COURT OF APPEAL FOR ONTARIO

CITATION: Malik v. Nikbakht, 2021 ONCA 176

DATE: 20210323

DOCKET: C67101

Feldman, Paciocco and Coroza
    JJ.A.

BETWEEN

Sarfraz Malik

Plaintiff/Respondent (Appellant)

and

Amir Nikbakht
, Derek Da Silva,
and Conbora Formings
  Inc.

Defendants/
Appellant
(
Respondent
)

Joel Cormier and Hudson Chalmers, for
    the appellant

Theodore P.
    Charney, Caleb Edwards and James Omran, for the respondent Amir Nikbakht

Heard: March 12, 2021 by video
    conference

On appeal from the order of Justice Peter
    J. Cavanagh of the Superior Court of Justice, dated May 22, 2019, with reasons
    reported at 2019 ONSC 3118, allowing an appeal from the order of Master Charles
    G.T. Wiebe of the Superior Court of Justice, dated April 30, 2018, with reasons
    reported at 2018 ONSC 2816.

Paciocco J.A.:

MATERIAL FACTS

[1]

On October 10, 2013, a vehicle operated by the
    appellant, Sarfraz Malik, was involved in a three-car collision. Mr. Malik and
    the passengers in his vehicle, Mr. Maliks wife and their three children, were
    injured.

[2]

On November 12, 2014, Mr. Malik sued the owners
    and operators of the other vehicles for damages relating to the injuries he
    suffered. Notably, Mr. Malik did not include a claim pursuant to s. 61 of the
Family
    Law Act
,
R.S.O. 1990, c. F.3 (
FLA
) for his losses
    arising from the injuries to his children.

[3]

Mr. Maliks wife, Khadija Malik, and his three
    children brought lawsuits of their own, including against Mr. Malik. Unlike Mr.
    Malik, they included s. 61
FLA

claims for their damages arising
    from the injuries to each other.

[4]

In February 2018, more than four years after the
    accident, Mr. Malik brought a motion for leave to amend his statement of claim
    to add his own s. 61
FLA
claims relating to his losses arising from
    the injuries to his children. One of the defendants, Amir Nikbakht, the
    respondent in this appeal, resisted Mr. Maliks motion, arguing that the s. 61
FLA

claims Mr. Malik wanted to advance constituted a new statutory cause of
    action that was statute barred under the
Limitations Act
, 2002
,
    S.O. 2002, c. 24, Sched. B.

THE DECISIONS
    BELOW

[5]

On April 30, 2018, Master Wiebe of the Superior
    Court of Justice granted Mr. Maliks motion for leave to amend his pleadings. Master
    Wiebe concluded that he was bound by
Bazkur v. Coore
, 2012 ONSC 3468,
    292 O.A.C. 391 (Div. Ct.), a decision by a single judge of the Divisional Court.
    In
Bazkur
, the court

held that subsequent s. 61
FLA

claims added to a timely negligence action are merely claims for additional
    damages arising from the existing negligence claim and therefore not subject to
    the two-year limitation period in the
Limitations Act
, 2002
.

[6]

Mr. Nikbakht successfully appealed Master
    Wiebes decision to a judge of the Superior Court of Justice. On May 22, 2019, the
    appeal judge ruled that Master Wiebe was bound by
Bazkur
, but that he
    was not. He declined to follow
Bazkur
after concluding that it was plainly
    wrong. The appeal judge gave extensive reasons supporting his conclusion that
    a claim under s. 61
FLA

is a cause of action distinct from the
    timely negligence claim brought by Mr. Malik. The s. 61
FLA

claims
    Mr. Malik sought to add were therefore statute barred. Accordingly, the appeal
    judge set aside Master Wiebes order and dismissed Mr. Maliks motion for leave
    to amend.

THE ISSUE ON APPEAL

[7]

Mr. Malik now appeals the appeal judges
    decision and seeks an order allowing the amendment to his statement of claim. Mr.
    Malik argues that the appeal judge erred in law in finding that his s. 61
FLA

claims constituted a cause of action distinct from his negligence claim. He
    submits that he has already pleaded, in a timely manner, the same acts of
    negligence on the part of the defendants that support the s. 61
FLA

claims and is simply seeking recovery under another head of damages.

[8]

As I will explain, I would not give effect to
    this appeal.

ANALYSIS

[9]

In my view, the appeal judge was correct in
    holding that a s. 61
FLA

claim is a cause of action that, in Mr.
    Maliks case, is statute barred.

[10]

As the appeal judge correctly acknowledged, the
    common law does not permit family members to sue for compensation for injuries
    to their relatives. He explained, at para. 26, that s. 61(1)
FLA
therefore
    created a statutory cause of action that did not previously exist at common
    law:
Camarata v. Morgan
, 2009 ONCA 38, 246 O.A.C. 235, at para. 10.

[11]

Section 61(1)
FLA
provides:

If a person is injured or killed by
    the fault or neglect of another under circumstances where the person is
    entitled to recover damages, or would have been entitled if not killed, the
    spouse,  children, grandchildren, parents, grandparents, brothers and sisters
    of the person are entitled to recover their pecuniary loss resulting from the
    injury or death from the person from whom the person injured or killed is
    entitled to recover or would have been entitled if not killed, and to maintain
    an action for the purpose in a court of competent jurisdiction.

[12]

As put by Laskin J.A. (concurring), this
    provision dramatically expanded recovery:
Macartney v. Warner
(2000), 46 O.R. (3d) 641 (Ont. C.A.), at para. 51.

[13]

Significantly, the new cause of action created
    by s. 61 of the
FLA
is derivative:
Camarata
, at para. 9. In
    other words, Mr. Maliks s. 61
FLA
claim would be for his damages
    arising out of injuries caused
to his children
as the result of
    allegedly negligent breaches by the defendants of duties of care they owed
to
    his children
. As the appeal judge pointed out, at paras. 28-29, this is a
    fundamentally different claim than Mr. Maliks negligence action, which claimed
    damages arising out of
his own injuries
caused as the result of
    allegedly negligent breaches by the defendants of duties of care they owed
to
    him
. Indeed, as the appeal judge recognized, at para. 17, had Mr. Malik
    brought his s. 61
FLA

claims in a timely way, he could have
    done so even without instituting a negligence action of his own.

[14]

I do not read this courts decision in
Ridel
    v. Cassin
, 2014 ONCA 763, which cites
Bazkur
, at para. 10, as
    holding that
Bazkur

was correctly decided. In
Ridel
,

this court cited
Bazkur
, along with other authorities, only for
    the uncontroversial proposition that claims for additional damages arising from
    an existing cause of action in a timely claim are not barred by the
Limitations
    Act
, 2002
. The error in
Bazkur

occurred in the
    application of that principle.

[15]

It follows that the appeal judge was correct in
    finding that Mr. Malik was not entitled to amend his statement of claim to
    bring a new statutory cause of action outside of the applicable limitation
    period.

DISPOSITION

[16]

For these reasons, I would affirm the appeal
    judges decision and dismiss Mr. Maliks appeal.

[17]

At the end of the hearing, the parties expressed
    confidence that they could agree to an appropriate amount for costs. If they
    fail to do so and a costs order is required, either party may notify the
    Registrar within 15 business days of the release of these Reasons for Decision,
    and a timeline for the exchange of costs submissions will be provided.

Released: Tuesday, March 23, 2021
    K.F.

David
    M. Paciocco J.A.

I agree. K. Feldman J.A.

I
    agree. S. Coroza J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Manchanda v. Thethi, 2021 ONCA 127

DATE: 20210301

DOCKET: C66823

Strathy C.J.O., Brown and Miller
    JJ.A.

BETWEEN

Jastinder
    Manchanda

Applicant (Appellant)

and

Sukhvir
    Thethi

Respondent (Respondent)

Stephen P. Kirby and Gary S. Joseph,
    for the appellant

Richard H. Parker, Q.C., for the
    respondent

Heard: February 8, 2021 by video conference

On appeal from the order of Justice
    Patrick J. Monahan of the Superior Court of Justice, dated March 21, 2019, with
    reasons reported at 2019 ONSC 1749, and the costs order dated July 12, 2019,
    with reasons reported at 2019 ONSC 4239.

REASONS FOR DECISION

[1]

This matter comes before the court a second
    time. On the first occasion, this court dismissed the respondents appeal from
    an order striking his pleadings as a result of his willful non-compliance with
    court orders, including orders to make financial disclosure:
Manchanda v.
    Thethi
, 2016 ONCA 909, 84 R.F.L. (7th) 374. The court observed that the
    parties had been engaged in high conflict matrimonial litigation, which gave
    rise to countless court attendances resulting in court orders from at least
    ten different judges.

[2]

The matter eventually proceeded to an
    uncontested trial, which the respondent was permitted to attend as an observer.

[3]

The appellant appeals various aspects of the
    trial judges disposition of her claims. We deal with each of her complaints
    below. In overview, we see no error in the trial judges thorough reasons.
    Before turning to the grounds of appeal, we address whether the respondent is
    entitled to make submissions on the appeal.

No right of audience

[4]

The appellant submits that the respondent should
    not be permitted to participate in the appeal. She describes the appellant as a
    serial violator of court orders. The respondent also remains in default of
    approximately $45,000 of court ordered costs. This courts decision in
Abu-Saud
    v. Abu-Saud
, 2020 ONCA 824, reaffirmed that an audience will not be
    granted to a party who is in default of court orders: see also
Dickie v.
    Dickie
, 2007 SCC 8, [2007] 1 S.C.R. 346, at para. 6. In
Murphy v.
    Murphy
, 2015 ONCA 69, 56 R.F.L. (7th) 257, the party in default was the
    respondent to the appeal, as is the case here.

[5]

After hearing the appellants submissions, and
    submissions from the respondents counsel on the issue of his clients standing
    on the appeal, we concluded that the respondents default was both deliberate
    and willful. We advised the respondents counsel that we would not hear
    submissions from him. Nor would we consider a document he had filed with the
    court on the day of the appeal, purportedly containing a calculation of the
    equalization payment.

First ground: trial judge allowed respondent
    to participate indirectly

[6]

The
Family Law Rules
, O Reg 114/99,
    provide that the court may deal with a partys failure to follow the rules,
    including a failure to make proper disclosure, by striking out any or all
    documents filed by that party. This consequence stems from the need to sanction
    and deter non-disclosure of assets, which has been described as the cancer of
    family law:
Leskun v. Leskun
, 2006 SCC 25, [2006] 1 S.C.R. 920, at
    para. 4, citing
Cunha v. Cunha
(1994), 99 B.C.L.R. 93 (S.C.).

[7]

The appellant submits that the trial judge
    imposed an unfair evidentiary burden on her and erred in failing to draw
    adverse inferences against the respondent where his documents had been struck.
    As a result, the appellant claims that the trial judge ultimately allowed the
    respondent to benefit from his own misconduct.

[8]

In
Meade v. Meade
(2002), 31 R.F.L.
    (5th) 88 (Ont. S.C.), Kiteley J. held that where disclosure is inadequate and
    inferences must be drawn, they should be in favour of the compliant party: at
    para. 81. The appellant submits that the trial judge failed to abide by this
    principle. The appellant also submits that the trial judge failed to recognize
    that once the respondents documents were struck, the documents of the compliant
    party should be accepted.

[9]

The appellant cited three instances in which the
    trial judge failed to accept the information in her documents: her claim to a
    constructive or resulting trust in the rental property, the respondents
    percentage of ownership of his company, A4U Limited, and the appellants
    valuation of the matrimonial home. In doing so, the appellant submits the trial
    judge permitted the respondent to re-enter the proceeding.

[10]

We disagree. Rule 1(8.4) of the
Family Law
    Rules
, which establishes the consequences of striking out documents, does
    not automatically exclude the defaulting party from the proceeding. Instead, it
    intentionally removes the partys
entitlement
to
    notice and participation. The court may nevertheless permit participation by
    the defaulting party, to the extent it will assist the court.

[11]

Referring to para. 81 of
Meade
, the
    trial judge acknowledged that in view of the respondents failure to make
    adequate financial disclosure, there is broad discretion for a court to draw
    reasonable inferences for the purpose of resolving property issues or imputing
    income. Contrary to the appellants assertion, the striking of the
    respondents documents did not mean that the trial judge was compelled to
    accept her evidence at face value. In an uncontested trial, the trial judge was
    entitled, indeed required, to probe the appellants evidence to ensure a just
    result.

[12]

As this court stated at para. 49 of
Purcaru
    v. Purcaru
, 2010 ONCA 92, 75 R.F.L. (6th) 33 and confirmed in
Mullin
    v. Sherlock
, 2018 ONCA 1063, 19 R.F.L. (8th) 1: the objective of a
    sanction ought not to be the elimination of the adversary, but rather one that
    will persuade the adversary to comply with the orders of the courtThis is
    because denying a party the right to participate at trial may lead to factual
    errors giving rise to an injustice.

[13]

The principle from
Purcaru
is
    applicable here. It is apparent from the record that the appellants own
    documentation was deficient in many respects, that she was over-reaching in
    some respects, and that her evidence shifted in the face of the trial judges
    inquiries. From our observations of the record, the trial judge did not impose
    an unfair burden on the appellant. On the contrary, he wanted to be satisfied
    that his findings of fact were based on credible and reliable evidence.

[14]

Pursuant to Rule 2 of the
Family Law Rules
,
    trial judges in family law proceedings have great latitude to use their
    discretion to adjudicate cases fairly:
Titova v. Titov
, 2012 ONCA 864,
    29 R.F.L. (7th) 267, at para. 48. The trial judges approach appropriately
    reflected the courts obligation to guard against the risk of factual errors in
    the face of only one partys evidence and documents.

Second ground:
    constructive trust

[15]

The appellant submits that the trial judge erred
    in failing to recognize a constructive trust in her favour. She submits that
    the issue of net family property and constructive trust are linked. In the net
    family property calculation, the trial judge reduced the value of the
    matrimonial home from the current value to the value on valuation day. The
    appellant submits that the value she put forward reflected her contribution to
    the property and that the trial judges reduction of the property value failed
    to acknowledge her contributions  contributions that, the appellant submits,
    are tied to the constructive trust.

[16]

The appellant concedes that in the vast majority
    of cases, a married couples division of property will be governed by the net
    family property statutory scheme. However, in some circumstances, a party may
    seek the equitable remedy of a constructive trust. In this case, the appellant
    submits that the trial judge should have recognized that a trust was created
    through unjust enrichment. She submits that this is an appropriate case to
    recognize a constructive trust because her contribution to the business of the
    rental property, including financial contribution, was substantial.

[17]

The trial judge noted that in family law cases
    there is an expectation that the net family property calculations will address
    unjust enrichment. However, the appellant submits that unjust enrichment is not
    always addressed in the statutory scheme:
Martin v. Sansome
, 2014 ONCA
    14, 118 O.R. (3d) 522. For example, the net family property equalization does
    not account for unjust enrichment when there is a significant increase in value
    due to one partys contribution. The appellant submits that her contributions
    were ignored and that this constitutes a reviewable error. The appellant
    submits that she met the test for unjust enrichment, and that the trial judge
    failed to properly engage with the test, simply saying that the appellant
    failed the test.

[18]

We disagree. The trial judge considered the
    appellants submissions and held that this was not an exceptional case as
    described in
Martin
. In this case, any unfairness that might otherwise
    arise out of unequal contribution could adequately be addressed by the equalization
    of net family property. The trial judges conclusion is consistent with s. 5(6)
    of the
Family Law Act
, R.S.O. 1990, c. F. 3.

Third ground: spousal support

[19]

The appellant submits that the trial judge
    failed to acknowledge that loss of opportunity factors are not the only
    factors to be considered in a compensatory spousal support claim. The appellant
    submits that compensatory support should also address sacrifices and
    contribution. The appellant contributed to the rental business by collecting
    rent and dealing with defaulting renters, among other things. The appellant
    submits that the trial judge failed to recognize these contributions and
    articulated a narrow definition for compensatory support. In the appellants
    submission, this was an error and ignores the second half of s. 15.2(6) [of
    the
Divorce Act
, R.S.C. 1985 c. 3. (2nd Supp)].

[20]

In our view, the trial judge did not err. The
    trial judge specifically acknowledged, at para. 58 of his reasons, the
    expansive approach to considering a compensatory basis for spousal support.
    He simply found that, based on the facts before him, the appellant failed to
    establish an entitlement to spousal support on compensatory or other grounds.
    His conclusion is entitled to deference.

Fourth ground:
    vesting order

[21]

The trial judge dismissed the appellants
    request for an order pursuant to s. 9(1)(d) of the
Family Law Act
. The
    appellant sought an order that a property owned by the respondent, valued at
    $870,000, be transferred to her in satisfaction of the judgment if the
    respondent had not paid the judgment within 120 days. In rejecting this relief,
    the trial judge reasoned that such an order would constitute a windfall to the
    appellant because the value of the property exceeded the amount of the
    judgment. He also noted that there could be third parties with an interest in
    the property.

[22]

The appellant submits that this was an
    appropriate case for a vesting order due to the respondents persistent
    breaches of court orders. She acknowledges that granting a vesting order is
    discretionary, but submits that the trial judge should have imposed a partial
    charge on the property. The appellant concedes that this option was not
    proposed to the trial judge.

[23]

The trial judge cannot be faulted for failing to
    grant a remedy that was not requested at trial. We would not interfere with the
    exercise of his discretion.

Fifth ground: costs

[24]

In the event the appeal is dismissed, the
    appellant seeks leave to appeal the costs award. She submits that the costs
    award was unreasonably low and had the effect of punishing her for the respondents
    misconduct.

[25]

We do not agree. The trial judge awarded costs
    of $80,000, all-inclusive, about half the amount claimed by the appellant on a
    full indemnity basis. He found that while the rates charged by counsel were
    reasonable, and much of the time spent was necessary, the costs award should
    reflect the fact that many of the appellants claims were rejected in whole and
    in part. He also found that the appellant conducted the litigation in a way that
    needlessly added to its length and complexity.

[26]

In arriving at the costs award, the trial judge
    considered the relevant principles in Rule 24(12)(a) of the
Family Law
    Rules
. The appellant has identified no error in principle and no error in
    the exercise of the trial judges discretion. We dismiss the application for
    leave to appeal costs.

Disposition

[27]

For these reasons, the appeal is dismissed. In all
    the circumstances, we make no order as to costs.

G.R.
    Strathy C.J.O.

David
    Brown J.A.

B.W.
    Miller J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Manicom v. Manicom, 2021 ONCA 399

DATE:  20210607

DOCKET: C69099

Rouleau, Hoy and van Rensburg JJ.A.

BETWEEN

Donald Conrad Manicom, Conrad Refrigerated Trucking Inc.

and Manicom Holdings Inc.

Applicants
    (Appellants/

Respondents by way of cross-appeal)

and

Michele Ann Manicom

Respondent
    (Respondent/

Appellant by way of cross-appeal)

Michael A. Polvere and James R. Leslie, for the
    appellants/respondents by way of cross-appeal

J. Douglas Skinner and Justin Newman, for the
    respondent/appellant by way of cross-appeal

Heard and released orally: June 4, 2021 by video conference

On appeal from the order
    of Justice Jonathon C. George of the Superior Court of Justice, dated February
    3, 2021, with reasons reported at 2021 ONSC 855, and from the costs order,
    dated March 29, 2021.

REASONS FOR DECISION

[1]

The individual appellant, Donald Conrad Manicom, and the respondent are
    separated spouses engaged in a matrimonial dispute. Each owns 50% of the shares
    of two corporations (the Corporations). The respondent refused to complete
    the sale of her shares in the Corporations to the appellant on the scheduled
    closing date, asserting that she had not agreed to the Non-Solicitation and
    Non-Competition Agreement (NCA) which formed part of the closing documents.
    Mr. Manicom was unwilling to purchase the respondents shares without the NCA.

[2]

Mr. Manicom and the Corporations sought an order for specific
    performance, compelling the respondent to execute the documents, including the
    NCA, necessary to complete the sale of her shares in the Corporations to Mr.
    Manicom. The application judge held that, on the evidence before him, he could
    not find that the respondent had agreed to the NCA. Accordingly, he dismissed the
    application.

[3]

The application judge awarded costs to the respondent in the
    all-inclusive amount of $9000.

[4]

Mr. Manicom and the Corporations appeal the order dismissing their
    application. The respondent seeks leave to cross-appeal the order as to costs.

[5]

The appellants repeat arguments that they made to the application judge,
    principally that, objectively, the respondent would have expected that she
    would be required to enter into a non-solicitation and non-competition
    agreement in connection with the sale of her shares and that the terms of the
    agreement drafted by them were reasonable. They also say that the fact that the
    parties counsel engaged in negotiations of the terms of the NCA after the
    scheduled closing date shows that the parties had agreed in principle that
    there would be a non-solicitation and non-competition agreement with a
    five-year term. We note that the appellants concede that the parties did not
    agree as to the end date of the NCA in those negotiations.

[6]

The application judge accepted that a non-solicitation and non-competition
    agreement is a standard term in a transaction such as this and that it is hard
    to imagine that the Respondent did not and does not know this. However, the
    fact was that it was not a topic of discussion during the negotiation period
    and the best evidence was that the respondent had not discussed such an
    agreement with her counsel before the closing date. The application judge noted
    that there was no written agreement and no evidence of a verbal agreement. He
    found that neither the respondents lawyers receipt and presentation of the
    closing documents to the respondent nor the lawyers exchanges about the NCA
    after the scheduled closing date gave rise to a valid and enforceable contract.

[7]

There is no basis for this court to interfere with the application
    judges finding that the respondent had not agreed to the NCA.

[8]

As to the cross-appeal as to costs, we agree with the respondent that to
    the extent that the application judge may have taken into account the
    respondents decision not to enter into the NCA on the appellants terms, the
    application judge misdirected himself. However, in all the circumstances, we
    consider that the amount of the costs awarded was reasonable.

[9]

Accordingly, we dismiss the appeal and deny leave to appeal the order as
    to costs. The respondent shall be entitled to costs in the agreed amount of
    $10,000.

Paul Rouleau J.A.

Alexandra Hoy J.A.

K. van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Marchant Realty Partners Inc. v. 2407553 Ontario
    Inc., 2021 ONCA 375

DATE: 20210531

DOCKET: M52417, M52418 & M52419

Jamal J.A. (Motions
    Judge)

DOCKET: M52417

BETWEEN

Marchant Realty Partners
    Inc., as agent

Responding Party

and

2407553
    Ontario Inc., 2384648 Ontario Inc., 2384646 Ontario Inc., 24000196

Ontario Inc. and 2396139
    Ontario Inc.

Moving
    Parties

DOCKET: M52418

AND BETWEEN

Marchant Realty
    Partners Inc., as agent

Responding Party

and

4544 Zimmerman
    Avenue LP and 4544 Zimmerman Avenue GP Inc.

Moving Parties

DOCKET: M52419

AND BETWEEN

Marchant Realty
    Partners Inc., as agent

Responding Party

and

4267 River Road
    LP and 4267 River Road GP Inc.

Moving
    Parties

Steven L. Graff, Miranda Spence
    and Stephen Nadler, for the moving parties

Sara-Ann Wilson and Kenneth
    Kraft, for the responding party Zeifman Partners Inc.

Heard: May 20, 2021 by video conference

REASONS FOR DECISION

[1]

The moving parties are debtors (Debtors) over whose assets,
    undertakings, and real property the responding party Zeifman Partners Inc., (Receiver)
    is the court-appointed receiver and manager. The Debtors seek leave to appeal to
    this court under s. 193(e) of the
Bankruptcy and Insolvency Act
,
    R.S.C. 1985, c. B-3 (
BIA
), from orders of Cavanagh J. (motion
    judge) of the Superior Court of Justice (Commercial List) dated March 25, 2021,
    approving the Receivers proposed sale process and list prices for five commercial
    properties in downtown Niagara Falls, Ontario (Properties).

[2]

For the reasons that follow, the motions for leave to appeal are
    dismissed.

Background

[3]

Marchant Realty Partners Inc. (Agent), as agent for a group of lenders
    (Lenders), commenced three related receivership proceedings before the
    Commercial List concerning loans the Lenders made to the Debtors. The loans
    matured over three years ago, some loans more than four years ago. As of
    October 2020, the Debtors owed more than $16 million under the loans.

[4]

The three receivership applications were originally scheduled for September
    2018 but were adjourned five times to give the Debtors more time to refinance
    the Properties. The refinancing never happened.

[5]

With no refinancing or repayment plan on the horizon, the Agent moved
    forward with the receivership applications. In August 2020, Gilmore J. of the
    Commercial List appointed the Receiver as receiver and manager over the
    Debtors Properties, although the appointment was stayed for just over two
    months to give the Debtors one last chance to repay the loans. They could not do
    so, and the Receivers appointment became effective in mid-October 2020.

[6]

The Properties are about 4 km from the tourist area of Niagara Falls.
    The Properties are mixed-use commercial properties (most needing repairs), a
    seasonal operating motel (closed because of the pandemic), and vacant land.

[7]

The Receiver is authorized to market the Properties, including
    advertising them for sale, soliciting offers to buy them, and negotiating such
    terms as the Receiver deems appropriate.

The Motion Judges Decision

[8]

The Receiver recommended list prices for the sale of Properties based
    on: (1) independent appraisals from two local appraisers, Humphrey Appraisal
    Services Inc. and Jacob Ellens & Associates Inc.; (2) recommended list
    prices for the Properties from three real estate brokerages; and (3)
    discussions with Jones Lang LaSalle Real Estate Services, the proposed listing
    brokerage, which has expertise selling properties around Niagara Falls. Even
    with these list prices, the Lenders will lose money on their loans to the
    Debtors.

[9]

The Debtors opposed the proposed list prices and relied on competing
    appraisals of Colliers, a commercial real estate firm. Colliers appraisals  which
    focussed on the development potential of the Properties  were almost 300%
    higher than the Receivers list prices. The Debtors asked the motion judge to
    direct the Receiver to list the Properties at Colliers proposed prices for 60
    days to see what the market will bear.

[10]

By
    order dated March 25, 2021, the motion judge approved the Receivers proposed
    sale process and list prices for the Properties. The motion judge found:

The Receiver is an officer of the court with duties to all
    stakeholders. In
my view, the
Receiver has
    shown that it is acting in good faith and diligently to discharge its duties to
    deal with the [Properties] in a commercially reasonable manner. The Receiver
    has reviewed the Colliers appraisals and the information upon which Colliers
    relies for its appraisals of the [Properties]. The Receiver has explained why
    it does not agree with the Colliers appraisals, and why it has recommended that
    the sale process be approved. I have considered the process which the Receiver
    has followed and the information upon which it relies to support its
    recommendations. The [Debtors] have not shown that the Receiver followed a
    flawed procedure. I am not satisfied
that
this
    is an exceptional case where it is proper for me to reject the business
    judgment made by the Receiver.

The Test for Leave to Appeal Under s. 193(e) of the
BIA

[11]

The
    moving parties seek leave to appeal from the motion judges orders under s.
    193(e) of the
BIA
. This provision provides that, unless an appeal lies
    as of right or as otherwise expressly provided, an appeal lies to the Court of
    Appeal from any order or decision of a judge of the court  by leave of a
    judge of the Court of Appeal.

[12]

In
    deciding whether to grant leave under s. 193(e) of the
BIA
, this court
    considers the following principles:

·

Granting leave is discretionary and must be exercised in a
    flexible and contextual way:
Business Development Bank of Canada v. Pine
    Tree Resorts Inc.
, 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29.

·

In exercising its discretion, the court should examine whether
    the proposed appeal: (1) raises an issue of general importance to
    bankruptcy/insolvency practice or the administration of justice, and is one
    this court should address; (2) is
prima facie
meritorious; and (3)
    would not unduly hinder the progress of the bankruptcy/insolvency proceedings:
Pine
    Tree Resorts
, at para. 29;
McEwen (Re)
, 2020 ONCA 511, 452 D.L.R.
    (4th) 248, at para. 76.

Should this Court Grant Leave to Appeal?

(1)

Does the proposed appeal raise an issue of general importance to
    bankruptcy/insolvency practice or the administration of justice?

[13]

The Debtors
    assert that the proposed appeal raises an issue of general important to
    bankruptcy/insolvency practice. They frame the issue on the proposed appeal as the
    extent of the deference that the Court owes to a receivers business judgment
    when approving a sale process. They claim the appeal will provide guidance to
    receivers as they consider the level of scrutiny they may expect from the Court,
    and to other stakeholders as they consider whether to challenge the actions
    taken by any given receiver.

[14]

The
    Receiver frames the issue on appeal much more narrowly. It claims the appeal is
    highly fact-specific and concerns, in essence, the appropriate list prices of the
    Properties. It says no legal principles are in dispute and the appeal will have
    no bearing or importance for the practice of insolvency and the administration
    of receivership proceedings.

[15]

I
    agree with the Receiver. Although on any appeal the court would consider and
    apply the principles of deference applicable to a receivers business judgment,
    those principles are not in dispute. They were correctly stated by the motion
    judge, who cited this courts decision in
Regal Constellation Hotel Ltd. (Re)
(2004), 71 O.R. (3d) 355 (C.A.), at para. 23:

Underlying these considerations are the principles the courts
    apply when reviewing a sale by a court-appointed receiver. They exercise
    considerable caution when doing so, and will interfere only in special
    circumstances  particularly when the receiver has been dealing with an unusual
    or difficult asset. Although the courts will carefully scrutinize the procedure
    followed by a receiver, they rely upon the expertise of their appointed
    receivers, and are reluctant to second-guess the considered business decisions
    made by the receiver in arriving at its recommendations. The court will assume
    that the receiver is acting properly unless the contrary is
clearly
shown. See
Royal Bank of Canada v.
    Soundair Corp.
(1991), 4 O.R. (3d) 1, 83 D.L.R. (4th) 76 (C.A.).

[16]

On the
    Debtors argument, the appeal would involve the application of these settled principles.
    However, applying settled principles of deference to the Receivers business decisions
    here would not raise an issue of general importance to bankruptcy/insolvency
    practice or the administration of justice.

[17]

The
    Debtors also say the motion judge failed to apply the correct legal test
for evaluating whether a receiver has acted properly in
    selling a
property, as stated in
Royal Bank of Canada v. Soundair Corp.
(1991), 4 O.R. (3d) 1 (C.A.). This issue relates to the deference issue because
    the Debtors claim the motion judge failed to cite or apply the
Soundair
test and instead was unduly deferential to the Receiver. I will consider this
    argument below in evaluating whether the proposed appeal is
prima facie
meritorious.

(2)

Is the proposed appeal
prima facie
meritorious?

[18]

In
    evaluating whether the proposed appeal has
prima facie
merit, I begin
    by noting that this court gives substantial deference to the discretion of commercial
    court judges supervising insolvency and restructuring proceedings and does not
    intervene absent demonstrable error:
Ravelston Corp. Ltd. (Re)
, 2007
    ONCA 135, 85 O.R. (3d) 175, at para. 3.

[19]

As already
    noted, commercial court judges also give substantial deference to the decisions
    and recommendations of a receiver as an officer of the court. If the receivers
    decisions are within the broad bounds of reasonableness and the receiver proceeded
    fairly, after considering the interests of all stakeholders, the court will not
    intervene:
Ravelston
, at para. 3;
Regal Constellation Hotel
,
    at para. 23. A court will assume that the receiver is acting properly unless
    the contrary is clearly shown:
Regal Constellation Hotel
, at para.
    23.

[20]

The
    Debtors assert, however, that this court would overcome the deference shielding
    the receivers business judgments and the motion judges review of those
    judgments because the motion judge made an extricable error of law. The Debtors
    say the motion judge erred in law by failing to state or apply the
Soundair
test for evaluating whether a receiver has acted properly in recommending list
    prices for the Properties.

[21]

The
Soundair
test in the context of a sale involves consideration of:

·

Whether the receiver made sufficient effort to obtain the best
    price and did not act improvidently;

·

The interests of the parties;

·

The efficacy and integrity of the process by which offers were
    obtained; and

·

Whether there has been unfairness in the working out of the
    process:
Soundair
, at p. 6;
Regal Constellation Hotel
, at
    para. 24.

[22]

The
    Debtors claim that the motion judge did not cite or apply the
Soundair
test but instead applied a new, two-part test: (1) the respondent on a motion
    to approve a sale process must show the receiver followed a flawed process in
    developing its sale process; and (2) only if that hurdle is cleared may the respondent
    challenge the sale process itself.

[23]

I do
    not accept the Debtors submission. Although I agree the motion judge did not expressly
    set out the
Soundair
test, he cited
Soundair
elsewhere in his
    reasons. As an experienced commercial judge, he was familiar with the
Soundair
test and applied it in his reasons:

·

Whether the receiver made sufficient effort to obtain the
    best price and did not act improvidently
 The motion judge found that the
    Receiver made sufficient effort to obtain the best and most realistic list
    price and did not act improvidently. He noted that the Receiver reviewed the
    Colliers appraisals and the information upon which Colliers relies for its
    appraisals of the [Properties]. The Receiver has explained why it does not
    agree with the Colliers appraisals, and why it has recommended that the sale
    process be approved. The motion judge also noted that the Receiver explained
    why listing the Properties for 60 days at Colliers proposed list prices could
    result in little to no interest in the sale process, with the result that
    properties languish on the market and ultimately require drastic price
    reductions to generate interest. This could lead to lower recoveries than
    what would have been possible had the property [been] listed for sale at an
    appropriate price at the outset.

·

The interests of the parties
 The motion judge found
    that the Receiver considered the interests of all parties in proposing the
    suggested list prices. He noted that [t]he Receiver is an officer of the court
    with duties to all stakeholders, which included the interests of the Debtors. He
    found that the Receiver has shown that it is acting in good faith and
    diligently to discharge its duty to deal with the [Properties] in a
    commercially reasonable manner.

·

The efficacy and integrity of the process by which offers
    were obtained
 The motion judge considered the integrity of the process
    by which the list prices were recommended. He considered the process which the
    Receiver has followed and the information upon which it relies to support its
    recommendations. He found that [t]he [Debtors] have not shown that the
    Receiver followed a flawed procedure.

·

Whether there has been unfairness in the working out of the
    process
 The motion judge found no unfairness in the process that the Receiver
    followed. He found the Receiver properly considered and responded to Colliers
    appraisals. The proposed list prices did not result from any unfairness.

[24]

I thus
    conclude the motion judge applied the
Soundair
test. I see no
    extricable error of law or any basis to interfere with his decision.

[25]

The proposed
    appeal therefore lacks
prima facie
merit.

(3)

Would the proposed appeal unduly hinder the progress of the receivership
    proceedings?

[26]

Lastly,
    the Debtors assert that the proposed appeal would not unduly hinder the progress
    of the receivership proceedings. They say the Debtors have no other assets, so all
    the Receiver has left to do is list and sell the Properties. The Debtors agree
    to expedite the appeal and claim that any minor delay in the sale process is
    not enough to deny leave to appeal.

[27]

I
    disagree. All the loans in issue matured at least three years ago, some four
    years ago. Over two years have passed since the original return date of the
    receivership applications. There have been further delays to allow the Debtors
    to refinance the Properties, which they could not do. Substantial property
    taxes are accruing on the Properties and the Receiver is responsible for their ongoing
    carrying costs, which rank ahead of the Lenders mortgages and are thus eroding
    their potential recovery. Further delay in the Receivers ability to sell the
    Properties will only further degrade the Lenders security position and should
    not be permitted.

[28]

I thus
    conclude the proposed appeal would unduly hinder the progress of the
    receivership proceedings.

Disposition

[29]

The motions
    for leave to appeal are dismissed. As agreed by the parties, there shall be no order
    as to costs.

[30]

As
    jointly requested by the parties, pending further order the unredacted versions
    of the Debtors factums shall remain under seal and will not be publicly
    available because they contain commercially sensitive and confidential information
    about the Receivers and Debtors proposed list prices for the Properties.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
    Marmolejo (Re), 2021 ONCA 130

DATE: 20210302

DOCKET:
    C67649

Tulloch,
    Paciocco and Harvison Young JJ.A.

IN
    THE MATTER OF:
Alfredo G. Marmolejo

AN
    APPEAL UNDER PART XX.1 OF THE
CODE

Alfredo G. Marmolejo, acting in person

Anita Szigeti and Maya Kotob, for the
    appellant

Lisa Fineberg
, for the respondent, Attorney
    General of Ontario

Leisha Senko and Michele Warner, for
    the respondent, Person in Charge of Centre for Addiction and Mental Health

Heard: August 21, 2020 by
    video conference

On appeal from the disposition of the
    Ontario Review Board dated September 25, 2019, with reasons reported at
Marmolejo
    (Re)
, [2019] O.R.B.D. No. 2378.

Tulloch J.A.:

A.

OVERVIEW

[1]

The appellant appeals from the September 25, 2019 disposition of the
    Ontario Review Board (the Board), which continued the appellants conditional
    discharge. That conditional discharge was one of several annual conditional
    discharges that followed an August 2010 determination that the appellant was
    not criminally responsible on account of mental disorder (NCR) in relation to
    two index offences.

[2]

The Board released its reasons for disposition on October 16, 2019. It
    determined that the appellant remained a significant threat to the safety of
    the public. It further concluded that the only way to manage that threat was a
    continuation of a conditional discharge with a new term requiring the appellant
    to submit urine samples for alcohol and drug screening.

[3]

The appellant argues that the Board erred in law and arrived at an unreasonable
    disposition. First, the appellant contends that the Board erred in its
    application of the significant risk test by simply accepting the evidence and
    not offering any analysis. Second, and along a similar vein, the appellant
    submits that the Boards reasons for disposition are insufficient. The
    appellant submits that the proper application of the significant risk test does
    not support the Boards determination on this issue. The appellant seeks an
    order for an absolute discharge. Alternatively, he asks this court to remit the
    matter to the Board for a re-hearing before a differently constituted panel.

[4]

For reasons that follow, I agree with the appellants position. The
    Board did not conduct a proper assessment of whether the appellant met the
    significant risk threshold, as evident by the complete lack of analysis on this
    point. The evidence before the Board could not support a finding that the
    appellant constituted a significant risk to the public. He was therefore
    constitutionally entitled to an absolute discharge.

[5]

In ordinary circumstances, an absolute discharge would be the
    appropriate disposition. However, a month after this appeal was heard, the
    Board convened for the appellants 2020 annual disposition review hearing. On
    November 2, 2020, it held that the appellant no longer represented a
    significant risk to the public and granted an absolute discharge:
Marmolejo
    (Re),
[2020] O.R.B.D. No. 2277. In other words, the appellants request
    for relief is now moot. I would nonetheless address the merits of this appeal
    in order to provide guidance to the Board.

B.

FACTUAL BACKGROUND

(1)

The Appellants Psychiatric History

[6]

The appellants psychiatric history dates back to 1987 when he was a
    teenager. He was first hospitalized at age 15 when police found him wandering
    in the streets and crossing in traffic. His mother reported that he experienced
    symptoms of paranoia and suspiciousness in the years following his
    hospitalization.

[7]

In September 2005, the appellant was found NCR for a charge of arson. A
    doctor diagnosed him with schizophrenia and depression. He was transferred to a
    minimum secure unit in November 2005. By September 2006, he was spending
    weekends with his parents. After a hearing in November 2006, the Board issued a
    minimum-security detention order with community living privileges. In December 2006,
    he was discharged to live in an apartment in the community. Just under a year
    later, in November 2007, the Board issued a conditional discharge. The
    appellants mental status remained stable and he was compliant with his
    medications.

[8]

At his 2008 annual disposition review hearing, the Board granted the appellant
    an absolute discharge. The appellant reported that he stopped taking his
    medication approximately one year after his discharge. Between 2009 and 2010,
    he was hospitalized pursuant to the
Mental Health Act
, R.S.O. 1990, c.
    M. 7 on three occasions.

(2)

The Index Offences

[9]

In April 2010, the appellant was convicted of one count of criminal
    harassment and one count of failing to comply with a probation order. On August 24,
    2010, the appellant was found NCR for these offences. At the time, the
    appellant was delusional, paranoid, and verbally aggressive. He was treated
    with medication and sentenced to a period of incarceration, followed by a
    period of probation for two years. These two index offences form the subject
    matter for the disposition of the Board that is now at issue.

(3)

The Boards Dispositions Between 2010 and 2019

[10]

On
    November 8, 2011, the appellant was discharged to live in an apartment at a
    temporary transitional housing facility. Eleven months later, he moved in with
    his family. By 2012, his medication was reduced.

[11]

In
    2013 the appellant was briefly hospitalized when his parents reported he was
    experiencing auditory hallucinations. His medications were increased. He
    returned to live with his parents, and then moved into an apartment shortly
    thereafter.

[12]

The
    Board issued a conditional discharge on May 20, 2014. His medications were
    decreased. His mental status remained stable and he continued to adhere to his
    medication regime. He continued to live independently and began working for his
    brother on a part-time basis.

[13]

At
    annual disposition reviews conducted from 2015 to 2018, the appellant
    unsuccessfully sought to receive an absolute discharge: each time the Board found
    that he continued to pose a significant threat, and either added or removed conditions
    of his discharge.

[14]

From
    2018 to 2019 the appellant continued to reside independently in his subsidized
    apartment in Toronto without incident. He received financial support through the
    Ontario Disability Support Program (ODSP) and from his parents. He maintained
    his relationship with his girlfriend. There were no changes to his medication.

(4)

The 2019 Hearing Before the Board

[15]

In
    2019, the Board released its sixth consecutive disposition continuing the conditional
    discharge, this time reinserting a term requiring the appellant to submit urine
    samples for alcohol and drug testing. That disposition is the subject of this
    appeal.

[16]

At
    the 2019 hearing, the Board received written and oral evidence by way of the
    Hospitals report to the Board and the testimony of Dr. Choptiany, who is the
    appellants outpatient psychiatrist.

[17]

Dr.
    Choptiany testified that the appellant had been compliant with his reporting
    requirements and accepts that he has schizophrenia. Dr. Choptiany also
    testified that the appellant has stated that he would continue to take his
    medication in the event that he was granted an absolute discharge.

[18]

Dr.
    Choptiany expressed concern regarding the appellants attitude toward his index
    offences. In particular, Dr. Choptiany opined that the appellant had downplayed
    the significance or severity of the behaviours that occurred at the time of the
    index offences. The Hospitals report also noted that the appellant was unable
    to link his illness to his behaviours at the time of the index offence.

[19]

Both
    the Hospitals report and Dr. Choptiany also noted that the appellants
    therapeutic relationship with his psychiatric team deteriorated significantly
    over the course of the reporting year. It appeared that at least part of the
    reason was that the appellant was frustrated with his continued supervision by
    the Board, and the fact that he still had not received an absolute discharge.
    In his testimony, Dr. Choptiany suggested that it might be helpful if the
    Boards disposition required the appellant to submit to urine sampling. He was
    of the view that such testing could assist the psychiatric team in determining
    why the appellants demeanor changed.

[20]

Dr.
    Choptiany opined that the appellant still posed a significant threat based on
    the diagnosis of schizophrenia, along with the appellants history of
    non-compliance with medication, substance abuse, aggressive behavior, and
    limited insight into his situation.

[21]

Dr.
    Choptiany further observed that if the appellant were no longer under the
    jurisdiction of the Board, he would discontinue his medications, likely use
    alcohol or illegal substances, and again become psychotic, which would put the
    public at risk of harm.

C.

THE DECISION OF THE
    BOARD

[22]

In
    the reasons for disposition of the Board dated October 16, 2019, the Board set
    out a brief summary of the two index offences, the appellants personal
    history, and the legal and psychiatric history. The Board then summarized the
    appellants progress over the past year in four paragraphs, which consisted
    mainly of a lengthy quote from the Hospitals report.

[23]

In
    dealing with the issue of whether the appellant posed a significant threat, the
    Board stated only the following:

18. The Hospitals report contains information
    concerning the issue of significant threat to the safety of the public
    including:

''If Mr. Marmolejo were to reoffend, it
    would flow from noncompliance with antipsychotic medication potentially
    exacerbated by the use of substances. Mr. Marmolejo has demonstrated limited
    insight into the specific benefit of a reduced risk for violent or harassing
behaviour
as emanating from ongoing compliance with
    antipsychotic medication. While he has reported that he would continue taking
    his medications if no longer under the ORB, it is considered likely that he
    would stop or reduce the dose of his medication if no longer under the ORB.
    Risk of violent behaviour would gradually arise as a result of noncompliance.
    The risk would be exacerbated in the event of his reverting to use of cannabis,
    which has historically contributed to a paranoid state of mind and the
    emergence of other psychotic symptoms in Mr. Marmolejo."

19. In his oral testimony Dr. Choptiany
    confirmed that Mr. Marmolejo remains a significant threat to the safety of
    the public because he has limited insight into the nature of his illness. He
    has a past history of substance use. When he is unwell, he is aggressive and is
    capable of physical and psychological harm. If he did go off his medication, he
    would fall away from care and decompensate particularly since his therapeutic
    relationship with his clinical team has deteriorated so badly in the last year.

[24]

The
    Board then concluded as follows:

21.
The evidence in this
    case establishes that Mr. Marmolejo continues to represent a significant
    threat to the safety of the public. This panel accepts that evidence
.
    This panel is also satisfied that the only way to manage the threat is by the
    maintenance of the conditional discharge with the addition of a urine screen
    for alcohol and the nonmedical use of drugs. In our view, this is the necessary
    and appropriate order. It is also the least onerous and least restrictive order
    in the circumstances of this case. [Emphasis added.]

D.

POSITION OF THE PARTIES

[25]

The
    appellant submits that the Boards disposition was unreasonable and rested on
    an error of law. He argues that the Board failed to conduct a proper assessment
    as to whether the appellant was a significant threat to the safety of the
    public. The appellant submits that he does not meet the threshold of
    significant risk. He takes issue with the imposition of a conditional discharge,
    as well as the addition of a new condition requiring him to submit urine
    samples.

[26]

The
    appellant also argues that the Board provided insufficient reasons. In
    particular, he notes that there is no analysis section: the Board simply
    states its conclusion that the appellant posed a significant risk. The Board
    failed to explain how it applied the statutory test, how it dealt with the
    material evidence before them, or how it reached its conclusion that the
    appellant remains a significant threat to the safety of the public.

[27]

The
    respondents submit that the Board made no error in its application of the
    significant threat test; there was sufficient evidence before the Board to
    reach its conclusion; and the reasons provided by the Board were legally
    sufficient.

E.

ANALYSIS

(1)

Standard of Review

[28]

This
    court may set aside an order of the Board only where it is of the opinion that:
    (a) the decision is unreasonable or cannot be supported by the evidence; (b) the
    decision is based on a wrong decision on a question of law (unless no
    substantial wrong or miscarriage of justice has occurred); or (c) there was a
    miscarriage of justice:
Criminal Code
, R.S.C., 1985, c. C-46, s.
    672.78(1);
R. v. Owen
, 2003 SCC 33, 174 C.C.C. (3d) 1, at
    para. 31.

[29]

The
    standard of review under s. 672.78(1)(a) is one of reasonableness. The court
    should ask itself whether the Boards risk assessment and disposition order was
    unreasonable in the sense of not being supported by reasons that can bear even
    a somewhat probing examination:
Owen
, at para. 33, citing
Canada
    (Director of Investigation and Research) v. Southam Inc
., [1997] 1 S.C.R.
    748, at para. 56.

[30]

If
    the Boards decision could reasonably be the subject of disagreement among
    Board members properly informed of the facts and instructed on the applicable
    law, the court should in general decline to intervene:
Owen
, at para.
    33. As this court explained in
Sokal (Re),
2018 ONCA 113, at paras.
    12-13:

An appellate court must always recall the
    difficulty of assessing whether a given individual poses a significant threat
    to public safety:
Winko v. British Columbia
    (Forensic Psychiatric Institute)
, [1999] 2 S.C.R.
    625, at para. 61.
The appeal court does not make its own
    judgment on the question of significant threat and use that judgment as the
    benchmark for assessing the reasonableness of the Board's decision. Nor does
    the court re-weigh the considerations that were before the Board
:
Wall (Re)
, 2017 ONCA 713, at para. 21.

The reasonableness of
    the Board's decision must be evaluated by considering the reasons it proffers
    in the context in which the decision is made
. At
    issue is whether the Board reached an acceptable and defensible outcome,
    keeping in mind the need to protect the liberty of the NCR accused as much as
    possible, while also protecting society:
Wall
, at para. 22. [Emphasis added.]

[31]

However,
    the standard is not as high as the unreasonable verdict in criminal cases. As
    stated by this court, the standard of reasonableness enacted by s.
    672.78(1)(a) involves respectful attention, though not submission to the
    Board's reasons:
Mental Health Centre Penetanguishene v. Ontario
,
    2010 ONCA 197, 260 O.A.C. 125, at para. 65.

[32]

The
    standard of review under s. 672.78(1)(b), with respect to errors of law, is one
    of correctness:
Mazzei v. British Columbia (Director of Adult Forensic
    Psychiatric Services
), [2006] SCC 7, [2006] 1 S.C.R. 326, at para. 16. An
    erroneous application of the significant threat test is an error of law:
Hammoud (Re),
2018 ONCA 317, at para. 9.

(2)

The Significant Risk Requirement Under Section 672.54

[33]

Review
    Boards derive their jurisdiction from Part XX.1 of the
Criminal Code
. Pursuant
    to s. 672.54, the Board must make a disposition that takes into account the
    safety of the public, the mental condition of the accused, the reintegration of
    the accused into society and the other needs of the accused. That section
    empowers the Board to order the following dispositions:

When a court or Review Board makes a
    disposition under subsection 672.45(2), section 672.47, subsection 672.64(3) or
    section 672.83 or 672.84, it shall, taking into account the safety of the
    public, which is the paramount consideration, the mental condition of the
    accused, the reintegration of the accused into society and the other needs of
    the accused, make one of the following dispositions that is necessary and
    appropriate in the circumstances:

(a) where a verdict of not criminally
    responsible on account of mental disorder has been rendered in respect of the
    accused and, in the opinion of the court or Review Board, the accused is not a
    significant threat to the safety of the public, by order, direct that the
    accused be discharged absolutely;

(b) by order, direct that the accused be
    discharged subject to such conditions as the court or Review Board considers
    appropriate; or

(c) by order, direct that the accused be
    detained in custody in a hospital, subject to such conditions as the court or
    Review Board considers appropriate.

[34]

Accordingly,
    the role of the Board is first to determine whether an NCR accused represents a
    significant threat to public safety. If the answer to that question is no or
    uncertain then the NCR accused must be discharged absolutely:
Winko v.
    British Columbia (Forensic Psychiatric Institute),
[1999] 2 S.C.R. 625, at
    pp. 659-661, 669. If the NCR accused does present a significant threat, the
    Board must either conditionally discharge or detain the individual:
Winko,
pp.
    662, 669.

[35]

It
    is important to bear in mind that the Boards responsibility to grant an
    absolute discharge is non-discretionary in the event that it harbours any doubt
    about whether the NCR accused represents a significant threat:
Carrick (Re),
2018 ONCA 752, at para. 16. As the majority of the Supreme Court
    emphasized in
Winko,
at pp. 652-653: Once an NCR accused is no longer
    a significant threat to public safety, the criminal justice system has no
    further application.

[36]

Individuals
    with mental disorders are not inherently dangerous:
Winko,
at p. 653.
    There is no presumption of dangerousness and no burden on the NCR accused to
    prove a lack of dangerousness:
Winko,
at pp. 660-661, 662. Rather, the
    legal and evidentiary burden of establishing significant threat rests on the
    Board or the court:
Winko,
at p. 663.

[37]

The
    threshold for significant risk is onerous:
Carrick (Re)
, 2015 ONCA
    866, 128 O.R. (3d) 209, at para. 17. A significant threat to the safety of the
    public means a foreseeable and substantial risk of physical or psychological
    harm to members of the public:
R. v. Ferguson,
2010 ONCA 810, at para.
    8. The conduct must be of a serious criminal nature:
Ferguson,
at para.
    8. A very small risk of grave harm will not suffice, nor will a high risk of
    trivial harm:
Ferguson,
at para. 8. The threat must be more than
    speculative in nature; it must be supported by evidence:
Winko
, at p.
    665;
Pellett (Re),
2017 ONCA 753, 139 O.R. (3d) 651, at para. 21.

(3)

The Disposition of the Board  Significant Threat

[38]

As
    explained above, the Boards conclusion on the significant threat issue was
    devoid of any analysis, a point I will return to below. It rested solely on a
    flat acceptance of the evidence before the Board. In examining whether the
    Board erred in finding that the appellant posed a significant threat to the
    safety of the public, I will assume that the Board based that finding on
    conclusions found in the Hospitals report and the evidence of Dr. Choptiany
    that was before the Board.

[39]

The
    evidence pertaining to significant threat, as summarized by the Boards reasons
    at paras. 18-19, included the following general conclusions: (1) the appellant
    has limited insight into the nature of his illness; (2) when he is unwell, he
    is capable of physical and psychological harm; (3) he would decompensate if he
    went off his medication; and (4) the risk of decompensation is heightened due
    to the deterioration of his therapeutic relationship with his clinical team and
    his history of substance use:
Marmolejo (Re),
[2019] O.R.B.D. No.
    2378, at paras. 18-19.

[40]

None
    of these factors, taken alone or together, support the Boards finding that the
    appellant presented a significant threat to the safety of the public. More
    specifically, the general conclusions relied upon by the Board address neither
    the degree of the risk nor the gravity of the apprehended harm. An appropriate significant
    threat finding cannot be made without considering these questions. A finding of
    significant threat based on the aforementioned factors without such evidence would
    have been an error in law because it would amount to a failure to apply the
    proper test to the evidence adduced at the hearing:
Hammoud,
at para. 9.
    It would also have been an unreasonable disposition. I will examine each of the
    factors identified in evidence before the Board, in turn.

[41]

The
    fact that an accused lacks insight into their condition is but one factor for
    consideration, and it must be used with care. In
Kalra (Re)
, 2018 ONCA
    833, at para. 52, this court examined the role of insight in relation to
    significant risk and found that a lack of insight must be evaluated in its
    proper context:

Whether an NCR accused has insight into his or
    her mental illness, and the extent of that insight, is only part of the
    analysis in determining if there is a significant threat to the safety of the
    public.
While insight is a treatment goal, it is one some
    persons living with mental illness may be unable to fully achieve. In some
    instances, particularly where the contemplated harm falls at the lower end of
    the spectrum, it may be unreasonable to require, as the Board did here, that an
    NCR accused's insight into his or her illness be "entrenched on his
    consciousness" in order to obtain an absolute discharge
. [Emphasis
    added.]

[42]

This analysis is equally applicable to the circumstances at hand. A lack
    of insight alone cannot form the basis of a significant threat finding without
    analysis of how that lack of insight factors into the risk the NCR accused will
    pose. Due to the brevity of the Boards reasons, the extent to which this
    factor contributed to the finding of significant risk is unclear. Yet the
    appellants lack of insight has been a running and dominant theme throughout
    the appellants dispositions over the years. It also figured prominently in the
    Hospitals report and Dr. Choptianys testimony. Needless to say, the Board
    must be cautious in inferring that an NCR accused comprises a significant risk without
    consideration of how that lack of insight poses a risk in the circumstances of
    the case at hand.

[43]

Furthermore,
the fact that the appellant may be capable of physical
    and psychological harm when he is unwell is likewise insufficient to ground a
    finding of significant risk. That is not the threshold. There needs to be a
    foreseeable and substantial risk of significant physical or psychological harm;
    that is, the NCR accused must pose a risk of
serious
criminal conduct.
    Anything less is an insufficient basis to deny entitlement to an absolute
    discharge.

[44]

Additionally,
    a finding that a person might discontinue their medication must be supported by
    evidence and be linked in a reasoned way to the finding that the NCR accused
    poses a significant threat to the public. In
Pellett,
at para. 32,
    this court noted that the onerous substantial threat standard was not met by
    the risk that an NCR accused could cease taking her medication, which would
    result in a worsening of her condition. This is so even where there is considerable
    likelihood that the NCR accused would discontinue their medication:
Hammoud,
at para. 9;
Ferguson,
at paras. 1-3. As this court noted in
Hammoud
:

There was no doubt that for three decades the
    appellant has suffered, as she continues to suffer, from a serious mental
    disorder.
Equally, there was no doubt that, presented with
    the opportunity to do so, the appellant would discontinue her medication. But
    these are not the risks at which the "significant threat" threshold
    in s. 672.5401 is directed
. In our view, read as a whole, the reasons of
    the Board reveal legal error  the failure to apply the proper test for
    "significant threat to the safety of the public" to the evidence
    adduced at the hearing. [Emphasis added.]

[45]

In the present case, the appellant has complied with his medication
    regimen for years and has repeatedly indicated that he would continue taking
    his medication upon his absolute discharge. Although he stopped taking his
    medication after he received his 2008 absolute discharge, there is no evidence
    that this would happen again. His liberty cannot be beholden to a mistake made
    over a decade ago.

[46]

Nor
    can one equate the deterioration in the appellants relationship with his
    psychiatric team with significant threat. The team did not observe any overt
    psychiatric symptoms. Admittedly, the change in temperament remains unexplained.
    However, uncertainty does not ground a finding of significant threat, even when
    considered along with the other conclusions that emerge from the evidence that
    was before the Board.

[47]

Finally,
    it is well recognized that a risk of substance abuse does not justify the
    denial of an absolute discharge unless that substance abuse would pose a
    significant threat to the public:
Carrick (Re),
(2015), at para. 39;
Wall
    (Re),
2017 ONCA 713, 417 D.L.R. (4th) 124,

at paras. 25, 29-30;
Sokal
,

at para. 25. An NCR accused cannot be under the Boards jurisdiction
    indefinitely because of substance use. The evidence before the Board failed to
    offer insight into the degree of the risk that substance abuse posed to the
    appellants behavior and was therefore of marginal utility.

[48]

In
    sum, the Board erred in law by not engaging the appropriate legal standards required
    for a significant risk finding. If the Boards finding was, in fact, based on
    the conclusions put before it in evidence, viewing these factors in light of the
    concerns raised above the finding was also unreasonable. The evidence before
    the board leads me to a different outcome than the Board: I am satisfied that
    the totality of this record does not permit a finding that the appellant posed
    a significant threat to the public. The appellant was entitled to an absolute
    discharge.

(4)

The Need for Robust Reasons on the Significant Threat Issue

[49]

In
    every case, the Board is required to explain why the disposition is necessary
    and appropriate in the circumstances:
Marchese (Re)
, 2018 ONCA 307,
    359 C.C.C. (3d) 408, at para. 16. A cursory consideration of the question of significant
    risk will not suffice where an individuals liberty is on the line:
Carrick
    (Re),
(2018), at para. 20. As noted above, the Boards disposition must be
    able to withstand a somewhat probing examination in order for the conclusion
    on significant threat to be upheld as reasonable. As this court observed in
Marchese
,
    at para. 8: To conduct a somewhat probing examination this court must have
    something to probe.

[50]

In
Marchese
, this court contemplated the difficulty posed when the Board
    fails to provide sufficient reasons. In that case, the Boards analysis on the
    key issue of significant threat was confined to one paragraph at the end of
    five pages of reasons. Brown J.A., writing for the court, commented that: This
    brevity led the Board to treat material evidence without the rigour one would
    expect from a specialized tribunal such as the Board.

[51]

Nevertheless
,
the court ultimately upheld the Boards disposition. After remarking on
    the insufficiency of reasons, the court reviewed the record before the Board.
    It concluded that there was evidence that supported the Boards finding on the
    significant threat issue, notwithstanding the clear deficiency in reasons. For
    example, Ms. Marchese was re-admitted to the hospital for seven months due to a
    deterioration in her mental status during the period under review:
Marchese
,
    at para. 13. While in seclusion at the hospital, she also exhibited escalated
    behaviour that risked harm to herself and others:
Marchese
,

at
    paras. 13-14. At the hearing, there was also some indication that Ms. Marchese
    had further contact with the hospital in the interim. Thus, the court declined
    to interfere with the Boards finding that Ms. Marchese remained a significant
    threat.

[52]

However,
    in so doing, the court identified a trend besetting Ontario Review Board cases:
    Yet, too often this court sees reasons from the Board that go on at
    considerable length to recite submissions, only to conclude with a cursory
    analysis of the key issue: is the appellant a significant threat to the safety
    of the public? Brown J.A. provided the following helpful commentary for Board
    going forward:

Cursory analysis is difficult to probe. It
    also risks failing to provide justification, transparency, and intelligibility
    for the resulting decision.
To avoid that risk, in every
    case the Board's reasons should clearly explain what evidence in the record
    leads it to conclude that the condition and conduct of the NCRMD accused
    creates a significant threat to the safety of the public, both in the sense
    that there exists a real, foreseeable risk of physical or psychological harm
    occurring to individuals in the community and in the sense that this potential
    harm must itself be serious:

R. v. Ferguson
, 2010 ONCA 810, 264 C.C.C. (3d) 451 (Ont. C.A.), at para. 8. The
    Board's reasons must clearly deal with the likelihood of a risk materializing
    and the seriousness of the harm that might occur:
Carrick
    (Re)
, 2015 ONCA 866, 128 O.R. (3d) 209 (Ont.
    C.A.), at para. 16. [Emphasis added.]

[53]

He
    further noted that the Boards reasons must identify the material evidence
    which it relies on and explain how the evidence is linked to the issue of
    significant threat:
Marchese
, at para. 11. A conclusion is not an
    explanation; and
whether that conclusion falls within a
    range of possible, acceptable outcomes cannot be assessed in light of the
    absence of any analysis
:
Marchese
, at para. 17.

[54]

Another
    case that grapples with a similar issue is
Magee (Re)
,

2020
    ONCA  418. Although the case is factually distinguishable, the Boards
    reasons for dismissing Mr. Magees request suffered from the same defects that
    are present here: namely, an absence of meaningful reasons. On appeal, this
    court ordered a new hearing on the basis that the Boards disposition was unreasonable.
    Harvison Young J.A., writing for the court, held that the reasons failed to
    reflect an adequate engagement with the requirement that it make the least
    onerous disposition:
Magee
,

at paras. 24, 30-32; 40-42. She
    noted that the Board failed to explain its disposition in light of the
    supporting evidence:
Magee
,

at para. 25. In doing so, she reminds
    us of the following helpful comment in
Vavilov
,

at para. 127:
    T
he
principles of justification and transparency
    require that an administrative decision maker's reasons
meaningfully account
for the central issues and
    concerns raised by the parties" (emphasis added).

[55]

More
    broadly, to succeed on an appeal based on inadequate reasons, an appellant must
    show that the reasons are so deficient that they foreclose meaningful appellate
    review, and the deficiency has occasioned prejudice to the exercise of the
    appellants legal right to an appeal:
R. v. Dinardo
, 2008 SCC 24,
    [2008] 1 S.C.R. 788, at para. 25,
R. v. Sheppard,
2002 SCC 26, [2002]
    1 S.C.R. 869, at para. 33, and
R. v. Braich
, 2002 SCC 27, [2002] 1
    S.C.R. 903, at para. 31.

(5)

The Disposition of the Board  Insufficient Reasons

[56]

In
    some ways, the facts of this case align with those in
Marchese
. The
    decision of the Board sets out the history of the matter, and quotes at length
    from the Hospitals report. The Board discussed that report, and the evidence
    of Dr. Choptiany, in a cursory manner. The decision of the Board does not
    clearly set out why the condition and conduct of the appellant creates a
    significant threat to the public.

[57]

In
    fact, the Board does not even mention the appellants position when making its
    determination that the appellant posed a significant risk to the public. There
    is no analysis at all. There is no indication as to why the appellant might
    stop taking medication when he states that he would continue to take it, and he
    had taken in for years. There is no analysis as to why the potential risk posed
    by the appellant was serious as opposed to relatively trivial harm.

[58]

I
    am satisfied that the Boards reasons are so deficient that they foreclose
    meaningful appellate review. Likewise, the deficiency would have occasioned
    prejudice to the exercise of the appellants legal right to appeal.

[59]

Notably,
    this case departs from
Marchese
in a crucial way: here, the evidence
    before the Board does not appear to support a finding of significant threat. Accordingly,
    I do not have the same hesitations about interfering with the Boards disposition.
    As explained above, the appellant was entitled to an absolute discharge.

F.

CONCLUSION AND
    DISPOSITION

[60]

Accordingly,
    the appeal is allowed. As noted above, in light of the Boards 2020
    disposition, there is no need for further relief at this point in time.

Released: March 2, 2021 M.T.

M.
    Tulloch J.A.

I
    agree. David M. Paciocco J.A.

I
    agree. Harvison Young J.A.