COURT OF APPEAL FOR ONTARIO

CITATION: Apotex Inc. v. Eli Lily and Company, 2015 ONCA 305

DATE: 20150505

DOCKET: C58293

Doherty, Feldman and Blair JJ.A.

BETWEEN

Apotex Inc.

(Plaintiff) Appellant

and

Eli Lilly and Company and Eli Lilly Canada Inc.

(Defendants) Respondents

David D. Conklin and Nando De Luca, for the appellant

Patrick Smith and Todd J. Burke, for the respondents

Heard: September 10, 2014

On appeal from the judgment of Justice Lax, Justice Sachs
    and Justice Grace of the Divisional Court, dated September 19, 2013, with
    reasons reported at 2013 ONSC 5937.

Feldman J.A.:

Overview

[1]

Eli Lilly and Company and Eli Lilly Canada Inc. (Lilly) owned the
    patent relating to the use of atomoxetine hydrochloride in the treatment of
    Attention Deficit Hyperactivity Disorder. Lilly marketed its brand of this
    product under the name Strattera. Lilly used the process established by the
Patented
    Medicines (Notice of Compliance) Regulations
, SOR/93-133, enacted under the
Patent Act
, R.S.C. 1985, c. P-4 (the PMNOC regulations), to keep Apotexs
    generic version of atomoxetine hydrochloride out of the market for two years.
    Because Lillys patent was later invalidated, Apotex became entitled under the PMNOC
    regulations to recover the damages it suffered during the period it was
    excluded from the market.

[2]

The issue on this appeal is whether Apotex also has a claim against Lilly
    for unjust enrichment that would entitle it to disgorgement of the monopolistic
    profits Lilly made on sales of Strattera during the same two-year period, over
    and above what Apotex would have earned from sales of its generic drug at lower
    prices.

[3]

On a motion brought by Lilly under rule 21.01(1)(b) of the
Rules of
    Civil Procedure
, R.R.O. 1990, Reg. 194, the motion judge refused to strike Apotexs
    claim for unjust enrichment. The Divisional Court reversed the motion judges
    decision and struck the claim, finding that it was plain and obvious that it
    could not reasonably succeed.

[4]

For the reasons that follow, I would dismiss the appeal.

Background

[5]

As this appeal arises in the context of a Rule 21 motion, the facts as pleaded
    in the Statement of Claim are taken to be true for the purpose of analyzing
    whether it is plain and obvious that the impugned claim cannot reasonably succeed.

[6]

Lilly obtained Patent No. 2,209,735 (the 735 Patent) for the use of
    atomoxetine hydrochloride in the treatment of Attention Deficit Hyperactivity Disorder
    in March 2001. In December 2004, it obtained the required Notice of Compliance
    (NOC) under the PMNOC regulations for its brand, Strattera, and entered the
    market as sole supplier. Pursuant to the PMNOC regulations, it later listed its
    patent on the Patent Register.

[7]

On October 10, 2008, Apotexs formulation of atomoxetine hydrochloride,
    Apo-Atomoxetine, became approvable under the
Food and Drug Regulations
, C.R.C.,
    c. 870. In order to obtain its own NOC, Apotex first served a Notice of
    Allegation on Lilly, a procedure required by the PMNOC regulations when a patent
    is listed for the same drug. Apotex alleged that the 735 Patent was invalid on
    the grounds of,
inter alia
, anticipation, obviousness and inutility.

[8]

In response, Lilly commenced a prohibition proceeding against Apotex in
    the Federal Court for an order prohibiting the issuance of an NOC to Apotex, in
    accordance with s. 6 of the PMNOC regulations. The effect of the prohibition proceeding
    was to prevent Apotex from obtaining an NOC and gaining entry to the market for
    two years or until the disposition of the prohibition proceeding, whichever
    occurred earlier: PMNOC regulations, ss. 7(1), 7(2)(b).

[9]

Around the same time, another generic, Teva Canada Limited (then
    Novapharm Limited), began an action in Federal Court under s. 60(1) of the
Patent
    Act
, challenging the validity of Lillys 735 Patent directly. On September
    14, 2010, in the Teva action, the Federal Court declared the 735 Patent to be
    invalid, based on want of disclosure by Lilly in its original patent
    application:
Novopharm Ltd. v. Eli Lilly and Company
, 2010 FC 915, 87
    C.P.R. (4th) 301, at para. 120. That decision was upheld by the Federal Court
    of Appeal: 2011 FCA 220, 94 C.P.R. (4th) 95, leave to appeal refused, [2011]
    S.C.C.A. No. 362. On September 21, 2010, as a result of the declaration of invalidity
    of the 735 Patent in the Teva action, which was an
in rem
finding,
    Apotex received its NOC for Apo-Atomoxetine.

[10]

Lillys
    prohibition application against Apotex was dismissed on October 29, 2010, again
    based on the invalidation of the 735 Patent in the Teva action:
Eli Lilly
    Canada Inc. v. Apotex Inc.
, 2010 FC 1065, 89 C.P.R. (4th) 345. Apotex then
    became entitled to recover from Lilly, under s. 8(1) of the PMNOC regulations,
    the loss it suffered as a result of its exclusion from the market.

[11]

During
    the period when Apotex was prevented from entering the market, from October 10,
    2008 through September 21, 2010, Lilly made sales of Strattera at monopolistic
    prices, earning revenue totalling approximately $70,000,000. The Statement of
    Claim alleges that Lilly made those sales at Apotexs expense and deprived Apotex
    of the ability to earn its own revenues. Apotex also pleads that those sales came
    at the expense of the public, who were forced to pay monopolistic prices for
    Strattera.

[12]

Apotex
    claims four heads of relief in its Statement of Claim: (1) relief under the
    Ontario
Statute of Monopolies
, R.S.O. 1897, c. 323
[1]
,
    and the
Statute of Monopolies
, 1623

(U.K.), 21 Jac. 1, c. 3
[2]
;
    (2) relief under s. 8 of the PMNOC regulations; (3) relief under the
Trade-marks
    Act
, R.S.C. 1985, c. T-13; and (4) relief based on Lillys unjust
    enrichment. The only head of relief at issue on appeal is the unjust enrichment
    claim.

[13]

Section
    8(1) of the PMNOC regulations provides that where the application of the person
    relying on the patent (in this case Lilly) is dismissed, that person is liable
    to the person that was kept out of the market (in this case Apotex) for any
    loss suffered during the period commencing when the NOC would have been issued
    and ending on the date the application was withdrawn, discontinued, dismissed
    or reversed.

[14]

Apotex
    is therefore entitled under s. 8(1) of the PMNOC regulations to seek
    compensation from Lilly for the losses it suffered during the exclusion period.
    However, in its unjust enrichment claim, Apotex seeks to recover the
    monopolistic profits Lilly earned during that period as a result of Apotexs
    exclusion from the market, an amount that Apotex would never have earned selling
    its generic product.

[15]

To
    support its claim for unjust enrichment, Apotex pleads: (1) it suffered a
    deprivation by the delay in the issuance of the NOC for its generic product; (2)
    Lilly enjoyed a corresponding benefit by an extension of its market exclusivity
    equivalent to Apotexs delay, resulting in a windfall to Lilly; and (3) there
    is no juristic reason for Lilly to retain that windfall. Apotex alleges that
    the delay was caused by the fact that Lilly consciously took advantage of the
    PMNOC Regulations in listing the 735 Patent and in commencing and prosecuting
    the above-noted Prohibition Proceeding. Under the
Trade-marks Act

    heading of its Statement of Claim, Apotex asserts that Lilly made materially
    false and misleading statements and representations in the context of the
    prohibition proceeding and in listing the 735 Patent on the Patent Register.

[16]

Finally,
    Apotex pleads that it is entitled to a remedy in unjust enrichment over and
    above its right to recovery of its losses under s. 8(1) of the PMNOC regulations
    because:

In the absence of a disgorgement of this unjust enrichment,
    every patentee would have an incentive to use the
PMNOC Regulations
in
    all cases to unjustly delay entry of every generic product at the expense of
    the Generic, in the knowledge that the revenues made by it would exceed the
    damages for which it will be liable for the delay caused to the Generic.

[17]

Lilly
    moved to strike a number of the claims in the Statement of Claim including the
    claim for unjust enrichment. The motion judge dismissed the motion to strike
    the
Trade-marks Act
claim and the unjust enrichment claim. The
Statute
    of Monopolies
claims are being heard separately. With regard to the unjust
    enrichment claim, the motion judge found that all three requirements for unjust
    enrichment had been pleaded by Apotex and that it was not plain and obvious
    that s. 8 of the PMNOC regulations operates as part of a complete code that limits
    plaintiffs from enforcing other existing rights or causes of action.

[18]

Lilly
    was granted leave to appeal to the Divisional Court only in respect of the
    unjust enrichment claim. The Divisional Court disagreed with the motion judges
    view of the operation of the PMNOC regulations. It found that the regulations
    do constitute a complete code of remedies arising out of their operation, though
    the court recognized that there could be another remedy for a cause of action
    that is totally independent of the regulatory regime. The court struck
    Apotexs claim for unjust enrichment on the basis that Apotex had not asserted
    an independent cause of action outside the ambit of the PMNOC regulations, as
    the impugned representations were made by Lilly on a form prescribed by the regulations.

Issue

[19]

The
    issue on appeal is whether the Divisional Court was correct to strike Apotexs
    claim for unjust enrichment under rule 21.01(1)(b) on the basis that it was
    plain and obvious that it had no reasonable prospect of success:
R. v. Imperial
    Tobacco Canada Ltd.
, 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17.

[20]

In
    order to succeed in a claim for unjust enrichment, a plaintiff must prove three
    components: (1) an enrichment of or benefit to the defendant; (2) a
    corresponding deprivation of the plaintiff; and (3) the absence of a juristic
    reason for the enrichment:
Kerr v. Baranow
, 2011 SCC 10, [2011] 1 S.C.R.
    269, at para. 32.

[21]

Though
    Apotex has pleaded the constituent elements of unjust enrichment, these are
    legal conclusions and are therefore subject to examination on a Rule 21 motion
    to strike. The question is whether the facts as pleaded, assumed to be true,
    could support a successful unjust enrichment claim:
Imperial Tobacco
,

at para. 22.

Analysis

(a)

The parties positions on this appeal

[22]

This
    is not the first case in which Apotex has tried to claim unjust enrichment
    against an original patentee. Apotex has sought to make this same claim in a
    number of cases both in the Federal Court and in the Ontario Superior Court of
    Justice.
[3]
The two main issues that previous cases have focused on were: (1) whether the
    PMNOC regulations are a complete code that precludes generic companies,
    through common law or equitable causes of action, from recovering more than is
    provided for under s. 8; and (2) whether the provisions of the PMNOC regulations
    provide a juristic reason for the monopoly period that is granted to the
    patent claimant, making a claim for unjust enrichment unsustainable.

[23]

Lillys
    position is that the issues raised on this appeal are identical to those
    already decided by the Federal Court of Appeal and this court, where Apotexs
    identical or nearly identical unjust enrichment claims have been struck
    under Rule 21 or dismissed under Rule 20. It argues that this court should
    uphold the Divisional Courts decision to strike the unjust enrichment claim on
    the basis that the allegations arise from the PMNOC regulations, which
    constitute a complete statutory code regulating how drugs are brought to
    market, and a valid juristic reason for Lilly to retain, and not be obliged to
    disgorge, its profits.

[24]

Apotexs
    position is that its claim for unjust enrichment in this case arises outside
    the PMNOC regulations because, as alleged in its Statement of Claim, it is not
    based on the dismissal of the prohibition proceeding. Rather, the claim is
    based on misrepresentations Lilly made when it obtained and then listed the
    735 Patent, and on Lillys conscious decision to nevertheless rely on its
    patent to invoke the prohibition proceeding. It argues that Lilly is therefore disentitled
    from relying on and obtaining the advantage of the PMNOC regulatory scheme and the
    limited remedy under s. 8.

[25]

Further,
    Apotex argues that because this case is distinguishable on its facts from other
    decided cases as a result of the finding of patent invalidity and the
    allegations of misrepresentation, the PMNOC regulations cannot provide a valid
    juristic reason for Lilly to be immune from an unjust enrichment claim.

(b)

The two bases upon which other courts have decided the unjust enrichment
    issue

(i)

Complete code

[26]

The
    Federal Court of Appeal has dismissed Apotexs claim for unjust enrichment in
    nearly identical contexts. The reasoning related to the jurisdiction of the Federal
    Court to grant equitable relief under s. 20(2) of the
Federal Courts Act
,
    R.S.C. 1985, c. F-7, and the exercise of that jurisdiction in the face of s. 8
    of the PMNOC regulations. Section 20(2) provides:

20(2) The Federal Court has concurrent
    jurisdiction in all cases, other than those mentioned in subsection (1) [where
    it has exclusive jurisdiction], in which a remedy is sought under the authority
    of an Act of Parliament or at law or in equity respecting any patent of
    invention, copyright, trade-mark, industrial design or topography referred to
    in paragraph (1)(
a
).

[27]

In
Apotex Inc. v. Eli Lilly Canada Inc.
[4]
,
    2011 FCA 358, 98 C.P.R. (4th) 323, leave to appeal denied, [2012] S.C.C.A. No.
    78, Noël J.A. refused to exercise the courts equitable jurisdiction to allow a
    remedy beyond s. 8 for a claim that was tied to the PMNOC regulations. He explained,
    at para. 18, that s. 8 reflects the decision of Parliament to strike a balance
    between the need for patent protection on the one hand and the timely entry of
    lower priced drugs on the market, on the other. The remedy available to a
    generic company in the event that its exclusion from the market is found to
    have been wrongful therefore represents a compromise. Further, Parliaments
    intention to limit a generic companys recovery to actual losses sustained was
    made explicit by the 2006 amendments to the PMNOC regulations, which removed
    the word profits from the available remedies under s. 8:
Regulations
    Amending the Patented Medicines (Notice of Compliance) Regulations
,
    SOR/2006-242. The accompanying explanation in the Regulatory Impact Analysis
    Statement (RIAS) confirmed that the purpose of the amendment was to preclude
    the argument that profits referred to the profits of the patentee. Noel J.A.
    reproduced, at para. 21, the relevant conclusion in the RIAS:

[T]he Government is aware of a number of ongoing section 8
    cases in which it is argued that in order for this provision to operate as a
    disincentive to improper use of the PM(NOC) Regulations by innovative
    companies, the term profits in this context must be understood to mean an
    accounting of the innovator's profits ... [T]he Government believes that this
    line of argument should no longer be open to generic companies that invoke
    section 8.

[28]

In
    various proceedings, Apotex has raised this very objection, namely, that the
    compromise struck under s. 8 does not sufficiently deter a patentee from
    wrongfully keeping a generic out of the market through the prohibition
    proceeding process  a process that allows the patentee to retain the
    monopolistic profits it earned during the exclusionary period.

[29]

Noël
    J.A. responded, at para. 23, that because Parliament had made a policy decision:

[W]hatever jurisdiction the Federal Court has under subsection
    20(2) of the
Federal Courts Act
to provide equitable relief, it cannot
    be used to grant a remedy which s. 8 was intended to exclude (compare
Radio
    Corp. of America v. Philco Corp. (Delaware)
(1966), 48 C.P.R. 128 (S.C.C.),
    at 136; see also
Zaidan Group Ltd. v. London (City)
(1990), 71 O.R. (2d)
    65 (Ont. C.A.), at 69, aff'd [1991] 3 S.C.R. 593 (S.C.C.)), unless a cause of
    action independent of the operation of s. 8 is alleged. Here, no such cause of
    action has been pled. The result is that Apotex claim for disgorgement of
    profits cannot possibly succeed.

[30]

The
    effect of this decision is that the Federal Court will not use its equitable
    jurisdiction to allow a generic to pursue a claim for disgorgement that arises
    out of the operation of the PMNOC regulations, because that would effectively
    thwart the intent of Parliament that the remedy under s. 8 is the exclusive
    remedy in the event of wrongful exclusion from the market under the regulations.
    However, the court did not close the door to an action for disgorgement that
    may arise independent of the PMNOC regulations.

[31]

The
    Divisional Court reached a similar conclusion in this case. It also rejected
    Apotexs submission that because Lilly made false and misleading statements
    in its patent application and its patent was found to be invalid, its claim is independent
    of the PMNOC regulations. To the contrary, because the impugned representations
    were made on forms prescribed under s. 4 of the PMNOC regulations, the
    Divisional Court concluded that the claim arose from the regulations.

[32]

The
    issue of whether s. 8 is a complete code that precludes the assertion of
    other remedies was also addressed by Smith J. in
Low v. Pfizer

Canada
    Inc.
, 2014 BCSC 1469
[5]
,
    in the context of a class action lawsuit involving the drug Viagra. The patent
    for Viagra had been declared invalid based on non-disclosure in a separate prohibition
    proceeding brought by Pfizer against the generic drug manufacturer, Teva, in
    response to Tevas application for an NOC.

[33]

In
Low
, the class plaintiffs are individuals who purchased Viagra during the
    period commencing when Teva filed its NOC application in 2006 and ending when
    the patent was declared invalid by the Supreme Court of Canada in 2012
[6]
.
    They assert, as Apotex asserts here, that the patentee wrongly obtained and
    relied on the patent, with the effect that the public paid an inflated price
    for the drug while Teva was excluded from the market. One of the causes of
    action asserted was unjust enrichment.

[34]

On
    a pre-certification motion, Pfizer argued that the
Patent Act
and the
    PMNOC regulations constitute a complete code and provide no remedy for members
    of the public. Smith J. rejected the complete code argument, at least in
    respect of the rights of consumers. He found, at para. 34, that although the
    legislation provides no right of action for consumers, neither does it expressly
    or implicitly bar a consumer action if the conduct that was in breach of
    statute is also relevant to a common law cause of action.

[35]

To
    summarize, the Divisional Court in this case and the Federal Court of Appeal
    have both held that the
Patent Act
and PMNOC regulations constitute a
    complete code with respect to available remedies for a breach of the
Patent
    Act
or its regulations. However, the British Columbia Court of Appeal in
Low
rejected that proposition, at least to the extent that it would preclude a potential
    common law right of action by consumers.

(ii)

Juristic reason

[36]

In
Apotex Inc. v
.
Abbott Laboratories Ltd.
, 2013 ONCA 555, this
    court considered whether the provisions of the PMNOC regulations provide a
    juristic reason for a patentee to retain its excess monopolistic profits and pay
    the generic only the amount of the loss it suffered during the period it was
    wrongly excluded from the market.

[37]

In
    upholding Quigley J.s decision to grant summary judgment to Abbott and dismiss
    Apotexs claim for unjust enrichment (2013 ONSC 356, 107 C.P.R. (4th) 332), this
    court held, at para. 6, that because the monopolistic profits earned by Abbott
    were due to the operation of the PMNOC regulations, which gave Abbott the right
    to be in the market to the exclusion of Apotex, [t]hose regulations constitute
    a valid juristic reason for [Abbotts] profits and revenues for the period in
    question. This precludes [Apotexs] claim for disgorgement. Apotex argues that
Abbott
is not determinative of the issue before this court, as it does
    not address whether the PMNOC regulations can provide a valid juristic reason
    for the enrichment of a patent holder that obtains and lists its patent through
    misrepresentation.

[38]

Smith
    J. accepted a similar argument in
Low
. In discussing whether the
Patent
    Act
and its regulations constituted a juristic reason that would negate a
    claim against Pfizer by consumers for unjust enrichment, he held that if, on
    the facts as proved, the patent was wrongfully obtained through knowing and
    deliberate non-disclosure, amounting to an abuse of the system, that may be
    sufficient to exclude the patent legislation as a sufficient juristic reason: at
    para. 85. Smith J. therefore found that the pleadings could disclose a cause of
    action in unjust enrichment.

(c)

Corresponding deprivation

[39]

Regardless
    of any potential merit of the complete code and juristic reason arguments
    on the facts as alleged by Apotex in this case, in my view there is a
    fundamental flaw in Apotexs claim for unjust enrichment that makes this
    doctrine unavailable to Apotex, irrespective of the nature of Lillys conduct
    that may be proved at a trial. The flaw is in the second requirement for a
    claim of unjust enrichment: a corresponding deprivation.

[40]

I
    acknowledge that this was not the basis of the Divisional Courts decision nor
    was it relied upon by the respondent in its factum or addressed by the
    respondent in oral argument. However, the court raised and discussed the issue
    with counsel for the appellant in oral argument, and it arises squarely as a
    legal issue on this appeal.
[7]

[41]

Put
    simply, Apotex was never deprived of the portion of Lillys revenues
    represented by its monopolistic profits because Apotex would never have earned
    those profits. This precludes reliance on unjust enrichment as a stand-alone cause
    of action, as it is pleaded in the Statement of Claim. Further, even if
    Apotexs pleadings could be read as also seeking unjust enrichment as a restitutionary
    remedy

for a tort committed against it, this is not a case in which the
    exceptional remedy of disgorgement would be available.

[42]

In
    the Statement of Claim, Apotex does not plead that it was deprived of Lillys
    monopolistic profits. Nor could it. In fact, Apotex pleads that Lillys sales
    came at the expense of Apotex who was kept off the market and thereby deprived
    of the ability to earn its own revenues, and also that those sales also came
    at the expense of the public who was forced to pay monopolistic prices for
    Strattera. In other words, the pleading itself makes a case for deprivation
of
    the public
of the difference between Apotexs prices and Lillys
    monopolistic prices. Though Apotex was clearly deprived of revenues and sales,
    the pleading does not allege that Apotex was deprived of those monopolistic profits.

[43]

The
    Supreme Court of Canada recently discussed the elements of unjust enrichment in
Professional Institute of the Public Service of Canada v. Canada (Attorney General)
,
    2012 SCC 71, [2012] 3 S.C.R. 660, at paras. 148-158. With respect to the first
    and second elements, the enrichment and the corresponding deprivation, the
    court explained, at para. 151, that they are the same thing from two different
    perspectives or two sides of the same coin. These elements are properly
    understood to connote a transfer of wealth: at para. 152. Since the purpose
    of the doctrine of unjust enrichment is to reverse unjust transfers of wealth,
    the first question the court asked in that case was whether the government was
    enriched at the plaintiffs expense. The court affirmed that the governments
    gain had to correspond to the plaintiffs loss for the unjust enrichment claim
    to succeed.

[44]

In
    the family law context, courts have recognized that there need not be quantifiable
    equivalence between the enrichment and the deprivation. In
Pettkus v. Becker
,
    [1980] 2 S.C.R. 834, Dickson J. applied the doctrine of unjust enrichment to
    find that a constructive trust arose where unmarried spouses each contributed
    to the successful establishment of a bee-keeping business and the purchase of
    property. The court held that the elements of unjust enrichment that formed the
    basis for the constructive trust  enrichment and corresponding deprivation
    were satisfied by Ms. Beckers contribution of unpaid labour over 19 years under
    the reasonable expectation that she had an interest in the farm. The court
    explained that a causal connection must exist between the enrichment and the
    deprivation. It stated, at p. 852:

For the unjust enrichment principle to apply it is obvious that
    some connection must be shown between the acquisition of property and
    corresponding deprivation. On the facts of this case, that test was met. The
    indirect contribution of money and the direct contribution of labour is clearly
    linked to the acquisition of property, the beneficial ownership of which is in
    dispute.

[45]

In
    Peter D. Maddaugh and John D. McCamus,
The Law of Restitution
,
    loose-leaf (2014-Rel. 14) (Toronto: Canada Law Book, 2004), the authors explain,
    at pp. 3-23 to 3-24, that [a]lthough there was no equivalence between the
    value of Ms. Beckers efforts and Mr. Pettkus benefits, those benefits did
    result from or, in the Courts words, there existed a causal connection
    between the services provided by the plaintiff and the benefits enjoyed by the
    defendant. Where that benefit should have accrued to the plaintiff, the
    corresponding deprivation factor will be met.

[46]

In
    the present case, Apotex cannot show that Lillys monopolistic profits should
    have accrued to it as a result of a legal entitlement or a contribution it made.
    The family law cases following
Pettkus
are therefore not applicable, nor
    are the traditional unjust enrichment cases involving transfers of wealth.

[47]

Apotex
    also points to some cases where a remedial claim for disgorgement of profits
    has been awarded despite the absence of any quantifiable loss to the plaintiff.
    These cases arise where a defendant has committed an underlying legal wrong
    against a plaintiff, and the ordinary damages remedy for the underlying wrong
    is inadequate. The wrong in these contexts typically consists of a breach of
    fiduciary duty or a breach of trust, and in some instances has involved
    criminal conduct, breach of contract or a tort committed against the plaintiff.
    Courts that have applied this restitutionary remedy in non-fiduciary contexts
    have explained that it is limited to exceptional cases, emphasizing that
    restitution damages are employed infrequently: see, e.g.,
Bank of America
    Canada v. Mutual Trust Co.
, 2002 SCC 43, [2002] S.C.R. 601, at para. 25,
    referred to by Winkler C.J.O. in
Cassano v. Toronto Dominion Bank
, 2007
    ONCA 781, 87 O.R. (3d) 401, at para. 27.

[48]

For
    example, in
Attorney General v. Blake
, [2000] UKHL 45, [2001] 1 A.C.
    268, a former member of the Secret Intelligence Service (SIS) of Great
    Britain disclosed valuable secrets to the Soviet Union. He was convicted of
    spying, and ultimately defected to the U.S.S.R. As an employee of the SIS, he
    had signed an undertaking not to divulge any official information that he acquired
    in the course of his employment. While living in the Soviet Union, he wrote a
    book disclosing former state secrets  although by then, much of the
    information was no longer secret. The Attorney General sued Blake for breach of
    contract and sought disgorgement of his profits.

[49]

The
    House of Lords ordered an accounting of profits. The court referred to this as
    an exceptional case of breach of contract, akin to a breach of fiduciary
    duty, where the normal remedies were inadequate and where deterrence of others
    was an important factor, thereby justifying the imposition in this case of the
    remedy of a full accounting of profit.

[50]

A
    similar approach was taken by the British Columbia Court of Appeal in
ICBC
    v. Lo,
2006 BCCA 584, 278 D.L.R. (4th) 148. In that case, a driving school
    owner and an employee of the British Columbia motor vehicle licensing agency
    conspired in a scheme where the driving school owner accepted bribes from
    unqualified students to obtain driving licenses, which were then issued by the licensing
    agency employee for a fee. The court held that both the licensing agency
    employee and the driving school owner were required to disgorge and account to the
    Insurance Corporation of British Columbia (ICBC) for all the monies they
    received in the illegal scheme.

[51]

The
    court reasoned, at paras. 59-60, that because the driving school owner had
    knowingly assisted a breach of trust against ICBC, and his assistance was
    essential to the bribery scheme, there was a clear causal connection
    between the wrongdoing to ICBC and the enrichment of both defendants. The driving
    school owner  although not in a trust relationship with ICBC  exposed ICBC
    to a substantial risk of loss through accidents caused by unqualified drivers:
    at para. 63. The court found that it would be equally inequitable to allow the
    driving school owner to profit from the illegal scheme as it would the licensing
    agency employee. Therefore, the court concluded that there was a proper
    foundation for a claim of unjust enrichment against him.

[52]

Academic
    commentators have taken different approaches to try to reconcile the two forms
    of unjust enrichment  the traditional transfer of wealth cases and the
    remedial profiting from wrong cases  within a coherent conceptual framework.
    Kevin McGuinness, in C. Graham, ed.,
Halsburys Laws of Canada  Restitution
,
    (Toronto: LexisNexis, 2012), at p. 645, differentiates between substantive and
    remedial restitution. Where disgorgement of profit is sought as a
remedy
for an independent legal wrong rather than asserted as a cause of action for
    unjust enrichment, the three components of unjust enrichment, including the corresponding
    deprivation factor, need not be met: McGuinness, at p. 606. On the other hand,
    Maddaugh and McCamus view the two categories of unjust enrichment  unearned
    windfall (classic unjust enrichment) and recovery of the profits of
    wrongdoing (remedial disgorgement)  as two rationales within a single broad
    principle: at pp. 3-4 to 3-6. In the second category, the corresponding
    deprivation factor is satisfied because the wrongdoers gain was made
    possible through the infliction of an injury upon or the infringement of an
    interest of the plaintiff and therefore the enrichment was at the plaintiffs
    expense: at p. 3-7.

[53]

In
    my view, cases relied upon by Apotex involving disgorgement of the profits of
    wrongdoing, such as
Blake
and
ICBC
, are not applicable in Apotexs
    case. First, Apotex has pleaded unjust enrichment as a distinct cause of action
    based on the windfall earned by Lilly due to the operation of the PMNOC regulations.
    However, the portion of the windfall that is not compensable under s. 8 of the
    PMNOC regulations, the monopolistic profit, was not in any way transferred from
    Apotex or lost by Apotex. Therefore, the unjust enrichment claim as a stand-alone
    cause of action must fail on the ground that there is no corresponding
    deprivation.

[54]

Second,
    even if it could be argued that Apotex has pleaded the elements of an
    underlying legal wrong  such as misrepresentation or abuse of process  and is
    seeking restitutionary unjust enrichment as a remedy, this is not a case where
    the extraordinary remedy of disgorgement of profits to Apotex is available.

[55]

This
    is not a bilateral context where Apotex is the only party that has been wronged
    by Lilly. Effectively, Apotex is asking the court to designate it as the
de
    facto
beneficiary of the wrongfully-obtained monopolistic profits despite
    recognizing in its pleadings that it was the public that suffered actual
    deprivation as a result of the monopolistic pricing. Unlike the plaintiffs in
    the profiting from wrong cases discussed above, Apotex is not positioned as
    the sole party with a legitimate right to enforce or deter the underlying
    wrong. The pecuniary interests of consumers, and potentially other generic
    companies, are also implicated. Lilly did not owe Apotex an equitable duty, nor
    is this case akin to the exceptional breach of contract cases where courts
    award restitution damages to a plaintiff in order to prevent a defendant from
    exploiting a bilateral agreement to its advantage.

[56]

Further, remedial unjust enrichment is an exceptional remedy that
    should not be invoked unless other available remedies are inadequate. The
    remedial unjust enrichment cases cited by Apotex all involve contexts where the
    ordinary remedies were insufficient to address the injury committed against the
    plaintiffs interest. In contrast, generic companies can be made whole through
    the process established under s. 8 of the PMNOC regulations, which requires
    significant compensation to be made by patent holders in the event of wrongful
    market exclusion.

[57]

In
Apotex Inc. v. Sanofi-Aventis
, 2014 FCA 68, 125 C.P.R. (4th) 403, affd, 2015 SCC 20,
the
    Federal Court of Appeal concluded, at para. 107, that s. 8 of the PMNOC
    regulations should be applied in a way that strives to compensate adequately
    and fairly the generic manufacturers, while avoiding windfalls. The court
    cited
Ratych v. Bloomer
, [1990] 1 S.C.R. 940, at p. 962, for the
    proposition that it is a fundamental principle of tort law that an injured
    person should be compensated for the full amount of its loss, but no more: at
    para. 109. This line of reasoning, recently affirmed by the Supreme Court, not
    only suggests that adequate compensation can be achieved by s. 8, but also that
    overcompensation should be avoided in this regulatory context.

[58]

Apotex
    argues that restricting a generic companys remedy to its actual losses under
    s. 8 creates an incentive for patentees to misuse the PMNOC regulations in
    order to make and retain windfall profits. While this argument raises important
    policy concerns, there are at least two answers to it.

[59]

First,
    there may be other potential mechanisms to ameliorate the alleged disincentive,
    such as disgorgement to the parties who actually suffered the loss equivalent
    to the windfall  namely, the members of the public who purchased the drug
    during the monopoly period. The class action in
Low
is an example.

[60]

Second,
    unlike in the profiting from wrong cases discussed above, there is a
    legislatively-enacted incentive structure that forms the context of this
    dispute. As the Federal Court of Appeal has observed, the s. 8 scheme was
    developed by Parliament as a compromise between the interests of the public in
    encouraging research and development of new patentable drugs and in encouraging
    generics to market drugs at lower prices. Parliament has considered whether
    generic companies should be entitled to the disgorgement of first persons
    profits in the circumstances contemplated by section 8, and has excluded this
    remedy ... This is a legislative policy issue with respect to which the will of
    Parliament is paramount:
Apotex Inc. v. Eli Lilly Canada Inc.
, 2011 FCA
    358, 98 C.P.R. (4th) 323, at para. 22, leave to appeal refused, [2012] S.C.C.A.
    No. 77 and No. 78. If the legislative balance is flawed, it is open to
    Parliament to reconsider the incentive structure, taking into account all
    relevant factors including any competing public policy concerns.

Conclusion

[61]

I
    would dismiss the appeal with costs of the appeal and the leave motion to
    Lilly, fixed at the agreed-upon amount of $17,500 inclusive of disbursements
    and HST. The parties have agreed that the costs below of $22,932.75 and $15,000
    would follow.

Released: DD MAY 5, 2015

K. Feldman J.A.

I agree. Doherty
    J.A.

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

[1]

An Act concerning Monopolies, and Dispensation with penal laws, etc.
,
    R.S.O. 1897, c. 323

[2]
An
    Act concerning Monopolies, and Dispensation with Penal Laws, and the
    Forfeitures thereof, 1623
(U.K.), 21 Jac. 1, c. 3.

[3]
See, e.g.,
Apotex Inc. v. Abbott Laboratories Ltd.
, 2013 ONSC 356,
    affd, 2013 ONCA 555;
Apotex Inc. v. Eli Lilly Canada Inc.
,

2009
    FC 693, 76 C.P.R. (4th) 361 (Prothonotary Tabib), affd, 2011 CarswellNat 6086,
    (18 April 2011), Ottawa, T-656-09 (F.C.) (Heneghan J.), affd, 2011 FCA 358,
    leave to appeal refused, [2012] S.C.C.A. No. 78;
Apotex Inc. v. Nycomed
    Canada Inc. and Nycomed GmbH
, (18 April 2011), Ottawa, T-1786-08 (F.C.)
    (Heneghan J.), affd, 2011 FCA 358, leave to appeal refused, [2012] S.C.C.A.
    No. 77.

[4]

This appeal also disposed of another matter,
Apotex Inc. v.
    Nycomed Canada Inc. and Nycomed GmbH
(A-173-11), affirming
Apotex Inc.
    v. Nycomed Canada Inc. and Nycomed GmbH
(18 April 2011), Ottawa,
    T-1786-08 (F.C.) (Heneghan J.)
. The appeals were heard
    together but not consolidated. Leave to appeal was also refused:
[2012]
    S.C.C.A. No. 77.

[5]
This decision has been appealed to the British Columbia Court of Appeal, and
    the hearing of the appeal is scheduled for September 2015.

[6]

Pfizer Canada Inc. v. Novopharm Ltd.
, 2012 SCC 60, [2012] 3 S.C.R. 625.

[7]
Paragraphs 30 and 31 of the reasons of the motion judge suggest that this argument
    was raised by Lilly on the motion and rejected by the motion judge.


COURT OF APPEAL FOR ONTARIO

CITATION: Armstrong (Re), 2015 ONCA 326

DATE: 20150508

DOCKET: C59329

Feldman, Pardu and Brown JJ.A.

IN THE MATTER OF: Luke Armstrong

AN APPEAL UNDER PART XX.1 OF THE
CODE

Anita Szigeti, for the appellant

Melanie de Wit, for the respondent, Person in Charge of
    Ontario Shores Centre for Mental Health Sciences

Frank Au, for the respondent, Attorney General for
    Ontario

Heard and released orally: April 30, 2015

On appeal against the disposition of the Ontario Review
    Board dated, June 27, 2014.

ENDORSEMENT

[1]

The appellant appeals the disposition of the Ontario Review Board, on
    the basis that its decision not to transfer him to the General Unit, from the
    Medium Secure Unit, was unreasonable when he had no violent incidents and had
    made some progress over the past year.  He also submits that the Board erred in
    finding that he had refused treatment and had made no progress.

[2]

In our view, based on the record before the Board and the evidence at
    the hearing, the Boards findings were reasonable and based on the evidence.
    We see no basis to interfere.  For example, the evidence was that the appellant
    attended programs but refused to cooperate, so was removed from them.  The
    Board characterized that as the appellant refusing to attend programs.  In our
    view, that was a reasonable conclusion based on the evidence.

[3]

The other issue raised is whether the Board failed to recognize a treatment
    impasse.  In our view, it did not.  As discussed by counsel before us, the
    appellant is not receiving treatment but is still demonstrating delusions and
    inappropriate behaviour, and is not able to progress through the system to a
    less restrictive situation.  The appellant asks, in the alternative, for an
    independent assessment on the basis of a treatment impasse.  The Crown submits
    in response that in its reasons, the Board recognized the possibility of
    progress if the appellant were to consent to medication and that his father had
    agreed to try to assist in that regard.

[4]

We note that the next annual review is
    to be held in June 2015.  At that time the Board will assess whether the
    appellant has made progress, whether the diagnosis needs to be revisited, and
    whether there is an impasse that merits an independent assessment.

[5]

We note that it is positive that the
    court was told that the appellant has been able to successfully take advantage
    of the six-hour passes in the community, with his father, that were granted in
    the last disposition.

K. Feldman J.A.

G. Pardu J.A.

"David Brown J.A."


COURT OF APPEAL FOR ONTARIO

CITATION: Bienstock v. Adenyo Inc., 2015 ONCA 310

DATE: 20150505

DOCKET: C59395

Simmons, Gillese and Rouleau JJ.A.

BETWEEN

Terry S. Bienstock

Plaintiff (Respondent)

and

Adenyo Inc., 7539088 Canada
Inc., Adenyo Acquisition Sub Inc., Adenyo USA Inc., Michael Orr, Michael
OConnor, Paul Heney, Tyler Nelson, David Wilson and Dennis Kavelman

Defendants (Appellants)

Alan L. W. DSilva and Aaron Kreaden, for the appellants

Ruzbeh Hosseini, for the respondent

Heard: April 27, 2015

On appeal from the judgment of Justice James A. Ramsay of
the Superior Court of Justice, dated August 29, 2014, with reasons reported at
2014 ONSC 4997.

ENDORSEMENT

[1]

The motion judge granted summary judgment to the
respondent against the corporate appellants, permitting the respondent to
enforce a Delaware judgment against the corporate appellants in Ontario.

[2]

The Delaware judgment required the corporate
appellants to pay to the respondent a sum in excess of USD$3 million.

[3]

In addition, based on a finding that a
fraudulent transfer of assets to Adenyo Inc. had taken place, the Delaware
judgment imposed a constructive trust in favour of the respondent over the
proceeds of sale of the assets of the corporate appellants to Motricity, Inc., including,
without limitation, the proceeds that remain in the possession of any and all
of [the corporate appellants] until such time as the full amount owing under
the judgment is paid by the corporate appellants.

[4]

The appellants appeal from the portion of the
summary judgment permitting the respondent to enforce the order for a
constructive trust in Ontario. Their primary argument is that the motion judge
failed to consider the impact of the order for a constructive trust on the
rights and interests of third parties  namely, the personal defendants (all of
whom are or were officers, directors or shareholders of one or more of the
corporate appellants) and other shareholders of the recently amalgamated
corporate appellant, 7539088 Canada Inc. The appellants contend that because of
this error the motion judges consideration of several of the
Pro
Swing
[1]
factors was flawed.

[5]

We do not
accept these submissions. The motion judges reasons demonstrate that he was
alive to the possibility that permitting the order for a constructive trust to
be enforced in Ontario had the potential to impact on the rights of third parties.
We see no basis on which to interfere with the motion judges exercise of
discretion. He granted summary judgment only against the corporate appellants. In
these circumstances, and on the record before him, the possibility that the
order for a constructive trust could be enforced in Ontario in a manner that is
unfair or unjust to third parties was entirely speculative. We see no error in
the motion judges consideration of the
Pro Swing
factors.

[6]

Costs of the
appeal are to the respondent on a partial indemnity scale fixed in the amount
of $25,000 inclusive of disbursements and applicable taxes.

Janet Simmons J.A.

Eileen E. Gillese J.A.

Paul
Rouleau J.A.

[1]

Pro Swing Inc. v. Elta Golf Inc.
, 2006 SCC 52, [2006] 2 S.C.R. 612.


COURT OF APPEAL FOR ONTARIO

CITATION: BMW Financial
    Services Canada v. McLean, 2015 ONCA 342

DATE: 20150514

DOCKET: C59659

Feldman, van Rensburg and Huscroft JJ.A.

BETWEEN

BMW Financial Services Canada, a division of BMW
    Canada Inc.

Plaintiff

(Respondent)

and

Amy McLean also known as Amy Katz also known as
    Amy Katz McLean also known as Amy A. Katz also known as Amy A. McLean also
    known as Amy A. Katz McLean

Defendant

(Appellant)

Howard E. Katz, for the appellant

Adam Nathanson, for the respondent

Heard: May 4, 2015

On appeal from the judgment of Justice Jane A. Milanetti
    of the Superior Court of Justice, dated November 14, 2014.

ENDORSEMENT

[1]

The appellant appeals from the judgment of Milanetti J. granting summary
    judgment to the respondent in an action arising out of an alleged default on a
    conditional sales agreement for the purchase of a used BMW car.

[2]

The appellant purchased the car from a BMW dealership and the respondent
    financed the purchase in two contracts dated August 7, 2009. The purchase price
    was $109,172.90.

[3]

The financing agreement assigned the dealerships rights and title to
    the car to the respondent, who registered a security interest in the car under
    the
Personal Property Security Act
, R.S.O. 1990, c. P.10 (the
PPSA
)
. The appellant returned to the
    dealership for service on several occasions and was ultimately unsatisfied with
    the car. She failed to keep up with the payment schedule and made a unilateral
    decision to return the car to the dealership on December 15, 2010.

[4]

The respondent sold the car at a public auction for less than the amount
    outstanding on the loan and brought an action against the appellant for the
    balance owing. Milanetti J. granted summary judgment for $40,865.92 plus 18%
    interest.

[5]

The appellant says that she raised a genuine issue requiring a trial.
    She says that the dealership made false and misleading representations to her
    that induced her to purchase the car. She submits that the relationship between
    the dealership and the respondent is a close and continuing one and, as a
    result, she should be able to raise any defences relevant to the dealership
    against the respondent. In addition, she says that the respondent did not provide
    the required notice of sale under the
PPSA
and sold the car for less
    than its market value.

[6]

We reject these arguments. As to the relationship between the dealership
    and the respondent, it was open to the motion judge to conclude that they are
    separate entities. The appellant led no evidence on the point and the
    respondent was never cross-examined on the affidavit it filed indicating its
    independence from the dealership. The evidence shows no more than that the trade
    name BMW is common to the dealer and the respondent.

[7]

Moreover, there was no evidence that the respondent played any role in
    the relationship between the appellant and dealership. This is not a case like
Federal
    Discount Corporation v. St. Pierre
, [1962] O.R. 310 (C.A.), on which the
    appellant relied. In the absence of evidence establishing a relationship
    between the dealership and respondent, any false or misleading representations
    the dealership may have made to the appellant are not relevant to the
    respondents actions.

[8]

The motion judge concluded that she did not need to resolve the
    conflicting evidence as to whether notice of the intent to sell the car was
    properly given under the
PPSA.
According
    to the motion judge,
even assuming a failure to provide notice
    occurred, it would not undermine the respondents right to claim for a
    deficiency under the contract. We agree with this conclusion.

[9]

Although a failure to provide notice under the
PPSA
gives rise
    to a right to compensation, it is for the appellant to establish damages and
    she did not do so. The appellant argues that the respondent failed to mitigate
    properly, but the motion judge was entitled to conclude that the appellant led
    insufficient evidence to permit a conclusion that the sale was improvident and
    that she incurred a compensable loss as a result.

[10]

Although
    the motion judges reasons are brief, her conclusion is supported on the evidentiary
    record that was before her. There is no reason to interfere with her conclusion
    that the sale of the vehicle at a public auction was a commercially reasonable
    approach for the respondent to have taken.

[11]

Accordingly,
    the appeal is dismissed.

[12]

The
    appellant shall pay the respondent costs of $8,000 inclusive of taxes and
    disbursements.

K.
    Feldman J.A.

K.
    van Rensburg J.A.

Grant
    Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Brown v. University of Windsor, 2015 ONCA 311

DATE:  20150504

DOCKET: C59465

Simmons, Gillese and Rouleau JJ.A.

BETWEEN

Brian E. Brown, on his own behalf and on behalf
    of all affected Members of the University of Windsor Faculty Association

Appellant (Plaintiff)

and

The University of Windsor

Defendant

and

Attorney General of Canada

Respondent (Proposed Defendant)

James A. Renaud and Matthew R. Todd, for the appellant

Michael J. Kennedy, for the respondent, The University
    of Windsor

Joseph Cheng, for the respondent, Attorney General of
    Canada

Heard: April 30, 2015

On appeal from the order of Justice Scott K. Campbell of
    the Superior Court of Justice, dated September 8, 2014.

APPEAL BOOK ENDORSEMENT

[1]

The appellant appeals from an order dismissing his motion to add the
    Attorney General of Canada as a party defendant to a pending action against the
    University of Windsor relating to the sharing of employment insurance premium reductions.
    The appellant proposed to assert three causes of action against the added
    defendant: breach of fiduciary duty; breach of trust; and negligence.

[2]

In our view, the appeal must be dismissed.  The motion judge set out the
    correct test for determining whether a party may be added to an action.  He
    also identified the proper elements of each cause of action the appellant
    proposed to assert and analyzed in relation to each whether the appellant had pleaded
    a tenable cause of action.  He concluded that the appellant had not.

[3]

We see no error in the motion judges analysis and agree with his
    conclusion in relation to each cause of action.

[4]

The appeal is therefore dismissed.  Costs of the appeal to the
    respondent on a partial indemnity scale, fixed in the amount of $7,500,
    including disbursements and applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: Buik v.
    Canasia Power Corp., 2015 ONCA 352

DATE: 20150515

DOCKET: C58918

Strathy C.J.O., LaForme and Tulloch JJ.A.

BETWEEN

Ann
    Buik, Sandra Buik and Catherine Buik, Trustees of the Estate of William

Buik, Deceased

Plaintiffs (Respondents)

and

Canasia Power Corp.

Defendant (Appellant)

Hari Nesathurai and Glen M. Perinot, for the appellant

H. Michael Rosenberg and Christine Wadsworth, for the respondent

Heard: May 12, 2015

On appeal from the judgment of Justice Susan G. Himel of
    the Superior Court of Justice, dated May 16, 2014, with reasons reported at
    2014 ONSC 2959 and reasons for costs reported at 2014 ONSC 4042.

ENDORSEMENT

[1]

Mr. Buik made a number of loans to the appellant, Canasia, between May
    2000 and April 2002. A promissory note, dated June 5, 2002, stated that the
    appellant owed $462,500 at 15% interest per annum, falling due on May 31, 2003.
    An additional unsigned promissory note, dated July 10, 2002, reflected a
    further loan of $4,000, bringing the total to $466,500.

[2]

Mr. Buik died in December 2002 leaving his estate to his wife. Following
    his death, a number of documents revealed the loans to Canasia, and inquiries
    were made as to their status. The following subsequently occurred: (i) Canasia
    wrote to Ms. Buik on May 31, 2008, acknowledging the loans; (ii) Canasia wrote
    again on June 25, 2009, indicating the loans were for $344,000; and (iii)
    Canasia sent Ms. Buik two cheques, each for $5,000, in August 2010.

[3]

On March 1, 2011, a written demand for payment was made to Canasia. No
    payments were received, an action was commenced and a trial ensued.

[4]

The trial judge concluded that: (i) the cause of action arose when the
    debt became due; (ii) the
Limitations Act
, R.S.O. 1990, c. L.15 applied
    because the cause of action arose before the
Limitations Act, 2002
,
    S.O. 2002, c. 24 Sched. B came into force; (iii) there was a six-year
    limitation period for repayment of a debt; and (iv) the limitation period was
    re-started when Canasia acknowledged the debt in 2008, re-started again with
    the acknowledgement letter of June 25, 2009, and again with the partial
    repayments in August 2010. Therefore, the limitation defence was dismissed.

[5]

The trial judge went on to hold that the estate was entitled to be paid
    approximately $2.3 million, representing the principal amounts owing and
    interest at the rate of 15% from the date the loans fell due until the date of
    trial. She awarded substantial indemnity costs in the amount of $105,051.08,
    because the promissory note provided for full reimbursement of enforcement
    costs and because the plaintiffs (respondents) had made a written offer to
    settle which was not accepted.

[6]

Canasia does not take issue with the finding of fact that a debt was
    owed. It raises two discrete grounds of appeal. First, it asserts that the
    trial judge should have considered and applied s. 38(3) of the
Trustee Act
,
    R.S.O. 1990, c. T.23, even though it was neither pleaded nor raised at trial.
    Second, it argues that she erred in finding that the communications between
    Canasia and Ms. Buik restarted the limitation period.

[7]

We reject both grounds of appeal.

1.       Section 38(3) of the
Trustee
    Act

[8]

In this court, for the first time, Canasia submits that the action is
    statute-barred because it was not brought within two years of Mr. Buiks death.
    For this argument, Canasia relies on
s. 38
(3)
of the
Trustee Act
, which
    requires that all actions brought by an estate under s. 38(1) be commenced
    within two years of the death of the deceased.

[9]

The appellant has given no satisfactory explanation for the failure to
    raise the
Trustee Act

in the court below. Although the appellant
    was self-represented at trial, the statement of defence was prepared by counsel
    and did not plead the
Trustee Act
.

[10]

As
    a general rule, appellate courts will not entertain an entirely new issue on
    appeal, because it is unfair to advance a new argument where the other party
    did not have the opportunity to lead evidence on the issue:
Kaiman v.
    Graham
, 2009 ONCA 77,
245 O.A.C. 130,
at para. 18.
    The appellant has not discharged the burden of persuading us that "all the
    facts necessary to address the point are before the court as fully as if the
    issue had been raised at trial". The respondent may well have adduced
    evidence to establish fraudulent concealment or to show that the case falls
    within the special circumstances doctrine, thereby making the two-year
    limitation period inapplicable. It would be unfair to permit the appellant to
    raise this new issue on appeal when the respondent would be prejudiced by the
    absence of an evidentiary foundation to respond.

[11]

We
    agree, in any event, with the respondent. Section 38(3) is not applicable to
    the case at bar.

[12]

The
    limitation period under the
Trustee Act
applies only to injuries to
    the deceased person.  In this case, Mr. Buik died before the promissory note
    matured, before Canasia was obligated to pay its debt, and before the cause of
    action arose.  Accordingly, the injury was to Mr. Buiks estate and s. 38(3) of
    the
Trustee Act
does not apply: see
Dundas

v. Zurich
    Canada
, 2012 ONCA 181,
109 O.R. (3d)
    521,
at paras. 57-59.

2.       Restarting the limitation
    period

[13]

The
    trial judge found the limitation period began to run on May 31, 2003, the date
    the note became payable: see
Skuy v. Greennough Harbour Corporation
,
    2012 ONSC 6998,
10 B.L.R. (5th) 146,
at
    paras. 42-43
.
She found that under the transition rules in the
Limitations
    Act, 2002
, specifically s. 24(5), the former six-year limitation period
    applied, because the claim was discovered before January 1, 2004. We see no
    error in this analysis.

[14]

The appellant submits, however,
    that the trial judge erred in finding the limitation period was extended
    because the appellant acknowledged the debt before the expiry of the limitation
    period. It submits the acknowledgment was not clear and unequivocal.

[15]

In the circumstances of this case
    we would not interfere with the conclusions of the trial judge that the
    limitation period was restarted as a result of Canasias actions. She found
    that Canasia both acknowledged the debt, and sufficiently identified it,
    through written correspondence and partial payment. The record fully supports her
    conclusions. On our review, it is clear that Canasia knew precisely what debt
    it was addressing with the respondent and what the partial payment was for.

[16]

As the appellant has demonstrated
    no palpable and overriding error in the trial judges findings of fact with
    respect to the appellants acknowledgment of the debt, part payment of the loan
    and consequent extension of the limitation period, we dismiss this ground of
    appeal.

Costs of the trial

[17]

Finally,
    Canasia also seeks to appeal the costs order made by the trial judge. It did
    not, however, address the leave requirement and made no oral submissions on
    this point. In any case, Canasia has not satisfied us that the trial judge made
    an error in principle or that the costs award is plainly wrong: see
Hamilton
    v. Open Window Bakery Ltd.
,
2004 SCC 9,
[2004] 1 S.C.R. 303,
at para. 27. The costs award was within the
    discretion of the trial judge and was supported by the factors she considered.

Disposition

[18]

For the foregoing reasons, we
    dismiss the appeal. Leave to appeal the costs award made by the trial judge is
    denied.

[19]

The respondent has provided us
    with no authority for an award of full indemnity costs in this court, based on
    the provision of the promissory note. We fix costs to the respondent in the
    amount of $15,000.00, inclusive of disbursements and all applicable taxes,
    payable forthwith.

G.R. Strathy C.J.O.

H.S.
    LaForme J.A.

M.
    Tulloch J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Canadian Real Estate Association v. American Home
    Assurance Company, 2015 ONCA 389

DATE: 20150529

DOCKET: C59889

Simmons, Epstein and Pardu JJ.A.

BETWEEN

The Canadian Real Estate Association

Plaintiff/Respondent

Appellant by
    Cross-Appeal

and

American
    Home Assurance Company, Chartis Insurance Company of Canada

Chubb
    Insurance Company of Canada,
Continental Casualty Company,

Encon
    Group Inc., Temple Insurance Company, XL Reinsurance

American
    Inc. Lloyds Underwriters, Certain Underwriters at Lloyds
,

Thomas Hanrahan and Zarek Taylor Grossman Hanrahan LLP

Defendants

(Appellants, Thomas
    Hanrahan and Zarek Taylor Grossman Hanrahan LLP)

(Respondent: Chubb
    Insurance Company of Canada)

William G. Scott, for the appellants, Thomas Hanrahan
    and Zarek Taylor Grossman Hanrahan LLP

Simon Bieber and Adrienne Lipsey, for the respondent
    Chubb Insurance Company of Canada

Peter Hagen, for the cross-appellant, Canadian Real
    Estate Association

Heard: May 25, 2015

On appeal from the order of Justice E.P. Belobaba of the
    Superior Court of Justice, dated December 19, 2014.

APPEAL BOOK ENDORSEMENT

[1]

We agree that the motion judge erred in striking the statement of claim under
    rule 21.01 based on expiry of the limitation period prior to a statement of
    defense and reply being delivered.  A plaintiff is under no obligation to plead
    matters relating to discoverability until a statement of defense pleading a
    limitation period is delivered:
Collins v. Cortez
, 2014 ONCA 685.

[2]

In our view, the exception in
Beardsley v. Ontario Provincial Police
(2001), 57 O.R. (3d) 1 (Ont. C.A.) must be confined to cases that involve no
    legal or factual complexities.

[3]

The appeal is allowed and the order below is set aside.

[4]

Costs of the appeal are payable by the respondent to the appellants and
    cross-appellant in the amount of $5,000 in total on a partial indemnity basis
    inclusive of disbursements and applicable taxes.  Costs of the motion below are
    payable by the respondent to the cross-appellant in the amount of $5,000
    inclusive of disbursements and applicable taxes and $2,000 to the appellants inclusive
    of disbursements and applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: CIBC Mortgages Inc. v. Mostafavi, 2015 ONCA 363

DATE: 20150528

DOCKET: C56178

Weiler, Epstein and Brown JJ.A.

BETWEEN

CIBC Mortgages Inc.

Plaintiff (
Respondent
)

and

Sayed Shahram Mostafavi and
Ghasem Gil

Defendants (
Appellant
)

and

Ghasem Gil

Plaintiff by Counterclaim (
Appellant
)

and

CIBC Mortgages Inc.
and Jacob O. Edeniyere

Defendants by Counterclaim (
Respondent
)

Patrick Di Monte, for the appellant

Daniel Waldman, for the respondent

Heard: February 11, 2015

On appeal from the judgment of Justice William Hourigan
    of the Superior Court of Justice, dated September 20, 2012.

Brown J.A.

Overview

[1]

The appellant, Ghasem Gil, appeals from the judgment of Hourigan J.,
    which granted summary judgment in favor of the respondent, CIBC Mortgages Inc. The
    judgment required Gil to pay the CIBC $814,318.26 under a mortgage on
    residential property located at 47 Tarmack Drive, Richmond Hill and to deliver
    up possession of the property to the CIBC.

[2]

Gil advances two main arguments on this appeal. First, Gil submits that
    the motion judge erred in finding that no genuine issue requiring a trial
    existed concerning the principal amount of the mortgage assumed by Gil. CIBC
    contends that Gil assumed the principal amount of $587,623.44, whereas Gil
    takes the position he assumed only a principal amount of $502,000. Second, Gil
    submits that the motion judge erred in finding that the CIBC had properly
    applied the $113,825.87 paid by Gil in March, 2007, against the Mortgage.

[3]

For the reasons set out below, I would dismiss the appeal.

Background

[4]

In March 2007, the registered owner of the property was Sayed Shahram
    Mostafavi. On March 2, 2007, Mostafavi granted a mortgage in favor of the CIBC
    on the property.  The Mortgage was for a principal amount of $588,147.06, at an
    interest rate of 5% per annum and had a five-year term.  It was registered
    against title on March 5, 2007.

[5]

On July 12, 2007, a transfer of the property from Mostafavi to Gil was
    registered against title. The transfer disclosed a nominal consideration of $2.00,
    but it had been made pursuant to a May 1, 2007, agreement of purchase and sale
    entered into between Gil and Mostafavi for a purchase price of $502,000. As
    part of that transaction, Gil executed a mortgage assumption agreement in favor
    of the CIBC dated June 1, 2007. In October, 2007, CIBC commenced this action
    against Mostafavi and Gil seeking possession of the property and payment from
    them of the amounts due under the Mortgage based upon a principal amount of $587,623.44.

[6]

In his statement of defence and counterclaim, Gil took the position that
    he had only assumed a principal debt of $502,000 under the Mortgage and, in his
    counterclaim, he sought a declaration that his liability under the Mortgage was
    limited to that amount. In his counterclaim, Gil also sought a declaration that
    any indebtedness under the Mortgage in excess of $502,000 had been released by
    the conduct of the defendants by counterclaim, the CIBC and the lawyer who had
    acted on the transfer and mortgage assumption transaction, Jacob O. Edeniyere.

[7]

In January 2008, CIBC gave Gil notice of sale under the Mortgage.

[8]

In 2009, CIBC brought a motion for partial summary judgment. That motion
    ultimately was dealt by the July 28, 2010 order of M.G.J. Quigley J. (the 2010
    Order) under which Gil was required to pay the CIBC the sum of $95,093.06 on
    account of arrears of principal and interest owing under the Mortgage, together
    with the amount of $18,732.81 on account of municipal property taxes paid by the
    CIBC and owing pursuant to the terms of the Mortgage. The 2010 Order also
    required Gil to make monthly mortgage payments of $2,517.13 commencing August
    1, 2010. Gil appealed that order to this court.

[9]

As will be described in more detail below, in March 2011 the parties
    ultimately agreed to set aside the 2010 Order on the basis that Gil would pay
    to the CIBC the amount of $113,825.87, which he did on March 25, 2011. Gil made
    no further payments under the Mortgage.

[10]

In
    July 2012 the CIBC brought a further motion for summary judgment against Gil
    seeking payment of all amounts due under the Mortgage, together with possession
    of the property. The motion judge granted the summary judgment requested.

Standard of review

[11]

In
Hryniak v. Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court
    of Canada held that absent an error of law, the exercise of powers by a motion
    judge under rule 20 of the
Rules of Civil Procedure
attracts
    deference. Whether a genuine issue requiring a trial exists is a question of
    mixed fact and law. Where there is no extricable error in principle, findings
    of mixed fact and law should not be overturned, absent palpable and overriding
    error:
Hryniak
, at para. 81.

First Issue: The Principal
    Amount Assumed by Gil

[12]

Gil
    admits that he assumed the Mortgage granted by Mostafavi to the CIBC, but he
    submits that a genuine issue requiring a trial exists as to whether he assumed
    the full principal amount of $587,623.44, or the lesser amount of $502,000. In
    dealing with this argument, the motion judge wrote, at para. 21:

Turning first to the argument that Mr. Gil only agreed to
    assume a mortgage of $502,000, there is no dispute that Mr. Gil executed the
    Assumption Agreement. The CIBC is entitled to rely on that agreement, the
    effect of which when coupled with s. 20 of the
Mortgages Act
, is that
    Mr. Gil became responsible for all obligations under the mortgage.

[13]

Ample
    evidence supported that finding. Gil did not dispute that he had signed the
    June 1, 2007, Assumption Agreement. Under the Assumption Agreement, Gil agreed
    to pay all sums due under the Mortgage, which was identified as a mortgage
    dated March 5, 2007, and registered as Instrument YR955870. That was the
    Mortgage granted by Mostafavi to the CIBC. On its face, the Mortgage recorded
    the principal amount as $588,147.06, at an interest rate of 5% per annum.

[14]

Although
    Gil deposed that under his transaction with Mostafavi he would acquire the property
    and assume a mortgage debt to the CIBC quantified at $502,000.00 at 2.2% per
    annum, those terms do not appear in the May 1, 2007, agreement of purchase and
    sale entered into between Gil and Mostafavi. Under that agreement, Gil agreed
    to acquire the property for $502,000, and Schedule A to the agreement stated
    that the offer was conditional upon Gils arranging to his satisfaction a new
    first mortgage within five business days of the acceptance of this agreement. In
    the result, Gil did not arrange a new first mortgage. Instead, he signed the
    Assumption Agreement, which referred only to the mortgage terms contained in
    the Mortgage granted by Mostafavi to the CIBC.  Further, Gil did not depose
    that the CIBC had made any representation to him that his obligations under the
    Mortgage would be limited to a principal amount of $502,000.

[15]

Gil
    pleaded that his liability to the CIBC should be limited by reason of the
    conduct of Edeniyere. Gil deposed that Edeniyere never told him that under the
    Mortgage he might be liable for the amount of $587,623.44. Instead, Gil
    believed the debt being assumed was $502,000no onetold me otherwise.

[16]

The
    motion judge rejected Gils submission that, in the circumstances of this case,
    Edeniyeres alleged conduct excused Gil from some of his liability to the CIBC,
    writing, at para. 22:

Even accepting for present purposes that Mr. Edeniyere was
    negligent, that does not impact on the obligations of Mr. Gill to the CIBC. In
    short, all of the allegations made regarding Mr. Edeniyere, including his
    failure to explain that there was a variable interest rate, amount to a
    solicitors negligence claim. This is not a case of fraud, as no fraud is
    alleged.

[17]

In
    my view, two aspects of the facts of this case support the motion judges
    conclusion that the CIBC was entitled to summary judgment on the Mortgage debt
    notwithstanding Gils allegations against Edeniyere. First, there was no
    evidence that Edeniyere had made any misrepresentation to Gil about the terms
    of the assumed Mortgage. Nor was there any evidence from Gil that Edeniyere had
    remained silent in the face of Gils description of his purported incorrect
    understanding of the terms of the assumed Mortgage. Indeed, Gils own evidence
    was that he never met personally with Edeniyere and he never had anything
    explained to him by a lawyer.

[18]

Second,
    although in resisting liability for the principal amount of $587,623.44 Gil
    relied heavily on his assertion that his deal with Mostafavi only required him
    to assume a mortgage in the amount of $502,000 at an annual rate of interest of
    2.2%, Gil provided no explanation about how the agreement of purchase and sale
    changed from one in which Gil would arrange a new first mortgage for the property
    into one under which Gil assumed the Mortgage. Moreover, Gil adduced no
    evidence that either the CIBC or Edeniyere had been involved in his decision to
    make that change in his purchase transaction with Mostafavi.

[19]

In
    sum, I see no reviewable error by the motion judge in respect of his finding
    that Gil assumed the Mortgage with the CIBC with a principal amount of $587,623.44.

Second Issue: Payments by Gil under the Mortgage

[20]

The
    second main ground of appeal Gil advances is that the motion judge failed to
    treat properly two payments Gil had made under the Mortgage, specifically a
    cheque in the amount of $15,336.03 the CIBC had received from him on November
    8, 2007, as well as the amount of $113,825.87 Gil had paid to the CIBCs lawyers
    by cheque dated March 25, 2011. Gil submits that the CIBC wrongfully returned
    the first payment and mis-applied the second payment to the Mortgage by failing
    to allocate a sufficient portion of the payment to the reduction of the
    Mortgage principal. According to Gill, had the CIBC properly applied both
    payments, the Mortgage would have been brought into good standing in November
    2007 and March 2011.

[21]

The
    motion judge did not accept those submissions, writing, at para. 25:

The arguments with respect to whether money should have been
    applied against the mortgage also do not provide a defence given that the
    mortgage has now matured. In any event, I accept the evidence of Lanning
    Abramson that the payment of $15,336.03 was insufficient to bring the mortgage
    into good standing.

[22]

As
    to the payment of $15,336.03, Lanning Abramson, a lawyer acting for the CIBC,
    had filed an affidavit on the summary judgment motion that explained, in
    detail, why the November 2007 payment of $15,336.03 had not covered the arrears
    of principal, interest and taxes then outstanding. In light of that evidence,
    the motion judge did not commit any palpable and overriding error of fact when he
    concluded that Gils November 2007 payment was insufficient to bring the
    Mortgage into good standing.

[23]

As
    to the payment of $113,825.87, on March 25, 2011, uncertainty about the
    explanation contained in the appeal record about how the CIBC had applied that
    amount against the Mortgage led the panel to write to counsel on February 12,
    2015, requesting clarification of the actual allocation of that amount. By
    letter dated March 26, 2015, counsel for the CIBC provided the requested information
    which clarified evidence already in the record. Gils counsel filed responding
    submissions dated May 25, 2015, which enclosed some correspondence that had
    passed between counsel in the period March to June, 2011 concerning the
    settlement of the appeal of the 2010 Order.

[24]

From
    the record, it is clear that the March 25, 2011, payment by Gil originated in
    the 2010 Order. In granting that partial summary judgment, the court had ordered
    Gil to pay $95,093.06 on account of arrears of principal and interest, and
    $18,732.81 on account of municipal property tax arrears paid by the CIBC. Gil
    appealed that order. His appeal was dismissed for failure to perfect it within
    time. By order dated March 3, 2011, Simmons J.A. set aside the registrars
    dismissal of the appeal, set a timetable for the perfection of the appeal, and
    ordered Gil to pay counsel for the CIBC the amounts ordered by Quigley J.

[25]

Andrina
    McMillan, a Risk Manager at the CIBC, deposed on the summary judgment motion that
    the parties had agreed to set aside the 2010 Order on the basis that the
    $113,825.87 paid by Gil would be applied to reduce the Mortgage debt in accordance
    with the terms of the Mortgage, and not as directed in the 2010 Order. Ms.
    McMillan deposed that, as a result of that agreement, only $3,187.39 of the
    amount Gil paid went to reduce the principal owing under the Mortgage, with the
    rest applied against accumulated interest, legal fees and property tax arrears.

[26]

The
    written submissions requested by the panel included correspondence between
    counsel dated May 12, 2011, and June 2, 2011, which confirmed that the
    $113,825.87 would be applied to the Mortgage debt in accordance with the terms
    of the Mortgage. As well, the March 26, 2015, correspondence from CIBCs
    counsel provided the details about the allocation of the $113,825.08 to
    principal, interest, taxes and legal fees.

[27]

The
    evidence therefore supported the finding that the CIBCs application of the
    $113,825.87 did not bring the Mortgage into good standing.

Disposition

[28]

For
    these reasons, I see no basis upon which to interfere with the motion judges
    grant of summary judgment in favor of the CIBC. Accordingly, I would dismiss
    the appeal.

[29]

As
    to costs, the CIBC submits that it should be awarded substantial indemnity
    costs in the amount of $17,805.24. Gil submits that costs of only $7,500, all
    in, should be awarded to the successful party. Although by the terms of the
    Mortgage the CIBC is entitled to substantial indemnity costs, I consider
    unreasonable its request to recover costs for both senior and junior counsel in
    this relatively straight-forward appeal. Accordingly, I would order Gil to pay
    the CIBC its reasonable substantial indemnity costs fixed in the amount of
    $14,000, inclusive of disbursements and HST.

Released: May 28, 2015 (GE)

David
    Brown J.A.

I
    agree K.M. Weiler J.A.

I
    agree Gloria Epstein J.A.