CITATION: Healey v. Lakeridge Health Corporation, 2011
      ONCA 55

DATE: 20110121

DOCKETS: C51777, C51778

COURT OF APPEAL FOR ONTARIO

Winkler C.J.O., Moldaver, Feldman, Sharpe and Simmons JJ.A.

BETWEEN

Garrett Joseph Healey

Plaintiff (Appellant)

and

Lakeridge Health Corporation and David J. Ross

Defendants
          (Respondents)

AND BETWEEN

Michael
          David Horgan

Plaintiff (Appellant)

and

Lakeridge Health Corporation, David J. Ross and Hak Ming
          Chiu

Defendants
          (Respondents)

Kirk Baert and Jonathan Ptak, for
          the plaintiffs (appellants)

Barry Glaspell and Tanya Goldberg,
          for Lakeridge Health Corporation

Mary Thomson and Belinda Bain, for
          David J. Ross and Hak Ming Chiu

Leah Price, for the intervener Law
          Foundation of Ontario

Heard: December 6 & 7, 2010

On appeal from the orders of Justice Paul Perell of the
          Superior Court of Justice dated March 31, 2010 and May 25, 2010, with reasons
          reported at 72 C.C.L.T. (3d) 361 and supplemental reasons reported at 2010
          ONSC 725.

Sharpe J.A.:

[1]

This appeal involves two class actions against the respondent Lakeridge
    Health Corporation (Lakeridge) and two physicians arising from incidents in
    which large numbers of people were exposed to two patients with tuberculosis (TB).
     None of the appellants tested positive for TB.  They allege that notices
    advising class members that they should be tested for TB as a result of
    possible exposure caused them mental anxiety, suffering and distress.  They
    admit that the harm suffered fell short of a recognizable psychiatric illness.
    The central issue on this appeal is whether the harm they suffered gives rise
    to a claim for legally compensable damages in a negligence action.

FACTS

[2]

In October 2003, a frequent patient (the first index patient) at
    Lakeridges Oshawa site was diagnosed with active TB.  As required by the
Health
    Protection and Promotion Act
, R.S.O. 1990, c. H.7, Lakeridge reported this
    to the Durham Region Health Department.  Durham Public Health in turn notified
    2,800 people of their potential exposure to TB and advised them to get tested.  Most
    of those notified had been exposed when visiting Lakeridges emergency room between
    February and October 2003.

[3]

In April 2004, another Lakeridge patient (the second index patient) was
    diagnosed with active TB.  Again Durham Public Heath was advised, and 1,602
    people were notified and advised to be tested.  The majority of people
    contacted in this second group were exposed when visiting Lakeridges oncology
    unit between February and April 2004.  Many were cancer patients receiving
    chemotherapy and were immuno-compromised at the time of exposure.

[4]

TB is a potentially fatal disease caused by an organism that usually attacks
    the lungs.  TB exists in both latent and active forms.  Active TB is transmitted
    to others through the air through coughing, sneezing, or talking, but it is not
    highly infectious.  The latent form is not communicable, and the risk of
    infection from casual contact with a person who has active TB is low.  It is
    estimated that 10% of the non-aboriginal Canadian-born population is infected
    with latent TB.  In 2004, there were 657 cases of active TB in Ontario.  Given
    the prevalence of TB, public heath notices advising potentially infected
    persons to be tested are not uncommon.

[5]

The vast majority of individuals with latent TB will not develop the
    active disease.  The risk of latent TB becoming active can be reduced to less
    than 1% by taking a course of prophylactic medication.  However, the chances of
    latent TB becoming active are increased if the person infected is immuno-compromised,
    develops a chronic condition, or undergoes other severe physical or mental
    health issues.

[6]

The test for TB involves injecting a small amount of the tuberculin
    protein under the skin of the inner forearm.  The test site is then examined by
    a health professional 48 to 72 hours later.  A positive skin test may indicate
    TB infection, but often simply indicates the latent, asymptomatic form of TB
    that rarely develops into active disease.  A positive skin test is followed up
    with a chest x-ray and a sputum analysis to rule out active infection.  There
    is no way of determining when a patient with a positive skin test was exposed
    to TB.

[7]

It can take up to three months from the date of exposure for the skin
    test to produce an accurate result.  However, as the notices were sent after
    the date of potential infection, for many of the class members the three-month
    period would have elapsed by the time they received the notice and so they were
    able to be tested immediately.  It follows that a significant number would have
    known within 72 hours after the administration of the skin test that they were
    not infected.

[8]

No active case of TB was diagnosed as a result of the Lakeridge
    incidents.  In the 2003 exposure group, 2,155 people were tested for TB: 1,967
    people tested negative, indicating no TB infection, and 188 people tested
    positive, indicating past or current infection with TB, although not
    necessarily as a result of contact with the Lakeridge index patient.  In the
    2004 exposure group, 1,384 people were tested: 1,094 people tested negative and
    290 people tested positive.

[9]

A press release issued at the time of the 2003 notices stated:

Its important to note that
    the possibility of being infected as a result of exposure to TB is low and the
    possibility of actually developing the disease is even lower.  However, our
    goal is to try to alert those who may have been exposed and infected, and allow
    them to take preventative action.

[10]

Similarly, the notices to the 2004 exposure group stated that the risk
    to you is low. There was also evidence that when accurately informed of the
    actual risk they face, the concerns of individuals who test positive for latent
    TB tend to resolve completely.

The class actions

[11]

Two class actions were commenced on behalf of the individuals who had
    received Durham Public Health notices of potential exposure to TB.  The Healey
    action involved the 2003 incident and the Horgan action involved the 2004
    incident.  The representative plaintiffs allege that Lakeridge and the index
    patients treating physicians negligently failed to properly diagnose the index
    patients TB and negligently failed to take adequate steps to prevent the
    spread of infection.

[12]

The plaintiff classes in both actions were composed of the following
    subclasses:

·

those
      who tested positive for TB (the infected persons)

·

those
      who tested negative for TB or chose not to be tested (the uninfected persons);
      and

·

family
      members of the infected and uninfected persons with derivative claims under the
Family Law Act
, R.S.O. 1990, c. F.3 (the FLA claims).

[13]

This appeal involves the claims made on behalf of the uninfected persons
    and the related FLA claims.  The claims are for damages for the psychological
    harm allegedly caused by being told of the possibility of TB infection.

Summary Judgment Motions

[14]

In January 2010, Lakeridge moved for summary judgment dismissing the
    claims pursuant to Rule 20 on the ground that there was no genuine issue
    requiring a trial.  The appellants brought a cross-motion for partial summary
    judgment on two issues: (1) that the damages claimed by the uninfected persons
    are compensable in law, and (2) that the damages of the uninfected persons and
    the FLA claims be determined and fixed on an aggregate basis.

[15]

The appellants offered the evidence of nine class members as to the harm
    they had suffered.  It was acknowledged that the affiants were the most
    seriously affected class members in the two actions.  The most serious
    complaints came from patients who were being treated for cancer or who suffered
    from other serious pre-existing ailments.  There was no evidence from any
    physician or healthcare worker who had examined or treated any class member.  The
    appellants expert, a psychiatrist, deposed that in his opinion, it was
    reasonable to expect that 30-40% of individuals in the uninfected class would
    experience psychological injury or illness and that an additional 30-40% would
    suffer from a recognized psychiatric illness.  The appellants expert did not
    examine any class member or their medical records.

[16]

The appellants asked for an award of aggregate damages of $7,500 for
    each uninfected class member and $750 for each FLA claimant, both amounts to be
    discounted by 40% on account of the contingency reflected by the experts
    opinion that up to 40% of individuals would likely not suffer psychological
    injury, for a total award of $4,500 for each uninfected class member and $450
    for each FLA claimant.

The motion judges reasons for dismissing
    the claims

[17]

The motion judge gave extensive reasons for granting Lakeridges motions
    for summary judgment, dismissing the claims of the uninfected persons and the derivative
    FLA claims, and dismissing the appellants motion for partial summary judgment.
     In summary, the motion judge made the following determinations:

(a) Duty
    of Care

[18]

Lakeridge does not owe the uninfected persons a duty of care to prevent
    psychological injury.  If Lakeridge had a duty of care to the uninfected persons,
    it would be a duty not previously recognized by the law.  To establish the
    duty, the appellants must therefore satisfy the test set out in
Cooper v.
    Hobart
,
[2001] 3 S.C.R. 537, modifying the test in
Anns
    v. Merton London Borough Council,
[1978] A.C. 728 (the
Cooper-Anns
test).  The motion judge found that the proximity element of the test was
    not satisfied and that, in any event, there were policy reasons sufficient to
    negative any duty of care.

(b)
    Psychological Injuries

[19]

The uninfected persons did not suffer a type of personal injury for
    which the law provides compensation.  While the evidence shows that the
    uninfected persons suffered psychological injuries, in the absence of accompanying
    harm to a body part, negligence law provides no compensation for psychological
    injury unless it is a recognizable psychiatric illness.  Here, the plaintiffs
    did not prove that any of the uninfected persons suffered a recognizable
    psychiatric illness.

[20]

The motion judge concluded, at para. 168, that there is no genuine
    issue requiring a trial that the affiants either: (a) did not suffer from a
    recognizable psychiatric illness that would qualify for compensation; or (b)
    already suffered from a psychiatric illness but there was no proof of
    exacerbation of their pre-existing psychiatric illness as a result of the shock
    of receiving the notification of exposure to TB.

[21]

The motion judge, at para. 167, rejected the appellants expert evidence
    on the ground that it just explained the common sense that frightening news
    causes stress and grief to varying degrees of seriousness and that it is
    possible that some people hearing frightening news may have a reaction that is
    a recognizable psychiatric illness.  He was not prepared to accept the experts
    opinion that 30-40% would suffer psychiatric illness as [t]hat threshold  was
    not proven to have been passed  by any of the affiants, many of whom actually
    denied any such an injury.

(c)
    Standard of Care

[22]

Whether the defendants breached the standard of care was an issue for
    another day.

(d)
    Causation

[23]

There is a genuine issue requiring a trial that the notification of
    exposure to TB caused in fact the psychological injuries of the uninfected persons.

(e)
    Remoteness of Damages

[24]

Any compensable psychological injuries suffered by the uninfected persons
    do not satisfy the test for remoteness.

(f)
    Aggregate Assessment of Damages

[25]

An aggregate assessment of damages is not available in the actions
    because the prerequisites of s. 24 of the
Class Proceedings Act, 1992
,
    S.O. 1992, c. 6, for an aggregate assessment have not been satisfied.  If
    aggregate damages were available, the motion judge assessed them at $1,000 for
    each uninfected person.

(g) Costs

[26]

The motion judge awarded partial indemnity costs to Lakeridge in the
    amount of $180,000 and to the respondent physicians in the amount of $80,000.

[27]

The motion judge also granted the respondent physicians subsequent
    motion for summary judgment pursuant to Rule 37.13(2)(a) dismissing the claims
    against them.

ISSUES

[28]

The appellants have raised a number of issues on this appeal:

(1)

Did
      the motion judge err in finding that Lakeridge did not owe a duty of care to
      the uninfected persons?

(2)

Did
      the motion judge err in finding that the threshold for compensable damages is a
      recognizable psychiatric illness?

(3)

Did
      the motion judge err in finding the injuries too remote?

(4)

Did
      the motion judge err in finding that causation-in-fact was a genuine issue
      requiring trial?

(5)

Did
      the motion judge err in finding that an aggregate assessment of damages was not
      available?

(6)

Did
      the motion judge err in his assessment of the damages?

(7)

Did
      the motion judge err in his application of Rule 20?

(8)

Did
      the motion judge err in his costs award?

ANALYSIS

1. Did
    Lakeridge owe a duty of care to the uninfected persons?

[29]

The first element of a tort claim for negligence is a duty of care owed
    by the defendant to the plaintiff.  Analysis of whether a duty of care exists
    begins by asking whether the plaintiff and the defendant are in a relationship
    that has previously been recognized as involving a duty of care.  If so, or if
    the relationship is analogous to a recognized relationship, a
prima facie
duty of care is established:
Cooper v. Hobart
, at para. 36.

[30]

If the relationship has not been previously recognized as one giving rise
    to a duty of care, the two-part
Cooper-Anns
test is to be applied:

1.

Does the relationship
    between the parties justify the imposition of a duty of care on the defendant?
    This stage involves consideration of foreseeability and proximity, which may
    include aspects of policy.

2.

If the claim survives the
    first stage, are there overriding public policy grounds that negative the
prima
    facie
duty of care?

[31]

The motion judge adopted the respondents proposed description of the
    alleged duty of care, namely, did the respondents owe a duty of care to the Uninfected
    Persons to prevent psychological injury or
a
    duty of care to prevent the psychological injury that would be an incident of
    giving the Uninfected Persons notification of exposure to an infectious
    disease?
He found that such a duty had not been previously recognized
    and proceeded to analyze the alleged duty under the
Cooper-Anns
test.  He
    decided that the proximity element was not satisfied and that, in any event,
    the alleged duty was negatived for reasons of policy.

[32]

In my respectful view, the motion judge erred in his description of the
    alleged duty at issue and, on account of that error, he failed to recognize
    that, properly framed, the alleged duty of care fell into a well-recognized
    category and that it was therefore unnecessary to apply the full
Cooper-Anns
analysis.

[33]

The appellants properly described the duty of care at issue in their
    statement of claim: The defendants owed a duty of care to the plaintiff and
    class members to take appropriate steps to prevent the potential transmission
    of ... TB infection.  In oral argument before us, Lakeridge quite properly
    conceded that it owed a duty of care to patients and visitors at the hospital
    to take reasonable care to prevent the transmission of infectious diseases.

[34]

While some of the earlier cases may have treated the issue of whether
    damages for psychological injury may be recovered as involving the duty of
    care, as I read
Mustapha v. Culligan,
[2008] 2 S.C.R. 114, whether the
    plaintiff has sustained compensable damages is a separate and distinct issue
    not to be conflated with the question of whether a duty of care exists.  In
Mustapha
,
    the plaintiff found dead flies in an unopened water bottle and became very
    upset by the idea that he and his family had been consuming tainted water.  He
    suffered no physical injury.

[35]

McLachlin C.J. set out the elements of the tort of negligence at para.
    3:

A successful action in negligence requires that the
    plaintiff demonstrate (1) that the defendant owed him a duty of care; (2) that
    the defendants behaviour breached the standard of care; (3) that the plaintiff
    sustained damage; and (4) that the damage was caused, in fact and in law, by
    the defendants breach.

[36]

McLachlin C.J. noted, at para. 6, that [i]t has long been established
    that the manufacturer of a consumable good owes a duty of care to the ultimate
    consumer of that good.  She treated the nature of the injury and the question
    of whether damages for such an injury are recoverable as a separate issue, to
    be dealt with at the third and fourth stages of the analysis, after the
    plaintiff has established a duty of care and a breach of the standard of care.

[37]

Where there is a duty of care to avoid physical harm to person or
    property, that duty embraces the category of claims for nervous shock.  In
Cooper
,
    when describing the relationships that will give rise to a
prima facie
duty
    of care, a unanimous Supreme Court wrote, at para. 36:
First,
    of course, is the situation where the defendants act foreseeably causes
    physical harm to the plaintiff or the plaintiffs property.  This has been
    extended to nervous shock
(citations omitted).

[38]

Accordingly, I respectfully disagree with the motion
    judges decision that the claim should be dismissed on the ground that the
    respondents did not owe the appellants a duty of care.

2. Is the
    threshold for compensable damages a recognizable psychiatric illness?

[39]

A plaintiff who claims damages for nervous shock or psychological injury
    faces two hurdles.  First, the plaintiff must satisfy the court that he or she
    has suffered the type of damages that are compensable.  It is well-established
    that, absent physical injury, there is a threshold that the plaintiff must meet
    when claiming damages for the negligent infliction of mental, psychological or psychiatric
    harm.  The appellants do not dispute that such a threshold exists.  They do,
    however, challenge the traditional view that a plaintiff must show some
    physical symptoms like a heart attack or a miscarriage, or some recognizable
    psychiatric illness: Allen M. Linden & Bruce Feldthusen,
Canadian Tort
    Law
, 8th ed. (Markham: LexisNexis, 2006) at pp. 425-26 (footnotes omitted).

[40]

The second hurdle is that the plaintiff must satisfy the court that the
    psychological injury was caused by the negligence of the defendant.  This
    involves asking whether psychological damage was a reasonably foreseeable
    consequence of the defendants negligence.

[41]

Both the threshold issue and the issue of remoteness were argued before
    the motion judge.  I will deal first with the question of whether there is a
    triable issue that the plaintiff class suffered the type of damages that are
    compensable.

[42]

The appellants filed the affidavits of several uninfected class members
    and FLA claimants, and cross-examinations were conducted.  It is common ground
    that those affiants were the most seriously affected class members.  The motion
    judge provided a very helpful detailed summary of their evidence, at paras. 148-65,
    that I need not repeat here.  Suffice it to say that the affiants variously
    described their reactions to the notices and to awaiting the results of their
    tests as being depression, fear, shock, anxiety, anger, frustration, shame,
    outrage, distress and sleeplessness.  Many of them feared for the health and
    safety of friends and family, and temporarily disrupted their social and family
    lives.  Several of the deponents suffered from pre-existing medical conditions
    that already produced some or all of the psychological complaints they
    attributed to the TB notification and it may well be that the notification
    exacerbated the degree of their anxiety and distress.  None of the affiants
    suffered a recognizable psychiatric illness. Many did not even consult a doctor
    about their complaints.

[43]

The appellants do not challenge the motion judges finding that their
    evidence fails to raise an issue for trial under the traditional test for
    damages for pure psychological injury requiring a plaintiff to prove a
    recognizable psychiatric illness.  The appellants essentially rest their case
    on the proposition that the Supreme Court of Canada changed, and significantly
    lowered, the threshold for compensable psychological injury in
Mustapha
,
    citing paras. 8 and 9 of McLachlin C.J.s unanimous judgment:

Generally, a plaintiff
    who suffers personal injury will be found to have suffered damage.  Damage
    for purposes of this inquiry includes psychological injury.  The
    distinction between physical and mental injury is elusive and arguably
    artificial in the context of tort.  As Lord Lloyd said in
Page v. Smith
,
    [1996] 1 A.C. 155 (H.L.), at p. 188:

In an age when medical knowledge is expanding
          fast, and psychiatric knowledge with it, it would not be sensible to commit the
          law to a distinction between physical and psychiatric injury, which may already
          seem somewhat artificial, and may soon be altogether outmoded.
Nothing
            will be gained by treating them as different kinds of personal injury, so as
            to require the application of different tests in law.

This said,
    psychological disturbance that rises to the level of personal injury must be
    distinguished from psychological upset.  Personal injury at law connotes
    serious trauma or illness: see
Hinz v. Berry
, [1970] 2 Q.B. 40 (C.A.),
    at p. 42;
Page v. Smith
, at p. 189; Linden and Feldthusen, [
Canadian
    Tort Law
, 8th ed. (Markham: LexisNexis, 2006)] at pp. 425-27.  The law
    does not recognize upset, disgust, anxiety, agitation or other mental states
    that fall short of injury.  I would not purport to define compensable
    injury exhaustively, except to say that it must be serious and prolonged and
    rise above the ordinary annoyances, anxieties and fears that people living in
    society routinely, if sometimes reluctantly, accept.  The need to accept
    such upsets rather than seek redress in tort is what I take the Court of Appeal
    to be expressing in its quote from
Vanek v. Great Atlantic & Pacific Co.
    of Canada
(1999), 48 O.R. (3d) 228 (C.A.): Life goes on (para. 60).
    Quite simply, minor and transient upsets do not constitute personal
injury
,
    and hence do not amount to damage. [Emphasis in original.]

[44]

The appellants submit that this passage changes the law by removing the
    need to show a recognizable psychiatric illness and replacing for that
    requirement the need to show harm that goes beyond
upset, disgust, anxiety, agitation or other mental states
    that fall short of injury and
amounts to serious trauma or illness
    that
is

serious and prolonged and ris[ing] above
    the ordinary annoyances, anxieties and fears that people living in society
    routinely, if sometimes reluctantly, accept.  The appellants say that
the
    evidence before the motion judge demonstrated that such harm had been suffered
    and, accordingly, that the motion judge erred by granting summary judgment
    dismissing their claim rather that granting summary judgment in their favour.

[45]

The term recognizable psychiatric illness was first used by Lord
    Denning in
Hinz v. Berry
, [1970] 1 All E.R. 1074 (C.A.), at p. 1075,
    where the plaintiff claimed damages for nervous shock caused by seeing her
    husband fatally injured:

In English law no damages are awarded for grief or
    sorrow caused by a persons death.  No damages are to be given for the worry
    about children, or for the financial strain or stress, or the difficulties of
    adjusting to a new life.  Damages are however recoverable for nervous shock or,
    to put it in medical terms, for any recognizable psychiatric illness caused by
    the breach of duty by the defendant.

[46]

This court has adopted and applied the recognizable psychiatric illness
    language from
Hinz v. Berry
in a number of cases.  In
Duwyn v.
    Kaprielian
(1978), 22 O.R. (2d) 736 (C.A.), Morden J.A., at pp. 754-55, stated
    that [t]he law is relatively clear that the kind of nervous shock for which
    recovery may be had involves something more than general emotional upset and quoted
    the passage from
Hinz v. Berry
referring to recognizable psychiatric
    illness.  As there was no medical evidence that Mrs. Duwyn was suffering from
    any recognizable psychiatric illness, her claim for mental distress was
    dismissed.  In
Koerfer v. Davies (c.o.b. Caeleon Farms),
[1994] O.J. No.
    1408, this court set aside an award of damages for vexation, frustration and mental
    distress and stated, at para. 4, that [t]he courts to date have declined to
    award damages for mental distress arising from negligence, except where the
    distress stems from recognizable psychiatric illness.

[47]

Both the House of Lords and the High Court of Australia have affirmed
    the recognizable psychiatric illness requirement.

[48]

In
White and Others v. Chief Constable of South Yorkshire
,

[1999] 2 A.C. 455 (H.L.) at p. 491, in a
    passage quoted by the motion judge, Lord Steyn stated:

The law divides those who were mentally scarred
    in different categories. There are those whose mental suffering was a concomitant
    of physical injury. This type of mental suffering is routinely recovered as pain
    and suffering. Next, there are those who did not suffer any physical injuries
    but sustained mental suffering. For present purposes this category must be
    subdivided into two groups. First, there are those who suffered extreme grief.
    This category may include cases where the condition of the sufferer is
    debilitating. Secondly, there are those whose suffering amounts to recognisable
    psychiatric illness. Diagnosing a case as falling within the first or second
    category is often difficult. [y]et the law denies redress in the former case.
    [o]nly recognisable psychiatric harm ranks for consideration. Where the line is
    to be drawn is a matter for expert psychiatric evidence. This distinction
    serves to demonstrate how the law cannot compensate for all emotional suffering
    even if it is acute and truly debilitating. [Citations omitted.]

[49]

In
Tame v. New South Wales
(2002), 211 C.L.R. 317 (H.C.A.) at
    paras. 193-94, Gummow and Kirby JJ. stated:

In Australia, as in England, Canada and New
    Zealand, a plaintiff who is unable affirmatively to establish the existence of
    a recognisable psychiatric illness is not entitled to recover. Grief and sorrow
    are among the ordinary and inevitable incidents of life; the very
    universality of those emotions denies to them the character of compensable loss
    under the tort of negligence. Fright, distress or embarrassment, without more,
    will not ground an action in negligence. Emotional harm of that nature may be
    evanescent or trivial.

Properly
    understood, the requirement to establish a recognisable psychiatric illness
    reduces the scope for indeterminate liability or increased litigation. It
    restricts recovery to those disorders which are capable of objective
    determination. To permit recovery for recognisable psychiatric illnesses, but
    not for other forms of emotional disturbance, is to posit a distinction
    grounded in principle rather than pragmatism, and one that is illuminated by
    professional medical opinion rather than fixed purely by idiosyncratic judicial
    perception. Doubts as to adequacy of proof (which are particularly acute in
    jurisdictions where civil juries are retained) are to be answered not by the
    denial of a remedy in all cases of mental harm because some claims may be
    false, but by the insistence of appellate courts upon the observance at trial
    of principles and rules which control adjudication of disputed issues. [Footnotes
    omitted.]

[50]

In
Odhavji Estate v.Woodhouse
, [2003] 3 S.C.R. 263 at paras.
    40-41, Iacobucci J. observed that a plaintiff cannot claim damages for grief or
    emotional distress, but that it is well established that compensation for
    psychiatric damages is available in instances in which the plaintiff suffers
    from a visible and provable illness or recognizable physical or
    psychopathological harm (citations omitted).

[51]

Against this line of authority the appellants cite instances in
    which some Canadian courts have questioned, either implicitly or explicitly,
    the recognizable psychiatric illness threshold.
In
McDermott
    v. Ramadanovic Estate

(1988), 44 C.C.L.T. 249 (B.C.S.C.), Southin J.
    held, at p. 259, that there is no
logical
    difference between a scar on the flesh and a scar on the mind and allowed
a
    13-year-old girl who saw her parents die in a car accident to recover damages
    for emotional pain despite the fact that she had not suffered a recognizable
    psychiatric illness.  See also the concurring judgment of
Southin J.A. in
Rhodes v. Canadian
    National Railway
(1990), 75 D.L.R. (4th) 248 (B.C.C.A.).
However, in
Graham v. MacMillan
(2003), 15 C.C.L.T.
    (3d) 155 at para. 8, the British Columbia Court of Appeal confirmed that, notwithstanding
    decisions such as
McDermott
, the weight of authority supports a
    recognized psychiatric illness as a condition for liability.

[52]

In Ontario, Molloy J. relied on
McDermott
in
Mason v. Westside
    Cemeteries Ltd.
(1996), 135 D.L.R. (4
th
) 361 (Ont. Gen. Div.).
    The defendant lost the cremated remains of the plaintiffs parents.  The plaintiff
    had lost peace of mind, but did not require any professional care or
    medication as a result of his emotional distress.  Molloy J. made a modest
    damage award, commenting at p. 379:

It is difficult to rationalize awarding damages for
    physical scratches and bruises of a minor nature but refusing damages for deep
    emotional distress which falls short of a psychiatric condition. Trivial
    physical injury attracts trivial damages. It would seem logical to deal with
    trivial emotional injury on the same basis, rather than by denying the claim
    altogether.

[53]

Cosgrove J. followed this approach in
Vanek v. Great Atlantic
    & Pacific Co. of Canada
, [1997] O.J. No. 3304 (Gen. Div.).  He awarded
    damages to the parents of an 11-year-old child who became anxious after their
    child swallowed contaminated grape juice packed in her school lunch.  That
    judgment was reversed by this court in
Vanek
    v. Great Atlantic & Pacific Co. of Canada
(1999), 48 O.R. (3d) 228, leave to appeal refused [2000] S.C.C.A. No.
    50.  This court allowed the appeal on the basis that the defendants and the
    third parties could not have reasonably foreseen the parents highly unusual
    reaction and the psychiatric damages that flowed from it.  This made it
    unnecessary for the court to decide whether the recognizable psychiatric
    illness threshold should be maintained.  MacPherson J.A. stated, at para. 62,
    that
[t]here is no  doubt  that  for many years
    it  was  settled  law  in  Ontario
    and   in   most jurisdictions that recovery could not take
    place without  such  a finding (citations omitted).

[54]

MacPherson J.A. noted that some trial judges had questioned that
    principle and, at para. 64, that there was also criticism in the academic
    literature of the recognizable psychiatric illness factor, most notably by
    Linden, the dean of Canadian tort scholars, in
Canadian Tort Law,
[6th
    ed., (Toronto: Butterworths, 1997)] at p. 402.  He concluded, however, at
    para. 68, that as it was unnecessary to decide the issue, it is wise to leave
    reconsideration of the recognizable psychiatric illness factor to another case.

[55]

There are also two appellate-level decisions that certified class
    actions involving claims for psychological injury falling short of recognizable
    psychiatric illness but both arose at the certification stage where the point
    was decided on the pleadings under the minimal plain and obvious test.

[56]

Anderson v. Wilson
(1999), 44 O.R. (3d) 673 (C.A.), leave to
    appeal refused [1999] S.C.C.A. No. 476, involved a class action on behalf of
    patients notified that they might have been infected with Hepatitis B.  The
    uninfected class members asserted a claim similar to that at issue in the
    present appeal, one for nervous shock on the basis of the psychological trauma
    they had allegedly experienced after being told of the possibility of infection
    and the uncertainty as to their condition until they received a negative test.  This
    court set aside the decision of the Divisional Court refusing to certify the
    claim of the uninfected class members, citing
Mason
and the trial
    decision in
Vanek
. Carthy J.A. held, at p. 679:

Given the uncertain state of the law on tort relief
    for nervous shock, it is not appropriate that the court should reach a
    conclusion at this early stage and without a complete factual foundation. It
    cannot be said, in this case, that it is plain and obvious that the claim for
    the tort of mental distress standing alone will fail.

[57]

In
Fakhri v. Alfafas
    Canada, Inc.
(2004), 203 B.C.A.C. 227, the defendants appealed from an
    order certifying a class action for claims arising from the distribution of
    food contaminated by the Hepatitis A virus.  The British Columbia Court of
    Appeal held, at para. 16, that it could not be said with finality that only
    psychiatric disorders are compensable but there the class members also claimed
    to have suffered a physical disturbance when immunized due to the alleged
    carelessness of the appellant.  To repeat, however, both
Anderson v. Wilson
and
Fakhri v. Alfafas Canada, Inc.
were decisions at the certification
    stage under the minimal
plain and obvious test.

[58]

Post-
Mustapha
judicial decisions have, for the most part,
    rejected the argument that
Mustapha
changed the nature of the threshold.
Kotai v. Queen of the North (The)
(2009), 70 C.C.L.T. (3d) 221
    (B.C.S.C.) involved a class action arising from the sinking of a ferry.  The
    class action judge, at paras. 64-65, rejected the submission that
Mustapha
had changed the threshold for recovery of damages for psychological injury.
Frazer
    v. Haukioja
(2010), 101 O.R. (3d) 528 (C.A.), involved a claim arising from
    a misdiagnosis and non-disclosure of a leg fracture.  While the plaintiff did
    suffer from a recognizable psychiatric illness, LaForme J.A. observed, at para.
    37, that there must be physical symptoms or some recognizable psychiatric
    illness for there to be compensable damages.  LaForme J.A. also stated, at
    para. 16, that he took the
Mustapha
reference to mental injury to be
    the equivalent to this courts reference to recognizable psychiatric illness.

[59]

Academic writers accept that recognizable psychiatric illness is the
    current legal test but some argue that it should be abandoned in favour of a
    more lenient approach to accommodate compensating less grievous psychological
    harm: see e.g. Linden and Feldthusen, at pp. 439-40; Philip H. Osborne,
The
    Law of Torts
, 3d. ed (Toronto: Irwin Law, 2007) at pp. 82-89; D. Spencer
    Campbell & Chris Montigny, Psychological Harm and Tort Law: Reassessing the
    Legal Test for Liability in Hon. Todd Archibald & Michael Cochrane, eds.,
Annual
    Review of Civil Litigation (2003)
(Toronto: Thomson Carswell, 2003) 133 at
    pp. 145-46; Louise Bélanger-Hardy, Droit et émotion: réflexion novatrice sur
    le préjudice moral in Sanda Rodgers, Rakhi Ruparelia & Louise
    Bélanger-Hardy, eds.,
Critical Torts
(Markham: LexisNexis, 2009) 203 at
    pp. 221-25; Des Butler,
Damages for Psychiatric Injuries
(Annandale,
    NSW: Federation Press, 2004) at pp. 135-36.

[60]

It is apparent from this review of the jurisprudence that the appellants
    face a very strong  although admittedly not unbroken or unquestioned  line of
    authority that to recover damages for psychological injury independent of any
    claim for physical injury, they are required to show that they suffer from a
    recognizable psychiatric illness.

[61]

When the passage the appellants rely on from
Mustapha
is read in
    the light of this body of jurisprudence and scholarly writing, I find it
    impossible to imagine that McLachlin C.J. could have intended her brief
    description of the type of psychological injuries that qualify as being
    compensable to change a well-established, though at times contested, rule.  She
    explicitly stated, at para. 9, that she did
not purport to define compensable injury exhaustively.  As I read
Mustapha
, McLachlin C.J. was simply trying to explain in non-technical
    language the level to which psychological injury had to rise to be eligible for
    legal compensation.  Had she intended to make a fundamental change to the law,
    she almost certainly would have discussed the authorities and the policy issues
    at stake in a more extensive manner.

[62]

I agree with and adopt para. 63 of the motion judges reasons,
    explaining why
Mustapha
cannot be read as having changed that standard
    to some other more flexible standard:

For the purposes of the case
    at bar, four observations may be made about Chief Justice McLachlins comments.
    First, jurisprudentially speaking, her comments about the threshold of
    psychological injury in a tort claim for negligence were at most
obiter
    dicta
because in
Mustapha,
it was a given that Mr. Mustapha suffered
    a recognizable psychiatric illness. Second, it is doubtful that the Chief
    Justice would make an important and potentially far-reaching change in the law
    by
obiter dicta.
Third, and in any event, if her comments are taken to
    be more than
obiter
and are an authoritative statement of the law, all
    she decided was that: (a) personal injury damages include psychological injury;
    but (b) not all psychological upset constitutes personal injury damages.
    Justice McLachlin expressly left open - she said: I would not purport to
    define - the definition of compensable psychological injury except to say that
    it must be serious and prolonged and rise about the ordinary annoyances,
    anxieties and fears that people living in society routinely, if sometimes
    reluctantly accept.  Quite simply, minor and transient upsets do not
    constitute personal injury and hence do not amount to damage. Fourth, her
    citation of
Hinz v. Berry
suggests that she was equating a psychological
    disturbance that rises to the level of personal injury to a psychiatric illness
    recognizable to the medical profession.

[63]

As the appellants essentially rest their case on the proposition that
Mustapha
changed the law and as that argument fails, I would dismiss the appeal on this
    ground.  However, I wish to add two points.

[64]

First, even if I were to accept the submission that
Mustapha
did
    change the law, it is my view that the evidence in this case falls short of
    demonstrating that the appellants suffered harm of sufficient gravity and
    duration to qualify for compensation.  The harm revealed by the evidence was
    not
serious trauma or illness that amounted to
    more than upset, disgust, anxiety, agitation or other mental states that fall
    short of injury or that was serious and prolonged and [rising] above the
    ordinary annoyances, anxieties and fears that people living in society
    routinely, if sometimes reluctantly, accept.

[65]

As has been repeatedly stated in the case law, there are strong policy
    reasons for imposing some sort of threshold.  It seems to me quite appropriate
    for the law to decline monetary compensation for the distress and upset caused
    by the unfortunate but inevitable stresses of life in a civilized society and
    to decline to open the door to recovery for all manner of psychological insult
    or injury.  Given the frequency with which everyday experiences cause transient
    distress, the multi-factorial causes of psychological upset, and the highly
    subjective nature of an individuals reaction to such stresses and strains,
    such claims involve serious questions of evidentiary rigour.  The law quite
    properly insists upon an objective threshold to screen such claims and to
    refuse compensation unless the injury is serious and prolonged.  Even critics
    of the current rule tend to agree that it is conceptually sound to limit
    compensable claims for psychological harm to those that are serious.  Indeed,
    as I have mentioned, the appellants themselves do not dispute the need to
    impose some threshold.

[66]

Second, I do not wish to be taken as saying the possibility of any
    change in the formulation of the test should be foreclosed once and for all.  The
    precise manner in which the threshold is defined or identified is a matter of
    legitimate debate and the recognizable psychiatric illness test has attracted
    criticism from the authors I have already cited as being unduly rigid and
    dependent upon shifting medical opinion. However, as the nature of the
    appellants complaints in this case falls below what I would regard as a
    minimum acceptable threshold for compensable claims for psychological injury,
    this case does not provide a proper factual foundation for any reconsideration
    of the traditional recognizable psychiatric illness test.

3.
    Other issues

[67]

As the issues of remoteness, causation and
    aggregate damages are only reached if the appellants establish an injury that
    meets the threshold for a compensable claim, it is not strictly necessary for
    me to consider those issues.

[68]

However, for the sake of completeness, I offer
    the following observations with respect to the issues of causation and
    aggregate damages.

4.
    Causation

[69]

I see no error in the motion judges conclusion
    that the issue of causation was one that could only be determined at trial.  The
    evidence led by the appellants shows that many members of the uninfected class
    faced health, financial and family issues that were the source of stress and
    the motion judge did not err in concluding, at para. 241,
that a trial
    would be necessary to determine the difficult question of whether but for the
    notice they suffered compensable psychological injuries.

5.
    Aggregate damages

[70]

Where it is possible to determine damages on a class-wide basis without
    proof of the damages suffered by individual class members, aggregate damages
    may be awarded.  Section 24(1) of the
Class Proceedings Act
provides as
    follows:

24 (1)
    The court may determine the aggregate or a part of a defendants liability to
    class members and give judgment accordingly where,

(a) monetary
    relief is claimed on behalf of some or all class members;

(b) no
    questions of fact or law other than those relating to the assessment of
    monetary relief remain to be determined in order to establish the amount of the
    defendants monetary liability; and

(c) the
    aggregate or a part of the defendants liability to some or all class members
    can reasonably be determined without proof by individual class members.

[71]

Given the nature of the claims advanced here, it seems to me apparent
    that the assessment of damages requires proof of the harm suffered by the individual
    class members.  The appellants concede that not all members of the class
    suffered compensable harm, even on the relaxed test they advance for
    psychological injury.  Some class members will have suffered no compensable
    harm and some will have suffered more stress and anxiety than others.  The
    claims are inherently individual in nature and hence fall squarely within the
    principle identified by Winkler J. in
Bywater v. Toronto Transit Commission
(1998), 27 C.P.C. (4th) 172 (Ont. Gen. Div.) at paras. 18-19, where the
    plaintiff class advanced a claim for damage caused by smoke inhalation:

The
    action advances claims for personal injury, property damage and claims under
    the
Family Law Act
. These claims cannot, reasonably be determined
    without proof by individual class members as required by s. 24(1)(c).
    Furthermore, each individual claim will require proof of the essential element
    of causation, which, in the words of 24(1)(b), is a question of fact or law
    other than those relating to an assessment of damages.

In addition, the assessment of damages in each case
    will be idiosyncratic. All of the usual factors must be considered in assessing
    individual damage claims for personal injury, such as: the individual
    plaintiffs time of exposure to smoke; the extent of any resultant injury;
    general personal health and medical history; age; any unrelated illness; and
    other individual considerations. Indeed here, the representative plaintiff was
    suffering from and experiencing symptoms of food poisoning at the time of the
    incident. The property damage claims of class members must be assessed
    individually as the underlying facts will vary from one class member to the
    next.

See also
Caputo v. Imperial Tobacco Ltd.
(2004),
    236 D.L.R. (4th) 348 (Ont. S.C.) at para. 55, where Winkler J. stated:

The circumstances [in
Bywater
] were starkly
    similar to those in the present case. This case is equally unsuited to an
    aggregate assessment concerning the damages claimed. There are numerous, and
    significant, individual issues pertinent to the issue of liability and damages
    that must be determined. As stated by Feldman J.A. in
Chadha
[
v.
    Bayer Inc.
(2003), 63 O.R. (3d) 22 (C.A.)] at para. 49:

... s. 24 of the
Class
            Proceedings Act
is applicable only once liability has been established, and
            provides a method to assess the quantum of damages on a global basis, but not
            the fact of damage.

[72]

I agree with the motion judges conclusion, at para. 277:

[T]his is a case like
Bywater

where the assessment of damages cannot be
    bifurcated and resolved independently of the determination of liability, and,
    most particularly, in the case at bar causation-in-fact must be determined
    before there could be an aggregate assessment of damages.

[73]

I do not accept the appellants submission that the following passage
    from
Anderson v. Wilson
, at pp. 678-80, supports their contention that
    aggregate damages are appropriate:

There are many persons with the same complaint, each
    of which would typically represent a modest claim that would not itself justify
    an independent action. In addition, the nature of the overall claim lends
    itself to aggregate treatment because individual reactions to the notices would
    likely be similar in each case  fear of a serious infection and anxiety during
    the waiting period for a test result. If evidence from patients to support such
    reactions to the notices is necessary, it would probably suffice to hear from a
    few typical claimants. The balance of the evidence as to liability would relate
    to the conduct of the clinics, the reaction of the Public Health Authorities
    and foreseeability issues.

[74]

Anderson v. Wilson
was a certification decision and in the
    passage cited, Carthy J.A. was discussing the appropriateness of a class
    proceeding to advance the claims under the test for certification and not the issue
    of the availability of aggregate damages pursuant to s. 24(1).  This point is
    reinforced at p. 680, where Carthy J.A. states that it might be possible to
    deal with the claim that the defendants conduct should attract punitive and
    exemplary damages under s. 24, as that claim could be
determined
without a significant
    involvement of the individual class members, but he makes no reference to the claim
    for psychological injury in the category of claims susceptible to being dealt
    with on an aggregate basis.

6.
    Assessment of damages

[75]

In view of my conclusion that the harm suffered by the class members was
    not compensable and that aggregate damages are not available, it is unnecessary
    for me to consider whether the motion judge erred in his assessment of the
    damages.

7. Did the
    motion judge err in his application of Rule 20?

[76]

The appellants submission that the motion judge erred in his
    application of Rule 20 in granting summary judgment is inconsistent with the
    position they took before the motion judge when they considered the record
    sufficient to support summary judgment in their favour.  In my view, given the
    nature of the issues, the extensive evidentiary record provided the motion
    judge with a sufficient basis to decide that there was no genuine issue for
    trial.  In these circumstances, it is unnecessary to consider the effect of the
    recent amendments to Rule 20.  I leave that question to another day without
    commenting on the motion judges analysis of those amendments.

8. Did the
    motion judge err in his costs award?

[77]

The appellants submit that the motion judge erred in awarding $260,000 in
    costs to the respondents.  The Law Foundation of Ontario (LFO) joins in that
    submission.  LFO funded the litigation, thereby triggering ss. 59.1(2) and 59.4
    of the
Law Society Act
, R.S.O. 1990, c. L.8, which permits defendants to
    apply to the Class Proceedings Fund for payment of a costs award made against a
    plaintiff, where the plaintiff has received financial support from the fund.  The
    appellants and LFO submit that the issues raised were novel, qualified as a
    test case, and involved matters of public interest, and that the actions were
    brought to provide access to justice to a vulnerable class of individuals.  They
    rely on s
.
31(1) of the
Class Proceedings Act
:

31(1) In exercising its discretion with respect to
    costs under subsection 131 (1) of the
Courts of Justice Act
, the
    court may consider whether the class proceeding was a test case, raised a novel
    point of law or involved a matter of public interest.

[78]

The appellants also submit that the costs award was prohibitively
    excessive.

[79]

The motion judge agreed with the respondents that s. 31(1) does not
    apply, as this was not a test case, did not amount to public interest
    litigation, and the bulk of the time was spent on the threshold for compensable
    damages, which is not a novel issue.

[80]

The motion judge gave detailed and comprehensive reasons for making the
    costs award.  Deference must be accorded to his determination of entitlement
    and quantum of costs.  Although I would not wish to be seen as endorsing all elements
    of his reasoning, I can see no arguable error of law or principle that could
    justify appellate intervention.  While departure from the normal loser pays
    rule may sometimes be justified in class actions, which are designed to foster
    access to justice, in view of the carefully considered reasons of the motion
    judge and the dubious and speculative nature of the claims advanced in this
    proceeding, the appellants and LFO have not persuaded me that leave to appeal
    the costs order should be granted.  Accordingly, I would refuse leave to appeal
    costs.

CONCLUSION

[81]

Accordingly, I would dismiss the appeals.  The respondents may make
    brief written submissions as to the costs of the appeals within 15 days of the
    release of these reasons and the appellants may file their response within 10
    days thereafter.

Robert J. Sharpe J.A

I agree W. Winkler
    C.J.O.

I agree M.J. Moldaver
    J.A.

I agree K. Feldman
    J.A.

I agree J.M. Simmons
    J.A.

RELEASED:  January 21, 2011


CITATION: The Jorg Trust v. Sussman, 2011 ONCA 45

DATE: 20110119

DOCKET: C52228

COURT OF APPEAL FOR ONTARIO

Weiler, Gillese and Blair JJ.A.

BETWEEN

The Jorg Trust and Marianne Reichert

Appellants (Plaintiffs)

and

Murray
          Sussman, Sandy Sussman, Mortgage Funding
, Gordon Gampbell,

McFlow Capital Corp.
,
          the Premium Group and
Andy Pollack

Respondents (Defendants)

Hans Jorg Reichert for the Jorg Trust and Marianne Reichert,
          in person

Hilary Book for the respondents, McFlow Capital Corp. and Andy
          Pollack

Paul J. Daffern for the respondents Murray Sussman, Sandy
          Sussman and Mortgage Funding

Heard and released orally: January 12, 2011

On appeal from the order of Justice James M. Spence of the
          Superior Court of Justice dated May 11, 2010.

ENDORSEMENT

[1]

This appeal arises in the context of an action by The Jorg Trust and
    Mrs. Reichert (the appellants) against the Mortgagees and Andy Pollack for
    damages arising out of the Mortgagees refusal to renew a $560,000 mortgage on
    property in Schomberg, Ontario.  The main issue in the action is whether the Mortgagees
    did or did not agree to renew the mortgage.

[2]

There was a motion for interim relief of various kinds before Spence J.
    on May 11, 2010.  He made two orders that are at issue on this appeal.  First,
    he struck the appellants claim against the respondent Andy Pollack personally,
    as disclosing no cause of action against him in his personal capacity.
    Secondly, while granting an interlocutory injunction restraining the Mortgagees
    from exercising their rights to enforce the mortgage prior to October 30, 2010,
    the motion judge imposed certain terms as a condition of that equitable relief
    being granted.  The terms were that the appellants pay the requested renewal
    fee of $22,000 and make five monthly payments of $9,200 each to be applied
    against principal and interest.  It is these orders that the appellants seek to
    set aside.

[3]

Although we understand the personal difficulties the underlying
    circumstances may have caused the appellants, the issues before us are quite
    narrow, and the appeal must be dismissed.

[4]

Whatever Mr. Pollack is alleged to have done or not to have done, there
    are no allegations in the statement of claim that would support an action
    against him personally in that regard.  As pleaded, the allegations amount to
    no more than a claim that he was acting in his capacity as a representative of
    the Mortgagees, not in any personal capacity.

[5]

An interlocutory injunction is a discretionary equitable remedy.  In the
    circumstances, the motion judge was entitled to impose the conditions he did.
    As the motion judge said, the appellants should not have a free ride.  If, as
    they say, the mortgage has been renewed  and the effect of the motion judges
    order was to renew it for a further six months  the renewal fee or some
    portion thereof (a condition or renewal) ought to be paid, and as long as the
    mortgage is outstanding, the mortgage payments required should be paid as
    well.  Mr. Reichert says that the appellants have made these payments.  He now
    asks that we order the amounts be paid back or paid into court.  We would not
    accede to this request, as in our view it was open to the motion judge, as we
    have indicated, to impose those conditions as terms of granting the equitable
    relief he did.

[6]

The appellants asked us to issue a further injunction restraining the
    defendants from acting on the notice of sale pending the disposition of the
    trial.  That requested relief is beyond the scope of this appeal, and, if it is
    to be pursued, is properly pursued at the Superior Court level.

[7]

The appellants made a number of other submissions, but they relate to
    the outstanding issues to be determined in the action concerning their claim
    for damages and to various admittedly difficult circumstances in which the
    Reicherts find themselves as a result of their problems with the property.
    These complaints do not relate to the issues we are asked to determine today.

[8]

The appeal is therefore dismissed.

[9]

Costs of the appeal are payable by the appellants to the respondents
    McFlow Capital and Andy Pollack in the amount of $3,500 and to the respondent
    Sussman Group in the amount of $2,500, both inclusive of disbursements and all
    applicable taxes.

Karen M. Weiler J.A.

E.E.
    Gillese J.A.

R.A.
    Blair J.A.


CITATION:
Kenzie v. Kenzie, 2011
      ONCA 53

DATE: 20110120

DOCKET: C52590

COURT OF APPEAL FOR ONTARIO

Laskin, Feldman and Lang JJ.A.

BETWEEN

Ian Kenzie

Applicant (Appellant)

and

Joan Marjorie Kenzie, Stephen Agar Kenzie
and
          Wendy Michael

Respondents (
Respondents
)

Simon J. Adler and Derek Johnson, for the appellant

Daved Muttart, for the respondent, Joan Marjorie Kenzie

No one appearing for the respondent, Stephen Agar Kenzie

Heard: January 18, 2011

On appeal from the order of Justice
          Susan E. Healey of the Superior Court of Justice, dated August 5, 2010.

APPEAL BOOK ENDORSEMENT

[1]

The appellant argues that he is entitled to declaratory relief, and that
    under s. 16(1)(a) of the
Limitations Act
, there is no limitation period
    barring his application.  We do not agree with the appellants argument.

[2]

Implicit, if not explicit, in the appellants application is his intent
    to seek a finding or findings that would be
res judicata
in other
    proceedings.  In our view, that is consequential relief, which takes the
    appellants application out of s. 16(1)(a) of the
Limitations Act
.
    Therefore, we agree with the application judge that this application as framed
    on this record is statute barred.

[3]

If the appellant has any viable claim  and we make no determination
    whether he does or does not  it is by an application for an order that the
    respondent pass the accounts.

[4]

The respondent concedes that the appellant is entitled for an order for
    the passing of accounts.  Whether the
Limitations Act
bars any claim in
    the different context of a passing of accounts is an issue to be decided by the
    judge on the passing of those accounts.

[5]

The appeal is dismissed, with costs in the agreed-upon amount of
    $11,000, inclusive of disbursements and all applicable taxes.


CITATION: Kingsway
          General Insurance Company v. Gore Mutual Insurance
      Company, 2011 ONCA 87

DATE: 20110128

DOCKET: M39618 (C52924)

COURT OF APPEAL FOR ONTARIO

Juriansz J.A. (In Chambers)

BETWEEN

Kingsway General Insurance Company

Applicant (Appellant)

and

Gore Mutual Insurance Company

Respondent (Respondent in Appeal)

Harry Brown, for the appellant

Mark Donaldson, for the respondent

George Kanellakos, for the Markel Insurance Company

Heard: January 28, 2011

ENDORSEMENT

[1]

This motion raises a point of general application: may a party to an
    arbitration award appeal a decision of the Superior Court of Justice to this
    court in accordance with s. 6(1)(b) of the
Courts of Justice Act
, R.S.O.
    1990, c. C.43, instead of in accordance with s. 49 of the
Arbitration Act
,
    1991, S.O. 1991, c. 17?

[2]

Kingsway General Insurance Company seeks an order that it may appeal
    from the decision of the Superior Court of Justice dismissing its appeal from
    an arbitration award without leave of this court.

[3]

Section 49 of the
Arbitration Act
states as follows:

An appeal from the court's decision in an appeal of
    an award, an application to set aside an award or an application for a
    declaration of invalidity may be made to the Court of Appeal, with leave of
    that court.

[4]

However, s. 6(1)(b) of the
Courts of Justice Act
contains the
    general provision:

An appeal lies to the Court of Appeal from  a
    final order of a judge of the Superior Court of Justice.

[5]

Kingsway argues that although s. 49 of the
Arbitration Act
requires the party appealing from the Superior Court to obtain leave to appeal
    to the Court of Appeal, s. 6(1)(b) of the
Courts of Justice Act
provides
    for an appeal to the Court of Appeal as a matter of right.

[6]

I disagree.

[7]

Section 49 of the
Arbitration Act
and s. 6(1)(b) of the
Courts
    of Justice Act
are in fundamental conflict. One requires leave and the
    other does not. Both cannot be given effect. Section 6(1)(b) of the
Courts
    of Justice Act
has general application. However, in s. 49 of the
Arbitration
    Act
the legislature has specifically addressed the right to further appeal
    the decision of an arbitrator. The legislative intent, obviously, was that the
    specific legislation should prevail over the general.

[8]

The motion is dismissed. Kingsway requires leave to appeal the decision of
    the Superior Court to this court.

[9]

Mr. Kanellakos appeared for the Markel Insurance Company, which is
    involved in another case raising identical issues. On the request of all,
    Kingsways application for leave to appeal and that of the Markel Insurance Company
    in C52873 should be place before the same panel for determination.


CITATION: Leek v. Vaidyanathan, 2011
      ONCA 46

DATE: 20110120

DOCKET: C52443

COURT OF APPEAL FOR ONTARIO

Weiler, Blair and Epstein JJ.A.

BETWEEN:

Penny
          Leek, Lauren Leek by her Litigation Guardian Penny Leek, and

George Zafiris by his Litigation
          Guardian Penny Leek

Respondents/Plaintiffs

and

Sankar
          Vaidyanathan
, Humber River Regional Hospital,

Rueben Devlin, Patrick Safieh
          and David Starr

Appellant
/Defendant

Cynthia Kuehl and Stuart
          Zacharias, for the appellant

Paul Harte, for the respondents

Heard: January
      11, 2011

On appeal from the order and declaration of Justice E.P.
          Belobaba of the Superior Court of Justice, dated June 28, 2010.

ENDORSEMENT

[1]

Dr. Vaidyanathan seeks to set
    aside the order of Justice E.P. Belobaba of the Superior Court of Justice,
    dated June 28, 2010, declaring that the respondent Penny Leek had no legal
    obligation or duty to the appellant to terminate her second-trimester pregnancy
    in order to mitigate the plaintiffs claim for damages in a wrongful birth
    action.

[2]

We are satisfied that the order
    must be set aside.  In our view this is not a proper case for the question
    posed to the motion judge to be determined on the pleadings under Rule
    20.01(1)(a), which states:

A party may move before a judge,

(a) For the determination,
    before trial, of a question of law raised by a pleading in an action where the
    determination of the question may dispose of all or part of the action,
    substantially shorten the trial or result in a substantial saving of costs.

[3]

The pure question of law raised by
    the motion is whether a woman can
ever
be required to mitigate her claim
    for damages in a wrongful birth action by having an abortion.  This is an
    important issue of law, raising significant policy considerations, and such
    questions are normally better determined on a full factual record after trial,
    where the judge has been able to make findings that form the basis for the
    legal analysis and conclusions: see
PDC 3 Limited Partnership v. Bregman +
    Hamann Architects
(2001), 52 O.R. (3d) 533, at para. 11;
Haskett v.
    Equifax Canada Inc.
(2003), 63 O.R. (3d) 577, at para. 24.

[4]

In addition, the pure question
    of law articulated above is not the way the case was put to us by counsel, or
    it appears, to the motion judge.  What the motion judge was asked to determine
     and did  was whether, on the facts as pleaded, this case constituted a most
    exceptional circumstance case where a court might find that refusing to have
    an abortion was unreasonable, and, therefore, a failure to mitigate.  Framed in
    that way, this is not a question of law, but a question of mixed fact and law
    to be determined at trial.

[5]

On the pleadings here, we simply
    do not know enough to be able to make any such determination.  Respectfully,
    the motion judge erred in concluding that a determination of the question
    before him would not benefit from a more complete evidentiary record available
    at trial.

[6]

Accordingly, we allow the appeal
    and set aside the declaration made by the motion judge.

K.M. Weiler J.A.

R.A. Blair J.A.

G.J.
    Epstein J.A.


CITATION: Mauldin v. Cassels Brock & Blackwell
      LLP, 2011 ONCA 67

DATE: 20110124

DOCKET: M39492 & M39517 (C52912)

COURT OF APPEAL FOR ONTARIO

Weiler J.A. (in chambers)

BETWEEN

Fred Mauldin,
          Dan Myers, Robert Blomberg, Theodore Landkammer,

Lloyd Chelli, Stephen
          Yee, Marvin Cleair, Carolyn Cleair, Richard Hanna,

Douglas Laird, Charles
      Ivans, Lyn White, and Athena Smith

Plaintiffs
          (Respondents)

(Responding Parties in
          M39492/Moving Parties in M39517)

and

Cassels Brock
          & Blackwell LLP,

Gregory Jack Peebles,
      and
Robert Hryniak

Defendants (
Appellant
)

(
Moving Party in
          M39492/Responding Party in M39517
)

DOCKET: M39493 & M39519 (C52913)

BETWEEN

Bruno Appliance and Furniture, Inc.

Plaintiffs
          (Respondents)

(Responding Party in
          M39493/Moving Party in M39519)

and

Cassels Brock
          & Blackwell LLP,

Gregory Jack Peebles,
      and
Robert Hryniak

Defendants (
Appellant
)

(
Moving Party in
          M39493/Responding Party in M39519
)

Kenneth Cancellara, Q.C., Gleb Bazov and Andrea Sanche, for the
          appellant

Javad Heydary, David Alderson and Ruzbeh Hosseini, for the
          respondents

Heard: January 6, 2011

On motions for extensions of time to perfect the
          appeals and on motions for stays pending the appeals and on appeal from the
          order of Justice A. Duncan Grace of the Superior Court of Justice dated
          October 22, 2010, with reasons reported at 2010 ONSC 5490.

Weiler J.A. (in chambers):

[1]

The appellant, Robert Hryniak, has brought a motion
    to extend the time to perfect his appeal until March 31, 2011. Rule 3.02(1) of
    the
Rules of Civil Procedure
provides that the court may extend the time prescribed by the rules on such
    terms as are just.

[2]

The respondents, referred to as the Mauldin group
    and Bruno Appliance and Furniture, Inc. (Bruno), oppose Hryniaks motion and
    have each brought cross-motions for the following relief: (a) an order lifting
    the automatic stay pending appeal, pursuant to rule 63.01; (b) an order that
    Hryniak post security for costs, pursuant to rule 61.06; and (c) an
    interlocutory or mandatory order requiring Hryniak to pay the amount awarded by
    summary judgment into court, pursuant to rule 40.01 and s. 101 of the
Courts of Justice Act
, R.S.O. 1990, c.
    C.43.

[3]

The motions arise out of the order of Grace J.,
    granting partial summary judgment pursuant to Rule 20. Hryniak was ordered to
    pay the Mauldin group $1,190,401.29 USD and to pay Bruno $1 million USD. The
    motion judge found that the evidence established that Hryniak had created an
    investment structure designed to defraud them. He further found that Hryniak
    procured the Mauldin groups money fully intending to take it. Finally, the
    motion judge found that Hryniak received the Bruno funds and did not invest
    them, instead using them to make payments to others. These findings were made
    on the basis of a voluminous documentary record consisting of 28 volumes of
    evidentiary material, along with transcripts of cross-examinations and rule
    39.03 examinations involving 18 witnesses.

[4]

The Mauldin group and Bruno also brought a motion
    for summary judgment against Hryniaks lawyer, Greg Peebles, and Peebles
    former law firm, Cassels Brock & Blackwell LLP. The motion judge concluded
    that summary judgment was not warranted against Peebles or Cassels Brock and
    dismissed the motion for summary judgment in relation to them. He ordered that the
    action against these defendants proceed to trial with dispatch. The full
    reasons for judgment are reported at 2010 ONSC 5490.

The Test

[5]

Although this motion involves a request for leave
    to extend time to perfect an appeal, it is useful to consider the factors that
    apply when determining whether to exercise discretion to extend the time for
    filing a notice of appeal. Those factors are:

·

Has the appellant maintained a firm intention to
    appeal within the relevant time period?

·

Has the appellant provided a reasonable explanation
    for the delay in perfecting the appeal?

·

Is there prejudice to the respondent in granting
    the extension?

·

Is there is so little merit in the proposed appeal that
    the court could reasonably deny the appellant this important right?

·

Does
    the justice of the case require the granting of an extension?

See Todd Archibald,
    Gordon Killeen & James C. Morton,
Ontario
    Superior Court Practice

2011
(Toronto: Lexis Nexis Canada, 2010), at p.580;
Rizzi
    v. Mavros
(2007), 85 O.R. (3d) 401 (C.A.); and
Kefeli v. Centennial College of Applied Arts and
    Technology
, 23 C.P.C. (5
th
) 35 (Ont. C.A.), at para. 14.

i. Intention to Appeal

[6]

The judgment at issue was released on October 22,
    2010. The notices of appeal in the actions brought by the Mauldin group and Bruno
    against Hryniak were served on November 8, 2010, and filed on November 9, 2010,
    well within the 30-day time limit prescribed by the rules for appealing the
    order. I am satisfied that Hryniak had an intention to appeal within the
    relevant time period.

ii. Explanation for the Delay

[7]

Hryniaks explanation for the delay in perfecting
    his appeals within the 30-day period after filing the notices of appeal, as
    required by rule 61.09(1), is that he wished to obtain a second opinion about
    his litigation strategy and ultimately retained new solicitors on December 15,
    2010. The explanation for the delay is reasonable.

iii.  Prejudice

[8]

In this case the motion to extend the time within
    which to perfect the appeal was promptly brought and the extension of time that
    Hryniak seeks to perfect the appeal is less than two months.
It
    does not appear that the respondents would be prejudiced in defending against
    the appeal by the granting of an extension of time within which to perfect it.

[9]

The respondents do, however, allege prejudicial
    conduct on the part of the appellant.
I prefer to discuss this
    conduct when considering the justice of the case.

iv. The Merits of the Appeal

[10]

The fourth factor requires me to consider the
    merits of the appeal, not with a view to determining whether the appeal will
    succeed, but to determine whether it has so little merit that the court could
    reasonably deny the important right of an appeal: see
Duca Community Credit Union Ltd. v. Giovannoli
(2001), 142 O.A.C. 146 (C.A.), per

MacPherson
    J.A. at para. 11.

[11]

Hryniaks principal ground of appeal is that the
    motion judge exceeded the scope of what a judge is permitted to do on a motion
    for summary judgment by using the powers under rule 20.04(2.1) of weighing
    evidence, evaluating credibility and drawing inferences as though he were
    exercising the powers and jurisdiction of a trial court judge, rather than
    using the powers as tools to determine whether there was a genuine issue
    requiring a trial.

[12]

To deal with the merits of Hryniaks primary ground
    of appeal, it is necessary for me to briefly consider the history and general
    scope of the amendments to Rule 20.

[13]

Prior to the new amendments to the
Rules of Civil Procedure
which came into
    effect on January 1, 2010, Rule 20 provided that a party bringing a motion for
    summary judgment had the onus of showing that there was no genuine issue for
    trial. In support of the motion, the party could file supporting affidavit
    evidence. The responding party could not rest on a mere denial of the
    allegations but had to set out specific facts showing that there was a genuine
    issue for trial. The former rule was, however, interpreted by the Court of
    Appeal as not allowing a judge to assess credibility, weigh evidence, or draw
    factual inferences in determining whether there was a genuine issue for trial.
    See
Aguonie v. Galion

Solid Waste Material Inc.
(1998), 38 O.R.
    (3d) 161 (C.A.). As a result, a trial was required whenever there was any
    genuine issue with respect to material facts, no matter how weak the issue. See
Dawson v. Rexcraft Storage &Warehouse
    Inc.
(1998), 164 D.L.R. (4
th
) 257 (Ont. C.A.).

[14]

On June 28, 2006, the Attorney General of Ontario
    asked the Honourable Coulter Osborne, former Associate Chief Justice of
    Ontario, to lead the Civil Justice Reform Project for the purpose of proposing
    ways to make the civil justice system more accessible and affordable in the
    province. Mr. Osbornes report was released on November 20, 2007: see the
    Honourable Coulter A. Osborne,
Civil Justice Reform Project: Summary of Findings
    & Recommendations
(Ministry of the Attorney General, 2007)
(the Osborne Report). Commenting on the Court of Appeals decisions under
    Rule 20, he wrote at p. 35: [F]rom my reading of the Court of Appeals
    decisions on summary judgment, it is how the court has confined the scope of
    the powers of a motion judge or master under Rule 20, not the no genuine issue
    for trial test itself that has limited the effectiveness of the rule. The Osborne Report recommended that
    Rule 20 be amended to allow a motion judge to weigh evidence, evaluate
    credibility and draw any reasonable inference from the evidence and documents
    filed in order to determine whether an issue should proceed to trial.

[15]

Mr. Osborne also recommended that Ontario adopt a
    new mini-trial or summary trial mechanism, similar to Rule 18A (now Rule 9-7)
[1]
of British Columbias
Supreme Court Civil
    Rules
, B.C. Reg. 168/2009. Rule 18A(11) provided:

On the hearing of a summary trial application, the
    court may

(a) grant judgment in favour of any party, either
    on an issue or generally, unless

(i) the court is
    unable, on the whole of the evidence before the court on the application, to
    find the facts necessary to decide the issues of fact or law, or

(ii) the court is of
    the opinion that it would be unjust to decide the issues on the application,

(b) impose terms respecting enforcement of the
    judgment, including a stay of execution, and

(c) award costs.

[16]

Mr. Osborne commented on this concept of a summary
    trial at p. 36 of his report:

As rule 20 matters now stand, the result of a rule 20
    motion is binary; the motion is granted and the action ends, or it is dismissed
    and the parties are on the way to a full trial. In my view, there should be
    more flexibility in the system.
Where the
    court is unable to determine the motion [for summary judgment] without hearing
    viva voce evidence on discrete issues, the rules should provide for a
    mini-trial where witnesses can testify on these issues in a summary fashion,
    without having to wait for a full trial.
This can be done in British
    Columbia through rule 18A. It could be done in Ontario through a similar rule,
    i.e., by amending rule 20. [Emphasis added]
[2]

[17]

The recommendations in the Osborne Report were
    considered and, subject to small modifications, approved by the Civil Rules
    Committee. They form the basis of the present rule. The new summary judgment
    rule in Ontario now provides:

Disposition of Motion

20.04 (2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine
    issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim
    determined by a summary judgment and the court is satisfied that it is
    appropriate to grant summary judgment.

[18]

Rule 20.04 now enables a court to grant summary
    judgment where there is no genuine issue
requiring
a trial with respect to a claim or a defence (emphasis added). This replaces
    the former wording of no genuine issue for trial. The use of the words
    requiring a trial is indicative that the court may still grant summary
    judgment where there is an issue on the merits that, with the exercise of its
    powers, the court can resolve. This is similar to British Columbias Rule 18A,
    which allows the court to grant judgment on an issue of fact or law on the merits
    where there is sufficient evidence before the court to find the facts necessary
    to decide the issue.

[19]

The new amendments also bestow new powers to a
    summary judgment motion judge to assist him or her in determining whether the
    action should proceed to trial.
[3]
Rule 20.04(2.1) provides:

In determining under clause (2) (a) whether there is a
    genuine issue requiring a trial, the court shall consider the evidence
    submitted by the parties and, if the determination is being made by a judge,
    the judge may exercise any of the following powers for the purpose, unless it
    is in the interest of justice for such powers to be exercised only at a trial:

1.
Weighing
      the evidence,

2.
Evaluating
      the credibility of a deponent,

3.
Drawing
      any reasonable inference from the evidence.

[20]

I note that a summary judgment motion judge may
    exercise these powers unless it is in the interest of justice for such powers
    to be exercised only at a trial. This exception echoes rule 18A(11)(ii) of
    British Columbias summary trial rule, which provides that the court may not
    grant summary judgment if it is of the opinion that it would be unjust to
    decide the issues on the application.

[21]

Finally, the vehicle of the mini-trial recommended
    in the Osborne Report was adopted in rule 20.04(2.2):

Oral Evidence (Mini-Trial)

(2.2) A judge may, for the purposes of exercising any
    of the powers set out in subrule (2.1), order that oral evidence be presented
    by one or more parties, with or without time limits on its presentation.

[22]

The effect of the 2010 amendments to Rule 20 was
    discussed by Karakatsanis J. in
Cuthbert v.
    TD Canada Trust,
2010
    ONSC 830
, and in
Hino Motors Canada Ltd. v.
    Kell,

2010 ONSC 1329
.  In
Cuthbert
, Karakatsanis J. suggests that
    the principles from
Dawson v. Rexcraft

Storage
still have force.  She

stated at para. 11:

The decision itself or the test for
    summary judgment -whether there is a genuine issue of material fact that
    requires a trial for its resolution as first articulated in
Irving Ungerman Ltd. v. Galanis
(citation omitted) - has not changed. However, the cases that have since
    restricted a motions judge in assessing credibility, weighing evidence or
    drawing factual inferences have been superseded by the powers set out in the
    new Rule.
Both the analytical review and the availability of oral
    evidence have considerably broadened the motions judge's tools in a summary
    judgment motion. Nonetheless, although a motions judge may weigh the evidence,
    evaluate the credibility and draw reasonable inferences from the evidence,
it is not the role of the motions judge to make
    findings of fact for the purpose of deciding the action on the basis of the
    evidence presented on a motion for summary judgment. This change in the Rule
    does [not?] substitute a summary trial for a summary judgment motion. Although
    a summary judgment motion may, if the motions judge so directs, resemble a
    summary trial, the test and the decision are different (See
Dawson v.
    Rexcraft Storage and Warehouse Inc.
(citation omitted). The motions judge
    must take "a hard look" at the evidence to determine whether it
    raises a genuine issue requiring a trial. (See
Rozin
    v. Ilitchev
(2003), 66 O.R. (3d) 410 at para. 8 (C.A.)) New Rule
    20.04 provides the judge with more tools to do so. [Emphasis added.]

[23]

An arguably more expansive reading of the new Rule
    20 was adopted by Perell J. in
Healey v.
    Lakeridge Health Corp.
,

2010
    ONSC 725, a decision referred to by the motion judge. Perell J. states at
    paras. 22-23 and 29:

Rule 20.04 (2.1) is a statutory reversal of the case
    law that had held that a judge cannot assess credibility, weigh evidence, or
    find facts on a motion for summary judgment. Further under rule 20.04(2.2), a
    judge for the purpose of weighing the evidence, evaluating credibility, and
    drawing inferences may order that oral evidence be presented by one or more
    parties, with or without time limits on its presentation.

Placed in the context of the other amendments to Rule
    20, the purposes of the change from no genuine issue for trial to no genuine
    issue requiring a trial in the test for summary judgment are: (1) to make
    summary judgment more readily available; and (2) to recognize that with the
    courts expanded forensic powers, although there may be issues appropriate for
    trial, these issues may not require a trial because the court has the power to
    weigh evidence on a motion for summary judgment.

.

It is informative to note that rule 20.04(2.1)
    envisions that the motions judge may use the powers of a trial judge unless it
    is in the interest of justice for such powers to be exercised only at a trial.
    The reference to the interests of justice suggests that the motions judge will
    have to assess whether the search for truth and justice requires the forensic
    machinery of a trial.

[24]

In a more recent decision,
Canadian Premier Life Insurance Co. v. Sears Canada
    Inc
.,
2010 ONSC 3834
,
    Pepall J. refers to
Cuthbert
and
Hino Motors
and indicates her disagreement
    with the view expressed by Karakatsanis J.  that the judge hearing a motion for
    summary judgment should not make findings of fact for purposes of deciding the
    action.  After reviewing the recommendations in the Osborne Report, Pepall J.
    held as follows at para. 68 (footnotes omitted):

[C]onsistent with the language of
    Rule 20, a motions judge is not precluded from making findings of fact for the
    purpose of deciding the action on the basis of the evidence presented on a
    motion for summary judgment.
A judge is now able to weigh the
    evidence, evaluate credibility and draw reasonable inferences from the evidence
    and order oral evidence. Implicit in these powers is the ability to make a
    finding of fact. If a motions judge using these powers can safely make a
    determination without the need for a trial, he or she is authorized to do so.
    This view is consistent with that expressed by D.M. Brown J. in
Lawless v. Anderson
: ... in a
    very real sense Rule 20.40(2.1) vests in a motion judge the powers typically
    exercised by a trial judge and ... the fact-finding restrictions placed on
    judges under old Rule 20 have been removed, or at least significantly loosened.
    [Emphasis added.]

[25]

Having set out the history and wording of the
    amendments to Rule 20, as well as  the two streams of jurisprudence, I turn to
    the appellants primary ground of appeal, namely, that the motion judge
    exceeded the scope of Rule 20 in granting summary judgment, rather than
    ordering a trial.  Of course, the issue for present purposes is not whether I
    would give effect to that ground of appeal, but only whether this ground is
    utterly devoid of merit.

[26]

In the present case, it is at least arguable the
    motion judge approached his task as being more along the lines of conducting a
    summary trial in which he made a host of factual findings for the purpose of
    deciding the action on the basis of the evidence before him. As acknowledged by
    the motions judge at para. 63, Hryniak vigorously denie[d] the suggestion he
    was involved in a sham and he pointed to others as being responsible for the
    respondents losses.  The motions judge observed at para. 74: Stopping here,
    the task facing the Mauldin group and Bruno on a motion for summary judgment
    seems overwhelming.  However, the motion judge went on to closely scrutinize
    the voluminous evidence and reached a determination that Hryniak was
    responsible for defrauding the Mauldin group and Bruno.

[27]

This approach to a motion for summary judgment may
    potentially be consistent with the more expansive scope of the rule as
    interpreted by Perell J. in
Healy
and Pepall J. in
Canadian Premier Life
.
    On the other hand, the above passage from
Cuthbert
could be taken to possibly support the appellants argument that the motion
    judges fact-finding mission was more extensive, and was conducted for a
    different purpose, than how the fact-finding function in the amended Rule 20
    should be performed.

[28]

Our court has not yet commented on the scope and
    meaning of the amended rule, or the extent to which it is open to a judge on a
    summary judgment motion to make findings of fact for the purpose of deciding
    the action based on the evidence presented on a motion for summary judgment.
    Thus, I do not think it can safely be said that there is so little merit to
    this ground of appeal that the appellants right to appeal should be denied.

[29]

Hryniak also raises three further grounds of
    appeal: (1) that summary judgment ought not to be granted where fraud is
    alleged; (2) that the motion judge misinterpreted the rule in
Browne v. Dunn
(1893), 6 R. 67 (H.L.); and
    (3) that his findings of fact reveal overriding and palpable errors. In light
    of my conclusion that there is sufficient merit in the first ground, it is
    unnecessary to address the other grounds, the merits of which may be considered
    by the panel hearing the appeal.

v. Considerations
    relating to the
justice of
    the case

[30]

The respondents raise serious concerns relating to
    Hryniaks conduct in encumbering his interest in his family home following the
    release of the motion judges reasons for judgment. They submit that Hryniak`s
    motion to extend time to perfect his appeal is designed to delay the proceeding
    and to frustrate their efforts to enforce the court order against him to
    recover their losses. This is a reasonable submission, given Hryniak`s actions
    leading up to this motion as well as the undertaking given in his affidavit in
    support of this motion.

[31]

Hryniaks affidavit states:

My spouse and I have no interest in or intention to
    sell our home.  Our family resides in Toronto and our life and assets are here,
    in Ontario.  Given the nature of the Plaintiffs motions, the fact that my
    spouse and I have no interest in alienating title to our property at this time,
    and so to allay any concerns that the Plaintiffs may have (although these
    concerns are wholly unsubstantiated), I will undertake not to transfer, divest
    or dissipate my title to the matrimonial home pending the hearing of the
    plaintiffs motions.

[32]

When Hryniak swore this affidavit he had already
    dealt with the matrimonial home located at 66 Cotswold Crescent, Toronto. On
    December 3, 2010, he transferred ownership of the matrimonial home from joint
    tenancy to tenancy in common and charged his interest in the matrimonial home
    in the principal amount of $1,000,000 in favour of his wife, Suzanna Mandryk.
    Hryniak says the charge was granted as security for his wife pursuant to an
    agreement dated December 1, 2010, in recognition of his indebtedness to her for
    subsidizing his legal fees.

[33]

Hryniak deposes that he did the transfer [p]rior
    to any knowledge of the Plaintiffs motions, on my or my former counsels
    behalf. While that may be so, before the transfer was effected and the
    indebtedness registered on title, Hryniaks former solicitors forwarded to him
    a letter dated November 5, 2010, from counsel for the respondents requesting
    that he agree in writing and that his counsel undertake that he would not deal
    with his interest in the property.

[34]

Presumably this request was made because, pursuant
    to rule 60.07, in order to enforce the judgment by requisitioning a writ of
    seizure and sale without leave of the court, the respondents had to file a copy
    of the order
as entered
. As the
    order had not yet been settled, it could not be entered.

[35]

Following receipt of this letter, Hryniaks former
    solicitors advised that he did not own the property, his wife did; they then
    filed his notices of appeal, dated November 8, 2010, which had the effect under
    rule 63.01 of automatically staying the orders for payment by him to the
    respondents until the disposition of the appeals. On November 10, however, they
    advised that Hryniak actually held the property in joint tenancy with his wife.
[4]

[36]

As I have indicated, after Hryniak filed his
    notices of appeal staying enforcement of the judgments against him, he gave a
    charge on the matrimonial home to his wife for $1 million on December 3, 2010.
    After this, on December 6, 2010, the order was finally settled. A Basic
    Residential Market Value Report from the Municipal Property Assessment
    Corporation obtained by counsel for the respondents values the property at
    $1,905,000, which suggests that Hryniaks undivided joint interest in the
    property was worth $952,500.

[37]

The undertaking offered by Hryniak only deals
    with his interest in the matrimonial home pending disposition of the
    respondents motions. It is not an undertaking that he will refrain from
    dealing or disposing of all assets he may have pending the outcome of his
    appeals.

[38]

On December 17, 2010, Rosenberg J.A. adjourned the
    appellants motion and the respondents cross-motions that are now before me.
    At that time, he lifted the automatic stay on enforcing judgment pending appeal
    for two purposes: (1) to permit the respondents to lodge the judgment against
    the matrimonial home; and (2) to allow them to examine Hryniak in aid of
    execution.

[39]

The examination ordered by Rosenberg J.A. was held,
    albeit not to the satisfaction of either the Mauldin group or Bruno. Hryniak
    refused to answer a number of questions and the propriety of those refusals has
    yet to be determined. At this point, Hryniaks only known asset is the
    matrimonial home in which he continues to enjoy living.

[40]

Bruno and the Mauldin group assert that they have
    been prejudiced by Hryniaks actions. In the event that Hryniak has other
    assets, it is apparent that the limited undertaking offered does not cover
    them. Bearing in mind the summary judgment against Hryniak, his dealing with
    the matrimonial home in the face of his creditors request that he not do so
    pending settlement of the order, the self-interested preference he gave to his
    wife as a creditor, the lack of transparency concerning his financial position,
    and the careful wording of his undertaking, the risk of prejudice to the
    respondents in allowing the appeal to proceed is very real. Subject to any
    conditions the court may impose as a reasonable term for granting the
    extension, extending the time within which to perfect the appeal would give
    more time to Hryniak to encumber or dispose of his assets.

[41]

However, such risk to the respondents may be
    minimized if certain conditions are imposed on Hryniak. Rule 3.02(1) provides
    that the court may extend the time prescribed by the rules
on such terms as are just
(emphasis
    added). Having regard to the respondents cross-motions, I believe that any
    prejudice arising from allowing Hryniak to proceed with his appeal may be
    remedied by requiring him to pay an amount reflecting his undivided joint
    interest in his matrimonial home. This would be a just balance between
    Hryniaks right to an appeal and the respondents interest in ensuring that
    they may enforce the motion judges court order if Hryniak loses his appeal.

Conclusion

[42]

Having regard to all of the factors governing the
    test for extending the time to perfect an appeal, I would grant the appellants
    motion to extend time for perfection while also imposing terms. Those terms
    are: (1) that Hryniak post an irrevocable letter of credit with the court in the
    amount of $950,000; and (2) that he provide the court with his written
    undertaking not to encumber or dispose of any assets he may have pending the
    outcome of his appeals.  The letter of credit should be made payable to the Accountant
    of the Superior Court of Justice, and the undertaking should be addressed to
    the Registrar of the Court of Appeal for Ontario.

[43]

Provided that the terms above are complied with on
    or before February 3, 2011, I order that the time to perfect the appeals be
    extended until February 28, 2011. If the terms are not complied with, the
    motion to extend the time to perfect the appeals  will be dismissed on February 3,
    2011, without further notice to Hryniak.

[44]

Given that these terms in substance reflect the
    relief sought by the respondents in the cross-motions, I would dismiss those
    motions.

Costs

[45]

In the circumstances, I make no order as to costs.

RELEASED:  January 24, 2011

[1]
British Columbias
Supreme Court Civil Rules
,
    B.C. Reg. 221/90, were recently amended. The new rules, B.C. Reg. 168/2009,
    came into force on July 1, 2010.

[2]
British Columbias Rule 18A did not itself provide that the court may order
    viva voce evidence at a summary trial. Rather, rules 52(8)(a) and (b) (now
    rules 22-1(4)(a) and (b)) of the
Supreme
    Court Civil Rules
permitted the court to order the examination of a
    witness or party, or the cross-examination of a deponent, before the court in
    chambers proceedings. Pursuant to rule 52(2)(c), chambers proceedings included
    summary trials under Rule 18A.

[3]
It should be noted that only a judge, and not a master, may exercise these new
    powers.

[4]
Hryniak did not attend an examination in aid of execution in the Mauldin Action
    scheduled on November 17, 2010, although duly served through his lawyer with
    the notice of the examination. However, because the execution of the judgment
    was stayed when Hryniak filed the notice of appeal on November 8, 2010, and an
    examination in aid of execution is considered to be enforcement of the
    judgment, it appears he did not have to attend the examination.