COURT OF APPEAL FOR ONTARIO

CITATION: TMS
    Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1

DATE: 20140102

DOCKET: C56285

Cronk, Blair and Strathy JJ.A.

BETWEEN

TMS Lighting Ltd. and Bahra Holdings Inc.

Plaintiffs

(Respondents in
    Appeal)

and

KJS Transport Inc., Kulwant Singh and 1707416
    Ontario Inc.

Defendants

(Appellants)

Thomas Slade and Jonathan Melo, for the appellants

Salvatore Mannella, for the respondents

Heard: September 3, 2013

On appeal from the judgment of Justice David Price of the
    Superior Court of Justice, dated October 17, 2012, with reasons reported at
    2012 ONSC 5907.

Cronk J.A.:

I.        Introduction

[1]

This action arose from a dispute between neighbouring commercial
    businesses located in an industrial area of Brampton, Ontario.  For
    approximately five years, airborne dust generated by the appellants trucking
    operations persistently disrupted the respondents conduct of their lighting
    manufacturing business.  As a result, the respondents sued the appellants in
    nuisance and trespass, seeking compensation for various losses, including for
    an alleged loss of productivity in their business occasioned by the dust.

[2]

The trial judge held the corporate appellants liable to the respondents
    in both nuisance and trespass.  He awarded damages to the respondents for loss
    of productivity and the costs of refinishing various lighting fixtures to
    repair damage caused by the dust, among other matters.  He held the individual
    appellant liable for the awarded trespass damages.

[3]

There are two main issues on appeal: (1) whether the trial judge erred in
    his nuisance analysis by finding that the appellants interference with the
    respondents use and enjoyment of their lands was unreasonable in the
    circumstances; and (2) whether the trial judge further erred by awarding the
    respondents damages for lost productivity in their manufacturing operations, occasioned
    by the appellants unreasonable interference with and trespass on the respondents
    lands.

II.       Background Facts

[4]

The appellant, KJS Transport Inc. (KJS), operates a long-haul
    transport trucking business.  It maintains its own fleet of transport trucks
    and trailers.  The individual appellant, Kulwant Singh, is a director and
    shareholder of KJS and the appellant, 1707416 Ontario Inc. (170 Inc.).  He
    manages KJSs transport trucking business.

[5]

The respondent, TMS Lighting Ltd. (TMS), is a manufacturer of high-end
    commercial and retail lighting fixtures.  It operates its business on lands
    owned by the respondent, Bahra Holdings Inc. (Bahra), an affiliated
    corporation, in an industrial park in Brampton.

[6]

In late August 2006, 170 Inc. purchased the lands immediately adjacent
    to those occupied by TMS.  The lands included an unpaved parking lot, with a
    sand and gravel surface.  Shortly after the purchase, KJS began to operate its
    trucking business on the property.

[7]

In the spring of 2007, airborne dust generated by the movement of KJS trucks
    on 170 Inc.s unpaved parking lot began to interfere with TMSs manufacturing
    operations.  TMS maintained that the interference was substantial.   It also
    complained that KJS trucks encroached on its premises when entering KJSs
    driveway or turning to back into KJSs loading bays.  In so doing, the trucks
    struck and displaced a series of concrete barrier stones that TMS had erected
    to prevent trespass to its premises.

[8]

When the appellants failed to remedy the dust problems, TMS sued KJS and
    Singh in trespass and nuisance, claiming special damages in the amount of
    $50,000 and aggravated damages in a like amount.  It later twice amended its
    statement of claim: (1) to add 170 Inc. as a defendant and Bahra as a
    plaintiff; (2) to claim injunctive relief; and (3) to increase the quantum of
    the damages claimed for trespass and nuisance to the amount of $650,000, plus
    aggravated damages in the sum of $50,000.

[9]

The action was tried in January 2012.  The trial judge held that the appellants
    interference with the respondents use and enjoyment of their lands was
    substantial and unreasonable.  He ruled that the corporate appellants were
    liable to the respondents for damages in the amount of $281,112.50 for nuisance
    ($278,687.50 for loss of productivity and $2,425 for the costs of refinishing
    various lighting fixtures), plus the sum of $29,310 for trespass on the
    respondents property ($23,400 for loss of productivity and $5,910 for the costs
    of replacing barrier stones).  The trial judge also held Mr. Singh personally
    liable for the awarded trespass damages.  In addition, he granted a permanent
    injunction to enjoin the appellants from further trespassing on 170 Inc.s property.

[10]

The
    appellants appeal from the trial judges finding that their interference with
    the respondents lands was unreasonable and, consequently, from his holding
    that they are liable to the respondents for nuisance.  They also appeal from
    his awards of damages for loss of productivity, in both nuisance and trespass,
    and refinishing costs.  They do not challenge his liability holding in
    trespass, the other components of his damages awards, or the injunctive relief
    granted by him.

III.      Issues

[11]

I
    would frame the issues on appeal as follows:

(1)

Did the
    trial judge err in his nuisance analysis by finding that the appellants
    interference with the respondents use and enjoyment of their lands was
    unreasonable?

(2)

Did the
    trial judge err in his damages assessment:

(a) by

failing

to

consider

whether

the respondents
    established lost productivity damages at trial, as distinct from proving how
    such damages could be quantified;

(b) by adopting a method for quantifying
    lost productivity

damages

that

was

neither supported by the evidence nor
    advanced by the parties;

(c) by failing to discount TMSs
    lost productivity damages to take account of the seasonal and intermittent
    nature of the dust problems caused by the appellants;

(d) by impermissibly relieving
    the respondents of their burden to prove lost productivity damages, as pleaded;
    and

(e) by failing to award only
    nominal damages, if any, for the loss of productivity in TMSs manufacturing operations
    caused by the appellants nuisance and trespass?

IV.     Analysis

(1)

Liability in Nuisance

[12]

The
    appellants argue that the trial judge erred in his nuisance analysis by failing
    to assign appropriate weight, impact and effect to the alleged abnormal
    sensitivity of TMSs manufacturing operations to damage from dust.  The appellants
    say, in effect, that this error fatally taints the trial judges finding that
    the appellants interference with the respondents use and enjoyment of their lands
    was unreasonable in the circumstances.  I disagree.

[13]

To
    begin, the trial judge recognized the two-part test for establishing private
    nuisance and the factors relevant to the assessment of the reasonableness of an
    unauthorized interference with private property rights, as set out in
Antrim
    Truck Centre Ltd. v. Ontario (Transportation)
, 2011 ONCA 419, affd 2013
    SCC 13.  See also,
Mandrake Management Consultants Ltd. v. Toronto Transit
    Commission
, [1993] O.J. No. 995, 102 D.L.R. (4th) 12 (Ont. C.A.).

[14]

Antrim
confirms, at para. 18, that private nuisance consists of an interference with a
    plaintiffs use or enjoyment of land that is both substantial and
    unreasonable.  The Supreme Court explained, at para. 19:

A substantial interference with property is one that is
    non-trivial.  Where this threshold is met, the inquiry proceeds to the
    reasonableness analysis, which is concerned with whether the non-trivial
    interference was also unreasonable in all of the circumstances.

[15]

With
    respect to the reasonableness component of the test for private nuisance, the
Antrim
court emphasized, at para. 25, that the reasonableness of the interference must
    be assessed in light of all the relevant circumstances.  Further, under the
    reasonableness inquiry, the court assesses, in broad terms, whether the
    interference is unreasonable by balancing the gravity of the harm against the
    utility of the defendants conduct in all of the circumstances:
Antrim
at para. 26.  While the courts are not limited by any specific list of factors
    in assessing the gravity of the harm occasioned by the defendant, such factors
    as the severity of the interference, the character of the neighbourhood, the
    sensitivity of the plaintiff to the harm caused, and the frequency and duration
    of the interference may be relevant under the reasonableness inquiry:
Antrim
at paras. 26 and 53-54.

[16]

Before
    this court, the appellants accept the trial judges finding that their interference

with

the

respondents

use

and

enjoyment

of

their

lands

was substantial.

This

was

a

prudent

concession.

The

evidentiary

record overwhelmingly establishes that dust arising from the
    activities of the KJS trucks on 170 Inc.s unpaved parking lot interfered with
    TMSs manufacturing operations for approximately five years.  As the trial
    judge explained, the frequency, duration, degree and impact of the dust
    generated by the KJS trucks, among other factors, caused a continuing and
    substantial interference with TMSs manufacturing operations.

[17]

The
    trial judge also found that from mid-April 2007, when he concluded that the
    dust problems began, until mid-June 2011, the appellants failed to pave 170
    Inc.s parking lot to eliminate the dust problems.  When the parking lot was
    finally paved in mid-June 2011, the dust problems were effectively resolved.
    The trial judge concluded, in these circumstances, that the appellants
    interference with the respondents use and enjoyment of their lands was
    unreasonable.

[18]

I
    see no reversible error in the trial judges appreciation and application of
    the
Antrim
private nuisance test, or in his analysis of the factors
    pertinent to that test, as identified in
Antrim
.  In particular, in my
    opinion, his finding of unreasonable interference was open to him on the
    evidence adduced at trial.

[19]

The
    trial judges finding of unreasonable interference was based on his
    consideration of three factors: (1) the incompatibility of the dust generated
    on the appellants property with the character of the neighbourhood in which
    the parties businesses are located; (2) the nature and utility of the
    appellants conduct; and (3) the alleged sensitivity of TMSs manufacturing
    operations to damage from dust.  As
Antrim
confirms, these are proper
    considerations on an assessment of the reasonableness of an unauthorized
    interference with private property rights.

[20]

I
    did not understand the appellants to challenge the trial judges findings
    regarding the first two factors.  As to the third, the appellants submit that
    the trial judge erred by ignoring relevant evidence about the nature of TMSs
    manufacturing operations and products that rendered them especially susceptible
    to damage from airborne dust.  Again, I disagree.

[21]

The
    trial judges reasons confirm that he was alive to the significance of the
    alleged sensitivity of TMSs manufacturing operations and products to damage from
    the effects of dust.  His appreciation of the relevance of this issue and the
    evidence bearing upon it is also reflected in the transcript of his lengthy
    exchanges on the issue with the respondents counsel during the course of final
    submissions at trial.

[22]

The
    trial judge was not obliged to refer in his reasons to all the evidence
    regarding the specific nature of TMSs manufacturing operations and products.  In
    his reasons, he referred to some of the pertinent evidence adduced at trial
    concerning TMSs business, including the evidence of the suggested
    peculiarities of its manufacturing operations and the specialized nature of the
    lighting fixtures produced by it.  The transcript also reveals that he explored
    the question of the alleged sensitivity of TMSs manufacturing operations and
    products to damage from dust, in detail, with counsel during final argument.

[23]

In
    this context, the trial judge found as follows, at para. 144:

[W]hile TMSs manufacturing process was sensitive to dust, its
    sensitivity was not unique in the area.  Its use of its property was consistent
    with the use that its neighbours made of their properties, including retail
    warehouses, small manufacturing concerns, and professional offices.  TMSs sensitivity
    to dust is not what made KJSs failure to pave its [parking] lot for four years
    unreasonable, although it contributed to the extent of damages TMS suffered
    because of it.

[24]

These
    findings were open to the trial judge on the evidence.  Where, as here, a trial
    judges factual findings are supported by evidence at trial, they attract deference
    from this court.  Absent palpable and overriding error, there is no basis for
    appellate interference with these findings.

[25]

Moreover,
    in his analysis of the reasonableness of the appellants interference with the
    respondents use and enjoyment of their lands, the trial judge considered the
    appropriate factors in light of the evidentiary record.  His appreciation of and
    assignment of weight to be given to the evidence bearing on the reasonableness
    of the appellants activities are matters squarely within his domain.  They,
    too, attract considerable deference from a reviewing court.  See for example,
Woelk
    v. Halvorson
, [1980] 2 S.C.R. 430;
Toneguzzo-Norvell (Guardian ad
    litem of) v. Burnaby Hospital
, [1994] 1 S.C.R. 114, at para. 15.

[26]

In
    my opinion, the trial judges finding of unreasonable interference with the
    respondents use and enjoyment of their lands is firmly grounded in the
    evidentiary record.  The appellants have failed to demonstrate that this
    finding is tainted by palpable or overriding error.

[27]

Accordingly,
    I would reject this ground of appeal.

(2)

Lost Productivity Damages

[28]

I
    reach a different conclusion, however, concerning the appellants challenges to
    the trial judges awards of lost productivity damages.  In my view, on this
    record and in light of the manner in which the trial judge quantified lost
    productivity damages, these awards are unsustainable.  I say this for the
    following reasons.

[29]

The
    appellants submit that the trial judge erred: (1) by failing to consider
    whether the respondents established lost productivity damages at trial, either
    in nuisance or trespass, as distinct from proving how such damages could be
    quantified; and (2) by failing, in several respects, to properly assess lost
    productivity damages.  The appellants contend that, in light of these errors, only
    nominal damages, if any, should be awarded for TMSs lost productivity arising
    from their nuisance and trespass.

[30]

The
    force of these submissions must be considered in the context of the respondents
    theory of lost productivity damages at trial, the trial judges findings
    concerning that theory, and his ultimate approach to the quantification of lost
    productivity damages.

(a)

Respondents
    theory of lost productivity damages

[31]

In
    the final version of their statement of claim, the respondents pleaded that:

(1)

dust and
    sand generated by the movement of KJS trucks on 170 Inc.s unpaved parking lot
    entered TMSs business premises through doors and windows on the south face of
    the structure (para. 9);

(2)

the
    resulting dust in the respondents building had to be cleaned from TMSs
    manufacturing and product staging areas in order to avoid damaging  manufactured
    product (para. 12);

(3)   the respondents incurred damages through the loss of
    productivity caused by the increased man hours required to continually clean
    [their building] of dust during the spring, summer and autumn months (para.
    12); and

(4)  to mitigate the effects of the dust generated by KJSs trucks,
    the respondents were required to keep the doors and windows of their facility
    closed during the spring, summer and fall months, leading to elevated internal
    temperatures. These elevated temperatures, in turn, allegedly occasioned
    employee complaints, reduced morale and reduced productivity (para. 13).

[32]

The
    respondents pleading contains no further particulars of their claim for lost
    productivity damages or of their theory as to how such damages should be measured.

[33]

However,
    in his opening and closing submissions at trial, the respondents counsel
    explained that the respondents theory of lost productivity damages in nuisance
    was based on proof of the penetration of dust into TMSs premises, which
    required TMS employees to devote time and services that would otherwise have
    been spent on TMSs manufacturing operations, to dust remediation and
    corrective measures.  The respondents took the position that damages in
    nuisance for TMSs resulting lost business productivity should be calculated on
    the basis of a percentage of its lost sales revenues during the period April
    2007 to June 2011, when dust problems from KJS trucks were experienced.

[34]

In
    his opening address at trial, the respondents counsel stated:

You will hear from the witnesses for the plaintiffs that the
    sand and dust disturbance  detrimentally affected the business operations of
    the plaintiff, TMS Lighting.  The evidence will show that TMS had to incur time
    and effort to do a number of tasks and work as a result of the sand and dust
    disturbance caused by the defendants, including as follows: additional time by
    TMS Lightings employees in cleaning sand from materials used during the
    assembly and  and packing processes, the repainting and refinishing of
    fixtures, lighting fixtures and other equipment, other products damaged from
    scratches caused by the sand emissions.  You will hear that there were
    excessive handling of parts, equipment, and product and resulting shipping
    delays caused by the infiltration of sand and dust into their building.  And
    you will ultimately hear that there was a loss of labour productivity due to
    the increased plant temperature.

The plaintiffs will present evidence that as a result of these
    additional tasks and remedial actions, necessitated by the infiltration of the
    sand and dust, that TMS Lighting suffered a loss of productivity.
These
    witnesses will testify that based on their everyday observations and knowledge
    of their business, that TMS lost revenues in a range of two percent to seven
    percent of its admitted revenues over the period of April, 2007 to June, 2011
.
    Youll note that the admitted revenue which we discussed earlier was
    $9,223,104.00.

Your Honour will hear that TMS Lighting would have had better
    productivity over that period had its employees not had to deal with the sand
    disturbance issues.
The evidence of the plaintiffs will show that the time
    the employees spent cleaning and trying to remedy the dust disturbances and the
    lost hours due to heat-related reductions in productivity would have instead
    been used to do what TMS Lighting is in the business of doing, that is
    assembling, packing and shipping custom lighting fixtures and products.

The
    witnesses of the plaintiffs will testify that TMS Lighting could have completed
    more sales during the subject period
.

Youll hear that TMS was losing productive labour time as a
    result of the sand and dust disturbance and that, if it had not lost that
    labour time, it wouldve been able to accept and complete more orders for its
    customers during the period in question
.  [Emphasis added.]

[35]

To
    these damages, the respondents maintained, should be added TMSs damages in
    trespass, consisting of: (1) the costs of replacing the concrete barrier stones
    damaged or dislocated by KJSs trucks; and (2) compensation for the lost time
    spent by TMS employees in realigning or repositioning the displaced barrier
    stones.

[36]

In
    support of their theory of nuisance-based damages, the respondents relied on
    the admitted fact that TMS realized $9,223,104.51 in total gross sales revenues
    for the period April 1, 2007 to June 30, 2011.  On the respondents theory, the
    quantum of TMSs lost productivity damages in nuisance could be measured by
    calculating two to seven percent of this admitted gross sales revenues figure,
    and treating the resulting range ($184,462 to $645,617) as the range of TMSs diminished
    revenues and, hence, its damages due to lost productivity caused by the
    appellants nuisance.

[37]

There
    were several evidentiary weaknesses in this theory.  First, the respondents led
    no expert evidence at trial to establish the extent of TMSs damages due to
    lost productivity, whether in nuisance or trespass, or the appropriate manner
    of calculating those damages.

[38]

Second,
    the respondents failed to produce any business records or other evidence to
    establish with any degree of certainty or precision: (1) TMSs net sales
    revenues for the period in question; (2) the increased man hours allegedly expended
    by TMS employees to clean the TMS facility of dust or to otherwise address or
    remedy dust-related problems in TMSs plant; (3) the productivity levels
    achieved by TMS before the commencement of the dust-related problems; (4) the
    production hours lost due to elevated internal temperatures caused by the need
    to keep the TMS plant windows and doors closed in the relevant months; or (5) the
    identity and value of any lost, unfilled or delayed customer orders occasioned
    by the dust problems and the responsive efforts undertaken by TMS.

(b)

Trial judges rejection of respondents theory

of nuisance-based lost productivity damages

[39]

The
    trial judge was satisfied that TMS suffered damages due to lost productivity
    occasioned by the dust generated by the KJS trucks.  However, he concluded that,
    although it was within their power to do so, the respondents failed to lead
    available evidence to support their theory of lost productivity damages in
    nuisance, calculated as a percentage of TMSs gross sales revenues.  He set out
    his central findings on this issue in these terms:

[194]  In the present case,
TMS did not produce an expert
    whose opinion of TMS loss of productivity as a percentage of its gross
    revenues the court could accept and rely on.  Additionally, I find that there
    were records that TMS could have tendered to prove its loss of productivity on
    a percentage basis
.  The Court invited TMS counsel to provide the records
    it had showing TMS increase in gross revenues from the summer quarter of 2010
    to the summer quarter of 2011, both of which were affected by dust from KJS
    unpaved parking lot; and the increase in its gross revenues from the fall or
    winter quarters of 2010, which were affected by the dust, to the fall or winter
    quarters of 2011, which were not affected, so that the effect of the paved lot
    at the end of June 2011 could be measured with precision.  David Bahra
    acknowledged that this information was available, but he did not tender it.

[195]  It is up to a plaintiff to decide how it chooses to
    prove its case, but the Court in the present case must draw an adverse
    inference from TMS failure to tender evidence that was available to it to
    prove the percentage loss in its productivity.  I find that such evidence, if
    called, would not have supported the full amount of damages it claims.

[196]
Having regard to TMS failure to produce evidence in
    support of the percentage loss of productivity that it argues should be
    applied, the court will not assess TMSs damages on the basis of 2% to 7% of
    gross revenues.  There is simply no evidence whose reliability and
    appropriateness both the defence and the court can assess to support those
    percentages
.

.

[200]  Additionally,
TMS  did not name any specific job in
    which substantial delays occurred, or in which a contract was cancelled, or
    could not be accepted because of such delays.  I therefore decline to base my
    assessment of TMS damages on a percentage of its gross revenues during the
    claim period
.

.

[205] It is not the nature of TMS damages that makes them
    difficult to assess.  Rather, it is TMSs failure to call the evidence
    necessary to support its theory of damages based on lost productivity,
    calculated as a percentage of revenues.

[206] Because TMS asked the court to calculate the damages
    caused by the dust as a percentage of the revenues it earned during the five
    year period when the dust was a nuisance, it was incumbent on it to prove not
    only what its revenues and profit margins were during the period, but also the
    extent to which the dust negatively affected them.
There was no evidence
    to support its theory that its damages amounted to 2% to 7% of gross revenues
    earned, or to establish where within the range of $184,000.00 to $645,000.00
    that those percentages represented, its actual damages lay
.  [Emphasis
    added.]

(c)

Trial
    judges response to respondents theory

of
    trespass-based lost productivity damages

[40]

As
    I will describe later in these reasons, the trial judge accepted, with some adjustments,
    the respondents theory of trespass-based damages.  However, in doing so, he
    relied in part on the same approach that he employed in his nuisance-based damages
    analysis to calculate the value of time expended by TMS employees to address
    the dust problems.

(d)

Trial judges approach to the quantification

of lost productivity damages

[41]

After
    holding that the respondents had failed to lead sufficient reliable evidence to
    establish their theory of lost productivity damages in nuisance, the trial
    judge turned to the question whether an alternative basis for the
    quantification of those damages was available on the evidence.  He concluded that
    TMSs lost productivity damages could be measured, both in nuisance and
    trespass, on the basis of the estimated value of production time lost to
    address the dust problems.

(i)

Lost
    productivity damages in nuisance

[42]

The
    trial judges awards of damages in nuisance had two components: (1) damages for
    lost productivity; and (2) damages for the costs of refinishing light fixtures
    affected by dust.

[43]

With
    respect to these damages, TMS led evidence at trial, and the trial judge
    accepted, that dust generated by the KJS trucks was a daily problem at the TMS
    facility during the months of April or May to September or November in each relevant
    year, commencing in April 2007 and continuing until June 2011.  TMS witnesses
    also testified that, in order to combat the dust in these months, its employees
    were required to handle lighting fixtures three or four times, rather than
    once, in preparing the fixtures.  For example, one of TMSs fixture assemblers,
    Mark Wilson, testified that he assembled 15 to 20 fixtures over a nine-hour
    shift and that he was typically required to spend an extra five to ten minutes,
    per fixture, handling the lighting fixtures affected by the dust.

[44]

There
    was also evidence before the trial judge that: (1) in the spring months, three
    assemblers worked on TMS fixtures and, in the summer months, four TMS
    assemblers were involved in this task; (2) the shop rate billed by TMS to its
    customers was $90 per hour, based on its costs of running its plant; and (3)
    the TMS employees who were required to reposition TMSs concrete barrier stones
    were paid $15 to $35 per hour, depending on their position.

[45]

Based
    on this evidence, the trial judge held, at para. 210, that the production time
    lost by TMS due to the dust problems was as follows:

(a)     April 15 to June 15:

Average of 150 minutes/day x 3 employees = 450 minutes/day

450 minutes/day x 5 days/week x 8 weeks = 300 hours

(b)     June 15 to Sept. 15:

Average of 150 minutes/day x 4 employees = 600 minutes/day

600 minutes/day x 5 days/week x 13 weeks = Total of 650
    hours

(c)     Total time from April 15, 2007
    to June 15, 2011:

(i)      5
    years x 300 hours = 1500 hours

(ii)      4
    years x 650 hours = 2600 hours

[46]

The
    trial judge next considered the hourly value of the production time that he
    viewed as having been lost by TMS.  He held, at para. 211:

A reasonable hourly rate to apply to TMS[s] loss of
    productivity is the difference between the $90.00 per hour shop rate which it
    charged its customers, less the average of $15.00 to $35.00 per hour (average
    $25.00) actually paid to employees, for a net hourly rate of $65.00 per hour.

[47]

The
    trial judge relied on his estimates of the total production time lost by TMS
    and the hourly value of this lost production time to conclude, at para. 212,
    that TMSs lost productivity damages occasioned by the appellants nuisance
    equalled: 4100 hours x $65 per hour = $266,500.00.  However, at the end of his
    reasons, at para. 273, the trial judge indicated, without elaboration, that the
    respondents lost productivity damages in nuisance were $278,687.50.  I will
    return to this discrepancy later in these reasons.

[48]

To
    the figure of $266,500, the trial judge added the amount of $2,425 as
    additional damages for the costs incurred by TMS to refinish fixtures affected
    by the dust.  He based this amount on the evidence of David Bahra, one of TMSs
    principals, that dust-affected fixtures required repainting two or three times
    per week, at a cost of $10 per instance.  In light of this evidence, the trial
    judge quantified TMSs refinishing costs, at para. 214, as: An average of 2.5
    fixtures per week x the 97 weeks referred to above (9 weeks x 5 years) + (13
    weeks x 4 years) x $10.00 per fixture produces a cost of $2,425.00.

[49]

As
    a result, in one part of his reasons, the trial judge calculated TMSs lost
    productivity damages in nuisance in the amount of $268,925 ($266,500 plus $2,425).
    However, as I have said, he later stated in his reasons that these damages
    totalled $278,687.50, plus $2,425 on account of refinishing costs, for an
    aggregate amount of $281,112.50.

(ii)

Lost
    productivity damages in trespass

[50]

The
    trial judge then considered the respondents claim for trespass-based damages.
    This claim, and the damages awarded by the trial judge under this heading, also
    had two components: (1) damages for the costs of replacing TMSs concrete
    barrier stones damaged or dislocated by KJSs trucks; and (2) lost productivity
    damages for the time spent by TMS employees in repositioning or realigning the
    displaced barrier stones.

[51]

During
    oral argument before this court, the appellants conceded the trial judges
    damages award for TMSs costs of replacing 10 damaged concrete barrier stones
    ($5,910 plus GST).  Thus, with respect to trespass-based damages, only the
    damages awarded at trial for TMSs alleged lost productivity as a result of
    dealing with the damaged or dislocated barrier stones ($23,400) remains in
    issue.

[52]

The
    respondents claim for lost productivity damages in trespass was based on time
    spent by TMS employees to prevent or mitigate continuing trespass by the KJS
    trucks.  The respondents led evidence that, from September 2006 to January
    2012, a period of 65 months, TMS employees were required to reposition TMSs
    barrier stones approximately 65 times.  In a Repositioning Summary filed at
    trial, TMS estimated that the labour time of these employees was 6.0 man hours/occurrence,
    plus forklift, for a total of 390 hours (6 x 65).  Further, based on its
    hourly shop rate of $90, TMS maintained that its labour costs for barrier repositioning
    work totalled $35,100 (390 hours x $90 per hour).

[53]

With
    some adjustments, the trial judge accepted the respondents approach to the
    calculation of TMSs increased labour costs in dealing with the damaged or
    dislocated barrier stones.  He found that repositioning or realignment of the
    barrier stones was required on a regular basis from September 2006 to the end
    of August 2012, a period of 72 months.  Further, based on the respondents evidence
    that this corrective work sometimes involved only one TMS employee to assist a
    forklift driver in realigning the concrete blocks, the trial judge reduced the
    respondents estimate of TMSs expended labour hours to an average of five,
    rather than six, hours per occurrence.  Finally, and importantly, the trial
    judge rejected the use of TMSs $90 per hour shop rate as an appropriate
    estimate of TMSs hourly incremental labour costs, instead applying an
    estimated hourly rate of $65, as he utilized in his analysis of nuisance-based
    lost productivity damages.  The trial judge held, at para. 262:

I am therefore reducing the labour hours per occurrence [from
    that claimed by TMS] to an average of 5 (between four and six) and using the
    hourly rate of $65.00, being the difference between the shop rate of $90 per
    hour charged to customers, and the average of $25.00 paid to employees.  On
    this basis, the loss incurred by TMS was $23,400.00 (72 months x 5 labour hours
    x $65.00).

(e)

The
    appellants challenges to the

lost
    productivity damages awards

(i)

Lost productivity damages were established

[54]

As
    indicated at paragraph 11 of these reasons, the appellants raise numerous
    grounds of appeal regarding the trial judges awards of lost productivity
    damages.  First, they argue that the trial judge erred in his damages assessment
    by failing to consider whether the respondents established lost productivity
    damages at trial, as distinct from proving how such damages could reasonably
    and reliably be quantified.

[55]

I
    would reject this ground of appeal.

[56]

It
    is true that the trial judge did not clearly distinguish in his reasons between
    whether the respondents established a loss of productivity by TMS due to the
    dust problems, on the one hand, and whether they had demonstrated a reasonable
    and reliable method for quantifying lost productivity damages, on the other
    hand.  However, the trial judges detailed reasons for rejecting the
    respondents theory of lost productivity damages in nuisance and his own
    calculations of those damages both in nuisance and trespass are premised on a
    demonstrated loss of productivity suffered by TMS in its business.  It is
    therefore implicit throughout the trial judges damages analysis that he
    accepted the respondents proffered proof of loss through diminished business
    productivity due to the appellants nuisance and trespass.

[57]

Moreover,
    the evidence at trial amply grounded the trial judges acceptance of the
    respondents claim that TMS experienced diminished business productivity as a
    result of the dust problems caused by the appellants.  Several witnesses called
    by the respondents at trial testified that TMS employees were required to
    expend time that would otherwise have been devoted to TMSs manufacturing
    operations to handle dust-affected fixtures, to clean the dust off parts and
    fixtures, to deal generally with dust issues during the course of a regular
    working day, and to reposition or realign the concrete barrier stones affected
    by the activities of KJSs trucks.  For example, there was evidence before the
    trial judge that:

(1) TMS productivity was lost because, as the trial judge put
    it at para. 159: extra labour was required to clean dust from components or
    fixtures, which resulted in the company shipping fewer products over the period
    than they could otherwise have done;

(2) hours and sometimes days of extra work were required to
    restore TMS products that had been scratched by dust or sand particles to their
    original condition;

(3) the closing of the doors to TMSs premises in the summer
    and spring months, necessitated by the penetration of airborne dust, forced TMS
    to buy more water and provide longer breaks for its employees to stave off
    employee heat exhaustion;

(4) increased temperatures in the plant sometimes required TMS
    to close its facility or send its employees home early;

(5) TMS employees were required to expend extra time placing lighting
    fixtures in boxes, rather than on shelves, in TMSs plant packaging area to
    protect the fixtures from dust; and

(6) at least one TMS assembler (Mark Wilson) was obliged during
    each shift to spend at least an extra five to ten minutes, per fixture, to
    control or respond to dust problems.

[58]

In
    the end, the critical damages question that emerged at trial was not whether
    the existence of a loss due to reduced productivity had been shown.  Rather,
    the key question was whether the evidence afforded a reasonable and reliable
    basis on which damages flowing from that loss might properly be quantified.  It
    is in considering this latter question and attempting to quantify TMSs lost
    productivity damages that, in my opinion, the trial judge fell into error.

(ii)

Trial judges
    quantification of

lost
    productivity damages

[59]

The
    appellants maintain that, having rejected the respondents theory that TMSs lost
    productivity damages in nuisance could be calculated as a percentage of gross
    sales revenues, the trial judge, on his own motion, devised a method for quantifying
    those damages that was neither supported by the evidence nor urged by the
    parties.  They submit that the trial judges assessment of lost productivity
    damages was fundamentally flawed, that they had no opportunity to challenge or
    make submissions on the quantification approach used by the trial judge and
    that, as a result, trial fairness was compromised.  I agree.

[60]

At
    the outset, I acknowledge that a trial judges assessment of damages attracts
    considerable deference from a reviewing court.  Appellate interference with a
    damages award at trial, particularly an award made by a trial judge sitting
    alone, is justified only where the trial judge made an error in principle,
    misapprehended the evidence, failed to consider relevant factors, considered
    irrelevant factors, made an award without any evidentiary foundation, or
    otherwise made a wholly erroneous assessment of damages:
Kerr v. Baranow
,
    2011 SCC 10, [2011] 1 S.C.R. 269, at para. 158;
Magnussen Furniture Inc.
    (c.o.b. Magnussen/Presidential Furniture) v. Mylex Ltd
., 2008 ONCA 186, 89
    O.R. (3d) 401, at para. 71;
Naylor Group Inc. v. Ellis-Don Construction
    Ltd.
, 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 80.

[61]

It
    is also beyond controversy that a plaintiff bears the onus of proving his or
    her claimed loss and the quantum of associated damages on a reasonable
    preponderance of credible evidence.  Further, as the trial judge recognized in
    this case, a trial judge is obliged to do his or her best to assess the damages
    suffered by a plaintiff on the available evidence even where difficulties in
    the quantification of damages render a precise mathematical calculation of a
    plaintiffs loss uncertain or impossible.  Mathematical exactitude in the
    calculation of damages is neither necessary nor realistic in many cases.  The
    controlling principles were clearly expressed by Finlayson J.A. of this court
    in
Martin v. Goldfarb
, [1998] O.J. No. 3403, 112 O.A.C. 138, at para.
    75, leave to appeal to S.C.C. refused, [1998] S.C.C.A. No. 516:

I have concluded that it is a well established principle that
    where damages in a particular case are by their inherent nature difficult to
    assess, the court must do the best it can in the circumstances.  That is not to
    say, however, that a litigant is relieved of his or her duty to prove the facts
    upon which the damages are estimated.  The distinction drawn in the various
    authorities, as I see it, is that where the assessment is difficult because of
    the nature of the damage proved, the difficulty of assessment is no ground for
    refusing substantial damages even to the point of resorting to guess work.
    However, where the absence of evidence makes it impossible to assess damages,
    the litigant is entitled to nominal damages at best.

See also
Cadbury Schweppes Inc. v. FBI Foods Ltd.
,
    [1999] 1 S.C.R. 142, at para. 99;
100 Main Street East Ltd. v. W.B.
    Construction Ltd.
(1978), 20 O.R. (2d) 401 (C.A.), 88 D.L.R. (3d) 1, at para.
    80;
Penvidic Contracting Co. v. International Nickel Co. of Canada
,
    [1976] 1 S.C.R. 267, at pp. 278-79.

[62]

Thus,
    the respondents bore the onus of establishing their lost productivity damages,
    which they characterized in their pleading as special damages.  Whether
    damages of this type are properly to be termed special damages (a label that
    I regard as inappropriate), or simply as a type of general damages to be
    measured in accordance with the trial evidence, the plaintiff bears the onus of
    proof on a balance of probabilities.

[63]

On
    this appeal hearing, the respondents do not fault the trial judge for rejecting
    their theory of the appropriate method for the calculation of lost productivity
    damages in nuisance.  Rightly so.  There was no evidence at trial to support
    the respondents proposed use of a range of two to seven percent of gross sales
    revenues to measure these damages.  As a result, consistent with his
    obligations under
Goldfarb
and related cases, the trial judge was
    obliged to examine whether the evidentiary record afforded a reasonable and
    reliable alternative basis for the quantification of these damages.

[64]

The
    quantification of damages occasioned by a proven loss is often a difficult
    task.  In many cases, while loss is established, the evidence affords little
    support for a precise or reliable assessment of damages arising from the loss.
    For this reason, as Finlayson J.A. noted in
Goldfarb
, at para. 75, a
    trial judge confronted with a meagre evidentiary record on damages may be
    required to resort to educated guess work.

[65]

That
    said, in my opinion, it is not open to a trial judge to postulate a method for
    the quantification of damages that is not supported by the evidence at trial.
    Nor is it open to a trial judge to employ an approach to the quantification of
    damages that the parties did not advance and had no opportunity to test or
    challenge at trial.  See for example,
Stemeroff v. Swartz
, [2005] O.J.
    No. 2073, 198 O.A.C. 141 (C.A.); and, in the context of liability,
Rodaro
    v. Royal Bank of Canada
, [2002] O.J. No. 1365, 59 O.R. (3d) 74 (C.A.).  To
    hold otherwise would sanction trial unfairness.

[66]

In
    this case, in my respectful view, the trial judge erred in principle in his
    approach to the quantification of lost productivity damages and, in the
    process, trial fairness was compromised.

[67]

Recall
    that the trial judges formula for the calculation of lost productivity damages,
    both in nuisance and trespass, was based on his estimates of the extra time
    spent by TMS employees to address the dust problems caused by the appellants
    during the relevant months, multiplied by his estimate of a reasonable hourly
    rate to apply to TMS[s] loss of productivity.  There are several critical
    difficulties with this quantification approach, as employed by the trial judge.

[68]

First,
    the trial judge based his nuisance-related calculation of the hours spent on
    dust-related problems primarily on Mark Wilsons testimony about the extra time
    he spent handling lighting fixtures affected by the dust.  However, there
    appears to have been no evidence at trial that TMSs productivity actually
    declined as a result of the expenditure of this additional time.  Nor was there
    any evidence of TMSs expected productivity during the relevant months in the
    relevant years or of its historical or baseline productivity in the same months
    in the years before the dust problems were encountered.  The absence of this
    evidence precluded any comparison of the average time spent by TMS product
    assemblers on the handling of fixtures, before and after the dust problems, and
    the effect on productivity of the incremental handling time during the
    intervals when dust interference was an issue.

[69]

Second,
    as the appellants stress, Mr. Wilson commenced employment with TMS in September
    2010.  His evidence of his experience with the dust problems related to a
    narrow time frame  April 15 to June 15, 2011  a period of only two months before
    the appellants halted the dust problems by paving 170 Inc.s driveway.  The
    respondents have pointed to no basis in the evidence on which Mr. Wilsons
    limited experience with the dust problems could reliably be extrapolated to all
    TMS product assemblers (including more experienced assemblers) over the entire
    five-year period of the appellants nuisance.  Nor have the respondents pointed
    to any evidence that the number of fixtures produced by TMS from April 15 to
    June 15, 2011 was representative of the number of fixtures manufactured by it
    during the prior five years or before the commencement of the dust problems in
    2007.

[70]

Third,
    the trial judge used a net hourly rate of $65 for the estimated hourly cost to
    TMS of the extra time spent by its employees on dust-related issues.  This rate
    was based on the difference between what David Bahra testified was the $90 per
    hour shop rate that TMS billed to customers, less the average of $15.00 to
    $35.00 per hour ($25.00) that Mr. Bahra said TMS paid those employees who were
    involved in repositioning or realigning the barrier stones damaged or dislodged
    by KJSs trucks.

[71]

However,
    there appears to be no evidentiary support for the application of an estimated net
    hourly rate of $65 as a reasonable estimate of the hourly cost to TMS of extra
    time spent by TMS employees on the dust problems.  As I have indicated, the net
    hourly rate of $65 derived from the $90 per hour shop rate charged by TMS to
    its customers and the average hourly wage rate paid to those TMS employees who
    dealt with the concrete barrier stones.  But the use of the $65 net hourly rate
    ignores any profit margins employed by TMS in setting its hourly billing rate
    to customers, as well as its actual costs of increased labour in the relevant
    years for plant assemblers who were required to address the dust problems in
    TMSs facility, neither of which was established by the evidence at trial.

[72]

The
    trial judges reasons do not provide an evidentiary justification for the use
    of $65 as an estimate of the hourly cost to TMS of increased labour by its
    plant assemblers.  Nor, as the respondents counsel candidly acknowledged in
    oral submissions, were the respondents able to do so.

[73]

Fourth,
    the respondents concede that the trial judges approach to the calculation of
    lost productivity damages emerged, for the first time, in his reasons.  The trial
    judges formula for the calculation of the costs to TMS of lost production time
    formed no part of the parties cases at trial.  Consequently, the appellants
    had no opportunity to challenge this approach on cross-examination of the
    respondents witnesses or by leading evidence of their own.

[74]

In
    my view, it is no answer to these flaws in the trial judges method of quantifying
    lost productivity damages to say that it was open to the respondents to seek
    leave to re-open their case on damages at trial once they were alerted, as
    occurred here, to the trial judges concerns regarding their own theory on
    damages.

[75]

In
    his exchanges with counsel during final submissions at trial, the trial judge
    referred at one point to bits of evidence as to how long it takes to, to
    remedy dust or scratches [on lighting fixtures] depending on whether the job is
    a big one or a small one.  However, he then immediately noted that there was
    no evidence of specifics regarding this remedial time expended by TMS
    employees.  This was an accurate, indeed an understated, characterization of
    the state of the record.

[76]

The
    important point is that, fairly read, nothing in this exchange between the
    trial judge and counsel or in those that followed it during closing submissions
    revealed any intention by the trial judge to employ the formula for quantifying
    lost productivity damages that he ultimately utilized.  Nor do I think that the
    parties were obliged to anticipate an approach to the quantification of damages
    that was not fully grounded in the evidence, nor developed during the course of
    trial.

[77]

In
    fairness to the trial judge, the transcript of closing submissions confirms his
    appreciation of the difficulties regarding the quantification of the
    respondents lost productivity damages.  The trial judge identified, and
    explicitly put to the respondents counsel, the implications of the thin
    evidentiary record on the means by which those damages might be measured.  In
    so doing, the trial judge actively sought the assistance of counsel on how his
    obligation to assess lost productivity damages might be satisfied in the face
    of this record.  In this context, the trial judges approach to the quantification
    of lost productivity damages represents his best attempt to meet that obligation.

[78]

Nonetheless,
    at the end of the day, there was an evidentiary foundation for only parts of
    the trial judges calculations of lost productivity damages, as I have
    described above.  There was no evidentiary support for key components of his calculations,
    in the manner employed by him, either in nuisance or trespass.  Nor were the
    parties, especially the appellants, afforded an opportunity to test the
    reliability of or otherwise counter the quantification approach eventually adopted
    by the trial judge.  The resulting trial fairness implications are self-evident.

[79]

There
    is a final, albeit more minor, difficulty with the trial judges assessment of
    lost productivity damages, to which I have already alluded.  In his original calculations
    of the respondents nuisance-based lost productivity damages, the trial judge
    indicated that TMSs lost productivity damages were $266,500, plus the further
    sum of $2,425 for fixture refinishing costs.  In contrast, when setting out his
    final orders at the conclusion of his reasons, the trial judge stated that the
    same damages totalled $278,687.50, plus fixture refinishing costs.  The latter
    figures for lost productivity damages in nuisance appear in the trial judgment.
    The reasons afford no explanation for this discrepancy.  Nor were the parties
    able to furnish one.

(iii)

Other grounds of
    appeal

[80]

In
    light of the errors that I have described, it is unnecessary to consider the appellants
    other grounds of appeal from the trial judges lost productivity damages
    awards.  In the circumstances, the trial judges quantification of TMSs lost
    productivity damages, both in nuisance and trespass, cannot stand.  I turn now
    to the question of an appropriate remedy.

(f)

The question of remedy

[81]

The
    appellants argue that any award of damages for TMSs lost productivity should
    be nominal, at best.  They submit that because the respondents nuisance-based
    damages theory was justifiably rejected at trial, and the trial judges
    substituted approach for the quantification of lost productivity damages is
    fatally flawed, the respondents must bear the consequences for their failure to
    lead the necessary evidence to establish the quantum of their damages.  They
    rely, in this regard, on the trial judges findings that the respondents failed
    to adduce available evidence at trial that bore on their theory of lost
    productivity damages and that, as a result, an adverse inference should be
    drawn against the respondents regarding the utility of any such evidence.  As a
    result of these factors, the appellants say, an award of only nominal damages
    is mandated.

[82]

In
    the particular circumstances of this case, I would not accede to this argument.

[83]

It
    is well-established that where the absence of evidence renders it impossible to
    assess damages, a plaintiff may be entitled to only nominal damages.
Goldfarb
,
    for example, says so.  But this is not invariably the case.   Where a plaintiff
    proves a substantial loss and the trial judge errs in the assessment of damages
    arising from that loss, the interests of justice may necessitate a new trial on
    damages.  Although the quantification of damages flowing from the established
    loss may prove difficult, nonetheless the injured plaintiff is entitled to
    compensation.

[84]

Goldfarb
itself is a case in point.
Goldfarb
involved a claim for damages for
    breach of fiduciary duty advanced by the client of a law firm against the firm
    and the involved firm lawyer.  This court held that there was inadequate cogent
    evidence to support the substantial award of damages made by the trial judge.
    Justice Finlayson explained, at para. 67:

[The plaintiff/client] failed to prove the losses through
    appropriate evidence.  The trial judges award of damage is speculative at
    best, and does not reflect with much precision real losses flowing from the
    breach, notwithstanding that the plaintiff bore the burden of proving the
    losses in the normal course.

[85]

Notwithstanding
    that the proffer of relevant evidence was fully within the control of [the
    plaintiff], the
Goldfarb
court rejected the remedy of nominal damages
    and concluded that a new assessment of damages was necessary because the
    plaintiff had demonstrated a substantial personal loss although evidence
    proving the quantum of that loss was lacking:
Goldfarb
at paras. 80, 83
    and 84.  See also
Rosenhek v. Windsor Regional Hospital
, 2010 ONCA 13,
    257 O.A.C. 283, at paras. 37-38, leave to appeal to S.C.C. refused, [2010]
    S.C.C.A. No. 89.

[86]

This
    reasoning is apposite here.  On the trial judges findings, the respondents
    suffered a substantial and unreasonable interference with the use and enjoyment
    of their lands, as well as trespass to those lands.  The appellants nuisance
    and trespass were neither trivial nor transitory.  To the contrary, they
    occurred over a sustained period and interfered, to a significant extent, with
    the respondents use and enjoyment of their lands for the purpose of TMSs
    manufacturing operations.  For approximately five years, disruption of TMSs
    manufacturing operations led to reduced business productivity.  This is a real
    wrong, which caused real loss.

[87]

Damages,
    including damages for loss of revenues or profits, may be measured in various
    ways including, where appropriate, based on expert opinion evidence.  That the
    manner of proof of lost productivity damages posited by the respondents at
    trial failed, does not mean that no proof is available.  In all the circumstances,
    in my view, a new assessment of TMSs lost productivity damages arising from
    the appellants proven nuisance and trespass is required in the interests of
    justice.

V.      Disposition

[88]

Accordingly,
    for the reasons given, I would allow the appeal in part, set aside the judgment
    below relating to lost productivity damages, and order a new trial limited to
    the assessment of those damages both in nuisance and trespass, save only for the
    admitted trial award of $5,910 for the respondents costs of replacing damaged
    barrier stones.

[89]

The
    appellants are entitled to their costs of the appeal, fixed, as agreed by the
    parties, in the aggregate sum of $12,500, inclusive of disbursements and all
    applicable taxes.  This court was informed that the costs of the trial are
    under reserve.  In light of my proposed disposition of this appeal, I would
    order that the respondents should be entitled to costs at trial relating to
    liability, in an amount to be determined by the trial judge.  The costs of the
    new trial on damages should be in the discretion of the judge presiding at that
    trial.

Released:

JAN -2 2014                                     E.A.
    Cronk J.A.

RAB                                                I
    agree R.A. Blair J.A.

I
    agree G.R. Strathy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Trupei v. Toronto (City), 2014 ONCA
    46

DATE: 20140120

DOCKET: C57180

Rouleau, Tulloch and Strathy JJ.A.

BETWEEN

Michael Melchior Trupei

Plaintiff/Appellant

and

The City of Toronto Inc. and 51 Police Division

Appellants/Defendants

Michael M. Trupei, in person

Matthey Cornett, for Toronto Services Board

Heard: January 17, 2014

On appeal from the judgment of Justice T. McEwens of the
    of the Superior Court of Justice, dated May 16, 2013.

APPEAL BOOK ENDORSEMENT

[1]

The appellant appeals the dismissal of his claim for negligent
    investigation of a theft and misfeasance in public office. He maintains that he
    entered into a contract with the police and that the police breached it. We
    would not give effect to this submission. The motion judge committed no error
    in dismissing the claim.

[2]

There is no basis for the appellants claim that a contract was entered
    into or that a special relationship was created with the police. The motion
    judge correctly applied the law and we see no basis to interfere. Costs to the
    respondent fixed at $2,500 all inclusive.


COURT OF APPEAL FOR ONTARIO

CITATION: Yaiguaje v. Chevron
    Corporation, 2014 ONCA 40

DATE: 20140116

DOCKET: M43289 and M43291 (C57019)

MacPherson J.A. (In Chambers)

BETWEEN

Daniel Carlos Lusitande Yaiguaje,
    Benancio Fredy Chimbo Grefa, Miguel Mario Payaguaje Payaguaje, Teodoro Gonzalo
    Piaguaje Payaguaje, Simon Lusitande Yaiguaje, Armando Wilmer Piaguaje
    Payaguaje, Angel Justino Piaguaje Lucitante, Javier Piaguaje Payaguaje, Fermin
    Piaguaje, Luis Agustin Payaguaje Piaguaje, Emilio Martin Lusitande Yaiguaje,
    Reinaldo Lusitande  Yaiguaje, Maria Victoria Aguinda Salazar, Carlos Greea
    Huatatoca, Catalina Antonia  Aguinda Salazar, Lidia Alexandria Aguinda Aguinda,
    Clide Ramiro Aguinda  Aguinda, Luis Armando Chimbo  Yumbo, Beatriz Mercedes
    Grefa Tanguila,
Lucio Enrique Grefa Tanguila, Patricio Wilson Aguinda
    Aguinda, Patricio Alberto  Chimbo Yumbo, Segundo Angel Amanta Milan, Francisco Matias
    Alvarado Yumbo, Olga Gloria Grefa Cerda, Narcisa Aida Tanguila Naryaez, Bertha
    Antonia Yumbo Tanguila, Gloria Lucrecia Tanguila Grefa, Francisco Victor
    Tanguila Grefa, Rosa Teresa Chimbo Tanguila, Maria Clelia Reascos Revelo,
    Heleodoro Pataron Guaraca, Celia Irene Viveros Cusangua, Lorenzo Jose Alvarado
    Yumbo, Francisco Alvarado Yumbo, Jose Gabriel Revelo Llore, Luisa Delia
    Tanguila Narvaez, Jose Miguel Ipiales Chicaiza, Hugo Gerardo Camacho Naranjo,
    Maria Magdalena Rodriguez Barcenes, Elias Roberto Piyahuaje Payahuaje, Lourdes
    Beatriz Chimbo Tanguila, Octavio Ismael Cordova Huanca, Maria Hortencia
    Viveros Cusangua, Guillermo Vincente Payaguaje Lusitande, Alfredo Donaldo
    Payaguaje Payaguaje and Delfin Leonidas Payaguaje  Payaguaje

Plaintiffs (Respondents/Responding Parties)

and

Chevron Corporation
,

Chevron Canada Limited

and

Chevron
    Canada

Finance

Limited

Defendants (Appellants/
Moving Parties
)

Clarke Hunter, Q.C. and Robert Frank, for the moving
    party Chevron Corporation

Benjamin Zarnett and Peter Kolla, for the moving party
    Chevron Canada Limited

Alan J. Lenczner, Q.C., and Brendan Morrison, for the
    responding parties

Heard: January 15, 2014

On motion to stay the Order of this court dated December
    17, 2013.

MacPherson
    J.A.:

[1]

The
    moving parties, Chevron Corporation and Chevron Canada Limited, seek a stay of
    the Order of this court dated December 17, 2013, which held that the Superior
    Court of Justice has jurisdiction to hear an action by the responding parties seeking
    recognition and enforcement of a judgment for approximately $9.51 billion
    rendered by Ecuadors National Court of Justice.  The moving parties were
    ordered to file statements of defence by January 16, 2014 and to pay costs of
    $100,000 ($50,000 each) to the responding parties.

[2]

Pursuant
    to s. 65.1(1) of the
Supreme Court Act
, R.S.C. 1985, c. S-26 (
SCA
),
    the moving parties may bring their motion for a stay before a single judge of
    this court if they have served and filed a notice of application for leave to
    appeal.  The moving parties did so three days ago, on January 13, 2014.

[3]

In
RJR
-
MacDonald
    Inc. v. Canada (Attorney General)
, [1994] 1 S.C.R. 311, at p. 334, the
    Supreme Court of Canada articulated a three-part test for obtaining a stay of a
    judgment pending appeal: (1) is there a serious question to be tried (i.e., to
    be determined on the appeal); (2) will the moving party suffer irreparable harm
    if the stay is not granted; and (3) does the balance of convenience favour
    granting the stay?

(1)

Serious question

[4]

In
    Ontario, as well as in other jurisdictions, this component of the
RJR
-
MacDonald
test has been modified in the context of stays pending leave to appeal
    applications to the Supreme Court of Canada.  This court, and other appellate
    courts, have held that a judge hearing a stay motion must engage not only in an
    assessment of the merits of the proposed appeal (i.e., is there a serious issue
    to be determined); in addition, the judge must consider the factors in s. 40(1)
    of the
SCA
and assess whether there is some merit in the leave application,
    and especially whether the appeal raises an issue of public importance.

[5]

As
    explained by Laskin J.A. in
BTR Global Opportunity Trading Limited v. RBC
    Dexia Investor Services Trust
, 2011 ONCA 620,

283 O.A.C. 321,
at paras. 18 and 19:

Ordinarily, the threshold for showing a
    serious issue to be adjudicated is low.  However, the criteria for
    granting leave to appeal to the Supreme Court of Canada add another layer to
    this component of the test.  Under s. 40(1) of the
Supreme Court Act
,
    R.S.C. 1985, c. S-26, the Supreme Court of Canada typically grants leave to
    appeal only in cases of public or national importance.  Thus, a provincial
    appellate court judge hearing a motion for stay pending leave to appeal to the
    Supreme Court of Canada must take account of the stringent leave requirements
    in the
Supreme Court Act
: see
Merck
    & Co. v. Nu-Pharm Inc.
(2000), 5 C.P.R. (4th) 417
    (F.C.A.) and
Ontario Public Service Employees Union v. Ontario
    (A.G.)
(2002), 158 O.A.C. 113.

The Supreme Court of Canada itself decides
    when leave should be granted and does not give reasons for doing so. As
    Rothstein J.A. noted in
Merck
, this puts provincial appellate court
    judges in a somewhat awkward position. Nonetheless, the stay test requires
    that I make some preliminary assessment of the merit of the leave motion.

[6]

I
    have no hesitation in concluding that the moving parties have established both
    branches of the serious question component of the test.

[7]

The
    proposed appeals raise at least three serious questions: (1) the proper test to
    determine the jurisdiction of a provincial superior court to hear and determine
    an action for recognition and enforcement of a foreign judgment; (2) the test
    for jurisdiction of a provincial superior court when faced with a claim to recognize
    and enforce a foreign judgment against a non-party to the foreign judgment; and
    (3) potentially, consideration of the role of a corporate veil-piercing
    analysis with respect to related corporations in the context of the recognition
    and enforcement of a foreign judgment against a corporate defendant.

[8]

I
    also conclude that these legal questions easily meet the public importance
    component of s. 40(1) of the
SCA
.  They raise significant legal issues
    that lie at the heart of private international law.

(2)

Irreparable harm

[9]

The
    moving parties assert that they will suffer irreparable harm in two respects if
    a stay is not granted.

[10]

First, the moving
    parties submit that, without a stay, they will be forced to choose between
    risking attornment to the jurisdiction of the Ontario court by filing a defence
    by January 16, 2014 or being noted in default and subjected to default
    proceedings, either of which would irreparably harm their proposed appeals by
    rendering them moot.

[11]

I do not accept this
    submission.  This court has stated that where a court order requires a party to
    file a defence, compliance with the order, including related conduct of
    depositions and discoveries, does not constitute attornment in the face of an
    ongoing jurisdictional challenge: see
Van Damme v. Gelber
, 2013 ONCA
    388, 115 O.R. (3d) 470, at para. 23.  Moreover, and importantly, the responding
    parties have explicitly stated in their factum (para. 28) that if the moving
    parties simply provide them with their statements of defence (without formally
    filing them), the respondents are content to receive the same, without
    prejudice to the Chevron companies Leave to Appeal Applications and will not
    claim that by doing so they have attorned to the jurisdiction of the Ontario
    Superior Court of Justice.  See
BTR Global
, at para. 31.  I see no
    reason not to accept and respect this undertaking.

[12]

Second, the moving
    parties contend that, without a stay, if the costs ordered by this court are
    paid to the
ex juris
plaintiffs who are resident in Ecuador, there is
    no assurance they will be returned if leave to appeal is granted and the appeal
    succeeds.

[13]

In a case that has
    lasted 20 years in several countries and continents, where the existing
    judgment in question is for $9.51 billion, and where Chevron has been
    represented by excellent commercial litigators in those countries, I find this
    submission surprising.  The costs award of this court is for $100,000, a small
    amount against the backdrop of the reality of this
uber
-expensive,
    worldwide litigation.  In any event, my assumption is that
all
parties
    in this litigation, be they Chevron or Ecuadorian villagers, will respect final
    costs orders of the relevant Canadian court, especially the Supreme Court of
    Canada.

[14]

Nonetheless, as noted
    in
RJR-MacDonald
, at p. 341,

Irreparable refers to the nature of the harm
    suffered rather than its magnitude. It is harm which either cannot be
    quantified in monetary terms or which cannot be cured, usually because one
    party cannot collect damages from the other.  The fact that one party may be
    impecunious does not automatically determine the application in favour of the
    other party who will not ultimately be able to collect damages, although it may
    be a relevant consideration.

[15]

While the prospect of
    the moving parties permanently losing the costs awarded by this court after
    succeeding on appeal may not represent a serious harm, it may reflect an
    irreparable harm as that  term is defined in
RJR-MacDonald
.

[16]

In conclusion, the
    moving parties have made a very weak showing that they will suffer irreparable
    harm if the stay is not granted.

(3)

Balance of convenience

[17]

The third branch of
    the test concerns the balance of convenience as between the parties, including
    which of the parties will suffer the greater harm from the stay being granted
    or refused: see
RJR
-
MacDonald
, at p. 342.

[18]

In my view, the
    balance of convenience favours the moving parties.  The jurisdictional issue
    they raise is a serious one that deserves to be resolved before they are forced
    to take steps to mount a substantive defence in the Ontario action.  The moving
    parties have moved expeditiously to file their leave applications in the
    Supreme Court of Canada; they did so in less than half the 60-day period
    allowed by the
SCA
.  In almost all cases, the Supreme Court of Canada
    disposes of leave applications in a timely fashion, approximately three to four
    months.  Accordingly, it is likely that these applications for leave will be
    determined by late spring.  Obviously, if the Supreme Court of Canada grants
    leave, there would be no point in any of the parties taking further steps in
    the Ontario action until the jurisdiction issue is resolved by that court.
    Alternatively, if the Supreme Court of Canada denies leave, the Ontario action
    can proceed on the merits, with only a few months pause awaiting that courts
    decision.

Conclusion

[19]

The serious issue
    and balance of convenience factors favour the moving parties.  The irreparable
    harm factor favours the responding parties.  In these circumstances, it is
    worth recalling what Laskin J.A. said in
Circuit World Corp. v. Lesperance
(1997), 33 O.R. (3d) 674 (C.A.), at p. 677: These three criteria are not
    watertight compartments.  The strength of one may compensate for the weakness
    of another.  Generally, the court must decide whether the interests of justice
    call for a stay.  In a similar vein, Laskin J.A. said in
BTR Global
,
    at para. 16: These three components of the test are interrelated in the sense
    that the overriding question is whether the moving party has shown that it is
    in the interests of justice to grant a stay.

[20]

In my view, a stay is
    justified in the interests of justice.  For me, the determinative factor is the
    balance of convenience analysis set out above.  The jurisdictional issue raised
    by the moving parties in their applications for leave to appeal is a
    significant one.  They have taken appropriate and timely steps to apply for
    leave to appeal to the Supreme Court of Canada, where it will almost certainly
    be dealt with in about three or four months.  There would be very limited
    prejudice to the responding parties from the Ontario action awaiting the
    Supreme Court of Canadas leave decisions.

Disposition

[21]

The motions are
    granted.  The Order of this court dated December 17, 2013, is stayed pending
    the determination of the leave applications to the Supreme Court of Canada.

[22]

The parties agree that
    they should bear their own costs.

Released: January 16, 2014 (J.C.M.)

J.C. MacPherson J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Young (Re), 2014 ONCA 30

DATE: 20140114

DOCKET: C56819

Doherty, Strathy and Pardu JJ.A.

IN THE MATTER OF Ian Young

AN APPEAL UNDER PART XX.1 OF THE
CODE

Michael Davies,
amicus curiae
for the appellant

Ian Young, in person

Amy Alyea, for the respondent the Attorney General for
    Ontario

Janice Blackburn, for the respondent the Centre of
    Addiction and Mental Health

Heard and released orally: January 9, 2014

On appeal against the disposition of the Ontario Review
    Board dated, March 19, 2013.

ENDORSEMENT

[1]

The Appellant Ian Young appeals from a disposition of the Ontario Review
    Board dated March 19, 2013 ordering that he be detained at the General Forensic
    Unit of the Centre for Addiction and Mental Health, subject to various
    conditions, but authorizing him to live in the community with the approval of
    the person in charge of the Centre.

[2]

The Appellant says he should have been given an absolute discharge, or
    conditionally discharged and that the Board erred in reducing its members to
    three from the original five scheduled to hear the matter, when one of the five
    became ill and could not participate.

[3]

The index offences resulting in the finding that the Appellant was not
    criminally responsible occurred on November 17, 1998 and amounted to serious
    acts of violence.

[4]

In April 2004 the Appellant was discharged to live in the community and
    was generally stable until 2009. In the summer of 2009 his mental health
    deteriorated significantly and he was admitted to the Emergency Assessment Unit.
    He ultimately agreed to take medications and return to live in the community.

[5]

In the fall of 2012 the hospital became concerned that the Appellants
    condition was deteriorating again. He refused to attend for required monthly
    assessments and turned off his phone so he could not be contacted. An
    assessment of risk in a hospital report of December 14, 2012 concluded:

The actuarial risk assessment places Mr. Young in a moderate
    risk category. His actuarial risk, the severity of the index offence and his
    dynamic factors (including his recent non-compliance with treatment and
    associated decline in his mental state, his minimization of potential problems
    and his ease of hostility) render him an ongoing significant threat to the
    safety of the public absent appropriate supervision and structure. It is the
    treatment teams opinion that Mr. Young continues to represent a significant
    risk to the community per
Winko
.

[6]

Following arrest by the police on February 4, 2013 for failure to
    report as a sexual offender, the Appellant has been detained pursuant to the
Mental
    Health Act
.

[7]

By the time of the hearing, his treating psychiatrist testified before
    the Board that the Appellant continued to present with very active symptoms of
    his mental illness, a personality disorder with narcissistic features marked by
    paranoia and increased hostility when he is in a decompensated state and that
    he refused to engage in any assessment or discussion of his condition and the
    need for treatment.

[8]

By the time of the March 18, 2013 hearing Mr. Young was continuing to
    refuse all efforts to assess his condition, and also refused at times to eat
    meals, take medication, submit to blood testing or speak to a doctor.

[9]

The Board accepted the evidence of the Appellants treating psychiatrist
    and concluded that he continued to constitute a significant risk to the
    community and that the least onerous and restrictive disposition possible was
    to order detention in a hospital with the possible privilege of residing in the
    community. The Board found that the Appellant continued to present with
    decompensation and could not be assessed or treated in his present state.

[10]

These
    conclusions were reasonable on the evidence before the Board. The Boards
    reasons were comprehensive and logical.

[11]

The
    wisdom of those conclusions is borne out by fresh evidence indicating that the
    mental condition of the Appellant has significantly deteriorated since the
    hearing to the point that he has been transferred to a more secure unit. His
    deterioration is consistent with a failure to take prescribed medication. He
    has exhibited episodes of bizarre behaviour and psychosis with grandiosity and
    paranoia. He attempted to leave the secure unit, and was placed on observation
    every 15 minutes because of the risk he would leave the unit.

[12]

On
    October 10, 2013 he was placed on 24 hour constant observation after exhibiting
    increasingly bizarre behaviour, and ultimately had to be chemically restrained
    and secluded. He refuses to take any medication and remains mute. He refuses to
    speak to any clinicians. He has been aggressive with a nurse and made remarks
    she perceived as threatening. His attending psychiatrist, now Dr. Swayze,
    indicates that his condition is consistent with psychosis as a result of
    non-compliance with medication and that Mr. Young is likely incapable of
    consenting to or refusing psychiatrist treatment and that a finding of
    incapacity will be necessary unless there is a change in his condition.

[13]

Given
    that the Boards conclusions were reasonable and are borne out by the fresh
    evidence, there is no basis to interfere with the Boards decision that an
    absolute or conditional discharge was not appropriate.

[14]

Section
    672.41(1) of the
Criminal Code
provides that:

A quorum of a Review Board is constituted by the
    chairperson, a member who is entitled under the laws of a province to practise psychiatry,
    and any other member.

The Board which heard this matter was so constituted.
    The Board had a discretion to reduce its members to an odd number as long as it
    maintained a quorum. Mr. Young expressed a preference through his counsel for
    the community member to remain, and a preference for proceeding with the
    hearing rather than adjourning it. These preferences were accommodated.

[15]

There
    being no basis to intervene in the Boards decision, the appeal is dismissed.

D.
    Doherty J.A.

G.R.
    Strathy J.A.

G.
    Pardu J.A.