COURT OF APPEAL FOR ONTARIO

CITATION: 2256157 Ontario Ltd. v. Fazl, 2019 ONCA 666

DATE: 20190822

DOCKET: M50400 (C65716)

Paciocco, Harvison Young and Zarnett JJ.A.

BETWEEN

2256157 Ontario Ltd.

Plaintiff (Respondent on Appeal)

and

Hafeez Fazl also known as Fazl Hafeez

Defendant (Appellant on Appeal)

Hafeez Fazl, in person

Dina Peat, for the respondent

Heard and released orally: August 16, 2019

REASONS FOR DECISION

[1]

A party seeking to set aside a decision pursuant
    to Rule 37.14(b) based on the absence of notice of the hearing must, as a
    necessary condition to obtaining that relief, prove that non-attendance was the
    result of accident or mistake. Mr. Fazl has not done so.

[2]

He asserts that he did not attend his March 29,
    2019 appeal hearing because he did not receive notice but a court letter of
    November 13, 2018 setting out the court date was sent to the residence address
    he provided, and on November 28
th
, 2018 the respondents materials
    also setting out the date were successfully delivered by courier to that
    address and he was sent the same materials by email to the address he had
    provided to the court.

[3]

Mr. Fazl has a history of delay.  Justice
    Lederer found in a prior related proceeding that two claims made by Mr. Fazl
    about not receiving documents, were untrue. Mr. Fazl has not demonstrated a
    plausible explanation for why he would not have received the multiple notices
    sent.

[4]

The motion to set aside the decision of this
    court is denied. Costs are payable on this motion to the respondent in the
    amount of $4,471.86 inclusive of all applicable taxes and disbursements.

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


COURT OF APPEAL FOR ONTARIO

CITATION: Cassandro v. Glass, 2019 ONCA 654

DATE: 20190813

DOCKET: C65643

MacPherson, Tulloch and Harvison Young JJ.A.

BETWEEN

Angelo Cassandro

Plaintiff (Appellant/

Respondent by way of cross-appeal)

and

Peter Glass and Peter Glass c.o.b. Micugh
    Construction Services

Defendants (Respondents/

Appellants by way of cross-appeal)

Paul J. Pape and Cristina Senese, for the appellant

Trent Falldien, for the respondents

Heard: June 13, 2019

On appeal from the order of
    Justice John S. Poupore of the Superior Court of Justice, dated June 19, 2018,
    with reasons reported at 2018 ONSC 3503.

Tulloch J.A.:

OVERVIEW

[1]

The appellant, Mr. Cassandro, leased his property to the respondent, Mr. Glass.
    Mr. Glass ran a commercial contracting business as a sole proprietorship. The
    relationship between Mr. Cassandro and Mr. Glass broke down. Mr. Cassandro
    terminated the lease, took possession of the premises, and distrained Mr. Glass
    commercial operating equipment on the property. Mr. Cassandro sued Mr.
    Glass claiming damages for unpaid rent and damage to the property. Mr. Glass counterclaimed
    and claimed damages for the value of the chattels seized and lost income. The
    trial judge awarded damages to both parties and set them off against each
    other. Both parties appeal on liability and damages.

[2]

For the following reasons, I would allow Mr. Cassandros appeal in part
    on the issue of damages for loss of income and would order a new trial on this
    issue, but would otherwise dismiss his appeal. I would allow Mr. Glass cross-appeal
    in part on the issue of crediting rent arrears from the value of the seized
    chattels, but would otherwise dismiss his cross-appeal.

FACTS

[3]

Mr. Cassandro owned a property in the City of Greater Sudbury (the
    City). Mr. Glass ran a commercial contracting business. In 2009, Mr.
    Cassandro leased his property to Mr. Glass. The lease was an oral agreement on
    a month-to-month basis with rent of $3,090 per month.

[4]

Mr. Glass intended to use the property to store construction vehicles
    and equipment. However, the property was zoned as rural which precluded this
    use. As a result, Mr. Glass undertook to rezone the property for commercial use
    with Mr. Cassandros assistance. Mr. Glass agreed to pay the fees and costs of
    the rezoning process and complete the paperwork. I will refer to this agreement
    as the Oral Agreement. Mr. Cassandro thus applied for approval to the City and
    to the Nickel District Conservation Authority (NDCA) to rezone the property
    to industrial.

[5]

As the parties proceeded with the rezoning application, Mr. Glass began
    to modify the property to make it suitable for his business. In 2009, Mr. Glass
    began dumping landfill into a designated flood plain regulated by the NDCA. A
    regulation enacted under the
Conservation Authorities Act
, R.S.O. 1990,
    c. C.27, prohibited such dumping without a permit.
[i]
The NDCA issued a violation notice and a stop work order. The NDCA later issued
    a permit to Mr. Cassandro that authorized Mr. Glass to dump landfill
    within certain limits. On October 30, 2009, the NDCA inspected the property. It
    found that Mr. Glass had violated the terms of the permit by dumping excessive
    landfill too close to the waters edge. Because Mr. Cassandro was the
    owner, the NDCA ordered him to remove the excess fill and to remediate the
    environmental damage the fill was causing.

[6]

Mr. Cassandro was ultimately successful in rezoning the property to
    industrial. However, the Ontario Municipal Board required him to enter into a
    Site Plan Control Agreement (the Site Plan Agreement) with the City as a
    condition of the rezoning. On August 30, 2011, Mr. Cassandro and the City signed
    the Site Plan Agreement, which was registered on title. The Site Plan Agreement
    incorporated the terms of the remediation that the NDCA had required and Mr. Cassandro
    agreed to complete this remediation to the NDCAs satisfaction. The Site Plan
    Agreement also contained additional terms that required further modifications
    to the property.

[7]

The Site Plan Agreement required Mr. Cassandro to pay $25,339.30 to the
    City for various fees and deposits related to the rezoning. Pursuant to the
    Oral Agreement, Mr. Glass was responsible for paying this sum and he did so.
    Likewise, as the Oral Agreement provided, Mr. Glass assumed the cost of
    completing the Site Plan Agreement.

[8]

After the Site Plan Agreement was signed, Mr. Glass was injured while
    working on the property. This resulted in an extended hospital stay. Mr. Glass
    evidence was that he spent one and a half years in a wheelchair after his
    release from hospital. Mr. Glass admitted at trial that this accident affected
    his income. However, he insisted in his trial evidence that the accident did
    not prevent him from managing his business and that he was able to direct his
    employees and staff.

[9]

In 2013, a survey was conducted that set out the extent of Mr. Glass
    overfilling of landfill. The NDCA directed Mr. Cassandro to remove the
    excessive landfill and conduct remediation. Mr. Cassandro approached Mr. Glass.
    They agreed that Mr. Glass would conduct the remediation. However, Mr. Glass did
    not complete the required remediation and refused responsibility to rectify the
    excessive landfill.

[10]

Mr.
    Glass failure to remediate the property led to the breakdown of the
    landlord-tenant relationship. Mr. Cassandro served a notice of eviction on Mr. Glass
    on November 4, 2013. Beginning in mid-January, Mr. Cassandro denied Mr. Glass
    access to the leased premises and his chattels. On January 13, 2014, Mr. Cassandro
    served a further notice on Mr. Glass that gave Mr. Glass nine days to remove
    all remaining property from the premises. The notice stated that Mr. Glass
    could not enter the leased premises unless he first paid Mr. Cassandro $3,100.
    Mr. Glass never removed the property from the premises. By January 31, 2014,
    Mr. Cassandro terminated the lease, took possession of the leased premises and
    distrained Mr. Glass chattels.

[11]

At
    some time after February 1, 2014, Mr. Cassandro took the position that he was entitled
    to distrain Mr. Glass chattels as security for damages that would be assessed
    at a future date. These damages included damage for ongoing rent and the excessive
    number of the chattels on the property, which Mr. Cassandro alleged were too
    expensive to relocate and store. However, Mr. Cassandro did not begin to
    attempt to ascertain the quantum of these damages until October 2015.

[12]

The
    chattels remain on the property by the lakeside. Mr. Cassandro failed to
    properly secure and maintain them. Some have disappeared and others have
    depreciated in value. The property is full of the chattels. At trial, Mr.
    Cassandro gave evidence that the chattels blocked access to the property. This
    both prevented him from renting the property and prevented the equipment required
    to remediate the environmental damage from gaining access to the property. The
    quote for an on-site move of the chattels to permit remediation was $17,797.50
    and the quote for removal to another site was $49,835.

SUPERIOR COURT DECISIONS

(1)

Endorsement of Gordon R.S.J., dated October 19, 2015

[13]

Gordon
    R.S.J. granted in part Mr. Cassandros motion for summary judgment. He found
    that Mr. Glass was in arrears of rent in January 2014 and that it was thus
    appropriate for Mr. Cassandro to take possession of the property owing to the
    default in payment. He ordered that Mr. Glass was liable to Mr. Cassandro for
    loss of rental income and other losses resulting from Mr. Glass use of the
    property, including the claim for work required to comply with the NDCA remediation
    order. Gordon R.S.J. ordered a trial to establish the amount of Mr. Cassandros
    damages. He made no determination as to the validity of Mr. Cassandros
    decision to retain possession of Mr. Glass chattels.

(2)

Endorsement of Gordon R.S.J., dated February 2, 2017

[14]

Gordon
    R.S.J. dismissed Mr. Glass motion to set aside his summary judgment order. He
    accepted Mr. Glass argument that the permit was issued to Mr. Cassandro and
    that the NDCA would hold Mr. Cassandro responsible for compliance with the
    permit. However, Gordon R.S.J. held that Mr. Cassandro still had a valid claim
    against Mr. Glass for the costs of remediating the work that Mr. Glass had
    improperly performed. This remedial work was required to comply with the
    permit.

(3)

Reasons of the Trial Judge

(a)

Mr. Cassandros Claim

[15]

The
    trial judge found that Mr. Cassandro was entitled to only $3,090 in rent for
    the month of January 2014. The trial judge based this finding on the fact that
    Mr. Cassandro terminated the lease agreement on January 31, 2014 and, as such, he
    could no longer charge Mr. Glass rent after this date.

[16]

The
    trial judge also awarded Mr. Cassandro damages for the remediation required by
    the NDCA and the cost of completing the Site Plan Agreement. He assessed these
    damages at $54,240 and $92,660 respectively, based on the cost estimates
    provided at trial. He also awarded Mr. Cassandro $1,299.56 for obtaining the
    survey to detail the remediation work required and the NDCA fees of $750.

[17]

The
    trial judge rejected the remainder of Mr. Cassandros claim for damages,
    including the cost that Mr. Cassandro claimed to move Mr. Glass chattels. He
    found that either Mr. Cassandro failed to prove these damages or they resulted
    from the excessive distress that he found that Mr. Cassandro had taken.

[18]

The
    trial judge awarded Mr. Cassandro total damages in the amount of $152,039,
    broken down as follows:

Category of Damage

Damage Award

Rent

$3,090

Cost to relocate fill

$54,240

Survey

$1,299

NDCA fees

$750

Cost to complete Site Plan Agreement

$92,660

(b)

Mr. Glass Counterclaim

[19]

The
    trial judge found that Mr. Cassandros distress of Mr. Glass chattels was
    excessive and in effect was a wrongful conversion. Because Mr. Cassandro had
    terminated the lease, he could only dispose of sufficient chattels to satisfy
    the outstanding rent. Mr. Cassandro had no right to withhold the remainder of
    Mr. Glass chattels in anticipation of future damages. The trial judge accepted
    the value of these chattels at $161,900 as appraised by the valuator Mr.
    Cassandro retained and awarded Mr. Glass this sum less the $3,090 in rent
    arrears for a total of $158,810. I note, however, that the actual number of the
    valuation was $167,390. The trial judge proceeded to rule that the chattels
    would be Mr. Cassandros to dispose of.

[20]

The
    trial judge noted that Mr. Glass counterclaim was very thin on evidence and
    difficult to accept as presented. He accepted that the seizure of the chattels
    prevented Mr. Glass from earning income. However, he found that Mr. Glass
    failed to mitigate his losses because he failed to pursue expeditious legal
    means to regain the seized chattels and instead chose to do nothing. The
    trial judge ultimately assessed damages for the loss of income counterclaim at
    $100,000. He provided no other analysis explaining how he arrived at this
    figure.

[21]

The
    trial judge awarded Mr. Glass total damages of $258,810. Finally, the trial
    judge set-off Mr. Cassandros damages against Mr. Glass damages and awarded
    Mr. Glass judgment in the amount of $106,771.

ISSUES

[22]

Mr.
    Cassandro raises the following issues on his appeal:

1)

Did the trial judge err by failing to find that Mr. Cassandro lawfully
    distrained Mr. Glass chattels pursuant to the common law remedy of distress
    damage feasant?

2)

Did the trial judge make a palpable and overriding error in determining
    that Mr. Glass had lost income as a result of the distraint?

3)

Did the trial judge err by awarding damages for the value of Mr. Glass
    chattels and for loss of income in light of the trial judges finding that Mr.
    Glass failed to mitigate his damages?

[23]

In
    his cross-appeal, Mr. Glass raises the following issues:

1)

Did the trial judge err by ordering Mr. Glass to pay damages of $92,660
    to finish the zoning upgrade for Mr. Cassandros property?

2)

Did the trial judge err in failing to give Mr. Glass credit for the $25,339.30
    he paid to the City pursuant to the Site Plan Agreement?

3)

Did the trial judge overcompensate Mr. Cassandro for the $3,090 in rent
    arrears by double-counting this figure?

MR. CASSANDROS APPEAL

(1)

Distress Damage Feasant

[24]

Mr.
    Cassandros first argument is that he was entitled to distrain Mr. Glass
    chattels by virtue of the common law defence of distress damage feasant.

[25]

The
    defence of distress damage feasant is an ancient common law right that permits
    an occupant of land to distrain a chattel found on that land in certain
    circumstances. Mr. Cassandro referred us to several Canadian cases that
    establish the requirements of the doctrine of distress damage feasant. Those
    cases appear to establish two main requirements. First, the chattel the
    occupant of the land has seized must have trespassed or have been unlawfully
    present on the occupants land:
Stewart v. Gustafson
, [1999] 4 W.W.R.
    695 (Sask. Q.B.), at para. 32;
Forhan & Read Estates Ltd. v. Hallett and
    Vancouver Auto Towing Service
(1959), 19 D.L.R. (2d) 756 (B.C. Co. Ct.), at
    p. 759. Second, the chattel must have caused actual damage to the occupants
    land and must be continuing to cause such damage at the time of its seizure:
R.
    v. Howson
, [1966] 2 O.R. 63 (C.A.), at pp. 77-78, per Laskin J.A. (as he
    then was);
Forhan
, at pp. 758-759;
Barbour v. University of British
    Columbia
, 2009 BCSC 425, 310 D.L.R. (4th) 130, at para. 50, revd on other
    grounds, 2010 BCCA 63, 316 D.L.R. (4th) 354, leave to appeal refused, [2010]
    S.C.C.A. No. 135. If these requirements are met, the occupant can distrain the
    offending chattel in order to secure compensation for the damage it has caused from
    its owner:
Stewart
, at para. 32;
Forhan
, at p. 758.

[26]

Mr.
    Cassandro asserts that the chattels were unlawfully on the property because Mr.
    Glass had no right to keep them there following the termination of the lease.
    Mr. Cassandro also identifies three forms of damage that he says allow him to
    rely on the defence of distress damage feasant. First, Mr. Cassandro says that
    the chattels caused environmental damage that led to the NDCA remediation order
    because Mr. Glass used the chattels to dump the landfill. This damage continues
    to the present day as the fill continues to sit on the flood plain and
    destabilize the slope. Second, Mr. Cassandro states that Mr. Glass chattels
    continue to prevent the machinery needed to remediate the property from
    accessing it. Third, the chattels form an obstruction that prevents Mr.
    Cassandro from renting out the property.

[27]

I
    do not accept this argument. Mr. Cassandro did not plead distress damage feasant
    and did not argue it at trial. The evidentiary record is not adequate to permit
    him to advance this claim on appeal and it would be unfair to Mr. Glass to
    allow him to do so. Moreover, properly understood, the doctrine does not assist
    Mr. Cassandro.

[28]

First,
    Mr. Cassandro neither pled distress damage feasant nor did he argue it at
    trial. It is uncontested that Mr. Cassandro did not argue distress damage
    feasant at trial. Nor is the statement of claim capable of being construed as
    including a pleading of distress damage feasant. The statement of claim does
    plead that Mr. Glass caused damage to the property by placing fill on the land
    and that Mr. Cassandro seized the chattels to secure compensation for the
    damage to the land and the cost of complying with the NDCA remediation order.
    However, it does not plead that the chattels themselves caused any damage to
    the land, even though this is a necessary element of distress damage feasant.

[29]

As
    a result, I conclude that it would be unfair to Mr. Glass to permit Mr. Cassandro
    to raise this doctrine on appeal. This court is rightly reluctant to consider
    new issues on appeal, particularly when those issues involve a factual
    component that was not fully explored at trial:
Kaiman v. Graham
, 2009
    ONCA 77, 245 O.A.C. 130, at paras. 18, 21. I do not accept Mr. Cassandros
    argument that it is appropriate to consider distress damage feasant on appeal
    because it is a pure question of law. The application of the distress damage
    feasant doctrine to this case involves factual questions that were never raised
    or fully explored at trial because Mr. Cassandro never argued distress damage
    feasant. In particular, as Mr. Glass submits, there is no evidence that any
    individual chattels that Mr. Cassandro seized were used in the excavation
    work that led to the NDCA remediation order. Nor did Mr. Glass have notice or
    an opportunity to respond to this argument as it was not pled or advanced at
    trial. The evidentiary record is not adequate to adjudicate the distress damage
    feasant issue and it would be unfair to Mr. Glass for this court to do so.

[30]

Second,
    even if it was appropriate for this court to consider the doctrine of distress
    damage feasant on this appeal, that doctrine does not assist Mr. Cassandro.
    As I have explained, distress damage feasant has two main requirements: that a
    chattel is trespassing or is unlawfully present on the occupants property, and
    that it is causing continuing actual damage to the occupants property. Here,
    Mr. Cassandros argument fails on the first requirement, namely that of trespass
    or unlawful presence. At the time of the initial damage in 2009, the chattels
    were lawfully on the leased premises because, as Mr. Cassandros tenant,
    Mr. Glass was entitled to bring the commercial operating equipment there.

[31]

I
    do not accept Mr. Cassandros argument that the chattels became unlawfully
    present on the property at the time that Mr. Cassandro terminated the lease. This
    argument is inconsistent with Mr. Cassandros own actions. The January 13, 2014
    notice he delivered to Mr. Glass barred Mr. Glass from removing the chattels
    until Mr. Glass satisfied all outstanding rent and cost. It does not lie in Mr.
    Cassandros mouth to assert that the chattels were trespassing when Mr.
    Cassandro himself prevented Mr. Glass from removing them prior to the date on
    which Mr. Cassandro seized the chattels.

[32]

Accordingly,
    it is not necessary to consider whether the second requirement of continuing
    actual damage is met on these facts.

(2)

Damages for Lost Income

[33]

Mr.
    Cassandros second argument is that the trial judge made a palpable and
    overriding error of fact in determining that Mr. Glass lost income as a result
    of the seizure of his chattels. Mr. Cassandro submits that the evidence does
    not support the finding that Mr. Glass business was in operation prior to the
    distraint of his chattels. He points to the evidence that Mr. Glass 2013
    income tax summary records $0 of income for the entirety of 2013, even though
    the chattels were only seized in January 2014. Accordingly, there is no
    evidence that Mr. Glass was operating his business or making a profit at the
    time of the seizure.

[34]

I
    agree with Mr. Cassandro that the trial judge failed to explain how he resolved
    the central issues on the counterclaim for damages for lost income. He neither
    explained how he concluded that Mr. Glass had lost income nor how he arrived at
    the $100,000 figure for lost income. This court owes deference to a trial
    judges assessment of damages. However, the trial judges reasons which leads
    to his or her assessment of damages must allow for meaningful appellate review:
R. v. Sheppard
, 2002 SCC 26, [2002] 1 S.C.R. 869, at para. 28;
Saramia
    Crescent General Partner Inc. v. Delco Wire and Cable Limited
, 2018 ONCA
    519, at para. 93.   The trial judge simply did not explain how he found that
    Mr. Glass had proven a loss and how he calculated the damages for loss of
    income. Accordingly, it falls to this court to undertake a fresh assessment:
Pita
    Royale Inc. (Aroma Taste of the Middle East) v. Buckingham Properties Inc.
,
    2019 ONCA 439, 1 R.P.R. (6th) 1, at para. 11.

[35]

I
    rely on the principles of proof of loss and quantum of damages that this court
    set out in
TMS Lighting Ltd. v. KJS Transport Inc.
, 2014 ONCA 1, 314
    O.A.C. 133, at para. 61, citing
Martin v. Goldfarb
(1998), 41 O.R. (3d)
    161 (C.A.), at p. 187, leave to appeal refused, [1998] S.C.C.A. No. 516. As
    the plaintiff in the counterclaim, Mr. Glass bore the onus of proving his
    claimed loss and the quantum of damages on a balance of probabilities. Trial
    judges are of course obligated to do their best to assess damages even where
    difficulties in quantification render a precise mathematical calculation
    impossible. In cases where the nature of the damage makes assessment difficult,
    the trial judge may even resort to guess work in assessing damages. However,
    plaintiffs still have the duty to prove the facts that trial judges base their
    damage estimates upon. Where a plaintiff fails to adduce the necessary evidence
    and the resulting absence of evidence makes it impossible for the trial judge
    to assess damages, that plaintiff may only be entitled to nominal damages.
    However, nominal damages are not appropriate where the plaintiff has
    demonstrated a substantial loss, even if there is a lack of evidence on
    quantum:
TMS Lighting
, at para. 85;
Rosenhek v. Windsor Regional
    Hospital
, 2010 ONCA 13, 257 O.A.C. 283, at para. 38, leave to appeal
    refused, [2010] S.C.C.A. No. 89.

[36]

In
    my view, the trial judge failed to resolve the conflicting evidence on whether
    Mr. Glass had in fact met his onus to prove that he lost income as a result of
    the seizure of his chattels. The trial judge simply stated that he was
    satisfied that the seizure of the chattels prevented Mr. Glass from earning
    income. Respectfully, the trial judge failed to make the necessary findings on
    this issue. As Mr. Cassandro argues, Mr. Glass 2013 income tax summaries show
    an income of $0 for that entire year. In light of Mr. Glass trial evidence
    that the injury he experienced did not prevent him from operating his business,
    it would have been open to the trial judge to find that Mr. Glass had ceased
    operating his business prior to the seizure of the assets. Yet the trial judge
    never made a finding on this critical issue. As this issue involves assessing
    Mr. Glass credibility, this court is not in a position to resolve it. In the
    circumstances, I would be prepared to order a new trial on the trial judges
    failure to resolve this issue alone.

[37]

Second,
    Mr. Glass failed to meet his onus in this case to quantify the lost income. As
    the trial judge himself found at para. 102 of his reasons, his counterclaim was
    very thin on evidence and difficult to accept as presented. The only
    documentary evidence that Mr. Glass provided in support of his claim for loss
    of income was personal tax return summaries. As the trial judge found, at para.
    51, Mr. Glass failed to provide back-up documentation to explain how the net
    business income was generated. Nor did the tax return summaries provide the source
    of the income. Likewise, Mr. Glass provided no documentary evidence for the
    years 2017 or 2018. Instead, Mr. Glass simply gave oral evidence that he ran a
    successful construction business and that he was unable to earn income
    following the seizure of his chattels.

[38]

Mr.
    Glass is responsible for the absence of evidence. He could have asked his
    clients and customers for documents or contracts to prove a revenue stream. He
    could have also sought documentary materials from his suppliers. As he admitted
    in cross-examination, he did not do so. All he did was produce his income tax
    summaries. As I have explained, these income tax summaries are a wholly
    inadequate basis on which to assess his damages. I am convinced that it would
    not have been difficult for Mr. Glass to produce evidence that would have
    allowed the trial judge to properly quantify the loss of income from the seized
    chattels, if any. Accordingly, this is not a case where the assessment of
    damages was difficult because of the nature of the damage Mr. Glass was
    attempting to prove.

[39]

As
    a result, I am satisfied that the trial judge erred in principle when he
    quantified the damages for loss of income at $100,000. On this record, there
    was an absence of evidence that made it impossible to assess damages for loss
    of income. The trial judge could not simply pick a number, as he appears to
    have done.

[40]

However,
    it would be inappropriate for this court to award nominal damages in this case.
    Mr. Glass gave oral evidence that prior to the eviction he ran a very
    successful construction service business. His evidence was that the eviction
    and seizure of his chattels had a devastating impact on his business.  As a
    result, he had to completely shut his business down because he had no
    additional income-generating capital assets. Admittedly, I would order a new
    trial on this issue due to the trial judges failure to resolve the conflicting
    evidence on whether Mr. Glass in fact suffered a loss. However, it would be
    open to a trier of fact to accept Mr. Glass evidence and find that he did
    suffer a substantial loss. I therefore disagree with Mr. Cassandro that
    there was no evidence capable of supporting a finding that Mr. Glass was
    operating his business at the time of the seizure of the chattels or that he
    suffered a loss. In these circumstances, it would be unjust to deprive Mr. Glass
    of the opportunity to establish the quantum of his damages: see
Martin
,
    at p. 190;
TMS Lighting
, at paras. 83-87. Accordingly, I would order a new
    trial on the issue of damages for lost income.

(3)

Mitigation

[41]

Mr.
    Cassandros third argument is that the trial judge erred in law by awarding Mr.
    Glass damages for both the value of the chattels and lost income in light of
    his finding that Mr. Glass failed to mitigate his damages. In response to this
    argument, Mr. Glass submits that the trial judge erred in finding that he had
    failed to mitigate his losses.

[42]

I
    agree with Mr. Cassandro that the trial judge failed to explain how his finding
    on mitigation affected his ultimate damage awards. The trial judge found that
    Mr. Glass had failed to mitigate his damages but then proceeded to award him
    $100,000 for lost income. He did not explain how he took Mr. Glass failure to
    mitigate into account in arriving at this figure. He likewise did not appear to
    make any deduction from the value of the chattels as a result of Mr. Glass
    failure to mitigate.

[43]

However,
    I do not accept Mr. Cassandros argument that Mr. Glass failure to mitigate
    disentitles him to damages. I agree with Mr. Glass argument that the trial
    judge made a palpable and overriding error of fact when he found, at para. 102
    of his reasons, that Mr. Glass simply chose to do nothing in the years from
    seizure until now.

[44]

First,
    the trial judges finding that Mr. Glass chose to do nothing is a misapprehension
    of the evidence. When Mr. Cassandro commenced his action against Mr. Glass on
    May 2, 2014, Mr. Glass promptly made a counterclaim for conversion in respect
    of the seized chattels. The trial judges finding, at para. 55 of his reasons,
    that Mr. Cassandro took no legal step to recover his property is thus a
    palpable and overriding error. Section 73 of the
Commercial Tenancies Act
,
    R.S.O. 1990, c. L.7, in fact expressly preserves the tenants right to bring an
    action to seek a remedy for unlawful distress. Mr. Glass thus did pursue a
    legal step to recover his property by commencing the counterclaim, and he did
    so promptly. In this regard, I also note that, on August 15, 2017, Mr. Glass
    counsel wrote to Mr. Cassandros counsel requesting dates for Mr. Glass to
    obtain the seized chattels from the property. Mr. Cassandros counsel rebuffed
    this request.

[45]

I
    also reject Mr. Cassandros argument that the trial judges finding of failure
    to mitigate finds support in the evidence of the bailiff. The bailiff gave
    evidence that Mr. Glass neither approached him with rent monies nor with
    instructions on how to recover the chattels in January 2014. However, as a
    matter of law, this evidence was incapable of grounding a finding of failure to
    mitigate. As the trial judge found, the loss only crystallized on January 31,
    2014 when Mr. Cassandro terminated the lease and seized the chattels. The
    bailiffs evidence thus concerned Mr. Glass conduct prior to the date the loss
    definitively occurred. As this court held in
Davy Estate v. CIBC World
    Markets Inc.
, 2009 ONCA 763, 97 O.R. (3d) 401, at para. 18, the defence of
    mitigation only arises after the plaintiff has suffered the loss and it
    concerns conduct unrelated to the initial loss. Accordingly, the defendant
    cannot invoke mitigation in relation to the plaintiffs pre-loss conduct or failure
    to avoid the loss prior to its occurrence: see Angela Swan & Jakub Adamski,
Canadian Contract Law
, 3rd ed. (Markham, Ont.: LexisNexis Canada Inc.,
    2012), at para. 6.274.1. Mr. Glass alleged failure to approach the bailiff
    with rent monies or to recover the chattels in January 2014 predated the loss
    and thus is incapable of grounding a finding of failure to mitigate.

[46]

Second,
    the trial judge made a palpable and overriding error of fact in finding that Mr.
    Glass failed to mitigate because he failed to pursue fairly expeditious legal
    meansto regain the chattels. Presumably, the trial judge was referring to the
    procedure in s. 66(1) of the
Commercial Tenancies Act
that permits a
    tenant to apply to a Superior Court judge to challenge the validity of
    distress. Sections 66(1) and 67 of the
Commercial Tenancies Act
provide
    that the Superior Court judge will hear and determine the matters the
    application raises in a summary way and may provide interim relief pending the
    determination of the dispute.

[47]

The
    trial judges apparent finding that Mr. Glass unreasonably failed to use the
    application procedure in s. 66(1) of the
Commercial Tenancies Act
was in
    error because the trial judge did not give any effect to the fact that Mr.
    Cassandro had started an action against Mr. Glass. That action put squarely in
    issue the validity of the seizure of the chattels as Mr. Cassandro pled that he
    was entitled to retain them. Instead of commencing a separate proceeding, Mr.
    Glass chose to respond to the action by making a counterclaim for conversion in
    respect of the seized chattels.  I am not convinced that it would have served
    the interests of justice for Mr. Glass to instead commence a parallel
    proceeding to seek the return of the seized chattels. Commencing a separate
    application instead of responding to the action with a counterclaim would have resulted
    in a duplication of proceedings that would raise the prospect of inconsistent
    findings between the judge hearing Mr. Glass application and the judge presiding
    over Mr. Cassandros action.

CROSS-APPEAL

(1)

Damages for Cost of Completing the Site Plan Agreement

[48]

Mr.
    Glass first argument on his cross-appeal is that the trial judge erred in
    awarding Mr. Cassandro $92,660 in damages for the cost of completing the Site
    Plan Agreement. Mr. Glass first challenges his liability for those damages. He
    submits that it is unclear that he made any agreement with Mr. Cassandro
    regarding their commitments to contribute towards the zoning upgrade. Even if
    they did make any agreements, Mr. Cassandro terminated those agreements when he
    terminated the lease in January 2014. Second, Mr. Glass argues that Mr. Cassandro
    failed to mitigate his damages. Mr. Glass submits that the property was not
    rezoned from rural to industrial. Accordingly, Mr. Cassandro can mitigate his
    damages by not completing the Site Plan Agreement and keeping the property zoned
    as rural. Even if the property was rezoned to industrial, Mr. Cassandro could
    mitigate his damages by submitting an application to change the zoning back to
    rural. If he did so, he would not be required to comply with the Site Plan
    Agreement.

[49]

I
    reject these arguments.

[50]

The
    trial judges findings of fact provide a complete answer to Mr. Glass argument
    that he was not liable. The trial judge found that Mr. Cassandro and Mr. Glass
    made an Oral Agreement in which Mr. Glass agreed to pay the fees and assume the
    costs of the rezoning application. Pursuant to this Oral Agreement, Mr. Glass
    assumed the costs of completing the work required by the Site Plan Agreement. I
    do not accept that Mr. Cassandros termination of the lease terminated the Oral
    Agreement. The Oral Agreement was separate from the lease agreement. Indeed,
    the parties made the Oral Agreement after the lease began. Accordingly, the
    termination of the lease did not relieve Mr. Glass from his obligations under
    the Oral Agreement.

[51]

The
    trial judges findings of fact also provide an answer to Mr. Glass argument on
    mitigation. The trial judge found that the rezoning application was successful.
    Implicit in this finding is that the propertys zoning changed from rural to
    industrial as a result of the rezoning application. The trial judges finding
    was grounded in the evidence of a site plan and subdivisions control engineer
    for the City who testified that the property was successfully rezoned from
    rural to industrial.

[52]

Furthermore,
    I also reject Mr. Glass alternative argument that Mr. Cassandro could
    have simply rezoned the property back to rural and thus avoided the obligations
    under the Site Plan Agreement.

[53]

In
    support of his argument, Mr. Glass points to evidence showing that the cost of
    filing a rezoning application is approximately $3,000 along with the evidence
    of the City engineer that a rural property typically does not require a site
    plan. However, in cross-examination, Mr. Glass counsel asked the City engineer
    whether the City would still require the Site Plan Agreement to be completed
    upon rezoning. The City engineer stated as follows:

There would be modifications
    required to the property, to go back to that zoning, because of the nature of
    the buildings, all the buildings on a property. There would have to be things
    Im not an expert in that. That would be more of a planning exercise that would
    have to be discussed, how we would get back to [the rural] designation, given
    the history. Its a bit complicated.

The City engineer went on to state that he was not sure
    whether the buildings on the property would have to be demolished if the
    property was rezoned.

[54]

In
    my view, Mr. Glass has failed to meet his onus to show that Mr. Cassandro could
    have reasonably avoided his losses by submitting a rezoning application:
Southcott
    Estates Inc. v. Toronto Catholic District School Board
, 2012 SCC 51, [2012]
    2 S.C.R. 675, at para. 24. The evidence of the City engineer indicates that
    rezoning the property back to rural would involve a complex planning exercise
    that would require modifications to the property and possibly the demolition of
    structures. I cannot infer from this evidence how extensive these modifications
    would be. Nor can I conclude that the cost of these modifications would be less
    than the cost of simply completing the Site Plan Agreement. Without such
    evidence, this court cannot infer that Mr. Cassandro failed to mitigate his
    damages by acting unreasonably. Mr. Cassandros duty to mitigate does not
    require him to embark on such a risky or speculative venture for the benefit of
    Mr. Glass: see
Davy Estate
, at para. 26; Stephen M. Waddams,
The Law
    of Damages
, 5th ed. (Toronto: Canada Law Book, 2012), at para. 15.150.

(2)

Credit for Deposit Paid to the City

[55]

Mr.
    Glass second argument is that the trial judge erred in failing to award him credit
    for the $25,339.30 that he paid to the City under the Site Plan Agreement. Mr.
    Glass submits that it would result in a windfall to Mr. Cassandro if he did not
    receive credit for this sum.

[56]

As
    a preliminary matter, I note that only $13,500 of the $25,339.30 that Mr. Glass
    paid to the City is properly characterized as a deposit. A letter from the City
    to Mr. Glass that was entered as an exhibit at trial makes clear that
    $11,839.30 of the $25,339.30 total payment consists of payment for a
    non-refundable cash contribution and legal fees. There is no basis to give Mr.
    Glass credit for this sum.

[57]

I
    do not accept Mr. Glass argument that he is entitled to credit for the
    remaining $13,500. His argument is inconsistent with the law of deposit. As
    this court recently held in
Benedetto v. 2453912 Ontario Inc.
, 2019 ONCA
    149, 86 B.L.R. (5th) 1, at para. 7 (citations omitted), a deposit is not part
    of the contract to which it is attached but instead stands on its own as an
    ancient invention of the law designed to motivate contracting parties to carry
    through with their bargains. If the contract is not performed, the payee is
    not obligated to return the deposit to the payor:
Benedetto
, at para. 5.
    In this case, Mr. Glass would have understood when he paid the deposit that he
    would not get it back until the Site Plan Agreement was completed. Pursuant to the
    Oral Agreement with Mr. Cassandro, Mr. Glass was responsible for completing the
    Site Plan Agreement. He did not do so. He would only get the deposit back if he
    did. Mr. Glass cannot get his deposit back through the backdoor by crediting it
    from the damages he owes Mr. Cassandro.

[58]

Nor
    does failing to credit Mr. Glass for the deposit result in a windfall to Mr.
    Cassandro. Mr. Cassandros claim against Mr. Glass is grounded in contract,
    namely the Oral Agreement between the two men. The aim of contract damages in
    this case is to place Mr. Cassandro in the same position he would have been in
    if Mr. Glass had performed the Oral Agreement:
Fidler v. Sun Life Assurance
    Co. of Canada
, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 44. If the Oral
    Agreement had been performed, Mr. Cassandro would no longer have to pay the
    costs of completing the Site Plan Agreement. That is why the trial judge
    properly awarded Mr. Cassandro the costs of completing the Site Plan Agreement
    in damages. There is thus no windfall to Mr. Cassandro. The return of the deposit
    is a matter between Mr. Glass and the City.

(3)

Double-Counting of Rent Arrears

[59]

Mr.
    Glass third argument is that the trial judge double-counted the $3,090 in rent
    arrears. He submits that the trial judge both awarded Mr. Cassandro $3,090 in
    damages for rent arrears and applied this same sum as a discount against Mr. Glass
    damages for the value of the seized assets.

[60]

I
    accept this argument. The trial judges reasons show that he misunderstood the
    law of distraint and the principle that a party can either take distress or
    terminate the lease, but not both. The trial judge found that Mr. Cassandro
    had terminated the lease as of January 31, 2014. Yet the trial judge still
    found that Mr. Cassandro was entitled to take distraint for the $3,090 of rent
    and merely characterized the distraint as excessive. In fact, the distraint
    was not merely excessive, but wholly unlawful. It is settled law that distraint
    is unlawful when the landlord terminates the lease at the same time the
    landlord attempts to take distress. If the landlord terminates the lease, the
    landlord loses the entitlement to take distress, including the ability to take
    distress for rent arrears: see
Pita Royale
, at para. 5;
Country
    Kitchen Ltd. v. Wabush Enterprises Ltd.
(1981), 35 Nfld. & P.E.I.R. 391
    (Nfld. C.A.), at para. 10. As Mr. Cassandro had no right to take distress to
    begin with, he is not entitled to credit the $3,090 of rent arrears against the
    chattels seized.

CORRECTION OF NUMERICAL DISCREPANCY

[61]

In
    addition, I would revise the damages the trial judge awarded to Mr. Glass for the
    seized assets from $161,900 to $167,390 to correct a numerical discrepancy. The
    trial judge initially referred to the value of the seized assets as $166,190
    but later used the $161,900 figure when awarding damages. Neither of these
    figures is correct. In fact, the valuator, whose evidence the trial judge
    accepted, appraised the value of the assets at $167,390.

DISPOSITION

[62]

Accordingly,
    I would allow in part both the appeal and the cross-appeal. On the appeal, I
    would set aside the trial judges award to Mr. Glass of $100,000 in damages for
    lost income and order a new trial on this issue. I would otherwise dismiss the
    appeal. On the cross-appeal, I would strike out the trial judges finding that
    Mr. Cassandro was entitled to credit the rent arrears against the damages he owes
    Mr. Glass for the seized assets. I would thus strike out the trial judges
    deduction of the $3,090 in rent arrears from the $161,900 in damages that he
    awarded for illegal distress. I would otherwise dismiss the cross-appeal. Finally,
    I would correct the numerical discrepancy and revise the damages the trial
    judge awarded to Mr. Glass for the seized assets from $161,900 to $167,390. The
    effect of my ruling is to reduce Mr. Glass damages to $167,390, pending any
    additional damages that may be awarded at the new trial on damages for lost
    income. The result is that Mr. Glass shall have judgment against Mr. Cassandro
    after set-off in the amount of $15,351.

[63]

I
    would thus modify the trial judges order as follows:

·

Para. 2: Strike out $258,810 in the damages Mr. Cassandro owes to
    Mr. Glass and substitute $167,390;

·

Para. 3: Strike out $106,771 in the judgment Mr. Glass has
    against Mr. Cassandro following set-off and substitute $15,351.

[64]

I
    would also insert two additional paragraphs in the order following para. 3. The
    first additional paragraph will order that title to the seized chattels be
    vested in Mr. Cassandro. This gives effect to the trial judges ruling, at
    para. 101 of his reasons, that the seized chattels are [Mr. Cassandros] to
    dispose of. The second additional paragraph will order a new trial before a
    different judge to determine the damages, if any, due to Mr. Glass by Mr.
    Cassandro for loss of income resulting from Mr. Cassandros seizure of Mr. Glass
    chattels. This paragraph will also state that the costs of this new trial are
    reserved to the judge hearing it.

[65]

As
    success is split, I would order no costs.

Released: M.T. August 13, 2019

M. Tulloch J.A.

I agree. J.C.
    MacPherson J.A.

I agree. Harvison
    Young J.A.

[i]
The regulation is
Nickel District Conservation Authority: Regulation of
    Development, Interference with Wetlands and Alterations to Shorelines and
    Watercourses
, O. Reg. 156/06.


COURT OF APPEAL FOR ONTARIO

CITATION: Giscombe (Re), 2019 ONCA 675

DATE: 20190826

DOCKET: C66453

Watt, Pepall and Huscroft JJ.A.

IN THE MATTER OF:  JAMEEL GISCOMBE

AN APPEAL UNDER PART XX.1 OF THE
CODE

Joanne Weiss, for the appellant

Kendra Naidoo, for the Person in Charge
    of the Centre for Addiction and Mental Health

Catherine Weiler, for the Crown

Heard: August 23, 2019

On appeal against the disposition of the
    Ontario Review Board dated, December 27, 2018.

APPEAL BOOK ENDORSEMENT

[1]

The appellant appeals from the December 27, 2018
    disposition of the Board, pursuant to which he was detained on a forensic unit
    at the Centre for Addiction and Mental Health (CAMH), with privileges up to and
    including indirectly supervised hospital and grounds privileges and entry into
    the community of Toronto accompanied by staff.

[2]

The appellant asserts that the Board departed
    from a joint submission of the parties in rejecting his request for community
    privileges accompanied by an approved person, and denied him procedural
    fairness in doing so.

[3]

We disagree.

[4]

The short answer to the appellants submission
    is that no joint submission was made.

[5]

The Boards decision requiring staff
    accompaniment, and rejecting a community living option, is amply supported by
    the evidence of the appellants history of violence, hallucinations, and
    refusal to take oral medication, in addition to the opinion of Dr. Jones, the
    appellants treating psychiatrist, who testified that the appellant is simply
    not ready for community living.

[6]

The Boards decision is reasonable and there is
    no basis for this court to interfere.

[7]

The appeal is dismissed.


COURT OF APPEAL FOR ONTARIO

CITATION: Huachangda Canada Holdings Inc. v. Solcz Group
    Inc.,

2019 ONCA 649

DATE: 20190808

DOCKET: C66420

Hoy A.C.J.O.,
    Trotter and Jamal JJ.A.

BETWEEN

Huachangda
    Canada Holdings Inc.
,
Winvalco Limited,

Valiant Holdings GmbH
and
TMS Turnkey Manufacturing Solutions GmbH

Plaintiffs (
Respondents
)

and

Solcz Group Inc.

Defendant (
Appellant
)

and

Solcz Group Inc.

Plaintiff by Counterclaim (Appellant)

and

Huachangda Canada
    Holdings Inc., Shanghai Xianxing Intelligent Technology LLP, and Tony Sauro

Defendants by Counterclaim (Respondents)

Alan Merskey and Stephen Taylor, for the appellant

David Foulds and Wendy Sun, for the respondents

Heard: July 19, 2019

On appeal from the order of Justice Michael A. Penny of
    the Superior Court of Justice, dated December 10, 2018.

REASONS FOR
    DECISION

Introduction

[1]

May a defendant plead in a statement of defence that the plaintiff
    has an ulterior motive in bringing an action, if the plaintiffs motive is not
    otherwise an element of any cause of action or defence? That is the issue
    raised in this appeal.

[2]

The motion judge struck out,
    without leave to amend, two paragraphs in the appellants statement of defence because
    they pleaded that the respondents ulterior motive in bringing the action was to
    seek an adjustment of the purchase price under a share purchase agreement, rather
    than to seek genuine damages for genuine wrongs. The motion judge found that the
    paragraphs were irrelevant to the causes of action pleaded and therefore
    frivolous and vexatious under r. 25.11(b) of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194.

The appellant now appeals to this court.

[3]

We agree with the motion judges determination.
    Generally, allegations regarding a
plaintiffs personal reasons or
    motives in bringing an action, however improper, do not in themselves provide a
    defence to the action and are therefore irrelevant. A court will not inquire
    into a litigants private motives in bringing an action. However, a plea of
    ulterior motive in bringing an action may be permitted where the plea is an
    essential part of a cause of action or defence, or where it is otherwise
    relevant, such as where it bears on a claim of abuse of process.

[4]

In this case, the respondents alleged ulterior motive was not an
    essential part of any cause of action or defence, nor was it otherwise relevant.
    As such, the plea was properly struck out under r. 25.11(b).

The pleadings

[5]

The respondents assert claims for alleged breaches of representations
    and warranties and fraudulent conduct arising out of a share purchase agreement.

[6]

The appellant, Solcz Group Inc. (SGI), an auto parts manufacturer, was
    the vendor. The respondent, Huachangda Canada Holdings Inc. (HCH), was the
    purchaser.

[7]

The respondents amended statement of claim pleads that under the share
    purchase agreement (SPA), HCH acquired a European auto parts manufacturing
    business from SGI, by purchasing all the issued and outstanding shares of SGI subsidiaries
    Valiant Corporation and the respondent Winvalco Limited. HCH thereby became the
    indirect owner of several Valiant subsidiaries, including the respondents
    Valiant Holdings GmbH and TMS Turnkey Manufacturing Solutions GmbH. The total value
    of the transaction, which closed in March 2017, was $410,000,000.

[8]

The amended claim pleads that SGI breached numerous representations and
    warranties in the SPA by failing to disclose or by concealing serious issues
    with significant contracts that TMS had with Porsche and Volvo, thereby causing
    substantial losses to Valiant. As a result, HCH claims that it overpaid SGI for
    the shares of Valiant and Winvalco and seeks a purchase price adjustment. It
    also pleads that the losses suffered caused a liquidity crisis at TMS, which
    placed TMS on the brink of insolvency and thereby injured HCH and Valiant.

[9]

The appellants statement of defence denies these allegations and claims
    that any losses incurred by the respondents were caused by their own financial mismanagement
    and by the actions of HCHs principal shareholder, Huachangda Intelligent
    Equipment Group Inc. (HCD), which is not a party to the action.

[10]

The
    statement of defence also pleads that the respondents motive in suing the
    appellant was not to recoup genuine damages for genuine wrongs, but rather to
    obtain an after-the-fact reduction in the purchase price because of HCHs
    financial and liquidity issues. Paragraphs 8 and 37 of the statement of
    defence, which are the subject of the present appeal, read as follows:

8        Subsequently, the Plaintiffs commenced these
    proceedings raising allegations with respect to the very same disclosure and
    due diligence process under the SPA.
Ultimately, the claims advanced by the
    Plaintiffs in this proceeding are not an effort to recoup genuine damages for
    genuine wrongs, but rather an effort to seek an after the fact reduction to the
    agreed upon purchase price established under the SPA for the benefit of itself
    and its direct and indirect shareholders, and in response to financial and
    liquidity issues recently and currently experienced by HCH and those
    shareholders
.

[]

37
HCHs recovery efforts
    resulted, in part, from direct or indirect pressure placed on HCH to recoup
    portions of the Purchase Price in order to help address financial difficulties
    caused by extensive management, regulatory, financial, and liquidity issues
    experienced by HCD in or around this time. Among other things, HCD was involved
    in disputes with its former Chairman of the Board, President, and controlling
    shareholder, Mr. Hua Yan, including with respect to alleged debts in the
    approximate amount of CNY 3,000,000,000 and Mr. Yans ultimate resignation, and
    faced multi-month suspensions in the trading of its stocks in or around both
    April 2017 and October 2017
. [Emphasis added.]

The motion judges decision

[11]

The
    motion judge struck out the underlined portions of the above two paragraphs, without
    leave to amend. He found the majority of paragraph 8 to be improper because
    [i]t pleads ulterior motive, which is irrelevant to the causes of action
    asserted in the statement of claim; it was therefore frivolous and vexatious
    within the meaning of rule 25.11: para. 13. He similarly read paragraph 37 as
    a pleading of motive underlying the plaintiffs issuance of the statement of
    claim and not, on its face, a pleading that relates to causation of the
    damages or the alleged liquidity problems suffered by Valiant and Turnkey:
    para. 16.

[12]

However,
    the motion judge refused to strike out other paragraphs from the statement of
    defence, finding that they addressed the issue of causation  that any alleged
    losses suffered by the respondents, and the alleged liquidity crisis, were
    caused by the respondents mismanagement and the financial and other demands of
    the respondents shareholder: para. 15.

[13]

Finally,
    the motion judge struck out a counterclaim against the respondent Mr. Tony
    Sauro, the global chief financial officer of the Valiant group of companies and
    several of its subsidiaries, on the basis that he was not a necessary and
    proper party to the counterclaim: paras. 18-26. This ruling is not challenged
    on appeal.

Issues on appeal

[14]

The
    appellant raises two issues on appeal:

1.

Did the
    motion err in striking out paragraphs 8 and 37 of the statement of defence as
    improper pleas of ulterior motive?

2.

Did
    the motion judge err in refusing leave to amend?

Analysis

1.

Did
    the motion judge err in striking out paragraphs 8 and 37 of the statement of
    defence as improper pleas of ulterior motive?

[15]

Rule
    25.11(b) provides in relevant part that the court may strike out or expunge all
    or part of a pleading, with or without leave to amend, on the ground that the
    pleading is scandalous, frivolous or vexatious. A fact that is relevant to a
    cause of action cannot be scandalous, frivolous or vexatious. On the other
    hand, a pleading that raises irrelevant or superfluous allegations that cannot
    affect the outcome of an action is scandalous, frivolous or vexatious, and
    should be struck out: see
F.(M.)
v.
Dr. Sutherland
(2000), 188
    D.L.R. (4th) 296 (Ont. C.A.), at para. 67;
Carney Timber Company, Inc
.
    v.
Pabedinskas
, 2008 CanLII 63163 (Ont. S.C.), at para. 16. The courts
    will not allow any fact to be alleged which is wholly immaterial and can have
    no effect in the result:
Duryea v. Kaufman
(1910), 21 O.L.R. 161
    (H.C.), at p. 168, cited in
F.(M.)
v.
Dr. Sutherland
, at para.
    71.

[16]

The
    appellant asserts that the motion judge erred in applying these principles to
    strike out paragraphs 8 and 37 under r. 25.11(b), for three reasons.

[17]

First,
    the appellant faults the motion judge for citing no authority and claims that [t]here
    is no general rule that any pleading touching on motive is necessarily and
    irredeemably bad.

[18]

We
    do not accept the appellants submission. We do not read the motion judge as
    finding that
any
plea of ulterior motive is
necessarily
improper. Rather, he found that the plea of ulterior motive in this case is
    improper because it is irrelevant to the causes of action asserted in the
    statement of claim: para. 13.

[19]

The
    motion judges decision is amply supported by authority.

[20]

A
    plaintiffs motive in bringing an action, however allegedly improper, is not in
    itself a defence to the action:
E.O.E. Group Inc. v. Konica Minolta
    Business Solutions (Canada) Ltd.
, 2012 ONSC 197 (Master), at para. 7. A
    pleading with respect to the plaintiffs motive in bringing an action is
    generally improper
:

BMO Nesbitt Burns Inc. v. Shortt
, 2013 ONSC 1873
    (Master), at para. 18. As noted in
Davis v. City of Toronto
,
    1942 CarswellOnt 170 (H.C.), at para. 1
, [a]
litigants private motives will not be enquired into.

[21]

However,
    a plea of ulterior motive, improper intent, or malice in bringing an action may
    be permitted where the plea is an essential part of a cause of action or
    defence: see e.g.,
Refco Futures (Canada) Ltd. v. Keuroghlian
, [2002]
    O.J. No. 2981 (S.C.), at para. 38;
Welch, Anderson & Company v. Roberts
,
    [1945] O.J. No. 358 (H.C.), at para. 2. Such a pleading may also be permitted
    if it is otherwise relevant, such as if it bears on a claim of abuse of process:
    see e.g.,
Marineland
    of Canada v. Niagara Action for Animals
, 2004 CanLII 30880 (Ont. S.C.), at para.
    29
.

[22]

Here,
    the motion judge applied these principles correctly. He found that paragraphs 8
    and 37 of the defence plead the respondents improper motive in bringing the
    action. As noted, those paragraphs allege that the respondents were not suing
    in an effort to recoup genuine damages for genuine wrongs, but rather to
    obtain an after-the-fact reduction in the purchase price in response to their
    own financial and liquidity issues. But whether this allegation is true has no
    bearing on the outcome of this action: either the respondents have a valid claim
    under the share purchase agreement, or they do not. The improper motive alleged
    is therefore irrelevant, such that those paragraphs were properly struck out
    under r. 25.11(b).

[23]

Second,
    the appellant asserts that the motion judge should have refused to strike out
    paragraphs 8 and 37 because they are relevant to the respondents credibility regarding
    a material fact, namely, the appellants claim that the respondents suffered
    from buyers remorse.

[24]

We
    do not accept the appellants submission. Credibility is an issue in almost
    every action. If improper motive can be said to be relevant to credibility writ
    large, without being an element of a cause of action or defence, or without
    otherwise being relevant to an issue in the action, then an ulterior motive would
    be relevant and could be pleaded in almost every case. That would be
    inconsistent with the authorities precluding, as a general matter, a plea of
    improper motive in bringing an action.

[25]

Moreover,
    buyers remorse is a factual conclusion that the court may reach after
    hearing all the evidence. It is not itself part of a cause of action or
    defence.

[26]

Third,
    the appellant asserts that paragraph 37 is relevant to the issue of causation:
    whether the respondents alleged losses were caused by its own mismanagement
    and the internal financial difficulties of HCH and its shareholder, HCD, rather
    than by any misrepresentations under the share purchase agreement.

[27]

We
    do not accept the appellants submission. On its face, paragraph 37 does not address
    the cause of the respondents alleged losses, but rather addresses the
    respondents alleged ulterior motive in bringing this action. As we have
    already found, that is an irrelevant plea. As such, it was properly struck out.

2.

Did the
    motion judge err in refusing leave to amend?

[28]

Lastly,
    the appellant asserts that the motion judge should have granted leave to amend
    paragraphs 8 and 37. The appellant says that leave to amend should be denied
    only in the clearest of cases, and that the motion judge erred in refusing leave
    to amend without explanation. The appellant cites this courts decision in
Tran
    v. University of Western Ontario
, 2015 ONCA 295, at paras. 26-27, to
    contend that a party should be allowed to remedy its deficient pleadings,
    particularly where there have been no prior amendments.

[29]

We
    do not accept the appellants submission.

[30]

A
    motion judges decision as to whether to grant leave to amend is discretionary
    and entitled to deference on appeal, absent palpable and overriding error of
    fact or error of law:
Conway v. Law Society of Upper Canada
, 2016 ONCA
    72, 395 D.L.R. (4th) 100, at para. 16. An appellate court should interfere only
    if the motion judge erred in principle or acted unreasonably in the exercise of
    their discretion:
Grigonis v. Toronto Boardsailing Club
, 2010 ONCA
    651, at para. 5.

[31]

Here,
    the motion judge refused leave to amend because he concluded that the impugned
    paragraphs of the appellants defence were scandalous, frivolous or vexatious
    and disclosed no reasonable defence. In such circumstances, a court is not
    required to grant leave to amend:
1588444 Ontario Ltd. v. State Farm Fire
    and Casualty Company
, 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25.

[32]

Nor
    does this courts decision in
Tran
assist the appellant. In
Tran
,
    this court concluded that a statement of claim in which claims had been struck
    out did plead certain facts capable of supporting those claims. Because no
    prior amendments had been made, the court found that it was appropriate to
    grant leave to amend. Here, by contrast, the appellants plea of ulterior
    motive is irrelevant and improper, such that it cannot be cured by amendment.

[33]

As
    such, the motion judge did not err in law in refusing leave to amend.

Disposition

[34]

For
    these reasons, the appeal is dismissed, with costs to the respondents in the
    amount of $15,000, inclusive of HST and disbursements.

Alexandra Hoy A.C.J.O.

G.T. Trotter J.A.

M.
    Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hunt v. Peel Mutual Insurance Company, 2019 ONCA
    656

DATE: 20190814

DOCKET: C66454

Paciocco, Harvison Young and Zarnett JJ.A.

BETWEEN

Bradley Clayton Hunt

Plaintiff
(Appellant)

and

Peel Mutual Insurance Company

Defendant
(Respondent)

Richard Campbell, for the appellant

M. Edward Key, for the respondent

Heard and released orally: August 12, 2019

On appeal from the order of Justice Patrick J. Flynn of
    the Superior Court of Justice, dated January 7, 2019.

REASONS FOR DECISION

[1]

The appellant, Bradley Hunts daughter, Amealia, a minor, is suing him
    for negligent parenting. She alleges that he was negligent in permitting her to
    be transported in the motor vehicle of an impaired driver, a vehicle in which
    Mr. Hunt was also an occupant.

[2]

The driver alleged to have been impaired was Mr. Hunts girlfriend,
    Tammy-Lynn Dingman, who held an automobile insurance policy at the time with
    the respondent, Peel Mutual Insurance Company [Peel Mutual]. Mr. Hunt moved for
    a declaration that Peel Mutual has a duty to defend him against his daughters
    lawsuit, as he is an insured person within the meaning of
Insurance Act
,
    R.S.O. 1990, c.18, s. 239, or at the very least, there is a very real
    possibility that he is insured, triggering the duty to defend.

[3]

The motion judge denied Mr. Hunts motion. Mr. Hunt appeals that
    decision, claiming that the motion judge misinterpreted the plain and ordinary
    meaning of s. 239, by construing s. 239 narrowly against coverage, and by
    applying an improper causation test.

[4]

We would dismiss Mr. Hunts appeal. Peel Mutual is not required to
    defend Mr. Hunt against his daughters claim.

[5]

Section 239(1), the applicable section, provides in relevant part, as
    follows:

239
(1) Subject to
    section 240,
every
contract
    evidenced by an
owners policy insures
the person named therein, and
every
other person who with the named persons consent drives, or is
an occupant of, an automobile owned by the insured
named in the contract and within the description or definition thereof
    in the contract,
against liability imposed by law
upon the insured named in the contract or that other person
for loss or damage
,

(a)
arising
from the ownership or directly or indirectly
from the use or

operation of any
    such automobile
; and

(b)
    resulting from bodily injury to or the death of any person and damage to
    property.  R.S.O. 1990, c. I.8, s. 239 (1).

[6]

The plain and ordinary meaning of section 239(1)(a) precludes recovery. It
    makes clear that to be covered, an occupants liability must be for loss or
    damage arising from the use or operation of the automobile. Even though Amealias
    injuries arose from the use of a vehicle, Mr. Hunts liability for her loss or
    damage does not. His liability is alleged to arise from negligent parenting,
    not from anything he did or did not do as an occupant connected to the use or
    operation of the automobile. When the motion judge spoke of the absence of a
    causal connection this is what he was alluding to  the statutory requirement
    that the occupants liability must be caused by or connected to the use or
    operation of the automobile.

[7]

As the motion judge pointed out, on Mr. Hunts theory his liability for
    negligent parenting arising from a decision to put his daughter in an
    automobile operated by an impaired driver would be covered if he also got into
    the car, but not if he did not. The plain language of the provision prevents
    the absurdity of coverage linked to his fortuitous and immaterial occupancy. Nor
    can the plain language of section 239 be overcome by the fact that the
Insurance
    Act
is consumer protection legislation, or that policies should be
    construed in favour of coverage.

[8]

The appeal is dismissed. Costs in the appeal to the respondent are
    ordered in the amount of $2,500, inclusive of disbursements and all applicable
    taxes.

David
    M. Paciocco J.A.
Harvison Young J.A.

B. Zarnett J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Jung v. Talon International Inc., 2019 ONCA 644

DATE: 20190807

DOCKET: C66092 & C66093

Juriansz, van Rensburg and Paciocco JJ.A.

BETWEEN

Henry Jung

Plaintiff/Defendant by counterclaim

(Respondent)

and

Talon International Inc.

Defendant/Plaintiff by counterclaim

(Appellant)

AND BETWEEN

Henry Jung and Long Ocean Holding Ltd.

Plaintiffs/Defendants by counterclaim

(Respondents)

and

Talon International Inc.

Defendant/Plaintiff by counterclaim

(Appellant)

Symon Zucker and Nancy J. Tourgis, for the appellant

Terry Corsianos, for the respondents

Heard: June 19, 2019

On appeal from the judgments of Justice Bernadette
    Dietrich of the Superior Court of Justice, dated October 5, 2018, with reasons
    reported at 2018 ONSC 4245.

Juriansz J.A.:

[1]

Talon International Inc. (Talon) appeals from two summary
    judgments. The first judgment ordered that the respondents, Henry Jung and Long
    Ocean Holding Inc., were entitled to the return of deposits paid for two
    commercial condominium units. The second judgment ordered that Mr. Jung was
    entitled to the return of the deposit paid for the purchase of a residential
    condominium unit in the same development. The two summary judgment motions were
    heard simultaneously on the consent of the parties. On appeal, I deal with them
    separately as each raise somewhat different issues.

A.

The Commercial Units

(1)

Facts

[2]

In the summer of 2005, the respondents and Talon entered into two
    agreements of purchase and sale (the agreements) for two commercial
    condominium units in the former Trump International Hotel. The deals were set
    to close on March 20, 2009. Following delays, the occupancy closing dates were
    scheduled for February 2012.

[3]

In May 2012, Talon provided the respondents with a revised
    disclosure statement for the commercial units. The disclosure statement indicated,
    among other things, the Trump International Hotel would have only 60 stories
    instead of 70, the commercial units would not have a kitchen, and the Trump International
    Hotel would not be connected to the PATH (a network of underground walkways in
    downtown Toronto).

[4]

The respondents considered these to be material changes and
    delivered notices of rescission on June 1, 2012 under s. 74(7) of the
Condominium
    Act
, 1998
, S.O. 1998, c. 19 (the Act"). In response, Talon
    brought an application under s. 74(8) to invalidate the notices of rescission. MacKinnon
    J. found the changes were not material changes as defined in the Act and
    declared the notices of rescission void:
Talon International Inc. v. Jung
,
    2013 ONSC 2466. The respondents appeal to this court was dismissed: 2014 ONCA
    137. Their application to the Supreme Court of Canada for leave to appeal was
    dismissed on July 24, 2014: [2014] S.C.C.A. No. 179.

[5]

After that, Talon affirmed its intention to close the purchases
    and the parties agreed to a unit transfer date of August 29, 2014. The
    respondents subsequently objected to the statements of adjustments provided by
    Talon. Among other things, they objected to the payment of occupancy fees and
    the calculation of interest owing. In addition, they sought abatements to the
    purchase price for the changes in the development. For example, they claimed
    abatements because the units did not have kitchens, as the agreements provided
    they would. When the statements of adjustments were not amended to their
    satisfaction, the respondents sued for specific performance with appropriate revisions
    to the statements of adjustments, and abatements to the purchase price for each
    commercial unit. In the alternative, the respondents sued for the return of the
    deposits. Talon counterclaimed for the forfeiture of the deposits, alleging
    that the respondents had breached the agreements by delivering the notices of
    rescission and failing to close the transaction.

[6]

The action and counterclaim were stayed on November 1, 2016, when
    a receiver was appointed after Talon had run into financial difficulty. On
    March 30, 2017, the Superior Court issued an approval and vesting order, transferring
    units to Talons main creditor free and clear of any security interest,
    excluded contract, adverse interest, and any right or claim of specific
    performance. The transfer included the commercial units that Talon had agreed
    to sell to the respondents.

[7]

Naturally, since Talon no longer owned the commercial units, when
    the receiver was discharged and the stay of the respondents action expired,
    the respondents could no longer obtain specific performance. They brought a
    motion for summary judgment on their alternative claim for the return of their
    deposits plus interest.

(2)

Decision of the Motion Judge

[8]

At the outset of the hearing of the motion, the motion judge
    granted the respondents leave to amend their statement of claim to make specific
    reference to s. 19 of the agreements. She determined the amendment did not
    result in any prejudice to Talon. Section 19 provided:

Termination without Default

19. In the event this Agreement is terminated through
no
    fault of the Purchaser
, all deposit monies paid by the Purchaser towards
    the Purchase Price, together with any interest required by law to be paid,
    shall be returned to the Purchaser; [Emphasis added.]

[9]

The motion judge found that summary judgment was appropriate, as
    she was able to make the necessary findings of fact and apply the law to the
    facts, and there were no genuine issues requiring a trial.

[10]

First, the motion judge referred to Talons argument in the
    motion materials, but not advanced at the hearing of the motion, that the
    respondents delivery of the notices of rescission constituted anticipatory
    breaches of the agreements. She said this argument could not succeed, as the
    respondents were simply attempting to exercise their statutory rights pursuant
    to the [Act]. In any event, after the rescission litigation, Talon did not
    elect to terminate the agreements, but instead affirmed its intention to
    complete the transactions.

[11]

Next, the motion judge found that the respondents were entitled
    to refuse to close the transactions on August 29, 2014. She described Talons
    statements of adjustments as aggressive and overreaching. Talon included
    occupancy fees without a corresponding credit for rental income, and it
    calculated interest at a rate and for a period that it declined to
    substantiate. She found Talons defence of its statements of adjustments
    cannot be supported, and the [respondents] acted in good faith in their
    attempts to negotiate fair and reasonable statements of adjustments with a view
    to closing the transactions on a timely basis. She concluded the respondents had
    no obligation to close in the face of erroneous statements of adjustments and
    in refusing to close, were merely exercising their right to insist on fair and
    appropriate statements of adjustments.

[12]

As the respondents had not breached the agreements, the
    agreements remained in force when the litigation was stayed by the appointment
    of a receiver. The motion judge reasoned that
the receiver had repudiated the agreements when it sold the units
    to a third party. She said this sale evinced the receivers intention not to
    be bound by the contracts as it rendered Talon unable to tender the units and
    close the agreements. She concluded the agreements had been terminated through
    no fault of the purchasers, and therefore s. 19 mandated the deposits should
    be returned to the respondents with interest. She granted summary judgment on
    that basis.

[13]

In her reasons, the motion judge did not refer to the
    respondents demand for abatements of the purchase price of each unit.

(3)

Issues

[14]

On appeal, Talon alleges the motion judge erred in three respects
    regarding the commercial units:

1.

The amendment of
    the statement of claim should not have been granted;

2.

The notices of
    rescission were not delivered within the required time, or alternatively, the
    notices of rescission were anticipatory breaches of the agreements; and

3.

The respondents
    breached the agreements by failing to close, and in any event, the motion judge
    should have ordered a trial of issues to determine: the validity of the
    statements of adjustments, and whether the appellants were entitled to
    abatements of the purchase price.

(4)

Analysis

(a)

Amendment of the Statement of Claim

[15]

At the hearing of the appeal, Talon did not advance, but did not
    abandon, its written argument that the motion judge erred by allowing the
    respondents to amend their statement of claim to make specific reference to the
    contractual term on which they relied to recover their deposits.

[16]

This argument has no merit given the motion judges finding Talon
    would suffer no prejudice by the amendment: see r. 26 of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194. As she noted, the relief sought in the
    action included the recovery of the deposits paid with interest. The amendment
    merely added a reference to a section of the agreement that provided the
    deposit would be returned with interest should the agreement of purchase and
    sale be terminated through no fault of the purchaser.

(b)

Notices of Rescission

[17]

In oral argument Talon advanced, but did not press, arguments that
the respondents notices of rescission
under s. 74(7)
    of the Act were not delivered within the required time, and if in time, the
    notices of rescission constituted anticipatory breaches of the agreements.

[18]

These arguments also have no merit. As the motion judge found, Talon
    affirmed its intention to complete the transactions and set August 29, 2014 as
    the closing date. All issues related to the notices of rescission became
    irrelevant when Talon affirmed it would close the agreements, thereby waiving
    any alleged anticipatory breaches:
Ali v. O-Two Medical Technologies Inc
.
,
    2013 ONCA 733, 118 O.R. (3d) 321, at para. 24.

(c)

The Respondents Failure to Close

[19]

Talons primary position is that the respondents breached the
    agreements by failing to close the transactions on August 29, 2014. Talon
    claims this breach resulted in the termination of the agreements, and consequently
    the agreements were no longer binding on Talon when the receiver subsequently conveyed
    the units to the third party. In Talons view, by then the deposits had already
    been forfeited. The motion judge rejected this argument on the basis that the
    respondents had no obligation to close in the face of Talons erroneous
    statements of adjustments.

[20]

Talon argues the motion judge should have ordered a trial of the
    issues to determine the validity of the statements of adjustments and the
    respondents claim for abatements. Talon points out that the motion judge made
    no findings with respect to the respondents claim for abatements and argues,
    at the very least, that any entitlement to abatements was a genuine issue for
    trial.

[21]

These arguments cannot succeed. Talon offers no basis on which to
    disturb the motion judges finding that the statements of adjustments were
    aggressive and overreaching. There was ample support in the record for the motion
    judges finding that the statements of adjustments were erroneous. No trial of
    issues was necessary to determine this. There is no basis to interfere with the
    motion judges conclusion that the erroneous statements entitled the
    respondents to refuse to close the transactions. As the motion judge noted, the
    respondents action for specific performance (commenced on the scheduled
    closing date) was consistent with their willingness to close the transactions on
    a proper basis. The failure by the respondents to close the transactions on
    August 29, 2014 did not terminate the agreements.

[22]

As a result, the motion judge did not have to deal with the
    abatements issue. Her finding that Talons statements of adjustments were
    improper gave the respondents sufficient grounds to refuse to close. Whether
    the respondents would have been entitled to close with abatements, and the
    amount of any abatements, could not be genuine issues for trial because in the circumstances
    there was no issue of the agreements closing at all.

[23]

I am not persuaded by Talons argument that the motion judge was
    obliged to decide, or order a trial of issue to determine, what the results of
    the moot issues might have been. The act of the receiver conveying the units to
    a third party made it impossible to close the transactions on any basis and
    made the abatements issue moot.

(5)

Conclusion

[24]

The motion judges finding that the agreements were terminated as
    a consequence of the receivership, and not through any fault of the respondents,
    was amply supported by the record. There is no basis for interfering with that
    finding. I would therefore dismiss the appeal from her judgment ordering the
    return of the deposits with interest for the commercial units.

B.

The Residential Unit

(1)

Facts

[25]

Mr. Jung purchased the residential unit by agreement of purchase
    and sale (the agreement) dated November 20, 2006, and took interim occupancy
    in July 2012.

[26]

On December 20, 2012, Talon set a unit transfer date of February
    7, 2013. On February 5, 2013, Mr. Jung claimed the agreement was not binding
    because Talon had failed to deliver a current disclosure statement. In the
    alternative, he provided a notice of rescission pursuant to s. 74(7) because
    there were material changes that Talon had failed to disclose. The material
    changes alleged were the same ones he had raised in regard to the commercial
    units, including the height of the building and the lack of connection to the
    PATH. Talon responded by bringing an application under s. 74(8) for a
    determination of whether the changes were material.

[27]

Mr. Jung then issued and served a statement of claim, alleging he
    was entitled to rescind the agreement and have his deposit returned because of
    the material changes. Mr. Jung did not claim specific performance in the residential
    unit action. Talon defended and counterclaimed, alleging that Mr. Jung breached
    the agreement and forfeited the deposit.

[28]

Essentially, this was the state of affairs when litigation was
    stayed by the appointment of the receiver on November 1, 2016. The receiver
    conveyed the residential unit to Talons main creditor, as he had the
    commercial units. When the stay of proceedings expired, Mr. Jung moved for
    summary judgment for the return of his deposit plus interest.

(2)

The Decision of the Motion Judge

[29]

The motion judge
    explained that
[o]n February 5, 2013 Mr. Jung sent Talon a notice of
    rescission demanding a current disclosure statement and seeking the return of
    his deposit based on material changes in the disclosure. She found that Talon
    did not deliver a current disclosure statement to Mr. Jung, but rather
    responded by initiating an application seeking a declaration that the notice
    of rescission was void. She reasoned that:

Mr. Jung had no obligation to close the sale of the residential
    unit while he was asserting his right of rescission under the [Act]. The
    assertion of a right of rescission does not amount to a breach of contract.

[30]

The motion judge found that Mr. Jungs position that Talon had
    failed to provide a current disclosure statement as required by the Act was reasonable
    and taken in good faith. She said:

He could not have known with certainty the extent of the
    material change because he had not been provided with a current disclosure
    statement despite his request for one and his legal entitlement to it. Based on
    the disclosure given to him regarding the commercial units, he would have known
    that there were some changes in the disclosure (e.g., the change in the height
    of the Trump Tower and the fact it would not be connected to the PATH). He
    would not have known whether there were additional changes in the disclosure
    relating to the residential unit that could be material.

[31]

She noted that at the time Mr. Jung took this position and
    delivered the notice of rescission, his appeals from MacKinnon J.s decision (which
    found that the changes were not material to the commercial unit transactions)
    had not yet been exhausted.

[32]

In the motion judges view, the agreement continued to exist
    while the litigation remained unresolved. The agreement was then terminated
    through no fault of Mr. Jung. She found:

The agreement for purchase and sale of the residential unit was
    repudiated when the receiver sold the unit to a third-party creditor. Mr. Jung
    accepted the repudiation when he moved for partial summary judgment of his
    claim and sought the return of the deposit. The agreement was thereby
    terminated.

[33]

The motion judge granted summary judgment. She did so on the
    basis of s. 20 of the agreement which, like s. 19 in the commercial unit
    agreements, stated the deposit would be returned with interest should the
    agreement be terminated through no fault of the [p]urchaser.

(3)

Issues

[34]

On appeal, Talon advances a number of grounds on which it submits
    the appeal should be allowed, some of which are identical to those raised in
    the appeal of the commercial units:

1.

The amendment of the statement of claim should not have been granted;

2.

The notice of rescission was not delivered within the required time, or
    alternatively, the notice of rescission was an anticipatory breach of the
    agreement;

3.

Mr. Jungs claim was
res judicata
, as MacKinnon J. already
    determined the changes at issue were not material; and

4.

Mr. Jung breached the agreement by failing to close and commencing an
    action in which he did not seek specific performance.

[35]

Before explaining why none of Talons arguments have merit, I
    dispose of a new argument Mr. Jung advanced on appeal: namely, the agreement
    was never binding on him as provided by s. 72(2) of the Act, because Talon
    never delivered a copy of the current disclosure statement.

(4)

Analysis

(a)

Current Disclosure Statement

[36]

Mr. Jung advanced a new argument on appeal based on the motion
    judges finding that Talon failed to deliver a current disclosure statement
    relating to the residential unit. The legal consequence of this factual
    finding, he submits, is that that the agreement was never binding on him.
    Section 72(2) provides:

An agreement of purchase and sale of a unit or a proposed unit
    entered into by a declarant is not binding on the purchaser until the declarant
    has delivered to the purchaser a copy of the
current disclosure statement
.
    [Emphasis added.]

[37]

I am not persuaded the matter is that simple. While the motion
    judge did indeed find Talon had not delivered a current disclosure statement,
    her finding when read in the full context of her reasons suggests she meant
    that Talon had not provided a revised disclosure statement under s. 74. Her
    analysis is consistent with the framework of s. 74, not s. 72. Section 74(1) requires
    the declarant to deliver to the purchaser a notice or revised disclosure
    statement clearly identifying and summarizing the changes that may be material
    changes. As the motion judge stated:

When Talon provided the
new
disclosure statement to Mr.
    Jung and his company for each of the commercial units, it did not provide Mr.
    Jung with a current disclosure statement relating to the residential unit. [Emphasis
    added.]

[38]

This sentence suggests the motion judge meant that Talon did not
    provide Mr. Jung with a new (i.e. the revised) disclosure statement for the
    residential unit at the time it provided one in regard to the commercial units.

[39]

It is telling that, Mr. Jung, in para. 16 of his affidavit, which
    he asserts is the evidentiary support for the motion judges finding, says
    Talon failed to provide a
new
disclosure statement in regards to the
    residential suite (emphasis added).

[40]

I am satisfied the motion judges finding Talon did not provide a
current disclosure statement meant that Talon did not provide a revised
    disclosure statement to advise the purchaser of what might be material changes
    as required by s. 74.

[41]

I do not accept that s. 72(2) rendered the agreement not binding
    on Mr. Jung.

(b)

Amendment of the Statement of Claim

[42]

For the reasons given in regard to the commercial units, the
    motion judge made no error in permitting Mr. Jung to amend his statement of
    claim to make specific reference to the contractual term that provided the
    deposit would be returned with interest should the agreement of purchase and
    sale be terminated through no fault of the purchaser.

(c)

Notice of Rescission and Repudiation

[43]

Before proceeding with the analysis of Talons argument that the
    notice of statutory rescission repudiated the agreement, it is useful to review
    the framework of s. 74, and its role in the Act.

[44]

It is well-established that an important purpose of the Act is
    consumer protection: see
Harvey v. Talon International Inc
.
,
    2017 ONCA 267, 137 O.R. (3d) 184, at para. 62. Section 74, in particular,
    provides a statutory scheme to protect the purchaser when there are material
    changes to a condominium development after the purchaser was first provided
    with a disclosure statement as required by s. 72. As noted, s. 74(1) requires
    the declarant to deliver to the purchaser a notice or revised disclosure
    statement clearly identifying and summarizing the changes. If the changes in
    the revised disclosure statement are material changes, or if there is a material
    change that the declarant does not disclose, s. 74(6) gives the purchaser the
    right to rescind the agreement by delivering a notice under s. 74(7). Either
    the purchaser under s. 74(5), or the declarant under s. 74(8), may make an
    application to the Superior Court for a determination whether the changes
    constitute material changes. Sections 74(9) and (10) require that the declarant
    refund the purchasers money with interest within ten days of receipt of the
    notice of rescission if no application has been made, or if an application has
    been made, within ten days of a determination that the changes are material.

[45]

The motion judge was correct to summarily reject Talons argument
    that Mr. Jungs notice of rescission under s. 74(7) constituted a repudiation
    of the contract. The effect of notice of rescission under s. 74(7) must be
    understood within the entire framework of s. 74 and its purpose of consumer
    protection. The framework: (1) places a duty on the declarant to disclose
    material changes to the information in the disclosure statement first presented
    to the purchaser, (2) provides a means of determining whether changes to the
    development are material within the meaning of the Act, and (3) entitles the
    purchaser to rescind the agreement if there are material changes. The notice of
    rescission under s. 74(7) is subject to the court confirming or invalidating
    the notice of rescission. The delivery of a notice of rescission is the
    exercise of a statutory right, not a contractual or equitable right.

[46]

In any event, the argument does not assist Talon. If the
    purchasers notice of rescission under s. 74(7) is regarded as a repudiation of
    the contract, then the declarants application to the court under s. 74(8) would
    be an affirmation of the contract. In its application under s. 74(8), Talon requested
    the court to find the notice of rescission was void.

(d)

Notice of Rescission and Timeliness

[47]

Talon submits that Mr. Jungs notice of rescission was not
    delivered within the statutorily required ten days. Talon says there are two
    bases for this finding.

[48]

First, Talon submits that in its counsels letter dated December
    20, 2012, in which it set a unit transfer date of February 7, 2013, it provided
    to Mr. Jungs counsel the information to access all of the closing documents.
    This, Talon, argues satisfied its obligation under s. 74(1) to provide a
    revised disclosure statement and started the running of the ten-day period for
    the purchaser to deliver a notice of rescission. Talon points out that Mr.
    Jungs notice of rescission was delivered on February 5, 2013, more than ten days
    after its December 20, 2012 letter.

[49]

This argument amounts to an attack on the motion judges finding
    that Talon did not provide to Mr. Jung a revised disclosure statement as
    required s. 74(1). The argument fails because providing information on how to
    access the closing documents does not satisfy s. 74(1)s requirement that
    revised disclosure be provided under this section.  T.A. Heeney R.S.J. explained
    in
Ram v. Talon International Inc
.,
2015 ONSC 5660, affd 2016
    ONCA 807, why disclosure under s. 74(1) must clearly and specifically bring
    home to the purchaser that s. 74 is being engaged. He said at para. 226:

Since the giving of a notice under this section triggers certain
    specified statutory rights on the part of the purchaser, to which attach
    certain specified time limits during which those rights must be exercised, it
    seems to me to be essential that the notice bring home to the purchaser that s.
    74 of the Act is thereby being engaged. Words such as this notice is being
    delivered to you pursuant to s. 74 of the [Act] would be necessary and
    sufficient to put the purchaser on notice that the time limit for exercising
    his or her rights under s. 74 has now begun to run.

[50]

There is no basis for revisiting the motion judges finding Talon
    failed to provide a revised disclosure statement. The ten-day period to
    deliver a notice of rescission did not begin running when Talon provided Mr.
    Jungs counsel the information to access all of the closing documents.

[51]

Second, Talon submits that Mr. Jung learned of all the material
    changes when he received the revised disclosure statement regarding the
    commercial units, and that he did not deliver the notice of rescission until
    well after ten days later.

[52]

This may be so, but s. 74(6) requires that the notice of
    rescission be delivered within 10 days
of the latest of
: (1) receipt
    of the revised disclosure statement if one is provided, (2) the date when the
    purchaser became aware of the material change, or (3) the date on which the
    Superior Court determines whether the change is a material change. Here,
    Talons application to the Superior Court to determine whether the changes were
    material has never been determined. Therefore, the notice of rescission cannot
    be out of time.

(e)

MacKinnon J.s Decision

[53]

Talon claims that the motion judge ought to have applied the
    principle of
res judicata
to Mr. Jungs claim. Talon points out the
    alleged material changes are in fact the same changes that MacKinnon J. found not
    to be material in the commercial unit transactions.

[54]

This argument also rests on a faulty premise. MacKinnon J.s
    decision turned on expert evidence that the changes did not affect the investment
    value of the commercial units, and there would be no reduction in the income
    the purchasers might have expected to receive from the commercial units. Quite
    different considerations would apply in determining whether a change is
    material to a residential unit. For example, whether a building has direct
    access to the PATH may be material to a person who is resident in the building
    throughout the winter.

[55]

Mr. Jungs claim that there were material changes entitling him
    to rescind the agreement is not barred by the principle of
res judicata
.
    The motion judge found that Mr. Jung brought this claim in good faith and on an
    objectively reasonable basis. His claim  and Talons s. 74(8) application  remained
    outstanding at the time of receivership.

(f)

Failure to Seek Specific Performance

[56]

Talons principal argument is that Mr. Jung breached the
    agreement by failing to close and commencing an action in which he did not seek
    specific performance. Talon submits the failure to seek specific performance is
    the crucial difference in the two actions: by not seeking specific performance,
    Mr. Jung did not affirm his intention to complete the transaction as he had in
    regard to the commercial units.

[57]

However, the fact that the Superior Court has not yet determined
    Talons s. 74(8) application undermines Talons main argument. That Talons s.
    74(8) application remained outstanding means the agreement could not be
    considered terminated. In determining that application, the court might have
    invalidated Mr. Jungs notice of rescission leaving him with the obligation to
    close the transaction, or it might have confirmed his right to rescind the
    agreement. But the application was stayed by the appointment of the receiver
    before proceedings reached that stage of finality. When the stay expired,
    Talons s. 74(8) application and the validity of Jungs notice of rescission
    had become moot because the receiver had conveyed the residential unit to the third-party
    creditor. The motion judge properly concluded the agreement was still in force
    up until the time at which the receiver conveyed the residential unit to the
    third party.

[58]

I stated in regard to Talons argument about the commercial units,
    the motion judge was not obliged to decide, or order a trial of issue to
    determine, what the results of the moot issues might have been. Once the
    receiver had completed the transfer of the residential unit, the agreement was
    terminated through no fault of Mr. Jung. On the basis of s. 20 of the
    agreement, Mr. Jung was entitled to the return of the deposit plus interest.

(5)

Conclusion

[59]

The motion judges finding that the agreement was terminated as a
    consequence of the receivership, and not through any fault of Mr. Jung, was
    amply supported by the record. There is no basis for interfering with that
    finding. I would therefore dismiss the appeal from her judgment ordering the
    return of the deposit plus interest for the residential unit.

C.

COSTs

[60]

As agreed by the parties, costs are awarded to the respondents in
    the amount of $10,000 inclusive of disbursements and applicable taxes.

Released: DMP AUG 7 2019

R.G. Juriansz J.A.

I agree. K. van
    Rensburg J.A.

I agree. David M.
    Paciocco J.A.