, 2001 SCC 79, Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, Toronto Dominion Bank v. 1633092 Ontario Ltd., 2019 ONSC 1473, Dr. Robert Grossman v. The Toronto-Dominion Bank, 2014 ONSC 3578, Toronto Dominion Bank v. Whitford, 2020 ABQB 802, Lee v. Canadian Imperial Bank of Commerce, 2001 CarswellOnt 3019 (S.C.), Good Mechanical v. Canadian Imperial Bank of Commerce (2005), 49 C.L.R. (3d) 183 (Ont. S.C.), Don Bodkin Ltd. v. Toronto Dominion Bank (1993), 14 O.R. (3d) 571 (Gen Div.), aff’d (1998) 40 O.R. (3d) 262 (C.A.), Oak Incentives Group Inc. v. Toronto Dominion Bank, 2011 ONSC 3245, aff’d 2012 ONCA 726, Groves-Raffin Construction Ltd. v. Canadian Imperial Bank of Commerce (1975), 64 D.L.R. (3d) 78 (B.C.C.A.), Rausch v. Pickering City, 2013 ONCA 740, R. v. Sheppard, 2002 SCC 26, R. v. M. (R.E.), 2008 SCC 51, Granitile Inc. v. Canada (1998), 41 C.L.R. (2d) 115 (Ont. Gen. Div.), Peter Sankoff, Law of Witnesses and Evidence in Canada

Amelin Engineering Ltd. v. Blower Engineering Inc , 2022 ONCA 785

Keywords: Limitations, Statute Barred, Discoverability, Ameliorating Loss, Limitations Act2002, S.O. 2002, c. 24, Sch. B, s.5(1), Limitations Act, R.S.O. 1990, c. L.15, s.45(1)(g), St. Jean (Litigation Guardian of) v. Cheung, 2008 ONCA 815, Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005, Brown v. Baum, 2016 ONCA 325, Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, Ferrara v. Lorenzetti Wolfe Barristers and Solicitors, 2012 ONCA 851, Crombie Property Holdings Ltd. v. McColl-Frontenac Inc. (Texaco Canada Ltd.), 2017 ONCA 16

Greta Energy Inc. v. Pembina Pipeline Corporation , 2022 ONCA 783

Keywords: Contract Law, Securities Law, Purchase and Sale, Right of First Refusal, Good Faith, Duty of Honest Performance, Torts, Inducement of Breach of Contract, Conspiracy, GATX Corp. v. Hawker Siddeley Canada Inc. (1996), 27 B.L.R. (2d) 251 (Ont. C.J.), C.M. Callow Inc. v. Zollinger, 2020 SCC 45, Correia v. Canac Kitchen, 2008 ONCA 506

Short Civil Decisions

Pervez v. Mohammed , 2022 ONCA 778

Keywords: Family Law, Separation Agreement, Child and Spousal Support, Settlement, Financial Disclosure, Consent Order, Motions, Family Law Rules, O. Reg. 114/99, rr. 13, 14, Federal Child Support Guidelines, SOR/97-175, s. 25(1), Dowdall v. Dowdall, 2021 ONCA 260

Van Delst v. Hronowsky , 2022 ONCA 782

Keywords: Appeal, Stay of Order, Standard of Review

Klim v. Klim , 2022 ONCA 784

Keywords: Evidence, Credibility, Wills and Estates, Power of Attorney, Capacity, Frivolous Allegations, Costs, Full-Indemnity

Lamothe v. Ellis, 2022 ONCA 789

Keywords: Appeals, Uncontested Trial, Motion to Quash an Appeal, Non-compliance of Court Orders, Prejudice, Courts of Justice Act, R.S.O. 1990, c. C.43., ss. 134, 140(5), Peerenboom v. Peerenboom, 2020 ONCA 240, Abu-Saud v. Abu-Saud, 2020 ONCA 824

Hart v. Balice, 2022 ONCA 787

Keywords: Civil Procedure, Frivolous and Vexatious Conduct, Abuse of Process, Re-litigating Issues, Finality, Rules of Civil Procedure, rr. 2.1, 59.06, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, Lochner v. Ontario Civilian Police Commission, 2020 ONCA 720


CIVIL DECISIONS

Stevens v. Hutchens , 2022 ONCA 771

[Feldman, Hoy and Favreau JJ.A.]

COUNSEL: 

B. Moldaver, for the appellant, Adroit Advocacy LLC (Non-Party)

J. Necpal, for the respondents, G. S., L. S., and 1174365 Alberta Ltd.

J. Gibson, for the respondent, A. Farber & Partners Inc. (Receiver)

B. F. VanBunderen, for the respondents, CGC Holding Company, LLC, Harlem Algonquin LLC, and J. T. M.

Keywords: Fraudulent Conveyance, Void Ab Initio, Mortgages, Constructive Trust, Lien, Legal Fees, Receivership, Rights of Creditors, Priority, Unjust Preference, Intent to Defeat, Abuse of Process, Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Assignments and Preferences Act, R.S.O. 1990, c. A.33, Ontario Securities Commission v. Money Gate Mortgage Investment Corporation, 2020 ONCA 812, Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, Indcondo Building Corp. v. Sloan, 2014 ONSC 4018, Mohammed v. Makhlouta, 2020 ONSC 7494

FACTS:

The respondents are judgment creditors of TH and SH (the “Hutchens”). The Hutchens live in Ontario and their known assets are in Ontario. The respondents brought their motion in the context of the receivership proceeding. The receiver deferred to the appellants to bring the motion and took no position on the motion for cost reasons. The judgment, dated July 5, 2019, recognized two 2018 judgments of the United States District Court for the Eastern District of Pennsylvania, each for more than $26 million USD. The Pennsylvania judgments arose from a mortgage financing fraud perpetrated by the Hutchens. There were other judgement creditors of the Hutchens’ as a Colorado class action resulted in an award of damages to the plaintiffs of more than $24 million USD. The presiding judge in Colorado also imposed a constructive trust over several properties, including five of the six mortgaged properties at issue, finding that they were probably purchased using funds advanced by the Colorado plaintiffs in the fraudulent scheme.

The appellant, Adroit Advocacy LLC (a U.S. law firm), acted for various defendants in the Colorado class action, including the Hutchens and, until they were released from the action, the corporations (the “mortgagor corporations”) which were the registered owners of the mortgaged properties. On October 4, 2017, 8 days after the Colorado judgment, the appellant law firm registered a $2 million CAD mortgage against six properties in Ontario to secure its payment of legal fees, five of which were subject to the constructive trust imposed by the Colorado class action. TH gave the mortgages in her capacity as the sole shareholder of the mortgagor corporations.

At the time, the appellant’s outstanding invoices for legal fees were in the range of $180,000 USD. In an email to SH, a lawyer at the appellant law firm complained about the delay in the granting of the mortgages: “[I]t is nearly incomprehensible to me that there is a delay in allowing us to receive a lien to ensure our payment that will put us ahead of the plaintiff….”

The Hutchens live in Ontario and have known assets in Ontario. In February 2019, over the objections of the Hutchens, an interim receiver was appointed in Ontario over their property, including the mortgagor corporations. The mortgages represent over half of the value of the just over $3 million CDN available to creditors.

The respondents brought their motion in the receivership proceeding. The Colorado plaintiffs supported their motion. The receiver deferred to the appellants to bring the motion and took no position on the motion for cost reasons.The motion judge found that the mortgages were void under two statutes: they constituted fraudulent conveyances under s. 2 of the Fraudulent Conveyances Act (the “FCA”) and were made with the intent to defeat creditors and were an unjust preference under ss. 4(1) and 4(2) of the Assignments and Preferences Act (the “APA”).

ISSUES:

(1) Did the motion judge err in concluding that the respondents had standing to bring their motion?

(2) Did the motion judge err in concluding that the respondents, who were creditors of TH and not creditors of the mortgagor corporations, were “creditors or others” with intent to defeat “creditors or others” within the meaning of those terms in s. 2 of the FCA?

(3) Did the motion judge err in concluding that the mortgages were not made “in good faith” and “upon good consideration”, and, therefore, that the exceptions to s. 2 of the FCAset out in ss. 3 and 7(2) did not apply?

(4) Did the motion judge fail to conclude that that motion was barred by res judicataor was an abuse of process?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The Court disagreed with the appellant’s assertion that in the context of a receivership, only the receiver, and not a creditor in the receivership, can bring a motion affecting the rights of another creditor in the receivership.

The Court held that a receivership proceeding has a time sensitive and multi-stakeholder nature: Ontario Securities Commission v. Money Gate Mortgage Investment Corporation. The mortgagor corporations were included in the scope of the receivership order, and the appellant and the respondents were creditors in the receivership. The respondents’ motion involved a priority dispute between two creditors asserting claims against the assets of the receivership. The Court agreed with the motion judge who found, and the appellants do not dispute, that the receiver deferred to the respondents to bring the motion for cost efficiency reasons. Moreover, the appellants did not point to any prejudice to them resulting from the respondents proceeding in the manner that they did.

(2) No.

The appellant argued that s. 2 of the FCA required the mortgagor corporations to have made the mortgages with the intent to defeat creditors or prospective creditors of the mortgagor corporations and that there was no evidence that the mortgagor corporations had creditors or prospective creditors other than the appellant. Hence, the mortgages were not made to defeat “creditors or others” within the meaning of s. 2 of the FCA.

The Court rejected this argument and noted that the appellant had construed s. 2 of the FCA too narrowly and ignored the substance of what occurred. The Court reasoned that the FCA is remedial in nature and should be given a fair, large, and liberal interpretation that best achieves its purpose, namely to strike down all conveyances of property made with the intention of delaying, hindering, or defrauding creditors and others except for conveyances made for good consideration and bona fide to persons not having notice of such fraud: Royal Bank of Canada v. North American Life Assurance Co.

The Court stated that TH was the sole shareholder or “principal” of the mortgagor corporations. She granted the mortgages in her capacity as sole shareholder of the mortgagor corporations, thus causing the mortgages to be granted as security for, among other liabilities, her liabilities to the appellant. She treated the properties registered in the name of the mortgagor corporations as her own.

Section 2 of the FCA focuses on whether the conveyance was made with the intent of defeating creditors or others. The Court held that even if s. 2 was interpreted in the manner urged by the appellant (that is, by requiring that the mortgagor corporations have made the mortgages with the intent of defeating their “creditors or others”), the argument fails. For instance, the appellant argued that the meaning of “others” is restricted to prospective creditors of the mortgagor corporations. The Court found that although the appellant was correct that “others” has been interpreted as including prospective creditors of the debtor, “others” could also include creditors of the mortgagor corporation’s sole principal, in circumstances where all or some of the money used to purchase the mortgaged properties came from the defrauded creditors of the principal, and where the principal caused the mortgages to be granted and did so with the intention of defeating her creditors. The Court noted that these were the circumstances present in this case.

(3) No.

To fall within the exceptions to s. 2 of the FCA set out in ss. 3 and 7(2), the conveyance must be made both “in good faith” and “upon good consideration”. The motion judge found that the grant of the mortgages did not satisfy either requirement.

The Court found it was unnecessary to address the appellant’s argument that there was good consideration for the mortgages as the findings of the motion judge were based on findings of fact and entitled to deference.  The Court noted that the finding was rooted in, among other evidence, the appellant’s own email evidencing its intent to “get ahead” of other creditors, the appellant’s knowledge of the Hutchens’ fraudulent activities, and the appellant’s registration of the mortgages in the face of court-imposed constructive trusts. The Court held that the appellant had failed to identify any palpable and overriding error and that the motion judge’s finding was amply supported by the record.

(4) No.

The appellant asserted that the Colorado plaintiffs’ support of the respondents’ motion was an abuse of process because they did not have a judgment in Ontario and were using the receivership to take steps that they should have taken in Colorado. The motion judge had found that the Colorado plaintiffs’ course of action in supporting the respondents’ motion made sense procedurally and cost efficient. The motion judge had found it was not an abuse of process.

The Court held that there was no merit to the appellant’s argument that the motion should have been barred by the doctrine of res judicata or as an abuse of process. The Court concluded there was nothing inappropriate in the Colorado plaintiffs supporting the motion.


Deluca v. Bucciarelli , 2022 ONCA 774

[Simmons, Benotto and Favreau JJ.A.]

COUNSEL:

J. B. R. Palmer, for the appellant

J. Vrancic, for the respondent

Keywords: Summary Judgment, Torts, Assault, Limitation Periods, Intentional Infliction of Emotional Distress, Limitations Act, 2002, S.O. 2002, c. 24, s. 4, s. 5(1)(a)(iv) and s. 16(1)(h.2)(i), Bruce v. Dyer, [1966] 2 O.R. 705 (H.S.) aff’d [1970] 1 O.R. 482 (C.A.), Warman v. Grosvenor (2008), 92 O.R. (3d) 663 (S.C.), Dunne v. Gauthier, 2000 BCSC 1603, Barker v. Barker, 2022 ONCA 567

FACTS:

The appellant and respondent were involved in a romantic relationship between 2003 and 2010. The appellant ended the relationship in early November 2010. In January 2019, the appellant issued a statement of claim against the respondent claiming damages of $1.4 million for multiple causes of action, including assault arising from the respondent’s conduct toward her between December 2010 and sometime in 2012 after she had ended the relationship. The appellant asserted that after she terminated the parties’ relationship, beginning in December 2010 until sometime in 2012, the respondent engaged in a campaign of harassing and threatening behaviour toward her that caused her to fear for her safety.

The appellant did not dispute that she was aware that the conduct she alleged in her statement of claim occurred more than two years before she issued her statement of claim. However, she relied on ss. 5(1)(a)(iv) and 16(1)(h.2)(i) of the Limitations Act, 2002, (the “Act”) to assert that there was a genuine issue for trial concerning whether she was prevented from discovering her claim within the two-year period because of her fear of the respondent (s. 5(1)(a)(iv)) or whether her claim fell within the exception to the two-year period because her proceeding was based, at least in part, on an assault that occurred in an intimate relationship (s.16(1)(h.2)(i)).

On a summary judgment motion, the motion judge dismissed the appellant’s action against the respondent because the motion judge found that the action was barred by the basic two-year limitation period set out in the Act. In particular, the motion judge found that the appellant had not brought herself within the ambit of s. 16(1)(h.2)(i) of the Act because she had not demonstrated she had reasonable grounds to believe that she was in danger of imminent harmful, offensive conduct or violence from the appellant. The motion judge was not satisfied the appellant had adduced evidence of conduct by the appellant that could meet the definition of “an assault” as it appears in s. 16(1)(h.2)(i) of the Act. In addition, the motion judge said, “[t]he affidavit evidence proffered in support of the [appellant’s] alleged fear for her personal safety and the safety of her family [lacked] particulars and [was not] persuasive.”

ISSUES:

(1) Did the motion judge reverse the burden of proof on a summary judgment motion?

(2) Did the motion judge err in appreciating the scope of s. 16(1)(h.2(i) of the Act or in articulating or applying the elements of the tort of assault?

(3) Did the motion judge fail to address the appellant’s argument under s. 5(1)(a)(iv) of the Act that the appellant was prevented from discovering her claim because of her fears for the safety of herself and her family?

(4) Were the motion judge’s reasons infected by assumptions based on myths and stereotypes or palpable and overriding error?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The Court noted that the appellant did not dispute the fact that the conduct alleged in her statement of claim occurred more than two years before it was issued. In these circumstances it was up to the appellant to put her best foot forward and adduce sufficient evidence to demonstrate a genuine issue requiring a trial concerning whether she could rely on either of ss. 5(1)(a) (iv) or 16(1)(h.2)(i) of the Act. The motion judge was not satisfied she had done so and the Court did not see any error in this conclusion.

(2) No.

The Court noted that the motion judge relied on Bruce v. Dyer for a description of the elements of the tort of assault. The motion judge said, “[t]he [appellant] must prove on a balance of probabilities that she had reasonable grounds to believe that she was in danger of violence from [the respondent], that she feared imminent harmful or offensive contact (emphasis in the original)” The motion judge was not satisfied the appellant had adduced evidence that could meet this standard.

The appellant submitted that the motion judge took too narrow a view of “imminence” and of the scope of “an assault” as that term appears in s. 16(1)(h.2)(i) of the Act. The appellant pointed to Warman v. Grosvenor (“Warman”) and Dunne v. Gauthier (“Dunne”) as examples of cases that illustrate that ‘imminence’ can mean different things in different contexts. The appellant also argued that the motion judge erred in failing to recognize that the term “assault”, as it appears in s. 16(1)(h.2)(i), can and should be interpreted broadly, so as to encompass threatening and harassing behaviour giving rise to fear of harm at some future unspecified point in time.

The Court noted that s. 16(1)(h.2)(i) of the Act provides that there is no limitation period in respect of “a proceeding based on an assault” where at the time of the assault the parties “had an intimate relationship.” The Court found the appellant’s arguments were foreclosed by the Court’s recent decision in Barker v. Barker, in which the Court considered the scope of the tort of assault. In Barker, this Court explained that a tortious assault “involves intentionally causing another to fear imminent contact of a harmful or offensive nature.” Barker also confirmed that “imminence is a critical component of the tort of assault.”

In light of Barker, the Court saw no error in the motion judge’s appreciation of the scope of s. 16(1)(h.2)(i) of the Act or in her articulation or application of the elements of the tort of assault. The Court held that the motion judge’s articulation of the elements of assault is consistent with Barker. The motion judge had concluded that the appellant had not adduced evidence capable of demonstrating a genuine issue for trial concerning whether the respondent’s alleged conduct met the threshold of “an assault”. The Court noted that this conclusion was based on an assessment of the appellant’s evidence as lacking in particulars and being unpersuasive.  The appellant had relied on a police occurrence which the motion judge noted contained a comment that the appellant did not fear for her safety. The Court held that the facts of both Warman and Dunne are distinguishable. The Warman trial judge was satisfied based on the specific facts of that case that the plaintiff was “reasonably apprehensive of imminent physical contact”. The physical battering that preceded the conditional threat in Dunne and the victim’s knowledge of the appellant’s capabilities were specific circumstances creating support for the finding of an assault. The Court concluded that the appellant’s allegations and evidence did not rise to a similar level and thus, saw no basis to interfere with the motion judge’s findings and conclusions.

(3) No.

The Court noted that while the motion judge may not have referred to that section specifically in her reasons, her finding that the evidence proffered in support of that assertion “[lacked] particulars and [was not] persuasive” was fatal to the assertion that the appellant was prevented from discovering her claim because of her fears for the safety of herself and her family.

(4) No.

The Court rejected the appellant’s submission that the motion judge erred in failing to rely on her assertion on cross-examination that the respondent had threatened to harm her. Her statement was no more than a bald assertion. She provided no particulars of date, time or context. She also acknowledged that the record did not include additional particulars of any such threats.


Bimman v. Igor Ellyn Professional Corporation (Ellyn Law), 2022 ONCA 781

[Gillese, Huscroft and Sossin JJ.A.]

COUNSEL:

I. Ellyn, for the appellant

J. Levitt, for the respondent

Keywords: Contracts, Interpretation, Solicitor-Client Retainer Agreement, Solicitors Act, R.S.O. 1990, c. S.15., s. 16, s. 23, s. 24, English Attorneys’ and Solicitors’ Act 1870 (U.K.), 33 & 34 Vict., c. 28, ss. 8-9, The Conveyancing and Law of Property Act, 1886, S.O. 1886, c. 20, s. 23(4), Solicitors Remuneration Act 1881 (U.K.), 44 & 45 Vict., c. 44, s. 8(4), The Law Reform Act, 1909, S.O. 1909, c. 28, ss. 31-32, Moore v. John A. Annen Barrister Professional Corporation, 2017 ONSC 7720, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Raphael Partners v. Lam (2002), 61 O.R. (3d) 417 (C.A.)., Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, Re Stuart, Ex p. Cathcart, [1893] 2 Q.B. 201 (C.A.), Re Mendelson, Beatty & Wood and Iwan, [1969] 2 O.R. 393 (H.C.), Re Solicitor, [1972] 1 O.R. 694 (H.C.), Andrew Feldstein & Associates Professional Corporation v. Keramidopulos, 2007 CanLII 40202 (Ont. S.C.)

FACTS:

The appellant, Mr. E, and his former law firm, Ellyn Law LLP, were retained by the respondents to act on a complex shareholder dispute that ran between December 2012 and May 2017 (through the “Agreement”). Mr. B and several other Toronto investors were involved in a real estate project. The other investors diluted the respondents’ minority share and accused Mr. B of fraud. In response, the respondents commenced an action for oppression and damages.

When Mr. B approached Ellyn Law, the action had been ongoing for two years and the respondents had gone through two other lawyers. In addition to acting on the main litigation, the respondents retained Ellyn Law to assess the accounts of their most recent counsel, which was the subject of a separate retainer agreement.

Ellyn Law drafted the Agreement for the main litigation, which the parties signed on January 30, 2013. Paragraph 3 listed the matters covered by the Agreement. Paragraph 3(3) did not include any qualifications or exceptions. Mr. E’s evidence was that his overall goal for the Agreement was to assure the respondents that he would see the matter through to trial. In addition to a retainer fee, the Agreement set out a hybrid compensation structure. Paragraph 15 provided that, “[i]n no circumstance will the fees and disbursements be less than the costs recovered.” However, paragraph 16 imposed an overriding cap on fees at 30% of total recovery. Paragraph 17 of the Agreement dealt specifically with disbursements in the case of an appeal. There was no other reference to an appeal in the Agreement.

Following trial in 2014, the trial judge found that the respondents had been oppressed. Both parties filed appeals, which were dismissed. There was no separate retainer agreement prepared or agreed to for the appeal. The respondents’ recovery after the appeals included partial indemnity costs and post-judgment interest. Additional costs were awarded for legal fees, disbursements, and HST, while the balance was for the fees of expert witnesses. In January 2014, the respondents signed an irrevocable direction, providing that the proceeds of any settlement or judgment in the action would be paid to Ellyn Law in trust out of the funds held in court.

In May 2017, following these appeals, Mr. B informed Mr. E that he was withdrawing the irrevocable direction and asked that the funds in court be paid directly to him. Mr. E rejected these instructions as contrary to the previous direction and order of the trial judge, and, in reply, the respondents terminated the Agreement.

Mr. E realized he had both a duty to deal with the funds in accordance with the trial judgment and a potential conflict given his personal interest in how those funds were distributed. He retained Chitiz Pathak LLP to represent Ellyn Law. The dispute was resolved through a motion for directions before the trial judge, who directed that the funds under the judgment be paid to the appellant in trust.

The appellant rendered regular accounts to the respondents between January 2013 and January 2015. No further accounts were rendered until June 2017, after the respondents terminated the Agreement. In the June 2017 account, the appellant sought payment for fees all-in, which were greater than the 30% recovery cap, though still less than the actual docketed time on the file. Specifically, the appellant sought costs for the following: the argument needed to finalize the trial judgment; for negotiation of advance costs; for a motion in the appeal; for the cross-appeal; for arguing costs on the appeal; and for the services of Chitiz Pathak LLP (“the Chitiz disbursement”).

The respondents disagreed with these additional charges. They brought a motion under the Solicitors Act (the “Act”) to determine the effect of the Agreement on the fees claimed. The respondents asked the motion judge to find that the Agreement capped fees at 30%, that the five other accounts claimed by the appellant were subsumed by the Agreement, and that the Chitiz disbursement was not payable. They also sought an assessment of the fees charged by the appellant for assessing prior counsel’s account. The appellant argued that the 30% cap was unfair and unreasonable in the context of a difficult client, an excellent result in the litigation, and the many unforeseen activities that were required on the file.

The motion judge found that the Agreement was valid and enforceable, capping the appellant’s fees at 30%. He disallowed any further fees or disbursements except for the appellant’s assessment of prior counsel’s account, which was remitted to the assessment officer. He declined to order costs of the motion in the circumstances.

The motion judge noted that the regular rules of contract interpretation apply to a retainer agreement, subject to the requirement under s. 24 of the Act and the common law that the agreement be fair and reasonable. The motion judge reviewed the Agreement and affidavit evidence and found the appellant agreed to accept a retainer that was less than the amount reasonably needed to secure the firm’s fees. In exchange, the appellant negotiated a possible premium payment based on the quantum of damages recovered.

The motion judge found that paragraph 3(e) of the Agreement was drafted broadly and was not limited to litigation through the end of trial, given the Agreement’s reference to disbursements for an appeal. The parties must have understood that an appeal was likely and made provision for it. It was reasonably foreseeable at the time of the retainer that the respondents might appeal an eventual trial decision.

The motion judge also observed that the history of the litigation at the time the Agreement was signed, as well as the respondents’ request to assess prior counsel’s fees, would have reasonably raised the appellant’s concerns about the future collectability of his own account. The motion judge noted that he must look at fairness and reasonableness both at the time the Agreement was entered into and “at the end of the day.” He accepted that he had jurisdiction to refuse to enforce an agreement that worked an unfairness against a lawyer.

The motion judge observed that, as a general principle of interpreting fee agreements, a court will usually order an agreement enforced against the lawyer, but not always. He found the Agreement in this case was both fair and reasonable.

The motion judge found that all steps in the litigation were or ought to have been reasonably anticipated. The appellant, as drafter, could have included exceptions in the Agreement or required a separate retainer for an appeal. The fact that he did not do so was consistent with a finding that the parties knowingly and voluntarily remained under this arrangement throughout the litigation.

The motion judge noted that although the fees sought were likely reasonable on a purely quantum meruit basis, it was not unfair or unreasonable to hold a solicitor to a fee agreement in respect of specific matters that fell within its scope, that were reasonably foreseeable, and from which they could have protected themselves by drafting differently. A 30% recovery is common in contingency fee agreements, and if the hybrid nature of this arrangement made a difference to the economics, this should have been dealt with in the Agreement. Having concluded the Agreement was valid, the motion judge went on to find that all of the additional fees sought were expressly contemplated by, or reasonably part of, the broad language of paragraph 3(e). The only exception was the fees billed for assessing prior counsel’s bill, which were subject to a separate retainer agreement.

Finally, the motion judge reasoned that the Chitiz disbursement did not fall under the Agreement because it was related to a dispute between lawyer and client rather than to resolving the action. He concluded that the time to seek costs in that matter was during the motion before the trial judge. As no costs were awarded at that time, the appellant could not seek reimbursement after the fact.

ISSUES:

(1) Did the motion judge err in finding that the retainer agreement was valid and enforceable under s. 24 of the Act?

(2) Did the motion judge err in finding that the additional fees claimed were covered by the retainer agreement or that the disbursement should not be allowed?

HOLDING:

Appeal allowed in part. Order varied.

REASONING:

(1) No.

The parties agreed that s. 24 of the Act was to be interpreted according to the Court’s decision in Raphael Partners v. Lam (“Raphael”). Based on Raphael, the appellant argued that resolving a motion under s. 24 involved two discrete steps: (1) a decision-maker must consider whether the retainer agreement was fair, and (2) the decision-maker must determine whether the retainer agreement was reasonable in light of the outcome of the matter.

The Court distinguished Raphael from the current case. Raphael dealt with a client seeking to invalidate a contingency fee arrangement with his lawyer, whereas the current case is where a lawyer is seeking to invalidate a retainer agreement.

The Court clarified that nothing in the Act precludes a lawyer from bringing a motion for relief on the basis that a retainer agreement was unfair and/or unreasonable. Further, the Court clarified that s. 23 explicitly allowed for an application by a “party to the agreement”, including a lawyer. In its review of the policy context of s. 24 of the Act, the Court found that s. 24 must be interpreted and applied in light of its purpose of protecting clients from unfair and unreasonable retainer agreements.

S. 21 of the Act makes it clear that lawyers are not entitled to seek fees beyond what is expressly agreed to in an agreement with a client. When a fee agreement is challenged under s. 24 by the client, the lawyer bears the onus of satisfying the Court that the way in which the agreement was obtained was fair and that the terms of the agreement are reasonable. The Court explained that the fairness requirement of s. 24 is concerned with the circumstances surrounding the making of the agreement and whether the client fully understood and appreciated the nature of the agreement executed. The Court saw no reason as to why the onus would shift in a case where a lawyer seeks to invalidate a retainer agreement.

With respect to reasonableness of the Agreement, the Court clarified and contemplated the factors: (1) the time expended by the lawyer; (2) the legal complexity of the matter; (3) the results achieved; and (4) the risk assumed by the lawyer.

Although the motion judge did not expressly refer to the two-part framework from Raphael, the Court found the motion judge’s findings addressed the substantive inquiries required by that test. The motion judge also appropriately focused on the reasonable foreseeability of the steps that occurred in the litigation and the fact that the appellant could have revisited the Agreement when it became clear it was not favourable to him.

However, in the Court’s view, the Raphael framework should be modified in the rare case of a lawyer challenging their own retainer agreement under s. 24. In these circumstances, the Court found it should be presumed that retainer agreements are made fairly and that its terms are reasonable. The Court found that a lawyer seeking to challenge the validity of a retainer agreement will bear the burden of demonstrating some exceptional circumstance to rebut this assumption.

The Court found that there were no exceptional circumstances which would rebut the presumption of validity.

(2) Yes.

The Court found no basis to interfere with the motion judge’s findings in relation to whether the additional fees were covered by the Agreement. The Court, however, disagreed that the Chitiz disbursement fell outside of the Agreement and is not payable by the respondents.

The Court found that the motion judge erred in his interpretation and application of the Agreement by concluding that the Chitiz disbursement did not fall within paragraph 3(e) of the Agreement. The Court found that the appellant was both legally and professional obligated to ensure that the funds from the action were not paid out contrary to the trial judgement. The disbursement was reasonably necessary to fulfill this obligation.


Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779

[Gillese, Trotter and Harvison Young JJ.A.]

COUNSEL:

M.A. Church and S. Virdi, for the appellant UNIFOR Local 975

J. Craig and C. Fynney, for the respondents Ganeh Energy Services Ltd. and Beaver Energy Services Ltd.

R.J. Charney and S. Cass, for the respondent Enercare Home & Commercial Services Limited Partnership

A. Hart and A. Bowker, for the respondent Ontario Labour Relations Board

Keywords: Labour and Employment, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Subcontractors, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness,  Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Delios v. Canada (Attorney General), 2015 FCA 117, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

FACTS:

The respondent, Enercare Home & Commercial Services Limited Partnership (“Enercare”), and the appellant, UNIFOR Local 975 (“Unifor”), were in a collective bargaining relationship. Unifor asked the Ontario Labour Relations Board (the “Board”) to declare that Enercare, Ganeh Energy Services Ltd. (“Ganeh”), Beaver Energy Services Ltd. (“Beaver”), and Perras Mechanical Services Ltd. (“Perras”) (collectively “the respondents”) were related employers within the meaning of s. 1(4) of the Labour Relations Act (the “LRA”).

Enercare and Unifor entered into settlements and letters of understanding related to contracting out. In May 2006, a settlement clarified the scope of the bargaining rights of several unions, including Unifor’s predecessor. At that time, Unifor’s predecessor did not attempt to expand its bargaining rights to include Enercare’s independent contractors. In April 2010, Enercare and Unifor entered into Letter of Understanding (“LOU”) #3, which provided that Enercare “shall not sub-contract work that is presently being performed by employees covered by this agreement that would by so doing result in lay off of regular Bargaining Unit Employees”. LOU #2, which was also part of the collective agreement, provides that Enercare “is committed to successfully growing its competitive sales and services business with our own employees in our franchise area.”

Ganeh and Beaver are economically dependent on Enercare. Enercare contracts form 100% of Ganeh’s business and 95-98% of Beaver’s business. Between December 2011 and March 2012, Unifor brought applications to the Board for declarations that Enercare and its contractors Ganeh, Beaver, and Perras were “related employers” within the meaning of s. 1(4) of the LRA and, alternatively, that there had been a transfer of business within the meaning of s. 69. The Board declared, pursuant to s. 1(4), that respondents were related employers, but Perras was not (the “Board Decision”).

The Board stated the “well established” purpose of s. 1(4) is to prevent the erosion of a trade union’s bargaining rights. If that occurs, or if there is a reasonably foreseeable erosion of bargaining rights, the relief available pursuant to s. 1(4) is a related employer declaration. However, the purpose of s. 1(4) is not to extend a trade union’s bargaining rights. The Board then stated that four criteria must be met for a related employer declaration to be made: (1) there must be more than one entity involved; (2) the business activities of the entities must be associated or related; (3) the entities must be under common control or direction; and, (4) there must be a labour relations reason for granting the declaration.

The Board found that each criterion was met, and that Enercare had not divested fundamental control and direction over the work performed for it by Ganeh, Beaver and Perras. The evidence established that Enercare and those entities share common control and direction over the activities which they carry on as part of Enercare’s core business activities.

Having found that the s. 1(4) preconditions were met, the Board then considered whether there was a labour relations reason for issuing a related employer declaration. The Board found that Unifor’s bargaining rights were eroded or undermined by the diversion of what would normally be work performed by Unifor’s members to one of the respondents. Accordingly, Ganeh and Beaver were deemed to be related employers, however, Perras was not as the majority of its business was not with Enercare.

The Divisional Court concluded that the Board’s analysis leading to it declaring the respondents to be related employers was unreasonable because it failed to consider the parties’ bargaining history, the collective agreement, and the relevant LOUs addressing Enercare’s longstanding contracting out practices. It said that this unreasonable analysis led the Board to analyze other issues without regard for the proper context in which those issues arose.

The Divisional Court questioned the validity of the Board’s distinction between Ganeh/Beaver and Perras. It said the distinction was drawn on the basis that virtually all of Ganeh/Beaver’s business was with Enercare while only roughly 30% of Perras’ business was. It said that this distinction did not affect the bargaining relationship between Enercare and Unifor. It added that nothing prevented Ganeh/Beaver from performing other work and it was solely a management decision on their part to work almost exclusively for Enercare. After quashing the Board’s Decision, the Divisional Court remitted the matter to the Board for a fresh determination.

ISSUES:

(1) Was the Board’s decision reasonable in light of the considerations from Vavilov?

(2) Did the Divisional Court err in finding that the Board was unreasonable because the Board did not consider the parties’ bargaining history, collective agreement and LOUs?

(3) Did the Divisional Court err in finding that the Board was unreasonable because the Board conflated Enercare’s contracting out generally with its contracting out specifically to Ganeh and Beaver?

(4) Did the Divisional Court err in finding that the Board was unreasonable because the Board treated Ganeh and Beaver’s economic dependence as a relevant factor?

HOLDING:

Appeal allowed.

REASONING:

(1) Yes.

The Court began its analysis with a review of the principles in Canada (Minister of Citizenship and Immigration) v. Vavilov (“Vavilov”) and their application to the decision of the Board.  As a preliminary issue, the Court held that the Divisional Court had correctly identified reasonableness as the proper standard of review.

The Court stated that two types of fundamental flaws can render an administrative decision unreasonable: 1) a failure of rationality internal to the reasoning process, and 2) where a decision is untenable, in some respect, in light of the relevant factual and legal constraints that bear on it.

The Court found that the Board’s reasoning was internally coherent, rational, and logical. The Court stated that, having found that the preconditions to the exercise of discretion under s. 1(4) were met, the Board chose to exercise its discretion and make the related employer declaration in respect of Enercare, Ganeh, and Beaver because Unifor’s bargaining rights were being eroded by the diversion of work that would normally be performed by Unifor’s members.  The Court agreed with the Board’s refusal to make a related employer declaration in respect of Perras because the evidence did not show that the relationship between Enercare and Perras had eroded Unifor’s bargaining unit. Accordingly, the Court considered the Board’s decision to have bore the hallmarks of reasonableness – justification, transparency, and intelligibility.

The Court also found the Board’s decision tenable in light of the relevant factual and legal constraints. The Court stated that, according to Vavilov, three factual constraints are pertinent on a reasonableness review: 1) the evidence before the decision maker and facts of which the decision maker may take notice; 2) the parties’ submissions; and 3) the potential impact on the individual to whom the decision applies. The Court stated that the Board had identified the evidence before it and the facts upon which it relied in making the related employer declarations. Further, it clearly set out the parties’ submissions, and explained that the impact of a s. 1(4) finding on the respondents was not an issue because those provisions are concerned with protecting bargaining rights and not their effect on the corporate entities involved. Accordingly, the Court held that the Board’s decision was factually tenable.

The Court stated that the relevant legal constraints include the governing statutory scheme, other relevant statutory and common law, the principles of statutory construction, and the past practices and decisions of the administrative body. The Court held that the issues with which the Board had to grapple, including the scope of bargaining rights, were squarely within the Board’s core jurisdiction and the confines of its enabling statute. Consequently, the Court saw nothing unreasonable about the Board’s Decision.

(2) Yes.

The Court found that the Divisional Court decision did not align with two core Vavilov directives. The Court found that the Divisional Court failed to determine if the Board’s decision bore the requisite level of intelligibility, transparency, and justification.  Instead, it considered the legislative history of s. 1(4) and the Board’s jurisprudence on it and came to its own determination of what was required for the Board to make a related employer declaration. The Court found that the Divisional Court had erred in imposing’s its view that it was necessary for the parties’ bargaining history, collective agreement, and other agreements respecting contracting out to be considered when determining whether the s. 1(4) preconditions to a declaration had been met. The Court concluded that the Divisional Court had erred when it “made its own yardstick and measured the Board Decision against it”.

The Court held that the Divisional Court also erred because, before deciding that the Board had unreasonably excluded considerations of the collective agreement and LOUs, the Divisional Court had failed to look at the Board’s reasons for so doing, determine if the Board’s approach accorded with the purposes and practical realities of s. 1(4), and was reasonable given the consequences and operational impact of the decision. Further, the Divisional Court’s review failed to reflect an appropriate degree of restraint rooted in an appreciation of the Board’s demonstrated expertise and lengthy experience in deciding s. 1(4) applications, a matter within its exclusive jurisdiction.

(3) Yes.

The Court held that the Divisional Court had erred in its conclusion that the Board erroneously conflated Enercare’s general practice of contracting out with contracting out work specifically to Ganeh and Beaver. The Court held that it was incorrect to say that the Board distinguished Perras from Ganeh/Beaver solely on the amount of Enercare work each performed. The Board made numerous critical factual findings that distinguished Ganeh/Beaver from Perras and had erred in ignoring these findings. The Court held that as the reviewing court, the Divisional Court was not to interfere with the Board’s factual findings and had to refrain from reweighing and reassessing the evidence considered by the Board, absent exceptional circumstances.

The Court also found that the Divisional Court’s conclusion overlooked the Board’s analysis on whether a s. 1(4) labour relations purpose would be served by making a related employer declaration in respect of Ganeh/Beaver and Perras. In this regard, the Court found that the Board again made critical factual findings that distinguished Ganeh/Beaver from Perras, which were subsequently disregarded by the Divisional Court.

(4) Yes.

The Court held that the Divisional Court did not find the Board Decision unreasonable because of its treatment of Ganeh and Beaver’s economic dependence on Enercare. Rather, the Divisional Court accepted that economic dependence could be a factor for consideration on a s. 1(4) application but viewed the Board’s use of that factor to be flawed because it failed to consider it within the context of the parties’ bargaining history, their collective agreement, and the relevant LOUs.

The Court found that Vavilov was clear in that the Divisional Court was not to interfere with the Board’s factual findings that underlaid its determination of common control or direction nor was the Divisional Court to reweigh or reassess the evidence the Board relied on for that determination “absent exceptional circumstances”. The Court held that instead of reviewing the reasonableness of the Board’s determination of common control or direction, the Divisional Court measured the Board’s determination against its view of the legislation and its analysis of the Board’s jurisprudence. In doing so, the Divisional Court effectively decided the issue of common control or direction de novo, something which the Court held Vavilov expressly prohibited.

The Court held that because the Divisional Court was conducting a reasonableness review of the Board Decision, it was to consider the Decision and the reasons for it, with respectful attention to the Board’s demonstrated expertise. The Divisional Court was to see if the Board Decision accorded with the purposes and practical realities of s. 1(4) and represented a reasonable approach given the consequences and operational impact of the decision. The Court stated that that approach was not limited to an assessment of the Board Decision as a whole. It was also the approach to be taken when considering individual components of the Board Decision, including its determination that the statutory condition of common direction or control had been met. Accordingly, on the Vavilov approach, the Court found that the Board reasonably determined that the third criterion of common direction or control had been satisfied.


Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

[Gillese, Trotter and Harvison Young JJ.A.]

COUNSEL:

P. Cavalluzzo, S. Moreau, and A. Hanif, for the appellants Bricklayers, Masons Independent Union of Canada, Local 1, Labourers’ International Union of North America, Local 183 and Masonry Council of Unions Toronto and Vicinity

M.Z. Tufman and G.A.P. Tufman, for the respondent T.T.

A. Hart and A. Bowker, for the respondent Ontario Labour Relations Board

Keywords: Labour and Employment Law, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness, s. 1(4), s. 69, s. 133, Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, 133, Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, Wasaga Trim Supply (2006) Inc., [2010] O.L.R.D. No. 1854, Re Blouin Drywall Contractors Ltd. and United Brotherhood of Carpenters and Joiners of America, Local 2486 (1975), 8 O.R. (2d) 103 (C.A.), leave to appeal to S.C.C. refused, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, D’Errico v. Canada (Attorney General), 2014 FCA 95, Canada (Attorney General) v. Zalys, 2020 FCA 81, Canadian Broadcasting Corporation v. Ferrier, 2019 ONCA 1025, leave to appeal to S.C.C. refused [2020] S.C.C.A. No. 59

FACTS:

TT, one of the respondents, is currently a sole proprietor operating as Tomasz Turkiewicz Custom Masonry Homes (“TTCMH”). TT was a principal and director of Brickpol Masonry Corporation (“Brickpol”). The appellants, Bricklayers, Masons Independent Union of Canada, Local 1 (“Local 1”), and the Labourers’ International Union of North America, Local 183 (“Local 183”), (together, the “Unions”) are construction trade unions within the meaning of ss. 1 and 129 of the Labour Relations Act (“LRA”). The Unions have a collective agreement with an employers’ group, the Masonry Contractors’ Association of Toronto Inc. (“MCAT”) known as the MCUTV Collective Agreement, which recognizes MCUTV as the exclusive bargaining agent for its employees engaged in construction work in the residential sector of the construction industry in certain geographical areas.  Local 1 and MCAT are also parties to another collective agreement, known as the “Local 1 Collective Agreement”. The terms and conditions of the Local 1 Collective Agreement are the same as those in the MCUTV Collective Agreement except for the sector of the construction industry and geographic areas to which the Local 1 Collective Agreement applies. Together, the MCUTV Collective Agreement and the Local 1 Collective Agreement are known as the Masonry Collective Agreements (“MCA”).

Brickpol was incorporated by TT in 2001 and signed voluntary recognition agreements (“VRAs”) with the Unions, binding Brickpol to the MCA. In 2004 and 2007, TT signed renewal agreements on behalf of Brickpol. In 2007, TT was injured in a car accident and, as a result, declared personal bankruptcy. In 2008, Brickpol notified the Unions that it was no longer performing work covered under the MCA and later voluntarily dissolved in 2010. In December 2011, TT was discharged from his personal bankruptcy. In May 2017, TT registered TTMCH as a sole proprietorship and began performing bricklaying/masonry work in North York. TT was no longer a union member and did not hire union members to perform the work.

The Unions filed two applications against both TTCMH and Brickpol with the Ontario Labour Relations Board (“OLRB”) relating to bricklaying work being done by TT pursuant to ss. 1, 69, and 126 of the LRA. The Unions alleged that TTCMH violated the MCA by failing to apply its terms to the work TTMHC was performing. The OLRB proceedings took place in three stages: (1) the s. 1(4) application (the “First Decision”); (2) the first part of the grievance, which dealt with whether TTCMH was bound to the then-current version of the MCA (the “Second Decision”); and (3) the second part of the grievance, which dealt with whether TTCMH had violated the MCA and, if so, the quantum of damages TTCMH was to pay to the Unions (the “Third Decision”).

In the First Decision, the OLRB declared that Brickpol and TTMHC are a single employer within the meaning of s.1(4) of the LRA as they were both carried out under the common control and direction of TT, served the same markets, and perform work for the same type of clients. The OLRB also concluded that the Unions collective bargaining rights under the MCA were being eroded by TT’s decision to recommence bricklaying and masonry work in the same market and for the same type of clients as Brickpol but on a non-union basis through TTCMH. Accordingly, the OLRB held that TTCMH was deemed to be a signatory to the VRAs entered into between Brickpol and the Unions.

In the Second Decision, the OLRB relied on the findings in the First Decision and concluded that TTCMH was bound by the MCA. Vice-Chair K viewed TT’s personal bankruptcy and the fact that TTCMH had no employees to be irrelevant to this conclusion.

In the Third Decision, the OLRB heard the grievance with respect to TTCMH’s bricklaying and masonry work in North York. TTCMH argued that collective agreements did not apply where a sole proprietor searches out work on his own behalf and performs it on his own. The OLRB disagreed, observing that the pre-cast work was “clearly bargaining unit work,” and allowed the grievance, concluding that TTCMH had violated the MCA. The OLRB awarded damages of $32,466 to the Unions.

TT then brought three judicial review applications to the Division Court for each of the OLRB Decisions. The Divisional Court granted the applications and quashed the OLRB Decisions. The Divisional Court held that although the OLRB’s finding in the First Decision, that Brickpol and TTCMH are a single employer was available and reasonable, the OLRB failed to find a valid labour relations purpose before making a related employer declaration. The Divisional Court observed that this was not a case of an employer repositioning its business to avoid labour relations obligations, but rather, the case was about a man whose life and business were largely destroyed due to injury who, many years later, tried to start again. The Divisional Court also noted that while it was “clear” that TT would meet the test of a “key individual”, the OLRB did not put its mind to the nature and reason for the hiatus, nor did it seem to place weight on the length of the hiatus, which, in practical terms, was a decade. Because the First Decision was unreasonable, it was quashed. Because the Second and Third Decisions were based on the First Decision, they too were quashed. The Divisional Court declined to remit the First Decision to the OLRB because the result that the declaration does not serve the purpose of s.1(4) of the LRA would be inevitable. The Divisional Court also stated that had it not quashed the Third Decision due to the First Decision being quashed, it would have quashed and remitted the Third Decision for reconsideration as the quantum of damages was harsh and unreasonable.

ISSUES:

(1) Did the Divisional Court err in its application of Vavilov and the standard of review of reasonableness to the OLRB Decisions?

(2) Did the Divisional Court err in finding that the OLRB failed to consider whether a related employer declaration made pursuant to s. 1(4) of the LRAwould serve a labour relations purpose?

(3) Did the Divisional Court err in finding that the OLRB failed to properly address s. 126(3) of the LRAand consider the reasons for the hiatus?

(4) Did the Divisional Court err in making findings of fact not made by the OLRB?

(5) Did the Divisional Court err in finding that the damages award was punitive and unreasonable?

(6) Did the Divisional Court err in declining to remit the OLRB Decisions to the Board for a new hearing?

HOLDING:

Appeal allowed.

REASONING:

(1) Yes.

The Court held that the Divisional Court erred by failing to follow the of Canada (Minister of Citizenship and Immigration) v. Vavilov (“Vavilov”) directives in its the application of the reasonableness standard to the OLRB Decisions. The Divisional Court did not show the requisite restraint and respect for the specialized expertise of the OLRB, nor did it afford the OLRB Decisions appropriate deference. It committed errors that Vavilov specifically cautioned against with respect to the proper application of the reasonableness standard.

As set out in Vavilov, a court conducting a reasonableness review must focus on the decision actually made by the decision maker and, where reasons have been given, examine the reasons with respectful attention, seeking to understand the reasoning process the decision maker used to arrive at its conclusion. Two types of fundamental flaws can render a decision unreasonable: (1) a failure of rationality internal to the reasoning process; and (2) the decision is untenable in light of the relevant factual and legal constraints that bear on it. The Court reviewed the OLRB Decisions according to the Vavilov directives and found, under the first directive, that the OLRB Decisions were rational and logical as each decision was based on reasoning that was rational and logical. Under the second directive, the Court found that the OLRB Decisions were tenable in light of the relevant factual and legal constraints. A consideration of the relevant factual constraints reinforced the reasonableness of the OLRB Decisions and a consideration of the relevant legal constraints showed nothing untenable about the OLRB Decisions and offered no basis for judicial intervention.

(2) Yes.

The Court held that the Divisional Court erred in its application of the reasonableness standard of review in concluding that the OLRB had “failed to analyze whether a related employer declaration would serve a labour relations purpose as it was required to do.” In the First Decision, the OLRB found that the Unions’ bargaining rights were being eroded because TTCMH was performing bargaining unit work on a non-union basis. Although the OLRB did not use the phrase “labour relations purpose”, it is clear that it chose to exercise its discretion to grant the related employer declaration for that labour relations purpose. The labour relations purpose, as found by the Board, falls squarely within the Divisional Court’s statement that a labour relations purpose includes the preservation or protection from artificial erosion of a union’s bargaining rights.

The Court further stated that it was not open to the Divisional Court to substitute its own view of what constitutes a labour relations purpose. Section 1(4) gives the OLRB the discretion to make a related employer declaration when the statutory preconditions are met. The Divisional Court should have shown appropriate deference to the OLRB’s specialized expertise and jurisprudence on the issues before it. In finding the First Decision to be unreasonable, the Court held that the Divisional Court failed to adhere to the foundational principle underlying a reasonableness review: intervene in administrative matters only if it is truly necessary to safeguard the legality, rationality, and fairness of the administrative process.

(3) Yes.

The Court found that the Divisional Court erred by criticizing the OLRB’s treatment of s. 126(3) of the LRA by failing to consider whether the nature, length, and reasoning behind TT’s hiatus would not lead to a related employer declaration. The Court held that these criticisms reflect an erroneous application of the reasonableness standard of review. Further, the Court found that the OLRB was not required to consider the reasons for the hiatus and that the only factor that s. 126(3) requires the OLRB to consider is the length of the hiatus, which it did. OLRB jurisprudence affirms that there is no requirement for anti-union motivations to exist for a s. 1(4) declaration to be issued. The Court concluded that the Divisional Court erred by imposing an additional factor on the OLRB that is not grounded in the LRA or the jurisprudence.

(4) Yes.

The Court held that the Divisional Court improperly made factual findings that the OLRB did not make in the First Decision concerning TT’s injury, ability to work, and the impact of his circumstances. Vavilov affirmed that reviewing courts must not interfere with a tribunal’s factual findings absent exceptional circumstances, and should refrain from reweighing and reassessing the evidence considered by the decision maker. The Court concluded that there were no exceptional circumstances justifying the Divisional Court’s departure from the general prohibition against reassessing evidence. Accordingly, the Court held that the Divisional Court erred in making those findings and relying on them to conclude that the OLRB Decisions were unreasonable.

(5) Yes.

The Court found that the Divisional Court erred in its assessment of the reasonableness of the OLRB’s damages award by failing to refer to Blouin Drywall or explain why it concluded that the damages award was harsh and unreasonable. The Court noted that there was no basis for the Divisional Court’s determination that the damages award was unreasonable.

(6) Yes.

The Court held that Vavilov instructs reviewing courts that where a decision is unreasonable it is most often appropriate to remit the matter to the decision maker. In refusing the remit the matter, the Divisional Court erred because the high threshold for refusing to remit was not met. The Court determined that a reviewing court may only render a decision in exceptional circumstances and further concluded that there no exceptional circumstances to justify the Divisional Court from departing from this general principle.


McDonald v. Toronto-Dominion Bank , 2022 ONCA 788

[Fairburn A.C.J.O., Sossin and Favreau JJ.A.]

COUNSEL:

L. Caylor, M. M. Ward, N. J. Shaheen, A. C. Payne, S. P. Tolani and T. Feore, for the appellants

G. R. Hall, J. Sirivar, C. Wadsworth, A. Bond, E. Chesney and J. Klugsberg, for the respondent

Keywords: Torts, Duty of Care, Standard of Care, Negligence, Novel Duty of Care, Proximity, Foreseeability, Established Categories, Rules of Civil Procedure, rr. 1.04(1), 53.07, Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L); Cooper v. Hobart, 2001 SCC 79, Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, Toronto Dominion Bank v. 1633092 Ontario Ltd., 2019 ONSC 1473, Dr. Robert Grossman v. The Toronto-Dominion Bank, 2014 ONSC 3578, Toronto Dominion Bank v. Whitford, 2020 ABQB 802, Lee v. Canadian Imperial Bank of Commerce, 2001 CarswellOnt 3019 (S.C.), Good Mechanical v. Canadian Imperial Bank of Commerce (2005), 49 C.L.R. (3d) 183 (Ont. S.C.), Don Bodkin Ltd. v. Toronto Dominion Bank (1993), 14 O.R. (3d) 571 (Gen Div.), aff’d (1998) 40 O.R. (3d) 262 (C.A.), Oak Incentives Group Inc. v. Toronto Dominion Bank, 2011 ONSC 3245, aff’d 2012 ONCA 726, Groves-Raffin Construction Ltd. v. Canadian Imperial Bank of Commerce (1975), 64 D.L.R. (3d) 78 (B.C.C.A.), Rausch v. Pickering City, 2013 ONCA 740, R. v. Sheppard, 2002 SCC 26, R. v. M. (R.E.), 2008 SCC 51, Granitile Inc. v. Canada (1998), 41 C.L.R. (2d) 115 (Ont. Gen. Div.), Peter Sankoff, Law of Witnesses and Evidence in Canada

FACTS:

RS is serving a 110-year sentence for perpetrating the second largest Ponzi scheme in history. He and three others used Stanford International Bank Ltd. (“SIB”) as a vehicle to defraud the bank’s customers of over 7 billiondollars. SIB was an offshore bank solely owned by RS. In the early 1990’s, the bank was migrated to Antigua and Barbuda (“Antigua”) and was renamed SIB.

The Toronto Dominion Bank (“TD”) acted as SIB’s primary U.S. dollar correspondent bank from 1991 until SIB’s collapse in 2009. As a correspondent bank, TD was responsible for receiving funds from and disbursing funds to purchasers of SIB’s certificates of deposit.

RS and JD (SIB’s Vice-President/Controller) led customers to believe that SIB earned consistently high investment returns, which allowed it to pay guaranteed high returns and fund all redemption requests. To do this, they reported misleading investment types and invented fictitious investment balances

Using a classic Ponzi setup, RS and JD misappropriated money from SIB’s assets, leaving redemption requests from old customers to be paid by the incoming funds from new customers. In large measure, the scheme went undetected because of the structure of SIB’s investment portfolio, which RS divided into three tiers. While the first two tiers were legitimate and known by everyone, there was a secret third tier that consisted of illiquid and risky investments. Only RS, JD and two others (officers of other Stanford Group companies) knew about the third tier. Ultimately, the third tier contained at least 2 billion USD of personal loans to RS.

While there was a risk that SIB’s auditor or the Financial Services Regulatory Commission in Antigua would uncover the scheme, RS took care of that risk by bribing the SIB auditor and the chair of the regulator. These bribes resulted in the auditor providing yearly, unqualified opinions about SIB’s financial health and the regulator turning a blind eye instead of undertaking its normal review and audit function.

The Ponzi scheme continued undetected until the financial crisis in 2008. At the time of its collapse, only approximately $678 million USD in identifiable or traceable assets remained in SIB, a small fraction of the $7.4 billion USD owed to its customers. The Securities Exchange Commission (“SEC”) filed charges against RS, JD and the other two perpetrators alleging a massive fraud. All four received prison sentences. SIB was placed into liquidation. Ultimately, the Joint Liquidators were appointed to replace the original receiver-managers.

The Joint Liquidators commenced an action on behalf of SIB against TD, claiming: (1) it was liable to SIB for knowing assistance in breach of fiduciary duty; and (2) it was negligent in the provision of services. The Joint Liquidators’ action was dismissed. As for the knowing assistance claim, the trial judge found that TD had no actual knowledge of the fraud and was not reckless or wilfully blind. The trial judge found that the negligence claim could not succeed because the Joint Liquidators had failed to establish the “required proximity to give rise to the novel duty of care proposed in this case.” In the alternative, the trial judge concluded that even if there was a duty of care, the Joint Liquidators had failed to prove a breach of the standard of care.

The Joint Liquidators appealed only from the dismissal of the negligence claim. They submitted that the trial judge erred in both the duty of care and standard of care analysis. They also contended that the trial judge erred in permitting an unfair trial process by making a flawed procedural ruling.

ISSUES:

(1) Did the trial judge err in her duty of care analysis?

a. Did the trial judge err in finding that the relationship between TD and SIB did not fall within an established or analogous category of proximity and so a full proximity analysis was required?

b. Did the trial judge err in conducting her full proximity analysis?

(2) Did the trial judge make legal or factual errors in concluding that, if there were a duty of care, there would have been no breach of the standard of care?

a. Did the trial judge err by suggesting that TD had to have subjective knowledge of the fraudulent scheme to fall below the standard of care?

b. Did the trial judge err in her treatment of evidence with respect to the 1999 FinCEN Advisory and the 2002 Philadelphia Inquirer article?

c. Did the trial judge err in uniformly accepting TD’s expert opinion evidence?

d. Were the trial judge’s reasons inadequate?

(3) Did the trial judge err in interpreting and applying r. 53.07 of the Rules of Civil Procedure, resulting in trial unfairness?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The Joint Liquidators submitted the trial judge erred by failing to find that the relationship between TD and SIB fell within an established or analogous category of proximity. And, alternatively, if a full proximity analysis was required, she erred in concluding that the required proximity between the parties had not been established. According to the Joint Liquidators, the trial judge went off course in her proximity analysis by finding that sufficient proximity could only exist if TD had subjective knowledge of the fraudulent scheme and by incorrectly defining the duty of care. The Court found no error in the trial judge’s application of the test.

a. No.

The Court reviewed the governing case law and stated that under the Anns/Cooper framework, establishing a duty of care requires a two-step analysis. At the first stage, the Court asks whether the defendant owes the plaintiff a prima facie duty of care by considering proximity and foreseeability: Cooper v. HobartDeloitte & Touche v. Livent Inc. (Receiver of)1688782 Ontario Inc. v. Maple Leaf Foods Inc. If a prima facie duty is established, the analysis moves to the second stage where the question is whether there are residual policy considerations that may negate the imposition of a duty of care: Livent.

According to Livent, where it is alleged that there was negligent performance of a service, it is more useful to consider proximity before foreseeability, because whether an injury is reasonably foreseeable will depend upon the scope of the relationship of proximity. At the proximity stage of the analysis, the overarching question is whether the parties are in “‘such a close and direct’ relationship that it would be ‘just and fair having regard to that relationship to impose a duty of care in law’”: LiventCooper; and Maple Leaf. In cases of pure economic loss arising from negligent performance of services, two factors are determinative in the proximity analysis: the defendant’s undertaking and the plaintiff’s reliance: LiventMaple Leaf.

The Court found the trial judge correctly concluded that the relationship between TD and SIB did not fall within an established or analogous category of proximity. The Court found the trial judge correctly recognized that the mere fact that proximity has been recognized as existing in a bank-customer relationship for one purpose is insufficient to conclude that proximity exists between the same parties for all purposes. She detailed prior cases in which banks had been found to owe duties to customers with respect to the opening and ongoing operation of bank accounts and explained why they were distinguishable. She found that the Joint Liquidators were seeking to impose a novel duty of care and so a full proximity analysis was required.

The Joint Liquidators took issue with the trial judge’s conclusion that the proximate relationship in this case was novel, and her discussion of proximity in of a duty “to protect the bank’s customer terms from insider abuse”, which they said amounts to conflating duty and standard of care. In their submission, the relationship between TD and SIB is at the very least analogous to prior cases recognizing a proximate relationship between a bank and its customer: Toronto Dominion Bank v. 1633092 Ontario Ltd.; Dr. Robert Grossman v. The Toronto-Dominion BankToronto Dominion Bank v. Whitford.

The Court disagreed that the fact that banks have been found to owe duties to their customers was an all-encompassing category of proximity between banks and their customers in relation to “banking services”. This broad characterization was at odds with the Supreme Court’s admonition in Livent and Maple Leaf to look beyond the mere identity of the parties. To accept such a broad category would be to ignore that banks undertake an extremely broad range of activities for very different purposes: cashing cheques, transferring funds, offering bank accounts, issuing credit cards, underwriting mortgages and a host of other “banking services”. Therefore, to define the relationship of proximity as simply that of a “bank-customer” relationship is to ignore the reality that banks and their customers are not engaged in a one-size-fits-all relationship.

The Court agreed with the trial judge that this case was unlike prior cases where banks have been held to owe duties to their customers in carrying out a range of different activities for different purposes, for example, securing loans (1633092 Ontario Ltd.), executing bank drafts (Good Mechanical), responding to customer inquiries (Oak Incentives), following customer instructions (Don Bodkin) and cashing cheques (Dr. Robert Grossman). The Court found that none of these cases established that a bank has a proximate relationship with a client that extended to monitoring the client for the purpose of detecting internal fraud. The Court determined that this case was different than prior authorities that suggested that a bank may be liable to a customer where the bank failed to question suspicious banking transactions since there were no allegations of suspicious banking transactions in this case.

b. No.

The Court found the trial judge did not err in concluding that the Joint Liquidators failed to establish the required proximity. Given the nature of the bank’s undertaking, the trial judge concluded that there was no “basis for SIB to reasonably rely on TD Bank to protect it from insider abuse”. Given the mismatch between the undertaking and reliance, the trial judge concluded that the Joint Liquidators had not established “the required proximity to give rise to the novel duty of care proposed in this case”. To hold otherwise would expand TD’s responsibilities well beyond what it undertook as a correspondent bank. It agreed to provide correspondent banking services; it did not, in the words of the trial judge, “assume the role of a regulator, auditor or insurer.”

The Court found the trial judge’s analysis was consistent with Livent and Maple Leaf, which recognized that a plaintiff’s entitlement to rely on the defendant “operates only so far as the [defendant’s] undertaking goes”: Maple LeafLivent. In other words, reliance by the plaintiff that “falls outside of the scope of the defendant’s undertaking of responsibility – that is, of the purpose for which the representation was made or the service was undertaken – necessarily falls outside the scope of the proximate relationship and, therefore, of the defendant’s duty of care”: Livent, at para. 31; Maple Leaf, at para. 35. It was simply not believable that SIB detrimentally relied on TD to effectively protect SIB from itself.  Monitoring SIB’s internal operations so as to protect SIB from internal abuse fell well outside the scope of the proximate relationship and therefore outside TD’s duty of care.

The Joint Liquidators contended that the trial judge’s proximity analysis was flawed for two main reasons. First, they contended that the trial judge erred in finding that sufficient proximity to give rise to a duty of care could only exist if TD had subjective knowledge of the fraudulent scheme. In support of this submission, the Joint Liquidators pointed to the trial judge’s comment about the need for “clear indicia to put the bank on notice”. According to the Joint Liquidators, the only plausible interpretation that can be given to the impugned comments about “clear indicia” to put the bank on notice is that the trial judge erroneously required TD to be subjectively aware, or at least reckless or wilfully blind, to the fraudulent scheme before proximity could be made out.

In the Court’s view, the impugned passages need to be read in context. The trial judge found as a matter of fact that there were no clear indicia to put the bank on notice. She concluded that this was an “elaborate, highly sophisticated, and tightly concealed fraud”, there was no indication that internal abuse was occurring at SIB, and there were “no transactional or operational matters that raised” suspicion. The court understood the trial judge to be saying that a different factual scenario could lead to a different analysis and, therefore, a different conclusion. There was no basis to suggest that the trial judge erred by making this observation.

Second, the Joint Liquidators submitted that the trial judge conflated duty and standard of care by basing her full proximity analysis on the content of the duty of care (i.e., the standard of care). The Court rejected this argument for the same reasons they rejected the subjective knowledge argument.

(2) No.

The Joint Liquidators contended that the trial judge made at least four legal and factual errors in how she approached the standard of care, including that she erred in: (1) injecting a subjective element into her standard of care analysis; (2) disregarding the evidence of Mr. Cullen and Mr. Doyle; (3) uniformly accepting Ms. Joyce’s evidence; and (4) providing inadequate reasons.

a. No.

According to the Joint Liquidators, the trial judge’s view that the duty of care rested on TD’s subjective knowledge of the fraud led her to erroneously believe that the standard of a reasonable banker also depended upon subjective knowledge of the fraudulent scheme. The Court rejected the assertion that the trial judge injected a subjective element into the standard of care analysis for two reasons.

The Court held that, first, the Joint Liquidators’ point of departure on this alleged error has already been rejected: the trial judge did not erroneously inject a subjective knowledge standard into the duty of care analysis. Second, the Joint Liquidators’ argument was predicated on an assumption that is not borne out by the reasons. Their argument proceeded on the assumption that the trial judge must have asked herself whether TD had reason to suspect that RS was perpetrating a fraud. However, nowhere in her reasons did the trial judge say this. To the contrary, she assessed the evidence, including the expert evidence as to what a reasonable bank ought to have done, made findings of fact, and ultimately concluded that TD, in its capacity as a correspondent bank, acted reasonably in the circumstances.

b. No.

The Joint Liquidators took issue with the trial judge’s treatment of evidence related to a 1999 advisory directed at U.S. banks and a 2002 newspaper article mentioning RS. The advisory was issued by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in April of 1999 and was withdrawn just over two years later in August 2001. The Advisory advised U.S. banks to give enhanced scrutiny to all financial transactions routed into or out of Antigua.

The newspaper article was published in the Philadelphia Inquirer on August 28, 2002. It was titled “Offshore banker is Torricelli key donor” and focussed on Mr. Torricelli, a U.S. politician, and referred to contributions that RS had made to a defence fund for legal proceedings in which Mr. Torricelli was involved. The article stated that three years before, RS had become embroiled in a bitter dispute with U.S. authorities who said he was using his financial and political clout to subvert banking laws in Antigua. The article noted that RS’s name was never mentioned in the Advisory, but that U.S. officials confirmed that there were referring to RS.

The Joint Liquidators submitted that the trial judge erred in disregarding Mr. C’s evidence related to the FinCEN Advisory and Mr. D’s evidence related to the Philadelphia Inquirer article on the basis that they testified with “hindsight knowledge” that RS was a fraudster. They also submitted that the trial judge made palpable and overriding errors in failing to find that a reasonable bank would have obtained and investigated the FinCEN Advisory. The Joint Liquidators submitted that there was no basis for the trial judge to reject Mr. C’s evidence about the FinCEN Advisory. They suggested that the trial judge effectively singled out Mr. C (and Mr. D) by taking issue with their hindsight knowledge and ignoring that every expert witness testifies at trial with hindsight knowledge.

The Court rejected these submissions holding that it was entirely open to the trial judge to reject Mr. C’s evidence and she did so in a clear and reasoned manner. Not only was it open to the trial judge to reject Mr. C’s hindsight view as to what he might have done had he received the FinCEN Advisory based upon the multiple “contingencies” built into his answers, but it was also open to the trial judge to resolve the expert evidence on the FinCEN point and the Court found that is exactly what she did.

The trial judge accepted Ms. J’s evidence over other experts. She concluded that the Joint Liquidators had not proven on a balance of probabilities that TD fell below the standard of care with respect to the FinCEN Advisor. The Court found it was open to her to make these findings. She gave reasons for doing so and the Court saw no error of law or fact as it related to that reasoned conclusion.

The trial judge rejected Mr. D’s evidence as to what he would have done had he known about the Philadelphia Inquirer article in 2003. The trial judge accepted Ms. J’s evidence over other experts. In her view, the article contained “rumours”, “gossip” and four-year-old information, and it related to the FinCEN Advisory that had long been withdrawn. Ms. J’s point, was that in light of the content of the article, sending it to AML Group was nothing more than an option. The trial judge accepted this evidence and concluded that there was no breach of the standard of care. The Court found it was open to the trial judge to come to the factual conclusions she did, all of which informed her ultimate conclusions relating to the standard of care.

c. No.

The Joint Liquidators argued that the trial judge made two related errors in uniformly accepting TD’s expert opinion evidence given by Ms. J. The Court found there was no merit to these claims. The Court noted that there were no objections to Ms. J’s evidence at trial, which is evidence that Ms. J stayed within the appropriate bounds of her expert opinion. The Court also found that trial judge did not cross the line. She did what she was called upon to do: determine the facts.

d. No.

The Court found there was no basis to suggest that the reasons on any of the issues in the case, including the standard of care, were inadequate. Trial judges have an obligation to provide reasons. Reasons provide a level of accountability for all judicial decisions. They serve to justify the result, explain how the result was achieved, tell the party that lost why they lost, allow for informed consideration as to whether an appeal should be taken, and allow for effective appellate review: R. v. SheppardR. v. M. (R.E.).

The Court found the reasons achieved all of these purposes. The trial judge meaningfully grappled with the extensive evidentiary record and positions of the parties, and she thoroughly explained how she reached her findings that informed her conclusion. While the Joint Liquidators took objection to the reasoning, there was no basis to find that the reasons lacked or did not permit meaningful appellate review.

(3) No.

The Joint Liquidators said that the trial judge’s second ruling contradicted her earlier ruling under r. 53.07 (i.e., calling an adverse party as witness) (the “First Ruling”) and that her second ruling was based on an incorrect interpretation of r. 53.07 (the “Second Ruling”). The Joint Liquidators submitted that this resulted in an unfair trial process. The Court did not accept that the trial judge’s second ruling was incorrect or that it resulted in trial unfairness.

In the First Ruling, TD was opposed to the Joint Liquidators cross-examining any former employees. It argued that r. 53.07 only applies to current employees and so if the Joint Liquidators wished to examine former employees as witnesses at trial, they were required to summon and examine those witnesses in chief. The trial judge rejected TD’s position. She found that the rule applied to former employees. She concluded that it was in the interests of justice to permit the Joint Liquidators to cross-examine the witnesses pursuant to r. 53.07 and to allow TD to re-examine them.

Once the Joint Liquidators closed their case, TD sought to recall three of the witnesses (the “Recall Witnesses”) who had already testified pursuant to the first procedural ruling. The Joint Liquidators opposed this and maintained that the trial judge’s first procedural ruling precluded this approach and that permitting the Recall Witnesses to testify again would “eviscerate the effect of Rule 53.07” and “result in irreparable prejudice” to the Joint Liquidators.

The trial judge concluded there was “nothing” in r. 53.07 that “states that an adverse party who does not give an undertaking to call a witness forfeits the right to call that witness” after that witness’ initial testimony. The trial judge decided that she would not resolve “all theoretical abuses of the rule” and tailored her ruling to provide a just outcome. That outcome was to allow the recall of the witnesses while at the same time directing TD not to duplicate evidence that the Recall Witnesses had previously given. This arrangement, she concluded, would mitigate any prejudice arising from the recall and allow the court to have a complete evidentiary record.

The Joint Liquidators submitted that the trial judge’s Second Ruling “eviscerated both her first procedural ruling… on which the Joint Liquidators’ trial strategy was based, and rule 53.07. The Court rejected this ground of appeal for 5 reasons.

1) The Court held there was nothing in the wording of r. 53.07 that precluded a party from recalling a witness after refusing to undertake to call that witness in the first place. And, notably, r. 53.01(3) provides that “[t]he trial judge may at any time direct that a witness be recalled for further examination.”

2) The Court noted that pursuant to r. 1.04(1), r. 53.07 is to be construed liberally in order to secure “the just, most expeditious and least expensive determination” of every proceeding based on its merits.

3) The Court found that the Second Ruling did not render r. 53.07 “effectively meaningless”. The Joint Liquidators submission ignored the purpose of the rule: it permitted a plaintiff to call as a witness a person opposed in interest but whose evidence is critical to the plaintiff’s case without being limited to direct examination, which is unlikely to be an effective way to prove a party’s case in the circumstances: Peter Sankoff, Law of Witnesses and Evidence in CanadaGranitile Inc. v. Canada. The rule fulfilled its clear purpose: it allowed the Joint Liquidators to elicit evidence through cross-examination from adverse witnesses in building their case.

4) The Court concluded that the trial judge’s interpretation prevented strategic behaviour that could deprive the finder of fact of relevant evidence.

5) The Court held that the trial judge’s two procedural rulings were reconcilable. The trial judge tailored her ruling to limit the examination of the Recall Witnesses to areas not previously covered in their testimony. She also provided the Joint Liquidators with the right to exercise full cross-examination and to call reply evidence should they choose to do so. They exercised the first right and chose not to exercise the second.

The Court concluded there was nothing unfair or prejudicial about this procedure.


Amelin Engineering Ltd. v. Blower Engineering Inc., 2022 ONCA 785

[Fairburn A.C.J.O., Huscroft and George JJ.A.]

COUNSEL:

M. Diskin, T. Dumigan, and D. Gibbs, for the appellants

J. F. Lancaster and R. Laurion, for the respondents

Keywords: Limitations, Statute Barred, Discoverability, Ameliorating Loss, Limitations Act2002, S.O. 2002, c. 24, Sch. B, s.5(1), Limitations Act, R.S.O. 1990, c. L.15, s.45(1)(g), St. Jean (Litigation Guardian of) v. Cheung, 2008 ONCA 815, Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005, Brown v. Baum, 2016 ONCA 325, Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, Ferrara v. Lorenzetti Wolfe Barristers and Solicitors, 2012 ONCA 851, Crombie Property Holdings Ltd. v. McColl-Frontenac Inc. (Texaco Canada Ltd.), 2017 ONCA 16

FACTS:

The appellants purchased steam generators from the respondents over a period of several years, commencing in 1995. The appellant, the founder and president of Amelin Engineering Ltd., entered into an agency relationship with the respondents in 1995 pursuant to which the appellant would sell generators designed and manufactured by the respondents for a five-year period. This agreement was subsequently extended for an additional five years. Different generators were purchased on various dates.

Repairs to the generators were made over several years, sometimes by the appellants and other times by the respondents. The trial judge noted that the appellants pleaded that they immediately encountered a number of difficulties and technical deficiencies with the generators, including critical components of the generators disintegrating within just a few days of operation and generators producing unacceptably high levels of CO and NO/NOx, and not operating at their rated maximum output.

In April 2003, the appellants retained an independent firm, Bell Combustion, to carry out tests on a generator manufactured by the respondents at one of the respondents’ facilities. Bell Combustion delivered its report on April 16, 2003 (the “Bell Report”), following which the appellants sent a letter to the respondents outlining their difficulties with the generators. The respondents demanded outstanding payments on November 26, 2003 and terminated the agreements with the appellants by letter dated January 12, 2004.

The appellants’ statement of claim for negligent misrepresentation was not issued until April 3, 2009, just under six years after receipt of the Bell Report. The respondents issued a counterclaim on July 29, 2009, seeking a set-off for unpaid invoices.

The trial judge dismissed the action and the counterclaim following a 13-day trial. She found that the appellants’ claim was statute barred and, in any event, could not succeed. The counterclaim was dismissed on the basis that there was no evidence as to when the debts were due.

ISSUE:

Did the motion judge err in concluding that the claim is statute barred?

HOLDING:

Appeal dismissed.

REASONING:

No.

The Court cited its decision in Sosnowski v. MacEwen Petroleum Inc. to reason that it may be appropriate to delay the start of a limitation period if a plaintiff is relying on a defendant’s superior knowledge and expertise, especially where the defendant was taking steps to ameliorate a loss. That was the case, for example, in Brown v. Baum, in which the court concluded that delay in suing a doctor who was taking steps to ameliorate problems arising out of a patient’s surgery was reasonable.

The Court further held that the rationale for delaying the discovery of a claim is that ameliorative efforts may reduce or eliminate a plaintiff’s damages and render litigation unnecessary. However, the Court held that discovery cannot be delayed indefinitely. To do so would undermine the rationale for limitation periods. S. 5(1)(b) of the Limitations Act2002 establishes a “modified objective” test that requires consideration of what a reasonable person with the abilities and in the circumstances of the claimant ought to have known.

In applying this test, the Court held that this case was concerned with the purchase of multiple generators over a period of several years. According to the appellants, the report made April 16, 2003, was the earliest possible date their claim became discoverable, and they had six years from that date to bring their claim. The appellants claimed that the respondents assured the appellants that the generators could operate as represented. The respondents undertook various ameliorative efforts from 1998-2003. When the problems were not resolved, the appellants commissioned an independent third party to conduct an emissions test which established the generators were inherently flawed.

The trial judge found that the appellants knew or ought to have known of their potential claim as early as 1998 and, in any event, by November 2002 or January 2003. She found that the appellants knew that the generators purchased in 1997 could not operate at their rated maximum output and were aware of this throughout their dealings with the respondent. Further, the appellants were aware of high CO, NO/NOx emissions by late 2002. The Court agreed with the trial judge’s finding that the appellants did not require an independent report to know that they had suffered damage or injury.

The Court noted that this was a case involving two professional engineers. The appellant had acknowledged his extensive experience in the thermal generation industry. The respondent’s president presumably had greater knowledge, having invented the machines in question, but the appellant was capable of making his own judgment and in all the circumstances should have done so well before the Bell Report was received. Ameliorative efforts had been ongoing for several years prior to the decision to commission the Bell Report. The Court held that it was not necessary to commission an expert report to confirm what the appellants ought reasonably to have known.

The Court concluded that the appellants’ decision to not bring their claim until April 3, 2009 was not reasonable in all the circumstances and held that the trial judge did not err in concluding that the claim was statute barred.


Greta Energy Inc. v. Pembina Pipeline Corporation , 2022 ONCA 783

[Gillese, Huscroft and Sossin JJ.A.]

COUNSEL:

B. van Niejenhuis and S. Luk, for the appellants Greta Energy Inc. and Great Grand Valley 2 Limited Partnership

M.A. Gelowitz and S. Hay, for the respondent Pembina Pipeline Corporation

R.S.M. Woods and R. Torrance, for the respondent BluEarth Renewables Inc.

J.H. Nasseri and A. Bourassa, for the intervener Ontario Petroleum Institute

Keywords: Contract Law, Securities Law, Purchase and Sale, Right of First Refusal, Good Faith, Duty of Honest Performance, Torts, Inducement of Breach of Contract, Conspiracy, GATX Corp. v. Hawker Siddeley Canada Inc. (1996), 27 B.L.R. (2d) 251 (Ont. C.J.), C.M. Callow Inc. v. Zollinger, 2020 SCC 45, Correia v. Canac Kitchen, 2008 ONCA 506

FACTS:

The respondent, Pembina Pipeline Corp. (formerly and at all material times, “Veresen”), owned three wind farms: 1) Grand Valley 1 (“GV1”), 2) Grand Valley 2 (“GV2”), and 3) St. Columban. The other respondent, BluEarth Renewables Inc. (“BluEarth”), was interested in purchasing the three wind farms. However, the appellants, Greta Energy Inc. (“Greta”) and Great Grand Valley 2 Limited Partnership (“GGVLP”), held a right of first refusal (“ROFR”) on GV1 and GV2.

In August 2016, Veresen announced its intention to sell the wind farms. Veresen preferred an en bloc sale of its interest in the three wind farms. BluEarth submitted a bid on January 13, 2017. The bid was successful, which resulted in a signed Purchase and Sale Agreement on February 18, 2017. ROFR notices were sent to the appellants on February 23, 2017. Greta ultimately informed Veresen on March 14, 2017 that it would only be exercising its ROFR on GV2.

The appellants alleged that Veresen and BluEarth conspired to manipulate the price of the wind farms being sold by Veresen in a bad faith attempt to prevent them from exercising their ROFRs. The appellants sought damages for breaching the duty of honest performance, inducing breach of contract, and conspiracy. The motion judge granted the respondents’ motions for summary judgment. Specifically, the motion judge held that Veresen had set up a legitimate process to sell the wind farms and BluEarth engaged in that process. Further, it was not commercially unreasonable for BluEarth to pay a price for any or all of the wind farms that would pressure the appellants not to exercise its ROFR.

ISSUES:

(1) Did the motion judge err in her application of the duty of honest performance?

(2) Did the motion judge err in failing to consider BluEarth’s liability for inducing breach of contract?

(3) Did the motion judge err in her application of the tort of conspiracy?

HOLDING:

Appeal dismissed.

REASONING:

(1) No.

The Court held that the motion judge did not err in concluding that the respondents did not breach the duty of honest performance. Veresen set up a package bidding process on the advice of its bank in an attempt to obtain a better price. The purchase price was allocated among the three wind farms only because it was required by the ROFR notice. There was no evidence that Veresen consciously permitted and encouraged BluEarth to artificially inflate the price of GV2. On the contrary, the motion judge found that BluEarth allocated the price in the manner that it did for legitimate reasons. This was a competitive bidding process that entailed upward pressure on prices. Fair market value was not determinative of whether Veresen acted in good faith.

The Court further confirmed that C.M. Callow Inc. v. Zollinger does not impose a duty of disclosure so long as a party does not knowingly mislead the other party. Veresen disclosed documents each time that the appellants made a request, and this disclosure was sufficient to allow the appellants to make an informed decision on whether or not to waive the ROFR. The Court held that the motion judge’s conclusion that the appellants were not misled was supported by the record and was entitled to deference.

(2) No.

The motion judge found there was no evidence that BluEarth intended to cause a breach of contract, or that it had in fact caused a breach of contract. The appellants argued that the motion judge erred in determining that BluEarth could not be liable so long as it was willing to complete the transaction. They characterized the motion judge as holding that BluEarth had “no duties whatsoever” to the ROFR holder. The Court rejected the Appellants’ arguments. The motion judge noted that, at most, BluEarth may have intended to discourage the appellants’ exercise of the ROFRs. However, the dynamic between the ROFR holder and the third party is a competitive one: the respondents were entitled to attempt to discourage the exercise of the ROFR and did not “eviscerate” the appellants’ rights. The Court held that the appellants did not establish a palpable and overriding error and as such there was no reason for the Court to intervene.

(3) No.

The Court held that the motion judge did not err in her application of the tort of conspiracy. The motion judge found that BluEarth priced the wind farms in a manner intended to discourage the exercise of the ROFR on GV2 and that it was entitled to do so. She found no evidence that the price was deliberately manipulated to prevent the exercise of the ROFRs or harm the appellants. The Court held that the appellants did not establish any palpable and overriding error in the motion judge’s findings and there was no basis for the Court to intervene.


SHORT CIVIL DECISIONS

Pervez v. Mohammed , 2022 ONCA 778

[Pepall, Trotter and Thorburn JJ.A.]

COUNSEL:

A.C. Gerstl, for the appellant

J.K. Grossman and R.D. Richards, for the respondent

Keywords: Family Law, Separation Agreement, Child and Spousal Support, Settlement, Financial Disclosure, Consent Order, Motions, Family Law Rules, O. Reg. 114/99, rr. 13, 14, Federal Child Support Guidelines, SOR/97-175, s. 25(1), Dowdall v. Dowdall, 2021 ONCA 260

Van Delst v. Hronowsky , 2022 ONCA 782

[Paciocco, George and Favreau JJ.A.]

COUNSEL:

T.J.H., acting in person

K. Shadbolt, for the responding party

Keywords: Appeal, Stay of Order, Standard of Review

Klim v. Klim , 2022 ONCA 784

[Paciocco, George and Favreau JJ.A.]

COUNSEL:

R.N. Brady, for the appellants

R.C. Corbett, for the respondents

Keywords: Evidence, Credibility, Wills and Estates, Power of Attorney, Capacity, Frivolous Allegations, Costs, Full-Indemnity

Lamothe v. Ellis , 2022 ONCA 789

[Paciocco, George and Favreau JJ.A.]

COUNSEL:

V. Ambrosino, A. Voss and A. Boggild, for the respondent / moving party

P.G.E., acting in person

Keywords: Appeals, Uncontested Trial, Motion to Quash an Appeal, Non-compliance of Court Orders, Prejudice, Courts of Justice Act, R.S.O. 1990, c. C.43., ss. 134, 140(5), Peerenboom v. Peerenboom, 2020 ONCA 240, Abu-Saud v. Abu-Saud, 2020 ONCA 824


Hart v. Balice , 2022 ONCA 787

[Paciocco, George and Favreau JJ.A.]

COUNSEL:

M.H., acting in person

Ferguson and N. Groot, for the respondent

Keywords: Civil Procedure, Frivolous and Vexatious Conduct, Abuse of Process, Re-litigating Issues, Finality, Rules of Civil Procedure, rr. 2.1, 59.06, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, Lochner v. Ontario Civilian Police Commission, 2020 ONCA 720

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