COURT OF APPEAL FOR ONTARIO

CITATION: Kobylecki v. Toronto
    (Municipality), 2013 ONCA 280

DATE: 20130429

DOCKET: C56210

Laskin, Cronk and Hoy JJ.A.

BETWEEN

James Walter Kobylecki

Plaintiff (Appellant)

and

The Municipality of Metropolitan Toronto and                                                     Fer-Pal
    Construction Ltd.

Defendants (Respondents)

Rod Byrnes, for the appellant

Natalie D. Kolos, for the respondent, The Municipality
    of Metropolitan Toronto

Andrew L. Mercer, for the respondent, Fer-Pal
    Construction Ltd.

Heard: April 26, 2013

On appeal from the order of Justice Gloria R. Klowak of
    the Superior Court of Justice, dated September 20, 2012.

APPEAL BOOK ENDORSEMENT

[1]

The plaintiff was injured in August 2003.  He issued a claim against the
    city in November 2003, and added Fer-Pal as a defendant in August 2005.
    However, in nearly 10 years since the accident occurred, virtually nothing
    further has taken place in this litigation.  Over long periods of time, the
    plaintiff has taken no steps at all to move this action forward.  No
    discoveries have yet been held, and the action has not been set down for trial.

[2]

Both defendants brought motions to dismiss the action for delay under r.
    24.01(1)(c), which entitles  a defendant to move to dismiss an action for delay
    if the action has not been set down for trial within six months of the close of
    pleadings.

[3]

Klowak J. granted the motion.  She concluded that the presumption of
    prejudice that arises from a lengthy delay had not been rebutted.  We are not
    persuaded that she erred in her conclusion.  The plaintiff has simply filed no
    evidence to show the absence of prejudice.  In particular, the plaintiff has
    filed no evidence to support his contention that he is the only material
    witness to the incident, and that the rest of the relevant evidence is
    documentary.

[4]

In addition, the plaintiff has produced no medical records showing the
    course of his injuries after his initial treatment.

[5]

As we have found no error in the reasons of the motion judge, the appeal
    is dismissed with costs, which we fix as follows:

·

The Municipality of Metropolitan Toronto - $5,500, inclusive of
    disbursements and applicable taxes

·

Fer-Pal Construction Ltd. - $2,500, inclusive of disbursements
    and applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: Lantheus Medical Imaging Inc. v. Atomic Energy of
    Canada Ltd., 2013 ONCA 264

DATE: 20130429

DOCKET: C55753

Cronk, LaForme and Hoy JJ.A.

BETWEEN

Lantheus Medical Imaging Inc.

Applicant (Appellant)

and

Atomic Energy of Canada Limited

Respondent (Respondent)

H. Scott Fairley and Brett Harrison, for the appellant

Don Jack and Matthew Diskin, for the respondent

Heard: February 4, 2013

On appeal from the order of
    Justice Kenneth L. Campbell of the Superior Court of Justice, dated June 19,
    2012, with reasons reported at 2012 ONSC 3582.

Hoy
    J.A.:

I

OVERVIEW

The conceptual rationale underlying
    the doctrine of Crown immunity is obscure It seems to conflict with the basic
    notions of equality before the law. The more active government becomes in
    activities that had once been considered the preserve of private persons, the
    less easy it is to understand why the Crown need be, or ought to be, in a
    position different from the subject.

Dickson J. in
R. v. Eldorado Nuclear Ltd.
,

[1983]
    2 S.C.R. 551 at 558.

[1]

This appeal considers whether agents in right of the Crown in Canada are
    immune from s. 60 of the
Ontario Evidence Act
, R.S.O. 1990, c. E.23,
    (the OEA), which authorizes the enforcement in Ontario of a letter of request
    (LoR)
[1]
from a foreign court, and, if not, whether the LoR in this case should be
    enforced against the respondent, Atomic Energy of Canada Limited (AECL).

[2]

AECL is a federal Crown corporation and Crown agent that is, an agent
    of the Government of Canada. The Minister of Natural Resources holds its shares
    in trust for Her Majesty the Queen in Right of Canada.

[3]

The appellant, Lantheus Medical Imaging Inc. (Lantheus), is an
    American pharmaceutical company.  It used medical isotopes produced by AECLs
    nuclear reactor at Chalk River in the manufacture of its products. Lantheus
    suffered losses estimated at more than $70 million as a result of the extended
    closure of AECLs reactor commencing in May of 2009.

[4]

Lantheus sought indemnification from its insurer, which provides
    coverage for contingent business interruption losses; the insurer denied
    coverage, asserting that the reactor shutdown resulted from an excluded peril
    under its policy.  Lantheus commenced a lawsuit against its insurer:
Lantheus
    Medical Imaging Inc. v. Zurich Am. Ins. Co.
, No. 10 Civ. 9371 (JPO) (JLC) (the
    U.S. Action).

[5]

Lantheus first sought information from AECL through a request for
    documentary production under the
Access to Information Act
, R.S.C.
    1985, c. A-1. Shortly after it filed that request, it obtained a LoR from the
    United States District Court for the Southern District of New York (the U.S.
    Court).  The LoR seeks the assistance of the courts of this province in
    securing documents and
viva voce
testimony from AECL for use at the
    trial of the U.S. Action.  The U.S. Court held that the LoR sought vital
    evidence and that the cause of the water leakis a significant, if not
    determining factor in Lantheus ability to obtain insurance.

[6]

Lantheus then commenced an application in Ontario, under s. 60 of the
    OEA, seeking an order giving effect in Ontario to the LoR.  The application
    judge concluded that the court did not have jurisdiction to enforce the LoR
    against AECL because it enjoyed Crown immunity and, even if jurisdiction
    existed, Lantheus had not satisfied the applicable legal standard for the
    enforcement of letters rogatory in Ontario. He accordingly dismissed the
    application.

[7]

Lantheus appeals, arguing both that the court had jurisdiction pursuant
    to s. 27 of the
Crown Liability and Proceedings Act
, R.S.C. 1985, c.
    C-50 (the CLPA), and that the application judge erred in his application of
    the applicable test in determining whether, if the court had jurisdiction, it
    should exercise its discretion to enforce the LoR.

[8]

I address each of these issues in turn.

II

THE JURISDICTIONAL ISSUE- CROWN IMMUNITY

(1)

An overview of the issues

[9]

The central question on the jurisdictional issue is whether s. 60 of the
    OEA binds the Crown. This turns on whether it is a rule of practice and
    procedure within the meaning of that term in s. 27 of the CLPA or a rule of
    evidence, as the application judge found.

[10]

Section
    60 of the OEA provides as follows:

60. (1) Where it is made to appear to the Superior
    Court of Justice or a judge thereof, that a court or tribunal of competent
    jurisdiction in a foreign country has duly authorized, by commission, order or
    other process, for a purpose for which a letter of request could be issued
    under the rules of court, the obtaining of the testimony in or in relation to
    an action, suit or proceeding pending in or before such foreign court or
    tribunal, of a witness out of the jurisdiction thereof and within the
    jurisdiction of the court or judge so applied to, such court or judge may order
    the examination of such witness before the person appointed, and in the manner
    and form directed by the commission, order or other process, and may, by the
    same or by a subsequent order, command the attendance of a person named therein
    for the purpose of being examined, or the production of a writing or other
    document or thing mentioned in the order, and may give all such directions as
    to the time and place of the examination, and all other matters connected
    therewith as seem proper, and the order may be enforced, and any disobedience
    thereto punished, in like manner as in the case of an order made by the court
    or judge in an action pending in the court or before a judge of the court.

Payment of expenses of witness

(2)  A
    person whose attendance is so ordered is entitled to the like conduct money and
    payment for expenses and loss of time as upon attendance at a trial in the Superior
    Court of Justice.

Right of refusal to answer questions and to produce
    documents

(3)  A
    person examined under such commission, order or process has the like right to
    object to answer questions tending to criminate himself or herself, and to
    refuse to answer any questions that, in an action pending in the court by which
    or by a judge whereof or before the judge by whom the order for examination was
    made, the witness would be entitled to object or to refuse to answer, and no
    person shall be compelled to produce at the examination any writing, document
    or thing that the person could not be compelled to produce at the trial of such
    an action.

Administration of oath

(4)  Where
    the commission, order or other process, or the instructions of the court
    accompanying the same, direct that the person to be examined shall be sworn or
    shall affirm, the person so appointed has authority to administer the oath to
    the person or take his or her affirmation.

[11]

As
    the application judge explained, the law has always treated the Crown
    differently from other entities. This is reflected in s. 17 of the
Interpretation
    Act
, R.S.C. 1985, c I-21:

No enactment is binding on Her Majesty or affects Her
    Majesty or Her Majestys rights or prerogatives in any manner, except as
    mentioned or referred to in the enactment.

[12]

The
    jurisprudence is clear that something short of express words binding the Crown
    will satisfy the requirements of s. 17 of the
Interpretation Act
:
Temelini
    v. Ontario Provincial Police (Commissioner)
(1999), 44 O.R. (3d) 609 (C.A.),
    at para. 40. See also
Friends of Oldman River Society v. Canada (Minister
    of Transport)
, [1992] 1 S.C.R. 3, at pp. 52-53;
Alberta v. Canada
    (Transport Commission),
[1978] 1 S.C.R. 61, at p. 281.

[13]

A
    province cannot validly enact legislation affecting the federal Crown in a
    compulsory manner:
Alberta v. (Canada) (Transport Commission)
. Only
    Parliament can do so.

[14]

The
    area of Crown liability has been subject to considerable statutory reform. The
    CLPA is the most recent of a series of federal statutes establishing and
    governing the liability of the Crown. Part 1 of the CLPA establishes and
    defines the liability of the Crown; Part 2 sets out jurisdiction for, as well
    as the procedural rules that apply to, litigation involving the Crown.

[15]

Section
    27 of Part 2 of the CLPA provides as follows:

Except as otherwise provided by this Act or the
    regulations, the rules of practice and procedure of the court in which
    proceedings are taken apply in those proceedings.

[16]

Section
    27 of the CLPA binds a federal Crown agency, in a proceeding in Ontario to
    which it is not a party, to the Ontario
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194:
Temelini
.

[17]

Lantheus
    argues that s. 60 of the OEA is, in substance, a rule of practice and procedure
    of the court in which the application for enforcement of the LoR was brought,
    and s. 27 of the CLPA accordingly constitutes the necessary federal legislative
    authority to bind the Crown.

[18]

In
    response, AECL argues that ss. 33 and 34 of the CLPA, reproduced below, make
    clear that a rule of evidence is distinct from a rule of practice and
    procedure, and that s. 60 of the OEA is a rule of evidence and therefore not a
    rule of practice and procedure within the meaning of that term in s. 27 of the
    CLPA.

33. Except as otherwise expressly provided in this
    Act, nothing in this Act affects any rule of evidence or any presumption
    relating to the extent to which the Crown is bound by an Act of Parliament.

34. The Governor in Council may make regulations

(a) prescribing rules of practice and procedure in
    respect of proceedings by, against or involving the Crown, including tariffs of
    fees and costs;

(d) making applicable to any proceedings by,
    against or involving the Crown all or any of the rules of evidence applicable
    in similar proceedings between subject  and subject;

[19]

Pursuant
    to s. 34 of the CLPA, the Governor in Council enacted the
Crown Liability
    and Proceedings (Provincial Court) Regulations
, SOR/91-604 (the
    Regulations), prescribing the rules of practice and procedure in respect of
    proceedings taken in provincial courts under Part II of the [CLPA]

[20]

Section
    2 of the Regulations defines provincial rules as the rules of practice and
    procedure of the court.  The word court is in turn defined as the court
    having jurisdiction under Part II of the Act to hear and determine the claim in
    respect of which the proceedings have been taken.

[21]

Sections
    7 and 8 thereof provide:

Examination for Discovery

7. Subject to sections 37 to 39 of the
Canada
    Evidence Act
, where, under the provincial rules, there is provision under
    which, if an action were an action between a corporation (other than an agency
    of the Crown) and another person, an officer or servant of the corporation
    could be examined for discovery, such officer or servant of the Crown or an
    agency of the Crown, as the case may be, as may be designated for the purpose
    by the Deputy Attorney General or after such designation by order of the court,
    may be examined for discovery during an action subject to the same conditions
    and with the same effect as would apply to the examination for discovery of the
    officer or servant of a corporation.

File list of documents

8.(1) Subject to sections 37 to 39 of the
Canada
    Evidence Act
, where the Attorney General or an agency of the Crown would,
    if the Crown were a private person, be required under the provincial rules to
    file or serve a list or an affidavit of documents, the Deputy Attorney General
    shall, subject to the same conditions as apply between subject and subject,
    file or serve a list of the documents relating to the matter of which the Crown
    has knowledge within 60 days after the event that under the provincial rules
    gives rise to the obligation to file or serve the list or affidavit, or within
    such further time as may be allowed by the court.

(2) Where, under provincial rules, a party would
    be entitled to obtain production for inspection of any document or a copy of
    any document as against or from the Crown, if the Crown were a private person,
    such production for inspection or copy may be had, subject to sections 37 to 39
    of the
Canada Evidence Act
, under order of the court after
    consideration has been given to any objection that would be available to the
    Crown if the Crown were a private person.

[22]

The
    secondary question on the jurisdictional issue is whether, if s. 60 is a rule
    of evidence, the benefit/burden exemption to crown immunity applies that is,
    whether, because in the ordinary course AECL avails itself of the provisions of
    the OEA, it cannot seek to exempt itself from the burdens of the OEA, such as
    s. 60.

(2)

The application judges reasons

[23]

The
    application judge concluded that s. 60 of the OEA was not captured by the
    phrase rules of practice and procedure. He did not address the secondary,
    benefit/burden exemption to Crown immunity argued on this appeal. A summary of
    his reasons with respect to s. 60 of the OEA is as follows.

·

Section 60 of the OEA is a provincially enacted statutory rule
    for evidence gathering.

·

Applying the modern approach to statutory construction, rules of
    practice and procedure of the court is limited to the court rules of practice
    and procedure that govern litigation conducted in any given jurisdiction and,
    in Ontario, refers to the Ontario
Rules of Civil Procedure.
The phrase
    does not include any provincially enacted statutory rules for evidence
    gathering.

·

Section 2 of the Regulations defines the term provincial rules
    as, for the purposes of the Regulations, meaning the rules of practice and
    procedure of the court. Hence, rules of practice and procedure of the court
    in s. 27 is synonymous with the governing provincial rules. Moreover, prior
    to 1985, the current Ontario
Rules of Civil Procedure
were called the
    Ontario
Rules of Practice and Procedure
. Those rules have never
    included the provisions of the OEA, either expressly or implicitly.

·

Sections 7 and 8(2) of the Regulations specify that the right to
    examine an officer or servant of an agency of the Crown, and obtain production
    for inspection of documents from the Crown under the provincial rules is
    subject to ss. 37 to 39 of the
Canada Evidence Act
. Those provisions
    permit the Crown to object to disclosure on the basis of a specified public
    interest or on the basis that it is sensitive information (i.e. information
    relating to international relations, national defence or national security that
    is in the possession of the government of Canada, and which the federal
    government is taking measures to safeguard) or potentially injurious to
    international relations, national defence or national security. If Parliament
    had intended to restrict the principle of Crown immunity in this international
    context, it would have built into the legislation the same protections provided
    by ss. 37-39 of the
Canada Evidence Act
.

·

A clearer indication from Parliament would be required to
    derogate from the usual principle of Crown immunity.

·

Re Mulroney et al. and Coates et al
(1986), 54 O.R. (2d)
    353 (H.C.J.), affd by C.A. at [1987] O.J. No. 408, stands for the proposition
    that, in the absence of some express or implied legislative indication to the
    contrary, the presumption of Crown immunity will prevent the enforcement of
    letters rogatory. This was not affected by
Temelini. Re Mulroney
therefore
    supports the conclusion that the Crown is not subject to s. 60 of the OEA.

(3)

Analysis

(a)

Statutory Interpretation

[24]

The
    central issue on this appeal is one of statutory interpretation. As the
    application judge noted, the correct approach to statutory interpretation is
    well-established. The words of the enactment must be read in their entire
    context, in their grammatical and ordinary sense, and harmoniously with the
    scheme of the act, the object of the act, and the intention of Parliament: R.
    Sullivan, Sullivan
on the Construction of Statutes
(5th ed., 2008) at
    pp. 1-18.

[25]

In
Temelini
, at para. 41, OConnor J.A. (as he then was) identified the
    purpose of the CLPA:

In general terms, its purpose is to create liability on the
    federal Crown for certain causes of action where none existed at common law and
    to expand the jurisdiction of the courts of the provinces for proceedings
    involving the federal Crown.

[26]

I
    keep this statement of purpose in mind in conducting this exercise of statutory
    interpretation.

(i)      Rules of Practice and
    Procedure

[27]

In
    my view, the application judge erred in interpreting the phrase rules of
    practice and procedure as restricted, in Ontario, to the
Rules of Civil
    Procedure
for two reasons.

[28]

First,
    he did not recognize that the phrase rules of practice and procedure in the
    context of the CLPA has a broad meaning. This phrase predates the current CLPA,
    and was first included in the
Crown Liability Act
, S.C. 1952-53, c.
    30, s. 14. At para. 33 of his decision, the application judge observes that, prior
    to 1985, the Ontario
Rules of Civil Procedure
were actually called the
    Rules of Practice and Procedure, and that the phrase naturally refers to this
    specific source of procedural rules. In my view, the application judge erred in
    coming to this conclusion.

[29]

The
    formal title of the Ontario
Rules of Civil Procedure
in 1952 was not
    the Rules of Practice and Procedure, but was simply the Rules of Practice,
    C.R.O. 1950, Reg. 464. Furthermore, the CLPA is a federal statute, and s. 27 is
    meant to refer to the courts in any province. In 1952, not a single set of provincial
    rules were officially titled the Rules of Practice and Procedure. On the
    contrary, these rules were most often titled the Rules of the Supreme Court
    or simply the Rules of Court.
[2]
Today, the provinces exhibit a similar variety in how they refer to their own
    rules of court, but none of them refers to their rules as the Rules of
    Practice and Procedure.
[3]

[30]

Second,
    the
Rules of Civil Procedure
are supplementary in nature, and are by
    no means the only rules governing the practice and procedure of Ontarios
    courts.

[31]

The
Rules of Civil Procedure
are created by the Civil Rules Committee (the
    Committee) pursuant to s. 66(1) of the
Courts of Justice Act
, R.S.O.
    1990, c. C.43, (the CJA). The CJA itself recognizes that the Committees
    jurisdiction to make rules in relation to practice and procedure is not
    exhaustive. Section 66(1) of the CJA provides that the Civil Rules Committee
may
make rules for the Court of Appeal and Superior Court of Justice in relation to
the practice and procedure of those courts
in all civil proceedings,
    (emphasis added). Subsection 66(3) of the CJA provides that the Committee may
    make rules supplementing the provisions of an Act in respect of practice and
    procedure. By describing the rules as supplementary, this passage presumes
    that provincial statutes may also create rules governing the practice and
    procedure of courts in Ontario.

[32]

In
    his decision, the application judge points to the fact that the Regulations
    passed under the CLA expressly define the term provincial rules as the rules
    of practice and procedure of the court. He erred, however, in using this
    short-hand, defined term to limit the substance of the definition and conclude
    that these rules are limited to the
Rules of Civil Procedure
, and
    have never included, either expressly or implicitly, the provisions of the
    Ontario
Evidence Act
.

[33]

In
    my view, the phrase rules of practice and procedure as it appears in s.27 of
    the CLPA has a broad meaning. It refers to rules governing the practice and
    procedure of provincial courts, but it does not refer only to one specific source
    of those rules and, in Ontario, it is clearly not restricted to rules made by
    the Committee pursuant to the CJA.

(ii)      Section 60 of the
    Ontario Evidence Act

[34]

The
    next question is whether s. 60 of the OEA is a rule of practice and procedure
    or a rule of evidence. In my view, it is better understood as a rule of practice
    and procedure.

[35]

In
    the CLPA, the word rules is used both in the phrase rules of practice and procedure
    and the phrase rules of evidence.  Most of the rules of evidence are common
    law rules concerning the admissibility and reliability of evidence: Paccioco
    & Stuesser,
The Law of Evidence
, 6th ed, (Toronto: Irwin Law,
    2011), at p. 2. The evidence acts, such as the OEA and the
Canada Evidence
    Act
, modify some common law rules of evidence, but they also set out procedural
    rules for various matters. The question is which of these two general
    categories better encapsulates the procedure for enforcing LoRs set out in s.
    60.

[36]

While
    there is certainly some overlap between the two concepts, a general distinction
    can also be made between rules of procedure and rules of evidence.
Blacks
    Law Dictionary
defines rules of procedure as the judicial rule or
    manner for carrying on a civil lawsuit or criminal prosecution. It defines rules
    of evidence as the body of law regulating the admissibility of what is offered
    as proof into the record of a legal proceeding: B. Garner ed.
Blacks Law
    Dictionary
, 8th ed. (St Paul, MN: Thompson West, 2004), at pp. 595 and
    1241. Similarly,
The Law of Evidence in Canada
distinguishes between
    rules of evidence and rules governing court practice and procedure:

The rules of evidence control the presentation of facts before
    the court Rules governing court practice and procedure can govern the conduct
    of litigation in a manner similar to evidentiary rules, but, again, these are
    matters ancillary to evidence law and are not considered in any detail in this
    text. Evidentiary principles, on the other hand, regulate (1) what matters are
    or are not admissible before the court; and (2) the method by which admissible
    facts are placed before it.

Bryant, Lederman & Fuerst,
The Law of Evidence in
    Canada
, 3rd ed. (Markham, ON: LexisNexis Canada, 2009), at p. 3

[37]

Accepting
    these general definitions, section 60 of the OEA is, in my view, more akin to a
    procedure for obtaining pre-trial discovery than a rule of evidence. Rather
    than concerning admissibility or common law rules of evidence, it sets out a
    procedure by which evidence can be gathered. The application judge was correct
    in calling s. 60 a rule for evidence gathering, but I believe he was
    incorrect in thereby saying that it was not a rule of procedure.

[38]

Interestingly,
    it would appear that the Committee potentially has the authority to pass rules
    in relation to the enforcement of letters rogatory. Subsection 66(2)(f) of the
    CJA specifically authorizes the Committee to make rules in relation to
    discovery and
other forms of disclosure before hearing
, including
    their scope and the admissibility and use of that discovery and disclosure in
    the proceeding, and s. 66(2)(s) authorizes the Committee to make rules with
    respect to the enforcement of orders (emphasis added). Subsection 66(3) makes
    clear that while the Committee cannot pass rules that conflict with an Act, it
    may make rules supplementing the provisions of an Act in respect of practice
    and procedure. Therefore, it is presumably open to the Committee to pass rules
    which parallel (but do not conflict with) the provisions of s. 60 of the OEA
    with respect to the enforcement of letters rogatory issued to obtain pre-trial
    discovery, or to supplement the provisions of s. 60 of the OEA in respect of
    practice and procedure. The fact that the Committee might do so is in my view a
    compelling indication that s. 60 is a rule of practice and procedure, rather
    than a rule of evidence.

[39]

In
    support of its argument that s. 60 is a rule of practice and procedure,
    Lantheus points to the integrated nature of the OEA and the
Rules of Civil
    Procedure
. For example, s. 60 of the OEA was amended in 1985 to extend to
    non-parties, to match the broadening of the examination for discovery process
    in Ontario affected by the 1985 amendment to the
Rules of Civil Procedure
.
    (
See Fecht v. Deloitte & Touche
(1996), 28 O.R. (3d) 188, (Gen.
    Div.) per Blair J., at para. 23.) Further, the OEA addresses matters which are
    also addressed in the
Rules of Civil Procedure
, such as the calling of
    expert witnesses (see Rule 53.03 and s. 52 of the OEA). I agree that the
    integrated nature of the OEA and the
Rules of Civil Procedure
supports
    the conclusion that parts of the OEA are rules of practice and procedure.

(iii)     Effect of comity

[40]

In
Morguard Investments Ltd. v. De Savoye
, [1990] 3 S.C.R. 1077, La
    Forest J. defined comity as the recognition which one nation allows within its
    territory to the legislative, executive or judicial acts of another nation,
    having due regard both to international duty and convenience and to the rights
    of its own citizens or of other persons who are under the protection of its
    laws, at para. 31.
[4]
More recently, in
R. v. Hape
, 2007 SCC 26, [2007] 2 S.C.R. 292, at
    para. 47, Lebel J. explained that comity refers to informal acts performed and
    rules observed by states in their mutual relations out of, politeness,
    convenience and goodwill, rather than strict legal obligation. In this sense,
    comity refers to mutual respect between sovereign nations and holds that,
    generally, LoRs from foreign courts should be enforced in Canada.

[41]

Lantheus
    argues that the doctrine of international comity should inform the modern
    principle of statutory interpretation and guide our understanding of the CLPA.
    It does not provide authority for this proposition. In response, AECL argues
    that no comity is due because the U.S. Court asks the courts of this Province
    to do something it would not. In support of this assertion, AECL proffers a
    case in which a U.S. court held that foreign letters rogatory are not
    enforceable against the United States: see
Al Fayed v. Central Intelligence
    Agency
(2000), 229 F. 3d 272, U.S. App. LEXIS 25454 at 5-6 (D.C. Cir.). In
    that case, Mr. Al Fayed sought disclosure of details in the CIAs files
    regarding its investigation of the car crash that killed Princess Diana and Mr.
    Al Fayeds son. AECL did not provide an opinion as to the state of the law in
    the Southern District of New York. Of interest, in coming to the conclusion it
    did, the court in
Al Fayed
noted that the courts in the United States
    were in some disarray as to whether discovery could be obtained against the
    government when it is not a party. There is no such confusion in Ontario. The
    issue of Crown liability under the
Rules of Civil Procedure
for
    non-party disclosure was put to rest in Ontario in 1998 by
Temelini,
discussed
    below.

[42]

At
    issue here is the interpretation of domestic legislation, as it is applied in
    Canada. On balance, I am not persuaded that in the circumstances comity is a
    relevant factor in interpreting the phrase rules of practice and procedure in
    the CLPA. However, as discussed below, international comity underpins the courts
    approach to enforcement of a LoR: see
R. v. Zingre
, [1981] 2 S.C.R.
    392.   Accordingly, I consider comity below.

(iv)     Temelini

[43]

In
Temelini
, this court

concluded that s. 27 of the CLPA
    constituted the necessary federal authority pursuant to s. 17 of the
Interpretation
    Act
to render the
Rules of Civil Procedure
binding upon the
    Crown, and that the reference to proceedings in s. 27 included proceedings in
    which the federal Crown was not a party. Therefore, the Crown was subject to
    non-party discovery pursuant to Rule 30.10. The court in
Temelini
did
    not need to consider the meaning of the phrase rules of practice and
    procedure.

[44]

OConnor
    J.A., at paras. 49 and 50 of
Temelini
, stated that such an
    interpretation was in keeping with the modern legislative trend to ... move
    towards putting the Crown on an equal footing with everyone else and noted the
    desirability of narrowing or removing Crown immunity from pre-trial discovery
    obligations...

[45]

In
    my view, an interpretation that s. 60 of the OEA is a rule of practice and
    procedure is similarly in keeping with the modern legislative trend of moving
    towards putting the Crown on an equal footing with everyone else, at least in
    commercial matters.

(v)     Re Mulroney

[46]

Both
    the application judge and AECL rely on
Re Mulroney
to argue that, at
    common law, the presumption of Crown immunity prevents the enforcement of a LoR
    against the Crown.  However,
Re Mulroney
is not of assistance to AECL.
    As OConnor J.A. noted at para. 58 of
Temelini
, cases that rely on
    the common law principle that the Crown is not compellable for pre-trial
    non-party production and discovery do not assist in interpreting the meaning of
    s. 27. In this context, he explicitly referred to
Re Mulroney
and
    related cases. At issue here is the interpretation of s. 27 of the CLPA, and
Re
    Mulroney
did not consider s. 27 of the CLPA. The application judge
    accordingly erred in relying on this authority.

(vi)     Sections 37-39 of the
    Canada Evidence Act

[47]

Respectfully,
    I do not agree with what I understand to be the application judges conclusion that
    protections afforded by ss. 37-39 of the
Canada Evidence Act
are not
    available to the Crown where a party seeks to enforce a LoR against it pursuant
    to s. 60 of the OEA.

(vii)    Conclusion

[48]

I
    conclude that the procedure for enforcing a LoR set out in s. 60 of the OEA is
    correctly understood as a rule of practice and procedure, and that the Crown is
    therefore bound by it pursuant to s. 27 of the CLPA.

(b)

The benefit/burden exemption to crown immunity

[49]

Lantheus
    also advances an alternative argument. It points to the evidence before the
    application judge that AECL has been involved in litigation, as plaintiff and
    defendant. Perforce, Lantheus submits, AECL has implicitly accepted the
    benefits of the OEA, which applies to all actions and other matters respecting
    which the Legislature has jurisdiction. The benefit/burden exemption to Crown
    immunity described in
Sparling v. Quebec,
[1988] 2 S.C.R. 1015, discussed
    below, and ignored by the application judge, therefore applies to s. 60 of the
    OEA. Phrased differently, if the benefit/burden exemption applies, AECL has
    waived its prerogative or immunity, s. 17 of the
Interpretation Act
is
    accordingly not triggered, and it is unnecessary to consider whether, for the
    purposes of s. 27 of the CLPA, s. 60 of the OEA is a rule of practice and
    procedure or a rule of evidence.

[50]

In
Sparling,
the Supreme Court of Canada considered whether the Caisse de
    dépôt et placement du Québec, as agent of the Crown in right of Quebec, could
    invoke the Crown immunity provided for in s. 16 of the
Interpretation Act
,
    R.S.C. 1970, c. I-23, and thereby escape the insider trading provisions of the
Canada
    Business Corporations Act,
S.C. 1974-75-76, c.73 (the CBCA).  Section 16
    of the
Interpretation Act
then in effect is identical to s. 17 of the
    current
Interpretation Act
.

[51]

The
    Supreme Court held that the benefit/burden exemption (sometimes referred to as
    the waiver exemption) was an exception to Crown immunity under the
Interpretation
    Act.
At paras. 18 and 28, La Forest J., writing for the court, described
    the exemption:

By taking advantage of legislation the crown will be treated
    as having assumed the attendant burdens, though the legislation has not been
    made to bind the crown expressly or by necessary implication. The force of the
    rule of immunity is avoided by the particular conduct of the crown and the
    integrity of the relevant statutory provisions, beneficial and prejudicial.

...[The exemptions] application depends not upon the existence
    or breadth of a statutory scheme regulating an area of commerce or other
    activity, but, as noted earlier, upon the relationship or nexus between the
    benefit sought to be taken from a statutory or regulatory provision and the
    burdens attendant upon that benefit.

[52]

La
    Forest J. concluded, at para. 24, that the act of purchasing a share was an
    implicit acceptance of the benefits of the CBCA, and those benefits were
    indissolubly intertwined with the restrictions upon them. By buying a share
    to which the CBCA applies, the Crown was bound by the provisions of the CBCA
    that define and regulate the rights and obligations of shareholders. The Caisse
    was therefore subject to the insider trading provisions in the CBCA.

[53]

While
    sympathetic to a broad application of the benefit/burden exemption, I am not
    satisfied that it applies in this case. La Forest J. in
Sparling
, held
    that the Crown will not be found to have assumed the burden of a statute unless
    it actively relied on a statute to secure positive rights. In coming to this
    conclusion, he relied on C.H.H. McNairn in
Governmental and

Intergovernmental
    Immunity in Australia and Canada
(Toronto: University of Toronto Press,
    1977), at pp 11-12; there, McNairn explained that the Crown will not be found
    to have assumed the burden of a statute unless it actively relied on a statute
    to secure positive rights. (See also the Divisional Courts decision in
Wheeler
    v. Ontario
(2005), 75 O.R. (2d) 113, at para. 11.)

[54]

While
    there was evidence before the application judge that AECL had been involved in
    litigation, both as plaintiff and defendant, there was no evidence, and,
    indeed, no submissions from Lantheus, as to the benefits obtained, or the
    positive rights acquired, by AECL under the OEA, and whether or how those
    benefits were intertwined with s. 60 of the OEA.

III

APPLICABLE TEST FOR ENFORCEMENT OF LETTERS ROGATORY

[55]

Having
    concluded that AECL is bound by s. 60 of the OEA, I will next consider whether
    the application judge erred in refusing to enforce the LoR against AECL in this
    case. Lantheus argues that he erred in law as to the applicable standard for
    the enforcement of the LoR, and that he erred in his application of that
    standard to this case.

(1)

An overview of the applicable test

[56]

Subsection
    60(1) of the OEA establishes several conditions that must be met before the
    court may grant an order for the examination of a witness. (For example, a
    court or tribunal of competent jurisdiction in a foreign country must have duly
    authorized the obtaining of the testimony.) If those preconditions are met, the
    court may grant the order. In this case, it is conceded that these statutory pre-conditions
    were met. The issue is whether the application judge applied the correct test
    in declining to exercise his discretion.

[57]

As
    mentioned above, the central concept guiding the enforcement of LoRs is the
    comity of nations. In
Zingre
, at para. 18, Dickson J., writing for the
    Supreme Court of Canada, established the framework for the exercise of this
    discretion:

It is upon this comity of nations that international legal
    assistance rests. Thus the courts of one jurisdiction will give effect to the
    laws and judicial decisions of another jurisdiction, not as a matter of
    obligation, but out of mutual deference and respect. A foreign request is given
    full force and effect unless it be contrary to the public policy of the
    jurisdiction to which the request is directed (see
Gulf Oil Corp. v. Gulf
    Canada Ltd.
(1980), 111 D.L.R. (3d) 74,51 C.P.R. (2d) 1, [1980] 2 S.C.R.
    39) or otherwise prejudicial to the sovereignty or the citizens of the latter
    jurisdiction.

[58]

As
    Doherty J.A. observed in
France (Republic) v. De Havilland Aircraft of
    Canada Ltd.
(1991), 3 O.R. (3d) 705 (C.A.), at para. 30, this modern
    approach not only recognizes the inherent value in international judicial
    co-operation between friendly nations, but also reflects an enlightened self-interest.

[59]

The
    test requires that the court,

consider whether the request imposes any limitation or
    infringement on Canadian sovereignty and whether justice requires an order for
    the taking of commission evidence. The considerations encompassed by the phrase
    Canadian sovereigntyinclude as assessment of whether the request would give
    extra-territorial authority to foreign laws which violate relevant Canadian or
    provincial laws; whether granting the request would infringe on recognized
    Canadian moral or legal principles; and whether the request would impose an
    undue burden on, or do prejudice to, the individual whose evidence is
    requested.
De Havilland
, para. 37.

[60]

Re Friction Division Products, Inc.

and
    E. I. Du Pont de Nemours & Co. Inc. et al.

(No. 2)
(1986),
    56 O.R. (2d) 722 (H.C.J.) at p. 732, identified six, non-exhaustive factors for
    consideration in determining whether to enforce a letter of request:

(1)

the evidence sought is relevant;

(2)

the evidence sought is necessary for trial and will be adduced at trial,
    if admissible;

(3)

the evidence is not otherwise obtainable;

(4)

the order sought is not contrary to public policy;

(5)

the documents sought are identified with reasonable specificity;

(6)     the order
    sought is not unduly burdensome, having in mind what the relevant witnesses
    would be required to do, and produce, were the action to be tried here.

[61]

While
    some cases describe the six factors identified in
Re Friction
as
    pre-conditions (see, for example,
Connecticut Retirement Plans and Trust
    Funds v. Buchan
, 2007 ONCA 462, 225 O.A.C. 106, at para. 7), others have
    made clear that, with the exception of the fourth factor, the factors in
Re
    Friction
are useful guideposts and not rigid preconditions to the
    exercise of a judges discretion. (See, for example,
Optimight
    Communications v. Innovance
, 2002 CarswellOnt 510, 155 O.A.C. 202 (C.A.),
    at paras. 22 and 23;
Pecarsky v. Lipton Wiseman Altbaum & Partners
,
    [1999] O.J. No. 2004, 96 O.T.C. 178 (S.C.J.), at para. 15, and, most recently,
    this courts decision in
Treat America Ltd. v. Nestle Canada Inc.
,
    2011 ONCA 560, 340 D.L.R. (4th) 707, at para. 12.) Indeed, in
De Havilland
,
    this court made no reference to the
Re Friction
factors.

[62]

Nevertheless,
    a few points are worth making regarding these factors.

[63]

First,
    the purpose for which the evidence is required is only one of the factors
    relevant to the exercise of discretion. While generally Canadian courts will
    order the taking of commission evidence only for the purpose of gathering
    evidence to be used at trial, there is no rule against making such an order in
    relation to pre-trial proceedings:
Zingre
, para.
22;
De
    Havilland
, para. 31;
Fecht v. Deloittte & Touche
(1996), 28
    O.R. (3d) 188 (Gen. Div.), para.
23; affd (1997), 97 O.A.C. 241.

[64]

Second,
    the factor of the evidence being not otherwise obtainable does not mean that
    no evidence on the subject in issue is available. Rather, it means that
    evidence of the same value as that sought from the person to be examined
    cannot be otherwise obtained:
Connecticut Retirement
, at para. 19;
    see also
Treat
, at para. 24.

[65]

Lastly,
    the enforcement of the LoR must not be contrary to public policy or
    inconsistent with the laws of Ontario:
Treat
, at para. 12.

(2)

The application judges reasons on the enforcement issue

[66]

A
    summary of the application judges reasons on this issue is as follows:

·

The requested evidence was identified with reasonable specificity
    and is relevant. It is not unduly burdensome or contrary to Canadian public
    policy for the Crown to produce it.

·

Lantheus failed to establish all six of the necessary criteria
    for the enforcement of letters rogatory.

·

Lantheus did not establish that the evidence sought is necessary
    for the American litigation, and will be adduced at trial. While the
    information that AECL has is vital to Lantheus, Lantheus only wants this
    information so that it may provide it to its own expert witnesses as background
    information upon which those experts will base their expert opinion evidence.

·

Letters rogatory are a remedy of last resort.  Lantheus did not establish
    that the evidence was not otherwise obtainable. AECL has provided Lantheus with
    considerable documentation. The evidence that Lantheus seeks through the
    letters rogatory process had already been provided through the mechanism of the
Access to Information Act
, R.S.C. 1985, c. A-1.

·

Enforcement would impact on Canadian sovereignty because it would
    trench upon Crown immunity.  Given that the evidence has already been provided,
    justice does not require the enforcement of the letters rogatory.

(3)

Analysis: did the application judge commit an error in principle?

[67]

Lantheus
    submits that the application judge made three legal errors:

(i)

in exercising his discretion as to whether or not to enforce the LoR, he
    treated the six factors identified in
Re Friction
as preconditions to
    the enforcement of the LoR, as opposed to useful guideposts;

(ii)

contrary to
Zingre
and
DeHavilland
, he required that
    the evidence sought be used at trial (and, in any event, he erred in concluding
    that the evidence was not necessary for trial); and

he concluded that letters rogatory are a remedy of last resort
    and should not be granted if there are other means of obtaining the evidence
    sought, even if more cumbersome and less efficient, and failed to consider
    whether evidence of the same value could be obtained, as required by
Connecticut
    Retirement
and
Treat
.

[68]

I
    agree.

[69]

As
    discussed above, the six factors identified in
Re Friction
are
    guideposts, not preconditions. Yet, the application judges reasons reveal
    that he treated the factors as pre-conditions. This is demonstrated by his
    conclusion, at para. 85: In conclusion, Lantheus has failed to establish all
    six of the necessary criteria for the enforcement of letters rogatory... Accordingly,
    the application by Lantheus cannot succeed.

[70]

Moreover,
    Osbourne J.s identification of the factors in
Re Friction
pre-dated
    this courts decisions in
De Havilland
and
Fecht
, both of
    which made clear that a LoR may be enforced for pre-trial purposes. The
    application judge therefore erred when he held that the evidence sought must be
    adduced at trial.

[71]

Finally,
    while referring in his reasons to the principle that the evidence obtained
    through the alternative means must be of the same value as the evidence
    sought, in my view, the application judge failed to apply that principle. The
    disclosure obtained through the
Access to Information Act
request was
    documentary and redacted. Documentary disclosures, especially when redacted,
    even if voluminous (and perhaps more so if voluminous), are not of the same
    value as the
viva voce
testimony of a responsible individual who can
    explain the documentation.

(4)

Application of the correct principles

[72]

Having
    concluded that the application judge erred in the application of the relevant
    principles in the exercise of his discretion, this court must consider if it will
    enforce the LoR.

[73]

I
    would do so.

[74]

No
    issue is taken with the application judges conclusion that the requested
    evidence was identified with reasonable specificity and is relevant, and that it
    is not unduly burdensome or contrary to Canadian public policy for the Crown to
    produce it.

[75]

The
    application judge characterized the evidence sought as vital, but concluded
    that, through the
Access to Information Act
process, the evidence had
    already been provided to Lantheus.

[76]

Each
    party filed fresh evidence on this appeal without objection from the other.

[77]

In
    connection with the application, AECL filed evidence, accepted by the
    application judge, that AECL had already produced all documents in its
    possession that would be responsive to Lantheus ATI request, and hence the
    LoR. Since the application was heard, AECL has disclosed further information; all
    relevant evidence seemingly had not been provided to Lantheus as at the time of
    the application. Moreover, the evidence of Lantheus expert is that even with
    this additional information, the disclosures to date in the ATI process, some
    of which are heavily redacted, do not include relevant quantitative scientific
    or technical data and it is clear from the documents that have been produced that
    other documents exist. Furthermore, there is no explanation as to how or why
    AECL reached a particular conclusion in a given instance.  Oral testimony is
    required in order to provide context in this complex technical matter, and to
    authenticate documents in order to make them admissible in the U.S. Action.

[78]

I
    therefore conclude that the evidence sought has not already been provided to
    Lantheus, and, while it is not essential that it be required for trial, the
    evidence sought is in fact required for trial. This case is very far from a
    fishing expedition.

[79]

Significantly,
    the ATI process does not afford Lantheus the opportunity to obtain oral
    testimony. It therefore does not provide evidence of the same value.

[80]

As
    the application judge noted, in this case disclosure is not contrary to public
    policy. AECL is faced with the disclosure request as a result of engaging in a
    commercial activity.

[81]

As
    discussed above, ss. 7 and 8(2) of the Regulations make the right to
    examination for discovery or production of a document under the provincial
    rules subject to ss. 37 to 39 of the
Canada Evidence Act
, and s. 2 of
    the Regulations defines provincial rules as the the rules of practice and
    procedure of the court. I have concluded that the phrase rules of practice
    and procedure is not restricted to the
Rules of Civil Procedure
and
    s. 60 of the OEA is a rule of practice and procedure. It follows that Lantheus
    right to disclosure from AECL is subject to ss. 37 to 39 of the
Canada
    Evidence Act.
AECL does not argue that the information sought relates to,
    or is potentially injurious to, international relations or national defence or
    national security. Enforcement would not infringe on Canadian sovereignty.

[82]

I
    therefore conclude that justice requires that the LoR be enforced.

IV

SUMMARY

[83]

In
    summary, contrary to the application judge, I conclude that the effect of s. 27
    of the CLPA is that AECL, as a Crown agent, is not immune from s. 60 of the
    OEA. As a result, the Superior Court of Justice had jurisdiction to enforce the
    LoR issued by the U.S. Court against AECL. In my view, the application judge did
    not apply the correct principles in determining whether, if he had
    jurisdiction, he should exercise his discretion to enforce the LoR. Applying
    the correct principles, I conclude that justice requires that the LoR be
    enforced.

V

DISPOSITION AND COSTS

[84]

In
    the result, I would allow the appeal and issue an order enforcing the LoR.

[85]

The
    parties agreed that the successful party on this appeal would be entitled to
    costs of the appeal calculated on a partial indemnity scale in the all-inclusive
    amount of $30,000, and to costs below in the all-inclusive amount of $18,189. I
    would accordingly order costs in favour of Lantheus in such amounts.

Released: Apr 29, 2013                                          Alexandra
    Hoy J.A.

EAC                                                                  I
    agree E.A. Cronk J.A.

I
    agree H.S. LaForme J.A.

[1]
Letters of request are also called letters rogatory.

[2]
In 1952, the rules in each of the provinces were titled as follows: Alberta,
Rules
    of the Supreme Court of Alberta
, (Alberta Regulation 561/57, as authorized
    by Order in Council 716/44); British Columbia,
The Supreme Court Rules
,
    1943; Manitoba,
The Queens Bench Rules
, 1939; Newfoundland,
Rules of
    the Supreme Court
; New Brunswick,
Rules of the Supreme Court, 1927
(Regulation 90 under the
Judicature Act
); Nova Scotia
Rules of the
    Supreme Court
, 1950; Prince Edward Island,
Rules of Supreme Court
;
    Saskatchewan,
Rules of Court
.

[3]
Today, the rules in the provinces are titled as follows: Alberta,
Rules of
    Court
, A.R. 124/2010; British Columbia,
Supreme Court Civil Rules
, B.C.
    Reg. 168/2009; Manitoba,
Court of Queens Bench Rules
, Manitoba
    Regulation 553/88; New Brunswick,
Rules of Court
, N.B. Reg. 82-73;
    Newfoundland and Labrador,
Rules of the Supreme Court

1986
, S.N.L.
    1986, c. 42, Sch. D; Nova Scotia,
Civil Procedure Rules
, Royal Gazette
    Nov 19, 2008; Prince Edward Island,
Rules of Civil Procedure
;
    Saskatchewan,
Queens Bench Rules
, Royal Gazette Nov 19, 2008.

[4]
La Forests definition here is itself a quote from the decision of the United
    States Supreme Court in
Hilton v. Guyot
, 159 U.S. 113 (1895), at pp.
    163-64.


COURT OF APPEAL FOR ONTARIO

CITATION:
    Malka v. Vasiliadis, 2013 ONCA 239

DATE: 20130416

DOCKET: C54531

Feldman, MacFarland and Pepall JJ.A.

BETWEEN

Elie Malka and Circle Inc.

Plaintiffs (Appellants)

and

Larry Vasiliadis and Joe Lugassy

Defendants (Respondents)

Andrew Stein, for the appellants

Stephen Schwartz and Gillian Silverhart, for the
    respondent, Larry Vasiliadis

David R. Rothwell, for the respondent, Joe Lugassy

Heard and released orally: March 28, 2013

On appeal from the judgment of Justice Kenneth L. Campbell
    of the Superior Court of Justice, dated October 5, 2011.

ENDORSEMENT

[1]

We are troubled by the fact that at trial the respondents changed their
    evidence from what it had been at discovery without giving proper notice.

[2]

On discovery both Vasiliadis and Lugassy said that the key events with
    respect to the termination of the lease took place on Friday, February 19,
    1999.  At trial they changed their evidence and said that these events took
    place on Monday, February 22. Despite this known change in the evidence, notice
    of the change was not provided to the appellants in writing as the
Rules of
    Civil Procedure
require. The respondents were obliged to give written
    notice to the appellants when they became aware that their evidence would
    change.

[3]

The key issue before the trial judge was whether the appellant Malka had
    made or tendered payment of the rent that was due on February 1, 1999 or on the
    subsequent extensions to February 19, 1999. The overwhelming evidence was that neither
    he nor his co-appellant, Circle Inc. did and furthermore that they did not have
    the financial ability to do so.

[4]

The trial judge gave lengthy and extensive reasons for judgment
    following an acrimonious, six-day trial. He accepted the evidence of the
    respondents over that of the appellant Malka. While the trial judge appears to
    have misapprehended the evidence in relation to the value of the appellants
    inventory on hand in October of 1998, in our view, this misapprehension did not
    materially impact the result. The fact remained, as the trial judge found, that
    the appellants did not pay the rent on February 19 and had no ability to do so.

[5]

We agree with the trial judges interpretation of article 8.1 of the
    lease.

[6]

The appellants were afforded ample opportunity to recover any documents
    left in the premises after the lease was terminated and before the documents
    were destroyed. In any event, there is no basis in the evidence to conclude
    that those documents would have had any impact on the result. Any relevant
    financial information could have been acquired from the appellants bank at the
    time.

[7]

On this appeal, the appellant raised and relied on the fact that both
    the respondents changed their evidence without complying with the notice
    requirements in the Rules of Civil Procedure. In our view, whether the
    termination events occurred on Friday, February 19 or on Monday, February 22 was
    immaterial to the outcome of the action in view of the trial judges amply supported
    finding that the rent was not tendered by the appellants on either date.

[8]

While the change in evidence did not impact the result, in our view, at
    this stage, the appropriate remedy for the failure to give notice of the change
    in evidence is that there be costs consequences to the respondents. Therefore,
    while the appeal is dismissed, the respondents claims for costs of the appeal will
    be reduced and each of the respondents is awarded the reduced amount of $5,000,
    inclusive of disbursements and H.S.T.

K. Feldman J.A.

J. MacFarland J.A.

S.E. Pepall J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Onex Corporation v. American Home
    Assurance Company, 2013 ONCA 284

DATE: 20130430

DOCKET: C54076, C54123, C55034

OConnor A.C.J.O.
[1]
,
    Rosenberg and Simmons JJ.A.

BETWEEN

Onex
    Corporation, Gerald W. Schwartz, Christopher A. Govan, Mark Hilson and Nigel Wright

Plaintiffs/Defendants by Counterclaim
(Respondents/Cross-Appellants)

and

American Home Assurance
    Company
,
Brit Syndicates Ltd. (Lloyds Syndicate 2987), Heritage
    Managing Agency Limited (Lloyds Syndicate 3245), XL Insurance Company Limited
,
    Liberty Mutual Insurance Company, Lloyds Underwriters Syndicates No. 2623,
    0623, 0033 and AIG Europe (UK) Limited, and Houston Casualty Company

Defendants/Plaintiff by Counterclaim American Home
(
Respondents
/
Appellant/Respondent on Cross-Appeal
)

Geoffrey D. E. Adair, Q.C. and Alexa Sulzenko, for the
    respondents/cross-appellants

Glenn A. Smith, Rory Gillis and Marcus B. Snowden, for
    the appellant and respondent on cross-appeal, American Home Assurance Company

Alan L. W. DSilva, Mark E. Walli and Ellen M. Snow, for
    the respondents Brit Syndicates Ltd. (Lloyds Syndicate 2987), Heritage
    Managing Agency Limited (Lloyds Syndicate 3245) and XL Insurance Company
    Limited

Heard:  June 20, 2012

On appeal and cross-appeal from the judgment of Justice
    Laurence A. Pattillo of the Superior Court of Justice, dated June 30, 2011,
    with reasons reported at 2011 ONSC 1142, 98 C.C.L.I. (4th) 228, with
    supplementary reasons dated August 4, 2011, and on appeal from the judgment of
    Justice Laurence A. Pattillo of the Superior Court of Justice, dated January
    20, 2012.

COSTS ENDORSEMENT

[1]

American Home Assurance Company is awarded its costs of the appeal on a
    partial indemnity scale fixed in the amount of $45,000 inclusive of
    disbursements and applicable taxes.

[2]

American Home Assurance Company, Brit Syndicates Ltd. (Lloyds Syndicate
    2987), Heritage Managing Agency Limited (Lloyds Syndicate 3245) and XL
    Insurance Company Limited are awarded their costs fixed in the amount of
    $20,000 inclusive of disbursements and applicable taxes.

M.
    Rosenberg J.A.

Janet
    Simmons J.A.

[1]
Associate Chief Justice Dennis OConnor took no part in this decision.