COURT OF APPEAL FOR ONTARIO

CITATION: Sagan v. Dominion of Canada General Insurance
    Company, 2014 ONCA 720

DATE: 20141021

DOCKET: C58299

Epstein, van Rensburg and Benotto JJ.A.

BETWEEN

Daniel Sagan

Plaintiff (Appellant)

and

Dominion of Canada General Insurance Company

Defendant (Respondent)

Sean Oostdyk, for the appellant

Joyce Tam, for the respondent

Heard: September 25, 2014

On appeal from the judgment of Justice
Thomas
    R. Lofchik
of the Superior Court of Justice, dated December 31, 2013.

ENDORSEMENT

[1]

The appellant appeals the summary judgment, which dismissed his claim
    against the respondent insurance company for accident benefits on the basis
    that the action was barred by the two-year limitation period.

[2]

The appellant was in a car accident in March 2008.  The same month he
    advised his insurer of his claim.  The insurance company sent him a package that
    included an application form known as OCF 1.  The package also included a disability
    certificate known as OCF 3.

[3]

The appellant filed the application (OCF 1) for accident benefits (that included
    a claim for non-earner benefits) but did not file a disability certificate (OCF
    3).  The respondent sent the appellant a denial of the claim in April 2008.

[4]

In April 2011 the appellant sought to apply for mediation with respect
    to the denial of his claim submitted in 2008.  The respondent took the position
    that the two-year limitation period had expired.

[5]

An action was commenced but was dismissed on a motion for summary
    judgment.

[6]

The appellant relies on the Regulations under the
Insurance Act
governing claims for accident benefits (the
SABS
regime) that requires
    that a claim for non-earner benefits be accompanied by a disability certificate.
    Section 35(2) of the Regulation provides:

An insured person who applies for a specified benefit
    shall submit with the application a disability certificate completed no later
    than 10 business days before the date the application is submitted.

[7]

The appellant alleges that the motion judge erred by determining that
    the limitation period started to run from the time that the claim was denied.
    The appellant argues that the time does not start to run until there is a
    denial of a valid claim; namely, one that includes a disability certificate.
    Since the appellants claim did not include a disability certificate, it was
    not valid. It therefore did not trigger the two-year limitation period that
    starts to run upon the denial of a claim.

[8]

We do not agree.  In our view the Regulation cannot be interpreted in
    this manner for two reasons:

1.

A plain reading of section 35(2) provides that the disability
    certificate is to be filed
with
the application for benefits.  It is
    not
the

application.  In addition, section 35(6) provides for
    claims to be considered in cases where there is no disability certificate filed
    at all.

2.

The statutory regime is designed to ensure timely submission and
    resolution of accident benefits.  It is not in keeping with this overall
    purpose to suggest that a claimant can delay the start of the limitation period
     perhaps indefinitely  by not submitting a disability certificate.

[9]

For these reasons, the appeal is dismissed with costs payable by the
    appellant fixed at $5,000 including disbursements and applicable taxes.

Gloria
    Epstein J.A.

K.
    van Rensburg J.A.

M.L.
    Benotto J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Susin v. Susin, 2014 ONCA 733

DATE: 20141029

DOCKET: C58399

Hoy A.C.J.O., Feldman and Blair JJ.A.

BETWEEN

Dorino Susin

Moving Party (Appellant)

and

Fermino Susin

Defendant (Respondent)

Robert Klotz, for the appellant

Margaret A. Hoy, for the respondent

Heard: September 8, 2014

On appeal from the order of Justice James A. Ramsay of
    the Superior Court of Justice dated January 10, 2014.

R.A. Blair J.A.:

[1]

Dorino Susin appeals from the order of Ramsay J. declaring him in
    contempt and dismissing his request for a passing of accounts in his fathers
    estate to take place in Brampton.

The Factual Maelstrom

[2]

The Susin brothers and sisters have been squabbling over the estate of
    their late father, John Sr., since the death of their mother in 1998.

[3]

John Sr. died on December 16, 1983.  His will directed his trustees to
    permit his wife to reside in his house for life and, on her death, to sell the
    home and divide the proceeds equally among his nine children.  The residue of
    his estate he bequeathed to his wife absolutely.

[4]

After the mothers death, John Jr. claimed an equitable interest in the
    house, which is located in Niagara Falls.  The litigation and skirmishes
    spawned by that claim have kept the estate in limbo for years.  John Jr.s
    claim was decided by Turnbull J. in 2007, and John Jr. finally moved out of the
    house in June 2008.  Subsequently the house was sold for slightly more than $170,000.
    About $80,000 remained in the estates account as of October 2013, the balance
    having been dissipated in the ongoing litigation.

[5]

The nine siblings are divided into two factions, one led by John Jr. and
    Dorino (supported by sisters Dianne, Esther and Theresa), and the other led by
    Fermino (supported by sisters Gloria, Stella and Anita).  The two factions have
    litigated, amongst other things  mostly at the instance of the John Jr./Dorino
    team  John Jr.s claim to an interest in the house; Turnbull J.s ruling on
    that claim; two proceedings in the Federal Court over mouldy papers John Jr.
    allegedly abandoned in the house; and a motion for relief based upon an
    improvident sale.  At one point the John Jr./Dorino team commenced contempt
    proceedings against Ms. Hoy, counsel for the estate and the trustees; in August
    2013 the motion was dismissed.  The John Jr./Dorino team also brought a
    repetitious series of motions seeking a change in venue from Welland or to have
    various matters dealt with elsewhere than in Welland.

[6]

Almost all the orders made against the interests of John Jr. and Dorino
    were appealed  none successfully  and there are numerous costs orders against
    them both that remain unpaid.

[7]

John Jr. was declared a vexatious litigant by Quinn J. in July 2008.
    That order was upheld on appeal.

[8]

The venue dispute triggered the series of events leading to the present
    appeal.  The John Jr./Dorino faction objects to the estate matters being dealt
    with in Welland.  On March 29, 2010, however, Darla Wilson J. dismissed a
    motion heard in Toronto for a change in venue.  This Court quashed an attempt
    to appeal that order.

[9]

Since then, no fewer than seven Superior Court judges at different times
     in separate motions brought in Toronto, Newmarket and Brampton  have
    affirmed, in one fashion or another, that Welland is the proper venue for
    proceedings relating to the estate, including proceedings for the passing of
    accounts.  For example, in November 2012, Snowie J. ordered that all matters
    relating to John Sr.s estate be heard in Welland from [the date of the order]
    forward.

[10]

This
    did not prevent Dorino from bringing the present motion seeking a passing of
    accounts
in Brampton
.

[11]

Ferminos
    team had had enough.  They launched a cross-motion seeking to commit both
    Dorino and John Jr. for contempt of court.  They also sought an order pursuant
    to s. 140 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43,
    declaring Dorino to be a vexatious litigant and ordering him not to commence
    any litigation against Fermino Susin or Habibur Rahman
[1]
except with leave of the court.

[12]

At
    a hearing in Welland, Ramsay J. dismissed Dorinos motion for the passing of
    accounts to be held in Brampton and allowed the cross-motion with respect to
    Dorino, finding him in contempt; he dismissed the contempt proceedings against
    John Jr.  Ramsay J. rejected a request that he recuse himself because, although
    he is not from Welland, he is a judge of the Central South Region of the
    Superior Court of Justice.

[13]

Dorino
    and John Jr. both attended and made submissions at the hearing before Ramsay J.
    Both filed affidavits in response to the affidavit Fermino filed in support of
    the cross-motion.  Because of the vexatious litigant order against him, John
    Jr. was not allowed to make submissions on behalf of Dorino on the passing of
    accounts.  However, John Jr. made lengthy submissions in response to the
    contempt proceedings.  When asked for his submissions on that issue, Dorino
    (after a discussion with John Jr.) deferred to his brother, confining his
    remarks to the s. 140 vexatious litigant issue.

[14]

After
    dismissing the motion regarding the passing of accounts in Brampton, Ramsay J.
    found Dorino in contempt and ordered (a) that he be committed to prison for
    three days; (b) that he pay a fine to the estate in the amount of $10,000; (c) that
    he be prohibited from taking any further steps in this proceeding or in any
    proceedings to which Fermino Susin or Habibur Rahman are parties, except for an
    appeal from the present order; and (d) that he pay costs of the motions to the
    estate in the amount of $10,141.78 on a full indemnity basis.  Ramsay J.
    declined to declare Dorino a vexatious litigant.  Ramsay J. also ordered that
    no parties to any of the passings of the accounts of the estate or any related
    proceedings shall be represented by John Susin, nor shall John Susin be
amicus
    curiae
.
[2]

Discussion

[15]

Dorinos
    principal attacks on appeal related to the contempt finding and the sentence
    imposed.  As his sentence to imprisonment has been served, what the appeal from
    sentence is really about, as Mr. Klotz observed, is the $10,000 fine payable to
    the estate imposed by the motion judge.  Dorino contended as well, however,
    that the motion judge erred in failing to grant his request for an order
    directing the passing of accounts.  In oral argument, Dorino abandoned his argument
    that Brampton was the proper venue for the passing of accounts.

The Passing of Accounts

[16]

I
    see no basis for interfering with the motion judges exercise of discretion in
    refusing to order the passing of accounts at this stage.  He had two reasonable
    bases for doing so.  First, as the motion judge observed, the trustees could
    not pass the final accounts at that stage because there are still significant
    debts owing to the estate (including substantial outstanding costs awards
    against Dorino and John Jr.) and the estate was continuing to incur legal costs
    as the John Jr./Dorino team persisted in bringing further motions before the
    court. Secondly, Dorino sought a passing of accounts
to be held in Brampton
.
     The issue of venue, including the venue of the passing of accounts, had
    already been litigated repeatedly, and repeatedly Superior Court judges had
    held that the venue for dealing with matters relating to the estate was
    Welland.  This was another attempt to re-litigate the issue yet again.

[17]

I
    reject this ground of appeal.

Contempt

[18]

Mr.
    Klotz raised a number of issues on behalf of Dorino in oral argument.  The
    following need to be addressed:

a)

whether the finding of
    contempt is supported in the record;

b)

whether the contempt
    order should be set aside because Dorino was not personally served with the
    contempt cross-motion;

c)

whether the motion judge
    erred in imposing a fine of $10,000 payable to the estate as opposed to the
    province of Ontario; and

d)

whether the motion judges
    order prohibiting Dorino from taking any further steps in the proceeding or in
    any proceedings to which Fermino Susin or Habibur Rahman are parties (except
    for an appeal from his order) was too broad.

The
    Finding of Contempt

[19]

The
    motion judge dismissed the cross-motion for contempt against John Jr.  He did
    so because he was not satisfied beyond a reasonable doubt that John Jr. was
    simply putting Dorino forward as his proxy on the passing of accounts motion in
    order to avoid the consequences of the vexatious litigant order.

[20]

At
    the same time, the motion judge was satisfied beyond a reasonable doubt that
    Dorino was in contempt of court by bringing the present motion to have the
    passing of accounts heard in Brampton, having regard to the history and
    circumstances characterizing the estate litigation.  His reasons are summarized
    at paras. 14 and 15:

The trustees submit that John and Dorino are in contempt of
    court by bringing the present motion
in the context of this litigation
.
     Three times the court has pronounced that the matter must proceed in Welland.
[3]
On the last occasion a clear warning was given that misbehaving beneficiaries
    could face imprisonment if they continue their campaign of abusive motions.  In
    the face of that warning, the present motion, a fourth request to transfer the
    matter out of Welland, was brought.
In my view in the particular
    circumstances of this case this serious and repeated abuse of process rises to
    the level of contempt.  It subverts the administration of justice
by making
    ineffective the rules of procedure and basic concepts of fairness such as
res
    judicata
.

I have no doubt on the criminal standard of proof that Dorino
    Susin brought the present motion
intending to subvert the administration of
    justice, to show disrespect for the court and to harass the responding parties
.
Dorino Susins motives are purely vindictive.  He has no hope of
    recovering from the estate.  He owes the estate much more than his share of
    what remains.  I find him guilty of contempt of court.  [Emphasis added.]

[21]

The
    test for civil contempt where breach of a court order is in issue is
    three-fold: (a) the order that is said to have been breached must be clear and
    unequivocal; (b) the party who is alleged to have breached the order must be
    found to have done so deliberately and wilfully; and (c) the evidence must
    prove contempt beyond a reasonable doubt:
Prescott-Russell Services for
    Children and Adults v. G.(N.)

(2006), 82 O.R. (3d) 686 (C.A.), at
    para. 27;
Bell ExpressVu Limited Partnership v. Torroni
, 2009 ONCA 85,
    94 O.R. (3d) 614, at para. 21.

[22]

Dorino
    argues that the bringing of the present motion did not constitute disobedience
    of the previous orders requiring all estate matters to be dealt with in Welland
    and therefore that the motion judge had no authority to make a contempt order
    in the circumstances.  The previous orders did not [require Dorino] to do an act,
    other than the payment of money, or to abstain from doing an act, he submits;
    therefore a contempt order could not be made to enforce them under rule 60.11
    of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194.

[23]

While
    this may be technically so at one level, I see no practical difference between
    failing
to obey
the orders and failing
to recognize and accept
the validly-made previous orders, in these circumstances.  They are tantamount
    to the same thing.  Substantively they have the same destructive effect on the
    integrity of the administration of justice.  In any event, breach of a prior
    court order is not the only type of conduct that will justify a finding of
    contempt.

[24]

The
    classic definition of contempt at common law comes from
The Queen v. Gray
,
    [1900] 2 Q.B. 36, at p. 40, quoted in
R. v. Cohn
(1984), 48 O.R. (2d)
    65 (C.A.), at p. 78, leave to appeal to S.C.C. refused, [1985] 1 S.C.R. vii:

Any act done or writing published calculated to bring a Court
    or a judge of the Court into contempt, or to lower his authority, is a contempt
    of Court. That is one class of contempt. Further, any act done or writing
    published calculated to obstruct or interfere with the due course of justice or
    the lawful process of the Courts is a contempt of Court. The former class
    belongs to the category which Lord Hardwicke L.C. characterised as scandalising
    a Court or a judge.

[25]

I
    agree with the motion judge that Dorinos conduct fell within the second class
    of conduct referred to above.  It constituted an act done that was intended to,
    or was likely to, interfere with or obstruct
the fair administration of
    justice
: see
Cohn
, at p. 71.  Here, even if Dorinos conduct did
    not amount to breach of a court order, it was open to the motion judge  as he
    recognized  to resort to the common law power to commit for contempt in the
    circumstances.

[26]

Looked
    at in isolation, Dorinos motion for the passing of accounts in Brampton could
    be taken as simply an abuse of process.  But in the circumstances here, it is
    more than that.  The facts outlined by the motion judge in the passages quoted above
    raise Dorinos motion to another level, in my view. As the motion judge found,
    Dorino brought the motion intending to subvert the administration of justice,
    intending to show disrespect for the court, and intending to harass the
    opposing beneficiaries, all for vindictive reasons and in the context of having
    been previously warned of the risk of imprisonment for contempt.

[27]

Dorino
    argues the motion judge misapprehended the evidence and by implication, that
    there is no basis in the record for those findings.  I disagree and can see no
    basis for interfering with the finding of contempt in these circumstances.

Personal
    Service

[28]

Procedural
    protections on motions for civil contempt are generally strictly enforced.
    This includes the requirement that the materials be served personally on the
    party sought to be found in contempt: see
Rules of Civil Procedure
, r.
60.11(2).  However, procedural
    protections that are meaningless in a particular case ought not to trump
    substantive compliance where the purpose of personal service has been met in
    the circumstances and there has been no substantial wrong or miscarriage of
    justice.  I am satisfied that is the case here.

[29]

Dorino
    was not served personally with the cross-motion materials and it would have
    been preferable had the moving parties obtained an order for substituted
    service.  That said, I think it is inevitable such an order would have been
    granted, given the process servers evidence regarding his unsuccessful
    attempts at service and the fact that Dorinos son was served with Dorino quite
    likely on the premises at the time.  The process servers affidavit deposes to
    his belief that Dorino was in the house standing at the window watching what
    was happening when his son was served.

[30]

Moreover,
    it is evident that the rationale underlying the requirement for personal
    service in contempt proceedings  which are quasi-criminal in nature  has been
    satisfied in the circumstances.

[31]

Dorino
    and John Jr. had full knowledge of the terms of the previous orders determining
    that Welland was the proper venue for proceedings regarding the estate; those
    orders formed the framework for the contempt motion.  Dorino and John Jr. had full
    knowledge of the cross-motion and of the evidentiary basis for the allegations
    being made against them.  In fact, they each filed affidavits in response to
    Ferminos affidavit supporting the cross-motion.  John Jr.s affidavit
    responded in detail to the allegations and Dorinos adopted and relied upon
    that evidence.  In addition, the lengthy and hotly contested history of the war
    of attrition in which he and John Jr. were engaged  at great cost to the
    estate  left Dorino in no doubt of what the issues were.  Finally, Dorino and
    John Jr. both attended at the hearing and both argued, or had the opportunity
    to argue, the merits of the contempt proceeding  again, John Jr. made
    elaborate submissions and Dorino, when asked for his input, confined his remarks
    to the s. 140 issue.

[32]

In
    short, Dorino knew what he was facing and was provided with a full opportunity
    to be heard.  He knew as well of his potential exposure to imprisonment.  Before
    dismissing Dianne, Esther and Theresas attempt to cite Ms. Hoy for contempt,
    Price J. warned John Jr. and Dianne in open court that if they did not desist
    in their ways they risked imprisonment for contempt.  The motion judge found it
    was inconceivable that this warning did not come to the attention of Dorino.

[33]

In
    my opinion  whether the motion for contempt here is viewed as a motion
    pursuant to rule 60.11 relating to the breach of an order or as a common law
    motion for contempt in other respects  the fact that Dorino was not personally
    served with the notice of motion and supporting materials is not fatal to the
    finding of contempt made against him.  The court has authority under rule 2.03
    of the
Rules of Civil Procedure
to dispense with full compliance with
    the rules where the interests of justice require it.  I am satisfied that the
    proceedings leading up to the contempt finding afforded Dorino adequate
    procedural fairness and did not deprive him of a fair hearing.

[34]

In
    spite of the
strictissimi juris
approach to contempt proceedings where
    committal is sought, there are examples in the jurisprudence supporting the
    view that the strict compliance principle may not always carry the day.  In
Dickie
    v. Dickie

(2006), 78 O.R. (3d) 1 (C.A.), Laskin J.A. in dissent
    would have refused to hear Dr. Dickies appeal from a contempt finding until his
    contempt had been purged, but noted that, if the appeal were to be heard  as
    the majority concluded  he would have dismissed it in spite of the lack of
    personal service (at paras. 119-23).  Mrs. Dickie appealed to the Supreme Court
    of Canada, which allowed the appeal, stating that [o]n the appeal from the
    decision on the contempt motion, we are in substantial agreement with the
    reasons of Laskin J.A.:
Dickie v. Dickie
, 2007 SCC 8, [2007] 1 S.C.R.
    346, at para. 7.

[35]

Another
    example of relaxation of the
strictissimi juris
rule  albeit in a
    slightly different context  is
Bhatnager v. Canada (Minister of Employment
    and Immigration)
, [1990] 2 S.C.R. 217, where the Supreme Court of Canada affirmed
    that the order the contemnor has allegedly violated need not be served
    personally where actual knowledge is proven or can be inferred (at pp. 225-26).
    See also
Scaffidi v. Scaffidi
(1998), 41 R.F.L. (4th) 166 (Gen. Div.),
    at paras. 12-14.

[36]

Such
    is the case here.  I would not give effect to this argument.

[37]

I
    do think, however, that when it came to the penalty phase of the proceedings,
    it would have been proper for the motion judge to have adjourned the
    proceedings to enable Dorino  a self-represented litigant, now exposed to the
    deprivation of his liberty  to obtain legal advice, and to consider his
    submissions as to sentence.  Instead, when the motion judge asked Dorino for
    submissions and Dorino appears to have become flustered  saying he intended to
    appeal and that he wanted to retain a lawyer for that purpose because he was
    desperate  the motion judge took that as his submissions and proceeded to
    impose the penalty.

[38]

That
    said, I do not think the motion judges failure to adopt this procedure makes a
    difference in these circumstances.  As counsel acknowledged, the real area of
    concern at this point with respect to the penalty is the $10,000 fine that was
    imposed.  For the reasons that follow, that fine must be set aside, in any
    event.

The Fine

[39]

Respectfully,
    in my view the motion judge erred in imposing a fine payable to the estate.
    This Court has held, in
SNC-Lavalin Profac Inc. v. Sankar
, 2009 ONCA
    97, 94 O.R. (3d) 236, that a fine imposed for civil contempt of court ought not
    to be payable to a party in the action but, rather, to the Provincial
    Treasurer.  As Laskin J.A. explained, at paras. 14 and 15:

Contempt of court for breach of a court order is an offence
    against the authority of the court and the administration of justice.  As
    Cumming J. said in
Sussex Group Ltd. v. 3933938 Canada Inc. (c.o.b. Global
    Export Consulting)
, [2003] O.J. No. 2952, 2003 CanLII 49334  (S.C.J.), at para.
    13, It does not have,
and must not appear to have
, the function of a
    civil action in tort or for breach of contract.  See, also,
Royal Bank of
    Canada v. Yates Holding Inc.
, [2007] O.J. No. 1264, 2007 CanLII 23601 (S.C.J.),
per
Cumming J., at para. 19.  A fine for contempt of court, therefore,
    should not go to the plaintiff in the lawsuit.

Provisions of the
Criminal Code
, R.S.C. 1985, c. C-46 and
    the
Courts of Justice Act
, R.S.O. 1990, c. C.43 support this
    conclusion.  The
Criminal Code
is relevant because, although the
    appellants committed a civil contempt of court, civil contempt bears the
    imprint of the criminal law.  A person found in civil contempt may face any
    sanction available for the commission of a criminal offence.  A fine is one of
    those sanctions: see s. 734.1 of the
Criminal Code
;
Pro Swing Inc.
    v. Elta Golf Inc.
, [2006] 2 S.C.R. 612, [2006] S.C.J. No. 52; and
Chiang
    (Trustee of) v. Chiang
, [2009] O.J. No. 41, 2009 ONCA 3.  [Emphasis
    added.]

[40]

As
    mentioned above, I see no material difference for these purposes between the
    breach of a court order and  as is the case here  the failure to recognize
    and accept the validity of previous orders by repeatedly launching
    unmeritorious motions seeking the same relief that was the subject matter of these
    orders and was denied.  And I see no reason why the principle in
SNC-Lavalin
would not apply equally where, as here, contempt at common law is made out.
    Nor do I see any difference between the reference to the plaintiff in
SNC-Lavalin
and the estate in the present proceedings; both are parties to the proceedings.

[41]

Recently,
    in
Boily v. Carleton Condominium Corporation 145
,
2014 ONCA 574
,
this Court ordered a fine payable to a condominium corporation, one of the
    parties to the appeal.  The directors of the corporation had been found in
    contempt for refusing to implement the provisions of a court order concerning the
    restoration of certain portions of the garage and landscaping.  On appeal, this
    Court set aside a penalty provision requiring the individual directors to personally
    bear the costs of restoration, but replaced it with an order that the
    individual directors each pay a fine of $7,500 to the condominium corporation (at
    para. 145).

[42]

In
    its outcome,
Boily
appears to be in conflict with
SNC-Lavalin
.
     The majority in
Boily
ordered the directors who were found in
    contempt to pay a fine to another party, the condominium corporation.
SNC-Lavalin
established that if a fine is imposed for civil contempt the fine should be payable
    to the Provincial Treasurer.

[43]

In
Boily
, however, the principal issues were the quantum of the fine and
    the personal liability of the directors, and not the fact that the fine had not
    been made payable to the Provincial Treasurer.  Each director was fined
    approximately $100,000 payable towards the costs of restoration as a means of
    ensuring those costs were not shouldered by the individual unit owners.
    Speaking for the majority, Epstein J.A. concluded that the fines imposed were
    unfit  they were above an amount necessary to reflect the public interest in
    the matter  and that the motion judge erred in focusing on the costs of his
    restoration order rather than on the central issue of deterrence (at para. 133).
    She held that a fine of $7,500 imposed on each director would achieve the
    necessary degree of deterrence (at para. 136).

[44]

Although
    the Court in
Boily
made the fine payable to the condominium
    corporation, there does not appear to have been an argument about the propriety
    of a fine being made payable to a party, and the Court does not seem to have
    been referred to
SNC-Lavalin
.
SNC-Lavalin
was not cited in
    any of the parties facta, nor did any of the parties argue that making the
    fine payable to a party was problematic. It was not cited by the court below.

[45]

As
    noted above, the issues in
Boily
were quantum, liability, and
    deterrence.  Moreover, in arriving at her conclusion, Epstein J.A. reinforced
    the principles  as stated by this Court in
SNC-Lavalin
 that civil
    contempt proceedings are not to have the appearance of a civil action for the
    recovery of damages and that the courts concern in such circumstances is the
    failure to respect the courts process (at para. 130): see also
Royal Bank
    v. Yates Holdings Inc.

(2007), 33 C.B.R. (5th) 268 (S.C.), at para.
    19;
Sussex Group Ltd. v. 3933938 Canada Inc.
, [2003] O.J. No. 2952
    (S.C.), at para. 13;
Merck & Co. v. Apotex Inc.
,
2001 FCT
    589, 12 C.P.R. (4th) 456, at para. 11, vard 2003 FCA 234, 227 D.L.R. (4th) 106,
    leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 366.

[46]

I
    do not think that in these circumstances the outcome in
Boily
is of
    assistance.

[47]

In
    the result, I am satisfied that the motion judge erred in imposing a fine
    payable to the estate.  This opens the issue of a fine for reconsideration.

[48]

After
    consulting with her client, Ms. Hoy advised that if we were inclined to rule
    that payment of the fine to the estate was an error, the respondent would
    prefer that no fine be imposed.  The reason for this position is that a fine of
    $10,000 payable by Dorino to the Provincial Treasurer would have the effect of
    further diminishing Dorinos assets, thus making it even more unlikely that the
    estate will recover Dorinos outstanding liabilities.

[49]

While
    the preferences of a party are not necessarily persuasive in determining an
    appropriate penalty for civil contempt, I think that a fine was not necessary
    in this case to meet the goals of deterrence and the need to stress the
    importance of respect for the courts process.  The sentence of three days
    imprisonment underlined those points.  This is not a case where strengthening
    the message by doubling the sanction was necessary, in my view.

[50]

Accordingly,
    I would set aside the portion of the order compelling Dorino to pay a fine of
    $10,000 to the estate.

Scope
    of the Prohibition Order

[51]

Ferminos
    cross-motion also sought an order pursuant to s. 140 of the
Courts of
    Justice Act
, declaring Dorino to be a vexatious litigant and ordering him
    not to commence any litigation against Fermino Susin or Habibur Rahman except
    with leave of the court.

[52]

The
    motion judge declined to grant a vexatious litigant order, but nonetheless ordered
    that Dorino Susin is prohibited from taking any further steps in this
    proceeding or in any proceeding to which Fermino Susin or Habibur Rahman are
    parties, except for an appeal from todays Orders to the appropriate Appeal
    Court.  He does not appear to have made this order pursuant to his powers to
    deal with vexatious litigants under s. 140.  Instead, he stated at para. 17 of
    his reasons that the order prohibiting Dorino from filing further motions was
    imposed as part of the penalty for contempt.

[53]

A
    judge has a broad discretion in crafting the penalties on a finding of contempt
    of court.  It is not necessary to resort to s. 140 of the
Courts of Justice
    Act
to make such an order.  Under rule 60.11(5) the judge may make such
    order as is just and, where a finding of contempt is made, may order the
    person in contempt (d) to do or refrain from doing an act or (f) to comply
    with any other order that the judge considers necessary.  A judge has a
    similarly broad discretion when imposing a penalty for contempt at common law.  As
    well, a judges exercise of that discretion is entitled to considerable
    deference and should only be interfered with where there has been an error in
    principle or the sentence is clearly unfit.

[54]

For
    those reasons I would not interfere with the motion judges decision to impose a
    prohibition order in relation to further steps in these proceedings or in other
    proceedings to which Fermino or Habibur are parties.  However, the scope of the
    order goes beyond what is reasonably necessary in my view and constitutes an
    error in principle.

[55]

A
    review of the transcript indicates that what the motion judge initially
    intended to do was to make directions as to [Dorinos] further participation
    in the passing of accounts.  His ultimate order went further, however.  It
    prohibits Dorino from taking any further steps in this proceeding or in any
    proceeding to which Fermino Susin or Habibur Rahman are parties, except for an
    appeal from todays Orders to the appropriate Appeal Court.  I take no issue
    with the motion judges ultimate decision to broaden the order to encompass
    estate matters beyond the passing of accounts, but an absolute prohibition
    without any further recourse goes beyond what is reasonably necessary.
    Accordingly, I would vary the order by adding the words without leave of the
    court.

Disposition

[56]

Accordingly,
    I would allow the appeal to the extent that the order of Ramsay J. dated
    January 10, 2014 is varied as follows:

a)

by deleting the
    provisions of paragraph 4; and

b)

by amending paragraph
    5 to add the words , without leave of the court, in line three after the
    words are parties and before the words except for an appeal.

[57]

I
    would dismiss the appeal otherwise.

[58]

As
    success has been divided, there will be no order as to costs on the appeal.  I
    would not interfere with the costs order below.

Released: October 29, 2014
(D.D.)

R.A.
    Blair J.A.

I
    agree, Alexandra Hoy A.C.J.O.

I
    agree, K. Feldman J.A.

[1]
Habibur Rahman is the husband of Anita (one of Ferminos supporters) and was
    appointed executor to replace Dorino by Turnbull J. in 2007.

[2]
This order arose because John Susin had made submissions before Justice Ramsay
    and had attempted to do so as
amicus curiae
for Dorino.  Ramsay J.
    cited Price J.s earlier finding that John Jr. had used his siblings as proxies
    in other proceedings in order to circumvent the vexatious proceedings order.

[3]
The motion judge referred to three, but by my count there were seven.  Darla
    Wilson J., Hoy J. (as she then was), Di Tomaso J., Snowie J., McCarthy J., Herold
    J., and Price J. have all made orders directly or indirectly confirming Welland
    as the venue for the hearing of the estate matters.


COURT OF APPEAL FOR ONTARIO

CITATION: Toronto Standard Condominium Corporation No. 2095
    v. West Harbour City (I) Residences Corp., 2014 ONCA 724

DATE: 20141022

DOCKET: C57795

Laskin, Rouleau and Epstein JJ.A.

BETWEEN

Toronto Standard Condominium Corporation No. 2095

Applicant (Appellant)

and

West Harbour City (I) Residences Corp.

Respondent (Respondent)

Thomas McRae and John De Vellis, for the appellant

Richard P. Hoffman, Harry Herskowitz and Sabrina
    Adamski, for the respondent

Heard: June 3, 2014

On appeal from the judgment
    of Justice David L. Corbett of the Superior Court of Justice, dated September
    23, 2013, with reasons reported at 2013 ONSC 5987.

Rouleau J.A.:

OVERVIEW

[1]

West
Harbour
(I)
    Residences Corp. (the declarant) is the declarant of the condominium
    registered as Toronto Standard Condominium Corporation No. 2095 (TSCC 2095).
    TSCC 2095s first board of directors, appointed by the declarant, adopted
    By-Law No. 2 requiring TSCC 2095 to enter into a warranty agreement with the
    declarant. That agreement limits the declarants warranties in respect of the
    common elements of TSCC 2095 to the statutory warranties provided in the
Ontario New Home Warranties Plan Act
,
    R.S.O. 1990, c. O.31 (
ONHWP Act
). The agreement also prevents TSCC 2095 from making any warranty
    claim in respect of the common elements except through the process established
    for and administered by the Tarion Warranty Corporation, which administers the
ONHWP Act
.

[2]

After a new TSCC 2095 board of directors was
    elected by the purchasers of individual units, TSCC 2095 brought an application
    seeking a declaration that By-Law No. 2 and the warranty agreement were invalid
    on the grounds that enacting the by-law and entering into the warranty
    agreement were beyond the authority of the declarant-appointed board of
    directors. TSCC 2095 also maintains that the by-law and agreement are
    unreasonable and therefore inconsistent with the
Condominium
    Act, 1998
, S.O. 1998, c. 19.

[3]

On September 23, 2013, the application judge
    dismissed the application, and TSCC 2095 now appeals that dismissal.

FACTS

[4]

The dispute grows out of a residential
    condominium project at 628 Fleet Street in Toronto. The appellant, TSCC 2095,
    is a condominium corporation. The respondent, West
Harbour
, is the declarant of the condominium, having filed the declaration
    on July 23, 2010. The first board of directors of TSCC 2095 was appointed by the
    declarant. On July 30, 2010 that board of directors enacted By-Law No. 2, which
    states, in part, that the directors of the Corporation [i.e. TSCC 2095] shall
    cause the Corporation to enter into an agreement with [the declarant]
    stipulating, among other things, that

The Corporation shall have no rights against the
    Declarant beyond those that are specifically granted to the Corporation under
    the Condominium Act, the Ontario New Home Warranties Plan Act and by Tarion
    Warranty Corporation, formerly the Ontario New Home Warranty Program;

the Corporations only recourse against the Declarant
    for a final and binding resolution of any outstanding, incomplete or deficient
    construction items and any other related matters relating to the Property, the
    Corporation and the Building shall be through the process established for and
    administered by Tarion Warranty Corporation;

(e)     the Agreement shall neither be terminated nor
    terminable by the Corporation following the Turnover Meeting;

[5]

Also on July 30, 2010, TSCC 2095 and the
    declarant entered into the warranty agreement containing the provisions
    specified in By-Law No. 2. The warranty agreement states that the parties agree
    to those provisions in consideration of the premises and mutual covenants and
    agreements herein contained and other valuable consideration.

[6]

The warranties statutorily provided for by the
ONHWP Act
are limited in various ways.
    For instance, the amount of compensation is capped with respect to the common
    elements to a maximum of the lesser of $2,500,000 or an amount equal to $50,000
    multiplied by the number of condominium dwelling units in the condominium
    project. There are also specified and limited time periods for reporting
    certain deficiencies. TSCC 2095 has identified certain alleged construction
    deficiencies that it says may not be warrantable within the purview of the
    Tarion Warranty Corporation process. However, the point is in dispute and all
    of the deficiencies identified to date are being addressed in that process.

[7]

The warranty agreement and By-Law No. 2 were
    disclosed in the declarants disclosure statement, and in the agreements of
    purchase and sale that the declarant entered into with original purchasers. In
    his reasons, the application judge notes that the by-law and [warranty]
    agreement were registered on title to the condominium project, to give notice
    to all prospective purchasers of condominium units that the liability of the
    developer to the condominium corporation was limited. According to the
    declarant, all purchasers were represented by counsel.

[8]

In accordance with the
Condominium Act
, s. 43, the initial
    condominium board appointed by the declarant must call and hold a turnover
    meeting within 42 days after the declarant ceases to be the registered owner of
    a majority of the condominium units. At the turnover meeting the individual
    unit owners elect a new board. The turnover meeting for TSCC 2095 was held on October
    28, 2010.

[9]

On May 15, 2012, TSCC 2095 filed its Notice of
    Application, through which it sought a declaration that By-Law No. 2 and the
    warranty agreement were void and of no force or effect.

[10]

The application judge dismissed
TSCC 2095s application finding that [n]othing in the
Condominium Act,
the
ONHWP Act
,
or any other provincial legislation, precludes a developer from
    limiting its liability in respect to common elements. There was, therefore, no
    basis for concluding that By-Law No. 2 or the warranty agreement were
ultra vires
the declarant board or
    unreasonable within the meaning of the
Condominium
    Act
.

ISSUES

[11]

On appeal, TSCC 2095 argues that By-Law No. 2 is
    void and of no force or effect because:

a.

it is not within the enumerated subject matters of permissible by-laws
    provided for in s. 56 of the
Condominium Act
, and is inconsistent with
    the
Condominium Act
and TSCC 2095s declaration; and

b.

it is otherwise unreasonable, contrary to the
Condominium Act
.

[12]

TSCC 2095 then argues that, absent a properly
    enacted by-law, the directors had no authority to enter into the warranty
    agreement with the declarant.

[13]

The issues on appeal are, therefore, as follows:

1.

Is the impugned by-law
ultra vires
?

2.

Is the impugned by-law unreasonable?

3.

Can the warranty agreement be valid even if the by-law is found to be invalid?

ANALYSIS

(1)

Is the impugned by-law
ultra vires
?

[14]

The application judge found that s. 56 of the
Condominium Act
provided the initial
    board of TSCC 2095 broad authority to adopt by-laws governing the management
    and operation of the condominium. Encompassed within this broad discretion was
    the power to enact By-Law No. 2. In his reasons, the application judge noted that

it would be within the Boards jurisdiction to
    assert, prosecute and settle a claim against [the declarant]. It follows, then,
    that it is within the Boards jurisdiction to decide not to do any of these
    things and to embody that decision in an agreement.

[15]

TSCC 2095 argues that the application judge erred in three respects.
    First he erred in concluding that the by-law fell within the powers granted in
    s. 56 of the
Condominium Act
. Further, he erred in failing to find that, even if authority for
    the passage of By-Law No. 2 could be found in the various subsections of s. 56(1),
    it was nonetheless unauthorized because it breached the requirement in s. 56(1)
    that a by-law adopted by the board not be otherwise contrary to this Act or to
    the declaration. Finally, he erred in failing to find that by passing By-Law
    No. 2 the declarant-appointed directors breached their statutory obligations
    set out in s. 37 of the
Condominium Act
. I will deal with these three submissions in turn.

(a)

Does the by-law fall within one of the powers
    listed in s. 56(1)?

[16]

The relevant portions of s. 56 provide as
    follows:

56.  (1) The board may, by resolution, make, amend or
    repeal by-laws, not contrary to this Act or to the declaration,

(l) to govern the management of the property;

(m) to govern the use and
    management of the assets of the corporation;

(n) to specify duties of the corporation in addition to
    the duties set out in this Act and the declaration;

(p) to govern the conduct generally
    of the affairs of the corporation.

[17]

TSCC 2095 argues that the powers listed in s.
    56(1)(l), (m), (n) and (p) are far too general to support the By-law
    authorizing the execution of the Agreement.

[18]

I acknowledge that the wording of these
    provisions is general. They grant very broad authority to the board of
    directors of a condominium corporation. Subsection (p) is particularly broad in
    that it provides that a by-law will be within the boards by-law making power provided
    that it governs the conduct generally of the affairs of the corporation. I
    see no reason not to give effect to the words chosen by the legislature. TSCC
    2095 provides no case law in support of its argument that, because the power
    conferred is general, it ought to be ignored or somehow limited or read down.

[19]

The purpose of By-Law No. 2 and of the warranty
    agreement is to arrange the affairs of the condominium corporation and, more
    specifically, its relationship with the declarant. By-Law No. 2 provides a
    framework within which the condominium corporation will deal with any and all
    outstanding or incomplete work and construction deficiencies. The decision by
    the board of directors of TSCC 2095 to limit the corporations options to
    making claims within the Tarion process is clearly an exercise in the
    governance of the affairs of the corporation.

[20]

TSCC 2095 acknowledges that if By-Law No. 2 and
    the warranty agreement had not been entered into, it would have the
    jurisdiction to advance a claim against the declarant. If the corporation has
    the authority to advance a claim then, presumably, it has the authority to
    resolve any claim it might choose to advance. Surely, therefore, the corporations
    authority must extend to deciding that a claim will not be advanced, or that it
    will be advanced in a particular manner or venue, such as before the Tarion
    Warranty Corporation. In other words, deciding when to advance such claims, and
    in which forum, is part of the conduct generally of the affairs of the
    corporation. A by-law that governs the way in which the corporation is to
    advance such claims, whether it is adopted by the current board or by the
    declarant-appointed board, is therefore authorized by s. 56(1)(p), so long as
    it is not otherwise contrary to the
Condominium Act
or the
    declaration.

(b)

Is the by-law otherwise contrary to the Act or to the declaration?

[21]

TSCC 2095 submits that even if the authority to
    pass By-Law No. 2 can be found in subsections (l), (m), (n) or (p), the by-law does
    not meet the overarching requirement imposed in s. 56(1) that the by-law not be
    contrary to other provisions of the
Condominium Act
or to the
    declaration. In TSCC 2095s view, the by-law runs afoul of this condition as it
    is inconsistent with ss. 18, 23, 89 and 90 of the
Condominium Act
as
    well as para. 10.1 of the declaration. Those provisions read as follows:

18.  (1) The corporation may own, acquire, encumber
    and dispose of real and personal property only for purposes that are consistent
    with the objects and duties of the corporation.

(1.1) The assets of the corporation do not include any real
    property that the corporation does not own or any interest in real property
    where the corporation does not own the interest.

(2) The owners share the assets of the corporation in the same
    proportions as the proportions of their common interests in accordance with
    this Act, the declaration and the by-laws.

(3) A grant or transfer of an easement to the corporation is
    valid even though the corporation does not own land capable of being benefited
    by the easement.

23. (1) Subject to subsection (2), in addition to any other
    remedies that a corporation may have, a corporation may, on its own behalf and
    on behalf of an owner,

(a) commence, maintain or settle an action for damages and
    costs in respect of any damage to common elements, the assets of the corporation
    or individual units; and

(b) commence, maintain or settle an action with respect to
    a contract involving the common elements or a unit, even though the corporation
    was not a party to the contract in respect of which the action is brought.

(2) Before commencing an action mentioned in subsection (1),
    the corporation shall give written notice of the general nature of the action
    to all persons whose names are in the record of the corporation maintained
    under subsection 47(2) except if,

(a) the action is to enforce a lien of the corporation
    under section 85 or to fulfil its duty under subsection 17(3); or

(b) the action is commenced in the Small Claims Court.

89.  (1)  Subject to sections 91 and 123, the
    corporation shall repair the units and common elements after damage.

(2) The obligation to repair after damage includes the
    obligation to repair and replace after damage or failure but, subject to
    subsection (5), does not include the obligation to repair after damage
    improvements made to a unit.

90.  (1)  Subject to section 91, the corporation
    shall maintain the common elements and each owner shall maintain the owners
    unit.

(2)  The obligation to maintain includes the
    obligation to repair after normal wear and tear but does not include the obligation
    to repair after damage.

The Declaration

10.1
The Corporation shall be responsible to enforce and abide by the provision of
    the Declaration, By-laws and Rules
in the
    best interests of the Owners
. In addition to any specific duties
    and obligations of the Corporation set out elsewhere in this Declaration and/or
    specified in the Act and the By-laws and Rules of the Corporation or in any
    agreements entered into by the Corporation, the Corporations duties shall
    include the following, namely:

(j) Without limiting the specific
    duties of the Corporation to maintain, repair and replace (where necessary) as
    set forth in this Declaration, to maintain, repair and replace the components
    of the Building so that the Building is maintained and operated in good order
    and clean condition and to a standard acceptable to the majority of the Unit
    Owners; and

(k) To take all actions reasonably
    necessary as may be required to fulfill any of the Corporations duties and
    obligations pursuant to this Declaration.

[Emphasis added.]

[22]

Broadly speaking, ss. 89 and 90 of the
Condominium Act
and para. 10.1 of the declaration
    impose obligations on TSCC 2095 to repair and maintain the property. The
    condominiums power to make claims is provided in s. 23 of the
Condominium Act
and that section
    includes a requirement that notice be given to owners before a claim is made. Section
    18 restricts a condominium boards ability to dispose of personal property  including,
    in the TSCC 2095s submission, a potential cause of action against the
    declarant  to dispositions that are consistent with the objects and duties of
    the corporation.

[23]

In TSCC 2095s submission, because By-Law No. 2
    disposed of the right to sue the declarant for any construction deficiencies,
    it impaired TSCC 2095s ability to meet its repair and maintenance obligations
    imposed by ss. 89 and 90 of the
Condominium Act
and article 10.1 of the declaration. As a result, even if the
    by-law fell within one of the subsections of s. 56(1), it is nonetheless
ultra vires
as it did not meet the requirement
    that it not to be contrary to the Act or to the declaration.

[24]

I do not agree. Assuming that By-Law No. 2 and the
    warranty agreement constitute a disposition of personal property as contemplated
    in s. 18, the disposition is not inconsistent with TSCC 2095s obligation to
    repair and maintain the property. As the declarant points out, the by-law and
    warranty agreement simply impose limits on the options that TSCC 2095 may have
    to pursue the declarant and seek recovery of any costs it may incur in carrying
    out its repair and maintenance obligations. The by-law and the warranty
    agreement do not restrict TSCC 2095s repair and maintenance obligations; they
    simply circumscribe to a certain extent the manner in which TSCC 2095 will
    manage its resources and fund any repair and maintenance costs.

[25]

In my view, s. 23 is also of no assistance to
    TSCC 2095. Section 23 simply provides that a condominium corporation may
    commence a claim for damage to common elements. There is no statutory requirement
    that a claim be made nor, as suggested by TSCC 2095, that unit owners need to
    receive notice should the condominium corporation decide not to advance such a
    claim. In any event, all of the unit owners have received proper disclosure of
    the limits placed on TSCC 2095s ability to advance claims against the
    declarant.

(c)

Is By-Law No. 2 invalid because, in passing it, the directors breached
    their statutory obligations?

[26]

TSCC 2095 further argues that by passing By-Law
    No. 2 and entering into the agreement, the directors appointed by the declarant
    breached their statutory obligations. Section 37 of the
Condominium Act
imposes on directors of
    condominium corporations obligations as follows:

37.  (1) Every director and every officer of a
    corporation in exercising the powers and discharging the duties of office
    shall,

(a) act honestly and in good faith; and

(b) exercise the care, diligence
    and skill that a reasonably prudent person would exercise in comparable
    circumstances.

[27]

In TSCC 2095s submission, by releasing the
    declarant from all liability other than the statutory minimum imposed by the
ONHWP
    Act
, the transitional board of directors appointed by the declarant
    disposed of an asset (the potential causes of action against the declarant) in
    a manner that was not consistent with the objects and duties of the condominium
    corporation. By passing the by-law and entering into the agreement, the
    directors fundamentally undermined the condominium corporations ability to
    ensure that repairs and maintenance necessitated by the declarants actions or
    inaction would be corrected and paid for by the declarant. Because no careful
    or diligent director cognizant of the condominium corporations obligations to
    maintain and repair the common elements would pass such a by-law, TSCC 2095
    submits that the by-law and the agreement are
ultra vires
as being
    contrary to s. 37.

[28]

I disagree. Section 37(1) creates a standard of
    care that applies to directors and officers and describes circumstances in
    which directors and officers of condominium corporations may be held personally
    liable for their acts. TSCC 2095 has cited no case in which s. 37(1) forms the
    basis for a finding that a particular by-law or resolution of a condominium
    board was
ultra vires
.

[29]

Further, the actions of the board initially
    appointed by the declarant must be viewed in context. In
Peel Condominium
    Corp. No. 417 v. Tedley Homes Ltd.
(1997), 35 O.R. (3d) 257 (C.A.), this
    court considered a condominium corporations application for rescission of an
    agreement between the corporation and the declarant requiring the corporation
    to purchase superintendent and guest units from the declarant. The corporation
    argued, in part, that the declarant-appointed directors on the corporations
    initial board had failed to disclose their conflict of interest and had
    breached their fiduciary duties. This court disagreed, stating at p. 264:

These directors did no more than organize the affairs of the
    condominium in the manner anticipated by the declaration and agreed to by the
    purchasers of the individual units.

[30]

It is the declarant, as developer of the
    property, who defines the content, character and structure of the condominium
    project. This is done through the filing of the declaration creating the
    condominium corporation as well as by having the founding board pass by-laws
    and enter into agreements structuring the condominium corporation and governing
    its operation. How the condominium project is structured will have an impact on
    the value and therefore, the selling price of the individual units. For
    example, if the superintendents suite and guest units are included as part of
    the common elements, the value of each of the condominium units sold to
    purchasers by the declarant will be higher than if the superintendents suite
    and guest units had to be purchased or rented from the declarant by the
    condominium corporation. Similarly, one could well expect that the declarant in
    this case, absent the protection of the warranty agreement, would seek to net a
    higher sale price for the units to compensate for the additional risk it would
    be assuming.

[31]

In implementing the structure determined by the
    declarant, the initial directors are not acting as fiduciaries for the
    purchasers of condominium units. Their role is not to try and obtain the best
    possible agreement for the condominium corporation or for the purchasers of
    units. As explained in
Tedley Homes
, at p. 264, their role is to
    organize the affairs of the condominium in the manner anticipated by the declaration
    and agreed to by the purchasers of the individual units, provided of course,
    that the directors are acting within the limits and constraints imposed by the
Condominium
    Act
.

[32]

By-Law No. 2 and the warranty agreement entered
    into by the board of directors appointed by the declarant do not, as explained
    earlier, contravene the
Condominium Act
. The by-law and agreement were
    disclosed to the individual unit purchasers and the by-law was placed on title
    giving notice to the world of its terms. In these circumstances, I see no basis
    for finding that in passing the by-law and entering into the warranty agreement
    the directors acted in violation of their duties or for concluding that the by-law
    was
ultra vires
.

(2)

Is the impugned by-law unreasonable?

[33]

TSCC 2095 argues that By-Law No. 2 and
    consequently, the warranty
agreement, are unreasonable and
    therefore contravene ss. 56(6) and (7) of the
Condominium Act
. Those
    sections read as follows:

56.  (1) The board may, by resolution, make, amend or
    repeal by-laws, not contrary to this Act or to the declaration,

(6) The by-laws shall be reasonable and consistent with this
    Act and the declaration.

(7) By-laws proposed by the declarant before the registration
    of a declaration and description shall be reasonable and consistent with this
    Act and the proposed declaration.

[34]

In support of this submission, TSCC 2095 relies
    on its earlier submissions to the effect that the by-law and agreement are inconsistent
    with the
Condominium Act
and the declaration. TSCC 2095 adds the further
    argument that the by-law and agreement do not meet the reasonableness
    requirements in ss. 56(6) and (7) because TSCC 2095 received no consideration
    for entering into the warranty agreement and because disclosure of the by-law
    and agreement was inadequate.

[35]

As to the first prong of the submission, I have
    already concluded that the by-law and agreement do not contravene and are not inconsistent
    with either the
Condominium Act
or the declaration.

[36]

With respect to TSCC 2095s submission that the
    warranty agreement is unreasonable because TSCC 2095 received no consideration,
    I agree with the application judges finding that the consideration given was to
    be found in the declarants agreement to transfer the project to the
    condominium corporation and the unit owners. This is not to say that TSCC 2095
    exchanged its potential causes of action against the declarant in return for
    the transfer of the project, but rather that the warranty agreement was part of
    the structure of the condominium project imposed by the declarant before the
    declarant sold any of the units. Through the disclosure detailed above and the
    terms in the agreements of purchase and sale, the original purchasers were made
    aware of precisely what warranty came with their purchase.

[37]

The
ONHWP Act
imposes on a declarant
    certain statutory warranty obligations. The degree to which a declarant would,
    at common law, be exposed to potential deficiency claims over and above those
    imposed by statute will, as noted earlier, invariably factor into the price at
    which the declarant is prepared to sell and the price a potential purchaser of
    units is prepared to pay. Through the disclosure of the by-law and agreement,
    both vendor and purchaser were fully informed of the terms of the bargain being
    proposed and the consideration they agreed to exchange on the purchase reflects
    those terms.

[38]

TSCC 2095 then suggests that because the
    warranties sought to be avoided by the declarant are in respect of common
    elements, the consideration for the warranty agreement should flow to TSCC 2095.
    In TSCC 2095s submission, therefore, the consideration exchanged between the unit
    owners and the declarant cannot constitute consideration for TSCC 2095s
    agreeing to the declarant limiting its exposure to warranty claims in respect
    of common elements.

[39]

I do not agree. The consideration for the warranty
    agreement is to be found in the creation of the condominium project as a whole.
    The unit owners, as a group, own all of the common elements and their purchase
    from the declarant includes both the purchase of their respective units and, in
    the aggregate, the purchase of the common elements  common elements as defined
    and structured by the declaration as well as the resolutions and by-laws
    adopted by the initial board and disclosed to the purchasers.

[40]

The purchase price reflects not only the value
    of the individual unit acquired but also the value of the interest in the common
    elements that attach to the unit.

[41]

Finally, I would not give effect to TSCC 2095s
    suggestion that inadequate disclosure somehow makes the by-law and agreement
    unreasonable. No claim has been advanced by a purchaser alleging that
    disclosure was inadequate. Nor has TSCC 2095 referred to any provision in the
Condominium
    Act
or jurisprudence that supports the submission that inadequate
    disclosure renders a by-law unreasonable.

[42]

In any event, the by-law and agreement were
    disclosed in both the declarants disclosure statement and in the agreements of
    purchase and sale signed by each of the original purchasers of units. Further,
    By-Law No. 2 was registered on title to give notice to all prospective
    purchasers. Should there be any issue as to the adequacy of this disclosure,
    there are provisions in the
Condominium Act
that offer remedies to affected
    purchasers of units.

(3)

Can the warranty agreement be valid even if the by-law is found to be
    invalid?

[43]

Because I have concluded that the by-law is
    valid, I need not address this submission. If the by-law was valid, the
    entering into of the warranty agreement was authorized and the agreement is
    binding whether or not TSCC 2095 chooses to now amend or repeal the by-law.

CONCLUSION

[44]

As noted by the declarant, TSCC 2095 has the
    benefit of the
ONHWP Act
. There is no suggestion that, when it entered
    into the agreement, the declarant knew of any deficiencies that would not be
    covered by the Tarion Warranty Corporation process. All of the construction
    deficiencies identified to date are being addressed within that process.
    Further, although I acknowledge that consumer protection is a significant
    purpose of the C
ondominium Act
(see
Lexington on the Green Inc. v.
    Toronto Standard Condominium Corp. No. 1930
, 2010 ONCA 751), all of the initial
    purchasers received notice of these arrangements prior to concluding their
    purchase. Finally, no evidence of deception, misfeasance or misrepresentation
    by the declarant has been advanced.

[45]

In conclusion, therefore, I find that By-Law No.
    2 and the warranty agreement are lawful and valid. There is nothing inherently
    unreasonable in a declarant limiting its liability for construction
    deficiencies in the manner done here. None of the provisions cited by TSCC
    2095, either individually or read in the context of the
Condominium Act
as a whole, prevents a declarant from entering into such an arrangement.

[46]

Whether developers should be prevented from
    limiting their liability to the statutory warranties provided in the
ONHWP
    Act
is a matter of policy for the legislature and not one for judicial
    determination.

[47]

For these reasons, I would dismiss the appeal.
    If the parties are unable to agree on costs, the declarant is to provide brief
    written submissions within 15 days of the release of these reasons and TSCC
    2095 is to provide a brief response within 15 days thereafter.

Released: OCT 22, 2014

JL                                                                       Paul
    Rouleau J.A.

I
    agree John Laskin J.A.

I
    agree Gloria Epstein J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Toronto Standard Condominium Corporation No. 2095
    v. West Harbour City (I) Residences Corp., 2014 ONCA 738

DATE: 20141027

DOCKET: C57795

Laskin, Rouleau and Epstein JJ.A.

BETWEEN

Toronto Standard Condominium Corporation No. 2095

Applicant (Appellant)

and

West Harbour City (I) Residences Corp.

Respondent (Respondent)

Thomas McRae and John De Vellis, for the appellant

Richard P. Hoffman, Harry Herskowitz and Sabrina
    Adamski, for the respondent

Heard: June 3, 2014

On appeal from the judgment
    of Justice David L. Corbett of the Superior Court of Justice, dated September
    23, 2013, with reasons reported at 2013 ONSC 5987.

COSTS ENDORSEMENT

[1]

By agreement of the parties, costs are awarded to the respondent in the
    amount of $15,000.00 inclusive of disbursements and applicable taxes.

John
    Laskin J.A.

Paul
    Rouleau J.A.

Gloria
    Epstein J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Weidelich v. de Koning, 2014 ONCA 736

DATE: 20141024

DOCKET: C58597

Doherty, Laskin and Epstein JJ.A.

BETWEEN

Colin Weidelich, Shawn Boire, Cecilia Mo, Joe
    Gilinsky, Yvonne Gilinsky, Ken Baldin and Pam Leeworthy-Baldin

Applicants (Appellants)

and

Pieter de Koning and Rachna de Koning

Respondents
    (Respondents)

Harvey J. Ash, for the appellants

Rahul Shastri and David Winer, for the respondents

Heard: August 13, 2014

On appeal from the judgment of Justice David G. Stinson of
    the Superior Court of Justice, dated December 5, 2013, with reasons reported at
    2013 ONSC 7486.

Doherty J.A.:

[1]

This litigation arises out of a dispute between neighbours over a right-of-way
    that runs behind a block of six row houses on the south side of Cottingham
    Street in Toronto. Cottingham Street runs east to west. The respondents own the
    easternmost house in the block (No. 69). The appellants own four of the other
    houses (Nos. 71, 73, 77 and 79). The owners of the sixth home (No. 75) are not parties
    to the litigation.

[2]

Each of the six properties backs onto a private laneway. Six garages
    (one for each home) stand on the south side of the laneway. Entrance to the
    laneway runs south from Cottingham Street directly to the east of the
    respondents home. The laneway traverses lands owned by each of the six
    homeowners, and those lands are subject to a right-of-way described in each
    propertys title documents. For example, the respondents deed provides that their
    ownership is:

SUBJECT to a right-of-way in favour of the owners and occupants
    from time to time of [the other five properties]  over, along and upon  Part
    19  for the purpose of vehicular ingress and egress.

[3]

The part of the laneway that passes over the respondents property,
    identified as Part 19 in the deed, is 3.6 metres at its narrowest point. The
    laneway continues west onto the appellants properties where its narrowest
    point is 3.5 meters.

[4]

In 2012, the respondents began a home renovation (the Addition). They
    intended to add a three-story structure, an outdoor balcony on the second floor
    of the new structure, a ground floor patio, and an outdoor planter. The
    Addition was largely complete when this application was heard in November 2013.

[5]

The Addition encroaches upon Part 19. However, the right-of-way remains
    at least 4.4 metres wide wherever the Addition encroaches on it.  Schedule B of
    the application judges reasons depicts the right-of-way and the encroachment
    (the cross-hatched section).  I have appended a copy of that Schedule to these
    reasons.

[6]

The appellants applied for a declaration that the respondents not
    obstruct the right-of-way and sought an order requiring the respondents to
    remove all structures built on the right-of-way. They also sought a declaration
    that they had certain ancillary rights  for example, the right to use the
    right-of-way for snow removal.

[7]

The application judge found, at para. 11:

[T]he Encroachments caused by the Addition do not create a
    real or substantial interference with the use of the laneway for vehicular
    access: it remains as accessible and passable now as it was before the
    construction, subject to the obvious result that the portion of Part 19 on
    which the Addition has been constructed can no longer be driven over.
Despite
    that limitation, however, it is still possible for vehicles (including delivery
    trucks) to traverse across the remainder of Part 19 unimpeded for purposes of
    accessing the remainder of the laneway. [Emphasis added.]

[8]

The appellants do not challenge the finding that the respondents
    Addition does not affect the appellants ability to drive to and from their
    garages along the laneway. Counsel contends, however, that the encroachment is
    actionable even if it does not interfere with the appellants ability to use
    the right-of-way for the purpose identified in the deed. Counsel submits that
    the appellants have a right to use the right-of-ways entire width for the
    purpose of vehicular ingress and egress. He maintains that the erection of a
    permanent structure on any part of the right-of-way necessarily compromises the
    right granted because the appellants cannot pass over that part of the right-of-way.
    In counsels submission, the encroachments practical effect on the appellants
    ability to use the right-of-way for its granted purpose is irrelevant.

A: Is There An Actionable Encroachment
?

[9]

The application judge, referring to Canadian and English authority, found
    that there was not an actionable encroachment.  He held that an encroachment on
    a right-of-way is actionable only if there is a substantial interference with
    the use of the right-of-way as granted. Quoting from
West v. Sharp
(1999), 79 P. & C.R. 32 (C.A.), the application judge said, at para. 24:

There is no actionable interference with a right of way if it can
    be substantially and practically exercised as conveniently after as before the
    occurrence of the alleged obstruction.

[10]

I
    agree with the reasons of the motion judge. The authorities he cites and others
    fully support the conclusion that an encroachment on a private right-of-way is
    actionable only where the encroachment substantially interferes with the
    dominant owners ability to use the right-of-way for a purpose identified in
    the grant.
Gale on Easements
, 19th ed. (London: Sweet & Maxwell, 2012),
    the leading English text on the topic, puts it this way, at para. 13-06:

As regards the disturbance of private rights of way, it has
    been laid down that whereas in a public highway any obstruction is a wrong if
    appreciable,
in the case of a private right of way the obstruction is not
    actionable unless it is substantial
. Again, it has been said that for the
    obstruction of a private way the dominant owner cannot complain unless he can
    prove injury; unlike the case of trespass, which gives a right of action though
    no damage be proved.
In Hutton v Hamboro, where the obstruction of a
    private way was alleged, Cockburn C.J. laid down that the question was whether
    practically and substantially the right of way could be exercised as
    conveniently as before
. [Emphasis added.]

[11]

Lord
    Cockburns language echoes through the English and Canadian case law: see, e.g.,
Clifford v. Hoare
(1874), L.R. 9 C.P. 362;
Pettey v. Parsons
,
    [1914] 2 Ch. 653 (C.A.), at 662, 665-6, 667-8;
Keefe v. Amor
, [1965] 1
    Q.B. 334 (C.A.), at 347;
Celsteel Ltd. v. Alton House Holdings Ltd.
,
    [1985] 1 W.L.R. 204 (Ch.), at 216-18, revd on other grounds, [1986] 1 W.L.R.
    512 (C.A.);
B & Q Plc. v. Liverpool and Lancashire Properties Limited
,
    [2000] E.W.H.C. 463, 81 P. & C.R. 20 (Ch.);
Devaney v. McNab
(1921), 69 D.L.R. 231 (Ont. C.A.);
Voye v. Hartley
, 2002 NBCA 14, 247 N.B.R. (2d) 128,
at
    para. 25;
Donohue v. Robins
, 2012 ONSC 2851, [2012] O.J. No. 2133, at
    para. 58;
Lester v. Bo
nd
, 2013 ONSC 7888, [2013] O.J. No. 6006,
    at paras. 30-33.

[12]

The
    requirement that the dominant owner prove substantial interference to maintain a
    claim reflects the nature of the dominant owners right. He or she does not own
    the right-of-way or the land upon which the right-of-way runs, but only enjoys
    the reasonable use of that property for its granted purpose. The dominant owner
    may only sustain a claim predicated on substantial interference with that
    reasonable use. The distinction is between the rights of ownership and the
    right of reasonable use for an identified purpose.

[13]

Lord
    Brett, in
Clifford v. Hoare
, focused on the distinction between the rights
    of ownership and the right of reasonable use for an identified purpose in
    explaining why a dominant owner had no claim even though a building encroached
    some two feet onto the 40-foot right-of-way:

[T]hat which is granted to the plaintiff by
    the conveyance of the 2nd of August, 1872, was, not a forty-foot road, nor the
    exclusive use of a forty-foot road; but a right to use it in common with
    others. He was to have an easement in the nature of an access or right of way
    over the road, by himself and his friends and servants, and nothing but an
    easement. If this were a grant of the road itself, any interference with the
    plaintiffs enjoyment of it would, no doubt, give a right of action. But all
    that is granted here is a right to a reasonable use of the road by the
    plaintiff in common with others, who have equal rights with him; and I am of
    opinion that no substantial interference with his exercise of that easement has
    been made out.

[Emphasis added.]

[14]

A
    court, when deciding whether an encroachment results in a substantial
    interference with the claimants use of the right-of-way, will have regard to
    the terms of the grant and the nature of the encroachment. The determination is
    a factual one and will turn on the specific circumstances of each case.

[15]

The
    significance of an encroachment depends on its impact on reasonable use. The dominant
    owner is entitled to every reasonable use of the right-of-way for its granted
    purpose. I would adopt as correct the inquiry captured in the following passage
    in
B & Q Plc.
, at 257:

In short, the test,  is one of convenience and not necessity
    or reasonable necessity, Provided that what the grantee is insisting on is not
    unreasonable, the question is: can the right of way be substantially and
    practically exercised as conveniently as before?

[16]

The
    facts of
Celsteel Ltd.
provide an excellent example of the proper
    application of the substantial interference test. In
Celsteel Ltd.
,
    the defendant lessee of the property decided to build a car wash that
    encroached on a right-of-way the plaintiffs used to access their parking
    garages. The defendant argued that the encroachment was not substantial as it related
    to one of the plaintiffs because, although the plaintiff would have to drive
    into and reverse out of the garage, contrary to his habit of reversing into and
    driving out of the garage, the plaintiff could still access his garage.

[17]

Scott
    J. acknowledged that either approach to garage entry and exit was reasonable. He
    went on, however, to hold that the encroachment was actionable. He said, at p.
    217:

In the present case the test is not, in my view, whether the
    means of access still possible is a reasonable means of access. The correct
    test is whether insistence by the third plaintiff [the holder of the
    right-of-way] on being able to continue to use the other means of access is
    reasonable. In my opinion, it is. I do not think it is open to the defendants
    to deprive the third plaintiff of his preferred means of entry to garage 52 and
    then to justify themselves by arguing that most other people would prefer some
    other still available means of entry. Such an argument might avail the
    defendants if the third plaintiffs preference was unreasonable or perverse. But,
    in my view, it is neither of these things.

[18]

The
    application judges unchallenged finding that the laneway remains as
    accessible and passable now as it was before the construction compels dismissal
    of the appellants claim.  Counsel for the appellants, however, makes three valiant
    attempts to escape the substantial interference requirement.

[19]

First, counsel submits that an encroachment by a permanent structure
    is a substantial interference whether or not the encroachment actually
    interferes with the dominant owners reasonable use.

The
    case law does not support that proposition. Several of the cases that have set
    down and refined the substantial interference requirement involve encroachments
    by permanent structures: see, e.g.,
Clifford
;
Celsteel Ltd.
;
B
    & Q Plc.
;

Devaney
.
    Moreover, the authors of the current edition of
Gale on Easements
do
    not distinguish between encroachments by permanent structures and other forms
    of encroachment onto private rights-of-way.

[20]

The
    appellants rely on
Albiston v. Liu
, [2013] O.J. No. 3685 (S.C.), which
    does draw the appellants desired distinction.

In
    that case, the trial judge held a trivial interference by a permanent structure
    may not be substantial if the defendant inherited the encroaching structure,
    but a trivial interference by a permanent structure is substantial if the
    defendant deliberately built on the right-of-way. This decision stands alone in
    relying on the deliberateness of the defendants conduct, rather than on the
    degree of actual interference, to define substantial interference. I think
Albiston
was wrongly decided.

[21]

The
    appellants also rely on
Chester v. Roch
(1975), 20 N.S.R. (2d) 536
    (S.C.), at para. 8, and, in particular, the trial judges reference on an extract
    from the text
Anger & Honsberger Law of Real Property
. The quoted
    reference supports the appellants contention that an encroachment by a
    permanent building is
per se
actionable.

[22]

Counsel
    has, however, fairly included the latest version of the same text in his
    materials: Anne La Forest,
Anger & Honsberger Law of Real Property
,
    loose-leaf, vol. 2, 3d ed. (Aurora: Canada Law Book, 2006), at 17:20.30(b). In the
    latest edition, the author accepts that interference with a private
    right-of-way is actionable only if substantial. She notes that if an
    obstruction is permanent, it may substantially interfere with the use of the
    right-of-way even if the actual interference is not great. I have no quarrel
    with this observation, insofar as it identifies the nature of the obstruction
    as relevant to the substantial interference inquiry.  However, given the
    application judges finding that the addition does not interfere with the
    appellants use of the right-of-way for its granted purpose, the commentary
    does not assist the appellants.

[23]

Counsels
    second argument rests on Middleton J.s reasoning, at p. 237 in
Devaney v.
    McNab
. His Lordship commented:

Where the thing that is complained of is the erection of a
    substantial and permanent structure upon the land over which the grantor has
    already given a right of way, it appears to me to be almost impossible to say
    that there is not a real and substantial interference with the right conveyed.

[24]

Anything
    said by Middleton J. deserves careful attention.
In the
    sentences immediately before the appellants cited passage, he writes:

It is well settled that the rights of the
    parties must be determined according to the true construction of the grant; and
    it is to be observed that the grant here is in the widest possible terms. It
    follows, I think, that the grantor must not derogate in any way from his grant.
    [Citation omitted.]

[25]

The
    right-of-way in
Devaney
was granted at all times and for all
    purposes. Middleton J. had to measure the effect of the encroachment on the
    right-of-way in the light of that very broad grant.  Given the broad purpose of
    the grant, he could not say that the obstruction (a fire escape projecting some
    three feet four inches into a 20 foot right-of-way) did not substantially
    interfere with any potential reasonable use of the right-of-way.

[26]

In
    my view, the analysis of Middleton J. is consistent with the substantial
    interference test described in the authorities cited above. Indeed, Middleton
    J. (and Latchford J. in a concurring judgment) relied on
Clifford v. Hoare
,
    one of the seminal cases in the significant interference line of authorities.

[27]

The
    third argument advanced by counsel relies on this courts judgment in
Spencer
    v. Sallow
, 2013
ONCA
98, 114 O.R.
    (3d) 226, leave to appeal refused, [2013] S.C.C.A. No. 174.
Spencer
involved a motion brought by a land surveyor to rectify a mis-description of a
    right-of-way contained in a reference plan registered on title under the
Land
    Titles Act
,
R.S.O. 1990,
    c. L-5. The appeal turned on the appellants right to a rectification order.

[28]

At
    para. 50 of his reasons, the Chief Justice observed that the territorial limits
    of easements, including rights-of-way, are boundaries in every sense of that
    word. Counsel relies on this passage to support the contention that the
    encroachment in this case was actionable.

[29]

I
    have no difficulty accepting the Chief Justices observation about the nature
    of a right-of-ways boundaries. However, this case is not about defining the
    boundaries of the right-of-way. They are clearly delineated in the deed and are
    not in dispute. Nor is there any dispute that the respondents Addition
    encroaches over the boundary line onto the right-of-way. The sole issue here is
    whether that encroachment is actionable. Nothing in
Spencer
assists in
    that determination.

[30]

The appellants have not persuaded me that encroachment by a
    permanent structure is actionable absent actual, substantial interference with
    the granted right. On the trial judges factual findings, the appellants cannot
    meet that burden.

B: The Ancillary Rights Claim

[31]

The
    application judge indicated, at para. 28, that the only ancillary right pressed
    by the applicants at argument concerned snow removal and that the respondents
    had conceded a right to use the right-of-way for the purpose of snow removal. Although
    the application judge indicated he would make a declaration to that effect, the
    judgment makes no reference to any ancillary rights, but simply dismisses the
    application in its entirety.

[32]

In
    their factum, the appellants reasserted a claim to various ancillary rights. The
    respondents argued against any declaration concerning ancillary rights in their
    factum. Neither party said much about ancillary rights in oral argument.

[33]

Ancillary
    rights are those that are reasonably necessary to the enjoyment of the right-of-way
    granted:
Fallowfield v. Bourgault
(2003), 68 O.R. (3d) 417 (C.A.), at
    para. 11.  The determination of the existence and scope of any claimed
    ancillary right is a factual one.  This record does not admit of the kind of
    factual inquiry necessary to essay a definitive declaration as to any ancillary
    rights associated with the appellants use of their right-of-way.  If
    disagreements arise in the future, hopefully common sense and neighbourly
    goodwill will find a solution.  If not, the court will have to settle the
    dispute by reference to the specific facts revealed by the evidence.

C:      CONCLUSION

[34]

For
    the reasons set out above, I would dismiss the appeal. As agreed between the
    parties, the respondents, as the successful party on appeal, are entitled to
    their costs fixed at $12,000 inclusive of disbursement and relevant taxes.

RELEASED: October 24, 2014 (D.D.)

Doherty J.A.

I agree John Laskin J.A.

I agree Gloria Epstein J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Zesta Engineering Ltd. v. Cloutier, 2014 ONCA 762

DATE: 20141030

DOCKET: C52951 and C52999

Laskin, Gillese and Pardu JJ.A.

BETWEEN

Zesta Engineering Ltd.

Plaintiff (Appellant)

and

David Cloutier, Michael Jefferies, Hi-Cap
    Technologies, Guiseppe Durante, Keith Sanger, James White and Kelvin
    Technologies Inc., Douglas Christie, 798068 Ontario Limited and Derek Peatling

Defendants (Respondents)

AND BETWEEN

David Cloutier. Guiseppe Durante
    and Kelvin Technologies Inc.

Plaintiffs by Counterclaim (Respondents)

and

Zesta Engineering Ltd.

Defendant to the Counterclaim (Appellant)

AND BETWEEN

Zesta Engineering Ltd.

Plaintiff (Appellant)

and

Joe Durante and Wendy Durante

Defendant (Respondent)

Sarit Bather and Moya Graham, for the appellant

Morris Cooper, for the respondents Douglas Christie and
    798068 Ontario Limited

Heard: October 17, 2014

On appeal from the judgment of Justice David G. Stinson
    of the Superior Court of Justice, dated October 21, 2010.

APPEAL BOOK ENDORSEMENT

[1]

Zesta Engineering Ltd. appeals against Christie and his company on the
    issues of costs and pre-judgment interest.

A.
Costs

[2]

Zesta settled and then abandoned its appeal on liability and damages,
    leaving costs and pre-judgment interest as the only outstanding issues.  It thus
    requires leave to appeal costs.  See
Murano v. Bank of Montreal
.

[3]

Zesta raises two issues requiring leave: first, it submits that the
    trial judge erred in failing to award costs of the first trial against Christie
    on the basis that as counsel he knowingly led false evidence at the first
    trial; and second, Zesta submits that the trial judge erred in failing to award
    substantial indemnity costs of the second trial.  Zesta contends that both
    errors are errors in principle, warranting our intervention.

[4]

We do not agree with Zestas submissions.  On Zestas first submission
    the trial judge declined to award costs of the first trial against Christie
    because Zestas claim  essentially that Christie committed a fraud on the
    court  was not pleaded at the second trial, and thus was not the subject of any
    finding.  This was a proper exercise of the trial judges discretion.

[5]

On Zestas second submission, the trial judge was aware of the competing
    considerations and applied the right test in declining to award substantial
    indemnity costs.  Again, we see no error in the exercise of his discretion.

[6]

Accordingly, leave to appeal costs is refused.

B.
Pre-judgment interest

[7]

Zesta claimed pre-judgment interest in the Statement of Claim.  Perhaps
    through inadvertence, pre-judgment interest was not dealt with at the close of
    the trial or in the submissions on costs.

[8]

In our view Zesta is entitled to pre-judgment interest.  There are no
    considerations that would warrant refusing to award it.  Accordingly, the
    appeal on pre-judgment interest is allowed, and Zesta is entitled to
    pre-judgment interest on the damages award against Christie and his company
    from the date the cause of action arose, which is the date of conversion.  The
    rate of pre-judgment interest shall be four per cent.

[9]

Zesta was partly successful on its appeal, and is entitled to a modest
    costs award.  We award it $5000, inclusive of disbursements and applicable
    taxes.