COURT OF APPEAL FOR ONTARIO

CITATION:
Simkeslak
    Investments Limited v. Kolter Yonge LP Limited, 2013
    ONCA 116

DATE: 20130225

DOCKET: C54848

Armstrong, LaForme and Hoy JJ.A.

BETWEEN

Simkeslak Investments Limited, Schooner
    Corporation Limited, Petobell Holdings Inc.,
    Jayobell Holdings Inc., Philip Matthews, and
    C. Jane Dobell, and Douglas C. Matthews,               Thomas A. Matthews, and
    The Canada Trust Company, each in  their
    capacities as Estate Trustees for the Estate of Arnold Colton Matthews,
    deceased

Plaintiffs (Appellants)

and

Kolter Yonge LP Limited and Bazis International
    Inc.

Defendants (Respondents)

David P. McCutcheon and Jeremy Millard, for the
    appellants

Fred Myers and Lauren Butti, for the respondents

Heard: February 8, 2013

On appeal from the order of Justice Glenn Hainey of the Superior
    Court of Justice, dated December 8, 2011.

ENDORSEMENT

[1]

The appellants appeal the motion judges order granting summary judgment
    dismissing their claim against the respondent, Kolter Yonge LP Limited
    (Kolter).

[2]

The facts are significant. Briefly, they are as follows.

[3]

A limited partnership was formed to develop the property located at the
    southeast corner of Yonge and Bloor streets in Toronto. The appellants held the
    Class A units of the limited partnership, and through them, a 50 per cent
    interest in the limited partnership. Kolter held the Class B units, and,
    through them, the remaining 50 per cent interest in the limited partnership.

[4]

The development did not proceed as quickly as hoped, and the
    relationship between the appellants and Kolter soured. Twice, the appellants
    and Kolter each offered to buy the others interest. These offers were
    rejected. The appellants also rejected Kolters proposal that they sell the
    property on the open market. The appellants wanted to proceed independently of
    Kolter.

[5]

The appellants approached a third party, Bazis International Inc.,
    about acquiring their 50 per cent interest in the partnership, but Bazis was
    only interested in purchasing a 100 per cent interest in the property.

[6]

The appellants had a tactical advantage. Significantly, they (but not
    Kolter) would shortly have the right to trigger a shot-gun buy/sell provision
    under the Limited Partnership Agreement requiring Kolter to either sell its
    interest to the appellants, or purchase the appellants interests at a price
    specified by the appellants.

[7]

The appellants engaged in negotiations with another third party  Cityzen
    Development Group  with a view to concluding a multi-step transaction,
    utilizing the shot-gun provision if necessary, that would result in Cityzen
    acquiring a 100 per cent interest in the property. If Cityzen was able to
    acquire Kolters interest in the limited partnership below a specified price,
    the appellants would be entitled to a further payment from Cityzen. The
    appellants did not disclose their arrangement with Cityzen to Kolter.

[8]

At the time that the appellants were negotiating with Cityzen, Bazis
    approached them, again expressing interest in acquiring the property. The
    appellants rebuffed Bazis and their spokesman advised that they expected to shortly
    have a committed deal but that, if such does not materialize, I would be
    prepared to give you the exclusive option to purchase the development at a
    price of $90 per square foot...

[9]

As a first step in the proposed transaction with Cityzen, the
    appellants again offered to sell their interest in the limited partnership to
    Kolter, which had a right of first refusal under the Limited Partnership
    Agreement, at a price that valued the property at $80 per square foot.

[10]

After
    receiving the appellants offer, Kolter met with Bazis. Kolter negotiated an
    agreement to sell the property to Bazis at a price of $90 per square foot,
    conditional upon Kolters acquisition of the appellants limited partnership
    interests.  Kolter accepted the appellants offer and completed the purchase of
    the appellants limited partnership interests without disclosing its arrangement
    with Bazis to the appellants.  At closing, the parties exchanged mutual
    releases.  The limited partnership was dissolved. Thereafter, Kolter sold the
    property to Bazis at a profit.

[11]

The
    appellants sought summary judgment, arguing that Kolter: (1) breached its
    fiduciary duty by failing to disclose its arrangement with Bazis and account
    for the profits from that transaction, and (2) breached the terms of  the Limited
    Partnership Agreement by completing the sale to Bazis without their consent.

[12]

The
    motion judge concluded that, while there was a
per se
fiduciary relationship
    between the parties because they were partners, in the circumstances Kolter was
    not required to disclose its arrangement with Bazis or share the profits
    derived from its transaction with Bazis. The appellants take issue with this determination.

[13]

The
    motion judge found, at para. 65, that Kolters negotiations with Bazis took
    place when the parties were clearly acting in their own self-interest with the
    knowledge that the partnership was coming to an end and with the expectation
    that the other partner would act in its own self- interest. There is no basis
    for interfering with this pivotal finding.

[14]

The
    motion judge concluded that this courts reasoning in
Aronowicz v. Emtwo
    Properties Inc
., 2010 ONCA 96 was applicable.

[15]

We
    agree with this, and his conclusion that in the circumstances the actions of
    Kolter did not constitute a breach of fiduciary duty.

[16]

Not
    all actions taken by a person in a
per se
fiduciary relationship  that
    is, in a category of relationship in which a fiduciary relationship has been
    traditionally recognized  attract a fiduciary obligation. The presumption that
    in a
per se
fiduciary relationship one party has a duty to act in the
    best interests of the other is rebuttable:
Hodgkinson v. Simms
, [1994]
    3 S.C.R. 377, paras. 31 and 124. That presumption was rebutted in this case. We
    do not give effect to the appellants first ground of appeal.

[17]

Nor
    are we persuaded by the appellants argument that Kolter breached the Limited Partnership
    Agreement by selling the property to Bazis without their consent.

[18]

Section
    6.08(d) of the Limited Partnership Agreement, relied on by the appellants,
    provides:

No General Partner
    shall []

(d) save as permitted by section 6.02.01 cause the
    Limited Partnership to sell or otherwise dispose of the Property or any part
    thereof without the prior approval of the Limited Partnership expressed by a
    Special Resolution;

[19]

The
    appellants argue that, because Kolter was also a general partner of the limited
    partnership, this section prohibited Kolter from selling the property to Bazis
    after Kolter acquired the appellants partnership interest.

[20]

The
    section speaks to the general partner causing the limited partnership to sell
    the property.  Its clear intent is to provide some constraints on the authority
    of the general partner to deal with the limited partnerships only asset while
    the partnership was subsisting. At the time of the sale, the limited
    partnership had been dissolved. Kolter, and not the limited partnership, sold
    the property.

[21]

The
    appellants also argue that Kolter breached s. 6.03 of the Limited Partnership
    Agreement, which obligates the general partner to act in good faith and in the
    best interests of the limited partnership in managing and operating the limited
    partnership. In responding to the appellants offer, Kolter was not acting qua
    general partner, managing and operating the limited partnership.

[22]

As
    the appellants did not prevail on either of the above issues, it is unnecessary
    for us to address their argument that the release they signed was ineffective
    because of Kotlers breaches of its fiduciary duty and contractual obligations.

[23]

This
    appeal is accordingly dismissed. The respondent shall be entitled to its costs in
    the agreed upon amount of $25,000, inclusive of disbursements and applicable
    taxes.

Robert P. Armstrong J.A.

H.S. LaForme J.A.

Alexandra Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:

Spendiff v. Schmiedl, 2013
    ONCA 120

DATE: 20130225

DOCKET: C56011

Rosenberg, MacPherson and LaForme JJ.A.

BETWEEN

Jan Kelly Spendiff and Rodney James Spendiff

Appellants

and

Janet
    Frances Schmiedl, Keith Sinclair Schmiedl and Philip
    J. McInerney carrying on business as Castlerock Professional
    Home Inspections

Respondents

Taylor B. Robertson, for the appellants

J. Ross MacFarlane, for the respondents, Janet Frances
    Schmiedl and Keith Sinclair Schmiedl

Jay Stolberg, for the respondent Castlerock Professional
    Home Inspections

Heard: February 20, 2013

On appeal from the order of Justice J.R. Henderson of the
    Superior Court of Justice, dated August 13, 2012, with reasons reported at 2012
    ONSC 4663 (CanLII).

ENDORSEMENT

Introduction

[1]

The record in this case
discloses
    that the appellants were not ready for trial when they set the action down for
    trial on March 19, 2010; nor were they ready when their action was struck from
    the trial list on May 10, 2011.  T
heir
    case was struck from the trial list, on the fourth appearance in assignment
    court, with the following endorsement: Matter is not ready for trial and thus
    is struck from the list.  The appellants did not restore it to the trial list
    within 180 days as required by Rule 48.14 (2).

[2]

Rule 48.14(13) provides that at
    the status hearing, the plaintiff shall show cause why the action should not be
    dismissed for delay.  The status hearing judge, under Rule 48.14(13)(i), found
    that the appellants did not offer any reasonable explanation for the delay in
    either the four year period between discoveries and obtaining a 1 page report,
    or the 180 day period after it was struck from the list.  The appellants appeal
    the order.

The appellants position

[3]

The appellants allege that the hearing judge made two errors in
    reaching his decision.  First, they submit that the hearing judge should have
    focused only on why the action was not restored to the trial list after being
    struck; that is the 180 day period.  Second, they contend that in deciding that
    there was no explanation by the appellants for the delay, the hearing judge
    made palpable and overriding errors.

[4]

In connection with both issues,
    the appellants argue that the hearing judge misapprehended material portions of
    the evidence, which they say actually demonstrate that they were moving the
    case forward.

[5]

In addition, they argue that the
    hearing judge did not consider the respondents conduct.  This included the
    respondents failure to take issue with any of the delays prior to the action
    being struck from the trial list and a December 6, 2011 letter, indicating the
    respondent Castlerocks desire to inspect the property and creating the
    impression that the action was not ready for trial.

[6]

We disagree with both grounds of
    appeal.

(1)

The period to consider

[7]

The court, in cases involving dismissal for delay, will
    balance the need to enforce the rules to ensure timely and efficient justice,
    with sufficient flexibility to allow parties to provide a reasonable
    explanation for failing to comply with the rules to have their disputes decided
    on the merits: see,
1196158 Ontario v. 6274013 Canada Ltd.
, 2012 ONCA 544, at
    para. 20.  The hearing judge in this case engaged in this balancing test.

[8]

While
the conduct of a defendant may be relevant in
    dismissal for delay cases, t
he overall focus of an
    inquiry under Rule 48.14 is the conduct of the plaintiff, and there is n
othing in the rule
    that limits consideration for delay to the 180 day time period.
The hearing judge specifically addressed
    this issue and correctly, in our view, decided that i
t was open to him to consider the entire
    history of delay: see again,
1196158 Ontario
, at para. 25.  We
    think this is particularly the case where the action is struck from the trial
    list because it was not ready for trial.  Furthermore, in doing so he
considered the respondents conduct.

[9]

The appellants also argue that
    Rule 48.14(2) is a ''saving provision" which provides an additional 90
    days for a plaintiff to restore an action to the trial list.   They say that
    they were ready to set the action down for trial within 90 days after receipt
    of the status notice from the registrar and ask this court to infer that the
    reason they did not do so was because the December 6, 2011 letter from the Castlerock
    respondent "created the impression that the action was not ready for trial
    because the defendant wanted to conduct an inspection".

[10]

As the respondents point out, the
    essence of the appellants argument is that the hearing judge should have
    concluded they were not ready for trial within the 90-day period, but that they
    had an excuse and that this should relieve the appellants of all prior delays
    in the action.
In rejecting this argument
, the hearing judge
noted that 180 days had already passed when the appellants invited the
    respondents to conduct the inspection.  In any case, t
he hearing judge was correct, as the appellants
    concede, in finding that the letter does not explain the delay during the
    180-day period.

[11]

Without addressing the doubtful
    merits of the appellants interpretation of the purpose of the 90 day period,
    there is simply no evidence that they intended to bring
a
    motion to restore the action to the trial list within the 90 days, just as the
    hearing judge found.

(2)

Palpable and overriding errors

[12]

The hearing judge, several
    times in his reasons, found that no reasonable explanation was offered for the
    appellants failure to move the case forward while it lingered on the trial
    list; nor was there any acceptable explanation for the plaintiffs failure to
    restore this action to the trial list within 180 days.

[13]

The appellants real argument here
    is that the hearing judge misapprehended material portions of the evidence.
In particular, they point to the many and various
    reports that they were obtaining throughout in connection with the costs of
    repair and demolition.  This, they say, was moving the case forward by
    gathering evidence.

[14]

We disagree with the
    submission that the hearing judge misapprehended the evidence.
The evidence that the
    hearing judge considered consisted of affidavits from the appellants and the
    respondents.  That evidence was properly and fairly considered by him and amply
    supported his conclusions.  The alleged palpable and overriding errors now made
    by the appellants, or any misapprehension of evidence, are simply not present.

[15]

The difficulty the appellants are
    faced with in their arguments on this appeal is that the hearing judge
    considered the evidence in assessing, as the appellants contended, that they
    were ready for trial.   On this appeal the appellants ask this court to assess
    the same evidence to infer that they were not ready for trial because an
    inspection had not occurred.  That approach is not a fair or proper basis upon
    which to challenge the hearing judges findings.

[16]

The appellants have failed to
    demonstrate that the hearing judge made any errors in his assessment of the
    evidence or that he made any palpable and overriding errors in his findings of
    fact.

Conclusion

[17]

In
    sum, the status hearing judges decision to dismiss the appellants action for
    delay is discretionary and entitled to deference by this court.  The appellants
    have failed to demonstrate any error of law or fact, which would allow this
    court to interfere with the exercise of that discretion.  The appeal is
    dismissed and each of the respondents, Castlerock and the Schmiedls are awarded
    costs of the appeal fixed in the amount of $5,000 inclusive of disbursements
    and HST.  For clarity, the aggregate costs award is $10,000.

M. Rosenberg J.A.

J.C. MacPherson J.A.

H.S. LaForme
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:

Srebot v. Srebot
    Farms Ltd., 2013 ONCA 84

DATE: 20130211

DOCKET: C54246

Cronk, LaForme and Hoy JJ.A.

BETWEEN

Michael John Srebot

Plaintiff (Respondent)

and

Srebot Farms Ltd., Joseph Edward Srebot,
CCNE Investments Inc.
, and Steven M. Mucha

Defendants (Appellants)

David Rubin, for the appellants

Orie H. Niedzviecki and Evelyn Perez-Youssoufian, for
    the respondent

Heard: February 5, 2013

On appeal from the judgment of Justice Sandra Chapnik of
    the Superior Court of Justice, dated July 26, 2011.

ENDORSEMENT

[1]

The trial of various issues in this matter was directed by Grace J. of
    the Superior Court of Justice by order dated May 14, 2010.  Following the trial
    of those issues, the trial judge, in the exercise of her discretion under rule
    49.09 of the
Rules of Civil Procedure
, declined to enforce the terms
    of a settlement concluded by the parties at a mediation session, instead directing
    that the lawsuit between the parties continue as if there had been no
    settlement.

[2]

In our view, it is unnecessary for the disposition of this appeal to
    address all the appellants complaints regarding the trial judges decision.
    During oral argument, the focus of the appellants challenge of the trial
    judges ruling was narrowed significantly.  As argued, the appellants
    essentially allege that the trial judge erred: (1) by making numerous factual
    errors occasioned by her misapprehension of the evidence, her failure to
    consider relevant evidence and her uncritical acceptance of evidence favourable
    to the respondent, to the exclusion of that favourable to the appellants; and
    (2) by finding that the settlement was unreasonable and that its enforcement
    would result in a real injustice to the respondent.  In the particular
    circumstances of this case, we would not give effect to these arguments.

[3]

The trial judges reasons indicate that she properly understood and
    correctly applied the governing principles guiding the exercise of her
    discretion under Rule 49.09.  She reviewed the evidence in detail, finding that
    a settlement agreement had been reached at the mediation, the terms of which
    were clear, specific and unequivocal.

[4]

However, the trial judge also evaluated the evidence concerning the
    respondents state of mind and condition at the time of the settlement, the
    truncated and brief nature of the mediation and the respondents alleged lack
    of understanding of what was agreed upon at the mediation, as well as the consequences
    of the settlement.

[5]

The trial judges appreciation of the evidence and her related factual
    findings attract great deference from this court.  In our view, contrary to the
    appellants submission, any misapprehension of the evidence by the trial judge
    does not reach the level of palpable and overriding error and, hence, does not
    taint the exercise of her discretion to decline to enforce the settlement.  Evidentiary
    support exists for the trial judges critical factual findings.  For example,
    the respondent provided evidence in his testimony sufficient to ground the
    trial judges impugned finding that he was both stressed and emotional at the
    time of the mediation.  While there was also evidence to the contrary on this
    issue, it was for the trial judge to determine which evidence to credit.

[6]

The discretionary decision not to enforce a concluded settlement,
    especially where the settlement has been partially or fully performed, should be
    reserved for those rare cases where compelling circumstances establish that the
    enforcement of the settlement is not in the interests of justice.  The trial
    judges reasons indicate that she was alive to this issue.  On the facts as she
    found them, the trial judge concluded that this is one of those rare cases.  We
    see no basis for appellate interference with this conclusion.

[7]

Importantly, we note that the appellants led no evidence of any
    particular prejudice arising from their acts of performance under the
    settlement.  On the contrary, they candidly acknowledged before this court that
    they suffered no financial prejudice from implementation of the settlement.

[8]

Further, in our opinion, the appellants post-settlement adjustment of
    the characterization, for tax purposes, of the nature of the underlying share
    transaction at issue does not prevent the appellants from fully defending the
    allegations in the respondents statement of claim.

[9]

Nor do we accept that the steps taken by the parties after the
    settlement had the effect of granting the respondent the substance of the relief
    sought by him in his pleading.  While resolution of the contested tax issue,
    pleaded as alternative relief in the respondents statement of claim, was in
    fact resolved by the post-settlement actions of the parties, this does not
    respond to the respondents additional damages claims as detailed in his
    pleading.

[10]

At
    the end of the day, the critical issue in this case was whether, on
    consideration of all the relevant factors disclosed by the evidence, the
    enforcement of the settlement would lead to clear injustice: see for example,
Royal
    Bank v. Central Canadian Industrial Inc.
, 2003 CarswellOnt.
5214 (Ont. C.A.);
Milios v. Zagas
(1998), 38 O.R. (3d) 218
    (C.A.).
The trial judge concluded that in the circumstances of this
    emotionally-charged case, arising from the unfortunate estrangement of two
    brothers following a dispute concerning their respective interests in the
    family farming business, the interests of justice demanded that the settlement
    not be enforced and that the respondents action continue.  This was her call
    to make.

[11]

Accordingly,
    the appeal is dismissed.  The respondent is entitled to his costs of the appeal,
    fixed in the amount of $12,500, inclusive of disbursements and all applicable
    taxes.

E.A. Cronk J.A.

H.S. LaForme J.A.

Alexandra Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Van
    Sun v. Woodbine Pontiac Buick Inc., 2013 ONCA 107

DATE: 20130220

DOCKET: C54884

Rosenberg, MacPherson and LaForme JJ.A.

BETWEEN

Lenno Van Sun

Plaintiff/Appellant

and

Woodbine Pontiac Buick Inc. and Erin Mills Acura
    of Mississauga

Defendants/Respondents

Matt W. Mulholland, for the appellant

Andy C. Jairam, for the respondent, Woodbine Pontiac
    Buick Inc.

Heard: February 19, 2013

On appeal from the judgment of Justice Brian P. OMarra
    of the Superior Court of Justice, dated December 9, 2012.

APPEAL BOOK ENDORSEMENT

[1]

We have not been persuaded that the trial judge made any reversible
    error. The only evidence was that the respondent was unaware that the vehicle
    had been in an accident. There was no evidence of negligence on the part of the
    respondent. The respondents witnesses were entitled to say what they had done
    in this transaction, even if they strayed into opinion. This case was pleaded as
    a negligence case and dealt with at trial as a negligence case, not breach of
    contract. The appellant failed to show any negligence.

[2]

Accordingly, the appeal is dismissed with costs fixed at $10,000
    inclusive of HST and disbursements.


COURT OF APPEAL FOR ONTARIO

CITATION:
Wayne v. 1690416 Ontario
    Inc., 2013 ONCA 108

DATE: 20130220

DOCKET: C56126

Rosenberg, MacPherson and LaForme JJ.A.

BETWEEN

Linda Wayne, Glenn Kiff and Jason Kiff o/a East
    Village Coffeehouse

Plaintiffs (Respondents)

and

1690416 Ontario Inc.

Defendant (Appellant)

P. Wardle and E. Pleet, for the appellant

Jennifer Quick, for the respondents

Heard: February 19, 2013

On appeal from the judgment of Justice Ian F. Leach of
    the Superior Court of Justice, dated September 18, 2012.

APPEAL BOOK ENDORSEMENT

[1]

The appellant appeals the order of Leach J. of the Superior Court of
    Justice dated September 18, 2012, upholding an order setting aside the
    appellants statement of defence and dismissing its counterclaim. The appellant
    appeals on three grounds.

[2]

First, the appellant contends that the motion judge erred by
    interpreting Rule 37.14 in too strict a fashion by using the language might
    have led to a different result as a
de facto
test for the application
    of the Rule.

[3]

We disagree. The motion judge explicitly referred to the statutory
    language in Rule 37.14 which requires the balancing of the interests of the
    parties and depends on the evidence in each case. He then engaged
    comprehensively in precisely this balancing exercise.

[4]

Second, the appellant contends that the motion judge erred by saying
    that the appellants motion before him was an improper collateral attack on the
    earlier Compliance Order of Morissette J.

[5]

We do not accept this submission. It was obvious that there would be a
    linkage between the motion before the motion judge and previous orders in this
    long-running action.

[6]

Finally, the appellant contends that in his balancing exercise the
    motion judge downplayed the short duration of the relevant delay by the
    appellant and ignored the fact that the appellant was self-represented at a
    crucial juncture.

[7]

We disagree. In our view, the motion judges analysis of the relevant
    factors was comprehensive and persuasive. He stated his conclusion in this
    fashion at paras. 80-82:

In the case before me, I am not presented with a defendant
    guilty of technical non-compliance, offering a reasonable explanation for
    failure to abide by obligations in the rules and court orders, based on
    unexpected or unusual contingencies.

. . .

I am instead presented with a defendant that has wholly failed
    to comply with specific obligations arising pursuant to the Rules and a court
    order, provides no real explanation for the ongoing non-compliance, (let alone
    a reasonable one), and gives no indication as to when compliance might be
    expected. Moreover, all this takes place against the backdrop of a litigation
    history suggesting the defendants current failings are consistent with behaviour
    demonstrated in the past, as far as its approach to this litigation is
    concerned.

In such circumstances, I think the balancing exercise described
    by the Court of Appeal requires denial of the Rule 37.14 relief requested by
    the defendant.

[8]

In our view, the record on the motion strongly supports this analysis
    and conclusion.

[9]

The appeal is dismissed. The respondent is entitled to its costs of the
    appeal fixed at $9000 inclusive of HST and disbursements.