| 1. Canadian Northern Shield Insurance Company v. 2421593 Canada Inc., 2017 ONCA 570 (LaForme, van Rensburg and Huscroft JJ.A.), July 5, 2017 1. Canadian Northern Shield Insurance Company v. 2421593 Canada Inc., 2017 ONCA 570 (LaForme, van Rensburg and Huscroft JJ.A.), July 5, 2017
In this decision, the Court of Appeal weighed in on a contractual dispute.
2421593 Canada Inc., or Vancity Insurance, had non-exclusive broker agreements with the appellants, Canadian Northern Shield Insurance Company and Royal & Sun Alliance Insurance Company of Canada. In February 2008, Vancity sought expressions of interest from insurers in developing an exclusive supplier arrangement. A few months later, the appellants were selected to enter exclusive negotiations to become Vancity’s sole insurer. Although the parties issued a press release announcing their relationship and Vancity provided notice terminating its relationships with other insurers, no written agreement was signed by June 2009 when Vancity was purchased by The Co-operators Group Limited.
The appellants claimed that the parties concluded an oral agreement at meetings held in June and September of 2008, and that they had taken various steps in performance of their contractual obligations after the oral contract was formed despite the absence of a written contract. Vancity, meanwhile, argued that no oral agreement was reached at those meetings on all essential matters and that, in any event, a signed written agreement was required.
The appellants commenced an action against Vancity Insurance and Vancouver City Savings Credit Union (together the “Vancity respondents”) for damages and other relief, alleging a breach of the parties’ agreement. They also sued The Co-operators Group Limited, Federated Agencies Limited and 7081332 Canada Ltd. (together the “Co-operators respondents”) for damages for inducing breach of contract.
Each of the two groups of respondents brought motions for summary judgment.
The motion judge’s dismissal of the action was based primarily on his finding that there was a “precondition” to a binding contractual agreement, namely, that the parties expected and required there to be a signed written agreement. The motion judge further determined that, in any event, the decision of the Vancity respondents not to proceed with the alleged contract with the appellants could not have been induced by The Co-operators Group several months later.
The appellants appealed, seeking an order setting aside the dismissal and sending the entire action to trial.
The Court of Appeal dismissed the appeal with respect to the Co-operators respondents, but allowed the appeal with respect to the action against the Vancity respondents, directing that matter to trial.
The court held that the motion judge’s finding of a precondition – that is, that the parties intended and agreed that their “legal obligations were to be deferred until a formal contract had been approved by both sides and executed” – was a palpable and overriding error, noting that the evidence was not capable of supporting such a conclusion whether considered individually or cumulatively. The granting of summary judgment therefore relied on a fundamentally flawed analysis.
The court further observed that there were several factual disputes that remained unresolved, and held that it was not in a position to uphold the dismissal on the basis that there was no genuine issue requiring a trial. The appeal was thus allowed with respect to the action against the Vancity respondents.
The court dismissed the appeal with respect to the Co-operators respondents, however, holding that the motion judge provided a reasonable, alternative basis for dismissing the claim against them that did not rely on his conclusions with respect to whether a binding contract had been formed.
2. D'Ascenzo v. Nichols, 2017 ONCA 578 (MacPherson, Cronk and Benotto JJ.A.), July 6, 2017
The appellant, Carl Nichols, appealed from an order granting partial summary judgment to the respondents, Scott D’Ascenzo and related numbered companies. The judgment relates to two pieces of vacant land that the respondents sought to purchase from the appellant (a petting zoo and a property known as Lot 511).
Between 2006 and 2013, the respondents made payments to the appellant totalling $168,727.74 with respect to the two properties, although title to the properties remained with the appellant.
D’Ascenzo demanded clear title to the petting zoo, claiming that he had paid for it in full, and said that he would pay the $27,500 owing for Lot 511 when Nichols cleared up the title issues relating to the severance of that property. Nichols refused to convey title to the petting zoo, however, and informed D’Ascenzo that he was “foreclosing” on Lot 511. Nichols remained the legal owner of both properties and only recently sought the required severance for Lot 511.
The motion judge ordered rescission and damages with respect to the petting zoo, and issued a Certificate of Pending Litigation, with a view to potential transfer to the respondents, over Lot 511. The appellant sought to overturn the motion judge’s decision on the basis that the respondents defaulted on their debt obligation and therefore forfeited their interest in both properties. In the alternative, he sought to vary the judgment, claiming that the motion judge erred in determining the appropriate remedies for both properties. The Court of Appeal rejected the appellant’s submission that the issues determined by the motion judge were not appropriate for resolution on a summary judgment basis and that a trial was required. The court noted that there was a comprehensive record before the motion judge and that he properly granted judgment on some issues while referring others on for a trial.
The appellant argued that the motion judge erred by not concluding that the respondents had breached the contract by not continuing their monthly payments towards the mortgage. The court dismissed this submission, noting that the reason D’Ascenzo stopped making payments in 2013 was that the appellant had taken no steps to obtain severance of Lot 511. The court also dismissed the appellant’s argument that the motion judge erred in granting rescission of the agreement to purchase the petting zoo, finding that it was open to the motion judge to treat the two properties separately and to determine that D’Ascenzo, after spending so much money over many years towards the purchase of the petting zoo, was entitled to treat the contract as at an end and to obtain damages.
On the respondents’ cross-appeal, they argued that the motion judge erred by denying the return of any interest paid relating to the petting zoo based on a finding that the interest was paid to delay the closing. The court agreed with this submission, noting that the interest was to be paid, whether or not the closing was delayed, because it was a component of the original purchase price. Moreover, it was the appellant who committed the pivotal breach of the contract. The respondents were thus entitled to restitution of the interest paid. The court found no error, however, in the motion judge’s calculation of principal owed to them.
The court also agreed with the respondents that the motion judge erred by not granting prejudgment interest on the damages awarded for the petting zoo and by not dealing with and awarding $1,955.03 representing the amount paid by the respondents for municipal property taxes on that property.
3. Khan v. Krylov & Company LLP, 2017 ONCA 625 (Pepall, Lauwers and Huscroft JJ.A.), July 26, 2017
The respondent, Krylov & Company LLP, represented the appellant, Zaka Ullah Khan, in his claim for damages arising from a motor vehicle accident. The respondent, Devry Smith Frank LLP, acted for the defendant in that action. The appellant subsequently sued both respondents, alleging that the law firms defrauded him by misappropriating settlement funds and forging his name on a final release or having him sign a release without knowledge of its contents.
The motion judge dismissed the action under r. 2.1.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as being frivolous, vexatious or otherwise an abuse of the process of the court.
The Court of Appeal held that the motion judge erred in doing so. Citing its decision in Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, the court emphasized that the use of r. 2.1 should be limited to the clearest of cases where the abusive nature of the proceeding is apparent on the face of the pleading. The court also noted that even a vexatious litigant can have a legitimate complaint. As Myers J. explained in Gao v. Ontario (Workplace Safety and Insurance Board), 2014 ONSC 6497, “[c]are should be taken to allow generously for drafting deficiencies and recognizing that there may be a core complaint which is quite properly recognized as legitimate even if the proceeding itself is frivolously brought or carried out and ought to be dismissed”.
The court held that when read generously, the appellant’s pleading alleged that the respondent law firms settled the motor vehicle action for much more than they told him, and pocketed the difference.
In the court’s view, the appellant’s allegation, while distasteful, was not entirely implausible. The court emphasized that a cautious approach must be taken: what if, as Myers J. asked in Husain v. Craig, 2015 ONSC 1754, the plaintiff's allegations are true?
The court emphasized that r. 2.1 is “an extremely blunt instrument”, reserved for the clearest of cases where the hallmarks of frivolous, vexatious or abusive litigation are plainly evident on the face of the pleading. The court found that the appellant’s Statement of Claim bore none of these hallmarks, which are well known to judges. Nothing on the face of the claim showed the appellant to be a vexatious litigant, nor was there any suggestion that he would abuse the process of the court.
The court held that when a pleading asserts a cause of action and does not bear the hallmarks of frivolous, vexatious or abusive litigation, resort to r. 2.1 is not appropriate as a means for bringing the action to an early end. The motion judge erred in truncating the normal process.
The appeal was allowed.
4. Marsland Centre Limited v. Wellington Partners International Inc., 2017 ONCA 631 (Simmons, Lauwers and Hourigan JJ.A.), August 2, 2017
The appellant, Wellington Partners International Inc., was the tenant under a commercial lease with the respondent, Marsland Center Limited, as landlord. The lease commenced on November 1, 2012, with a termination date of October 31, 2017.
Less than a year into the lease, Wellington was in economic difficulty. It sought rent relief from Marsland, but this was refused. On September 24, 2014, Wellington returned the keys and vacated the building, removing most of its furnishing and other assets. Marsland sued for damages in the amount of $200,000, representing the total rent owed through the term of the lease, with costs.
On a motion for partial summary judgment, Marsland sought an order and declaration that Wellington was liable pursuant to s. 50 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, for twice the value of certain goods and chattels removed from the premises.
The motion judge granted judgment.
The Court of Appeal allowed Wellington’s appeal, holding that the motion judge improperly exercised his authority under r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Writing for the court, Lauwers J.A. held that the motion judge failed to apply the two-step approach mandated by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7. The motion judge addressed the first step of the analysis, finding that he was able to “make necessary findings of fact and apply the law to those facts in order to achieve a fair and just adjudication of the case on the merits”. He erred at the second step, however, failing to turn his mind to whether and how the factual issues in dispute between the parties should be determined.
Lauwers J.A. noted that there was no doubt that genuine factual issues existed between the parties on the evidence: Marsland denied giving permission for Wellington to remove their furnishings and other assets, whereas Wellington claimed that Marsland gave permission.The motion judge recognized that the parties’ evidence conflicted, however, he did not turn his mind to how the conflicts in the evidence were to be resolved and instead simply picked one party’s version over the other. Lauwers J.A. pointed out that while the respondent’s version might well be the more plausible one, the motion judge’s “bald conclusion” that that version was more in keeping with common sense was not a proper basis on which to make a credibility finding in the circumstances of this case, where there was conflicting evidence on a fundamental issue and where significant amounts of money were involved.
The court held that the order granting summary judgment must be set aside.
5. Bonello v. Gores Landing Marina (1986) Limited, 2017 ONCA 632 (Sharpe, Tulloch and Lauwers JJ.A.), August 2, 2017*
In August 2007, Timothy Bonello was playing a game of tug-of-war on a campground owned and operated by Gores Landing Marina (1986) Limited, when his left arm got caught in a loop in the rope. Bonello suffered an injury to his forearm so severe that it had to be amputated.
Bonello sued Gores Landing Marina and Joseph Davies Sr., its principal. He later added Joseph Davies Jr. as a defendant after learning of his role in finding the rope and making it available to the guests of the campground. The Amended Statement of Claim asserted that Gores Landing Marina and Davies Sr. were liable under the Occupiers’ Liability Act, R.S.O. 1990, c. O.2, and for common law negligence, and that they were also vicariously liable for the negligent actions of Davies Jr.
Gores Landing Marina and Davies Sr. brought a summary judgment motion to have the main action against them dismissed. They successfully sought to exclude certain evidence from the motion judge’s consideration, including the affidavit of one of the people at the campground and the discovery evidence of Davies Jr. and two other campers. The motion judge granted summary judgment and dismissed the action against Gores Landing Marina and Davies Sr., along with their third party actions against several individuals who had participated in the tug-of-war.
Timothy Bonello appealed.
Writing for the Court of Appeal, Lauwers J.A. rejected the respondents’ submission that the motion judge’s order striking the affidavit and discovery evidence was interlocutory, and therefore only appealable to the Divisional Court, pursuant to ss. 6 and 19 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Lauwers J.A. noted that had this been a standalone order, it would have been interlocutory. However, it was contained in the order granting summary judgment and was an inextricable part of the decision to grant judgment. In Lauwers J.A.’s view, bifurcating the appeal would risk unduly complicating the appeal process from a summary judgment, contrary to the spirit of rules 20 and 1.04 of the Rules of Civil Procedure and the “culture shift” called for by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7 to ensure more efficient and less expensive access to justice. The Court of Appeal thus had jurisdiction to consider the appeal and, as “a necessarily incidental or inextricably related matter”, the motion judge’s decision to exclude certain evidence.
Turning to the substance of the appeal, Lauwers J.A. found that the motion judge erred by excluding the discovery evidence of Davies Jr. and two other people at the campground. The motion judge reasoned that since Gores Landing Marina and Davies Sr. brought the motion, the discovery evidence of other parties ought to be struck because evidence of one adverse party cannot be used against another adverse party. In Lauwers J.A.’s view, the motion judge adopted an overly technical approach to the admission of the discovery evidence on the motion.
Lauwers J.A. noted that the weight to be attached to the discovery evidence of an adverse party other than the adverse party who brings a summary judgment motion may vary. If the motion judge is invited to use the discovery evidence of another adverse party as evidence establishing liability, he might conclude that the evidence falls short of what is required. However, where the issue on a motion is whether there is sufficient evidence to establish that there is a genuine issue requiring a trial, the discovery evidence may be sufficient.
In this case, the impugned evidence established that the vicarious liability of Gores Landing Marina and Davies Sr. for any negligence on the part of Davies Jr. was a genuine issue requiring a trial. This triggered the motion judge’s discretion to consider exercising his power under r. 20.04 as an alternative to a full trial or simply finding that a trial was required. By excluding this evidence from his consideration, the motion judge was left with the respondents’ “bald assertions” that Davies Jr. had no connection with Gores Landing Marina and that Davies Sr. was its only employee.
Because the improperly excluded evidence provided some support for the assertion that there was a triable issue as to vicarious liability, Lauwers J.A. held that the motion judge erred in concluding there was no genuine issue requiring a trial in relation to Gores Landing Marina and Davies Sr.
The appeal was allowed.
*Lerners acted for the Appellant.
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