COURT OF APPEAL FOR ONTARIO

CITATION: Grain Farmers of Ontario v. Ontario (Environment
    and Climate Change), 2016 ONCA 283

DATE: 20160420

DOCKET: C61289

Laskin, Cronk and Miller JJ.A.

BETWEEN

Grain Farmers of Ontario

Applicant (Appellant)

and

Ontario Ministry of the Environment and Climate
    Change

Respondent (Respondent)

Eric Gillespie and Karen Dawson, for the appellant

Sandra Nishikawa and Domenico Polla, for the respondent

Heard: March 9, 2016

On appeal from the order of Justice Suhail A.Q.
Akhtar
of the Superior Court of Justice, dated October 23,
    2015, with reasons reported at 2015 ONSC 6581.

B.W. Miller J.A.:

I.

Overview

[1]

The Ontario farmers represented by the Grain Farmers of Ontario (GFO) rely
    on seeds treated with neonicotinoids, a class of pesticide, to protect crops
    against harmful insects. However, neonicotinoids are believed to have a toxic
    effect on bees and other pollinators. Out of concern over the environmental
    impact of neonicotinoids, Ontario amended Regulation 139/15 (the Regulation)
    made under the
Pesticides Act
,
R.S.O. 1990, c. P. 11 (the Act) to sharply reduce, but not eliminate, their use.
    GFO is concerned that the Regulation is unworkable, will produce little
    benefit, and will significantly impair the ability of its members to protect
    their crops from damaging insects.

[2]

GFO brought an application under r. 14.05(3)(d) of the
Rules of
    Civil Procedure
, for a declaration interpreting the Regulation. It also
    brought a motion for a stay of the Regulation pending the determination of the
    application. The respondent, Ontario Ministry of the Environment and Climate
    Change (Ontario) brought a cross-motion to strike out GFOs Notice of
    Application as disclosing no reasonable cause of action. The motion judge granted
    Ontarios cross-motion and dismissed GFOs application and stay motion. GFO
    appeals the dismissals of the application and the stay motion.

[3]

This appeal turns on whether the motion judge erred in holding that the
    remedy that GFO sought was not a determination of rights arising from the interpretation
    of the Regulation, but a re-writing of the Regulation. Importantly, GFO
    challenges neither the constitutionality of the Regulation nor its validity. It
    claims that the Regulation, on a plain reading, is ambiguous and that a
    declaration of what the Regulation requires is needed to ascertain the farmers
    rights and obligations in respect to the use of treated seeds. GFO submits that
    in circumstances where a partys rights depend on the interpretation of an
    ambiguous regulation, r. 14.05(3)(d) authorizes that party to apply to court
    for a determination of its rights.

[4]

I would dismiss the appeal. The Regulation is not ambiguous and GFO has
    not identified a genuine dispute about the farmers rights and obligations. To
    grant the remedy that GFO seeks would be tantamount to amending a regulation
    through interpretation, a remedy well outside the courts discretionary power to
    order declaratory relief.

II.

Background

[5]

GFO represents 28,000 producers of corn, soybean, and wheat in Ontario.
    Their produce generates $2.5 billion in farm gate receipts and sustains 40,000
    agricultural jobs. It believes neonicotinoid-treated seeds to be an important weapon
    in the arsenal against crop infestation, allowing for more efficient grain
    farming to the benefit of both farmers and their customers.

[6]

The Act establishes Ontarios authority for classifying pesticides and
    regulating their use in Ontario. The Regulation came into force on July 1,
    2015, amending O. Reg 63/9 made under the Act, restricting the sale and use of
    neonicotinoid-treated seeds. The amendments added neonicotinoid-treated seeds
    to the substances classified as pesticides. The use of these treated seeds is
    still permitted where a user obtains a pest assessment report that establishes
    that the use is in fact necessary, according to the criteria set out in the
    Regulation and Pest Assessment Guideline. The pest assessment report must be
    presented to seed vendors prior to the purchase of treated seeds.

[7]

The Regulation provides for two different types of pest assessment
    reports: a crop pest assessment (CPA), and a soil pest assessment (SPA).
    The Regulation specifies that a CPA may only be prepared after March 1, 2016. There
    is no similar temporal restriction on the preparation of an SPA. GFO argues
    that the absence of a date governing the preparation of SPAs creates an
    ambiguity in the Regulation, making its application uncertain and rendering
    compliance with it impossible. It asks the court to grant a declaration reading
    a specific date into the text of the Regulation before which SPAs will not be required.
    At the appeal hearing, GFO proffered a date of March 1, 2017. This would, in
    effect, create a one year stay of the Regulation.

[8]

The Regulation includes a transitional provision: in the first year of the
    new regime, farmers can use treated seeds on 50% of their lands without needing
    a pest assessment report. GFO argues that the transitional provision suffers
    from a baseline problem: a pest assessment report in the transition year would not
    accurately indicate the need for treated seeds, because the use of treated seeds
    in the previous year will have temporarily suppressed the harmful pests in
    crops and soil. With reduced access to treated seeds, GFO expects the harmful
    insects to rebound, resulting in substantial crop damage in the transition
    year, possibly in the millions of dollars. Only after the farmers have incurred
    these losses will they have the evidence necessary to obtain a favourable pest
    assessment report and purchase treated seeds to combat infestation in the next
    planting cycle. Ontarios response is that the transition provision recognizes
    the baseline problem and provides a compromise by allowing for treated seeds to
    be used on up to 50% of the area farmed without requiring a pest assessment
    report.

[9]

On GFOs reading, the plain textual meaning of the Regulation would
    perpetrate a senseless and harmful result  significant losses from crop damage.
    It submits that such an interpretation is inconsistent with the basic
    assumption that Ontario is a competent institution acting in the public
    interest.

[10]

GFO applied for a declaration providing an interpretation of the
    Regulation that would relieve farmers from having to comply with the
    Regulations requirements for the 2016 growing season.

[11]

Ontario brought a cross-motion to strike GFOs application as disclosing
    no reasonable cause of action. The motion judge granted that motion, holding at
    para. 38 that although GFO formally sought an interpretive declaration, in
    reality it was asking the court to rewrite or correct legislation argued []
    to be faulty or ambiguous.

III.

Issues

[12]

GFO raises two issues on appeal. It submits that the motion judge erred
    in finding that: (1) the Regulation does not limit the farmers property
    rights, and (2) the relief sought is not the determination of rights through
    the interpretation of a regulation.

IV.      Analysis

(1)

Does the Regulation affect property rights?

[13]

GFO submits that the motion judge erred by characterizing GFOs claim as
    one of economic rather than property rights. It is unnecessary, however, to
    decide whether the Regulation affects property rights. It would be enough, for
    the purposes of GFOs argument, that the Regulation affect any of the farmers
    legal rights. Nothing is added to GFOs argument by further specifying those
    rights as distinctly property rights.

[14]

Although the motion judge concluded that the Regulation does not affect
    property rights, I do not interpret him as concluding that the Regulation does
    not affect the farmers legal rights at all. In any event, in my view, it
    plainly does. Purchasing and using treated seeds is an exercise of a liberty. A
    liberty, to use the standard grammar of juridical relationships, is a species of
    legal right: it is the absence of any law that would constrain any particular action:
MacDonald v. City of Montreal
, [1986] 1 S.C.R. 460 (Wilson J., in
    dissent) at pp. 517-519.
[1]
Because a liberty is only the absence of a legal restriction, and not a legal
    or constitutional right that government not create such restrictions, a liberty
    can be narrowed, or extinguished entirely, by a constitutionally valid statute
    or regulation.

[15]

The Regulation narrows the farmers range of legally permitted options,
    and so affects the farmers rights in this sense. Little, however, turns on
    this. The limitation of a right does not, standing alone, create a justiciable
    issue. The problem that GFO cannot overcome is that there is simply no
    controversy as to the farmers rights or obligations under the Regulation that
    could make the matter justiciable. As the motion judge held, and as I explain
    below, the exercise of the courts declaratory power is discretionary and is
    informed by the doctrine of justiciability:
Canada v. Solosky
, [1980]
    1 S.C.R. 821, at p. 832;
Green v. Canada (A.G.)
, 2011 ONSC 4778,
    [2011] O.J. No. 3615, at paras. 24-25.

(2)

Rule 14.05(3)(d): has GFO identified a justiciable issue?

[16]

The motion judge was correct to strike the application on the basis that
    it presented no genuine issue for determination. Although the court has broad
    jurisdiction to grant declaratory relief as a result of its inherent
    jurisdiction and pursuant to s. 97 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43, the party seeking the declaration must establish that the
    question it raises in its application is a legal or justiciable issue: L.
    Sossin,
Boundaries of Judicial Review: The Law of Justiciability in Canada
,

2nd ed. (Toronto: Carswell, 2012), at p. 275;
Bedford Service
    Commission v. Nova Scotia (A.G.)
(1976), 72 DLR (3d) 369, (N.S. C.A.),
    revd on other grounds [1977] 2 S.C.R. 269.

[17]

GFO has attempted to ground the relief sought in r. 14.05(3)(d), arguing
    that it provides free-standing jurisdiction where an interpretative question is
    raised. This submission is clearly in error. Rule 14.05(3)(d) is procedural in
    nature. The rule provides:

(3)
A proceeding
    may be brought by application where these rules authorize the commencement of a
    proceeding by application or where the relief claimed is,

(d) the determination of rights that depend on the
    interpretation of a deed, will, contract or other instrument, or on the
    interpretation of a statute, order in council, regulation or municipal by-law
    or resolution;

[18]

Rule 14.05, as has often been noted, does not create jurisdiction but
    assumes it, and provides a means by which to engage that jurisdiction:
Canada
    Post Corp. v. C.U.P.W.
(1989), 70 O.R. (2d) 394, 62 D.L.R. (4th) 724
    (H.C.), at p. 397;
N.(J.) v. Durham

Regional Police Service
,
    2012 ONCA 428, 284 C.C.C. (3d) 500, at para. 16.

[19]

Accordingly, r. 14.05(3)(d) does not expand the courts jurisdiction to
    grant declaratory relief on the basis of a free-standing challenge to the
    wisdom or fairness of governmental action. The motion judge, as required by r.
    21, accepted the facts as pleaded: the regime will create significant, serious
    hardship for the farmers represented by GFO. But even if, as pleaded, the Regulation
    creates financial hardship, is futile, and provides little environmental
    benefit, neither the wisdom nor the efficacy of a regulation is a justiciable
    issue. Although couched in the language of r. 14.05(3)(d), the remedies that
    GFO is actually seeking are solely within the powers of the legislative and
    executive branches of government.

[20]

Although its policy dispute with Ontario is real and may have
    significant consequences for GFO, the problem of legal interpretation alleged
    by GFO is artificial  the dispute between the parties does not turn on the
    interpretation of the Regulation. The regulatory preconditions that must be
    satisfied before a farmer can purchase and use treated seeds are clear. A
    farmer must obtain a pest assessment report that demonstrates the need for
    treated seeds, according to the criteria set in the Regulation. GFO has not
    identified any ambiguity in the Regulation. The absence of a date in the SPA
    provision does not create any interpretive problems. It is clear that the
    farmers are free to obtain an SPA report at any time, as Ontario argued.

[21]

The issues raised in the Notice of Application can be contrasted with
    the issues raised in
Schaeffer v. Wood
, 2011 ONCA 716, 107 O.R. (3d)
    721, revd on other grounds, 2013 SCC 71, [2013] 3 S.C.R. 1053.
Schaeffer
involved a successful application for a determination of rights under r. 14.05(3)(d).
    In that case, the applicants sought an interpretation of a legislative
    framework governing investigations by the Special Investigations Unit, which
    was established by the
Police Services Act
, R.S.O. 1990, c. P.15. That
    legislation had left unspecified whether police officers involved in SIU
    investigations were permitted to consult with legal counsel prior to drafting
    notes that they were required to make. There were, in short, practical questions
    to be answered about the rights of state actors under legislation that was intended
    to guide and constrain their conduct.

[22]

There are no similarly practical questions of interpretation or
    application raised here. Instead, GFO makes an open-ended invitation to the
    court to rewrite a regulation of general application. GFO asks the court to take
    the alleged unfairness of the Regulation as authority to rewrite it to
    alleviate the burden on its members. To do so would not resolve a genuine
    interpretive question. It would instead defeat the intention of the Regulation.
    This problem was clearly identified by the motion judge at para. 37 of his reasons:

In my view, GFO is not asking for a determination of rights
    that depend on the interpretation of the Regulation but a re-writing of that
    Regulation in a manner that would permit the effects of the Regulation to be
    delayed to its advantage.

[23]

I agree entirely with the reasoning of the motion judge at paras. 38-39:

It is not the job of this court to pronounce on the efficacy or
    wisdom of government policy absent the aforementioned constitutional or
    jurisdictional challenges, neither of which are made here: see
Ontario
    Federation of Anglers & Hunters v. Ontario (Ministry of Natural Resources)
.
    Nor is it within the power of this court to rewrite or correct legislation
    argued by a party to be faulty or ambiguous. Yet, this is precisely what GFO
    asks in the context of its application. Such a course of action would, in
    effect, render the operative Regulation inoperative and would, in effect,
    change the legislation. I agree with Ontario that it is neither possible nor
    desirable that this court have the jurisdiction to effectively grant a stay in
    the guise of a declaration of a Regulation which is otherwise unchallenged:
Rajan
    v. Canada (Minister of Employment and Immigration)
.

The words of the Alberta Court of Appeal in
Trang v.
    Alberta (Edmonton Remand Centre)
are apposite in the circumstances of this
    case:

Private litigants are not entitled to use the courts as an
    indirect method of altering public policy decisions, especially those involving
    the expenditure of public funds. Just because a private party has a sincere
    concern about the validity of a public policy
does
not entitle him or her to litigate its legality:
Canadian Council of
    Churches v. Canada (Minister of Employment and Immigration)
. As a
    corollary, the superior courts are not to use their powers to grant generally
    worded declarations as a method of controlling or influencing governmental
    operations. [Citations omitted.]

[24]

The motion judge made no error in concluding that the Notice of
    Application does not disclose a reasonable cause of action. I would dismiss the
    appeal from the dismissal of GFOs application.

[25]

Given this result, it is unnecessary to consider the appeal from the
    dismissal of GFOs stay motion.

V.      Disposition

[26]

For the reasons given, I would dismiss the appeal from the dismissal of
    GFOs application. I would make no order as to the costs of the appeal.

Released: JL APR 20 2016

B.W. Miller J.A.

I agree. John Laskin
    J.A.

I agree. E.A. Cronk
    J.A.

[1]
See also Adam J. Macleod,
Property and Practical Reason

(Cambridge
    University Press 2016) p. 60, 214-15. Simon Douglas, Ben MacFarlane Defining
    Property Rights in James Penner and Henry Smith (eds.)
Philosophical
    Foundations of Property Law

(Oxford University Press 2013)


COURT OF APPEAL FOR ONTARIO

CITATION: Gray v. Rizzi, 2016 ONCA 290

DATE: 20160427

DOCKET: C59047

Sharpe, Brown and Miller JJ.A.

BETWEEN

Nadine Ellen Gray

Applicant (Appellant/

Respondent by way of cross-appeal)

and

Mario Rizzi

Respondent (Respondent/

Appellant by way of cross-appeal)

Cheryl Goldhart and Maneesha Mehra, for the appellant/ respondent
    by way of cross-appeal

Peter B. Cozzi, for the respondent/appellant by way of cross-appeal

Heard: December 18, 2015

On appeal from the order of Justice Lydia M. Olah of the Superior
    Court of Justice, dated June 10, 2014.

ENDORSEMENT

[1]

In our reasons released February 25, 2016, reported at 2016 ONCA 152, we
    directed that in the event the parties could not agree on the precise amounts
    of child and spousal support arrears that resulted from our decision, the
    parties should submit a brief joint submission setting out their respective
    calculations. We are disappointed that counsel failed to discuss their
    respective calculations with each other. Instead, the parties filed separate
    submissions that differed significantly in their calculation of arrears.

[2]

Having reviewed the parties submissions, we conclude that the
    calculations filed on behalf of Nadine came closer to reflecting the
    determinations made in our decision. Accordingly, we order that the Variation Order
    dated June 10, 2014, be varied as follows:

(i)

The total spousal
    support owed by the respondent, Mario Rizzi, from August 2002 until January 1,
    2012, amounts to $324,762.00, exclusive of interest;

(ii)

The total child support owed
    by the respondent, Mario Rizzi, from August 2002, until December 31, 2013,
    amounts to $212,600, exclusive of interest.

[3]

In her submissions, Nadine advised that she is prepared to give Mario
    credit for support payments and garnishments of $272,544.90. According to the
    chart accompanying her submissions, that amount includes payments made by Mario
    in 2014 and 2015. When limited to the period August, 2002 until December 31,
    2013, Nadines concession amounts to payments totalling $259,508.19.  Given
    that concession, we amend para. 67 of our reasons to read that from 2002 until
    the end of 2013, Mario made total support contributions of $259,508.19.

[4]

Consequently, as at December 31, 2013, the amount of spousal and child
    support due and owing by Mario to Nadine totaled $277,853.81, exclusive of
    interest.

Robert J. Sharpe J.A.

David Brown J.A.

B.W. Miller J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hashemi-Sabet Estate v. Mazzulla, 2016 ONCA 273

DATE: 20160415

DOCKET: C60893

Weiler, Cronk and Benotto JJ.A.

BETWEEN

The Estate
    of Abdolrahim Hashemi-Sabet, By his
    Estate Trustee and Executrix Savitri Maharaj, Savitri
    Maharaj, Fatima Hashemi-Sabet by her Litigation  Guardian
    Savitri Maharaj, and Farah Hashemi-Sabet by her  Litigation
    Guardian Savitri Maharaj

Plaintiffs (Appellants)

and

Giuseppe Mazzulla and Christine Gavine

Defendants (Respondents)

Alfred Schorr, for the appellants

Alan L. Rachlin and Emily Casey, for the respondents

Heard: April 12, 2016

On appeal from the judgment of Justice M.L. Edwards of
    the Superior Court of Justice, dated June 19, 2015.

By the Court:

[1]

The deceased  who could not swim  drowned on Lake Simcoe while he and
    his family were visiting the respondents cottage. His estate and the surviving
    family members brought an action alleging negligence on the part of the
    respondents for failing to warn the deceased of the dangers of going into the
    lake; failing to provide him with a life jacket; failing to stop him from going
    to the lake; and failing to supervise him. The action was dismissed on a
    summary judgment motion. The estate and the family members appeal.

[2]

At the conclusion of oral argument on behalf of the appellants, the
    court dismissed the appeal with reasons to follow. These are those reasons.

Facts

[3]

The respondent Giuseppe Mazzulla owns a cottage near Lake Simcoe;
    Christine Gavine is his wife. The respondents were friends with the deceased
    and his family and had entertained them at their cottage. The cottage was not
    on the lake. There were other properties between their cottage and the lake.

[4]

On August 16, 2010, the deceased, his common law spouse and her daughter
    visited the respondents. On at least one previous visit, the deceased had gone
    to the lake and waded in the water without a life jacket. This time, while the
    others were having lunch, he left the cottage to walk to the lake. He did not
    ask for a life jacket, nor did anyone suggest to him that he should take a life
    jacket. He changed into a swim suit and took an inflatable ring that he had brought
    with him. His wifes daughter, then 10 years old, accompanied him to the lake.
    At some point after she returned to the cottage, the deceased drowned.

[5]

A police report indicated that witnesses observed that the wind blew the
    deceased out into the open lake and that he either fell or jumped off the ring
    in approximately 10-12 feet of water, possibly in a panicked state, and that he
    went under the surface. Although there was wind that day, the deceaseds wife
    agreed that the wind was not so strong at the cottage that she was concerned
    about her husband going to the lake.

[6]

In support of their negligence claim, the appellants primarily relied on
    the allegation that the respondents had previously told the deceased that the
    lake was safe and that one could walk out for miles without the water going
    above ones knees.

Decision Below

[7]

The motion judge determined that the claim essentially boils down to the
    suggestion that the [respondents] had misrepresented to the [appellants], and
    [the deceased] in particular, that the lake was safe, very shallow, and that
    one could walk for miles with the water level never being above ones knees.
    He referred to
Her Majesty the Queen v. Cognos Inc.
,
[1993] 1 S.C.R. 87, for the elements of
    the tort of negligent misrepresentation, and noted that the appellants were
    required to establish that the respondents owed the deceased a duty of care
    based on a special relationship. He also referred to
Childs v. Desormeaux
,
    [2006] 1 S.C.R. 643 for the principle that:  A positive duty of care may exist
    if foreseeability of harm is present and if other aspects of the relationship
    between the plaintiff and the defendant establish a special link or proximity.

[8]

The motion judge concluded that there was no special relationship
    between the parties, no duty of care owed by the respondents and no foreseeable
    risk of harm. Further, there was no evidence to suggest that the lake was
    unsafe. It only became unsafe when, for reasons that could not possibly have
    been known to the respondents, the deceased chose to get onto the ring and
    place himself in peril.

Appeal

[9]

The appellants submit that the trial judge erred in finding that the
    representation allegedly made to the deceased was insufficient to support a
    finding of negligence. Simply put, they allege that he drowned as a result of
    his reliance on the respondents representation that the lake was safe. They
    state further that the statement as to the depth of the lake
itself
gave rise to a duty of care.

Analysis

[10]

We
    agree with the motion judge that there is no genuine issue requiring a trial.
    The motion judge put the appellants case at its highest by viewing the action as
    one that encompassed negligent misrepresentation and then by accepting that the
    alleged statement about the lake had been made by the respondents. He concluded
    however that the facts did not disclose any special relationship of proximity
    giving rise to a duty of care on the part of the respondents to the deceased.

[11]

We
    agree. The evidence disclosed that the deceased and his family were attending
    the cottage purely as a social visit; the cottage property did not abut Lake
    Simcoe and the beach; the deceased had been to the cottage previously and had
    gone into the water up to his waist; the deceased, although a non-swimmer, was
    a highly educated, intelligent and sober adult; and, no one, including the
    deceaseds wife, had reason to believe that he would get onto the ring and
    float into the lake.

[12]

In
    these circumstances, no relationship of supervision or control by the
    respondents over the deceased existed.  Nor did the respondents create or
    control a risky situation, giving rise to a duty to warn.  The motion judges
    finding of no special relationship between the parties was fatal to the
    appellants claim that the respondents owed a duty of care to the deceased.

[13]

The
    motion judge concluded that any representation made to the deceased concerning
    the lake was not relied upon. The deceased had been in the water before, gone
    in deeper than his knees, knew he could not swim, was well educated and sober. On
    this basis as well, the respondents did not owe a duty of care to protect the
    deceased from or warn him of obvious dangers removed from their property over
    which they had no control.

[14]

In
    the absence of any duty of care owed by the respondents to the deceased, the
    appellants negligence action cannot succeed. There is no genuine issue
    requiring a trial.

[15]

Accordingly,
    the appeal is dismissed with costs of the appeal payable to the respondents in
    the amount of $8,260.10, inclusive of disbursements and HST.

Released: April 15, 2016

K.M. Weiler J.A.

E.A. Cronk J.A.

M.L. Benotto J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Haunert-Faga v. Caprara, 2016 ONCA 266

DATE: 20160411

DOCKET: C61352

Sharpe, Juriansz and Roberts JJ.A.

BETWEEN

Christine Marie Haunert-Faga

Plaintiff (Respondent)

and

Giuliana
    Caprara in her personal capacity and in the capacity of Estate Trustee

without
    a Will of the Estate of Bruno Caprara, deceased, Stephen Leonardo Glen Faga,
    Marco Caprara, Christian Caprara, Faga Group Limited, Faga Group Construction
    Limited, Domenico Faga, Rhodena Macdonald and
Presta Caparrotta LLP

Defendants (
Appellant)

Maurice J. Neirinck, for the defendant, Giuliana Caprara,
    and for the appellant, Faga Group Construction Limited

Sean Lawler, for the appellant, Presta Caparrotta LLP

Robert Rueter and Sara J. Erskine, for the respondent,
    Christine Marie Haunert-Faga

Heard and released orally: April 7, 2016

On appeal from the judgment of Justice Michael A. Penny
    of the Superior Court of Justice, dated October 23, 2015.

ENDORSEMENT

[1]

The appellants moved for summary judgment to dismiss the claims on the
    grounds that they were barred by the applicable statutory limitation period.
    The parties agreed that all of the evidence necessary for resolution of the
    limitations issue was before the court and that the trial judge would be in no
    better position to decide it. The appellants now appeal from the motion judges
    dismissal of their motion.

[2]

The issue before the motion judge was whether the respondent had
    commenced her claim within two years of the time she knew or ought to have
    known, through the exercise of reasonable diligence, the facts necessary to
    support her claims.

[3]

The motion judge found that the respondent lacked standing to bring the
    fraudulent conveyance claim prior to the appointment of the receiver, given the
    elaborate corporate structure used by her former husband and his family. The
    motion judge also found that prior to the respondents unsuccessful attempt to
    execute her divorce judgment and prior to the receivers investigation, she did
    not have the required information relating to fraudulent intent in relation to
    the challenged transfer. The motion judge further found that the appellants had
    concealed facts necessary to support the respondents claims and that the
    respondent only acquired knowledge of those concealed facts following the
    receivers investigation. At para. 55, the motion judge added that prior to the
    receivers investigation, Presta Corporation and Giuliana Caprara denied any
    fraudulent intent.

[4]

The motion judge gave careful reasons explaining the basis for these challenged
    findings. They are supported by the evidence and entitled to deference on
    appeal. He identified the correct legal test to determine the issue of
    discoverability. His application of the facts he found to that test was a
    finding of mixed fact and law that also attracts deference on appeal. We cannot
    agree that there is any basis to interfere with his determination that the appellants
    failed to establish a limitation defence.

[5]

Costs to the respondent fixed in the amount of $20,000, inclusive of
    disbursements and applicable taxes, payable in equal amounts by the appellants.

Robert
    J. Sharpe J.A.

R.G.
    Juriansz J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Howard v. Benson Group Inc. (The Benson Group Inc.),
    2016 ONCA 256

DATE: 20160408

DOCKET: C60404

Cronk, Pepall and Miller JJ.A.

BETWEEN

John Howard

Plaintiff (Appellant)

and

Benson Group Inc., carrying on business as The Benson
    Group Inc.

Defendant (Respondent)

Kevin Sherkin and Ryan Wozniak, for the appellant

Albert Campea and Rachel Goldenberg, for the respondent

Heard: October 16, 2015

On appeal from the order of Justice Donald MacKenzie of
    the Superior Court of Justice, dated April 22, 2015, with reasons reported at
    2015 ONSC 2638.

Miller J.A.:

Overview

[1]

The appellant, John Howard, was employed at an automotive service centre
    in Bowmanville, Ontario as Truck Shop Manager and then as Sales Development
    Manager. His written employment contract was for a five-year term, commencing
    September 2012 (the Employment Contract). His employer, the respondent Benson
    Group Inc., terminated the appellants employment, without alleging cause, 23
    months later.

[2]

The appellant brought an action for breach of contract, seeking payment
    of his compensation for the unexpired portion of the contract: more than three
    years salary. His subsequent motion for summary judgment was granted by the
    motion judge, but he was not awarded the remedy that he sought. Instead of
    payment of salary to the end of the term of the contract, the appellant was
    awarded common law damages for wrongful dismissal. The quantum of damages,
    subject to mitigation, was to be assessed at a mini trial.

[3]

The primary question raised on appeal is whether an employee who is
    employed under a fixed term employment contract that does not provide for early
    termination without cause, is entitled to payment of the unexpired portion of
    the contract on early termination of the contract?

[4]

For the reasons that follow, I conclude that the motion judge erred in holding
    that the appellant is entitled to common law damages and that a duty to
    mitigate applies in the circumstances of this case. In my view, the appellant
    is entitled to a contractual sum for the termination of his employment in an
    amount equal to his salary and benefits for the unexpired term of the
    Employment Contract.

Background

[5]

The respondent terminated the appellants employment on July 28, 2014
    23 months into the Employment Contract. The appellant was then 57 years old and
    earned a base salary of $60,000 per year, plus benefits.

[6]

The Employment Contract expressly provided for early termination. Clause
    1.3 set out the general framework: (t)he Employee and the Employer may
    terminate the Employees employment at any time in accordance with the terms
    and conditions of this Agreement. Various early termination scenarios were
    governed by Article 8. These included early termination by the employee (Clause
    8.2), and by the employer for cause (Clause 8.3). Most significantly for this
    appeal, the employers right to early termination without cause was governed by
    Clause 8.1:

Employment may be terminated at any time by the Employer and
    any amounts paid to the Employee shall be in accordance with the
Employment
    Standards Act of Ontario
.

[7]

The respondent took the position that it terminated the Employment
    Contract according to Clause 8.1, and that Clause 8.1 governed its liability to
    the appellant. The respondent argued that its liability was limited to two weeks
    salary in lieu of notice. The motion judge, however, found Clause 8.1 to be
    unenforceable due to ambiguity. Significantly, that finding is not appealed.

[8]

After excising Clause 8.1 due to vagueness, the motion judge examined
    the remaining provisions of the Employment Contract to determine whether it
    demonstrated an intention by the parties to displace the common law presumption
    of reasonable notice (or pay in lieu) in the event of termination without cause.
    He concluded that it did not. Accordingly, he rejected the appellants argument
    that he was entitled to contractual damages (or liquidated damages) for the
    unexpired term of the Employment Contract.

[9]

The motion judge ordered a mini-trial to address the question of what
    is the reasonable notice period attributable to the defendants termination of
    the plaintiffs employment according to common law, including any obligation
    on the appellant to mitigate his damages by seeking other employment.

Issues

[10]

The appellant raises two issues on appeal. Did the motions judge err in
    finding that:

(1) the respondent is liable for damages according to the
    common law of reasonable notice, rather than damages for termination of a fixed
    term contract? and

(2) an award of damages for early termination of the Employment
    Contract is subject to a duty to mitigate?

Issue 1: Common law reasonable notice or damages for
    termination of a fixed term contract?

[11]

The motion judge made two critical findings: (1) that the early termination
    clause is sufficiently ambiguous as to be unenforceable; and (2) that in the
    absence of an enforceable early termination clause, the respondents
    obligations are governed by an implied term under the common law requiring
    reasonable notice for the termination of the employment of the [appellant].
    Only the latter finding is appealed.

The Appellants Argument

[12]

The appellant argues that the motion judge erred in finding that he is
    entitled only to common law damages for reasonable notice, rather than contractual
    damages for the unexpired part of the contract. He submits that although Clause
    8.1 was found to be unenforceable, the remainder of the contractual provisions
    with respect to term and termination remained in effect, and the Employment
    Contract remained a fixed term contract.

[13]

As the right to early termination, per Clause 1.3, could only be exercised
    in accordance with the terms and conditions of this Agreement, the appellant
    argues that without Clause 8.1, the respondent had no contractual right to
    terminate the Employment Contract without cause. The only contractual rights the
    respondent had to terminate the Employment Contract were: (1) termination for
    cause under Clause 8.3, and (2) early termination without cause during a
    long-expired probationary period under Clause 1.

[14]

The appellant argues that the motion judge erred in concluding that a
    consequence of the failure of Clause 8.1 was that the Employment Contract did
    not evidence an intention to oust the common law presumption of reasonable
    notice. The appellant maintains that the Employment Contract remained a fixed
    term contract, and should be interpreted in the same manner as any fixed term
    employment contract without a provision allowing for early termination without
    cause.

The Respondents Argument

[15]

The respondent submits that the Employment Contract must be interpreted
    in accordance with the parties intentions, particularly the intention,
    manifest in Clause 1.3, that the Employment Contract could be terminated at
    any time.

[16]

If the Employment Contract expressly permits early termination, the
    respondent says, then the appellant, on early termination, cannot be entitled to
    compensation that he would have earned to the end of the Employment Contract. To
    hold otherwise, the respondent says, would mean that the appellants right to
    compensation would be the same regardless of whether the Employment Contract
    permitted early termination or not. Clause 1.3 permitting termination at any
    time would have no practical effect and the employer would derive no benefit
    from contracting for early termination. Accordingly, the respondent contends,
    the motion judge made no error in finding that the Employment Agreement did not
    displace the common law presumption of reasonable notice.

The Applicable Standard of Review

[17]

The applicable standard of review was not addressed by the parties. In
    my view, it is correctness. Generally, a motion judges interpretation of a
    contract will be entitled to deference and is reviewable for palpable and
    overriding error on the reasonableness standard. This is because contractual
    interpretation most often raises questions of mixed fact and law. However, where
    the decision below contains an extricable question of law, it is reviewable on
    the correctness standard. Extricable errors include: (1) the application of an
    incorrect legal principle; (2) the failure to consider a required element of a
    legal test; and (3) the failure to consider a relevant factor:
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at
    para. 53.

[18]

In
Sattva
, Rothstein J. warned that courts must be cautious in
    identifying questions of law in disputes over contractual interpretation, and
    ensure that the proposed ground of appeal has been properly characterized. The
    close relationship between the selection and application of principles of
    contractual interpretation and the construction ultimately given to the
    instrument means that the circumstances in which a question of law can be
    extracted from the interpretation process will be rare:
Sattva
, at paras.
    54-55.

[19]

The first question raised by the appellant is properly characterized as
    an extricable question of law. The question is whether an employer who: (1)
    terminates without cause (2) a fixed term employment contract that (3) does not
    include an enforceable provision for early termination without cause is (4) liable
    for damages according to the common law of reasonable notice, or for wages for
    the unexpired term of the contract? Accordingly, in light of this extricable
    question of law, the correctness standard of review applies.

Common law damages or wages for the unexpired
    term

[20]

There is a common law presumption that every employment contract includes
    an implied term that an employer must provide reasonable notice to an employee
    prior to the termination of employment. Absent an agreement to the contrary, an
    employee is entitled to common law damages as a result of the breach of that
    implied term:
Bowes v. Goss Power Products Ltd.
, 2012 ONCA 425, 351
    D.L.R. (4th) 219, at para. 23. This presumption can only be rebutted if the
    employment contract clearly specifies some other period of notice, whether
    expressly or impliedly:
Machtinger v. HOJ Industries Ltd.,
[1992] 1
    S.C.R. 986, at p. 998;
Ceccol v. Ontario Gymnastic Federation
(2001),
    55 O.R. (3d) 614 (C.A.), at para. 45. The question, then, is whether the motion
    judge erred in holding that the Employment Contract, without Clause 8.1, failed
    to rebut that presumption by clearly specifying some other period of notice,
    expressly or impliedly.

[21]

In my view, the motion judge erred in so holding. Where an employment
    agreement states unambiguously that the employment is for a fixed term, the
    employment relationship automatically terminates at the end of the term without
    any obligation on the employer to provide notice or payment in lieu of notice.
    Such a provision, if stated unambiguously, will oust the implied term that
    reasonable notice must be given for termination without cause:
Lovely v.
    Prestige Travel Ltd.
, 2013 ABQB 467, 568 A.R. 215, at para. 135;
Ceccol
,
    at para. 25.

[22]

Of course, parties to a fixed term employment contract can specifically
    provide for early termination and, as in
Bowes
, specify a fixed term
    of notice or payment in lieu. However, and on this point the appellant and the
    respondent agree, if the parties to a fixed term employment contract do not
    specify a pre-determined notice period, an employee is entitled on early
    termination to the wages the employee would have received to the end of the
    term:
Lovely
, at para. 136;
Bowes
,

at para. 26;
Canadian
    Ice Machine Co. v. Sinclair
, [1955] S.C.R. 777, at p. 786.

[23]

The respondent argues, however, that because the Employment Contract
    does not (in the absence of Clause 8.1) contain a provision that expressly specifies
    a notice period for early termination without cause, the common law presumption
    of reasonable notice must govern. To conclude otherwise, the respondent argues,
    would be to ignore the effect of Clause 1.3, expressly authorizing the early
    termination of the Employment Agreement. What would be the point of authorizing
    early termination, the respondent asks, if the consequences of early
    termination would be the same regardless of whether the contract permitted
    early termination?

[24]

I reject the respondents interpretation of the Employment Contract. Clause
    1.3 does not establish an undifferentiated right to early termination with or
    without cause. By providing that (t)he Employee and the Employer may terminate
    the Employees employment at any time in accordance with the terms and
    conditions of this Agreement, the clause merely creates a framework for termination
    in accordance with the terms and conditions of the Employment Contract. With
    the removal of Clause 8.1, the only rights of termination which remained were those
    established by Clauses 8.2 and 8.3.

[25]

Accordingly, the excision of Clause 8.1 had no effect on the fixed term
    nature of the Employment Contract. As noted above, the respondent does not
    contest that had the Employment Contract run its course, the respondent would
    have had no obligation to provide notice to the appellant or payment in lieu of
    notice upon termination.

[26]

The Employment Contract, without Clause 8.1, unambiguously remains a
    fixed term contract. Without Clause 8.1, it contains no provision for early
    termination without cause. In keeping with
Machtinger
and
Ceccol
,
    the Employment Contract is sufficiently clear to oust the common law
    presumption of reasonable notice on termination. It follows that the appellant is
    entitled to the compensation that he would have earned to the end of the Employment
    Contract.

[27]

The respondent objects that such an outcome produces a windfall for the
    appellant and is unfair. I disagree for the following reasons.

[28]

The motion judge found that the respondent drafted the Employment
    Agreement. The respondent is not an unsophisticated party. Its position before
    the motion judge was that the Employment Agreement required the appellant to forego
    the implied term of reasonable notice of termination for (on the respondents interpretation
    of the unenforceable Clause 8.1) pay in lieu of two weeks notice.

[29]

The respondent sought to use a fixed term contract either to eliminate
    its severance obligation entirely or to limit it to two weeks notice on an
    early termination. It was, of course, free to do this. But the courts have
    consistently held that the consequences to an employee of such a bargain are so
    significant that the employer must communicate clearly in the contract that
    this is what it is intending to do:
Ceccol
, at para. 27. If an
    employer does not use unequivocal, clear language and instead drafts an ambiguous
    or vague termination clause that is later found to be unenforceable, it cannot
    complain when it is held to the remaining terms of the contract.

[30]

I conclude that the motion judge erred in not finding that the
    Employment Contract, without Clause 8.1, clearly established a notice period equal
    to the unexpired portion of the fixed term contract. The motion judge further erred
    in not finding that this notice period ousted the common law presumption of
    reasonable notice.

Issue 2: Was the appellant under an obligation to mitigate his
    damages arising from the termination of the fixed term contract?

The Applicable Standard of Review

[31]

The motion judge held that there was a duty to mitigate, and directed a
    mini-trial on both quantification of reasonable notice and mitigation. The
    motion judge, of course, made no error in holding that damages in lieu of
    reasonable notice are subject to mitigation. However, having found that the
    appellant is entitled to compensation on another basis, it is necessary for
    this court to make a fresh determination about whether he is bound by a duty to
    mitigate.

The Duty to Mitigate

[32]

The leading case from this court on the duty to mitigate in the context
    of an employment contract is
Bowes
. The question in
Bowes
was
    whether an employment agreement that fixes the period of notice, but makes no
    specific reference to mitigation, attracts the obligation to mitigate in the
    event of breach in the same way as the obligation to mitigate attaches to the
    common law duty to provide reasonable notice or pay in lieu.

[33]

Bowes
held that a contractually fixed term of notice is
    distinguishable from common law reasonable notice. At para. 34, the
Bowes
court stated: [a]n employment agreement that stipulates a fixed term of notice
    or payment in lieu should be treated as fixing liquidated damages or a
    contractual amount. It follows that, in such cases, there is no obligation on
    the employee to mitigate his or her damages. Thus, the duty to mitigate does
    not apply to liquidated damages or contractual amounts:
Bowes
, at
    para. 41.

[34]

The rationale for this conclusion is that: (1) it would be unfair to
    permit an employer to opt for certainty by specifying a fixed amount of damages
    for termination, and then permit it to reduce that amount by compelling the
    employee to mitigate his or her damages when mitigation was not addressed in
    the employment agreement; and (2) it would be inconsistent for parties to
    contract for certainty, and yet leave mitigation as a live issue with its
    uncertainty and risk of future litigation:
Bowes
, at para. 61.

[35]

The employment agreement in
Bowes
differed from the Employment
    Contract in this case in two respects: (1) it was not a fixed term contract;
    and (2), more significantly, it contained an express clause stipulating a fixed
    quantum of damages for early termination of the contract.

[36]

The appellant argues that the
Bowes
principle ought to be
    extended to fixed term contracts that, in effect, do not contain a provision
    for early termination without cause. He argues that the same interests of
    fairness and certainty apply. He relies on Wakeling J.s commentary on
Bowes
in
Lovely
, at para. 140:

Certainty is just as much a feature of a fixed-term contract
    with no early termination provision as a contract term requiring an employer to
    pay an employee a stipulated sum if it wishes to invoke an early termination provision
    in a fixed-term contract or a termination provision in an indefinite-duration
    agreement. An employer who ends the employment relationship in a fixed-term contract
    before its term expires must pay the employee the value of the salary and
    benefits the employee would have received had he or she worked throughout the
    remaining term of the contract. If the parties wish to modify that obligation
    they should unambiguously say so.

[37]

The respondents objection to this reasoning is that, far from the
    circumstances of
Bowes
, the parties here had not bargained for
    certainty. The motion judge found that there was no evidence as to what the
    parties agreed should happen if Clause 8.1 was found to be unenforceable. It
    would be odd, on the respondents view, to characterize the result in this case
    as the consequence of parties bargaining for certainty as the absence of a specified
    termination payment was accidental.

[38]

I would reject this argument. In my view, the parties did bargain for
    certainty when they entered a fixed term contract.

[39]

There is no reason to depart from the rule in
Bowes
that there
    is no duty to mitigate where the contract specifies the penalty for early
    termination. It does not matter whether the penalty is specified expressly, as
    in
Bowes
, or is by default the wages and benefits for the unexpired
    term of the contract, as in the case of fixed term contracts generally.

[40]

The respondent resists this conclusion, relying on
Loyst

v.
    Chattens Better Hearing Service
,

2012 ONSC 1653, 98 C.C.E.L.
    (3d) 243, affd 2013 ONCA 781, 14 C.C.E.L. (4
th
) 151, and
Graham
    v. Marleau, Lemire Securities Inc
. (2000), 49 C.C.E.L. (2d) 289 (Ont.
    S.C.). In my opinion, neither of these cases help the respondent.

[41]

In
Loyst
, the question was whether a refusal by an employee to
    accept unilaterally imposed changes to her employment contract constituted a
    failure to mitigate. The trial judge found that the employer had terminated the
    employment, and had not satisfied its onus of proving that the employees
    mitigation efforts were inadequate. On appeal, this court held, in a brief
    endorsement, that based on the trial judges finding that the employment had
    been terminated, the employer could not argue that the employee had failed to
    mitigate by not remaining with the employer. The termination of employment precluded
    the option of remaining with the employer.

[42]

The trial decision in
Loyst
is easily explained on the basis
    that it predates
Bowes
. On appeal to this court in
Loyst
, neither
Bowes
nor the question of whether the duty to mitigate applied, were
    put in issue. On that basis,
Loyst
is of no assistance to the
    respondent.

[43]

In
Graham
, Nordheimer J. exhaustively canvassed the case law on
    the question of whether a contractual sum payable on termination of employment
    is subject to the duty to mitigate. After observing that there were competing
    lines of authority, he concluded at para. 50 that the duty to mitigate applied
    to both fixed term contracts and contracts of indefinite duration.
Graham
,
    however, has been overtaken on this point by
Bowes
. At paras. 34-37,
    the
Bowes
court wrote:

An employment agreement that stipulates a fixed term of notice
    or payment
in lieu
should be treated as fixing liquidated damages or a
    contractual amount. It follows that, in such cases, there is no obligation on
    the employee to mitigate his or her damages.

To reiterate, the premise of
Graham
, set out at para.
    53, was as follows:

[A contractually fixed term of
    notice]
is nothing more than an agreement between the parties as to the
    length of the reasonable notice
to terminate the contract. I see no reason
    why there should be any distinction drawn between contracts of employment where
    the notice period is not stipulated and those where it is with the result that there
    would be a duty to mitigate in the former but not in the latter. [Emphasis
    added.]

In my view, Nordheimer J. in
Graham
, and the
    application judge in this case, erred by treating a contractually fixed term of
    notice as effectively indistinguishable from common law reasonable notice.

When parties contract for a specified period of notice or pay
in
    lieu
they are choosing to opt out of the common law approach applied in
Bardal.
In doing so, the parties should not be taken as simply attempting to
    replicate common law reasonable notice. The Alberta Court of Appeal explained
    as follows in
Brown v. Pronghorn Controls Ltd.
, 2011 ABCA 328 (CanLII),
    515 A.R. 128, at para. 47:

If the contract entitles the employee
    to payment of money, howsoever calculated, on termination, that right to that
    money is contractual. As such, the parties were not bound to specify an
    entitlement that is equal or even analogous to the quantum of reasonable notice
    that the common law might require if the contract was silent.

Damages for contractually stipulated
    notice or pay
in lieu
should not be analogized directly to damages for
    common law reasonable notice. The parties have specifically contracted for
    something different; it is an error to simply equate the two.

[44]

In the absence of an enforceable contractual provision stipulating a
    fixed term of notice, or any other provision to the contrary, a fixed term
    employment contract obligates an employer to pay an employee to the end of the
    term, and that obligation will not be subject to mitigation. Just as parties
    who contract for a specified period of notice (or pay in lieu) are contracting
    out of the common law approach in
Bardal v. Globe & Mail Ltd.
(1960),
    24 D.L.R. (3d) 140 (Ont. H.C.), so, too, are parties who contract for a fixed
    term without providing in an enforceable manner for any other specified period
    of notice (or pay in lieu).

Disposition

[45]

For the reasons given, I would allow the appeal. A declaration shall
    issue that the appellant is entitled to a contractual sum for the termination
    of his employment in an amount equal to his salary and benefits for the
    unexpired term of the Employment Contract. I would remit the matter to the
    motion judge for a determination of the quantum of that sum, unless the parties
    are able to agree. Finally, I would award costs to the appellant in the amount
    of $9,000, inclusive of disbursements and HST.

Released: BWM  APR 8, 2016

B.W. Miller J.A.

I agree. E.A. Cronk
    J.A.

I agree. S.E. Pepall
    J.A.