COURT OF APPEAL FOR ONTARIO

CITATION: Solomon v. Abughaduma, 2019 ONCA 677

DATE: 20190829

DOCKET: C65534

Paciocco, Harvison Young and Zarnett JJ.A.

BETWEEN

Albert Solomon

Plaintiff (Respondent)

and

Read Mohamed Ali Abughaduma
, The
    Scarborough Hospital, General Site; John Doe and Jane Doe

Defendants (
Appellant
)

Anu Koshal and Natalie V. Kolos, for the appellant Read
    Mohamed Ali Abughaduma

Albert Solomon, acting in person

Shantona Chaudury and Brodie Noga, appearing as
amicus
    curiae

Heard: August 14, 2019

On appeal from the judgment of Justice Janet Wilson of
    the Superior Court of Justice, dated May 28, 2018, with reasons reported at
    2018 ONSC 3287, 49 C.C.L.T. (4th) 125.

Paciocco J.A.:

OVERVIEW

[1]

Dr. Abughaduma was found liable to pay $20,000 for general damages and
    $40,000 for lost income to Albert Solomon for having failed to obtain informed
    consent from Mr. Solomon before performing total wrist fusion surgery on him.
    After that surgery, Mr. Solomon was no longer able to earn money as a golf
    professional.

[2]

Dr. Abughaduma appeals the trial judges liability and damage decisions.
    Although he does not contest the trial judges finding that he breached his
    duty to warn Mr. Solomon, he argues that she erred in law by failing to apply
    the but for test for causation. Indeed, he urges that causation was disproved
    on the trial judges own factual findings.

[3]

Second, he argues that the trial judge erred in law in deciding on her
    own motion and contrary to the expert evidence that Dr. Abughaduma had a duty
    to warn Mr. Solomon of the risk of regional sympathetic dystrophy (RSD), a rare
    post-operative chronic regional pain syndrome that the trial judge found Mr.
    Solomon to have developed.

[4]

Finally, Dr. Abughaduma argues that the trial judge made several
    palpable and overriding errors in coming to her decision, including: (1) misapprehending
    the evidence of defence expert, Dr. van Schroder, about the impact of total
    wrist surgery on the ability to play golf; (2) misapprehending the evidence of
    Dr. Axelrod about the severity of Mr. Solomons arthritis; and (3)
    misapprehending Mr. Solomons own testimony about the nature of the complaints
    he made to Dr. Abughaduma. Dr. Abughaduma contends that this latter
    misapprehension caused the trial judge to fail to give proper consideration to
    Dr. Abughadumas hindsight defence.

[5]

For the reasons that follow, I do not accept any of these grounds of
    appeal and would dismiss the appeal.

THE MATERIAL FACTS

[6]

For many years, Mr. Solomon earned his living primarily as a golf
    teacher and golf hustler. With age, he began having problems with his left
    wrist that caused him pain and interfered with his golf game. After several
    years of discomfort and reduced wrist flexion he wanted these problems to be addressed.
    Initially, the medical doctors he consulted attempted to manage his condition
    with physiotherapy and anti-inflammatory medication. Dissatisfied with the results,
    Mr. Solomon decided to get serious. He was referred to Dr. Abughaduma, an
    orthopaedic surgeon to arrange for surgical intervention.

[7]

On February 25, 2010, when Mr. Solomon was 73 years old, Dr. Abughaduma
    performed total wrist fusion surgery on Mr. Solomons left wrist. This was
    achieved by inserting a four-inch metal plate above Mr. Solomons wrist joint
    and then placing Mr. Solomons wrist in a cast. Although Mr. Solomons ability
    to bend his wrist was seriously compromised before the operation, he could
    still bend his wrist. The surgery ended that.

[8]

When the cast was removed on March 9, 2010, Mr. Solomon discovered for
    the first time that a metal plate had been inserted, and that he had lost all
    wrist flexion. After the staples were removed, he was placed in another cast.
    This second cast was removed some six weeks later. Mr. Solomons wrist proved
    to be extremely swollen and he could not move his fingers. He was prescribed
    Percocet and physiotherapy to assist his convalescence. By August 17, 2010, Mr.
    Solomon was asking Dr. Abughaduma to remove the metal plate. Dr. Abughaduma discouraged
    this, advising Mr. Solomon that removing the metal plate would not make a lot
    of difference to the stiffness.

[9]

In December 2010, Mr. Solomon sought a second opinion. In July 2011, he
    managed to see Dr. Terry Axelrod, an experienced upper hand and upper extremity
    surgeon. As expected from the kind of surgery he had received, Mr. Solomon had
    no wrist flexion or extension when he met with Dr. Axelrod. However, he also had
    pain in his fingers and wrist, and hand stiffness so severe that he could not
    bring his fingers down to his palm, meaning he could not grip. His hand was like
    a lobster claw.

[10]

After
    studying Mr. Solomons pre-op and post-op x-rays, Dr. Axelrod explained to Mr.
    Solomon that there had been surgical alternatives to a full wrist fusion.

[11]

He
    also cautioned Mr. Solomon that although there was a 50% to 60% chance that further
    surgery, including removing the metal plate, could improve things by increasing
    the flexion in his hand and possibly reducing his pain, further surgery would
    not make his hand or wrist normal.

[12]

In
    October 2011, Mr. Solomon had the further surgery. This second surgery
    succeeded in improving Mr. Solomons grip so that he could pick up a coffee
    cup, but he still could not grip a golf club, and his wrist was still fused and
    immobile.

[13]

On
    February 23, 2017, Mr. Solomon sued Dr. Abughaduma in negligence, claiming
    damages for pain and suffering and lost income from his incapacity to play golf.

[14]

On
    December 7, 2017, all of Mr. Solomons claims were dismissed, save and except
    for the claim that Dr. Abughaduma failed to obtain [Mr. Solomons] informed
    consent. That claim proceeded to trial. Central to Mr. Solomons claim is his
    assertion that had he been advised that he was having total wrist fusion
    surgery, he would not have had the procedure, and that the surgery he did have has
    prevented him from playing golf.

[15]

During
    the trial, competing expert evidence was provided. Most materially, Dr.
    Axelrod, called by Mr. Solomon, testified that Mr. Solomons pre-operative
    wrist arthritis was moderate and localized. Therefore, there were available surgical
    options short of a total wrist fusion.

[16]

Defence
    expert Dr. von Schroeder testified that Mr. Solomons pre-operative wrist
    arthritis was severe, precluding the other surgical options. Dr. von Schroeder
    also testified that he has had patients who have opted for the same total wrist
    fusion surgery that Mr. Solomon had and played better golf afterwards. This evidence
    was offered in support of the defence theory that a reasonable person in Mr.
    Solomons shoes would have consented to the surgery, even if properly informed.

[17]

The
    trial judge found in Mr. Solomons favour. In the course of doing so, she made
    the following findings that are material to this appeal:

·

Ms. Solomon informed Dr. Abughaduma that he earned a living
    playing golf, wanted the surgery to reduce his pain to improve his golf game, requested
    the kind of wrist fusion surgery he saw on the internet that would help him cock
    his wrist better, and that he would need to be able to cock his wrist to hold
    a golf club;

·

At the time, Mr. Solomon did not have generalized advanced
    arthritis of the entire wrist. Therefore, surgical options short of total
    wrist fusion were available;

·

Mr. Solomon had not been provided with adequate disclosure before
    the total wrist fusion surgery. Specifically, he was not advised of other
    available surgical options and he was not told that he would lose all mobility
    in his wrist as a result of [the procedure Dr. Abughaduma was proposing] and
    that a metal plate would be inserted in his wrist.

·

Had proper disclosure been made, Mr. Solomon would not have
    agreed to a total wrist fusion, and would have in all probability opted for
    one of the alternative surgical options that would not have totally eliminated
    his wrist movements, or perhaps he would have chosen to play through the pain;

·

A reasonable person in Mr. Solomons shoes, properly informed,
    would make the choice not to have total wrist fusion surgery;

·

During the surgery, Mr. Solomon contracted RSD, a rare and
    unfortunate risk inherent with all surgeries that caused considerable pain and
    the loss of function in Mr. Solomons fingers; and

·

Dr. Abughaduma did not tell Mr. Solomon about the rare and
    devastating risk of RSD, and the failure to do so was a breach of Dr. Abughadumas
    duty to disclose.

ISSUES

[18]

Dr.
    Abughaduma appeals both the liability and damages findings. In the appeal, he does
    not contest the trial judges factual determination that Dr. Abughaduma failed
    to secure Mr. Solomons informed consent to the surgery, or that Mr. Solomon
    would not have had total wrist fusion surgery had that occurred. However, he
    claims that the trial judge made other material errors. Those alleged errors
    can best be analysed in the following order:

A.

Did the trial judge err by holding that the risk of RSD should have been
    disclosed?

B.

Did the trial judge err in analyzing the law of causation?

C.

Did the trial judge misapprehend or improperly reject Dr. von Schroeders
    evidence?

D.

Did the trial judge misapprehend Dr. Axelrods evidence?

E.

Did the trial judge
    misapprehend Mr. Solomons complaint, thereby failing to properly analyse the
    defence theory of hindsight?

ANALYSIS

A.

DID THE TRIAL JUDGE ERR BY HOLDING THAT THE RISK OF RSD SHOULD HAVE BEEN
    DISCLOSED?

[19]

Dr.
    Abughaduma urges that the trial judge erred in finding that the risk of RSD
    should have been disclosed. He contends that: (1) RSD is too rare and unpredictable
    a condition to give rise to a duty to warn, and (2) the trial judge erred in
    finding this breach to have occurred given that it was not pleaded, and she
    raised it of her own initiative.

[20]

In
    my view, we need not resolve whether either alleged error occurred. The trial
    judge, mindful that this issue had been raised and explored only tangentially,
    made clear that the RSD disclosure issue was not necessary to her decision.
    That being so, if the trial judge did commit either or both alleged errors
    those errors are immaterial to her ultimate decision. I would therefore dismiss
    this ground of appeal.

B.

DID THE TRIAL JUDGE ERR IN ANALYZING THE LAW OF CAUSATION?

[21]

Dr.
    Abughaduma argues that the trial judge erred in analyzing the law of causation.
    Specifically, he contends that the trial judge erred in applying the but for
    test in the informed consent context by failing to determine whether the
    failure to warn brought about Mr. Solomons injuries. More specifically, he
    argues that the trial judge failed to find that the injuries would been avoided
    if he had been properly warned and chosen one of the alternative surgeries:
Cojocaru
    v. British Columbia Womens Hospital and Health Centre
, 2013 SCC 30,
    [2013] 2 SCR 357;
Van Dyke v. Grey Bruce Regional Health Centre,
255
    D.L.R. (4th) 397 (Ont. C.A.), leave to appeal to S.C.C. refused, [2005]
    S.C.C.A. No. 335.

[22]

Central
    to Dr. Abughadumas argument is his thesis that the damages the trial judge
    found arose from the RSD. His argument is that since the trial judge accepted
    correctly that RSD is a random risk in any surgery and could have been
    contracted from the surgical alternatives, a causation finding is not possible;
    instead of holding Dr. Abughaduma liable for damages, he should have been
    absolved of responsibility.

[23]

This
    argument raises interesting causation and remoteness questions but, in my view,
    we need not consider them because Dr. Abughadumas central thesis about the
    basis for the trial judges decision  that the damage arose from the RSD  is
    not correct. At most, it can be credibly argued that the trial judge may have
    allowed the RSD symptoms to exert modest influence on her general damage
    assessment. But it cannot realistically be contended that the trial judge
    rested her finding that Mr. Solomon lost the ability to golf on the RSD symptoms.
    The trial judge asserted repeatedly in her reasons for judgment that it was the
    total wrist fusion surgery that Mr. Solomon had without proper warning that prevented
    him from playing golf. She said so more than a half dozen times including in
    this passage in the section of her endorsement called Impact of Loss of Range
    of Motion:

A total wrist fusion offered the best chance to totally
    eliminate pain, but it also eliminated all wrist movement, which impaired the
    ability to cock the wrist: essential to the Plaintiffs golfing livelihood.

[24]

In
    his submission, Dr. Abughaduma ignores these passages and focuses primarily on
    two others. The first passage he features appears shortly after the trial judge
    had already observed that the total wrist fusion surgery rendered Mr. Solomons
    wrist joint immobile making it impossible for him to play golf, and immediately
    after she described how Mr. Solomon had also developed RSD. In that featured
    passage the trial judge said, in relevant part:

This [RSD] condition meant that post-surgery the Plaintiff had
    no movement in his wrist, and also that he lost functional use of his fingers.
    His pain increased. The loss of use of his fingers and the lobster claw
    configuration was the result of the RSD. He could not play golf. The Plaintiff
    did not know until after the surgery that the metal plate had been inserted in
    his wrist preventing any movement of the wrist. He is a right handed golfer. It
    was essential to him with the limited movement that he had prior to surgery
    that he be able to cock his left wrist to play and teach golf.

[25]

Read
    in context, the meaning of this passage is clear. The trial judge is saying
    that in addition to the fact the Plaintiff had no movement in his wrist, a condition
    she had just described as preventing Mr. Solomon from playing golf, he also
    lost functional use of his fingers because of the RSD. That too meant that he
    could not play golf, but as she had already established and then repeated, the
    total wrist fusion surgery was enough on its own to prevent Mr. Solomon from
    playing and teaching golf.

[26]

Dr.
    Abughaduma also placed heavy reliance on the passage in which the trial judge
    expressed her general damages findings:

I conclude that the general damages in the amount of $20,000.00,
    is fair and reasonable. The Plaintiff went through two surgeries. His hand
    function improved after the second surgery, but has not improved to his
    functioning prior to the surgery. The Plaintiff had serious increased pain
    following the surgery. The pain was for at least two years after the surgery
    was worse than his pre-operative state, in spite of the Plaintiff taking
    significant doses of Percocet medication. The Plaintiff lost his quality of
    life as a golf teacher and respected golfer. Today, he cannot play golf. He
    became socially isolated, and embarrassed to meet people he knew in his former
    life. As he lost his source of income, he lost his condominium. He is now
    living in his sons basement.

[27]

It
    can be credibly argued that by including a reference to impaired hand function,
    a symptom of RSD, the trial judge may have allowed her RSD findings to leak
    into her general damage assessment. However, it cannot be credibly argued that the
    RSD symptoms was
the
damage she found. This passage must be read in
    context, and the trial judge had said repeatedly that Mr. Solomon lost his
    ability to play golf because of the total wrist fusion that Dr. Abughaduma
    performed without his informed consent. The evidence also established that
    after the second surgery to remove the metal plate, Mr. Solomons wrist
    remained immobile, and at no point did the trial judge ever suggest that the
    RSD caused or even contributed to that loss of mobility. Moreover, although not
    definitive, the trial judge had already said that her findings do not depend on
    the failure to warn about the RSD symptoms as there were many other problems
    with the scope of the disclosure that were clearly raised and argued. Finally,
    the RSD symptoms are not required to explain the relatively modest general
    damage award of $20,000 for pain and suffering arising from two surgeries, the
    loss of the ability to golf, and the social isolation and embarrassment that
    came with it, all of which are unequivocally causally linked to the failure to
    warn Mr. Solomon that the surgery would immobilize his wrist. In all of the
    circumstances, a finding that the trial judge erred in applying the law of
    causation is not realistic.

[28]

Nor
    would I re-adjust the general damage award to remove any influence that RSD symptoms
    arguably had on the general damage assessment. I would not do so, even on the
    assumption that Dr. Abughadumas submission is correct that damages for RSD
    cannot properly be awarded in the circumstances of this case. For the reasons
    given, a fair contextual reading of the trial judges general damage passage is
    that although she mentioned the limited hand function in passing when
    describing the effect of the surgeries, her general damage assessment is
    premised on the pain and suffering from the surgeries and the sequalae of the
    incapacity to golf that total wrist fusion caused.

[29]

I
    would therefore dismiss the causation appeal.

C.

Did the trial judge misapprehend or improperly reject Dr. von Schroeders
    evidence?

[30]

Dr.
    von Schroeder, called by Dr. Abughaduma, testified that total wrist fusion
    surgery would improve Mr. Solomons golf game. Dr. Abughaduma contends that the
    trial judge erred in rejecting this evidence by: (1) rejecting it because it
    was not contained in Dr. von Schroeders expert report which was never admitted
    as evidence; and (2) mischaracterizing the evidence. The mischaracterization
    argument takes issue with the trial judges conclusion that Dr. von Schroeders
    opinion was a general one, arrived at without taking into account the unique aspects
    of Mr. Solomon as a professional golf teacher and hustler. Relatedly, Dr. Abughaduma
    urged before us that the only expert evidence before the court was that Mr.
    Solomons total wrist fusion would not prevent him from golfing.

[31]

The
    submission that the trial judge rejected Dr. von Schroeders opinion because it
    was not contained in his expert report is too simplistic. The relevance she gave
    the written report was more subtle and damning, and in no way improper. She
    found that, in contrast to his careful and fairly worded written report, Dr. von
    Schroeder lost his bearing as an expert witness and became an advocate in his
    oral testimony. The expert report was properly before the trial judge to be
    used in evaluating the credibility of Dr. von Schroeders in court testimony
    and she committed no error in doing so.

[32]

In
    contrast, there is some basis for the submission that the trial judge failed to
    appreciate that Dr. von Schroeder affirmed his opinion even after confronted
    with the fact that Mr. Solomon made his living as a golfer. In this sense, she
    mischaracterized his opinion as a generalization made without taking into
    account the unique aspects of this particular patient. Yet I would not allow
    the appeal because of this. In a devastating critique of his evidence, the
    trial judge gave myriad reasons for not accepting the evidence of Dr. von Schroeder.
    She found that Dr. von Schroeder offered opinions based on inaccurate factual
    assumptions and without adequate foundation (he offered opinions about the nature
    of Mr. Solomons arthritic condition without seeing x-rays or the patient), and
    that he exceeded his established expertise in even offering the opinion in
    question, related as it was to what a reasonable person in Mr. Solomons
    position would do. These shortcomings render the trial judges oversight of an
    answer provided in cross-examination immaterial.

[33]

Nor
    do I agree with Dr. Abughaduma that the trial judge erred by finding, contrary
    to the expert evidence, that the total wrist surgery prevented Mr. Solomon from
    playing golf. Even leaving aside that Dr. von Schroeder himself agreed in
    cross-examination that the left wrist cocks during a golf swing and that the
    wrist cock would be extremely important to Mr. Solomon in deciding whether to
    have the surgery, the trial judge was entitled to accept Mr. Solomons
    unambiguous and adamant testimony that it was impossible to swing properly or
    instruct golf with a totally fused wrist.

D.

Did the trial judge misapprehend Dr. Axelrods evidence?

[34]

If
    Mr. Solomons arthritis was advanced enough, alternative surgeries would not
    have been viable. There could therefore be no liability for failing to advise
    Mr. Solomon about non-viable surgeries. During cross-examination, Mr. Solomons
    expert, Dr. Axelrod, agreed that it was fair for Dr. Abughaduma to infer that
    Mr. Solomon had advanced osteoarthritis. The trial judge did not include this
    answer in summarizing Dr. Axelrods evidence. Dr. Abughaduma contends that this
    is a fatal error, since, if credited, this answer undermines this theory of
    liability.

[35]

I
    do not agree. Dr. Axelrods position was that Mr. Solomons arthritis was
    localized, not throughout the entire wrist. Dr. Axelrods concession must be
    understood in that context. Even though it was fair to conclude that Mr.
    Solomons arthritis was severe in that location, that would not have altered
    Dr. Axelrods position, accepted by the trial judge, that the surgical
    alternatives were viable.

E.

Did the trial judge misapprehend Mr. Solomons complaint, thereby
    failing to properly analyse the defence theory of hindsight?

[36]

Dr.
    Abughadumas position at trial was that Mr. Solomon never complained about the
    total wrist fusion surgery and that his evidence that he did so is distorted by
    hindsight; his real complaint was that Dr. Abughaduma botched the surgery.

[37]

In
    advancing this position, Dr. Abughaduma relied upon written complaints made by Mr.
    Solomon that do raise the botched surgery but not the total wrist fusion. As
    well, during cross-examination Mr. Solomon agreed with a suggestion that he
    complained about the surgery being botched but the trial judge did not address
    this response in her reasons.

[38]

This
    hindsight line of attack was important to the defence strategy because, if
    true, it could cast doubt on Mr. Solomons claim that he was not told that his
    wrist would be fused. It would also show that Mr. Solomons concern was with
    the outcome rather than the type of procedure, and that he would have followed
    through with the operation even if properly warned. Despite indicating that he
    was not contesting the failure to warn finding on appeal, Dr. Abughaduma did
    not abandon this ground of appeal, and so I will address it.

[39]

At
    bottom, this is not a misapprehension of evidence challenge, as Dr. Abughaduma
    claims. It is a challenge made to the factual finding of the trial judge to
    accept Mr. Solomons evidence that he complained about his unexpected total
    wrist fusion surgery loud and clear. This was a credibility finding that the
    trial judge was entitled to make, and she gave cogent reasons for why she
    preferred the testimony of Mr. Solomon about what was said during the follow up
    meetings to Dr. Abughadumas recall.

[40]

In
    coming to that decision, the trial judge was not obliged to refer to Mr.
    Solomons cross-examination answer. In any event, it is controversial whether
    that answer bears the probative value that Dr. Abughaduma seeks to assign it.
    The answer was not an unequivocal acknowledgement by Mr. Solomon that botched
    surgery was his only complaint. He was responding to leading questions that,
    fairly read, can be taken to have been framed as pertaining to a particular complaint.
    In my view, an answer would have to be much clearer than the one at issue here
    before a trial judge would be obliged to include it in her reasons, and to treat
    it as an acknowledgement that the real complaint is not the one that is being
    advanced at trial.

[41]

I
    would dismiss this ground of appeal.

CONCLUSION

[42]

I
    would therefore dismiss the appeal. Costs submissions are to be received within
    10 working days of the release of this decision, not to exceed 5 pages and to
    be accompanied by a costs outline.

Released: BZ August 29, 2019

David M. Paciocco J.A.
I agree. Harvison Young J.A.
I agree. B. Zarnett J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: The Commonwell Mutual Insurance Group v. Campbell,
    2019 ONCA 668

DATE: 20190826

DOCKET: C66074

Paciocco, Harvison Young and Zarnett JJ.A.

BETWEEN

The Commonwell Mutual Insurance Group

Applicant (Appellant)

and

Shayne Campbell

Respondent (Respondent)

Cynthia Verconich and Jessica Forester, for the
    appellant The Commonwell Mutual Insurance Group (Commonwell)

Christine A. Powell, for the respondent Shayne Campbell

Heard: August 16, 2019

On appeal from the judgment of Justice Calum Macleod of
    the Superior Court of Justice, dated October 4, 2018, with reasons reported at
    2018 ONSC 5899, [2019] I.L.R. I-6101.

REASONS FOR DECISION

[1]

In April 2013, the respondent, Shayne Campbell, was involved in a dirt
    bike accident. He collided with an ATV (all-terrain vehicle), injuring the ATV
    driver. In April 2015, Mr. Campbell was sued in negligence.

[2]

Mr. Campbells automobile insurer, The Guarantee Company of North
    America (Guarantee), had Mr. Campbell sign a non-waiver agreement and issued a
    reservation of rights letter before ultimately denying coverage.

[3]

The appellant, Commonwell Mutual Insurance Group (Commonwell), held Mr.
    Campbells home owners policy.
[1]
In June 2015, without securing a non-waiver agreement or issuing a reservation
    letter, Commonwell appointed a lawyer to defend the claim against Mr. Campbell,
    pleadings were exchanged, and other steps detailed below were taken.

[4]

In January 2016, plaintiffs counsel ultimately asked Mr. Campbells
    lawyer whether there was any issue about coverage. This provoked Commonwell to
    inquire further into the coverage issue, and in March 2016, Commonwell advised
    Mr. Campbell in writing that they were denying coverage and would be moving for
    a declaration that Commonwell was not obligated to defend or indemnify him. Commonwells
    position is that the policy does not cover liability arising from the use of
    the dirt bike, as it was required to be registered. In taking this position, Commonwell
    was invoking an exemption from coverage in the policy for vehicles not owned by
    the insured that are required to be registered under any government authority
    (the unowned registrable vehicles exemption).

[5]

In August 2016, that application was brought. Commonwell sought
    declarations that Mr. Campbell did not have coverage, nor was Commonwell
    obliged to defend him. During the course of the application, Commonwell also invoked
    a further exemption from coverage for vehicles used without the owners consent
    (the consent exemption). In October 2018, the application judge denied the
    application, holding that Commonwell had either waived its right to deny
    coverage and refuse to defend, or was estopped from doing so. Commonwell
    appeals that decision.

[6]

At the end of oral argument we dismissed Commonwells appeal with
    reasons to follow. These are our reasons, presented in an analytically
    convenient order.

[7]

First, Commonwell argues that the application judge erred in law in not
    distinguishing between waiver and estoppel, which are different legal
    doctrines. We do not agree. The application judge refers to these doctrines
    disjunctively. His comment that [e]ither waiver or estoppel would apply does
    not reflect a failure to decide whether either doctrine applied. In context, he
    is clearly saying that the application must fail on either basis.

[8]

Second, Commonwell argues that the application judge erred in applying
    each of these doctrines. We will begin with estoppel. Commonwell urges that the
    application judge erred in law by inferring prejudice when the litigation was
    not well advanced, and by making a palpable and overriding error of fact in
    finding prejudice to ground the estoppel finding.

[9]

To be clear, when Commonwell refers to prejudice, it is referring to the
    detrimental reliance element that a proper estoppel finding requires. To be
    even more precise, Commonwell does not contest that it had the knowledge that
    it now relies upon to deny coverage at the material time, nor does it dispute Mr.
    Campbells claim that he relied upon Commonwells conduct to conclude that his
    potential liability was covered and that he would be defended. Commonwell urges
    that the application judge erred in law and in fact in finding that Mr. Campbells
    reliance has been detrimental. We do not agree.

[10]

The alleged error of law is grounded in the application judges finding
    that by the time Commonwell denied coverage the litigation was well advanced,
    thus permitting him to draw an inference of prejudice. Commonwell contends that
    the litigation was not well enough advanced to trigger presumed prejudice. Implicit
    in Commonwells contention is that well advanced litigation is a formal legal
    status that can be identified by the stage of litigation, and that prejudice is
    presumed as a matter of law where litigation reaches this stage. The decision
    relied upon,
Rosenblood Estate v. Law Society of Upper Canada
(1989), 37
    C.C.L.I. 142 (Ont. H.C.J.), aff'd. 16 C.C.L.I. (2d) 226 (Ont. C.A.), does not
    stand for these propositions, nor does any other authority brought to the
    courts attention. When R.E. Holland J. found in
Rosenblood
that
    where the insurer persisted in the defence through production and discovery
    into settlement negotiations prejudice must be presumed, he was not purporting
    to draw a line as to when litigation is well advanced. Nor was he identifying a
    presumption of law. He was simply explaining why prejudice could be inferred in
    the case before him. Whether to infer or find prejudice or detriment from the
    circumstances of a case is a factual determination; the question before us is therefore,
    whether it was a palpable and overriding error for the application judge to do
    so in this case.

[11]

Commonwell has not persuaded us that the application judge made a
    palpable and overriding error in finding detrimental reliance. Immediately upon
    being served with a statement of claim in April 2015, Mr. Campbell contacted
    his insurance broker and was put in touch with adjustors for Guarantee and Commonwell.
    Guarantee promptly issued a non-waiver agreement and a reservation of rights
    letter, and ultimately denied coverage. To the contrary, instead of taking similar
    prudent steps Commonwell appointed counsel for Mr. Campbell. An investigation
    of Mr. Campbells potential liability was then undertaken. A detailed statement
    of defence was prepared. Tactical decisions were made relating to who would be
    joined in the action, and crossclaims were issued. The tactical decision not to
    have a jury trial was made.

[12]

The application judge also found that the action proceeded to the
    discovery stage, as things had progressed to the point where plaintiffs
    counsel was seeking information from defence counsel, at least relating to
    coverage issues. We see no error in the application judges characterization
    that this was part of the discovery process. In any event, he was clear in the
    step he was describing.

[13]

Ultimately, the lawyer Commonwell appointed for Mr. Campbell acted for
    him for 10 months before Commonwell gave Mr. Campbell any reason to believe his
    liability was not covered and he would not be defended. In these circumstances,
    the application judge was entitled to conclude that the litigation was
    well-advanced, and to infer that allowing Commonwell to now assert that there
    is no coverage and therefore no duty to defend Mr. Campbell would be
    detrimental to him.

[14]

There was also supplementary direct evidence of prejudice. As Mr.
    Campbell attested, he assumed that his interests were being taken care of during
    this 10-month period. He did nothing to secure his own counsel to second-guess
    the decisions being made by the lawyer Commonwell retained. Nor did he seek to
    have Guarantee defend him, as they may well have done given their remaining
    potential for liability under the
Insurance Act
, R.S.O. 1990, c. I.8,
    s. 258.

[15]

We do not accept that to prove prejudice Mr. Campbell is obliged to
    identify missteps that have occurred; this is an unrealistic and unnecessary
    burden to impose at this stage in the litigation. The immediate point is that
    as a result of Commonwells conduct, Mr. Campbell allowed Commonwell to
    prosecute the defence of his case for close to a year without taking charge of
    his own defence.

[16]

We would not interfere with the application judges estoppel finding.
    Given that estoppel and waiver were redundant mechanisms for preventing Commonwell
    from denying coverage and its obligation to defend, we need not consider
    whether the application judge erred in applying the doctrine of waiver.

[17]

Commonwell also argues that the application judges reasons for decision
    are inadequate. We disagree. The application judges reasons are responsive to
    the issues before him and demonstrate the path of his reasoning, facilitating
    appellate review. There was no need for him to resolve whether, properly
    interpreted, the policy did provide coverage given his decision that Commonwell
    is estopped from denying coverage.

[18]

Nor did the application judge fail to make clear what policy terms the
    estoppel and waiver findings applied to. In context, it is evident that the
    application judges ruling, including the estoppel ruling we uphold, prevents
    reliance by Commonwell on both the unowned registrable vehicles exemption and
    the consent exemption. Not even counsel for Mr. Campbell contends that the ruling
    goes beyond this. If different bases for lawfully denying indemnification to
    Mr. Campbell emerge during trial, Commonwell will be free to rely upon them.

[19]

Finally, Commonwell argues that the application judge erred in finding
    that Commonwell is prevented from denying coverage, when an appropriate
    application of waiver or estoppel would simply oblige Commonwell to defend Mr.
    Campbell, not indemnify him. Even leaving aside that Commonwell put both
    matters in issue in its application, we disagree. The application judges
    finding that Commonwell is estopped from relying upon the unowned registrable
    vehicles exemption and the consent exemption undercuts Commonwells ability to
    invoke these exemptions, whether to dispute its duty to defend or to dispute indemnification.

[20]

This outcome is not inconsistent with the fact that the obligation to
    defend is broader than the obligation to indemnify:
Progressive Homes Ltd. v.
    Lombard General Insurance Co. of Canada
, 2010 SCC 33, [2010] 2 S.C.R. 245,
    at para. 19. The duty to defend is based on the possibility rather than the
    fact of coverage because, as a practical matter, the decision whether to defend
    has to be made before the duty to indemnify can be finally determined. This
    functional distinction between the duty to defend and the obligation to
    indemnify has nothing to do with resolving which provisions of the insurance
    contract the insurer is entitled to rely upon. The question before the
    application judge was whether exemption clauses could be invoked, not whether
    there is a possibility of coverage based on the facts pleaded and the terms of
    the insurance contract.

[21]

The appeal is dismissed. Consistent with the general practice of
    awarding substantial indemnity costs where an insurance company has
    unsuccessfully sought to avoid its duty to defend, and with the scales of costs
    contained in the Information Notice to the Profession, costs are awarded to Mr.
    Campbell in the amount of $25,139.20, and disbursements of $1,761.20, inclusive
    of all applicable taxes.

David
    M. Paciocco J.A.

Harvison Young J.A.
B. Zarnett J.A.

[1]
There was a discrepancy between the judgment and reasons for decision.
The judgment below referred to Commonwell Mutual Insurance Group
    and the reasons for decision referred to Commonwell Mutual Assurance Group.
    The proper name for the title of proceedings follows the judgment, Commonwell
    Mutual Insurance Group.


COURT OF APPEAL FOR ONTARIO

CITATION: Third Eye
    Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA
    667

DATE: 20190822

DOCKET: C62925

Pepall, Lauwers and Huscroft
    JJ.A.

BETWEEN

Third Eye Capital
    Corporation

Applicant

(Respondent)

and

Ressources Dianor
    Inc./Dianor Resources Inc.

Respondent

(Respondent)

and

2350614 Ontario Inc.

Interested Party

(Appellant)

Peter L. Roy and Sean M. Grayson, for the appellant 2350614
    Ontario Inc.

Stuart Brotman and Dylan Chochla, for the receiver of
    the respondent Ressources Dianor Inc./Dianor Resources Inc., Richter Advisory
    Group Inc.

Heard: In writing

On appeal from the order of Justice Frank J.C. Newbould
    of the Superior Court of Justice dated October 5, 2016, with reasons reported
    at 2016 ONSC 6086, 41 C.B.R. (6th) 320.

COSTS ENDORSEMENT

[1]

The Receiver, Richter Advisory Group Inc., requests that the appellant, 2350614
    Ontario Inc., pay its costs of this appeal in the amount of $90,941.67
    inclusive of fees, disbursements, and HST on a substantial indemnity scale. It
    asserts that the issues were complex and significant to both the insolvency
    practice and mining industry and that these costs are fair and reasonable. Moreover,
    the Receiver submits that a substantial indemnity scale is warranted due to the
    appellants allegations of improper conduct against the Receiver.

[2]

We agree with the Receiver that the issues raised by the appeal were
    both complex and significant. In light of the history of the proceeding
    however, we are not persuaded that a substantial indemnity award is
    appropriate.

[3]

That said, the Receiver was ultimately successful on the appeal. In our
    view, an award of $40,000 inclusive of fees, disbursements, and applicable
    taxes on a partial indemnity scale is fair and reasonable and we so order.

S.E.
    Pepall J.A.
P. Lauwers J.A.
Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 1179 Hunt Club Inc. v. Ottawa Medical Square Inc.,
    2019 ONCA 700

DATE: 20190910

DOCKET: C66128

Hoy A.C.J.O., Lauwers and Zarnett JJ.A.

BETWEEN

1179
    Hunt Club Inc.

Applicant (Appellant)

and

Ottawa Medical Square Inc. and Abrar
    Mobarak

Respondents (Respondents)

Elliot Birnboim and Michael Crampton, for the appellant

Anne Tardif, for the respondents

Heard: May 8, 2019

On appeal from the order
    of Justice Robyn M. Ryan Bell of the Superior Court of Justice, dated October
    17, 2018, with reasons reported at 2018 ONSC 6200.

Lauwers
    J.A.:

[1]

Ottawa Medical Square Inc., as purchaser, agreed to buy commercial condominium
    units in the Hunt Club project. The transaction did not close. The vendor, 1179
    Hunt Club Road Inc., applied for a declaration that the purchaser had anticipatorily
    breached the agreement of purchase and sale, and that the vendor was entitled to
    retain the deposit, under r. 14.05 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194.

[2]

The application judge found that the agreement came to an end when both
    parties were unable to close the transaction on the appointed closing date. She
    required the vendor to return the deposit to the purchaser.

[3]

The vendor appealed and asks this court to make the declaration it
    sought, and to find that the respondent, Abrar Mobarak, who signed the
    agreement on behalf of the purchaser, is personally liable for the vendors
    damages as guarantor. The vendor wishes both to retain the deposit and to
    pursue an action for damages for breach of the agreement.

[4]

For the reasons that follow, I would dismiss the appeal.

A.

The Factual Context

[5]

The purchaser was to acquire commercial condominium units in the Hunt
    Club project for $5.6 million under an agreement of purchase and sale dated January
    19, 2015. The deposit was $250,000. Because it was a new project in the course
    of development, the closing date was uncertain. As provided for in the
    agreement, counsel for the vendor, Mr. Vinayagalingam, sent a letter to counsel
    for the purchaser on November 2, 2017 notifying him that the condominium documents
    had been registered, and setting the closing date for the transfer of the
    condominium units as November 28, 2017.

[6]

On November 22, 2017, new counsel for the purchaser, Mr. Presseau, sent
    an email to Mr. Vinayagalingam advising that his firm had just been retained.
    He asked for an extension of the closing date to allow the purchaser to secure
    financing and to accommodate the change in counsel. Mr. Vinayagalingam and Mr.
    Presseau then conversed about the closing date and the basis on which the
    vendor would agree to an extension. Mr. Presseau told Mr. Vinayagalingam that
    the purchaser would not close on November 28, and said to him we both know
    its not closing.

[7]

Litigation counsel for the vendor then sent a letter dated November 24,
    2017 to Mr. Presseau, which stated:

Mr. Vinayagalingam has conveyed to you the terms upon which our
    client would be willing to agree to an extension of the Unit Transfer Date. Your
    client has rejected these terms and in response has provided no concessions, assurances
    or incentive for our client to agree to the requested extension. Given the
    history of this transaction and the numerous concessions already granted to the
    Purchaser to date, our client is not prepared to agree to an extension of the
    Unit Transfer Date. Our instructions are therefore to insist that the close of
    the sale proceed on November 28, 2017, as scheduled, failing which our client
    will pursue all available rights and remedies, while also seeking to mitigate
    its damages.

If the sale does not close on November 28, 2017, your client
    will be in default of its obligations under the Agreement of Purchase and Sale.
    Our instructions are to then take immediate steps to have your clients deposit
    released to the Vendor in accordance with section 26 of the Agreement of
    Purchase and Sale, while our client seeks to mitigate its damages by finding a
    new purchaser.

[8]

However, on November 27, 2017, the vendor learned that the Land Registry
    Office had made an error in assigning parcel identification numbers to the
    condominium project. This problem was remedied late in the day on November 27,
    but it prevented the vendor from registering the remaining condominium
    documents and any transfers of the condominium units on that date. This came
    out distinctly in the evidence of Barry Godfrey, the vendors president. When
    cross-examined on his affidavits, he testified:

Q.  Okay. And as I understand, there was some kind of change to
    the parcel identification numbers that meant that the vendor was in fact unable
    to close on November 28th; correct?

A.  Yes.

Q.  Alright. And that has nothing to do with the purchaser;
    correct? I'll rephrase

A.  Unless we give them the PINs, they can't take title.

Q.  Right. What I meant was the delay that was caused by the
    change in the PINs, that was not the fault of the purchasers.

A.  Correct.

[9]

Counsel then tussled over whether the lack of PINs meant the
    vendor was not ready, willing and able to close on November 28, the appointed
    date. Counsel instructed Mr. Godfrey not to answer the question, and took the
    question under advisement.

[10]

Counsel for the vendor later responded and answered in writing:

Yes, the Vendor was ready, able and willing to complete the
    transaction on November 28, 2017. On November 27, 2017, Mr. Grégoire [prior
    real estate counsel for the purchaser] was provided with the Statement of
    Adjustments in relation to the sale of the Units. The same day, Mr.
    Vinayagalingams office was advised that there had been an error at the [Land
    Registry Office] at Ottawa with respect to the PINs. That error was resolved
    later that evening.

The only outstanding registration issues on November 28, 2017 were
    the registration of the Shared Facilities Agreement and the Condominium By-Laws.
    At that time, these documents were prepared and ready to be registered. The Vendor
    was clearly in a position to register the Shared Facilities Agreement and the
    By-Laws on November 28, 2017.

Recall that Mr. Pressau [new counsel for the purchaser] advised
    Mr. Vinayagalingam on November 22nd that the sale of the Units would not close
    on the Unit Transfer Date while seeking an extension of same. Mr. Vinayagalingam
    also had received no response to his email enclosing the Statement of
    Adjustments, nor any response to his offices email requesting that the
    Gowlings firm [acting for the purchaser] designate an appropriate recipient of
    the Transfers on the morning of November 28th.

Had the Purchaser indicated (in
    any way) that it had reconsidered, and was ready, willing and able to close on
    November 28, 2017, Mr. Vinayagalingam's office would have registered the Shared
    Facilities Agreement and the By-Laws under the new PINs on that date, prior to
    registering the transfer to the Purchaser. In the event, those outstanding
    documents were in fact registered the next day, November 29, 2017.

B.

The Issues

[11]

There
    are three live issues in this case. First, did the purchaser anticipatorily
    repudiate the agreement? Second, if so, did such repudiation excuse the vendor
    from its obligation to be ready, willing and able to close the transaction on
    the closing date?
Third, d
id the
    guarantee clause in the agreement bind the signatory, Ms. Mobarak, personally?

C.

Analysis

(1)

Did the purchaser anticipatorily repudiate the agreement?

[12]

The application judge found, at para. 27, that Mr. Presseau did
    not anticipatorily repudiate the agreement in the conversation he had with Mr. Vinayagalingam
    on November 22, 2017. She expressed a concern that such an approach would
    automatically equate a partys request for an extension of time within which to
    complete a transaction an anticipatory repudiation of the contract. She
    worried that doing so would impede cooperative discussions between parties
    aimed at completing transactions and avoiding litigation.

[13]

I agree with application judge that a mere request for an
    extension of time would not ordinarily amount to anticipatory repudiation. But
    the conversation did not end there. The purchaser sought the extension of time
    because it did not have the financing to complete the transaction on the
    appointed date. Knowing this, the vendor was entitled to refuse the purchasers
    extension request. The purchaser moved into the state of being in anticipatory
    breach of the agreement when it did not relent in the face of the vendors refusal
    and undertake to close on the appointed date. It is not the request for an
    extension that amounted to the purchasers anticipatory breach, but its refusal
    to close on the appointed date when the vendor refused the extension as it was
    entitled to do. In my view the application judge erred in concluding that the
    purchaser did not anticipatorily repudiate the agreement.

(2)

Did the purchasers repudiation excuse the vendor from its obligation to
    be ready, willing and able to close the transaction on the closing date?

[14]

This issue requires consideration of the judgment of this court
    in
Domicile Developments Inc. v. MacTavish
(1999), 45 O.R. (3d) 302 (C.A.).
    At pp. 306-307 (paras. 10-12), Laskin J.A. said:

Because Domicile's rejection of MacTavish's anticipatory
    repudiation kept the agreement alive, time remained of the essence. A time is
    of the essence provision means that on the closing date an innocent party may
    treat the contract as ended and sue the defaulting party for damages or it may
    keep the contract alive and sue for specific performance or damages. In order
    to take advantage of a time of the essence provision the innocent party must
    itself be ready, desirous, prompt and eager to carry out the agreement.
    Domicile could not satisfy this requirement on the closing date. Because it had
    not yet substantially completed construction of the house it could not carry
    out the agreement. Equally MacTavish could not rely on the time of the essence
    provision to end the agreement. A time of the essence provision can be raised
    as a defence only by a party who is ready, willing and able to close on the
    agreed date and MacTavish was not ready, willing and able to close on September
    15, 1995.

Therefore, on the closing date neither Domicile nor MacTavish
    was entitled to enforce or end the agreement. A similar situation arose in
King
    v. Urban & Country Transport Ltd.
(1974), 1 O.R. (2d) 449, 40 D.L.R.
    (3d) 641, a decision of this court relied on by Binks J. In
King v. Urban
,
    the purchaser was not in a position to close on the closing date; but the
    vendor was also in default and not entitled to rely on the time of the essence
    provision in the contract. Arnup J.A. resolved the stalemate by applying two
    propositions (at pp. 454-56):

1. When time is of the essence and
    neither party is ready to close on the agreed date the agreement remains in
    effect.

2. Either party may reinstate time of
    the essence by setting a new date for closing and providing reasonable notice
    to the other party.

An important corollary of Arnup
    J.A.'s second proposition is that a party who is not ready to close on the
    agreed date and who subsequently terminates the transaction without having set
    a new closing date and without having reinstated time of the essence will
    itself breach or repudiate the agreement.

[15]

The
    application judge addressed
Domicile Developments
,

at para. 33.
    She noted that if the purchaser did anticipatorily repudiate the agreement, then
    the vendor, as the innocent party, was put to an election: it could accept the
    repudiation and sue for damages or it could reject the repudiation and insist
    on performance of the contract.

[16]

In applying
Domicile Developments
, the application judge
    found, at para. 34, that the vendor had made its election in its counsels
    November 24 letter, and expressly rejected the repudiation and insisted on
    performance of the agreement. Accordingly, the rejection of the purchasers
    anticipatory repudiation kept the agreement of purchase and sale alive, [and]
    time remained of the essence. In her view: In order to take advantage of a
    time of the essence provision, the innocent party must itself be ready,
    desirous, prompt and eager to carry out the agreement (
Domicile
    Developments
at para. 10).

[17]

The application judge then considered whether the vendor was in a
    position to close the transaction on November 28, 2017, the closing date set by
    the vendor. She assessed the evidence, particularly the written answer of
    counsel to the question taken under advisement in Mr. Godfreys
    cross-examination. She rejected the assertion that the vendor would have registered
    the Shared Facilities Agreement and condominium by-laws on November 28, 2017 if
    the purchaser had indicated it was ready, willing and able to close: at paras. 39-40.

[18]

The application judge gave three
    reasons for rejecting the evidence. First, she stated at para. 40:
It
    is clearly contentious. Pursuant to r. 39.01(5) of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194, this evidence cannot be provided on
    information and belief. Second, she added: More importantly, it lacks
    credibility as it contradicts the evidence provided by Mr. Godfrey in his
    affidavit.

[19]

Third,
    as noted in paras. 41 and 42, the vendors position that November 28 was the
    proper closing date contradicted an email by Mr. Vinayagalingam on November 30
    invoking s. 36 of the agreement to close on November 30 electronically, and the
    position taken by counsel for the vendor at the cross-examination of Mr.
    Godfrey that specified November 30 as the date on which the purchaser failed to
    close. The application judge stated that it was too late for the vendor to
    now assert that the date of [the purchasers] breach was November 28, 2017 in
    an effort to avoid the consequences of its own inability to close the
    transaction on November 28, 2017.

[20]

I
    note that Mr. Godfreys answer to the question taken under advisement, to the
    effect that the vendor would have registered the Shared Facilities Agreement
    and condominium by-laws on November 28, 2017, really concedes that on that day it
    was not actually ready to close.

[21]

If
    the vendor had simply refused to accept the purchasers repudiation, it would
    have been open to the vendor on November 28, 2017 to tender or to set a new
    closing date.
Domicile Developments
states that when time is of the
    essence and neither party is ready to close on the agreed date, the agreement
    remains in effect. By contrast, here the vendor not only refused to accept the
    repudiation but insisted that the transaction close on November 28, specifying
    the consequences if that did not occur, including the immediate pursuit of
    legal remedies. The application judge concluded that, in light of that
    insistence, because the vendor was not ready on November 28, the agreement came
    to an end. She relied on
Kwon v. Cooper
(1996), 89 O.A.C. 239 (C.A.),
    leave to appeal refused, [1996] S.C.C.A. No. 142, where the vendors insistence
    that the closing occur on the scheduled date and its threat to claim damages if
    that did not occur, given its own subsequent failure to be ready, willing and
    able to close as scheduled, resulted in the contract coming to an end. In such
    a situation the vendor could not rely on
King v. Urban & Country
    Transport Ltd
. to maintain that the agreement continued in effect and to
    set a new closing date.

[22]

I
    agree with the application judges analysis.

[23]

Having
    refused to accept the purchasers repudiation of the agreement, and having
    insisted on perfection in the purchasers performance, the vendor was required
    to render perfection in its own performance and it did not. The vendors
    failure to tender on November 28, 2017 was fatal. This strict approach is not
    unusual in the law, in view of the maxim he who seeks equity must do equity, or
    in life, where the proverbial caution that he who lives by the sword dies by
    the sword. Both resonate.

[24]

I
    do not agree, however, with the application judges approach to the evidence of
    Mr. Godfrey on one point. His evidence, given via counsels answer to a
    question taken under advisement, was that the vendor would have been ready,
    willing and able to close on November 28, 2017 if the purchaser had indicated
    it was ready to close. In my view, an answer to an undertaking has the same
    character as the basic document to which it relates, in this case Mr. Godfreys
    affidavit. The application judge invoked r. 39.01(5) of the
Rules
to
    assert that counsels answer, which constitutes evidence, cannot be provided
    on information and belief because it is clearly contentious

[25]

The
    difficulty with the application judges approach is that r. 14.05 permits an
    application for a declaration in relation to an agreement of purchase and sale,
    as in this case. However, if a factual controversy that is real, relevant and
    material emerges, and could affect the outcome of the case, then the
    controversy must be resolved before the decision can be justly rendered. In my
    view it is not open to an application judge to sidestep an issue on the basis
    that it has become controversial. The method of resolution in applications is
    usually the trial of an issue, which can be as short and efficient as the
    application judge directs. In the spirit of
Hryniak v. Mauldin
, 2014
    SCC 7, [2014] 1 S.C.R. 87, it would be most efficient if the application judge
    remained seized of the matter.

[26]

In
    this case, the issue is not whether the vendor could have been ready to close
    on November 28, 2017, but that it was not ready to close on that date, a date
    on which it insisted. Hence the controversy was not material.

[27]

The appellant argues that its
    failure to register
the Shared Facilities Agreement and condominium
    by-laws on November 28, 2017 amounted to a
curable
    imperfection/defect that could have been
easily cured the next day.

The appellant cites in support

Time Development Group Inc. (In trust) v. Bitton
,

2018 ONSC 4384, 98 R.P.R. (5th) 308,

but that was a case involving an imperfect tender
    where the vendor remained capable of closing on the scheduled date
.
Having set the
    date, here the vendor did not trouble itself to tender, and in fact could not
    have tendered because on that day it was incapable of transferring title.

[28]

I
    therefore agree with the application judge that, since the agreement terminated
    on November 28, 2017 because of the inability of both parties to close, the
    purchaser is entitled to the return of the deposit.

(3)

Did the guarantee clause in the agreement bind the signatory, Ms.
    Mobarak, personally?

[29]

The
    appellant argues that Ms. Mobarak is liable for damages it suffered from the
    respondents failure to close because the agreement she signed contained a
    guarantee clause that bound her personally.

[30]

Ms.
    Mobarak is the purchasers president, secretary and founding director, although
    Mr. Godfrey admitted that he did not know this at the time that the agreement
    of purchase and sale was signed in January 2015. Her signature appears on the
    first page of the agreement of purchase and sale, where she signs for the
    purchaser. The vendor relies on the guarantee in s. 41(b) of the agreement,
    which is buried in thick text on p. 9. It provides:

Where the Purchaser is a
    corporation, or where the Purchaser is buying in trust for a corporation to be
    incorporated, the execution of this Agreement by the principal or principals of
    such corporation, or by the person named as the Purchaser in trust for a
    corporation to be incorporated, as the case may be, shall be deemed and
    construed to constitute the personal guarantee of such person or persons so
    signing with respect to the obligations of the Purchaser herein.

[31]

There
    is no other indication in the agreement that the signatory is signing a
    guarantee in her personal capacity.

[32]

As
    a result of the purchasers failure to waive the financing condition in its
    favour in the original agreement of purchase and sale, the agreement of
    purchase and sale became null and void. The parties reinstated the agreement subject
    to the terms and conditions set out in a reinstatement and amending agreement
    made as of April 30, 2015. The agreement was specifically revived without any
    conditions in favour of the purchaser. Although she signed it for the
    purchaser, Ms. Mobarak was not personally a party to that agreement and it does
    not refer to a personal guarantee.

[33]

The
    application judge found that, reading the agreement of purchase and sale
    agreement as a whole and considering the surrounding circumstances, the
    agreement was ambiguous as to whether the parties intended s. 41(b) to be a
    personal guarantee on the part of Ms. Mobarak. Applying the contra proferentem
    rule, the application judge found that s. 41(b) does not amount to a personal
    guarantee given by Ms. Mobarark. She also concluded that, if it had amounted to
    a valid guarantee, then Ms. Mobaraks obligations were discharged when the
    agreement of purchase and sale came to an end as result of the purchasers
    failure to waive the financing condition. She was not a party to the new
    agreement, it did not refer to the guarantee, and it varied the risks under the
    agreement by deleting the condition in favour of the purchaser.

[34]

I
    largely agree with the application judges reasoning. The guarantee clause is
    an artfully designed trap for the unwary, the validity of which must be closely
    considered by the court: see Kevin McGuinness,
The Law of Guarantee
,
    3rd ed. (Markham: LexisNexis Canada, 2013), at p. 365, s. 7.88.

D.

Disposition

[35]

I
    would dismiss the appeal, with costs payable by the appellant to the respondent
    in the amount of $10,000 all-inclusive, as agreed.

RELEASED: A.H. September 10, 2019

P. Lauwers J.A.

I agree. Alexandra Hoy
    A.C.J.O.

I agree. B. Zarnett
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 1472292 Ontario Inc. (Rosen
    Express) v. Northbridge General Insurance Company, 2019 ONCA 753

DATE:20190927

DOCKET: C65688

Feldman, Roberts, and Fairburn
    JJ.A.

BETWEEN

1472292 Ontario Inc. O/A Rosen
    Express

Applicant (Respondent)

and

Northbridge General Insurance
    Company

Respondent (Appellant)

Alan S. Cofman,
    for the Appellant

Patrick J.
    Monaghan, for the Respondent

Heard: March 7, 2019

On appeal from the judgment of Justice
    Edward M. Morgan of the Superior Court of Justice, dated June 27, 2018, with
    reasons reported at 2018 ONSC 4017, [2019] I.L.R. I-6077

Feldman J.A.:

Overview

[1]

This appeal arises out of a coverage dispute
    between a trucking company and its insurer as a result of the theft of two
    containers of electronic goods that the trucking company was consigned to
    deliver for a customer. Following the theft, the trucking company asked its
    insurer to confirm coverage, but after an investigation, the insurer sent a
    letter denying coverage for the stolen goods for two reasons. In the meantime,
    the customer had taken no steps to make a claim for its loss to the trucking
    company. All it did was fail to pay a number of outstanding invoices, which the
    trucking company assumed was a response to the theft.

[2]

The trucking company decided that it would be
    imprudent to make any inquiries of the customer regarding the outstanding
    invoices, lest it provoke a large loss claim that may be uninsured. It decided
    instead to bring an application against the insurer seeking a declaration that
    1) the insurer was obliged to indemnify the trucking company for claims in
    respect of the stolen goods, 2) the insurer had a duty to defend and 3) the
    insurer was obliged to reimburse the trucking company for the costs of
    responding to the claims.

[3]

The insurer filed no material in response
    because no claim had been made for the loss, and requested an order striking
    out the relief sought or an adjournment. That request was denied. The
    application judge declined to make the declaration for indemnity requested in
    the application, but made two declarations of fact based on the evidence filed by
    the trucking company. Those declarations disposed of the insurers two reasons
    for denying coverage.

[4]

The trucking company sought to file fresh
    evidence on the appeal to show that following the decision on the application, the
    trucking company made inquiries of the customer, resulting in confirmation from
    the customer that it had offset from its payables to the trucking company some
    of the outstanding amount owed for the stolen goods, and that it valued the
    stolen cargo at $356,968.26. The trucking company subsequently commenced an
    action (the subsequent action) against the insurer for $356,968.26 for breach
    of contract, based on the two declarations of fact made by the application
    judge.

[5]

For the reasons that follow, I would allow the appeal,
    set aside the declarations and orders made by the application judge, and order
    that the application be consolidated with the subsequent action.

Background facts

[6]

The respondent Rosen is a truck carrier and load
    broker insured with the appellant Northbridge. Rosen contracted with a member
    of a group of companies collectively referred to as FLS to pick up and
    deliver two loads of cargo consisting of electronics from Toronto to Montreal.
    It subcontracted the Toronto pick-up to Greenway Carriers. Rosen, Greenway and
    a third company shared a truck yard. The two loads were picked up by Greenway
    on November 11, 2016 and delivered to the yard. Rosen was to transport them to
    Montreal on November 14, but the two containers were stolen on November 12 and
    13 respectively.

[7]

Rosen reported the theft to the police and to
    Northbridge, seeking confirmation of coverage and indemnity. However, in a
    January 2017 letter, Northbridge denied coverage. In its letter, Northbridge
    gave two reasons for the denial of coverage. First, Rosen had failed to disclose
    in its application for insurance that it would be transporting electronics,
    which affected the risk and the premium, and that misrepresentation voided coverage
    for those loads. Second, the cargo was in the custody of Greenway and not Rosen
    at the time of the theft, and therefore not covered.

[8]

The police report valued the lost cargo at approximately
    $300,000, but FLS had not made any claim for compensation from Rosen. However,
    one or more FLS companies for which Rosen transported cargo failed to pay $65,516.01
    of unrelated invoices, which Rosen assumed was a set-off against the loss.
    Rosen was not prepared to inquire about the unpaid invoices lest FLS assert a possibly
    uninsured loss claim for the total of approximately $300,000.

[9]

With no underlying claim from FLS having been
    made, Rosen brought this application for a declaration that a) Northbridge had
    an obligation to indemnify Rosen under the policy for the claims advanced
    against Rosen Express in relation to two loads that were stolen from its yard
    (the underlying claims); b) Northbridge had an obligation under the policy to
    defend Rosen Express in the underlying claims; and c) an order that Rosen
    Express be repaid by Northbridge the legal expenses that it incurred in responding
    to the underlying claims.

[10]

Rosen filed an affidavit of its president on
    which Northbridge conducted a cross-examination. However, Northbridge filed no
    responding record. Its position was that the application should be struck and
    adjourned because there was no underlying claim to indemnify, with leave to
    amend if a claim were made.

Reasons of the application judge

[11]

Although the judgment dismisses the requests to
    strike out the relief sought in the application and for an adjournment, the
    application judge does not refer to or address those motions in his reasons.

[12]

The application judge stated that Northbridge
    raised two grounds for denying coverage of Rosens claim, then addressed each reason
    in turn. He acknowledged that there was a factual controversy over whether the
    goods had been delivered to Rosen at the time they were stolen. He referred to
    the presidents affidavit which states that the goods were dropped off at the
    Rosen yard. He then stated that Rosens evidence was that there was a shared
    yard and that the goods were delivered to Rosens portion of the yard, although
    they were still in the Greenway trucks. I note here that although the affiant
    gave evidence about the shared yard and that there were designated areas for
    each company, he was not asked whether the trailers were in Rosens part of the
    yard when the theft occurred.

[13]

Rosens position was that the goods were in its
    custody because the goods were waiting in the shared yard for a Rosen driver to
    start the delivery trip to Quebec, while Northbridges position was that the
    goods had not yet been handed over to Rosen by Greenway. The application judge
    stated that he was skeptical about Northbridges characterization of custody.
    He found that even if the goods had not been delivered to Rosen, they were in
    the custody of Greenway as Rosens agent, and if that was not accurate, then
    Greenway was a connecting carrier under the policy because it picked up the
    goods. According to the application judge, there was coverage either way.

[14]

Dealing with Northbridges second ground for
    denying coverage contained in its letter of January 2017, the alleged
    misrepresentation with respect to the type of cargo Rosen transported, the
    application judge set out Rosens position that its cargo was described generally
    in the application and would change from day to day but not in a dramatic
    fashion. Rosens president stated in cross-examination that electronics fell
    under general freight.

[15]

The application judge held that the onus was on
    the insurer to prove reliance on any misrepresentation, and that its denial
    letter was just an after the fact position and was not evidence of reliance.
    Sworn evidence was required.

[16]

Because no claim had been made for the loss by
    FLS, the application judge was not prepared to declare an obligation to indemnify.
    However, he made two other declarations: first, that Rosen did not make a
    material misrepresentation on its application for insurance with respect to its
    transportation of consumer electronic goods; and second, that the theft occurred
    while the cargo was in Rosens custody. His intention was to address
    Northbridges two objections to coverage referred to in the January 2017 letter.
    He concluded, however, that: [o]f necessitythis approach leaves to another
    day the question of whether the actual claim of loss eventually brought against
    the Applicant is covered in whole or in part by the Respondents insurance
    policy, as that will depend on the nature and scope of that eventual claim.

Proposed fresh evidence

[17]

Following the application judges decision, Rosen
    contacted FLS, resulting in confirmation that FLS had offset from its payables some
    of the outstanding amount owed for the stolen cargo, and that FLS valued the loss
    at $356,968.26. Rosen has subsequently issued a statement of claim against
    Northbridge in the subsequent action, claiming damages for breach of contract
    in that amount and reciting and relying on the two declarations to foreclose
    any objection to coverage by Northbridge.

[18]

Rosen seeks to adduce its correspondence with FLS
    that forms the basis for the subsequent action as fresh evidence. Northbridge
    takes no position on the fresh evidence motion. While the subsequent
    correspondence and procedural steps are not fresh evidence in the classic
    sense because they did not exist at the time of the application, as this court
    stated in similar circumstances in
Sengmueller v. Sengmueller
(1994),
    17 O.R. (3d) 208 (C.A.) at p. 211: where the evidence is necessary to deal
    fairly with the issues on appeal, the court may admit it. As the existence of
    the subsequent developments is relevant and necessary to the remedy sought on
    the appeal, I would admit the fresh evidence.

Issues

1.

Did the application judge err by making declarations in the absence
    of an underlying claim and therefore a real dispute?

2.

Did the application judge err by declaring findings of fact?

[19]

Northbridge raises a number of other issues,
    including: did the application judge err by deciding issues that were not
    pleaded in the notice of application; did the application judge err by effectively
    penalizing Northbridge for not filing evidence when there was no claim to
    respond to; did the application judge err by misapprehending the evidence; and
    did the application judge err by failing to apply the statutory definition of
    connecting carrier? These issues do not need to be addressed in light of my
    conclusions on the first two issues and the remedy I propose.

Analysis

Issue 1: Did the application judge err by making
    declarations in the absence of an underlying claim and therefore a real dispute?

[20]

The Supreme Court most recently described the
    criteria for declaratory relief in
S.A. v. Metro Vancouver Housing Corp.
,

2019 SCC 4, 430 D.L.R. (4th) 621, at para. 60:

Declaratory relief is granted by the courts on
    a discretionary basis, and may be appropriate where (a) the court has
    jurisdiction to hear the issue, (b) the dispute is real and not theoretical,
    (c) the party raising the issue has a genuine interest in its resolution, and
    (d) the responding party has an interest in opposing the declaration being sought
    (
Ewert v. Canada
, 2018 SCC 30, at para. 81; see also
Daniels v.
    Canada (Indian Affairs and Northern Development)
, 2016 SCC 12, [2016] 1
    S.C.R. 99, at para. 11;
Canada (Prime Minister) v. Khadr
, 2010 SCC 3,
    [2010] 1 S.C.R. 44, at para. 46).

[21]

The authority to make a declaration of right is
    found in s. 97 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43.
    Section 97 provides:

The Court of Appeal and the Superior Court of
    Justice, exclusive of the Small Claims Court, may make binding declarations of right,
    whether or not any consequential relief is or could be claimed.

[22]

While the court has the jurisdiction and
    authority to make a declaration of right, it is only to be used when the
    declaration will have an effect on an existing dispute between the parties. It is
    not to be given as an opinion on a hypothetical set of facts, or as an academic
    exercise to settle what may happen in the future. For example, in
Re
    Lockyer
, [1934] O.R. 22 (Ontario Supreme Court  Court of Appeal), a will
    left the residue of the testators estate following the death of the life
    interest beneficiary to be divided among named charities, one of which was the
    Protestants Orphan Asylum. As there was no such charity in existence, the
    Protestant Childrens Homes sought a declaration that it was the intended
    residuary beneficiary. However, it brought the application before the death of
    the life interest beneficiary. The court refused to give the declaration
    because it would have no present effect and circumstances could change before
    it could have an effect; for example, the life interest beneficiary could use
    the entire interest before she died. At p. 26, Riddell J.A. quoted from
Curtis
    v. Sheffield
(1882), 21 Ch. D. 1, at pp. 3-4, where Jessel M.R. stated:

Now it is true that it is not the practice of
    the Court, and was not the practice of the Court of Chancery, to decide as to
    future rights, but to wait until the event has happened, unless a present right
    depends on the decisions, or there are some other special circumstances to
    satisfy the Court that it is desirable at once to decide on the future rights.

[23]

The leading decision from the Supreme Court on
    this issue is
Solosky v. The Queen
, [1980] 1 S.C.R. 821. Mr. Solosky,
    a federal prisoner, sought a declaration that it would be illegal for penitentiary
    officials to open and read his mail to and from his lawyer. Dickson J. stated
    that the principles that guide the court in exercising its jurisdiction to grant
    a declaration have been stated many times. There are two factors to consider. The
    first is the reality of the dispute: Dickson J. explained at p. 832 that [i]t
    is clear that a declaration will not normally be granted when the dispute is
    over and has become academic, or where the dispute has yet to arise and may not
    arise. In
Solosky
, the dispute was not hypothetical because there was
    an order in place requiring that Mr. Soloskys mail be opened and read; that order
    had been and was continuing to be applied and therefore would apply to future
    mail.

[24]

If the dispute is established as a real dispute,
    then the second factor is whether the declaration is capable of having any
    practical effect in resolving the issues in the case: at p. 833. In
Solosky
,
    the court concluded that the appellant was not entitled to the declaration
    sought for other reasons, but that otherwise, the court could have exercised
    its jurisdiction to grant it because the two criteria stated above were met.

[25]

In the present case, neither of the two criteria
    for granting a declaration of rights was satisfied. First, Rosen sought a
    declaration that Northbridge was required to indemnify it for a claim that had
    not yet been made. While the theft had occurred, the party that suffered the
    loss had not yet sought to recover for that loss from Rosen. There was, as yet,
    no real dispute. It was unclear whether a claim would be made, and if so the
    nature or extent of the claim.

[26]

Second, the declaration had no practical effect.
    That was recognized by the application judge when he declined to make the
    declaration that was requested, which was that Northbridge was obliged to
    indemnify Rosen for a claim advanced in relation to the stolen goods. He found
    that because the nature and extent of the potential claim were not known, the
    court could not grant a declaration that required Northbridge to indemnify
    against it. As a result, the declarations that were made had no practical
    effect. The utility of the declarations was only hypothetical, and contingent
    on a viable claim being brought against Rosen.

[27]

This court set aside a declaration made under r.
    612 (superseded by r. 14.05(3))
[1]
in somewhat analogous circumstances in
296616 Ontario Ltd. v. Richmond Hill
    (Town)

(1977)
,
14 O.R. (2d) 787 (C.A.). In that case,
    parties to an agreement of purchase and sale of a building in Richmond Hill,
    Ontario brought an application for the court to declare in advance that the
    purchasers proposed use of the building would amount to a legal non-conforming
    use.

[28]

On appeal by the municipality, apparently on the
    merits, this court raised the question whether such a declaration could be
    made, and concluded that it could not, at pp. 789-90:

It is our respectful view that the order ought
    not to have been made. If Rule 612 is applicable at all, and we are not persuaded
    that it was, it applies, as it states, only where there are no material facts
    in dispute, or upon undisputed facts and the proper inference from such facts.
    The reference in the statement of facts to the future use of lands, should
    not be confused with the future facts when such use is said to occur. It is only
    upon the actual facts that the Court can declare the rights of the parties, and
    it cannot be said that, where those facts have not yet occurred, the situation
    is within the type contemplated by Rule 612. If it were otherwise, a
    declaration might well preclude any future action by the municipal corporation
    for what is then a breach of the by-law. Such a motion as this based upon a
    hypothetical situation could not be used to escape future enforcement of the
    by-laws of the municipality.

[]

By adopting this course, it was again
    contended the Court will resolve future differences between the parties.
    However, this is not the function of this Court in this type of application.
    There is no pending issue between the parties to these proceedings, which raises
    the question of construction of the by-law and the right of the landowner as to
    present use, and the Court will not make an order on the basis of an assumed
    set of facts to resolve future matters.

[29]

In my view, this case, similarly, was not one where
    the court could make a declaration to govern the rights of the parties contingent
    on a possible future event, here, a claim against Rosen for compensation for
    the theft.

Issue 2: Did the application judge err by
    declaring findings of fact?

[30]

Declaratory relief must determine the rights of
    the parties. While determining the rights of the parties may entail findings of
    fact, courts do not have jurisdiction to simply declare facts, detached from
    the rights of the parties.

[31]

Where the issue between an insured and the insurer
    is not the interpretation and application of the policy to a specific set of
    facts, but rather, what were the facts that occurred, then it is not a proper
    case for declaratory relief. The application judge erred by making findings of
    fact under the guise of a declaration of right.

[32]

This issue has been canvassed numerous times by
    the Ontario Superior Court of Justice in the context of s. 108(2) of the
Courts
    of Justice Act
,
which provides that claims for declaratory relief
    are to be assessed without a jury. Therefore where a plaintiff asks for
    declaratory relief and seeks to strike a jury notice, the court will examine
    whether in fact the claim is for declaratory relief, in which case the jury notice
    will be struck, or whether it is in reality merely a factual dispute that can
    be decided by a jury. The jury notice will not be struck where the claim is not
    properly for declaratory relief but for findings of fact on disputed evidence:
    see
Harrison v. Antonopoulos

(2002)
,
62 O.R. (3d) 463
    (S.C.)
;
Ramm v. Sun Life Assurance Co. of Canada

(1999)
,
43
    O.R. (3d) 652 (S.C.); and
Thibault v. Empire Life Insurance Co.
,
2012
    ONSC 1723, 24 C.P.C. (7th) 208.

[33]

For example, in
Reid v. Manufacturer
,
    2010 ONSC 4645, 89 C.C.L.I (4th) 149, the court explained at paras. 35-36:

Manulife's argument, of course, assumes that
    there was, in fact, a detrimental change in Mr. Reid's health in the relevant
    time period. But that fact is disputed. In fact it is the very centre of the
    dispute between the parties. There appears to be no dispute about their legal
    rights, obligations and entitlements depending on the outcome of that factual
    finding.
The court in this instance is not called upon to make a
    pronunciation on the legal rights of the parties. They agree that their rights
    are spelled out in the policy.

What they do not agree upon is whether a
    particular constellation of facts existed that vitiated the policy.
The
    court is called upon to determine what is a relatively narrow factual dispute:
    whether there was a detrimental change in Joel Reid's health in the relevant
    time period.

On careful review, in pith and substance,
    this case is clearly a factual dispute
. The parties
    seek a determination of that factual dispute and, at least from the plaintiff's
    point of view, a coercive order should that factual determination be resolved
    in his favour. [Emphasis added.]

[34]

With respect, once the application judge heard
    the application and found that he could not make a declaration of rights because
    no claim existed, it was an error to make factual findings in relation to the
    two disputed issues raised by Northbridges denial of coverage letter and to
    frame those findings as declaratory relief.

[35]

As an ancillary point, s. 138 of the
Courts
    of Justice Act
directs that: As far as possible, multiplicity of legal
    proceedings shall be avoided. This court has recently explained in the context
    of the propriety of awarding partial summary judgment, that cases should only rarely
    be bifurcated. In
Butera v. Chown, Carins LLP
,
2017 ONCA 783,
    137 O.R. (3d) 561, the court set out a number of reasons why findings should
    not be made by one judge that do not dispose of the action and bind the judge
    that will hear and dispose of it, at paras. 29-34: (1) the danger of
    duplicative or inconsistent findings; (2) delay of the main action; (3) such
    motions can be expensive; (4) judges are required to spend time writing
    extensive reasons which do not dispose of the action; and (5) the record
    available at the hearing of a partial summary judgment motion will likely not
    be as expansive as the record at trial, increasing the risk of inconsistent
    findings.

[36]

In this case, the effect of the declarations of
    fact was to leave for another proceeding the issue of coverage, with findings
    that were intended to be used in a future dispute regarding a claim for
    compensation for the stolen property. Once that claim was made in this case, a subsequent
    action was commenced by Rosen against Northbridge. All issues could have been
    determined in that claim. The application and this appeal involved the unnecessary
    expenditure of the resources of the parties as well as judicial resources.

Remaining Issues

[37]

In light of my conclusions regarding the lack of
    propriety of the declaratory relief granted in this case, there is no need to
    address the balance of the evidentiary issues or the interpretation of
    connecting carrier in the policy, which may be determined, if raised, in the subsequent
    action that Rosen has brought.

Result

[38]

I would allow the appeal and set aside the declarations
    of fact made by the application judge. Rather than dismiss the application, I
    would order that it be consolidated with and continued as part of the subsequent
    action Rosen has commenced against Northbridge (court file number CV-18-00609508-0000).
    I would order the costs of the application and of this appeal to follow the
    event of the cause in the subsequent action, at the discretion of the trial
    judge or summary judgment motion judge.

Released: K.F. September 27, 2019

K. Feldman J.A.

I agree. L.B. Roberts J.A.

I agree. Fairburn J.A.

[1]
Homestead
    and Watson
, Ontario Civil Procedure,
volume 1, (Toronto: Carswell,
    1990), tables of concordance, 1990 rules/1984 rules/1980 rules, at p. C-22.