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Timestamp: 2019-04-25 14:11:02+00:00

Document:
This is the summaries for this week’s civil decisions of the Court of Appeal for Ontario.
In Beaver v Hill, the Court of Appeal reiterated that although under the Family Law Rules, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedures, there is no provision in the Family Law Rules that provides that costs awards should approach “full recovery costs”. In awarding costs, family law judges must apply the principles of proportionality and reasonableness set out in Rule 24(12) of the Family Law Rules.
Other topics covered this week included the acceptance of a Rule 49 offer before it could be withdrawn in writing, whether parents paying off the mortgage of their child and spouse was a gift or loan, adverse possession and prescriptive easements, contractual interpretation, lack of jurisdiction to hear judicial review applications and appeals in the OLRB context, setting aside default judgments and dismissals for delay, and vexatious litigants.
This matter began as a motion, by the appellant, to stay the family law proceedings until the constitutional issue was heard and determined. In response, the respondent brought a motion seeking 14 different orders or declarations. It was not clear why the respondent launched such a broad and sweeping response, but, having done so, she bore a significant share of the responsibility for the unwarranted eight days of court time it took to address the issues, even with the serious constitutional issue that was raised.
The motion judge’s task was, in essence, to determine whether the appellant’s answer adequately pleaded the constitutional issue and, if so, whether that issue should have proceeded before, after, or concurrently with the family law claims. Unfortunately, the motions traversed into other issues, the answers to which were either obvious or unnecessary to the narrow issues that were before the motion judge.
In terms of her costs award, the motion judge correctly concluded that a risk premium could not be awarded. She also correctly concluded that this was not a case for a full recovery award of costs. Yet, that is not how the costs in this case were determined. Rather, the resulting award approached a full recovery amount. In defence of that result, the respondent relied on what is contended to be the principle from Biant v. Sagoo,  O.J. No. 3693 (SCJ), that costs in family proceedings should “generally approach full recovery”.
(1) Did the motion judge err in adopting a “close to full recovery” approach in fixing costs of the motions?
(1) Yes. The Court began with the basic premise that costs awards are discretionary and entitled to deference. However, the motion judge erred in her costs decision as a result of her failure to apply two important principles. One is proportionality and the other is the “reasonableness” evaluation of the ultimate award. That error led to a costs award that was excessive.
First, while the judge in Biant does refer to costs generally approaching full recovery, it is based on two decisions of other Superior Court judges, a close reading of which do not support the thrust of costs generally approaching full recovery. What those other cases do establish is that under the Family Law Rules, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedure, since no scales of costs are mentioned in the Family Law Rules. Second, the respondent’s assertion that Berta v. Berta, 2015 ONCA 918 supports the “full recovery” approach to costs in family matters also reflected a failure to read the decision closely. What the court endorsed in that case was the principle that “a successful party in a family law case is presumptively entitled to costs” (at para. 94) subject, though, to the factors set out in Rule 24.
There is no provision in the Family Law Rules that provides for a general approach of “close to full recovery” costs. Rather, r. 24(12) sets out the appropriate considerations in fixing the quantum of costs. As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.
The motion judge did not evaluate the hourly rates charged with the proportionality and reasonableness principles in mind. The motion judge also gave undue weight to the respondent’s offer to settle, along with the appellant’s failure to make an offer to settle. The Court of Appeal found that the case was not a situation where the issues could have been settled in any practical way. Either the appellant was going to be able to proceed with his constitutional claim or he was not. The motion judge determined that it was appropriate to award the respondent 85% of her full recovery costs but did not explain where she drew that percentage from or why it was appropriate to apply it. Also concerning was the fact that she appeared to have increased the amount of costs as a consequence of the appellant’s ability to pay. There is no principle relating to costs that requires wealthier individuals to pay higher costs for the same step in a proceeding.
What was most important, however, is that the motion judge did not consider the principle of proportionality. She never considered whether a costs award of over $300,000 was proportionate to the issues raised by the motions that were before her. In the end, the Court of Appeal adopted the appellant’s suggested upper limit for a costs award at $200,000 and fixed the costs of the original motions at $200,000.
The respondent sued the appellants for damages for breach of contract, oppression, and various other causes of action. In 2015, the appellants served the respondent with a written Rule 49 offer to settle the action (the “2015 Offer”) and the offer provided it would remain open until the trial of the action. On September 20, 2016, counsel for both parties attended a pretrial of the action. What happened next was disputed. The appellants took the position that their offer had been rescinded orally at pretrial, and that on September 19, 2016 they served by process server a second written Rule 49 offer to settle the action for much less (the “2016 Offer”). This offer expressly revoked the 2015 Offer. The respondent took the position that the 2015 Offer had been accepted before receipt of the 2016 Offer. The respondent brought a motion for judgment in accordance with the terms of the accepted offer, which the motion judge granted. The motion judge found that the parties agreed that the 2015 Offer was made in accordance with Rule 49.02(1) and accordingly found that it had to be withdrawn in writing per Rule 49.04(1). The motion judge then found that the 2016 Offer was served on the respondent’s counsel after the respondent had accepted the 2015 Offer and granted judgment in favour of the respondent.
(1) Did the motion judge err in giving judgment in terms of the 2015 Offer the appellants had made?
(2) Should fresh evidence be admitted?
(1) No. The motion judge did not err in giving judgment in accordance with the terms of the 2015 Offer. Firstly, the motion judge correctly concluded that any revocation of the 2015 Offer had to comply with Rule 49.04(1). Secondly, the motion judge did not err in applying the two-step analysis from Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., (2007) 87 O.R. (3d) 464 (Div Ct). Although Capital Gains was decided before the Supreme Court of Canada’s decision in Hryniak v. Mauldin, 2014 SCC 7, which altered the framework for granting summary judgment, the two-step approach applying to the enforcement of a Rule 49 offer remains unaltered. The motion judge did not expressly advert to the two-step test, but she nonetheless applied it.
The first step of the test was satisfied because it was uncontested that the Rule 49 offer had to be revoked in writing and there was no evidence that the 2015 Offer had been revoked at the pretrial. The motion judge found that the appellants had known for over a year that the respondent was taking the position that their counsel was not served with the second offer until 5:23pm on September 20, 2016, without providing an affidavit of service from the process server. This finding, in particular, was fatal to the appellants’ case. The appellants had provided affidavits of service for other documents served on the respondents by that process server, and accordingly the absence of an affidavit of service weighed heavily in the respondent’s favour, given the case turned on the timing of service of the second offer. Accordingly, it was reasonable for the motion judge to find against the appellants.
It was also unnecessary for the motion judge to hear viva voce evidence in considering the first part of the two-step test. The motion judge was entitled to presume on a summary judgment motion that the record contains all evidence which the parties will present if there is a trial, per Dawson v. Rexcraft Storage & Warehouse Inc., (1998), 111 O.A.C. 201 at para. 17 and Chao v. Chao, 2017 ONCA 701 at para 24. The same is true on a motion to enforce a Rule 49 offer. It was incumbent on the appellants to answer the respondent’s version of events, but they did not file an affidavit of service to establish the date and time of service, nor did they provide an explanation for its absence. The motion judge was also not required to grant an adjournment and was entitled to deference on this point.
The motion judge also did not err in applying the second part of the two-step test, weighing if the agreement should be enforced. The appellant did not ask the motion judge to consider the second part of the test, and the motion judge nonetheless did consider whether on all the evidence she should enforce the offer. The appellants were also unable to point to any compelling inequity that arose from the enforcement of the 2015 Offer.
(2) No. The fresh evidence did not meet the test articulated by the Supreme Court of Canada in R. v. Palmer,  1 S.C.R. 759 and the Ontario Court of Appeal in Sengmueller v. Sengmueller (1994), 17 O.R. (3d) 208 (CA), as recast in R. v. Truscott, 2007 ONCA 575. The proposed fresh evidence could have been adduced prior to the return of the motion. Additionally, even if the evidence was reasonably capable of being believed, it could not have been reasonably expected to have affected the result. Notably, it did not include an affidavit of service by the process server. Instead, it addressed the wording on invoices filed by the appellants and the motion judge expressly gave no weight to this evidence.
The appellants paid off the initial mortgage on the matrimonial home of their daughter and her husband. Several months later, a second mortgage in favour of the appellants was registered on title to the matrimonial home.
The mortgage was apparently not subject to any further discussion by any of the parties until at least ten years later, when matrimonial proceedings ensued between husband and wife. The husband moved for summary judgment on the issue of whether the mortgage secured loans made by the appellants to the husband and wife, or whether the monies advanced by the appellants were gifts. If the funds advanced were a gift, the mortgage would not represent a debt, and could be removed from the parties’ net family property calculations.
The appellants argued that the mortgage was registered on title to secure the loans that they had made to the wife and husband that enabled them to pay off the initial mortgage. The husband argued that there was never any discussion of a mortgage at the time the appellants provided the funds to pay off the initial mortgage. Rather, the husband maintained that his wife told him after the initial mortgage had been paid off that her father wanted a mortgage on the home.
The husband and wife did provide the mortgage after receiving independent legal advice, and signed an acknowledgement that they “had already received the total proceeds of the mortgage”. The husband argued that he signed the mortgage, and related documents, in order to keep his wife happy, and that his wife continually assured him that the mortgage was just a mechanism to make her father feel better, and that the house would always be theirs.
The motion judge found that he could not fairly resolve the matter on the contested record alone, and that it would be more appropriate to use the expanded fact-finding powers rather than requiring a trial or mini-trial. He ultimately concluded that the monies were gifts and that, consequently, there were no advances made under, or secured by, the mortgage.
(1) Did the motion judge err in concluding that the monies advanced by the appellants were gifts?
(1) No. The Court of Appeal found that the motion judge was satisfied that it was fair for him to go beyond the written record to weigh the evidence, evaluate credibility and draw inferences from the cross-examinations in order to make the factual findings that he made. While other judges might have chosen to hear directly from the parties before making factual findings, it could not be said that the failure to do so in this case represented a reversible error.
The Court of Appeal found that it was open to the motion judge to make those findings of fact, and there was therefore no basis to interfere with those findings unless the appellants could establish that they represented palpable and overriding error. The appellants failed to do so.
As a final note, the Court of Appeal observed that the history of the dealings between the appellants, the husband and the wife prior to the mortgage strongly suggested that the financial assistance was intended to be by way of gifts and not loans. There was never a request for any form of security documentation, and perhaps most damningly, all of the parties went out for a celebration after the initial mortgage had been paid off. This event was inconsistent with the appellants’ position that the husband and wife had simply replaced one mortgage with another.
The appellant is a former employee of the Ministry of Community and Social Services. She was fired after six years of employment. Since her termination, the appellant has commenced an impressive number of civil and criminal proceedings. The allegations generally contend assault, sexual assault, harassment, defamation, and discrimination based on race and ethnicity. Each civil proceeding was struck down under Rule 21 of the Rules of Civil Procedure as showing no cause of action or under Rule 2.1 as being frivolous, vexatious or an abuse of process. In Strang v Ontario, the judge noted that the appellant had submitted 47 requests to lay private informations under s. 504 of the Criminal Code, which had all been either withdrawn by the Crown or rejected by the provincial court.
At first instance, the judge found the appellant to be a vexatious litigant. The judge stated that she had the required jurisdiction under s. 140 of the Courts of Justice Act and pursuant to any inherent jurisdiction in respect of both civil and criminal proceedings to make an order forbidding the appellant from continuing or starting new proceedings, both civil and criminal, without beforehand obtaining the authorization of a judge of the Superior Court. She stated that the appellant was monopolizing judicial resources through an avalanche of proceedings, which had to be subjected to a reasonable level of control. The appellant was not present at the hearing, but was noted to have been aware of the date of the hearing, and there was no indication that the trial judge was made aware of any reason for the appellant’s absence. The appellant submitted to the Court of Appeal an undated affidavit in which she affirms not to have been available on the date of the hearing, and indicates that she had sent something to that effect to someone by fax on that day. The documents did not reveal to whom the document had been sent or what the document was.
The appellant submitted that the trial judge erred in three ways in granting this order. First, the trial judge should not have heard the application without the presence of the appellant. Second, the trial judge should not have declared the appellant to be a vexatious litigant, as she was the victim of various torts perpetrated by numerous people. Third, the language rights of the appellant were not respected since she did not receive a copy of the reasons for the order in French.
(1) Did the fact that the trial judge heard the application without the presence of the appellant amount to procedural unfairness?
(2) Did the trial judge err in forbidding the appellant from continuing or commencing civil proceedings?
(3) Did the trial judge err in forbidding the appellant from continuing or commencing criminal proceedings?
(4) Did the fact that the appellant did not receive a copy of the reasons for the order in French amount to an infringement of her language rights?
(1) No. The explanation by the appellant that she was simply not available on the date of the hearing, without further qualifications, cannot constitute a valid reason to adjourn the hearing. In view of the history of proceedings commenced by the appellant, the trial judge did not err in hearing the application in the absence of the appellant.
(2) No. The evidence before the trial judge fully warranted the interdiction to commence or continue civil proceedings. The Court found that the appellant’s behavior on multiple occasions, which was without foundation and sometimes incomprehensible and related to the same events, and the refusal to abide by the court’s orders or to pay costs, constituted a solid basis for the order made by the judge. However, the Court found that the judge should not have precluded the appellant from commencing a civil proceeding indefinitely unless she paid her unpaid costs. The unpaid costs were to weigh in the balance when the appellant would ask for the authorization to commence a civil proceeding, but should not preclude it entirely.
(3) Yes. The Court stated that despite the breadth of the inherent jurisdiction of the Court, its usage by Superior Courts in helping Provincial Courts has been restricted by the Supreme Court’s decision in R c. Caron. That decision imposes three limits to the exercise of the inherent jurisdiction towards helping provincial tribunals: (1) those tribunals must not have the necessary powers to intervene and the intervention must be essential to prevent an injustice; (2) the exercise of inherent jurisdiction cannot constitute an interference; and (3) the exercise of the inherent jurisdiction must not infringe on a legislative disposition.
The Court found that in view of the means available to prevent vexatious litigants from abusing the justice system, it was not necessary to give a Superior Court judge the competence of limiting access of people who wish to lay down an information under ss. 504 or 810 of the Criminal Code. Aware of the difficulties created by vexatious litigants, Parliament had adopted s. 507(1) of the Criminal Code in 2002. This section creates a distinct procedure enabling the court to scrutinize the private informations being laid under s. 504 before deciding whether a summation or a warrant should be issued. The judge can only give a warrant after having an ex parte hearing to hear from witnesses corroborating the information, and after having ensured that the Attorney General knows of the hearing and can opt to participate. The Court stated that although this procedure does not afford the same finality or economy of resources as an interdiction to commence new proceedings, s. 579(1) provides additional means to protect judicial resources. Under that provision, the Attorney General can order a stay of proceedings affecting a certain defendant. The Court stated that the waste of judicial resources caused by vexatious litigants is a serious problem which deprives others of their time in court. However, that wastefulness can be stopped by the Attorney General under s. 579(1), and it is not necessary to have recourse to the Superior Court. The order below was therefore modified to only prohibit civil, but not criminal, proceedings.
(4) No. The Court found that the language rights of the appellant had not been infringed, because s. 126(2)8 of the Courts of Justice Act states that the reasons of a bilingual action can be written in French or in English. However, under s. 126(2)9, the tribunal must provide a translation of those reasons to a party who requests them. The appellant did not request a translation of the reasons. The Court stated that even in the absence of a legislative obligation, a judge hearing a cause in French, where the pleadings and oral arguments were given in French, should give their reasons in French. An unsuccessful party pleading in French should not have to wait for the translation of the reasons to be able to assess whether that party will appeal.
The appellant wanted to have two decisions judicially reviewed. One was an arbitration decision and the other was an Ontario Labour Relations Board (the “OLRB”) decision. Instead of bringing the application for judicial review directly to the Divisional Court, the appellant sought leave to have it heard by a single judge of the Superior Court of Justice on an urgent basis.
The motion judge dismissed the appellant’s leave motion and ordered that the application for judicial review be transferred to the Divisional Court. The motion judge ordered the appellant to pay $10,000 in costs to the respondent.
The appellant sought to appeal the motion judge’s orders and to have the Court of Appeal hear the application for judicial review and constitutional issues, none of which were determined below. The appellant submitted that the motion judge’s orders were final orders. The respondents moved for an order quashing the appeal since the appellant sought to appeal interlocutory orders.
(1) Does the Court of Appeal have jurisdiction to hear the appeal?
(1) No, the Court of Appeal does not have jurisdiction to hear the appeal. The appellant may seek leave from the Divisional Court to appeal the refusal of her leave motion under s. 19(1)(b) of the Courts of Justice Act. Alternatively, the appellant may proceed with her judicial review application before the Divisional Court, in accordance with s. 6(1) of the Judicial Review Procedure Act.
The application for judicial review is within the jurisdiction of the Divisional Court. No aspect of the merits of her judicial review has been adjudicated, including any constitutional issues she wishes to raise in respect of the OLRB. No final order has been made that disposes of any matter in issue in the litigation. Thus, there is no appeal to the Court of Appeal.
Similarly, the appellant’s proposed appeal from the motion judge’s costs order is to the Divisional Court, with leave, because it is within that court’s monetary jurisdiction in accordance with s 19(1.2) of the Courts of Justice Act.
This appeal involved a boundary dispute between neighbours. The parties acquired neighbouring acreages of land during the 1980s. In 2008, the appellants discovered that the respondent was encroaching on their land. The trial judge found that the respondent had acquired possessory title to an area of the appellants’ land on which a portion of the respondent’s house, outbuildings and yard were situated (“the house lands”). The trial judge also held that the respondent was entitled to prescriptive easements, based on the doctrine of lost modern grant, over a portion of a laneway and a cedar trail that encroached on the appellants’ lands.
(1) Did the trial judge err in finding that the respondent had acquired possessory title to the house lands?
(2) Did the trial judge err in finding it was unnecessary that the respondent establish effective exclusion of the appellants from possession of the house lands to establish a possessory title, and in failing to find that the appellants were not effectively excluded from the house lands?
(3) Did the trial judge err in using the period of 1997 to 2007 for establishing adverse possession instead of using the ten-year period immediately preceding registration of the lands in Land Titles, and did this error lead her to misconstrue or ignore evidence that the appellants objected to the respondent’s encroachments within the applicable statutory period?
(4) Did the trial judge err in finding that the “harvesting and transporting of wood” use on the cedar trail was continuous, and in consequently concluding that the cedar trail conferred a benefit on the dominant tenement?
(5) Did the trial judge err in finding a prescriptive right to maintain a laneway encroachment by clearing brush, plowing snow and cutting grass?
(1) No. The trial judge’s conclusion was premised largely on her finding that, until 2008, the parties operated under the mutually mistaken belief that the respondent owned the house lands. Notwithstanding the appellants’ evidence that they gave permission to the respondent to do certain things on their land (e.g. cut grass), nothing gave rise to an inference that the appellants gave permission to the respondent to occupy the house lands as if he owned it and for the purpose of building a permanent residence on it. The Court of Appeal therefore found no error on this point.
(2) No. The trial judge correctly noted the three elements of the test for adverse possession (actual possession, intention to exclude the true owner from possession, and effective exclusion of the true owner from possession) and correctly observed that it is unnecessary to prove the second element, where, as here, the parties have a mutual misunderstanding of true ownership.
The trial judge did not say that it was unnecessary to prove effective exclusion of the true owner to establish a possessory title. Rather, she was saying that, in this case, which involved mutual mistake as to the ownership of the house lands (on which the respondent had established a permanent home) it was unnecessary that those lands be completely fenced to establish effective exclusion of the true owners. The respondent had achieved that result through the nature of their occupation and by virtue of the mutual mistake of the parties. The Court of Appeal affirmed that this finding was well supported by the evidence. It was therefore open to the trial judge to conclude that an inference of effective exclusion arose from the nature of the respondent’s use.
(3) No. The Court of Appeal found that the appellants’ arguments relied on a misinterpretation of the Real Property Limitations Act, under which limitation periods are established for an owner to move to recover possession of land. Contrary to the appellants’ submissions, Sipsas v. 1299781 Ontario Inc. actually stands for the proposition that adverse possession can be established with respect to lands registered under the Land Titles Act by possession meeting the necessary requirements during any continuous ten-year period prior to registration in Land Titles. The Court of Appeal concluded that the trial judge did not misconstrue the starting date of the adverse possession claim.
(4) Yes. The trial judge correctly recognized that one of the essential characteristics of a prescriptive easement is that it must be reasonably necessary to the better enjoyment of the dominant tenement. She also correctly recognized that to acquire a prescriptive easement under the doctrine of lost modern grant or by prescription under the Real Property Limitations Act, the claimant must demonstrate use that is continuous, uninterrupted, open, and peaceful for a period of 20 years.
However, having set out the law correctly, the trial judge failed to properly consider whether the continuous use she found met the criterion of accommodating the dominant tenement. With the respondent having only used the trail twice for the purpose of harvesting and transporting wood, the only continuous use of the trail was for recreational purposes. Accordingly, the Court of Appeal found that there was no evidence that the use of the trail was reasonably necessary to the dominant tenement, and that therefore the requirements for an easement were not met.
(5) No. The Court of Appeal found that based on the evidence, it was open to the trial judge to make the order permitting maintenance of the laneway.
Accordingly, the Court of Appeal allowed the appeal in part by setting aside the trial judge’s finding of a prescriptive easement over the cedar trail. The balance of the appeal was dismissed.
The responding party commenced an action against the moving parties pertaining to the responding party’s purchase of equipment from the moving parties. Default judgment was obtained and damages were awarded. The moving parties filed a notice of motion for an order to set aside default judgment, but the motion was not heard until three years later. The motion judge dismissed the motion to set aside the default judgment. The moving parties appealed to the Court of Appeal but the Deputy Registrar dismissed the appeal for delay. Another three years passed, during which the moving parties did nothing to resurrect their appeal. The moving parties then brought a motion to set aside the Deputy Registrar’s order, and this was dismissed by MacFarland J.A.
(1) Did the motion judge err in dismissing the motion to set aside the dismissal of the appeal for delay?
(1) No. The Court of Appeal agreed with MacFarland J.A. that the delay was extraordinary, the moving parties had failed to address the delay in any meaningful way, and prejudice would result to the responding party if the matter were permitted to proceed. The Court also agreed with MacFarland J.A.’s observation that it was impossible on the record to make any conclusion except that the litigation was “parked” until the timing served the moving parties better. It was open for MacFarland J.A. to conclude that the moving parties had lost their right to have their case determined on the merits due to the equities of the situation, and the fact that it was almost eleven years since the original purchase giving rise to the dispute. There was also no error in MacFarland J.A.’s careful review of the factual record or her application of legal principles to the facts.
H. Dhaliwal, for the appellants M.M. and H.S.
The respondents attempted to purchase a property owned by the appellant, Sikh Lehar International Organization (“SLIO”). The individual appellants, M.M. and H.S., were two of SLIO’s five trustees. The trial judge found that the money the respondents advanced to SLIO under an agreement (the “Control Agreement”) was a loan, that the loan was subject to interest at a rate of 12% per annum, and that M.M. and H.S. were jointly and severally liable with SLIO to repay the loan. The appellants appealed all of these findings.
(1) Did the trial judge err in failing to conclude that the loan was repayable only if the respondents ultimately purchased the property?
(2) Did the trial judge err in finding that interest was payable on the loan at a rate of 12% per annum when the Control Agreement did not specifically provide for payment of interest?
(3) Did the trial judge err in finding that MM. and H.S. were jointly and severally liable in their personal capacities, along with SLIO, for repaying the loan?
The Court of Appeal, before considering the issues, stated that the trial judge’s findings were all driven by his interpretation of the Control Agreement. Accordingly, his findings were only reviewable for palpable and overriding error, as per the Supreme Court’s decision in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53,  2 S.C.R. 633. The Court stated that the appellants had not identified any extricable questions of law arising in the interpretive process that would be reviewed on a standard of correctness.
(1) No. The trial judge properly interpreted the Control Agreement as requiring the loan to be repaid having regard to the surrounding factual matrix, and his interpretation of the agreement in this context was reasonable. The Control Agreement specifically described the funds at issue as a loan and did not state that the loan would be a limited-recourse loan repayable only if the respondents purchased the property. The appellants’ interpretation of the Control Agreement was also not commercially reasonable. Their interpretation would allow SLIO to retain both the property itself as well as the funds advanced from the Control Agreement in the event that the sale failed to take place. This would result in a windfall to the appellants for failing to complete the transaction and invite a commercially absurd result.
(2) No. This finding was amply supported by the record. As the trial judge noted, a letter from counsel to SLIO, prepared under instructions, identified this as the prevailing interest rate for the loan. Contrary to the appellants’ submissions, this letter was not inconsistent with evidence given by S.S. at trial.
(3) No. The respondent 2207190 Ontario Inc. and the appellants M.M. and H.S. were the parties to the Control Agreement. All the parties knew at the time the Control Agreement was entered into that M.M. and H.S. were not in a position to incur liabilities on behalf of SLIO, and the Control Agreement did not state that M.M. and H.S. would not be liable in their personal capacities for the loan.

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