COURT OF APPEAL FOR ONTARIO

CITATION:
    Sub-Prime Mortgage Corporation v. Kaweesa, 2021 ONCA 215

DATE: 20210406

DOCKET:
    M52319 (C69127)

Paciocco
    J.A. (Motion Judge)

BETWEEN

Sub-Prime
    Mortgage Corporation and Elle Mortgage Corporation

Plaintiffs

(Respondents/Moving
    Parties)

and

David Kaweesa
,
Jacqueline Kaweesa
and Jeremy Kaweesa

Defendants

(
Appellants
/
Responding Parties
)

AND BETWEEN

David
    Kaweesa and Jacqueline Kaweesa

Plaintiffs
    by Counterclaim

(Appellants/Responding
    Parties)

and

Sub-Prime
    Mortgage Corporation, Elle Mortgage Corporation

and
    Terry Walman

Defendants
    by Counterclaim

(Respondents/Moving
    Parties)

Glenn Cohen, for the moving parties
    Sub-Prime Mortgage Corporation and Elle Mortgage Corporation

Ranjan Das, for the moving party Terry
    Walman

Matthew Tubie, for the responding
    parties

Heard:
    March 29, 2021 by video conference

ENDORSEMENT

FACTUAL BACKGROUND

[1]

The moving party mortgagee Elle Mortgage
    Corporation (Elle Mortgage) holds a first and fifth mortgage on a residential
    property at 68 Cotswold Crescent in the City of Toronto (the Cotswold
    Property or the Property). The moving party mortgagee Sub-Prime Mortgage Corporation
    (Sub-Prime) holds a second mortgage on the Cotswold Property. I shall refer
    to the moving parties Elle Mortgage and Sub-Prime collectively as the
    Mortgagees.

[2]

Title to the Cotswold Property is held by the responding
    party mortgagor Jacqueline Kaweesa (Jacqueline) and her son Jeremy Kaweesa
    (Jeremy). The mortgages held by the Mortgagees secure debts owed by
    Jacqueline and her husband, the responding party mortgagor David Kaweesa, who both
    currently reside at the Cotswold Property. Jeremy resides elsewhere.

[3]

The Cotswold Property is heavily encumbered,
    including by third and fourth mortgages and a priority lien in favour of the
    City of Toronto for unpaid taxes and water levies. There is also a certificate
    of lien in favour of the Minister of National Revenue against the Property
    dating back to April 2015.

[4]

The responding parties fell into arrears on the
    mortgages held by the Mortgagees. In a separate proceeding, the Mortgagees obtained
    default judgment against Jeremy. The mortgage enforcement action underlying
    this motion was discontinued as against Jeremy but proceeded against the responding
    parties, who issued a counterclaim against the Mortgagees and the moving party
    Terry Walman, the Mortgagees principal. Ranjan Das now represents Mr. Walman.

The Minutes of Settlement

[5]

After several settlement conferences conducted
    by Stinson J., the parties executed minutes of settlement dated November 3,
    2020, which underwent modest modifications in an addendum dated November 20,
    2020 (together, the Minutes of Settlement). I will now summarize the terms of
    the Minutes of Settlement which are germane to the motion before me.

[6]

First, the parties agreed that if the responding
    parties paid $2.1 million made out to Elle Mortgage on or before January 25,
    2021, mortgage discharges would be arranged and the instant action and counterclaim
    against Mr. Walman would be dismissed without costs.

[7]

Second, at para. 13 of the Minutes of Settlement,
    the responding parties agreed that if they did not make the $2.1 million
    payment before January 25, 2021, judgment in favour of the Mortgagees would
    immediately issue, requiring the responding parties to:

1)

pay to the Mortgagees the amount of $2.7 million
    inclusive of prejudgment interest and costs, plus post-judgment interest at a
    rate of 8.5 percent per annum;

2)

dismiss their counterclaim; and

3)

give possession of the Property over to the
    Mortgagees, who would have leave to issue a writ of possession.

[8]

Third, pursuant to para. 5, Mr. Das agreed to execute
    a letter set out in a schedule to the Minutes of Settlement and undertook to answer
    any potential queries from potential lenders by confirming the contents of the
    letter.

[9]

Fourth, pursuant to para. 19 (reproduced below at
    para. 24), the parties permitted Stinson J. to remain seized of the action for
    any purpose in connection with implementing these Minutes of Settlement.

Non-compliance with the Minutes of Settlement

[10]

The responding parties did not pay $2.1 million
    to the Mortgagees by the January 25, 2021 deadline. The Mortgagees brought a
    motion for judgment in accordance with the Minutes of Settlement. Having been
    unable to secure financing, the responding parties resisted the motion and requested
    an extension of the payment deadline. They argued the Minutes of Settlement had
    been frustrated by the ongoing COVID-19 pandemic and additional lockdown
    measures. The financing commitment letter the responding parties relied upon
    to support their extension request was unsigned and contained conditions that
    the responding parties clearly could not satisfy.

[11]

In reasons on the motion for judgment dated
    January 29, 2021, Stinson J. denied the extension. He ruled that, since he was
    enforcing the Minutes of Settlement, it was not open to the court to re-write
    the agreement by changing the deadline and that, in any event, the responding
    parties knew the Property was heavily encumbered and took a knowing risk that
    they may not be able to secure requisite financing in time to meet the
    deadline. According to Stinson J., all parties had been aware of the COVID-19-related
    restrictions when they executed the Minutes of Settlement and those restrictions
    were not of a nature that would preclude [the responding parties] from
    refinancing.

[12]

Stinson J. further ruled that the Minutes of
    Settlement were not frustrated because the pandemic (1) had not altered the
    obligations the responding parties had assumed, and (2) did not constitute a
    supervening event, as the pandemic was ongoing with no prospect of early
    resolution when the Minutes of Settlement were executed.

[13]

Stinson J. therefore granted judgment in favour
    of the moving parties on the terms provided for in the Minutes of Settlement;
    namely, a money judgment against the responding parties for $2.7 million, the
    termination of the counterclaim, and a writ of possession against the Property
    (the Judgment).

The Temporary Stay

[14]

However, Stinson J. added a term to the Judgment,
    at para. 5, temporarily staying enforcement of the writ of possession: enforcement
    of the writ of possession is stayed for 90 days after the termination of the
    State of Emergency in Ontario. I shall refer to this term as the Temporary
    Stay.

The Stay Condition

[15]

Stinson J. imposed two conditions on the Temporary
    Stay. Only one of those conditions, at para. 5(i) of the Judgment, is material
    to the motions before me. It stated that the Temporary Stay was conditional on
    the [responding parties] complying with the following term:

The [responding parties] shall pay to the City
    of Toronto in reduction of realty tax arrears $3,000.00, monthly on the 15
th
day of each month starting February 15, 2021.

I shall refer to this term as the Stay
    Condition.

[16]

The responding parties are in breach of the Stay
    Condition; they have not made the $3,000 monthly realty tax payments to date.
    Their counsel on this motion, who did not represent them before Stinson J., now
    argues that the responding parties are not required to comply with the Stay
    Condition because they claim to have an agreement with the City of Toronto relieving
    them from the obligation to make tax payments until this action is settled.

RELIEF SOUGHT BY THE MOVING PARTIES

[17]

The responding parties have appealed the
    Judgment to this court. In the meantime, the moving parties ask me to grant the
    following relief:

1)

An order that the responding parties post security for the moving
    parties costs of the appeal;

2)

An order lifting or revoking the Temporary Stay
    of the writ of possession contained in the Judgment;

3)

An order that the responding parties post
    further security of $11,037 for the costs awarded in the Judgment; and

4)

An order expediting the hearing of this appeal.

ANALYSIS

(1)     Security for Costs

[18]

To order a party to post security for costs, I
    must be persuaded that the preconditions provided for in the relevant rule are
    met and that it is in the interests of justice to exercise my discretion to
    make such an order:
Heidari v. Naghshbandi
, 2020 ONCA 757, 153 O.R.
    (3d) 756, at para. 6. The moving parties seek an order for security for costs
    under rr. 61.06(1)(a) and (c). I need only to consider r. 61.06(1)(a).

[19]

I cannot make an order pursuant to r. 61.06(1)(a)
    unless: (i) there is good reason to believe that the appeal is frivolous and
    vexatious, and (ii) the responding parties have insufficient assets in Ontario
    to pay the costs of their appeal.

(a)

There is good reason to believe the grounds of
    appeal are frivolous

[20]

With respect to the first precondition, I am
    satisfied there is good reason to believe that the grounds advanced by the
    responding parties in their appeal are frivolous, in that there is good
    reason to believe that those grounds are devoid of merit, with little prospect
    of success:
Heidari
, at para. 10.

The grounds of appeal regarding Mr. Das

[21]

The first two grounds of appeal are challenges
    to the conduct of Mr. Das which the responding parties say were raised before
    Stinson J. in the proceedings below. Namely, the responding parties allege that
    Mr. Das impeded the responding parties efforts to obtain financing by refusing
    or failing to answer potential queries from potential lenders confirming the
    contents of the executed letter, contrary to his obligations under para. 5 of
    the Minutes of Settlement (reproduced above at para. 8).

[22]

In my view, there is good reason to believe that
    these two grounds of appeal are devoid of merit and have little prospect of
    success on appeal. This is because there is good reason to believe the issues underlying
    these grounds of appeal were not raised before Stinson J. The moving parties
    point to four considerations which I find support my conclusion:

1)

Jacquelines first affidavit was executed on January 25, 2021 and
    filed before Stinson J. It says nothing about Mr. Das compliance with the
    Minutes of Settlement. Jacquelines second affidavit, which includes exhibited
    documents the responding parties claim to be relevant to Mr. Das compliance,
    was executed on March 23, 2021, long after Stinson J.s Judgment was rendered.

2)

Mr. Walmans affidavit, dated March 17, 2021,
    asserts that no evidence was presented and no argument made before Stinson J.
    relating to Mr. Das. Mr. Walman also attests: I attended the virtual
    hearing and I saw and heard [prior counsel for the responding parties]
    expressly state that her clients were not making allegations regarding Mr.
    Das. This assertion is uncontradicted on the evidence before me.

3)

Mr. Das appeared on this matter before Stinson
    J. Had his conduct been a material issue in the case, as alleged by the
    responding parties, he would have been in a position of conflict. It is
    unlikely that he would have been permitted to continue as counsel.

4)

In his thorough decision, Stinson J. makes no
    mention of what the responding parties now claim was a central issue before him.
    In my view, it is highly probable that Stinson J. would have addressed this
    issue if it had been raised before him.

The ground of appeal related to Stinson J.s
    role in the proceedings

[23]

One of the remaining two grounds of appeal is
    that Stinson J. erred in presiding over the motion for judgment after having
    presided at the settlement conferences. The responding parties contend that
    Stinson J. erred by treating the matter before him as a consent judgment, when
    in fact it was contested.

[24]

There is good reason to believe that this ground
    of appeal is also devoid of merit. Rule 50.10(1) permits pre-trial conference
    judges to preside at the trial of an action with the written consent of the
    parties. Paragraph 19 of the Minutes of Settlement provide as follows:

The parties agree that the Honourable Justice
    D. Stinson will, subject to His Honours discretion, remain seized of this
    action and [the action against Jeremy] for any purpose in connection with
    implementing these Minutes of Settlement including, if necessary, scheduling
    and dealing with next steps if Jeremy Kaweesa does not sign these Minutes of
    Settlement and the signing of Judgment on January 26, 2021.

[25]

This provision appears to constitute clear
    written consent by the parties to Stinson J. presiding over the motion for judgment.
    I am therefore satisfied that there are good grounds to believe that this
    ground of appeal is frivolous.

The ground of appeal regarding frustration of
    the Minutes of Settlement

[26]

The final ground of appeal is that Stinson J.
    erred in failing to find that the Minutes of Settlement were frustrated.
    Stinson J. held that the doctrine of frustration did not apply because: (1) the
    pandemic was not a supervening event, but was contemplated by the parties at
    the time of the settlement; and (2) the pandemic and the ensuing lockdown did
    not render the contract substantially different from the one which the parties
    had executed. Stinson J. also held that the pandemic had not precluded the
    responding parties from obtaining financing. Any one of these considerations
    condemns the frustration argument, indicating that this ground of appeal has
    little prospect of success. There are therefore grounds to believe this ground
    of appeal is also frivolous.

[27]

Accordingly, without declaring that the grounds
    of appeal are frivolous, I am satisfied that there are grounds to believe that all
    of them are frivolous because I find they are devoid of merit, offering little
    prospect of success.

(b)

There is good reason to believe the appeal is
    vexatious

[28]

Turning to the second component of the first
    precondition to r. 61.06(1)(a), I am also satisfied there is good reason to
    believe that the appeal is vexatious. An appeal is vexatious when it is
    taken to annoy or embarrass the respondent or conducted in a vexatious
    manner:
Heidari
, at para. 10.

[29]

The moving parties have identified good reasons to
    believe that the appeal is being conducted in a vexatious manner. The
    responding parties have provided nothing to support their claim that
    allegations about Mr. Das non-compliance with the Minutes of Settlement were
    raised before Stinson J. These allegations jeopardized Mr. Das ability to
    continue representing his client and impugn his good faith. The responding
    parties have also impugned the integrity and professionalism of Mr. Walman,
    which does nothing to advance their appeal on the merits. Like those against
    Mr. Das, the responding parties allegations against Mr. Walman are based on
    material that does not appear to have been before Stinson J.

[30]

On these bases, I find good reason to believe
    that the appeal is vexatious.

(c)

There is good reason to believe there are
    insufficient funds to pay the costs of the appeal

[31]

I am also satisfied there is good reason to
    believe the second precondition of r. 61.06(1)(a) is met; namely, that the
    responding parties have insufficient assets in Ontario to pay the costs of
    their appeal.

[32]

This issue was in controversy before me. The
    responding parties contend that the Cotswold Property is worth $3.5 million in
    the current market, based on a November 2020 appraisal. The moving parties
    contest this, relying on a drive-by appraisal of their own, from March 2021,
    which values the Property at between $2.7 and $2.8 million.

[33]

The Cotswold Property appears to be the sole
    asset claimed by the responding parties. Even if one accepts their valuation of
    $3.5 million, the moving parties argue that there is insufficient equity in the
    Property to cover the proven encumbrances plus the costs of the appeal.

[34]

I have reviewed the documentary evidence and I
    am persuaded that there is good reason to accept the moving parties position
    regarding the encumbrances on the Property. The responding parties have not
    been making payments on those encumbrances, in some cases for years. The
    accumulated interest, which only continues to mount, is staggering.

(d)

Conclusion on security for costs

[35]

The preconditions to making an order for
    security for costs pursuant to r. 61.06(1)(a) are therefore met and I
    exercise my discretion to order security for costs. Doing so is necessary to
    provide the moving parties, the respondents in the appeal, with a measure of
    protection for the costs of that appeal. I base the justness of this decision
    on the facial weakness of the appeal, the promptness with which the motion for
    security for costs was brought, and the serious risk that, without such an
    order, the moving parties will be unable to collect a costs award in the likely
    event that the appeal is unsuccessful.

[36]

The submissions made by the moving parties on
    the estimated costs of the appeal are reasonable. I order the responding
    parties to post $30,000 as security for costs in favour of the Mortgagees.

[37]

In addition, I order the responding parties to
    post $7,500 as security for costs in favour of Mr. Walman.

(2)    Lifting or Revoking the temporary STAY

[38]

I do not accept the responding parties position
    that they are not in breach of the Stay Condition. The responding parties have
    not proven the agreement with the City of Toronto that they say suspends
    their obligation to make the required tax payments. More importantly, even if such
    an agreement exists, it would not alter the condition that the Temporary Stay
    is premised upon; namely, that the responding parties pay $3,000 monthly to the
    City of Toronto. The Stay Condition is not contingent on the City of Toronto
    demanding payment; the payments are to be made in reduction of the realty tax
    arrears. The responding parties breached the Stay Condition in February 2021
    and again in March.

(a)

A conditional writ of possession is not automatically stayed on
    appeal

[39]

Nor do I accept the responding parties position
    that a term providing for a writ of possession is automatically stayed pursuant
    to r. 63.01(1). Rule 63.01(1) provides as follows:

The delivery of a notice of appeal from an
    interlocutory or final order stays, until the disposition of the appeal, any
    provision of the order for the payment of money, except a provision that awards
    support or enforces a support order.

[40]

The provision of the Judgment at issue provides
    conditionally for a writ of possession. It is not an order for the payment of
    money. In my view, the nature of an order for a writ of possession does not
    change because it is conditional on the payment of money to a third party. It
    is evident that r. 63.01(1) is intended to automatically stay monetary remedies
    secured by the respondent to an appeal, pending that appeal. Manifestly, r. 63.01(1)
    is not intended to stay
in rem
remedies, and the order requiring the
    responding parties to pay their realty taxes is not a monetary remedy in favour
    of the moving parties. Rather, it is a modest condition attaching to an
    indulgence granted by Stinson J. to the responding parties on this motion, no
    doubt intended to ameliorate the hardship of the
in rem
order for a
    writ of possession. If interpreted as suggested by the responding parties, the
    purpose of r. 63.01(1) would be exceeded and frustrated.

[41]

Accordingly, the conditional order for a writ of
    possession in the Judgment is not automatically stayed pending the responding
    parties appeal.

[42]

However, that does not end the matter. The Temporary
    Stay is tied to an
in rem
remedy and therefore remains in place
    pending appeal unless and until it is set aside, as the moving parties ask me
    to do.

(b)

The Temporary Stay should be lifted

[43]

The moving parties submit that, given the responding
    parties breach of the Stay Condition, the Temporary Stay should be lifted and
    a writ of possession should issue. They argue that since this matter is now
    before this court, Stinson J. is
functus
and lacks the jurisdiction to
    make such an order. Therefore, they submit that I have authority to grant the order
    sought as a single judge of the Court of Appeal, either by necessity or
    pursuant to s. 134(2) of the
Courts of Justice Act
, R.S.O. 1990, c.
    C.43 (
CJA
), which provides as follows:

On motion, a court to which a motion for leave
    to appeal is made or to which an appeal is taken may make any interim order
    that is considered just to prevent prejudice to a party pending the appeal.

[44]

I agree with the moving parties that
CJA
s.
    134(2) authorizes an appellate court to remove a stay as an interim order
    pending an appeal: Paul M. Perell and John W. Morden,
The Law of Civil Procedure
    in Ontario
, 4th ed. (Toronto: LexisNexis Canada, 2020), at ¶12.160. As
    acknowledged by Laskin J.A. (in Chambers), the jurisdiction conferred by s.
    134(2) may be exercised by a single judge of this court pursuant to s. 7(2) of
    the
CJA
:
Hakim Optical Laboratory Ltd. v. 1570710
    Ontario Ltd.
, 2010 ONCA 627, [2010] O.J. No. 4102, at para. 5.

[45]

The jurisdiction under
CJA
s. 134(2) is
    broad, but it is not unlimited. The focus of any remedy provided under s.
    134(2) must be on preventing prejudice in the context of the appeal and the
    interests of justice:
Waxman v. Waxman
(2003), 168 O.A.C. 217, at
    para. 21 (C.A.).

[46]

The test for granting relief under s. 134(2) is
    the same as that for granting a stay pending appeal pursuant to r. 63.02(1):
Abuzour
    v. Heydary
, 2015 ONCA 249, 126 O.R. (3d) 101, at para. 24. It is based on
    the test for an interlocutory injunction set out by the Supreme Court of Canada
    in
RJR-MacDonald Inc. v. Canada (Attorney General)
, [1994] 1 S.C.R.
    311, at p. 334. Namely, it must be established that it is in the interests of
    justice to exercise the judges discretion to lift or remove the stay, given
    the relative strengths and weaknesses of the following criteria:

1)

there is a serious question to be adjudicated on appeal;

2)

the moving party would suffer irreparable harm
    if the relief were refused; and

3)

the balance of convenience favours the moving
    party (i.e., the moving party would suffer greater harm if the relief were not
    granted than would the responding party if the relief were granted).

There is a serious question to be determined
    on appeal

[47]

Obviously, the relevant concern under the first
RJR-MacDonald
criterion is whether the moving party has identified a serious question to
    be adjudicated on appeal that supports the relief sought. Here, the moving
    parties contend that the trial judges discretionary Temporary Stay should be
    set aside, in part, because the grounds of appeal that are to be adjudicated are
    weak and unlikely to succeed. I have already found that there is good reason to
    believe that the grounds of appeal are frivolous. The position of the Mortgagees
    that will be adjudicated on the appeal  that the appeal should be rejected  is
    therefore a serious one, thereby satisfying the first
RJR-MacDonald
consideration.
    Indeed, the weakness of the appeal pushes strongly in favour of the relief
    sought.

The moving parties will suffer irreparable
    harm if the Stay is not lifted

[48]

I am also satisfied that unless the Temporary
    Stay is set aside, the moving parties will suffer irreparable harm, thereby supplying
    the prejudice required for relief under s. 134(2). Given the weakness of the
    grounds of appeal, there is every reason to believe that this appeal is being
    used as a litigation tactic to delay enforcement of the Minutes of Settlement. The
    responding parties have a strong incentive to employ such a tactic. They remain
    in the residence pending appeal and are not making payments on any of the
    mortgages against the Property, nor have they been paying the property taxes
    and water charges they are incurring.

[49]

As these expenses accumulate, the equity in the
    Cotswold Property is reduced, as is the strength of the Mortgagees security
    for the responding parties debt to them and to the City of Toronto, which the Mortgagees
    will have to discharge before recovering the funds they are owed. Meanwhile, as
    the unpaid interest on the mortgages accumulates, the Mortgagees investment in
    the Property is increasing, further reducing the prospect that full collection
    will ever be achieved. Moreover, if the Temporary Stay is not lifted and the
status
    quo
is maintained, the Mortgagees will be unable to access the capital they
    have tied up in the Property until the appeal is finalized.

[50]

These harms will be irreparable if the heavily encumbered
    Property proves insufficient as security for the Mortgagees investment, because
    it is evident that personal judgments against the responding parties will
    almost certainly go unpaid. The responding parties have an established history
    of not paying their debts.

The balance of convenience favours the moving
    parties

[51]

I am equally persuaded that the balance of
    convenience favours the moving parties. As I have already described, if the
    Temporary Stay is not lifted, the moving parties will suffer irreparable harm.

[52]

On the other hand, I appreciate that if
    possession is given over to the Mortgagees, the responding parties will be
    displaced from their residence and much of the benefit of their appeal would be
    lost. However, three things must be emphasized.

[53]

First, the responding parties agreed to pay the
    mortgage debts secured against the residence they now inhabit. Displacement in
    the event of non-payment was a consequence they accepted. There was no
    suggestion made before me that the money in question is not owed to the
    Mortgagees.

[54]

Second, as I have said, the responding parties are
    living in the residence without paying the expenses associated with doing so. In
    the circumstances, their moral and legal claim to entitlement to remain in the Property
    is diminished.

[55]

Third, the outcome of lifting the Temporary Stay
    is simply that the responding parties may lose possession of the Property before
    the expiry of the State of Emergency in Ontario, as provided for in the
    Judgment. In other words, lifting the Temporary Stay now does not remove a
    benefit the responding parties were guaranteed to enjoy until the end of their
    appeal.

[56]

In the circumstances, the responding parties
    argument that the balance of convenience lies with them is unpersuasive. I am
    satisfied that the balance of convenience favours the moving parties.

The interests of justice favour lifting the Temporary
    Stay

[57]

Finally, since the order I am being asked to
    make is discretionary, I will consider the relative equities at play.

[58]

First, the responding parties have shown an
    unwillingness to pay their debts, including to the Mortgagees, yet no
    explanation for this conduct has been offered.

[59]

Second, the responding parties freely entered into
    Minutes of Settlement with the benefit of legal representation, but then sought
    to disavow their agreement. Notwithstanding their attempt to do so, Stinson J.
    generously granted them an indulgence to ameliorate the hardship that the writ
    of possession would cause, subject to the very modest precondition that they
    begin repaying money they owe to the City of Toronto. They breached that
    precondition, and then claimed before me that an unproven deal with the City
    relieved them from having to do so.

[60]

Third, it appears that the responding parties
    have burdened the Mortgagees by complicating the underlying appeal with inappropriate
    and legally gratuitous allegations against two lawyers, Mr. Das and the moving
    party Mr. Walman.

[61]

In my view, the equities in this case militate
    in favour of granting the discretionary relief sought by the moving parties.

[62]

Based on the foregoing, I am satisfied that
    it is in the interests of justice to lift the Temporary Stay pursuant to s.
    134(2) of the
CJA
.

(3)    The Costs of the proceedings below

[63]

I am not prepared to order payment of the costs
    below. In the unlikely event that the appeal is successful, that costs order is
    apt to be set aside. Although I am empowered to do so, I would not exercise my
    discretion to order payment of a costs order that remains a live issue before
    this court.

(4)     Expediting the Appeal

[64]

In my view, given the orders I am making for
    security for costs and to lift the Temporary Stay, there is no need to expedite
    the appeal.

DISPOSITION

[65]

For the reasons set out above, I order the
    following:

1)

The motions for security for costs are granted. The responding
    parties shall post the following amounts within 10 business days of the release
    of this decision:

a.

$30,000 to secure the costs of the appeal to the
    moving party Mortgagees; and

b.

$7,500 to secure the costs of the appeal to the moving
    party Mr. Walman.

2)

The motion for an order lifting the Temporary
    Stay of enforcement of the writ of possession is granted. Paragraph 5 of
    Stinson J.s Judgment dated January 29, 2021 is hereby set aside.

3)

The motion for payment of the costs in the proceedings
    before Stinson J. is dismissed.

4)

The motion expediting the appeal is dismissed.

[66]

Costs in this motion are payable to the moving
    party Mortgagees in the combined amount of $2,500, inclusive of disbursements
    and HST. Costs on this motion are also payable to the moving party Mr. Walman in
    the amount of $1,000, inclusive of disbursements and HST.

David
    M. Paciocco J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Subway Franchise Restaurants of
    Canada Ltd. v. BMO Life Assurance Company, 2021 ONCA 349

DATE: 20210526

DOCKET: C68087

Juriansz, Huscroft and Jamal
    JJ.A.

BETWEEN

Subway Franchise Restaurants of
    Canada Ltd.

Applicant (Appellant)

and

BMO Life Assurance Company, Bank
    of Montreal, and Yonge Melinda Realty Inc.

Respondents (Respondents)

Christopher J. Cosgriffe and Mark T.
    Dzurman, for the appellant

Mitch Koczerginski, for the respondents

Heard: May 10, 2021 by video conference

On appeal from the judgment of Justice Edward
    M. Morgan of the Superior Court of Justice, dated January 22, 2020, with
    reasons reported at 2020 ONSC 371.

REASONS FOR DECISION

[1]

The appellant, Subway Franchise Restaurants of
    Canada Ltd. (Subway), is the tenant in a commercial lease and appeals from
    the dismissal of its application for relief from forfeiture after it failed to
    exercise an option to renew the lease within the timeframe specified in the
    lease.

[2]

The appellant is the franchisor of Subway
    restaurants in Canada. The appellant is provided with operational and
    administrative services by Franchise World Headquarters, LLC (FWH), a
    Connecticut limited liability company. FWH negotiates the leases that the
    appellant enters into and then sublets to its franchisees. The respondent, BMO
    Life Assurance Co., was not the original landlord but acquired this lease in
    October 2008.

[3]

The lease provided that the renewal option had
    to be exercised at least 9 months and not more than 12 months prior to the
    expiration of the term. However, the lease did not specify the expiration date
     it provided the lease would begin following fixturing and terminate 10 years
    later. The application judge found there was no contemporaneous documentation that
    indicated when the fixturing period ended and the lease began.

[4]

The documentation accompanying acquisition by
    BMO included an estoppel certificate executed by the appellant. The estoppel
    certificate certified that the lease expired on August 23, 2018. Consequently,
    the appellants option to renew had to be delivered between August 24, 2017 and
    November 23, 2017. The application judge found that the estoppel certificate
    was the one and only document that contain[ed] the termination date for the ten-year
    Lease. Both parties were in possession of the estoppel certificate.

[5]

FWHs central database recorded the lease as
    expiring on May 31, 2018. The application judge observed that the reason the incorrect
    date was entered into the FWH database was unexplained.

[6]

On February 1, 2017, FWH, on behalf of the
    appellant, sent a letter to BMO indicating its mistaken understanding of the
    term of the lease:

According to our records, the current lease
    term for the above-referenced location shall expire on May 31, 2018. Pursuant
    thereto, renewal notice is due on or before May 31, 2017. In the event that any
    of these dates differ from your records, please contact us in writing
    immediately as your silence will be an acknowledgement and authorization of
    their accuracy and our reliance.

[7]

The letter indicates the entries in the FWH
    database were incorrect in two respects. The termination date was wrong and the
    time when notice of renewal could be given was not consistent with the lease.

[8]

FWH had sent BMO similar letters in earlier
    years. All went unanswered. The application judge observed these were standard
    form letters automatically generated that the appellant sent to all of its
    landlords. FWH sent another letter to BMO on May 1, 2017 asking for
    confirmation that the lease expired on May 31, 2018 and the right of renewal
    had to be exercised before August 31, 2017. The FWH employee who authored the
    May 1, 2017 letter was aware of the date in the estoppel certificate and that
    the date in the estoppel certificate was different from the date in the FWH
    database.

[9]

In accordance with the incorrect date of May 31,
    2018 in the FWH database, the appellant purported to exercise the option to
    renew by providing notice on May 19, 2017. This attempt to renew was outside of
    the notice period.

[10]

The application judge rejected the appellants
    argument that BMO had failed to perform the contractual terms of the lease in
    good faith by remaining silent when the appellant had asked for confirmation of
    the termination date of the lease and the window for the leases renewal. In
    rejecting this argument, the application judge cited this courts decision in
CM
    Callow Inc. v. Zollinger
, 2018 ONCA 896, 429 D.L.R. (4th) 704. After the
    application judges decision, the Supreme Court reversed this courts decision:

C.M. Callow Inc. v. Zollinger
, 2020 SCC 45. In analysing the
    appellants submission that the application judge erred in finding BMO did not
    breach its duty of good faith, it is necessary to consider the application
    judges decision in light of the Supreme Courts decision in
Callow
.

[11]

The Supreme Courts decision in
Callow
does not disturb the application judges reasoning in this case. The
    application judge reasoned that the appellant had the estoppel certificate and
    did not make diligent efforts to comply with the terms of the lease. He said
    that the appellant could have and should have known and complied with the
    relevant dates for giving notice. Significantly, the application judge found
    that BMO did not intentionally obscure anything from the [appellant]. He
    found that BMO was up front and entirely transparent with the appellant, including
    disclosing its plans to redevelop the property and offering the appellant various
    forms of assistance and compensation for having to relocate.

[12]

The application judge concluded that the
    appellant could not cast blame on BMO because it had itself mis-diarized the
    termination date and so miscalculated the notice date for renewal of the Lease.
    He stated the duty of good faith did not require BMO to make sure that the
    appellant fulfilled its own obligations correctly.

[13]

The facts as found by the application judge are
    different from those in
Callow
in an important respect. In
Callow
the trial judge had found deception on the part of the defendant that was
    directly linked to the contract, and the breach of the duty of good faith was
    premised on that deception. Kasirer J. writing for himself and four other
    judges said, at para. 38,
In circumstances where a party lies to or
    knowingly misleads another
, a lack of a positive obligation of disclosure
    does not preclude an obligation to correct the false impression
created
    through its own actions
 (emphasis added). At para. 104, Kasirer J. spoke
    of the duty to correct a misapprehension, but this duty arose because of the
    defendants false representations. In the absence of the defendants false
    representations, the failure to disclose a material fact, without more, would
    not be contrary to the standard: at para. 77.

[14]

Brown J. writing for himself and two other
    judges in
Callow
, said, at para. 133, the question is whether
the
    defendants active conduct contributed to a misapprehension
that could be
    corrected only by disclosing additional information and then stated clearly
    that a contracting party is not required to correct a misapprehension to which
    it has not contributed (emphasis added).

[15]

The Supreme Courts decision in
Callow
does not support the appellants attempt to invoke the duty of good faith
    performance of a contract in the circumstances of this case. Here, there was no
    finding, or any basis in the evidence to find, that BMO lied or knowingly
    misled Subway, created a false impression through its own actions, or actively
    contributed to Subways misapprehension. The application judge applied the
    correct legal principles to the facts he found.

[16]

The record amply supported the application
    judges determination that the appellant failed to make diligent efforts to
    comply with the terms of the lease and his determination that the appellant
    failed to properly deliver the renewal notice.

[17]

The appeal is dismissed. Costs of the appeal are
    fixed in favour of the respondent in the amount of $25,000 all inclusive.

R.G. Juriansz J.A.

Grant Huscroft J.A.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: T.A.W. v. J.C.L., 2021 ONCA 192

DATE: 20210326

DOCKET: C67517

Fairburn A.C.J.O., van Rensburg
    and Huscroft JJ.A.

BETWEEN

T.A.W.

Plaintiff/Respondent (Appellant)

and

J.C.L.

Defendant/Moving Party (Respondent)

T.A.W., acting in person

Natai Shelsen, for the respondent

Heard: in writing

On
    appeal from the order of Justice Kevin B. Phillips of the Superior Court of
    Justice, dated September 6, 2019.

REASONS FOR DECISION

[1]

This is an appeal from a decision arising from a
    motion brought under r. 21.01(1)(b) of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194, largely striking out the appellants pleadings as disclosing no
    reasonable cause of action. In particular, the appellants claims regarding fraudulent
    misrepresentation, intentional infliction of mental distress, and negligent
    infliction of mental distress were struck from his statement of claim. The
    appellants claim respecting unjust enrichment was transferred to the Family
    Court.

[2]

In his reasons, the motion judge made a
    publication ban, on his own motion, preventing the publication of any
    information that may tend to identify the identity of the parties. We are
    continuing this publication ban on appeal.

[3]

The appellant argues that the motion judge erred
    in concluding that the claims of fraudulent misrepresentation and negligent
    infliction of mental distress disclosed no reasonable cause of action. He also
    maintains that the motion judge erred by refusing to allow the appellant to
    amend his statement of claim and by transferring his unjust enrichment claim to
    the Family Court. The appellant also contends that the motion judge erred in
    granting costs on a substantial indemnity basis.

[4]

We do not agree with the appellants submissions.
    The motion judges reasons are error free. We agree with the respondent that
    the motion judge correctly held that the appellant failed to identify a false
    statement made by the respondent, one that could constitute a fraudulent
    misrepresentation. The motion judge also correctly held that no duty of care
    existed between the appellant and respondent that could ground a claim for
    negligent infliction of mental distress. Nor do we see any basis upon which the
    pleadings could have been amended in a way that would have cured their
    deficiencies. The motion judge was also correct to transfer the appellants
    unjust enrichment claim to the Family Court, where the issues could be dealt
    with expeditiously. Finally, the motion judges costs order is entitled to significant
    deference. It cannot be said that the motion judge erred in principle or was
    plainly wrong in awarding costs on a substantial indemnity basis: see
Hamilton
    v. Open Window Bakery Ltd.
, 2004 SCC 9,
[2004] 1
    S.C.R. 303, at para. 27.

Disposition

[5]

For the reasons given by the motion judge, the
    appeal is dismissed.

[6]

As this was an appeal heard in writing, we will
    receive written submissions on costs. The respondent will submit her written
    submissions, of no more than three pages in length, no later than March 31,
    2021. The appellant will submit his written submissions, of no more than three
    pages in length, no later than April 7, 2021.

Fairburn
    A.C.J.O.

K.
    van Rensburg J.A.

Grant
    Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: T.A.W. v. J.C.L., 2021 ONCA 270

DATE: 20210426

DOCKET: C67517

Fairburn A.C.J.O., van Rensburg
    and Huscroft JJ.A.

BETWEEN

T.A.W.

Plaintiff/Respondent (Appellant)

and

J.C.L.

Defendant/Moving Party (Respondent)

T.A.W., acting in person

Natai Shelsen, for the respondent

Heard: in writing

On appeal from the order of Justice Kevin
    B. Phillips of the Superior Court of Justice, dated September 6, 2019.

COSTS ENDORSEMENT

[1]

This court issued reasons on March 26, 2021, dismissing
    the appeal from an order largely striking out the appellants pleadings as
    disclosing no reasonable cause of action, pursuant to r. 21.01(1)(b) of the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194.

[2]

As this was an appeal heard in writing, we invited
    the parties to file written submissions on costs. We have now received and reviewed
    those submissions. The respondent seeks costs on a substantial indemnity basis
    in the amount of $12,004.16. While the appellant acknowledges that the
    respondent was successful on appeal, he submits that costs should be awarded on
    a partial indemnity basis in the amount of $8,002.77.

[3]

Given the nature and the circumstances of the
    appeal, the respondent is entitled to her requested substantial indemnity
    costs.

[4]

Costs on a substantial indemnity basis are
    generally awarded only where there has been reprehensible, scandalous or
    outrageous conduct on the part of one of the parties:
Young v. Young
,
[1993] 4 S.C.R. 3, at p. 134;
Hamilton v. Open Window Bakery Ltd.
,
    2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26. Notably, the motion judge awarded
    costs on a substantial indemnity basis, because the appellants statement of
    claim was offensive and constituted a misogynistic attack on the respondent.
    We agree with that observation.

[5]

The appellant argues that his appeal to this
    court did not include any discriminatory reasoning. He also submits that the
    mere fact of bringing an appeal does not constitute a continuation of the
    conduct below. We do not accept this position.

[6]

Among other things, the appellants continuing
    conduct on appeal includes his reference to the respondent as engaging in a repeated
    pattern of deceitful, manipulative and predatory behaviour in her relationships
    with three other men. Moreover, as the Supreme Court of Canada indicated in
Hamilton
, at para. 26, allegations of
    fraud and dishonesty are serious and potentially very damaging to those accused
    of deception. Here, the appellant attempted to revitalize his claim of
    fraudulent misrepresentation against the respondent, one that constitutes a continuing
    unacceptable attack on her integrity and dignity.

[7]

In these circumstances, it is entirely
    appropriate to hold the appellant liable for costs on a substantial indemnity
    basis:
Hamilton
, at
    para. 26.

[8]

For the reasons above, we order that the
    appellant shall pay to the respondent the requested substantial indemnity costs
    in the amount of $12,004.16.

Fairburn
    A.C.J.O.

K.
    van Rensburg J.A.

Grant
    Huscroft J.A.


WARNING

This is a case under the
Child, Youth and
    Family Services Act, 2017
and subject to subsections 87(8) and 87(9) of this legislation.
These subsections and
    subsection 142(3) of
the
Child, Youth and Services Act, 2017
, which
deals with the consequences of failure to comply,
    read as follows:

87
(8)
Prohibition
    re identifying child

 No
    person shall publish or make public information that has the effect of
    identifying a child who is a witness at or a participant in a hearing or the
    subject of a proceeding, or the childs parent or foster parent or a member of
    the childs family.

(9)
Prohibition
    re identifying person charged
 The court may make an order prohibiting the publication of
    information that has the effect of identifying a person charged with an offence
    under this Part.

142
(3)
Offences
    re publication

 A person who contravenes
    subsection 87(8) or 134(11) (publication of identifying information) or an
    order prohibiting publication made under clause 87(7)(
c
) or subsection
    87(9), and a director, officer or employee of a corporation who authorizes,
    permits or concurs in such a contravention by the corporation, is guilty of an
    offence and on conviction is liable to a fine of not more than $10,000 or to
    imprisonment for a term of not more than three years, or to both.

COURT OF APPEAL FOR ONTARIO

CITATION: T.J.L. v. E.B., 2021 ONCA 75

DATE: 20210204

DOCKET: C68185

Roberts, Zarnett and Sossin JJ.A.

BETWEEN

T.J.L.

Applicant

(Respondent)

and

E.B.

Respondent

(Appellant)

E.B., acting in person

Michelle Dwyer, for the respondent

Heard: January 26, 2021 by
    video conference

On appeal from the order of Justice Donald
    J. Gordon of the Superior Court of Justice, dated October 25, 2019, with
    reasons reported at 2019 ONSC 6096.

REASONS FOR DECISION

[1]

The appellant mother appeals from aspects of the
    trial judges final order made in proceedings claiming divorce and orders concerning
    the custody, principal residence, and parenting of the parties young child. The
    appellant does not appeal from the trial judges divorce order nor the order
    for joint custody. She submits that the trial judge erred in giving the
    respondent father the final decision-making power for major decisions
    concerning their child in the event of disagreement and in ordering that the principal
    residence of their child remain with the respondent, as it has been since February
    2017. The appellant maintains their childs principal residence should be with
    her, the appellant should have final decision-making power for major decisions
    concerning their child in the event of disagreement, and the respondent should pay
    child support.

[2]

In her factum, the appellant has raised eight
    arguments for consideration on appeal. Except for the argument of reasonable
    apprehension of bias, which we turn to below, the other seven arguments essentially
    challenge the trial judges findings of fact that underpin his decision. In
    sum, what the appellant characterizes as the trial judges misapprehension of
    the facts and evidence or his failure to assess credibility do not amount to reversible
    errors on appeal. Rather, these represent the appellants disagreements with the
    trial judges assessment and weighing of the evidence, particularly what she
    contends was his failure to reject the respondents evidence.

[3]

Although submitted as errors of law, similarly,
    the appellants submissions about the trial judges application of the criteria
    under s. 24 of the
Childrens Law Reform Act
, R.S.O. 1990, c. C.12 (
CLRA
),
    and
Gordon v. Goertz
, [1996] 2 S.C.R. 27, illustrate her disagreement
    with the trial judges consideration of the evidence and his findings but fail
    to reveal any error in the trial judges analysis or conclusions. In essence,
    the appellant complains about the weight that the trial judge gave or did not
    give to the various factors that he considered to determine their childs principal
    residence and to allow the respondent to make the final major decisions about
    their child in the event of disagreement with the appellant.

[4]

The trial judge extensively reviewed the history
    of the parties relationship and the proceedings to provide context for his
    findings. He was clear that any past difficulties that the parties experienced
    were historical issues and neutral factors in his assessment regarding the best
    interests of their child. In the end, the trial judge gave significant weight
    to the importance of their childs stability and determined that it was in the
    childs best interests to have the principal residence remain with the
    respondent. The trial judges determination that the respondent has the final decision-making
    power for major decisions involving their child in the event of disagreement flowed
    from his determination of the principal residence of their child and,
    importantly, is not unlimited. In fact, the trial judges order indicates that
    decision-making is the joint responsibility of the parties and requires the parties
    to meaningfully consult, co-operate, and communicate with each other.

[5]

In determining the matters before him, the trial
    judge was properly guided by the primary consideration of the best interests of
    the child, as dictated by s. 24 of the
CLRA
. The trial judges
    findings are reasonable and supported by the evidence. It is the trial judges
    task, and not this courts role, to assess and weigh the evidence and make
    findings of fact and credibility. In child custody cases, the trial judges findings
    are subject to considerable deference on appeal, and intervention is only
    warranted when there is a material error, a serious misapprehension of the evidence,
    or an error in law:
Van de Perre v. Edwards
, 2001 SCC 60, [2001] 2
    S.C.R. 1014, at paras. 11, 13;
Perron v. Perron
, 2012 ONCA 811, 113
    O.R. (3d) 600, at para. 25, leave to appeal refused, [2013] S.C.C.A. No. 26. The
    appellant has not pointed to any such error or serious misapprehension of the
    evidence that would permit this court to intervene.

[6]

Turning to the appellants allegation of bias
    against the trial judge, as the appellant fairly acknowledges, the threshold
    for establishing bias is a high one. There is a presumption of fairness,
    impartiality, and integrity in the performance of the judicial role. The
    grounds and evidentiary support for an apprehension of bias must be
    substantial. See:
Miglin v. Miglin
(2001), 53 O.R. (3d) 641 (C.A.), at
    paras. 29-30, revd on other grounds 2003 SCC 24, [2003] 1 S.C.R. 303;
Yukon
    Francophone School Board, Education Area #23 v. Yukon (Attorney General)
,
    2015 SCC 25, [2015] 2 S.C.R. 282, at para. 30.

[7]

We see no basis for the appellants allegation
    of bias against the trial judge. In our view, a reasonable and informed person,
    viewing the matter realistically and practically, and having thought the matter
    through, would conclude that the trial judge decided fairly:
Committee for
    Justice and Liberty et al. v. National Energy Board et al.
, [1978] 1 S.C.R.
    369, at p. 394,
per
de Grandpré J. (dissenting).

[8]

Again, the trial judges thorough and careful
    reasons demonstrate that his overarching consideration in making his order
    concerning custody and principal residence of the child was the best interests
    of the parties young child. He meticulously and fairly assessed the evidence
    and reviewed the parties submissions. The appellants disagreement and disappointment
    with the trial judges findings do not establish bias.

[9]

Moreover, the appellants bias argument is significantly
    undermined by the trial judges acceptance of her position requesting joint custody.
    In changing the sole custody order in favour of the respondent to joint custody
    with the appellant, notwithstanding the past conflicts between the parties, the
    trial judge recognized that both parties are committed and able to work
    together to care for their child. The trial judge also made it clear that this obligation
    rests on both parties:

The parties must understand their communication
    is essential for the well-being of [their child]. [Their child] needs to know
    that both parents are co-operating and deciding matters together. The parties
    are given notice, by these reasons, that a record of their future communication
    will be of significant interest to the court on any future motion to change.

Disposition

[10]

For these reasons, the appeal is dismissed. As
    the trial judges order and the childs principal residence remain unaltered,
    there is no need to address the appellants arguments concerning child support.

[11]

The respondent is entitled to partial indemnity
    costs in the amount of $7,500, inclusive of disbursements and HST.

L.B.
    Roberts J.A.

B. Zarnett
    J.A
.

Sossin
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Toronto (City) v. Queen-St.
    Patrick Market Inc., 2021 ONCA 276

DATE: 20210427

DOCKET: C67921

Huscroft, Nordheimer and
    Harvison Young JJ.A.

BETWEEN

The City of Toronto

Applicant (Respondent)

and

Queen-St. Patrick Market Inc.

Respondent (Appellant)

Jeffrey Larry and Daniel Rosenbluth, for the appellant

Michele Ann Wright and Graham Thomson, for the respondent

Heard: April 26, 2021 by video conference

On appeal from the judgment of Justice Janet
    Leiper of the Superior Court of Justice, dated December 12, 2019.

APPEAL BOOK ENDORSEMENT

[1]

The appellant argues that the application judge
    erred in finding it was in breach of its lease with the respondents and denying
    it relief from forfeiture.

[2]

The appellants submissions essentially invite
    us to revisit the application judges findings. That is not our function on
    appeal. The application judges interpretation of the lease is entitled to
    deference. We see no error, let alone a palpable and overriding error that
    would justify this courts intervention. The appellant left the building vacant
    for almost two years. The application judges finding that this breached the
    use clause is amply supported by the record and we agree with her analysis that
    the respondent was entitled to terminate the lease as a result.

[3]

Nor is there any basis for interfering with the
    application judges decision denying the appellant relief from forfeiture. The
    appellant acknowledges that the application judge stated the relevant legal
    principles. She found that the appellants conduct revealed a pattern of
    non-compliance with the terms of the lease. Her decision to exercise her
    discretion to deny relief from forfeiture in these circumstances reveals no
    error of principle and is entitled to deference in the absence of a palpable
    and overriding error. We see none.

[4]

The appeal is dismissed. The respondent is
    entitled to its costs in the agreed amount of $15,000, inclusive of taxes and
    disbursements.


COURT OF APPEAL FOR ONTARIO

CITATION: Toronto-Dominion Bank v. 1633092
    Ontario Ltd., 2021 ONCA 6

DATE: 20210106

DOCKET: C67799

Pepall, Hourigan and Roberts
    JJ.A.

BETWEEN

The Toronto-Dominion Bank

Plaintiff

(Appellant/Respondent by way of cross-appeal)

and

1633092 Ontario Ltd., 2362378
    Ontario Inc., Matthew Rooney and Haley Rooney

Defendants

(Respondents/Appellants by way of cross-appeal)

Oren Chaimovitch and Shawna Sosnovich,
    for the appellant/respondent in cross-appeal

Andrew D. Ferguson, for the
    respondents/appellants in cross-appeal

Heard in writing

On appeal from the judgment of Justice
    Michelle OBonsawin of the Superior Court of Justice, dated March 7, 2019, with
    reasons reported at 2019 ONSC 1473.

COSTS ENDORSEMENT

[1]

The parties costs submissions were brought to the
    attention of the panel on January 4, 2021.

[2]

Having considered them, we are of the view that success
    on the appeal and the cross-appeal was divided and that the parties should bear
    their own costs.  We so order.

S.E. Pepall
    J.A.

C.W. Hourigan
    J.A.

L.B. Roberts
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Tsai v. Dugal, 2021 ONCA 170

DATE: 20210317

DOCKET: M52234 (C68741)

van
    Rensburg J.A. (Motions Judge)

BETWEEN

Wen-Chi
    Tsai

Applicant

(Appellant/Responding Party)

and

Lucien Dugal by his Estate Trustees,

Johanne Dugal Roussee and Luc Dugal

Respondent

(Respondent in Appeal/Moving Party)

Alexandra Carr, for the moving party

Michael S. Deverett, for the responding
    party

Heard: March 9, 2021 by video conference

REASONS
    FOR DECISION

[1]

The appellant is appealing a judgment after trial dismissing her claim for
    a constructive trust in a property that was owned by her common law spouse,
    Lucien Dugal. The two had lived together at the property for approximately nine
    years. The appellant commenced proceedings against Mr. Dugal following their
    separation in 2014. Mr. Dugal died in 2017 and the proceedings were continued against
    the estate.

[2]

The appellant had registered a certificate of pending litigation (CPL)
    against the property. Before the action was tried, the CPL was discharged to
    permit the sale of the property in exchange for $500,000 of the net proceeds of
    sale being retained in the real estate lawyers trust account. There is a court
    order providing for the retention of the funds until further order of the
    court or signed written agreement of the parties.

[3]

The respondent estate moves for an order for security for costs of the
    appeal and in the court below in the sum of $110,000 and for an order
    permitting the release of the funds from the lawyers trust account.

The motion for security for costs

[4]

The motion for security for costs is brought under r. 61.06(1)(a) and
    (c) of the
Rules of Civil Procedure
, R.R.O. 1990,
    Reg. 194. The test under (a) is conjunctive. The moving party must establish
    that the appeal is frivolous and vexatious, and that the appellant has
    insufficient assets in Ontario to pay the costs of the appeal. Rule 61.06(1)(c)
    provides that an order for security for costs may be ordered for other good
    reason. An order for security for costs is discretionary. The court must first
    consider the specific provisions of the Rules governing such motions and then
    consider the justness of the order sought in all the circumstances of the case:
Yaiguaje v. Chevron Corporation
, 2017 ONCA
    827, 138 O.R. (3d) 1, at para. 22.

[5]

Dealing first with r. 61.06(1)(a), the estate contends that the appeal
    is frivolous based on the notice of appeal which lists 36 grounds of appeal,
    the vast majority of which are alleged errors of fact, and vexatious based on
    the appellants pattern of conduct throughout the litigation. The estate also
    submits that there is no evidence that the appellant has sufficient equity in
    any property in Ontario such that she would be able to pay the costs of the appeal
    (estimated at $25,000) and the costs awarded in the court below ($85,000).

[6]

The appellant contends that her appeal is meritorious: the trial judge
    failed to consider certain evidence that supported her claim, and erred in
    focusing on whether there were direct contributions to the property rather than
    on the overall view of the parties relationship and whether there was a joint
    family venture.

[7]

On the second branch of the test under r. 61.06(1)(a), the appellant has
    provided evidence of her equity in a condominium unit (the York St. Property)
    to demonstrate that she has sufficient assets to pay costs of the appeal. The York
    St. Property had an assessed value of $646,000 as of January 1, 2016 (prior to
    its purchase). The appellant deposes that a similar condominium sold for
    $890,000 on July 8, 2020. As of February 24, 2021, the balance outstanding on a
    first mortgage to a commercial lender is $339,323.98 with additional credit
    available of $27,926.02. There is a second mortgage in favour of the appellants
    lawyer in the amount of $226,000, which was registered on August 24, 2020. The
    appellant states that, if this court were to award security for costs, she
    proposes to sign a direction to her lawyer to use the second mortgage as
    security for costs, and that she would be prejudiced if she were forced to sell
    the York St. Property in order to pay funds into court as security for costs.
    There was no cross-examination on the appellants affidavit.

[8]

Based on this record, the estate does not meet the test for security for
    costs under r. 61.06(1)(a).

[9]

The trial judge provided comprehensive reasons for judgment that appear
    to have addressed the appellants arguments and evidence. That said, I am
    unable to conclude that the appeal is frivolous, that is, that it is obviously
    devoid of merit, or that it is vexatious in the sense that it is brought only
    to annoy or harass the estate. I would however say that the prospects of
    success in the appeal are slim, which is a factor that I will return to when I
    consider whether security for costs should be granted under r. 61.06(1)(c).

[10]

As
    for the second requirement of r. 61.06(1)(a), I am satisfied that the appellant
    has equity of at least $50,000 in the York St. Property, and probably more. The
    estate estimates the costs of the appeal to be $25,000. On the evidence before
    the court the appellant has sufficient assets in Ontario to pay the costs of
    the appeal.

[11]

Accordingly,
    the estate is not entitled to security for costs under r. 61.06(1)(a).

[12]

I
    turn to r. 61.06(1)(c), whether there is other good reason to award security
    for costs. Here I am guided by the words of Laskin J.A. in
Combined Air Mechanical Services Inc. v. Flesch
, 2010
    ONCA 633, 268 O.A.C. 172, at para. 8, that, while the list of reasons
    justifying security under this rule is open-ended, the other good reason should
    be compelling. It must also be related to the purpose of ordering security:
    that a respondent is entitled to a measure of protection for costs in the
    proceeding under appeal. Security for costs has been awarded under this
    provision where an appeal has a low prospect of success and although the appellant
    has the ability to pay, it would be nearly impossible to collect costs: see
Perron v. Perron
, 2011 ONCA 776, 286 O.A.C. 178, at
    para. 23;
Henderson v. Wright
, 2016 ONCA 89,
    345 O.A.C. 231, at para. 27.

[13]

Apart
    from again relying on the contention that the appeal is without merit, the estate
    points to the fact that the appellant did not respond to repeated requests before
    the motion was brought that she provide evidence of her ability to pay costs,
    as well as the paucity of financial information that she provided in response
    to the motion. Although the estate provided evidence that the appellant sold a
    second condominium unit in September 2020, the appellant did not disclose what
    happened to the net proceeds. While the appellant was not obliged to provide
    disclosure of
all
of her assets and income in response to the motion, the
    fact that she provided information about only one asset  the York St. Property
     and her assertion that she would have to sell that asset if she were required
    to post security, suggests that the estate may have considerable difficulty
    recovering costs if the appellant loses the appeal. The estate also points to
    the appellants pattern of conduct over six years of litigation, including unpaid
    costs awards and her pursuit of various unmeritorious claims.

[14]

I
    am satisfied that in all the circumstances this is an appropriate case to award
    security for costs under r. 61.06(1)(c). In view of the low prospect of success
    in the appeal, the appellants pattern of conduct in the litigation, the very
    limited information she has provided about her ability to pay costs, the fact
    that she has recently encumbered the York St. Property as security for her own
    legal costs, and the assertion that she would need to sell the York St.
    Property to pay security for costs, there is a very real risk that the estate
    would be prevented from collecting its costs of the appeal from the appellant
    in the event of an unsuccessful appeal.

[15]

As
    for the amount of security for costs, the estate seeks security for the costs
    awarded by the trial judge, in addition to security for costs of the appeal.
    Such orders are not granted routinely: some justification must be offered by
    the moving party when the amount of security sought under r. 61.06 includes
    security for the costs awarded in the court below:
Foodinvest
    Limited v. Royal Bank of Canada
, 2020 ONCA 387. The estate did not
    provide any reasonable basis for requiring the appellant to post security for
    costs of the proceedings below. Accordingly, the estate is entitled to security
    for costs of the appeal, but not of the trial.

[16]

In
    the circumstances, I order that the appellant provide on or before March 31,
    2021, security for costs in the sum of $25,000. At the appellants option she
    may pay that amount into court, or alternatively provide to the estate trustees
    a mortgage of her interest in the York St. Property, with priority over her
    lawyers mortgage to be provided by way of a postponement of that mortgage. The
    required documents shall be prepared and registered at the appellants expense.
    In the event of the appellants non-compliance with this order, the appeal
    shall be dismissed.

The motion for the release of funds

[17]

The
    estate seeks an order for the release of the sum of $500,000, which has been
    held in trust since April 2019 from the net proceeds of sale of the property in
    which the appellant claims a constructive trust.

[18]

The
    funds were put in trust as a condition of the discharge of the appellants CPL
    as a result of a motion brought by the estate. Akbarali J. determined that $500,000
    was sufficient to cover the value of the interest in the property the appellant
    was then seeking and her costs. Akbarali J.s order of April 4, 2019, states:
    the respondents estate trustees shall execute an irrevocable direction to the
    estates real estate lawyer directing him or her to hold $500,000 in trust in
    order to satisfy the applicants potential claim against the estate and
    potential costs awarded to the applicant, until further order of the court or
    signed written agreement of the parties.

[19]

The
    estate contends that, although there was no request specifically for an order
    dealing with the funds in trust, the trial judges conclusion at para. 69 of
    her reasons for judgment that the estate trustees are at liberty to distribute
    the assets of the Estate in accordance with the provisions of [the deceaseds]
    will would permit the distribution of the funds held in trust. After filing
    her notice of appeal however, the appellant wrote to the real estate lawyer to
    ensure that the funds would not be released pending court order or agreement
    between the parties until after she had completed her appeals, including any
    appeal to the Supreme Court of Canada.

[20]

According
    to the affidavit of Luc Dugal, filed in support of this motion, the concern is
    that the funds in trust are earning a very low rate of interest, while the
    appellant is pursuing a meritless appeal with impunity. Mr. Dugal deposes that
    the estate trustees wish to distribute the estate, including the $500,000 which
    remains in trust, to the beneficiaries. He proposes that the estate trustees
    keep $110,000 in a joint investment account to be available in the event that
    the appellant is successful in her appeal.

[21]

At
    the hearing of this motion, however, the estates lawyer indicated that the
    estate trustees intend only to invest the funds, and not to distribute them.

[22]

I
    am not prepared to make the order requested. The order sought in the estates
    notice of motion is inconsistent with the intention of the order of Akbarali J.
    that the funds in trust stand in place of the CPL which was registered against
    the property to which the appellant asserted a claim. The appellant has an
    appeal as of right. The fact that the appeal appears at this stage to be weak
    is not sufficient reason to permit the funds to be released to the estate
    trustees for distribution at this time. Nor am I persuaded that the alternative
    form of order, raised in argument  that the estate trustees be permitted to hold
    and invest the funds at a higher rate of return  is necessary or advisable on
    this record.

Disposition

[23]

For
    these reasons the estate is entitled to an order for security for costs of the
    appeal in the terms indicated. The balance of the motion is dismissed. Costs of
    this motion are reserved to the panel hearing the appeal.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Tuffnail v. Meekes, 2021 ONCA 24

DATE:
    20210114

DOCKET: C66633, C64430 & C64479

Doherty and Hoy JJ.A. and
    Marrocco A.C.J.
[1]
(
ad hoc
)

DOCKET:
    C66633

BETWEEN

Gregory Alan Tuffnail, Patricia
    Diane Tuffnail, David Alan Tuffnail and Michael Alan Tuffnail

Plaintiffs (Appellants/Respondents by way of
    cross-appeal)

and

Steven Andrew Meekes,
State Farm Mutual Automobile Insurance Company
and
Sharon
    Carlene Drown as Litigation Administrator for the Estate of Thomas Michael
    Bolton

Defendants (
Respondent/Respondent
    and Appellant by way of cross-appeal
)

and

Steve
    Coulthard

Third Party (Respondent)

DOCKET: C64430

AND BETWEEN

Gregory Alan Tuffnail, Patricia
    Diane Tuffnail, David Alan Tuffnail and Michael Alan Tuffnail

Plaintiffs (Respondents)

and

Steven Andrew Meekes,
State Farm Mutual Automobile Insurance Company
and
    Sharon Carlene Drown as Litigation Administrator for the Estate of Thomas
    Michael Bolton

Defendants (
Appellant
)

and

Steve
    Coulthard

Third Party (Respondent)

DOCKET: C64479

AND BETWEEN

Gregory Alan Tuffnail, Patricia
    Diane Tuffnail, David Alan Tuffnail and Michael Alan Tuffnail

Plaintiffs (Respondents)

and

Steven Andrew Meekes,
State Farm Mutual Automobile Insurance Company
and
Sharon
    Carlene Drown as Litigation Administrator for the Estate of Thomas Michael
    Bolton

Defendants (
Respondents
)

and

Steve
    Coulthard

Third Party (Appellant)

Peter W. Kryworuk and Jacob R.W.
    Damstra, for State Farm Mutual Automobile Insurance Company

James D. Virtue and Rasha M. El-Tawil, for
    Gregory Alan Tuffnail, Patricia Diane Tuffnail, David Alan Tuffnail, and
    Michael Alan Tuffnail

Alan L. Rachlin, for the Litigation
    Administrator for the Estate of Thomas Michael Bolton

Brian A. Pickard, James K. Brown and Ayren
    J. Brown, for Steve Coulthard

Heard: January 14 and 15, 2020

On appeal from the judgment of Justice Helen
    A. Rady of the Superior Court of Justice, dated July 23, 2019, with reasons
    reported at 2017 ONSC 4610, 72 C.C.L.I. (5th) 281; 2018 ONSC 4113; 2019 ONSC
    525, [2019] I.L.R. I-6127; 2019 ONSC 1334; and 2019 ONSC 2399.

COSTS ENDORSEMENT

[1]

The parties have resolved the costs of the
    appeal in C64479. We have received and reviewed the costs submissions of State
    Farm Mutual Automobile Insurance Company and Gregory Alan Tuffnail, Patricia
    Diane Tuffnail, David Alan Tuffnail and Michael Alan Tuffnail in C64430 and
    C66633. Success in these inter-related appeals, which were heard together with
    C64479, was mixed. In the circumstances, there shall be no order as to costs of
    the appeals in C64430 and C66633.

Doherty
    J.A.

Alexandra
    Hoy J.A.

"Marrocco
    ACJSC

[1]

Marrocco A.C.J.
    retired from the Superior Court of Justice on November 10, 2020.