COURT OF APPEAL FOR ONTARIO

CITATION: Gagnon v. Martyniuk, 2020 ONCA 708

DATE: 20201109

DOCKET: C67324

Hourigan,
Trotter and Jamal JJ.A.

BETWEEN

Shane Joseph Gagnon

Applicant

(Respondent)

and

Marylu Ginger Martyniuk

Respondent

(Appellant)

Marek Z. Tufman and Gregory A. P.
Tufman, for the appellant

Evgeniy Osipov, for the respondent

Heard: October 16, 2020 by
video conference

On appeal from
the order of Justice Susan E. Healey of the Superior Court of Justice, dated
March 7, 2019, with reasons reported at 2019 ONSC 1518, and the sentence
imposed, dated July 5, 2019.

REASONS FOR DECISION

Introduction

[1]

In the midst of high-conflict family law
proceedings, Ms. Martyniuk was found in contempt for failing to comply with a court
order. She was subsequently sentenced to a non-custodial penalty.

[2]

Ms. Martyniuk appeals from the finding of
contempt and the penalty imposed. She submits that the motion judge made errors
at both stages of the proceedings. She also brings a motion to adduce fresh
evidence.

[3]

For the reasons set out below, the appeal is
dismissed. The motion judge made no error in finding Ms. Martyniuk in contempt;
nor was the penalty she imposed unreasonable. We would also dismiss the
application to adduce fresh evidence. The fresh evidence application could have
no effect on the motion judges findings. Moreover, the issues raised by the
proposed fresh evidence are best addressed in the Superior Court in the context
of a Motion to Change that is currently before that court.

Background

[4]

The parties had an on-again, off-again
relationship between 2005 and 2015. They have three children: two sons, aged 12
and 14, and a daughter who is 4. The relationship has been rancorous, with the
parties often in conflict over Mr. Gagnons access to the children.

[5]

Earlier proceedings between the parties resulted
in a comprehensive final order on July 6, 2010. According to Mr. Gagnon, as
time went by, Ms. Martyniuk increasingly ignored this order. He commenced a new
proceeding in September 2017, seeking increased access to his children. At a
case conference on February 27, 2018, McDermot J. made a consent order (the
Order) that addressed access issues and required Ms. Martyniuk to obtain Mr.
Gagnons written consent before she could take the children out of the country.

[6]

There were compliance issues with this order
almost immediately. On a number of occasions, the parenting exchanges of the
children did not happen, or they were late. Ms. Martyniuk also took the
children on vacation out of the country without obtaining Mr. Gagnons written
consent.

The Contempt Proceedings

[7]

Mr. Gagnon initiated contempt proceedings in
October 2018. After numerous interim appearances,  the contempt hearing was
conducted on March 1, 2019. Both parties were represented by counsel. The
record consisted of competing affidavits. Neither side requested an opportunity
to cross-examine the other.

[8]

The motion judge provided detailed reasons for
judgment in which she reviewed the events that followed the Order. She
considered Mr. Gagnons allegations that Ms. Martyniuk contravened the Order by
denying access to Mr. Gagnon; removing the children from the country without
his written consent; and discussing adult issues with the children.

[9]

In her affidavit, Ms. Martyniuk alleged that the
children did not wish to spend time with Mr. Gagnon because of his temperament.
She alleged that he yells, bullies, threatens, and belittles the children. He
also allegedly says derogatory things about her. It is her view that the
children do not want to go with him. Ms. Martyniuk also relied upon Mr.
Gagnons extensive criminal record, which contains entries for crimes of
dishonesty and violence, including a conviction for manslaughter.

[10]

The motion judge reviewed the affidavit
evidence, which included dozens of text messages between the parties. She made
the following findings, at paras. 91 and 92 of her reasons:

Although the applicant has a history of
offences involving dishonesty, I find that the evidence presented by him on
this motion is credible
. It contains no
inconsistencies, and the applicant has offered up evidence that also reflects
poorly on his judgment at times.
The respondent's evidence, by contrast, is
general, vague and contains inconsistencies when recounting events
. While I
accept that there has been much verbal unpleasantness throughout their
relationship, I reject the respondent's evidence that casts her as a victim in
this dynamic. When she acted as the surety she describes having to live with
the applicant as being one of the worst periods. Yet she held all of the
control; if he was mistreating her as she alleges, she had only to revoke her
consent and the arrangement would be over. And her text messages to him reveal
frustration, but her manner of taunting him betrays any true fear.

The respondent excuses all of her behavior as
being in the best interests of the children. She accuses the applicant of
inflexibility where the children's needs and plans are concerned. What she
misses is that flexibility in relation to court orders only works in situations
where two parents 1) recognize what is required of them; 2) respect that the
other parent has rights; 3) do not impose changes unilaterally and without the
express agreement of the other parent; and 4) are prepared to offer makeup time
where a change impacts on the other parent's time with the children. None of
these are present for the respondent. [Emphasis added.]

[11]

The motion judge did not find Ms. Martyniuk in
contempt of all conditions in the Order; rather, she made the following specific
findings, at paras. 98-100:

I find that the respondent has committed
multiple breaches of the Order.
Specifically, I
find that she has wilfully and deliberately decided not to follow several clear
provisions: para. 3(a)(iii) regarding access with Jolie; para. 3(b) regarding
alternating weekend access; para. 3(d) regarding mid-week access; para. 3(e)
regarding daily telephone access; para. 4(a)(i) and (iii) regarding summer
access; para. 8 regarding travel with consent; and para. 10 with respect to discussing
adult issues in the presence of the children.

Where I have not found a breach, I find
that the Order is sufficiently ambiguous to not meet the test, or that the
supporting evidence does not prove a breach beyond a reasonable doubt.
In particular, para. 3(c) concerning professional activity days is
awkwardly worded, although I have serious doubts that the respondent was misled
by the wording. Nonetheless, the standard of proof is not there. Similarly, in
paragraph 4(c), the March Break "week" is not defined, and the Order
contemplates that such a special holiday will "interrupt the regular
schedule". With respect to Father's Day, there is no set time for an
exchange to occur. With respect to the Easter weekend, the evidence is not
clear about whether the applicant attempted to exercise the access on Sunday at
1:00 p.m. as set out in the Order.

I find beyond a reasonable doubt that the
breaches enumerated were carried out wilfully and deliberately by the
respondent. The evidence shows has not actively encouraged the boys' attendance
and involvement in compliance with the Order; instead, she has deliberately
allowed them not to spend time with their father, not call him, take them
places when they should be with him, and made plans when they should be with
him.
She has very deliberately engaged Joseph in
the tug-of-war over time spent with the applicant. She knowingly has permitted
Joseph to be involved in text messaging regarding these matters. Excusing the
children's exposure to the applicant's messages by saying that she cannot
control the Bluetooth feature in the vehicle is ridiculous and shows how little
the respondent actively does to shelter the boys from the interactions.
She
has clearly engaged in a history of conduct that has had the effect of generally
sabotaging the custody and access order.
[Emphasis added.]

[12]

As noted above, the motion judge reviewed many
text messages between the parties. She focused on one message in particular, written
by Ms. Martyniuk. As the motion judge wrote, at para. 101:

While all of the evidence reviewed on this
motion thus far proves to this court [that] respondent's breaches have been
flagrant and deliberate, the respondent's own words, sent via text message,
leave no room for argument on this point:
The judge does not rule my life
or make decisions for my kids Shane. I'm sorry you live in that kind of
mentality but I don't. I respect people and the law but my kids are everything
and I do my best to keep them happy children".
[Emphasis added.]

[13]

The motion judge adjourned the penalty phase of
the contempt proceedings to July 5, 2019. In the meantime, she clarified the
arrangements between the parties, and ordered Ms. Martyniuk to enroll in a parenting
course with Mr. Gagnon.

[14]

At the conclusion of the penalty hearing, the motion
judge made a number of orders. First, she ordered that Ms. Martyniuk comply
with the Order with respect to Mr. Gagnons access to all three children. Second,
she ordered that Ms. Martyniuk immediately enroll in the next session of the Cooperative
Parenting and Divorce Program. To prevent any issues with attendance of that
Program, the motion judge ordered that Ms. Martyniuk pay Mr. Gagnon: a fine of
$50 for each meeting in which she is late by 10 mins or longer and a fine of
$200 for each missed meeting unless a medical note from a heath practitioner is
provided to explain her non-attendance. Finally, she wrote that: The breach
of any of the terms of this order that lead[s] to a 2
nd
finding of
contempt shall result in further fines, or a period of incarceration, or both.

Discussion

(1)

The Contempt Finding

[15]

Ms. Martyniuk submits that the trial judge ought
not to have responded to a high conflict family law dispute with a contempt
finding. She further submits that the motion judge should not have conducted
the hearing solely on the basis of affidavit evidence. Rather, a trial was
necessary to establish contempt beyond a reasonable doubt. Finally, Ms.
Martyniuk submits that the trial judge failed to appreciate that contempt is a
remedy of last resort and must be used sparingly. We reject these submissions.

[16]

The motion judge carefully instructed herself
on the law of contempt and the proof required to make a finding of contempt, as
demonstrated by paras. 28-33 of her reasons. She noted that her authority to
conduct contempt proceedings derives from r. 31 of the
Family Law Rules
,
O. Reg 114/99. She cited the three-part test required for a contempt finding,
set out in this courts decision in
Les Services aux Enfants et Adultes de
Prescott-Russell v. N.G
.
(2006), 82 O.R. (3d) 669 (C.A.), at para.
27.

[17]

Counsel represented Ms. Martyniuk at the
contempt hearing. Her counsel did not request an opportunity to cross-examine the
parties on the affidavits filed. She made no request for a trial. Rather, she
was content to proceed on the paper record that was filed.

[18]

It was appropriate to proceed in this manner. In
her affidavit, Ms. Martyniuk did not dispute many of the incidents alleged by
Mr. Gagnon; instead, she sought to justify her actions. The motion judge
carefully considered the affidavits of both parties. Electronic communications
between the parties assisted in testing the veracity of their respective
accounts. The motion judge was entitled to place considerable weight on Ms.
Martyniuks text message, in which she explicitly  denied the authority of the
court order over her parenting decisions. Noted above in para. 12,  she wrote:
The judge does not rule my life or make decisions for my kids Shane.

[19]

The motion judge specifically recognized, at
para. 32, that contempt is a remedy of last resort that must be used sparingly,
citing
Godard v. Godard
, 2015 ONCA 568, 387 D.L.R. (4th) 667, at para.
17; and
Hefkey v. Hefkey
, 2013 ONCA 44, 30 R.F.L. (7th) 65, at para.
3. Counsel for Ms. Martyniuk on appeal submitted that, although the motion
judge repeated this principle, she did not give effect to it and there is no
evidence that she considered any alternatives to contempt. However, there is no
reason why we should not take the motion judges words at face value. Nothing
in her extensive reasons belie the authenticity of her stated approach. As the motion
judge found, this case involved multiple, wilful breaches of court orders,
which she rightly found were flagrant. Additionally, as noted above, the text
messages revealed Ms. Martyniuks clear renunciation of the courts authority
over her family law matters. As such, it was within the discretion of the
motion judge to resort to contempt as the only appropriate option in this case.

[20]

Counsel for Ms. Martyniuk further argued that
the motion judge did not adequately consider the bests interests of the
children. However, Ms. Martyniuks continuous refusal to comply with the Order
was aggravating an already dysfunctional dynamic, in a manner detrimental to
the children. The motion judge acted accordingly.

[21]

We note that the motion judge did not make a
blanket finding of contempt, capturing all of the allegations made against Ms.
Martyniuk. As demonstrated in the passage reproduced at para. 11 above, she
considered each allegation separately and gave Ms. Martyniuk the benefit of the
doubt with respect to a number of the conditions she was alleged to have
breached. Accordingly, it cannot be said that the motion judge failed to
resolve ambiguities in Mr. Gagnons allegations in favour of the appellant.

[22]

We would not disturb the finding of contempt.

(2)

The Penalty Imposed

[23]

Ms. Martyniuk submits that the penalty imposed
was improper. Her counsel argues that ordering her to pay a fine to Mr. Gagnon
when she fails to attend the parenting program in a timely manner is not a
proper exercise of discretion. Rather, counsel submits that this penalty
aggravates a highly antagonistic situation and does not take into consideration
the best interests of the children.

[24]

We are not persuaded that the penalty imposed
was improper. Rule 31(5) of the
Family Law Rules
provides judges with
wide discretion with respect to penalties for contempt. In particular, r. 31(5)
permits a motion judge to order the person found in contempt to:

(a)

be imprisoned for any period and on any
conditions that are just;

(b)

pay a fine in any amount that is appropriate;

(c)

pay an amount to a party as a penalty;

(d)

do anything else that the court decides is
appropriate;

(e)

not do what the court forbids;

(f)

pay costs in an amount decided by the court; and

(g)

obey any other order.

[25]

The motion judge demonstrated great restraint
in penalizing the appellants flagrant contempt. The fine structure she imposed
was designed to compel Ms. Martyniuk to participate in the cooperative
parenting program. The order also required Mr. Gagnon to attend, given that the
program was cooperative in nature. The fines were meant to avoid wasting Mr.
Gagnons time. There is nothing about this aspect of the order that could be
considered contrary to the best interests of the children.

[26]

The other aspect of the penalty addressed the
access issues that gave rise to the finding of contempt in the first place.
This was an appropriate exercise of the motion judges discretion. It was also
in the childrens best interest because it sought to prevent future disputes
over parenting time.

(3)

The Fresh Evidence Application

[27]

Ms. Martyniuk seeks to adduce fresh evidence
that she contends ought to result in setting aside the contempt finding. The
evidence mostly relates to events that followed the contempt proceedings. The
appellant relies on the fresh evidence to demonstrate that there were good
reasons why the children did not wish to interact with their father, and that
she was always acting in the best interests of her children.

[28]

A small portion of the fresh evidence that Ms.
Martyniuk seeks to adduce consists of  a recording of an incident that occurred
on June 23, 2017 (before the contempt hearing). It was a recording of an
aborted parenting exchange that resulted in Mr. Gagnon losing his temper and
yelling at Ms. Martyniuk and the children. There is no explanation as to the
history of this recording or why it did not come to light earlier. In her
affidavit, she simply stated: There is also another recording which I found.
In her fresh evidence affidavit, Ms. Martyniuk explained why she sees this
recording as relevant to this appeal:

I believe that together they would clearly
show to this Honourable Court that what I put before Justice Healy was true.
They would show that I was not deliberately contemptuous of the Order of
Justice McDermo[t], but I was simply a single mother, attempting to deal with
extraordinary events, and with the very violent and abusive personality of Mr.
Gagnon, and with its impact on our children.

[29]

The other evidence that Ms. Martyniuk seeks to
adduce relates to a court proceeding that occurred after the order under
appeal. On October 22, 2019, Mr. Gagnon commenced a second contempt motion,
alleging 10 incidents where Ms. Martyniuk was either late in delivering the
children (x2), or did not deliver them at all (x8). In his affidavit in support
of the contempt motion, Mr. Gagnon included a transcript of a conversation that
one of his sons had recorded during an access visit on August 8, 2019. The
transcript and the recording itself form part of the proposed fresh evidence. As
Mr. Gagnon said in his affidavit: I lost my temper and ranted to my boys. Understandably,
this was very upsetting for his two sons. In his affidavit, Mr. Gagnon
expressed remorse for his actions.

[30]

Based on the August 2019 recording, the Minutes
of Settlement filed by the parties, and other events, Wildman J. made an
interim order, dated November 21, 2019. Among other things, she referred the
matter to the Office of the Childrens Lawyer (OCL). On August 21, 2020, the
OCL delivered a report that includes a number of findings that are unfavourable
to Mr. Gagnon.

[31]

We would not admit the fresh evidence. Ms.
Martyniuk has provided no explanation for why the June 23, 2017 recording (that
pre-dated the first contempt motion) was not disclosed until now, more than
three years after it was purportedly made.

[32]

The August 8, 2019 recording should not be
admitted as fresh evidence on appeal. It does not displace the findings made by
the motion judge, based on the affidavits of the parties and their voluminous
text message correspondence. Moreover, this evidence does not affect the
integrity of the contempt findings made with respect to access to his daughter,
travel without consent, and discussing adult issues in the presence of the
children. It does not nullify the effect of Ms. Martyniuks the judge does not
rule my life text message.

[33]

As mentioned at the beginning of these reasons,
the events described in the fresh evidence application, including the report of
the OCL, are more appropriately addressed in the context of a Motion to Change
in the Superior Court. Accordingly, we decline to interfere on this basis.

Conclusion

[34]

We dismiss the appeal from the contempt finding
and penalty imposed. The application to adduce fresh evidence is also dismissed.

[35]

We order costs to the respondent in the amount
of $10,000, inclusive of taxes and disbursements.

C.W. Hourigan J.A.

Gary Trotter J.A.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Grant (Re), 2020 ONCA 707

DATE: 20201104

DOCKET: C67891

Fairburn A.C.J.O., Jamal and
    Coroza JJ.A.

IN THE MATTER OF:  NATHAN GRANT

AN APPEAL UNDER PART XX.1 OF THE
CODE

Meaghan McMahon, for the appellant

Manasvin Goswami, for the respondent,
    Her Majesty the Queen

Marie-Pierre T. Pilon, for the Person-in-Charge
    of The Royal Ottawa Mental Health Centre

Heard and released orally: October 30,
    2020 by video conference

On appeal against the disposition of the
    Ontario Review Board dated, November 18, 2019.

REASONS FOR DECISION

[1]

This is an appeal from the appellants latest
    Ontario Review Board disposition, dated November 18, 2019. The appellants
    request for an absolute discharge was dismissed. Instead, the Board continued
    the same disposition that had been previously imposed, one of a conditional
    discharge, but with less stringent conditions. The appellants next Review
    Board hearing is scheduled for about three weeks from now.

[2]

The appellant raises two grounds of appeal.

[3]

First, the appellant says that the Boards
    reasons suffer from a misapprehension of evidence. In its reasons, the Board
    referred to the fact that during the four nights that the appellant had spent
    at his mothers home in the previous year, while under a conditional discharge,
    he had not been compliant with his medication. While we agree with the
    appellant that the record does not support this factual statement, the
    misapprehension of evidence does not rise to a material level.

[4]

Among other things, it does not appear that the
    Board took this evidentiary mistake into account in the analysis portion of its
    reasons. As well, the record is clear that the appellant has not been compliant
    with his medications in the past, and that his psychiatrist was of the opinion
    that he would not be medication compliant if granted an absolute discharge.

[5]

Second, the appellant says that the conditional
    discharge imposed in this case rises to the level of an unreasonable
    disposition. We do not agree.

[6]

We start by noting the considerable deference
    owed to the expert Boards decision in determining whether to grant or deny an
    absolute discharge. As in
Canada (Minister of Citizenship and Immigration)
    v. Vavilov
, 2019 SCC 65, 441 D.L.R. (4th) 1, at para. 85, the Boards
    reasoning process and outcome in this case reflects an internally coherent and
    rational chain of analysis and is justified in relation to the facts and the
    law.

[7]

In our view, the disposition cannot be said to
    be unreasonable. The determination that a conditional discharge should be
    imposed was based upon, among other things, the appellants history involving
    the lack of insight into his illness, his past history involving substance
    abuse, and the likelihood that this abuse will continue, the gravity of harm
    arising from the index offence and the likelihood of serious harm occurring in
    the future, particularly arising from the appellants lack of insight into his
    own condition.

[8]

The appeal is dismissed.

Fairburn
    A.C.J.O.

M.
    Jamal J.A.

S.
    Coroza J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Heidari v. Naghshbandi, 2020 ONCA
    757

DATE: 20201126

DOCKET: M51922 (C67674 & C67676)

Jamal
    J.A. (Motions Judge)

BETWEEN

Shahram
    Heidari

Plaintiff (Respondent/Moving Party)

and

Bijan Naghshbandi

Defendant (Appellant/Responding Party)

AND BETWEEN

Tarra
    Engineering Inc.

Plaintiff (Respondent/Moving Party)

and

Bijan
    Naghshbandi

Defendant (Appellant/Responding Party)

AND BETWEEN

Bijan
    Naghshbandi

Plaintiff by Counterclaim
    (Appellant/Responding Party)

and

Tarra
    Engineering Inc. and Shahram Heidari and Tarra Engineering and Structural
    Consultants Inc.

Defendants by Counterclaim (Respondents/Moving
    Parties)

Sean N. Zeitz, for the moving parties

Antony Niksich, for the responding
    party

Heard: November 13, 2020 by video conference

REASONS
    FOR DECISION

[1]

The respondents (the moving parties on this motion)
    seek security for costs of $33,104.63 for two appeals pending before the court.
    The appeals are from orders of Bawden J. (trial judge), dated October 17,
    2019 and May 8, 2020, after a 23-day trial, ruling in the respondents favour
    in two actions, and from his order, dated July 23, 2020, ordering the appellant
    to pay the respondents costs of $513,186.67. The respondents do not seek security
    for the costs
awarded at trial
.

[2]

For the reasons that
follow, the motion for security for costs is dismissed.

Background

[3]

The appellant Bijan Naghshbandi and the respondent
    Shahram Heidari were friends and former business associates in an engineering
    business. Between 1998 and 2008, they incorporated companies, bought properties,
    and loaned money back and forth to fund their ventures. But they kept few records
    of their transactions. When their friendship soured, two lawsuits ensued:

·

In 2009, Heidari sued Naghshbandi for repayment
    of $187,092 in claimed loans. Naghshbandi denied owing anything and
    counterclaimed against Heidari, alleging that Heidari owed him $291,333.

·

The same year, the respondent Tarra Engineering
    Inc. (in which Heidari and Naghshbandi had been shareholders and directors), sued
    Naghshbandi for repayment of $450,146 in claimed loans. Naghshbandi denied the
    claim and counterclaimed against Heidari, Tarra Engineering Inc., and the
    respondent Tarra Engineering and Structural Consultants Inc. (a new company
    Heidari formed after the litigation began), alleging wrongful dismissal,
    corporate oppression, and fraud, and seeking over $3 million in damages and
    half the value of Tarra Engineering Inc. A decade later, Naghshbandi abandoned his
    counterclaim
on the eve of
trial.

[4]

The trial judge ruled against Naghshbandi in
    both actions. He noted that both parties agree that the litigation ultimately
    turns on findings of credibility. He found Naghshbandi simply did not present
    as a credible witness, his testimony w[as] not corroborated by any other
    witness and appeared to have been a complete fantasy, and it was impossible
    to place any serious weight on his evidence apart from a few claims. He ordered
    Naghshbandi to pay damages to Heidari of $173,544 and to Tarra Engineering Inc.
    of $105,810. He also ordered Naghshbandi to pay costs to Heidari and Tarra
    Engineering Inc. of $444,002.73 and to Tarra Engineering and Structural
    Consultants Inc. of $69,183.94.

Security for Costs of an Appeal Under r.
    61.06(1)

[5]

The respondents seek security for costs for the
    appeals under rr. 61.06(1)(a) or (c) of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194. Rule 61.06(1) provides:

61.06(1) In an appeal
where
    it appears that
,

(a) there is good
    reason to believe that the appeal is frivolous and vexatious and that the
    appellant has insufficient assets in Ontario to pay the costs of the appeal;

(b) an order for
    security for costs could be made against the appellant under rule 56.01; or

(c) for other good
    reason, security for costs should be ordered,

a judge of the appellate court, on motion by
    the respondent, may make such order for security for costs of the proceeding
    and of the appeal as is just.

[6]

The general principles governing an order
    for security for costs on appeal under r. 61.06(1) are well known:

1.

Rule 61.06(1) is permissive, not mandatory. A motion judge
has discretion to
refuse an order for security for
    costs, even if the respondent (moving party) otherwise meets the terms of r.
    61.06(1):
Yaiguaje v. Chevron Corporation
, 2017 ONCA 827, 138 O.R.
    (3d) 1, at para. 18;
Foodinvest Limited v. Royal Bank of Canada
, 2020
    ONCA 387, at para. 15. An order for security for costs under r. 61.06(1) should
    not be made routinely:
Health Genetic Center Corp. v. New Scientist
    Magazine
, 2019 ONCA 968, at paras. 22, 26.

2.

Rule 61.06(1) requires a two-stage analysis: first, the respondent must
    show that they meet the terms of the rule; second, the motion judge must take
    a step back and consider the justness of the order sought in all the circumstances,
    with the interests of justice at the forefront:
Yaiguaje
,
    at para. 22
;
Foodinvest
, at para. 15.

3.

In considering the justness of the order sought,
    relevant factors include, but are not limited to, the merits of the appeal, any
    delay in moving for security for costs, the impact of actionable conduct by the
    respondent on the available assets of the appellant, access to justice
    concerns, the public
importance of the litigation
,
    and the amount and form of security sought by the respondent:
Yaiguaje
,
    at para. 24;
Foodinvest
, at para. 15.

4.

An order for security for costs
is intended to provide
a measure of protection to
    the respondent for the costs to be incurred on the appeal, without denying the
    appellant a chance to pursue an appeal:
Foodinvest
, at para. 17;
Health
    Genetic
, at para. 26; and
Schmidt v. Toronto-Dominion Bank
(1995), 24 O.R. (3d) 1 (C.A.), at p. 6. The court must ensure that an order for
    security for costs is not used as a litigation tactic to prevent a case from
    being heard on its merits:
Yaiguaje
, at para. 23;
Foodinvest
,
    at para. 15.

[7]

With these general principles in mind, I turn to
    consider the respondents motion under rr. 61.06(1)(a) and (c) in turn.

(1)

Is there good reason to believe that the appeals
    are frivolous and vexatious and that the appellant has insufficient assets in
    Ontario to pay the costs of the appeals
: r.
    61.06(1)(a)?

(a)

The governing principles under r. 61.06(1)(a)

[8]

Under r. 61.06(1)(a), the respondent must prove that
    there is good reason to believe: (1) the appeal is frivolous and vexatious; and
    (2) the appellant has insufficient assets in Ontario to pay the costs of the
    appeal:
York University v. Markicevic
, 2017 ONCA 651, at para. 23;
Pickard
    v. London Police Services Board
, 2010 ONCA 643, 268 O.A.C. 153, at para.
    18; and
Schmidt
, at p. 5.

[9]

The good reason to believe standard requires
    the motion judge to reach only a tentative and not a definitive conclusion on
    the absence of merit or assets:
York University
, at para. 24;
Pickard
,
    at para. 18; and
Schmidt
, at p. 5.

[10]

The frivolous and vexatious element of r.
    61.06(1)(a) requires the respondent to show that there is good reason to believe
    the appeal is: (1) frivolous, that is, devoid of merit or with little
    prospect of success:
Pickard
, at para. 19;
Schmidt
, at p. 5; and
    (2)
vexatious, that is, taken to annoy or embarrass
    the respondent or conducted in a vexatious manner, including an oblique motive
    for launching the appea
l:
Pickard
, at para. 19;
York
    University
, at paras. 32, 36; and
Chinese Publications for Canadian Libraries
    Ltd. v. Markham (City)
, 2017 ONCA 968, at para. 9.

(b)

Application to these appeals

[11]

The respondents claim there is good reason to believe
    these appeals are frivolous because the appeals challenge only findings of fact
    and credibility and raise no arguable error in law. They say this court has accepted
    that such appeals appear to have no merit, citing
Henderson v. Wright
,
    2016 ONCA 89, 345 O.A.C. 231, at para. 16;
Groia & Company Professional
    Corporation v. Cardillo
, 2019 ONCA 165, 50 C.P.C. (8th) 55, at para. 31.

[12]

I agree with the respondents that the trial
    judges observation that both parties agree that the litigation ultimately
    turns on findings of credibility goes a long way towards meeting the
    frivolous criterion in r. 61.06(1)(a). The trial was largely about
    credibility, and the trial judge sided with the respondents. There is little
    prospect that a panel of this court would overturn such findings.

[13]

The appellant, however, disputes that the appeals
    will mainly be about credibility. He says the thrust of the appeals will be
    that the trial judge erred in law by substituting loan claims with joint
    investment claims. According to the appellant, rather than decide whether
    Heidari loaned money to Naghshbandi, the trial judge held that some payments
    were a joint investment, and not loans, and then ruled that Naghshbandi had to
    repay Heidari only half of what was advanced. The appellant says that the
    parties neither argued nor pleaded this joint investment characterization and
    that they did not seek this remedy.

[14]

This argument will face strong headwinds on
    appeal. A trial judge may form their own conclusion about the appropriate legal
    characterization of payments in issue, and has remedial discretion to order
    repayment of all, none, or only some of those amounts. Such discretionary
    determinations generally attract substantial appellate deference. Still, I
    agree with the appellant
that
this is not an
    issue of credibility and, if accepted by the court, could be a reviewable error
    of law. Even if only weakly arguable, this ground does raise a potential issue
    of law. On balance, then, I cannot conclude that there is good reason to
    believe the appeals are frivolous.

[15]

I also do not have good reason to believe that the
    appeals are vexatious.

[16]

The respondents assert that aspects of the
    appellants litigation conduct can be described as vexatious. They note that
    the appellant abandoned the counterclaim against Heidari only
on the eve of
trial, after about a decade of
    litigation. They add that the appellant has defaulted on the costs awarded for
    the abandoned counterclaim. Here, however, the trial judge did not allocate a
    specific dollar amount to the abandoned counterclaim. The entire costs order
    including the portion pertaining to the abandoned counterclaim  was
    automatically stayed by the appeal to this court: r. 63.01. It thus does not
    appear that the appellant has defaulted on his obligation to pay those costs.

[17]

In the final analysis,
    however,
I accept the appellants argument
that
I do not have good reason to believe the appeals
    have been brought to annoy or embarrass the respondents or with any other
    oblique motive. Rather, the appellant appears to have brought the appeals in
    good faith to challenge what he has been found to owe the respondents and to
    impugn the significant adverse findings of credibility made against him. As
    counsel for the appellant stated in oral argument, which I accept, the appellant
    has appealed largely to clear his name.

[18]

Thus, although the appeals appear to be only
    weakly arguable, I do not have good reason to believe that they are frivolous
    and vexatious.

[19]

While this suffices to conclude that the
    respondents have not met their burden under r. 61.06(1)(a), I will briefly address
    whether there is good reason to believe the appellant has insufficient assets
    in Ontario to pay the costs of the appeals. The respondents estimate those costs
    as being $33,104.63 on a partial indemnity basis.

[20]

The respondents submit that there is no evidence
    that the appellant has sufficient assets in Ontario, and the court should draw
    a negative inference from the appellants failure to tender such evidence. Shortly
    before the
return of this motion
, however, the
    appellant filed his responding motion record containing copies of his Canada
    Revenue Agency Notices of Assessment for the 2018 and 2019 taxation years.
    Counsel for the respondents had requested this information in early July 2020,
    in order to decide whether to bring this motion, but had been rebuffed by
    counsel for the appellant. This information was only provided four months
    later. The Notices of Assessment revealed that the appellants annual income in
    2018 and 2019 was about $100,000 before tax. The respondents contend that this
    income information is not especially meaningful because no information has been
    provided about the appellants living expenses or other liabilities.

[21]

Although it would have been preferable for the
    appellant to have provided this income information sooner, as it might have
    avoided this motion, because of this evidence I cannot conclude that there is
    good reason to believe the appellant has insufficient assets in Ontario to pay
    the costs of the appeals. There is at least
some
evidence
    that the appellant has sufficient assets to do so. It was the respondents
    burden to provide the court with evidence to form a tentative conclusion about
    the absence of the appellants assets. The respondents have not done so.

[22]

I therefore decline to award security for costs
    under r. 61.06(1)(a).

(2)

Is there other good reason for ordering
    security for costs of the appeals: r. 61.06(1)(c)?

(a)

The governing principles under r. 61.06(1)(c)

[23]

A motion judge may also order security for costs
    of an appeal under r. 61.06(1)(c) for other good reason. Although the list of
    reasons justifying security under this residual category is not closed, the other
    good reason must be: (1) consistent with the purpose for ordering security
    namely, that the respondent
is entitled to a measure
of
    protection for costs; and (2) fairly compelling, because the residual category
    is only engaged where the respondent cannot meet the requirements of rr. 61.06(1)(a)
    or (b):
Combined Air Mechanical Services Inc. v. Flesch
, 2010 ONCA
    633, 268 O.A.C. 172, at para. 8;
Health Genetic
, at para. 26.

[24]

Examples of circumstances recognized as providing
    other good reason to justify security for costs under r. 61.06(1)(c) include:

·

a finding that the appellant committed fraud,
    particularly if coupled with a finding that the appellant has
taken steps to
put his assets out of reach of his
    creditors:
York University
, at para. 58;
Health Genetic
, at
    para. 26;

·

when an appeal has a low prospect of success and
    the appellant
has the ability to
pay costs, but
    it would be nearly impossible to collect such costs:
Henderson
, at
    para. 27;
Perron v. Perron
, 2011 ONCA 776, 345 D.L.R. (4th) 513, at
    paras. 22-23; and
Groia
, at para. 35.

(b)

Application to these appeals

[25]

When I apply these principles to this motion, I
    conclude that the respondents have established no other good reason to
    justify security for costs of the appeals under r. 61.06(1)(c). There was no
    finding that the appellant committed fraud, despite this being alleged. Nor is
    there any evidence that the appellant has tried to put his assets out of reach
    of his creditors. And although the appeal has a low prospect of success, there
    is no evidence that it would be nearly impossible for the respondents to
    collect costs from the appellant.

[26]

I therefore decline to award security for costs
    under r. 61.06(1)(c).

Disposition

[27]

The motion for security for costs is dismissed.

[28]

I decline to award costs to the appellant
    because of the late disclosure of his income information. Had this information
    been disclosed earlier, when it was requested by respondents counsel, the
    motion might have been avoided. Each party will therefore bear its own costs of
    this motion.

M.
    Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Issa v. Wilson, 2020 ONCA 756

DATE: 20201130

DOCKET: C67821

MacPherson, Zarnett and Jamal JJ.A.

BETWEEN

Hassan
    Issa

Plaintiff (Respondent)

and

John Wilson,
Wasim Jarrah and Alexander Realty
    Centres Inc.

cob as Keller Williams Realty Centres

Defendants (
Appellants
)

Hans Engell, for the appellants

Howard L. Shankman, for the respondent

Heard: November 23, 2020 by video conference

On
    appeal from the judgment of Justice Jane Ferguson of the Superior Court of
    Justice, dated November 22, 2019, with reasons reported at 2019 ONSC 6744.

REASONS FOR DECISION

[1]

The appellants, real estate agent Wasim Jarrah
    and realty company Keller Williams Realty Centres, appeal from the judgment,
    following a one day trial, of Ferguson J. of the Superior Court of Justice. In
    that judgment, the trial judge granted the remedy sought by the respondent,
    Hassan Issa, namely, rescission of an agreement of purchase and sale of a
    residential property in Stouffville. The trial judge also ordered the return of
    the $50,000 deposit paid by the respondent.

[2]

The appellants acted for both the respondent and
    the vendor of the property, John Wilson. Mr. Wilson was originally a party to
    the action, but by agreement he was released from the action on the
    understanding that the issue of whether the respondent was entitled to rescission
    of the purchase agreement and return of the deposit would be determined as
    between the appellants and the respondent.

[3]

Mr. Issa was a 26 year old first time home
    buyer. He wanted to buy a home in which he could live with his parents and
    three sisters. He retained Mr. Jarrah to help him find a suitable home.

[4]

Mr. Jarrah told Mr. Issa that the home size was
    2,100 square feet. He relied on information provided by Mr. Wilson and
    information from a previous listing of the home (12 years prior) to record the
    size of the home as 2,000-2,500 square feet in the MLS listing. He did not
    conduct a measurement exercise himself. In an agreed statement of facts, Mr.
    Jarrah admitted that he was negligent in failing to measure or verify the size
    of the home.

[5]

Mr. Issa visited the property twice before
    making an offer to purchase. He saw all the rooms and was allowed to inspect
    the entire home. On his second visit, he was accompanied by family members, and
    on that occasion Mr. Wilson, the vendor, told Mr. Issa that the property was
    about 2,000 square feet.

[6]

In late May or early June 2017, Mr. Issa
    received an appraisal of the property in connection with his mortgage
    application. The appraisal indicated that the size of the home was 1,450 square
    feet.

[7]

Mr. Issa decided not to complete the purchase of
    the home. He commenced an action seeking a declaration that the agreement of
    purchase and sale was null and void and the return of his $50,000 deposit.

[8]

The trial judge agreed with Mr. Issa. She
    concluded:

In this case I do not find that Mr. Issas
    inspection of the subject property determined his expectations. He was given
    representations from both Messrs. Jarrah and Wilson that the property was 2000
    or greater than 2000 square feet and as well relied upon the MLS agreement
    which set out 2000 to 2500 square feet. His inspections did not override his
    expectation that this was the size of the property. (I take his young age,
    inexperience with square footage, and being a first time home buyer into
    account when considering the reasonableness of his belief.)

[9]

The appellants appeal from this decision.

[10]

The appellants submit that the trial judge erred
    by not accepting the proposition that where a purchaser inspects a property
    their reliance on a misrepresentation as to the size of the property will be
    displaced.

[11]

We do not accept that this is an absolute
    proposition of law. In some cases, it has been applied; in other cases it has
    not governed because of a constellation of facts that would make a strict
    application unfair in the circumstances.

[12]

The remedy of rescission of a contract may be
    obtained on the basis of misrepresentation where the defendant made a false
    statement that was material and induced the plaintiff to enter into the
    contract:
Panzer v. Zeifman et al.
(1978), 20 O.R. (2d) 502 (C.A.), at
    p. 5;
Singh v. Trump
, 2016 ONCA 747, at para. 156.

[13]

In this case, in our view, the trial judge did
    not err by concluding that the appellants misrepresentation concerning the
    size of the home was material to the respondents decision to purchase. We say
    this for several reasons.

[14]

First, Mr. Jarrah made explicit statements about
    square footage to Mr. Issa (2,100 square feet) and in the MLS listing that Mr. Issa
    saw (2,000-2,500 square feet). At trial, he formally admitted that he was
    negligent in making these statements. Mr. Wilson also admitted that he told Mr.
    Issa that the property was about 2,000 square feet. As the trial judge found,
    Mr. Issa was told (at least once) by both Messrs. Wilson and Jarrah that the
    property was 2000 or more than 2000 square feet.

[15]

Second, the discrepancy between the negligently
    communicated size of the home (2,100 square feet and 2,000-2,500 square feet)
    and the actual size (1,450 square feet) is substantial  either 27, 32 or 42
    per cent.

[16]

Third, Mr. Issas reliance on Mr. Jarrahs and
    Mr. Wilsons representations about the size of the home is supported by the
    fact that he remained ready to close the purchase until the moment he
    discovered, through the appraisal of the property related to his mortgage
    application, that its actual size was only 1,450 square feet. With this new
    knowledge, he immediately communicated that he was not prepared to complete the
    purchase.

[17]

Fourth, the trial judge did not err by making
    reference to Mr. Issas age and inexperience in home buying. These can be, in
    appropriate cases, relevant contextual factors:
Beer v. Townsgate I Limited
(1997), 36 O.R. (3d) 136 (C.A.), at para. 20.

[18]

For these reasons, we conclude that the trial
    judge did not err in her analysis and disposition on the main issue.

[19]

The appeal is dismissed. The respondent is
    entitled to his costs of the appeal fixed, through the agreement of counsel, at
    $10,000, inclusive of disbursements and HST.

J.C
    MacPherson J.A.

B.
    Zarnett J.A.

M.
    Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: J.D.M. v. T.L.L.M., 2020 ONCA 734

DATE: 20201119

DOCKET: C66885

Fairburn A.C.J.O., Pepall and
    Roberts JJ.A.

BETWEEN

J.D.M.

Applicant (Respondent in Appeal)

and

T.L.L.M.

Respondent (Appellant)

Michael H. Tweyman, for the appellant

J. Leigh Daboll, for the respondent

Kathleen Bingham, for the Office of the
    Childrens Lawyer

Heard and released orally:
    November 12, 2020 by video conference

On appeal from the order of Justice R.
    J. Harper of the Superior Court of Justice, dated April 8, 2019.

REASONS FOR DECISION

[1]

The appellant was found in contempt of a family
    law order. That order was settled on consent on June 19, 2017. Paragraph 7(f)
    of the order reads as follows:

The parties shall enroll the children in
    counselling and both parents shall participate in the counselling as directed
    by the counsellor. The parties shall advise the counsellor that the goal of
    counselling is to facilitate effective co-parenting and communication between
    the girls and both parents and that any issues can be resolved directly with
    the parent involved.

[2]

The motion judge concluded that the appellant
    was in contempt of this paragraph. He found beyond a reasonable doubt that the
    appellant did not facilitate the intended counselling and that her failure to
    do so was wilful in nature, in the sense that she wilfully put multiple road
    blocks in the way of getting the prescribed counselling.

[3]

The appellant made four broad submissions
    respecting alleged errors made by the motion judge.

[4]

First, she argues that the motion judge made
    palpable and overriding errors that were material to the contempt finding. We
    see no such errors. While the motion judge was incorrect when he said that out
    of the 20 investigations conducted by the authorities into the familys
    situation, the mother admitted to being responsible for at least 16 of those
    investigations, it matters not. The reality is that, while the appellant may
    not have been responsible for 16, she was responsible for a great many of those
    investigations, none of which ever resulted in any protection concerns or
    criminal charges.

[5]

The motion judges decision did not turn on the
    precise number of investigations the mother was responsible for. Rather, it
    turned on the entire contextual picture, much of which extended well beyond
    those investigations. The record before the motion judge, as set out in his
    reasons, supports his conclusion.

[6]

The appellant also argued that the motion judge
    erred in finding that the appellant breached para. 7(f) of the order. In
    particular, the appellant says that the clause is open to different
    interpretations, including that the parties could each pursue different
    counsellors for the children. As the appellant was getting counselling for the
    children, she said that this technically fell into compliance with the order.

[7]

We do not agree.

[8]

The appellants argument defies any reasonable
    interpretation of para. 7(f). It is entirely clear, addressing as it does the
    term counsellor in the singular.

[9]

Even if there had been any ambiguity in the
    appellants mind, which we do not accept, the parties appeared before a judge
    in December 2018 and an order was made as to which counsellor would be used for
    purposes of meeting the obligations under para. 7(f). That order was reinforced
    just over a month later. It is against that context that the motion judge found
    that the mother took active steps to obstruct the process. This was a finding
    that was available to the motion judge on the record.

[10]

The appellant also argues that the motion judge
    erred in concluding that the wilful nature of the appellants conduct had been
    proven beyond a reasonable doubt.

[11]

This argument is predicated on whether the
    counsellor was actually available to conduct the counselling. The appellant
    argues that the counsellor would not get involved with the family because there
    were outstanding custody issues. She contends that it was incumbent on the
    respondent to call the counsellor as a witness to resolve this issue.

[12]

The counsellors terms of reference make clear
    that she would not become involved in the event that custody issues were still
    outstanding.

[13]

The respondent denies that there were any such
    issues outstanding. This is evident from the court record.

[14]

The motion judge made findings of fact,
    including that the mother wilfully obstructed the counselling from the start.
    The record supports that finding of fact. It is not for this court to revisit
    that issue by reweighing the evidence.

[15]

The appellant also says that she was ambushed at
    trial by an email that the counsellor sent to the respondent concerning her
    availability to assist the family. While it would have been preferable to
    produce the email earlier in the proceedings, the reasons indicate that this
    email was not material to the motion judges determination of contempt. Nor was
    it used for credibility purposes. Rather, read in context, the motion judges
    reasons demonstrate that the email was used only for purposes of acknowledging
    that the counsellor remained available to assist the family.

[16]

In the end, the motion judge clearly and
    correctly stated the law relating to contempt. He understood that this power
    should only be invoked in family law proceedings in rare circumstances. He saw
    this case as one of those rare occasions.

[17]

The appeal is dismissed.

[18]

Costs will be granted in the amount of $5,000, inclusive
    of disbursements and relevant taxes.

Fairburn A.C.J.O.

S.E. Pepall J.A.

L.B. Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Jay-Pee Drycleaners Inc. v.
    2321324 Ontario Inc., 2020 ONCA 711

DATE: 20201106

DOCKET: M51873 (C68270)

van
    Rensburg J.A. (Motions Judge)

BETWEEN

Jay-Pee
    Drycleaners Inc. (Lee Byeongheon)

Plaintiff

(Appellant/Responding Party)

and

2321324
    Ontario Inc. A.K.A Jasaab Holdings Inc.

Defendant

(Respondent/Moving Party)

Richard J. Bosada, for the moving party

Lee Byeongheon, acting in person

Heard: November 4, 2020 in writing

ENDORSEMENT

[1]

This is an opposed motion for the extension of
    time to serve and file a notice of cross-appeal in C68270. The appeal is from
    the judgment of Hackland J. dated March 6, 2020 that proceeded as an assessment
    of damages following the wrongful termination of the appellants lease with the
    respondent. The appellant delivered a notice of appeal on March 20, 2020.

[2]

The evidence on the motion consists of the
    affidavit of a legal assistant in the office of the moving partys counsel,
    which for the most part is made on information and belief. She confirms that
    the respondent provided instructions to counsel to cross-appeal, and that
    senior counsel instructed junior counsel to prepare a notice of cross-appeal.
    She refers to the difficulties encountered in their law office as a result of
    COVID-19. She states that the junior lawyer only discovered on September 8,
    2020 that the time periods had begun to run again in this court on July 16,
    2020. All of this information ought to have been provided by affidavit from one
    or both of the lawyers.

[3]

On September 14, 2020 the parties attended a
    motion by teleconference. This was a motion by the appellant that was partially
    opposed by the respondent. Hourigan J.A. granted an order permitting e-filing
    without an OCR, dispensing with the necessity of filing an issued and entered
    order, and extending the time to December 14, 2020 for the appellant to perfect
    the appeal. He reserved costs to the panel hearing the appeal. Although the
    legal assistants affidavit refers to the motion, there is no explanation for
    the failure to raise the issue of the cross-appeal when that motion was heard,
    nor is there any real explanation for why this motion was brought only now.

[4]

In opposing the motion and asking that it be
    struck the appellant raises concerns about delay. He is afraid that the delays
    he experienced in the court below, which he attributes to the respondent, will
    continue in this court.

[5]

Extending the time as requested by the respondent
    with appropriate directions should not delay the scheduling and hearing of the
    appeal. At the end of September, the appellant served an appeal book, factum,
    exhibit book and transcript, attempting to perfect the appeal at that time.
    There were some issues with the materials, so the appeal has not yet been
    perfected. The respondent however has all that it needs to prepare its
    compendium and factum.

[6]

I am satisfied that it is in the interests of
    justice to extend time. Accordingly, I make the following order: the respondent
    shall serve and file its notice of cross-appeal on or before November 10, 2020.
    The respondent shall, by December 15, 2020, serve and file its compendium and
    factum on the appeal. The compendium shall include documents the respondent
    considers relevant to the cross-appeal, and the factum shall also address the
    cross-appeal. The appellant may then deliver a factum and cross-appeal
    compendium, if so required, responding to the cross‑appeal. Costs of this
    motion are reserved to the panel hearing the appeal.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Jesan Real Estate Ltd. v. Doyle, 2020 ONCA 714

DATE: 20201110

DOCKET: C67768

Feldman, Fairburn and Nordheimer JJ.A.

BETWEEN

Jesan Real Estate Ltd.

Applicant (Appellant)

and

Sean Doyle
, John Koutsoukos, Deena
    Koutsoukos and Anthy Koutsoukos

Respondents (
Respondent
)

Pathik Baxi, for the appellant

Sean Doyle, acting in person

Heard: in writing

On appeal from the judgment of Justice M.J. Lucille Shaw
    of the Superior Court of Justice dated November 6, 2019, with reasons reported
    at 2019 ONSC 6448.

Feldman J.A.:

[1]

The appellant, Jesan Real Estate Ltd. (Jesan), rented a home to the
    respondents pursuant to a written Occupancy Agreement (OA). The parties also
    entered into a written Option to Purchase Agreement (OPA) whereby the
    respondents could elect to purchase the property at the end of the term for a
    fixed price on defined conditions. One of the respondents, Sean Doyle,
    purported to exercise the option but the attempted exercise was rejected by Jesan.
    Mr. Doyle and Jesan then entered into an agreement to purchase the property for
    a higher price, but Mr. Doyle did not complete the purchase on the date set for
    closing. Mr. Doyle and the other respondents remained in the premises as
    renters.

[2]

Jesan brought an application seeking the following relief: an order that
    the OA and the OPA are null and void; leave to issue a writ of possession; an
    order that the deposit paid in respect of the agreement of purchase and sale be
    forfeited. Only Mr. Doyle responded to the application. The remaining named
    respondents, who are all members of Mr. Doyles family, did not participate in
    the hearing.

[3]

The application judge dismissed Jesans application without addressing
    the status of the uncompleted agreement of purchase and sale and the tenancy. I
    would allow the appeal, set aside the order and address the result as set out
    below.

Background facts

[4]

Through the agency of Wayne Muir, a real estate agent acting for all
    parties, Jesan, acting through Mr. Khan, and the respondents entered into the
    OA in respect of 25 Napa Valley Crescent on February 17, 2014 for a term of 36
    months beginning March 31, 2014 and ending on February 28, 2017. The monthly
    rent was $2515. On the same day they also entered into the OPA. The intent was
    that the respondents would rent with a view to purchasing the property.

[5]

Under the OPA, the respondents, described as the Occupant, were granted
    the option to purchase the property at the end of the occupancy agreement, so
    long as the Occupant complies with all conditions of the Occupancy Agreement,
    and, as long as the Occupant is not in default (all outlined in the Occupancy
    Agreement) for the Purchase Price of$489,000.00 CDN

[6]

A number of the terms of the OPA are reproduced here as they form the
    basis for determining the rights of the parties:

TERMS:

(e) Initial Option
    Deposit will be credited to the Occupant to go toward the down payment upon
    successful Purchase of the property. The Initial deposit is non refundable.
    Should the Occupant not exercise their right to Purchase the property, the
    Occupant shall forfeit this initial deposit in its entirety

(f) Monthly Option
    Payment credit will be credited back to the Occupant to go toward their down
    payment upon successful Agreement to purchase the property. Monthly option
    payment is only credited for months in which payments are made as agreed, on
    time. Monthly payment option credit will be forfeited for the month in which monthly
    payment is not made on time. Should the Occupant not exercise his right to
    purchase the Property, the Occupant forfeits all monthly option payment credits

OPTION DEPOSIT AND
    MONTHLY CREDITS:

Initial Option
    Deposit (Non Refundable) at time of signing of this Agreement $20,000.00 held
    in ReMax Realtron Realty Inc trust account until day of Occupancy when it is to
    be released to the Owner

Second Option Deposit
    (Non Refundable) on date of closing/occupancy   $   0.00

Monthly Option
    Payment Credit (Non Refundable) $375.00

EXERCISE OF OPTION:

The option may be
    exercised 60 days prior to the end of the term of the Occupancy Agreement
    unless mutually agreed to accelerate the Option, but not earlier than 2 years
    and shall be exercised by mailing or personally delivering written notice of
    intent to purchase to the Owner and by an additional deposit in the amount of
    $1,000.00 (CDN) One Thousand Dollars payable in Trust to the Owners Solicitor.

Notice, if mailed, it
    shall be registered mail, to the Owner at the address set forth below and shall
    be deemed to have been given upon the day following the day shown on the post
    office receipt.

In the event the
    option is exercised, the Option Deposit shall be credited back to the Occupant.
    The Monthly Option Payment Credits, if any shall be credited back to the
    Occupant, for each month the Occupancy Payment has been paid when due. If the
    Occupancy fee was late for any month, even for one business day, credit will
    not be given for that month. These funds will only be credited if the option is
    exercised and the sale of the Property closes. In particular, if the option is
    not exercised, the Occupant forfeits and the Owner retains all Option Deposits
    and Credits. If the Occupant is not in breach of contract and the Owner decides
    to terminate the contract, the Option Deposit shall be credited back to the
    Occupant. By exercising the option, the Occupant states that their obligation
    to purchase is unconditional. In particular, the Occupant states that the
    required financing is in place. The Investor hereby acknowledges that the
    Occupant is not in default and that this agreement is firm and binding for

title
    transfer to the Occupant and must abide by this agreement.

EXPIRATION OF OPTION

Notice of Intent to
    purchase may be made at least 90 days before the last day of the term of the
    Occupancy Agreement. If notice is not received and/or the Property is not
    purchased, the Option to Purchase expires. Upon expiration, the owner shall be
    released from all obligations hereunder and all Occupants rights hereunder,
    legal or equitable shall cease.

EXTENSION OF AGREEMENT:

If financing cannot
    be obtained on behalf of the Occupant by the designated mortgage team, and the
    Occupant is not in default, then this Agreement shall continue on a month to
    month basis for an additional (6) six months with no increase in the Occupancy
    payment or change in the Monthly Option Payment Credit. The Purchase Price
    shall however increase at the rate of 0.25% per month. If after these
    additional (6) six months, the Property still has not closed, then the Monthly
    Option Payment Credit can, at the option and absolute full discretion of the
    Owner, be increased. The Purchase Price shall increase at the rate of .3% per
    month.

NOTICES:

Any notice which
    either Party may or is required to give, may be given by mailing the same
    postage prepaid, to Occupant at the Property or to the Owner at the address
    shown below or at such other places as may be designated by the Parties from
    time to time.

TIME:

Time shall be of the
    essence of this Agreement.

[7]

According to the OPA, the option to purchase was conditional on the
    respondents compliance with all the conditions of the OA and not being in
    default. The respondents agreed to pay to the agent an initial non-refundable deposit
    of $20,000 upon signing the OPA, which was to be released to Jesan on the date
    of occupancy. If the option was exercised, the initial deposit would be
    credited to the purchase price as a down payment, together with a non-refundable
    credit of $375 per month. As a result, the amount of $33,500, paid to Jesan by
    the end of the lease term, would be credited to the purchase price as a down
    payment if the option to purchase was exercised. If the option to purchase was
    not exercised, this sum would be forfeited to Jesan.

[8]

The option was to be exercised by registered mail or personal service of
    a written notice of intent to purchase on Jesan and by an additional deposit of
    $1000 payable in trust to Jesans solicitor. The mailing address was not
    included in the agreement. The time limits for exercising the option were set
    out in the OPA.

[9]

On February 3, 2017, Mr. Muir emailed an offer to purchase on behalf of Mr.
    Doyle to Jesan for the agreed price of $489,000. The offer referred to a down
    payment of $35,000. However, the further $1000 called for in the OPA was not
    included. Jesan refused to agree to the offer. The application judge found that
    Mr. Khan did not communicate at that time that the offer did not comply with
    the OPA, but discussed with Mr. Muir the fact that the property was worth a lot
    more than the option price. Mr. Muir advised Mr. Doyle to make an offer for
    more money in order to avoid litigation. Mr. Muir prepared a second offer to
    purchase which was signed by Mr. Doyle on March 1 and by Mr. Khan on behalf of Jesan
    on March 7, 2017. The offer was for $550,000, again with $35,000 as the down payment
    and with the same closing date as the first offer, March 31. Mr. Doyle sent a
    bank draft on March 3 to Jesan for $1500 re RTO Final Payment, with RTO
    meaning rent to own.

[10]

Following
    acceptance of the second offer, Jesan asked for and received from Mr. Doyle three
    payments of $375 each because the rent had been late three times over the term,
    and the OPA provided that late payments would not count toward the down
    payment.

[11]

Mr.
    Doyle had difficulty arranging financing to close the transaction. Some of the
    other respondents contacted Jesan and advised that Mr. Doyle wanted to add a
    family member as a purchaser to facilitate financing.  Jesan refused to amend
    and relied on the time of the essence provision of the agreement of purchase
    and sale.

[12]

Mr.
    Doyle failed to close on March 31. Instead, on that same day, Mr. Doyles
    lawyer advised Jesan by letter that Mr. Doyle was exercising his right to
    extend the OPA by six months because he was still arranging financing. The
    letter alleged that Mr. Doyles inability to close was due to Jesan breaching
    the OPA and increasing the purchase price to $550,000.

[13]

In
    response, Jesans lawyer took the position that the February 3 email was not a
    valid notice of exercising the option to purchase because of a number of non-compliances
    including: it was not delivered personally or by registered mail; it did not
    enclose the $1000 deposit; and it was not delivered within 60 days prior to the
    end of the term of the OA. The letter also stated that the OA term ended on
    February 28 and that the OPA had expired. In response, Mr. Doyle registered a
    caution on the property and continued to reside there and pay monthly rent of $2515.

[14]

As
    indicated above, this litigation was commenced by Jesan seeking a declaration
    that the OA and OPA were null and void and for leave to issue a writ of
    possession. The respondents did not file a cross-application seeking any relief
    such as specific performance or relief from forfeiture.

Findings by the application judge

[15]

The
    evidence on the application consisted of an affidavit of Mr. Khan, an affidavit
    of Mr. Doyle, and the transcripts of the cross-examinations on those affidavits
    together with the answers to undertakings. The application judge explained that
    there was conflicting evidence on issues such as whether Mr. Doyle first
    notified Jesan in December 2016 that he wanted to purchase the property, and
    whether Jesan communicated in February after the February 3 email with no
    deposit that Mr. Doyle was in breach of the OPA.

[16]

The
    application judge found that Mr. Doyle first notified Jesan of his intention to
    exercise the option on February 3, 2017. She also found that Jesan first notified
    Mr. Doyle by letter dated April 18, 2017, after the second agreement failed to
    close, that his purported exercise of the option to purchase breached the OPA.

[17]

Relying
    on the Supreme Court of Canada decision in
Sail Labrador Ltd. v. Navimar
    Corp.
, [1999] 1 S.C.R. 265 (S.C.C.), the application judge found that the OA
    and the OPA constituted a bilateral contract, and that the legal result of that
    characterization was that only substantial non-performance of the terms of
    the contract by Mr. Doyle would be sufficient to disentitle him to performance
    by Jesan. The application judge defined substantial non-performance as
    requiring a finding that Mr. Doyles failure in performance substantially
    deprived Jesan of what was bargained for.

[18]

The
    application judge considered the effect of the time is of the essence clause,
    and found, based on the parties conduct during the term of the lease, that they
    did not intend time to be of the essence, or, at the very least, that Jesan
    acquiesced to delayed payments on multiple occasions. As examples, the
    application judge identified: the $20,000 deposit was not paid when the
    respondents took possession, but after, contrary to the OPA, and Jesan accepted
    late lease payments by etransfer made more than 120 hours after a cheque was
    returned for insufficient funds, which was not in accordance with the OA. The
    application judge concluded that by acquiescing to late occupancy payments and
    a late deposit, Jesan had waived the time of the essence requirement, and could
    not rely on the time of the essence provision of the OPA.

[19]

The
    application judge also noted, applying
Sail
at para. 50, that in this
    bilateral agreement, there was no provision requiring strict performance that
    would preclude the application of the substantial non-performance doctrine. She
    then concluded that Mr. Doyle had substantially complied with the option
    exercise terms and therefore, with the OPA. She added that if she was in error
    and the OPA was a unilateral contract, then any non-performance by Mr. Doyle
    was
de minimis
and did not amount to a fundamental breach.

[20]

The
    application judge specifically addressed each of the three alleged breaches of
    the option conditions and found that each one did not amount to substantial
    non-performance:

1)

The requirement to pay
    an extra $1000 deposit did not specifically say it had to be paid at the same
    time the option was exercised. Mr. Doyle paid it on March 3, 2017 as part of
    the bank draft of $1500 following the agreement on the second offer and it was
    accepted by Jesan.

2)

Mr. Doyle could not strictly
    comply with the requirement to serve the notice of exercising the option by
    mail because no address for service was included in the agreement. The email
    notice gave functionally clear and unambiguous notice to Jesan with no
    disadvantage to it. Also, email was not specifically prohibited by the OPA or
    OA.

3)

The notice served on
    February 3 was not out of time. There was ambiguity because the OPA provided
    for both 60 days and 90 days notice, and used the word may rather than must.
    Because of the ambiguity, there was no requirement for strict compliance. It
    was enough for Jesan to receive notice of Mr. Doyles intention to exercise the
    option prior to the end of the term of the OA.

[21]

The
    application judge concluded that Jesan did not accept the first offer, not
    because of any breach of the OPA in exercising the option to purchase, but
    because the price was too low. She concluded that the parties were still operating
    under the OPA because:  1) Mr. Doyle paid  $1125 on March 27 to make up the
    down payment because the three late rental payments  under the OA did not count
    toward the down payment under the OPA; and 2) Mr. Doyle paid the $1500 deposit
    to satisfy the OPA requirement for a further $1000 deposit upon exercise of the
    option to purchase.

[22]

Based
    on these findings, the application judge concluded that she did not have to address
    whether Mr. Doyle was in breach of the March agreement of purchase and sale based
    on the second offer, whether he had forfeited the $35,000 deposit, or whether
    he was entitled to an extension of the March 31 closing date. Instead, she
    found that Jesan failed to comply with its obligation to sell the property for
    the option price of $489,000 and dismissed the application.

Issues

[23]

This
    appeal raises four issues:

1.

Was Jesan
    entitled to reject the exercise of the option by Mr. Doyle because his notice
    did not comply with the OPA?

2.

Was the second
    agreement a new contract or an extension of the OPA?

3.

Is the deposit
    of $35,000 to be forfeited to Jesan or is Mr. Doyle entitled to any relief from
    forfeiture?

4.

Is Jesan
    entitled to an order for a writ of possession?

Analysis

Issue 1: Was Jesan entitled to reject the exercise of the
    option by Mr. Doyle because his notice did not comply with the OPA?

[24]

The
    respondents purported to exercise their option to purchase the leased premises,
    contained in the OPA, by way of an email to Jesan on February 3, 2017.  The OPA
    required the option to be exercised by mail or personal service, and that it be
    exercised 60 days before the end date of the OA which was February 28, 2017, or
    up to two years before that date. It also required a further $1000 deposit.

[25]

When
    Jesan did not accept the exercise of the option at the option price of $489,000,
    Mr. Doyle agreed with Jesan to purchase the leased property for the price of $550,000,
    but with the same terms as contained in the OPA regarding crediting of the initial
    down payment of $20,000, plus $375 from each lease payment that had been made on
    time, plus adding the $1000 deposit plus an additional $500 in order to round up
    the down payment amount to $35,000.

[26]

Mr.
    Doyle failed to close the transaction on the closing date of March 31, 2017. He
    has remained in the premises paying the same rent as before.

[27]

Because
    the contract is an option to purchase, the application judge referred to the
    decision of the Supreme Court of Canada in
Sail
, where the court
    explained that while an option is often viewed as a unilateral contract where
    the conditions for exercise must be strictly complied with, if the option is
    closely linked with another contract between the parties, then it is a
    bilateral contract which requires only substantial performance of the
    conditions to be enforceable. However, the substantial non-performance doctrine
    is always subject to the express terms of the contract. In
Sail
,
at
    para. 50, the court explained:

Having found that the option in the present case is a clause of
    the bilateral charter party, it must next be determined whether the parties
    have expressly provided for literal and strict enforcement of any or all of the
    terms of this contract. Courts will generally give effect to the parties
    intentions by upholding any clear contractual provisions which provide that the
    breach of a certain term, no matter how slight, will justify rescission of the
    entire contract by the non-offending party [Waddams, pp. 400-401; Treitel, pp.
    694-95;
Lombard North Central plc v. Butterwort
, [1987] Q.B. 527 (Eng.
    C.A.) ]. If the parties have made no such provisions, the bilateral nature of
    the contract in the present case will require that this Court apply the
    substantial non-performance doctrine.

[28]

Therefore,
    if the OPA is part of a bilateral agreement, to which the doctrine of substantial
    non-performance would generally apply, in order to assess whether Mr. Doyles non-compliance
    with the requirements for exercising the option amounted to a breach of the OPA
    that allowed Jesan to reject the exercise of the option, the court was required
    to read the OPA to determine its requirements and whether there are any
    provisions that speak to strict performance of the contract, or, conversely,
    that allow for some leeway in performance of the contractual obligations.

[29]

The
    application judge found that the OPA was part of a bilateral contract with the
    OA, and that there was no provision of the contract that required strict
    performance of its terms. I agree that the OPA is linked to the OA and that the
    OPA is part of a bilateral contract. However, by finding that no clause in the
    agreement had the effect of requiring strict performance of the conditions of
    exercise of the option, the application judge failed to address a number of specific
    clauses in the OPA that speak to the requirement for strict compliance.

[30]

For
    example, two clauses in the agreement govern the operation of the monthly option
    credit toward the down payment. The first is under the heading Terms
    subparagraph (f) which provides:

(f) Monthly Option Payment credit will be credited back to the
    Occupant to go toward their down payment upon successful Agreement to purchase
    the property. Monthly option payment is only credited for months in which
    payments are made as agreed, on time. Monthly payment option credit will be
    forfeited for the month in which monthly payment is not made on time. Should
    the Occupant not exercise his right to purchase the Property, the Occupant
    forfeits all monthly option payment credits.

[31]

The
    second is under the heading Exercise of Option:

In the event the option is exercised, the Option Deposit shall
    be credited back to the Occupant. The Monthly Option Payment Credits, if any
    shall be credited back to the Occupant, for each month the Occupancy Payment
    has been paid when due.
If the Occupancy fee was late for any month, even
    for one business day, credit will not be given for that month
. [Emphasis
    added].

[32]

These
    two provisions make it clear that the monthly option payment of $375.00 would
    only be credited toward the down payment for each month that the rent was paid
    on time, and that it would not be credited even if payment was late by only a
    day. It is indisputable that these provisions speak to strict performance of
    the monthly credit provision.

[33]

Other
    clauses that also speak to the requirement for strict performance are the two waiver
    clauses, the time of the essence clause, the entire agreement clause and the severability
    clause. I will set out the two waiver clauses and the time of the essence
    clause here:

WAIVER OF CONTRACTUAL RIGHT: The failure of either party to
    enforce any provision of this Agreement will not be construed as a waiver or
    limitation of that Partys right to subsequently enforce and compel strict
    compliance with every provision of this agreement.

WAIVERS: No failure of the Owner to enforce any term hereof
    shall be deemed a waiver, nor shall any acceptance of partial payment of
    monthly Occupancy payment be deemed a waiver of Owners right to full amount of
    refund.

TIME: Time shall be of the essence of this Agreement.

[34]

While
    the application judge briefly discussed the time is of the essence clause in
    the OPA, she concluded that Jesan waived the right to enforce it because it had
    accepted some late lease payments under the OA and the late $20,000 deposit. In
    reaching the conclusion that Jesan had waived its right to insist on strict
    compliance with time requirements in the OPA, the application judge failed to give
    effect to the two waiver provisions above.

[35]

While
    the standard of review for the interpretation of contracts set out in
Creston
    Moly Corp. v. Sattva Capital Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, is
    deferential on issues of fact as well as on the factual aspect of questions of
    mixed fact and law, the failure to read a disputed contract as a whole is a
    question of law:
Sattva
, at paras. 53, 63-64. Since the application
    judge did not consider the specific clauses in the contract which contradict
    her findings, and there is no indication that she took them into account when
    interpreting the contract, she committed an error of law and no deference is
    owed on appeal:
Fuller v. Aphria Inc.
, 2020 ONCA 403, at para. 50;
Thunder
    Bay (City) v. Canadian National Railway Company
, 2018 ONCA 517, 424 D.L.R.
    (4th) 588, at para. 46, leave to appeal to S.C.C. refused, 38247 (March 28,
    2019).

[36]

With
    the whole contract in mind, the court must reconsider the three impugned
    instances of non-compliance with the conditions for the notice to exercise the
    option to purchase: 1) the timing; 2) the method of delivery; 3) the $1000
    deposit.

(a)

Timing of the Notice

[37]

The
    OPA provides under Exercise of Option that the option may be exercised 60
    days prior to the end of the term of the [OA] unless mutually agreed to
    accelerate the Option, but not earlier than 2 years. Another provision,
    entitled Expiration of Option, provides that Notice of Intent to purchase
    may be made at least 90 days before the last day of the term of the [OA]. If
    notice is not received and/or the property is not purchased, the Option to
    Purchase expires.

[38]

As
    noted, the OPA also contains a clause that makes time of the essence. A time
    is of the essence clause is engaged where a time limit is stipulated in a
    contract. It means that a time limit in an agreement is essential such that
    breach of the time limit will permit the innocent party to terminate the
    contract.
Di Millo v. 2099232 Ontario Inc.
, 2018 ONCA 1051, 430 D.L.R.
    (4th) 296, at paras. 32-33, leave to appeal refused, [2019] S.C.C.A. No. 55.

[39]

Despite
    the timing requirements, and the time of the essence clause, the application
    judge concluded that Jesan could not insist on strict compliance with these
    provisions. She concluded that time was not of the essence because Jesan accepted
    some late lease payments and a late deposit and had thereby waived the time of
    the essence requirement. She also found the terms of exercise of the option
    ambiguous on the issue of timing. She noted that the OPA references both a 60
    day and 90 day notice period, and uses the word may rather than must. Accordingly,
    one interpretation, she stated, is that the
earliest
Mr. Doyle
    could exercise the option was 60 days before the end of the OA term, unless the
    parties agreed to an earlier date. [Emphasis added]. She concluded that if
    Jesan had wanted strict timing compliance, it should have drafted the terms in
    an unambiguous and internally consistent way.

[40]

In
    my view, the application judge erred in law by effectively reading out the
    timing requirements of the notice provision. Jesan was entitled to insist on
    strict compliance with the timely notice requirements of the OPA.

[41]

First,
    Jesan did not waive the time of the essence clause by accepting a late deposit
    and some late lease payments by etransfer. The application judges conclusion
    to that effect ignores the waiver clauses that state that any non-enforcement
    of any right under the contract will not be construed as a waiver of strict
    compliance with the Agreement.

[42]

Second,
    there was no ambiguity in this case. While the agreement contemplates both a 60
    day and a 90 day notice, which in some circumstances could create ambiguity, such
    circumstances did not arise in this case. The notice was given 25 days before the
    end of the lease term.

[43]

The
    use of the word may, rather than must, similarly does not create any
    ambiguity. Mr. Doyle was not required to exercise the option to purchase. But
    if he did, then it had to be exercised at least 60 days prior to the end of the
    OA. Moreover, there is no indication that the parties understood the OPA as
    operating in the manner proffered by the application judge. During
    cross-examination, Mr. Doyle agreed that the OPA required him to exercise his
    option to purchase 60 days prior to the end of the term. He did not suggest
    that his February 3 notice was in time. Rather, he claimed that he in fact had exercised
    the option 60 days prior to the end of the OA term  an assertion the application
    judge considered and rejected in her findings of fact.

[44]

As
    time was of the essence of the agreement and any forgiveness of late payment
    under the OA could not be construed as a waiver of the requirement of strict
    compliance with the time of the essence provision, the notice of exercise of
    the option was not made in a timely manner and was ineffective under the agreement.
    Jesan was entitled to insist on strict compliance with the timing requirements
    in the OPA and treat the OPA as terminated when notice was not provided in
    time. In the context of strict compliance analysis, a notice delivered 35 days
    late was not
de
minimis
.

(b)

Method of Delivery

[45]

The
    Exercise of Option clause required that the notice be delivered by registered
    mail to the address set out in the agreement or by personal service. As no
    address for Jesan was set out on the agreement, service by registered mail in
    compliance with the agreement was not possible. However, there was no
    impediment to personal service. Had the notice by email been delivered on time,
    an argument could have been made that the email constituted substantial
    performance of the contract, if it was proved that the notice came to the
    attention of Jesan. However, because it was delivered out of time, that issue
    need not be finally decided.

(c)

$1000 Deposit

[46]

The
    Exercise of Option clause states that the option is to be exercised by a
    written notice of intent and by an additional deposit in the amount of $1000.00
    (CDN) payable in trust to the owners solicitor. In this case, the amount was
    paid, not as part of the notice of intention to exercise the option, but later
    as part of the agreement of purchase and sale on the second offer. Based on
    what occurred, no deposit was ever paid with the notice of intent.

[47]

I
    disagree with the application judges conclusion that the deposit could be paid
    after the OA had expired because its timing requirement was ambiguous. The Exercise
    of Option clause states that The option may be exercised 60 days prior to the
    end of the term of the [OA]
and shall be exercised
by mailing or
    personally delivering written notice of intent to purchase to the owner
and

by an additional deposit in the amount of $1,000.00 (CDN). [Emphasis
    added]. The option is only exercised upon receipt of written notice of intent
and

a $1000 deposit. Without a deposit paid 60 days before the end of the OA, the
    option to purchase would expire because it had not been properly exercised.

[48]

In
    any event, even if the timing for the deposit payment is ambiguous, Mr. Doyle
    was not entitled to pay the deposit anytime, as the application judges reasons
    imply. When an agreement does not expressly reference a time for performance,
    the law will imply a term that it must be performed within a reasonable time:
Ju
    v. Tahmasebi
, 2020 ONCA 383, 447 D.L.R. (4th) 349, at para. 20;
Di
    Millo
, at para. 38. Here, the $1500 purportedly satisfying the $1000 OPA
    deposit requirement was paid on March 3, 2017, after the expiry of the term of
    the OA. In the circumstances of this case, this could not be payment within a
    reasonable time.

Conclusion: Issue 1

[49]

In
    my view, the application judge erred in law by failing to analyze the
    deficiencies in compliance with the conditions of the exercise of the option in
    the context of the specific contractual requirements of non-waiver and the time
    of the essence provision. She also made a palpable and overriding error by
    finding that the payment of the $1000 deposit satisfied the condition of
    exercise of the option when no deposit of $1000 was paid until a new agreement
    was reached.

[50]

I
    conclude that in light of the failure by Mr. Doyle to exercise the option in
    accordance with the requirements of the OPA, Jesan was entitled to reject the
    notice of intent. Although Jesans motivation for rejecting the notice may well
    have been because of the increase in value of the property, his legal
    entitlement to take that position was justified only by Mr. Doyles failure to
    comply with the OPA in exercising the option to purchase.

Issue 2: Was the second agreement a new contract or an
    extension of the OPA?

[51]

The
    agreement of purchase and sale for $550,000 was entered into following Jesans
    rejection of the notice of exercise of the option. That agreement included a
    deposit of $35,000 which was made up of the same components contemplated by the
    OPA, but with an additional $500. The application judge viewed the parties
    treatment of this deposit as evidence that the OPA was not null and void. Mr.
    Doyle tried to exercise his right under the OPA to a six-month extension of the
    agreement, as if the agreement was made in accordance with and was governed by
    the OPA. By dismissing Jesans application for an order declaring the OPA null
    and void, the application judge appeared to find that the OPA had not been
    terminated.

[52]

However,
    in so concluding, the application judge failed to consider the Expiration of
    Option provision of the OPA, which provides that where the option is not
    exercised, the agreement expires. In this case, Mr. Doyle did not exercise the
    option in accordance with the conditions of the OPA. As a result, the OPA
    expired. The agreement of purchase and sale for $550,000 was a new agreement.
    While it included the same credit for the deposit as Jesan had agreed to in the
    OPA, that did not have the effect of extending the OPA in contradiction to its
    express terms. As a result, Mr. Doyle was not entitled to the six-month
    extension provided in the OPA.

Issue 3: Is the deposit of $35,000 to be forfeited to Jesan or
    is Mr. Doyle entitled to any relief from forfeiture?

[53]

The
    deposit of $35,000 consisted of the $20,000 initially paid in 2014 and referred
    to as the Initial Option Deposit in the OPA; $375 per month for 33 months of
    the lease, plus $375 for three months that had to be made up because of three
    late lease payments that became disqualified for credit under the terms of the
    OPA; plus the $1500 extra deposit paid on March 3, 2017.

[54]

When
    a purchaser fails to close an agreement of purchase and sale, the vendor is
    entitled to retain the deposit regardless of whether he or she suffers a loss,
    subject to the courts ability to grant relief from forfeiture:
Azzarello
    v. Shawqi
, 2019 ONCA 820, 439 D.L.R. (4th) 127, at paras. 45-47,
leave to appeal to S.C.C. refused, 38982 (April 16, 2020):

However, forfeiture is always subject to the
    equitable remedy of relief from forfeiture. Section 98 of the
Courts
    of Justice Act
,
R.S.O. 1990, c.
    C.43, provides that: [a] court may grant relief against penalties and
    forfeitures, on such terms as to compensation or otherwise as are considered
    just. In
Stockloser v. Johnson
, [1954] 1 Q.B.
    476 (Eng. C.A.), the English Court of Appeal set out the two pronged test that
    has been followed in Ontario for applying the relief from forfeiture provision:
    1) whether the forfeited deposit was out of all proportion to the damages
    suffered; and 2) whether it would be unconscionable for the seller to retain
    the deposit:

Redstone

at para. 15

(para. 47).

[55]

In
Redstone Enterprises Ltd. v. Simple Technology Inc.
, 2017 ONCA 282, 137 O.R. (3d) 374, the court stated at para. 25 that the
    finding of unconscionability must be an exceptional one, strongly compelled on
    the facts of the case. Where there is no gross disproportionality in the size
    of the deposit, the court must consider other indicia of unconscionability. The
    list of the indicia of unconscionability is never closed and is context
    specific. Relevant factors include the gravity of the breach and the conduct of
    the parties:
Redstone
, at paras. 29-30.

[56]

In order to consider the question whether forfeiture of the deposit is
    unconscionable, the following facts are relevant:

(a)

$20,000 of the deposit was paid as the initial
    option deposit under the OPA which provides in Term e) that the initial deposit
    is non-refundable and will be forfeited if the right to purchase is not
    exercised;

(b)

the credits of $375/month from the monthly rental
    were also credited to the deposit in accordance with the OPA Term f) which
    provides that if the option is not exercised, then the monthly credits are
    forfeited;

(c)

the amounts paid in March 2017 were the $1500
    deposit and the $1125 to replace three monthly credits for months when the rent
    was paid late;

(d)

Jesan suffered no loss as the value of the property
    had increased;

(e)

Jesan did not try to accommodate Mr. Doyle by
    granting an amendment to help him secure financing, but it is unclear whether
    that would have made any difference to the outcome.

[57]

In
    my view, it is not unconscionable for Jesan to retain the $20,000 initial
    deposit and the 33 monthly credits. These amounts had been paid under the OPA,
    and the respondents had agreed in the OPA that those amounts would be forfeited
    if the option to purchase was not exercised. While this was a new agreement, I
    see no basis for finding unconscionability with respect to those amounts.

[58]

However,
    in the circumstances, it would be unconscionable for Jesan to retain the
    amounts paid in March 2017 to top up the deposit (the $1500 deposit and $1125 monthly
    credit payments), when Jesan suffered no loss and took no steps to try to
    facilitate Mr. Doyle securing financing to close the transaction.

Issue 4: Is Jesan entitled to an order for a writ of
    possession?

[59]

The
    OA provides for a three year lease term ending on February 28, 2017. Under the
    heading Applicable Law, there is a handwritten statement that This is not a
    tenancy under the Landlord and Tenant Act of Ontario. This addition is not
    initialed.

[60]

Regardless
    of the validity or effectiveness of the handwritten addition, the bigger
    problem is that the agreement is, in fact, a residential lease governed by the
Residential
    Tenancies Act
, 2006,
S.O. 2006, c. 17 (
RTA
).
[1]
The
RTA
does not allow contracting out of its provisions: ss.3(1), s.4;
Matthews v. Algoma Timberlakes Corp.
, 2010 ONCA 468, 102 O.R. (3d)
    590, at para. 24, leave to appeal refused, [2010] S.C.C.A. No. 369. Although
    this issue was not addressed by the application judge or referred to by the
    parties in their factums, the provisions of the
RTA
regarding security
    of tenure govern the issue of eviction: see.
RTA
,
Part V. Since
    the Landlord and Tenant Board has exclusive jurisdiction to determine applications
    between landlords and tenants under the
RTA
, Jesan and the respondents
    must have their possessory rights determined before that Board: ss.168(2).

Conclusion

[61]

In
    the result, I would allow the appeal and set aside the order of the application
    judge dismissing Jesans application. I would grant the application for an
    order that the OPA is terminated. I would grant the order for forfeiture of $32,375
    of the deposit to Jesan and order the balance to be paid to Mr. Doyle. I would
    not order a writ of possession as that matter must be addressed by the Landlord
    and Tenant Board if the parties cannot agree. Finally, I would order costs of
    the appeal to Jesan based on its success on the main issue and substantial
    success on the forfeiture issue. If the parties cannot agree on the amount of
    costs, they may each make brief (3 pages) written submissions within four weeks
    of the release of these reasons.

Released: K.F. November 10, 2020

K.
    Feldman J.A.

I
    agree. Fairburn J.A.

I
    agree. I.V.B. Nordheimer J.A.

[1]

The OA states that the premises shall be used as a residence
    and the OPA further confirms that the agreement is first and foremost a residential
    occupancy agreement.